SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                               (AMENDMENT NO. 2)
                                   (Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934


         FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ]      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 0-25194

                              FIRSTCOM CORPORATION

                     (Exact name of Registrant as specified)

              TEXAS                                        87-0464860
(STATE OR OTHER JURISDICTION OF            (IRS EMPLOYER IDENTIFICATION  NUMBER)
INCORPORATION OR ORGANIZATION)

          220 ALHAMBRA CIRCLE, SUITE 910 , CORAL GABLES, FLORIDA 33134
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                    ISSUER'S TELEPHONE NUMBER: (305) 448-4422

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                     NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                   ON WHICH REGISTERED
      NONE                                     NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

          COMMON STOCK, PAR VALUE $.001
            (TITLE OF CLASS)
          COMMON STOCK PURCHASE RIGHTS
            (TITLE OF CLASS)

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

         Indicate by check mark if disclosure of delinquent filers in response
to Item 405 of Regulation S-K is not contained herein and will not be contained,
to the best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes [X] No [ ]

         The aggregate market value at February 4,2000 of the registrant's
shares of Common Stock, $.001 par value (based upon the average bid and ask
price of $32.63 per share of such shares on the NASDAQ SmallCap Market), held by
non-affiliates of the registrant was approximately $847,560,000. Solely for the
purposes of this calculation, shares held by directors and officers of the
registrant have been excluded. Such exclusion should not be deemed a
determination or an admission by the registrant that such individuals are, in
fact, affiliates of the registrant.

         At February 4, 2000, there were outstanding 29,074,891 shares of the
Registrant's Common Stock.

<PAGE>

                           FORWARD LOOKING STATEMENTS

         THE INFORMATION CONTAINED IN THIS DOCUMENT CONTAINS "FORWARD-LOOKING
STATEMENTS" THAT REFLECT THE COMPANY'S CURRENT EXPECTATIONS, HOPES, INTENTIONS,
PLANS AND STRATEGIES. THE WORDS OR PHRASES "IS EXPECTED," "WILL CONTINUE,"
ANTICIPATES," "ESTIMATES," "EXPECTS," "PLANS," "INTENDS," OR SIMILAR EXPRESSIONS
IN THIS DOCUMENT ARE INTENDED TO IDENTIFY "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION
27A OF THE SECURITIES ACT OF 1933, AS ENACTED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THERE CAN BE NO ASSURANCE THAT SUCH
FORWARD-LOOKING STATEMENTS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS
THAT COULD CAUSE ACTUAL RESULTS OF THE COMPANY TO DIFFER MATERIALLY FROM THE
EXPECTATIONS THAT MAY BE IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, BUT
ARE NOT LIMITED TO, THE ECONOMIC, BUSINESS AND POITICAL ENVIRONMENT OF THE LATIN
AMERICAN COUNTRIES IN WHICH THE COMPANY OPERATES, CHANGES IN GOVERNMENTAL
REGULATION, THE COMPANY'S LIQUIDITY AND CAPITAL RESOURCES, COMPETITION, ACTUAL
DEMAND FOR THE COMPANY'S SERVICES AND THE OTHER FACTORS IDENTIFIED IN THIS
DOCUMENT. THE COMPANY DOES NOT UNDERTAKE TO UPDATE ANY SUCH FORWARD-LOOKING
STATEMENTS. ALL STATEMENTS IN THIS DOCUMENT ARE FORWARD-LOOKING STATEMENTS,
EXCEPT FOR HISTORICAL INFORMATION CONTAINED IN THIS DOCUMENT.

ITEM 1. BUSINESS

GENERAL. FirstCom Corporation ("FirstCom" or the "Company") provides broadband
communications services primarily to business customers in four major
metropolitan business centers: Santiago, Chile; Lima/Callao, Peru; and Bogota
and Cali, Colombia. FirstCom primarily targets business customers,
communications carriers and high volume users by offering a wide range of high
bandwidth integrated telecommunication services including data, voice, video,
audio and Internet access. Specific service offerings vary depending on the
current concessions held by FirstCom in each particular country, as well as
local laws and regulations and the infrastructure in each country.

         Until November 1996, FirstCom was a development stage company whose
activities primarily consisted of the acquisition of licenses, concessions and
rights-of-way in selected Latin American communications markets. Since that
time, FirstCom has focused on the deployment and operation of high-capacity
fiber optic networks in Latin American business centers.

         FirstCom currently owns and operates fiber optic ATM/IP networks in
Santiago, Chile, Lima/Callao, Peru, and Bogota and Cali, Colombia. ATM/IP is an
information transfer standard that is one of a general class of packet-based
technologies. ATM/IP can be used by many different information systems,
including local area networks, to deliver traffic at varying rates, permitting a
mix of data, voice, video and Internet applications. As of December 31, 1999,
FirstCom's primary and secondary backbone and access network consisted of the
following, by country:

                                       1
<PAGE>

/bullet/ CHILE: approximately 276 route kilometers extending through Santiago's
         downtown business district and the outlying industrial and airport
         corridor;

/bullet/ PERU: approximately 1,007 route kilometers extending through Lima's
         major commercial and industrial districts and the port city of Callao;
         and

/bullet/ COLOMBIA: approximately 715 route kilometers extending through the
         major commercial and industrial districts of Bogota and Cali.

           CHILE. In Chile, FirstCom currently holds concessions to provide the
following services:

/bullet/ data and voice transmission services and value-added services on a
         private line basis;

/bullet/ public switched domestic and international long distance services; and

/bullet/ public switched local services.

         FirstCom also maintains a concession to own and operate satellite earth
stations throughout Chile.

         Through FirstCom's Chilean subsidiaries, FirstCom currently provides
its corporate customers in Santiago with the following broadband communications
services:

/bullet/ high-quality voice and high-speed data communications services on a
         private line basis, LAN to LAN interconnections, dedicated channels for
         access to local information warehouses (e.g. credit bureaus, etc.),
         remote terminal access, PBX to PBX connections, remote printing
         capabilities, local and wide area network design, engineering,
         installation, systems' integration and support services;

/bullet/ domestic and international long distance services, switched and
         transported, in part, through FirstCom's own gateway switch and
         satellite earth station, as well as through interconnections with other
         Chilean long distance carriers; and

/bullet/ high-speed Internet access services including value-added services such
         as web hosting and mission critical applications.

         PERU. In Peru, FirstCom currently holds concessions to provide the
following services:

/bullet/ data and voice transmission services and value-added services on a
         private line basis;

/bullet/ public switched domestic and international long distance services; and

/bullet/ public switched local services.

         Through its Peruvian subsidiary, FirstCom currently provides its
corporate customers in Lima and Callao with the following broadband
communications services:

/bullet/ high-quality voice and high-speed data communications services on a
         private line basis, LAN to LAN interconnection and remote terminal
         access;

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<PAGE>

/bullet/ domestic and international long distance services switched and
         transported through interconnections with Telefonica del Peru;

/bullet/ local voice services switched and transported through Telefonica del
         Peru (service to begin in 2000); and

/bullet/ high-speed Internet access services.

         COLOMBIA. In Colombia, FirstCom currently holds concessions to provide
data and voice transmission services and value-added services on a private line
basis.

         Through its Colombian operations, FirstCom currently provides to its
corporate customers in Bogota and Cali with the following broadband
communications services:

/bullet/ high-quality voice and high-speed data communications services on a
         private line basis, LAN to LAN interconnection and remote terminal
         access;

/bullet/ high-speed Internet access services.

         FirstCom entered the Colombian market in February 1999 with the
acquisition of approximately 76% of Teleductos S.A., now known as FirstCom
Colombia S.A. ("FirstCom Colombia") and has a presence in Bogota and Cali. In
October 1999 FirstCom increased its ownership of FirstCom Colombia to 86%.

         BUSINESS STRATEGY. FirstCom's objective is to become a leading provider
of broadband communications services mainly to business customers in key Latin
American business centers. To achieve this objective, FirstCom intends to:

/bullet/ FOCUS ON HIGH-DEMAND BUSINESS CUSTOMERS. FirstCom has deployed its
         assets in key metropolitan markets in Chile, Peru and Colombia where
         there are concentrations of business customers with high demand for
         broadband services. It targets financial services companies, media and
         content providers, technology companies, government entities,
         multinational corporations, Internet service providers and
         communications carriers, as well as small and medium sized businesses.

/bullet/ OFFER BUNDLED PACKAGES OF COMMUNICATIONS SERVICES. FirstCom bundles a
         number of data, voice, video conferencing, Internet and electronic
         commerce services to provide its customers with a full suite of
         products. It believes that bundling these services enhance its ability
         to penetrate markets quickly and to build and maintain customer
         loyalty.

/bullet/ ACCELERATE ITS INTERNET OFFERINGS. FirstCom intends to capitalize on
         the substantial demand for Internet services within the Latin American
         business community. It plans to accelerate deployment of high-speed
         Internet access services, web hosting services, data center management,
         hosting of mission critical applications and other Internet-related
         services.

/bullet/ PROVIDE SUPERIOR CUSTOMER SERVICE. FirstCom plans to provide
         best-in-class service and maintain a company-wide commitment to quality
         and customer loyalty. FirstCom

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<PAGE>

         believes that its emphasis on customer care and service will result in
         a distinct competitive advantage in Latin America.

/bullet/ DEPLOY A TECHNOLOGICALLY ADVANCED NETWORK. FirstCom's in-country
         networks use ATM/IP based platforms to offer fully integrated data,
         voice, video conferencing, Internet and electronic commerce services,
         all delivered to the customer through a single connection. FirstCom
         also intends to use advanced networks to offer service level agreements
         and to enable multi-service platform offerings to its business
         customers.

/bullet/ DEVELOP NETWORKS TO PROVIDE BOTH REGIONAL REACH AND LOCAL presence.
         FirstCom intends to continue to expand its network coverage to the
         business, industrial and commercial sectors within Latin America's
         major cities to achieve high penetration of buildings passed and wired.
         FirstCom's networks use fiber optic technology and will introduce
         high-speed wireless connectivity, where appropriate, to broaden network
         coverage without sacrificing service quality.

/bullet/ EXPLOIT ECONOMIES OF SCALE AND SCOPE. FirstCom plans to use its
         regional presence to generate significant economies of scale and scope.
         Those economies include potentially increased buying power with key
         vendors, regional marketing campaigns, increased centralized customer
         service, common billing platforms and shared expertise in network
         management and development, engineering and maintenance.

/bullet/ PURSUE STRATEGIC ACQUISITIONS AND ALLIANCES. FirstCom intends to pursue
         suitable acquisitions and alliances to increase its network coverage,
         customer base and service offerings.

         FirstCom's proposed merger with AT&T Latin America Corp., which is
discussed below, is a major step towards implementation of FirstCom's strategy.

         The Company has tailored its strategy to adapt to the specific economic
and regulatory environments of each market in which the Company operates. The
Company's ability to implement its business strategy may be affected by a number
of factors including among others, the following: general national and
international economic , business and political conditions, as well as
conditions in the regions in which the Company operates; demographic change;
existing government regulations and changes in government regulations;
competition; the loss of any significant customers; changes in business strategy
or development plans; technological developments; the ability to attract and
retain qualified personnel; the significant indebtedness of the Company; the
availability and terms of capital to fund the expansion of the Company's
business; and other factors referenced in this annual report. Each of these
factors is, to a large extent, subject to economic, financial, competitive,
regulatory and other factors, many of which are beyond the Company's control.
Accordingly, there can be no assurance that the Company will successfully
implement its business strategy, in whole or in part. The Company's viability,
profitability and growth depend upon the successful continued implementation of
its business plan.

                                       4
<PAGE>

PROPOSED MERGER WITH AT&T LATIN AMERICA CORP.

         On November 1, 1999, FirstCom entered into an Agreement and Plan of
Merger (the "Merger Agreement") with AT&T ("AT&T"), AT&T Latin America Corp.
(formerly Kiri Inc.), an indirect wholly-owned subsidiary of AT&T ("AT&T Latin
America"), and Frantis, Inc., a Delaware corporation ("Frantis"). The Merger
Agreement provides for the merger (the "Merger") of FirstCom with and into
Frantis, which is a direct wholly owned subsidiary of AT&T Latin America Corp.

         Pursuant to the Merger, which is subject to approval of FirstCom's
shareholders, among other conditions, shareholders of FirstCom will receive (i)
one share of Class A common stock ("Class A Shares") of AT&T Latin America in
exchange for each share of common stock of FirstCom; and (ii) one share of
Series A convertible preferred stock of AT&T Latin America in exchange for each
share of Series A Preferred Stock, of FirstCom.

         AT&T Latin America today owns and operates, through its Netstream
subsidiary, fiber optic networks in the Brazilian cities of Sao Paulo, Rio de
Janeiro, Belo Horizonte and Barueri/Alphaville. It continues to expand its
existing networks and has plans to begin building additional networks in the
Brazilian cities of Brasilia, Campinas, Curitiba, Port Alegre and Salvador
during 2000. AT&T acquired Netstream from Promon Ltda. ("Promon") and its
affiliates in December 1999. At that time, AT&T contributed all of its interest
in Netstream, plus $10 million in cash, to AT&T Latin America.

         AT&T Latin America also plans to operate in Argentina after completing
its pending acquisition of Keytech LD, S.A., which it agreed to acquire on
February 23, 2000. Keytech LD is a development stage broadband communications
company in Argentina with limited assets that include switching equipment and
licenses to provide communications services in Argentina. Keytech currently
serves only a small number of customers by reselling services from other
carriers.

         Upon consummation of the Merger, on a fully-diluted basis, AT&T will
own approximately 60% of the shares of common stock of AT&T Latin America, in
the form of Class B Common Stock ("Class B Shares"), Promon will own
approximately 6% of the shares of common stock of AT&T Latin America, in the
form of Class A Shares, and the former shareholders of FirstCom will own
approximately 34% of the common stock of AT&T Latin America in the form of Class
A Shares.

         Each Class A Share will be entitled to one vote per share and each
Class B Share will be entitled to ten votes per share, on all matters submitted
to a vote of the stockholders of AT&T Latin America. Each Class A Shares and
Class B Shares will have the same economic rights. Upon the closing of the
Merger, the Class A Shares will be listed for trading on the Nasdaq National
Market System, and the common stock of FirstCom will no longer be traded. The
Class B Shares will not be publicly listed or traded.

         Immediately after AT&T completed its acquisition of Netstream, SL
Participacoes S.A., an affiliate of Promon, contributed $40 million in cash to
AT&T Latin America in exchange for a 10% equity interest. Promon is a leading
engineering and construction group based in Brazil, which has broad experience,
in Brazil and throughout Latin America, providing integrated engineering
solutions and construction management services to the communications, power,
petrochemicals and manufacturing industries.

                                       5
<PAGE>

         The closing of the Merger Agreement is subject to certain conditions,
including, but not limited to, the contribution by the stockholders of AT&T
Latin America (other than the stockholders of FirstCom) to AT&T Latin America of
a total of not less than $70 million in cash equity (including the $50 million
contributed to date), the provision by AT&T of a $100 million revolving credit
facility to AT&T Latin America and, if requested by AT&T, the successful
completion of a tender offer for FirstCom's 14% Notes due 2007. FirstCom
believes it is likely that AT&T will request the Company to initiate a tender
offer for the Notes. Further, the Merger is subject to the approval of the
Merger by FirstCom's shareholders and certain regulatory approvals.

         The Merger Agreement contains provisions restricting the conduct of the
Company's business until the Merger is closed or the Merger Agreement is
terminated. With certain exceptions, these provisions prohibit the Company from,
among other things, issuing capital stock, declaring dividends, disposing of a
material amount of assets, making material capital expenditures, incurring
indebtedness, entering into or amending its organizational documents, in each
case without the consent of AT&T.

         The Merger Agreement contains similar provisions restricting AT&T Latin
America from taking similar actions to those described above without the consent
of FirstCom.

         Either of FirstCom or AT&T is entitled to terminate the Merger
Agreement if the Merger has not been completed by June 30, 2000.

INDUSTRY OVERVIEW

         Liberalization of the global communications industry and technological
change have resulted in an increasingly data-intensive business environment. In
Latin America, regulatory, technological, marketing and competitive trends have
expanded opportunities in the converging voice and data communications markets.
Liberalization of the communications industry in Latin America is also leading
to expanded opportunities in the local communications services market. FirstCom
believes there is significant unmet demand for advanced communications services,
including reliable, high capacity data circuits, Internet access, private line
local area networks and domestic and international long distance connectivity.

         FirstCom believes that deregulation of the communications sector in
many Latin American countries, coupled with technological innovation, will lead
to market developments similar to those that have occurred in the United States.
These developments would include an increase in traffic volume and the market
entry of new communications service providers. In Latin America the regulatory
and market environment differ from country to country and differ from those in
the United States and other developed countries.

         FirstCom believes that demand for broadband transmission capacity will
continue to increase as customers require increased capability to handle complex
data, Internet, voice and video communications and that its high-speed data
networks and Internet platform are well suited to satisfy these requirements. In
Latin America, many incumbents and other communications carriers continue to use
older technologies for parts of their networks that are designed primarily for
voice services, although many are using fiber optic technology to expand their
networks.

                                       6
<PAGE>

         FirstCom believes that demand for transmission capacity will continue
to increase as customers require increased capability to handle complex data,
voice and video communications. Digital signals carried over optical fibers are
superior in many respects to signals carried over copper wires, wireless or
satellite-based transmission systems. In Latin America, many incumbents and
other communications carriers continue to use such older technologies for parts
of their networks, although many incumbents are using fiber optic technology to
expand their existing networks. In addition to offering significantly faster and
more accurate transmission of data and voice communications, digital fiber optic
networks generally require less maintenance than comparable copper wire
networks.

LOCAL ACCESS MARKET

         The local access market in both developed and emerging countries, which
once was the domain of incumbent carriers, is increasingly open to competition.
Throughout Latin America, including the countries in which FirstCom currently
operates, local markets may be entered via any combination of (i) construction
of proprietary wired network infrastructure, (ii) construction of wireless local
loop, PCS or cellular networks and (iii) resale using an existing local
carrier's network.

         FirstCom has based its strategy in part on the experiences of
alternative service providers and competitive local exchange carriers in the
United States and other developed countries. However, in Latin America the
regulatory and market environments differ from country to country and differ
from those in the United States and other developed countries. As a result,
FirstCom cannot assure you that the liberalizing Latin American markets and the
emerging role of alternative service providers will be comparable to trends in
more developed countries.

BUSINESS AND SERVICES IN LATIN AMERICA

         COMPETITIVE POSITION. FirstCom believes that it has important
competitive strengths in the Chilean, Peruvian and Colombian markets, including
the following:

/bullet/ extensive fiber optic networks installed in the commercial, industrial
         and financial centers, featuring technologically advanced network
         hardware and centralized network management;

/bullet/ high-quality, advanced technology in the components of the network
         infrastructure, which supports the company's broadband communications
         services without the restrictions imposed by legacy platforms;

/bullet/ capability to deploy network extensions rapidly and to provide new
         services; and

/bullet/ entrepreneurial, customer-driven business culture, with a strong
         reputation for innovation, service and quality among customers;

         NETWORKS. FirstCom's broadband communications networks provide "first
mile" links within a given metropolitan area and connectivity to points outside
each metropolitan area. FirstCom deploys its network facilities to reach larger
office

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<PAGE>

buildings, office parks and other high concentrations of business access lines
and potential business customers. By doing so, it seeks to use capital
efficiently to reach a maximum number of customers and prospects. FirstCom does
not currently own or use any material tangible property other than its broadband
communication facilities.

