##### 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,
2002

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: 333-12977



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IMPSAT Fiber Networks, Inc.

IMPSAT S.A.


(Exact name of registrant as specified in its
charter)


|                                                                                      |  |                                                                  
|------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------
|Delaware
    Argentina(state or other jurisdiction
    incorporation or organization) |  | 52-1910372
    Not Applicable(IRS employer identification number)

Alférez Pareja 256 (1107)

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE
YEARS


Indicate by check mark whether the Company has
filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan
confirmed by a
court.     YES n/a     NO n/a

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of
each of the issuers classes of common stock, as of the
latest practicable date:As of
March 31, 2002 the Company had outstanding 91,428,570
shares of Common Stock, $0.01 par value.









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TABLE OF CONTENTS



|                                             |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES
|IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES
|                                             | 1. GENERAL                                                                                   
|                                             | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                
|                                             | 3. INVESTMENTS                                                                               
|                                             | 4. TRADE ACCOUNTS RECEIVABLE                                                                 
|                                             | 5. OTHER RECEIVABLES                                                                         
|                                             | 6. BROADBAND NETWORK AND AGREEMENTS                                                          
|                                             | 7. PROPERTY, PLANT AND EQUIPMENT                                                             
|                                             | 8. SHORT-TERM DEBT                                                                           
|                                             | 9. LONG-TERM DEBT                                                                            
|                                             | 10. INCOME TAXES                                                                             
|                                             | 11. OPERATING SEGMENT INFORMATION                                                            
|                                             | 12. COMMITMENTS AND CONTINGENCIES                                                            
|IMPSAT S.A.                                 
|IMPSAT S.A.                                 
|IMPSAT S.A.                                 
|IMPSAT S.A.                                 
|IMPSAT S.A.                                 
|IMPSAT S.A.                                 
|                                             | 1. GENERAL                                                                                   
|                                             | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                
|                                             | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                             | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II OTHER INFORMATION                   
|                                             | Item 1. Legal Proceedings                                                                    
|                                             | Item 2. Changes in Securities                                                                
|                                             | 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                                  



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##### Table of Contents






IMPSAT Fiber Networks, Inc.


IMPSAT S.A.





INDEX

|                             |         |  |                                                                                           |          |  |     | 
|---------------------------- | ------- |  | ----------------------------------------------------------------------------------------- | -------- |  | --- | 
|                             |         |  |                                                                                           | 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  | 
|PART II OTHER INFORMATION    |         |  | 16                                                                                        |         
|                             | Item 1. |  | Legal Proceedings                                                                         |          |  | 16  | 
|                             | Item 2. |  | Changes in Securities                                                                     |          |  | 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  | 



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##### Table of Contents






PART I

FINANCIAL INFORMATION


IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE
SHEETS

(In thousands of U.S. Dollars)


(Unaudited)


|                                             |                                                                                                                                                        |                                |         |            |           |   |         |            |           |  
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------ | ------- | ---------- | --------- | - | ------- | ---------- | --------- | -
|                                             |                                                                                                                                                        | December 31,                   |         | March 31, 
|                                             |                                                                                                                                                        | 2001                           |         | 2002      
|                                             |                                                                                                                                                        |                                |         |           
|ASSETS                                      
|CURRENT ASSETS:                              |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             | Cash and cash equivalents                                                                                                                              |                                | $       | 35,606     |           |   | $       | 31,384     |          
|                                             | Trading investments                                                                                                                                    |                                |         | 29,319     |           |   |         | 29,637     |          
|                                             | Trade accounts receivable, net                                                                                                                         |                                |         | 58,411     |           |   |         | 53,493     |          
|                                             | Other receivables                                                                                                                                      |                                |         | 39,003     |           |   |         | 30,617     |          
|                                             | Prepaid expenses                                                                                                                                       |                                |         | 3,429      |           |   |         | 4,463      |          
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             |                                                                                                                                                        | Total current assets           |         |            | 165,768   |   |         |            | 149,594   |  
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|BROADBAND NETWORK, Net                       |                                                                                                                                                        |                                | 310,598 |            |           |   | 308,145 |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|PROPERTY, PLANT AND EQUIPMENT, Net           |                                                                                                                                                        |                                | 214,459 |            |           |   | 196,541 |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|NON-CURRENT ASSETS:                          |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             | Investment in common stock                                                                                                                             |                                |         | 3,307      |           |   |         | 2,440      |          
|                                             | Deferred financing costs, net                                                                                                                          |                                |         | 10,752     |           |   |         | 9,309      |          
|                                             | Other non-current assets                                                                                                                               |                                |         | 13,690     |           |   |         | 10,808     |          
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             |                                                                                                                                                        | Total non-current assets       |         |            | 27,749    |   |         |            | 22,557    |  
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|TOTAL                                        |                                                                                                                                                        | $                              | 718,574 |            |           | $ | 676,837 |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|LIABILITIES AND STOCKHOLDERS
    DEFICIENCY
|CURRENT LIABILITIES:                         |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             | Accounts payable  trade                                                                                                                               |                                | $       | 86,999     |           |   | $       | 77,119     |          
|                                             | Short-term debt                                                                                                                                        |                                |         | 8,323      |           |   |         | 8,217      |          
|                                             | Current portion of long-term debt                                                                                                                      |                                |         | 959,076    |           |   |         | 959,852    |          
|                                             | Accrued and other liabilities                                                                                                                          |                                |         | 79,237     |           |   |         | 111,940    |          
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             |                                                                                                                                                        | Total current liabilities      |         |            | 1,133,635 |   |         |            | 1,157,128 |  
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|LONG-TERM DEBT, Net                          |                                                                                                                                                        |                                | 23,189  |            |           |   | 20,145  |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|OTHER LONG-TERM LIABILITIES                  |                                                                                                                                                        |                                | 14,973  |            |           |   | 12,435  |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|DEFERRED REVENUES                            |                                                                                                                                                        |                                | 99,419  |            |           |   | 98,564  |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|COMMITMENTS AND CONTINGENCIES (NOTE 12)      |                                                                                                                                                        |                                |         |            |           |   |         |           
|STOCKHOLDERS DEFICIENCY:                    |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             | Common Stock, $0.01 par value; 300,000,000 shares
    authorized, 91,428,570 shares issued and outstanding at
    December 31, 2001 and March 31, 2002 |                                |         | 914        |           |   |         | 914        |          
|                                             | Additional paid in capital                                                                                                                             |                                |         | 537,924    |           |   |         | 538,066    |          
|                                             | Accumulated deficit                                                                                                                                    |                                |         | (1,072,330 | )         |   |         | (1,130,807 | )        
|                                             | Deferred stock-based compensation                                                                                                                      |                                |         | (5,438     | )         |   |         | (5,438     | )        
|                                             | Accumulated other comprehensive loss                                                                                                                   |                                |         | (13,712    | )         |   |         | (14,170    | )        
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|                                             |                                                                                                                                                        | Total stockholders deficiency |         |            | (552,642  | ) |         |            | (611,435  | )
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           
|TOTAL                                        |                                                                                                                                                        | $                              | 718,574 |            |           | $ | 676,837 |           
|                                             |                                                                                                                                                        |                                |         |            |           |   |         |           

See notes to condensed consolidated financial
statements.

F-1



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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS

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


(Unaudited)


|                                          |                                                                        |                        |                                                |         |        |         |         |         |        |         |  
|----------------------------------------- | ---------------------------------------------------------------------- | ---------------------- | ---------------------------------------------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | -
|                                          |                                                                        |                       
|                                          |                                                                        | Three Months Ended    
|                                          |                                                                        | March 31,             
|                                          |                                                                        |                       
|                                          |                                                                        | 2001                   |                                                | 2002   
|                                          |                                                                        |                        |                                                |        
|NET REVENUES:                             |                                                                        |                        |                                                |         |        |         |         |        
|                                          | Data and value added services                                          |                        | $                                              | 59,748  |        |         | $       | 48,365  |       
|                                          | Internet                                                               |                        |                                                | 11,168  |        |         |         | 7,854   |       
|                                          | Telephony                                                              |                        |                                                | 1,272   |        |         |         | 4,344   |       
|                                          | Services to carriers                                                   |                        |                                                | 1,932   |        |         |         | 1,566   |       
|                                          | Sales of equipment                                                     |                        |                                                | 8,054   |        |         |         | 284     |       
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|                                          |                                                                        |                        | Total net revenues from services and equipment |         |        | 82,174  |         |         |        | 62,413  |  
|                                          | Broadband network development revenues                                 |                        |                                                | 6,571   |        |         |         |         |       
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|                                          |                                                                        |                        | Total net revenues                             |         |        | 88,745  |         |         |        | 62,413  |  
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|COSTS AND EXPENSES:                       |                                                                        |                        |                                                |         |        |         |         |        
|                                          | Direct costs:                                                          |                        |                                                |         |        |         |         |         |       
|                                          |                                                                        | Contracted services    |                                                |         | 11,086 |         |         |         | 6,233  |        
|                                          |                                                                        | Other direct costs     |                                                |         | 5,792  |         |         |         | 6,535  |        
|                                          |                                                                        | Leased capacity        |                                                |         | 21,933 |         |         |         | 20,385 |        
|                                          |                                                                        | Broadband network cost |                                                |         | 3,335  |         |         |         |        |        
|                                          |                                                                        | Cost of equipment sold |                                                |         | 5,392  |         |         |         | 117    |        
|                                          |                                                                        |                        | Total direct costs                             |         |        | 47,538  |         |         |        | 33,270  |  
|                                          | Salaries and wages                                                     |                        |                                                | 22,197  |        |         |         | 13,042  |       
|                                          | Selling, general and administrative                                    |                        |                                                | 14,687  |        |         |         | 7,351   |       
|                                          | Depreciation and amortization                                          |                        |                                                | 29,432  |        |         |         | 23,908  |       
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|                                          |                                                                        |                        | Total costs and expenses                       |         |        | 113,854 |         |         |        | 77,571  |  
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|Operating loss                            |                                                                        |                        | (25,109                                        | )       |        |         | (15,158 | )      
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|OTHER INCOME (EXPENSES):                  |                                                                        |                        |                                                |         |        |         |         |        
|                                          | Interest income and investment gains                                   |                        |                                                | 4,511   |        |         |         | 355     |       
|                                          | Interest expense                                                       |                        |                                                | (33,509 | )      |         |         | (33,800 | )     
|                                          | Net loss on foreign exchange                                           |                        |                                                | (13,781 | )      |         |         | (7,365  | )     
|                                          | Recognition of other-than-temporary decline in
    value of investment |                        |                                                |         |        |         |         | (674    | )     
|                                          | Other income (loss), net                                               |                        |                                                | 2       |        |         |         | (1,397  | )     
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|                                          |                                                                        |                        | Total other expenses                           |         |        | (42,777 | )       |         |        | (42,881 | )
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|LOSS BEFORE INCOME TAXES                  |                                                                        |                        | (67,886                                        | )       |        |         | (58,039 | )      
|PROVISION FOR FOREIGN INCOME TAXES        |                                                                        |                        | (365                                           | )       |        |         | (438    | )      
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|NET LOSS                                  |                                                                        | $                      | (68,251                                        | )       |        | $       | (58,477 | )      
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|NET LOSS PER COMMON SHARE:                |                                                                        |                        |                                                |         |        |         |         |        
|                                          | BASIC AND DILUTED                                                      |                        | $                                              | (0.75   | )      |         | $       | (0.64   | )     
|                                          |                                                                        |                        |                                                |         |        |         |         |        
|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

(In thousands of U.S. Dollars)


(Unaudited)


|                                   |                                                                        |                    |         |        |        |   |         |      |      |  
|---------------------------------- | ---------------------------------------------------------------------- | ------------------ | ------- | ------ | ------ | - | ------- | ---- | ---- | -
|                                   |                                                                        |                   
|                                   |                                                                        | Three Months Ended
|                                   |                                                                        | March 31,         
|                                   |                                                                        |                   
|                                   |                                                                        | 2001               |         | 2002  
|                                   |                                                                        |                    |         |       
|NET LOSS                           |                                                                        | $                  | (68,251 | )      |        | $ | (58,477 | )   
|                                   |                                                                        |                    |         |        |        |   |         |     
|OTHER COMPREHENSIVE (LOSS) INCOME: |                                                                        |                    |         |        |        |   |         |     
|                                   | Foreign currency translation adjustment                                |                    |         | (3,752 | )      |   |         | (265 | )   
|                                   | Change in unrealized loss on investments
    available for sale        |                    |         | 1,912  |        |   |         | (867 | )   
|                                   | Recognition of other-than-temporary decline in
    value of investment |                    |         |        |        |   |         | 674  |     
|                                   |                                                                        |                    |         |        |        |   |         |     
|                                   |                                                                        | TOTAL              |         |        | (1,840 | ) |         |      | (458 | )
|                                   |                                                                        |                    |         |        |        |   |         |     
|COMPREHENSIVE LOSS                 |                                                                        | $                  | (70,091 | )      |        | $ | (58,935 | )   
|                                   |                                                                        |                    |         |        |        |   |         |     

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

FOR THREE MONTHS ENDED MARCH 31,
2002


(In thousands of U.S. Dollars)


(Unaudited)


|                             |                                                                                                       |              |            |            |  |             |     |             |  |               |          |      |  |       |              |          |  |   |        |   |  |   |         |      |   |   |          |         |  
|---------------------------- | ----------------------------------------------------------------------------------------------------- | ------------ | ---------- | ---------- |  | ----------- | --- | ----------- |  | ------------- | -------- | ---- |  | ----- | ------------ | -------- |  | - | ------ | - |  | - | ------- | ---- | - | - | -------- | ------- | -
|                             |                                                                                                       |              |            |            |  |             |     |             |  | Accumulated   |          |     
|                             |                                                                                                       | Common Stock |            | Additional |  |             |     | Deferred    |  | Other         |          |     
|                             |                                                                                                       |              |            | Paid In    |  | Accumulated |     | Stock-Based |  | Comprehensive |          |     
|                             |                                                                                                       | Shares       |            | Amount     |  | Capital     |     | Deficit     |  | Compensation  |          | Loss |  | Total
|                             |                                                                                                       |              |            |            |  |             |     |             |  |               |          |      |  |      
|BALANCE AT DECEMBER 31, 2001 |                                                                                                       |              | 91,428,570 |            |  | $           | 914 |             |  |               | $537,924 |      |  |       | $(1,072,330) |          |  | $ | (5,438 | ) |  | $ | (13,712 | )    |   | $ | (552,642 | )      
|                             | 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                                        |              |            |            |  |             |     |             |  |               |          |      |  |       |              |          |  |   |        |   |  |   |         | (867 | ) |   |          | (867    | )
|                             | Recognition of other-than-temporary decline in
    value of investment                                |              |            |            |  |             |     |             |  |               |          |      |  |       |              |          |  |   |        |   |  |   |         | 674  |   |   |          | 674     |  
|                             | Foreign currency translation adjustment                                                               |              |            |            |  |             |     |             |  |               |          |      |  |       |              |          |  |   |        |   |  |   |         | (265 | ) |   |          | (265    | )
|                             | Net loss for the period                                                                               |              |            |            |  |             |     |             |  |               |          |      |  |       |              | (58,477) |  |   |        |   |  |   |         |      |   |   |          | (58,477 | )
|                             |                                                                                                       |              |            |            |  |             |     |             |  |               |          |      |  |       |              |          |  |   |        |   |  |   |         |      |   |   |          |        
|BALANCE AT MARCH 31, 2002    |                                                                                                       |              | 91,428,570 |            |  | $           | 914 |             |  |               | $538,066 |      |  |       | $(1,130,807) |          |  | $ | (5,438 | ) |  | $ | (14,170 | )    |   | $ | (611,435 | )      
|                             |                                                                                                       |              |            |            |  |             |     |             |  |               |          |      |  |       |              |          |  |   |        |   |  |   |         |      |   |   |          |        

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

(In thousands of U.S. Dollars)


(Unaudited)


|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |         |        |        |        |  
|------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | -------------------------------------------------------------- | ------------------------------------------------------- | ------ | ------ | ------- | ------- | ------ | ------ | ------ | -
|                                                                         |                                                                                                                   |                                                                       
|                                                                         |                                                                                                                   | Three Months Ended                                                    
|                                                                         |                                                                                                                   | March 31,                                                             
|                                                                         |                                                                                                                   |                                                                       
|                                                                         |                                                                                                                   | 2001                                                                   |                                                                | 2002                                                   
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Net loss                                                                                                          |                                                                        | $                                                              | (68,251                                                 | )      |        | $       | (58,477 | )     
|                                                                         | Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities, net of acquisition: |                                                                        |                                                                |                                                         |        |        |         |         |       
|                                                                         |                                                                                                                   | Amortization and depreciation                                          |                                                                |                                                         | 29,432 |        |         |         | 23,908 |       
|                                                                         |                                                                                                                   | Provision for doubtful accounts                                        |                                                                |                                                         | 1,256  |        |         |         | 3,017  |       
|                                                                         |                                                                                                                   | Recognition of other-than-temporary decline in
    value of investment |                                                                |                                                         |        |        |         |         | 674    |       
|                                                                         |                                                                                                                   | Deferred income tax (benefit) provision                                |                                                                |                                                         | (206   | )      |         |         |        |       
|                                                                         |                                                                                                                   | Changes in assets and liabilities:                                     |                                                                |                                                         |        |        |         |         |        |       
|                                                                         |                                                                                                                   |                                                                        | (Increase) decrease in trade accounts receivable,
    net      |                                                         |        | (5,779 | )       |         |        | 1,901  |       
|                                                                         |                                                                                                                   |                                                                        | Increase in prepaid expenses                                   |                                                         |        | (2,104 | )       |         |        | (1,034 | )     
|                                                                         |                                                                                                                   |                                                                        | Decrease in other receivables and other
    non-current assets |                                                         |        | 3,249  |         |         |        | 12,711 |       
|                                                                         |                                                                                                                   |                                                                        | Increase (decrease) in accounts
    payable  trade            |                                                         |        | 312    |         |         |        | (9,880 | )     
|                                                                         |                                                                                                                   |                                                                        | Increase in accrued and other liabilities                      |                                                         |        | 2,572  |         |         |        | 32,703 |       
|                                                                         |                                                                                                                   |                                                                        | Increase (decrease) in deferred revenues                       |                                                         |        | 30,805 |         |         |        | (855   | )     
|                                                                         |                                                                                                                   |                                                                        | Decrease in other long-term liabilities                        |                                                         |        | (2,006 | )       |         |        | (2,538 | )     
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         |                                                                                                                   |                                                                        |                                                                | Net cash provided by (used in) operating
    activities |        |        | (10,720 | )       |        |        | 2,130  |  
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Net decrease (increase) in trading
    investments                                                                |                                                                        |                                                                | 80,408                                                  |        |        |         | (318    | )     
|                                                                         | Purchases of broadband network, net of disposals                                                                  |                                                                        |                                                                | (39,557                                                 | )      |        |         | (5,768  | )     
|                                                                         | Purchases of property, plant and equipment, net
    of disposals                                                  |                                                                        |                                                                | (30,445                                                 | )      |        |         | 2,373   |       
|                                                                         | Decrease in other investment                                                                                      |                                                                        |                                                                | 525                                                     |        |        |         |         |       
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         |                                                                                                                   |                                                                        |                                                                | Net cash provided by (used in) investing
    activities |        |        | 10,931  |         |        |        | (3,713 | )
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Net borrowings from short-term debt                                                                               |                                                                        |                                                                | 2,921                                                   |        |        |         | (106    | )     
|                                                                         | Proceeds from long-term debt, net of deferred
    financing costs                                                 |                                                                        |                                                                | 12,023                                                  |        |        |         | 476     |       
|                                                                         | Repayments of long-term debt                                                                                      |                                                                        |                                                                | (8,057                                                  | )      |        |         | (2,744  | )     
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         |                                                                                                                   |                                                                        |                                                                | Net cash provided by (used in) financing
    activities |        |        | 6,887   |         |        |        | (2,374 | )
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH
    EQUIVALENTS          |                                                                                                                   |                                                                        | (3,752                                                         | )                                                       |        |        | (265    | )      
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                 |                                                                                                                   |                                                                        | 3,346                                                          |                                                         |        |        | (4,222  | )      
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
    PERIOD                 |                                                                                                                   |                                                                        | 67,737                                                         |                                                         |        |        | 35,606  |        
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                           |                                                                                                                   | $                                                                      | 71,083                                                         |                                                         |        | $      | 31,384  |        
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                      |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Interest paid                                                                                                     |                                                                        | $                                                              | 33,520                                                  |        |        | $       | 4,769   |       
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Foreign income taxes paid                                                                                         |                                                                        |                                                                |                                                         |        |        | $       | 549     |       
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES: |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Change to unrealized gain (loss) in
    investment available for sale, net of tax                                 |                                                                        | $                                                              | 1,912                                                   |        |        | $       | (867    | )     
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        
|                                                                         | Broadband network vendor financing                                                                                |                                                                        | $                                                              | 22,477                                                  |        |        |         |         |       
|                                                                         |                                                                                                                   |                                                                        |                                                                |                                                         |        |        |         |        

See notes to condensed consolidated financial
statements.

