##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

FORM 10-Q



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

For the quarterly period ended March 31, 2001

OR



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

For the transition period from
          to

Commission File Number: 333-12977



---

IMPSAT Fiber Networks, Inc.

IMPSAT S.A.


(Exact name of registrant as specified in its
charter)


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

Alférez Pareja 256 (1107)

Buenos Aires, Argentina


(5411) 4300-4007








---

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 
  NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS


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

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest
practicable date:As of March 31, 2001 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
|                             | Item 1.Financial Statements                                                                  
|                             | 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                                                                                   
|Capacity IRU Agreement      
|IRU Fiber Agreement         
|Service Agreement           



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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                             |          |  | 7   | 
|                             
|                             
|                             
|                             
|PART II  OTHER INFORMATION    |          |  | 9                                                                                      |         
|                             
|                             
|                             
|                             
|                              | Item  1. |  | Legal Proceedings                                                                      |          |  | 9   | 
|                             
|                             
|                             
|                             
|                              | Item  2. |  | Changes in Securities                                                                  |          |  | 9   | 
|                             
|                             
|                             
|                             
|                              | Item  3. |  | Defaults Upon Senior Securities                                                        |          |  | 9   | 
|                             
|                             
|                             
|                             
|                              | Item  4. |  | Submission of Matters to a Vote of Security-Holders                                    |          |  | 9   | 
|                             
|                             
|                             
|                             
|                              | Item  5. |  | Other Information                                                                      |          |  | 9   | 
|                             
|                             
|                             
|                             
|                              | Item  6. |  | Exhibits and Reports on Form 8-K                                                       |          |  | 9   | 
|                             
|                             
|                             
|                             
|SIGNATURES                    |          |  | 12                                                                                     |         



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##### Table of Contents






PART I

FINANCIAL INFORMATION





Item 1. Financial Statements

IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. Dollars)


|                                        |                                                                                                                                                   |                            |           |             |         |   |           |          |         | 
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | --------- | ----------- | ------- | - | --------- | -------- | ------- | 
|                                        |                                                                                                                                                   | December 31,               |           | March 31,  
|                                        |                                                                                                                                                   | 2000                       |           | 2001       
|                                        |                                                                                                                                                   |                            |           |            
|                                        |                                                                                                                                                   |                            |           | (Unaudited)
|                                       
|                                       
|                                       
|                                       
|ASSETS                                 
|                                       
|                                       
|                                       
|                                       
|CURRENT ASSETS:                         |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                                                                         |                            | $         | 67,737      |         |   | $         | 71,083   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Trading investments                                                                                                                               |                            |           | 240,892     |         |   |           | 160,484  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Trade accounts receivable, net                                                                                                                    |                            |           | 83,351      |         |   |           | 87,874   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other receivables                                                                                                                                 |                            |           | 63,171      |         |   |           | 62,259   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Prepaid expenses                                                                                                                                  |                            |           | 3,722       |         |   |           | 5,826    |        
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                        |                                                                                                                                                   | Total current assets       |           |             | 458,873 |   |           |          | 387,526 | 
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|BROADBAND NETWORK, Net                  |                                                                                                                                                   |                            | 364,221   |             |         |   | 416,308   |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|PROPERTY, PLANT AND EQUIPMENT, Net      |                                                                                                                                                   |                            | 381,674   |             |         |   | 394,609   |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|NON-CURRENT ASSETS:                     |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                       
|                                       
|                                       
|                                       
|                                        | Investments                                                                                                                                       |                            |           | 15,091      |         |   |           | 17,635   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Intangible assets                                                                                                                                 |                            |           | 87,693      |         |   |           | 85,891   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred income taxes, net                                                                                                                        |                            |           | 33,059      |         |   |           | 31,199   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred financing costs, net                                                                                                                     |                            |           | 14,804      |         |   |           | 13,057   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other non-current assets                                                                                                                          |                            |           | 19,335      |         |   |           | 19,623   |        
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                        |                                                                                                                                                   | Total non-current assets   |           |             | 169,982 |   |           |          | 167,405 | 
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|TOTAL                                   |                                                                                                                                                   | $                          | 1,374,750 |             |         | $ | 1,365,848 |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                       
|                                       
|                                       
|                                       
|LIABILITIES AND STOCKHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|CURRENT LIABILITIES:                    |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable  trade                                                                                                                          |                            | $         | 113,516     |         |   | $         | 113,828  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Short-term debt                                                                                                                                   |                            |           | 14,603      |         |   |           | 17,524   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Current portion of long-term debt                                                                                                                 |                            |           | 38,377      |         |   |           | 43,200   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued and other liabilities                                                                                                                     |                            |           | 53,809      |         |   |           | 56,381   |        
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                        |                                                                                                                                                   | Total current liabilities  |           |             | 220,305 |   |           |          | 230,933 | 
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|LONG-TERM DEBT, Net                     |                                                                                                                                                   |                            | 915,263   |             |         |   | 936,883   |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|OTHER LONG-TERM LIABILITIES             |                                                                                                                                                   |                            | 28,307    |             |         |   | 26,301    |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|DEFERRED REVENUES                       |                                                                                                                                                   |                            | 52,290    |             |         |   | 83,095    |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|COMMITMENTS AND CONTINGENCIES (NOTE 12) |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                       
|                                       
|                                       
|                                       
|STOCKHOLDERS EQUITY:                   |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                       
|                                       
|                                       
|                                       
|                                        | Common Stock, $0.01 par value; 300,000,000 shares authorized,
	91,428,570 shares issued and outstanding at
	December 31, 2000, and March 31, 2001 |                            |           | 914         |         |   |           | 914      |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid in capital                                                                                                                        |                            |           | 537,356     |         |   |           | 537,498  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated deficit                                                                                                                               |                            |           | (357,075    | )       |   |           | (425,326 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred stock-based compensation                                                                                                                 |                            |           | (5,438      | )       |   |           | (5,438   | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive loss                                                                                                              |                            |           | (17,172     | )       |   |           | (19,012  | )      
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|                                        |                                                                                                                                                   | Total stockholders equity |           |             | 158,585 |   |           |          | 88,636  | 
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         
|TOTAL                                   |                                                                                                                                                   | $                          | 1,374,750 |             |         | $ | 1,365,848 |         
|                                        |                                                                                                                                                   |                            |           |             |         |   |           |         

See notes to consolidated financial statements.

F-1



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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


|                                             |                                      |                        |                          |         |        |         |         |         |        |         |  
|-------------------------------------------- | ------------------------------------ | ---------------------- | ------------------------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | -
|                                             |                                      |                       
|                                             |                                      | Three Months Ended    
|                                             |                                      | March 31,             
|                                             |                                      |                       
|                                             |                                      | 2000                   |                          | 2001   
|                                             |                                      |                        |                          |        
|                                             |                                      |                       
|                                             |                                      | (Unaudited)           
|                                            
|                                            
|                                            
|                                            
|NET REVENUES:                                |                                      |                        |                          |         |        |         |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Data and value added services        |                        | $                        | 51,260  |        |         | $       | 57,428  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Telephony                            |                        |                          |         |        |         |         | 1,272   |       
|                                            
|                                            
|                                            
|                                            
|                                             | Internet                             |                        |                          | 6,508   |        |         |         | 11,168  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Services to carriers                 |                        |                          |         |        |         |         | 4,373   |       
|                                            
|                                            
|                                            
|                                            
|                                             | Sales of equipment                   |                        |                          | 995     |        |         |         | 14,504  |       
|                                             |                                      |                        |                          |         |        |         |         |        
|                                             |                                      |                        | Total net revenues       |         |        | 58,763  |         |         |        | 88,745  |  
|                                             |                                      |                        |                          |         |        |         |         |        
|COSTS AND EXPENSES:                          |                                      |                        |                          |         |        |         |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Direct costs:                        |                        |                          |         |        |         |         |         |       
|                                            
|                                            
|                                            
|                                            
|                                             |                                      | Contracted services    |                          |         | 6,474  |         |         |         | 11,086 |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                      | Other direct costs     |                          |         | 5,184  |         |         |         | 5,792  |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                      | Leased capacity        |                          |         | 14,082 |         |         |         | 21,933 |        
|                                            
|                                            
|                                            
|                                            
|                                             |                                      | Cost of equipment sold |                          |         | 820    |         |         |         | 8,727  |        
|                                             |                                      |                        |                          |         |        |         |         |        
|                                             |                                      |                        | Total direct costs       |         |        | 26,560  |         |         |        | 47,538  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Salaries and wages                   |                        |                          | 14,230  |        |         |         | 22,197  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Selling, general and administrative  |                        |                          | 11,500  |        |         |         | 14,687  |       
|                                            
|                                            
|                                            
|                                            
|                                             | Depreciation and amortization        |                        |                          | 19,936  |        |         |         | 29,432  |       
|                                             |                                      |                        |                          |         |        |         |         |        
|                                             |                                      |                        | Total costs and expenses |         |        | 72,226  |         |         |        | 113,854 |  
|                                             |                                      |                        |                          |         |        |         |         |        
|Operating loss                               |                                      |                        | (13,463                  | )       |        |         | (25,109 | )      
|                                             |                                      |                        |                          |         |        |         |         |        
|OTHER INCOME (EXPENSES):                     |                                      |                        |                          |         |        |         |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Interest income and investment gains |                        |                          | 4,767   |        |         |         | 4,511   |       
|                                            
|                                            
|                                            
|                                            
|                                             | Interest expense                     |                        |                          | (22,381 | )      |         |         | (33,509 | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Net gain (loss) on foreign exchange  |                        |                          | 2,565   |        |         |         | (13,781 | )     
|                                            
|                                            
|                                            
|                                            
|                                             | Other income, net                    |                        |                          | 178     |        |         |         | 2       |       
|                                             |                                      |                        |                          |         |        |         |         |        
|                                             |                                      |                        | Total other expenses     |         |        | (14,871 | )       |         |        | (42,777 | )
|                                             |                                      |                        |                          |         |        |         |         |        
|LOSS BEFORE INCOME TAXES                     |                                      |                        | (28,334                  | )       |        |         | (67,886 | )      
|                                            
|                                            
|                                            
|                                            
|BENEFIT FROM (PROVISION FOR) INCOME TAXES    |                                      |                        | 660                      |         |        |         | (365    | )      
|                                             |                                      |                        |                          |         |        |         |         |        
|NET LOSS                                     |                                      |                        | (27,674                  | )       |        |         | (68,251 | )      
|                                            
|                                            
|                                            
|                                            
|DIVIDENDS ON REDEEMABLE PREFERRED STOCK      |                                      |                        | (1,393                   | )       |        |         |         |        
|                                             |                                      |                        |                          |         |        |         |         |        
|NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS |                                      | $                      | (29,067                  | )       |        | $       | (68,251 | )      
|                                             |                                      |                        |                          |         |        |         |         |        
|NET LOSS PER COMMON SHARE:                   |                                      |                        |                          |         |        |         |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | BASIC AND DILUTED                    |                        | $                        | (0.36   | )      |         | $       | (0.75   | )     
|                                             |                                      |                        |                          |         |        |         |         |        
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES:    |                                      |                        |                          |         |        |         |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | BASIC AND DILUTED                    |                        |                          | 80,591  |        |         |         | 91,429  |       
|                                             |                                      |                        |                          |         |        |         |         |        

See notes to consolidated financial statements.

F-2



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. Dollars)


|                                               |                                                                                   |                    |         |         |         |   |         |        |        |  
|---------------------------------------------- | --------------------------------------------------------------------------------- | ------------------ | ------- | ------- | ------- | - | ------- | ------ | ------ | -
|                                               |                                                                                   |                   
|                                               |                                                                                   | Three Months Ended
|                                               |                                                                                   | March 31,         
|                                               |                                                                                   |                   
|                                               |                                                                                   | 2000               |         | 2001   
|                                               |                                                                                   |                    |         |        
|                                               |                                                                                   |                   
|                                               |                                                                                   | (Unaudited)       
|                                              
|                                              
|                                              
|                                              
|NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS   |                                                                                   | $                  | (29,067 | )       |         | $ | (68,251 | )     
|                                               |                                                                                   |                    |         |         |         |   |         |       
|OTHER COMPREHENSIVE INCOME (LOSS), net of tax: |                                                                                   |                    |         |         |         |   |         |       
|                                              
|                                              
|                                              
|                                              
|                                               | Foreign currency translation adjustment                                           |                    |         | 303     |         |   |         | (3,752 | )     
|                                              
|                                              
|                                              
|                                              
|                                               | Change in unrealized (loss) gain on investment available
	for sale,
	net of taxes |                    |         | (59,244 | )       |   |         | 1,912  |       
|                                               |                                                                                   |                    |         |         |         |   |         |       
|                                               |                                                                                   | TOTAL              |         |         | (58,941 | ) |         |        | (1,840 | )
|                                               |                                                                                   |                    |         |         |         |   |         |       
|COMPREHENSIVE LOSS                             |                                                                                   | $                  | (88,008 | )       |         | $ | (70,091 | )     
|                                               |                                                                                   |                    |         |         |         |   |         |       

See notes to consolidated financial statements

F-3



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands of U.S. Dollars)


(Unaudited)


|                             |                                                                                                    |              |            |            |  |             |     |             |  |               |         |      |  |       |          |         |   |   |        |   |  |   |         |        |   |   |         |         |  
|---------------------------- | -------------------------------------------------------------------------------------------------- | ------------ | ---------- | ---------- |  | ----------- | --- | ----------- |  | ------------- | ------- | ---- |  | ----- | -------- | ------- | - | - | ------ | - |  | - | ------- | ------ | - | - | ------- | ------- | -
|                             |                                                                                                    |              |            |            |  |             |     |             |  | Accumulated   |         |     
|                             |                                                                                                    | Common Stock |            | Additional |  |             |     | Deferred    |  | Other         |         |     
|                             |                                                                                                    |              |            | Paid In    |  | Accumulated |     | Stock-Based |  | Comprehensive |         |     
|                             |                                                                                                    | Shares       |            | Stock      |  | Capital     |     | Deficit     |  | Compensation  |         | Loss |  | Total
|                             |                                                                                                    |              |            |            |  |             |     |             |  |               |         |      |  |      
|BALANCE AT DECEMBER 31, 2000 |                                                                                                    |              | 91,428,570 |            |  | $           | 914 |             |  | $             | 537,356 |      |  | $     | (357,075 | )       |   | $ | (5,438 | ) |  | $ | (17,172 | )      |   | $ | 158,585 |        
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of carrying value of net
	assets acquired from related party |              |            |            |  |             |     |             |  |               |         | 142  |  |       |          |         |   |   |        |   |  |   |         |        |   |   |         | 142     |  
|                            
|                            
|                            
|                            
|                             | Change on unrealized loss on investment available for sale, net
	of taxes                          |              |            |            |  |             |     |             |  |               |         |      |  |       |          |         |   |   |        |   |  |   |         | 1,912  |   |   |         | 1,912   |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                            |              |            |            |  |             |     |             |  |               |         |      |  |       |          |         |   |   |        |   |  |   |         | (3,752 | ) |   |         | (3,752  | )
|                            
|                            
|                            
|                            
|                             | Net loss for the period                                                                            |              |            |            |  |             |     |             |  |               |         |      |  |       |          | (68,251 | ) |   |        |   |  |   |         |        |   |   |         | (68,251 | )
|                             |                                                                                                    |              |            |            |  |             |     |             |  |               |         |      |  |       |          |         |   |   |        |   |  |   |         |        |   |   |         |        
|BALANCE AT MARCH 31, 2001    |                                                                                                    |              | 91,428,570 |            |  | $           | 914 |             |  | $             | 537,498 |      |  | $     | (425,326 | )       |   | $ | (5,438 | ) |  | $ | (19,012 | )      |   | $ | 88,636  |        
|                             |                                                                                                    |              |            |            |  |             |     |             |  |               |         |      |  |       |          |         |   |   |        |   |  |   |         |        |   |   |         |        

See notes to consolidated financial statements.

