##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 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,
2003

OR



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

For the transition period
from                               to

Commission File Number: 000-29085



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IMPSAT Fiber Networks, Inc.

(Exact name of registrant as specified in its
charter)


|                                                                |  |                                     
|--------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                        |  | 52-1910372                          
|(state or other jurisdiction
    incorporation or organization) |  | (IRS employer identification number)

Elvira Rawson de Dellepiane 150

Piso 8, C1107BCA


Buenos Aires, Argentina


(5411) 5170-0000


(Address, including zip code, and telephone
number, including area code,


of registrants principal executive offices)


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

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Securities Exchange Act
Rule 12b-2).     YES o     NO x

APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE
YEARS


Indicate by check mark whether the registrant
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 xNO
o

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, 2003, the registrant had outstanding 10,000,000
shares of common stock, $0.01 par value.









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TABLE OF CONTENTS



|                                                   |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES      
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES      
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES      
|                                                   | 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                
|                                                   | 4. INVESTMENTS                                                                               
|                                                   | 5. TRADE ACCOUNTS RECEIVABLE                                                                 
|                                                   | 6. OTHER RECEIVABLES                                                                         
|                                                   | 7. PROPERTY, PLANT AND EQUIPMENT                                                             
|                                                   | 9. LONG-TERM DEBT                                                                            
|                                                   | 10. INCOME TAXES                                                                             
|                                                   | 11. LIABILITIES SUBJECT TO COMPROMISE AND REORGANIZATION ITEMS                               
|                                                   | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                   | Item 4. Controls and Procedures                                                              
|PART II OTHER INFORMATION                         
|                                                   | Item 1. Legal Proceedings                                                                    
|                                                   | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                   | Item 3. Defaults Upon Senior Securities                                                      
|                                                   | Item 4. Submission of Matters to a Vote of Security-Holders                                  
|                                                   | Item 5. Other Information                                                                    
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                        
|CERTIFICATIONS                                    
|Employment Agt. bet. Ricardo A.Verdaguer & Company
|Employment Agt. bet. Hector R. Alonso & Company   
|Letter Agt. bet. Marcelo Girotti & Company        
|Certification of CEO                              
|Cetification of CFO                               



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##### Table of Contents






IMPSAT Fiber Networks, Inc.





|                             |         |  |                                                                                           |          |  |     | 
|---------------------------- | ------- |  | ----------------------------------------------------------------------------------------- | -------- |  | --- | 
|                             |         |  |                                                                                           | Page No.
|                             |         |  |                                                                                           |         
|PART I FINANCIAL INFORMATION |         |  | F-1                                                                                       |         
|                             | Item 1. |  | Financial Statements                                                                      |          |  | F-1 | 
|                             | Item 2. |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |          |  | 1   | 
|                             | Item 3. |  | Quantitative and Qualitative Disclosures About
    Market Risk                            |          |  | 13  | 
|                             | Item 4. |  | Controls and Procedures                                                                   |          |  | 15  | 
|PART II OTHER INFORMATION    |         |  | 16                                                                                        |         
|                             | Item 1. |  | Legal Proceedings                                                                         |          |  | 16  | 
|                             | Item 2. |  | Changes in Securities and Use of Proceeds                                                 |          |  | 16  | 
|                             | Item 3. |  | Defaults Upon Senior Securities                                                           |          |  | 16  | 
|                             | Item 4. |  | Submission of Matters to a Vote of
    Security-Holders                                   |          |  | 16  | 
|                             | Item 5. |  | Other Information                                                                         |          |  | 16  | 
|                             | Item 6. |  | Exhibits and Reports on Form 8-K                                                          |          |  | 17  | 
|SIGNATURES                   |         |  | 19                                                                                        |         
|CERTIFICATIONS               |         |  | 20                                                                                        |         



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##### Table of Contents



PART I

FINANCIAL INFORMATION




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

IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE
SHEETS

As of December 31, 2002 (Predecessor
Company) and March 31, 2003 (Successor Company)


(In thousands of U.S. Dollars, except share
amounts)


(Unaudited)


|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |        |         | 
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------- | ------- | ---------- | --------- | - | ------- | ------ | ------- | 
|                                                      |                                                                                                                                                                                            | Predecessor                                 |         | Successor 
|                                                      |                                                                                                                                                                                            | Company                                     |         | Company   
|                                                      |                                                                                                                                                                                            | December 31,                                |         | March 31, 
|                                                      |                                                                                                                                                                                            | 2002                                        |         | 2003      
|                                                      |                                                                                                                                                                                            |                                             |         |           
|ASSETS                                               
|CURRENT ASSETS:                                       |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      | Cash and cash equivalents                                                                                                                                                                  |                                             | $       | 32,563     |           |   | $       | 35,565 |        
|                                                      | Trading investments                                                                                                                                                                        |                                             |         | 23,021     |           |   |         | 26,324 |        
|                                                      | Trade accounts receivable, net                                                                                                                                                             |                                             |         | 31,012     |           |   |         | 34,493 |        
|                                                      | Other receivables                                                                                                                                                                          |                                             |         | 16,674     |           |   |         | 13,235 |        
|                                                      | Prepaid expenses                                                                                                                                                                           |                                             |         | 2,746      |           |   |         | 3,696  |        
|                                                      | Assets held for disposal                                                                                                                                                                   |                                             |         |            |           |   |         | 5,485  |        
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      |                                                                                                                                                                                            | Total current assets                        |         |            | 106,016   |   |         |        | 118,798 | 
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|PROPERTY, PLANT AND EQUIPMENT, Net                    |                                                                                                                                                                                            |                                             | 403,948 |            |           |   | 387,180 |       
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|NON-CURRENT ASSETS:                                   |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      | Investments in common stock                                                                                                                                                                |                                             |         | 86         |           |   |         | 141    |        
|                                                      | Other non-current assets                                                                                                                                                                   |                                             |         | 10,633     |           |   |         | 10,987 |        
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      |                                                                                                                                                                                            | Total non-current assets                    |         |            | 10,719    |   |         |        | 11,128  | 
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|TOTAL                                                 |                                                                                                                                                                                            | $                                           | 520,683 |            |           | $ | 517,106 |       
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|LIABILITIES AND STOCKHOLDERS
    (DEFICIENCY) EQUITY
|LIABILITIES NOT SUBJECT TO COMPROMISE:                |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|CURRENT LIABILITIES:                                  |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      | Accounts payable  trade                                                                                                                                                                   |                                             | $       | 72,860     |           |   | $       | 52,002 |        
|                                                      | Current portion of long-term debt                                                                                                                                                          |                                             |         | 281,680    |           |   |         | 23,642 |        
|                                                      | Accrued and other liabilities                                                                                                                                                              |                                             |         | 48,446     |           |   |         | 27,087 |        
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      |                                                                                                                                                                                            | Total current liabilities                   |         |            | 402,986   |   |         |        | 102,731 | 
|LONG-TERM DEBT, Net                                   |                                                                                                                                                                                            |                                             | 27,592  |            |           |   | 243,824 |       
|OTHER LONG-TERM LIABILITIES                           |                                                                                                                                                                                            |                                             | 15,280  |            |           |   | 13,765  |       
|DEFERRED REVENUES                                     |                                                                                                                                                                                            |                                             | 69,918  |            |           |   | 68,786  |       
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      |                                                                                                                                                                                            | Total liabilities not subject to compromise |         |            | 515,776   |   |         |        | 429,106 | 
|LIABILITIES SUBJECT TO COMPROMISE                     |                                                                                                                                                                                            |                                             | 727,522 |            |           |   |         |       
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      |                                                                                                                                                                                            | Total liabilities                           |         |            | 1,243,298 |   |         |        | 429,106 | 
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|COMMITMENTS AND CONTINGENCIES (NOTE 13)               |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|STOCKHOLDERS (DEFICIENCY) EQUITY:                    |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      | Common stock, $0.01 par value;
    50,000,000 shares authorized, 10,000,000 shares issued
    and outstanding in 2003 (including 686,000 shares held in the
    common stock reserve pool) |                                             |         |            |           |   |         | 100    |        
|                                                      | Common stock, $0.01 par value;
    300,000,000 shares authorized, 91,428,570 shares
    issued and outstanding in 2002                                                                     |                                             |         | 914        |           |   |         |        |        
|                                                      | Additional paid in capital                                                                                                                                                                 |                                             |         | 537,583    |           |   |         | 93,937 |        
|                                                      | Accumulated deficit                                                                                                                                                                        |                                             |         | (1,276,845 | )         |   |         |        |        
|                                                      | Common stock reserve pool (Note 2)                                                                                                                                                         |                                             |         |           |           |   |         | (6,037 | )      
|                                                      | Deferred stock-based compensation                                                                                                                                                          |                                             |         | (4,530     | )         |   |         |        |        
|                                                      | Accumulated other comprehensive income                                                                                                                                                     |                                             |         | 20,263     |           |   |         |        |        
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|                                                      |                                                                                                                                                                                            | Total stockholders (deficiency) equity     |         |            | (722,615  | ) |         |        | 88,000  | 
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       
|TOTAL                                                 |                                                                                                                                                                                            | $                                           | 520,683 |            |           | $ | 517,106 |       
|                                                      |                                                                                                                                                                                            |                                             |         |            |           |   |         |       

See notes to condensed consolidated financial
statements.

F-1



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2003
(PREDECESSOR COMPANY) AND


FOR THE THREE MONTHS ENDED MARCH 31, 2002
(PREDECESSOR COMPANY)


(In thousands of U.S. Dollars, except per
share amounts)


(Unaudited)


|                                          |                                                                         |                        |                               |         |        |         |         |         |        |         | 
|----------------------------------------- | ----------------------------------------------------------------------- | ---------------------- | ----------------------------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | 
|                                          |                                                                         |                       
|                                          |                                                                         | Predecessor Company   
|                                          |                                                                         |                       
|                                          |                                                                         |                       
|                                          |                                                                         | Three Months Ended    
|                                          |                                                                         | March 31,             
|                                          |                                                                         |                       
|                                          |                                                                         | 2002                   |                               | 2003   
|                                          |                                                                         |                        |                               |        
|NET REVENUES:                             |                                                                         |                        |                               |         |        |         |         |        
|                                          | Broadband and satellite                                                 |                        | $                             | 46,314  |        |         | $       | 41,382  |       
|                                          | Internet                                                                |                        |                               | 7,854   |        |         |         | 5,733   |       
|                                          | Value added services                                                    |                        |                               | 3,617   |        |         |         | 4,781   |       
|                                          | Telephony                                                               |                        |                               | 4,344   |        |         |         | 4,106   |       
|                                          | Sales of equipment                                                      |                        |                               | 284     |        |         |         | 74      |       
|                                          |                                                                         |                        |                               |         |        |         |         |        
|                                          |                                                                         |                        | Total net revenues            |         |        | 62,413  |         |         |        | 56,076  | 
|                                          |                                                                         |                        |                               |         |        |         |         |        
|COSTS AND EXPENSES:                       |                                                                         |                        |                               |         |        |         |         |        
|                                          | Direct costs:                                                           |                        |                               |         |        |         |         |         |       
|                                          |                                                                         | Contracted services    |                               |         | 6,233  |         |         |         | 4,447  |        
|                                          |                                                                         | Other direct costs     |                               |         | 6,535  |         |         |         | 4,227  |        
|                                          |                                                                         | Leased capacity        |                               |         | 20,385 |         |         |         | 17,601 |        
|                                          |                                                                         | Cost of equipment sold |                               |         | 117    |         |         |         | 48     |        
|                                          |                                                                         |                        |                               |         |        |         |         |        
|                                          |                                                                         |                        | Total direct costs            |         |        | 33,270  |         |         |        | 26,323  | 
|                                          | Salaries and wages                                                      |                        |                               | 13,042  |        |         |         | 10,727  |       
|                                          | Selling, general and administrative                                     |                        |                               | 7,351   |        |         |         | 5,506   |       
|                                          | Depreciation and amortization                                           |                        |                               | 23,908  |        |         |         | 19,216  |       
|                                          |                                                                         |                        |                               |         |        |         |         |        
|                                          |                                                                         |                        | Total costs and expenses      |         |        | 77,571  |         |         |        | 61,772  | 
|                                          |                                                                         |                        |                               |         |        |         |         |        
|Operating loss                            |                                                                         |                        | (15,158                       | )       |        |         | (5,696  | )      
|                                          |                                                                         |                        |                               |         |        |         |         |        
|OTHER INCOME (EXPENSES):                  |                                                                         |                        |                               |         |        |         |         |        
|                                          | Interest income                                                         |                        |                               | 355     |        |         |         | 200     |       
|                                          | Interest expense (contractual interest of $21,801
    in 2003)          |                        |                               | (33,800 | )      |         |         | (1,909  | )     
|                                          | Net (loss) gain on foreign exchange                                     |                        |                               | (7,365  | )      |         |         | 9,969   |       
|                                          | Recognition of other-than-temporary decline in
    value of investments |                        |                               | (674    | )      |         |         |         |       
|                                          | Reorganization items                                                    |                        |                               |         |        |         |         | 724,807 |       
|                                          | Other (loss) income, net                                                |                        |                               | (1,397  | )      |         |         | 2,781   |       
|                                          |                                                                         |                        |                               |         |        |         |         |        
|                                          |                                                                         |                        | Total other (expenses) income |         |        | (42,881 | )       |         |        | 735,848 | 
|                                          |                                                                         |                        |                               |         |        |         |         |        
|(LOSS) INCOME BEFORE INCOME TAXES         |                                                                         |                        | (58,039                       | )       |        |         | 730,152 |        
|PROVISION FOR FOREIGN INCOME TAXES        |                                                                         |                        | (438                          | )       |        |         | (406    | )      
|                                          |                                                                         |                        |                               |         |        |         |         |        
|NET (LOSS) INCOME                         |                                                                         | $                      | (58,477                       | )       |        | $       | 729,746 |        
|                                          |                                                                         |                        |                               |         |        |         |         |        
|NET (LOSS) INCOME PER COMMON SHARE:       |                                                                         |                        |                               |         |        |         |         |        
|                                          | BASIC AND DILUTED                                                       |                        | $                             | (0.64   | )      |         | $       | 7.98    |       
|                                          |                                                                         |                        |                               |         |        |         |         |        
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES: |                                                                         |                        |                               |         |        |         |         |        
|                                          | BASIC AND DILUTED                                                       |                        |                               | 91,429  |        |         |         | 91,429  |       
|                                          |                                                                         |                        |                               |         |        |         |         |        

See notes to condensed consolidated financial
statements.

F-2



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2003
(PREDECESSOR COMPANY) AND


FOR THE THREE MONTHS ENDED MARCH 31, 2002
(PREDECESSOR COMPANY)


(In thousands of U.S. Dollars)


(Unaudited)


|                            |                                                                        |                     |         |      |      |   |         |        |        |  
|--------------------------- | ---------------------------------------------------------------------- | ------------------- | ------- | ---- | ---- | - | ------- | ------ | ------ | -
|                            |                                                                        |                    
|                            |                                                                        | Predecessor Company
|                            |                                                                        | Three Months Ended 
|                            |                                                                        | March 31,          
|                            |                                                                        |                    
|                            |                                                                        | 2002                |         | 2003
|                            |                                                                        |                     |         |     
|NET (LOSS) INCOME           |                                                                        | $                   | (58,477 | )    |      | $ | 729,746 |       
|                            |                                                                        |                     |         |      |      |   |         |       
|OTHER COMPREHENSIVE LOSS:   |                                                                        |                     |         |      |      |   |         |       
|                            | Foreign currency translation adjustment                                |                     |         | (265 | )    |   |         | (4,097 | )     
|                            | Change in unrealized (loss) gain on investments
    available for sale |                     |         | (867 | )    |   |         | 55     |       
|                            | Recognition of other-than-temporary decline in
    value of investment |                     |         | 674  |      |   |         |        |       
|                            |                                                                        |                     |         |      |      |   |         |       
|                            |                                                                        | TOTAL               |         |      | (458 | ) |         |        | (4,042 | )
|                            |                                                                        |                     |         |      |      |   |         |       
|COMPREHENSIVE (LOSS) INCOME |                                                                        | $                   | (58,935 | )    |      | $ | 725,704 |       
|                            |                                                                        |                     |         |      |      |   |         |       

See notes to condensed consolidated financial
statements.

F-3



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##### Table of Contents






IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS (DEFICIENCY) EQUITY

FOR THREE MONTHS ENDED MARCH 31, 2003
(PREDECESSOR COMPANY)


AND AS OF MARCH 31, 2003 (SUCCESSOR
COMPANY)


(In thousands of U.S. Dollars)


(Unaudited)


|                                                       |                                                                                                       |              |            |             |   |             |     |         |   |             |         |               |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        |         |   |   |          |         |  
|------------------------------------------------------ | ----------------------------------------------------------------------------------------------------- | ------------ | ---------- | ----------- | - | ----------- | --- | ------- | - | ----------- | ------- | ------------- | - | ------------- | ---------- | ------- |  | - | ------ | ------ | - | - | ------ | ----- |  | - | ------ | ------- | - | - | -------- | ------- | -
|                                                       |                                                                                                       |              |            |             |   |             |     | Common  |   |             |         | Accumulated   |   |              
|                                                       |                                                                                                       | Common Stock |            | Additional  |   |             |     | Stock   |   | Deferred    |         | Other         |   |              
|                                                       |                                                                                                       |              |            | Paid In     |   | Accumulated |     | Reserve |   | Stock-Based |         | Comprehensive |   |              
|                                                       |                                                                                                       | Shares       |            | Amount      |   | Capital     |     | Deficit |   | Pool        |         | Compensation  |   | Income (Loss) |            | Total  
|                                                       |                                                                                                       |              |            |             |   |             |     |         |   |             |         |               |   |               |            |        
|BALANCE AT DECEMBER 31, 2002
    (PREDECESSOR COMPANY) |                                                                                                       |              | 91,428,570 |             |   | $           | 914 |         |   | $           | 537,583 |               |   | $             | (1,276,845 | )       |  |   |        |        |   | $ | (4,530 | )     |  | $ | 20,263 |         |   | $ | (722,615 | )      
|                                                       | Amortization of amount paid in excess of carrying
    value of net assets acquired from related party |              |            |             |   |             |     |         |   |             |         | 142           |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        |         |   |   |          | 142     |  
|                                                       | Change in unrealized loss on investment available
    for sale                                        |              |            |             |   |             |     |         |   |             |         |               |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        | 55      |   |   |          | 55      |  
|                                                       | Foreign currency translation adjustment                                                               |              |            |             |   |             |     |         |   |             |         |               |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        | (4,097  | ) |   |          | (4,097  | )
|                                                       | Net income for the period                                                                             |              |            |             |   |             |     |         |   |             |         |               |   |               |            | 729,746 |  |   |        |        |   |   |        |       |  |   |        |         |   |   |          | 729,746 |  
|                                                       |                                                                                                       |              |            |             |   |             |     |         |   |             |         |               |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        |         |   |   |          |        
|BALANCE AT MARCH 31, 2003
    (Predecessor Company)    |                                                                                                       |              | 91,428,570 |             |   |             | 914 |         |   |             | 537,725 |               |   |               | (547,099   | )       |  |   |        |        |   |   | (4,530 | )     |  |   | 16,221 |         |   |   | 3,231    |        
|                                                       | Elimination of Predecessor Company
    stockholders equity                                           |              |            | (91,428,570 | ) |             |     | (914    | ) |             |         | (537,725      | ) |               |            | 547,099 |  |   |        |        |   |   |        | 4,530 |  |   |        | (16,221 | ) |   |          | (3,231  | )
|                                                       | Issuance of Successor Company common stock                                                            |              |            | 10,000,000  |   |             |     | 100     |   |             |         | 93,937        |   |               |            |         |  |   | $      | (6,037 | ) |   |        |       |  |   |        |         |   |   |          | 88,000  |  
|                                                       |                                                                                                       |              |            |             |   |             |     |         |   |             |         |               |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        |         |   |   |          |        
|BALANCE AT MARCH 31, 2003
    (SUCCESSOR COMPANY)      |                                                                                                       |              | 10,000,000 |             |   | $           | 100 |         |   | $           | 93,937  |               |   | $             |           |         |  | $ | (6,037 | )      |   | $ |       |       |  | $ |       |         |   | $ | 88,000   |        
|                                                       |                                                                                                       |              |            |             |   |             |     |         |   |             |         |               |   |               |            |         |  |   |        |        |   |   |        |       |  |   |        |         |   |   |          |        

See notes to condensed consolidated financial
statements.