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##### Table of Contents






IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

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





1.     GENERAL

IMPSAT Fiber Networks, Inc., a Delaware holding
company, and subsidiaries (the Company) is a leading
integrated provider of broadband Internet, data and voice
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. In addition, the Company has built an
extensive pan-Latin American high capacity fiber optic network
(Broadband Network).

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. Finally, the Company has 500,000
gross square feet of premises housing advanced hosting
capabilities.

The 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 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 Company and its
operating subsidiaries.

Liquidity and Going Concern
Considerations The
accompanying condensed consolidated financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business. The Company currently faces
significant near-term cash flow and liquidity problems. The
Company has no material working capital or other credit facility
under which it may borrow for working capital or other general
corporate purposes. The Company is not generating sufficient
revenue to fund its operations and to repay its principal and
interest obligations under its indebtedness, including its
vendor financing obligations with Nortel Networks Limited
(Nortel) and Lucent Technologies Inc.
(Lucent) (collectively the Broadband Network
Vendor Financing Agreements) and its 12.125% Senior
Guaranteed Notes due 2003, 13.375% Senior Notes due 2005 and
12.375% Senior Notes due 2008 (collectively the Senior
Notes) The Company did not make the semiannual interest
payment on the Senior Notes due 2003 (which was due on
January 15, 2002), on the Senior Notes due 2005 (which was
due on February 15, 2002), or on the Senior Notes due 2008
(which was due on December 15, 2001). The Company is also
in default under the Broadband Network Vendor Financing
Agreements. The Companys cash flows and liquidity are
insufficient to satisfy all of the Companys obligations.
These factors raise substantial doubt as to the Companys
ability to continue as a going concern for a reasonable period
of time. The condensed consolidated financial statements do not
include any adjustments relating to the recoverability

F-6



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


and classification of recorded asset amounts or
the amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern.

The Company believes that it is unlikely it will
be able to obtain future debt or equity financing on acceptable
terms, or at all. The securities markets are currently not
available to the Company. The Company therefore will be required
to restructure its balance sheet. It is unlikely that the
Company could obtain additional financing without effecting a
restructuring.

The Company with the assistance of the investment
bank, Houlihan Lokey Howard & Zukin Capital (Houlihan
Lokey), is currently negotiating with the holders of the
Senior Notes and with the creditors under the Broadband Network
Vendor Financing Agreements and with other principal creditors
as to the proposed financial restructuring plan discussed below.
There is no assurance that the Company will be able to
successfully complete the proposed financial restructuring plan.
Such events could have a material adverse effect upon the
Company and could threaten its ability to continue as a going
concern.

Financial Restructuring On March 11, 2002, the
Companys management, who have been advised by Houlihan
Lokey, concluded negotiations with an ad hoc committee (the
Committee) representing certain holders of the debt
under its Broadband Network Vendor Financing Agreements, and
certain holders of the $125.0 million outstanding principal
amount of the 12.125% Senior Guaranteed Notes due 2003, the
$300.0 million 13.75% Senior Notes due 2005 and the holders
of the $225.0 million 12.375% Senior Notes due 2008 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. The
Restructuring Term Sheet, contemplates the following principal
components of the proposed restructuring plan:



| |   |                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | all of the shares of the Companys existing
    common stock, options granted under the Companys stock
    option plans, and any other equity interests would be cancelled,
    retired and eliminated with no consideration paid therefore, and
    the Company would issue new common stock in
    accordance with the proposed restructuring plan;
|
| |  | creditors under the Broadband Network Vendor
    Financing Agreements would receive                                                                                                                                                                                                                                                                     



| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $140.7 million senior secured debt issued by
    IMPSAT Argentina and IMPSAT Brazil and guaranteed by the Company;                                                          
|
| |  | $22.5 million of new senior convertible
    notes guaranteed by IMPSAT Argentina and convertible into 5% of
    the Companys new common stock on a fully-diluted basis; and

 warrants to acquire up to 15% of the
Companys new common stock on a fully-diluted basis.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | holders of the Notes due 2003 would receive
    $67.5 million of new senior convertible notes guaranteed by
    IMPSAT Argentina and convertible into 23% of the Companys
    new common stock on a fully-diluted basis                                                                                                                                                                                                                                      
|
| |  | holders of the Notes due 2005 and the Notes due
    2008 would exchange those securities for 98% of the
    Companys new common stock, subject to certain dilutive
    events                                                                                                                                                                                                                                                                                
|
| |  | the Companys guarantees of certain
    indebtedness owed by the Companys operating subsidiaries
    to certain of their respective creditors will either be
    restructured in exchange for new senior convertible notes and
    warrants consistent with and proportionate to the restructuring
    treatment of analogous indebtedness under the Broadband Network
    Vendor Financing Agreements, or canceled in exchange for equity
    in the Company
|
| |  | no distribution to existing stockholders of the
    Company                                                                                                                                                                                                                                                                                                                                                                                                   

F-7



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)




| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | management would receive 2% of the Companys
    new common stock plus stock options representing 8% of the
    Companys new common stock.

The term sheet agreement in principle provides
that completion of the proposed restructuring plan would be
subject to certain conditions, including the plans
acceptance by affected classes of the Companys securities
holders in accordance with the U.S. Bankruptcy Code.

Currently, the Company has not filed a
Chapter 11 plan of reorganization under the U.S. Bankruptcy
Code. There can be no assurances that the Company will be able
to complete this filing or, if the Company does, that any plan
of reorganization will be approved by the Bankruptcy Court. If
the Company is unable to timely file for protection under
Chapter 11 or obtain confirmation of a plan of
reorganization, the creditors may seek other alternatives for
the Company, including accepting bids for the Company or parts
thereof through an auction process or forcing the Company into a
liquidation proceeding under the federal bankruptcy laws.






2.     SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation The financial statements are presented
on a condensed consolidated basis and include the accounts of
the IMPSAT Fiber Networks, Inc and its subsidiaries. All
significant intercompany transactions and balances have been
eliminated.

Interim Financial Information The unaudited condensed consolidated
financial statements as of March 31, 2002 and for the three
months ended March 31, 2001 and 2002 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, 2002 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s
foreign exchange rate risk, other than in Brazil and in
Argentina since the devaluation discussed below, is limited
because the majority of its assets are either non-monetary in
nature or denominated in U.S. dollars, and the majority of its
debt is denominated in U.S. dollars. Additionally, a significant
portion of the Companys debt has a fixed interest rate
thereby limiting the Companys interest rate risk exposure.
Accordingly, the Company has not entered into derivative
transactions to hedge against these potential 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 peso free market
opened on January 11, 2002 and traded at 1.65 pesos to the
U.S. dollar and has been volatile since. At March 31, 2002,
the Argentine peso traded at pesos 2.85 to the
U.S. dollar. The devaluation of the Argentine peso will
generally affect the Companys

F-8



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


condensed consolidated financial statements by
generating foreign exchange gains or losses on
peso-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 mandatorily 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 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 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, IMPSAT
Argentinas customer contracts and operating cash inflows
are now predominantly denominated in pesos. Moreover, IMPSAT
Argentinas debt service payments and a significant 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.

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 realized 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.

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

F-9



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


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 the Companys
broadband network capacity and infrastructure. Pursuant to these
agreements, the Company will receive fixed advance payments for
the IRU 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 months ended
March 31, 2001 and 2002.

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.

Broadband Network Portions of the Broadband Network are
under construction. 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.

|                        |  |            
|----------------------- |  | -----------
|Network infrastructure  |  | 10-15 years
|Equipment and materials |  | 10 years   
|Right of way            |  | 10-20 years
|IRU investments         |  | 15 years   

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 
|Furniture, fixtures and other equipment |  | 2-10 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.

Investments
Investments covered under the scope of Statement of Financial
Accounting Standards (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

F-10



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


results of operations. Unrealized gains or
losses, net of tax, for available for sale investments are
included in accumulated other comprehensive loss within
stockholders equity. All other investments are carried at
cost.

Deferred Financing
Costs Debt issuance costs
and transaction fees, which are associated with the issuance of
the Senior Guaranteed Notes are being amortized (and charged to
interest expense) over the term of the related notes on a method
which approximates the level yield method.

Long-Lived
Assets Long-lived assets,
including goodwill, 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. During the
three month period ended March 31, 2001 and 2002, no
impairments were recorded.

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 which is included in accumulated other
comprehensive income (loss) in stockholders equity.

Fair Value of Financial
Instruments The
Companys financial instruments include receivables,
investments, payables, short- and long-term debt. The
Companys Senior Notes, trading and available for sale
investments, were valued at market closing prices at
December 31, 2001 and March 31, 2002. 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 December 31, 2001 and
March 31, 2002.

At December 31, 2001 and March 31,
2002, the fair value of the Companys financial instruments
was as follows:

|                                         |  |              |        |           |  |   |        | 
|---------------------------------------- |  | ------------ | ------ | --------- |  | - | ------ | 
|                                         |  | December 31, |        | March 31,
|                                         |  | 2001         |        | 2002     
|                                         |  |              |        |          
|12.125% Senior Guaranteed Notes due 2003 |  | $            | 6,250  |           |  | $ | 6,250  | 
|13.75% Senior Notes due 2005             |  |              | 12,000 |           |  |   | 9,000  | 
|12.375% Senior Notes due 2008            |  |              | 9,000  |           |  |   | 6,750  | 
|Trading Investments                      |  |              | 29,319 |           |  |   | 29,637 | 
|Available for sale investments           |  |              | 3,307  |           |  |   | 2,440  | 

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
members of the Board compensation plans at fair value. The
Company has chosen to continue to account for stock-based
compensation to employees and non-employee members of the Board
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 members of the
Board 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 member of the Board must pay for the
stock. The Company also provides the required disclosures of
SFAS No. 123.

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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


Net Loss 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
Loss Accumulated other
comprehensive loss is comprised as follows:

|                             |  |             |         |                 |  |       |      |   |  |   |         |  
|---------------------------- |  | ----------- | ------- | --------------- |  | ----- | ---- | - |  | - | ------- | -
|                             |  |             |         | Unrealized Gain |  |      
|                             |  |             |         | (Loss) on       |  |      
|                             |  | Foreign     |         | Investments     |  |      
|                             |  | Currency    |         | Available for   |  |      
|                             |  | Translation |         | Sale            |  | Total
|                             |  |             |         |                 |  |      
|Balance at December 31, 2001 |  | $           | (13,395 | )               |  | $     | (317 | ) |  | $ | (13,712 | )
|Change during the period     |  |             | (265    | )               |  |       | (193 | ) |  |   | (458    | )
|                             |  |             |         |                 |  |       |      |   |  |   |         |  
|Balance at March 31, 2002    |  | $           | (13,660 | )               |  | $     | (510 | ) |  | $ | (14,170 | )
|                             |  |             |         |                 |  |       |      |   |  |   |         |  

New Accounting
Pronouncements In June
2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which addresses financial accounting
and reporting for legal obligations associated with the
retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS No. 143 is effective for
fiscal years beginning after June 15, 2002, with early
adoption encouraged. The Company does not expect the adoption of
SFAS No. 143 to have a material effect on its consolidated
financial statements or disclosures.

In August 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001, and interim periods within those fiscal
years, with early adoption encouraged. The provisions of SFAS
No. 144 generally are to be applied prospectively. The
adoption of SFAS No. 144 did not have a material effect on
the Companys consolidated financial statements or
disclosures.

Reclassifications
Certain amounts in the 2001 condensed consolidated financial
statements have been reclassified to conform with the 2002
presentation.




3.  INVESTMENTS

The Companys investments consist of the
following at December 31, 2001 and March 31, 2002:

|                                   |  |              |        |           |  |   |        | 
|---------------------------------- |  | ------------ | ------ | --------- |  | - | ------ | 
|                                   |  | December 31, |        | March 31,
|                                   |  | 2001         |        | 2002     
|                                   |  |              |        |          
|Trading investments, at fair value |  | $            | 29,319 |           |  | $ | 29,637 | 
|                                   |  |              |        |           |  |   |        | 
|Investments in common stock        |  | $            | 3,307  |           |  | $ | 2,440  | 
|                                   |  |              |        |           |  |   |        | 

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

The Companys investment in common stock
includes a 3.3% ownership interest in the outstanding common
stock of Claxson Interactive Group Inc., an integrated media
company with operations in Latin America. This investment is
subject to equity price risk. The Company has not taken any
actions to hedge this market risk exposure. During the 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 this investment based
upon a sustained reduction in the quoted market price of $0.33
per share compared to the adjusted cost basis of $1.43 per share.

F-12



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)







4.  TRADE ACCOUNTS
RECEIVABLE

Trade accounts receivable, by operating
subsidiaries, at December 31, 2001 and March 31, 2002,
are summarized as follows:

|                                      |       |              |         |           |  |   |         |        | 
|------------------------------------- | ----- | ------------ | ------- | --------- |  | - | ------- | ------ | 
|                                      |       | December 31, |         | March 31,
|                                      |       | 2001         |         | 2002     
|                                      |       |              |         |          
|IMPSAT Argentina                      |       | $            | 51,037  |           |  | $ | 37,229  |       
|IMPSAT Brasil                         |       |              | 6,714   |           |  |   | 7,702   |       
|IMPSAT Colombia                       |       |              | 5,033   |           |  |   | 4,949   |       
|IMPSAT Venezuela                      |       |              | 6,637   |           |  |   | 8,658   |       
|All other countries                   |       |              | 12,772  |           |  |   | 14,200  |       
|                                      |       |              |         |           |  |   |         |       
|                                      | Total |              |         | 82,193    |  |   |         | 72,738 | 
|Less: allowance for doubtful accounts |       |              | (23,782 | )         |  |   | (19,245 | )     
|                                      |       |              |         |           |  |   |         |       
|Trade accounts receivable, net        |       | $            | 58,411  |           |  | $ | 53,493  |       
|                                      |       |              |         |           |  |   |         |       

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

The activity for the allowance for doubtful
accounts for the year ended December 31, 2001 and for the
three months ended March 31, 2002 is as follows:

|                                |  |              |        |           |  |   |        |  
|------------------------------- |  | ------------ | ------ | --------- |  | - | ------ | -
|                                |  | December 31, |        | March 31,
|                                |  | 2001         |        | 2002     
|                                |  |              |        |          
|Beginning balance               |  | $            | 22,509 |           |  | $ | 23,782 |  
|Provision for doubtful accounts |  |              | 16,784 |           |  |   | 3,017  |  
|Write-offs, net of recoveries   |  |              | (7,697 | )         |  |   | (127   | )
|Effect of exchange rate change  |  |              | (7,814 | )         |  |   | (7,427 | )
|                                |  |              |        |           |  |   |        |  
|Ending balance                  |  | $            | 23,782 |           |  | $ | 19,245 |  
|                                |  |              |        |           |  |   |        |  




5.  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, 2001 and March 31, 2002:

|                    |       |              |        |           |  |   |        |        | 
|------------------- | ----- | ------------ | ------ | --------- |  | - | ------ | ------ | 
|                    |       | December 31, |        | March 31,
|                    |       | 2001         |        | 2002     
|                    |       |              |        |          
|IMPSAT Argentina    |       | $            | 22,155 |           |  | $ | 12,805 |       
|IMPSAT Brazil       |       |              | 3,209  |           |  |   | 4,088  |       
|IMPSAT Colombia     |       |              | 3,777  |           |  |   | 4,710  |       
|IMPSAT Venezuela    |       |              | 2,667  |           |  |   | 1,926  |       
|All other countries |       |              | 7,195  |           |  |   | 7,088  |       
|                    |       |              |        |           |  |   |        |       
|                    | Total |              | $      | 39,003    |  |   | $      | 30,617 | 
|                    |       |              |        |           |  |   |        |       

F-13



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)







6.  BROADBAND NETWORK AND
AGREEMENTS

Broadband network and related equipment consists
of the following at December 31, 2001 and March 31,
2002:

|                                                |       |              |         |           |  |   |         |         | 
|----------------------------------------------- | ----- | ------------ | ------- | --------- |  | - | ------- | ------- | 
|                                                |       | December 31, |         | March 31,
|                                                |       | 2001         |         | 2002     
|                                                |       |              |         |          
|Network infrastructure                          |       | $            | 168,301 |           |  | $ | 166,975 |        
|Equipment and materials                         |       |              | 132,494 |           |  |   | 136,238 |        
|Right of ways                                   |       |              | 16,056  |           |  |   | 16,859  |        
|IRU investments                                 |       |              | 46,913  |           |  |   | 49,180  |        
|                                                |       |              |         |           |  |   |         |        
|                                                | Total |              |         | 363,764   |  |   |         | 369,252 | 
|Less: accumulated depreciation                  |       |              | (83,373 | )         |  |   | (91,102 | )      
|                                                |       |              |         |           |  |   |         |        
|                                                | Total |              |         | 280,391   |  |   |         | 278,150 | 
|Under construction  Network
    infrastructure |       |              | 30,207  |           |  |   | 29,995  |        
|                                                |       |              |         |           |  |   |         |        
|                                                | Total |              | $       | 310,598   |  |   | $       | 308,145 | 
|                                                |       |              |         |           |  |   |         |        

The recap of accumulated depreciation for the
year ended December 31, 2001 and for the three months ended
March 31, 2002 is as follows:

|                          |  |              |        |           |  |   |        |  
|------------------------- |  | ------------ | ------ | --------- |  | - | ------ | -
|                          |  | December 31, |        | March 31,
|                          |  | 2001         |        | 2002     
|                          |  |              |        |          
|Beginning balance         |  | $            | 46,433 |           |  | $ | 83,373 |  
|Depreciation expense      |  |              | 41,173 |           |  |   | 8,221  |  
|Disposals and retirements |  |              | (4,233 | )         |  |   | (492   | )
|                          |  |              |        |           |  |   |        |  
|Ending balance            |  | $            | 83,373 |           |  | $ | 91,102 |  
|                          |  |              |        |           |  |   |        |  

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 Company has guaranteed the obligations of each of IMPSAT
Argentina and IMPSAT Brazil under the Nortel financing
agreements. At March 31, 2002, a total of
$245.4 million was outstanding.

The Companys subsidiaries have obtained
additional vendor financing from Lucent Technologies, Ericsson,
Tellabs OY, DMC and Harris Canada, Inc. for the acquisition of
fiber optic cable and other telecommunications equipment for the
Broadband Network, with respect to which an aggregate of
$30.1 million was disbursed and outstanding as of
March 31, 2002, which are guaranteed by the Company.

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 the South American
Crossing, the Company also constructed turnkey backhaul segments
and granted IRUs to Global Crossing in Peru and Brazil between

F-14



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IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


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. In connection with the delivery of such
infrastructure to Global Crossing during 2000, the Company
recognized during the three months ended March 31, 2001,
revenues and costs totaling $6.6 million and
$3.3 million, respectively.

As part of its arrangements with Global Crossing,
the Company has 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 $9.7 million under this
agreement as of December 31, 2001 and has not purchased any
amount during the three months ended March 31, 2002.

IRU
Agreements The Company
has entered into several framework agreements 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, 2002, the
Company recognized approximately $0.9 million from these
agreements, which are reflected as services to carriers in the
accompanying condensed consolidated statement of operations.