F-4



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars)


|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |         |        |        |         |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ---------------------------------------------------------------------- | --------------------------------------------------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | -
|                                                                      |                                                                                                                      |                                   
|                                                                      |                                                                                                                      | Three Months Ended                
|                                                                      |                                                                                                                      | March 31,                         
|                                                                      |                                                                                                                      |                                   
|                                                                      |                                                                                                                      | 2000                               |                                                                        | 2001                                               
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                    
|                                                                      |                                                                                                                      |                                   
|                                                                      |                                                                                                                      | (Unaudited)                       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net loss                                                                                                             |                                    | $                                                                      | (27,674                                             | )      |        | $       | (68,251 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Adjustments to reconcile net loss to net cash provided by (used
	in) operating activities, net of acquisition:       |                                    |                                                                        |                                                     |        |        |         |         |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Amortization and depreciation      |                                                                        |                                                     | 19,936 |        |         |         | 29,432 |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Provision for doubtful accounts    |                                                                        |                                                     | 3,726  |        |         |         | 1,256  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Deferred income tax benefit        |                                                                        |                                                     | (1,395 | )      |         |         | (206   | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Changes in assets and liabilities: |                                                                        |                                                     |        |        |         |         |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | Increase in trade accounts receivable, net                             |                                                     |        | (4,428 | )       |         |        | (5,779 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | Increase in prepaid expenses                                           |                                                     |        | (1,188 | )       |         |        | (2,104 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | (Increase) decrease in other receivables and other non-current
	assets |                                                     |        | (1,733 | )       |         |        | 3,249  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | Increase in accounts payable  trade                                   |                                                     |        | 6,635  |         |         |        | 312    |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | Increase in deferred revenues                                          |                                                     |        | 18,925 |         |         |        | 30,805 |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | Increase in accrued and other liabilities                              |                                                     |        | 5,603  |         |         |        | 2,572  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                    | Decrease in other long-term liabilities                                |                                                     |        | (347   | )       |         |        | (2,006 | )      
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      |                                                                                                                      |                                    |                                                                        | Net cash provided by (used in) operating activities |        |        | 18,060  |         |        |        | (10,720 | )
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net decrease in trading investments                                                                                  |                                    |                                                                        |                                                     |        |        |         | 80,408  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Build-out of broadband network                                                                                       |                                    |                                                                        | (20,203                                             | )      |        |         | (39,557 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of property, plant and equipment                                                                           |                                    |                                                                        | (30,190                                             | )      |        |         | (30,445 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | (Increase) decrease in other investments                                                                             |                                    |                                                                        | (26                                                 | )      |        |         | 525     |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      |                                                                                                                      |                                    |                                                                        | Net cash (used in) provided by investing activities |        |        | (50,419 | )       |        |        | 10,931  |  
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net borrowings from short-term debt                                                                                  |                                    |                                                                        | 2,250                                               |        |        |         | 2,921   |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from long-term debt, net of deferred financing costs                                                        |                                    |                                                                        | 296,199                                             |        |        |         | 12,023  |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Repayments of long-term debt                                                                                         |                                    |                                                                        | (3,300                                              | )      |        |         | (8,057  | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from issuance of common stock, net                                                                          |                                    |                                                                        | 229,445                                             |        |        |         |         |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash paid in redemption of preferred stock                                                                           |                                    |                                                                        | (32,500                                             | )      |        |         |         |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      |                                                                                                                      |                                    |                                                                        | Net cash provided by financing activities           |        |        | 492,094 |         |        |        | 6,887   |  
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH                       |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | EQUIVALENTS                                                                                                          |                                    |                                                                        | 303                                                 |        |        |         | (3,752  | )     
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  |                                                                                                                      |                                    | 460,038                                                                |                                                     |        |        | 3,346   |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                  |                                                                                                                      |                                    | 97,507                                                                 |                                                     |        |        | 67,737  |        
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                        |                                                                                                                      | $                                  | 557,545                                                                |                                                     |        | $      | 71,083  |        
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                   |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest paid                                                                                                        |                                    | $                                                                      | 13,740                                              |        |        | $       | 33,520  |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      | Foreign income taxes paid                                                                                            |                                    |                                                                        |                                                     |        |        | $       |         |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
	ACTIVITIES: |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accrued dividends on redeemable preferred stock                                                                      |                                    | $                                                                      | 1,393                                               |        |        |         |         |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      | Change to unrealized gain in investment available for sale, net
	of tax                                              |                                    | $                                                                      | (59,244                                             | )      |        | $       | 1,912   |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      | Broadband network vendor financing                                                                                   |                                    | $                                                                      | 34,691                                              |        |        | $       | 22,477  |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      | Issuance of treasury stock upon conversion of preferred stock                                                        |                                    | $                                                                      | 115,142                                             |        |        |         |         |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        
|                                                                      | Issuance of common stock in exchange of minority interest of
	IMPSAT Argentina, IMPSAT Colombia and IMPSAT Venezuela |                                    | $                                                                      | 93,034                                              |        |        |         |         |       
|                                                                      |                                                                                                                      |                                    |                                                                        |                                                     |        |        |         |        

See notes to consolidated financial statements.

F-5



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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)


1.  GENERAL

IMPSAT Fiber Networks, Inc., a Delaware holding company (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) and
is currently undertaking its second phase of extension which it
expects to complete during the present year.

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 deployed 210,000 square feet
of advanced data centers in Argentina, Brazil, Chile, Mexico and
United States to complement its existing hosting facilities of
70,000 square feet.

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.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Interim Financial Information  The unaudited
consolidated financial statements as of March 31, 2001 and
for the three months ended March 31, 2000 and 2001 have
been prepared on the same basis as the Companys audited
consolidated financial statements. In the opinion of management,
the unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the results for such period. The
operating results for the three-month period ended
March 31, 2001 are not necessarily indicative of the
operating results to be expected for the full fiscal year or for
any future period.

F-6



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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. 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 is limited because the majority of
its assets are either non-monetary in nature or denominated in
US dollars, and the majority of its debt is denominated in US
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, to
date the Company has not entered into derivative transactions to
hedge against these potential risks.

Cash and Cash Equivalents  Cash and cash
equivalents are 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 and acceptance by customer. In addition,
the Company has entered into, and expects to enter into in the
future, agreements with carriers granting indefeasible rights of
use (IRUs) and access to portions of its 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 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,
2000 and 2001.

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. Depreciation will be computed using the
straight-line method over the life of the rights of way for the
related network. 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
|                       
|                       
|                       
|                       
|Rights of way           |  | 10-20 years
|                       
|                       
|                       
|                       
|IRU investments         |  | 15 years   
|                       
|                       
|                       
|                       
|Equipment and materials |  | 10 years   

F-7



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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 and available for sale for long term
investments and are carried at fair value. Unrealized gains and
losses for trading investments are recorded in income.
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.

Deferred Financing Costs  Debt issuance costs
and transaction fees, which are associated with the issuance of
the Companys 12 1/8% Senior Guaranteed Notes due 2003
(the Senior Guaranteed Notes), the 13 3/4%
Senior Notes due 2005 (the Senior Notes 2005) and
the 12 3/8% Senior Notes due 2008 (the Senior Notes
2008) are being amortized (and charged to interest
expense) over the term of the related notes on a method which
approximates the level yield method.

Intangible Assets  Intangible assets consist
of goodwill created from acquisitions. These intangible assets
are being amortized on a straight-line basis over a period
ranging from 4 to 15 years.

Long-Lived Assets  Long-lived assets,
including goodwill, are reviewed on an ongoing basis for
impairment based on comparison of carrying value against
undiscounted future cash flows. If an impairment is identified,
the assets carrying amount is adjusted to fair value. No
such adjustments were recorded for the three months ended
March 31, 2000 and 2001.

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 Guaranteed Notes, Senior Notes 2005 and
2008 and trading and available for sale investments, were valued
at market closing prices at December 31, 2000. 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,
2000.

F-8



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


At December 31, 2000, the fair value of the Companys
financial instruments was as follows:

|                                         |  |              |         | 
|---------------------------------------- |  | ------------ | ------- | 
|                                         |  | December 31,
|                                         |  | 2000        
|                                         |  |             
|12.125% Senior Guaranteed Notes due 2003 |  | $            | 98,750  | 
|                                        
|                                        
|                                        
|                                        
|13.75% Senior Notes due 2005             |  |              | 198,000 | 
|                                        
|                                        
|                                        
|                                        
|12.375% Senior Notes due 2008            |  |              | 124,875 | 
|                                        
|                                        
|                                        
|                                        
|Trading Investments                      |  |              | 240,892 | 
|                                        
|                                        
|                                        
|                                        
|Available for sale investments           |  |              | 7,166   | 

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.

Net Loss Per Common Share  Basic earnings per
share is computed based on the average number of common shares
outstanding and diluted earnings per share is computed based on
the average number of common and potential common shares
outstanding under the treasury stock method. Certain amounts in
the 2000 consolidated financial statements have been
reclassified to conform with the 2001 presentation.

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

|                             |  |             |         |                 |  |       |         |   |  |   |         |  
|---------------------------- |  | ----------- | ------- | --------------- |  | ----- | ------- | - |  | - | ------- | -
|                             |  |             |         | Unrealized      |  |      
|                             |  | Foreign     |         | Gain (Loss)     |  |      
|                             |  | Currency    |         | Available for   |  |      
|                             |  | Translation |         | Sale Investment |  | Total
|                             |  |             |         |                 |  |      
|Balance at December 31, 2000 |  | $           | (6,417  | )               |  | $     | (10,755 | ) |  | $ | (17,172 | )
|                            
|                            
|                            
|                            
|Change during the period     |  |             | (3,752  | )               |  |       | 1,912   |   |  |   | (1,840  | )
|                             |  |             |         |                 |  |       |         |   |  |   |         |  
|Balance at March 31, 2001    |  | $           | (10,169 | )               |  | $     | (8,843  | ) |  | $ | (19,012 | )
|                             |  |             |         |                 |  |       |         |   |  |   |         |  

Reclassifications  Certain amounts in the 2000
consolidated financial statements have been reclassified to
conform with the 2001 presentation.

3.  INVESTMENTS

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

|                                                            |       |              |         |           |  |   |         |        | 
|----------------------------------------------------------- | ----- | ------------ | ------- | --------- |  | - | ------- | ------ | 
|                                                            |       | December 31, |         | March 31,
|                                                            |       | 2000         |         | 2001     
|                                                            |       |              |         |          
|Trading investments, at fair value                          |       | $            | 240,892 |           |  | $ | 160,484 |       
|                                                            |       |              |         |           |  |   |         |       
|Investment, at cost                                         |       | $            | 7,925   |           |  | $ | 7,400   |       
|                                                           
|                                                           
|                                                           
|                                                           
|Investment in common stock, at fair value ($24,275 at cost) |       |              | 7,166   |           |  |   | 10,235  |       
|                                                            |       |              |         |           |  |   |         |       
|                                                            | Total |              | $       | 15,091    |  |   | $       | 17,635 | 
|                                                            |       |              |         |           |  |   |         |       

F-9



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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

The Companys cost basis investment represents a less than
1% ownership in an unaffiliated entity established for the
purchase and leasing of satellite capacity time. 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.