F-4



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##### Table of Contents






IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

FOR THREE MONTHS ENDED MARCH 31, 2003
(PREDECESSOR COMPANY) AND


FOR THREE MONTHS ENDED MARCH 31, 2002
(PREDECESSOR COMPANY)


(In Thousands of U.S. Dollars)


(Unaudited)


|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |         |          |        |         |  
|------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------------------------- | ------ | ------ | ------ | ------- | -------- | ------ | ------- | -
|                                                                         |                                                                                              |                                                                        
|                                                                         |                                                                                              | Predecessor Company                                                    
|                                                                         |                                                                                              |                                                                        
|                                                                         |                                                                                              |                                                                        
|                                                                         |                                                                                              | Three Months Ended                                                     
|                                                                         |                                                                                              | March 31,                                                              
|                                                                         |                                                                                              |                                                                        
|                                                                         |                                                                                              | 2002                                                                    |                                                                           | 2003                                                   
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         | Net (loss) income                                                                            |                                                                         | $                                                                         | (58,477                                                 | )      |        | $      | 729,746 |         
|                                                                         | Adjustments to reconcile net (loss) income
    to net cash provided by operating activities: |                                                                         |                                                                           |                                                         |        |        |        |         |         
|                                                                         |                                                                                              | Amortization and depreciation                                           |                                                                           |                                                         | 23,908 |        |        |         | 19,216   |       
|                                                                         |                                                                                              | Gain on extinguishment of debt                                          |                                                                           |                                                         |        |        |        |         | (728,203 | )     
|                                                                         |                                                                                              | Stock-based compensation                                                |                                                                           |                                                         |        |        |        |         | 1,760    |       
|                                                                         |                                                                                              | Deferred income tax provision                                           |                                                                           |                                                         |        |        |        |         | 82       |       
|                                                                         |                                                                                              | Provision for doubtful accounts                                         |                                                                           |                                                         | 3,017  |        |        |         | 515      |       
|                                                                         |                                                                                              | Recognition of other-than-temporary decline in
    value of investments |                                                                           |                                                         | 674    |        |        |         |          |       
|                                                                         |                                                                                              | Changes in assets and liabilities:                                      |                                                                           |                                                         |        |        |        |         |          |       
|                                                                         |                                                                                              |                                                                         | Decrease (increase) in trade accounts
    receivable, net                 |                                                         |        | 1,901  |        |         |          | (3,996 | )      
|                                                                         |                                                                                              |                                                                         | Increase in prepaid expenses                                              |                                                         |        | (1,034 | )      |         |          | (950   | )      
|                                                                         |                                                                                              |                                                                         | Decrease (increase) in other receivables and
    other non-current assets |                                                         |        | 12,711 |        |         |          | (12    | )      
|                                                                         |                                                                                              |                                                                         | (Decrease) increase in accounts payable 
    trade                       |                                                         |        | (9,880 | )      |         |          | 1,584  |        
|                                                                         |                                                                                              |                                                                         | Increase (decrease) in accrued and other
    liabilities                  |                                                         |        | 32,703 |        |         |          | (228   | )      
|                                                                         |                                                                                              |                                                                         | Decrease in deferred revenues                                             |                                                         |        | (855   | )      |         |          | (1,132 | )      
|                                                                         |                                                                                              |                                                                         | Decrease in other long-term liabilities                                   |                                                         |        | (2,538 | )      |         |          | (1,515 | )      
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         |                                                                                              |                                                                         |                                                                           | Net cash provided by (used in) operating
    activities |        |        | 2,130  |         |          |        | 16,867  |  
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         | Net (increase) decrease in trading
    investments                                           |                                                                         |                                                                           | (318                                                    | )      |        |        | (3,303  | )       
|                                                                         | Purchases of property, plant and equipment, net
    of disposals                             |                                                                         |                                                                           | (3,395                                                  | )      |        |        | (8,205  | )       
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         |                                                                                              |                                                                         |                                                                           | Net cash (used in) provided by investing
    activities |        |        | (3,713 | )       |          |        | (11,508 | )
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         | Net payments on short-term debt                                                              |                                                                         |                                                                           | (106                                                    | )      |        |        |         |         
|                                                                         | Proceeds from long-term debt, net of deferred
    financing costs                            |                                                                         |                                                                           | 476                                                     |        |        |        |         |         
|                                                                         | Repayments of long-term debt                                                                 |                                                                         |                                                                           | (2,744                                                  | )      |        |        | (2,464  | )       
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         |                                                                                              |                                                                         |                                                                           | Net cash provided by (used in) financing
    activities |        |        | (2,374 | )       |          |        | (2,464  | )
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH
    EQUIVALENTS          |                                                                                              |                                                                         | (265                                                                      | )                                                       |        |        | 107    |        
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|NET (DECREASE) INCREASE IN CASH AND CASH
    EQUIVALENTS                 |                                                                                              |                                                                         | (4,222                                                                    | )                                                       |        |        | 3,002  |        
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR                       |                                                                                              |                                                                         | 35,606                                                                    |                                                         |        |        | 32,563 |        
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|CASH AND CASH EQUIVALENTS AT END OF THE YEAR                             |                                                                                              | $                                                                       | 31,384                                                                    |                                                         |        | $      | 35,565 |        
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                      |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         | Interest paid                                                                                |                                                                         | $                                                                         | 4,769                                                   |        |        | $      | 940     |         
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         | Foreign income taxes paid                                                                    |                                                                         | $                                                                         | 549                                                     |        |        | $      | 594     |         
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|CASH PAID DURING THE YEAR FOR REORGANIZATION
    ITEMS:                  |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         |                                                                                              | Professional fees                                                       |                                                                           |                                                         |        |        |        | $       | 1,714    |       
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES: |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        
|                                                                         | Change to unrealized (loss) gain in
    investment available for sale                        |                                                                         | $                                                                         | (867                                                    | )      |        | $      | 55      |         
|                                                                         |                                                                                              |                                                                         |                                                                           |                                                         |        |        |        |        

See notes to condensed consolidated financial
statements.

F-5



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##### Table of Contents






IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

(Tables in Thousands of U.S. Dollars, except
for per share amounts)


(Unaudited)


1.     GENERAL

IMPSAT Fiber Networks, Inc., a Delaware holding
company (the Holding Company), and subsidiaries
(collectively the Company) is a leading provider of
integrated broadband, data, Internet, voice and data center
services in Latin America. The Company offers integrated
telecommunications solutions, with an emphasis on end-to-end
broadband data transmission, for national and multinational
companies, financial institutions, governmental agencies and
other business customers.

The Company currently provides telecommunications
services to its customers using its local access and long haul
fiber optic and satellite networks. The deployed facilities
include 15 metropolitan area networks in the largest cities of
the region, long haul networks across Argentina, Brazil, Chile
and Colombia, and leased submarine capacity to link South
America to the United States. In addition, the Company has
500,000 gross square feet of premises housing advanced hosting
capabilities.

The Holding Companys operating subsidiaries
are wholly owned (except for a small number of shares issued to
other persons to comply with local corporate law requirements).
A listing of the Holding Companys operating subsidiaries
is as follows:

|          |  |                               
|--------- |  | ------------------------------
|Argentina |  | Impsat S.A.                   
|Brazil    |  | Impsat Comunicacoes Ltda.     
|Chile     |  | Impsat Chile S.A.             
|Colombia  |  | Impsat S.A.                   
|Ecuador   |  | Impsatel del Ecuador S.A.     
|Mexico    |  | Impsat S.A. de C.V.           
|Peru      |  | Impsat S.A.                   
|USA       |  | Impsat USA, Inc.              
|Venezuela |  | Telecomunicaciones Impsat S.A.

In addition, the Company owns other subsidiaries,
which serve intermediary functions to the Holding Company and
its operating subsidiaries.



|   |                                                                                
|-- | -------------------------------------------------------------------------------
|2. | FINANCIAL RESTRUCTURING, PETITION FOR RELIEF
    UNDER CHAPTER 11 AND EMERGENCE

On March 11, 2002, the Holding Company
concluded negotiations with an ad hoc committee representing
certain creditors under the Holding Companys Broadband
Network Vendor Financing Agreements, and certain holders of its
$125.0 million 12 1/8% Senior Guaranteed Notes due
2003, $300.0 million 13 3/4% Senior Notes due 2005 and
$225.0 million 12 3/8% Senior Notes due 2008
(collectively, the Senior Notes) of a non-binding
term sheet agreement in principle (the Restructuring Term
Sheet) relating to the terms of a proposed restructuring
of these long-term obligations, as part of a comprehensive
financial restructuring of the Company.

In connection with this Restructuring Term Sheet,
on June 11, 2002 (the Petition Date), the
Holding Company filed a voluntary petition for relief under
Chapter 11 of the federal bankruptcy laws in the United
States Bankruptcy Court for the Southern District of New York
(the Bankruptcy Court). Under Chapter 11,
certain claims against the Holding Company in existence prior to
the filing of the petition for relief under the federal
bankruptcy laws are stayed while the Holding Company continues
business operations

F-6



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


as Debtor-in-Possession. These claims are
reflected in the December 31, 2002 condensed consolidated
balance sheet as liabilities subject to compromise.
Additional claims (liabilities subject to compromise) may arise
subsequent to the filing date resulting from rejection of
executory contracts, including leases, and from the
determination of the Bankruptcy Court (or agreed to by parties
in interest) of allowed claims for contingencies and other
disputed amounts.

On September 4, 2002, the Holding Company
filed a Disclosure Statement (the Disclosure
Statement) and a Plan of Reorganization (the
Plan) with the Bankruptcy Court. The Plan reflected
the terms of the pre-arranged plan of reorganization that a
majority of the holders of the indebtedness under the
Companys Vendor Financing Agreements and the holders of
the Senior Notes agreed to support. The Disclosure Statement
summarized the Plan and contained information concerning among
other matters the history, business, results of operations,
management, properties, liabilities and the assets available for
distribution under the Plan as well as the anticipated
organization and operation of a reorganized Holding Company. The
Disclosure Statement also described certain effects of Plan
confirmation, certain risk factors associated with the Plan, the
manner in which distributions will be made to the Holdings
Companys creditors under the Plan for all amounts that
were owed to such parties on the Petition Date and the
confirmation process and voting procedures that holders of
claims in impaired classes must follow for their votes to be
counted.

The Plan received the affirmative vote of the
Holding Companys creditors in accordance with the
Bankruptcy Code in December 2002 and was confirmed by order of
the Bankruptcy Court on December 16, 2002. In accordance
with the Plan, the Holding Company emerged from bankruptcy on
March 25, 2003 (the Effective Date). Pursuant
to the Plan, on the Effective Date, all of the shares of the
Companys old common stock, options granted under the
Companys stock option plans and all other equity interests
were cancelled, retired and eliminated with no consideration
paid thereon. The Company also adopted a new 2003 Stock
Incentive Plan and terminated all the previous stock options
plans.

Although the Holding Company has emerged from
bankruptcy, the Company remains in default under indebtedness
owed to certain creditors who voted against the Plan. Under the
Plan, the claims of these creditors were contingent obligations
arising under guarantees by the Holding Company of certain
primary indebtedness of its operating subsidiaries. In
accordance with the Plan, these holders will receive, in full
satisfaction of their contingent guarantee claim
(Post-Effective Date Contingencies), a pro ratashare of the shares of the Holding Companys new common
stock issuable to the Holding Companys creditors under the
Plan. Notwithstanding the Companys settlement of the
Post-Effective Date Contingencies, as a consequence of the
occurrence of the Companys Chapter 11 bankruptcy, an
event of default has occurred and is continuing with respect to
certain of the related primary underlying indebtedness of the
Holding Companys operating subsidiaries. These defaults,
which relate to indebtedness totaling approximately
$18.6 million in outstanding principal amount, give the
respective creditors the right to accelerate such indebtedness
and seek immediate repayment of all outstanding amounts and
accrued interest thereon. The Company is currently conducting
negotiations at the level of its operating subsidiaries with
these creditors with a view to rescheduling or otherwise
restructuring these defaulted debt obligations. There is no
assurance, however, that the Company will be successful in these
negotiations or that the Company will reach a definitive
agreement with these creditors to reschedule or restructure such
obligations. Under those circumstances, certain of the
Companys operating subsidiaries could be forced to seek
protection or liquidate under the bankruptcy laws of their
respective jurisdictions.

Following is a summary of the significant
transactions consummated on March 25, 2003 under the Plan:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | issued shares of New Common Stock to holders of
    the Holding Companys 13 3/4% Senior Notes due 2005
    and 12 3/8% Senior Notes due 2008, (the 2005/2008
    Holders) in full satisfaction of their claims thereunder,
    including the outstanding principal and all accrued and unpaid
    interest. The 2005/2008 Holders received their ratable portion
    of 9.8 million shares of New Common Stock, less an
    allocation

F-7



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | of a ratable number of such shares of New Common
    Stock to the holders of the Post-Effective Date Contingencies
    and certain other claims of unsecured creditors of the Holding
    Company. Under the Plan, the dollar value of the Post-Effective
    Date Contingencies and other unsecured claims is to be
    determined after the Effective Date based on factors at the
    level of the Holding Companys operating subsidiaries.
    Accordingly, the Plan required the Company to establish on the
    Effective Date a reserve (the Common Stock Reserve
    Pool) consisting of an estimated portion of such
    9.8 million shares of New Common Stock sufficient to enable
    the Company to make any distributions after the Effective Date
    on account of Post-Effective Date Contingencies and other
    unsecured claims. To this end, based on the estimated maximum
    value of the Post-Effective Date Contingencies and other
    unsecured claims, the Company and the creditors committee under
    the Plan have determined that the Common Stock Reserve Pool
    shall be composed of 686,000 shares of New Common Stock.
    The 2005/2008 holders have initially received on the Effective
    Date 9.1 million shares of New Common Stock, net of the
    Common Stock Reserve Pool. Pursuant to the Plan, any settlements
    or distributions from the Common Stock Reserve Pool with the
    holders of the Post-Effective Date Contingencies and other
    unsecured claims shall be made in accordance with the disputed
    claims resolution process contained therein. Following the
    resolution of these claims, the Company will distribute any
    shares of New Common Stock remaining in the Common Stock Reserve
    Pool ratably among the 2005/2008 Holders in accordance with the
    terms of the Plan. Holders of the Companys
    pre-Chapter 11 common stock (the Old Common
    Stock) and holders of any other equity interest received
    no distribution under the Plan. All Old Common Stock and all
    other equity interests were cancelled on the Effective Date;
|
| |  | filed with the Delaware Secretary of State a
    Restated Certificate of Incorporation (Certificate of
    Incorporation);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | amended and restated the Holding Companys
    Bylaws (Bylaws);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | cancelled all Old Common Stock, and all other
    existing securities and agreements to issue or purchase any
    equity interest;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | issued $67.5 million in aggregate principal
    amount of Series A 6% Senior Guaranteed Notes due 2011 (the
    Series A Notes) (initially convertible, in the
    aggregate, into 22.8% of the New Common Stock on a fully diluted
    basis) to holders of the Holding Companys former
    12 1/8% Senior Guaranteed Notes due 2003 (the
    2003 Noteholders), in full satisfaction of the
    claims of the 2003 Noteholders, including the outstanding
    principal and all accrued and unpaid interest thereon;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | issued to (i) holders of debt under the
    Companys pre-Effective Date Broadband Network vendor
    financing agreements (the Original Vendor Financing
    Agreements) and (ii) other creditors of the
    Companys operating subsidiaries holding guarantees by the
    Holding Company of such indebtedness who voted to accept the
    Plan, a combination of new senior indebtedness totaling
    $144.0 million, $23.9 million in the aggregate of new
    Series B 6% Senior Guaranteed Notes due 2011
    (Series B Notes) (initially convertible in the
    aggregate into 5.3% of the New Common Stock on a fully diluted
    basis), and eight-year warrants to acquire 15.3% in the
    aggregate of the New Common Stock (on a fully diluted basis);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | issued 200,000 shares of New Common Stock to
    certain officers of the Company in accordance with the
    Companys 2003 Stock Incentive Plan (the 2003 Stock
    Incentive Plan); and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | approved stock options for 1,646,332 shares
    of New Common Stock to senior officers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Under the Holding Companys Certificate of
Incorporation, the authorized capital stock as of the Effective
Date consists of (i) 50,000,000 shares of the New
Common Stock, with a par value of $0.01 per share and
(ii) 5,000,000 shares of Preferred Stock, with a par
value of $0.01 per share (the Preferred Stock). No
Preferred Stock has been issued. Pursuant to the Certificate of
Incorporation, Preferred Stock

F-8



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


may be issued in one or more series as determined
from time to time by the Companys Board of Directors (the
Board) without further approval of the Holding
Companys stockholders. Upon issuance of any series of
Preferred Stock, the Board will fix the voting powers,
designations, preferences, and relative, participating,
optional, redemption, conversion, exchange or other special
rights, qualifications, limitations or restrictions of such
Preferred Stock, to the extent permitted by law. Pursuant to the
Certificate of Incorporation, the Holding Company may not
create, designate, authorize or cause to be issued any class or
series of nonvoting stock to the extent prohibited by
Section 1123 of the United States Bankruptcy Code.

As a result of these transactions, as of
March 31, 2003, the Company had 10,000,000 shares of
new common stock issued and outstanding (including 686,000
shares held in the Common Stock Reserve Pool pending the
resolution of the Post-Effective Date Contingencies).

Because the Company emerged from bankruptcy on
March 25, 2003 (as so emerged, also referred to as the
Successor Company), for financial reporting purposes
the Company used an effective date of March 31, 2003 and
applied fresh-start accounting to the consolidated balance sheet
as of that date in accordance with the American Institute of
Certified Public Accountants Statement of Position
(SOP) 90-7, Financial Reporting by Entities
in Reorganization Under the Bankruptcy Code. In accordance
with SOP 90-7, the Company adopted fresh-start accounting
because (i) the holders of the existing voting shares
immediately before filing and confirmation of the Plan received
less than 50% of the voting shares of the emerging company and
(ii) the Companys reorganization value, which served
as the basis for the Plan approved by the Bankruptcy Court, was
less than the Companys post petition liabilities and
allowed claims, as shown below:

|                                                          |  |   |          |  
|--------------------------------------------------------- |  | - | -------- | -
|Post petition liabilities                                 |  | $ | 8,070    |  
|Liabilities deferred under the Chapter 11
    proceedings |  |   | 727,522  |  
|                                                          |  |   |          |  
|Total post petition liabilities and allowed claims        |  |   | 735,592  |  
|Reorganization value                                      |  |   | (557,000 | )
|                                                          |  |   |          |  
|Excess of liabilities over reorganization value           |  | $ | 178,592  |  
|                                                          |  |   |          |  

Under fresh-start accounting, a new reporting
entity is considered to be created and the Company adjusts the
recorded amounts of assets and liabilities to reflect their
estimated fair values at the date fresh-start accounting is
applied. Accordingly, the estimated reorganization value of the
Company of $557.0 million represents the total fair value
that the Company allocated to the assets of the Company. In
conformity with Statement of Financial Accounting Standards
(SFAS) No. 141, Business Combinations,
the Holding Company has used purchase accounting (pushed
down to its operating subsidiaries) to account for the
assets and liabilities as of the fresh-start date.

The Companys financial advisors advised the
Company with respect to the estimated reorganization value of
the Company and the reorganization equity value of the Company
of approximately $88.0 million. The financial advisors used
two methodologies to derive the total estimated reorganization
value: (a) the application of comparable company multiples
to the Companys historical and projected financial
results; and (b) a calculation of the present value of the
Companys free cash flows under the Companys revised
business plan using financial projections through 2010,
including an assumption for a terminal value, discounted at the
Companys estimated post-restructuring weighted-average
cost of capital. In deriving the total reorganization value, the
Companys advisors considered the Companys market
share and position, competition and general economic
considerations, projected revenue growth, potential
profitability, working capital requirements and other relevant
factors.

As a result of the Companys reorganization
and application of fresh-start accounting, during the three
months ended March 31, 2003, the Predecessor Company
recognized a gain of approximately $728.2 million on the
extinguishment of the Predecessor Companys Senior Notes,
Broadband Vendor Financing agreements and other trade accounts
payable.