7.  PROPERTY, PLANT AND
EQUIPMENT

Property, plant and equipment at
December 31, 2001 and March 31, 2002, consisted of:

|                                        |       |              |          |           |  |   |          |         | 
|--------------------------------------- | ----- | ------------ | -------- | --------- |  | - | -------- | ------- | 
|                                        |       | December 31, |          | March 31,
|                                        |       | 2001         |          | 2002     
|                                        |       |              |          |          
|Land                                    |       | $            | 11,223   |           |  | $ | 11,185   |        
|Building and improvements               |       |              | 68,350   |           |  |   | 67,974   |        
|Operating communications equipment      |       |              | 424,428  |           |  |   | 418,889  |        
|Furniture, fixtures and other equipment |       |              | 36,376   |           |  |   | 38,718   |        
|                                        |       |              |          |           |  |   |          |        
|                                        | Total |              |          | 540,377   |  |   |          | 536,766 | 
|Less: accumulated depreciation          |       |              | (332,345 | )         |  |   | (344,591 | )      
|                                        |       |              |          |           |  |   |          |        
|                                        | Total |              |          | 208,032   |  |   |          | 192,175 | 
|Equipment in transit                    |       |              | 3,413    |           |  |   | 2,570    |        
|Works in process                        |       |              | 3,014    |           |  |   | 1,796    |        
|                                        |       |              |          |           |  |   |          |        
|Property, plant and equipment, net      |       | $            | 214,459  |           |  | $ | 196,541  |        
|                                        |       |              |          |           |  |   |          |        

The recap of accumulated depreciation for the
year ended December 31, 2001 and for the three months ended
March 31, 2002, is as follows:

|                          |  |              |         |           |  |   |         |  
|------------------------- |  | ------------ | ------- | --------- |  | - | ------- | -
|                          |  | December 31, |         | March 31,
|                          |  | 2001         |         | 2002     
|                          |  |              |         |          
|Beginning balance         |  | $            | 265,354 |           |  | $ | 332,345 |  
|Depreciation expense      |  |              | 76,465  |           |  |   | 15,545  |  
|Disposals and retirements |  |              | (9,474  | )         |  |   | (3,299  | )
|                          |  |              |         |           |  |   |         |  
|Ending balance            |  | $            | 332,345 |           |  | $ | 344,591 |  
|                          |  |              |         |           |  |   |         |  

F-15



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)







8.  SHORT-TERM DEBT

Several of the Companys subsidiaries
maintain short-term credit facilities with local banks. These
credit facilities are denominated in local currencies and
U.S. dollars, with interest rates ranging from 16.84% to
22.87%. The Companys subsidiaries have historically
refinanced these short-term credit facilities on an annual
basis. As of December 31, 2001 and March 31, 2002,
amounts outstanding under these credit facilities totaled
approximately $8.3 million and $8.2 million,
respectively.




9.  LONG-TERM DEBT

The Companys long-term debt at
December 31, 2001 and March 31, 2002, is detailed as
follows:

|                                                                                                                                                                     |                                          |                                              |                      |           |        |         |          |         |        |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | -------------------------------------------- | -------------------- | --------- | ------ | ------- | -------- | ------- | ------ | ------- | 
|                                                                                                                                                                     |                                          | December 31,                                 |                      | March 31,
|                                                                                                                                                                     |                                          | 2001                                         |                      | 2002     
|                                                                                                                                                                     |                                          |                                              |                      |          
|Senior Notes:                                                                                                                                                        |                                          |                                              |                      |           |        |         |          |        
|                                                                                                                                                                     | 12.125% Senior Guaranteed Notes due 2003 |                                              | $                    | 125,000   |        |         | $        | 125,000 |       
|                                                                                                                                                                     | 13.75% Senior Notes due 2005             |                                              |                      | 300,000   |        |         |          | 300,000 |       
|                                                                                                                                                                     | 12.375% Senior Notes due 2008            |                                              |                      | 225,000   |        |         |          | 225,000 |       
|Term notes, maturing from 2001 through 2004;
    collateralized by buildings and equipment, the assignment of
    customer contracts and investment; denominated in: |                                          |                                              |                      |           |        |         |          |        
|                                                                                                                                                                     |                                          | U.S. dollars (interest rates 5.75%38.37%)   |                      |           | 16,325 |         |          |         | 14,253 |        
|                                                                                                                                                                     |                                          | Local currency (interest rates 14.7922.32%) |                      |           | 21,904 |         |          |         | 21,742 |        
|Eximbank notes (interest rates 2.27%5.31%),
    maturing semiannually through 2002 and 2004                                                                         |                                          |                                              | 18,585               |           |        |         | 18,551   |        
|Vendor financing (3.59%14.30%), maturing
    2004 to 2008                                                                                                           |                                          |                                              | 275,451              |           |        |         | 275,451  |        
|                                                                                                                                                                     |                                          |                                              |                      |           |        |         |          |        
|                                                                                                                                                                     |                                          |                                              | Total long-term debt |           |        | 982,265 |          |         |        | 979,997 | 
|Less: current portion including defaulted
    indebtedness                                                                                                           |                                          |                                              | (959,076             | )         |        |         | (959,852 | )      
|                                                                                                                                                                     |                                          |                                              |                      |           |        |         |          |        
|Long-term debt, net                                                                                                                                                  |                                          | $                                            | 23,189               |           |        | $       | 20,145   |        
|                                                                                                                                                                     |                                          |                                              |                      |           |        |         |          |        

The Senior Notes, the vendor financing and 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
described in Note 1 have led to non-compliance with certain
covenant requirements and payment provisions under the
Companys Broadband Network 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 Broadband Network
Vendor Financing Agreements totaling approximately $36.3 million
that were due on that date. The waiver expired on
November 25, 2001 and the Broadband Network Vendor
Financing Agreements became due and payable, and the Company is
in default, see Note 1. The Company is also in default
under the Senior Notes. The Company did not make the semi-annual
interest payment on the Senior Notes due 2003 (which was due on
January 15, 2002), on the Senior Notes due 2005 (which was
due on February 15, 2002), or on the Senior Notes due 2008
(which was due on December 15, 2001). As a result of the
Companys default under the Senior Notes and the Broadband
Network Vendor Financing Agreements, an aggregate of
$865,1 million and $862,5 million of the defaulted
amounts have been reclassified the current portion of long-term
debts as of December 31, 2001 and March 31, 2002,
respectively.

F-16



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)







10.  INCOME TAXES

The composition of the (provision for) benefit
from income taxes, all of which is for foreign taxes, for the
three months ended March 31, 2001 and 2002 is as follows:

|         |       |           |      |      |   |   |      |      |  
|-------- | ----- | --------- | ---- | ---- | - | - | ---- | ---- | -
|         |       |          
|         |       | March 31,
|         |       |          
|         |       | 2001      |      | 2002
|         |       |           |      |     
|Current  |       | $         | (571 | )    |   | $ | (414 | )   
|Deferred |       |           | 206  |      |   |   | (24  | )   
|         |       |           |      |      |   |   |      |     
|         | Total |           | $    | (365 | ) |   | $    | (438 | )
|         |       |           |      |      |   |   |      |     

The foreign statutory tax rates range from 15% to
35% depending on the particular country.

As of March 31, 2002, the Company has
recorded a valuation allowance to offset its entire net deferred
tax asset.




11.  OPERATING SEGMENT
INFORMATION

The Companys operating segment information,
by subsidiary, is as follows for the three months ended
March 31, 2001 and 2002:

|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |        | 
|---------------------------- | -------------------- | --------- | ------- | ------ |  | -------- | ------- | --------- |  | --------- | ------- | ------------ |  | ----- | ------ | ----- |  | - | ------- | ------ |  |  | ------ | ------ | - | - | ------- | ------ | 
|                             |                      |           |         |        |  |          |         |           |  | All other |         |              |  |      
|2002                         |                      | Argentina |         | Brazil |  | Colombia |         | Venezuela |  | countries |         | Eliminations |  | Total
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |      
|Net Revenues                 |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|Data & value added services: |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|                             | Satellite            |           | $       | 4,872  |  |          | $       | 3,696     |  |           | $       | 4,531        |  |       | $      | 5,696 |  |   | $       | 8,366  |  |  | $      | (2,299 | ) |   | $       | 24,862 | 
|                             | Broad Band           |           |         | 4,082  |  |          |         | 4,255     |  |           |         | 9,146        |  |       |        | 1,070 |  |   |         | 4,677  |  |  |        | (3,344 | ) |   |         | 19,886 | 
|                             | Value added services |           |         | 1,460  |  |          |         | 825       |  |           |         | 170          |  |       |        | 403   |  |   |         | 3,838  |  |  |        | (3,079 | ) |   |         | 3,617  | 
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|                             | Subtotal             |           |         | 10,414 |  |          |         | 8,776     |  |           |         | 13,847       |  |       |        | 7,169 |  |   |         | 16,881 |  |  |        | (8,722 | ) |   |         | 48,365 | 
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|Internet                     |                      |           | 2,183   |        |  |          | 1,320   |           |  |           | 1,153   |              |  |       | 631    |       |  |   | 3,570   |        |  |  | (1,003 | )      |   |   | 7,854   |       
|Telephony                    |                      |           | 2,495   |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   | 3,578   |        |  |  | (1,729 | )      |   |   | 4,344   |       
|Services to carriers         |                      |           | 687     |        |  |          | 637     |           |  |           | 59      |              |  |       |        |       |  |   | 190     |        |  |  | (7     | )      |   |   | 1,566   |       
|Sales of equipment           |                      |           | 62      |        |  |          |         |           |  |           | 10      |              |  |       | 54     |       |  |   | 158     |        |  |  |        |        |   |   | 284     |       
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|Total net revenues           |                      | $         | 15,841  |        |  | $        | 10,733  |           |  | $         | 15,069  |              |  | $     | 7,854  |       |  | $ | 24,377  |        |  |  |        |        |   | $ | 62,413  |       
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|Operating income (loss)      |                      | $         | (9,368  | )      |  | $        | (6,501  | )         |  | $         | 405     |              |  | $     | 581    |       |  | $ | (275    | )      |  |  |        |        |   | $ | (15,158 | )     
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       
|Total assets                 |                      | $         | 207,711 |        |  | $        | 186,688 |           |  | $         | 100,798 |              |  | $     | 54,092 |       |  | $ | 127,548 |        |  |  |        |        |   | $ | 676,837 |       
|                             |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |  |        |        |   |   |         |       

F-17



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |        | 
|-------------------------------------------------- | -------------------- | --------- | ------- | ------ |  | -------- | ------- | --------- |  | --------- | ------- | ------------ |  | ----- | ------ | ----- |  | - | ------- | ------ |  | - | ------ | ------ | - | - | --------- | ------ | 
|                                                   |                      |           |         |        |  |          |         |           |  | All other |         |              |  |      
|2001                                               |                      | Argentina |         | Brazil |  | Colombia |         | Venezuela |  | countries |         | Eliminations |  | Total
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |      
|Net Revenues                                       |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Data & value added services:                       |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|                                                   | Satellite            |           | $       | 16,130 |  |          | $       | 4,144     |  |           | $       | 6,341        |  |       | $      | 6,150 |  |   | $       | 8,658  |  |   | $      | (3,637 | ) |   | $         | 37,786 | 
|                                                   | Broad Band           |           |         | 7,470  |  |          |         | 1,664     |  |           |         | 8,090        |  |       |        | 608   |  |   |         | 1,707  |  |   |        | (1,098 | ) |   |           | 18,441 | 
|                                                   | Value added services |           |         | 1,453  |  |          |         | 924       |  |           |         | 100          |  |       |        | 172   |  |   |         | 3,477  |  |   |        | (2,605 | ) |   |           | 3,521  | 
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|                                                   | Subtotal             |           |         | 25,053 |  |          |         | 6,732     |  |           |         | 14,531       |  |       |        | 6,930 |  |   |         | 13,842 |  |   |        | (7,340 | ) |   |           | 59,748 | 
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Internet                                           |                      |           | 4,024   |        |  |          | 3,153   |           |  |           | 1,048   |              |  |       | 426    |       |  |   | 3,926   |        |  |   | (1,409 | )      |   |   | 11,168    |       
|Telephony                                          |                      |           | 706     |        |  |          |         |           |  |           | 4       |              |  |       |        |       |  |   | 703     |        |  |   | (141   | )      |   |   | 1,272     |       
|Services to carriers                               |                      |           | 772     |        |  |          | 312     |           |  |           | 7       |              |  |       |        |       |  |   | 1,061   |        |  |   | (220   | )      |   |   | 1,932     |       
|Sales of equipment                                 |                      |           | 2,024   |        |  |          | 2,698   |           |  |           |         |              |  |       | 1,127  |       |  |   | 2,282   |        |  |   | (77    | )      |   |   | 8,054     |       
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Total net revenues from services and
    equipment |                      | $         | 32,579  |        |  | $        | 12,895  |           |  | $         | 15,590  |              |  | $     | 8,483  |       |  | $ | 21,814  |        |  | $ | (9,187 | )      |   | $ | 82,174    |       
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Broadband network development revenues             |                      |           |         |        |  |          | 1,926   |           |  |           |         |              |  |       |        |       |  |   | 4,645   |        |  |   |        |        |   |   | 6,571     |       
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Total net revenues                                 |                      | $         | 32,579  |        |  | $        | 14,821  |           |  | $         | 15,590  |              |  | $     | 8,483  |       |  | $ | 26,459  |        |  |   |        |        |   | $ | 88,745    |       
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Operating income (loss)                            |                      | $         | (12,800 | )      |  | $        | (10,876 | )         |  | $         | 538     |              |  | $     | 129    |       |  | $ | (2,100  | )      |  |   |        |        |   | $ | (25,109   | )     
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       
|Total assets                                       |                      | $         | 545,112 |        |  | $        | 219,429 |           |  | $         | 125,607 |              |  | $     | 56,428 |       |  | $ | 419,272 |        |  |   |        |        |   | $ | 1,365,848 |       
|                                                   |                      |           |         |        |  |          |         |           |  |           |         |              |  |       |        |       |  |   |         |        |  |   |        |        |   |   |           |       




12.  COMMITMENTS AND
CONTINGENCIES

Commitments
The Company leases satellite capacity with average annual rental
commitments of approximately $24.0 million through the year
2006. In addition, the Company had committed to long-term
contracts for the purchase of terrestrial links from third
parties in Argentina, Colombia, and the United States for
approximately $3.3 million per year through 2006. The
Company has commitments to purchase communications and data
center equipment amounting to approximately $2.6 million at
March 31, 2002. The Company has commitments for additional
IRU investments totaling approximately $63.9 million in the
aggregate under its various IRU agreements. These commitments
are not included in the condensed consolidated balance sheet as
of March 31, 2002.

IMPSAT Brazil has entered into a
$5.9 million term note with El Camino Resources, which
is guaranteed by the Company and IMPSAT Argentina. At
March 31, 2002, the balance outstanding was approximately
$2.9 million.

360networks
During June 2001, the Company terminated a series of contracts
which the Company had signed in the first quarter of 2001 with
subsidiaries of 360americas networks (Bermuda) ltd., a
subsidiary of 360networks, Inc., and certain other subsidiaries
of 360networks, Inc. (collectively 360networks), to
construct and provide IRU dark fiber, capacity services and
conduit to 360networks over the Companys Broadband Network
in Argentina and Brazil, as a result of the breach by
360americas of its payment obligations under those contracts,
including the new Argentina-Brazil link that the Company has
recently completed. Between March and May 2001, the Company made
available segments of the IRU dark fiber and capacity services
to 360networks for acceptance, but 360networks failed to make
certain payments as required by the Companys contract with
them. 360networks also failed to make certain payments for
collocation space in the Companys telehouses in Sao Paulo
and Rio de Janeiro, Brazil and Buenos Aires, Argentina, and the
Company terminated those contracts as well. The Company has also
terminated a contract with 360networks for collocation space in
Caracas, Venezuela, also for payment default by 360networks.

F-18



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND
SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)


The Company has commenced arbitration and
litigation proceedings against 360networks for damages under the
terminated contracts for the provision of IRU dark fiber and
capacity services, as contemplated by the relevant agreements.
360americas and the other subsidiaries with which the Company
had contracted were not included in the series of bankruptcy and
insolvency filings made in the United State and Canada by their
parent, 360 networks, Inc. and certain of its other affiliates.
360networks, Inc. has announced that it intends to seek a buyer
for its South American undersea fiber optic cable system, which
is owned by 360americas. The Company intends to aggressively
pursue its remedies against 360networks, including its claim for
damages due under the terminated contracts, but is unable to
predict whether the Company will prevail in any such proceedings
and, if so, whether 360networks would be able to pay any
arbitration or litigation award that might be entered in favor
of the Company.

During the pendency of the arbitration and
litigation proceedings, the Company will continue to include as
deferred revenues on its condensed consolidated balance sheet
the amount received from 360networks as down payments under the
terminated contracts, after deducting amounts that were due and
payable at the time of the termination of the contracts. As of
December 31, 2001, the balance of such deferred revenue was
$22.6 million.

IPO Allocations
Class Action On
November 1, 2001, a lawsuit was filed in the United States
District Court for the Southern District of New York against the
Company, certain of the Companys current officers and
directors, and the underwriters to the Companys initial
public offering. 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. The plaintiff has proposed a
putative class from the date of the IPO to December 6,
2000. In August 2001, the court ordered that this suit be
coordinated for all pre-trial purposes in a proceeding styled
In re Initial Public Offering Securities Litigation,
21 MC 92, an intra-district proceeding involving
approximately 900 lawsuits concerning the initial public
offerings of approximately 310 companies and 48 underwriters.
The complaint does not seek a specified amount of damages. It is
the Companys present understanding that the plaintiffs
intend to file an amended complaint shortly. The Companys
management believes that the Company has meritorious defenses to
the allegations in the complaints and intends to defend the
litigation vigorously. However, due to the early stages of this
action, the Company cannot conclude as to the possible outcome.
The Company has certain insurance policies with respect to such
claims and has filed a claim with its carriers regarding this
matter.

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

In November 1996, IMPSAT Argentina filed suit
against a former customer, ENCOTESA, for amounts due and arising
under IMPSAT Argentinas contracts with ENCOTESA, the
Argentine national postal service for $7.3 million. The
ultimate collectibility of this matter continues to be
negotiated for settlement; however, the Company has valued this
receivable at a net realizable value of zero.

F-19



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##### Table of Contents






IMPSAT S.A.

CONDENSED BALANCE SHEETS

(In thousands of U.S. Dollars)


(Unaudited)


|                                             |                                                                                                                    |                                |         |           |         |   |         |          |         |  
|-------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ------------------------------ | ------- | --------- | ------- | - | ------- | -------- | ------- | -
|                                             |                                                                                                                    | December 31,                   |         | March 31,
|                                             |                                                                                                                    | 2001                           |         | 2002     
|                                             |                                                                                                                    |                                |         |          
|ASSETS                                      
|CURRENT ASSETS:                              |                                                                                                                    |                                |         |           |         |   |         |         
|                                             | Cash and cash equivalents                                                                                          |                                | $       | 3,979     |         |   | $       | 3,562    |        
|                                             | Trade accounts receivable, net                                                                                     |                                |         | 33,924    |         |   |         | 25,409   |        
|                                             | Receivable from affiliated companies                                                                               |                                |         | 17,715    |         |   |         | 18,910   |        
|                                             | Other receivables                                                                                                  |                                |         | 22,155    |         |   |         | 12,805   |        
|                                             | Prepaid expenses                                                                                                   |                                |         | 1,730     |         |   |         | 1,118    |        
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|                                             |                                                                                                                    | Total current assets           |         |           | 79,503  |   |         |          | 61,804  |  
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|BROADBAND NETWORK, Net                       |                                                                                                                    |                                | 105,995 |           |         |   | 106,338 |         
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|PROPERTY, PLANT AND EQUIPMENT, Net           |                                                                                                                    |                                | 40,149  |           |         |   | 31,807  |         
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|NON-CURRENT ASSETS:                          |                                                                                                                    |                                |         |           |         |   |         |         
|                                             | Investment in common stock                                                                                         |                                |         | 2,429     |         |   |         | 2,236    |        
|                                             | Other non-current assets                                                                                           |                                |         | 7,395     |         |   |         | 5,526    |        
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|                                             |                                                                                                                    | Total non-current assets       |         |           | 9,824   |   |         |          | 7,762   |  
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|TOTAL                                        |                                                                                                                    | $                              | 235,471 |           |         | $ | 207,711 |         
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|LIABILITIES AND STOCKHOLDERS
    DEFICIENCY
|CURRENT LIABILITIES:                         |                                                                                                                    |                                |         |           |         |   |         |         
|                                             | Accounts payable  trade                                                                                           |                                | $       | 59,535    |         |   | $       | 46,665   |        
|                                             | Advances from affiliated companies                                                                                 |                                |         | 2,448     |         |   |         | 4,154    |        
|                                             | Current portion of long-term debt                                                                                  |                                |         | 162,390   |         |   |         | 161,420  |        
|                                             | Accrued and other liabilities                                                                                      |                                |         | 15,422    |         |   |         | 23,081   |        
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|                                             |                                                                                                                    | Total current liabilities      |         |           | 239,795 |   |         |          | 235,320 |  
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|LONG-TERM DEBT, Net                          |                                                                                                                    |                                | 3,183   |           |         |   | 2,375   |         
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|DEFERRED REVENUES                            |                                                                                                                    |                                | 52,653  |           |         |   | 52,054  |         
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|COMMITMENTS AND CONTINGENCIES (Note 10)      |                                                                                                                    |                                |         |           |         |   |         |         
|STOCKHOLDERS DEFICIENCY:                    |                                                                                                                    |                                |         |           |         |   |         |         
|                                             | Common Stock, $0.01 par value 73,775 shares
    issued and outstanding at December 31, 2001 and
    March 31, 2002 |                                |         | 4         |         |   |         | 4        |        
|                                             | Paid in capital                                                                                                    |                                |         | 331,179   |         |   |         | 331,179  |        
|                                             | Accumulated deficit                                                                                                |                                |         | (391,024  | )       |   |         | (412,709 | )      
|                                             | Accumulated other comprehensive income (loss)                                                                      |                                |         | (319      | )       |   |         | (512     | )      
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|                                             |                                                                                                                    | Total stockholders deficiency |         |           | (60,160 | ) |         |          | (82,038 | )
|                                             |                                                                                                                    |                                |         |           |         |   |         |         
|TOTAL                                        |                                                                                                                    | $                              | 235,471 |           |         | $ | 207,711 |         
|                                             |                                                                                                                    |                                |         |           |         |   |         |         

See notes to condensed financial statements.

