<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-Q

[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 1998 OR

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

FOR THE TRANSITION PERIOD FROM _________ TO ____________

COMMISSION FILE NUMBER:  333-12977

                               IMPSAT CORPORATION
                                  IMPSAT S.A.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
 <S>                                                                               <C>
                         Delaware                                                   52-1910372
                        Argentina                                                 Not Applicable
(STATE OR OTHER JURISDICTION INCORPORATION OR ORGANIZATION)                (IRS EMPLOYER IDENTIFICATION NUMBER)
</TABLE>

                           Alferez Pareja 256 (1107)
                            Buenos Aires, Argentina
                                 (541) 300-4007
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)

Indicate by check mark whether the Registrants (1) have 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
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.  YES [ X ]   NO [   ]
                                                     ---        ---
               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

INDICATE BY CHECK MARK WHETHER THE COMPANY HAS FILED ALL DOCUMENTS AND REPORTS
REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY
A COURT.  YES  n/a   NO  n/a
              -----     -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:  As of March 31, 1998 the
Company had outstanding 75,594,480 shares of Common Stock, $1.00 par value, and
25,000 shares of Series A Convertible Preferred Stock, liquidation preference
$5,000 per share, outstanding.
<PAGE>   2

                         -----------------------------
                               IMPSAT CORPORATION
                                  IMPSAT S.A.
                         -----------------------------
                                     INDEX

<TABLE>
<CAPTION>
                                                                                 PAGE NO.
                                                                                 --------
<S>                                                                                <C>
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

  ITEM 1.  FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .  3
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . .  24
  ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . 28

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

  ITEM 1.  LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . .  28
  ITEM 2.  CHANGES IN SECURITIES  . . . . . . . . . . . . . . . . . . . . . . . . . 28
  ITEM 3.  DEFAULTS UPON SENIOR SECURITIES  . . . . . . . . . . . . . . . . . . . . 28
  ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS  . . . . . . . . . . 28
  ITEM 5.  OTHER INFORMATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
  ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K   . . . . . . . . . . . . . . . . . . . 29

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>





<PAGE>   3



                                     PART I
                             FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                      IMPSAT CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                         (IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,           MARCH 31,
                                                                                           1997                  1998
                                                                                     ----------------      ----------------
                                                                                                             (UNAUDITED)
            <S>                                                                           <C>                     <C>
            ASSETS

            CURRENT ASSETS:
               Cash and cash equivalents  . . . . . . . . . . . . . . . . . . .               $ 10,439             $ 10,911
               Trade accounts receivable, net   . . . . . . . . . . . . . . . .                 36,596               44,606
               Other receivables  . . . . . . . . . . . . . . . . . . . . . . .                 15,583               16,859
               Prepaid Expenses   . . . . . . . . . . . . . . . . . . . . . . .                  2,397                3,995
                                                                                                 -----                -----
                       Total current assets . . . . . . . . . . . . . . . . . .                 65,015               76,371
                                                                                                ------               ------
            PROPERTY, PLANT & EQUIPMENT, NET  . . . . . . . . . . . . . . . . .                255,422              264,458
                                                                                               -------              -------
            NON-CURRENT ASSETS:
               Trade accounts receivable, net   . . . . . . . . . . . . . . . .                  5,143                5,143
               License and permit costs, net  . . . . . . . . . . . . . . . . .                  2,003                1,903
               Deferred income taxes, net   . . . . . . . . . . . . . . . . . .                                          99
               Deferred financing costs, net  . . . . . . . . . . . . . . . . .                  4,044                3,115
               Other non-current assets   . . . . . . . . . . . . . . . . . . .                  8,289               14,825
                                                                                              --------             --------
                       Total non-current assets . . . . . . . . . . . . . . . .                 19,479               25,085
                                                                                              --------             --------
            TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              $ 339,916            $ 365,914
                                                                                             =========            =========

            LIABILITIES AND STOCKHOLDERS' EQUITY

            CURRENT LIABILITIES:
               Account payable - trade  . . . . . . . . . . . . . . . . . . . .              $  25,289            $  32,168
               Short-term debt  . . . . . . . . . . . . . . . . . . . . . . . .                 50,189               68,095
               Current portion of long-term debt  . . . . . . . . . . . . . . .                 10,186               11,165
               Accrued liabilities  . . . . . . . . . . . . . . . . . . . . . .                  8,878                6,718
               Deferred income taxes, net   . . . . . . . . . . . . . . . . . .                    247
               Other liabilities  . . . . . . . . . . . . . . . . . . . . . . .                  8,649               13,606
                                                                                                 -----               ------
                       Total current liabilities  . . . . . . . . . . . . . . .                103,438              131,752
                                                                                               -------              -------
            LONG-TERM DEBT, NET . . . . . . . . . . . . . . . . . . . . . . . .                159,677              159,532
                                                                                               -------              -------
            OTHER LONG-TERM LIABILITIES . . . . . . . . . . . . . . . . . . . .                  3,014                3,291
                                                                                                 -----                -----
            COMMITMENTS AND CONTINGENCIES (Note 10)
            MINORITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . .                 10,398               10,313
                                                                                                ------               ------
            STOCKHOLDERS' EQUITY
               Convertible Preferred Stock, Series A, 10% cumulative dividend,
                  25,000 shares issued and outstanding liquidation preference
                  $5,000 per share  . . . . . . . . . . . . . . . . . . . . . .                                     125,000
               Common stock, $1 par value; 100,792,640 shares issued and
                  outstanding at December 31, 1997 and 75,594,480 shares
                  outstanding at March 31, 1998 respectively  . . . . . . . . .                100,793              100,793
               Treasury stock, 25,198,160 shares, at cost   . . . . . . . . . .                                   (125,000)
               Accumulated deficit                                                            (37,404)             (39,767)
                                                                                              --------              -------
                       Total stockholders' equity . . . . . . . . . . . . . . .                 63,389               61,026
                                                                                             ---------            ---------
            TOTAL                                                                            $ 339,916            $ 365,914
                                                                                             =========            =========
</TABLE>
See notes to consolidated financial statements.



                                       3

<PAGE>   4



                      IMPSAT CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                         (IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
                                                                                                  THREE MONTHS ENDED
                                                                                                        MARCH 31
                                                                                                        --------
                                                                                                 1997              1998
                                                                                                 ----              ----
                                                                                                      (UNAUDITED)
          <S>                                                                                    <C>               <C>
          NET REVENUES FROM SERVICES  . . . . . . . . . . . . . . . . . . . . . . . . .           $  37,027        $  45,153
                                                                                                  ---------        ---------
          COST AND EXPENSES:
            Variable cost of services   . . . . . . . . . . . . . . . . . . . . . . . .               4,963            7,719
            Satellite capacity cost   . . . . . . . . . . . . . . . . . . . . . . . . .               4,435            6,115
            Salaries, wages and benefits  . . . . . . . . . . . . . . . . . . . . . . .               6,386            7,771
            Selling, general and administrative   . . . . . . . . . . . . . . . . . . .               7,555            8,516
            Depreciation and amortization   . . . . . . . . . . . . . . . . . . . . . .               6,750            8,061
                                                                                               ------------      -----------
            Total cost and expenses   . . . . . . . . . . . . . . . . . . . . . . . . .              30,089           38,182
                                                                                                -----------       ----------
              Operating income  . . . . . . . . . . . . . . . . . . . . . . . . . . . .               6,938            6,971
                                                                                               ------------      -----------
          OTHER INCOME (EXPENSES):
            Interest expense, net   . . . . . . . . . . . . . . . . . . . . . . . . . .             (6,182)          (7,785)
            Net (loss) gain on foreign exchange   . . . . . . . . . . . . . . . . . . .               (162)               23
            Other income (expense), net   . . . . . . . . . . . . . . . . . . . . . . .                  33              332
                                                                                             --------------      -----------
          INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST . . . . . . . . . . .
                                                                                                        627            (459)
          PROVISION FOR INCOME TAXES  . . . . . . . . . . . . . . . . . . . . . . . . .             (1,697)          (1,635)
                                                                                               -----------        ---------
          LOSS BEFORE MINORITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . .             (1,070)          (2,094)
          INCOME ATTRIBUTABLE TO MINORITY INTEREST  . . . . . . . . . . . . . . . . . .               (627)            (269)
                                                                                               ------------      -----------
          NET LOSS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $  (1,697)        $ (2,363)
                                                                                                 =========         ========
</TABLE>
See notes to consolidated financial statements




                                       4
<PAGE>   5



                     IMPSAT CORPORATION AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                    PREFERRED STOCK            COMMON STOCK
                                                   -----------------       ---------------------       TREASURY   ACCUMULATED
                                                    SHARES   AMOUNT         SHARES       AMOUNT         STOCK       DEFICIT