F-9



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


The effect of the Plan and the resulting
fresh-start accounting adjustments on the Companys
consolidated balance sheet as of March 31, 2003, is as
follows:

|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |        |         | 
|--------------------------------------------------- | -------------------------------------- | --------------------------------------- | ------- | -------------- | --------- | ------- | -------- | --------- | -------- | ------------------------- | - | -------------- | - | -------------- | - | ------ | - | - | - | -------- | - | - | ------ | ------ | ------ | - | ------- | ------ | ------- | 
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |               
|                                                    |                                        |                                         |         |                |           |         |          |           |          | Elimination of Equity and |   |               
|                                                    |                                        | Pre                                     |         |                |           |         |          |           |          | Fresh Start Adjustments   |   | Post          
|                                                    |                                        | Reorganization                          |         | Debt           |           | Common  |          | 2003      |          |                           |   | Reorganization
|                                                    |                                        | Balance                                 |         | Extinguishment |           | Stock   |          | Stock     |          |                           |   | Allocation of  |   | Balance       
|                                                    |                                        | Sheet                                   |         | and            |           | Reserve |          | Incentive |          | Equity                    |   | Reorganization |   | Sheet         
|                                                    |                                        | March 31, 2003                          |         | Reorganization |           | Pool    |          | Plan      |          | Elimination               |   | Value          |   | March 31, 2003
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |               
|ASSETS                                              |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|CURRENT ASSETS:                                     |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    | Cash and cash Equivalents              |                                         | $       | 35,565         |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   | $       | 35,565 |        
|                                                    | Trading investments                    |                                         |         | 26,324         |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 26,324 |        
|                                                    | Trade accounts receivable, net         |                                         |         | 34,493         |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 34,493 |        
|                                                    | Other receivables                      |                                         |         | 13,235         |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 13,235 |        
|                                                    | Prepaid expenses                       |                                         |         | 3,696          |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 3,696  |        
|                                                    | Assets held for disposal               |                                         |         | 5,222          |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   | $      | 263    |        |   |         | 5,485  |        
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    |                                        | Total current assets                    |         |                | 118,535   |         |          |           |         |                           |   |                |  |                |   |        |  |   |   |          |  |   |        |        | 263    |   |         |        | 118,798 | 
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|PROPERTY, PLANT AND EQUIPMENT, Net                  |                                        |                                         | 390,674 |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   | (3,494 | )      |        |   | 387,180 |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|NON-CURRENT ASSETS:                                 |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    | Investments in common stock            |                                         |         | 141            |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 141    |        
|                                                    | Other non-current assets               |                                         |         | 10,987         |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 10,987 |        
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    |                                        | Total non-current assets                |         |                | 11,128    |         |          |           |         |                           |   |                |  |                |   |        |  |   |   |          |  |   |        |        |       |   |         |        | 11,128  | 
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|TOTAL                                               |                                        | $                                       | 520,337 |                |           | $       |         |           |          | $                         |  |                |   | $              |  |        |   | $ |  |          |   | $ | (3,231 | )      |        | $ | 517,106 |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|LIABILITIES AND STOCKHOLDERS DEFICIENCY
    EQUITY |                                        |                                         |         |               
|LIABILITIES NOT SUBJECT TO COMPROMISE:              |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|CURRENT LIABILITIES:                                |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    | Accounts payable  trade               |                                         | $       | 74,444         |           |         | $        | (22,442   | )        |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   | $       | 52,002 |        
|                                                    | Current portion of long-term debt      |                                         |         | 282,474        |           |         |          | (258,832  | )        |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 23,642 |        
|                                                    | Accrued and other liabilities          |                                         |         | 52,224         |           |         |          | (25,137   | )        |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         | 27,087 |        
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    |                                        | Total current liabilities               |         |                | 409,142   |         |          |           | (306,411 | )                         |   |                |  |                |   |        |  |   |   |          |  |   |        |        |       |   |         |        | 102,731 | 
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|LONG-TERM DEBT, Net                                 |                                        |                                         | 24,334  |                |           |         | 219,490  |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   | 243,824 |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|OTHER LONG-TERM LIABILITIES                         |                                        |                                         | 13,765  |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   | 13,765  |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|DEFERRED REVENUES                                   |                                        |                                         | 68,786  |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   | 68,786  |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|LIABILITIES SUBJECT TO COMPROMISE                   |                                        |                                         | 727,522 |                |           |         | (727,522 | )         |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |        |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    |                                        | Total liabilities                       |         |                | 1,243,549 |         |          |           | (814,443 | )                         |   |                |  |                |   |        |   |   |   |          |  |   |        |        |       |   |         |        | 429,106 | 
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|STOCKHOLDERS (DEFICIENCY) EQUITY:                  |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    | Common Stock  old                     |                                         |         | 914            |           |         |          |           |          |                           |   |                |   |                |   |        |   |   | $ | (914     | ) |   |        |        |        |   |         |       |        
|                                                    | Common Stock  new                     |                                         |         |                |           |         |          | 98        |          |                           |   |                |   |                | $ | 2      |   |   |   |          |   |   |        |        |        |   |         | 100    |        
|                                                    | Additional paid in capital  old       |                                         |         | 537,725        |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   | (537,725 | ) |   |        |        |        |   |         |       |        
|                                                    | Additional paid in capital  new       |                                         |         |                |           |         |          | 86,142    |          |                           | $ | 6,037          |   |                |   | 1,758  |   |   |   |          |   |   |        |        |        |   |         | 93,937 |        
|                                                    | Accumulated deficit                    |                                         |         | (1,273,542     | )         |         |          | 728,203   |          |                           |   |                |   |                |   | (1,760 | ) |   |   | 550,330  |   |   | $      | (3,231 | )      |   |         |       |        
|                                                    | Common stock reserve pool              |                                         |         |                |           |         |          |           |          |                           |   | (6,037         | ) |                |   |        |   |   |   |          |   |   |        |        |        |   |         | (6,037 | )      
|                                                    | Deferred stock-based compensation      |                                         |         | (4,530         | )         |         |          |           |          |                           |   |                |   |                |   |        |   |   |   | 4,530    |   |   |        |        |        |   |         |       |        
|                                                    | Accumulated other comprehensive income |                                         |         | 16,221         |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   | (16,221  | ) |   |        |        |        |   |         |       |        
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|                                                    |                                        | Total stockholders (deficiency) equity |         |                | (723,212  | )       |          |           | 814,443  |                           |   |                |  |                |   |        |  |   |   |          |  |   |        |        | (3,231 | ) |         |        | 88,000  | 
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       
|TOTAL                                               |                                        | $                                       | 520,337 |                |           | $       |         |           |          | $                         |  |                |   | $              |  |        |   | $ |  |          |   | $ | (3,231 | )      |        | $ | 517,106 |       
|                                                    |                                        |                                         |         |                |           |         |          |           |          |                           |   |                |   |                |   |        |   |   |   |          |   |   |        |        |        |   |         |       

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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


These adjustments primarily include the following:

Debt Extinguishment and
Reorganization



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The extinguishment of the Companys
    2005/2008 Senior Notes plus accrued interest in exchange for the
    issuance of 9.8 million shares of the Companys new
    common stock (including 686,800 shares held in the Common
    Stock Reserve Pool pending the resolution of the Post-Effective
    Date Contingencies);                                                                                                                                                                                                               
|
| |  | The extinguishment of the Companys 2003
    Senior Notes plus accrued interest in exchange for the issuance
    of $67.5 million in aggregate principal amount of
    Series A Notes ($60.0 million as of March 31,
    2003);                                                                                                                                                                                                                                                                                                           
|
| |  | The extinguishment of the Companys
    Broadband Vendor Financing agreements that voted in favor of the
    plan plus accrued interest in exchange for the issuance of a
    combination of $144.0 million in senior indebtedness issued
    by IMPSAT Argentina and IMPSAT Brazil ($128.0 million as of
    March 31, 2003), $23.9 million in aggregate principal
    amount of Series B Notes ($21.2 million as of
    March 31, 2003) and eight-year warrants to acquire 15.3% in
    the aggregate of the Companys new common stock;

Common Stock Reserve Pool



| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | The establishment of the Common Stock Reserve
    Pool of 686,000 shares.

2003 Stock Incentive Plan



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The issuance of 200,000 shares of the New
    Common Stock to certain officers of the Company in accordance
    with the 2003 Stock Incentive Plan;

Equity Eliminations



| |   |                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | To effect the cancellation of all outstanding Old
    Common Stock and other equity interests and the elimination of
    all components of stockholders deficiency, including
    paid-in-capital, accumulated deficit, deferred compensation and
    accumulated other comprehensive income; and

Allocation of Reorganization Value



| |   |                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The adjustment to the carrying value of the
    Companys property, plant and equipment, based on the
    Companys estimates of their relative fair values, which
    the Company determined in consultation with an external
    valuation specialist that the Company hired, were determined as
    follows:

|                                                                       |  |   |         |  
|---------------------------------------------------------------------- |  | - | ------- | -
|Adjustment to record at fair value                                     |  | $ | 36,901  |  
|Excess of fair value assigned to the net assets
    acquired over cost |  |   | (40,395 | )
|                                                                       |  |   |         |  
|Net adjustment                                                         |  | $ | (3,494  | )
|                                                                       |  |   |         |  

In accordance with SFAS No. 141, the excess
of fair value assigned to net assets acquired over cost was
applied against property, plant and equipment.

Going Concern Matters The Companys history of losses
and default under indebtedness owed to certain creditors who
voted against the Plan raise substantial doubt about the
Companys ability to continue as a going concern. The
condensed consolidated financial statements do not include any
adjustments relating to recoverability and classification of
recorded asset amounts or the amount and classification of
liabilities that might be necessary should the Company be unable
to continue as a going concern. The ability of the Holding
Company to continue as a going concern and to appropriately use
the going concern basis is dependent upon, among other things,
(i) the Companys ability to revise and implement its
business plan, (ii) the Companys ability to achieve
profitable operations, and (iii) the Companys ability
to generate sufficient cash from operations to meet its
obligations. The condensed consolidated financial statements do
not give effect to any

F-11



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


adjustments to the carrying values of assets or
amounts and classifications of liabilities that might result
from the uncertainties described above.




3.     SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation The financial statements are presented
on a consolidated basis and include the accounts of IMPSAT Fiber
Networks, Inc and its subsidiaries. All significant intercompany
transactions and balances have been eliminated. SOP 90-7
(see Note 2) was followed in the preparation of these
condensed consolidated financial statements.

Interim Financial Information The unaudited condensed consolidated
financial statements as of March 31, 2003 and for the three
months ended March 31, 2002 and 2003 have been prepared on
the same basis as the Companys audited consolidated
financial statements. In the opinion of management, the
unaudited condensed 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 ended
March 31, 2003 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 accounting principles generally
accepted in the United States of America (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. Significant assumptions and estimates were used in
determining the carrying values of the Companys
telecommunication infrastructure and collectibility of
receivables. Actual results could differ from those estimates.

Market Risk The Company currently operates in
countries throughout Latin America. The Companys financial
performance may be affected by inflation, exchange rates and
controls, price controls, interest rates, changes in
governmental economic policy, taxation and political, economic
or other developments in or affecting the Latin America
countries in which the Company operates. The Company has not
entered into derivative transactions to hedge against potential
foreign exchange or interest rate risks.

Currency Risks In early January 2002, as
Argentinas ongoing political and financial crisis
deepened, the country defaulted on its massive foreign debt and
the government of President Eduardo Duhalde, who entered office
on January 1, 2002, abandoned the decade-old fixed
peso-dollar exchange rate and permitted the peso to float
freely against the U.S. dollar. The pesofree market
opened on January 11, 2002 at 1.65 pesos to the
U.S. dollar and has been volatile since. At
December 31, 2002, and March 31, 2003 the Argentine
pesotraded at 3.40 and 3.00 pesosto the
U.S. dollar, respectively. The devaluation of the Argentine
peso will generally affect the Companys consolidated
financial statements by generating foreign exchange gains or
losses on dollar-denominated monetary liabilities and
assets of IMPSAT Argentina and will generally result in a
decrease, in U.S. dollar terms, in the Companys
revenues, costs and expenses in Argentina.

During December 2001, the Argentine government
instituted a system for the freezing of the deposits in its
financial system. In February 2002, these measures led to, among
other things, the pesification decree.
Generally, this decree mandates that all monetary obligations
arising from agreements subject to Argentine law denominated in
foreign currency and existing as of January 6, 2002 are
mandatory converted into monetary obligations denominated in
pesos at an exchange rate of one U.S. dollar to one
peso. Such obligations generally may be adjusted pursuant
to the coeficiente de estabilizacion de referencia
(CER), as published by the Argentine central bank
based on the Argentine consumer price index. Under the
pesificationdecree, after the foreign
currency denominated contracts are converted to pesos (at the
rate of one peso to one U.S. dollar rate), the contracts
may be privately renegotiated by the parties back into foreign
currency denominated terms. Under the
pesificationdecree, if a contract governed
by Argentine law is

F-12



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


entered into after the decrees enactment,
that contract may be denominated in either U.S. dollars or
pesos. However, if the parties choose to denominate the new
contract in pesos, payments under that contract are not entitled
to be adjusted according to the CER or any other consumer price
index. Contracts denominated in pesos before the decree continue
to be denominated in pesos, unaffected by the decree. Finally,
the decree provides that if the value of the goods sold or
services rendered is higher or lesser than the price payable
after the mandatory pesification, either
party may request an equitable adjustment of such
price. If the parties do not agree on the equitable
adjustment, the dispute is to be settled by the courts,
which will attempt to preserve the contractual agreement between
the parties. The devaluation and the pesificationof agreements of the Company governed by Argentine law may
have adverse, unknown and unforeseeable effects on the Company.

Since the pesification decree, an
increasing portion of IMPSAT Argentinas customer contracts
and operating cash inflows are denominated in pesos while its
debt service payments and a portion of its costs (including
capital equipment purchases and payments for certain leased
telecommunication capacity) are denominated in U.S. dollars.
Accordingly, the Companys financial condition and results
of operations in Argentina are dependent upon IMPSAT
Argentinas ability to generate sufficient pesos(in
U.S. dollar terms) to pay its costs, expenses and to
satisfy its debt service requirements. Because of the recent
nature of these events and the significant uncertainties
regarding the extent and duration of the devaluation and the
direction of the fiscal policies in Argentina, management cannot
presently determine or reasonably estimate the impact a
continued economic crisis in that country could possibly have on
IMPSAT Argentinas and the Companys overall cash
flows, financial condition, and results of operations.

On March 5, 2003, Argentinas Supreme
Court declared the pesification decree
unconstitutional to the extent that it required the mandatory
redenomination of U.S. dollar bank deposits to pesos.
Although the ruling applies only to amounts held by the
petitioner in that case on deposit at a state-owned bank, the
decision will likely strengthen existing (and create a profusion
of similar) claims by other depositors seeking to
redollarize their deposits. This could force the
Argentine government to issue long-term bonds in satisfaction of
such claims, which, in turn, could increase Argentinas
public debt burden and cause a further deterioration of its
national economy. The future judicial implementation of the
Argentine Supreme Courts decision as well as any
legislative or executive response could take an unknown variety
of forms. Accordingly, its potential impact on the Argentine
economy and on the Companys operations in that country
presently cannot be estimated.

Numerous uncertainties exist surrounding the
ultimate resolution of Argentinas economic and political
instability and actual results could differ from those estimates
and assumptions utilized. The Argentine economic and political
situation continues to evolve and the Argentine government may
enact future regulations or policies that, when finalized and
adopted, may adversely and materially impact, among other items,
(i) the revenues the Company receives for services offered
in Argentina; (ii) the timing of repatriations of any
dividends or other cash flows from IMPSAT Argentina to the
Company in the United States; (iii) the Companys
asset valuations; and (iv) the Companys
peso-denominated monetary assets and liabilities.

The Companys results in Brazil also were
adversely affected during the period by the devaluation of the
Brazilian realagainst the U.S. dollar. At
December 31, 2001, the realtraded at a rate of
R$2.41 = $1.00, and at December 31, 2002 it had
depreciated to R$3.53 = $1.00. At March 31, 2003 the
real traded at R$3.35 to the U.S. dollar. These and
prior devaluations have had a negative effect on the
Companys real-denominated revenues. The devaluation
of the realand the decline in growth in the Brazilian
economy have been caused in part by the continued recession in
the region, a general aversion to emerging markets by foreign
direct and financial investors and the overall decline in
worldwide economic production. On October 27, 2002, Luiz
Inacio Lula da Silva of the left-wing Workers Party
was elected president of Brazil. Although, as a candidate, Mr.
da Silva expressed support for tightening of Brazils
fiscal policy as a condition of an IMF loan and

F-13



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


promised to honor and stabilize government debt,
anxiety persists within the investor community regarding whether
Mr. da Silva can restore financial confidence and
quickly establish trust in his administration and its ability to
govern. A protraction or worsening of the economic difficulties
in Brazil, including further currency devaluations, could have a
material adverse effect on IMPSAT Brazils and the
Companys overall financial condition and results of
operations.

In addition, in 2002, the Venezuelan government
removed controls over the trading range of the bolivar,
allowing the exchange rate to be determined by market
conditions. As a result, during 2002, the bolivar decreased in
value in relation to the U.S. dollar by approximately 85%.
During February 2003, the Venezuelan government imposed exchange
rate controls, fixing the bolivars value to the U.S.
dollar at approximately 1,600 bolivars to the
U.S. dollar.

Cash and Cash Equivalents Cash and cash equivalents are time
deposits with original maturities of three months or less at the
time of purchase. Cash equivalents and short-term investments
are stated at cost, which approximates fair value.

Revenue Recognition Revenues from data, value-added
telephony, IT solutions and Internet services are recognized
monthly as the services are provided. Equipment sales are
recorded upon delivery to and acceptance by the customer. In
addition, the Company has entered into, and may enter into in
the future, agreements with carriers granting indefeasible
rights of use (IRUs) and access to portions of the
Companys broadband network capacity and infrastructure.
Pursuant to these agreements, the Company will receive fixed
advance payments for the IRUs and will recognize the revenue
from the IRU ratably over the life of the IRU. Amounts received
in advance are recorded as deferred revenue in the accompanying
condensed consolidated balance sheets. The Securities and
Exchange Commission (the SEC) issued Staff
Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements. SAB No. 101
summarizes the SECs views on the application of generally
accepted accounting principles to revenue recognition. The
Company has reviewed SAB No. 101 and believes that it
is in compliance with the SECs interpretation of revenue
recognition.

No single customer accounted for greater than 10%
of total net revenues from services for the three month periods
ended March 31, 2002 and 2003.

Non-Monetary Transactions The Company may exchange capacity on
its Broadband Network for capacity from other carriers through
the exchange of IRUs. These transactions are accounted for in
accordance with Accounting Principles Board Opinion No. 29,
Accounting for Nonmonetary Transactions, where an
exchange of similar IRUs is recorded at a historical carryover
basis with no revenue or any gain or loss being recorded.

Assets Held for Disposal During the first quarter of 2003, the
Company determined to close its operations in Mexico, and as
such reclassified the amounts of assets associated with the
operations in Mexico to assets held for disposal. The Company
has entered into agreements with various parties to sell the
Companys real estate and other real and personal property
in Mexico, and expects to close such transactions during the
second quarter of 2003.

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:

|                                                |  |            
|----------------------------------------------- |  | -----------
|Buildings and improvements                      |  | 10-25 years
|Operating communications equipment              |  | 5-10 years 
|Network infrastructure (including Right of way) |  | 10-20 years
|IRU investments                                 |  | 15 years   
|Furniture, fixtures and other equipment         |  | 2-10 years 

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Costs in connection with the construction,
installation and expansion of the Broadband Network are
capitalized. Rights of way agreements represent the fees paid
and the net present value of fees to be paid per signed
agreements entered into for obtaining rights of way and other
permits for the Broadband Network. These capitalized agreements
are being amortized over the term of the rights of way, which
range from 10 to 20 years. In addition, the Company has
acquired IRUs from other entities for its own purposes. Such IRU
investments are capitalized and amortized over their estimated
useful lives, not to exceed 15 years. The acquired IRUs
have a 25-year term. In those cases where the right of use has
been acquired for a longer period of time (25 years)
management believes that, due to anticipated advances in
technology, the Companys IRUs are not likely to be
productive assets beyond 15 years.

The operating communications equipment owned by
the Company is subject to rapid technological obsolescence;
therefore, it is reasonably possible that the equipments
estimated useful lives could change in the near future.

Long-Lived Assets Long-lived assets are reviewed on an
ongoing basis for impairment based on a comparison of carrying
values to the related undiscounted future cash flows. If the
carrying amounts exceed such cash flows, identifying a possible
impairment, the assets carrying amount is adjusted to fair value.

Investments Investments covered under the scope of
SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities, are classified by the Company as
either trading for short term investments or
available for sale for long term investments and are
carried at fair value. Unrealized gains and losses for trading
investments are included in the Companys results of
operations. Unrealized gains or losses for available for sale
investments are included in accumulated other comprehensive loss
within stockholders equity (deficiency). All other
investments are carried at cost.

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 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.

Foreign Currency Translation The Companys subsidiaries
generally 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 or loss on
foreign exchange, except for IMPSAT Brazil, which uses the local
currency as the functional currency, and are included in
accumulated other comprehensive income (loss) in
stockholders equity.

Stock-Based
Compensation SFAS
No. 123, Accounting for Stock-Based Compensation,
encourages, but does not require, companies to record
compensation cost for stock-based employee and non-employee
director compensation plans at fair value. The Company has
chosen to continue to account for stock-based compensation to
employees and non-employee directors using the intrinsic value
method as prescribed by Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Accordingly,
compensation cost for stock options issued to employees and
non-employee directors are measured as the excess, if any, of
the fair value of the Companys stock at the date of grant
over the amount an employee or non-employee director must pay
for the stock. The Company also provides the required
disclosures of SFAS No. 123.

Fair Value of Financial
Instruments The
Companys financial instruments include trading
investments, receivables, investments in common stock, payables,
short- and long-term debt. The Companys trading and common
stock investments were valued at market closing prices at
March 31, 2003. The fair value of these investments is
presented in Note 4. The fair value of all other financial
instruments, which approximate their carrying value, have been
determined using available market information and interest rates
as of March 31, 2003.