         FirstCom will continue to deploy and expand its networks in the central
financial and business districts of major metropolitan areas. FirstCom also
intends to extend selectively its metropolitan networks to reach nearby
concentrations of industrial and multinational corporate customers. It plans to
connect its metropolitan area networks initially using fiber optic capacity
leased on a short-term basis. As inter-city traffic increases, FirstCom intends
to replace that short-term leased capacity by constructing, purchasing, swapping
or signing long-term leases for fiber optic links.

         In each of the metropolitan areas, the Company's broadband
communications networks consist of the following components:

/bullet/ a network management center, operating on a 24-hour/7-day basis, where
         FirstCom monitors the functioning of the network and traffic patterns;

/bullet/ primary "backbone" rings of fiber optic cable, each connected to the
         network management center, extending through the main areas or avenues
         served by the network;

/bullet/ numerous secondary rings of fiber optic cable, each connected to the
         backbone ring, which extend the network along additional streets and to
         other locations where the individual buildings served are located;

/bullet/ for each building served, a fiber optic access cable connecting central
         transmission equipment in the building to the secondary ring in the
         street; and

/bullet/ for each customer in a building, a fiber optic or high speed copper
         cable (UTP) connecting the building's central transmission equipment
         unit to one or more customer units.

         FirstCom's fiber optic networks provide greater bandwidth, reliability,
security and transmission quality compared to legacy transmission facilities,
such as copper cable or satellite systems. FirstCom intends to continue to
deploy its networks using fiber optic technology and to introduce high-speed
wireless connectivity, where appropriate, to broaden network coverage without
sacrificing service quality.

         FirstCom's metropolitan ATM/IP networks enable it to provide its
advanced data, voice, video, multimedia conferencing, Internet and electronic
commerce services through a single customer connection. FirstCom believes that
its ATM/IP-based networks have the following characteristics:

/bullet/ the ability to transport distinct types of traffic (e.g., data, voice,
         video) over the network using a single transmission system;

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<PAGE>

/bullet/ cost efficiency, due to the reduced amount of hardware required to
         transmit diverse traffic;

/bullet/ high-speed routing of traffic through the network, due to fewer
         capacity "bottlenecks";

/bullet/ high network and service reliability through utilization of ring-based,
         self-healing capabilities;

/bullet/ high degree of control, flexibility and manageability of the networks,
         allowing for more sophisticated central management; and

/bullet/ high levels of transmission quality.

         FirstCom's network architecture is compatible with prior-generation
transmission standards used in public networks in Latin America, so traffic can
be passed readily between and among the Company's networks, other local private
networks and public national networks. These technological advantages, together
with the high bandwidth of the Company's metropolitan area networks, permit it
to offer the following service benefits to its customers:

/bullet/ an integrated package of data, video and audio services, as well as
         basic communications and transmission services, from a single provider;

/bullet/ data transmission speeds ranging up to 155 megabits per second and ,
         within each metropolitan area, an ability to increase bandwidth easily;

/bullet/ an ability to accommodate flexibly the requirements of very large
         networks, such as dial-up networks used by Internet service providers
         and other complex multi-point networks used by financial institutions,
         multinational corporations, universities and government entities;

/bullet/ a high degree of transmission quality, with negligible error rate and
         "lost" traffic;

/bullet/ through sophisticated central network management systems, an ability to
         continuously monitor and optimize a customer's traffic patterns and to
         allow the customer to have full end-to-end visibility of network
         performance, even across interconnections with other carriers'
         networks;

/bullet/ maximum availability of the customer's internal and external networks
         and externally transmitted data through the "self-healing" design
         features, the networks re-route automatically any transmission over the
         network that is held up by faulty equipment or line damage; and

/bullet/    flexibility to upgrade rapidly transmission speed and bandwidth.

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The locations and status of FirstCom's broadband communications networks are
summarized in the table below:

                      Route
                    Kilometers          Buildings Wired
                 Installed as of            as of             Number of Ports
Country             12/31/99               12/31/99           as of 12/31/99
-------------- --------------------- ---------------------- --------------------
Peru                  1,007                   226                     733
-------------- --------------------- ---------------------- --------------------
Chile                   276                   178                   1,233
-------------- --------------------- ---------------------- --------------------
Colombia                715                   687                   1,801
-------------- --------------------- ---------------------- --------------------
Total                 1,998                 1,091                   3,767
-------------- --------------------- ---------------------- --------------------

         FirstCom has agreements in place for the interconnection of its long
distance networks in Chile and Peru with the networks of the respective
incumbent carriers. Those agreements are implemented by the co-location of
terminal equipment in the premises of either FirstCom or the other companies.
This interconnection permits the rapid satisfaction of customer service orders
for services outside the Company's metropolitan area networks.

         FirstCom's communications equipment vendors have actively participated
in planning and developing electronic equipment for use in its networks.
FirstCom currently obtains ATM equipment and IP-based routers from Cisco
Systems, Inc. and voice switching equipment from Nortel Networks Corp. FirstCom
is in the process of evaluating the capability of other suppliers in order to
diversify its supplier base. Because FirstCom uses existing communications
technology rather than developing new technology, its research and development
expenditures are not material.

         SERVICES. FirstCom believes that customers demand high quality, cost
effective communications services with simplified vendor interfaces. It also
believes that larger and more sophisticated customers expect FirstCom to
anticipate their communications requirements and provide customized solutions.
By offering an integrated package of advanced as well as basic services,
FirstCom believes it can access a larger market, improve customer retention,
achieve higher margins and reduce the cost of acquiring new customers.

         FirstCom's integrated portfolio of services falls into several
principal categories, which are described below:

/bullet/ data services;

/bullet/ Internet and IP-based services;

/bullet/ voice services; and

/bullet/ services to other carriers.

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<PAGE>

         DATA SERVICES. FirstCom's data services include basic connectivity
services, such as point-to-point private lines, and private network services,
which consist of multi-point communications such as wide area network ("WAN")
services. The basic infrastructure, plus supporting services (available or being
deployed) such as frame relay and ATM, allows FirstCom to implement different
communications applications, to support a wide range of customers' needs. The
availability of bandwidth and reliability of the services allow customers to
support additional value-added services, such as video conferencing.

         INTERNET AND IP-BASED SERVICES. FirstCom's Internet services consist of
dial-up and dedicated access services offered primarily to businesses, as well
as wholesale Internet services offered to Internet Service Providers. Wholesale
services allow Internet Service Providers to outsource entirely their access
infrastructure to the company.

         VOICE SERVICES. FirstCom's voice services include a family of services
that allow it to provide high quality, reliable voice communications. Through
interfaces with other private networks and with public networks, customers are
able to place and receive calls originating and terminating from outside the
company's networks.

         SERVICES TO OTHER CARRIERS. FirstCom provides "last mile" access
services to other carriers seeking to reach customers on its networks.

         SALES, MARKETING AND CUSTOMER SERVICE. In Chile, Peru and Colombia,
FirstCom has a total sales force of approximately 94 professionals that are
supported by the Company's technical engineering and network center staff.
FirstCom's sales force is trained to emphasize the Company's customer-focused
sales and service efforts, including its 24 hour/365 day customer service
centers.

         FirstCom's sales force is supported by highly-experienced technical
engineering personnel whose objective is to organize the efficient delivery of
communications solutions to each customer. The technical staff's role includes
the proper coordination of vendor service components, customer site preparation
and installation, testing, delivery and maintenance of the service solution for
the customer. All of FirstCom's engineering personnel have local market
experience and are receiving additional training from key equipment vendors.


PROVISION OF SERVICES FOLLOWING THE PROPOSED MERGER. FirstCom does not expect
that its proposed merger with AT&T Latin America will limit its current
operations or the scope of its current services. Restrictions exist, however,
with respect to the scope of telecommunications services that AT&T Latin
America, the merged Company including FirstCom's operations, may provide
following the merger. Upon completion of the proposed merger, AT&T Latin America
will be prohibited from providing the following services:

o        mobile wireless/personal communications services;
o        cable telephone or cable services;
o        cross-border transport services between two or more countries to
         international carries and select services involving the arrangement,
         management and delivery of termination international communications
         traffic;
o        solutions services such as outgoing professional services and systems
         integration services; and
o        managed network services to multinational corporations reserved for
         Concert by AT&T Corp. and British Telecom.


COUNTRY SPECIFIC OVERVIEW - CUSTOMERS, COMPETITION AND REGULATIONS

 CHILE
         COUNTRY OVERVIEW. Chile is a highly urbanized country, with an
estimated population of approximately 15 million at December 1999, of which
85.0% are estimated to live in cities. Santiago, the capital of Chile and a
major international economic center, has a population of approximately 5.1
million. The Chilean government has implemented a strategy to encourage foreign
investment in Chile and it has privatized and deregulated many industries,
including transportation, energy and communications. From 1994 through 1997,
real GDP increased by an average annual rate of 6.1%. Inflation has been
significantly curtailed, falling from 18.7% in 1991 to 6.3% in 1997. GDP has
been projected to grow at an average annual growth rate of 4.3% through 2000.

                                       11
<PAGE>

         MARKET OVERVIEW. As the first Latin American communications market to
commence deregulation, Chile has experienced substantial growth in its
communications sector. According to Pyramid Research, Chile's lines in service
have increased from approximately 2.7 million in 1997 to approximately 3.6
million in 1999, indicating a teledensity of approximately 24%.

         COMPETITION. Chile's telecommunications market is extremely
competitive. Chile's local and long distance markets were both opened to
competition in 1994, the only constraint being a six-year long distance market
share cap imposed on Chile's former local services monopoly, Compania de
Telefonos de Chile (CTC). There are currently five telecommunications groups
that provide both local and long distance services, three of which also provide
data services. There are also three other licensed providers of local telephony
services and four other licensed providers of domestic and international long
distance services. In the long distance market, Entel, the former long distance
PTT, has a market share of approximately 40% for long distance. In the local
telephony market, CTC, the former local services PTT, which was privatized in
1989, has a market share of approximately 90%.

         The identity of new entrants and the scope of increased competition,
and any corresponding adverse effect on FirstCom Chile's results, will depend on
a variety of factors. Among such factors are the business strategies and
financial and technical capabilities of potential competitors, prevailing market
conditions, applicable Chilean regulations with respect to new entrants and
FirstCom Chile, as well as the effectiveness of FirstCom Chile's strategy to
prepare for increased competition.

         CUSTOMERS. For data and Internet services, FirstCom Chile currently has
more than 500 business customers, FirstCom Chile also provides domestic and
international long distance services to approximately 1,200 business customers
and more than 5,000 residential customers through annual service contracts. In
addition, FirstCom Chile provides pick per call long distance services to
approximately 130,000 non-subscribed users. The pick per call long distance
service allows users to select their choice of long distance carriers for each
call made by dialing a caller specific access code. FirstCom Chile also provides
routing services to a number of other long distance carriers, including Entel.

         TELECOMMUNICATIONS LAWS AND REGULATIONS. The Ley General de
Telecomunicaciones, Law No. 18.168 (1982) (the "Chilean Telecommunications Law")
and various decrees issued by the Ministry of Transportation and
Telecommunications and other Chilean governmental authorities, constitute the
legal and regulatory framework within which the Company provides services in
Chile.

         In 1994, the Chilean Telecommunications Law was amended to promote
greater competition in the telecommunications sector and to establish a
framework for a multicarrier dialing system. The most significant amendments
were: (i) in the case of local telephone services, only their affiliates or
other related companies, rather than the local telephone carriers themselves,
can now provide public long distance services and (ii) the establishment of all
carriers' maximum market shares in the domestic long distance market for a

                                       12
<PAGE>

four-year period and in the international long distance market for three years,
each period measured from the inception of the multicarrier dialing system.
Companies that carry traffic above these units will be subject to substantial
financial penalties, and the Chilean Undersecretary of Telecommunications may
suspend their service.

         The Chilean Telecommunications Law also requires providers of public
telephone services to conform to a multicarrier system in which end-users,
rather than local telephone carriers, will determine on a call-by-call or
contractual basis the long distance carrier they want to use. In addition, long
distance carriers are authorized to establish direct connections to end users
through their own networks.

         The Chilean Telecommunications Law provides for substantial fines, the
suspension of service and other penalties for violations of the multicarrier
dialing system. The routing of calls by a local telephone company to a long
distance carrier other than the carrier selected by the end user or the
obstruction or delay of an interconnection between the local telephone carrier
and any long distance carrier would constitute violations, and the local
telephone carrier may be required to indemnify the provider of long distance
services for any such violations.

         CONCESSIONS. The Chilean Telecommunications Law specifies which
telecommunications services require that a provider obtain a concession or
permit from the Ministry of Transportation and Telecommunications. Such
concessions or permits are granted by the Subsecretaria de Telecommunicaciones
(the "Undersecretary of Telecommunications"). Concessions, which may be granted
only to entities constituted and domiciled in Chile, are necessary to provide
the following services, among others: (i) public telecommunications services
which are provided to satisfy the telecommunications needs of the general public
and (ii) intermediate telecommunications services which are transmission and
switching services offered by third parties to other concession holders who
provide public telecommunications services or other services to end-users.
Permits, which are granted following a simplified procedure and may have a
shorter duration than concessions, are required to provide limited services,
which are services necessary to satisfy specialized needs of businesses or other
institutions, but do not entail carrying traffic across public international and
certain telecommunications networks.

         Concessions and permits are granted by the Chilean government for a
fixed term which is presently 30 years. These concessions and permits can be
renewed for the same period if so requested by the concessionaire. However,
because the Company's concession was granted before the establishment of fixed
terms, such concession is deemed to be indefinite in accordance with its terms
and with Transitory Article 3 Law Number 19.277. Concessions and permits cannot
be assigned, transferred or leased without the prior authorization of the
Undersecretary of Telecommunications, which authorization cannot be denied

                                       13
<PAGE>

without reasonable cause.

         Holders of concessions to provide public telecommunications services
must establish and accept interconnection with others, in accordance with
technical requirements established by the Undersecretary of Telecommunications,
to ensure that users have access to all public services. Concession holders may
establish their own systems or use facilities of other entities.

         The Undersecretary of Telecommunications may suspend a concession
holder's service for up to thirty days for failure to comply with technical
requirements, which action may be challenged in the courts within a term of five
days as of the notification to the holder of the concession.

         The Chilean Telecommunications Law provides that holders of concessions
and permits shall have access, on equal economic and technical basis, to
satellite systems and international cables.

         Existing concessions may be terminated if the concession holder does
not fulfill certain of its obligations, including: (i) fulfillment of the
technical framework applicable to the service; (ii) reiterative sanctions
because of the suspension of transmissions; (iii) nonpayment of a fine imposed
on the concession holder for more than 30 days; and (iv) the unauthorized change
of any of the essential elements of the concession. The holder of the concession
can appeal such termination to the Chilean Supreme Court within ten days if it
believes that the termination was illegal.

         FirstCom Chile holds a concession with an unlimited duration to provide
intermediate telecommunications services (the "Networks Concession"). The
Networks Concession authorized the installation and operation of FirstCom
Chile's fiber optic cable local network in metropolitan Santiago. The FirstCom
Networks Concession authorizes the Company to provide voice and data
transmission services and certain value-added services on a private line basis.
The Networks Concession may not be transferred, assigned or leased, nor may
control of the Chilean subsidiary holding the concession be transferred or
assigned, without the prior approval of SUBTEL. FirstCom Chile holds a
concession with an unlimited duration to construct and operate a network of
satellite earth stations throughout Chile that can provide national and
international long distance telecommunications services. In addition, FirstCom
Chile is authorized to provide services based on 38 GHz wireless technology in
Santiago. The Chilean Ministry of Transport and Communication granted FirstCom
Chile a concession of unlimited duration to provide international and domestic
long distance services in 1993. In 1998, FirstCom Chile was granted a concession
to provide public switched local telephony services in Santiago.

         FEES, TARIFFS AND OTHER CHARGES. Currently, certain providers of
domestic and international long distance services are subject to maximum tariffs
fixed by the

                                       14
<PAGE>

Chilean government. The Chilean government establishes the maximum tariffs of
regulated services by using a methodology that provides for the recovery of
investments and the costs of operations of such services, as well as a profit
based on the cost of capital. Under the Chilean Telecommunications Law, the
structure, level and mechanism for indexing the affected services are fixed
every five years by a joint decree issued by the Ministry of Transportation and
Telecommunications and the Ministerio de Economia, Fomento y Reconstruccion (the
"Ministry of the Economy") on the basis of the incremental costs of providing
the tariffed service in each geographical service area where the service is
provided, including capital costs taking into account the expansion plans of the
regulated companies over the five year period. In the absence of expansion
plans, the structure and level of rates are set on the basis of marginal
long-term costs. Maximum tariffs are established on the basis of an economic
model that relies on the costs of an ideally efficient enterprise that offers
only the service subject to tariff. The tariff for each service that is subject
to tariff regulation reflects the theoretical cost components associated with
such service.

         Tariffs for domestic long distance telephone services must include the
prices of long distance transmission and switching as well as the price of local
telephone service. Tariffs for international long distance services must include
such price components as the price of domestic and international services, the
cost of access to the local network, as well as the settlement costs with
foreign correspondents.

         Providers of telecommunications services are prohibited from
discriminating among similarly situated users in the price charged for tariffed
services. Each tariff is subject to its own index, which is calculated using the
prices of its principal components. A concessionaire must give two months notice
to the Undersecretary of Telecommunications of changes to the maximum tariff
resulting from changes in the applicable index (including inflation adjustments)
and that tariff, upon readjustment, is the maximum price that users may be
charged for the service.

         Because the tariff-setting process takes place every five years,
providers of long distance services subject to tariff regulation are required to
prepare a special study for each regulated service included in their geographic
concession areas. The purpose of the study is to calculate the total and
marginal long-term costs with respect to each such service and to determine on
the basis of such calculation the structure and level of future tariffs. New
tariff proposals must be presented to the Ministries of Transportation and
Telecommunications and of Economy 180 days prior to the end of each five-year
period. The Company and other intermediate service providers are subject to the
maximum tariffs established by the corresponding authorities for the principal
intermediate service provider.

                                       15
<PAGE>

         FOREIGN INVESTMENT AND EXCHANGE CONTROLS. Complete foreign ownership of
investments in Chilean entities is possible and there is no minimum period
within which the foreign investments must remain in Chile. Foreign investment
capital may be remitted overseas one year after entering Chile.

         The Central Bank requires most transactions relating to foreign
investment to be effected in a "formal" currency market. Appropriate approvals
and registrations must be obtained when foreign investment capital enters the
country to ensure the right to acquire foreign currency to pay for imports,
repatriate capital and profits and pay interest and capital due on foreign
currency loans.

         Foreign investment capital may be remitted overseas one year after
entering Chile, but only from the proceeds of sale or liquidation of all or part
of the assets, business, shares or rights representing the investment. Capital
comprising reinvested profits are not subject to the one year restriction.

         Annual profits may be remitted overseas at any time. Interim profits
and dividends can be remitted quarterly if supported by audited financial
statements and permitted by the foreign investment contract with the government.

         Normally, foreign currency required to repatriate capital and profits
must be obtained in the local currency market. Certificates authorizing the
purchase of the foreign currency are issued by the Foreign Investment Committee,
normally within 48 hours in the case of profits. Investors may be able to
operate offshore foreign currency accounts which may be used to repatriate
capital profits directly.

         The Foreign Investment Statute guarantees that restrictions applicable
to the remittance of capital and profits will not be less favorable than those
applying generally to the acquisition of foreign currency to pay for imports.

         TAXATION. Foreign investors and local businesses are generally treated
equally, although foreign investors are given the benefit of certain fixed rate
tax options which allow them to limit the impact of future adverse tax changes.
There is a value-added tax (18% flat) charged on the importation of goods into
the country, and on the sale of goods and rendering of services inside the
country. The tax paid generates a revolving credit against the value-added tax
collected from sales in a monthly basis.