<S>                                                 <C>      <C>         <C>           <C>            <C>           <C>
BALANCE AT
  DECEMBER 31, 1997 .....................                                 100,792,640  $100,793                    $(37,404)
  Change in minority interest in
  IMPSAT Argentina  .....................
  Acquisition of Treasury stock..........                                (25,198,160)                 $(125,000)
  Issuance of Preferred Stock............           25,000   $125,000
  Net loss for the three months
    ended   .............................                                                                (2,363)  
                                                    ------   --------     -----------  --------       ----------   ---------
BALANCE AT MARCH 31, 1998 ...............           25,000   $125,000      75,594,480  $100,793       $(125,000)   $(39,767)
                                                    ------   --------     -----------  --------       ----------   ---------
</TABLE>

<TABLE>
<CAPTION>
                                                                          MINORITY
                                                     TOTAL                INTEREST

<S>                                             <C>                     <C>  
BALANCE AT
  DECEMBER 31, 1997 .....................           $63,389               $10,398
  Change in minority interest in
  IMPSAT Argentina  .....................                                   (354)
  Acquisition of Treasury stock .........         (125,000)
  Issuance of Preferred Stock ...........           125,000
  Net loss for the three months
    ended ...............................           (2,363)                   269
                                                 ----------               -------
BALANCE AT MARCH 31, 1998 ...............        (*)$61,026               $10,313
                                                 ----------               -------
</TABLE>

(*)   Includes an appropriation of retained earnings amounting to $1,622 to
comply with legal reserve requirements in Argentina. 

See notes to consolidated financial statements.

                                       5
<PAGE>   6



                      IMPSAT CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                                                            MARCH 31,
                                                                                    -----------------------------
                                                                                         1997         1998
                                                                                         ----         ----
                                                                                            (UNAUDITED)
            <S>                                                                    <C>                  <C>
            CASH FLOWS FROM OPERATING ACTIVITIES:
               Net loss                                                              $  (1,697)           $  (2.363)
                  Adjustments to reconcile net loss to net cash provided by
            operating activities:
                  Amortization and depreciation   .............................           6,750                8,061
                  Deferred income tax provision (benefit)   ...................             103                (346)
                  Net change in minority interest   ...........................             627                 (85)
                  Changes in assets and liabilities:                           
                  Increase in trade accounts receivable, net  .................         (4,001)              (8,010)
                  Decrease (increase) in prepaid expenses   ...................           2,332              (1,598)
                  (Decrease) increase in other receivables and
                     other non-current assets   ...............................           1,839              (6,883)
                  Increase in accounts payable-trade  .........................           7,081                5,905
                  (Decrease) increase in accrued and other liabilities  .......         (2,644)                2,797
                  (Decrease) increase in other long-term liabilities  .........         (7,594)                  277
                                                                                        -------                  ---
               Net cash provided by (used in) operating activities  ...........           2,796              (2,245)
                                                                                          -----              -------
            CASH FLOWS FROM INVESTING ACTIVITIES:
               Purchases of property, plant and equipment   ...................        (14,906)             (16,023)
                                                                                       --------             --------
               Net cash used by investing activities  .........................        (14,906)             (16,023)
                                                                                       --------             --------
            CASH FLOWS FROM FINANCING ACTIVITIES:
               Net borrowings from short-term debt  ...........................           1,751               17,906
               Proceeds from long-term debt   .................................           3,753                3,753
               Repayments of long-term debt   .................................         (3,744)              (2,919)
               Acquisition of Treasury Stock  .................................                            (125,000)
               Proceeds from issuance of preferred ............................                              125,000
                stock                                                                     -----              -------
               Net cash provided by financing activities  .....................           1,760               18,740
                                                                                      ---------             --------
            NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS  .............        (10,350)                  472
            CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  .................          29,583               10,439
                                                                                         ------           ----------
            CASH AND CASH EQUIVALENTS AT END OF PERIOD  .......................       $  19,233            $  10,911
                                                                                      =========            =========
            SUPPLEMENTAL CASH FLOW INFORMATION:
               Interest paid  .................................................      $    2,335           $    4,626
                                                                                     ==========           ==========
            SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
               Equipment in transit   .........................................       $   2,191          $       974
                                                                                      =========          ===========
</TABLE>
See notes to consolidated financial statements

                                        6
<PAGE>   7



                      IMPSAT CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (IN THOUSANDS OF U.S. DOLLARS)

1.    BACKGROUND AND EVOLUTION

IMPSAT Corporation, a Delaware holding company (the "Company"), is a
privately-held corporation which provides and operates private networks of
integrated data and voice telecommunications systems in a number of countries
in Latin America. The Company's principal line of business comprises the
provision of data transmission services for large national and multinational
companies, financial institutions, and governmental agencies and other business
customers in Latin America. The Company provides its services through its
advanced telecommunications networks comprised of owned teleports, earth
stations, fiber optic and microwave link and leased satellite and fiber optic
capacity.

The Company was formed in August 1994 for the purpose of combining operating
entities in Argentina, Colombia and Venezuela, which were previously controlled
by common ownership. The original operating entity was established in Argentina
in 1990 under the name of IMPSAT S.A. ("IMPSAT Argentina"). Thereafter,
operating entities were established in Colombia in 1992 ("IMPSAT Colombia") and
in Venezuela in 1993 ("IMPSAT Venezuela"). Other  operating subsidiaries have
been created in Mexico, Ecuador, Peru (inactive), and the United States.
Accordingly, the Company's operating subsidiaries at March 31, 1998 are as
follows:

<TABLE>
<CAPTION>



                                                                                                     NET
                                                                                                  REVENUES    OPERATING
                                                              OWNERSHIP            TOTAL            FROM       INCOME
        COUNTRY      OPERATING SUBSIDIARIES                   PERCENTAGE           ASSETS         SERVICES       (LOSS)
        -------      ----------------------                   ----------           ------         --------       -------
     <S>            <C>                                        <C>              <C>               <C>            <C>
     Argentina      Impsat S.A.                                 95.2%             $214,309         $23,944       $ 4,900
     Colombia       Impsat S.A.                                 74.2               115,806          13,828         4,495
     Venezuela      Telecomunicaciones Impsat S.A.              75.0                29,003           2,992           (84)
     Mexico         Impsat S.A. de C.V.                         99.9                 8,242             736          (576)
     Ecuador        Impsatel del Ecuador S.A                   100.0                15,080           1,846           194
     USA            Impsat USA, Inc.                           100.0                 7,669           1,815           211
                                                                                  --------         -------       -------
                    Subtotal for operating subsidiaries                            390,109          45,161         9,140

               Parent company, others and eliminations                              24,195              (8)       (2,169)
                                                                                  --------         -------       -------

                     Consolidated total                                           $365,914         $45,153       $ 6,971
                                                                                  ========         =======       =======
</TABLE>


  In addition, the Company owns other subsidiaries which serve as
intermediaries or provide support functions to the Company and its operating
subsidiaries. They are Resis Ingenieria, S.A. (Argentina) and International
Satellite Capacity Holding, NG (Liechtenstein).


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION -- The financial statements are presented on a
consolidated basis and include the accounts of the Company and its
subsidiaries. Effective December 31, 1997, IMPSAT Argentina changed its fiscal
year to December 31. All significant intercompany transactions and balances
have been eliminated.

                                      7

<PAGE>   8


INTERIM FINANCIAL INFORMATION -- The unaudited consolidated statements as of
March 31, 1998 and for the three months ended March 31, 1998 and 1997 have been
prepared on the same basis as the audited consolidated financial statements. In
the opinion of management, such unaudited consolidated financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the results for such period. The operating results
for the three months period ended March 31, 1998 and 1997 are not necessarily
indicative of the operating results to be expected for the full fiscal year or
for any future period.

USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS -- Cash and cash equivalents are highly liquid
investments, including short-term investments and time deposits with maturities
of three months or less at the time of purchase. Cash equivalents and
short-term investments are stated at cost, which approximates market value.

REVENUE RECOGNITION -- The Company provides services to its customers pursuant
to contracts which range from six months to five years but typically are for
three years. The customer generally pays  an installation charge at the
beginning of the contract and a monthly fee based on the number of microsystem
installations. The fees stipulated in the contracts are denominated in U.S.
dollars equivalents. Services are billed on a monthly, predetermined basis,
which coincides with when the services are rendered. No single customer
accounted for greater than 10% of total revenue from services for the three
months ended March 31, 1998 and 1997.