4.  TRADE ACCOUNTS RECEIVABLE

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

|                                      |       |              |         |           |  |   |         |         | 
|------------------------------------- | ----- | ------------ | ------- | --------- |  | - | ------- | ------- | 
|                                      |       | December 31, |         | March 31,
|                                      |       | 2000         |         | 2001     
|                                      |       |              |         |          
|IMPSAT Argentina                      |       | $            | 75,116  |           |  | $ | 75,389  |        
|                                     
|                                     
|                                     
|                                     
|IMPSAT Brasil                         |       |              | 6,553   |           |  |   | 8,999   |        
|                                     
|                                     
|                                     
|                                     
|IMPSAT Colombia                       |       |              | 6,662   |           |  |   | 6,417   |        
|                                     
|                                     
|                                     
|                                     
|IMPSAT Venezuela                      |       |              | 6,311   |           |  |   | 9,314   |        
|                                     
|                                     
|                                     
|                                     
|All other countries                   |       |              | 11,218  |           |  |   | 11,341  |        
|                                      |       |              |         |           |  |   |         |        
|                                      | Total |              |         | 105,860   |  |   |         | 111,460 | 
|                                     
|                                     
|                                     
|                                     
|Less: allowance for doubtful accounts |       |              | (22,509 | )         |  |   | (23,586 | )      
|                                      |       |              |         |           |  |   |         |        
|Trade accounts receivable, net        |       | $            | 83,351  |           |  | $ | 87,874  |        
|                                      |       |              |         |           |  |   |         |        

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, 2000 and for the three months ended
March 31, 2001 is as follows:

|                                |  |              |        |           |  |   |        |  
|------------------------------- |  | ------------ | ------ | --------- |  | - | ------ | -
|                                |  | December 31, |        | March 31,
|                                |  | 2000         |        | 2001     
|                                |  |              |        |          
|Beginning balance               |  | $            | 19,820 |           |  | $ | 22,509 |  
|                               
|                               
|                               
|                               
|Provision for doubtful accounts |  |              | 4,806  |           |  |   | 1,256  |  
|                               
|                               
|                               
|                               
|Write-offs, net of recoveries   |  |              | (2,117 | )         |  |   | (179   | )
|                                |  |              |        |           |  |   |        |  
|Ending balance                  |  | $            | 22,509 |           |  | $ | 23,586 |  
|                                |  |              |        |           |  |   |        |  

F-10



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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 as follows at
December 31 and March 31:

|                    |       |              |        |           |  |   |        |        | 
|------------------- | ----- | ------------ | ------ | --------- |  | - | ------ | ------ | 
|                    |       | December 31, |        | March 31,
|                    |       | 2000         |        | 2001     
|                    |       |              |        |          
|IMPSAT Argentina    |       | $            | 33,678 |           |  | $ | 38,694 |       
|                   
|                   
|                   
|                   
|IMPSAT Brazil       |       |              | 12,538 |           |  |   | 12,214 |       
|                   
|                   
|                   
|                   
|IMPSAT Colombia     |       |              | 4,149  |           |  |   | 4,365  |       
|                   
|                   
|                   
|                   
|IMPSAT Venezuela    |       |              | 2,156  |           |  |   | 2,537  |       
|                   
|                   
|                   
|                   
|All other countries |       |              | 10,650 |           |  |   | 4,449  |       
|                    |       |              |        |           |  |   |        |       
|                    | Total |              | $      | 63,171    |  |   | $      | 62,259 | 
|                    |       |              |        |           |  |   |        |       

6.  BROADBAND NETWORK AND AGREEMENTS

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

|                                            |       |              |         |           |  |   |         |         | 
|------------------------------------------- | ----- | ------------ | ------- | --------- |  | - | ------- | ------- | 
|                                            |       | December 31, |         | March 31,
|                                            |       | 2000         |         | 2001     
|                                            |       |              |         |          
|Network infrastructure                      |       | $            | 201,372 |           |  | $ | 229,604 |        
|                                           
|                                           
|                                           
|                                           
|Right of ways                               |       |              | 33,266  |           |  |   | 30,228  |        
|                                           
|                                           
|                                           
|                                           
|Equipment and materials                     |       |              | 151,185 |           |  |   | 166,301 |        
|                                           
|                                           
|                                           
|                                           
|IRU investments                             |       |              | 20,010  |           |  |   | 37,561  |        
|                                            |       |              |         |           |  |   |         |        
|                                            | Total |              |         | 405,833   |  |   |         | 463,694 | 
|                                           
|                                           
|                                           
|                                           
|Less: accumulated depreciation              |       |              | (46,433 | )         |  |   | (55,896 | )      
|                                            |       |              |         |           |  |   |         |        
|                                            | Total |              |         | 359,400   |  |   |         | 407,798 | 
|                                           
|                                           
|                                           
|                                           
|Under construction  Network infrastructure |       |              | 3,424   |           |  |   | 8,510   |        
|                                           
|                                           
|                                           
|                                           
|Under construction  Global Crossing ducts  |       |              | 1,397   |           |  |   |         |        
|                                            |       |              |         |           |  |   |         |        
|                                            | Total |              | $       | 364,221   |  |   | $       | 416,308 | 
|                                            |       |              |         |           |  |   |         |        

The recap of accumulated depreciation for the year ended
December 31, 2000 and for the three months ended
March 31, 2001, is as follows:

|                          |  |              |        |           |  |   |        |  
|------------------------- |  | ------------ | ------ | --------- |  | - | ------ | -
|                          |  | December 31, |        | March 31,
|                          |  | 2000         |        | 2001     
|                          |  |              |        |          
|Beginning balance         |  | $            | 42,368 |           |  | $ | 46,433 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  |              | 4,365  |           |  |   | 9,947  |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |              | (300   | )         |  |   | (484   | )
|                          |  |              |        |           |  |   |        |  
|Ending balance            |  | $            | 46,433 |           |  | $ | 55,896 |  
|                          |  |              |        |           |  |   |        |  

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.

F-11



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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 will be disbursed over a two
year period with final maturity in 2006, will be 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. Additionally, the Company has
obtained additional vendor financing from Lucent Technologies,
Ericsson and Tellabs OY for the acquisition of fiber optic cable
and other telecommunications equipment for the Broadband Network
for an aggregate of up to approximately $28.2 million. The
Company had amounts due under Broadband Network vendor financing
totaling approximately $247.1 million and
$269.6 million as of December 31, 2000 and
March 31, 2001, respectively.

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
received approximately $30.5 million during the three
months ended March 31, 2001 related to these agreements.
These advance payments are recorded as deferred revenue in the
accompanying balance sheet. During the three months ended
March 31, 2001, the Company recognized approximately
$6.1 million from these agreements, which are reflected as
services to carriers in the accompanying statement of operations.

7.  PROPERTY, PLANT AND EQUIPMENT

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

|                                        |       |              |          |           |  |   |          |         | 
|--------------------------------------- | ----- | ------------ | -------- | --------- |  | - | -------- | ------- | 
|                                        |       | December 31, |          | March 31,
|                                        |       | 2000         |          | 2001     
|                                        |       |              |          |          
|Land                                    |       | $            | 10,398   |           |  | $ | 10,111   |        
|                                       
|                                       
|                                       
|                                       
|Building and improvements               |       |              | 55,792   |           |  |   | 70,995   |        
|                                       
|                                       
|                                       
|                                       
|Operating communications equipment      |       |              | 513,287  |           |  |   | 534,159  |        
|                                       
|                                       
|                                       
|                                       
|Furniture, fixtures and other equipment |       |              | 33,703   |           |  |   | 35,509   |        
|                                        |       |              |          |           |  |   |          |        
|                                        | Total |              |          | 613,180   |  |   |          | 650,774 | 
|                                       
|                                       
|                                       
|                                       
|Less: accumulated depreciation          |       |              | (265,354 | )         |  |   | (281,655 | )      
|                                        |       |              |          |           |  |   |          |        
|                                        | Total |              |          | 347,826   |  |   |          | 369,119 | 
|                                       
|                                       
|                                       
|                                       
|Equipment in transit                    |       |              | 15,285   |           |  |   | 12,261   |        
|                                       
|                                       
|                                       
|                                       
|Works in process                        |       |              | 18,563   |           |  |   | 13,229   |        
|                                        |       |              |          |           |  |   |          |        
|Property, plant and equipment, net      |       | $            | 381,674  |           |  | $ | 394,609  |        
|                                        |       |              |          |           |  |   |          |        

The recap of accumulated depreciation for the year ended
December 31, 2000 and for the three months ended
March 31, 2001, is as follows:

|                          |  |              |         |           |  |   |         |  
|------------------------- |  | ------------ | ------- | --------- |  | - | ------- | -
|                          |  | December 31, |         | March 31,
|                          |  | 2000         |         | 2001     
|                          |  |              |         |          
|Beginning balance         |  | $            | 201,656 |           |  | $ | 265,354 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  |              | 74,156  |           |  |   | 17,510  |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |              | (10,458 | )         |  |   | (1,209  | )
|                          |  |              |         |           |  |   |         |  
|Ending balance            |  | $            | 265,354 |           |  | $ | 281,655 |  
|                          |  |              |         |           |  |   |         |  

F-12



---



##### 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 U.S. dollars, with interest rates ranging from
6.60% to 18.0%. The Companys subsidiaries have
historically refinanced these short term credit facilities on an
annual basis. As of December 31, 2000 and March 31,
2001, amounts outstanding under these credit facilities totaled
approximately $14.6 million and $17.5 million,
respectively.

9.  LONG-TERM DEBT

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

|                                                                                                                                                         |                                                 |                      |         |           |         |   |         |        |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | -------------------- | ------- | --------- | ------- | - | ------- | ------ | ------- | 
|                                                                                                                                                         |                                                 | December 31,         |         | March 31,
|                                                                                                                                                         |                                                 | 2000                 |         | 2001     
|                                                                                                                                                         |                                                 |                      |         |          
|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 payable, maturing from 2001 through 2004;
	collateralized by equipment, the assignment of customer
	contracts and investment; denominated in: |                                                 |                      |         |           |         |   |         |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                         | U.S. dollars (interest rates 6.30%  12.50%)    |                      |         | 27,959    |         |   |         | 28,972 |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                         | Local currency (interest rates 10.47%  20.53%) |                      |         | 17,177    |         |   |         | 16,953 |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Eximbank notes payable (9.30%), maturing semiannually through
	200l and 2004                                                                             |                                                 |                      | 11,359  |           |         |   | 14,536  |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Vendor financing (8.30%  11.87%), maturing 2004 to
	2008                                                                                                |                                                 |                      | 247,145 |           |         |   | 269,622 |       
|                                                                                                                                                         |                                                 |                      |         |           |         |   |         |       
|                                                                                                                                                         |                                                 | Total long-term debt |         |           | 953,640 |   |         |        | 980,083 | 
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Less: current portion                                                                                                                                    |                                                 |                      | (38,377 | )         |         |   | (43,200 | )     
|                                                                                                                                                         |                                                 |                      |         |           |         |   |         |       
|Long-term debt, net                                                                                                                                      |                                                 | $                    | 915,263 |           |         | $ | 936,883 |       
|                                                                                                                                                         |                                                 |                      |         |           |         |   |         |       

The Senior Guaranteed Notes, the Senior Notes 2005 and 2008, the
vendor financing and some of the term notes contain certain
covenants requiring certain financial ratios, limiting the
incurrence of additional indebtedness and capital expenditures,
and restricting the ability to pay dividends.

10.  INCOME TAXES

The composition of the benefit from (provision for) income
taxes, all of which are for foreign taxes, for the three months
ended March 31, 2000 and 2001 is as follows:

|         |       |           |       |      |  |   |      |      |  
|-------- | ----- | --------- | ----- | ---- |  | - | ---- | ---- | -
|         |       |          
|         |       | March 31,
|         |       |          
|         |       | 2000      |       | 2001
|         |       |           |       |     
|Current  |       | $         | (897  | )    |  | $ | (571 | )   
|        
|        
|        
|        
|Deferred |       |           | 1,557 |      |  |   | 206  |     
|         |       |           |       |      |  |   |      |     
|         | Total |           | $     | 660  |  |   | $    | (365 | )
|         |       |           |       |      |  |   |      |     

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

F-13



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


11.  OPERATING SEGMENT INFORMATION

The Companys operating segment information, by subsidiary,
is as follows for the three months ended March 31, 2000 and
2001:

|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |        |           | 
|------------------------------ | --------- | ------------------ | ------- | ------ | ------- | -------- | ------- | --------- | ------- | --------- | ----- | ------------ | ------- | ----- | --- | ----- | ------ | - | ------ | ----- | ------- |  | ------ | ------ | ------ | - | ------- | ------ | --------- | 
|                               |           |                    |         |        |         |          |         |           |         | All other |       |              |         |      
|2001                           |           | Argentina          |         | Brazil |         | Colombia |         | Venezuela |         | countries |       | Eliminations |         | Total
|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |      
|Net Revenues                   |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       
|                              
|                              
|                              
|                              
|Data and value added services: |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       
|                              
|                              
|                              
|                              
|                               | Satellite |                    | $       | 16,130 |         |          | $       | 4,144     |         |           | $     | 7,866        |         |       | $   | 6,226 |        |   | $      | 8,658 |         |  | $      | (3,713 | )      |   | $       | 39,311 |          
|                              
|                              
|                              
|                              
|                               | Broadband |                    |         | 7,470  |         |          |         | 1,664     |         |           |       | 6,565        |         |       |     | 608   |        |   |        | 951   |         |  |        | (343   | )      |   |         | 16,915 |          
|                              
|                              
|                              
|                              
|Value added services           |           |                    | 1,053   |        |         |          | 157     |           |         |           | 48    |              |         |       |     |       |        |   | 55     |       |         |  | (111   | )      |        |   | 1,202   |       
|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       
|                               | Subtotal  |                    |         | 24,653 |         |          |         | 5,965     |         |           |       | 14,479       |         |       |     | 6,834 |        |   |        | 9,664 |         |  |        | (4,167 | )      |   |         | 57,428 |          
|                              
|                              
|                              
|                              
|Telephony                      |           |                    | 706     |        |         |          | 0       |           |         |           | 4     |              |         |       |     |       |        |   | 703    |       |         |  | (141   | )      |        |   | 1,272   |       
|                              
|                              
|                              
|                              
|Internet                       |           |                    | 4,024   |        |         |          | 3,153   |           |         |           | 1,048 |              |         |       | 426 |       |        |   | 3,926  |       |         |  | (1,409 | )      |        |   | 11,168  |       
|                              
|                              
|                              
|                              
|Services to carriers           |           |                    | 1,172   |        |         |          | 1,079   |           |         |           | 59    |              |         |       | 294 |       |        |   | 1,989  |       |         |  | (220   | )      |        |   | 4,373   |       
|                              
|                              
|                              
|                              
|Sales of equipment             |           |                    | 2,024   |        |         |          | 4,624   |           |         |           |       |              |         |       | 929 |       |        |   | 6,927  |       |         |  |        |        |        |   | 14,504  |       
|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       
|                               |           | Total net revenues |         | $      | 32,579  |          |         | $         | 14,821  |           |       | $            | 15,590  |       |     | $     | 8,483  |   |        | $     | 23,965  |  |        | $      | (6,693 | ) |         | $      | 88,745    | 
|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       
|Operating income (loss)        |           | $                  | (12,800 | )      |         | $        | (10,876 | )         |         | $         | 538   |              |         | $     | 129 |       |        | $ | (2,100 | )     |         |  |        |        |        | $ | (25,109 | )     
|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       
|                               |           | Total assets       |         | $      | 545,112 |          |         | $         | 216,832 |           |       | $            | 125,607 |       |     | $     | 56,428 |   |        | $     | 421,869 |  |        |        |        |   |         | $      | 1,365,848 | 
|                               |           |                    |         |        |         |          |         |           |         |           |       |              |         |       |     |       |        |   |        |       |         |  |        |        |        |   |         |       