         Additional withholding income tax (the "Additional Withholding Income
Tax") of 35% is payable by non-resident individuals and entities on
Chilean-source business income withdrawn or remitted overseas. This tax is
withheld by the paying business entity. The 15% corporate tax is allowed as a
credit against the Additional Withholding Income Tax payable. As a result, the
effective rate payable on foreign investment profits remitted abroad is normally

                                       16
<PAGE>

35%, 15% being payable at the time profits are earned with the 20% balance due
on payment overseas.

         Withholding tax is also imposed on most other payments made abroad. For
example:

1. 30% for royalty payments and patents, license and similar fees;

2. 4% for interest payments to a foreign or international banking institution or
to a foreign or international financial institution registered with the Central
Bank of Chile. A 35% rate applies to interest payments to all other entities;

3. 35% for rental payments, this rate can be reduced to 1.75% for equipment
rental payments; and

4. 20% withholding tax applied to remuneration of foreign individuals not
resident in Chile for "technical assistance" or "engineering services" rendered
in Chile or abroad.

         These rates can be increased to 80% for royalties or fees for technical
services considered unproductive or unnecessary for the economic development of
the country. All these payments are tax deductible if necessary to produce
income.

 PERU
         COUNTRY OVERVIEW. Peru is the fourth largest country in South America
with an estimated population of 25 million at December 1999. Lima, the capital
of Peru and the major economic center in Peru, has a population of approximately
6.8 million. In 1990, the Peruvian government embarked on a series of economic
and political measures to curtail inflation and restore economic stability. From
1994 through 1997, GDP increased by an average annual growth rate of 9.3%.
Pyramid Research estimates that GDP will grow at a compound annual growth rate
of 6.2% from 1997 to 2002.

         MARKET OVERVIEW. The Company believes that demand for telephone service
in Peru has historically been unmet due to lack of investment, high prices, poor
service and long waiting periods for service. One of the stated goals of
privatizing Peru's former local and long distance incumbent, Telefonica del
Peru, in 1994 (the "Privatization") was to expand significantly the national
communications network and improve service quality. The number of lines in
service has increased since the Privatization from approximately 772,000 in 1994
to approximately 2 million. Notwithstanding the significant recent growth in
lines in service, Peru continues to have a relatively low penetration rate with
7.8 lines in service per 100 inhabitants as of the end of 1999. The Company
believes that continued growth in demand for communication services in Peru will
be influenced by the growth of the Peruvian economy, foreign investment and
international trade, the continued expansion of the communications network and
the re-balancing of tariffs. The Company believes that Peru's communications
market offers an excellent environment for the growth of communications
business. The Company

                                       17
<PAGE>

believes that the Peruvian economy is also a source of growing demand for
communication services with growing domestic and multinational businesses
attracting significant foreign investment.

         COMPETITION. Telefonica del Peru dominates Peru's communications
market. Telefonica del Peru was formed by the merger in 1994 of the former local
telephone service incumbent, Compania Peruana de Telefonos, and ENTEL, the
former long distance telephone service incumbent. Telefonica del Peru is 35%
owned by Telefonica de Espana S.A. BellSouth, which formerly operated as
Tele2000, is also an important competitor. BellSouth provides cellular, public
pay phone and cable television services in Lima and other Peruvian cities.
BellSouth also owns and operates a small fiber optic loop over which it offers
frame relay services.

         The following table sets forth the relative market shares of the
Company and its main competitors in Peru, based on research published by the
Yankee Group in 1999:

<TABLE>
<CAPTION>
                                                   LONG DISTANCE
                                LONG SERVICE          SERVICE          DATA AND INTERNET
                                ------------          -------          -----------------
<S>                                 <C>                 <C>              <C>
Telefonica del Peru ...........     95%                 100%                  75%
BellSouth .....................      5%                   -                    -
FirstCom ......................      -                    -              Less than 15%
Red Cientifica Peruana ........      -                    -              Less than 15%

</TABLE>

         Following the August 1998 deregulation of local and domestic and
international long distance telephony, competition in these services is arising
from variety of new entrants. They include communications carriers that provide
services in other countries as well as companies currently providing services in
other industries previously liberalized in Peru. In addition to the public
switched long distance concession granted to the Company, other entities,
including BellSouth, have been granted such a concession. In addition, existing
communications service providers, including local carriers, wireless telephone
operators, the providers of data services, cable television network operators
and operators of existing private network infrastructure, may have established
customer relationships as well as other capabilities and resources to expand
their current service offerings.
         The identity of new entrants and the scope of increased competition,
and any corresponding adverse effect on FirstCom Peru's results, will depend on
a variety of factors. Among such factors are the business strategies and
financial and technical capabilities of potential competitors, prevailing market
conditions, applicable Peruvian regulations with respect to new entrants and
FirstCom Peru, as well as the effectiveness of FirstCom Peru's strategy to
prepare for increased competition.

         CUSTOMERS. FirstCom Peru provides data and Internet services to more
than 270- customers. FirstCom Peru seeks to enter into contracts with new
customers for a term of at least two years. Prices charged to customers vary in
accordance with the customer's requirements based on the number of locations,
type of services, transmission rates, and length of service contracts. In
November 1999, FirstCom Peru also began to offer domestic and international long
distance services. As of December 31, 1999, the Company had more than 6,500
customers contracted for long distance service. FirstCom Peru also began to
provide routing services to a number of other long distance carriers.

         TELECOMMUNICATIONS LAWS AND REGULATIONS. The principal features of
Peruvian regulation of telecommunications services include the General
Telecommunications Law (the "Peruvian Telecommunications Law"), State Contracts
(as defined below), the General Regulation to the Telecommunications Law (the
"General Regulation"), and the Regulation (the "OSIPTEL Regulation") for the
Organization for Supervision of Private Investments in Telecommunications
("OSIPTEL"). These laws and their related governmental authorities constitute
the legal and regulatory framework within which the Company provides services in
Peru.

                                       18
<PAGE>

         The Peruvian Telecommunications Law sets out the basic framework for
the provision and regulation of telecommunications services, and has the stated
objective of providing a competitive market in telecommunications. The law
grants the Peruvian government the ability to oversee telecommunications
services through the Ministry of Transportation, Communications, Housing and
Construction (the "MTC"). The MTC has the authority to : (i) grant, renew and
cancel concessions, authorizations, permits and licenses; (ii) approve
telecommunications policy; (iii) manage the electric spectrum and approve the
assignment of frequencies; and (iv) discontinue the rendering of value added
services offered by concessionaires when such services cause any damage or harm
to the public telecommunications network.

         CONCESSIONS. A private entity may only provide telecommunications
services in Peru pursuant to a concession granted by the MTC and in accordance
with a state contract (the "State Contract") to be entered between the MTC and
the concessionaire. Such concessions, including the concession held by the
Company through FirstCom Peru, have a maximum period of twenty years and can be
renewed for an equal term without limitation subject to the submission of an
application for renewal two years prior to the expiration of the concession and
compliance with the requirements under the concession. A State Contract
outlines, among other obligations: (i) a minimum expansion plan for the
operator; (ii) required fees and tariffs; (iii) technology standards for all
equipment; and (iv) quality standards of service.

         State Contracts are treated under Peruvian law the same as contracts
between private parties. For this reason, such contracts cannot be modified or
terminated by any subsequent regulation or legislation. The Ministry may,
however, if it is deemed in the public interest, modify the terms of State
Contracts unilaterally if such terms relate to the international
telecommunications policy of the MTC, or if it is necessary to modify the
contract to comply with international laws, treaties or conventions. These
changes can only take place through an administrative process that provides for
public comment on any proposed changes.

         Although Telefonica's dial tone and public switched local and long
distance services exclusivity period was to last until May 1999, the government
of Peru and Telefonica reached an agreement to end Telefonica's exclusivity
period and open the market to new entrants in August 1998 in exchange for
OSIPTEL not including a productivity factor when calculating basic services
tariff ceilings until September 2001.

         Providers are required to comply with regulations and detailed
technical plans promulgated by OSIPTEL that apply to such matters as the
transmission, routing, signaling and assignment of numbers in the Peruvian
telephone network as well as use of the radio frequency spectrum. Before
concessionaires initiate service, their facilities must have been authorized by
the MTC and must be in full compliance with the applicable regulations and
technical plans. Failure to comply with the technical plans can be grounds for

                                       19
<PAGE>

terminating a concession if the holder does not comply within a period of time
prescribed by the OSIPTEL.

         Both Telefonica and operators of private networks must make their
networks available for interconnection with other carriers' networks in order to
promote competition within Peru's telecommunications marketplace.

         FirstCom Peru provides its services pursuant to a renewable local
carrier concession for the cities of Lima and Callao expiring in 2016. FirstCom
Peru's concession may be renewed for an additional 20 years upon prior approval
by the MTC. In February 1999, FirstCom Peru received a renewable concession to
provide international and national public switched long distance services
starting in mid-1999. The concession is valid for 20 years and may be renewed by
the MTC for an additional 20 years. In addition, FirstCom Peru is registered in
the Business Registry of Peru as an authorized provider of value-added services,
including providing local, national and international Internet services. In May
1999, FirstCom Peru received a concession to provide local fixed telephony
services for the cities of Lima and Callao for 20 years. The concession may be
renewed for an additional 20 years at the end of its initial term or may be
renewed periodically at the end of each 5 year period under the concession.

         FEES, TARIFFS AND OTHER CHARGES. In conformity with the Peruvian
Telecommunications Law, the General Regulation and the OSIPTEL Regulation,
telephone operators must pay certain fees, tariffs, and other charges which are
primarily comprised of: (i) a concession fee; (ii) annual tariffs; (iii) payment
to OSIPTEL for supervisory services; and (iv) contribution to the Fund for
Private Investment in Telecommunications ("FITEL"). Providers may set their own
tariff levels for private line service, subject to certain maximum tariff levels
set by the OSIPTEL.

         FOREIGN INVESTMENT AND EXCHANGE CONTROLS. The basic legal framework to
attract foreign investment to Peru is provided by the Foreign Investment
Promotion Law ("Promotion Law"). The Promotion Law provides for specific rules
that guarantee nondiscriminatory treatment of foreign investors investing in
Peru, and provides mechanisms to stimulate and secure foreign capital.
Specifically, under the Promotion Law, foreign investors may freely remit all
profit and repatriate all capital invested in Peru, and may freely convert such
local currency proceeds into U.S. dollars. No registration with any government
authority of such profit remittance or capital repatriation is required under
Peruvian law irrespective of whether the original investment was made in the
form of a capital contribution or intercompany loans. Notwithstanding the low
level of restrictions on foreign investment, Peruvian law provides that if the
foreign investor's home country imposes foreign investment restrictions on
investments made by Peruvian companies in that country, the Peruvian government
is authorized to impose similar restrictions with respect to investments made by
companies from that country. For this reason, foreign investors are encouraged
to enter into a legal stabilization agreement (the "Legal Stability Agreement")

                                       20
<PAGE>

with the Peruvian government to guarantee certain rights with respect to their
foreign investment in Peruvian companies.

         Legal Stability Agreements are entered into for a term of ten years.
Foreign investors who execute such agreements are guaranteed the following
rights, as of the date of the execution of the agreement: (i) maintenance of the
existing tax treatment of the foreign investment; (ii) legal stability as to the
availability of foreign currency for the remittance of profits and repatriation
of capital and (iii) non-discriminatory treatment of the foreign investor.

         Foreign investors may enter into the Legal Stability Agreement by
submitting an application to the National Commission on Foreign Investments,
provided that the capital contribution is made in the following manner: (i) a
capital contribution in cash of at least $2.0 million within two years of the
date of execution of the agreement; or (ii) a capital contribution in cash of at
least $500,000 and creation of at least 20 employment positions within two years
from the date of the execution of the agreement.

        TAXATION. The tax structure of Peru is composed of several broad based
taxes, a consumption tax on certain products (e.g. gasoline), a general income
tax, an alternative minimum tax based on a business' assets, a property tax, and
a simplified import tariff. In addition, withholding taxes are imposed on
interest and salary income, and Peru has a recently expanded value-added tax
that covers certain products and services.

 COLOMBIA

         COUNTRY OVERVIEW. Colombia is the third largest country in South
America with an estimated population of approximately 42 million. Bogota, the
capital of Colombia, have populations of approximately 5.5 million and Cali, two
of the largest cities in Colombia, 1.8 million, respectively. From 1994 through
1997, GDP grew at an average annual rate of 9%. Inflation continuously dropped
each year from 23.8% in 1994 to 18.5% in 1997. However, in 1998 the Colombian
economy began experiencing a severe economic crisis and is currently
experiencing its first economic recession in over 50 years. A combination of low
international commodity prices, a decline in global lending to emerging markets,
a drop in domestic consumption and high interest rates have resulted in an
economic recession and a negative economic performance. In June 1999, Colombia's
central bank effectively devalued the Colombian peso by 9% by widening the
foreign exchange band for the peso, and in September 1999, the central bank
discontinued the use of the foreign exchange band and permitted the peso to
float freely against the U.S. dollar. In the third quarter of 1999, citing
Colombia's macroeconomic imbalances and rising levels of government debt,
Moody's Investors Services and Standard & Poor's downgraded the country's credit
rating to below "investment grade". In addition to increasing borrowing costs
for Colombian companies, the impairment of Colombia's credit rating could
further lower investor confidence in that country and compound its economic
difficulties.

                                       21
<PAGE>

         MARKET OVERVIEW. As Colombia continues to deregulate its communications
market, the country has continued to experience significant growth in
communications revenue and telephone density. With new competitors entering the
local market, local operators are marketing aggressively to obtain subscribers.
According to Pyramid Research, total lines in service in Colombia has increased
from approximately 5.4 million in 1997 to approximately 6.9 million in 1999,
indicating a teledensity of approximately 17%.

         In the data communications industry, the addition of new operators
increased the selection of services available to the business community. As a
result of increasing, local and wide area networking demands and more companies
seeking out-sourced solutions for data processing, packet switching, Internet
access, value-added services, electronic commerce and online services,
significant growth of the communications industry has taken place in Colombia.
Internet is the fastest growing data communications service in the Colombian
market. The increasing demand for Internet access and services has encouraged a
greater number of Internet service providers to enter the market.

         COMPETITION. Colombia's telecommunications market has been dominated by
the incumbent long distance operator Empresa Nacional de Telecomunicaciones
("Telecom"). However, Telecom has limited local network presence relative to
Empresa de Telecommunicaciones de Santafe de Bogota ("ETB"); Empresas Publicas
de Medellin ("EPM"), and EMCATEL, the telecommunications entity which separated
from Empresas Municipales de Cali ("EMCali"), in Bogota, Medellin, and Cali,
respectively. Telecom's initial investment in Firstcom Colombia resulted from
their interest in finding alternative last-mile providers to reach their large
long distance corporate customers. The competitive long distance and domestic
telephone services market does not affect FirstCom Colombia because it does not
operate as a long distance telephone service provider.

         There are several companies that provide value-added services to
corporate customers, although their traditional focus has been the provisioning
of domestic satellite-based VSAT solutions. In the metropolitan areas,
specifically in Bogota, there appears to be a limited number of high-speed
communication service providers. However, there has beers increased competition
in the provisioning of "last mile" solutions in Bogota from Emte1co and
Teledatos.

         The following table sets forth the relative market shares of the
Company and its main competitors in Colombia, based on research published by the
Yankee Group in 1999:

<TABLE>
<CAPTION>
                                                          LONG DISTANCE
                                        LONG SERVICE         SERVICE          DATA AND INTERNET
                                        ------------         -------          -----------------
<S>                                          <C>               <C>                    <C>
TELECOM ............................         30%               65%                    40%
Empresa de Telecomunicaciones de
  Santafe de Bogota ................         32%               20%                     -
Empresa Publica de Medellin ........         l8%               15%                     -
Impsat .............................          -                 -                     30%
FirstCom ...........................          -                 -                      5%

</TABLE>

         The identity of new entrants and the scope of increased competition,
and any corresponding adverse effect on FirstCom Colombia's results will depend
on a variety of factors. Among such factors are the business strategies and
financial and technical capabilities of potential competitors, applicable
Colombian regulations with respect to new entrants and FirstCom Colombia, as
well as the effectiveness of FirstCom Colombia's strategy to prepare for
increased competition.

         The Company competes in the Colombian telecommunications market by
providing customers a competitively priced, modern service offering consisting
of local

                                       22
<PAGE>

access and Internet data services. FirstCom Colombia also competes on the basis
of its network quality, customer responsiveness, and reputation for innovation.
FirstCom Colombia believes that it is well-positioned to take advantage of the
unsatisfied demand for advanced communications services due to Colombia's
limited-capacity communications infrastructure and the increasing demand for
such services from business customers.

         CUSTOMERS. FirstCom Colombia currently services approximately 200
customers in Colombia. FirstCom Colombia offers and markets to its current and
potential customers services which include ATM services (Internet, ethernet,
fast ethernet, video, voice, and token ring), frame relay, and LAN to LAN
interconnection. Prices charged to customers vary in accordance with the
customer's requirements based on the number of locations, type of services,
transmission rates, and length of service contracts.

         TELECOMMUNICATIONS LAWS AND REGULATIONS. The principal components of
Colombian regulation of telecommunications services include Decree 1990 ("Decree
1990") issued in 1990, Law 142 ("Law 142") enacted in 1994 and various other
decrees issued by Colombian governmental authorities. These laws and the
governmental authorities that regulate the telecommunications industry
constitute the legal and regulatory framework within which the Company provides
services in Colombia.

         Decree 1990 embodies the general principles applicable to a number of
telecommunications activities and authorizes the Ministry of Communications (the
"Colombian Ministry") to regulate certain areas of the telecommunications
sector, in accordance with the plans adopted by the National Council for
Economic and Social Policy of Colombia including the administration, regulation
and control of radioelectric spectrum and frequencies and the physical
infrastructure in Colombia. Law 142 was issued to develop policies and
regulations related to certain public services and includes the regulation of
local and long distance public switched fixed telephony services, both national
and international. Law 142 created the Superintendency of Public Services (the
"SSP") and the Commission for the Regulation of Telecommunications ("CRT"). The
SSP oversees the management and performance of utilities and has the power to
impose sanctions for non-compliance with regulations. CRT performs the
regulatory function within the telecommunications industry with the stated
purpose of promoting competition and improving efficiency and quality of
service.

         Additionally, all network operators are obligated by law to make their
networks available for interconnection with other networks.

         CONCESSIONS. Concessions are granted by the Colombian Ministry.
Concessions are required to provide the services, among others as follows: (i)
public switched long distance services, (ii) value added services for particular
purposes and (iii) bearer services. Although a concession is required to provide
value added services and bearer services the environment related to these

                                       23
<PAGE>

services is very open and any applicant that meets the minimum criteria
established by the Colombian Ministry would be entitled to obtain a license.

         Long distance services are subject to provisions that in practice limit
the number of new entrants. Law 142 specifies that a company must be
incorporated as a public services enterprise (EMPRESAS DE SERVICIOS PUBLICOS -
"ESP"), among other requirements, to provide public switched telephony services.
An ESP must receive a concession to provide long distance services but no
concession is required to provide local public switched telephony (except where
radioelectric frequencies are to be used, in which case a concession is
required). Value added service and bearer service concessions are each granted
for a period of ten years and are each renewable for equal terms, except in the
case of a bearer service concession which may only be renewed for one additional
term.