PROPERTY, PLANT AND EQUIPMENT COSTS -- Property, plant and equipment are
recorded at cost and depreciated using the straight-line method over the
following estimated useful lives:

<TABLE>
         <S>                                                <C>
         Buildings and improvements                         20-25 years
         Operating communications equipment                  5-10 years
         Furniture, fixtures and other equipment             2-10 years
</TABLE>

LICENSE AND PERMIT COSTS -- License and permit costs, such as legal cost,
regulatory fees and application costs incurred to obtain and make functional
the operating licenses in each respective country were capitalized and are
being amortized on the straight-line basis over periods not to exceed ten
years. The Company reviews the carrying value of its license and permit costs
on an ongoing basis. If such review indicates that these values may not be
recoverable, the Company's carrying value will be reduced to its estimated fair
value. The amounts capitalized, by operating subsidiaries are as follows:

<TABLE>
<CAPTION>
                                       DECEMBER 31,       MARCH 31,
                                           1997              1998
                                      ---------------  ---------------
                                                         (UNAUDITED)
         <S>                          <C>              <C>
         IMPSAT Colombia              $     3,020      $     3,020
         IMPSAT Ecuador                       287              287
         IMPSAT Mexico                        293              293
         IMPSAT USA                           147              147
                                          -------          -------
            Total costs capitalized         3,747            3,747
         Less : accumulated                (1,744)          (1,844)
          amortization                    -------          -------
         
         Unamortized balance              $ 2,003          $ 1,903
                                          =======          =======
</TABLE>

INCOME TAXES -- Deferred income taxes result from temporary differences in the
recognition of expenses for tax and financial reporting purposes and are
accounted for in accordance with Statement of Financial

                                      8

<PAGE>   9




Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes, which
requires the liability method of computing deferred income taxes. Under the
liability method, deferred taxes are adjusted for tax rate changes as they
occur.

DEFERRED FINANCING COSTS -- Debt issuance costs and transaction fees, which are
associated with the issuance of the Company's 12-1/8 % Senior Guaranteed Notes
due 2003 (the "Senior Guaranteed Notes") (see Note 7) are being amortized (and
charged to interest expense) over the term of the related notes on a method
which approximates the level yield method.

FOREIGN CURRENCY TRANSLATION -- The Company's subsidiaries use the U.S. dollar
as the functional currency. Accordingly, the financial statements of the
subsidiaries were remeasured. The effects of foreign currency transactions and
of remeasuring the financial position and results of operations into the
functional currency are included as net gain on foreign exchange.

FAIR VALUE OF FINANCIAL INSTRUMENTS -- The Company's financial instruments
include receivables, payables, short and long-term debt.  The fair value of
such financial instruments have been determined using available market
information and interest rates as of December 31, 1997.

At December 31, 1997, the fair value of the Senior Guaranteed Notes was
approximately $129,000 compared to the carrying value of $125,000. The fair
value of all other financial instruments were not materially different from
their carrying value.

LONG LIVED ASSETS -- Long-lived assets are reviewed on an ongoing basis for
impairment based on comparison of carrying value against undiscounted future
cash flows.  If an impairment is identified, the assets carrying amount is
adjusted to fair value.  No such adjustments were recorded during the three
months ended March 31, 1998 and 1997.

RECLASSIFICATIONS -- Certain amounts in the three months ended March 31, 1997
consolidated financial statements have been reclassified to conform with the
three months ended March 31, 1998 presentation.

NEW ACCOUNTING PRONOUNCEMENTS -- In June 1997, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 130, Reporting Comprehensive Income.
SFAS No. 130 requires that all components of comprehensive income be reported
on one of the following: (1) the statement of income; (2) the statement of
changes in stockholders' equity, or (3) a separate statement of comprehensive
income.  Comprehensive income is comprised of net income and all changes to
stockholders' equity, except those due to investments by owners (changes in
paid-in capital) and distributions to owners (dividends). SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997. The adoption of
SFAS No. 130 did not have a material impact on the Company s consolidated
financial statements presentation.

In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131 changes the way public
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information
in their quarterly reports issued to shareholders. SFAS No. 131 also requires
entity-wide disclosures about the products and services an entity provides, the
foreign countries in which it holds assets and reports revenues, and its major
customers. SFAS No. 131 is effective for fiscal years beginning after December
15, 1997. The adoption of SFAS No. 131 did not to have a material impact on the
Company's consolidated financial statement presentation.

                                       9

<PAGE>   10



3.  TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable, by operating subsidiaries are summarized as follows:

<TABLE>
<CAPTION>
                                                       DECEMBER 31,                 MARCH 31,
                                                           1997                       1998
                                                 ---------------------      ---------------------
                                                                                   (UNAUDITED)
 <S>                                                   <C>                        <C>
 IMPSAT Argentina                                      $   27,531                 $   30,631
 IMPSAT Colombia                                           10,102                     14,486
 IMPSAT Venezuela                                           2,202                      2,777
 IMPSAT USA                                                 1,359                      1,996
 All Others                                                 1,335                      1,229
                                                       ----------                 ----------
                                                           42,529                     51,119
 Less: allowance for doubtful accounts                    (5,933)                    (6,513)
                                                       ----------                -----------
 Trade accounts receivable, net                        $   36,596                 $   44.606
                                                       ==========                 ==========
</TABLE>

The Company's subsidiaries provide trade credit to their customers in the
normal course of business. The collection of a substantial portion of the trade
receivables are susceptible to changes in the Latin American economies and
political climates. Prior to extending credit, the customers' financial history
is analyzed.

The activity for the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,                MARCH 31,
                                                            1997                      1998
                                                  ---------------------     ----------------------
                                                                                   (UNAUDITED)
 <S>                                                   <C>                      <C>
 Beginning balance                                     $  2,803                  $  5,933
 Provision for doubtful accounts                          3,269                     1,194
 Write-offs                                               (139)                     (614)
                                                        -------                  --------
 Ending balance                                          $5,933                 $   6,513
                                                         ======                 =========
</TABLE>

In addition, see Note 10.

                                      10

<PAGE>   11




4.  OTHER RECEIVABLES

Other receivables consist primarily of refunds or credits pending from local
governments for taxes other than income and other miscellaneous amounts due to
the Company and its operating subsidiaries as follows:

<TABLE>
<CAPTION>
                                                  DECEMBER 31,             MARCH 31,
                                                      1997                   1998
                                                  --------------      ---------------
                                                                          (UNAUDITED)
        <S>                                        <C>                  <C>
        IMPSAT Argentina                           $   4,753            $  3,845
        IMPSAT Colombia                                4,460               4,178
        IMPSAT Venezuela                               2,133               2,455
        IMPSAT Ecuador                                   548                 529
        All Others                                     3,689               3,852
                                                    --------            --------
               Total                                 $15,583             $16,859
                                                     =======             =======
</TABLE>


5.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,          MARCH 31,
                                                         1997                1998
                                                  --------------      ---------------
                                                                          (UNAUDITED)
  <S>                                               <C>                 <C>
  Land                                               $   1,478           $   1,478
  Building and improvements                             23,312              23,412
  Operating communications equipment                   310,321             327,449
  Furniture, fixtures and other equipment               14,503              15,010
                                                     ---------           ---------
      Total                                            349,614             367,349
  Less: accumulated depreciation                     (101,051)           (108,776)
                                                     ---------           ---------
      Total                                            248,563             258,573
  Deposit on purchase of equipment and
     in transit                                          6,859               5,885
                                                    ----------       -------------
  Property, plant and equipment, net                $  255,422          $  264,458
                                                    ==========          ==========
</TABLE>



The recap of accumulated depreciation is as follows:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,        MARCH 31,
                                                                     1997              1998
                                                             ---------------    ---------------
                                                                                    (UNAUDITED)
                     <S>                                        <C>                <C>
                     Beginning balance                          $   73,046         $   101,051
                     Depreciation expense                           29,665               7,961
                     Retirements and disposals                     (1,660)               (236)
                                                                ----------          ----------
                     Ending balance                               $101,051            $108,776
                                                                  ========            ========
</TABLE>

                                     11

<PAGE>   12




6.  SHORT-TERM DEBT

The Company's short-term debt is detailed as follows:

<TABLE>
<CAPTION>
                                                   DECEMBER 31,       MARCH 31,
                                                       1997             1998
                                                  ---------------   ---------------
                                                                     (UNAUDITED)
 <S>                                                 <C>              <C>
       Commercial paper (7.55% to 11%)               $  25,000        $  31,000
       Short-term credit facilities,
        denominated in US dollars; interest
        rates ranging  from
        6.26% to 15%;
             IMPSAT Argentina                           15,850           22,000
             IMPSAT Colombia                             5,414            7,194
             IMPSAT Venezuela                            1,714              848
             IMPSAT Ecuador                                992            2,744
             IMPSAT USA                                                      65
       Short-term credit facilities,
        denominated in local currencies;
        local interest  rates;
             IMPSAT Argentina (8.75% to 9%)                               3,068
             IMPSAT Venezuela (32%)                      1,219            1,176
                                                     ---------        ---------
       Total short-term debt                         $  50,189        $  68,095
                                                      ========         ========
</TABLE>

The Company has historically refinanced these short-term credit facilities on
an annual basis.