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##### Table of Contents






IMPSAT S.A.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands of U.S. Dollars)


(Unaudited)


|                          |                                      |                        |                           |        |       |        |         |        |       |         |  
|------------------------- | ------------------------------------ | ---------------------- | ------------------------- | ------ | ----- | ------ | ------- | ------ | ----- | ------- | -
|                          |                                      |                       
|                          |                                      | Three Months Ended    
|                          |                                      | March 31,             
|                          |                                      |                       
|                          |                                      | 2001                   |                           | 2002  
|                          |                                      |                        |                           |       
|NET REVENUES:             |                                      |                        |                           |        |       |        |         |       
|                          | Data and value added services        |                        | $                         | 25,053 |       |        | $       | 10,414 |      
|                          | Internet                             |                        |                           | 4,024  |       |        |         | 2,183  |      
|                          | Telephony                            |                        |                           | 706    |       |        |         | 2,495  |      
|                          | Services to carriers                 |                        |                           | 772    |       |        |         | 687    |      
|                          | Sales of equipment                   |                        |                           | 2,024  |       |        |         | 62     |      
|                          |                                      |                        |                           |        |       |        |         |       
|                          |                                      |                        | Total net revenues        |        |       | 32,579 |         |        |       | 15,841  |  
|                          |                                      |                        |                           |        |       |        |         |       
|COSTS AND EXPENSES:       |                                      |                        |                           |        |       |        |         |       
|                          | Direct costs:                        |                        |                           |        |       |        |         |        |      
|                          |                                      | Contracted services    |                           |        | 5,289 |        |         |        | 1,815 |        
|                          |                                      | Other direct costs     |                           |        | 3,160 |        |         |        | 3,437 |        
|                          |                                      | Leased capacity        |                           |        | 8,650 |        |         |        | 6,769 |        
|                          |                                      | Cost of equipment sold |                           |        | 1,840 |        |         |        | 32    |        
|                          |                                      |                        |                           |        |       |        |         |       
|                          |                                      |                        | Total direct costs        |        |       | 18,939 |         |        |       | 12,053  |  
|                          | Salaries and wages                   |                        |                           | 9,089  |       |        |         | 2,867  |      
|                          | Selling, general and administrative  |                        |                           | 4,960  |       |        |         | 2,044  |      
|                          | Depreciation and amortization        |                        |                           | 12,391 |       |        |         | 8,245  |      
|                          |                                      |                        |                           |        |       |        |         |       
|                          |                                      |                        | Total costs and expenses  |        |       | 45,379 |         |        |       | 25,209  |  
|                          |                                      |                        |                           |        |       |        |         |       
|Operating loss            |                                      |                        | (12,800                   | )      |       |        | (9,368  | )     
|                          |                                      |                        |                           |        |       |        |         |       
|OTHER INCOME (EXPENSES):  |                                      |                        |                           |        |       |        |         |       
|                          | Interest income and investment gains |                        |                           | 280    |       |        |         |        |      
|                          | Interest expense                     |                        |                           | (5,254 | )     |        |         | (5,233 | )    
|                          | Net gain (loss) on foreign exchange  |                        |                           | 321    |       |        |         | (7,085 | )    
|                          | Other income, net                    |                        |                           |        |       |        |         | 1      |      
|                          |                                      |                        |                           |        |       |        |         |       
|                          |                                      |                        | Total other expenses, net |        |       | (4,653 | )       |        |       | (12,317 | )
|                          |                                      |                        |                           |        |       |        |         |       
|LOSS BEFORE INCOME TAXES  |                                      |                        | (17,453                   | )      |       |        | (21,685 | )     
|BENEFIT FROM INCOME TAXES |                                      |                        | 379                       |        |       |        |         |       
|                          |                                      |                        |                           |        |       |        |         |       
|NET LOSS                  |                                      | $                      | (17,074                   | )      |       | $      | (21,685 | )     
|                          |                                      |                        |                           |        |       |        |         |       

See notes to condensed financial statements.

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##### Table of Contents






IMPSAT S.A.

CONDENSED STATEMENTS OF COMPREHENSIVE
LOSS

(In thousands of U.S. Dollars)


(Unaudited)


|                          |                                                                |                    |         |      |   |   |         |      |  
|------------------------- | -------------------------------------------------------------- | ------------------ | ------- | ---- | - | - | ------- | ---- | -
|                          |                                                                |                   
|                          |                                                                | Three Months Ended
|                          |                                                                | March 31,         
|                          |                                                                |                   
|                          |                                                                | 2001               |         | 2002
|                          |                                                                |                    |         |     
|NET LOSS                  |                                                                | $                  | (17,074 | )    |   | $ | (21,685 | )   
|                          |                                                                |                    |         |      |   |   |         |     
|OTHER COMPREHENSIVE LOSS: |                                                                |                    |         |      |   |   |         |     
|                          | Change in unrealized loss on investment available
    for sale |                    |         | (595 | ) |   |         | (193 | )
|                          |                                                                |                    |         |      |   |   |         |     
|                          | TOTAL                                                          |                    |         | (595 | ) |   |         | (193 | )
|                          |                                                                |                    |         |      |   |   |         |     
|COMPREHENSIVE LOSS        |                                                                | $                  | (17,669 | )    |   | $ | (21,878 | )   
|                          |                                                                |                    |         |      |   |   |         |     

See notes to condensed financial statements.

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##### Table of Contents






IMPSAT S.A.

CONDENSED STATEMENT OF STOCKHOLDERS
DEFICIENCY

(In thousands of U.S. dollars)


(Unaudited)


|                             |                                                                              |        |   |         |  |             |         |               |  |       |          |         |   |   |      |      |   |   |         |         |  
|---------------------------- | ---------------------------------------------------------------------------- | ------ | - | ------- |  | ----------- | ------- | ------------- |  | ----- | -------- | ------- | - | - | ---- | ---- | - | - | ------- | ------- | -
|                             |                                                                              |        |   |         |  |             |         | Accumulated   |  |      
|                             |                                                                              |        |   |         |  |             |         | Other         |  |      
|                             |                                                                              | Common |   | Paid in |  | Accumulated |         | Comprehensive |  |      
|                             |                                                                              | Stock  |   | Capital |  | Deficit     |         | (Loss)        |  | Total
|                             |                                                                              |        |   |         |  |             |         |               |  |      
|BALANCE AT DECEMBER 31, 2001 |                                                                              | $      | 4 |         |  | $           | 331,179 |               |  | $     | (391,024 | )       |   | $ | (319 | )    |   | $ | (60,160 | )      
|                             | Change on unrealized loss on investment available
    for sale, net of taxes |        |   |         |  |             |         |               |  |       |          |         |   |   |      | (193 | ) |   |         | (193    | )
|                             | Net loss for the period                                                      |        |   |         |  |             |         |               |  |       |          | (21,685 | ) |   |      |      |   |   |         | (21,685 | )
|                             |                                                                              |        |   |         |  |             |         |               |  |       |          |         |   |   |      |      |   |   |         |        
|BALANCE AT MARCH 31, 2002    |                                                                              | $      | 4 |         |  | $           | 331,179 |               |  | $     | (412,709 | )       |   | $ | (512 | )    |   | $ | (82,038 | )      
|                             |                                                                              |        |   |         |  |             |         |               |  |       |          |         |   |   |      |      |   |   |         |        

See notes to condensed financial statements.

F-23



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##### Table of Contents








IMPSAT S.A.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)


(Unaudited)


|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |         |       |         |        |  
|------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ------------------------------------------------------------------------- | ----------------------------------------- | ------ | ------ | ------- | ------- | ----- | ------- | ------ | -
|                                                                         |                                                                                                                   |                                   
|                                                                         |                                                                                                                   | Three Months Ended                
|                                                                         |                                                                                                                   | March 31,                         
|                                                                         |                                                                                                                   |                                   
|                                                                         |                                                                                                                   | 2001                               |                                                                           | 2002                                     
|                                                                         |                                                                                                                   |                                    |                                                                           |                                          
|CASH FLOWS FROM OPERATING ACTIVITIES:                                    |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Net loss                                                                                                          |                                    | $                                                                         | (17,074                                   | )      |        | $       | (21,685 | )    
|                                                                         | Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities, net of acquisition: |                                    |                                                                           |                                           |        |        |         |         |      
|                                                                         |                                                                                                                   | Amortization and depreciation      |                                                                           |                                           | 12,391 |        |         |         | 8,245 |        
|                                                                         |                                                                                                                   | Provision for doubtful accounts    |                                                                           |                                           | 722    |        |         |         | 2,134 |        
|                                                                         |                                                                                                                   | Deferred income tax benefit        |                                                                           |                                           | (379   | )      |         |         |       |        
|                                                                         |                                                                                                                   | Changes in assets and liabilities: |                                                                           |                                           |        |        |         |         |       |        
|                                                                         |                                                                                                                   |                                    | (Increase) decrease in trade accounts receivable,
    net                 |                                           |        | (346   | )       |         |       | 6,381   |       
|                                                                         |                                                                                                                   |                                    | (Increase) decrease in prepaid expenses                                   |                                           |        | (108   | )       |         |       | 612     |       
|                                                                         |                                                                                                                   |                                    | (Increase) decrease in other receivables and
    other non-current assets |                                           |        | (1,699 | )       |         |       | 11,219  |       
|                                                                         |                                                                                                                   |                                    | Increase (decrease) in accounts payable
     trade                       |                                           |        | 114    |         |         |       | (12,870 | )     
|                                                                         |                                                                                                                   |                                    | Increase (decrease) in deferred revenues                                  |                                           |        | 9,041  |         |         |       | (599    | )     
|                                                                         |                                                                                                                   |                                    | Increase in accrued and other liabilities                                 |                                           |        | 5,833  |         |         |       | 7,659   |       
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         |                                                                                                                   |                                    |                                                                           | Net cash provided by operating activities |        |        | 8,495   |         |       |         | 1,096  |  
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                    |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Purchases of broadband network, net of disposals                                                                  |                                    |                                                                           | (28,582                                   | )      |        |         | (4,086  | )    
|                                                                         | Purchases of property, plant and equipment, net
    of disposals                                                  |                                    |                                                                           | (5,844                                    | )      |        |         | 3,840   |      
|                                                                         | (Increase) decrease in other investment                                                                           |                                    |                                                                           | 525                                       |        |        |         |         |      
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         |                                                                                                                   |                                    |                                                                           | Net cash used in investing activities     |        |        | (33,901 | )       |       |         | (246   | )
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                    |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Net borrowings from short-term debt                                                                               |                                    |                                                                           | 540                                       |        |        |         |         |      
|                                                                         | Changes in advances to/from affiliates                                                                            |                                    |                                                                           | 3,284                                     |        |        |         | 511     |      
|                                                                         | Repayments of long-term debt                                                                                      |                                    |                                                                           | (2,156                                    | )      |        |         | (1,778  | )    
|                                                                         | Shareholders contribution                                                                                        |                                    |                                                                           | 28,686                                    |        |        |         |         |      
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         |                                                                                                                   |                                    |                                                                           | Net cash provided by financing activities |        |        | 30,354  |         |       |         | (1,267 | )
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                 |                                                                                                                   |                                    | 4,948                                                                     |                                           |        |        | (417    | )      
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
    PERIOD                 |                                                                                                                   |                                    | 12,051                                                                    |                                           |        |        | 3,979   |        
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                           |                                                                                                                   | $                                  | 16,999                                                                    |                                           |        | $      | 3,562   |        
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                      |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Interest paid                                                                                                     |                                    | $                                                                         | 718                                       |        |        | $       | 675     |      
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Income taxes paid                                                                                                 |                                    |                                                                           |                                           |        |        | $       | 285     |      
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES: |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Change to unrealized loss on investment available
    for sale, net of Tax                                        |                                    | $                                                                         | (595                                      | )      |        | $       | (193    | )    
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        
|                                                                         | Vendor financing                                                                                                  |                                    | $                                                                         | 18,158                                    |        |        |         |         |      
|                                                                         |                                                                                                                   |                                    |                                                                           |                                           |        |        |         |        

See notes to condensed financial statements.

F-24



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##### Table of Contents






IMPSAT S.A.

NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS

(Tables in thousands of U.S.
dollars)





1.     GENERAL

IMPSAT S.A. (the Company) is a
leading integrated provider of broadband Internet, data and
voice services in Argentina. 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 in Argentina. It provides its services
through its advanced telecommunications networks comprised of
owned teleports, earth stations, fiber optic and microwave links
and leased satellite capacity. As of March 31, 2002, the
Company is a 100% owned subsidiary of IMPSAT Fiber Networks,
Inc. (the Parent Company)

Liquidity and Going Concern
Considerations The
accompanying condensed financial statements have been prepared
on a going concern basic, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course
of business. The Parent Company and the Company currently face
significant near-term cash flow and liquidity problems. The
Parent Company and the Company have no material working capital
or other credit facility under which they may borrow for working
capital or other general corporate purposes. The Parent Company
and the Company are not generating sufficient revenue to fund
their operations or to repay their principal and interest
obligations under their vendor financing obligations with Nortel
Networks Limited (Nortel) and Lucent Technologies
Inc. (Lucent) (collectively the Broadband
Network Vendor Financing Agreements) that are due and
payable. As a result, the Company is in default under the
Broadbank Network Vendor Financing Agreements. The Parent
Companys and the Companys capital requirements under
the business plan for fiscal year 2002 are greater than
available capital resources, and the Parent Companys and
the Companys cash flows and liquidity are insufficient to
satisfy all of the Parent Companys and the Companys
obligations. These factors raise substantial doubt as to the
Parent Companys and the Companys ability to continue
as a going concern for a reasonable period of time. The
condensed financial statements do not include any adjustments
relating to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities
that might be necessary should the Company be unable to continue
as a going concern.

The Parent Company and the Company believe that
it is unlikely that they will be able to obtain future debt or
equity financing on acceptable terms, or at all. The Parent
Company and the Company therefore will be required to
restructure their balance sheets. It is unlikely that the Parent
Company and the Company could obtain additional financing
without effecting a restructuring. The Parent Company with the
assistance of the investment bank, Houlihan Lokey Howard &
Zukin Capital (Houlihan Lokey), is currently
negotiating with the holders of the Senior Notes and with the
creditors under the Broadbank Network Vendor Financing
Agreements as to the proposed financial restructuring plan
discussed below. There is no assurance that the Parent Company
and the Company will be able to successfully complete the
proposed financial restructuring plan. Such events could have a
material adverse effect upon the Parent Company and the Company
and could threaten its ability to continue as a going concern.

Financial
Restructuring On
March 11, 2002, the Parent Companys management, who
have been advised by Houlihan Lokey, concluded negotiations with
an ad hoc committee (the Committee) representing
certain holders of the debt under its Broadband Network Vendor
Financing Agreements and certain holders of the
$125.0 million outstanding principal amount of the 12.125%
Senior Guaranteed Notes due 2003, the $300.0 million 13.75%
Senior Notes due 2005 and the $225.0 million 12.375% Senior
Notes due 2008 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

F-25



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


restructuring of the Parent Company and the
Company. The Restructuring Term Sheet, contemplates the
following principal components of the proposed restructuring
plan:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | all of the shares of the Parent Companys
    existing common stock, options granted under the Parent
    Companys stock option plans, and any other Parent Company
    equity interests would be cancelled, retired and eliminated with
    no consideration paid therefor, and the Parent Company would
    issue new common stock in accordance with the
    proposed restructuring plan;
|
| |  | creditors under the Broadband Network Vendor
    Financing Agreements would receive                                                                                                                                                                                                                                                                                                            



| |   |                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $140.7 million senior secured debt issued by
    the Company and IMPSAT Brazil and guaranteed by the Parent
    Company;                                                           
|
| |  | $22.5 million of new senior convertible
    notes guaranteed by the Company and convertible into 5 % of the
    Parent Companys new common stock on a fully-diluted basis;
    and
|
| |  | warrants to acquire up to 15 % of the Parent
    Companys new common stock on a fully-diluted basis.                                                                              



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | holders of the Notes due 2003 would receive
    $67.5 million of new senior convertible notes guaranteed by
    the Company and convertible into 23% of the Parent
    Companys new common stock on a fully-diluted basis                                                                                                                                                                                                                                        
|
| |  | holders of the Notes due 2005 and the Notes due
    2008 would exchange those securities for 98 % of the Parent
    Companys new common stock, subject to certain dilutive
    events                                                                                                                                                                                                                                                                            
|
| |  | the Parent Companys guarantees of certain
    indebtedness owed by the operating subsidiaries to certain of
    their respective creditors will either be restructured in
    exchange for new senior convertible notes and warrants
    consistent with and proportionate to the restructuring treatment
    of analogous indebtedness under the Broadband Network Vendor
    Financing Agreements, or canceled in exchange for equity in the
    Parent Company
|
| |  | no distribution to existing stockholders of the
    Parent Company                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | management would receive 2 % of the Parent
    Companys new common stock plus stock options representing
    8 % of the Parent Companys new common stock.                                                                                                                                                                                                                                                                                                       

The term sheet agreement in principle provides
that completion of the proposed restructuring plan would be
subject to certain conditions in the event the Parent Company
files its plan with the Bankruptcy Court, including the
plans acceptance by affected classes of the Parent
Companys securities holders in accordance with the
U.S. Bankruptcy Code.

Currently, the Parent Company has not filed a
Chapter 11 plan of reorganization under the
U.S.  Bankruptcy Code. There can be no assurances that the
Parent Company will be able to complete this filing or, if the
Parent Company does, that any plan of reorganization will be
approved by the Bankruptcy Court. If the Parent Company is
unable to timely file for protection under Chapter 11 or
obtain confirmation of a plan of reorganization, the creditors
may seek other alternatives for the Parent Company and the
Company, including accepting bids for the Company or parts
thereof through an auction process or forcing the Parent Company
into a liquidation proceeding under the federal bankruptcy laws.




2.     SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Interim Financial
Information The unaudited
condensed financial statements as of March 31, 2002 and for
the three months ended March 31, 2001 and 2002 have been
prepared on the same basis as the audited financial statements.
In the opinion of management, such unaudited financial
statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the results
for such

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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


period. The operating results for the three
months ended March 31, 2001 and 2002 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 condensed financial statements in conformity with accounting
principles generally accepted in the United States of America
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 condensed financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant
assumptions and estimates were used in determining the carrying
value of the Companys telecommunications infrastructure
and collectibility of receivables. Actual results could differ
from those estimates.

Market
Risk 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 country in which the
Company operates. The Companys foreign exchange rate risk
is limited because the majority of its assets are non-monetary
in nature, and the majority of its debt is denominated in
U.S. dollars. Additionally, a significant portion of the
Companys debt has a fixed interest rate thereby limiting
the Companys interest rate risk exposure. Accordingly, the
Company has not entered into derivative transactions to hedge
against these potential 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 pesoto float freely against the U.S. dollar. The pesofree market opened on January 11, 2002 and traded at
1.65 pesosto the U.S. dollar and has been volatile
since. The devaluation of the Argentine pesowill
generally affect the Companys condensed financial
statements by generating foreign exchange gains or losses on
peso-denominated monetary liabilities and assets of the
Company 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
mandatorily converted into monetary obligations denominated in
pesosat 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 one pesoto 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 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
pesosbefore 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,
the Companys customer contracts and operating cash inflows
are now predominantly denominated in pesos. Moreover, the
Companys debt service payments and a significant portion
of its costs (including capital equipment purchases and payments
for certain leased telecommunica-

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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


tion capacity) are denominated in U.S. dollars.
Accordingly, the Companys financial condition and results
of operations in Argentina are dependent upon the Company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 the Companys and the
Companys overall cash flows, financial condition, and
results of operations.

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 realized revenues the Company receives for services
offered in Argentina; (ii) the timing of repatriations of
any dividends or other cash flows from the Company to the Parent
Company, in the United States; (iii) the Companys
asset valuations; and (iv) the Companys
pesos-denominated monetary assets and liabilities.

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

Revenue
Recognition Revenues from
data, value added, telephony 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 (IRU) 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 IRU 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
balance sheets. The Securities and Exchange Commission (the
SEC) issued Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in
Condensed 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 revenues from services for the three months ended
March 31, 2001 and 2002.