         FirstCom Colombia has a 10 year renewable concession ("FirstCom
Colombia Value Added Concession") to provide value added services nationally and
in connection with international networks, and to install a value-added network
having national and international scope. FirstCom Colombia must obtain the prior
approval of the Colombian Ministry of Communications to assign the FirstCom
Colombia Value Added Concession, initiate the delivery of each value added
service and expand its network. In 1998, FirstCom Colombia was granted a
concession (the "FirstCom Colombia Bearer Services Concession") to provide
bearer services within the city of Santafe de Bogota, which includes the
authority to provide bearer services to duly authorized public switched
telephone service operators and cellular operators. The FirstCom Colombia Bearer
Services Concession, which is assignable with the prior approval of the
Colombian Ministry of Communications, was granted for an initial term of 10
years and may be automatically renewed once for an additional 10 years. However,
at the expiration of the FirstCom Colombia Bearer Services Concession, FirstCom
Colombia may file a new application to obtain a similar concession, although
FirstCom Colombia may be required to pay a new license fee for the concession.

         FEES, TARIFS AND OTHER CHARGES. When required to promote competition,
CRT may set a tariff structure for public switched fixed telephony services.
Value added and bearer service concessions granted prior to February 1999
require such providers to pay an annual fee of 5% of the net revenues of the
operator. A decree issued in February, 1999 lowered the fees for new concessions
granted thereafter for such services to 3% of the net revenues of the operator.
The Company requested a reduction in fees, from 5% to 3%, for the value added
and bearer services concessions which were each granted prior to February 1999
and expects to receive a response to its request during 2000.

         FOREIGN INVESTMENT AND EXCHANGE CONTROLS. As a general rule foreign
investment in Colombia receives the same treatment as Colombian investment.
Foreign investment is only forbidden in activities related to public health or
national security. No authorization to make a foreign investment is required,

                                       24
<PAGE>

although it must be registered at the Central Bank in order to secure full
dividend remittance and repatriation rights.

         Two foreign exchange markets operate in Colombia: a free market
exchange ("free market") and a regulated market exchange ("regulated market").
In the free market, foreign-currency proceeds derived from operations conducted
outside the regulated market are not subject to official control. Companies
engaged in the import or export of services are considered to operate on the
free market and may, therefore, maintain foreign-country amounts abroad. In the
regulated market, exchange operations classified as occurring on the regulated
market must be channeled through domestic financial institutions or through
clearance mechanisms. The following operations are deemed to occur on the
regulated market:

/bullet/ Import and export of goods;

/bullet/ Foreign-debt transactions of Colombian residents and any costs related
         to these transactions;

/bullet/ Foreign capital investments in Colombia and any income generated from
         these investments;

/bullet/ Colombian capital investments abroad and any income generated from
         these investments;

/bullet/ Foreign-currency endorsements and guarantees; and

/bullet/ Derivative operations and hedging currency transactions.

         In addition to the operations listed above, any transaction involving
foreign currency that originates on the free market but is voluntarily channeled
through the regulated market is also subject to the regulations and requirements
of the regulated market.

         TAXATION. Taxes in Colombia are levied by the national departmental
(provincial) and municipal governments. The national government imposes
corporate income tax, value-added-taxes and customs and stamp duties. Municipal
governments impose industry and commerce tax, vehicles tax and real estate tax.

        EMPLOYEES

         As of February 4, 2000, the Company had approximately 675 full-time
employees, of whom approximately 250 are with FirstCom Peru, 270 are with the
Company's operations in Chile, 140 are with FirstCom Colombia and 15 are based
at the Company's corporate headquarters. The Company's employees are not
represented by any labor union. The Company believes that relations with its
employees are good.

                                       25
<PAGE>

GLOSSARY OF DEFINED TERMS

         "ATM" (Asynchronous Transfer Mode) means an information transfer
standard that is one of a general class of packet technologies that relay
traffic by way of an address contained within the first five bytes of a standard
53 byte-long packet or cell. The ATM format can be used by many different
information systems, including LANs, to deliver traffic at varying rates,
permitting a mix of data, voice and video.

         "Backbone" means the major fiber cable carrying the accumulated
transmissions of many businesses connected to a network system. Similar to a
water main, the backbone is the high volume conduit for transmissions input by
multiple smaller connections (last-mile connections) from business offices.

         "Bandwidth" means the range of frequencies that can be passed through a
medium, such as glass fibers, without distortion. The greater the bandwidth, the
greater the information carrying capacity of such medium. For fiber optic
transmission, electronic transmitting devices determine the bandwidth, not the
fibers themselves.

         "CAP" (competitive access provider) means a company that provides its
customers with an alternative to the local telephone company for local transport
of private line, special access telecommunications services and switched access
services. CAPs are also referred to in the industry as alternative access
vendors, alternative local telecommunications service providers (ALTS) and
metropolitan area network providers (MANs).

         "Carrier's carrier" means a telecommunications network that provides
wholesale telecommunications transmission to other major telecommunications
networks such as long distance, local and cellular telephone companies.

         "CENTREX" means the switching capability provided by a telephone
company's central office to a customer over telephone lines on a subscription
basis. Centrex allows a customer to receive such services as intra-office call
routing and voice mail from a telephone company's switch, thereby avoiding the
purchase of a private switch known as PBX.

         "Competitive local exchange carrier means a company that provides local
exchange services in competition with the incumbent local exchange carrier.

         "Common Stock" means the common stock of the Company, par value $0.001.

         "Company" means FirstCom Corporation formerly known as InterAmericas
Communications Corporation.

                                       26
<PAGE>

         "Dedicated lines" means telecommunications lines reserved for use by
particular customers along predetermined routes (in contrast to
telecommunications lines within the local telephone PTT's public switched
network).

         "Digital" means a method of storing, processing and transmitting
information through the use of distinct electronic or optical pulses that
represent the binary digits 0 and 1. Digital transmission and switching
technologies employ a sequence of these pulses to represent information, as
opposed to the continuously variable analog signal. The precise digital numbers
preclude any distortion (such as graininess or snow, in the case of video
transmission, or static or other background distortion, in the case of audio
transmission).

         "Drop and Insert" means a network's capability to share capacity among
users without dedicating any fiber strand to a single end user.

         "Earth station" means a parabolic antenna and associated electronics
for receiving or transmitting satellite signals.

         "Enhanced Services" means private line services, and LAN and WAN
connectivity services.

         "ESN (Enhanced Services Network)" means the name used to describe the
communication services providing digital connectivity, primarily for data
applications via frame relay, ATM, or digital interexchange private line
facilities.

         "Fiber optic" means fiber optic technology that involves sending laser
light pulses across glass strands in order to transmit digital information.
Fiber optic cable currently is the medium of choice for the telecommunications
and cable industries. Fiber is resistant to electrical interference and many
environmental factors that affect copper wiring and satellite transmission.

         "FirstCom Chile" means as the context may require, FirstCom Chile S.A.,
FirstCom Long Distance S.A., FirstCom Network S.A., FirstCom Wireless S.A. and
FirstCom Telephony S.A.

         "Frame relay" means a form of data communications packet switching that
uses smaller packets and requires less error checking than traditional
technologies such as X.25 or SNA. Frame relay is used in wide area networks to
interconnect LANs and computer systems. Frame relay was designed to operate at
higher speeds on modern fiber optic networks.

                                       27
<PAGE>

         "Gateway Switch" means a switch which is used to establish connection
with other carriers.

         "GDP" means the gross domestic product of a country.

         "Incumbent local exchange carrier" means a company which is the
principal local exchange carrier.

         "Indenture" means the Indenture Agreement between the Company and State
Street Bank and Trust Company, as Trustee.

         "Interconnection" means the interconnection of facilities between or
among local exchange carriers, including potential physical collocation of one
carrier's equipment in the other carrier's premises to facilitate such
interconnection.

         "IP (Internet protocol)" means the data ordering standard used by the
Internet to transport information.

         "ISP (Internet service provider)" means those companies which provide
its subscribers with access to the Internet.

         "LAN (local area network)" shall mean the interconnection of computers
for the purpose of sharing files, programs and printers. LANs may include
dedicated computers or file servers that provide a centralized source of shared
files and programs.

         "Last mile" means the last section of a telecommunications path to the
ultimate end-user which may be less than or greater than one mile.

         "Latin America" means Central America, South America and Mexico.

         "LEC (local exchange carrier)" means a company providing local
telephone services.

         "Long distance carriers or Interexchange carriers" means carriers that
provide services between local exchanges on an interstate or intrastate basis. A
long distance carrier may offer services over its own or another carrier's
facilities.

         "Ministry of Transportation and Telecommunications" means Chile's
government body which, through the Undersecretary of Telecommunications, is
responsible for regulating and registering all telecommunications equipment and
services. Its role is similar to that of the Federal Communications Commission
in the United States.

                                       28
<PAGE>

         "Multicarrier Agreement" means the legislation passed by Chile's
Ministry of Telecommunications in 1994 which opens Chile's long distance market
to competition while temporarily limiting the market share in that market which
may be held by the CTC.

         "New Notes" means the Notes which were converted into freely redeemable
notes.

         "Node" means a devices on a network that demand or supply services or
where transmission paths are connected.

         "Notes" and Senior Notes" means the notes consisting of $150.0 million
aggregate principal and 14% interest due October 27, 2007.

         "PBX (Private Branch Exchange)" means a customer owned and operated
switch on customer premises, typically used by large businesses with multiple
telephone lines.

         "POP (Points of Presence)" means locations where a long distance
carrier has installed transmission equipment in a service area that serves as,
or relays calls to, a network switching center of that long distance carrier.

         "PTT (public telephone and telegraph)" means a government or
privately-owned monopoly carrier of telecommunications services or having a
dominant market share.

         "Private line" means a private, dedicated telecommunications connection
between different locations (excluding long distance carriers' POPs).

         "Public switched network" means a traditional public (not dedicated)
LEC networks, that switch calls between different customers.

         "Pyramid" means the Telecoms Markets and Strategies - South America
Report, September 1998, Pyramid Research, The Economist Intelligence Unit, Ltd.

         "Redundancy" means one or more backup systems in case the main system
fails or malfunctions.

         "Right-of-Way" means rights negotiated with the appropriate entity,
such as a utility company or transportation agency, to secure access to poles,
ducts, conduits or subway tunnels, as the case may be, to install the fiber
optic lines.

         "SDH (synchronous digital hierarchy)" means an open standard for
signals used in optical fiber networks. It provides a basic data transport
format that can be used for all types of digital information (voice, video,

                                       29
<PAGE>

data, facsimile and graphics) and is used internationally. The specified base
rate is 51.48 MBPS (called synchronous transport signal level 1, or STS-1), and
specifications exist for data speeds up to 2.4 Gbps.

        "Self healing" means that network traffic is automatically re-routed
when confronted with a failure in its primary route.

         "SNA (systems network architecture)" means a tree structured computer
network architecture, with a mainframe host acting as the network control
center.

         "Switch" means a device that opens or closes circuits or selects the
paths or circuits to be used for transmission of information. Switching is the
process of interconnecting circuits to form a transmission path between users.

         "Switched services" means transportation of switched traffic along
dedicated lines between the local telephone company's central offices and the
long distance carrier's POPs.

         "Telefonica" means Telefonica de Peru, the former Peruvian PTT.

         "Teleport" means a facility capable of transmitting and receiving
satellite signals for other users.

         "WAN (wide area network)" means a data network typically extending a
LAN outside a building, over telephone common carrier lines to link other LAN's
in other buildings.

 ITEM 2.  DESCRIPTION OF PROPERTY

         The Company's corporate headquarters are located at 220 Alhambra
Circle, Suite 910, Coral Gables, Florida. These offices are occupied under
leases that expire in June 2003 and May 2007 at a rent of approximately $9,000
and $25,000 per month, respectively. The Company's offices in Santiago, Chile
are occupied under a lease, which expires in June 2004, at a rent of
approximately $32,000 per month. The Company's offices in Lima, Peru are
occupied under a five-year lease (the "Peru Lease") terminating on November 30,
2003 at a rent of approximately $39,300 per month. The Peru Lease may be
terminated at the option of the Company after the first year. The Company's
offices in Bogota, Colombia are located in a proprietary building. The Company
believes that its current facilities, together with other contiguous rental
space, are adequate to provide for its current needs and anticipated growth.

                                       30
<PAGE>

 ITEM 3.  LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

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

None.

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        The Company's Common Stock is traded on the Nasdaq Small Cap Market
("Nasdaq") (ticker symbol: FCLX). In conjunction with the Company's change of
name from InterAmericas Communications Corporation to FirstCom Corporation, the
Company changed its ticker symbol from ICCA to FCLX during 1998.

         The Company's Common Stock was traded over-the-counter ("OTC") and
quoted on the OTC bulletin board between June 1994 and November 1996. The
Company's Common Stock has been listed and traded on the Nasdaq since November
1996.

         The following table sets forth, for the two most recent fiscal years,
the high and low closing prices of the Company's common stock for the periods
indicated:

                        PERIOD                   HIGH         LOW

                  Fourth Quarter 1998           $2.63        $0.75
                  Third Quarter 1998             2.88         1.00
                  Second Quarter 1998            2.63         1.66
                  First Quarter 1998             2.69         1.66

                  Fourth Quarter 1999          $42.00        $9.38
                  Third Quarter 1999            11.13         7.69
                  Second Quarter 1999            9.13         2.75
                  First Quarter 1999             3.16         2.16

         DIVIDENDS

        The Company has never declared or paid any dividends on the Company's
Common Stock and does not presently intend to pay dividends on its Common Stock
in the foreseeable future. The Company's Board of Directors intends to retain
future earnings, if any, to finance the development and expansion of its
business. In addition, the Indenture relating to the Notes limits, and, for the
foreseeable future, effectively prohibits the ability of the Company to declare
or pay cash dividends.

                                       31

<PAGE>

        NUMBER OF SHAREHOLDERS

         As of February 4, 2000, there were 6,149 holders of record of the
Company's Common Stock.

ITEM     6. SELECTED FINANCIAL AND OTHER OPERATING DATA - (US$000's except share
         and per share data) The following financial information should be read
         in conjunction with

"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and the Consolidated Financial Statements of the Company
and the notes thereto, included elsewhere in this report.
<TABLE>
<CAPTION>
                                                       1999           1998           1997           1996           1995
                                                  ------------------------------------------------------------------------
<S>                                              <C>            <C>            <C>            <C>            <C>
Statement of Operations Data
      Net revenue                                $     38,356   $     18,142   $      1,130   $        652   $        224
      Net loss                                   ($    41,472)  $    (25,322)  $    (15,866)  $     (4,762)  $     (2,873)
      Net loss per share                         ($      1.94)  $      (1.33)  $      (0.95)  $      (0.32)  $      (0.31)
      Weighted average shares outstanding          21,354,012     19,084,300     16,667,719     14,795,660      9,407,000

Balance Sheet Data
      Property, plant & Equipment, net           $     92,469   $     45,901   $      9,348   $      3,956   $      2,885
      Total assets                               $    172,110   $    154,844   $    176,936   $     14,893   $      4,347
      Long-term debt (including capital leases)  $    139,397   $    133,913   $    131,982   $        248   $        210
      Total liabilities                          $    166,078   $    148,670   $    145,009   $        362   $        221
      Shareholder's equity (deficit)             $     (8,700)  $      6,174   $     31,927   $     12,819   $        670
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (US$000's except share and per share data)

         THE INFORMATION CONTAINED IN THIS DOCUMENT CONTAINS "FORWARD-LOOKING
STATEMENTS" THAT REFLECT THE COMPANY'S CURRENT EXPECTATIONS, HOPES, INTENTIONS,
PLANS AND STRATEGIES. THE WORDS OR PHRASES "IS EXPECTED," "WILL CONTINUE,
"ANTICIPATES," "ESTIMATES," "EXPECTS," "PLANS," "INTENDS," OR SIMILAR
EXPRESSIONS IN THIS DOCUMENT ARE INTENDED TO IDENTIFY "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934 AND SECTION 27A OF THE SECURITIES ACT OF 1933, AS ENACTED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THERE CAN BE NO ASURANCE THAT SUCH
FORWARD-LOOKING STATEMENTS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS
THAT COULD CAUSE ACTUAL RESULTS OF THE COMPANY TO DIFFER MATERIALLY FROM THE
EXPECTATIONS THAT MAY BE IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, BUT
ARE NOT LIMITED TO, THE ECONOMIC ENVIRONMENT OF THE LATIN AMERICAN COUNTRIES IN
WHICH THE COMPANY OPERATES, CHANGES IN GOVERNMENTAL REGULATION,

                                       32
<PAGE>

THE COMPANY'S LIQUIDITY AND CAPITAL RESOURCES, COMPETITION, ACTUAL DEMAND FOR
THE COMPANY'S SERVICES AND THE OTHER FACTORS IDENTIFIED IN THIS DOCUMENT. THE
COMPANY DOES NOT UNDERTAKE TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. ALL
STATEMENTS IN THIS DOCUMENT ARE FORWARD-LOOKING STATEMENTS, EXCEPT FOR
HISTORICAL INFORMATION CONTAINED IN THIS DOCUMENT.

         The following discussion and analysis should be read in conjunction
with the Company's consolidated financial statements and the notes thereto
appearing elsewhere in this document.

 OVERVIEW

         FirstCom's objective is to become a leading provider of broadband
communications services mainly to business customers in key Latin American
business centers.

         FirstCom Corporation ("FirstCom" or "Company") provides broadband
communications services primarily to business customers in four major
metropolitan business centers: Santiago, Chile; Lima/Callao, Peru; and Bogota
and Cali, Colombia. FirstCom primarily targets business customers,
communications carriers and other high volume users by offering a wide range of
high bandwidth integrated telecommunications services including data, voice,
video, audio and Internet access. Specific service offerings in each country
vary depending on the current concessions held by FirstCom in the particular
country, as well as local laws and regulations and the infrastructure in each
country.

         Until November 1996, FirstCom was a development stage company whose
activities primarily consisted of the acquisition of licenses, concessions and
rights-of-way in selected Latin American communications markets. Since that
time, FirstCom has focused on the development and operation of high-capacity
fiber optic networks in Latin American business centers.

         FirstCom currently owns and operates fiber optic ATM/IP networks in
Santiago, Chile, Lima/Callao, Peru, and Bogota and Cali, Colombia. ATM/IP is an
information transfer standard that is one of a general class of packet-based
technologies. ATM/IP can be used by many different information systems,
including local area networks, to deliver traffic at varying rates, permitting a
mix of data, voice, video and Internet applications. A summary of key operating
metrics follows:

                                       33
<PAGE>

A SUMMARY OF KEY METRICS AS OF DECEMBER 31, 1999 FOLLOWS (UNAUDITED):
<TABLE>
<CAPTION>
                                                          CHILE       PERU   COLOMBIA   CORPORATE   TOTAL
                                                          -----       ----   --------   ---------   -----
NETWORK INSTALLATION
<S>                                                         <C>       <C>        <C>               <C>
        Route Kilometers                                      276      1,007        715             1,998

        Fiber Kilometers                                    4,388     28,184     14,635            47,207

        ATM Nodes Installed                                     5         23          5                33

        Buildings Wired                                       178        226        687             1,091

        Long Distance Switches                                  3          1         --                 4

        Teleports                                               1          1         --                 2

OPERATING INDICATORS

        Employees                                             265        248        135     16        664

        Ports Sold:
                                    Dedicated Internet        361        360          7               728
                                                  Data        872        373      1,794             3,039

        Customers:
                   Dedicated Internet Access Customers        361        360          7               728

                           Data Transmission Customers        313         51        169               533

                     Dial-Up Internet Access Customers      4,206                                   4,206
</TABLE>

         Through FirstCom's Chilean subsidiaries, FirstCom currently provides
its corporate customers in Santiago with the following broadband communications
services:

/bullet/ high-quality voice and high-speed data communications services on a
         private line basis, LAN to LAN interconnections, dedicated channels for
         access to local information warehouses (e.g. credit bureaus, etc.),
         remote terminal access, PBX to PBX connections, remote printing
         capabilities, local and wide area network design, engineering,
         installation, systems' integration and support services;

/bullet/ domestic and international long distance services, switched and
         dedicated, in part, through FirstCom's own gateway switch and satellite
         earth station, as well as through interconnections with other Chilean
         long distance carriers; and

/bullet/ high-speed Internet access services.