7.  LONG-TERM DEBT


The Company's long-term debt is detailed as follows:

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,      MARCH 31,
                                                                         1997             1998
                                                                   ----------------  ----------------
                                                                                      (UNAUDITED)
 <S>                                                                   <C>              <C>
       12-1/8% Senior Guaranteed Notes due 2003                        $125,000         $125,000
       Term notes payable:
          IMPSAT Colombia; with maturities through  2002
           collateralized by equipment with a  carrying
           value of approximately $14,000 and the
           assignment  of customer contracts totaling
           approximately $12,000  denominated in:
                     U.S. dollars (Interest rates                        27,111           21,220
                     8.5% - 13%)
                     Local currency (24.93% - 34%)                        6,380           13,763
          IMPSAT Argentina (6.69% - 7%), maturing
           semiannually through 2001, collateralized by                   2,435            2,083
           certain assets
          IMPSAT Venezuela (9% - 10.75%), maturing                        5,550            4,671
           through 2001
          IMPSAT USA (8.75%), maturing through                                               573
           2003
       Eximbank notes payable (6.56%), maturing
          semiannually through 1999                                       3,387            3,387
                                                                       --------         --------
                  Total long-term debt                                  169,863          170,697
       Less: current portion                                            (10,186)         (11,165)
                                                                       --------         --------
       Long-term debt, net                                             $159,677         $159,532
                                                                       ========         ========
</TABLE>

The Senior Guaranteed Notes and some of the term notes payable for IMPSAT
Colombia and IMPSAT Venezuela contain certain covenants requiring certain
financial ratios, limiting the incurrence of additional indebtedness and
capital expenditures, and restricting the ability to pay dividends.

                                      12

<PAGE>   13





8.  INCOME TAXES

For the three months ended March 31, 1998 and 1997, the provision for  income
taxes, all of which are for foreign taxes, consist of a current provision of
$1,981 and $653, respectively, and a deferred (benefit) provision of $(346) and
$1,044, respectively. There is no provision or benefit for U.S. income taxes,
as the Company has net operating loss carryforwards The foreign statutory tax
rates range from 20% to 35% depending on the particular country. Deferred taxes
result from temporary differences in the capitalization policies of
preoperating costs and net operating loss carryforwards.


9. SHARE  PURCHASE AND SERIES A PREFERRED STOCK ISSUANCE

On March 19, 1998, the Company redeemed 25% of its outstanding common stock
previously held by STET International Netherlands NV (the "STET Shares") with
the proceeds of a substantially concurrent issuance and sale of $125,000 of the
Company's Series A Convertible Preferred Stock (the "Series A Preferred
Stock").  The Series A Preferred Stock were offered and sold to Princes Gate
Investors II, L.P. ("Princes Gate") and Morgan Stanley Global Emerging Markets
Private Investment Fund, L.P. ("MSGEM"), two private equity funds that are
affiliates of Morgan Stanley Dean Witter & Co., and to certain other investors
affiliated with Princes Gate and MSGEM (such investors along with Princes Gate
and MSGEM, the "Purchasers").  The Series A Preferred Stock was convertible at
the date of issuance into 25% of the common stock of the Company.

The following are some of the principal features of the Series A Preferred
Stock: (a) cumulative dividends at the rate of 10% per annum, compounded
quarterly and, with certain exceptions, payable in kind; (b) mandatorily
redeemable in cash by the Company at maturity (ten years after issuance) plus
accrued and unpaid dividends; (c) callable under certain circumstances by the
Company, in whole, at 100% of the principal amount, plus accrued and unpaid
dividends; (d) convertible into common stock of the Company at any time at the
option of the Purchasers (including upon a call by the Company), at a specified
conversion rate subject to certain antidilution rights; (e) the right by
Purchasers holding a certain minimum number of outstanding Series A Preferred
Stock to appoint two directors to the Company's Board of Directors as well as
to immediately appoint half of the members of the Company's Board of Directors
upon the occurrence of certain specified events; and (f) the right by Directors
appointed by the Purchasers holding a certain minimum number of outstanding
Series A Preferred Stock, to a veto over certain major corporate actions.

10.  COMMITMENTS AND CONTINGENCIES

The Company leases satellite capacity with annual rental commitments of
approximately $26,000. In addition, the Company has commitments to purchase
communications equipment amounting to approximately $10,500 and was
obligated under letter of credits amounting to approximately $1,600 at March
31, 1998.

The Company is a third party guarantor of up to 75% of a $6,000 credit facility
provided to IMPSAT Venezuela by a regional development fund. At March 31, 1998,
the balance outstanding on this credit facility amounted to approximately
$4,671.

During May, 1997, the Company and one of its subsidiaries entered into a three
party arrangement with a financial institution whereby $60,000 was borrowed by
the subsidiary and concurrently a like amount Certificate of Deposit was placed
at the financial institution by the Company. The arrangements establish a right
of setoff and, accordingly, the amounts have been netted for purposes of the
consolidated financial statement presentation. The arrangements expire in May
1999.

                                     13

<PAGE>   14




The Company is involved in or subject to various litigation and legal
proceedings incidental to the normal conduct of its business.  Whenever
justified, the Company expects to vigorously prosecute or defend such claims,
although there can be no assurance that the Company will ultimately prevail
with respect to any such matters.

In November 1996, IMPSAT Argentina filed suit against one of its customers,
ENCOTESA for amounts due and arising under IMPSAT Argentina's contracts with
ENCOTESA, the Argentine national postal service. In December 1996, ENCOTESA
filed its reply to IMPSAT Argentina's claim. The court has not yet ruled upon
IMPSAT Argentina's claim against ENCOTESA. In September 1997, ENCOTESA was
privatized and emerged as Correo Argentino S.A. In connection therewith, the
claim by IMPSAT Argentina remained with ENCOTESA. Based on these developments, 
the Company has reclassified the trade account receivables from ENCOTESA to 
non-current assets at the estimated net realizable value of $5,143 as 
determined by the Company's management based on the advice of local legal 
counsel. The Company will continue to assess the effect that the ENCOTESA 
receivables will have on its results of operations, liquidity or capital 
resources.

11. SUBSEQUENT EVENTS

On April 20, 1998, the Company signed a definitive agreement to purchase a 75%
interest in Mandic BBS Planejamento e Informatica S.A. ("Mandic S.A."), a
Brazilian Internet access provider, for approximately $9.8 million.  Upon
consummation of the transaction, the Company would acquire 75% of the common
stock of Mandic S.A., and the remaining 25% would be owned by Mr. Aleksander
Mandic, the founder and current president of Mandic S.A..  Assuming
satisfactory due diligence, the acquisition of Mandic S.A. is scheduled to be
consummated on or around June 1, 1998.  There can be no assurance however, that
any such transaction will take place.

                                     ******

                                     14

<PAGE>   15



                                  IMPSAT S.A.

                                 BALANCE SHEETS
                         (IN THOUSANDS OF U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                             DECEMBER 31,            MARCH 31,
                                                                                 1997                  1998
                                                                             --------------      ---------------
                                                                                                 (UNAUDITED)
                                 <S>                                               <C>                  <C>
                                 ASSETS
                                 CURRENT ASSETS:
                                  Cash and cash equivalents  .........           $    6,065          $       6,662
                                  Trade accounts receivable, net .....               22,034                 24,851
                                  Receivables from affiliated companies                 734                 10,440
                                  Other receivables  .................                4,753                  5,845
                                  Prepaid expenses ...................                  789                  1,322
                                                                                    -------              ---------
                                   Total current assets  .............               34,375                 49,120
                                                                                    -------              ---------

                                 PROPERTY, PLANT AND EQUIPMENT, NET ..              146,940                150,806
                                                                                    -------              ---------

                                 NON-CURRENT ASSETS:
                                  Trade accounts receivable, net .....                5,143                  5,143
                                  Other non-current assets ...........                4,571                  9,540
                                                                                    -------              ---------
                                   Total non-current assets  .........                9,714                 14,683
                                                                                    -------              ---------

                                 TOTAL ...............................           $  191,029          $     214,609
                                                                                   ========              =========

                                 LIABILITIES AND STOCKHOLDERS' EQUITY
                                 CURRENT LIABILITIES:
                                  Accounts payables - trade  .........           $   13,521          $      21,809
                                  Short-term debt  ...................               40,850                 56,068
                                  Advances from affiliated companies .                5,194                  3,677
                                  Current portion of long-term debt  .                2,794                  2,794
                                  Accrued liabilities  ...............                  432                  1,466
                                  Deferred income taxes  .............                4,301                  4,301
                                  Other liabilities  .................                4,569                  4,255
                                                                                    -------              ---------
                                   Total current liabilities .........               71,661                 94,370
                                                                                    -------              ---------

                                 LONG-TERM DEBT, NET .................               63,029                 62,677
                                                                                    -------              ---------

                                 OTHER LONG-TERM LIABILITIES .........                1,383                  1,570
                                                                                    -------              ---------


                                 COMMITMENTS AND CONTINGENCIES
                                 (Note 10)

                                 STOCKHOLDERS' EQUITY
                                  Common Stock; 5,123 shares authorized,
                                   issued, and outstanding ...........                    3                      3
                                  Paid-in capital  ...................               26,191                 26,191
                                  Retained earnings                                  28,762                 29,798
                                                                                    -------              ---------
                                   Total stockholders' equity  .......               54,956                 55,992
                                                                                    -------              ---------

                                 TOTAL ...............................           $  191,029               $214,609
                                                                                   ========              =========
</TABLE>

See notes to financial statements

                                      15

<PAGE>   16




                                  IMPSAT S.A.