|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |        |           | 
|------------------------------ | --------- | ------------------ | ------ | ------ | ------- | -------- | ------ | --------- | ------- | --------- | --- | ------------ | ------ | ----- | ---- | ----- | ------ | - | ------ | ----- | ------- |  | ------ | ------ | ------ | - | ------- | ------ | --------- | 
|                               |           |                    |        |        |         |          |        |           |         | All other |     |              |        |      
|2000                           |           | Argentina          |        | Brazil |         | Colombia |        | Venezuela |         | countries |     | Eliminations |        | Total
|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |      
|Net Revenues                   |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|                              
|                              
|                              
|                              
|Data and value added services: |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|                              
|                              
|                              
|                              
|                               | Satellite |                    | $      | 17,632 |         |          | $      | 3,439     |         |           | $   | 10,203       |        |       | $    | 5,820 |        |   | $      | 6,946 |         |  | $      | (2,445 | )      |   | $       | 41,595 |          
|                              
|                              
|                              
|                              
|                               | Broadband |                    |        | 5,554  |         |          |        | 242       |         |           |     | 2,910        |        |       |      | 438   |        |   |        | 247   |         |  |        | (53    | )      |   |         | 9,338  |          
|                              
|                              
|                              
|                              
|Value added services           |           |                    | 327    |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   | 2      |       |         |  | (2     | )      |        |   | 327     |       
|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|                               | Subtotal  |                    |        | 23,513 |         |          |        | 3,681     |         |           |     | 13,113       |        |       |      | 6,258 |        |   |        | 7,195 |         |  |        | (2,500 | )      |   |         | 51,260 |          
|                              
|                              
|                              
|                              
|Telephony                      |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|                              
|                              
|                              
|                              
|Internet                       |           |                    | 2,427  |        |         |          | 1,384  |           |         |           | 702 |              |        |       | 250  |       |        |   | 2,956  |       |         |  | (1,211 | )      |        |   | 6,508   |       
|                              
|                              
|                              
|                              
|Sales of equipment             |           |                    | 864    |        |         |          | 31     |           |         |           |     |              |        |       | 27   |       |        |   | 73     |       |         |  |        |        |        |   | 995     |       
|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|                               |           | Total net revenues |        | $      | 26,804  |          |        | $         | 5,096   |           |     | $            | 13,815 |       |      | $     | 6,535  |   |        | $     | 10,224  |  |        | $      | (3,711 | ) |         | $      | 58,763    | 
|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|Operating income (loss)        |           | $                  | (6,251 | )      |         | $        | (4,469 | )         |         | $         | 388 |              |        | $     | (432 | )     |        | $ | (2,699 | )     |         |  |        |        |        | $ | (13,463 | )     
|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       
|                               |           | Total assets       |        | $      | 302,791 |          |        | $         | 115,664 |           |     | $            | 81,782 |       |      | $     | 43,604 |   |        | $     | 813,565 |  |        |        |        |   |         | $      | 1,357.406 | 
|                               |           |                    |        |        |         |          |        |           |         |           |     |              |        |       |      |       |        |   |        |       |         |  |        |        |        |   |         |       

12.  COMMITMENTS AND CONTINGENCIES

Commitments  The Company leases
satellite capacity with average annual rental commitments of
approximately $30.0 million, through the year 2005. The
Company had commitments to purchase communications equipment
amounting to approximately $16.8 million at March 31,
2001. The Company has commitments for additional IRU investments
totaling approximately $79.5 million in the aggregate under
its various IRU agreements.

F-14



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES




NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


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, 2001, the balance outstanding was
approximately $3.9 million.

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-15



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##### Table of Contents



IMPSAT S.A.

BALANCE SHEETS

(In thousands of U.S. Dollars)


|                                        |                                                                                                                        |                            |         |             |         |   |         |         |         | 
|--------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ----------- | ------- | - | ------- | ------- | ------- | 
|                                        |                                                                                                                        | December 31,               |         | March 31,  
|                                        |                                                                                                                        | 2000                       |         | 2001       
|                                        |                                                                                                                        |                            |         |            
|                                        |                                                                                                                        |                            |         | (Unaudited)
|                                       
|                                       
|                                       
|                                       
|ASSETS                                 
|                                       
|                                       
|                                       
|                                       
|CURRENT ASSETS:                         |                                                                                                                        |                            |         |             |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                                              |                            | $       | 12,051      |         |   | $       | 16,999  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Trade accounts receivable, net                                                                                         |                            |         | 58,680      |         |   |         | 58,304  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Receivable from affiliated companies                                                                                   |                            |         | 13,303      |         |   |         | 12,516  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other receivables                                                                                                      |                            |         | 33,679      |         |   |         | 38,694  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Prepaid expenses                                                                                                       |                            |         | 2,584       |         |   |         | 2,692   |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|                                        |                                                                                                                        | Total current assets       |         |             | 120,297 |   |         |         | 129,205 | 
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|BROADBAND NETWORK, Net                  |                                                                                                                        |                            | 176,961 |             |         |   | 214,405 |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|PROPERTY, PLANT AND EQUIPMENT, Net      |                                                                                                                        |                            | 163,754 |             |         |   | 171,009 |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|NON-CURRENT ASSETS:                     |                                                                                                                        |                            |         |             |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Investments                                                                                                            |                            |         | 11,829      |         |   |         | 10,388  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred income taxes, net                                                                                             |                            |         | 8,262       |         |   |         | 8,962   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other non-current assets                                                                                               |                            |         | 13,672      |         |   |         | 11,143  |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|                                        |                                                                                                                        | Total non-current assets   |         |             | 33,763  |   |         |         | 30,493  | 
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|TOTAL                                   |                                                                                                                        | $                          | 494,775 |             |         | $ | 545,112 |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|LIABILITIES AND STOCKHOLDERS EQUITY   
|                                       
|                                       
|                                       
|                                       
|CURRENT LIABILITIES:                    |                                                                                                                        |                            |         |             |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable  trade                                                                                               |                            | $       | 71,362      |         |   | $       | 71,476  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Short-term debt                                                                                                        |                            |         | 8,860       |         |   |         | 9,400   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Advances from affiliated companies                                                                                     |                            |         | 7,523       |         |   |         | 10,807  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Current portion of long-term debt                                                                                      |                            |         | 15,385      |         |   |         | 16,836  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued and other liabilities                                                                                          |                            |         | 10,625      |         |   |         | 16,458  |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|                                        |                                                                                                                        | Total current liabilities  |         |             | 113,755 |   |         |         | 124,977 | 
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|LONG-TERM DEBT, Net                     |                                                                                                                        |                            | 127,626 |             |         |   | 146,683 |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|DEFERRED REVENUES                       |                                                                                                                        |                            | 32,561  |             |         |   | 41,602  |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|COMMITMENTS AND CONTINGENCIES (NOTE 11) |                                                                                                                        |                            |         |             |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|STOCKHOLDERS EQUITY:                   |                                                                                                                        |                            |         |             |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Common Stock, $0.01 par value 14,755 shares issued and
        outstanding at December 31, 2000, and at March 31, 2001 |                            |         | 3           |         |   |         | 3       |        
|                                       
|                                       
|                                       
|                                       
|                                        | Paid in capital                                                                                                        |                            |         | 250,326     |         |   |         | 279,012 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated deficit                                                                                                    |                            |         | (30,247     | )       |   |         | (47,321 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income                                                                                 |                            |         | 751         |         |   |         | 156     |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|                                        |                                                                                                                        | Total stockholders equity |         |             | 220,833 |   |         |         | 231,850 | 
|                                        |                                                                                                                        |                            |         |             |         |   |         |        
|TOTAL                                   |                                                                                                                        | $                          | 494,775 |             |         | $ | 545,112 |        
|                                        |                                                                                                                        |                            |         |             |         |   |         |        

See notes to financial statements.

F-16



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##### Table of Contents



IMPSAT S.A.

STATEMENTS OF OPERATIONS

(In thousands of U.S. Dollars)


|                                          |                                      |                        |                          |        |       |        |         |        |       |        |  
|----------------------------------------- | ------------------------------------ | ---------------------- | ------------------------ | ------ | ----- | ------ | ------- | ------ | ----- | ------ | -
|                                          |                                      |                       
|                                          |                                      | Three Months Ended    
|                                          |                                      | March 31,             
|                                          |                                      |                       
|                                          |                                      | 2000                   |                          | 2001  
|                                          |                                      |                        |                          |       
|                                          |                                      |                       
|                                          |                                      | (Unaudited)           
|                                         
|                                         
|                                         
|                                         
|NET REVENUES:                             |                                      |                        |                          |        |       |        |         |       
|                                         
|                                         
|                                         
|                                         
|                                          | Data and value added services        |                        | $                        | 23,513 |       |        | $       | 24,653 |      
|                                         
|                                         
|                                         
|                                         
|                                          | Telephony                            |                        |                          |        |       |        |         | 706    |      
|                                         
|                                         
|                                         
|                                         
|                                          | Internet                             |                        |                          | 2,427  |       |        |         | 4,024  |      
|                                         
|                                         
|                                         
|                                         
|                                          | Services to carriers                 |                        |                          |        |       |        |         | 1,172  |      
|                                         
|                                         
|                                         
|                                         
|                                          | Sales of equipment                   |                        |                          | 864    |       |        |         | 2,024  |      
|                                          |                                      |                        |                          |        |       |        |         |       
|                                          |                                      |                        | Total net revenues       |        |       | 26,804 |         |        |       | 32,579 |  
|                                          |                                      |                        |                          |        |       |        |         |       
|COSTS AND EXPENSES:                       |                                      |                        |                          |        |       |        |         |       
|                                         
|                                         
|                                         
|                                         
|                                          | Direct costs:                        |                        |                          |        |       |        |         |        |      
|                                         
|                                         
|                                         
|                                         
|                                          |                                      | Contracted services    |                          |        | 3,105 |        |         |        | 5,289 |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                      | Other direct costs     |                          |        | 2,182 |        |         |        | 3,160 |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                      | Leased capacity        |                          |        | 5,920 |        |         |        | 8,650 |       
|                                         
|                                         
|                                         
|                                         
|                                          |                                      | Cost of equipment sold |                          |        | 762   |        |         |        | 1,840 |       
|                                          |                                      |                        |                          |        |       |        |         |       
|                                          |                                      |                        | Total direct costs       |        |       | 11,969 |         |        |       | 18,939 |  
|                                          |                                      |                        |                          |        |       |        |         |       
|                                          | Salaries and wages                   |                        |                          | 5,913  |       |        |         | 9,089  |      
|                                         
|                                         
|                                         
|                                         
|                                          | Selling, general and administrative  |                        |                          | 6,121  |       |        |         | 4,960  |      
|                                         
|                                         
|                                         
|                                         
|                                          | Depreciation and amortization        |                        |                          | 9,052  |       |        |         | 12,391 |      
|                                          |                                      |                        |                          |        |       |        |         |       
|                                          |                                      |                        | Total costs and expenses |        |       | 33,055 |         |        |       | 45,379 |  
|                                          |                                      |                        |                          |        |       |        |         |       
|Operating loss                            |                                      |                        | (6,251                   | )      |       |        | (12,800 | )     
|                                          |                                      |                        |                          |        |       |        |         |       
|OTHER INCOME (EXPENSES):                  |                                      |                        |                          |        |       |        |         |       
|                                         
|                                         
|                                         
|                                         
|                                          | Interest income and investment gains |                        |                          | 162    |       |        |         | 280    |      
|                                         
|                                         
|                                         
|                                         
|                                          | Interest expense                     |                        |                          | (3,110 | )     |        |         | (5,254 | )    
|                                         
|                                         
|                                         
|                                         
|                                          | Net gain on foreign exchange         |                        |                          | 118    |       |        |         | 321    |      
|                                         
|                                         
|                                         
|                                         
|                                          | Other expenses, net                  |                        |                          | (8     | )     |        |         |        |      
|                                          |                                      |                        |                          |        |       |        |         |       
|                                          |                                      |                        | Total other expenses     |        |       | (2,838 | )       |        |       | (4,653 | )
|                                          |                                      |                        |                          |        |       |        |         |       
|LOSS BEFORE INCOME TAXES                  |                                      |                        | (9,089                   | )      |       |        | (17,453 | )     
|                                         
|                                         
|                                         
|                                         
|(PROVISION FOR) BENEFIT FROM INCOME TAXES |                                      |                        | (601                     | )      |       |        | 379     |       
|                                          |                                      |                        |                          |        |       |        |         |       
|NET LOSS                                  |                                      | $                      | (9,690                   | )      |       | $      | (17,074 | )     
|                                          |                                      |                        |                          |        |       |        |         |       

See notes to financial statements.

F-17



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##### Table of Contents



IMPSAT S.A.

STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. Dollars)


|                                             |                                                                           |                    |        |      |  |   |         |      |      |  
|-------------------------------------------- | ------------------------------------------------------------------------- | ------------------ | ------ | ---- |  | - | ------- | ---- | ---- | -
|                                             |                                                                           |                   
|                                             |                                                                           | Three Months Ended
|                                             |                                                                           | March 31,         
|                                             |                                                                           |                   
|                                             |                                                                           | 2000               |        | 2001
|                                             |                                                                           |                    |        |     
|                                             |                                                                           |                   
|                                             |                                                                           | (Unaudited)       
|                                            
|                                            
|                                            
|                                            
|NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS |                                                                           | $                  | (9,690 | )    |  | $ | (17,074 | )   
|                                            
|                                            
|                                            
|                                            
|OTHER COMPREHENSIVE LOSS, net of tax:        |                                                                           |                    |        |      |  |   |         |     
|                                            
|                                            
|                                            
|                                            
|                                             | Change on unrealized loss on investment available for sale, net
	of taxes |                    |        |      |  |   |         | (595 | )   
|                                             |                                                                           |                    |        |      |  |   |         |     
|                                             |                                                                           | TOTAL              |        |      |  |   |         |      | (595 | )
|                                             |                                                                           |                    |        |      |  |   |         |     
|COMPREHENSIVE LOSS                           |                                                                           | $                  | (9,690 | )    |  | $ | (17,669 | )   
|                                             |                                                                           |                    |        |      |  |   |         |     

See notes to financial statements

F-18



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##### Table of Contents



IMPSAT S.A.

STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands of U.S. Dollars)


|                             |                                                                           |        |   |         |  |             |         |               |  |       |         |         |   |   |     |      |   |   |         |         |  
|---------------------------- | ------------------------------------------------------------------------- | ------ | - | ------- |  | ----------- | ------- | ------------- |  | ----- | ------- | ------- | - | - | --- | ---- | - | - | ------- | ------- | -
|                             |                                                                           |        |   |         |  |             |         | Accumulated   |  |      
|                             |                                                                           |        |   |         |  |             |         | Other         |  |      
|                             |                                                                           | Common |   | Paid In |  | Accumulated |         | Comprehensive |  |      
|                             |                                                                           | Stock  |   | Capital |  | Deficit     |         | Income        |  | Total
|                             |                                                                           |        |   |         |  |             |         |               |  |      
|BALANCE AT DECEMBER 31, 2000 |                                                                           | $      | 3 |         |  | $           | 250,326 |               |  | $     | (30,247 | )       |   | $ | 751 |      |   | $ | 220,833 |        
|                            
|                            
|                            
|                            
|                             | Change on unrealized loss on investment available for sale, net
	of taxes |        |   |         |  |             |         |               |  |       |         |         |   |   |     | (595 | ) |   |         | (595    | )
|                            
|                            
|                            
|                            
|                             | Shareholders contribution                                                |        |   |         |  |             |         | 28,686        |  |       |         |         |   |   |     |      |   |   |         | 28,686  |  
|                            
|                            
|                            
|                            
|                             | Net loss for the period                                                   |        |   |         |  |             |         |               |  |       |         | (17,074 | ) |   |     |      |   |   |         | (17,074 | )
|                             |                                                                           |        |   |         |  |             |         |               |  |       |         |         |   |   |     |      |   |   |         |        
|BALANCE AT MARCH 31, 2001    |                                                                           | $      | 3 |         |  | $           | 279,012 |               |  | $     | (47,321 | )       |   | $ | 156 |      |   | $ | 231,850 |        
|                             |                                                                           |        |   |         |  |             |         |               |  |       |         |         |   |   |     |      |   |   |         |        

See notes to financial statements.

F-19



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##### Table of Contents



IMPSAT S.A.

STATEMENTS OF CASH FLOWS

(In thousands of U.S. Dollars)


|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |         |        |        |         |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | ---------------------------------- | ---------------------------------------------------------------------- | ----------------------------------------- | ----- | ------ | ------- | ------- | ------ | ------ | ------- | -
|                                                                      |                                                                                                                |                                   
|                                                                      |                                                                                                                | Three Months Ended                
|                                                                      |                                                                                                                | March 31,                         
|                                                                      |                                                                                                                |                                   
|                                                                      |                                                                                                                | 2000                               |                                                                        | 2001                                     
|                                                                      |                                                                                                                |                                    |                                                                        |                                          
|                                                                      |                                                                                                                |                                   
|                                                                      |                                                                                                                | (Unaudited)                       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net loss                                                                                                       |                                    | $                                                                      | (9,690                                    | )     |        | $       | (17,074 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Adjustments to reconcile net loss to net cash provided by (used
	in) operating activities, net of acquisition: |                                    |                                                                        |                                           |       |        |         |         |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                | Amortization and depreciation      |                                                                        |                                           | 9,052 |        |         |         | 12,391 |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                | Deferred income tax benefit        |                                                                        |                                           |       |        |         |         | (379   | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                | Changes in assets and liabilities: |                                                                        |                                           |       |        |         |         |        |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | Decrease in trade accounts receivable, net                             |                                           |       | 36     |         |         |        | 376    |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | Increase in prepaid expenses                                           |                                           |       | (13    | )       |         |        | (108   | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | Decrease (increase) in other receivables and other
	non-current assets |                                           |       | 1,839  |         |         |        | (1,699 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | (Decrease) increase in accounts payable  trade                        |                                           |       | (1,251 | )       |         |        | 114    |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | Increase in deferred revenues                                          |                                           |       | 9,591  |         |         |        | 9,041  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | (Decrease) increase in accrued and other liabilities                   |                                           |       | (786   | )       |         |        | 5,833  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                |                                    | Increase in other long-term liabilities                                |                                           |       | 367    |         |         |        |        |        
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                      |                                                                                                                |                                    |                                                                        | Net cash provided by operating activities |       |        | 9,145   |         |        |        | 8,495   |  
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of broadband network                                                                                 |                                    |                                                                        | (19,817                                   | )     |        |         | (28,582 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of property, plant and equipment                                                                     |                                    |                                                                        | (15,296                                   | )     |        |         | (5,844  | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | (Increase) decrease in other investment                                                                        |                                    |                                                                        | (26                                       | )     |        |         | 525     |       
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                      |                                                                                                                |                                    |                                                                        | Net cash used in investing activities     |       |        | (35,139 | )       |        |        | (33,901 | )
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net borrowings from short-term debt                                                                            |                                    |                                                                        | 1,201                                     |       |        |         | 540     |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Changes in advances to/from affiliates                                                                         |                                    |                                                                        | (46,813                                   | )     |        |         | 3,284   |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from long-term debt, net of deferred financing costs                                                  |                                    |                                                                        | 8,244                                     |       |        |         |         |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Repayments of long-term debt                                                                                   |                                    |                                                                        | (1,416                                    | )     |        |         | (2,156  | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Capital contribution                                                                                           |                                    |                                                                        | 67,243                                    |       |        |         | 28,686  |       
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                      |                                                                                                                |                                    |                                                                        | Net cash provided by financing activities |       |        | 28,459  |         |        |        | 30,354  |  
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|NET INCREASE IN CASH AND CASH                                         |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | EQUIVALENTS                                                                                                    |                                    |                                                                        | 2,465                                     |       |        |         | 4,948   |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                  |                                                                                                                |                                    | 4,199                                                                  |                                           |       |        | 12,051  |        
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                        |                                                                                                                | $                                  | 6,664                                                                  |                                           |       | $      | 16,999  |        
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                   |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest paid                                                                                                  |                                    | $                                                                      | 2,761                                     |       |        | $       | 718     |       
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
	ACTIVITIES: |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Change to unrealized loss on investment available for sale, net
	of tax                                        |                                    | $                                                                      |                                           |       |        | $       | (595    | )     
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        
|                                                                      | Vendor financing                                                                                               |                                    | $                                                                      | 6,745                                     |       |        | $       | 18,158  |       
|                                                                      |                                                                                                                |                                    |                                                                        |                                           |       |        |         |        

See notes to financial statements.

F-20



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##### Table of Contents



IMPSAT S.A.

NOTES TO FINANCIAL STATEMENTS

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


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 large national and multinational companies,
financial institutions, governmental agencies and other business
customers in Argentina. It provides its services through its
advanced telecommunications networks comprised of owned
teleports, earth stations, fiber optic and microwave links and
leased satellite capacity. As of March 31, 2001, the
Company is a 100% owned subsidiary of IMPSAT Fiber Networks, Inc.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information  The unaudited
statements as of March 31, 2001 and for the three months
ended March 31, 2000 and 2001 have been prepared on the
same basis as the audited financial statements. In the opinion
of management, such unaudited financial statements include all
adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the results for such period. The
operating results for the three months ended March 31, 2000
and 2001 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 requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Cash and Cash Equivalents  Cash and cash
equivalents are highly liquid investments, including short-term
investments and time deposits with maturities of three months or
less at the time of purchase. Cash equivalents and short-term
investments are stated at cost, which approximates 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 and acceptance by the customer. In
addition the Company has entered into, and expects to enter into
in the future, agreements with carriers granting indefeasible
rights of use (IRU) and access to portions of its
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 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,
2000 and 2001.

Broadband Network The Broadband Network has
been 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

F-21



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##### Table of Contents



IMPSAT S.A.




NOTES TO FINANCIAL STATEMENTS  (Continued)


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
|                       
|                       
|                       
|                       
|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 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 comparison
of carrying value against undiscounted future cash flows. If an
impairment is identified, the assets carrying amount is adjusted
to fair value. No such adjustments were recorded for the three
months ended March 31, 2000 and 2001.

Income Taxes  Deferred income taxes result
from temporary differences in the recognition of expenses for
tax and financial reporting purposes and are accounted for in
accordance with Statement of Financial 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 financial statements into U.S. dollars
has been made following the guidelines of SFAS No. 52,
Foreign Currency Translation. Major operations of IMPSAT
S.A. are stated in U.S. dollars. Accordingly, the U.S.
dollar has been designated as the functional currency. Local
currency denominated transactions are remeasured into the
functional currency. Accordingly, fixed assets and stockholders
account have been translated into U.S. dollars taking into
account the exchange rate prevailing at each transaction date.
Monetary assets and liabilities are translated using the
year-end exchange. Profit and loss accounts were translated
using average exchange rates for 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, short- and long-term debt. The available
for sale investments were valued at market closing prices at
March 31, 2001. 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, 2000.

Reclassifications  Certain amounts in the 2000
financial statements have been reclassified to conform with the
2001 presentation.

F-22



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##### Table of Contents



IMPSAT S.A.




NOTES TO FINANCIAL STATEMENTS  (Continued)


3.  TRADE ACCOUNTS RECEIVABLE

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

|                                      |  |              |         |             |  |   |         |  
|------------------------------------- |  | ------------ | ------- | ----------- |  | - | ------- | -
|                                      |  | December 31, |         | March 31,  
|                                      |  | 2000         |         | 2001       
|                                      |  |              |         |            
|                                      |  |              |         | (Unaudited)
|                                     
|                                     
|                                     
|                                     
|Trade accounts receivable             |  | $            | 75,116  |             |  | $ | 75,389  |  
|                                     
|                                     
|                                     
|                                     
|Less: allowance for doubtful accounts |  |              | (16,436 | )           |  |   | (17,085 | )
|                                      |  |              |         |             |  |   |         |  
|Trade accounts receivable, net        |  | $            | 58,680  |             |  | $ | 58,304  |  
|                                      |  |              |         |             |  |   |         |  

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

The activity for the allowance for doubtful accounts for the
year ended December 31, 2000 and for the three months ended
March 31, 2001 is as follows:

|                                |  |              |        |             |  |   |        |  
|------------------------------- |  | ------------ | ------ | ----------- |  | - | ------ | -
|                                |  | December 31, |        | March 31,  
|                                |  | 2000         |        | 2001       
|                                |  |              |        |            
|                                |  |              |        | (Unaudited)
|                               
|                               
|                               
|                               
|Beginning balance               |  | $            | 13,943 |             |  | $ | 16,436 |  
|                               
|                               
|                               
|                               
|Provision for doubtful accounts |  |              | 3,035  |             |  |   | 722    |  
|                               
|                               
|                               
|                               
|Write-offs, net of recoveries   |  |              | (542   | )           |  |   | (73    | )
|                                |  |              |        |             |  |   |        |  
|Ending balance                  |  | $            | 16,436 |             |  | $ | 17,085 |  
|                                |  |              |        |             |  |   |        |  

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.

5.  BROADBAND NETWORK AND AGREEMENTS

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

|                                            |       |              |         |             |  |   |         |         | 
|------------------------------------------- | ----- | ------------ | ------- | ----------- |  | - | ------- | ------- | 
|                                            |       | December 31, |         | March 31,  
|                                            |       | 2000         |         | 2001       
|                                            |       |              |         |            
|                                            |       |              |         | (Unaudited)
|                                           
|                                           
|                                           
|                                           
|Network infrastructure                      |       | $            | 91,206  |             |  | $ | 112,434 |        
|                                           
|                                           
|                                           
|                                           
|Equipment and materials                     |       |              | 122,477 |             |  |   | 144,853 |        
|                                           
|                                           
|                                           
|                                           
|IRU investments                             |       |              | 4,395   |             |  |   | 4,395   |        
|                                            |       |              |         |             |  |   |         |        
|                                            | Total |              |         | 218,078     |  |   |         | 261,682 | 
|                                           
|                                           
|                                           
|                                           
|Less: accumulated depreciation              |       |              | (42,084 | )           |  |   | (47,277 | )      
|                                            |       |              |         |             |  |   |         |        
|                                            | Total |              |         | 175,994     |  |   |         | 214,405 | 
|                                           
|                                           
|                                           
|                                           
|Under construction  Network infrastructure |       |              | 967     |             |  |   |         |        
|                                            |       |              |         |             |  |   |         |        
|                                            | Total |              | $       | 176,961     |  |   | $       | 214,405 | 
|                                            |       |              |         |             |  |   |         |        

F-23



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##### Table of Contents



IMPSAT S.A.




NOTES TO FINANCIAL STATEMENTS  (Continued)


The recap of accumulated depreciation for the year ended
December 31, 2000 and for the three months ended
March 31, 2001, is as follows:

|                          |  |              |        |             |  |   |        |  
|------------------------- |  | ------------ | ------ | ----------- |  | - | ------ | -
|                          |  | December 31, |        | March 31,  
|                          |  | 2000         |        | 2001       
|                          |  |              |        |            
|                          |  |              |        | (Unaudited)
|                         
|                         
|                         
|                         
|Beginning balance         |  | $            | 39,763 |             |  | $ | 42,084 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  |              | 2,321  |             |  |   | 5,211  |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |              |        |             |  |   | (18    | )
|                          |  |              |        |             |  |   |        |  
|Ending balance            |  | $            | 42,084 |             |  | $ | 47,277 |  
|                          |  |              |        |             |  |   |        |  

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 will be disbursed
over a two year period with final maturity in 2006, will be 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
agreements. Additionally, the Company has obtained additional
vendor financing from Lucent Technologies and Ericsson for the
acquisition of fiber optic cable and other telecommunications
equipment for the Broadband Network for an aggregate of up to
approximately $23.8 million. The Company had amounts due
under Broadband Network vendor financing totaling
$129.8 million and $147.9 million as of
December 31, 2000 and March 31, 2001, respectively.