         Through its Peruvian subsidiary, FirstCom currently provides its
corporate customers in Lima and Callao with the following broadband
communications services:

                                       34
<PAGE>

/bullet/ high-quality voice and high-speed data communications services on a
         private line basis, LAN to LAN interconnection and remote terminal
         access;

/bullet/ domestic and international long distance services switched and
         transported through interconnections with Telefonica del Peru;

/bullet/ local voice services switched and transported through Telefonica del
         Peru (service to begin in 2000); and

/bullet/ high-speed Internet access services.

         Through its Colombian operations, FirstCom currently provides its
corporate customers in Bogota and Cali with the following broadband
communications services:

/bullet/ high-quality voice and high-speed data communications services on a
         private line basis, LAN to LAN interconnection and remote terminal
         access;

/bullet/ high-speed Internet access services.

         FirstCom entered the Colombian market in February 1999 with the
acquisition of approximately 76% of Teleductos S.A., now known as FirstCom
Colombia S.A. ("FirstCom Colombia") and has a presence in Bogota and Cali. In
November 1999 FirstCom increased its ownership of FirstCom Colombia to 86%.

RESULTS OF OPERATIONS (Amounts in US$000) YEAR ENDED DECEMBER 31, 1999 COMPARED
TO YEAR ENDED DECEMBER 31, 1998

        REVENUES

         The Company's revenues were $38,356 for the year ended December 31,
1999 as compared to $18,142 for the year ended December 31, 1998. Long distance
revenues increased from $16,445 for the year ended December 31, 1998 to $24,318
for the year ended December 31, 1999. These revenues were generated through the
sale of approximately 113.3 million and 55.9 million minutes for the year ending
December 31, 1999 and 1998, respectively, resulting in an average revenue per
minute of approximately $0.22 and $0.29, respectively. The increased long
distance revenue was driven by the marketing and promotional campaigns that
started in mid-1998 continuing through 1999, and the initiation of long distance
services in Peru. The decrease in the revenue per minute is due to an increased
mix of domestic long distance traffic.

         Consistent with 1998, during 1999 the majority of the Company's
revenues were derived primarily from its operations in Chile. However, as a
result of the acquisitions of FirstCom Internet, FirstCom Colombia and the
completion of the ATM/IP networks in Chile and Peru, long distance revenues
decreased from 91% of total revenues for year ended December 31, 1998 to 63% of
total revenues for the year ended December 31, 1999. The Company expects
revenues to increase over the next few years due to the expansion of its
operations in Peru, Chile and Colombia.

                                       35
<PAGE>

         Internet and data service revenue increased significantly from $1,697
for the year ended December 31, 1998 to $14,038 for the year ended December 31,
1999. This increase was attributable to the acquisition of FirstCom Colombia and
FirstCom Internet in Chile and also to of the initiation of Internet and data
services over the Company's ATM/IP network in Peru and Chile.

         COST OF REVENUES. For the year ended December 31, 1999 cost of revenues
relate principally to long distance services and include access charges paid to
local exchange carriers and transmission payments to other carriers. Cost of
revenues also include payments for rights of way related to the Company's fiber
optic networks and license royalty payments related to telecommunication
services in Peru and Colombia.

         The Company's cost of revenues was $22,005 for the year ended December
31, 1999 as compared to $14,079 for the year ended December 31, 1998. This
increase was primarily attributable to the increased long distance revenue and
proportionate increased cost of providing long distance services. The Company's
gross margin increased from 22% for the year ended December 31, 1998 to 43% for
the year ended December 31, 1999. The increase attributable to a slight decrease
in long distance margins offset by the significant growth in the higher margin
data and Internet services.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses consist principally of salaries, wages and related
liabilities, advertising and marketing costs, professional fees related to
legal, recruiting and accounting, and travel. The Company expects selling,
general and administrative expenses to increase over time as it continues to
expand its operations.

         The Company's selling, general and administrative expenses were $25,698
for the year ended December 31, 1999 as compared to $12,293 for the year ended
December 31, 1998. This increase was primarily attributable to the hiring of
additional personnel related to the growth of the Peruvian and Chilean
operations, the acquisition of FirstCom Colombia and FirstCom Internet and
increased marketing efforts in Chile and Peru. At December 31, 1999 the Company
and its subsidiaries had 664 employees compared to 330 at December 31, 1998.

The significant components of selling, general and administrative expenses were
as follows:

                                      1999                     1998
                              ---------------------  ---------------------
Compensation                               $ 14,100                $ 5,775
Professional Fees                             1,367                  1,753
Marketing                                     3,661                  1,664
Bad Debt                                        961                    943
Travel                                          509                    288
Other                                         5,100                  1,870

                                       36
<PAGE>

         NON CASH COMPENSATION AND CONSULTING. The expense for the years ended
December 31,1999 and 1998 represents the fair value of options granted to
consultants for services performed during 1998 and 1999. The consultants
services were performed beginning in October 1998 through 1999, thus accounting
for the increase in expense from $175 for the year ended December 31, 1998 to
$353 for the year ended December 31, 1999.

         MERGER COSTS. Merger costs of $1,008 for the year ended December 31,
1999 represent incremental professional fees paid in connection with the pending
merger transaction among the Company and AT&T Latin America.

         DEPRECIATION AND AMORTIZATION. The Company depreciates its
telecommunications networks and intangible assets on a straight line basis over
their estimated useful lives. The Company believes that depreciation and
amortization expense will continue to increase with the expansion of its
operations.

         The Company's depreciation and amortization was $10,211 for the year
ended December 31, 1999 as compared to $2,237 for the year ended December 31,
1998. This increase was primarily attributable to increased investment in the
Company's telecommunications networks.

         INTEREST EXPENSE. The Company currently incurs interest expense on the
outstanding Notes (as defined below), bank debt, promissory notes, and vendor
financing. Interest expense has been reduced for amounts capitalized related to
the Company's construction of its fiber optic networks. Interest costs reported
with respect to the Company's Notes include amortization of (i) deferred
financing costs and (ii) original issue discount related to detachable warrants.

         The Company's interest expense was $22,552 for the year ended December
31, 1999 as compared to $19,578 for the year ended December 31, 1998.
Capitalization of interest costs in connection with the Company's construction
of its fiber optic networks decreased from $2,955 for the year ended December
31, 1998 to $1,532 for the year ended December 31, 1999 and were offset by
increased interest expense related to bank debt and promissory notes resulting
from the acquisition of FirstCom Colombia.

         INTEREST INCOME AND OTHER. The Company currently earns interest income
on cash and cash equivalents, restricted cash, and restricted investments.

         The Company's interest income and other was $2,202 for the year ended
December 31, 1999 as compared to $4,898 for the year ended December 31, 1998.
This decrease was primarily attributable to a reduction in restricted cash and
investments.

                                       37
<PAGE>

         INCOME TAXES. The Company is subject to federal, state and foreign
income taxes and with the exception of its Colombian operations, has incurred no
liability for such taxes due to net operating losses incurred. Under certain
circumstances, these net operating losses could be used to offset future taxable
income. The Company's net deferred tax assets, which result primarily from the
future benefit of these net operating losses, are fully offset by a valuation
allowance for the same amount because of the uncertainty surrounding the future
realization of these net operating loss carryforwards. However, as the Company
expands its fiber optic networks in Chile, Peru and Colombia, the Company
expects to generate taxable income. Certain tax benefits could expire prior to
the time the Company generates taxable income.

         The Company's income tax expense for the year ended December 31, 1999
was $170. This expense related to the Company's operations in Colombia.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

During December 1997, The Company acquired FirstCom Long Distance S.A. (formerly
Iusatel Chile S.A.). The Company's comparative operating results during 1998
were significantly affected by this acquisition as discussed in more detail
below.

         REVENUES. During 1998 the Company's revenues were derived primarily
from its operations in Chile. During 1998 FirstCom Chile contributed
approximately 99% of total revenues. The Company expects revenues to increase
over the next few years due to (i) the completion of the Company's ATM fiber
optic networks and the related expansion of its operations in Peru and Chile and
(ii) the acquisition of FirstCom Colombia.

         The Company's revenues were $18,142 for the year ended December 31,
1998 compared to $1,130 for the year ended December 31, 1997. FirstCom Chile
generated long distance revenues during 1998 of approximately $16,445 through
the sale of approximately 55.9 million minutes, resulting in average revenue per
minute of approximately $0.29. All of the long distance revenues were generated
by FirstCom Long Distance S.A. which was acquired by the Company in December
1997. These long distance revenues were generated from (1) pick per call and
contracted customers and (2) long distance traffic exchange with other carriers.
FirstCom Chile's data revenue during 1998 of $1,697 consisted primarily of
equipment sales and system integration services. As a result of the October 1998
acquisition of FirstCom Internet (formerly known as RDC), the Company earned
approximately $670 of internet services revenue during the fourth quarter of
1998.

         COST OF REVENUES. The Company's cost of revenues in 1998 were derived
primarily from its operations in Chile. Costs of revenues include both the cost
of services provided and the cost of equipment sold. During 1998 cost of
revenues related principally to FirstCom Chile's long distance services and
included access charges paid to local exchange carriers and transmission
payments to other carriers. Costs of revenues also include payments for rights
of way related to the Company's fiber optic networks.

         The Company's cost of revenues was $14,079 for the year ended December
31, 1998 as compared to $1,203 for the year ended December 31,

                                       38
<PAGE>

1997. This increase was primarily attributable to the increase in long distance
revenue.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company expects
selling, general and administrative expenses to increase over time as it
continues to expand its operations.

         The Company's selling, general and administrative expenses were $12,293
for the year ended December 31, 1998 as compared to $4,678 for the year ended
December 31, 1997. This increase was primarily attributable to FirstCom Chile
and the hiring of additional personnel related to the anticipated growth of the
Peruvian and Chilean operations. At December 31, 1998 the Company had 330
employees compared to 130 at December 31, 1997. The significant components of
selling, general and administrative expenses were as follows:

                                      1998                     1997
                              ---------------------  ---------------------
Compensation                               $  5,775                $ 2,775
Professional Fees                             1,753                    728
Marketing                                     1,664                     --
Bad Debt                                        943                     --
Travel                                          288                    254
Other                                         1,870                    921

        NON CASH COMPENSATION AND CONSULTING. This expense of $4,640 during
September 1997 was directly attributable to the intrinsic value of shares of the
Company's common stock and stock options issued to certain officers and former
directors of the Company. There were no such transactions or expenses during
1998. The $175 of expense recognized during 1998 related to the fair market
value of stock options granted to a consultant for services performed during
1998.

        DEPRECIATION AND AMORTIZATION. The Company depreciated its
telecommunications networks and intangible assets on a straight line basis over
their estimated useful lives. The Company believes that depreciation and
amortization expense will continue to increase with the expansion of its
operations.

        The Company's depreciation and amortization was $2,237 for the year
ended December 31, 1998 as compared to $1,201 for the year ended December 31,
1997. This increase was primarily attributable to certain assets purchased in
the acquisition of FirstCom Long Distance.

        INTEREST EXPENSE. The Company incurred interest expense on the
outstanding Notes, capital leases and vendor financing. Interest expense has
been reduced for amounts capitalized related to the Company's construction of
its fiber optic networks. Interest costs reported with respect to the Company's

                                       39
<PAGE>

Notes include amortization of (i) deferred financing costs and (ii) original
issue discount related to detachable warrants.

        The Company's interest expense was $19,578 for the year ended December
31, 1998 as compared to $6,521 for the year ended December 31, 1997. This
increase was due to the Notes that were issued on October 21, 1997. Of the total
interest costs incurred by the Company for the year ended December 31, 1998 and
1997, $2,955 and $712, respectively, of such costs were capitalized in
connection with the Company's construction of its fiber optic Network.

         INTEREST INCOME AND OTHER. The Company's interest income and other was
$4,898 for the year ended December 31, 1998 as compared to $1,247 for the year
ended December 31, 1997. This increase was primarily attributable to interest
income earned on the Company's restricted cash and investments.

        INCOME TAXES. The Company is subject to federal, state and foreign
income taxes but has incurred no liability for such taxes in 1998 or 1997 due to
net operating losses incurred. Under certain circumstances, these net operating
losses could be used to offset future taxable income. The Company's net deferred
tax assets, which result primarily from the future benefit of these net
operating losses, are fully offset by a valuation allowance for the same amount
because of the uncertainty surrounding the future realization of these net
operating loss carryforwards. Certain tax benefits could expire prior to the
time the Company generates taxable income.

LIQUIDITY AND CAPITAL RESOURCES

         On October 27, 1997, the Company consummated a private offering (the
"Senior Note Offering") of 150,000 Units (the "Units") consisting of $150,000
aggregate principal amount of 14% Notes due October 27, 2007 (the "Notes") and
5,250,000 Unit Warrants to purchase 5,250,000 shares of common stock of the
Company at an exercise price of $4.40 per share. In addition, UBS Securities
LLC, the initial purchaser of the Units in the Senior Note Offering, was granted
2,250,000 warrants to acquire 2,250,000 shares of common stock of the Company at
an exercise price of $4.40 per share.

         Approximately $57,000 of the proceeds were invested in an escrow fund
(referred to herein on the Company's balance sheet as "Restricted Investments")
for payment of interest on the Notes through October 27, 2000. Under certain
circumstances, Restricted Investments may be used for repayment of principal of
the Notes. Restricted investments were reduced by $10,500 on each of April 27
and October 27 during 1998 and 1999 to pay interest on the Notes. Approximately
$62,000 of the proceeds were deposited in an account controlled by a trustee
(referred to on the Company's balance sheet as "Restricted Cash") for payment of
Permitted Expenditures, as defined in the Indenture Agreement between the
Company and State Street Bank, as Trustee (the "Indenture"). As of

                                       40
<PAGE>

December 31, 1999 the Company had invested approximately $62,000 of the
Restricted Cash into its telecommunications networks and operations in Peru,
Chile and Colombia.

         The ability of the Company to make scheduled payments with respect to
its indebtedness, including interest on the Notes after October 27, 2000, will
depend upon, among other things, (i) its ability to implement its business plan,
and to expand its operations and to successfully develop its customer base in
its target markets, (ii) the ability of the Company's subsidiaries to remit cash
to the Company in a timely manner and (iii) the future operating performance of
the Company and its subsidiaries. Each of these factors is, to a large extent,
subject to economic, financial, competitive, regulatory and other factors, many
of which are beyond the Company's control. The Company expects that it will
continue to generate cash losses for the foreseeable future. The Company has
deposited cash in escrow funds representing interest payments with respect to
the Notes through October 2000. However, no assurance can be given that the
Company will be successful in developing and maintaining a level of cash flow
from operations sufficient to permit it to pay the principal of, and the
interest on the Notes after such time, or with respect to its other
indebtedness. If the Company is unable to generate sufficient cash flow from
operations to service its indebtedness, including the Notes, it may have to
modify its growth plans, restructure or refinance its indebtedness or seek
additional capital. There can be no assurance that (i) any of these strategies
can be effected on satisfactory terms, if at all, in light of the Company's high
leverage or (ii) any such strategy would yield sufficient proceeds to service
the Company's indebtedness, including the Notes. Any failure by the Company to
satisfy its obligations with respect to the Senior Notes at maturity or prior
thereto would constitute a default under the indenture and could cause a default
under other agreements governing current or future indebtedness of the Company.

         Substantially all of the Company's assets are held by its subsidiaries
and substantially all of the Company's sales are derived from operations of such
subsidiaries. Future acquisitions may be made through present or future
subsidiaries of the Company. Accordingly, the Company's ability to pay the
principal of, and interest and liquidated damages, if any, when due, on the
Notes is dependent upon the earnings of its subsidiaries and the distribution of
sufficient funds from its subsidiaries. The Company's subsidiaries will have no
obligation, contingent or otherwise, to make funds available to the Company for
payment of the principal of, and interest and liquidated damages on, if any, the
Notes. In addition, the ability of the Company's subsidiaries to make such funds
available to the Company may be restricted by the terms of such subsidiaries'
current and future indebtedness, the availability of such funds and the
applicable laws of the jurisdictions under which such subsidiaries are
organized. Furthermore, the Company's subsidiaries will be permitted under the
terms of the Indenture to incur indebtedness that may severely restrict or
prohibit the making of distributions, the payment of dividends or the making of
loans by such subsidiaries to the Company. The failure of the Company's
subsidiaries to pay dividends or otherwise make funds available to the Company
could have a material adverse effect upon

                                       41
<PAGE>

the Company's ability to satisfy its debt service requirements including its
ability to make payments on the Notes.

         On November 11, 1998 a subsidiary of the Company entered into a
financing arrangement (the "First Vendor Financing") with one of the Company's
significant equipment vendors. The terms of the First Vendor Financing are as
follows: (i) maximum amount available $10,000 (ii) interest rate of LIBOR plus
5.5%, (iii) the Company may draw on the facility until December 31, 2000, (iv)
draws under the facility shall be repaid in 20 consecutive quarterly principal
and interest payments, (v) the First Vendor Financing is collateralized by the
equipment being financed. On July 28, 1999 the Company increased the maximum
amount available under the First Vendor Financing from $10,000 to $29,500. As of
December 31, 1999 the Company had approximately $4,800 outstanding under the
First Vendor Financing.

         On December 24, 1998 a subsidiary of the Company entered into a
financing arrangement (the "Second Vendor Finanacing") with another one of the
Company's significant equipment vendors. The terms of the Second Vendor
Financing are as follows: (i) maximum amount available $10,000 (ii) interest
rate of Libor plus 4%, (iii) the Company may draw on the facility until December
31, 2000, (iv) draws under the facility shall be repaid in 20 consecutive
quarterly principal and interest payments beginning on March 31, 2001, (v)
interest only quarterly payments shall be made for each draw from the respective
date of funding through December 31, 2000, (vi) the Second Vendor Financing will
be collateralized by the equipment being financed. As of December 31, 1999 the
Company had no amounts outstanding under the Second Vendor Financing.

         On June 30, 1999, the Company issued 1,250,000 shares of 15%
Convertible Redeemable Preferred Stock (the "Preferred Stock") for an aggregate
amount of $10,000. The Preferred Stock is convertible at any time at the option
of the holders into the Company's common stock on a one for one basis, subject
to adjustment. The 15% dividend is payable in kind until June 30, 2001, after
which it will be payable in cash. Beginning June 30, 2001, if the closing price
of the Company's common stock ,as quoted on the Nasdaq Stock Market, exceeds $15
per share for 30 consecutive trading days, the Preferred Stock is automatically
converted into the Company's common stock. The holders of the Preferred Stock
also have certain preemptive, redemption, anti-dilution, tag along and
registration rights.

         On August 4, 1999, the Company converted $5,000 of outstanding
promissory notes into 500,000 shares of the Company's common stock.

         During December 1999, one of the Company's Chilean subsidiaries
obtained a $1,400 working capital revolving credit facility (the "Working
Capital Facility") from a local bank. The Working Capital Facility is
denominated in UF's ( a published inflation adjusted unit used in financing
transactions in Chile)and bears interest at the prevailing

                                       42
<PAGE>

market rates at the time of each draw down. As of December 31, 1999, there were
no amounts outstanding under the Working Capital Facility.

         As a result of the October 1999 sale of 800,000 shares of the Company's
common stock to Patricio E. Northland during January 2000 the Company received
related proceeds of approximately $8,600.

         The Company intends to continue to make significant capital
expenditures during the next several years in connection with the further
expansion of its networks in Peru, Chile and Colombia and the acquisition of new
customer accounts (for which we install our equipment on customer premises). The
Company intends to meet its capital requirements during 2000 from:

         -- Cash reserves totaling approximately $13.6 million at December 31,
            1999,

         -- Available credit under existing vendor facilities totaling
            approximately $34.6 million at December 31, 1999.