                              STATEMENTS OF INCOME
                         (IN THOUSANDS OF U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                           THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                         1997              1998
                                                                     ---------------   ----------
                                                                            (UNAUDITED)
                   <S>                                                <C>                <C>
                   NET REVENUES FROM SERVICES ..............          $ 22,838           $23,944
                                                                      --------           -------

                   COSTS AND EXPENSES:
                      Variable cost of services ............             3,234             4,567
                      Satellite capacity cost ..............             2,218             2,831
                      Salaries, wages and benefits .........             2,914             3,052
                      Selling, general and administrative ..             4,298             3,562
                      Depreciation and amortization ........             4,277             4,732
                                                                      --------           -------
                         Total cost and expenses ...........            16,941            18,744
                                                                      --------           -------

                        Operating income ...................             5,897             5,200
                                                                      --------           -------

                   OTHER INCOME (EXPENSES)
                      Interest expense, net ................            (3,419)           (3,109)
                      Other income, net ....................                                  (5)
                                                                      --------           --------
                        Total other expenses ...............            (3,419)           (3,114)
                                                                      --------           -------

                   INCOME BEFORE INCOME TAXES ..............             2,478             2,086

                   PROVISION FOR INCOME TAXES ..............            (1,311)           (1,050)
                                                                      ---------          --------

                   NET INCOME ..............................          $  1,167           $ 1,036
                                                                      ========           =======
</TABLE>

See notes to financial statements

                                      16

<PAGE>   17



                                  IMPSAT S.A.

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                         (IN THOUSANDS OF U.S. DOLLARS)


<TABLE>
<CAPTION>                                                         COMMON STOCKHOLDERS'
                                                               ------------------------------
                                                                 COMMON          PAID-IN        RETAINED
                                                                 STOCK           CAPITAL        EARNINGS            TOTAL
                                                                 -----           -------        --------            -----
               <S>                                             <C>              <C>              <C>              <C>
               BALANCE AT DECEMBER 31, 1997 ..........         $       3        $ 26,191         $  28,762        $54,956
               
               Net income for the three months                                                                           
               ended .................................                                               1,036          1,036
                                                               ---------        --------         ---------         ------

               BALANCE AT MARCH 31, 1998 .............         $       3        $ 26,191         $  29,798 (*)    $55,992
               -------------------------                       =========        ========         =========        =======
</TABLE>

                 (*) Includes an appropriation of retained earnings amounting
                 to $1,622 in 1998 to comply with legal reserve requirements in
                 Argentina.

            See notes to financial statements.

                                        17

<PAGE>   18



                                  IMPSAT S.A.

                            STATEMENTS OF CASH FLOWS
                         (IN THOUSANDS OF U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                                    THREE MONTHS ENDED               
                                                                                         MARCH 31,                    
                                                                                 1997                    1998             
                                                                           ---------------        -----------------             
                                                                                         (UNAUDITED)                   
                                                                                                      
              <S>                                                            <C>                      <C>    
              CASH FLOWS FROM OPERATING ACTIVITIES:

               Net income ......................................             $  1,167                 $   1,036
               Adjustment to reconcile net income to net cash
                 provided by operating activities:
                  Amortization and depreciation ................                4,277                     4,732
                  Deferred income tax provision ................                1,311                     1,050
                  Changes in assets and liabilities:
                    Increase in trade accounts receivable,
                     net .......................................              (1,481)                   (2,817)
                    Decrease (increase) in prepaid expenses ....                  253                     (533)
                    Decrease (increase) other receivable
                     assets and other non-current assets .......                3,141                   (6,061)
                    Increase in accounts payable trade .........                4,094                     7,314
                    Increase in accrued and other liabilities ..                  799                       720
                    (Decrease) increase in other long-term
                      liabilities ..............................              (1,711)                       187
                                                                              -------                       ---
               Net cash provided by operating activities .......               11,850                     4,578
                                                                               ------                     -----
              CASH FLOWS FROM INVESTING ACTIVITIES:
                  Purchases of property, plant and equipment ...              (8,794)                   (7,624)
                                                                              -------                   -------

              CASH FLOWS FROM FINANCING ACTIVITIES:
                  Net borrowings from short-term debt ..........                  696                    15,218
                  Increase (decrease) in advances from/to
                   affiliates ..................................                6,849                  (11,223)
                  Repayments of long - term debt ...............              (4,888)                     (539)
                  Proceeds from long - term debt ...............                                            187
                                                                              -------                       ---
               Net cash provided by financing activities .......                2,657                     3,643
                                                                                -----                     -----
              NET INCREASE IN CASH AND CASH EQUIVALENTS ........                5,713                       597

              CASH AND CASH EQUIVALENTS AT
                BEGINNING OF PERIOD ............................                2,571                     6,065
                                                                                -----                     -----
              CASH AND CASH EQUIVALENTS AT END OF
                 PERIOD ........................................               $8,284                    $6,662
                                                                               ======                    ======
              SUPPLEMENTAL CASH FLOW INFORMATION:
                  Interest paid ................................               $3,723                    $1,510
                                                                               ======                    ======
              SUPPLEMENTAL SCHEDULE OF NON-CASH
              INVESTING ACTIVITIES:
                  Equipment in transit .........................               $2,191                      $974
                                                                               ======                      ====
</TABLE>

                       See notes to financial statements

                                       18

<PAGE>   19



                                  IMPSAT S.A.

                         NOTES TO FINANCIAL STATEMENTS
                         (IN THOUSANDS OF U.S. DOLLARS)


1.  BACKGROUND

   IMPSAT S.A. provides and operates private networks of integrated data and
   voice telecommunications systems in Argentina. IMPSAT S.A.'s principal line
   of business comprises the provision of data transmission services for large
   national and multinational companies, financial institutions, governmental
   agencies and other business customers in Argentina. It provides its services
   through its advanced telecommunications networks comprised of owned
   teleports, earth stations, fiber optic and microwave links and leased
   satellite capacity. IMPSAT S.A. is a 95.2% owned subsidiary of IMPSAT
   Corporation, a Delaware holding company (the "Parent Company").


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   INTERIM FINANCIAL INFORMATION - The unaudited statements as of March 31,
   1998 and  1997 have been prepared on the same basis as the audited financial
   statements. In the opinion of management, such unaudited financial
   statements include all adjustments (consisting only of normal recurring
   adjustments) necessary to present fairly the results for such period. The
   operating results for the three months period ended March 31, 1998 and 1997
   are not necessarily indicative of the operating results to be expected for
   the full fiscal year or for any future period.

   USE OF ESTIMATES -- The preparation of financial statements in conformity
   with generally accepted accounting principles requires management to make
   estimates and assumptions that affect the reported amounts of assets and
   liabilities and disclosure of contingent assets and liabilities at the date
   of the financial statements and the reported amounts of revenues and
   expenses during the reporting period. Actual results could differ from those
   estimates.

   CASH AND CASH EQUIVALENTS -- Cash and cash equivalents are highly liquid
   investments, including short-term investments and time deposits with
   maturities of three months or less at the time of purchase. Cash equivalents
   and short-term investments are stated at cost, which approximates market
   value.

   REVENUE RECOGNITION -- IMPSAT S.A. provides services to its customers
   pursuant to contracts which range from six months to five years but
   typically are for three years. The customer generally pays an installation
   charge at the beginning of the contract and a monthly fee based on the
   number of microsystem installations. The fees stipulated in the contracts
   are generally denominated in U.S. dollars. Services are billed on a monthly,
   predetermined basis, which coincides with when the services are rendered.
   For the three months ended March 31, 1998 and 1997, no single customer
   accounted for greater than 10% of total revenue from services.

   PROPERTY, PLANT AND EQUIPMENT -- Property, plant and equipment are recorded
   at cost and depreciated using the straight-line method over the following
   estimated useful lives:

<TABLE>
                               <S>                                                <C>
                               Building and improvement                           10-25 years
                               Operating communications equipment                  10 years
                               Furniture, fixtures and other equipment             5-10 years
</TABLE>

                                       19

<PAGE>   20




INCOME TAXES -- Deferred income taxes result from timing differences in the
recognition of expenses for tax and financial reporting purposes and are
accounted for in accordance with Financial Accounting Standards Board (the
"FASB") Statements of Financial Accounting Standards ("SFAS") No. 109,
accounting for Income Taxes, which required the liability method of computing
deferred income taxes. Under the liability method, deferred taxes are adjusted
for tax rate changes as they occur.