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Net (Loss) Income Per Common
Share Basic earnings
(loss) per share is computed based on the average number of
common shares outstanding and diluted earnings (loss) per share
is computed based on the average number of common and potential
common shares outstanding under the treasury stock method.

Accumulated Other Comprehensive Income
(Loss) Accumulated other
comprehensive income (loss) is comprised as follows:

|                                                                                     |  |             |         |                 |  |       |     |   |  |   |         |  
|------------------------------------------------------------------------------------ |  | ----------- | ------- | --------------- |  | ----- | --- | - |  | - | ------- | -
|                                                                                     |  |             |         | Unrealized Loss |  |      
|                                                                                     |  | Foreign     |         | on Investments  |  |      
|                                                                                     |  | Currency    |         | Available for   |  |      
|                                                                                     |  | Translation |         | Sale            |  | Total
|                                                                                     |  |             |         |                 |  |      
|Balance at December 31, 2002
    (Predecessor Company)                               |  | $           | 20,263  |                 |  | $     |    |   |  | $ | 20,263  |  
|Change during the period                                                             |  |             | (4,097  | )               |  |       | 55  |   |  |   | (4,042  | )
|                                                                                     |  |             |         |                 |  |       |     |   |  |   |         |  
|Balance at March 31, 2003
    (Predecessor Company)                                  |  |             | 16,166  |                 |  |       | 55  |   |  |   | 16,221  |  
|Elimination of Predecessor Company Accumulated
    Other Comprehensive Income (Loss) |  |             | (16,166 | )               |  |       | (55 | ) |  |   | (16,221 | )
|                                                                                     |  |             |         |                 |  |       |     |   |  |   |         |  
|Balance at March 31, 2003
    (Successor Company)                                    |  | $           |        |                 |  | $     |    |   |  | $ |        |  
|                                                                                     |  |             |         |                 |  |       |     |   |  |   |         |  

New Accounting
Pronouncements In April
2002, the Financial Accounting Standards Board
(FASB) issued SFAS No. 145, Rescission of
the FASB Statements No. 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. SFAS
No. 145 eliminates the requirement to classify gains and
losses from the extinguishment of indebtedness as extraordinary,
requires certain lease modifications to be treated the same as a
sale-leaseback transaction, and makes other non-substantive
technical corrections to existing pronouncements. SFAS
No. 145 is effective for fiscal years beginning after
May 15, 2002, with earlier adoption encouraged. The Company
does not expect the adoption of SFAS 145 to have a material
effect on its condensed consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when
they are incurred rather than at the date of a commitment to an
exit or disposal plan. Examples of costs covered by the standard
include lease termination costs and certain employee severance
costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activities.
SFAS No. 146 is effective prospectively for exit or
disposal activities initiated after December 31, 2002, with
earlier adoption encouraged. As the provisions of SFAS
No. 146 are required to be applied prospectively after the
adoption date, the Company cannot determine the potential
effects that adoption of SFAS No. 146 will have on its
condensed consolidated financial statements.

In November 2002, the FASB issued FASB
Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others, an interpretation of FASB Statements No. 5, 57, and
107 and Rescission of FASB Interpretation No. 34.
FIN 45 clarifies the requirements of SFAS No. 5,
relating to the guarantors accounting for, and disclosure
of, the issuance of certain types of guarantees. This
Interpretation clarifies that a guarantor is required to
recognize, at the inception of certain types of guarantees, a
liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial
measurement provisions of this Interpretation are applicable on
a prospective basis to guarantees issued or modified after
December 31, 2002, irrespective of the guarantors
fiscal year-end. The disclosure requirements in this
Interpretation are effective for financial

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


statements of interim or annual periods ending
after December 15, 2002. The Company is currently
evaluating the impact of adopting FIN 45.

In January 2003, the FASB issued FASB
Interpretation No. 46 (FIN 46),
Consolidation of Variable Interest Entities, an
Interpretation of APB No. 51. FIN 46 requires certain
variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity
do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity
to finance its activities without additional subordinated
financial support from other parties. FIN 46 is effective
for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or
acquired prior to February 1, 2003, the provisions of
FIN 46 must be applied for the first interim or annual
period beginning after June 15, 2003. The Company is
currently evaluating the effect that the adoption of FIN 46
will have on its results of operations and financial condition.

Reclassifications
Certain amounts in the 2002 condensed consolidated financial
statements have been reclassified to conform with the 2003
presentation.




4.     INVESTMENTS

The Companys investments consist of the
following at December 31, 2002 and March 31, 2003:

|                                   |  |                     |        |                   |  |   |        | 
|---------------------------------- |  | ------------------- | ------ | ----------------- |  | - | ------ | 
|                                   |  | Predecessor Company |        | Successor Company
|                                   |  | December 31, 2002   |        | March 31, 2003   
|                                   |  |                     |        |                  
|Trading investments, at fair value |  | $                   | 23,021 |                   |  | $ | 26,324 | 
|                                   |  |                     |        |                   |  |   |        | 
|Investments in common stock        |  | $                   | 86     |                   |  | $ | 141    | 
|                                   |  |                     |        |                   |  |   |        | 

The Companys trading investments consist of
high-quality, short-term investments with maturities of less
than 360 days.

The Companys investments in common stock at
December 31, 2002 and March 31, 2003, included a 3.3%
ownership interest in the outstanding common stock of Claxson
Interactive Group Inc. (Claxson), an integrated
media company with operations in Latin America. During the three
month period ended March 31, 2002, the Company recorded a
non-cash charge of $0.7 million which reflected an
other-than-temporary decline in value of the Claxson investment
based upon a sustained reduction in the quoted market price.




5.     TRADE ACCOUNTS
RECEIVABLE

Trade accounts receivable, by operating
subsidiaries, at December 31, 2002 and March 31, 2003,
are summarized as follows:

|                                      |       |                     |         |                   |  |   |         |        | 
|------------------------------------- | ----- | ------------------- | ------- | ----------------- |  | - | ------- | ------ | 
|                                      |       | Predecessor Company |         | Successor Company
|                                      |       | December 31, 2002   |         | March 31, 2003   
|                                      |       |                     |         |                  
|IMPSAT Argentina                      |       | $                   | 27,739  |                   |  | $ | 25,555  |       
|IMPSAT Brazil                         |       |                     | 4,577   |                   |  |   | 5,311   |       
|IMPSAT Colombia                       |       |                     | 3,542   |                   |  |   | 4,470   |       
|IMPSAT Venezuela                      |       |                     | 8,154   |                   |  |   | 8,179   |       
|All other countries                   |       |                     | 10,384  |                   |  |   | 12,336  |       
|                                      |       |                     |         |                   |  |   |         |       
|                                      | Total |                     |         | 54,396            |  |   |         | 55,851 | 
|Less: allowance for doubtful accounts |       |                     | (23,384 | )                 |  |   | (21,358 | )     
|                                      |       |                     |         |                   |  |   |         |       
|Trade accounts receivable, net        |       | $                   | 31,012  |                   |  | $ | 34,493  |       
|                                      |       |                     |         |                   |  |   |         |       

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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 is
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 for the years ended December 31, 2002 and for the
three months ended March 31, 2003 is as follows:

|                                |  |                     |        |                   |  |   |        |  
|------------------------------- |  | ------------------- | ------ | ----------------- |  | - | ------ | -
|                                |  | Predecessor Company |        | Successor Company
|                                |  | December 31, 2002   |        | March 31, 2003   
|                                |  |                     |        |                  
|Beginning balance               |  | $                   | 23,782 |                   |  | $ | 23,384 |  
|Provision for doubtful accounts |  |                     | 13,053 |                   |  |   | 515    |  
|Write-offs, net of recoveries   |  |                     | (4,741 | )                 |  |   | (1,553 | )
|Effect of exchange rate change  |  |                     | (8,710 | )                 |  |   | (988   | )
|                                |  |                     |        |                   |  |   |        |  
|Ending balance                  |  | $                   | 23,384 |                   |  | $ | 21,358 |  
|                                |  |                     |        |                   |  |   |        |  




6.     OTHER
RECEIVABLES

Other receivables consist primarily of refunds or
credits pending from local governments for taxes other than
income, advances to suppliers, and other miscellaneous amounts
due to the Company and its operating subsidiaries and are as
follows at December 31, 2002 and March 31, 2003:

|                    |       |                     |       |                   |  |   |       |        | 
|------------------- | ----- | ------------------- | ----- | ----------------- |  | - | ----- | ------ | 
|                    |       | Predecessor Company |       | Successor Company
|                    |       | December 31, 2002   |       | March 31, 2003   
|                    |       |                     |       |                  
|IMPSAT Argentina    |       | $                   | 3,576 |                   |  | $ | 2,045 |       
|IMPSAT Brazil       |       |                     | 2,150 |                   |  |   | 2,158 |       
|IMPSAT Colombia     |       |                     | 3,498 |                   |  |   | 3,619 |       
|IMPSAT Venezuela    |       |                     | 2,024 |                   |  |   | 2,693 |       
|All other countries |       |                     | 5,426 |                   |  |   | 2,720 |       
|                    |       |                     |       |                   |  |   |       |       
|                    | Total |                     | $     | 16,674            |  |   | $     | 13,235 | 
|                    |       |                     |       |                   |  |   |       |       

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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







7.     PROPERTY,
PLANT AND EQUIPMENT

Property, plant and equipment at
December 31, 2002 and March 31, 2003 consists of:

|                                                 |       |                     |          |                   |  |   |         |         | 
|------------------------------------------------ | ----- | ------------------- | -------- | ----------------- |  | - | ------- | ------- | 
|                                                 |       | Predecessor Company |          | Successor Company
|                                                 |       | December 31, 2002   |          | March 31, 2003   
|                                                 |       |                     |          |                  
|Land                                             |       | $                   | 11,238   |                   |  | $ | 10,045  |        
|Building and improvements                        |       |                     | 70,070   |                   |  |   | 44,252  |        
|Operating communications equipment               |       |                     | 535,394  |                   |  |   | 147,564 |        
|Network infrastructure (including rights of way) |       |                     | 167,907  |                   |  |   | 151,113 |        
|IRU investments                                  |       |                     | 42,618   |                   |  |   | 19,737  |        
|Furniture, fixtures and other equipment          |       |                     | 38,824   |                   |  |   | 11,643  |        
|                                                 |       |                     |          |                   |  |   |         |        
|                                                 | Total |                     |          | 866,051           |  |   |         | 384,354 | 
|Less: accumulated depreciation                   |       |                     | (465,142 | )                 |  |   |         |        
|                                                 |       |                     |          |                   |  |   |         |        
|                                                 | Total |                     |          | 400,909           |  |   |         | 384,354 | 
|Equipment in transit                             |       |                     | 2,705    |                   |  |   | 2,694   |        
|Works in process                                 |       |                     | 334      |                   |  |   | 132     |        
|                                                 |       |                     |          |                   |  |   |         |        
|Property, plant and equipment, net               |       | $                   | 403,948  |                   |  | $ | 387,180 |        
|                                                 |       |                     |          |                   |  |   |         |        

The recap of accumulated depreciation for the
year ended December 31, 2002 and for the three months ended
March 31, 2003 is as follows:

|                                     |  |                     |         |                   |  |   |          |  
|------------------------------------ |  | ------------------- | ------- | ----------------- |  | - | -------- | -
|                                     |  | Predecessor Company |         | Successor Company
|                                     |  | December 31, 2002   |         | March 31, 2003   
|                                     |  |                     |         |                  
|Beginning balance                    |  | $                   | 415,718 |                   |  | $ | 465,142  |  
|Depreciation expense                 |  |                     | 82,199  |                   |  |   | 18,654   |  
|Disposals and retirements            |  |                     | (32,775 | )                 |  |   | (2,394   | )
|Application of fresh-start reporting |  |                     |         |                   |  |   | (481,402 | )
|                                     |  |                     |         |                   |  |   |          |  
|Ending balance                       |  | $                   | 465,142 |                   |  | $ |         |  
|                                     |  |                     |         |                   |  |   |          |  

Nortel Networks
Agreements On
September 6, 1999, the Company executed two turnkey
agreements with Nortel Networks Limited (Nortel)
relating to Nortels design and construction of segments of
the Broadband Network in Argentina and Brazil for approximately
$265 million.

On October 25, 1999, each of IMPSAT
Argentina and IMPSAT Brazil signed definitive agreements with
Nortel to borrow an aggregate of up to approximately
$149.1 million and $148.3 million, respectively, of
long-term vendor financing. The financing, which has a final
maturity in 2006, was used to finance Nortels construction
of the segments of the Broadband Network in Argentina and Brazil
as well as additional purchases of telecommunications equipment.
The Holding Company has guaranteed the obligations of each of
IMPSAT Argentina and IMPSAT Brazil under the Nortel financing
agreements. At December 31, 2002, a total of
$245.4 million was outstanding. See Note 2 for a
description of the restructuring of these amounts under the Plan.

The Companys subsidiaries have obtained
additional vendor financing for the acquisition of fiber optic
cable and other telecommunications equipment for the Broadband
Network, with respect to which an aggregate of
$13.0 million was outstanding as of March 31, 2003.

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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Global
Crossing During the
year ended December 31, 2000, the Company completed and
delivered to Global Crossing the portion of the Trans-Andean
Crossing System connecting Las Toninas, Argentina and Santiago,
Chile. As part of the Broadband Network and Global
Crossings South American Crossing system, the Company also
constructed turnkey backhaul segments and granted IRUs to Global
Crossing in Peru and Brazil between Global Crossings
landing points in those countries and its metropolitan points of
presence located at the Companys telehouses in Lima, Peru
and Sao Paulo and Rio de Janeiro, Brazil.

As part of its arrangements with Global Crossing,
the Company agreed to purchase from Global Crossing indefeasible
rights of use of capacity valued at not less than
$46 million on any of Global Crossings fiber optic
cable networks worldwide. These rights enable the Company to
interconnect the Companys networks in Argentina and Brazil
and give the Company global international access. The Company
had purchased approximately $22.3 million under this
agreement as of December 31, 2001 and did not purchase any
amount during the year ended December 31, 2002. As part of
the Holding Companys emergence from bankruptcy, the
Company rejected its obligation to purchase the outstanding
balance of $23.7 million in IRUs from Global Crossing as
permitted by the Bankruptcy Code.

In January 2002, Global Crossing filed for
protection under Chapter 11 of the U.S. Bankruptcy
Code. Although the Global Crossing subsidiaries to which the
Company provides services and infrastructure were not originally
included in the Global Crossings Chapter 11 filing,
during August 2002, Global Crossing amended its Chapter 11
proceeding to include its subsidiaries that are counter parties
to the agreements with the Company. As of December 31,
2002, and March 31, 2003, Global Crossing was in default
for a total of approximately $3.3 million and
$5.0 million, respectively, for services provided under
such agreements. The Company has recorded provisions for
doubtful accounts of approximately $2.1 million and
$3.4 million, respectively, against these receivables prior
to emergence.

The Company has filed motions in Global
Crossings bankruptcy proceeding seeking an order that
Global Crossing make payment to the Company of the amounts
claimed by the Company and that Global Crossing either accept or
reject its agreements with the Company. Global Crossing has
disputed that it owes the Company any amounts under the
agreements at issue and has filed a proceeding seeking that the
bankruptcy court grant Global Crossing a property right in
certain of the IRUs that it acquired from the Company.

To link the Companys Broadband Network to
other parts of Latin America and the world, the Company has
secured IRU and leased capacity on Global Crossings
undersea fiber optic cable systems (and associated terrestrial
capacity) between the United States and Latin America, including
Global Crossings South American network. Although Global
Crossing has indicated its intention to assume these agreements
upon its emergence from bankruptcy, if Global Crossing is unable
to successfully reorganize and were to sell or terminate its
South American operations as part of its bankruptcy proceedings,
it is unclear what rights the Company would have to continue to
utilize the IRUs that the Company purchased from Global
Crossing. It is possible that the Companys agreements with
Global Crossing would be terminated and the Company would need
to seek substitute sources of IRU or other capacity from
competing undersea fiber optic systems to link its operations,
including the Companys Broadband Network, to other parts
of Latin America and the world. As of March 31, 2003, the
unamortized balance of IRU investments acquired from Global
Crossing approximated $ 32.5 million. See also Note 13
for a further description of the Companys disputes with
Global Crossing.

IRU
Agreements The Company
has entered into several agreements, including with Global
Crossing, granting IRUs of up to 25 years on the
Companys Broadband Network, including network maintenance
services and telehousing space. The Company has received advance
payments related to these agreements. These advance payments are
recorded as deferred revenue in the accompanying condensed
consolidated balance sheets. During the three months ended
March 31, 2003, the Company recognized approximately
$1.1 million, from these agreements, which are reflected as
services to carriers in the accompanying condensed consolidated
statement of operations of the Predecessor Company.

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)







9.     LONG-TERM
DEBT

The Companys long-term debt at
December 31, 2002 and March 31, 2003 is detailed as
follows:

|                                                                                                                                                           |                                               |                      |          |                   |         |   |         |        |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | -------------------- | -------- | ----------------- | ------- | - | ------- | ------ | ------- | 
|                                                                                                                                                           |                                               | Predecessor Company  |          | Successor Company
|                                                                                                                                                           |                                               | December 31, 2002    |          | March 31, 2003   
|                                                                                                                                                           |                                               |                      |          |                  
|Series A 6% Senior Guaranteed Notes due 2011                                                                                                               |                                               |                      |          |                   |         | $ | 60,000  |       
|Series B 6% Senior Guaranteed Notes due 2011                                                                                                               |                                               |                      |          |                   |         |   | 21,241  |       
|Senior Secured 10%, maturing 2011                                                                                                                          |                                               |                      |          |                   |         |   | 127,961 |       
|Term notes, maturing through 2005; collateralized
    by buildings and equipment, the assignment of customer contracts
    and investment; denominated in: |                                               |                      |          |                   |         |   |         |       
|                                                                                                                                                           | U.S. dollars (interest rates 5.34% to 11.57%) |                      | $        | 11,821            |         |   |         | 12,730 |        
|                                                                                                                                                           | Local currency (interest rates 12.85%)        |                      |          | 19,279            |         |   |         | 12,865 |        
|Eximbank notes (interest rates 3.34% to 8.98%),
    maturing semiannually through 2004                                                                     |                                               |                      | 18,275   |                   |         |   | 9,422   |       
|Vendor financing (3.59% to 11.68%), maturing 2004
    to 2008                                                                                              |                                               |                      | 259,897  |                   |         |   | 23,247  |       
|                                                                                                                                                           |                                               |                      |          |                   |         |   |         |       
|                                                                                                                                                           |                                               | Total long-term debt |          |                   | 309,272 |   |         |        | 267,466 | 
|Less: current portion including defaulted
    indebtedness                                                                                                 |                                               |                      | (281,680 | )                 |         |   | (23,642 | )     
|                                                                                                                                                           |                                               |                      |          |                   |         |   |         |       
|Long-term debt, net                                                                                                                                        |                                               | $                    | 27,592   |                   |         | $ | 243,824 |       
|                                                                                                                                                           |                                               |                      |          |                   |         |   |         |       

The Companys Series A, Series B
and Senior Secured notes shown above were issued in conjunction
with effecting the Plan described in Note 2.

The Company was in default on its Old Senior
Notes as a result of its failure to make the semi-annual
interest payments on the Senior Notes due 2003 (which were due
on January 15, 2002), on the Senior Notes due 2005 (which
were due on February 15, 2002), or on the Senior Notes due
2008 (which were due on December 15, 2001). As of
June 11, 2002, the Company reclassified the senior notes,
which were outstanding prior to the bankruptcy filing, to
liabilities subject to compromise (see Note 11).

Some of the term notes contain certain covenants
requiring the Company to maintain certain financial ratios,
limiting the incurrence of additional indebtedness and capital
expenditures, and restricting the ability to pay dividends.

The Companys liquidity difficulties led to
non-compliance with certain covenant requirements and payment
provisions under the Companys Original Vendor Financing
Agreements. On October 25, 2001, the Company obtained a
waiver of covenant defaults and an extension from these lenders
for scheduled principal and interest payments under the Original
Vendor Financing Agreements totaling approximately
$36.3 million that were due on that date. The waiver
expired on November 25, 2001 and the Original Vendor
Financing Agreements became due and payable. On June 11,
2002, the Holding Company filed a voluntary petition for
reorganization under Chapter 11 of the Bankruptcy Code and,
effective as of such date pursuant to the provisions of the
Bankruptcy Code, contractually accrued interest on the Holding
Companys unsecured, pre-petition obligations ceased to
accrue. As a result of the Companys default under the
Original Vendor

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Financing Agreements, the defaulted amounts have
been reclassified to current portion of long-term debt as of
December 31, 2002.