         The Company's budget contemplates that it will need approximately $90
million during 2000 and approximately $78 million during 2001 for capital
expenditures. The Company's capital budget reflects a more aggressive deployment
of its networks in anticipation of the completion of the pending merger with
AT&T Latin America. However, the actual timing of the expenditures has not been
finalized and is dependent on a number of factors, including the availability of
adequate financing. The Company is currently negotiating a $10 million bank loan
with an international bank to fund capital expenditures related to its Peruvian
subsidiary. In addition, at December 31, 1999 the Company had approximately 9.8
million options and warrants that were exercisable at an weighted average
exercise price of $3.54, which was significantly below the Company's share value
on that date. If all such options/warrants were exercised the total cash
proceeds to the Company would approximate $34.7 million. Although, some of these
options and warrants may be in the money, holders are not obligated to exercise
and the Company cannot require the holders to exercise their options and
warrants. As such, the Company has no control over the timing of proceeds from
the exercise of options and warrants.

         Currently, the Company does not have any short-term commitments beyond
those that have been disclosed as liabilities in its financial statements. We do
not have any long-term commitments to acquire capital expenditures. If the
Company is unable to obtain additional financing, which is greatly dependent on
its ability to complete its merger with AT&T Latin America, the Company will
have to significantly reduce its capital budgets. Such an action will
significantly decrease its planned growth and market penetration. As a result,
the failure to complete the merger with AT&T Latin America could have a material
adverse effect on the price of the Company's common stock.

         To accelerate its growth rate and to finance the launch or build-out of
additional markets, the Company will consider obtaining financing from various
sources, including additional vendor financing provided by equipment suppliers,
project financing from commercial banks and international agencies, bank lines
of credit and the sale of equity and debt securities. To the extent that the
Company or any of its subsidiaries issues debt, its leverage and debt service
obligations will increase. There can be no assurance that the Company will be
able to raise such capital on satisfactory terms, if at all. In addition, the
Indenture related to the Notes limits the ability of the Company and its
subsidiaries to incur additional indebtedness.

         As part of its business strategy, the Company intends to continue to
evaluate potential acquisitions, joint ventures and strategic alliances in
companies that own existing networks or companies that provide services that
complement the Company's existing businesses. The Company continues to consider
potential acquisitions from time to time. New sources of capital such as credit
facilities and other borrowings, and additional debt and equity issuances, will
be necessary to fund any material acquisitions and similar strategic
investments.

         A summary of the Company's value of common stock issued and common
stock and common stock equivalents outstanding as of December 31, 1999 and the
pro forma effect on the Company's equity capitalization upon the exercise of all
common stock equivalents outstanding at December 31, 1999 follows:

                                       43
<PAGE>
<TABLE>
<CAPTION>

                                                                                      Other
                                                Options held by                      Options         Incremental
                                  Shares          Management      Senior Note          and               as
                              Outstanding at
                              December 31, 1999  and Directors    Warrants(5)       Warrants(6)       Adjusted(7)
                                                     (4)
                              -----------------------------------------------------------------------------------
<S>                            <C>                <C>               <C>               <C>              <C>
 Shares of Common Stock        26,858,526         9,233,500         3,348,500         1,366,271        13,948,271
 Value of Common Stock
   Issued (1) (2)

   Par Value                  $    26,859       $     9,234       $     3,349       $     1,366       $    13,949
   Additional Paid in         $68,475,629       $51,101,902       $14,730,052       $ 3,412,642       $69,244,596
Capital
                              -----------------------------------------------------------------------------------
                              $68,502,488       $51,111,136       $14,733,401       $ 3,414,008       $69,258,545
                              ===================================================================================

Per Share (3)                 $      2.55       $      5.54       $      4.40       $      2.50       $      4.97
</TABLE>

(1)  The closing price of the Common Stock on December 31, 1999 was $36.75. The
     exercise of stock options and warrants as shown above assumes full vesting
     of all stock options and warrants.

(2)  Value of Common Stock represents the proceeds from the Company's issuance
     of Common Stock and Common Stock equivalents, and is comprised of par value
     and additional paid in capital, as stated in the Company's consolidated
     historical financial statements.

(3)  Represents the amount in (2) per share of Common Stock.

(4)  Represents the increase to the Company's value of Common Stock issued upon
     the exercise of all stock options (vested and not vested) held by the
     Company's management and directors and the Company's receipt of the
     exercise price as of December 31, 1999.

(5)  Represents the increase to the Company's value of Common Stock issued upon
     the exercise of all warrants (vested and not vested) that were issued in
     connection with the Notes and are outstanding and the Company's receipt of
     the exercise price as of December 31, 1999.

(6)  Represents the increase to the Company's value of Common Stock issued upon
     the exercise of all other stock options and warrants (vested and not
     vested) outstanding and the Company's receipt of the exercise price as of
     December 31, 1999.

(7)  Represents the combined increase to the Company's value of Common Stock
     issued of (4), (5) and (6) above.

        Net cash used in operating activities for the year ended December 31,
1999 was $31,941. This amount represented cash used to fund the Company's net
loss for the period and increased accounts receivable. The increase in accounts
receivable was driven by increased revenue during 1999.

                                       44
<PAGE>

         Net cash used in investing activities for the year ended December 31,
1999 was $15,948. This amount primarily represented the Company's continued
build-out of its fiber-optic network in Peru and the February 1999 acquisition
of FirstCom Colombia offset by the use of restricted cash to fund such items.
The growth of the Company's fiber networks was evidenced as route kilometers and
buildings wired increased from approximately 817 km and 22 buildings as of
December 31, 1998 to approximately 1,757km and 1,091 buildings as of December
31, 1999.

         Net cash provided by financing activities for the year ended December
31, 1999 was $51,983. Other than the use of restricted investments to make
interest payments on the Notes the Company received significant funding during
1999 from (a) the exercise of stock options and warrants (b) the issuance of
1,250,000 shares of preferred stock at $8.00 per share and (c) vendor financing.
As of December 31, 1999 the Company had approximately $34,700 available under
credit facilities with equipment vendors.

IMPACT OF YEAR 2000

         In the prior year, the Company discussed the nature and progress of its
plans to become Year 2000 ready. In late 1999, the Company completed its
remediation and testing of systems. As a result of those planning and
implementation efforts, the Company experienced no significant disruptions in
mission critical information technology and non-information technology systems
and believes those systems successfully responded to the Year 2000 date change.
The Company expensed approximately $63 during 1999 in connection with
remediating its systems. The Company is not aware of any material problems
resulting from Year 2000 issues, either with its products, its internal systems,
or the products and services of third parties. The Company will continue to
monitor its mission critical computer applications and those of its suppliers
and vendors throughout the year.

INFLATION AND EXCHANGE RATES

         Inflation and exchange rate variations may have substantial effects on
the Company's results of operations and financial condition. Generally, the
effects of inflation in many Latin American countries, including Chile, Peru and
Colombia, have been offset in part by a devaluation of the local countries'
currencies relative to the U.S. dollar. Nevertheless, the devaluation of each
country's currency may have an adverse effect on the Company.

         A substantial portion of the Company's purchases of capital equipment
and interest on the Notes is payable in U.S. dollars. To date, the Company has
not had significant foreign currency exposure with third parties and generally
intends to be paid for its services in U.S. dollars or in local currencies with

                                       45
<PAGE>

a pricing adjustment that is structured to protect the Company against the
risk of fluctuations in exchange rates. As a result, the Company has not entered
into foreign currency hedging transactions. In the future, if third party
foreign currency exposure increases, the Company may enter into hedging
transactions in order to mitigate any related financial exposure. However, a
portion of sales to customers of the Company will be denominated in local
currencies, and substantial or continued devaluation in such currencies relative
to the U.S. dollar could have a negative effect on the ability of customers of
the Company to absorb the costs of devaluation. This could result in the
Company's customers seeking to renegotiate their contracts with the Company or,
failing satisfactory renegotiation, defaulting on such contracts.

         In addition, from time to time, Latin American countries have
experienced shortages in foreign currency reserves and restrictions on the
ability to expatriate local earnings and convert local currencies into U.S.
dollars. Also, currency devaluations in one country may have adverse effects in
another country, as in late 1994 and 1995, when several Latin American countries
were adversely impacted by the devaluation of the Mexican peso. Any devaluation
of local currencies in the country where the Company operates, or restrictions
on the expatriation of earnings or capital from such countries, could have a
material adverse effect on the business, results of operations and financial
condition of the Company.

NET OPERATING LOSS CARRYFORWARDS

         At December 31, 1999 the Company had net tax operating loss
carryforwards of approximately $59,000 for U.S. income tax purposes and
approximately $46,900 for foreign income tax purposes. These carryforwards are
available to offset future taxable income, if any, and expire for U.S. income
tax purposes in the years 2007 through 2019. The foreign net operating loss
carryforwards related (1) to Peru of $15,300 expire in the years 2000 through
2003 and (2) to Chile of $31,500 do not expire.

EFFECTS OF NEW ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES (the "Statement"). The Company expects to adopt the Statement
effective January 1, 2000. The Statement will require the recognition of all
derivatives on the Company's consolidated balance sheet at fair value. The
Company does not anticipate that the adoption of this Statement will have a
significant effect on its results of operations or financial position.

                                       46
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                                                       PAGE
FirstCom Corporation

Report of Independent Certified Public Accountants................       F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998 ......      F-4

Consolidated Statements of Operations for the years ended
  December 31, 1999, 1998, and 1997................................      F-5

Consolidated Statements of Stockholder's Equity (Deficit) for the years ended
   December 31, 1999, 1998 and 1997 ...............................      F-6

Consolidated Statements of Cash Flows for the years ended
   December 31, 1999, 1998 and 1997 ...............................      F-7

Notes to Consolidated Financial Statements ........................      F-8

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

        None

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS

                        EXECUTIVE OFFICERS AND DIRECTORS

         The executive officers and directors of the Registrant are as follows
(as of February 4, 2000):

<TABLE>
<CAPTION>
                                      POSITION WITH
NAME                         AGE      THE COMPANY                                DIRECTOR SINCE
-------------------------  --------   -------------------------------------    ------------------
<S>                           <C>     <C>                                      <C>
Patricio E. Northland         44      Chairman of the Board of Directors,      November1996
                                      President and Chief Executive Officer

David Kleinman                64      Director                                 May 1997

George Cargill                58      Director                                 July 1994

Andrew Hulsh                  39      Director                                 December 1997

Carlos Fernandez              43      CEO-Firstcom Chile                            -

Jose Gandullia                55      CEO-Firstcom Peru                             -
</TABLE>

PATRICIO E. NORTHLAND has over sixteen years of experience as an international
communications executive and entrepreneur. Mr. Northland has been chairman of
the

                                       47
<PAGE>

board of directors, president and chief executive officer of FirstCom since
November 1996. Born in Chile, Mr. Northland is a U.S. citizen. In 1991, Mr.
Northland founded AmericaTel Corporation, a Miami-based international
communications carrier providing satellite-based voice, data and fax
communications services to corporate customers throughout Latin America. Prior
to his involvement with AmericaTel, Mr. Northland held key management positions
with PanamSat and IntelSat. In 1996, Mr. Northland sold his interest in
AmericaTel to Entel. Mr. Northland holds engineering degrees from the University
of Chile, a master's degree in communications from George Washington University,
and a master's degree in business administration from the University of Chicago.
Mr. Patricio Northland is the brother of Mr. Marco Northland.

         DAVID C. KLEINMAN has been a Director of the Company since May 1997.
Mr. Kleinman is currently an Adjunct Professor of Strategic Management at the
Graduate School of Business of The University of Chicago where he has taught
since 1971. Mr. Kleinman serves as a member of the Board of Directors of Irex
Corporation, which trades its stock in the over-the-counter market. Mr. Kleinman
is also a member of the Board of Directors of the Acorn Fund, the Acorn
International Fund, the Acorn USA Fund, Acorn Select Twenty Fund and Acorn
Foreign Forty Fund which are registered under the Investment Company Act of
1940. Additionally, Mr. Kleinman serves as a member of the Board of Directors of
Sonic Foundry which is listed on the American Stock Exchange.

         GEORGE A. CARGILL has been a Director of the Company since July 1994.
Mr. Cargill has been the President and owner of Telectronic S.A., a major
Chilean systems integrator and the Northern Telecom equipment distributor in
Chile since 1976. Prior thereto, Mr. Cargill spent seven years with CTC as a
network engineer and manager of quality control.

         ANDREW HULSH has been a Director of the Company since December 1997.
Mr. Hulsh has been a partner with the law firm of Baker & McKenzie since January
1997. For more than five years prior thereto, Mr. Hulsh was an attorney with the
law firm of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., most
recently as a shareholder.

         CARLOS FERNANDEZ has been the CEO of FirstCom Chile since March 1998.
Mr. Fernandez' management experience spans more than 17 years performing
multiple executive positions at IBM Chile including Director of IBM Chile,
Corporate and Business Affairs Manager, Commercial Manager of Corporate
Accounts, Latin America Programs Manager, Marketing Manager. Carlos Fernandez
earned his degree in Mechanical Engineering from the Universidad Tecnica
Federico Santa Maria in Santiago, Chile.

         JOSE GANDULLIA joined FirstCom Peru in October 1998 and is currently
their CEO. Mr. Gandullia brings to FirstCom Peru 20 years of experience in the
Americas. He has held positions in the U.S., Venezuela, Mexico and Central
America. He has worked in companies such as ITT Sheraton, Arthur Andersen & Co.
and Int'l Petroleum Company. Mr. Gandullia, a native Peruvian, holds a Bachelor
of Arts degree in Accounting from the Catholic University in Lima, Peru where he
also taught courses in Financial and Administration Matters.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10 percent of the Company's Common Stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten percent shareholders are
required by regulations promulgated by the SEC to furnish the Company with
copies of all Section 16(a) forms that they file with the SEC.

                                       48
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

         The following table sets forth certain information regarding the annual
compensation earned by the Chief Executive Officer of the Company, and the other
most highly compensated executive officers of the Company during 1999 (such
persons are hereinafter referred to as the "Named Executive Officers").

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
                                 Annual Compensation                        Long-Term Compensation
                                                             Other       Restricted      Securities
                                                             Annual         Stock        Underlying
          Name and                                        Compensation     Awards         Options
                                                               (6)
   Principal Position(s)      Year   Salary ($)  Bonus ($)     ($)           ($)             (#)
<S>                            <C>   <C>        <C>          <C>             <C>             <C>
Patricio E. Northland,         1999  412,500    884,000      474,400                        2,200,000
President & CEO
Chairman of the Board          1998  375,000    758,580                                       333,333
President and CEO (2)          1997  300,000    630,000                                     1,614,000

Douglas G. Geib II             1999  281,250    450,000      197,680                          100,000
Executive Vice President       1998  266,666    275,000                                       166,667
and Chief Financial Officer    1997  166,667    170,000                                     1,036,000
(3)

Carlos Fernandez Calatayud     1999  207,139    117,500                                             -
CEO, FirstCom Chile (4)        1998  170,000     85,000                                       130,000

Jose Gandullia                 1999  217,500    101,250                                        75,000
CEO, FirstCom Peru (5)         1998   35,000                                                   50,000

Marco A. Northland
Vice President, Product
Marketing and Business
Development (7)                1999  183,333     91,667                                       200,000
</TABLE>

------------------
(1) Perquisites to each officer did not exceed the lesser of $50,000 or 10% of
the total salary and bonus for any officer.

(2) Mr. P. Northland commenced employment with the Company on November 23, 1996.

(3) Effective January 31, 2000, Mr. Geib resigned from the Company.

(4) Mr. Fernandez Calatayud commenced employment with the Company on March 28,
1998, as the CEO of the Company's Chilean operations.

(5) Mr. Jose Gandullia commenced employment with the Company on October 8, 1998
as the CFO and is currently the CEO of the Company's Peruvian operations.

(6) Represents compensation related to the forgiveness of shareholders loans.

                                       49
<PAGE>

(7) Mr. Marco Northland commenced employment with the Company on February 1,
1999 as Vice President, Product Development. Mr. Marco Northland is the brother
of Mr. Patricio Northland.

         The following table sets forth certain information concerning options
granted in 1999 to the Company's Named Executive Officers. The Company has no
outstanding stock appreciation rights. None of the Named Executive Officers
exercised options during 1999.

<TABLE>
<CAPTION>

OPTIONS GRANTS IN THE LAST FISCAL YEAR
                                                                             Potential Realized
                        Number of           % of                              Value at Assumed
                        Securities      Total Options                         Annual Rates of
                        Underlying  Granted to  Exercise                      Stock Appreciation
                         Options     Employees   Price     Expiration         For Option Term
        Name           Granted (#)   In Fiscal Per Share      Date          5%($)         10%($)
                                       Year     ($/SH)
-----------------------------------------------------------------------------------------------------
<S>                        <C>           <C>      <C>          <C>         <C>           <C>
Patricio Northland         2,200,000     56.2%    $10.70       10/31/09    $14,804,180   $37,516,698
Douglas Geib                 100,000      2.6%    $10.70       10/31/09       $672,917    $1,705,304
Carlos Fernandez                  --        --        --             --             --            --
Jose Gandullia                75,000     1.90%     $9.55(1)     various(2)   $ 197,956     $ 437,430
Marco A. Northland           200,000      5.1%     $2.30         2/1/09       $289,292      $733,122

<FN>
NOTES

(1) Weighted average of options granted of $50,000 at $9.49 and $25,000 at $9.68.
(2) Expiration dates are 8/5/04 and 10/8/04
</FN>
</TABLE>

         The following table sets forth information with respect to the
Company's Named Executive Officers concerning the exercise of options during
1999 and unexercised options held as of the end of 1999.

<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

                                                                                  Value of
                                                  Number of Securitie s          Unexercised
                                                       Underlying               in-the-money
                                                   Unexercised Options           options at
                          Shares                      At FY-End (#)              FY-end($)
                         Acquired        Value          Exercisable/             Exercisable/
         Name         On Exercise(#)  Realized($)     Unexercisable             Unexercisable
----------------------------------------------------------------------------------------------------
<S>                              <C>          <C>   <C>                      <C>
Patricio Northland               --           --    2,836,222 / 2,311,111    $94,886,003 / $61,235,552
Douglas Geib                     --           --    1,147,111 / 155,556      $38,997,652 / $4,567,793
Carlos Fernandez                 --           --        32,500 / 97,500       $1,130,750 / $3,392,250
Jose Gandullia                   --           --       12,500 / 112,500         $443,500 / $3,370,250
Marco A. Northland               --           --         --/200,000                   -- / $6,890,000
</TABLE>

STOCK OPTIONS

         As of February 4, 2000 the Company had outstanding options to purchase
 10,343,500 shares of Common Stock.

                                       50
<PAGE>

      LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION

         The Company's Articles of Incorporation and By-laws contain certain
provisions that eliminate the liability of its directors and officers to the
fullest extent permitted by the Texas Business Corporation Act, except that they
do not eliminate liability for: (i) any breach of the duty of loyalty to the
Company or its shareholders; (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) an act or
omission for which the liability of a director is expressly provided by an
applicable statute; or (iv) any transaction from which the director derived an
improper personal benefit. The Texas Business Corporation Act provides that
Texas corporations may indemnify any director, officer or employee made or
threatened to be made a party to a proceeding, by reason of the former or
present official capacity of such person, if such person (i) conducted himself
in good faith and (ii) reasonably believed that his conduct was in the
corporation's best interests or, in the case of any criminal proceeding, that
his conduct was not unlawful and opposed to the corporation's best interests.
The indemnification provision does not permit indemnification of officers,
directors and employees (i) when such persons are found liable to the
corporation or (ii) for any transaction from which such persons derive improper
personal benefits. The foregoing provisions may reduce the likelihood of
derivative litigation against directors, officers and employees of the Company
and may discourage or deter shareholders or management from bringing a lawsuit
against directors and officers for breaches of their fiduciary duties, even
though such an action, if successful, might otherwise have benefited the Company
and its shareholders.