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 approximately $9.3 million during the three
months ended March 31, 2001 related to these agreements.
These advance payments are recorded as deferred revenue in the
accompanying balance sheet.

F-24



---



##### Table of Contents



IMPSAT S.A.




NOTES TO FINANCIAL STATEMENTS  (Continued)


6.  PROPERTY, PLANT AND EQUIPMENT

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

|                                        |       |              |          |             |  |   |          |         | 
|--------------------------------------- | ----- | ------------ | -------- | ----------- |  | - | -------- | ------- | 
|                                        |       | December 31, |          | March 31,  
|                                        |       | 2000         |          | 2001       
|                                        |       |              |          |            
|                                        |       |              |          | (Unaudited)
|                                       
|                                       
|                                       
|                                       
|Land                                    |       | $            | 3,160    |             |  | $ | 3,069    |        
|                                       
|                                       
|                                       
|                                       
|Building and improvements               |       |              | 37,369   |             |  |   | 46,442   |        
|                                       
|                                       
|                                       
|                                       
|Operating communications equipment      |       |              | 224,293  |             |  |   | 230,349  |        
|                                       
|                                       
|                                       
|                                       
|Furniture, fixtures and other equipment |       |              | 16,594   |             |  |   | 17,979   |        
|                                        |       |              |          |             |  |   |          |        
|                                        | Total |              |          | 281,416     |  |   |          | 297,839 | 
|                                       
|                                       
|                                       
|                                       
|Less: accumulated depreciation          |       |              | (131,378 | )           |  |   | (138,046 | )      
|                                        |       |              |          |             |  |   |          |        
|                                        | Total |              |          | 150,038     |  |   |          | 159,793 | 
|                                       
|                                       
|                                       
|                                       
|Equipment in transit                    |       |              | 12,928   |             |  |   | 9,636    |        
|                                       
|                                       
|                                       
|                                       
|Works in process                        |       |              | 788      |             |  |   | 1,580    |        
|                                        |       |              |          |             |  |   |          |        
|Property, plant and equipment, net      |       | $            | 163,754  |             |  | $ | 171,009  |        
|                                        |       |              |          |             |  |   |          |        

The recap of accumulated depreciation for the year ended
December 31, 2000 and for the three months ended
March 31, 2001, is as follows:

|                          |  |              |         |             |  |   |         |  
|------------------------- |  | ------------ | ------- | ----------- |  | - | ------- | -
|                          |  | December 31, |         | March 31,  
|                          |  | 2000         |         | 2001       
|                          |  |              |         |            
|                          |  |              |         | (Unaudited)
|                         
|                         
|                         
|                         
|Beginning balance         |  | $            | 105,801 |             |  | $ | 131,378 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  |              | 35,850  |             |  |   | 7,180   |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |              | (10,273 | )           |  |   | (512    | )
|                          |  |              |         |             |  |   |         |  
|Ending balance            |  | $            | 131,378 |             |  | $ | 138,046 |  
|                          |  |              |         |             |  |   |         |  

7.  INVESTMENTS

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

|                                          |                                         |              |       |             |        |   |       |       |        | 
|----------------------------------------- | --------------------------------------- | ------------ | ----- | ----------- | ------ | - | ----- | ----- | ------ | 
|                                          |                                         | December 31, |       | March 31,  
|                                          |                                         | 2000         |       | 2001       
|                                          |                                         |              |       |            
|                                          |                                         |              |       | (Unaudited)
|                                         
|                                         
|                                         
|                                         
|Investment, at cost                       |                                         | $            | 7,925 |             |        | $ | 7,400 |      
|Investment in common stock, at fair value |                                         |              |       |             |        |   |       |      
|                                         
|                                         
|                                         
|                                         
|                                          | New Skies Satellites N.V. ($2,748 cost) |              |       | 3,904       |        |   |       | 2,988 |       
|                                          |                                         |              |       |             |        |   |       |      
|                                          |                                         | Total        |       | $           | 11,829 |   |       | $     | 10,388 | 
|                                          |                                         |              |       |             |        |   |       |      

The Companys cost basis investment represents a less than
1% ownership in an unaffiliated entity established for the
purchase and leasing of satellite capacity time. 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-25



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##### Table of Contents



IMPSAT S.A.




NOTES TO FINANCIAL STATEMENTS  (Continued)


8.  SHORT-TERM DEBT

The Companys short-term debt consists of short-term credit
facilities, denominated in U.S. dollars with interest rates
ranging from 10.5% to 11.5%. As of December 31, 2000 and
March 31, 2001, amounts outstanding under these credit
facilities totaled approximately $8.8 million and
$9.4 million, respectively.

9.  LONG-TERM DEBT

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

|                                                                              |                      |              |         |             |  |   |         |         | 
|----------------------------------------------------------------------------- | -------------------- | ------------ | ------- | ----------- |  | - | ------- | ------- | 
|                                                                              |                      | December 31, |         | March 31,  
|                                                                              |                      | 2000         |         | 2001       
|                                                                              |                      |              |         |            
|                                                                              |                      |              |         | (Unaudited)
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Term notes payable, maturing through 2004, collateralized by
	certain assets: |                      | $            | 1,861   |             |  | $ | 1,034   |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Eximbank notes payable (9.30%), maturing semiannually through
	200l and 2004  |                      |              | 11,359  |             |  |   | 14,536  |        
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Vendor financing (8.30%  11.87%), due 2006                                   |                      |              | 129,791 |             |  |   | 147,949 |        
|                                                                              |                      |              |         |             |  |   |         |        
|                                                                              | Total long-term debt |              |         | 143,011     |  |   |         | 163,519 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Less: current portion                                                         |                      |              | (15,385 | )           |  |   | (16,836 | )      
|                                                                              |                      |              |         |             |  |   |         |        
|Long-term debt, net                                                           |                      | $            | 127,626 |             |  | $ | 146,683 |        
|                                                                              |                      |              |         |             |  |   |         |        

10.  INCOME TAXES

The composition of the (provision for) benefit from income
taxes, for the three months ended March 31, 2000 and 2001
is as follows:

|         |       |             |      |      |   |   |     |     | 
|-------- | ----- | ----------- | ---- | ---- | - | - | --- | --- | 
|         |       |            
|         |       | March 31,  
|         |       |            
|         |       | 2000        |      | 2001
|         |       |             |      |     
|         |       |            
|         |       | (Unaudited)
|        
|        
|        
|        
|Current  |       | $           | (601 | )    |   |   |     |    
|        
|        
|        
|        
|Deferred |       |             |      |      |   | $ | 379 |    
|         |       |             |      |      |   |   |     |    
|         | Total |             | $    | (601 | ) |   | $   | 379 | 
|         |       |             |      |      |   |   |     |    

The foreign statutory tax rate in Argentina was 35%.

11.  COMMITMENTS AND CONTINGENCIES

Commitments The Company has leased
telecommunications links with annual rental commitments of
approximately $8.1 million through the year 2005. In
addition, the Company has commitments to purchase communications
equipment amounting to approximately $10.6 million at
March 31, 2001.

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 has entered into a $5.9 million term note
with El Camino Resources, which is guaranteed by the Company and
Impsat Fiber Networks, Inc. At March 31, 2001, the balance
outstanding was approximately $3.9 million.

F-26



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##### Table of Contents



IMPSAT S.A.




NOTES TO FINANCIAL STATEMENTS  (Continued)


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 collectivity
of this matter continues to be negotiated for settlement,
however, the Company has valued this receivable at a net
realizable value of zero.

*  *  *  *  *  *

F-27



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##### Table of Contents






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

Results of Operations

The following financial table summarizes our results of
operations:

|                                             |                                        |                                      |                    |   |        |        |      |   |      |       |         |       |        |        |       |     |      |       | 
|-------------------------------------------- | -------------------------------------- | ------------------------------------ | ------------------ | - | ------ | ------ | ---- | - | ---- | ----- | ------- | ----- | ------ | ------ | ----- | --- | ---- | ----- | 
|                                             |                                        |                                      |                    |   |        |       
|                                             |                                        |                                     
|                                             |                                        | Three Months Ended March 31,        
|                                             |                                        |                                     
|                                             |                                        |                                      |                    |  
|
|                                             |                                        | 2000                                 |                    |   | 2001  
|                                             |                                        |                                      |                    |   |        |        |      |  
|                                             |                                        |                                     
|                                             |                                        | (in thousands and as a percentage of
|                                             |                                        | consolidated revenues)              
|                                            
|                                            
|                                            
|                                            
|Net revenues:                                |                                        |                                      |                    |   |        |        |      |   |      |       |         |       |        |        |       |    
|                                            
|                                            
|                                            
|                                            
|                                             | Net Revenues from services:            |                                      |                    |   |        |        |      |   |      |       |         |       |        |        |       |     |     
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Data and value added services        |                    | $ | 51,260 |        |      |   | 87.2 | %     |         | $     | 57,428 |        |       |     | 64.7 | %    
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Telephony                            |                    |   |       |        |      |   |     |       |         |       | 1,272  |        |       |     | 1.4  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Internet                             |                    |   | 6,508  |        |      |   | 11.1 |       |         |       | 11,168 |        |       |     | 12.6 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Services to carriers                 |                    |   |       |        |      |   |     |       |         |       | 4,373  |        |       |     | 4.9  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Sale of equipment                    |                    |   | 995    |        |      |   | 1.7  |       |         |       | 7,933  |        |       |     | 8.9  |      
|                                            
|                                            
|                                            
|                                            
|                                             | Broadband network development revenues |                                      |                    |  |        |        |      |  |      |       |         | 6,571 |        |        |       | 7.4 |     
|                                             |                                        |                                      |                    |   |        |        |      |   |      |       |         |       |        |        |       |    
|                                             |                                        |                                      | Total net revenues |   |        | 58,763 |      |   |      | 100.0 |         |       |        | 88,745 |       |     |      | 100.0 | 
|                                            
|                                            
|                                            
|                                            
|Direct costs:                                |                                        |                                      |                    |   |        |        |      |   |      |       |         |       |        |        |       |    
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Contracted services                  |                    |   | 6,474  |        |      |   | 11.0 |       |         |       | 11,086 |        |       |     | 12.5 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Other direct costs                   |                    |   | 5,184  |        |      |   | 8.8  |       |         |       | 5,792  |        |       |     | 6.5  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Leased capacity                      |                    |   | 14,082 |        |      |   | 24.0 |       |         |       | 21,933 |        |       |     | 24.7 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Cost of equipment sold               |                    |   | 820    |        |      |   | 1.4  |       |         |       | 5,392  |        |       |     | 6.1  |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                        | Broadband network development costs  |                    |   |       |        |      |   |     |       |         |       | 3,335  |        |       |     | 3.8  |      
|                                             |                                        |                                      |                    |   |        |        |      |   |      |       |         |       |        |        |       |    
|                                             |                                        |                                      | Total direct costs |   |        | 26,560 |      |   |      | 45.2  |         |       |        | 47,538 |       |     |      | 53.6  | 
|                                            
|                                            
|                                            
|                                            
|Salaries and wages                           |                                        |                                      | 14,230             |   |        |        | 24.2 |   |      |       | 22,197  |       |        |        | 25.0  |    
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |                                        |                                      | 11,500             |   |        |        | 19.6 |   |      |       | 14,687  |       |        |        | 16.5  |    
|                                            
|                                            
|                                            
|                                            
|Depreciation and amortization                |                                        |                                      | 19,936             |   |        |        | 33.9 |   |      |       | 29,432  |       |        |        | 33.2  |    
|                                            
|                                            
|                                            
|                                            
|Interest expense, net                        |                                        |                                      | 17,614             |   |        |        | 30.0 |   |      |       | 28,998  |       |        |        | 32.7  |    
|                                            
|                                            
|                                            
|                                            
|Net gain (loss) on foreign exchange          |                                        |                                      | 2,565              |   |        |        | 4.4  |   |      |       | (13,781 | )     |        |        | (15.5 | )  
|                                            
|                                            
|                                            
|                                            
|Benefit from (provision for) income taxes    |                                        |                                      | 660                |   |        |        | 1.1  |   |      |       | (365    | )     |        |        | (0.4  | )  
|                                            
|                                            
|                                            
|                                            
|Net loss attributable to common stockholders |                                        |                                      | 29,067             |   |        |        | 49.5 |   |      |       | 68,251  |       |        |        | 76.9  |    

Three Months Ended March 31, 2001 Compared to Three
Months Ended March 31, 2000

Revenues. Our total net revenues for the first quarter of
2001 were composed of net revenues from services and Broadband
Network development revenues. Our total net revenues for the
first quarter of 2001 equaled $88.7 million, an increase of
$30.0 million, or 51.0%, from the same period in 2000.

Our net revenues from services for the three months ended
March 31, 2001, totaled $82.2 million, an increase of
$23.4 million, or 39.8%, from the same period in 2000, and
an increase of $8.8 million, or 12.0%, from the fourth
quarter of 2000. Our net revenues from services include net
revenues from:



| |   |                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | data and value added services, which include satellite and
        broadband data transmission services revenues, systems
        integration and other information technology revenues and other
        value-added services                                          
|
| |  | telephony, including local, national and international
        long-distance services                                                                                                                                                                                   
|
| |  | Internet, which is composed of our Internet backbone access and
        managed modem services to ISPs and other telecommunications
        providers, and related collocation and web hosting services
        which we provide through our advanced hosting facilities
|
| |  | carriers carrier services, which consist of our wholesale
        long-haul services to other telecommunications carriers
        (including accruals from the sale of IRU capacity on our
        Broadband Network to, and our                                       

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| |   |                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | provision of switching and transportation of telecommunications
	traffic services for, such carriers), and related maintenance
	and collocation services to those carriers, and
|
| |  | sales of equipment.                                                                                                                                                            

Our net revenues for the three months ended March 31, 2001
included $6.6 million of Broadband Network development revenues,
which related to our construction on behalf of Global Crossing
Ltd. and 360networks, Inc. of certain backhaul segments
connecting those companies undersea fiber optic cable
systems with the terrestrial portions of their networks that
have been constructed to link with our Broadband Network in
Argentina, Brazil, Chile and Peru. These revenues were recorded
upon our delivery of the constructed segments to Global Crossing
and 360networks and their provisional acceptance of the
infrastructure.