10.     INCOME
TAXES

The composition of the provision for income
taxes, all of which is for foreign taxes, the three months ended
March 31, 2002 and 2003 is as follows:

|         |       |               |      |      |   |   |      |      |  
|-------- | ----- | ------------- | ---- | ---- | - | - | ---- | ---- | -
|         |       |              
|         |       | Predecessor  
|         |       | Company Three
|         |       | Months Ended 
|         |       | March 31,    
|         |       |              
|         |       | 2002          |      | 2003
|         |       |               |      |     
|Current  |       | $             | (414 | )    |   | $ | (324 | )   
|Deferred |       |               | (24  | )    |   |   | (82  | )   
|         |       |               |      |      |   |   |      |     
|         | Total |               | $    | (438 | ) |   | $    | (406 | )
|         |       |               |      |      |   |   |      |     

The foreign statutory tax rates range from 15% to
35% depending on the particular country. Deferred taxes result
from temporary differences in revenue recognition, depreciation
methods and net operating loss carryforwards. The Company
recorded a valuation allowance to offset its deferred income tax
asset because management cannot conclude that utilization of the
tax benefits resulting from operating losses and the other
temporary differences are more likely than not to be
realized, as required by SFAS 109.






|    |                                                               
|--- | --------------------------------------------------------------
|11. | LIABILITIES SUBJECT TO COMPROMISE AND
    REORGANIZATION ITEMS

Liabilities subject to
compromise This term
referred to liabilities incurred prior to the commencement of
the Chapter 11 case. These liabilities consisted primarily
of amounts outstanding under the Companys Old Senior Notes
and also included accounts payable, accrued interest and other
accrued expenses. These amounts represented the Companys
estimate of known or potential claims to be resolved in
connection with the Chapter 11 case as of December 31,
2002. These liabilities were restructured in accordance with the
Plan, see Note 2.

Liabilities subject to compromise as of
December 31, 2002 were as follows:

|                 |                                          |   |         |         | 
|---------------- | ---------------------------------------- | - | ------- | ------- | 
|Senior Notes:    |                                          |   |         |        
|                 | 12.125% Senior Guaranteed Notes due 2003 |   | $       | 125,000 | 
|                 | 13.75% Senior Notes due 2005             |   |         | 300,000 | 
|                 | 12.375% Senior Notes due 2008            |   |         | 225,000 | 
|Accrued Interest |                                          |   | 77,317  |        
|Accounts payable |                                          |   | 205     |        
|                 |                                          |   |         |        
|Total            |                                          | $ | 727,522 |        
|                 |                                          |   |         |        

Contractual interest expense not accrued on
prepetition debt totaled $52.2 million and
$72.1 million for the period that began as of June 11,
2002, the date of the Companys petition for relief under
chapter 11 of the

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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Bankruptcy Code, and ended December 31,
2002, and March 25, 2003, the date of the Companys
emergence from bankruptcy, respectively.

Reorganization
items Reorganization
items during the three-month period ended March 31, 2003
are comprised of the following:

|                                |       |   |         |         | 
|------------------------------- | ----- | - | ------- | ------- | 
|Professional fees               |       | $ | (1,636  | )      
|Gain on extinguishments of debt |       |   | 728,203 |        
|Stock-based compensation        |       |   | (1,760  | )      
|                                |       |   |         |        
|                                | Total |   | $       | 724,807 | 
|                                |       |   |         |        

12.     OPERATING
SEGMENT INFORMATION

The Companys operating segment information,
by subsidiary, is as follows for the three months ended
March 31, 2002 and 2003:

|                        |  |           |         |        |  |          |         |           |  |           |        |              |  |       |        |  |  |   |         |  |  |   |         |   |  |   |         |  
|----------------------- |  | --------- | ------- | ------ |  | -------- | ------- | --------- |  | --------- | ------ | ------------ |  | ----- | ------ |  |  | - | ------- |  |  | - | ------- | - |  | - | ------- | -
|                        |  |           |         |        |  |          |         |           |  | All other |        |              |  |      
|2003                    |  | Argentina |         | Brazil |  | Colombia |         | Venezuela |  | countries |        | Eliminations |  | Total
|                        |  |           |         |        |  |          |         |           |  |           |        |              |  |      
|Net Revenues            |  |           |         |        |  |          |         |           |  |           |        |              |  |       |        |  |  |   |         |  |  |   |         |   |  |   |         |  
|Satellite and Broadband |  | $         | 9,196   |        |  | $        | 5,504   |           |  | $         | 12,068 |              |  | $     | 7,510  |  |  | $ | 14,432  |  |  | $ | (7,328  | ) |  | $ | 41,382  |  
|Internet                |  |           | 1,585   |        |  |          | 838     |           |  |           | 1,147  |              |  |       | 910    |  |  |   | 2,810   |  |  |   | (1,557  | ) |  |   | 5,733   |  
|Value added services    |  |           | 1,157   |        |  |          | 956     |           |  |           | 225    |              |  |       | 518    |  |  |   | 2,541   |  |  |   | (616    | ) |  |   | 4,781   |  
|Telephony               |  |           | 2,701   |        |  |          |         |           |  |           | 117    |              |  |       |        |  |  |   | 2,439   |  |  |   | (1,151  | ) |  |   | 4,106   |  
|Sales of equipment      |  |           | 41      |        |  |          |         |           |  |           |        |              |  |       | 29     |  |  |   | 4       |  |  |   |         |   |  |   | 74      |  
|                        |  |           |         |        |  |          |         |           |  |           |        |              |  |       |        |  |  |   |         |  |  |   |         |   |  |   |         |  
|Total net revenues      |  | $         | 14,680  |        |  | $        | 7,298   |           |  | $         | 13,557 |              |  | $     | 8,967  |  |  | $ | 22,226  |  |  | $ | (10,652 | ) |  | $ | 56,076  |  
|                        |  |           |         |        |  |          |         |           |  |           |        |              |  |       |        |  |  |   |         |  |  |   |         |   |  |   |         |  
|Operating income (loss) |  | $         | (3,004  | )      |  | $        | (2,761  | )         |  | $         | (2,729 | )            |  | $     | 2,459  |  |  | $ | 339     |  |  |   |         |   |  | $ | (5,696  | )
|                        |  |           |         |        |  |          |         |           |  |           |        |              |  |       |        |  |  |   |         |  |  |   |         |   |  |   |         |  
|Total assets            |  | $         | 164,693 |        |  | $        | 116,330 |           |  | $         | 79,076 |              |  | $     | 47,781 |  |  | $ | 103,738 |  |  |   |         |   |  | $ | 511,618 |  
|                        |  |           |         |        |  |          |         |           |  |           |        |              |  |       |        |  |  |   |         |  |  |   |         |   |  |   |         |  

|                        |  |           |         |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   |         |   |  |   |         |   |  |   |         |  
|----------------------- |  | --------- | ------- | ------ |  | -------- | ------- | --------- |  | --------- | ------- | ------------ |  | ----- | ------ |  |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                        |  |           |         |        |  |          |         |           |  | All other |         |              |  |      
|2002                    |  | Argentina |         | Brazil |  | Colombia |         | Venezuela |  | countries |         | Eliminations |  | Total
|                        |  |           |         |        |  |          |         |           |  |           |         |              |  |      
|Net Revenues            |  |           |         |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   |         |   |  |   |         |   |  |   |         |  
|Satellite and Broadband |  | $         | 9,641   |        |  | $        | 8,588   |           |  | $         | 13,736  |              |  | $     | 6,766  |  |  | $ | 13,233  |   |  | $ | (5,650  | ) |  | $ | 46,314  |  
|Internet                |  |           | 2,183   |        |  |          | 1,320   |           |  |           | 1,153   |              |  |       | 631    |  |  |   | 3,570   |   |  |   | (1,003  | ) |  |   | 7,854   |  
|Value added services    |  |           | 1,460   |        |  |          | 825     |           |  |           | 170     |              |  |       | 403    |  |  |   | 3,838   |   |  |   | (3,079  | ) |  |   | 3,617   |  
|Telephony               |  |           | 2,495   |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   | 3,578   |   |  |   | (1,729  | ) |  |   | 4,344   |  
|Sales of equipment      |  |           | 62      |        |  |          |         |           |  |           | 10      |              |  |       | 54     |  |  |   | 158     |   |  |   |         |   |  |   | 284     |  
|                        |  |           |         |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   |         |   |  |   |         |   |  |   |         |  
|Total net revenues      |  | $         | 15,841  |        |  | $        | 10,733  |           |  | $         | 15,069  |              |  | $     | 7,854  |  |  | $ | 24,377  |   |  | $ | (11,461 | ) |  | $ | 62,413  |  
|                        |  |           |         |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   |         |   |  |   |         |   |  |   |         |  
|Operating income (loss) |  | $         | (9,368  | )      |  | $        | (6,501  | )         |  | $         | 405     |              |  | $     | 581    |  |  | $ | (275    | ) |  |   |         |   |  | $ | (15,158 | )
|                        |  |           |         |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   |         |   |  |   |         |   |  |   |         |  
|Total assets            |  | $         | 207,711 |        |  | $        | 186,688 |           |  | $         | 100,798 |              |  | $     | 54,092 |  |  | $ | 127,549 |   |  |   |         |   |  | $ | 676,837 |  
|                        |  |           |         |        |  |          |         |           |  |           |         |              |  |       |        |  |  |   |         |   |  |   |         |   |  |   |         |  

13.     COMMITMENTS
AND CONTINGENCIES

Commitments
The Company leases satellite capacity with average annual rental
commitments of approximately $21.1 million through the year
2007. In addition, the Company has committed to long-term
contracts for the purchase of terrestrial links from third
parties for approximately $2.4 million per year through
2007. The Company has commitments to purchase communications and
data center equipment amounting to approximately
$2.4 million at March 31, 2003.

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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


IPO Allocations
Class Action On
November 1, 2001, a lawsuit (the IPO
Class Action) was filed in the United States District
Court for the Southern District of New York against the Company,
certain individuals who were then officers and directors of the
Company, and the underwriters to the Companys initial
public offering (IPO). This lawsuit alleges on behalf of a
proposed class of all shareholders that the Company and its
underwriters violated various provisions of the securities laws
in connection with the IPO in February 2000. Pursuant to the
Plan, the plaintiffs in the IPO Class Action received in
connection with their claims the assignment of any insurance
proceeds that the Company receives in connection with the
litigation, but otherwise the claims of the plaintiffs against
the Company or any of its other assets, have been discharged as
part of the Chapter 11 proceedings.

Global
Crossing Global
Crossing Ltd. filed for protection under Chapter 11 of the
Bankruptcy Code in January 2002, and the Global Crossing
subsidiaries to whom the Company provides services and
infrastructure, as described below, were included in Global
Crossings Chapter 11 proceedings during August 2002.
The Company is party to a series of agreements with Global
Crossing for the provision of telecommunications services.
Pursuant to those agreements, the Company constructed a
terrestrial portion of Global Crossings South American
network between landing points on the Atlantic Ocean in
Argentina and the Pacific Ocean in Chile, granted Global
Crossing a series of indefeasible rights of use (IRU) over ducts
and dark fiber on its broadband telecommunication network in
Argentina, Brazil and Peru, provided Global Crossing with
collocation space and related services in its telehouses in
Argentina, Brazil, Chile, Venezuela and Peru and provided Global
Crossing with maintenance services for their telecommunications
assets in Latin America. In addition, the Company acquired IRU
and leased capacity on Global Crossings South American
undersea fiber optic cable system in order to connect the
Broadband Network with other parts of Latin America and the
world, See Note 7.

Commencing in the first quarter of 2002 and
subsequent to the filing of Global Crossings petition
under Chapter 11, Global Crossing has disputed a number of
invoices that the Company delivered to it in connection with the
services the Company is rendering to Global Crossing and has
failed to make full payment in accordance with the terms of such
invoices. The principal disputed matters include the following:

Beginning in the first quarter of 2002, Global
Crossing disputed certain of the invoices sent by the Company to
its Argentine and Brazilian subsidiaries for collocation and
related services in the Companys telehouses in those
countries. On January 15, 2003, the Company filed a motion
in the Global Crossing Chapter 11 proceeding seeking an
order that Global Crossing either irrevocably reject or assume
the telehouse agreements and that Global Crossing make payment
of all shortfalls under the telehouse agreements after the
respective petition dates of the Global Crossing debtors,
through December 31, 2002, in the aggregate amount of
approximately $1.1 million, plus interest on the past due
amounts, as administrative expense claims. On February 19,
2003, Global Crossing responded to the Companys motion. In
its response, Global Crossing stated its intention to assume the
Brazil and Argentina telehouse agreements, along with three
other telehouse agreements covering collocation space in
Santiago, Chile, Lima, Peru and Caracas, Venezuela, although it
also stated its right under its plan of reorganization to
reconsider its assumption of such agreements at any time prior
to the effective date of the Global Crossing plan of
reorganization. Global Crossing denied that it owed any unpaid
amounts with respect to the Argentine or Brazilian telehouse
agreements. The Company and Global Crossing are currently
seeking to agree to a schedule for evidence, briefing and
adjudication of the disputes regarding the Argentine and
Brazilian telehouse agreements.

In October 2002, Global Crossing failed to make
payment of the full amount of recurring service charges for
operation and maintenance of the IRUs that Global Crossing
acquired under the TAC Turnkey Construction and IRU Agreement
dated September 22, 1999 (the TAC Agreement).
During the first quarter of 2003, Global Crossing also paid
recurring service charges under the TAC Agreement and the other
backhaul agreements in amounts less than the Company asserts to
be contractually required. As part of the Companys
January 15, 2003 motion in Global Crossings
bankruptcy proceeding, the Company requested that

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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


the bankruptcy court find that Global Crossing
has failed to make the full recurring service charges required
by the TAC Agreement and order Global Crossing to make payment
of such amounts as administrative expenses through
December 31, 2002, in the amount of approximately
$0.6 million, plus interest on the past due amounts as set
forth in the TAC Agreement. On March 26, 2003, Global
Crossing filed an adversary proceeding with the bankruptcy court
overseeing its Chapter 11 case asserting a proprietary
interest in the IRUs granted to them under the TAC Agreement and
other backhaul agreements entered into between the two
companies. The Company and Global Crossing are currently seeking
to agree to a schedule for evidence, briefing and adjudication
of Global Crossings asserted proprietary interest in the
IRUs arising under the TAC Agreement and other backhaul
agreements.

On March 26, 2003, Global Crossing
Bandwidth, Inc., one of the debtors in Global Crossings
Chapter 11 proceeding, filed an adversary proceeding in the
Global Crossing Chapter 11 case claiming IMPSAT USA had
failed to pay Global Crossing Bandwidth, Inc. a total of
approximately $0.5 million for IP transit services pursuant
to a Carrier Service Agreement dated January 19, 2001
between IMPSAT USA and Global Crossing Bandwidth, Inc. The
Company has disputed Global Crossing Bandwidths complaint
on the basis that IMPSAT USA has paid in full all amounts owed
by it under the Carrier Services Agreement.

* * * * * *

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##### Table of Contents






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

Reorganization.As
discussed in our prior filings with the Securities and Exchange
Commission (SEC), on June 11, 2002, we filed a
voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code with the United States Bankruptcy
Court for the Southern District of New York (the
Bankruptcy Court). On September 4, 2002, we
also filed with the Bankruptcy Court our plan of reorganization
(as amended, the Plan). By order dated
December 16, 2002, the Bankruptcy Court confirmed the Plan.
In accordance with the terms of the Plan, we formally emerged
from bankruptcy on March 25, 2003 (the Effective
Date). Pursuant to the Plan, on the Effective Date, all of
the shares of our pre-Chapter 11 common stock (the
Old Common Stock), options granted under our stock
option plans and any other equity interests were cancelled,
retired and eliminated with no consideration paid thereon. We
also adopted a new 2003 Stock Incentive Plan and terminated our
1998 Stock Option Plan and our 1999 Stock Option Plan. Also
under the Plan, we restructured our obligations with certain
holders of our pre-Effective Date indebtedness in the manner
described in the Plan. (For a more detailed description of our
Chapter 11 restructuring, see the section
Business  Chapter 11 Filing and
Emergence in our 2002 Annual Report on Form 10-K,
which we filed with the SEC on April 15, 2003 (the
2002 Form 10-K)).

Pursuant to our reorganization, we have
substantially reduced our outstanding debt and annual interest
expense and increased our liquidity. At December 31, 2002,
prior to the reorganization, our long-term debt, including
current maturities and estimated liabilities subject to
Chapter 11 proceedings, aggregated approximately
$1.09 billion. Also at December 31, 2002, our total
indebtedness aggregated $1.04 billion and our cash, cash
equivalents and trading investments totaled $55.6 million.
As of March 31, 2003, our total indebtedness was
approximately $267.5 million and our cash, cash equivalents
and trading investments totaled approximately
$61.9 million. Our reported net interest expense for 2002
totaled $73.9 million (not including $52.2 million of
contractually accrued interest on our unsecured, pre-petition
obligations, which, pursuant to the provisions of the Bankruptcy
Code, ceased to accrue at and after June 11, 2002, the date
of our Chapter 11 filing). As a consequence of our
Chapter 11 reorganization, we estimate that our net cash
interest expense will be reduced to approximately
$18.7 million during 2003.

Upon our emergence from bankruptcy on
March 25, 2003, we have adopted fresh start
reporting as required by the American Institute of Certified
Public Accountants Statement of Position 90-7,
Financial Reporting by Entities in Reorganization under
the Bankruptcy Code (SOP 90-7). Under
SOP 90-7 fresh start reporting, a new reporting entity is
considered to be created and the recorded amounts of assets and
liabilities are adjusted to reflect their estimated fair values
at the date fresh start reporting is applied. Among other
things, this requires us to allocate the reorganization value of
our reorganized company to its specific tangible and
identifiable assets and liabilities. The effect of the
reorganization and the implementation of SOP 90-7 fresh
start reporting on our consolidated financial statements is
discussed in detail in Note 2 to our unaudited condensed
consolidated financial statements included elsewhere in this
Report. As a result of the implementation of SOP 90-7 fresh
start reporting, the consolidated financial statements of our
Company from and after its emergence from bankruptcy will not be
comparable to the consolidated financial statements of our
Company in prior periods.

Global Crossing Insolvency.We are party to a series of agreements
with several subsidiaries of Global Crossing Ltd. for the
provision of telecommunications services. Pursuant to those
agreements, which were initially signed in 1999, we constructed
a terrestrial portion of Global Crossings South American
network between landing points on the Atlantic Ocean in
Argentina and the Pacific Ocean in Chile, granted Global
Crossing a series of indefeasible rights of use
(IRU) over ducts and dark fiber on our Broadband
Network in Argentina, Brazil and Peru, provided Global Crossing
with collocation space and related services in our data centers
in Argentina, Brazil, Chile, Venezuela and Peru and provided
Global Crossing with maintenance services for their
telecommunications assets in Latin America. In addition, we
acquired IRU and leased capacity on Global Crossings South
American undersea fiber optic cable system in order to connect
our Broadband Network with other parts of Latin America and the
world.

During the first quarter of 2003, we recognized
revenues totaling $4.2 million from Global Crossing for the
services provided under our agreements with Global Crossing. Of
this amount, $3.2 million represented

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##### Table of Contents



services that were billed on a quarterly basis,
and $1.0 million represented the recognition of revenue
that had been deferred under the IRUs that we granted to Global
Crossing and for which we received advanced payment in prior
periods in respect of the use by Global Crossing of the IRUs
over their contractual terms. During the first quarter of 2003,
Global Crossing invoiced us a total of $0.6 million,
principally for maintenance services on the IRUs that we have
acquired from Global Crossing. In general, invoices under our
agreements with Global Crossing are submitted quarterly in
advance and are payable 30 days after receipt.


In January 2002, Global Crossing Ltd. filed for
protection under Chapter 11 of the U.S. Bankruptcy
Code. Although the Global Crossing subsidiaries to whom we
provide services and infrastructure were not originally included
in Global Crossing Ltd.s Chapter 11 filing, during
August 2002 Global Crossing Ltd. amended its Chapter 11
proceeding to include its subsidiaries that are counterparties
to the agreements with us.

We are engaged in a series of disputes with
Global Crossing regarding amounts owed under the various
contracts between the parties. Those disputes are currently the
subject of various proceedings in Global Crossings
Chapter 11 proceeding and as part of the disputed claims
procedures in our Chapter 11 proceeding. As of
March 31, 2003, Global Crossing owed us $5.0 million
that we invoiced to them during prior periods. We have recorded
a provision for doubtful accounts of $3.4 million against
these receivables. We are currently recording as revenue all
amounts invoiced to Global Crossing, which are billed quarterly
in advance, and are recording a provision for doubtful accounts
to cover any portion of such amounts remaining unpaid at the end
of that quarter.

We have disputed a total of $1.4 million
that Global Crossing has invoiced us for services through
March 31, 2003. The amounts that we owe Global Crossing are
principally owed to Global Crossing Bandwidth, Inc., a
subsidiary of Global Crossing that is among the Global Crossing
parties that have filed for relief under Chapter 11.
Certain of these amounts are the subject of disputes and claims
in our Chapter 11 proceeding and in Global Crossings
Chapter 11 proceeding.