         The Company has entered into an indemnification agreement with each
director (an "Indemnitee"). Pursuant to the indemnification agreement, the
Company will indemnify an Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by the
agreement, the Company's Articles of Incorporation and By-laws, or statute. In
addition, the Company will indemnify each Indemnitee against any and all
expenses incurred in connection with claims relating to the fact that such
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company or any subsidiary of the Company, and the Company will advance all such
expenses. The Company maintains directors' and officers' liability insurance.

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and therefore unenforceable.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  SECURITY OWNERSHIP

         The following table sets forth, as of February 4, 2000, information
with respect to the beneficial ownership of the Company's Common Stock by (i)
each director of the Company, (ii) the Named Executive Officers, (iii) the
beneficial

                                       51
<PAGE>

owners of more than 5% of the outstanding Common Stock and (iv) all directors
and executive officers of the Company, as a group.

                                                  AMOUNT AND        PERCENTAGE
                                                   NATURE OF            OF
                                                  BENEFICIAL       OUTSTANDING
 NAME AND ADDRESS                                OWNERSHIP (1)      SHARES (2)
-------------------------------------------------------------------------------
Patricio Northland (3)                                4,236,222           10.9%

George Cargill (4)                                    2,200,000            5.6%

David Kleinman (5)                                      240,000               *

Andrew Hulsh (6)                                        250,000               *

Carlos Fernandez (7)                                     32,500               *

Jose Gandullia (8)                                       12,500               *

Marco A. Northland(9)                                   155,682               *

SFG-N, Inc., a wholly-owned subsidiary
of General Electric Capital Corporation(10)           1,345,507            3.5%

All Directors and Executive Officers as a
Group (5 persons)                                     7,126,904           18.3%

-----------------
 *       Less than 1%.
(1)      Includes shares of Common Stock which may be acquired pursuant to
         options and warrants exercisable within 60 days of February 4, 2000.

(2)      Based on 38,961,700 shares of Common Stock issued and outstanding on
         February 4, 2000, including shares of Common Stock which may be
         acquired pursuant to options and warrants exercisable within 60 days of
         February 4, 2000 and shares of common stock issuable upon the
         conversion of convertible preferred stock.

(3)      The address of this person is 220 Alhambra Circle, Suite 910, Coral
         Gables, Florida 33134. Includes 2,836,222 of shares of common stock
         that may be acquired upon the exercise of outstanding stock options.

(4)      The address of this person is Eliodoro Yanez, 2238 Santiago, Chile.

(5)      The address of this person is 1101 E. 58th Street, Chicago, Illinois
         60637.

(6)      The address of this person is 1200 Brickell Avenue, Suite 1900, Miami,
         Florida 33131.

(7)      The address of the person is Vitacura 2939, piso 849, Las Condes,
         Santiago, Chile. Represents shares of common stock that may be acquired
         upon the exercise of outstanding stock options.

(8)      The address of this person is Av. Victor Andres Belaunde, No. 147,
         Edificio Real Seis, Centro Empresarial, Oficina 303, San Isidro, Lima
         Peru. Represents shares of common stock that may be acquired upon the
         exercise of outstanding stock options.

(9)      The address of this person is 220 Alhambra Circle, Suite 910, Coral

                                       52
<PAGE>

         Gables, Florida 33134. Includes 66,667 shares of common stock that may
         be acquired upon the exercise of outstanding stock options.

(10)     Represents shares of preferred stock that are convertible into common
         stock.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS. (US$000)

TELECTRONIC S.A.

         During the year ended December 31, 1999, the Company entered into
certain transactions with Telectronic S.A. and one of its founders, Mr. George
A. Cargill. Mr. Cargill owns more than 5% of the issued and outstanding shares
of the Company Common Stock and has been a director of the Company since 1994.
As compensation for his service as a director of the Company, during 1999,
the Company granted Mr. Cargill  80,000 stock options with a weighted average
exercise price of $11.30. The exercise price of such grants was equal to the
grant date fair value of the underlying Common Stock. The Company's Chilean
operations purchased approximately $104 of certain telecommunication equipment
in 1999 from Telectronic, S.A.

OTHER RELATED PARTY TRANSACTIONS

         During October 1999, Mr. Patricio E. Northland, FirstCom's chairman of
the board, president and chief executive officer, purchased from FirstCom
800,000 restricted common shares of FirstCom and received options to purchase
2.2 million common shares of FirstCom. The purchase price per share for the
restricted common shares, and the exercise price per share of the options, was
$10.70. Mr. Northland financed the purchase of the restricted shares by giving a
note to the Company in the amount of $8.55 million, which Mr. Northland repaid
in full, including accrued interest, during January 2000. These options vest,
subject to Mr. Northland's continued employment, one-ninth on March 1, 2001,
three-ninths on each of March 1, 2002 and 2003, and one-ninth on each of March
1, 2004 and 2005. The restricted shares are subject to repurchase rights by
FirstCom at $10.70 per share; the number of these shares subject to that
repurchase right is progressively reduced at the same rate as the rate at which
Mr. Northland's 2.2 million options vest. Also during October 1999, FirstCom
forgave an existing loan to Mr. Northland in the amount of approximately $425
plus accrued and unpaid interest.

        During October 1999, FirstCom forgave an existing loan to Douglas G.
Geib II, in the amount of approximately $181 plus accrued and unpaid interest.

         On February 2, 2000, the Company announced the resignation of Douglas
G. Geib II. In accordance with his employment arrangements with the Company, Mr.
Geib received a lump sum payment of $675 and the full vesting of 155,556
previously issued and unvested stock options.

                                       53
<PAGE>

         The Company paid approximately $1,012 in legal fees in 1999, to the law
firm of Baker & McKenzie. Mr. Hulsh, a Director of the Company, is a Senior
Partner with Baker & McKenzie.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

         EXHIBITS

EXHIBIT NUMBER      DESCRIPTION OF EXHIBITS
----------------    -----------------------------------------------------------

2.2      Agreement and Plan of Merger, dated November 1, 1999, as previously
         filed as an exhibit to Registrant's Current Report on Form 8-K with the
         Commission on November 4, 1999 and incorporated herein by reference.

2.3      Voting Agreement between AT&T and each of Patricio E. Northland, George
         Cargill and Eleazar Donoso as previously filed as an exhibit to
         Registrant's Current Report on Form 8-K with the Commission on November
         4, 1999 and incorporated herein by reference.

2.4      Voting Agreement between AT&T and Douglas G. Geib II as previously
         filed as an exhibit to Registrant's Current Report on Form 8-K with the
         Commission on November 4, 1999 and incorporated herein by reference.

2.5      Amendment, dated February 1, 2000, to the Agreement and Plan of Merger
         among AT&T, Kiri Inc., Frantis Inc., and the Registrant as previously
         filed on Registrant's Current Report on Form 8-K filed with the
         Commission on February 3, 2000 and incorporated herein by reference.

4.9      Securities Purchase Agreement, dated June 30, 1999, between FirstCom
         Corporation and SFG-N, Inc. (GE Capital Structured Finance Group, a
         wholly owed subsidiary of GE Capital) previously filed as an exhibit to
         Registrant's Current Report on Form 8-K filed with the Commission on
         July 8, 1999 and incorporated herein by reference.

4.10     Investor Rights Agreement, dated June 30, 1999, between FirstCom
         Corporation and SFG-N, Inc. (GE Capital Structured Finance Group, a
         wholly owned subsidiary of GE Capital) previously filed as an exhibit
         to Registrant's Current Report on Form 8-K filed with the Commission on
         July 8, 1999 and incorporated herein by reference.

                                       54
<PAGE>

4.11     Certificate of Designation, dated June 30, 1999, between FirstCom
         Corporation and SFG-N, Inc. (GE Capital Structured Finance Group, a
         wholly owned subsidiary of GE Capital) previously filed as an exhibit
         to Registrant's Current Report on Form 8-K filed with the Commission on
         July 8, 1999 and incorporated herein by reference.

10.3     Amendment Agreement, dated July 28, 1999, between FirstCom Equipment
         Ltd. and Cisco Systems Capital Corporation, previously filed as an
         exhibit to Registrant's Current Report on Form 8-K filed with the
         Commission on August 12, 1999 and incorporated herein by reference.

10.4     Amended and Restated Promissory Note, dated July 28, 1999, previously
         filed as an exhibit to Registrant's Current Report on Form 8-K filed
         with the Commission on August 12, 1999 and incorporated herein by
         reference.

10.5     Agreement Amendment, dated July 27, 1999, between FirstCom Teleductos
         (B.V.I.) Inc., Varel International Limited and Zelbord Properties
         Limited, previously filed as an exhibit to Registrant's Current Report
         on Form 8-K filed with the Commission on August 6, 1999 and
         incorporated herein by reference.

10.6     Registration Rights Agreement, dated July 27, 1999, between FirstCom
         Corporation, Varel International Limited and Zelbord Properties
         Limited, previously filed as an exhibit to Registrant's Current Report
         on Form 8-K filed with the Commission on August 6, 1999 and
         incorporated herein by reference.

10.7     Amendment Agreement, dated July 28, 1999, between FirstCom Equipment
         Ltd. and Cisco Systems Capital Corporation, previously filed as an
         exhibit to Registrant's Current Report on Form 8-K, filed with the
         Commission on August 2, 1999 and incorporated herein by reference.

10.8     Amended and Restated Promissory Note, dated July 28, 1999, previously
         filed as an exhibit to Registrant's Current Report on Form 8-K, filed
         with the Commission on August 2, 1999 and incorporated herein by
         reference.

10.9     Separation Agreement between the Registrant and Douglas Geib II,
         previously filed as an exhibit to Registrant's Current Report on Form
         8-K filed with the Commission on February 3, 2000 and incorporated
         herein by reference.

23.1     Consent of Ernst & Young, LLP.

27.0     Financial Data Schedule

c)       Reports on Form 8-K.

         (i)      The Registrant filed a Current Report on Form 8-K with the
                  Commission on November 4, 1999 for the Agreement and Plan of
                  Merger between FirstCom Corporation, AT&T, Kiri Inc., and
                  Frantis Inc.

                                       55
<PAGE>

         (ii)     The Registrant filed a Current Report on Form 8-K with the
                  Commission on February 3, 2000 for the following reasons: to
                  announce that it had filed preliminary proxy materials with
                  the Commission; to announce that it amended the Agreement and
                  Plan of Merger among AT&T, Kiri Inc., Frantis Inc. and the
                  Registrant; and to announce that Douglas G. Geib II, a
                  Director and the Executive Vice President and Chief Financial
                  Officer of the Registrant, resigned from all positions with
                  the Registrant.

SCHEDULE II.  VALUATION AND QUALIFYING ACCOUNTS (US$000's)
<TABLE>
<CAPTION>
                                 BALANCE AT                                                    BALANCE AT
                                BEGINNING OF                                                   END OF
DESCRIPTION                        PERIOD            ADDITIONS             DEDUCTIONS          PERIOD
-----------------            ------------------    ---------------     ------------------     ----------------
<S>                                    <C>                 <C>                   <C>                    <C>
 YEAR ENDED DECEMBER 1999
Allowance for doubtful
Accounts                                  $953             $ 1,361               $(1,180)                $1,134

Deferred tax asset
valuation allowance                    $16,994             $13,118                    --                $30,112

YEAR ENDED DECEMBER 31, 1998
Allowance for doubtful
accounts                                    --                $953                    --                   $953

Deferred tax asset
valuation allowance                     $9,700              $7,294                    --                $16,994

YEAR ENDED DECEMBER 31, 1997
Deferred tax asset
valuation allowance                     $4,771              $4,929                    --                $ 9,700

YEAR ENDED DECEMBER 31, 1996
Deferred tax asset
valuation allowance                     $3,751              $1,020                    --                $ 4,771
</TABLE>

                                       56
<PAGE>

                                   SIGNATURES

                  Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coral Gables, Florida on
the __ day of June 2000.

                              FIRSTCOM CORPORATION

                              By:/S/ PATRICIO E.  NORTHLAND
                                  Patricio E.  Northland
                                  PRESIDENT AND CHIEF EXECUTIVE OFFICER

<TABLE>
<CAPTION>

                NAME                                       TITLE                           DATE
-------------------------------------    -------------------------------------------    ------------
<S>                                      <C>                                            <C>

/S/ PATRICIO E. NORTHLAND                Chairman of the Board, Director                June 27, 2000
-------------------------------------
Patricio E. Northland                    President and Chief Executive Officer
                                         (PRINCIPAL EXECUTIVE OFFICER)

/S/ JOSE A. SEGRERA*                     Interim Chief Financial Officer                June 27, 2000
-------------------------------------
Jose A. Segrera                          PRINCIPAL ACCOUNTING OFFICER

/S/ DAVID C. KLEINMAN*                   Director                                       June 27, 2000
-------------------------------------
David C. Kleinman

/S/ GEORGE A. CARGILL*                   Director                                       June 27, 2000
-------------------------------------
George A. Cargill

/S/ ANDREW HULSH*                        Director                                       June 27, 2000
-------------------------------------
Andrew Hulsh

*By: /S/ PATRICIO E. NORTHLAND
-------------------------------------
Patricio E. Northland
Attorney-in-fact
</TABLE>

                                       57
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS

FirstCom Corporation                                                                             PAGE
                                                                                                 ----
<S>                                                                                               <C>
Reports of Independent Certified Public Accountants...............................................F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998......................................F-4

Consolidated Statements of Operations for the years ended
 December 31, 1999, 1998 and 1997.................................................................F-5

Consolidated Statement of Stockholder's Equity (Deficit) for the years ended
 December 31, 1999, 1998 and 1997.................................................................F-6

Consolidated Statement of Cash Flows for the years ended
 December 31, 1999, 1998 and 1997.................................................................F-7

Notes to Consolidated Financial

Statements........................................................................................F-8
</TABLE>

                                      F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
FirstCom Corporation

         We have audited the accompanying consolidated balance sheets of
FirstCom Corporation as of December 31, 1999 and 1998 and the related
consolidated statements of operations and stockholders' equity(deficit) and cash
flows for each of the two years in the period ended December 31, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
FirstCom Corporation at December 31, 1999 and 1998, and the consolidated results
of its operations and its cash flows for each of the two years in the period
ended December 31, 1999, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

                                                           /s/ Ernst & Young LLP

Miami, Florida
February 14, 2000

                                       F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
 of FirstCom Corporation

In our opinion, the consolidated statements of income, of cash flows and of
changes in stockholders' equity for the year ended December 31, 1997 present
fairly, in all material respects, the results of operations and cash flows of
FirstCom Corporation and its subsidiaries for the year ended December 31, 1997,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above. We have not audited the consolidated financial statements of FirstCom
Corporation for any period subsequent to December 31, 1997.

As described in Note 4, during 1996 the Company had transactions and
relationships with related parties. Because of these relationships, it is
possible that the terms of these transactions may not be the same as those that
would result from transactions among unrelated parties.

The Company has restated its financial statements for the years ended December
31, 1997 and 1996 to reflect the effect of revising the price per share of
Company common stock issued in connection with the May 1996 acquisition of
FirstCom Peru (formerly Resetel S.A.) from $2.25 to $5.99 per share.

                                                       /S/PricewaterhouseCoopers

Miami, Florida
March 2, 1998, except as
to restatement described above
which is as of August 6, 1998

                                      F-3
<PAGE>

<TABLE>
<CAPTION>
                              FIRSTCOM CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                  (THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

                                                               1999         1998
                                                               ----         ----
<S>                                                          <C>         <C>
ASSETS
Current assets:
Cash and cash equivalents ................................   $  12,986   $   8,892
Restricted cash ..........................................         645      22,599
Restricted investments ...................................      20,440      19,670
Accounts receivable, net of allowance for doubtful
  accounts of  $1,134 and $953 in 1999 and 1998,
  respectively ...........................................      11,041       6,935
Prepaid expenses and other current assets ................       2,775         624
                                                             ---------   ---------
Total current assets .....................................      47,887      58,720
Restricted investments ...................................          --      20,021
Property, plant, and equipment, net ......................      92,469      45,901
Intangible assets, net ...................................      17,704      15,765
Deferred financing costs and other assets ................      14,050      14,437
                                                             ---------   ---------
Total assets .............................................   $ 172,110   $ 154,844
                                                             ---------   ---------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Vendor financing, current ................................   $     814   $     254
Lease obligations, current ...............................          70         136
Accounts payable .........................................      12,653       8,238
Accrued interest .........................................       3,716       3,695
Other accrued expenses ...................................       5,334       1,963
Deferred income taxes ....................................         302          --
Other current liabilities ................................       1,325         471
                                                             ---------   ---------
Total current liabilities ................................      24,214      14,757

Senior notes, net ........................................     133,197     132,338
Vendor financing .........................................       4,050       1,337
Lease obligations, less current portion ..................         142         238
Deferred income taxes ....................................       2,228          --
Other Liabilities ........................................       2,247          --
                                                             ---------   ---------
Total liabilities ........................................     166,078     148,670

Minority interest ........................................       3,012          --
Redeemable Preferred Stock, $.001 par value, authorized ..      11,720          --
  10,000,000 shares, issued and outstanding 1,345,507
  shares as of December 31, 1999

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, $.001 par value, authorized ................          27          19
  50,000,000 shares, issued and outstanding
  26,858,526 and 19,084,300 shares as of December 31, 1999
  and 1998, respectively
Additional paid in capital ...............................      68,476      31,737
Warrants .................................................      26,737      26,737
Accumulated deficit ......................................     (95,057)    (51,475)
Cumulative translation adjustments .......................        (238)       (238)
                                                             ---------   ---------
                                                                   (55)      6,780
Shareholder loans ........................................      (8,645)       (606)
                                                             ---------   ---------
Total stockholders' equity (deficit) .....................      (8,700)      6,174
                                                             ---------   ---------
Total liabilities and stockholders' equity (deficit) .....   $ 172,110   $ 154,844
                                                             =========   =========
                                    See accompanying notes
</TABLE>

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                              FIRSTCOM CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           (THOUSANDS OF US DOLLARS, EXCEPT SHARE AND PER SHARE DATA)

                                                                             YEAR ENDED DECEMBER 31,
                                                               ------------------------------------------------
                                                                   1999              1998              1997
                                                               ------------      ------------      ------------
<S>                                                            <C>               <C>               <C>
Revenues:
  Long Distance ..........................................     $     24,318      $     16,445      $         --
  Internet and data ......................................           14,038             1,697             1,130
                                                               ------------      ------------      ------------
                                                                     38,356            18,142             1,130

Operating expenses:
Cost of revenues:
  Long Distance ..........................................           16,361            12,379                --
  Internet and data ......................................            5,644             1,700             1,203
                                                               ------------      ------------      ------------
                                                                     22,005            14,079             1,203

Selling, general and administrative ......................           25,698            12,293             4,678
Non-cash compensation and

 Consulting expenses (selling, general,
   and administrative)....................................              353               175             4,640

Depreciation and amortization ............................           10,211             2,237             1,201
Merger expense ...........................................            1,008                --                --
                                                               ------------      ------------      ------------
                                                                     59,275            28,784            11,722
                                                               ------------      ------------      ------------
Loss from operations .....................................          (20,919)          (10,642)          (10,592)
Interest expense .........................................          (22,552)          (19,578)           (6,521)
Interest income ..........................................            2,286             5,448             1,315
Other income/(expense), net ..............................              (84)             (550)              (68)
                                                               ------------      ------------      ------------
Net loss before income taxes and minority interest expense          (41,269)          (25,322)          (15,866)
Income taxes .............................................              170                --                --
                                                               ------------      ------------      ------------
Net loss before minority interest expense ................          (41,439)          (25,322)          (15,866)
Minority interest expense ................................               33                --                --
                                                               ------------      ------------      ------------
Net Loss .................................................     $    (41,472)     $    (25,322)     $    (15,866)
                                                               ============      ============      ============
Net basic and diluted loss per share .....................     $      (1.94)     $      (1.33)     $      (0.95)
Weighted average common shares outstanding ...............       21,354,012        19,084,300        16,667,719
                                                               ============      ============      ============
                             See accompanying notes
</TABLE>