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

Broadband
Network The Broadband
Network was finished during the fourth quarter of 2000. These
assets are recorded at cost and depreciated using the
straight-line method over the following estimated useful lives.
In addition, the Company during 2000 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

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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


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.

|                        |  |            
|----------------------- |  | -----------
|Network Infrastructure  |  | 10-15 years
|IRU investment          |  | 15 years   
|Equipment and materials |  | 10 years   

Property, Plant and Equipment
Costs Property, plant and
equipment are recorded at cost and depreciated using the
straight-line method over the following estimated useful lives:

|                                        |  |            
|--------------------------------------- |  | -----------
|Building and improvement                |  | 10-25 years
|Operating communications equipment      |  | 5-10 years 
|Furniture, fixtures and other equipment |  | 2-10 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.

Investments
Investments covered under the scope of Statement of Financial
Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity
Securities,are classified by the Company as available
for sale and are carried at fair value. Unrealized gains
or losses, net of tax, for available for sale investments are
included in accumulated other comprehensive income
(loss) within stockholders equity. All other
investments are carried at cost.

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. During the three month periods
ended March 31, 2001 and 2002, no impairments were recorded.

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

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

Fair Value of Financial
Instruments The
Companys financial instruments include receivables,
investments, payables and long-term debt. The available for sale
investments were valued at market closing prices at
December 31, 2001 and March 31, 2002. The fair value
of all other financial instruments, which approximate their
carrying (or contract) values, have been determined using
interest rates as of December 31, 2001 and March 31,
2002.

F-29



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


New Accounting
Pronouncements The
Financial Accounting Standards Board (FASB) has
issued Statement of Financial Accounting Standards No. 143,
Accounting for Asset Retirement Obligations,which
addresses financial accounting and reporting for legal
obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs.
SFAS No. 143 is effective for fiscal years beginning after
June 15, 2002, with early adoption encouraged. The Company
does not expect the adoption of SFAS No. 143 to have a
material effect on its unaudited condensed financial statements
or disclosures.

In August 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets,which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets.
SFAS No. 143 is effective for fiscal years beginning after
December 15, 2001 and interim years within those fiscal
years, with early adoption encouraged. The provisions of SFAS
No. 144 generally are to be applied prospectively. The
adoption of SFAS No. 144 did not have a material effect on
the Companys unaudited condensed financial statements or
disclosures.

Reclassifications
Certain amounts in the 2001 condensed financial statements have
been reclassified to conform with the 2002 presentation.

3.  TRADE ACCOUNTS
RECEIVABLE

Trade accounts receivable at December 31,
2001 and March 31, 2002 are summarized as follows:

|                                      |  |              |         |           |  |   |         |  
|------------------------------------- |  | ------------ | ------- | --------- |  | - | ------- | -
|                                      |  | December 31, |         | March 31,
|                                      |  | 2001         |         | 2002     
|                                      |  |              |         |          
|Trade accounts receivable             |  | $            | 51,037  |           |  | $ | 37,229  |  
|Less: allowance for doubtful accounts |  |              | (17,113 | )         |  |   | (11,820 | )
|                                      |  |              |         |           |  |   |         |  
|Trade accounts receivable, net        |  | $            | 33,924  |           |  | $ | 25,409  |  
|                                      |  |              |         |           |  |   |         |  

The Company provides trade credit to their
customers in the normal course of business. Prior to extending
credit, the customers financial histories are analyzed.

The activity for the allowance for doubtful
accounts for the year ended December 31, 2001 and for the
three months ended March 31, 2002 is as follows:

|                                |  |              |        |           |  |   |        |  
|------------------------------- |  | ------------ | ------ | --------- |  | - | ------ | -
|                                |  | December 31, |        | March 31,
|                                |  | 2001         |        | 2002     
|                                |  |              |        |          
|Beginning balance               |  | $            | 16,436 |           |  | $ | 17,113 |  
|Provision for doubtful accounts |  |              | 15,590 |           |  |   | 2,134  |  
|Write-offs, net of recoveries   |  |              | (7,099 | )         |  |   |        |  
|Effect of exchange rate change  |  |              | (7,814 | )         |  |   | (7,427 | )
|                                |  |              |        |           |  |   |        |  
|Ending balance                  |  | $            | 17,113 |           |  | $ | 11,820 |  
|                                |  |              |        |           |  |   |        |  

4.  OTHER RECEIVABLES

Other receivables consist primarily of refunds or
credits pending from local governments for taxes other than
income, advances to suppliers other than for fixed assets, and
other miscellaneous amounts due to the Company.

F-30



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


5.  BROADBAND NETWORK AND
AGREEMENTS

Broadband network and related equipment at
December 31, 2001 and March 31, 2002 consists of:

|                               |       |              |         |           |  |   |         |         | 
|------------------------------ | ----- | ------------ | ------- | --------- |  | - | ------- | ------- | 
|                               |       | December 31, |         | March 31,
|                               |       | 2001         |         | 2002     
|                               |       |              |         |          
|Network infrastructure         |       | $            | 76,693  |           |  | $ | 76,880  |        
|Equipment and materials        |       |              | 90,222  |           |  |   | 93,554  |        
|IRU investments                |       |              | 2,616   |           |  |   | 2,616   |        
|                               |       |              |         |           |  |   |         |        
|                               | Total |              |         | 169,531   |  |   |         | 173,050 | 
|Less: accumulated depreciation |       |              | (63,536 | )         |  |   | (66,712 | )      
|                               |       |              |         |           |  |   |         |        
|                               | Total |              | $       | 105,995   |  |   | $       | 106,338 | 
|                               |       |              |         |           |  |   |         |        

The recap of accumulated depreciation for the
year ended December 31, 2001 and for the three months ended
March 31, 2002 is as follows:

|                          |  |              |        |           |  |   |        |  
|------------------------- |  | ------------ | ------ | --------- |  | - | ------ | -
|                          |  | December 31, |        | March 31,
|                          |  | 2001         |        | 2002     
|                          |  |              |        |          
|Beginning balance         |  | $            | 42,084 |           |  | $ | 63,536 |  
|Depreciation expense      |  |              | 23,673 |           |  |   | 3,743  |  
|Disposals and retirements |  |              | (2,221 | )         |  |   | (567   | )
|                          |  |              |        |           |  |   |        |  
|Ending balance            |  | $            | 63,536 |           |  | $ | 66,712 |  
|                          |  |              |        |           |  |   |        |  

Nortel Networks
Agreements On
September 6, 1999, the Company executed a turnkey agreement
with Nortel Networks Inc. (Nortel) relating to
Nortels design and construction of segments of the
Broadband Network in Argentina for approximately
$133.1 million.

On October 25, 1999, the Company signed a
definitive agreement with an affiliate of Nortel Networks to
borrow an aggregate of up to approximately $149.1 million
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 and the purchase of
additional equipment to be used by the Company in connection
with the operation of the Broadband Network. The Parent Company
has agreed to guarantee the obligations of the Company under the
Nortel financing agreement. At March 31, 2002, a total of
$120.3 million was outstanding under the Nortel Financing
Agreement (see Note 8).

Additionally, the Company has obtained additional
vendor financing from Lucent Technologies, Ericsson, Tellabs OY,
DMC and Harris Canadá, Inc. for the acquisition of fiber
optic cable and other telecommunications equipment for the
Broadband Network for an aggregate of up to approximately
$29.2 million.

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 its arrangements with Global Crossing,
the Parent Company or its affiliates have 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 Parent Company to interconnect the Parent
Companys networks in Argentina and Brazil and give the
Parent Company global international access. The Parent Company
had purchased approximately $9.7 million under this
agreement as of December 31, 2001 and has not purchased any
amount during the three months ended March 31, 2002,
respectively.

F-31



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


IRU
Agreements The Company
has entered into several agreements granting IRUs of up to
25 years to 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 balance sheet. During the three months
period ended March 31, 2002, the Company recognized
approximately $0.6 million from these agreements, which are
reflected as services to carriers in the accompanying condensed
statement of operations.

6.  PROPERTY, PLANT AND
EQUIPMENT

Property, plant and equipment at
December 31, 2001 and March 31, 2002 consists of:

|                                        |       |              |          |           |  |   |          |         | 
|--------------------------------------- | ----- | ------------ | -------- | --------- |  | - | -------- | ------- | 
|                                        |       | December 31, |          | March 31,
|                                        |       | 2001         |          | 2002     
|                                        |       |              |          |          
|Land                                    |       | $            | 3,106    |           |  | $ | 3,106    |        
|Building and improvements               |       |              | 30,909   |           |  |   | 30,420   |        
|Operating communications equipment      |       |              | 142,318  |           |  |   | 135,982  |        
|Furniture, fixtures and other equipment |       |              | 17,629   |           |  |   | 19,584   |        
|                                        |       |              |          |           |  |   |          |        
|                                        | Total |              |          | 193,962   |  |   |          | 189,092 | 
|Less: accumulated depreciation          |       |              | (158,278 | )         |  |   | (159,522 | )      
|                                        |       |              |          |           |  |   |          |        
|                                        | Total |              |          | 35,684    |  |   |          | 29,570  | 
|Equipment in transit                    |       |              | 3,047    |           |  |   | 2,237    |        
|Works in process                        |       |              | 1,418    |           |  |   |          |        
|                                        |       |              |          |           |  |   |          |        
|Property, plant and equipment, net      |       | $            | 40,149   |           |  | $ | 31,807   |        
|                                        |       |              |          |           |  |   |          |        

The recap of accumulated depreciation for the
year ended December 31, 2001 and for the three months ended
March 31, 2002, is as follows:

|                          |  |              |         |           |  |   |         |  
|------------------------- |  | ------------ | ------- | --------- |  | - | ------- | -
|                          |  | December 31, |         | March 31,
|                          |  | 2001         |         | 2002     
|                          |  |              |         |          
|Beginning balance         |  | $            | 131,378 |           |  | $ | 158,278 |  
|Depreciation expense      |  |              | 31,717  |           |  |   | 4,502   |  
|Disposals and retirements |  |              | (4,817  | )         |  |   | (3,258  | )
|                          |  |              |         |           |  |   |         |  
|Ending balance            |  | $            | 158,278 |           |  | $ | 159,522 |  
|                          |  |              |         |           |  |   |         |  

7.  INVESTMENTS

The Companys investments at
December 31, 2001 and March 31, 2002 consist of:

|                                                                                        |  |              |       |           |  |   |       | 
|--------------------------------------------------------------------------------------- |  | ------------ | ----- | --------- |  | - | ----- | 
|                                                                                        |  | December 31, |       | March 31,
|                                                                                        |  | 2001         |       | 2002     
|                                                                                        |  |              |       |          
|Investment in common stock, at fair
    value  New Skies Satellites N.V. ($2,748 cost) |  | $            | 2,429 |           |  | $ | 2,236 | 
|                                                                                        |  |              |       |           |  |   |       | 

The Companys investment in common stock is
subject to equity price risk. The Company has not taken any
actions to hedge this market risk exposure.

F-32



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


8.  LONG-TERM DEBT

The Companys long-term debt at
December 31, 2001 and March 31, 2002 is detailed as
follows:

|                                                                                                                            |                      |              |          |           |  |   |          |         | 
|--------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------ | -------- | --------- |  | - | -------- | ------- | 
|                                                                                                                            |                      | December 31, |          | March 31,
|                                                                                                                            |                      | 2001         |          | 2002     
|                                                                                                                            |                      |              |          |          
|Term notes payable, maturing from 2001 through
    2004, collateralized by certain assets; denominated in U.S.
    dollars: |                      | $            | 2,590    |           |  | $ | 812      |        
|Eximbank notes payable (2.27%  4.89%),
    maturing semiannually through 200l and 2004                                     |                      |              | 13,513   |           |  |   | 13,513   |        
|Vendor financing (5.21%  14.30%), due
    2006                                                                             |                      |              | 149,470  |           |  |   | 149,470  |        
|                                                                                                                            |                      |              |          |           |  |   |          |        
|                                                                                                                            | Total long-term debt |              |          | 165,573   |  |   |          | 163,795 | 
|Less: current portion, including defaulted
    indebtedness                                                                 |                      |              | (162,390 | )         |  |   | (161,420 | )      
|                                                                                                                            |                      |              |          |           |  |   |          |        
|Long-term debt, net                                                                                                         |                      | $            | 3,183    |           |  | $ | 2,375    |        
|                                                                                                                            |                      |              |          |           |  |   |          |        

The vendor financing and 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
described in Note 1 have led to non-compliance with certain
covenant requirements and payment provisions under the Broadband
Network 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 Broadband Network Vendor Financing
Agreements totaling approximately $18.4 million that were
due on that date. The waiver expired on November 25, 2001
and the Broadbank Network Vendor Financing Agreements became due
and payable. The Company is in default under the Broadbank
Network Vendor Financing Agreements, and as a result of the
default, an aggregate of $118.0 million and $116.2 million
of the defaulted amounts have been reclassified to current
portion of long-term debt as of December 31, 2001 and
March 31, 2002, respectively.

9.  INCOME TAXES

The composition of the benefit from income taxes,
all of which is for foreign taxes, for the three months ended
March 31, 2001 and 2002 is as follows:

|         |       |           |     |      |  |   |   |   | 
|-------- | ----- | --------- | --- | ---- |  | - | - | - | 
|         |       |          
|         |       | March 31,
|         |       |          
|         |       | 2001      |     | 2002
|         |       |           |     |     
|Deferred |       | $         | 379 |      |  | $ |  |  
|         |       |           |     |      |  |   |   |  
|         | Total |           | $   | 379  |  |   | $ |  | 
|         |       |           |     |      |  |   |   |  

The statutory tax rate in Argentina is 35%.

As of March 31, 2002, the Company has
recorded a valuation allowance to offset its entire net deferred
tax asset.

10.  COMMITMENTS AND
CONTINGENCIES

Commitments
The Company leases telecommunications links with annual rental
commitments of approximately $1.9 million through the year
2006. In addition, the Company has commitments to purchase
communications and data center equipment amounting to
approximately $2.0 million at March 31, 2002. These
commitments are not included in the balance sheet as of
March 31, 2002.

F-33



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


Guarantees
The Company is guarantor on the $125 million 12 1/8%
Senior Guaranteed Notes due 2003 issued on July 30, 1996 by
the Parent Company.

IMPSAT Brazil, another wholly-owned subsidiary of
IMPSAT Fiber Networks, Inc., has entered into a
$5.9 million term note with El Camino Resources, which is
guaranteed by the Company and the Parent Company. At
March 31, 2002, the balance outstanding was approximately
$2.9 million.

IPO Allocations
Class Action On
November 1, 2001, a lawsuit was filed in the United States
District Court for the Southern District of New York against the
Parent Company, certain of the Parent Companys current
officers and directors, and the underwriters to the Parent
Companys initial public offering. This lawsuit alleges on
behalf of a proposed class of all shareholders that the Parent
Company and its underwriters violated various provisions of the
securities laws in connection with the IPO in February 2000. The
plaintiff has proposed a putative class from the date of the IPO
to December 6, 2000. In August 2001, the court ordered that
this suit be coordinated for all pre-trial purposes in a
proceeding styled In re Initial Public Offering Securities
Litigation, 21 MC 92, an intra-district proceeding involving
approximately 900 lawsuits concerning the initial public
offerings of approximately 310 companies and 48 underwriters.
The complaint does not seek a specified amount of damages. It is
the Parent Companys present understanding that the
plaintiffs intend to file an amended complaint shortly. The
Parent Companys management believes that the Parent
Company has meritorious defenses to the allegations in the
complaints and intends to defend the litigation vigorously.
However, due to the early stages of this action, the Parent
Company cannot conclude as to the possible outcome. The Company
has certain insurance policies with respect to such claims and
has filed a claim with its carriers regarding this matter.

360Networks
During June 2001, the Company and IMPSAT Brazil terminated a
series of contracts which they had signed in the first quarter
of 2001 with subsidiaries of 360 americas networks (Bermuda)
ltd., a subsidiary of 360 networks, Inc., and certain other
subsidiaries of 360 networks, Inc. (collectively
360networks) to construct and provide IRU dark
fiber, capacity services and conduit to 360networks over the
Companys Broadband Network in Argentina and Brazil, as a
result of the breach by 360networks of its payment obligation
under those contracts, including the new Argentina 
Brazil link that the Companies has recently completed. Between
March and May 2001, the Company and IMPSAT Brazil made available
segments of the IRU desk fiber and capacity services to
360networks for acceptance, but 360networks failed to make
certain payments as required by the contracts. 360networks also
failed to make certain payments for collocation space in the
Companys and IMPSAT Brazils telehouses in Sao Paulo
and Rio de Janeiro, Brazil and Buenos Aires, Argentina, and
those contracts were terminated as well. The Parent Company has
also more recently terminated a contract with 360networks for
collocation space in Caracas, Venezuela, also for payment
default by 360networks.

The Parent Company has commenced arbitration and
litigation proceedings against 360networks for damages under the
terminated contracts for the provision of IRU dark fiber and
capacity services, as contemplated by the relevant agreements.
360americas and the other subsidiaries with which the Parent
Company had contracted were not included in the series of
bankruptcy and insolvency filings made in the United States and
Canada by its parent, 360networks, Inc. and certain of its other
affiliates. 360networks, Inc. has announced that it intends to
seek a buyer for its South American underseas fiber optic cable
system, which is owned by 360americas. The Parent Company
intends to aggressively pursue its remedies against 360networks,
including its claim for damages due under the terminated
contracts, but is unable to predict whether the Parent Company
will prevail in any such proceedings and, if so, whether
360networks would be able to pay any arbitration or litigation
award that might be entered in favor of the Parent Company.

During the pendency of the arbitration and
litigation proceedings, the Company will continue to include as
deferred revenues on its balance sheet the amount received from
360networks as down payments under the

F-34



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##### Table of Contents



IMPSAT S.A.




NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS  (Continued)


(Tables in Thousands of U.S.
Dollars)


terminated contracts, after deducting amounts
that were due and payable at the time of the termination of the
contracts. As of March 31, 2002, the balance of such
deferred revenue was $8.0 million.

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

In November 1996, the Company filed suit against
a former customer, ENCOTESA, for amounts due and arising under
the Companys contracts with ENCOTESA, the Argentine
national postal service, for $7.3 million. The ultimate
collectability of this matter continues to be negotiated for
settlement; however, the Company has valued this receivable at a
net realizable value of zero.

* * * * * *

F-35



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##### Table of Contents








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

Significant Recent Development.

During January 2002, Argentina abandoned the
fixed dollar-to-pesoexchange rate and devalued the
Argentine peso. Argentina also enacted Decree
No. 214/02, or the pesification decree.
Generally, this decree mandates that all monetary obligations
arising from agreements subject to Argentine law denominated in
a foreign currency and existing as of January 6, 2002 are
mandatorily converted into monetary obligations denominated in
pesosat an exchange rate of one U.S. dollar to one
peso. Under the pesification decree,
after the foreign currency denominated contracts are converted
to pesos(at the one pesoto one U.S. dollar
rate), the contracts may be privately renegotiated by the
parties back into foreign currency denominated terms, and if a
contract governed by Argentine law is entered into after the
decrees enactment, that contract may be denominated in
either U.S. dollars or pesos. See Note 2 to our
condensed consolidated financial statements.

Since the pesification decree,
IMPSAT Argentinas customer contracts and operating cash
inflows are now predominantly denominated in pesos.
However, IMPSAT Argentinas debt service payments and a
significant portion of its costs (including capital equipment
purchases and payments for certain leased satellite and
terrestrial capacity) remain denominated and payable in U.S.
dollars. These circumstances make IMPSAT Argentinas
financial condition and results of operations dependent upon its
ability to generate sufficient pesos in U.S.
dollar terms  to pay its costs, expenses and to
satisfy its debt service requirements. In response to the
devaluation of the pesoand the decrease in IMPSAT
Argentinas accounts receivable (in U.S. dollar terms) as a
result of the pesification decree, we have
translated IMPSAT Argentinas financial position and
results of operations at and for the three months ended
March 31, 2002 using applicable peso/ U.S dollar
exchange rates for that period. In accordance with U.S. GAAP,
balance sheet accounts were translated using an exchange rate of
2.85 pesos= $1.00 (which was the exchange rate
at the end of the quarter), and income statement accounts were
translated at average monthly rates of exchange prevailing
during the quarter.

In future periods, we will continue to account
for IMPSAT Argentinas peso-denominated earnings,
expenses and cash flows based on the U.S. dollar equivalent of
such amounts measured in Argentine pesos. Such amounts
will be translated using the applicable exchange rates
prevailing during the relevant period.

As discussed further below, as a result of the
pesification of IMPSAT Argentinas
customer contracts and operating cash inflows, along with the
devaluation of the pesoagainst the U.S. dollar, IMPSAT
Argentinas revenues declined significantly (in U.S. dollar
terms) during the first quarter of 2002 compared to previous
periods. We expect that this decline will continue during the
remainder of 2002.