Global Crossings reorganization plan was
confirmed by the U.S. Bankruptcy Court in December 2002.
However, Global Crossing is awaiting receipt of certain
regulatory approvals and satisfaction of other conditions to the
effectiveness of its plan of reorganization, and there is no
guaranty as to when or if it will emerge from bankruptcy.
Published reports indicate that the proposed reorganization plan
of Global Crossing, which contemplates the acquisition of
control of Global Crossing by certain new investors, failed to
obtain all applicable U.S. governmental approvals and that
Global Crossing is currently discussing a revised reorganization
plan with certain of the initial proposed new investors.

The difficulties being experienced by Global
Crossing, including Global Crossings Chapter 11
proceeding, have had an adverse effect on our financial
condition and operations. At a minimum, Global Crossings
bankruptcy proceedings have caused delays in our efforts to
enforce our contracts with Global Crossing. If Global Crossing
is unsuccessful in emerging from its Chapter 11 proceedings
as a going concern, there is a risk that all of Global
Crossings contracts with us will be terminated. In the
event that Global Crossing emerges successfully from its
bankruptcy proceedings but chooses to reject some or all of its
contracts with us, any pre-petition damages that we might have
in respect of such rejected contracts would be treated as claims
in the applicable Global Crossing bankruptcy proceedings, which
claims may not realize any meaningful recovery to us. In this
regard, as part of its bankruptcy proceedings, Global Crossing
has sought to reject some of its agreements with us, including
an agreement pursuant to which IMPSAT Colombia had agreed to
lease space in its telehouse in Bogota, Colombia to Global
Crossing. More recently, Global Crossing has indicated in its
filings related to its Chapter 11 proceeding that it would
assume certain contracts with us, including the IRUs which
Global Crossing has granted us over parts of its network, and
may reject some or all of the other agreements that it has with
us.

We have filed motions in Global Crossings
bankruptcy proceeding seeking an order that Global Crossing make
payment to us of the amounts claimed by us. Global Crossing has
disputed that it owes us any amounts under the contracts at
issue and has filed a proceeding seeking that the bankruptcy
court grant Global

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Crossing a property right in the IRUs that it
acquired from us. We are currently agreeing on a schedule with
Global Crossing regarding the prosecution of such disputes as
part of Global Crossings bankruptcy proceeding.


Termination of Mexican Operations.During the first quarter of 2003, we
determined to close our operations in Mexico, which we initially
established in 1994. We have entered into agreements with
various parties to sell our real estate and other real and
personal property, including our contracts with existing
customers, and expect to close such transactions during the
second quarter of 2003. We also are considering the transfer of
our permits and other licenses to third parties. In connection
with the assessment of our business plan following our
restructuring, we concluded that our Mexican operations did not
constitute a critical or core business and that our prospects
for expanding our Mexican operations were inconsistent with our
available financial resources. The Mexican telecommunications
market, which is dominated by the existing PTO, Telemex, has
been very difficult for foreign and new entrants.

Critical Accounting Policies

In the ordinary course of business, we have made
a number of estimates and assumptions relating to the reporting
of results of operations and financial position in the
preparation of our financial statements in conformity with
U.S. generally accepted accounting principles
(GAAP). We use our best judgment based on our
knowledge of existing facts and circumstances and actions that
we may undertake in the future, as well as the advice of
external experts in determining the estimates that affect our
consolidated financial statements. Actual results could differ
significantly from those estimates under different assumptions
and conditions. Our most critical accounting policies are:

Revenue Recognition.We record revenues from data,
value-added services, telephony, IT solutions and Internet
services monthly as the services are provided. Equipment sales
are recorded upon delivery to and acceptance by the customer.

We have entered into agreements with carriers
granting IRUs and access to portions of our Broadband Network
capacity and infrastructure. Pursuant to some of these
agreements, we receive fixed advance payments for the IRUs and
recognize the revenue from the IRUs ratably over the life of the
IRUs. Amounts received in advance are recorded as deferred
revenue.

Non-Monetary Transactions.We may exchange capacity on our
Broadband Network for capacity from other carriers through the
exchange of IRUs. We account for these transactions as an
exchange of similar IRUs at historical carryover basis with no
revenue, gain or loss recognized.

Property, Plant and Equipment.Our business is capital intensive. We
record at cost our telecommunications network assets and other
improvements that, in managements opinion, extend the
useful lives of the underlying assets, and depreciate such
assets and improvements over their estimated useful lives. Our
telecommunications network is highly complex and, due to
innovation and enhancements, certain components of the network
may lose their utility faster than anticipated. We periodically
reassess the economic lives of these components and make
adjustments to their expected lives after considering historical
experience and capacity requirements, consulting with the
vendors, and assessing new product and market demands and other
factors. When these factors indicate that network components may
not be useful for as long as anticipated, we depreciate their
remaining book values over their residual useful lives. The
timing and deployment of new technologies could affect the
estimated remaining useful lives of our telecommunications
network assets, which could have a significant impact on our
results of operations in the future.

Impairment of Long-Lived Assets.We periodically review the carrying
amounts of our property, plant, and equipment to determine
whether current events or circumstances warrant adjustments to
the carrying amounts. As part of this review, we analyze the
projected discounted cash flows associated with our property,
plant, and equipment. Considerable management judgment is
required in establishing the assumptions necessary to complete
this analysis. Although we believe these estimates to be
reasonable, they could vary significantly from actual results
and our estimates could change based on market conditions.
Variances in

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results or estimates could cause changes to the
carrying value of our assets including, but not limited to,
recording additional impairment charges for some of these assets
in future periods.


Basis for Translation.IMPSAT maintains its accounts in
U.S. dollars. The accounts of our subsidiaries are
maintained in the currencies of the respective countries. In
accordance with Statement of Financial Accounting Standards
No. 52, Foreign Currency Translation, the
accounts of our subsidiaries are translated from local currency
amounts to U.S. dollars. The method of translation is
determined by the functional currency of our subsidiaries. A
subsidiarys functional currency is defined as the currency
of the primary environment in which a subsidiary operates and is
determined based on managements judgment. When a
subsidiarys accounts are not maintained in the functional
currency, the financial statements must be remeasured into the
functional currency. This involves remeasuring monetary assets
and liabilities using current exchange rates and non-monetary
assets and liabilities using historical exchange rates. The
adjustments generated by remeasurement are included in our
consolidated statement of operations.

When the local currency of a subsidiary is
determined to be the functional currency, the statements are
translated into U.S. dollars using the current rate method.
The adjustments generated by translation using the current rate
method are accumulated in an equity account entitled
Accumulated other comprehensive loss within our
consolidated balance sheets.

These policies, which are those that are most
important to the portrayal of our financial condition and
results of operations and require managements most
difficult, subjective and complex judgments, often are a result
of the need to make estimates about the effect of matters that
are inherently uncertain. We have not made any changes in any of
these critical accounting policies during the first quarter of
2003, nor have we made any material changes in any of the
critical accounting estimates underlying these accounting
policies during the first quarter of 2003.

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Results of Operations

The following table summarizes our results of
operations:

|                                                                        |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |      |      |       | 
|----------------------------------------------------------------------- | --------------------------- | --------------------------------- | -------------------------------- | ------ | ------ | ------ | ----- | ---- | ---- | ----- | -------- | ------ | ------ | ------ | -------- | ---- | ---- | ----- | 
|                                                                        |                             |                                  
|                                                                        |                             | Three Months Ended March 31,     
|                                                                        |                             |                                  
|                                                                        |                             |                                   |                                  |       
|                                                                        |                             | 2002                              |                                  | 2003  
|                                                                        |                             |                                   |                                  |       
|                                                                        |                             |                                   |                                  |        |        |        |       |     
|                                                                        |                             |                                  
|                                                                        |                             | (in thousands and as a percentage
|                                                                        |                             | of consolidated revenues)        
|Net revenues:                                                           |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     
|                                                                        | Net revenues from services: |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |      |     
|                                                                        |                             | Broadband and satellite           |                                  | $      | 46,314 |        |       |      | 74.2 | %     |          | $      | 41,382 |        |          |      | 73.8 | %    
|                                                                        |                             | Internet                          |                                  |        | 7,854  |        |       |      | 12.6 |       |          |        | 5,733  |        |          |      | 10.2 |      
|                                                                        |                             | Value added services              |                                  |        | 3,617  |        |       |      | 5.8  |       |          |        | 4,781  |        |          |      | 8.6  |      
|                                                                        |                             | Telephony                         |                                  |        | 4,344  |        |       |      | 7.0  |       |          |        | 4,106  |        |          |      | 7.3  |      
|                                                                        |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     
|                                                                        |                             |                                   | Total net revenues from services |        |        | 62,129 |       |      |      | 99.6  |          |        |        | 56,002 |          |      |      | 99.9  | 
|                                                                        | Sales of equipment          |                                   |                                  | 284    |        |        |       | 0.4  |      |       |          | 74     |        |        |          | 0.1  |     
|                                                                        |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     
|                                                                        |                             |                                   | Total net revenues               |        |        | 62,413 |       |      |      | 100.0 |          |        |        | 56,076 |          |      |      | 100.0 | 
|Direct costs:                                                           |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     
|                                                                        | Contracted services         |                                   |                                  | 6,233  |        |        |       | 10.0 |      |       |          | 4,447  |        |        |          | 7.9  |     
|                                                                        | Other direct costs          |                                   |                                  | 6,535  |        |        |       | 10.5 |      |       |          | 4,227  |        |        |          | 7.5  |     
|                                                                        | Leased capacity             |                                   |                                  | 20,385 |        |        |       | 32.7 |      |       |          | 17,601 |        |        |          | 31.4 |     
|                                                                        | Cost of equipment sold      |                                   |                                  | 117    |        |        |       | 0.2  |      |       |          | 48     |        |        |          | 0.1  |     
|                                                                        |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     
|                                                                        |                             |                                   | Total direct costs               |        |        | 33,270 |       |      |      | 53.3  |          |        |        | 26,323 |          |      |      | 46.9  | 
|Salaries and wages                                                      |                             |                                   | 13,042                           |        |        |        | 20.9  |      |      |       | 10,727   |        |        |        | 19.1     |     
|Selling, general and administrative expenses                            |                             |                                   | 7,351                            |        |        |        | 11.8  |      |      |       | 5,506    |        |        |        | 9.8      |     
|Depreciation and amortization                                           |                             |                                   | 23,908                           |        |        |        | 38.3  |      |      |       | 19,216   |        |        |        | 34.3     |     
|Interest expense, net                                                   |                             |                                   | 33,445                           |        |        |        | 53.6  |      |      |       | 1,709    |        |        |        | 3.0      |     
|Net loss (gain) on foreign exchange                                     |                             |                                   | 7,365                            |        |        |        | 11.8  |      |      |       | (9,969   | )      |        |        | (17.8    | )   
|Recognition of other-than-temporary decline in
    value of investments |                             |                                   | 674                              |        |        |        | 1.1   |      |      |       |         |        |        |        |         |     
|Reorganization items                                                    |                             |                                   |                                 |        |        |        |      |      |      |       | (724,807 | )      |        |        | (1,292.5 | )   
|Other loss (income), net                                                |                             |                                   | 1,397                            |        |        |        | 2.2   |      |      |       | (2,781   | )      |        |        | (5.0     | )   
|Provision for foreign income taxes                                      |                             |                                   | 438                              |        |        |        | 0.7   |      |      |       | 406      |        |        |        | 0.7      |     
|                                                                        |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     
|Net (loss) income                                                       |                             | $                                 | (58,477                          | )      |        |        | (93.7 | )%   |      | $     | 729,746  |        |        |        | 1,301.4  | %   
|                                                                        |                             |                                   |                                  |        |        |        |       |      |      |       |          |        |        |        |          |     

Three Months Ended March 31, 2003
Compared to Three Months Ended March 31, 2002

Revenues.Our total
net revenues for the three months ended March 31, 2003 and
2002 equaled $56.1 million and $62.4 million,
respectively. Net revenues were composed of net revenues from
services and sales of equipment. The decrease in our net
revenues was principally due to the continuing adverse economic
conditions being experienced throughout Latin America, including
the negative impact on these revenues (in U.S. dollar terms) of
a relative devaluation of the Argentine pesoand the
Brazilian realduring the first quarter of 2003 as
compared to the average exchange rate of these currencies during
first quarter of 2002. The following table shows U.S. dollar
exchange rates for the currencies and at the dates indicated:

|               |  |                             |      |                |  |                   |      |                |  |  |      |  |  |  |      | 
|-------------- |  | --------------------------- | ---- | -------------- |  | ----------------- | ---- | -------------- |  |  | ---- |  |  |  | ---- | 
|Currency       |  | December 31, 2001           |      | March 31, 2002 |  | December 31, 2002 |      | March 31, 2003
|               |  |                             |      |                |  |                   |      |               
|               |  |                            
|               |  | Exchange Rate per U.S.$1.00
|Argentina Peso |  |                             | 1.00 |                |  |                   | 2.85 |                |  |  | 3.40 |  |  |  | 3.00 | 
|Brazil Real    |  |                             | 2.41 |                |  |                   | 2.32 |                |  |  | 3.53 |  |  |  | 3.46 | 

Our net revenues from services for the three
months ended March 31, 2003 totaled $56.0 million, a
decrease of $6.1 million (or 9.9%) compared to the
corresponding period in 2002, and an increase of
$2.9 million (or 5.5%) compared to our net revenues from
services for the three months ended December 31, 2002. Our
net revenues from services during the first quarter of 2003
included net revenues from:



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | data and value added services, which include
    satellite and broadband data transmission services, data center
    services, and other value-added services

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| |   |                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Internet, which is composed of our Internet
    backbone access and managed modem services                                                                                                                                                                                                                                                                                        
|
| |  | telephony, including local, national and
    international long-distance services, and                                                                                                                                                                                                                                                                                            
|
| |  | services to carriers, which consist of our
    wholesale services to other telecommunications carriers
    (including revenue recognition from the sale of IRU capacity on
    our Broadband Network to, and our provision of switching and
    transportation of telecommunications traffic services for, such
    carriers), and related maintenance services to those carriers.

The following table shows our revenues from
services by business lines (after elimination of intercompany
transactions) for the periods indicated:

|                                 |  |                               |        |             |  |      |       |   |  |   |        | 
|-------------------------------- |  | ----------------------------- | ------ | ----------- |  | ---- | ----- | - |  | - | ------ | 
|                                 |  |                              
|                                 |  | Three Months Ended March 31, 
|                                 |  |                              
|                                 |  | 2002                          |        | % change(1) |  | 2003
|                                 |  |                               |        |             |  |     
|                                 |  |                              
|                                 |  | (dollar amounts in thousands)
|Broadband and satellite          |  | $                             | 46,314 |             |  |      | (10.6 | ) |  | $ | 41,382 | 
|Value added services(2)          |  |                               | 3,617  |             |  |      | 32.2  |   |  |   | 4,781  | 
|Internet                         |  |                               | 7,854  |             |  |      | (27.0 | ) |  |   | 5,733  | 
|Telephony                        |  |                               | 4,344  |             |  |      | (5.5  | ) |  |   | 4,106  | 
|                                 |  |                               |        |             |  |      |       |   |  |   |        | 
|Total net revenues from services |  | $                             | 62,129 |             |  |      | (9.9  | ) |  | $ | 56,002 | 
|                                 |  |                               |        |             |  |      |       |   |  |   |        | 






| |     |                                                                                                      | 
| | --- | ---------------------------------------------------------------------------------------------------- | 
| | (1) | Percentage increase (decrease) in first
    quarter of 2003 compared to first quarter of 2002.       | 
|
| | (2) | Includes data center services and systems
    integration and other information technology services. | 

The decrease in our net revenues from services in
the first quarter of 2003 as compared to the corresponding
period in 2002 resulted from lower revenues from satellite,
Internet and telephony services, which offset the increase in
our revenues from broadband and other value added services.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The decrease in our revenues from broadband and
    satellite services during the first quarter of 2003 in
    comparison to the first quarter of 2002 was due to:
    (i) lower satellite-based services volume (as we
    transferred telecommunications services to our Broadband
    Network); and (ii) the negative effect on such revenues, in
    U.S. dollar terms, of the relative devaluation during the period
    of local currencies in Argentina and Brazil as compared to
    during the first quarter of 2002.            
|
| |  | Our revenues from value added services increased,
    notwithstanding the negative effect on these revenues (in U.S.
    dollar terms) of the lower average values of the Argentine
    pesoand the Brazilian realduring the first
    quarter of 2003 as compared to such values during the first
    quarter of 2002, principally due to our receipt during the first
    quarter of 2003 of an approximately $1.3 million payment
    generated in connection with the early termination of certain of
    our U.S. customer contracts.
|
| |  | We experienced lower Internet revenues
    principally because of (i) pricing pressure (because of
    competition and adverse economic conditions), and (ii) the
    effect of the relative devaluation during the period of local
    currencies in Argentina and Brazil compared to the first quarter
    of 2002.                                                                                                                                                                                                                     
|
| |  | Our telephony services revenues were flat during
    the first quarter of 2003 as compared to the same period in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                    

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We had 2,596 customers as of March 31, 2003,
compared to 2,649 customers at December 31, 2002 and 2,859
customers at March 31, 2002. The following table shows the
evolution of our customer base as of the dates indicated:

|                 |       |                            |       |              |  |           |     |             |  |             |     |       |  |  |        |      |   |  |        |      |  
|---------------- | ----- | -------------------------- | ----- | ------------ |  | --------- | --- | ----------- |  | ----------- | --- | ----- |  |  | ------ | ---- | - |  | ------ | ---- | -
|                 |       |                            |       |              |  |          
|                 |       | Number of Customers as of: |       |              |  |          
|                 |       |                            |       |              |  |          
|                 |       | March 31,                  |       | December 31, |  | March 31, |     |             |  |            
|                 |       | 2002                       |       | 2002         |  | 2003      |     | % Change(1) |  | % Change(2)
|                 |       |                            |       |              |  |           |     |             |  |            
|IMPSAT Argentina |       |                            | 1,097 |              |  |           | 953 |             |  |             | 886 |       |  |  | (19.2  | )%   |   |  | (7.0   | )%  
|IMPSAT Colombia  |       |                            | 691   |              |  |           | 678 |             |  |             | 699 |       |  |  | 1.2    |      |   |  | 3.1    |     
|IMPSAT Brazil    |       |                            | 391   |              |  |           | 366 |             |  |             | 361 |       |  |  | (7.7   | )    |   |  | (1.4   | )   
|IMPSAT Venezuela |       |                            | 239   |              |  |           | 215 |             |  |             | 204 |       |  |  | (14.6  | )    |   |  | (5.1   | )   
|IMPSAT Ecuador   |       |                            | 234   |              |  |           | 216 |             |  |             | 210 |       |  |  | (10.3  | )    |   |  | (2.8   | )   
|IMPSAT Mexico    |       |                            | 47    |              |  |           | 24  |             |  |             | 0   |       |  |  | (100.0 | )    |   |  | (100.0 | )   
|IMPSAT Chile     |       |                            | 50    |              |  |           | 60  |             |  |             | 92  |       |  |  | 84.0   |      |   |  | 53.3   |     
|IMPSAT Peru      |       |                            | 35    |              |  |           | 70  |             |  |             | 78  |       |  |  | 122.9  |      |   |  | 11.4   |     
|IMPSAT USA       |       |                            | 75    |              |  |           | 67  |             |  |             | 66  |       |  |  | (12.0  | )    |   |  | (1.5   | )   
|                 |       |                            |       |              |  |           |     |             |  |             |     |       |  |  |        |      |   |  |        |     
|                 | Total |                            |       | 2,859        |  |           |     | 2,649       |  |             |     | 2,596 |  |  |        | (9.2 | ) |  |        | (2.0 | )
|                 |       |                            |       |              |  |           |     |             |  |             |     |       |  |  |        |      |   |  |        |     





| |     |                                                                                                      | 
| | --- | ---------------------------------------------------------------------------------------------------- | 
| | (1) | Increase (decrease) as of end of first
    quarter of 2003 compared to end of first quarter of 2002. | 
|
| | (2) | Increase (decrease) as of end of first
    quarter of 2003 compared to end of 2002.                  | 

During the first quarter of 2003, we lost a net
total of 53 customers, a decrease of 2.0% compared to the prior
years end. Due to adverse economic conditions in
Argentina, we lost a net total of 67 customers in that country
during the first quarter of 2003. Negative or sluggish economic
growth persisted throughout most of the Latin American region
during the first quarter of 2003. During the three months ended
March 31, 2003, we have not experienced any significant
customer losses to our competitors.

In addition to net revenues from services, our
total net revenues for the first quarter of 2003 included
revenues from sales of equipment, which totaled
$0.1 million compared to $0.3 million for the first
quarter of 2002. Because equipment sales are ancillary to our
core business and are generally engaged in by our company only
on an opportunistic basis, we are currently unable to predict
more than minimal sales of equipment during the remainder of
2003.