FOREIGN CURRENCIES TRANSLATION -- The translation of theses consolidated
financial statements into U.S. dollars has been made following the guidelines
of SFAS No. 52, Foreign Currency Translation. Major operations of IMPSAT S.A.
are stated in U.S. dollars.  Accordingly, the U.S. dollar has been designated
as the functional currency. Local currency denominated transactions are
remeasured into the functional currency. Accordingly, fixed assets and
stockholders account have been translated into U.S. dollars taking into account
the exchange rate prevailing at each transaction date. Monetary assets and
liabilities are translated using the year-end exchange. Profit and loss
accounts were translated using average exchange rates for periods in which they
were accrued, except for the consumption of non - monetary assets for which
their respective dollar translated costs were considered.

FAIR VALUE OF FINANCIAL INSTRUMENTS -- IMPSAT S.A.'s financial instruments
include receivables, payables, short and long-term debt.  The fair value of
such financial instruments have been determined based on market interest rates
as of December 31, 1997. The fair values were not materially different than
their carrying (or contract) values.

LONG LIVED ASSETS -- Long-lived assets are reviewed on an ongoing basis for
impairment based on comparison of carrying value against undiscounted future
cash flows.  If an impairment is identified, the assets carrying amount is
adjusted to fair value.  No such adjustments were recorded during the three
months ended March 31, 1998 and 1997.

RECLASSIFICATIONS -- Certain amounts in the 1997 financial statements have been
reclassified to conform with the 1998 presentation.


3.  TRADE ACCOUNTS RECEIVABLE

The detail of trade accounts receivable is the following:


<TABLE>
<CAPTION>
                                                                   DECEMBER 31,        MARCH 31,
                                                                       1997              1998
                                                                 ----------------  ----------------
                                                                                      (UNAUDITED)
                <S>                                              <C>               <C>
                Trade accounts receivable                        $       27,531    $       30,631
                Less: allowance for doubtful accounts                    (5,497)           (5,780)
                                                                 --------------    --------------
                Trade accounts receivable, net                   $       22,034    $       24,851
                                                                 ==============    ==============
</TABLE>

   IMPSAT S.A. provides trade credit to its customers in the normal course of
   business. Prior to extending credit, the customers' financial history is
   analyzed.

                                        20

<PAGE>   21




The activity for the allowance for doubtful account is as follows:


<TABLE>
<CAPTION>
                                                                   DECEMBER 31,        MARCH 31,
                                                                       1997              1998
                                                                 ---------------   ---------------
                                                                                      (UNAUDITED)
                <S>                                              <C>               <C>
                Beginning balance                                $        5,282    $        5,497
                Provision for doubtful accounts                             215               723
                Write-offs                                                                   (440)
                                                                 --------------    --------------
                Ending balance                                   $        5,497    $        5,780
                                                                 ==============    ==============
</TABLE>

4.  OTHER RECEIVABLES

   Other receivables consist primarily of refunds or credits pending from local
   government for taxes other than income, advances to suppliers other than for
   fixed assets, related parties receivables and other miscellaneous amounts
   due to IMPSAT S.A.


5.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of:


<TABLE>
<CAPTION>
                                                                   DECEMBER 31,           MARCH 31,
                                                                       1997                 1998
                                                                 ---------------      ---------------
                                                                                         (UNAUDITED)
                <S>                                              <C>                  <C>
                     Building installations and improvements             $ 15,993              $ 16,003
                     Operating communications equipment                   200,019               205,490
                     Furniture, fixtures and other equipment                6,517                 6,636
                                                                         --------              --------
                              Total                                       222,529               228,129
                     Less: accumulated depreciation                       (76,976)              (81,414)
                                                                         --------              --------
                              Total                                       145,553               146,715
                     Deposit on purchase of equipment and in                1,387                 4,091
                      transit                                            --------              --------

                     Property, plant and equipment, net                  $146,940              $150,806
                                                                         ========              ========
</TABLE>

The recap of accumulated depreciation is as follows:


<TABLE>
<CAPTION>
                                                                 DECEMBER 31,       MARCH 31,
                                                                     1997              1998
                                                               ---------------    -------------
                                                                                   (UNAUDITED)
                       <S>                                     <C>                <C>
                       Beginning balance                       $         61,063   $     76,976
                       Depreciation expense                              17,951          4,732
                       Retirements and Disposals                         (2,038)          (294)
                                                               ----------------   -------------
                       Ending balance                          $         76,976   $     81,414
                                                               ================   ============
</TABLE>

                                      21

<PAGE>   22




6.  SHORT-TERM DEBT

IMPSAT S.A.'s short-term debt is detailed as follows:


<TABLE>
<CAPTION>
                                                                   DECEMBER 31,         MARCH 31,
                                                                       1997                1998
                                                                 ---------------      -------------
                                                                                        (UNAUDITED)
                  <S>                                            <C>                   <C>
                  Commercial paper (7.55% to 11%)                $         25,000      $     31,000
                  Short-term credit facilities, denominated
                   in U.S. dollars, interests rates ranges
                   from 8.75% to 15%                                       15,850            22,000
                  Short-term credit facilities, denominated
                   in local currency, interests rates ranges                                  3,068
                   from 8.75% to 9%                              ----------------      ------------

                  Total short-term debt                          $         40,850      $     56,068
                                                                 ================      ============
</TABLE>

 IMPSAT S.A. has historically refinanced its short-term credit facilities on an
 annual basis.

7.  LONG-TERM DEBT

IMPSAT S.A.'s long-term debt is detailed as follows:


<TABLE>
<CAPTION>
                                                                 DECEMBER 31,       MARCH 31,
                                                                     1997              1998
                                                               ---------------    ---------
                                                                                   (UNAUDITED)
                  <S>                                          <C>                <C>
                   Term notes payable (6.69% - 12.63%)
                    maturing semiannually through 1999,
                    collateralized certain assets              $       62,435     $       62,084
                   Eximbank notes payable (7%) maturing
                    semiannually through 1999                           3,388              3,387
                                                                --------------     --------------
                   Total long-term debt                                65,823             65,471
                   Less: current portion                               (2,794)           (2,794)
                                                               --------------     -------------
                   Long-term debt, net                         $       63,029     $       62,677
                                                               ==============     ==============
</TABLE>

8.  INCOME TAXES

   The provision for income taxes for the three months ended March 31, 1998 and
   1997 consists of $1,050 in current taxes and $1,311 in deferred taxes, 
   respectively. The statutory tax rate in Argentina is 33%.

9.  COMMITMENTS AND CONTINGENCIES

   IMPSAT S.A. leases satellite capacity with annual rental commitments of
   approximately $11,000 through the year 2001. In addition, IMPSAT S.A. has
   commitments to purchase communications equipment amounting to approximately
   $6,500 at March 31, 1998.

   IMPSAT S.A. is guarantor on the $125,000,000, 12 1/8% Senior Guaranteed
   Notes Due 2003 issued on July 30, 1996 by the Parent Company.

   During May, 1997, the Parent Company and IMPSAT S.A. entered into a three
   party arrangement with a financial institution whereby $60,000 was borrowed
   by IMPSAT S.A. and concurrently a like amount Certificate of Deposit was
   placed at the financial institution by the Parent Company. The arrangement
   expires in May 1999.

   IMPSAT S.A. is involved in or subject to various litigation and legal
   proceedings incidental to the normal conduct of its business. Whenever
   justified, IMPSAT S.A. expects to vigorously prosecute or

                                      22

<PAGE>   23




   defend such claims, although there can be no assurance that IMPSAT S.A. will
   ultimately prevail with respect to any such matters.

   In November 1996, IMPSAT S.A. filed suit against one of its customers,
   ENCOTESA for amounts due and arising under IMPSAT S.A.'s contracts with
   ENCOTESA, the Argentine national postal service. In December 1996,
   ENCOTESA filed its reply to IMPSAT S.A.'s claim. The court has not yet ruled
   upon IMPSAT S.A.'s claim against ENCOTESA. In September 1997, ENCOTESA was
   privatized and emerged as Correo Argentino S.A. In connection therewith, the
   claim by IMPSAT Argentina remained with ENCOTESA. Based on these 
   developments, the IMPSAT S.A. has reclassified the trade account 
   receivables from ENCOTESA to non-current assets at the estimated net 
   realizable value of $5,143 as determined by the IMPSAT S.A.'s management 
   based on the advice of local legal counsel. IMPSAT S.A. will continue to 
   assess the effect that the ENCOTESA receivables situation will have on its 
   results of operations, liquidity or capital resources.

11.  SUBSEQUENT EVENTS

   IMPSAT S.A. currently has a five-year Euro-Commercial Paper Program (the
   "ECP Program") for the issuance of up to $50,000 in commercial paper. At
   March 31, 1998, IMPSAT S.A. had $6,000 of Euro-commercial paper outstanding
   under a prior commercial paper program, which matured in May 1998, and
   $25,000 of commercial paper outstanding under the first series of the ECP
   Program maturing August 1998 (see Note 6). During April 1998, IMPSAT S.A.
   issued $25,000 of commercial paper under the second series of the ECP
   Program, which matures in December 1998.