Effects of the Global Crossing
Insolvency

We are party to a series of agreements initially
signed in 1999 with several subsidiaries of Global Crossing Ltd.
for the provision of telecommunications services. Pursuant to
those agreements, among other things, we have constructed
certain terrestrial portions of Global Crossings South
American network, granted Global Crossing a series of
indefeasible rights of use (IRU) capacity on certain
segments of our Broadband Network, and provided Global Crossing
with certain collocation space and related maintenance and other
services. In addition, we acquired IRU and leased capacity on
Global Crossings South American undersea fiber optic cable
system.

During the first quarter of 2002, we recognized
revenues totaling $3.5 million from Global Crossing for the
services provided under our agreements with Global Crossing. Of
this amount, $2.5 million represented services billed
during the quarter and $0.5 million represented the revenue
recognition effect under the IRUs that we granted to Global
Crossing. During the same period, Global Crossing invoiced us a
total of $1.0 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.

At March 31, 2002, Global Crossing was in
default for a total of $0.9 million that we invoiced to them
during the second half of 2001 and the first quarter of 2002. In
January 2002, Global Crossing filed for

1



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##### Table of Contents



protection under chapter 11 of the U.S.
Bankruptcy Code. Although none of the Global Crossing
subsidiaries that have amounts outstanding to us are currently
included in Global Crossings chapter 11 filing, the
company believes that these payment defaults are related to the
significant cash shortfalls that Global Crossing is currently
experiencing. As of May 1, 2002, we have submitted invoices
for a total of $2.6 million for services to be rendered
under our agreements with Global Crossing for the second quarter
of 2002.


In light of Global Crossings payment
defaults to us, we have declined to pay to Global Crossing a
total of $1.8 million that Global Crossing has invoiced us
for services through the first quarter of 2002. 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.

We are monitoring the Global Crossing bankruptcy
proceedings and commercial relationship carefully. Our company
is currently evaluating its contractual rights in respect of
Global Crossings payment defaults and its alternatives
with respect to the acquisition of alternative capacity in light
of the uncertainty that Global Crossing will be able or willing
to perform its obligations under its agreements with us.

The difficulties being experienced by Global
Crossing, including Global Crossings chapter 11
proceeding, could have an adverse effect on our financial
condition and operations. If Global Crossings bankruptcy
proceedings were to expand to include any of the subsidiaries
that are parties to our agreements, we likely would not receive
payment on outstanding amounts due to us for previously rendered
services and sales of equipment, except to the extent of our
claims as unsecured creditors. At a minimum, such an action
could cause additional delays in our receipt of amounts due to
us. It is also possible that Global Crossing could seek, in the
applicable bankruptcy proceedings, to reject some or all of the
contracts. In the latter case, any damages that we might have in
respect of the rejected contracts would be treated as general
unsecured claims in the applicable bankruptcy proceedings.

Critical Accounting Policies

We have identified the following critical
accounting policies that underlie our condensed consolidated
financial statements:



| |   |                              
| | - | -----------------------------
| |  | Revenue Recognition          
|
| |  | Non-Monetary Transactions    
|
| |  | Broadband Network            
|
| |  | Property, Plant and Equipment
|
| |  | Long-Lived Assets            
|
| |  | Foreign Currency Translation 

These critical accounting policies and how we
have applied them in the preparation of our condensed
consolidated financial statements are discussed in Note 3
of our Notes to Unaudited Condensed Consolidated Financial
Statements.

2



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##### Table of Contents



Results of Operations

The following table summarizes our results of
operations:

|                                                                        |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |      |      |       | 
|----------------------------------------------------------------------- | -------------------------------------- | ------------------------------------ | -------------------------------- | ------ | ------ | ------ | ---- | ---- | ---- | ----- | ------ | ------ | ------ | ------ | ---- | ---- | ---- | ----- | 
|                                                                        |                                        |                                     
|                                                                        |                                        | Three Months Ended March 31,        
|                                                                        |                                        |                                     
|                                                                        |                                        |                                      |                                  |       
|                                                                        |                                        | 2001                                 |                                  | 2002  
|                                                                        |                                        |                                      |                                  |       
|                                                                        |                                        |                                      |                                  |        |        |        |      |     
|                                                                        |                                        |                                     
|                                                                        |                                        | (in thousands and as a percentage of
|                                                                        |                                        | consolidated revenues)              
|Net revenues:                                                           |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     
|                                                                        | Net revenues from services:            |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |      |     
|                                                                        |                                        | Data and value added services        |                                  | $      | 59,748 |        |      |      | 67.3 | %     |        | $      | 48,365 |        |      |      | 77.5 | %    
|                                                                        |                                        | Internet                             |                                  |        | 11,168 |        |      |      | 12.6 |       |        |        | 7,854  |        |      |      | 12.6 |      
|                                                                        |                                        | Telephony                            |                                  |        | 1,272  |        |      |      | 1.4  |       |        |        | 4,344  |        |      |      | 7.0  |      
|                                                                        |                                        | Services to carriers                 |                                  |        | 1,932  |        |      |      | 2.2  |       |        |        | 1,566  |        |      |      | 2.5  |      
|                                                                        |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     
|                                                                        |                                        |                                      | Total net revenues from services |        |        | 74,120 |      |      |      | 83.5  |        |        |        | 62,129 |      |      |      | 99.6  | 
|                                                                        | Sales of equipment                     |                                      |                                  | 8,054  |        |        |      | 9.1  |      |       |        | 284    |        |        |      | 0.4  |     
|                                                                        | Broadband network development revenues |                                      |                                  | 6,571  |        |        |      | 7.4  |      |       |        |       |        |        |      |     |     
|                                                                        |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     
|                                                                        |                                        |                                      | Total net revenues               |        |        | 88,745 |      |      |      | 100.0 |        |        |        | 62,413 |      |      |      | 100.0 | 
|Direct costs:                                                           |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     
|                                                                        | Contracted services                    |                                      |                                  | 11,086 |        |        |      | 12.5 |      |       |        | 6,233  |        |        |      | 10.0 |     
|                                                                        | Other direct costs                     |                                      |                                  | 5,792  |        |        |      | 6.5  |      |       |        | 6,535  |        |        |      | 10.5 |     
|                                                                        | Leased capacity                        |                                      |                                  | 21,933 |        |        |      | 24.7 |      |       |        | 20,385 |        |        |      | 32.7 |     
|                                                                        | Broadband network cost                 |                                      |                                  | 3,335  |        |        |      | 3.8  |      |       |        |       |        |        |      |     |     
|                                                                        | Cost of equipment sold                 |                                      |                                  | 5,392  |        |        |      | 6.1  |      |       |        | 117    |        |        |      | 0.2  |     
|                                                                        |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     
|                                                                        |                                        |                                      | Total direct costs               |        |        | 47,538 |      |      |      | 53.6  |        |        |        | 33,270 |      |      |      | 53.3  | 
|Salaries and wages                                                      |                                        |                                      | 22,197                           |        |        |        | 25.0 |      |      |       | 13,042 |        |        |        | 20.9 |     
|Selling, general and administrative expenses                            |                                        |                                      | 14,687                           |        |        |        | 16.5 |      |      |       | 7,351  |        |        |        | 11.8 |     
|Depreciation and amortization                                           |                                        |                                      | 29,432                           |        |        |        | 33.2 |      |      |       | 23,908 |        |        |        | 38.3 |     
|Interest expense, net                                                   |                                        |                                      | 28,998                           |        |        |        | 32.7 |      |      |       | 33,445 |        |        |        | 53.6 |     
|Net loss on foreign exchange                                            |                                        |                                      | 13,781                           |        |        |        | 15.5 |      |      |       | 7,365  |        |        |        | 11.8 |     
|Recognition of other-than-temporary decline in
    value of investments |                                        |                                      |                                 |        |        |        |     |      |      |       | 674    |        |        |        | 1.1  |     
|Other income (loss), net                                                |                                        |                                      | 2                                |        |        |        |     |      |      |       | (1,397 | )      |        |        | (2.2 | )   
|Provision for foreign income taxes                                      |                                        |                                      | 365                              |        |        |        | 0.4  |      |      |       | 438    |        |        |        | 0.7  |     
|                                                                        |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     
|Net loss                                                                |                                        | $                                    | 68,251                           |        |        |        | 76.9 | %    |      | $     | 58,477 |        |        |        | 93.7 | %   
|                                                                        |                                        |                                      |                                  |        |        |        |      |      |      |       |        |        |        |        |      |     

Three Months Ended March 31, 2002
Compared to Three Months Ended March 31, 2001

Revenues.Our total
net revenues for the three months ended March 31, 2002 and
2001 equaled $62.4 million and $88.7 million. Net
revenues were composed of net revenues from services, sales of
equipment and Broadband Network development revenues.

Our net revenues from services for the first
quarter of 2002 totaled $62.1 million, a decrease of
$12.0 million (or 16.2%) compared to the corresponding
period in 2001. The decrease in our net revenues was principally
due to significant devaluation of the Argentine pesoagainst the U.S. dollar that occurred during the first
quarter of 2002. Excluding our operations in Argentina, our
revenues from services increased from $44.4 million during
the first quarter of 2001 to $48.0 million during the first
quarter of 2002.

Our net revenues from services during the first
quarter of 2002 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                                                     
|
| |  | 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 long-haul services to other telecommunications
    carriers (including revenue recognition from the sale of IRU
    capacity on our Broadband Network to,

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| |  |                                                                                                                                                                          
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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, 
|                                        |                               |                              
|                                        |                               | 2001                          |        | % change(1) |        | 2002
|                                        |                               |                               |        |             |        |     
|                                        |                               |                              
|                                        |                               | (dollar amounts in thousands)
|Data and value added services Broadband |                               | $                             | 18,441 |             |        |      | 7.8   | %     |       | $ | 19,886 |       
|                                        | Satellite                     |                               |        | 37,786      |        |      |       | (34.2 | )     |   |        | 24,862 |       
|                                        | Other value added services(2) |                               |        | 3,521       |        |      |       | 2.7   |       |   |        | 3,617  |       
|                                        |                               |                               |        |             |        |      |       |       |       |   |        |       
|                                        |                               | Total                         |        |             | 59,748 |      |       |       | (19.1 | ) |        |        | 48,365 | 
|Internet                                |                               |                               | 11,168 |             |        |      | (29.7 | )     |       |   | 7,854  |       
|Telephony                               |                               |                               | 1,272  |             |        |      | 241.5 |       |       |   | 4,344  |       
|Services to carriers                    |                               |                               | 1,932  |             |        |      | (18.9 | )     |       |   | 1,566  |       
|                                        |                               |                               |        |             |        |      |       |       |       |   |        |       
|Total net revenues from services        |                               | $                             | 74,120 |             |        |      | (16.2 | )     |       | $ | 62,129 |       
|                                        |                               |                               |        |             |        |      |       |       |       |   |        |       






| |     |                                                                                                      | 
| | --- | ---------------------------------------------------------------------------------------------------- | 
| | (1) | Percentage increase (decrease) in first
    quarter of 2002 compared to first quarter of 2001.       | 
|
| | (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 2002 as compared to the corresponding
period in 2001 resulted from lower revenues from data and value
added services, Internet and services to carriers, which offset
the increase in our revenues from telephony services.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Overall, our revenues from broadband services and
    other value added services increased notwithstanding the
    negative effect on these revenues (in U.S. dollar terms)
    primarily attributable to the devaluation of the Argentine
    pesoduring the first quarter of 2002. Revenues from our
    broadband services increased compared to the first quarter of
    2001 because of the ongoing migration of new and existing
    customer traffic to the Broadband Network. Revenues from other
    value added services, which includes our data center services,
    also increased compared to the first quarter of 2001. However,
    the increases in our revenues from broadband services and other
    value added services were more than offset by reduced revenues
    from our satellite services. Our revenues from satellite
    services during the first quarter of 2002 declined in comparison
    to the first quarter of 2001 due to: (i) lower
    satellite-based services volume (as we transferred
    telecommunications services to our Broadband Network),
    (ii) downward pressure on our prices (because of
    competition and adverse economic conditions), (iii) a
    number of customer cancellations or non-renewals, and
    (iv) the negative effect on such revenues, in U.S. dollar
    terms, of the devaluation of the pesoduring the first
    quarter of 2002.
|
| |  | We experienced lower Internet revenues
    principally because of renegotiated or terminated contracts with
    Internet service providers in Argentina and Brazil and the
    adverse impact on such revenues of the devaluation of the
    pesoduring the first quarter of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Our telephony services revenues grew during the
    first quarter of 2002 as compared to the same period in 2001.
    This increase in our telephony services revenues, which were
    partially offset by the effect of the devaluation of the
    Argentine peso, was generated in connection with our
    increased delivery during that period of switched voice services
    to corporate customers in Argentina and international call
    terminations to end-user customers in Peru and the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Our revenues from services to carriers decreased
    compared to the first quarter of 2001 as a result of the
    cancellation of our contracts with 360networks in June 2001 and
    a general decline in demand by telecommunications companies for
    dark and lit fiber capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

Global Crossing and 360networks were the
principal customers for our data center services and services to
carriers during 2001. Due to Global Crossings insolvency
and our dispute with 360networks (which is also

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engaged in ongoing insolvency proceedings), we
anticipate that we will generate significantly lower data center
services and services to carriers revenues during the remainder
of 2002.


At March 31, 2002, we experienced a net
decrease in the number of our customers, as compared to the same
date in 2001. We had 2,859 customers as of March 31, 2002,
compared to 2,877 customers at December 31, 2001 and 2,953
customers at March 31, 2001. 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, |       |             |  |            
|                 |       | 2001                       |       | 2001         |  | 2002      |       | % change(1) |  | % change(2)
|                 |       |                            |       |              |  |           |       |             |  |            
|IMPSAT Argentina |       |                            | 1,247 |              |  |           | 1,100 |             |  |             | 1,097 |       |  |  | (12.0 | )%   |   |  | (0.3  | )%  
|IMPSAT Colombia  |       |                            | 732   |              |  |           | 699   |             |  |             | 691   |       |  |  | (5.6  | )    |   |  | (1.1  | )   
|IMPSAT Brazil    |       |                            | 314   |              |  |           | 387   |             |  |             | 391   |       |  |  | 24.5  |      |   |  | 1.0   |     
|IMPSAT Venezuela |       |                            | 264   |              |  |           | 245   |             |  |             | 239   |       |  |  | (9.5  | )    |   |  | (2.4  | )   
|IMPSAT Ecuador   |       |                            | 237   |              |  |           | 236   |             |  |             | 234   |       |  |  | (1.3  | )    |   |  | (0.8  | )   
|IMPSAT Mexico    |       |                            | 52    |              |  |           | 47    |             |  |             | 47    |       |  |  | (9.6  | )    |   |  |      |     
|IMPSAT Chile     |       |                            | 11    |              |  |           | 57    |             |  |             | 50    |       |  |  | 354.5 |      |   |  | (12.3 | )   
|IMPSAT Peru      |       |                            | 28    |              |  |           | 33    |             |  |             | 35    |       |  |  | 25.0  |      |   |  | 6.1   |     
|IMPSAT USA       |       |                            | 68    |              |  |           | 73    |             |  |             | 75    |       |  |  | 10.3  |      |   |  | 2.7   |     
|                 |       |                            |       |              |  |           |       |             |  |             |       |       |  |  |       |      |   |  |       |     
|                 | Total |                            |       | 2,953        |  |           |       | 2,877       |  |             |       | 2,859 |  |  |       | (3.2 | ) |  |       | (0.6 | )
|                 |       |                            |       |              |  |           |       |             |  |             |       |       |  |  |       |      |   |  |       |     





| |     |                                                                                                      | 
| | --- | ---------------------------------------------------------------------------------------------------- | 
| | (1) | Increase (decrease) as of end of first
    quarter of 2002 compared to end of first quarter of 2001. | 
|
| | (2) | Increase (decrease) as of end of first
    quarter of 2002 compared to end of 2001.                  | 

Adverse economic conditions experienced in
Argentina resulted in a net decrease in the number of customers
(primarily small and medium-sized corporations) and the volume
of services provided in that country as of March 31, 2002
compared to as of March 31, 2001. In Brazil, our customer
base increased as new customers entered into contracts for
bandwidth-intensive telecommunications services over our
Broadband Network.

In addition to net revenues from services, our
total net revenues for the first quarter of 2002 included
revenues from sales of equipment, which totaled
$0.3 million. We did not record any Broadband Network
development revenues during that period. For the first quarter
of 2001, revenues from equipment sales totaled $8.1 million
and Broadband Network development revenues totaled
$6.6 million. We currently anticipate only minimal sales of
equipment during the remainder of 2002, and we do not anticipate
any Broadband Network development revenues during 2002.

Our Broadband Network development revenues for
the first quarter of 2001 related to our construction of
additional backhaul segments for Global Crossings fiber
optic cable system and for a similar fiber optic cable system
that was being developed by 360networks, Inc. These revenues,
which were recorded upon our delivery of the constructed
segments to Global Crossing and 360networks, include a total of
$1.9 million recognized upon the delivery of certain
segments to 360networks for which payment of $0.4 million
has not been received to date. In June 2001, we terminated a
series of contracts that we had signed with 360networks due to
the latters default in payments to us under those
contracts. For a description of this matter, refer to
Legal Proceedings section of our 2001 Annual Report
on Form 10-K, which we filed with the SEC on April 15,
2002.

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The following table shows our revenues by
operating subsidiary for the periods indicated (including
intercompany transactions):

|                 |                               |                               |   |             |  |      |  |        |    |  |   |        | 
|---------------- | ----------------------------- | ----------------------------- | - | ----------- |  | ---- |  | ------ | -- |  | - | ------ | 
|                 |                               |                              
|                 |                               | Three Months Ended March 31, 
|                 |                               |                              
|                 |                               | 2001                          |   | % Change(1) |  | 2002
|                 |                               |                               |   |             |  |     
|                 |                               |                              
|                 |                               | (dollar amounts in thousands)
|IMPSAT Argentina |                               |                               |   |             |  |      |  |        |    |  |   |       
|                 | Services                      |                               | $ | 30,555      |  |      |  | (48.4  | )% |  | $ | 15,779 | 
|                 | Sale of equipment             |                               |   | 2,024       |  |      |  | (96.9  | )  |  |   | 62     | 
|IMPSAT Colombia  |                               |                               |   |             |  |      |  |        |    |  |   |       
|                 | Services                      |                               |   | 15,590      |  |      |  | (3.4   | )  |  |   | 15,059 | 
|                 | Sale of equipment             |                               |   |            |  |      |  |       |    |  |   | 10     | 
|IMPSAT Brazil    |                               |                               |   |             |  |      |  |        |    |  |   |       
|                 | Services                      |                               |   | 10,197      |  |      |  | 5.3    |    |  |   | 10,733 | 
|                 | Sale of equipment             |                               |   | 2,698       |  |      |  | (100.0 | )  |  |   |       | 
|                 | Broadband network development |                               |   | 1,926       |  |      |  | (100.0 | )  |  |   |       | 
|IMPSAT Venezuela |                               |                               |   |             |  |      |  |        |    |  |   |       
|                 | Services                      |                               |   | 7,356       |  |      |  | 6.0    |    |  |   | 7,800  | 
|                 | Sale of equipment             |                               |   | 1,127       |  |      |  | (95.2  | )  |  |   | 54     | 
|Other(2)         |                               |                               |   |             |  |      |  |        |    |  |   |       
|                 | Services                      |                               |   | 19,532      |  |      |  | 24.0   |    |  |   | 24,219 | 
|                 | Sale of equipment             |                               |   | 2,282       |  |      |  | (93.1  | )  |  |   | 158    | 
|                 | Broadband network development |                               |   | 4,645       |  |      |  | (100.0 | )  |  |   |       | 






| |     |                                                                                                | 
| | --- | ---------------------------------------------------------------------------------------------- | 
| | (1) | Percentage increase (decrease) in first
    quarter of 2002 compared to first quarter of 2001. | 
|
| | (2) | Other includes IMPSAT Ecuador, IMPSAT Mexico,
    IMPSAT USA, IMPSAT Chile and IMPSAT Peru.    | 

Our net revenues from services have been
adversely impacted by continued adverse economic conditions in
our most important markets in Argentina and Colombia. Argentina,
which has been mired in economic recession for the past four
years, is our largest market.

In the beginning 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
recessionary conditions and a lack of access to international
capital markets and has recently faced internal disruption and
social unrest. For the foreseeable future, we do not expect the
recession affecting the Argentine economy will subside or that
future economic and political developments in Argentina will
improve. Since the inauguration in January 2002 of the
administration of Argentinas President Eduardo Duhalde,
that countrys government has been unable to achieve
political consensus and support for the introduction of economic
measures demanded by the International Monetary Fund and other
international lending agencies in exchange for an emergency loan
package. The Argentine economic and political environment has
continued to deteriorate even further, and Argentina is
currently experiencing a banking crisis and a significant lack
of liquidity. It is possible that the political and economic
crisis in Argentina could worsen in coming weeks or months. The
continued or worsening political and economic crisis in
Argentina, our largest country of operation, will continue to
have a materially adverse impact on our financial condition and
results of operations.