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The following table shows by operating subsidiary
our revenues from services and total revenues (in each case,
including intercompany transactions) for the periods indicated:

|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |        | 
|------------------------------------------------- | ----------------- | ----------------------------- | - | ----------- |  | ---- |  | ------ | -- |  | - | ------ | 
|                                                  |                   |                              
|                                                  |                   | Three Months Ended March 31, 
|                                                  |                   |                              
|                                                  |                   | 2002                          |   | % Change(1) |  | 2003
|                                                  |                   |                               |   |             |  |     
|                                                  |                   |                              
|                                                  |                   | (dollar amounts in thousands)
|IMPSAT Argentina                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               | $ | 15,779      |  |      |  | (7.2   | )% |  | $ | 14,639 | 
|                                                  | Sale of equipment |                               |   | 62          |  |      |  | (33.9  | )  |  |   | 41     | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 15,841      |  |      |  | (7.3   | )  |  |   | 14,680 | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|IMPSAT Colombia                                   |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 15,059      |  |      |  | (10.0  | )  |  |   | 13,557 | 
|                                                  | Sale of equipment |                               |   | 10          |  |      |  | (100.0 | )  |  |   |       | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 15,069      |  |      |  | (10.0  | )  |  |   | 13,557 | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|IMPSAT Brazil                                     |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 10,733      |  |      |  | (32.0  | )  |  |   | 7,298  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 10,733      |  |      |  | (32.0  | )  |  |   | 7,298  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | IMPSAT Venezuela  |                               |   |             |  |      |  |        |    |  |   |        | 
|                                                  | Services          |                               |   | 7,800       |  |      |  | 14.6   |    |  |   | 8,938  | 
|                                                  | Sale of equipment |                               |   | 54          |  |      |  | (46.3  | )  |  |   | 29     | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 7,854       |  |      |  | 14.2   |    |  |   | 8,967  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|IMPSAT Ecuador                                    |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 4,215       |  |      |  | (6.8   | )  |  |   | 3,927  | 
|                                                  | Sale of equipment |                               |   | 105         |  |      |  | (100.0 | )  |  |   |       | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 4,320       |  |      |  | (9.1   | )  |  |   | 3,927  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|IMPSAT Chile                                      |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 2,214       |  |      |  | 3.3    |    |  |   | 2,287  | 
|                                                  | Total             |                               |   | 2,214       |  |      |  | 3.3    |    |  |   | 2,287  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|IMPSAT Peru                                       |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 3,032       |  |      |  | 5.9    |    |  |   | 3,210  | 
|                                                  | Sale of equipment |                               |   | 52          |  |      |  | (100.0 | )  |  |   |       | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 3,084       |  |      |  | 4.1    |    |  |   | 3,210  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|IMPSAT USA                                        |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 9,618       |  |      |  | (12.9  | )  |  |   | 8,380  | 
|                                                  | Sale of equipment |                               |   |            |  |      |  |        |    |  |   | 4      | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 9,618       |  |      |  | (12.8  | )  |  |   | 8,384  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|International Satellite Capacity Holding, Ltd.(2) |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Services          |                               |   | 4,148       |  |      |  | (11.8  | )  |  |   | 3,660  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 4,148       |  |      |  | (11.8  | )  |  |   | 3,660  | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Other Services    |                               |   | 994         |  |      |  | (23.7  | )  |  |   | 758    | 
|                                                  | Sale of equipment |                               |   | 1           |  |      |  | (100.0 | )  |  |   |       | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       
|                                                  | Total             |                               |   | 995         |  |      |  | (23.8  | )  |  |   | 758    | 
|                                                  |                   |                               |   |             |  |      |  |        |    |  |   |       



| | 
| | 
| | 



| |     |                                                                                                                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Percentage increase (decrease) in first
    quarter of 2003 compared to first quarter of 2002.                                                                                                                  
|
| | (2) | This subsidiarys principal function is to
    lease private telecommunications capacity from
    telecommunications carriers and then sublease this capacity at
    market rates to our operating subsidiaries.

The growth in our net revenues from services has
been adversely impacted by continued adverse economic conditions
in our most important markets in Argentina, Brazil and Colombia,
as well as in Venezuela.

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Argentina, which has been mired in economic
recession for the past four years, is our largest market in
terms of number of customers and, until the devaluation of the
pesoin 2002, in revenues. In the first weeks of January
2002, Argentina defaulted on its external debt payments and
devalued its currency, exacerbating declining commercial
confidence and activity and further inflating exorbitant costs
of financing for Argentine companies. Argentina continues to
experience adverse economic conditions and a lack of access to
international capital markets. We are unable to predict whether
the conditions affecting the Argentine economy will subside or
if future economic developments in Argentina will improve in any
significant respect, and it is possible that the Argentine
economic and political environment could deteriorate further.
The political and economic crises in Argentina, our largest
country of operation, will continue to have a materially adverse
impact on our financial condition and results of operations.

Although the Argentine pesogained
strength during the first quarter of 2003 (3.00 pesos=
$1.00 at March 31, 2003 compared to 3.40 pesos=
$1.00 at December 31, 2002), IMPSAT Argentinas
financial condition and results of operations continued to be
severely and negatively impacted by the political and social
uncertainty and economic weakness that continue to affect
Argentina. The ongoing economic downturn in Argentina has
adversely affected many of our customers in that country and
caused a number of them to terminate their contracts with us,
fail to renew their contracts, reduce the amount of services
contracted, or delay their payment of amounts owed to us for
services provided. Our total net revenues at IMPSAT Argentina
for the first quarter of 2003 totaled $14.7 million, a
decrease of $1.2 million (or 7.3%) compared to the first
quarter of 2002. This decrease was primarily caused by the
above-described general recessionary conditions in Argentina.

IMPSAT Brazils revenues from services for
the first quarter of 2003 totaled $7.3 million, a decrease
of $3.4 million (or 32.0%) compared to the first quarter of
2002. Our results in Brazil also were adversely affected during
the first quarter of 2003 as compared to the corresponding
period in 2002 by the devaluation of the Brazilian realagainst the U.S. dollar (comparing the average exchange rate
for the first quarter of 2003 to the average exchange rate
during the corresponding period in 2002). At March 31,
2002, the realtraded at a rate of R$2.32 = $1.00, and at
March 31, 2003 it had depreciated to R$3.46 = $1.00. These
and prior devaluations have had a negative effect on our
real-denominated revenues. The devaluation of the
real and the decline in growth in the Brazilian economy
have been caused in part by the continued recession in the
region, a general aversion to emerging markets by foreign direct
and financial investors and the overall decline in worldwide
economic production. In addition, there remains lingering
concern among the international investor community that Mr. da
Silva, who was elected president of Brazil on October 27,
2002, will cause Brazil to alter its policies in a manner that
would adversely affect its economy. These conditions have had,
and can be expected to continue to have, an adverse effect on
IMPSAT Brazils and our companys overall financial
condition and results of operations.

In Colombia, we recorded revenues from services
of $13.6 million during the first quarter of 2003, compared
to $15.1 million for the same period in 2002. Revenues at
IMPSAT Venezuela equaled $9.0 million for the first quarter
of 2003, compared to $7.9 million for the first quarter of
2002. On February 12, 2002, Venezuelas government
floated its currency, ending a five-year-old regime that
permitted the bolivarto trade only within a fixed-band
against the U.S. dollar. As a result, devaluation of the
bolivaroccurred. Venezuela has experienced and continues
to experience political and economic uncertainty following the
attempted military coup staged against that countrys
President Hugo Chavez during the first weeks of April 2002 and
the labor strikes that commenced in December 2002 and ended two
months later. In response to this political and economic turmoil
affecting Venezuela, that countrys government imposed
foreign exchange and price controls during February 2003, making
it difficult for our customers in that country to obtain the
U.S. dollars needed to make payments due to us in U.S. dollars
on a timely basis. These foreign exchange controls also limit
our ability to convert local currency into U.S. dollars and
transfer funds out of Venezuela and to obtain U.S. dollars
required to purchase needed telecommunications equipment and
repair parts. The continuation or worsening of this crisis in
Venezuela could have a material adverse effect on IMPSAT
Venezuelas results of operations and financial condition.

Direct Costs.Our
direct costs for the first quarter of 2003 totaled
$26.3 million, a decrease of $6.9 million (or 20.9%)
compared to the same period in 2002. As compared to the first
quarter of 2002, this

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reduction was caused principally by (i) the
period over period devaluation in first quarter of 2003 of local
currencies in Argentina, Brazil, Colombia and Venezuela, which
had the effect of decreasing our direct costs in those countries
in U.S. dollar terms and (ii) our incurring lower total
costs of equipment sold during the first quarter of 2003. Of our
total direct costs for the first quarter of 2003,
$9.5 million related to the operations of IMPSAT Argentina,
compared to $12.1 million for the first quarter of 2002.
Direct costs for IMPSAT Brazil totaled $3.6 million for the
first quarter of 2003, compared to $6.9 million for the
same period in 2002. Direct costs of our subsidiaries are
described prior to the elimination of intercompany transactions.


(1)     Contracted
Services.Contracted services costs include costs of
maintenance and installation (and de-installation) services
provided by outside contractors. During the first quarter of
2003, our contracted services costs totaled $4.4 million, a
decrease of $1.8 million (or 28.7%) compared to the first
quarter of 2002. Of this amount, maintenance costs for our
telecommunications network infrastructure, including the
Broadband Network, totaled $3.5 million for the first
quarter of 2003 compared to $5.0 million during the first
quarter of 2002. Installation costs totaled $0.9 million
for the first quarter of 2003 compared to $1.3 million
during the first quarter of 2002. Our installation costs
decreased because we had fewer new customers in the first
quarter of 2003 compared to the same period in 2002. Of our
total contracted services costs for the first quarter of 2003,
$2.0 million related to the operations of IMPSAT Argentina,
compared to $1.8 million at IMPSAT Argentina for the first
quarter of 2002.

(2) Other Direct Costs. Other direct
costs principally include licenses and other fees; sales
commissions paid to third-party sales representatives; and our
provision for doubtful accounts.

Sales commissions paid to third-party sales
representatives for the first quarter of 2003 totaled
$1.2 million compared to $1.4 million for the same
period in 2002. The majority of these commissions,
($0.7 million in each of the first quarters of 2003 and
2002) related to customers of IMPSAT Argentina.

We recorded a provision for doubtful accounts of
$0.5 million for the first quarter of 2003, compared to
$3.0 million for the corresponding period during the
previous year. At March 31, 2003, approximately 31.6% of
our gross trade accounts receivable were past due more than six
months compared to 29.4% at March 31, 2002. The average
days in quarterly gross trade accounts receivable increased from
94 days at March 31, 2002 to 187 days at
March 31, 2003. The average days in quarterly net trade
accounts receivable decreased from 70 days at
March 31, 2002 to 51 days at March 31, 2003.

(3) Leased Capacity. Our leased
capacity costs for the first quarter of 2003 totaled
$17.6 million, a decrease of $2.8 million (or 13.7%)
compared to the first quarter of 2002. This decrease occurred
notwithstanding an overall increase in costs for interconnection
and telephony termination costs and frequency rights (which are
components of our leased capacity costs), as described below.

Our leased satellite capacity costs for the first
quarter of 2003 totaled $7.2 million, a decrease of
$1.6 million (or 18.4%) compared to the first quarter of
2002. In Argentina, our leased satellite capacity costs totaled
$2.1 million for the first quarter of 2003, as compared to
$2.4 million for the corresponding period in 2002. Our
leased satellite capacity costs for IMPSAT Brazil totaled
$0.8 million for 2003, as compared to $1.1 million for
the corresponding period in 2002. Our satellite capacity costs
decreased in Argentina and Brazil, in part because of our
transitioning customers from satellite-based solutions onto the
Broadband Network. We had approximately 779 MHz of leased
satellite capacity at March 31, 2003 and 910 MHz at
March 31, 2002.

Our costs for dedicated leased capacity on
third-party fiber optic networks totaled $6.7 million for
the first quarter of 2003, a decrease of $1.4 million (or
16.9%) compared to the first quarter of 2002. These costs were
incurred principally in Argentina, Colombia and the United
States. Although we have transferred substantial amounts of our
telecommunications traffic to the Broadband Network as we
migrated our customers to our Broadband Network, we will
continue to require leased capacity to provide
telecommunications services to clients with facilities outside
of the footprint of our Broadband Network in order to provide
end-to-end telecommunications services. The decrease in these
costs was also due, in part, to the effect on such costs of the
period over period relative devaluation of local currencies in
Argentina and Brazil.

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In connection with services that we offer since
the effectiveness of our license in Argentina to provide
domestic and international long distance services, we incur
costs for interconnection and telephony termination
(I&T) and frequency rights. Our I&T and
frequency rights costs totaled $3.6 million during the
first quarter of 2003 (which includes $2.7 million of
I&T costs). This compares to $3.4 million for the first
quarter of 2002 (which includes $2.8 million of I&T
costs).

Our I&T and frequency rights costs in
Argentina totaled $1.6 million during the first quarter of
2003 (which includes $1.6 million of I&T costs). This
compares to $1.7 million of I&T and frequency rights
costs for the first quarter of 2002 (which includes
$1.6 million of I&T costs).

(4) Costs of Equipment Sold. In the
first quarter of 2003, we incurred costs of equipment sold of
$0.1 million compared to $0.1 million for the first
quarter of 2002.

Salaries and Wages.Salaries and wages for the first
quarter of 2003 totaled $10.7 million, a decrease of
$2.3 million (or 17.8%) compared to the first quarter of
2002. As a result of the adverse economic conditions experienced
in Argentina, Brazil and elsewhere in Latin America, our
aggregate number of employees fell from 1,352 at March 31,
2002 to 1,271 at March 31, 2003. Management expects to
continue to monitor the size of its total workforce and to make
appropriate adjustments if required by financial and competitive
circumstances. The decrease in these costs was also due, in
part, to the effect on such costs of the period over period
relative devaluation of local currencies in Argentina, Brazil,
Colombia and Venezuela.

IMPSAT Argentina incurred salaries and wages for
the first quarter of 2003 totaling $2.6 million, a decrease
of $0.3 million (or 10.3%) compared to the same period in
2002. This decrease was due to the period over period relative
devaluation of the peso, which decreased the dollar value
of our salaries and wages expenses incurred in Argentina during
the first quarter of 2003 as compared to during the first
quarter of 2002. IMPSAT Argentina had 462 employees as of
March 31, 2003 as compared to 449 employees as of
March 31, 2002.

IMPSAT Brazil incurred salaries and wages for the
first quarter of 2003 of $2.0 million, a decrease of
$1.2 million (or 38.8%) compared to the first quarter of
2002. IMPSAT Brazil decreased its number of employees to
218 persons at March 31, 2003, compared to 309 persons
at March 31, 2002. In addition to our reduced employee
headcount in that country, the decrease in salaries and wages at
IMPSAT Brazil during the first quarter of 2003 is in part
related to the period over period relative devaluation of the
realagainst the U.S. dollar, which resulted in a
decrease in U.S. dollar terms of our salaries and wages expense
in Brazil.

Selling, General and Administrative Expenses.Our SG&A expenses consist
principally of:



| |   |                                                             
| | - | ------------------------------------------------------------
| |  | publicity and promotion costs                               
|
| |  | professional fees and other remuneration                    
|
| |  | travel and entertainment                                    
|
| |  | rent                                                        
|
| |  | plant services, insurance, telephone and energy
    expenses

We incurred SG&A expenses of
$5.5 million for the first quarter of 2003, a decrease of
$1.8 million (or 25.1%) compared to the same period in
2002. This decline in our SG&A expenses for the first
quarter of 2002 is due principally to a decrease in our
publicity and promotion costs, the effect of the period over
period relative devaluation of local currencies in Argentina,
Brazil, Colombia and Venezuela against the U.S. dollar
(which decreased the dollar value of our SG&A expenses
incurred in those countries), and overall cost control measures
undertaken by management.

SG&A expenses at IMPSAT Argentina for the
first quarter of 2003 totaled $1.8 million, a decrease of
$0.2 million (or 10.0%) compared to the corresponding
period in 2002. SG&A expenses at IMPSAT Brazil for the three
months ended March 31, 2003 totaled $1.3 million,
compared to $1.8 million for the same period in 2002.

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Depreciation and Amortization.Our depreciation and amortization
expenses for the first quarter of 2003 totaled
$19.2 million, a decrease of $4.7 million (or 19.6%)
compared to our depreciation and amortization for the
corresponding period in 2002.

Interest Expense, Net.Our net interest expense for the first
quarter of 2003 totaled $1.7 million, consisting of
interest expense (including financing costs and taxes) of
$1.9 million and interest income of $0.2 million. Our
net interest expense for the first quarter of 2002 totaled
$33.4 million, consisting of interest expense (including
financing costs and taxes) of $33.8 million and interest
income of $0.4 million. Our quarter over quarter interest
expense decreased principally because of reductions in
outstanding indebtedness and contractual interest following the
filing of the Plan, the restructuring of our indebtedness
(particularly our former 12 1/8% Senior Guaranteed Notes
due 2003, 13 3/4% Senior Notes due 2005, and 12 3/8%
Senior Notes due 2008 (the Old Senior Notes)
pursuant to the Plan.

Our total indebtedness as of March 31, 2003
was $262.0 million, as compared to $988.2 million as
of March 31, 2002 (excluding any unaccrued payment-in-kind
interest included in the face amount of any such indebtedness).
As of March 31, 2003, total outstanding indebtedness at
IMPSAT Argentina totaled $67.5 million ($63.7 million
after eliminating intercompany items), compared to
$167.9 million ($163.8 million after eliminating
intercompany items) as of March 31, 2002.

Net Gain (Loss) on Foreign Exchange.We recorded a net gain on foreign
exchange for the first quarter of 2003 of $10.0 million,
compared to a net loss of $7.4 million for the first
quarter of 2002. Our gain on foreign exchange was primarily due
to the appreciation of the Argentine pesoand the
Brazilian realduring the first quarter of 2003. This net
gain on foreign exchange reflects the effect of the appreciation
of the pesoand the realagainst the U.S. dollar
in the first quarter of 2003 on the book value of our monetary
assets and liabilities in Argentina and Brazil.

IMPSAT Argentina recorded a net gain on foreign
exchange for the first quarter of 2003 totaling
$0.6 million, compared to a net loss of $7.1 million
for the same period in 2002, and IMPSAT Brazil recorded a net
gain on foreign exchange for the first quarter of 2003 totaling
$9.6 million, compared to a net loss of $0.1 million
for the corresponding period in 2002.

Provision for Foreign Income Taxes.For the first quarter of 2003, we
recorded a provision for foreign income taxes of
$0.4 million, compared to a provision of $0.4 million
for the same period in 2002.

Reorganization
Items.We recorded reorganization
items for the three months ended March 31, 2003 of
$724.8 million. These items included an extraordinary gain
on extinguishment of indebtedness pursuant to the Plan of
$728.2 million, reduced by $3.4 million in
reorganization expenses, principally professional fees, incurred
during the quarter in connection with the negotiation and
formation of our Plan and Chapter 11 filing. (See
Liquidity and Capital Resources for
managements estimate of further reorganization expenses to
be paid by us during the second quarter of 2003.)

Net Income (Loss).For the first quarter of 2003, we recorded net income of
$729.8 million, compared to a net loss of
$58.5 million the first quarter of 2002. Our net income for
the period was principally due to the effect of the
extraordinary gain on extinguishment of indebtedness pursuant to
the Plan, as discussed above under
 Reorganization Items. For the first
quarter of 2003, our operating loss totaled $5.7 million,
compared to an operating loss of $15.2 million for the first
quarter of 2002.

Liquidity and Capital Resources

At March 31, 2003, we had total cash, cash
equivalents and trading investments of $61.9 million as
compared to $55.6 million as of December 31, 2002 and
$61.0 million at March 31, 2002. During the second
quarter of 2003, we expect to pay approximately
$13.0 million in cash, including amounts expended to date,
in satisfaction of all allowed general unsecured convenience
class claims as well as certain fees and expenses relating to
our Chapter 11 proceedings and reorganization.

At March 31, 2003, our total indebtedness
was $267.5 million (as compared to $1.04 billion as of
December 31, 2002 and $988.2 million at March 31,
2002), of which $23.7 million represented current portion

12



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of long-term debt and $243.8 million
represented long-term debt. As a result of the financial
restructuring of our Old Senior Notes and the Original Vendor
Financing Agreements that accompanied our emergence from
Chapter 11 protection, our capital requirements for the
remainder of 2003 are projected to be less than our available
capital resources. Our capital expenditures budget contemplates
that we will need approximately $21.0 million (including
amounts spent to date) through the end of 2003 for capital
expenditures.


As set forth in our consolidated statement of
cash flows, our operating activities provided $16.9 million
in net cash flow for the first quarter of 2003, compared to
$2.1 million provided by operating activities during the
corresponding period in 2002. The increase in cash flow from
operating activities in 2002 was primarily due to the effect of
the emergence from bankruptcy and the decrease in our operating
losses.