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

|                       |                               |                               |        |             |  |      |       |   |  |   |        |       | 
|---------------------- | ----------------------------- | ----------------------------- | ------ | ----------- |  | ---- | ----- | - |  | - | ------ | ----- | 
|                       |                               |                              
|                       |                               | Three Months Ended           
|                       |                               | March 31,                    
|                       |                               |                              
|                       |                               | 2000                          |        | % change(1) |  | 2001
|                       |                               |                               |        |             |  |     
|                       |                               |                              
|                       |                               | (dollar amounts in thousands)
|                      
|                      
|                      
|                      
|IMPSAT Argentina       |                               | $                             | 26,804 |             |  |      | 21.5  | % |  | $ | 32,579 |      
|                      
|                      
|                      
|                      
|IMPSAT Colombia        |                               |                               | 13,815 |             |  |      | 12.8  |   |  |   | 15,590 |      
|                      
|                      
|                      
|                      
|IMPSAT Venezuela       |                               |                               | 6,535  |             |  |      | 29.8  |   |  |   | 8,483  |      
|                      
|                      
|                      
|                      
|IMPSAT Brazil Services |                               |                               | 5,096  |             |  |      | 153.0 |   |  |   | 12,895 |      
|                      
|                      
|                      
|                      
|                       | Broadband network development |                               |        |            |  |      |       |   |  |   |        | 1,926 | 
|                      
|                      
|                      
|                      
|Other(2) Services      |                               |                               | 10,224 |             |  |      | 81.6  |   |  |   | 18,564 |      
|                      
|                      
|                      
|                      
|                       | Broadband network development |                               |        |            |  |      |       |   |  |   |        | 4,645 | 




|    |                                                              
|--- | -------------------------------------------------------------
|(1) | Increase in first quarter 2001 compared to first quarter 2000



|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(2) | Other includes IMPSAT Ecuador, IMPSAT Mexico, IMPSAT USA, IMPSAT
	Chile, and IMPSAT Peru.

Growth in our net revenues from services resulted primarily from
broadband data services, Internet services, services to carriers
and equipment sales. The following table shows our revenues from
services by business lines (after elimination of intercompany
transactions) for the periods indicated:

|                               |           |                                  |       |             |        |      |       |       |      |  |        |        |        | 
|------------------------------ | --------- | -------------------------------- | ----- | ----------- | ------ | ---- | ----- | ----- | ---- |  | ------ | ------ | ------ | 
|                               |           |                                 
|                               |           | March 31,                       
|                               |           |                                 
|                               |           | 2000                             |       | % change(1) |        | 2001
|                               |           |                                  |       |             |        |     
|                               |           |                                 
|                               |           | (dollar amounts in thousands)   
|                              
|                              
|                              
|                              
|Data and value added services: |           |                                  |       |             |        |      |       |       |      |  |        |       
|                              
|                              
|                              
|                              
|                               | Broadband |                                  | $     | 9,338       |        |      |       | 81.1  |      |  | $      | 16,915 |       
|                              
|                              
|                              
|                              
|                               | Satellite |                                  |       | 41,595      |        |      |       | (5.5  | )    |  |        | 39,311 |       
|                              
|                              
|                              
|                              
|                               | Other     |                                  |       | 327         |        |      |       | 267.6 |      |  |        | 1,202  |       
|                               |           |                                  |       |             |        |      |       |       |      |  |        |       
|                               |           | Total                            |       |             | 51,260 |      |       |       | 12.0 |  |        |        | 57,428 | 
|                              
|                              
|                              
|                              
|Telephony                      |           |                                  |      |             |        |      |      |       |      |  | 1,272  |       
|                              
|                              
|                              
|                              
|Internet                       |           |                                  | 6,508 |             |        |      | 71.6  |       |      |  | 11,168 |       
|                              
|                              
|                              
|                              
|Services to carriers           |           |                                  |      |             |        |      |      |       |      |  | 4,373  |       
|                              
|                              
|                              
|                              
|Equipment sales                |           |                                  | 995   |             |        |      | 697.3 |       |      |  | 7,933  |       
|                               |           |                                  |       |             |        |      |       |       |      |  |        |       
|                               |           | Total net revenues from services |       |             | 58,763 |      |       |       | 39.8 |  |        |        | 82,174 | 
|                               |           |                                  |       |             |        |      |       |       |      |  |        |       




|    |                                                                           
|--- | --------------------------------------------------------------------------
|(1) | Increase (decrease) in first quarter 2001 compared to first
	quarter 2000.

Our revenue growth for the first three months of 2001 compared
to the same period in 2000 was achieved principally because of
an overall increase in our customer base and an expansion of the
services we provided them offset, in part, by decreasing prices.
Excluding fax store and forward customers, we had a total of
2,953 customers at March 31, 2001, compared to 1,913
customers at March 31, 2000 and 2,656 customers at

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Our operations in Brazil recorded the highest revenue growth
rate among our countries of operation. Revenues from services at
IMPSAT Brazil during the first quarter of 2001 totaled
$12.9 million, an increase of $7.8 million, or 153.0%,
compared to the same period in 2000, and an increase of
$4.1 million, or 46.9%, from the fourth quarter of 2000. In
Brazil, the increase in our net revenues from services resulted
from increased data and value-added services to our expanding
customer base and from increased revenues for Internet access
services. The increase in services provided at IMPSAT Brazil
during the first quarter of 2001 was offset in part by the
devaluation of the Brazilian real against the U.S. dollar
during the period. For the first quarter of 2001, the realdevalued by 10.6% against the U.S. dollar as compared to
December 31, 2000. Unlike the other countries in which we
operate, pursuant to Brazilian law our contracts for services in
Brazil must be denominated in realesand may not be
indexed or linked to the exchange rate between the realand the U.S. dollar. See Item 3. Quantitative and
Qualitative Disclosures About Market Risk. Continued
devaluation of the realagainst the U.S. dollar
throughout the remainder of 2001 could have an adverse effect on
the expected growth of our revenues in Brazil.

Our net revenues from services in Argentina for the first
quarter of 2001 totaled $32.6 million, an increase of
$5.8 million (or 21.5%) from the first quarter of 2000. The
growth in our revenues in Argentina has been adversely affected
by the continued economic stagnation that the country has
experienced since late 1998. As compared to the fourth quarter
of 2000, revenues from services in Argentina during the first
three months of 2001 declined by $0.4, or 1.2%. Growth in
revenues in Argentina in the first quarter of 2001 as compared
to the same period in 2000 is attributable principally to
increased revenues for Internet services, carriers carrier
services and sales of equipment. The introduction of the
Broadband Network in the fourth quarter of 2000 has enabled us
to expand our range of services and attract these additional
sources of revenue.

After a period of declining revenues throughout 2000 in
Colombia, our second oldest market, we recorded an increase in
revenues from our Colombian operations during the first quarter
of 2001 of 12.8% as compared to the same period in 2000. IMPSAT
Colombias revenues totaled $15.6 million during the
first quarter of 2001 as compared to $13.8 million for the
three months ended March 31, 2000. The increase in revenues
in Colombia is attributable to data and other value-added
services and to revenues from Internet services. Our
acquisition, in January 2001, of the customer contracts of
Americatel S.A., a private telecommunications network service
provider, was an important factor in the increase in revenues
from our Colombian operations. Although we continue to expect
that the difficult macroeconomic situation in Colombia will
continue throughout 2001 and present a challenge to our plans
for sustained revenue growth in that country, we remain
cautiously optimistic about the expansion of our revenues in
Colombia during the remainder of 2001.

Our revenue for the first quarter of 2001 includes
$7.9 million that we generated from equipment sales during
that period, compared to $1.0 million during the first
quarter of 2000.

Direct Costs. Our direct costs for the first quarter of
2001 totaled $47.5 million, $3.3 million of which
related to Broadband Network development costs. Excluding direct
costs related to Broadband Network development, our total
directs costs increased by $17.6 million, or 66.4%,
compared to the first quarter of 2000. Excluding direct costs
relating to the Broadband Network development, for the first
quarter of 2001, $18.9 million of our direct costs related
to the operations of IMPSAT Argentina and $9.7 million
related to the operations of IMPSAT Brazil. This compares to
$12.0 million at IMPSAT Argentina and $4.1 million at
IMPSAT Brazil for the first quarter of 2000. 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. In
the first quarter of 2001, our contracted services costs totaled
$11.1 million, compared to $6.5 million in the first
quarter of 2000. Of this amount, maintenance

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

Sales commissions paid to third-party sales representatives
totaled $2.2 million in the first quarter of 2001, compared
to $2.1 million for the corresponding period in 2000.

We recorded a net provision for doubtful accounts of
$1.3 million in the first quarter of 2001, compared to
$1.2 million for the same period in 2000. At March 31,
2001 approximately 30.6% of our gross trade accounts receivable
were past due more than six months, compared to approximately
28.4% at March 31, 2000. At March 31, 2001, average
days of gross trade accounts receivable equaled 71 days,
compared to 74 days at March 31, 2000.

(3)  Leased Capacity.Our leased capacity costs
totaled $21.9 million, an increase of $7.9 million, or
55.8%, from the corresponding period in 2000.

Our leased capacity costs for satellite capacity for the first
three months of 2001 totaled $10.3 million, an increase of
$1.9 million, or 23.1%, from the corresponding period in
2000. Our satellite capacity costs increased principally in
Venezuela and the United States, where we increased our
satellite capacity due to the increased needs of our customers.
Leased satellite capacity costs declined in Argentina during the
first quarter of 2001 as compared to the same period in 2000, in
part due to our transitioning customers from satellite-based
solutions onto the Broadband Network. We had approximately 1,061
MHz of leased satellite capacity at March 31, 2001 and 810
MHz at March 31, 2000.

Our costs for dedicated leased capacity on third-party fiber
optic networks totaled $8.9 million for the first quarter
of 2001, an increase of $3.9 million (or 80.0%) from the
corresponding period in 2000 and a decrease of $1.1 million
(or 10.8%) from the fourth quarter of 2000. These costs were
incurred principally in Argentina, Brazil and the United States.
We incurred these higher costs of leased fiber optic capacity in
Argentina and Brazil due to the continued demand by our
customers for greater bandwidth and in the United States due to
the expansion of our Internet service offerings in Latin America
where we provide a link between Latin America and the U.S.
Internet backbone.

Although we anticipate transferring increasing amounts of our
telecommunications traffic to the Broadband Network as we
further migrate our customers to our Broadband Network during
2001, we believe that our leased satellite and fiber optic
capacity costs will continue to increase in 2001 in absolute
terms as compared to 2000. However, we believe that the rate of
growth in such costs will decrease and that such costs should
decrease as a percentage of 2001 revenues. 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 which we are offering in
2001 as a result of the implementation of our Broadband Network
and the effectiveness of our new license in Argentina to provide
domestic and international long distance services, we will incur
costs for interconnection and telephony termination costs and
frequency rights. These costs totaled $2.7 million during
the first three months of 2001 as compared to $0.8 million
for the same period in 2000.

(4)  Costs of Equipment Sold.Excluding Broadband
Network development costs, we incurred costs of equipment sold
of $5.4 million during the first quarter of 2001, compared
to $0.8 million in the first quarter of 2000.

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Salaries and Wages. Salaries and wages totaled
$22.2 million during the first quarter of 2001, an increase
of $8.0 million, or 56.0%, from the first quarter of 2000.
The increase resulted primarily from:



| |   |                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in the number of employees, from 1,153 at
	March 31, 2000 to 1,790 at March 31, 2001,
	particularly in connection with the progression of our
	operations in Brazil and the development of the Broadband
	Network, and                            
|
| |  | increases in the salaries and wages of our personnel to match
	market rates for personnel with the expertise we require and
	increases in cost of living, as well as legally mandated
	increases in salaries in certain of the countries in which we
	operate.

IMPSAT Argentina incurred salaries and wages expenses for the
first quarter of 2001 of $9.1 million compared to
$5.9 million during the same period in 2000. Salaries and
wages for the first three months of 2001 with respect to IMPSAT
Brazil totaled $5.2 million as compared to
$2.1 million for the same period in 2000. IMPSAT Brazil had
446 employees at March 31, 2001, compared to 184 persons at
March 31, 2000. We expect salaries and wages expenses to
increase as we expand our business over the Broadband Network in
Argentina and Brazil. We also expect to increase the number of
employees throughout 2001, although at a much lower level than
during 2000. However, because most of our recruitment and hiring
for the operation of the Broadband Network has now been
completed, we expect that increases in our salaries and wages
costs in future periods will decline as percentage of revenues
for such periods as compared to prior periods. Management
intends to monitor the level of its workforce in an effort to
maintain salaries and wages expenses at appropriate levels for
our new operations.

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, and                                     
|
| |  | plant services, telephone and energy expenses.

We incurred SG&A expenses totaling $14.7 million for
the first quarter of 2001, compared to $11.5 million for
the same period in 2000 and $20.1 million for the fourth
quarter of 2000. SG&A expenses at IMPSAT Argentina for the
first quarter of 2001 totaled $5.0 million, a decrease of
$1.1 million (or 18%) from SG&A expenses incurred by
IMPSAT Argentina for the same period in 2000. SG&A expenses
at IMPSAT Brazil for the three months ended March 31, 2001
totaled $4.4 million, compared to $1.9 million for the
same period in 2000, an increase of $2.5 million or 131.6%.
The increase in SG&A expenses for the first quarter of 2001
compared to the corresponding period in 2000 reflects higher
publicity and promotion expenses, travelling expenses and
advisory services related to the deployment of the Broadband
Network. The decrease in SG&A expenses from the fourth
quarter of 2000 is due to the completion in the fourth quarter
of 2000 of our pre-launch advertising campaign for the Broadband
Network. Management intends to take efforts throughout the
remainder of 2001 to control SG&A expenses in an effort to
keep these costs at or below the levels achieved at the end of
2000, during which period we allocated significant expenditures
for publicity, promotion and other sales efforts in connection
with the commencement of operations on our Broadband Network in
Argentina and Brazil.