During the first quarter of 2002, IMPSAT
Argentinas financial condition and results of operations
continued to be severely and negatively affected by currency
fluctuations, inflation, interest rates, and other political,
social and economic developments that affected Argentina during
2001. The ongoing severe 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. A summary of significant customer losses
during 2001 is included in our 2001 Annual Report on
Form 10-K (filed with the SEC on April 15, 2002) under
the section captioned Business 
Customers  Customer Contracts.

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Our total net revenues at IMPSAT Argentina for
the first quarter of 2002 totaled $15.8 million, a decrease
of $16.7 million (or 51.4%) compared to the first quarter
of 2001. Excluding Broadband Network development revenues and
other equipment sales revenues, IMPSAT Argentinas net
revenues from services for the first quarter of 2002 totaled
$15.8 million, a decrease of $14.8 million (or 48.4%)
compared to the first quarter of 2001. In pesos, IMPSAT
Argentinas first quarter 2002 revenues from services
increased by 6.8% as compared to the same period in 2001.

Our results in Brazil, where we commenced
operations in 1998, also were adversely affected during the
first quarter of 2002 as compared to the corresponding period in
2001 by the devaluation of the Brazilian realagainst the
U.S. dollar. At March 31, 2001, the realtraded at a
rate of R$2.15 = $1.00, and at March 31, 2002 it
had depreciated to R$2.32 = $1.00. This and prior
devaluations have had a negative effect on our
real-denominated revenues. Although the Argentine
economic crisis has so far not significantly affected the
Brazilian economy, there can be no assurance that such adverse
effects will not occur in the near term. Due to the size and
nature of Brazils trading relationship with Argentina, the
possible expectation of corresponding risks in Brazil by foreign
investors and the developing nature of the Argentine economic
crisis, economic and market conditions for our Brazilian
operations could be adversely affected in the foreseeable future
by recent events in Argentina. In addition, presidential
elections are scheduled in Brazil during October 2002, and a
change in governmental policies in Brazil, along with investor
reactions to any such changes, could adversely affect the
Brazilian economy.

IMPSAT Brazils revenues for the first
quarter of 2002 totaled $10.7 million, a decrease of
$4.1 million (or 27.6%) compared to the first quarter of
2001. This decrease in revenues relates in part to our
recognition in the first quarter of 2001 of $1.9 million in
Broadband Network development revenues upon delivery of
telecommunications infrastructure to 360networks. IMPSAT
Brazils revenues from services for the first quarter of
2002 were $10.7 million, a $0.5 million (or 5.3%)
increase from the same period in 2001. In local currency terms,
IMPSAT Brazils first quarter 2002 revenues from services
increased by 23.0% as compared to the same period in 2001.

In Colombia, we recorded revenues of
$15.1 million during the first quarter of 2002, compared to
$15.6 million for the same period in 2001. Revenues at
IMPSAT Venezuela equaled $7.9 million for the first quarter
of 2002, compared to $8.5 million for the first quarter of
2001. Venezuela is currently experiencing political and economic
uncertainty following the attempted military coup staged against
that countrys President Chavez during the first weeks of
April 2002. Any resurgence of the recent crisis in
Venezuela could have a material adverse effect on IMPSAT
Venezuelas and our consolidated results of operations and
financial condition.

Direct Costs.Our
direct costs for the first quarter of 2002 totaled
$33.3 million, a decrease of $14.3 million (or 30.0%),
compared to the same period in 2001. As compared to the first
quarter of 2001, this reduction was caused principally by
(i) the devaluation of the pesoduring the first
quarter of 2002, which had the effect of decreasing IMPSAT
Argentinas direct costs in U.S. dollar terms and
(ii) our not incurring any costs of equipment sold or
Broadband Network development costs during the first quarter of
2002. Of our total direct costs for the first quarter of 2002,
$12.1 million related to the operations of IMPSAT
Argentina, compared to $18.9 million for the first quarter
of 2001. In local currency terms, IMPSAT Argentinas direct
costs increased by 33.8% during the first quarter of 2002
compared to the first quarter of 2001.

Direct costs for IMPSAT Brazil totaled
$6.9 million for the first quarter of 2002, compared to
$10.4 million for the same period in 2001. 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 2002, our contracted services costs
totaled $6.2 million, a decrease of $4.9 million (or
43.8%) compared to the first quarter of 2001. Of this amount,
maintenance costs for our telecommunications network
infrastructure, including the Broadband Network, totaled
$5.0 million for the first quarter of 2002 compared to $6.1
million during the first quarter of 2001. Installation costs
totaled $1.3 million for the first quarter of 2002 compared to
$5.0 million during the first quarter of 2001. Our
installation costs decreased because we had fewer new customers
in the

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first quarter of 2002 compared to the same period
in 2001. Of our total contracted services costs for the first
quarter of 2002, $1.8 million related to the operations of
IMPSAT Argentina, compared to $5.3 million at IMPSAT
Argentina for the first quarter of 2001. In local currency
terms, IMPSAT Argentinas contracted services costs
decreased by 1.5 million pesos(or 29.0%) during the
first quarter of 2002 as compared to the first quarter of 2001.


(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 2002 totaled
$1.4 million compared to $2.2 million for the same
period in 2001. The majority of these commissions,
($0.7 million and $1.4 million for the first quarter
of 2002 and 2001, respectively) related to customers of IMPSAT
Argentina. In pesos, IMPSAT Argentinas sales
commissions paid to third-party sales representatives increased
by 4.8% during the first quarter of 2002 as compared to the
first quarter of 2001.

We recorded a provision for doubtful accounts of
$3.0 million for the first quarter of 2002, compared to
$1.3 million for the corresponding period during the
previous year. At March 31, 2002, approximately 29.4% of
our gross trade accounts receivable were past due more than six
months compared to 30.6% at March 31, 2001. At
March 31, 2002, our allowance for doubtful accounts covered
approximately 89.9% of our gross trade accounts receivable past
due more than six months. The average days in quarterly gross
trade accounts receivable increased from 71 days at
March 31, 2001 to 94 days at March 31, 2002. The
worsening of the recession in Argentina could adversely affect
the quality of our accounts receivable from our customers in
that country. IMPSAT Argentinas allowance for doubtful
accounts at March 31, 2002 covered approximately 84.3% of
its gross trade accounts receivable past due more than six
months. Although management currently believes that this
allowance is appropriate, we will monitor the aging of our
receivables in Argentina in light of the severe recession and
currency devaluation being experienced in that country.

(3) Leased Capacity.Our leased
capacity costs for the first quarter of 2002 totaled
$20.4 million, a decrease of $1.6 million (or 7.1%)
compared to the first quarter of 2001. This decrease occurred
notwithstanding an 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 2002 totaled $8.8 million, a decrease of
$1.5 million (or 14.5%) compared to the first quarter of
2001. In Argentina and Brazil, our leased satellite capacity
costs totaled $2.4 million and $1.1 million during the
first quarter of 2002. Compared to the first quarter of 2001,
our satellite capacity costs were unchanged in Argentina, and
decreased by $0.7 million (or 38.1%) in Brazil, in part
because of our transitioning customers from satellite-based
solutions onto the Broadband Network. We had approximately
910 MHz of leased satellite capacity at March 31, 2002
and 1,061 MHz at March 31, 2001.

Our costs for dedicated leased capacity on
third-party fiber optic networks totaled $8.1 million for
the first quarter of 2002, a decrease of $0.8 million (or
8.5%) compared to the first quarter of 2001. These costs were
incurred principally in Argentina, Brazil and the United States.
Prior to the implementation of our Broadband Network, we had
incurred these higher costs of leased fiber optic capacity in
Argentina and Brazil due to the continued demand by our
customers in those countries for greater bandwidth and, in the
United States, due to the expansion of our Internet service
offerings where we provide a link between Latin America and the
U.S. Internet backbone. Although we have transferred increasing
amounts of our telecommunications traffic to the Broadband
Network as we migrate 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.

In connection with certain new services that we
are offering as a result of the implementation of our Broadband
Network and the effectiveness of our license in Argentina to
provide domestic and international long distance services, we
also are incurring costs for interconnection and telephony
termination costs and frequency rights. These costs totaled
$3.4 million during the first quarter of 2002 (composed of
$2.7 million for

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interconnection and telephony termination costs
and $0.7 million for frequency rights) as compared to
$2.7 million for the first quarter of 2001 (composed of
$1.5 million for interconnection and telephony termination
costs and $1.2 million for frequency rights).


Our interconnection and telephony termination
costs in Argentina totaled $1.7 million during the first
quarter of 2002 (composed of $1.6 million for
interconnection and telephony termination costs and
$0.1 million for frequency rights) as compared to
$1.4 million for the first quarter of 2001 (composed of
$0.5 million for interconnection and telephony termination
costs and $0.9 million for frequency rights).

(4) Costs of Equipment Sold and Broadband
Network Development.In the first quarter of 2002, we
incurred costs of equipment sold of $0.1 million compared
to $5.4 million for the first quarter of 2001. During the
first quarter of 2002, we incurred no Broadband Network
development costs as compared to $3.3 million of such costs
during the first quarter of 2001. As discussed above, we
recorded no Broadband Network development revenues during the
first quarter of 2002.

We anticipate that our direct costs will decline
during the remaining periods in 2002 compared to corresponding
periods in 2001, principally because of the effect of the
devaluation of the Argentine pesoagainst the U.S.
dollar, which, in U.S. dollar terms, will result in lower
contracted services and other direct costs at IMPSAT Argentina,
and because of lower costs of equipment sold (consistent with
our expectation that sales of equipment will decline
substantially in 2002). This anticipated decline in our direct
costs during future periods in 2002 could be offset by an
increase in our provision for doubtful accounts if the Argentine
economy falls further into recession.

Salaries and Wages.Salaries and wages for the first
quarter of 2002 totaled $13.0 million, a decrease of
$9.2 million (or 41.2%) compared to the first quarter of
2001. As a result of the adverse economic conditions experienced
in Argentina, Brazil and elsewhere in Latin America and as part
of cost-control measures implemented by management following the
end of the first quarter of 2001, our aggregate number of
employees fell from 1,790 at March 31, 2001 to 1,352 at
March 31, 2002. Management expects to continue to monitor
the size of its total workforce and to make appropriate
adjustments if required by financial and competitive
circumstances.

IMPSAT Argentina incurred salaries and wages for
the first quarter of 2002 totaling $2.9 million, a decrease
of $6.2 million (or 68.5%) compared to the same period in
2001. This decrease was due to (i) the positive effect of
the devaluation of the peso, which decreased the dollar
value of our salaries and wages expenses incurred in Argentina
during the first quarter of 2002; and (ii) a reduction in
the number of employees at IMPSAT Argentina. In pesos,
IMPSAT Argentinas first quarter 2002 salaries and wages
expenses decreased by 8.0% as compared to the same period in
2001. IMPSAT Argentina had 348 employees as of
March 31, 2002 as compared to 486 employees as of
March 31, 2001.

IMPSAT Brazil incurred salaries and wages for the
first quarter of 2002 of $3.2 million, a decrease of
$2.0 million (or 38.4%) compared to the first quarter of
2001. IMPSAT Brazil decreased its number of employees to 309
persons at March 31, 2002, compared to 446 persons at
March 31, 2001. In addition to our reduced employee
headcount in that country, the decrease in salaries and wages at
IMPSAT Brazil during the first quarter of 2002 is in part
related to the 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.

During the remainder of 2002, we expect that the
devaluation of the Argentine peso, in addition to the
reduction in the number of our employees, will result in a
decrease in U.S. dollar terms of our consolidated salaries and
wages expense.

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

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We incurred SG&A expenses of
$7.4 million for the first quarter of 2002, a decrease of
$7.3 million (or 49.9%) compared to the same period in
2001. 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 devaluation of
Argentinas pesoand Brazils realagainst 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 2002 totaled $2.0 million, a decrease of
$2.9 million (or 58.8 %) compared to the corresponding
period in 2001. In pesos, IMPSAT Argentinas first
quarter 2002 SG&A expenses decreased by 15.7% as compared to
the same period in 2001. SG&A expenses at IMPSAT Brazil for
the three months ended March 31, 2002 totaled
$1.8 million, compared to $4.4 million for the same
period in 2001, a decrease of 58.8% (or 23.9% in local currency
terms). Management intends to take efforts in the coming periods
to further control or reduce SG&A expenses. Such efforts,
along with the effects of the devaluations of the Argentine
peso, are anticipated to result in a further decline in
SG&A expenses in future periods during 2002.

Depreciation and Amortization.Our depreciation and amortization
expenses for the first quarter of 2002 totaled
$23.9 million, a decrease of $5.5 million (or 18.8%)
compared to our depreciation and amortization for the
corresponding period in 2001. Depreciation and amortization for
IMPSAT Argentina for the first quarter of 2002 totaled
$8.3 million. This represents a decrease of $4.7 million
(or 36.2%) compared to IMPSAT Argentinas depreciation and
amortization for the first quarter of 2001. The quarter over
quarter decrease in depreciation and amortization primarily is
the result of the asset impairment charge of $381.9 million
recorded in the second half 2001, which reduced the dollar value
of our depreciable fixed asset base.

Interest Expense, Net.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
net interest expense for the first quarter of 2001 totaled
$29.0 million, consisting of interest expense (including
financing costs and taxes) of $33.5 million and interest
income of $4.5 million. At March 31, 2002, we had
cash, cash equivalents and other short-term trading investments
of $61.0 million compared to $64.9 million at
March 31, 2001. Our interest income has declined as we have
utilized our cash and trading investments in connection with our
capital expenditures and general corporate purposes. Our quarter
over quarter interest expense decreased principally because of
reductions in the floating interest rates applicable to certain
of our indebtedness.

As previously disclosed (see the section
captioned Certain Considerations  We have
defaulted on our indebtedness and could face liquidation
in our 2001 Annual Report on Form 10-K), we are in default
on accrued and unpaid amounts under our senior notes, our vendor
financing agreements with Lucent Technologies Inc. and Nortel
Networks Limited for the development of Broadband Network (which
agreements we call our Broadband Network Vendor Financing
Agreements), and certain other indebtedness. The interest
component of such defaulted amounts during the first quarter of
2002, which aggregated $7.9 million, is included in our net
interest expense for the first quarter of 2002 discussed in the
preceding paragraph.

For the first quarter of 2002, IMPSAT
Argentinas net interest expense totaled $5.2 million
($5.2 million after eliminating intercompany items),
compared to $5.0 million ($5.0 million after
eliminating intercompany items) for the first quarter of 2001.

For the first quarter of 2002, the average
interest rate on our indebtedness was 11.9%, compared to an
average interest rate of 12.3% for the corresponding period in
2001. Our total indebtedness as of March 31, 2002 was
$988.2 million, as compared to $997.6 million as of
March 31, 2001. As of March 31, 2002, total
outstanding indebtedness at IMPSAT Argentina totaled
$167.9 million ($163.8 million after eliminating
intercompany items), compared to $183.7 million
($172.9 million after eliminating intercompany items) as of
March 31, 2001.

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Net Loss on Foreign Exchange.We recorded net losses on foreign
exchange for the first quarter of 2002 of $7.4 million,
compared to net losses of $13.8 million for the first
quarter of 2001. As discussed in greater detail below, our
losses on foreign exchange were primarily due to the devaluation
of the Argentine pesoand the Brazilian realagainst the U.S. dollar during the first quarter of 2002.
Decreases in U.S. dollar terms of IMPSAT Argentinas
peso-denominated assets during the first quarter of 2002
caused by the devaluation were offset by the positive effects of
decreases in U.S. dollar terms of peso-denominated
liabilities during the same period. IMPSAT Argentina recorded
net losses on foreign exchange for the first quarter of 2002
totaling $7.1 million, compared to a net gain of
$0.3 million for the same period in 2001.

In response to the devaluation of the pesoand the decrease in IMPSAT Argentinas accounts
receivable (in U.S. dollar terms) as a result of the
pesification decree, we have translated
IMPSAT Argentinas financial position and results of
operations at and for the three months ended March 31, 2002
using applicable peso/ U.S. dollar exchange rates for
that period. In accordance with U.S. GAAP, balance sheet
accounts were translated using an exchange rate of
2.85 pesos= $1.00 (which was the exchange
rate at the end of the quarter), and income statement accounts
were translated at average monthly rates of exchange prevailing
during the quarter. In future periods, we will continue to
account for IMPSAT Argentinas peso-denominated
earnings, expenses and cash flows based on the U.S. dollar
equivalent of such amounts measured in Argentine pesos.
Such amounts will be translated using the applicable exchange
rates prevailing during the relevant period. See Note 2 to
our condensed consolidated financial statements. As of
March 31, 2002, the floating exchange rate was
2.85 pesosto the U.S. dollar.

IMPSAT Brazil recorded net losses on foreign
exchange for the first quarter of 2002 totaling
$0.1 million, compared to a net losses of
$15.8 million for the corresponding period in 2001. This
net loss on foreign exchange reflects the effect of the
devaluation of the realagainst the U.S. dollar in the
first quarter of 2002 on the book value of our monetary assets
and liabilities in Brazil, including the primarily
dollar-denominated debt of IMPSAT Brazil under the Nortel
Networks vendor financing agreement. At March 31, 2002, the
realtraded at a rate of R$2.32 = $1.00. At
March 31, 2001, the realtraded at a rate of
R$2.15 = $1.00.

Provision for Foreign Income Taxes.For the first quarter of 2002, we
recorded a provision for foreign income taxes $0.4 million,
compared to a provision of $0.4 million for the same period
in 2001.

Net Loss.For the
first quarter of 2002, we incurred a net loss of
$58.5 million, a decrease of $9.8 million (or 14.3%)
compared to the first quarter of 2001. The decrease in our net
loss was principally due to the net positive translation effect
of the devaluation of the pesoagainst the
U.S. dollar (as discussed above), which decreased the
dollar value of our expenses incurred in Argentina during the
first quarter of 2002.

Liquidity and Capital Resources

At March 31, 2002, we had total cash, cash
equivalents and trading investments of $61.0 million, as
compared to $64.9 million as of December 31, 2001 and
$231.6 million as of March 31, 2001. At March 31,
2002, our total indebtedness was $988.2 million, of which
$8.2 million represented short-term debt and
$959.9 million represented the current portion of our
long-term debt. As a result of our default under our senior
notes and the Broadband Network Vendor Financing Agreements, an
aggregate of $865.1 million of our long-term indebtedness
has been reclassified as current portion of long-term
indebtedness (and is thereby included in the $959.9 million
total identified in the preceding sentence). We face significant
cash flow and liquidity problems. As discussed further below,
our cash flows and liquidity are insufficient to satisfy all of
our obligations.

Our company has no material working capital or
other credit facility under which it may borrow for working
capital or other general corporate purposes. We are not
generating sufficient revenue to fund our operations and to
repay our principal and interest obligations under the Broadband
Network Vendor Financing Agreements that are due and payable. As
a result, we are in default under our senior notes. We did not
make the semi-annual interest payment on our Notes due 2003
(which was due on January 15, 2002), on our Notes due 2005
(which was due on February 15, 2002), or on our Notes due
2008 (which was due on December 15, 2001), and, in each
case, we were not able to make the required payment within the
30-day grace periods before a default. We are also in default
under our Broadband Network Vendor Financing Agreements. As of

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April 30, 2002, our indebtedness under the
Senior Notes and the Broadband Network Vendor Financing
Agreements had an aggregate outstanding principal balance of
$650.0 million and $261.1 million, respectively.


We believe that, without a successful
restructuring of our financial obligations, we are unlikely to
be able to obtain future debt or equity financing on acceptable
terms, or at all. The securities markets are currently not
available to us. We therefore will be required to restructure
our balance sheet. With the assistance of the investment bank,
Houlihan Lokey Howard & Zukin Capital, we are currently
negotiating with holders of the senior notes, with the creditors
under the Broadband Network Vendor Financing Agreements and with
other principal creditors regarding a proposed plan to
restructure our balance sheet.

Currently, we have not filed a Chapter 11
plan of reorganization under the U.S. Bankruptcy Code. There can
be no assurances that we will be able to complete this filing
or, if we do, that any plan of reorganization will be approved
by the Bankruptcy Court. If we are unable to timely file for
protection under Chapter 11 or obtain confirmation of a
plan of reorganization, our creditors may seek other
alternatives for our company, including accepting bids for our
company or parts thereof through an auction process or forcing
us into a liquidation proceeding under the federal bankruptcy
laws.