                                      23

<PAGE>   24




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

         The following table presents the Company's results of operations as a
percentage of revenues:

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED MARCH 31,
                                                                       ---------------------------------------------
                                                                                  1997                1998
                                                                       ---------------------------------------------
                                                                           (IN THOUSANDS AND AS A PERCENTAGE OF
                                                                               CONSOLIDATED REVENUES)
<S>                                                                     <C>         <C>        <C>          <C>
Net revenues from services  . . . . . . . . . . . . . . . . . . .       $37,027      100.0%    $45,153      100.0%
Variable costs of services  . . . . . . . . . . . . . . . . . . .         4,963      13.4        7,719      17.1
Satellite capacity cost . . . . . . . . . . . . . . . . . . . . .         4,435      12.0        6,115      13.5
Salaries, wages and benefits  . . . . . . . . . . . . . . . . . .         6,386      17.2        7,771      17.2
Selling, general and administrative expenses  . . . . . . . . . .         7,555      20.4        8,516      18.9
Depreciation and amortization . . . . . . . . . . . . . . . . . .         6,750      18.2        8,061      17.8
Interest expense, net . . . . . . . . . . . . . . . . . . . . . .         6,182      16.7        7,785      17.2
Net (loss) gain on foreign exchange . . . . . . . . . . . . . . .         (162)     (0.4)           23       0.1
Provision for foreign income taxes  . . . . . . . . . . . . . . .       (1,697)     (4.6)      (1,635)      (3.6)
Net loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (1,697)     (4.6)      (2,363)      (5.2)
</TABLE>


THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

              Revenues.  Net revenues of the Company (i.e., gross revenues less
sales taxes payable in accordance with local laws) for the first quarter of
1998 totaled $45.2 million, an increase of $8.1 million, or 21.9 %, from net
revenues for the first quarter of 1997.  Revenues at IMPSAT Argentina for the
first quarter of 1998 totaled $23.9 million (an increase of $1.1 million, or
4.8 %, from the first quarter of 1997).  Revenues at IMPSAT Colombia totaled
$13.8 million in the first quarter of 1998, an increase of $2.9 million, or
26.8%, from the first quarter of 1997; revenues at IMPSAT Venezuela totaled
$3.0 million for the first quarter of 1998 (an increase of $1.2 million from
the first quarter of 1997), and revenues at IMPSAT Ecuador totaled $1.8 million
for the first quarter of 1998 (an increase of $0.8 million from the first
quarter of 1997).  IMPSAT USA recorded revenues of $1.8 million and $0.3
million during the three months ended March 31, 1998 and 1997, respectively,
and IMPSAT Mexico recorded revenues of $0.7 million and $0.2 million for the
same periods, respectively.  Revenue growth of the Company for the first
quarter of 1998 is attributable to an increase in the number of customers and
services provided.

              The increase in the Company's net revenues for the first quarter
of 1998 is derived principally from growth in the Company's services other than
its VSAT based service offerings.  The Company anticipates that the percentage,
and absolute amount, of total revenues represented by non-VSAT based service
offerings will continue to grow at a faster rate than its VSAT based service
offerings.  Revenues from Dataplus service offerings for the first quarter of
1998 increased by $1.8 million, or 20.9%, from Dataplus revenues for the first
quarter of 1997.  Many of the Company's customers have supplemented or replaced
their VSAT services with Dataplus services over time as they have increased the
amount of private telecommunications network capacity contracted with the
Company, and the Company expects this trend to continue.  In addition, the
Company's revenues from newer service offerings, such as Internet, recorded
significant increases in the first quarter of 1998, totaling $2.2 million, as
compared to $0.9 million for the first quarter of 1997.  The Company
anticipates additional growth in Internet-related revenues, including revenues
derived from its planned acquisition of Mandic BBS Planejamento e Informatica 
S.A. ("Mandic S.A."), a Brazilian Internet access provider, which transaction is
currently anticipated to close in June 1998.  As part of net revenues, the
Company recorded

                                      24

<PAGE>   25




revenues of $0.4 million from certain non-recurring equipment sales during the
first quarter of 1998, as compared to no revenues from such sales during the
first quarter of 1997.

              Variable Cost of Services.  The Company's variable cost of
services for the first quarter of 1998 totaled $7.7 million, an increase of
$2.8 million, or 55.5%, from the Company's variable cost of services for the
first quarter of 1997.  Of total variable cost of services for the first
quarter of 1998, $4.6 million related to the operations of IMPSAT Argentina and
$1.5 million related to the operations of IMPSAT Colombia, compared to variable
cost of services of $3.2 million and $1.5 million at IMPSAT Argentina and
IMPSAT Colombia, respectively, for the first quarter of 1997.

              The principal items comprising total variable cost of services
are maintenance and installation (including de-installation) costs, and sales
commissions paid to third-party sales representatives.

              Maintenance costs totaled $3.8 million for the first quarter of
1998, compared to $1.7 million for the corresponding period in 1997.  

              Installation costs totaled $1.5 million for the first quarter of
1998 and $1.3 million for the first quarter of 1997.  The Company contracts
equipment installation services from outside providers.

              Sales commissions paid to third-party sales representatives
totaled $1.3 million for the first quarter of 1998, compared to $1.3 million
for the first quarter of 1997.  The overwhelming amount of such sales
commissions paid to third-party sales representatives related to customers of
IMPSAT Argentina.  Sales commissions paid to third-party sales representatives
in Argentina totaled $1.1 million and $1.2 million in the first quarters of
1998 and 1997, respectively.

              In addition, the Company incurred costs of equipment sold during
the first quarter of 1998 of $0.7 million, as compared with costs of equipment
sold during the first quarter of 1997 of $61,000.

              Satellite Capacity Cost.  The Company's satellite lease payments
for the first quarter of 1998 totaled $6.2 million, an increase of $1.7
million, or 37.9%, over satellite lease payments for the corresponding period
in 1997.  The Company had approximately 461.9 MHz and 245.0 MHz of leased
satellite capacity at March 31, 1998 and 1997, respectively.  The expansion of
the Company's satellite capacity during in the first quarter of 1998 compared
to the first quarter of 1997 is attributable primarily to contractually
scheduled increases in satellite capacity to match anticipated growth in the
total number of Dataplus earth stations to be installed by the Company over
time which, because of their greater transmission capacity and bandwidth
requirements compared to VSAT, utilize larger amounts of satellite capacity.
The increase in satellite capacity leased by the Company is also attributable
to growth of IMPSAT USA's satellite capacity requirements.  Increases in the
Company's utilization of satellite capacity have not been matched by
proportionate increases in revenues from its services.

              Salaries, Wages and Benefits.  Salaries, wages and benefits paid
by the Company for the first quarter of 1998 totaled $7.8 million, an increase
of $1.4 million, or 21.7%, over the Company's expenses for salaries, wages and
benefits during the first quarter of 1997.  The Company increased salaries,
wages and benefits of its personnel to match market rates and increases in cost
of living.  Salaries, wages and benefits increased principally in the Company's
more recently developed operations in Ecuador, Mexico,

                                     25

<PAGE>   26



Venezuela and the United States and remained relatively stable in Argentina
and Colombia.  The Company maintained a total of 714 employees at March 31,
1998, compared to 656 employees at March 31, 1997.

              Selling, General and Administrative Expenses. Selling, General
and Administrative Expenses ("SG&A") expenses for the Company consist
principally of publicity and promotion costs; provisions for doubtful accounts;
fees and other remuneration; travel and entertainment; rent; and plant
services, telephone and energy expenses.

              The Company incurred SG&A expenses of $8.5 million for the first
quarter of 1998, an increase of $1.0 million, or 12.7%, from SG&A expenses
incurred by the Company during the first quarter of 1997.  The increase relates
in part to increased advertising and promotion expenses related to the
introduction and roll-out of certain of the Company's newer service offerings,
including Internet services, Conexia and Telecampus; higher occupancy costs at
IMPSAT Colombia due to the expansion of its operations; and fees paid for
feasibility studies regarding the Company's proposed expansion into Brazil.

         SG&A expenses at IMPSAT Argentina for the first quarter of 1998
totaled $3.6 million, a decrease of $0.7 million from SG&A expenses incurred by
IMPSAT Argentina for the first quarter of 1997.  The decrease in SG&A expenses
at IMPSAT Argentina is due in part to a lower provision for doubtful accounts
during the first quarter of 1998 ($0.7 million) compared to the provision
recorded by IMPSAT Argentina on the first quarter of 1997 ($1.2 million).
On a Company-wide basis, the Company recorded a provision for doubtful accounts
in the first quarter of 1998 of $1.2 million as a result of certain payment
arrears experienced by certain customers in Argentina, Ecuador and the United
States.  The Company's current policy is generally to reserve 30% for accounts
receivable in excess of 180 days but less than one year, and 100% for all
accounts receivable in excess of 360 days, although this policy is not applied
in all cases.  