For the first quarter of 2003, we used
$11.5 million in net cash flow from investing activities,
compared to $3.7 million of net cash flow used by investing
activities during the corresponding period in 2002. The
decreased net cash flow from investing activities was
principally due to a decrease in our trading investments of
$3.3 million during 2003, compared to a decrease in our
trading investments of $0.3 million during 2002, and an
increase in our purchases of property, plant and equipment.
During the first quarter of 2003, we used $2.5 million in
net cash flows from financing activities. This compares to
$2.4 million in net cash flows used in financing activities
during the corresponding period in 2002.

At March 31, 2003, we had leased satellite
capacity with annual rental commitments of approximately
$21.1 million through the year 2007. In addition, at
March 31, 2003, we had commitments to purchase
telecommunications equipment amounting to approximately
$2.4 million. As reported in our 2002 Form 10-K, our
commitments in respect of IRU purchases under contracts with
360networks and Global Crossing have been terminated.
Furthermore, we have leased from third parties a series of
terrestrial links for the provision of data, Internet and
telephony services to our clients in the different countries in
which we operate. We have committed to long term contracts for
the purchase of terrestrial links from third parties in
Argentina, Colombia, and the United States for approximately
$2.5 million per year through 2007. The remainder of the
leases are typically under one-year contracts, the early
cancellation of which is subject to a fee.






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

The sections below highlight our exposure to
interest rate and foreign exchange rate risks. The analyses
presented below are illustrative and should not be viewed as
predictive of our future financial performance. Additionally, we
cannot assure you that our actual results in any particular year
will not differ from the amounts indicated below. However, we
believe that these results are reasonable based on our financial
instrument portfolio at March 31, 2003 and assuming that
the hypothetical interest rate and foreign exchange rate changes
used in the analyses occurred during 2003. We do not hold or
issue any market risk sensitive instruments for trading purposes.

Interest Rate Risk.Our cash, cash equivalents and trading
investments consist of highly liquid investments with a maturity
of less than 360 days. As a result of the short-term nature
of these instruments, we do not believe that a hypothetical 10%
change in interest rates would have a material impact on our
future earnings and cash flows related to these instruments. A
hypothetical 10% change in interest rates would also have an
immaterial impact on the fair values of these instruments.

We are exposed to interest rate risk on our
floating rate indebtedness, which affects our cost of financing.
At March 31, 2003, our floating rate indebtedness totaled
approximately $26.8 million. Our actual interest rate is
not quantifiable or predictable because of the variability of
future interest rates and business requirements. We do not
believe such risk is material and we do not customarily use
derivative instruments to adjust interest rate risk. As of
March 31, 2003, a hypothetical 100 basis point increase in
the London Interbank Offered Rate (LIBOR) would adversely
affect our annual interest cost related to our floating rate
indebtedness by approximately $ 0.3 million annually.

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|                                 |                    |      |        |      |   |      |        |      |   |      |        |            |   |       |        |       |   |   |        |      |   |   |        |      |   |   |         |      |   |   |         |  | 
|-------------------------------- | ------------------ | ---- | ------ | ---- | - | ---- | ------ | ---- | - | ---- | ------ | ---------- | - | ----- | ------ | ----- | - | - | ------ | ---- | - | - | ------ | ---- | - | - | ------- | ---- | - | - | ------- |  | 
|Year Ended                       |                    |      |        |      |   |      |        |      |   |      |        |            |   |       |        | Fair 
|December 31,                     |                    | 2003 |        | 2004 |   | 2005 |        | 2006 |   | 2007 |        | Thereafter |   | Total |        | Value
|                                 |                    |      |        |      |   |      |        |      |   |      |        |            |   |       |        |      
|Senior Notes (fixed rate)        |                    | $    |       |      |   | $    | 70,969 |      |   | $    | 32,005 |            |   | $     | 32,005 |       |   | $ | 32,005 |      |   | $ | 42,218 |      |   | $ | 209,202 |      |   | $ | 209,202 | 
|                                 | Avg. Interest rate |      |        |      |   |      |        | 8.45 | % |      |        | 8.45       | % |       |        | 8.45  | % |   |        | 8.45 | % |   |        | 8.45 | % |   |         | 8.45 | % |   |         |  | 
|Term Notes (fixed rate)          |                    | $    | 10,683 |      |   | $    | 3,692  |      |   | $    | 7,438  |            |   | $     | 12,278 |       |   | $ | 926    |      |   | $ |       |      |   | $ | 35,017  |      |   | $ | 35,017  | 
|                                 | Avg. Interest rate |      |        | 9.45 | % |      |        | 9.45 | % |      |        | 9.45       | % |       |        | 9.45  | % |   |        | 9.45 | % |   |        |      |   |   |         | 9.45 | % |   |         |  | 
|Vendor Financing (variable rate) |                    | $    | 12,959 |      |   | $    | 10,288 |      |   | $    |       |            |   | $     |       |       |   | $ |       |      |   | $ |       |      |   | $ | 23,247  |      |   | $ | 23,247  | 
|                                 | Avg. Interest rate |      |        | 7.64 | % |      |        | 7.64 | % |      |        |            |   |       |        |       |   |   |        |      |   |   |        |      |   |   |         | 7.64 | % |   |         |  | 

Foreign Currency Risk.A substantial portion of our costs,
including lease payments for certain satellite transponder and
fiber optic capacity, purchases of capital equipment, and
payments of interest and principal on our indebtedness, is
payable in U.S. dollars. To date, we have not entered into
hedging or swap contracts to address currency risks because our
contracts with our customers generally have provided for payment
in U.S. dollars or for payment in local currency linked to
the exchange rate between the local currency and the
U.S. dollar at the time of invoicing. These contractual
provisions are structured to reduce our risk if currency
exchange rates fluctuate. However, given that the exchange rate
is generally set at the date of invoicing and that in some cases
we experience substantial delays in collecting receivables, we
are exposed to some exchange rate risk.

During January 2002, Argentina abandoned the
fixed dollar-to-pesoexchange rate and devalued the
Argentine pesoand, on February 3, 2002, pursuant to
the pesification decree, the Argentine
government announced the mandatory conversion of all foreign
currency denominated contractual obligations governed by
Argentine law into Argentine pesosat a rate of one
Argentine pesoto one U.S. dollar. The floating exchange
rate at May 15, 2003 was pesos2.98 = $1.00. These
and any further devaluations of the pesohave and will
adversely affect IMPSAT Argentinas results of operations
and, in turn, our companys consolidated results of
operations and financial condition. Management is currently
unable to predict the most likely average or end-of-period
peso/dollar exchange rates for 2003 or provide estimates
of the impacts that the changes in Argentine laws, the potential
impacts of the currency devaluation and other recent events in
Argentina could have on our companys consolidated results
of operation and financial condition. There could occur during
2003 increases to our consolidated results that would result
from transaction gains or losses on our dollar-denominated
monetary assets and liabilities. Also, operating income
reductions could result from the potential impacts on our
consolidated revenues from services of the conversion to
pesos of contract obligations that were previously tied
to the dollar. Potential balance sheet exposures include the
reduction to our consolidated stockholders equity due to
the effects of lower net income on retained earnings. Our
management is continuing to assess the impacts that the events
in Argentina could have on our consolidated results of
operations and financial condition.

Pursuant to laws in Brazil, our contracts with
customers in Brazil cannot be denominated in dollars or linked
to the exchange rate between the Brazilian realand the
U.S. dollar. In Brazil, we are permitted to amend the
pricing of our services for our long-term telecommunication
services contracts with our customers annually based on changes
in the consumer price index in Brazil for the prior year. In
Argentina, obligations that were mandatorily converted to
pesosunder the pesification decree
are to be adjusted pursuant to the CER, an index rate based on
variations in the Argentine consumer price index. These aspects
of the laws in Brazil and Argentina do not eliminate completely
the currency exchange risk facing our operations in those
countries. Changes in the consumer price indices in Brazil and
Argentina may lag or be lower than changes in the exchange rate
between the Brazil and Argentine local currency and the
U.S. dollar and therefore may not fully allow us to address
the impact of a devaluation of those currencies against the
U.S. dollar. Also, contracts entered into after the
pesification decrees enactment that are
initially denominated in pesosare not entitled to be
adjusted according to the CER or any other consumer price index.
Accordingly, our operations in Brazil and Argentina have exposed
us, and will increase our exposure, to exchange rate risks. At
May 15, 2003, the realtraded at a rate of R$2.96 =
$1.00.

As discussed above, in response to political and
economic turmoil currently affecting Venezuela, that
countrys government imposed foreign exchange and price
controls during February 2003, making it difficult for our
customers in Venezuela to obtain the U.S. dollars needed to
make payments due to us in U.S. dollars

14



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##### Table of Contents



on a timely basis. These foreign exchange
controls also limit our ability to convert local currency into
U.S. dollars and transfer funds out of Venezuela. At
December 31, 2001, the bolivartraded at a rate of
Bs.769.00 = $1.00, at December 31, 2002, it traded at a
rate of Bs.1,392.00 = $1.00, and at March 31, 2003, it
traded at the rate of Bs.1,600 = $1.00. On February 6,
2003, the Venezuelan government set a single fixed exchange rate
for the bolivaragainst the U.S. dollar of approximately
Bs.1,600 = $1.00 as part of the new currency controls.


Revenues from services from our Argentine
operations for the three months ended March 31, 2003 and
2002 represented approximately 26.1% and 25.4% of our total net
revenues from services for such periods. Revenues from services
from our Brazilian operations for the three months ended
March 31, 2003 and 2002 represented approximately 13.0% and
17.3% of our total net revenues from services for such periods.
Our revenues from services in Venezuela accounted for 16.0% and
12.6% of our total revenues from services for the three months
ended March 31, 2003 and 2002.






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

Within the 90-day period prior to the filing of
this Report, an evaluation was carried out under the supervision
and with the participation of the Companys management,
including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in
Rule 13a-14(c) under the Securities Exchange Act of 1934).
Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the design and operation
of these disclosure controls and procedures were effective. No
significant changes were made in the Companys internal
controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.

15



---



##### Table of Contents






PART II

OTHER INFORMATION







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

As described in Item 2 under Part I of this
Report, the Plan was consummated on March 25, 2003.
Reference is made to such description and to our 2002
Form 10-K for more information regarding the Plan.

Also as described in Item 2 under Part I to
this Report, we are engaged in a series of proceedings with
affiliates of Global Crossing Ltd. regarding certain contractual
disputes. Please see the description of such matters contained
in our 2002 Form 10-K under Item 3 
Legal Proceedings therein.






|        |                                              
|------- | ---------------------------------------------
|Item 2. | Changes in Securities and Use of
    Proceeds

Pursuant to the Plan, on the Effective Date, the
Company, among other things, filed with the Delaware Secretary
of State a Restated Certificate of Incorporation (the
Certificate of Incorporation), under which its
authorized capital stock as of the Effective Date consists of
(i) 50,000,000 shares of common stock, with a par value of
$0.01 per share (the New Common Stock) and
(ii) 5,000,000 Million shares of Preferred Stock, with a
par value of $0.01 per share (the Preferred Stock).
No Preferred Stock has been issued. Pursuant to the Certificate
of Incorporation, Preferred Stock may be issued in one or more
series as determined from time to time by our Board of Directors
(the Board) without further approval of the
stockholders. Upon issuance of Preferred Stock, the Board will
fix the voting powers, designations, preferences, and relative,
participating, optional, redemption, conversion, exchange or
other special rights, qualifications, limitations or
restrictions of such Preferred Stock, to the full extent
permitted by law. Pursuant to the Certificate of Incorporation,
we may not create, designate, authorize or cause to be issued
any class or series of nonvoting stock to the extent prohibited
by Section 1123 of the United States Bankruptcy Code.
Pursuant to the Plan, on the Effective Date, among other things,
all then-outstanding shares of our pre-Effective Date common
stock, par value $0.01 per share, and

all other equity interests were cancelled,
including shares of restricted stock, as well as all options and
agreements to issue or purchase any equity interests.


A description of the New Common Stock and other
relevant information is contained in the Companys
Registration Statement on Form 8-A/ A (Amendment
No. 1) filed with the SEC on March 26, 2003. This
description is incorporated herein by reference.




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

Not applicable.

16



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##### Table of Contents






Item 6.     Exhibits
and Reports on Form 8-K

(a)(1)

Exhibit Index:

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.1     |  | Restated Certificate of Incorporation of the
    Company (filed on March 26, 2003 as
    Exhibit No. 2.1 to the Companys Amendment
    No. 1 to Registration Statement on Form 8-A and
    incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3.2     |  | Restated Bylaws of the Company (filed on
    March 26, 2003 as Exhibit No. 2.2 to the
    Companys Amendment No. 1 to Registration Statement on
    Form 8-A and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.1     |  | Indenture for the Companys 6% Senior
    Guaranteed Convertible Notes due 2011  Series A,
    dated as of March 25, 2003, among the Company, The Bank of
    New York, as trustee and IMPSAT Argentina, as guarantor
    (including form of Note) (filed on April 15, 2003 as
    Exhibit 4.1 to the Companys 2002 Annual Report on
    Form 10-K and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                  
|4.2     |  | Indenture for the Companys 6% Senior
    Guaranteed Convertible Notes due 2011  Series B,
    dated as of March 25, 2003, among the Company, The Bank of
    New York, as trustee and IMPSAT Argentina, as guarantor
    (including form of Note) (filed on April 15, 2003 as
    Exhibit 4.2 to the Companys 2002 Annual Report on
    Form 10-K and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                  
|4.3     |  | Disclosure Statement Under Chapter 11 of the
    Bankruptcy Code (filed on December 19, 2002 as
    Exhibit No. 99.2 to the Companys Current Report
    on Form 8-K, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.4     |  | Plan of Reorganization of the Company Under
    Chapter 11 of the Bankruptcy Code (filed on
    December 19, 2002 as Exhibit No. 99.3 to the
    Companys Current Report on Form 8-K, and incorporated
    herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|4.5     |  | Order Confirming the Companys Plan of
    Reorganization Under Chapter 11 of the Bankruptcy Code
    dated December 16, 2002 (filed on December 19, 2002 as
    Exhibit 99.1 to the Companys Current Report on
    Form 8-K, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4.6     |  | Registration Rights Agreement among the Company,
    IMPSAT Argentina and the securityholders party thereto, dated as
    of March 25, 2003 (filed on April 15, 2003 as
    Exhibit 4.6 to the Companys 2002 Annual Report on
    Form 10-K and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.7     |  | Specimen Common Stock Certificate (filed on
    March 26, 2003 as Exhibit No. 2.6 to the
    Companys Amendment No. 1 to Registration Statement on
    Form 8-A and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|4.8     |  | Warrant Agreement between the Company and The
    Bank of New York, as warrant agent, dated as of March 25,
    2003 (including form of Warrant) (filed on April 15, 2003
    as Exhibit 4.8 to the Companys 2002 Annual Report on
    Form 10-K and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                     
|9.1     |  | 2003 Stock Incentive Plan (filed on
    April 15, 2003 as Exhibit 9.1 to the Companys
    2002 Annual Report on Form 10-K and incorporated herein by
    reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.1   |  | Global Crossing Framework Agreement (filed on
    October 4, 1999 as an exhibit to the Companys
    Registration Statement on Form S-1 (No. 333-88389) and
    incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.2   |  | Turnkey Backhaul Construction and IRU Agreement
    between IMPSAT Brazil and South American Crossing, Ltd. (Rio de
    Janeiro), dated as of February 17, 2000 (filed on
    April 17, 2000 as an exhibit to the Companys
    Registration Statement on Form S-4 (No. 333-34954) and
    incorporated herein by reference). In accordance with
    Instruction 2 to Item 601 of Regulation S-K, the
    following agreement was not filed as an exhibit because it is
    substantially identical in all material respects to
    Exhibit 10.2: Turnkey Backhaul Construction and IRU
    Agreement between IMPSAT Brazil and South American Crossing,
    Ltd. (Sao Paolo), dated as of February 17, 2000.
|10.3   |  | TAC Turnkey Construction and IRU Agreement among
    IMPSAT Argentina, IMPSAT Chile and South American Crossing Ltd.
    (filed on October 4, 1999 as an exhibit to the
    Companys Registration Statement on Form S-1
    (No. 333-88389) and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                          

17



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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.4    |  | Amended and Restated Financing Agreement among
    IMPSAT Argentina, Nortel Networks Limited, and Deutsche Bank
    Trust Company Americas and the Lenders party thereto, dated as
    of March 25, 2003 (filed on April 15, 2003 as
    Exhibit 10.4 to the Companys 2002 Annual Report on
    Form 10-K and incorporated herein by reference). In
    accordance with Instruction 2 to Item 601 of
    Regulation S-K, the following agreement was not filed as
    exhibits because they are substantially identical in all
    material respects to Exhibit 10.4: Amended and Restated
    Financing Agreement between IMPSAT Brazil and Nortel Networks
    Limited, dated as of March 25, 2003.
|10.5    |  | Employment Agreement between Ricardo A. Verdaguer
    and the Company dated as of March 25, 2003 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.6    |  | Employment Agreement between Hector R. Alonso and
    the Company dated as of March 25, 2003 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.7    |  | Letter Agreement between Marcelo Girotti and the
    Company dated March 25, 2003 (filed herewith). In
    accordance with Instruction 2 to Item 601 of
    Regulation S-K, the following agreements were not filed as
    exhibits because they are substantially identical in all
    material respects to Exhibit 10.7: Letter Agreement between
    Mariano Torre Gomez and the Company dated March 25, 2003;
    Letter Agreement between Matias Heinrich and the Company dated
    March 25, 2003; Letter Agreement between Alexander Rivelis
    and the Company dated March 25, 2003.                                                                                                         
|21.1    |  | List of subsidiaries of the registrants
    (incorporated by reference to the Business 
    General section of the Companys 2002 Annual Report
    on Form 10-K and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|99.1    |  | Certification by the Companys Chief
    Executive Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|99.2    |  | Certification by the Companys Chief
    Financial Officer pursuant to 18 U.S.C. Section 1350,
    as adopted pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         




|  |                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------
| | Confidential treatment requested as to certain
    portions, which portions were omitted and filed separately with
    the Commission.

(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.

18



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Buenos Aires in the
Republic of Argentina, in the capacity and on the date indicated.



| |                            
| | ---------------------------
| | IMPSAT Fiber Networks, Inc.



| |     |                  
| | --- | -----------------
| | By: | /s/ HÉCTOR ALONSO

| |                        
| | -----------------------
| |                        
| | Héctor Alonso          
| | Chief Financial Officer
|
| | Date: May 20, 2003     

19



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##### Table of Contents






CERTIFICATIONS

Chief Executive Officer Certification pursuant
to

Section 302 of the Sarbanes-Oxley Act of
2002


I, Ricardo A. Verdaguer, certify that:



| |                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q of IMPSAT Fiber
    Networks, Inc. (the Registrant);                                                                                                                                                                                                                                       
|
| | 2.     Based on my
    knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this quarterly
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the Registrant as of, and for, the
    periods presented in this quarterly report;                     
|
| | 4.     The
    Registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in the Securities and Exchange Act of
    1934 Rules 13a-14 and 15d-14) for the Registrant and we
    have:                                                                             



| |                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    Registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared.
|
| | (b) evaluated the effectiveness of the
    Registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    Registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the Registrants
    auditors and the audit committee of the Registrants board
    of directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the Registrants ability to record, process,
    summarize and report financial data and have identified for the
    Registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the Registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    Registrants other certifying officer and I have indicated
    in this quarterly report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |                                          
| | -----------------------------------------
| | /s/ RICARDO A. VERDAGUER                 
| |                                          
| | Ricardo A. Verdaguer                     
| | President and Chief Executive
    Officer

May 20, 2003

20



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##### Table of Contents



Chief Financial Officer Certification pursuant
to

Section 302 of the Sarbanes-Oxley Act of
2002


I, Héctor Alonso, certify that:



| |                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this quarterly report on Form 10-Q of IMPSAT Fiber
    Networks, Inc. (the Registrant);                                                                                                                                                                                                                                       
|
| | 2.     Based on my
    knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this quarterly
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the Registrant as of, and for, the
    periods presented in this quarterly report;                     
|
| | 4.     The
    Registrants other certifying officer and I are responsible
    for establishing and maintaining disclosure controls and
    procedures (as defined in the Securities and Exchange Act of
    1934 Rules 13a-14 and 15d-14) for the Registrant and we
    have:                                                                             



| |                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    Registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared.
|
| | (b) evaluated the effectiveness of the
    Registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | (c) presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    Registrants other certifying officer and I have disclosed,
    based on our most recent evaluation, to the Registrants
    auditors and the audit committee of the Registrants board
    of directors (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the Registrants ability to record, process,
    summarize and report financial data and have identified for the
    Registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the Registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    Registrants other certifying officer and I have indicated
    in this quarterly report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |                        
| | -----------------------
| | /s/ HÉCTOR ALONSO      
| |                        
| | Héctor Alonso          
| | Chief Financial Officer

May 20, 2003

21