Due to the continued adverse macroeconomic
conditions in Argentina and Brazil and to the termination of
certain contracts with subsidiaries of 360networks, Inc. (see
Legal Proceedings), we have reduced our capital
expenditures in 2001. Our capital expenditures budget for 2002
contemplates that we will need approximately $29.8 million
(reduced from approximately $252.0 million) during the
period from December 31, 2001 (including amounts spent to
date) through the end of 2002 for capital expenditures.

As set forth in our consolidated statement of
cash flows, our operating activities provided $2.1 million
in net cash flow for the three months ended March 31, 2002,
compared to $10.7 million used by operating activities
during the same period in 2001. In addition to the decrease in
our operating losses discussed above, the increase in cash flow
from operating activities in the first quarter of 2002 was
primarily due to an increase in accrued and other liabilities of
$32.7 million (as compared to $2.6 million in the
first quarter of 2001) and a decrease in deferred revenue of
$0.9 million (as compared to an increase of
$30.8 million in the first quarter of 2001). Also, during
the first quarter of 2002, the $1.9 million decrease in our
trade accounts receivable (compared to an increase of
$5.8 million in the first quarter of 2001) and the
$12.7 million decrease in our other receivables (compared
to a decrease of $3.3 million in the first quarter of
2001), collectively offset a decrease in our trade accounts
payable of $9.9 million (as compared to an increase in
trade payables of $0.3 million in the first quarter of
2001) and thereby contributed to the increase in net cash flow
from operating activities during the period. These changes to
our accounts receivable and payable during the first quarter of
2002 reflect actual operating cash flows, as well as changes in
the value of those accounts (in U.S. dollar terms) caused by the
devaluation of the Argentine peso during that period.

For the first quarter of 2002, we used
$3.7 million in net cash flow from investing activities,
compared to $10.9 million of net cash flow provided by
investing activities during the corresponding period in 2001.
The decreased net cash flow from investing activities was
principally due to an increase in our trading investments of
$0.3 million during the first quarter of 2002, compared to
a decrease in our trading investments of $80.4 million
during the same period in 2001. During the first quarter of
2002, we used $2.4 million in net cash flows from financing
activities. This compares to $6.9 million in net cash flows
generated by financing activities during the first quarter of
2001, principally as a result of disbursements during that
period under the vendor financing agreements with Nortel.

At March 31, 2002, we had leased satellite
capacity with annual rental commitments of approximately
$24.0 million through the year 2006. In addition, at
March 31, 2002, we had commitments to purchase
telecommunications equipment amounting to approximately
$2.6 million. We also have commitments of approximately
$63.9 million with respect to purchases of IRUs for
undersea submarine fiber optic capacity with which we intend to
link our telecommunications networks in our countries of
operation with and among each other and other parts of the
World. Commitments under contracts with 360networks and Global
Crossing totaling $41.4 million and $22.5 million,
respectively, are included in this $63.9 million total.
Depending on the outcome of our dispute with 360networks (see
Legal Proceedings) and Global Crossings
ongoing insolvency proceedings, some or all of our liability
under these commitments may be canceled or fail

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to materialize. Furthermore, we had 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 $3.3 million per year through 2006. The
remainder of the leases are typically under one-year contracts,
the early cancellation of which is subject to a fee.


The following table sets forth due dates of our
contractual obligations:

|                                   |  |                |        |      |  |      |         |      |  |      |        |            |  |       |         |  |  |   |        |  |  |   |         |  |  |   |         | 
|---------------------------------- |  | -------------- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------ | ---------- |  | ----- | ------- |  |  | - | ------ |  |  | - | ------- |  |  | - | ------- | 
|Type of Obligations                |  | 2002           |        | 2003 |  | 2004 |         | 2005 |  | 2006 |        | Thereafter |  | Total
|                                   |  |                |        |      |  |      |         |      |  |      |        |            |  |      
|                                   |  |               
|                                   |  | (in thousands)
|Long-term debt(1)                  |  | $              | 85,841 |      |  | $    | 186,805 |      |  | $    | 60,523 |            |  | $     | 356,618 |  |  | $ | 47,889 |  |  | $ | 225,000 |  |  | $ | 962,676 | 
|Capital lease obligations          |  |                | 6,036  |      |  |      | 5,302   |      |  |      | 3,607  |            |  |       | 1,959   |  |  |   | 417    |  |  |   |        |  |  |   | 17,321  | 
|Operating leases                   |  |                | 644    |      |  |      | 408     |      |  |      | 172    |            |  |       |        |  |  |   |       |  |  |   |        |  |  |   | 1,224   | 
|Other long-term obligations        |  |                | 384    |      |  |      | 2,016   |      |  |      | 1,347  |            |  |       | 813     |  |  |   | 441    |  |  |   | 7,434   |  |  |   | 12,435  | 
|                                   |  |                |        |      |  |      |         |      |  |      |        |            |  |       |         |  |  |   |        |  |  |   |         |  |  |   |         | 
|Total contractual cash obligations |  | $              | 92,905 |      |  | $    | 194,531 |      |  | $    | 65,649 |            |  | $     | 359,390 |  |  | $ | 48,747 |  |  | $ | 232,434 |  |  | $ | 993,656 | 
|                                   |  |                |        |      |  |      |         |      |  |      |        |            |  |       |         |  |  |   |        |  |  |   |         |  |  |   |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As discussed elsewhere in this quarterly report,
    we are in default under our senior notes and the Broadband
    Network Vendor Financing Agreements. Accordingly, an aggregate
    of $865.1 million of our long-term indebtedness has been
    reclassified as short-term indebtedness. These reclassified
    amounts are not included in this line item as being due in 2002,
    but instead are set forth based on their originally scheduled
    contractual due dates.

The following table illustrates expirations of
our commercial commitments as provided in corresponding
contracts:

|                                |  |                |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|------------------------------- |  | -------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---------- |  | ----- | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------- | 
|Type of Commitments(1)          |  | 2002           |        | 2003 |  | 2004 |        | 2005 |  | 2006 |        | Thereafter |  | Total
|                                |  |                |        |      |  |      |        |      |  |      |        |            |  |      
|                                |  |               
|                                |  | (in thousands)
|Lines of credit                 |  |                |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       |  |  |   |       |  |  |   |        | 
|Standby letters of credit       |  |                |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       |  |  |   |       |  |  |   |        | 
|Guarantees                      |  |                |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       |  |  |   |       |  |  |   |        | 
|Standby repurchase obligations  |  |                |       |      |  |      |       |      |  |      |       |            |  |       |       |  |  |   |       |  |  |   |       |  |  |   |        | 
|Other commercial commitments(2) |  | $              | 31,444 |      |  | $    | 30,675 |      |  | $    | 27,675 |            |  | $     | 23,001 |  |  | $ | 19,357 |  |  | $ | 32,602 |  |  | $ | 164,754 | 
|                                |  |                |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |        |  |  |   |        |  |  |   |         | 
|Total commercial commitments    |  | $              | 31,444 |      |  | $    | 30,675 |      |  | $    | 27,675 |            |  | $     | 23,001 |  |  | $ | 19,357 |  |  | $ | 32,602 |  |  | $ | 164,754 | 
|                                |  |                |        |      |  |      |        |      |  |      |        |            |  |       |        |  |  |   |        |  |  |   |        |  |  |   |         | 



---



|    |                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Commitments are contractual obligations (other
    than indebtedness) that could potentially require our
    performance in the event of demands by third-parties or
    contingent events.
|   
|(2) | This includes commitments to purchase
    communications and data center equipment and long-term contracts
    for the purchase of satellite capacity and terrestrial links.               






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

The sections below highlight our exposure to
interest rate and foreign exchange rate risks and changes in the
market values of our investment in equity securities. 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,
2002 and assuming that the hypothetical interest rate and
foreign exchange rate changes used in the analyses occurred
during 2002. 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.
Our floating rate indebtedness has increased as we have drawn
down commitments under our vendor financing agreements to cover
capital expenditures, including the Broadband Network. Our
actual interest rate is not quantifiable or predictable because
of the variability of future interest rates and business
requirements. We do

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not believe such risk is material and we do not
customarily use derivative instruments to adjust interest rate
risk. As of March 31, 2002, 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 $0.7 million
annually.


|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |       |  |   |        |   |  |   |         |   |  |   |         |  |  |   |         | 
|-------------------------------- |  | ------------------------- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------ | ---------- |  | ----- | ------- | ----- |  | - | ------ | - |  | - | ------- | - |  | - | ------- |  |  | - | ------- | 
|                                 |  |                          
|                                 |  | Expected Maturity Date(1)
|                                 |  |                          
|Year Ended                       |  |                           |        | Fair
|December 31,                     |  | 2002                      |        | 2003 |  | 2004 |         | 2005 |  | 2006 |        | Thereafter |  | Total |         | Value
|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |      
|Senior Notes (fixed rate)        |  |                           |       |      |  | $    | 125,000 |      |  |      |       |            |  | $     | 300,000 |       |  |   |       |   |  | $ | 225,000 |   |  | $ | 650,000 |  |  | $ | 22,000  | 
|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |       |  |   |        |   |  |   |         |   |  |   |         |  |  |   |         | 
|Avg. interest rate               |  |                           |       |      |  |      | 12.13   | %    |  |      |       |            |  |       | 13.75   | %     |  |   |       |   |  |   | 12.38   | % |  |   | 12.96%  |  |  |   |         | 
|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |       |  |   |        |   |  |   |         |   |  |   |         |  |  |   |         | 
|Term Notes (fixed rate)          |  | $                         | 18,002 |      |  | $    | 13,402  |      |  | $    | 11,642 |            |  | $     | 10,495  |       |  | $ | 1,005  |   |  |   |         |   |  | $ | 54,546  |  |  | $ | 54,546  | 
|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |       |  |   |        |   |  |   |         |   |  |   |         |  |  |   |         | 
|Avg. interest rate               |  |                           | 13.06  | %    |  |      | 13.06   | %    |  |      | 13.06  | %          |  |       | 13.06   | %     |  |   | 13.06  | % |  |   |         |   |  |   | 13.06%  |  |  |   |         | 
|Vendor Financing (variable rate) |  | $                         | 73,875 |      |  | $    | 53,705  |      |  | $    | 52,488 |            |  | $     | 48,082  |       |  | $ | 47,301 |   |  |   |         |   |  | $ | 275,451 |  |  | $ | 275,451 | 
|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |       |  |   |        |   |  |   |         |   |  |   |         |  |  |   |         | 
|Avg. interest rate               |  |                           | 8.95   | %    |  |      | 8.95    | %    |  |      | 8.95   | %          |  |       | 8.95    | %     |  |   | 8.95   | % |  |   |         |   |  |   | 8.95%   |  |  |   |         | 
|                                 |  |                           |        |      |  |      |         |      |  |      |        |            |  |       |         |       |  |   |        |   |  |   |         |   |  |   |         |  |  |   |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As discussed elsewhere in this quarterly report,
    we are in default under our senior notes and the Broadband
    Network Vendor Financing Agreements. Accordingly, an aggregate
    of $865.1 million of our long-term indebtedness has been
    reclassified as short-term indebtedness. These reclassified
    amounts are not included in this line item as being due in 2002,
    but instead are set forth based on their originally scheduled
    contractual due dates.

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.

As previously discussed in this Report, 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 10, 2002 was pesos3.20 = $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 2002 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 is likely to occur
during the remainder of 2002 increases to our consolidated net
losses that would result from transaction gains or losses on our
peso-denominated monetary assets and liabilities. Also,
operating income reductions are likely to result from the
potential impacts on our consolidated revenues from services of
the conversion to pesosof contract obligations that were
previously tied to the dollar. 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 are mandatorily converted to pesosunder
the pesification decree may 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

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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.


Revenues from services from our Argentine
operations for the three months ended March 31, 2002 and
2001 represented approximately 25.4% and 41.2% of our total net
revenues from services for such periods. Revenues from services
from our Brazilian operations for the three months ended
March 31, 2002 and 2001 represented approximately 17.3% and
13.8% of our total net revenues from services for such periods.
At May 10, 2002, the pesotraded at a rate of
pesos3.20 = $1.00. At March 31, 2002 and
May 10, 2002, the realtraded at a rate of
R$2.32 = $1.00 and R$2.47 = $1.00.

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PART II

OTHER INFORMATION





Item 1.     Legal
Proceedings

Not applicable.




Item 2.     Changes
in Securities

Not applicable.




Item 3.     Defaults
Upon Senior Securities

As previously disclosed (see the section
captioned Certain Considerations  We have
defaulted on our indebtedness and could face liquidation
in our 2001 Annual Report on Form 10-K), we are in default
under the majority of our long-term indebtedness. We have failed
to make semi-annual interest payments on our $125 million
12 1/8% Senior Guaranteed Notes due 2003, which was due on
January 15, 2002; our $300 million 13 3/4% senior
notes due 2005, which was due on February 15, 2002; and our
$225 million 12 3/8% senior notes due 2008, which was
due on December 15, 2001. We are also in default under our
Broadband Network Vendor Financing Agreements and certain of our
other indebtedness. As of May 13, 2002, We have failed to
make principal and interest payments under our Broadband Network
Vendor Financing Agreements in an amount totaling
$75.7 million. As of March 31, 2002, our indebtedness
under the senior notes and the Broadband Network Vendor
Financing Agreements had an aggregate outstanding principal
balance of $650.0 million, and $261.1 million,
respectively.




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

Not applicable.




Item 5.     Other
Information

On April 29, 2002, our company announced in
a press release that Guillermo Jofré had resigned as its
chief financial officer. It was also announced that Héctor
Alonso, who has served as our companys chief operating
officer since 1996, has been designated as the new chief
financial officer of our company.

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Item 6.     Exhibits
and Reports on Form 8-K

(a)(1)

Exhibit Index:

|        |  |                                                                                                                                                                                                                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                   
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|3.1     |  | Amended and Restated Certificate of Incorporation
    of the Company (filed on January 14, 2000 as
    Exhibit No. 3.1 to the Companys Registration
    Statement on Form S-1 (No. 333-88389) and incorporated
    herein by reference).                                                                                                         
|3.2     |  | Amended and Restated Bylaws of the Company (filed
    on January 14, 2000 as Exhibit No. 3.2 to the
    Companys Registration Statement on Form S-1
    (No. 333-88389) and incorporated herein by reference).                                                                                                                                   
|4.1     |  | Indenture for the Notes Due 2005, dated as of
    February 16, 2000, among the Company, The Bank of New York,
    as Trustee and Banque Internationale a Luxembourg (including
    form of Note) (filed on March 10, 2000 as an exhibit to the
    Companys 1999 Annual Report on Form 10K and
    incorporated herein by reference).            
|4.2     |  | Indenture for the Notes due 2008, dated as of
    June 17, 1998, between the Company and The Bank of New
    York, as Trustee (including form of Note) (filed on
    July 21, 1998 as an exhibit to the Companys
    Registration Statement on Form S-4 (No. 333-59469) and
    incorporated herein by reference).                               
|4.3     |  | Securityholders Agreement dated as of
    March 19, 1998, among Nevasa Holdings, the Morgan Stanley
    investors and certain other parties (filed on April 15,
    1998, as an exhibit to the Companys Annual Report on
    Form 10-K for 1997 and incorporated herein by reference).                                                           
|4.4     |  | Supplemental Indenture for the Notes Due 2003
    dated as of May 13, 1997 among IMPSAT Corporation, IMPSAT
    S.A. and The Bank of New York (filed on April 15, 1998 as
    an exhibit to the Companys Annual Report on Form 10-K
    for 1997 and incorporated herein by reference).                                                          
|4.5     |  | Indenture for the Notes Due 2003 dated as of
    July 31, 1996, among the Company, IMPSAT Argentina as
    Guarantor and the Bank of New York as Trustee (including form of
    Note) (filed on November 20, 1996 as an exhibit to the
    Companys Registration Statement on Form S-4
    (No. 333-12977) and incorporated herein by reference).
|4.6     |  | Shareholders Agreement dated as of March 10,
    1999 (filed on January 14, 2000 as an exhibit to the
    Companys Registration Statement on Form S-1
    (No. 333-88389) and incorporated herein by reference).                                                                                                                                 
|4.7     |  | Specimen Stock Certificate (filed on
    January 14, 2000 as an exhibit to the Companys
    Registration Statement on Form S-1 (No. 333-88389) and
    incorporated herein by reference).                                                                                                                                                        
|4.8     |  | Form of Stockholder Rights Plan Agreement between
    the Company and The Bank of New York, as Rights Agent (filed on
    June 21, 2000 as an exhibit to the Companys
    Registration Statement on Form S-4 (No. 333-34954) and
    incorporated herein by reference).                                                                          
|4.9     |  | Certificate of Designations dated as of
    June 7, 2000 (filed on June 21, 2000 as an exhibit to
    the Companys Registration Statement on Form S-4
    (No. 333-34954) and incorporated herein by reference).                                                                                                                                 
|9.1     |  | 1998 Stock Option Plan (filed on March 31,
    1999 as an exhibit to the Companys 1998 Annual Report on
    Form 10-K and incorporated herein by reference).                                                                                                                                                                                     
|9.2     |  | 1999 Stock Option Plan (filed on January 14,
    2000 as an exhibit to the Companys Registration Statement
    on Form S-1 (No. 333-88389) 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).                                                                                                                                                

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|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. (São
    Paolo), dated as of February 17, 2000.                                                                                     
|10.3   |  | Turnkey Project Agreement between IMPSAT
    Argentina and Nortel Networks (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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.4   |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.5   |  | Capacity Commitment Agreement dated as of
    November 10, 2000, between South American Crossing Ltd. and
    IMPSAT Fiber Networks, Inc. (filed on March 30, 2001, as an
    exhibit to the Companys Annual Report on Form 10-K
    for 2000 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10.6   |  | Capacity Purchase Agreement dated as of
    November 10, 2000, between Global Crossing Bandwidth, Inc.
    and International Satellite Communication Holding Ltd. (filed on
    March 30, 2001, as an exhibit to the Companys Annual
    Report on Form 10-K for 2000 and incorporated herein by
    reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.7   |  | Capacity IRU Agreement dated as of
    February 15, 2001, by and between 360americas network
    (Bermuda) Ltd. and IMPSAT Fiber Networks, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.8   |  | IRU Fiber Agreement (Argentina) dated as of
    February 15, 2001, by and between IMPSAT S.A. (Argentina)
    and 360networks de Argentina S.R.L. (filed on March 30,
    2001 as an exhibit to the Companys 2000 Annual Report on
    Form 10K 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 10.9: IRU Fiber Agreement (Brazil)
    dated as of February 15, 2001, by and between Impsat
    Comunicações Ltda. and 360networks do Brasil Ltda.
    (filed on March 30, 2001 as an exhibit to the
    Companys 2000 Annual Report on Form 10K and
    incorporated herein by reference).
|10.9   |  | Service Agreement dated as of February 15,
    2001, by and between Impsat Comunicações Ltda. and
    360networks do Brasil Ltda. (filed on March 30, 2001 as an
    exhibit to the Companys 2000 Annual Report on
    Form 10K and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.10   |  | Master Loan Agreement dated as of June 6,
    2001 among Harris Canada, Inc. and the Company, IMPSAT
    Argentina, IMPSAT Brazil, IMPSAT Colombia, IMPSAT Ecuador, and
    IMPSAT Venezuela.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.11   |  | Amended and Restated Financing Agreement between
    IMPSAT Argentina and Nortel Networks. 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 10.11: Amended and Restated Financing Agreement
    between IMPSAT Brazil and Nortel Networks.                                                                                                                                                                                                                                                                                                                                                                                           
|21.1    |  | List of subsidiaries of the registrants
    (incorporated by reference to the Business 
    General section of the Companys Annual Report on
    Form 10-K for 2001 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    




|  |                                                                                                                                       
|- | --------------------------------------------------------------------------------------------------------------------------------------
| | 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.On
February 19, 2002, we filed with the SEC a current report
on Form 8-K announcing that our company had failed to make
its $20.6 million interest payment due on February 15, 2002

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on its $300 million principal amount of
13 3/4% Senior Notes due 2005. In addition, we announced
that our company had received a notice from the Nasdaq National
Market warning that our companys stock may be delisted
because its common stock has failed to maintain the required
minimum bid price and minimum market value of public float, and
that our company had 90 calendar days, or until May 15,
2002, to regain compliance.


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SIGNATURES

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



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



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

| |                        
| | -----------------------
| |                        
| | Héctor Alonso          
| | Chief Financial Officer
|
| | Date: May 14, 2002     
|
| | IMPSAT S.A.            



| |     |                      
| | --- | ---------------------
| | By: | /s/ JORGE PATERNOSTRO

| |                         
| | ------------------------
| |                         
| | Jorge Paternostro       
| | Chief Accounting Officer
|
| | Date: May 14, 2002      

20