Depreciation and Amortization. Our depreciation and
amortization expense for the first quarter of 2001 totaled
$29.4 million, an increase of $9.5 million, or 47.6%,
compared to the same period in 2000. Depreciation and
amortization expenses will increase in future periods due to the
development of the Broadband Network and our acquisition of
additional associated customer premises equipment. We monitor
technological advances to determine whether additional
adjustments in the depreciable life of certain of our
telecommunications equipment will be appropriate in future
periods.

Interest Expense, Net.Our net interest expense for the
first quarter of 2001 totaled $29.0 million. This consists
of interest expense of $33.5 million and interest income of
$4.5 million. Our net interest expense

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For the first quarter of 2001, the average interest rate on our
indebtedness was 12.3%, compared to an average interest rate of
12.2% for the corresponding period in 2000. Our total
indebtedness as of March 31, 2001 was $997.6 million,
as compared to $820.5 million as of March 31, 2000. We
anticipate that our net interest expense will increase in the
future based on:



| |   |                                                                                                                                                                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | expected increased levels of borrowing associated with our
	development of the Broadband Network, including the vendor
	financing agreements that we signed with Nortel Networks, Inc.
	in October 1999 and Lucent Technologies in
	September 2000 for a total of up to $313.4 million to
	construct the Broadband Network in Argentina and Brazil, and
|
| |  | decreases in interest income as we utilize our cash and trading
	investments in connection with our capital expenditures and
	general corporate purposes.                                                                                                                                                                                              

See  Liquidity and Capital Resources.

Net (Loss) Gain on Foreign Exchange. We recorded a net
loss on foreign exchange of $13.8 million for the first
quarter of 2001, compared to a net gain of $2.6 million for
the same period in 2000. The net losses on foreign exchange
reflect the effect of the devaluation of the Brazilian realagainst the U.S. dollar in the first quarter of 2001 on the
book value of our assets in Brazil. At March 31, 2001, the
exchange rate for the Brazilian realequaled
R$2.15 = $1.00, compared to R$1.95 = $1.00
at December 31, 2000, and R$1.75 = $1.00 at
March 31, 2000.

Benefit from (Provision for) Income Taxes. We recorded a
provision for income taxes (all of which are for foreign taxes)
of $0.4 million for the first quarter of 2001, compared to
a benefit for income taxes of $0.7 million for the first
quarter of 2000.

Net Loss Attributable to Common Stockholders. For the
first quarter of 2001, we incurred a net loss attributable to
common stockholders of $68.3 million, an increase of 134.8%
compared to $29.1 million for same period in 2000.

Liquidity and Capital Resources

We will continue to make significant capital expenditures in the
next several years in connection with the Broadband Network, the
further development of our operations and new customer accounts
(for which we install our equipment on customer premises). We
also have, and will continue to have, substantial interest
expense.

At March 31, 2001, we had total cash, cash equivalents and
short-term investments of $231.6 million. These amounts
relate principally to unused proceeds from:



| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | our $300 million 13 3/4 Senior Notes Due 2005 offering
	in February 2000                                                                     
|
| |  | our initial public offering in February 2000 of 11,500,000
	shares of our common stock and                                                   
|
| |  | our simultaneous private placement of 2,850,000 shares of common
	stock to British Telecommunications plc, one of our existing
	stockholders.

We are currently expanding the Broadband Network by constructing
a 2,000 kilometer long-haul link between the cities of Curitiba
and Porto Alegre in Brazil and the city of Parana in Argentina.
Civil construction on the new link was commenced in
September 2000. The new link will connect with the
Broadband Network that is currently deployed in Argentina,
Brazil and Chile and will result in the creation of a fully
integrated fiber optic network connecting Santiago, Chile,
Buenos Aires, Argentina and São Paulo and Rio de Janeiro,
Brazil with points in between. We anticipate that the cost of
the new link will be approximately $100 million and will be
financed through the sale of IRUs over the link to 360networks,
vendor

6



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##### Table of Contents





Including the costs of the new link described in the preceding
paragraph, our budget contemplates that we will need during 2001
approximately $280 million (including amounts spent to date) for
capital expenditures. We have executed definitive long-term
vendor financing agreements with



| |   |                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Nortel for commitments of up to approximately
	$297.4 million, which we are using to pay for Nortels
	construction of the segments of our Broadband Network in
	Argentina and Brazil (of which $245.8 million had been disbursed
	at March 31, 2001),                                             
|
| |  | Ericcson for commitments of up to $9.0 million for the
	purchase of telephony equipment which will be used in the
	Broadband Network in Argentina in connection with our new
	license to provide telephony services in Argentina (of which
	$7.8 million had been disbursed at March 31, 2001), and
|
| |  | DMC Stratex Networks, Inc. of up to $5.0 million for the
	purchase of telecommunications equipment to be used in the
	Broadband Network in Argentina.                                                                                                                                              

In addition, we are negotiating additional vendor financing
arrangements with our current and other potential vendors.

As set forth in our consolidated statement of cash flows, our
operating activities used $10.7 million of net cash flow
during the first quarter of 2001, compared to $18.1 million
generated during the same period in 2000. The decrease in cash
flow from operating activities in the first quarter of 2001
compared to the corresponding period in 2000 was primarily
attributable to an increase in our net loss and an increase in
our net trade receivables.

Financing activities provided $6.9 million in net cash for
the first quarter of 2001, compared with $492.1 million for
the same period in 2000. For the first quarter of 2001, net cash
flow from investing activities (including a decrease in our
trading investments) generated $10.9 million, compared to
$50.4 million used during the corresponding period in 2000. We
have used $22.5 million in non-cash investing and financing
activities related to the development of the Broadband Network
for the first quarter of 2001, principally as a result of
disbursements under the vendor financing agreements with Nortel.

At March 31, 2001, we had leased satellite and fiber optic
capacity with total annual rental commitments of approximately
$30.0 million through the year 2005. In addition, at
March 31, 2001, we had commitments to purchase
telecommunications equipment amounting to approximately $10.6
million. We also have commitments of approximately
$18.9 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.




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, 2001 and assuming that
the hypothetical interest rate and foreign exchange rate changes
used in the analyses occurred during year 2001. 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.

7



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##### Table of Contents



We are exposed to interest rate risk on our floating rate
indebtedness, which affects our cost of financing. Our floating
rate indebtedness has increased and is expected to increase
further as we draw down commitments under our vendor financing
agreements to cover expenditures relating to existing and
anticipated 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 not believe such risk is
material and we do not customarily use derivative instruments to
adjust interest rate risk.

|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |       |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         | 
|-------------------------------- |  | ---------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | ---------- |  | ----- | ------ | ----- |  | - | ------- | - |  | - | ------- | - |  | - | ------- | - |  | - | ------- | 
|                                 |  |                        |        |     
|                                 |  | Expected Maturity Date |        |     
|Three Months                     |  |                        |        | Fair
|Ending March 31,                 |  | 2001                   |        | 2002 |  | 2003 |        | 2004 |  | 2005 |         | Thereafter |  | Total |        | Value
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |      
|Senior Notes (fixed rate)        |  |                        |       |      |  |      |       |      |  | $    | 125,000 |            |  |       |       |       |  | $ | 300,000 |   |  | $ | 225,000 |   |  | $ | 650,000 |   |  | $ | 421,625 | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |       |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         | 
|Avg. interest rate               |  |                        |        |      |  |      |        |      |  |      | 12.13   | %          |  |       |        |       |  |   | 13.75   | % |  |   | 12.38   | % |  |   | 12.96   | % |  |   |         | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |       |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         | 
|Term Notes (fixed rate)          |  | $                      | 19,402 |      |  | $    | 13,378 |      |  | $    | 13,378  |            |  | $     | 8,558  |       |  | $ | 5,055   |   |  | $ | 690     |   |  | $ | 60,461  |   |  | $ | 60,461  | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |       |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         | 
|Avg. interest rate               |  |                        | 9.38   | %    |  |      | 9.38   | %    |  |      | 9.38    | %          |  |       | 9.38   | %     |  |   | 9.38    | % |  |   | 9.38    | % |  |   | 9.38    | % |  |   |         | 
|                                
|                                
|                                
|                                
|Vendor Financing (variable rate) |  | $                      | 23,798 |      |  | $    | 47,595 |      |  | $    | 47,595  |            |  | $     | 49,165 |       |  | $ | 49,165  |   |  | $ | 52,304  |   |  | $ | 269,622 |   |  | $ | 269,622 | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |       |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         | 
|Avg. interest rate               |  |                        | 10.09  | %    |  |      | 10.09  | %    |  |      | 10.09   | %          |  |       | 10.09  | %     |  |   | 10.09   | % |  |   | 10.09   | % |  |   | 10.09   | % |  |   |         | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |       |  |   |         |   |  |   |         |   |  |   |         |   |  |   |         | 

Foreign Currency Risk. A substantial portion of our
costs, including lease payments for satellite transponder
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 provide 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 exchange rate risk.

Pursuant to Brazilian law, 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. Pursuant to these Brazilian legal requirements, 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. Changes in the consumer price index may lag or be
lower than changes in the exchange rate between Brazil realand the U.S. dollar and therefore may not fully allow us to
address the impact of a devaluation of the Brazilian realagainst the U.S. dollar. Our expansion in Brazil, including
our development of the Broadband Network in Brazil, has, and
will continue to, increase our exposure to exchange rate risks.
Revenues from services from our Brazilian operations for the
first three months of each of 2000 and 2001 represented
approximately 8.7% and 15.7%, respectively, of our total net
revenues from services for such periods. However, this
proportion can be expected to increase significantly in future
periods in connection with the progression of our operations in
Brazil and the development of the Broadband Network. At
March 31, 2001, the realtraded at a rate of R$2.15
= $1.00.

Changes in Market Value of Investment. We hold a fair
value basis investment of approximately 13.6% of the common
stock of El Sitio, Inc., which is publicly traded on the Nasdaq
National Market System. Our investment in El Sitio is subject to
equity price and overall stock market risk. See Note 3 to our
consolidated financial statements. Our El Sitio investment is
included in non-current assets and is accounted for as
available for sale securities under SFAS
No. 115 because our ownership is less than 20% and we do
not have the ability to exercise significant influence over El
Sitios operations.

Our investment in El Sitio, which is in the Internet industry,
is subject to significant fluctuations in fair market value due
to the volatility of the stock market. A hypothetical 20%
decrease in the share price of El Sitios common stock from
the price at March 31, 2000 would decrease the fair value
of our investment by $1.4 million.

8



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On October 30, 2000, El Sitio announced that it had entered
into an agreement with affiliates of Ibero-American Media
Partners II Ltd., a joint venture between the Cisneros Group of
Companies and Hicks, Muse, Tate & Furst Incorporated, to
combine El Sitios interactive assets with Ibero-American
Media Partners media assets in the Latin American region
to form a new company to be called Claxson Interactive Group. As
part of the combination, our shares in El Sitio would be
converted into an equal number of shares in Claxson Interactive
Group. We have agreed with Ibero-American Media Partners to vote
our shares of El Sitio common stock in favor of the combination.

In the future, we may make additional equity investments in
other privately or publicly held corporations for business and
strategic purposes.




PART II

OTHER INFORMATION





Item 1.  Legal Proceedings

Not applicable.




Item 2.  Changes in Securities

Not applicable.




Item 3.  Defaults Upon Senior
Securities

Not applicable.




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

Not Applicable.




Item 5.  Other Information

Not Applicable.




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, 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, 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).                   

9



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|        |  |                                                                                                                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                             
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                             
|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 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 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).                                                                                                                                                                    
|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
	(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).                                                                                                                                         
|        |  | 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
	10.3: Turnkey Project Agreement between IMPSAT Brazil and Nortel.                                                                                          
|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    |  | Financing Agreement between IMPSAT Argentina and Nortel (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



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|        |  |                                                                                                                                                                                                                                                                                                                                              
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                              
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                              
|        |  | 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
	10.5: Vendor Financing Agreement between IMPSAT Brazil and
	Nortel.                                                                         
|10.6   |  | 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).                                                                    
|10.7   |  | 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).                                            
|10.8*  |  | Capacity IRU Agreement dated as of February 15, 2001, by and
	between 360americas network (Bermuda) ltd. and IMPSAT Fiber
	Networks, Inc.                                                                                                                                                                                                    
|10.9*  |  | IRU Fiber Agreement (Argentina) dated as of February 15, 2001,
	by and between IMPSAT S.A. (Argentina) and 360networks de
	Argentina S.R.L.                                                                                                                                                                                                  
|        |  | 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.
|10.10* |  | Service Agreement dated as of February 15, 2001, by and between
	Impsat Comunicações Ltda. and 360networks do Brasil
	Ltda.                                                                                                                                                                                                                  
|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
	2000 and incorporated herein by reference).                                                                                                                                        
|24.1    |  | Power of Attorney (included on the signature page hereto).                                                                                                                                                                                                                                                                                   




|  |                
|- | ---------------
|* | Filed herewith.

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

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

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

11



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##### Table of Contents






SIGNATURES

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



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



| |     |                    
| | --- | -------------------
| | By: | /s/ GUILLERMO JOFRÉ

| |                        
| | -----------------------
| |                        
| | Guillermo Jofré        
| | Chief Financial Officer
|
| | Date: May 14, 2001     
|
| | IMPSAT S.A.            



| |     |                
| | --- | ---------------
| | By: | /s/ JOSÉ TORRES

| |                         
| | ------------------------
| |                         
| | José Torres             
| | Director and            
| | Chief Accounting Officer
|
| | Date: May 14, 2001      

12