              Depreciation and Amortization.  The Company's depreciation and
amortization for the first quarter of 1998 totaled $8.1 million, an increase of
$1.3 million, or 19.4%, compared to the first quarter of 1997.  Depreciation
and amortization for IMPSAT Argentina totaled $4.7 million and $4.3 million for
the first quarters of 1998 and 1997, respectively.

              Interest Expense, Net.  The Company's net interest expense for
the first quarter of 1998 totaled $7.8 million, comprising interest expense of
$8.1 million and interest income of $0.3 million.  Net interest expense for the
first quarter of 1998 increased $1.6 million from net interest expense for the
first quarter of 1997.  IMPSAT Argentina's net interest expense for the first
quarter of 1998 totaled $3.1 million ($1.5 million after eliminating
intercompany items), compared to net interest expense of $3.4 million ($1.1
million after eliminating intercompany items) for the first quarter of 1997.
Net interest expense at IMPSAT Colombia for the first quarter of 1998 totaled
$2.1 million ($1.7 million after eliminating intercompany items), as compared
to $1.5 million ($1.1 million after eliminating intercompany items) for the
first quarter of 1997.  Interest expense with respect to intercompany loans are
eliminated in the Company's Consolidated Statement of Operations.

              The increase in net interest expense reflects increased
indebtedness of the Company, which grew from $195.7 million as of March 31,
1997 to $238.8 million as of March 31, 1998.  As of March 31, 1998, total
outstanding indebtedness at IMPSAT Argentina equaled $121.5 million ($61.5
million after eliminating intercompany items), compared to $103.3 million as of
March 31, 1997.  Total outstanding indebtedness at IMPSAT Colombia as of March
31, 1998 equaled $55.1 million ($42.1 million after eliminating intercompany
items), compared to $48.8 million as of March 31, 1997.  The average interest

                                     26

<PAGE>   27




rate on the Company's indebtedness for the first quarter of 1998 was 14.1%,
compared to an average interest rate of 12.1% for the first quarter of 1997.

              Provision for Income Taxes.  The Company recorded a provision for
income taxes, all of which are for foreign taxes, for the three months ended
March 31, 1998 and 1997 of $1.6 and $1.7 million, respectively.  IMPSAT
Argentina recorded a provision for income taxes for the first quarter of 1998
of $1.1 million, compared to $1.3 million in the first quarter of 1997.  IMPSAT
Colombia recorded a provision for income taxes for the first quarter of 1998 of
$0.7 million, compared to $0.3 million for the first quarter of 1997.

         Net Loss.  For the three months ended March 31, 1998, the Company
incurred a net loss of $2.4 million, an increase of $0.7 million, compared to
the Company's net loss of $1.7 million for the three months ended March 31,
1997.  The principal reasons for the Company's net loss for the three months
ended March 31, 1998 related to losses at IMPSAT Venezuela of $0.9 million and
management services provided, and unallocated overhead expenses incurred, by
IMPSAT Corporation of $2.0 million.  For the three month period ended March 31,
1998, IMPSAT Argentina recorded net income of $1.0 million, compared to net
income of $1.1 million for the three months ended March 31, 1997.  IMPSAT
Colombia recorded net income for the three months ended March 31, 1998 of $1.8
million compared to a net income of $1.3 million for the three months ended
March 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

         The Company anticipates that it will continue to incur significant
capital expenditures in the next several years in connection with the expected
growth of its existing commercial operations (Argentina, Colombia, Venezuela,
Ecuador and the United States), and the development of its operations in
Brazil.

         The ability of the Company to continue the expansion of its private
telecommunications network systems as is necessary to provide high-quality,
competitive private network services to its customers and to meet its debt
service obligations will be dependent upon the future performance of the
Company, including the ability of the Company to obtain additional debt
financing and potential equity financing.  The Company's ability to maintain
its planned program of capital expenditures will be dependent on its ability to
obtain additional sources of financing.  If the Company is unable to obtain
such additional sources of financing, it will not be able to maintain its
levels of growth and market position in any of the countries in which it
operates, which could have an adverse effect on the business and prospects of
the Company.

         As set forth in its consolidated statements of cash flow, in the three
months ended March 31, 1998, the Company utilized $2.2 million in net cash flow
from operating activities, compared with $2.8 million generated for the three
months ended March 31, 1997.  The negative cash flow from operating activities
in the first quarter of 1998 was primarily attributable to increases in net
trade receivables of $8.0 million (compared to an increase of $4.0 million in
net trade receivables in the first quarter of 1997) and in other receivables
and other non-current assets of $6.9 million (compared to a decrease of $1.8
million in the first quarter of 1997).  Financing activities provided $18.7
million in net cash flow for the three months ended March 31, 1998, compared
with $1.8 million from cash flow generated by financing activities for the
three months ended March 31, 1997.  Such increase is primarily attributable to
the issuance by IMPSAT Argentina in February 1998 of $25.0 million in notes
under the ECP Program.  The Company's net outstanding indebtedness increased by
$43.1 million during the three months ended March 31, 1998, compared to the
corresponding period in 1997.  During such period, the Company used $16.0
million in net cash flow for investing activities, compared to $14.9 million
for the three months ended March 31, 1997.  The Company had a cash balance of
$10.9 million as of March 31, 1998.

                                      27

<PAGE>   28




         The Company intends to meet its future capital requirements from cash
flow from operations, from additional lines of credit and from future private
or public offerings of debt and equity securities of IMPSAT Corporation and/or
any of its subsidiaries.  The Company currently anticipates that it will
require approximately $360 million during the period 1998 to 2000 for capital
expenditures.  The Company's projected capital expenditure requirements include
the further establishment of operations and development of private
telecommunications network systems in Brazil and continued additions to its
private telecommunications network infrastructure in order to maintain the
Company's ability to provide high quality, competitive services.  The Company's
budget contemplates that the Company will need approximately $90 million for
the period from 1998 to 2000 for capital expenditures related to the adequate
build-out of a private telecommunications network system in Brazil.  In
addition, with continued deregulation of the telecommunications market in the
region, the Company may in the future expand its business to include other
telecommunications services, such as general voice telephony, which would
require significant amounts of additional financing for capital expenditures.

         The Company leases satellite capacity with annual rental commitments
of approximately $20.1 million through the year 2001.  In addition, the Company
has commitments to purchase communications equipment amounting to approximately
$8.5 million at December 31, 1997.

         As of April 15, 1998, IMPSAT Argentina had outstanding $50 million of
commercial paper issued under the ECP Program.  On February 10, 1998, IMPSAT
Argentina completed the placement of a first series of $25 million of
short-term promissory notes under the ECP Program.  The first series under the
ECP Program will mature on August 10, 1998.  On April 3, 1998, IMPSAT Argentina
completed the issuance of a second series of $25 million of short-term
promissory notes under the ECP Program, which will mature on December 17, 1998.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

              Not Applicable.

                                    PART II
                               OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

              Not applicable.

ITEM 2.  CHANGES IN SECURITIES

              Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

              Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

              Not Applicable.

ITEM 5.  OTHER INFORMATION

                                      28

<PAGE>   29





         On April 20, 1998, the Company signed a definitive agreement to
purchase a 75% interest in Mandic S.A., a Brazilian Internet access provider,
for approximately $9.8 million.  Upon consummation of the transaction, the
Company would acquire 75% of the common stock of Mandic S.A., and the remaining
25% would be owned by Mr. Aleksander Mandic.  Assuming satisfactory due
diligence, the acquisition of Mandic S.A. is scheduled to be consummated on or
around June 1, 1998.  There can be no assurance however, that any such
transaction will take place.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)(1)  Exhibits.  27.1  Financial Data Schedule.

(a)(2)  List of Schedules.  All schedules for which provision is made in the
applicable accounting regulations of the Commission are omitted because they
are not applicable, or the information is included in the financial statements
included herein.

(b)  Reports on Form 8-K.  None.

                                      29

<PAGE>   30



                                   SIGNATURES

              Pursuant to the requirements of the Securities Act of 1934, as
amended, the registrants have duly caused this report to be signed on their
behalf by the undersigned thereunto duly authorized, in the City of Buenos
Aires in the Republic of Argentina, in the capacities and on the dates
indicated.

                                        IMPSAT Corporation





                                        By: /s/ Guillermo Jofre
                                            ------------------------------------
                                         Guillermo Jofre
                                         Vice President, Finance and
                                         Chief Financial Officer

                                        Date: May 15, 1998


                                        IMPSAT S.A.





                                        By: /s/ Jose Torres
                                            ------------------------------------
                                         Jose Torres
                                         Director and Chief Accounting
                                         Officer

                                        Date: May 15, 1998

                                      30