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                              FIRSTCOM CORPORATION
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)
                  (THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

                                                                            COMMON STOCK        ADDITIONAL
                                                                  -------------------------      PAID-IN
                                                                    SHARES        AMOUNTS        CAPITAL         WARRANTS
                                                                  ----------     ----------     ----------      ----------
<S>                                                               <C>            <C>            <C>             <C>
Balances at January 1, 1997 .................................     16,152,518     $       16     $   23,168      $       --

Conversion of debt ..........................................      1,101,782              1          1,993              --
Beneficial conversion feature ...............................             --             --            810              --
Reversal of beneficial conversion feature upon
 redemption of debt .........................................             --             --           (344)             --
Stock issued to a former director in connection with the
 FirstCom Long Distance acquisition .........................        100,000             --            205              --
Stock issued as compensation to officers and former directors      1,350,000              2          3,756              --
Stock option grants to officers and former directors ........             --             --            882              --
Conversion of liabilities ...................................         80,000             --            240              --
Stock issued for past financial assistance ..................        300,000             --            852              --
Warrants to purchase common stock ...........................             --             --             --          26,737
Currency translation adjustment .............................             --             --             --              --
Net loss ....................................................             --             --             --              --
                                                                  ----------     ----------     ----------      ----------
Total comprehensive net loss ................................             --             --             --              --
                                                                  ----------     ----------     ----------      ----------
Balances at December  31, 1997 ..............................     19,084,300             19         31,562          26,737

Shareholder loans ...........................................             --             --             --              --
Stock Option Grants to non-employees ........................             --             --            175              --
Net loss and comprehensive net loss .........................             --             --             --              --
                                                                  ----------     ----------     ----------      ----------

Balances at December 31, 1998 ...............................     19,084,300             19         31,737          26,737

Exercise of stock options and warrants ......................      6,374,226              6         23,015              --
Stock options vested ........................................             --             --            353              --
Common Stock issued with the acquisition
 of FirstCom Colombia .......................................        100,000             --            279              --
Common Stock sold to Executive Officer ......................        800,000              1          8,559              --
Promissory Note Conversion ..................................        500,000              1          4,533              --
Forgiveness of Shareholder Loans ............................             --             --             --              --
Preferred Stock PIK Dividend ................................             --             --             --              --
Accretion of Preferred Stock ................................             --             --             --              --
Net Loss and comprehensive net loss .........................             --             --             --              --
                                                                  ----------     ----------     ----------      ----------
Balances at December 31, 1999 ...............................     26,858,526     $       27     $   68,476      $   26,737
                                                                  ==========     ==========     ==========      ==========
</TABLE>
<TABLE>
<CAPTION>

                                                                                CUMULATIVE
                                                                  ACCUMULATED   TRANSLATION   SHAREHOLDER
                                                                  DEFICIT       ADJUSTMENT      LOANS         TOTAL
                                                                  ----------    -----------   -----------  ---------
<S>                                                               <C>           <C>           <C>           <C>
Balances at January 1, 1997 .................................     $(10,287)     $    (78)     $     --      $ 12,819
Conversion of debt ..........................................           --            --            --         1,994
Beneficial conversion feature ...............................           --            --            --           810
Reversal of beneficial conversion feature upon
 redemption of debt .........................................           --            --            --          (344)
Stock issued to a former director in connection with the
 FirstCom Long Distance acquisition .........................           --            --            --           205
Stock issued as compensation to officers and former directors           --            --            --         3,758
Stock option grants to officers and former directors ........           --            --            --           882
Conversion of liabilities ...................................           --            --            --           240
Stock issued for past financial assistance ..................           --            --            --           852
Warrants to purchase common stock ...........................           --            --            --        26,737
Currency translation adjustment .............................           --          (160)           --          (160)
Net loss ....................................................      (15,866)           --            --       (15,866)
                                                                  --------      --------      --------      --------
Total comprehensive net loss ................................           --            --            --       (16,026)
                                                                  --------      --------      --------      ---------

Balances at December  31, 1997 ..............................      (26,153)         (238)           --        31,927

Shareholder loans ...........................................           --            --          (606)         (606)
Stock Option Grants to non-employees ........................           --            --            --           175
Net loss and comprehensive net loss .........................      (25,322)           --            --       (25,322)
                                                                  --------      --------      --------      --------

Balances at December  31, 1998 ..............................      (51,475)         (238)         (606)        6,174

Exercise of stock options and warrants ......................           --            --            --        23,021
Stock options vested ........................................           --            --            --           353
Common Stock issued with the acquisition
 of FirstCom Colombia .......................................           --            --            --           279
Common Stock sold to Executive Officer ......................           --            --        (8,560)           --
Promissory Note Conversion ..................................           --            --            --         4,534
Forgiveness of Shareholder Loans ............................           --            --           606           606
Preferred Stock PIK Dividend ................................         (764)           --            --          (764)
Accretion of Preferred Stock ................................       (1,346)           --            --        (1,346)
Interest on Shareholder Loan ................................           --            --           (85)          (85)
Net Loss ....................................................      (41,472)           --            --       (41,472)
                                                                  --------      --------      --------      --------
Balances at December 31, 1999 ...............................     $(95,057)     $   (238)     $ (8,645)     $ (8,700)
                                                                  ========      ========      ========      ========
                             See accompanying notes
</TABLE>
                                      F-6
<PAGE>
<TABLE>

<CAPTION>
                              FIRSTCOM CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (THOUSANDS OF US DOLLARS)
                                                                     YEAR ENDED DECEMBER 31,
                                                           ---------------------------------------
                                                              1999           1998           1997
                                                           ---------      ---------      ---------
<S>                                                        <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................     ($ 41,472)     ($ 25,322)     ($ 15,866)
 Adjustments to reconcile net loss to net cash used
 in operating activities:
 Depreciation and amortization expense ...............        10,211          2,237          1,201
 Deferred income taxes ...............................          (448)            --             --
 Amortization of deferred financing costs and
 original issue discounts ............................         1,541          1,279            518
 Accrued income on restricted investments ............        (1,750)        (2,799)          (583)
 Beneficial conversion features on convertible .......            --             --            466
 debentures, net
 Capitalized interest related to network
 construction ........................................        (1,532)        (2,955)          (712)
 Services exchanged for common stock .................            --             --            852
 Non-cash compensation and consulting expense ........           353            175          4,640
 Interest converted to equity ........................            --             --             45
 Accrued interest on shareholder loan ................           (85)            --             --

 Changes in operating assets and liabilities:
  Accounts receivable ................................        (3,364)        (4,291)           (29)
  Prepaid expenses and other current assets ..........        (1,527)           645           (258)
  Other assets .......................................           590           (203)           (64)
  Accounts payable and accrued expenses ..............         5,108          2,560          4,602
  Due to related parties .............................            --           (263)          (179)
  Other current liabilities ..........................           434            548           (105)
                                                           ---------------------------------------
Net cash used in operating activities ................       (31,941)       (28,389)        (5,472)
                                                           ---------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of telecommunications network ..............       (33,124)       (34,674)        (2,763)
 Reduction of (increase in) restricted cash ..........        21,955         38,429        (61,028)
 Acquisition of FirstCom Long Distance, net ..........            --             --         (5,799)
 Acquisition of FirstCom Internet, net ...............            --         (1,528)            --
 Acquisition of FirstCom Colombia, net ...............        (4,779)            --             --
                                                           ---------------------------------------
Net cash provided by (used in) investing activities ..       (15,948)         2,227        (69,590)
                                                           ---------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Reduction of (increase in) restricted investments ...        21,000         21,000        (57,309)
 Repayment of convertible debentures .................            --         (1,550)            --
 Shareholder Loans ...................................           606           (606)            --
 Net proceeds from vendor financing ..................         2,435          1,591             --
 Issuance of Senior Notes ............................            --             --        150,000
 Deferred financing costs ............................            --             --         (7,000)
 Proceeds from convertible debentures ................            --             --          3,500
 Exercise of stock options ...........................        23,021             --             --
 (Payments under) proceeds from leasing obligations ..          (144)          (317)            84
 Net change in bank debt and promissory notes ........        (4,545)            --             --
 Redeemable preferred stock issued ...................         9,610             --             --
                                                           ---------------------------------------
Net cash provided by financing activities ............        51,983         20,118         89,275
                                                           ---------------------------------------
Net increase (decrease) in cash and cash equivalents..         4,094         (6,044)        14,213
                                                           ---------------------------------------
Cash and cash equivalents at beginning of year .......         8,892         14,936            723
                                                           ---------------------------------------
Cash and cash equivalents at end of year .............     $  12,986      $   8,892      $  14,936
                                                           =========      =========      =========
Supplemental Cash Flow Disclosure:

 Cash paid for interest ..............................     $  22,348      $  21,000      $     545
                                                           =========      =========      =========
Supplemental noncash disclosure:
 Promissory notes issued in connection with the ......     $   7,000             --             --
  acquisition of FirstCom Colombia, S.A
 Amount recorded for common stock issued in acquisition
  of FirstCom Colombia, S.A...........................     $     279             --             --
 Common stock issued in payment of outstanding
  promissory notes....................................     $   5,000             --             --
 Shareholder loan forgiven ...........................     $     606             --             --

During 1999, 1998 and 1997, the Company capitalized $1,532; $2,955 and $712 of
interest costs related to the construction of a fiber optic network.

                             See accompanying notes
</TABLE>
                                      F-7
<PAGE>
                              FIRSTCOM CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

 1.  ORGANIZATION AND BUSINESS FORMATION

         FirstCom Corporation ("the Company"), is a provider of
telecommunications services in Chile, Peru and Colombia. Historically, the
Company has developed its operations in Latin America through the acquisition of
holding and operating companies that own licenses, concessions or rights-of-way
in what the Company believes to be attractive markets. The Company operates in
Chile as FirstCom Networks, S.A. ("FirstCom Networks"), FirstCom Long Distance,
S.A. ("FirstCom Long Distance"), and FirstCom Internet, S.A. ("FirstCom
Internet"), in Peru as FirstCom, S.A. ("FirstCom Peru"), and in Colombia as
FirstCom Colombia, S.A. ("FirstCom Colombia", formerly "Teleductos").

         Although separate legal entities, the Company operates its Chilean
subsidiaries as one functional entity, providing seamless service delivery of
integrated telecommunication solutions to its Chilean customers. Services
provided by the Company to businesses in Santiago include: (i) high speed data
transmission (ii) domestic and international long distance services, (iii)
internet access services on a dial-up and dedicated access basis, as well as
related value-added services such as webhosting and corporate e-mail. FirstCom
Peru provides integrated telecommunication solutions to its customers,
including: (i) high-speed data transmission, (ii) dedicated internet access and
(iii) domestic and international long distance telephony services. FirstCom
Colombia provides multinational, national and local businesses with high speed
data services and dedicated internet access in the cities of Bogota and Cali,
Colombia.

Proposed Merger with AT&T Latin America Corp.

         On November 1, 1999, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with AT&T ("AT&T"), AT&T Latin America Corp.
(formerly Kiri Inc.), an indirect wholly-owned subsidiary of AT&T ("AT&T Latin
America"), and Frantis, Inc., a Delaware corporation ("Frantis"). The Merger
Agreement provides for the merger (the "Merger") of the Company with and into
Frantis, which is a direct wholly owned subsidiary of AT&T Latin America Corp.

         Pursuant to the Merger, which is subject to approval of the Company's
shareholders, among other conditions, shareholders of the Company will receive
(i) one share of Class A common stock ("Class A Shares") of AT&T Latin America
in exchange for each share of common stock of the Company; and (ii) one share of
Series A convertible preferred stock of AT&T Latin America in exchange for each
share of Series A Preferred Stock, of the Company

         Upon consummation of the Merger, on a fully-diluted basis, the former
shareholders of the Company will own approximately 34% of the common stock of
AT&T Latin America in the form of Class A Shares.

         The closing of the Merger Agreement is subject to certain conditions,
including, but not limited to, the contribution by the stockholders of AT&T
Latin America (other than the stockholders of the Company) to AT&T Latin America
of a total of not less than $70 million in cash equity (including the $50
million contributed to date), the provision by AT&T of a $100 million revolving
credit facility to AT&T Latin America and, if requested by AT&T, the successful
completion of a tender offer for the Company's 14% Notes due 2007. The Company
believes it is likely that AT&T will request the Company to initiate a tender
offer for the Notes. Further, the Merger is subject to the approval of the
Merger by the Company's shareholders and certain regulatory approvals.

         The Merger Agreement contains provisions restricting the conduct of the
Company's business until the Merger is closed or the Merger Agreement is
terminated. With certain exceptions, these provisions prohibit the Company from,
among other things, issuing capital stock, declaring dividends, disposing of a
material amount of assets, making material capital expenditures, incurring
indebtedness, entering into or amending its organizational documents, in each
case without the consent of AT&T.

Acquisitions of Businesses

         During the three years ended December 31, 1999, the Company made the
following acquisitions, each of which was accounted for as a purchase. The
consolidated financial statements include the operating results from the
effective date of acquisition.

 ACQUISITION OF FIRSTCOM LONG DISTANCE

         On December 17, 1997, the Company acquired 100% of FirstCom Long
Distance's outstanding stock for $5,799 in cash, net of cash acquired. In
addition, the Company incurred other direct acquisition costs totaling
approximately $300, which includes the fair market value of 100,000 shares of

Company Common Stock paid to a former director of the Company for his services
in facilitating the transaction.

         The excess purchase price, of approximately $6,200, over the fair value
of the net assets acquired has been allocated to FirstCom Long Distance's
telephone carrier concession. The Company has accounted for the acquisition of
FirstCom Long Distance as if it occurred on December 31, 1997.

                                      F-8
<PAGE>

ACQUISITION OF FIRSTCOM INTERNET

         On October 7, 1998 the Company acquired 99.9% of FirstCom Internet,
S.A.'s outstanding stock for $1,528 in cash, net of cash acquired. Goodwill of
approximately $1,400 was recorded representing the excess cost over the fair
value of net assets acquired in the transaction.

ACQUISITION OF FIRSTCOM COLOMBIA

         On February 2, 1999, the Company acquired 51% of FirstCom Colombia
S.A.'s outstanding stock for a total purchase price of approximately $12,000,
consisting of, $4,779 in cash, net of cash acquired, $7,000 in short-term
promissory notes, and 100,000 shares of the Company's common stock with a fair
value of $279. The promissory notes bear interest at 5% per annum and mature at
various dates through February 2000. The excess purchase price over the fair
value of the assets acquired of approximately $2,978 was allocated to goodwill
and is being amortized over 20 years. Also on February 2, 1999, the Company
purchased additional shares from FirstCom Colombia for $3,091, which increased
its ownership to 76%. On August 4, 1999 the Company converted the then
outstanding $5,000 principal balance of the Promissory Notes into 500,000 shares
of the Company's common stock. During November 1999, the Company purchased
additional shares from FirstCom Colombia for $3,800. As a result of this
purchase the Company's ownership in FirstCom Colombia increased to 86%.

 OTHER RELATED ACQUISITION DISCLOSURES - UNAUDITED

         The following unaudited pro forma summary presents the consolidated
results of operations as if the acquisition of FirstCom Long Distance, FirstCom
Internet and FirstCom Colombia had occurred at the beginning of the periods
presented, and do not purport to be indicative of the results that actually
would have occurred if the acquisitions had been consummated on those dates or
of results which may occur in the future:

                                             DECEMBER 31,
                                   ----------------------------------
                                              1999        1998
Revenue ....................                $38,756     $25,428
Net loss ...................                (41,440)    (26,333)
Net loss per share .........                 $(1.94)     $(1.38)

         Following is a summary of the intangible assets resulting from the
Company's acquisitions:

                                                                   ESTIMATED
                                           DECEMBER 31,             USEFUL
                                      1999              1998         LIFE
                                   -----------       ----------   ----------
  Satellite transmission rights         $1,166         $1,166     10 years
  Concessions                           13,870         13,870     20 years
  Goodwill                               5,708          2,730     10-20 years
                                   -----------       ----------
                                        20,744         17,766
  Less: accumulated amortization        (3,040)        (2,001)
                                   -----------       ----------
                                       $17,704        $15,765
                                   ===========       ==========

 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED ITEMS

 PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

                                      F-9
<PAGE>

 FOREIGN CURRENCY TRANSLATION

         Through December 31, 1997, the Company's subsidiaries used the
following functional currency: FirstCom Peru-Peruvian sole, FirstCom Networks
-Chilean peso. As such, assets and liabilities are translated at end-of-period
exchange rates. Income, expense and cash flows are translated at weighted
average exchange rates for the period. The resulting currency translation
adjustments are accumulated and reported as a component of stockholders' equity.

         As a result of (1) the Company's U.S. dollar denominated senior note
financing during October 1997, (2) the acquisition of FirstCom Long Distance on
December 17, 1997 and (3) the fact that FirstCom Long Distance and FirstCom
Networks operate as one functional entity of which FirstCom Long Distance
represents the majority of the operations, effective January 1, 1998 the
Company's Chilean subsidiaries began using the U.S. dollar as their functional
currency. This change did not have a significant impact on the Company's results
of operations.

         Effective January 1, 1998 the Company's Peruvian subsidiary, FirstCom
Peru, began using the U.S. dollar as its functional currency. Although, through
December 31, 1997 FirstCom Peru incorrectly used the local currency as its
functional currency, the impact of using the U.S. Dollar as FirstCom Peru's
functional currency on prior periods is not significant. This change did not
have a significant impact on the Company's results of operations.

         Included in other expense in 1999 and 1998 is approximately $448 and
$500, respectively, of foreign exchange losses resulting from the translation
into U.S. dollars of the Company's subsidiaries financial statements.

         In 1999, FirstCom Colombia used the U.S. dollar as its functional
currency.

 RECLASSIFICATIONS

         Certain amounts in the 1998 consolidated financial statements were
reclassified to conform with the 1999 presentation.

CONCENTRATIONS OF CREDIT RISK

         The Company's financial instruments that are exposed to concentrations
of credit risk are primarily cash and cash equivalents, restricted cash,
restricted investments and accounts receivable.

         The Company places its cash and cash equivalents, restricted cash, and
restricted investments with high-quality institutions. The majority of accounts
receivable are due from commercial telecommunications customers. Credit is
extended based on evaluation of the customer's financial condition and generally
collateral is not required. Anticipated credit losses are provided for in the
consolidated financial statements and have been within management's
expectations.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amount of cash and cash equivalents, restricted cash,
accounts receivable and accounts payable approximated fair value based on the
short maturity of these financial instruments. As of December 31, 1999 and 1998
the carrying amount of debt, excluding the Senior Notes, and capital leases
approximated fair value based on the prevailing market rates currently available
to the Company for similar financial instruments. The fair value of the Senior
Notes at December 31, 1999 was $154,500. As of December 31, 1998 the carrying
amount of the Senior Notes approximated fair value.

 CASH AND CASH EQUIVALENTS

         The Company considers all certificates of deposit and highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents.

                                      F-10
<PAGE>

 RESTRICTED CASH AND INVESTMENTS

         Restricted cash represents proceeds from the senior note offering (see
Note 3) to be used, in accordance with the terms of the related Indenture

Agreement ("Indenture"), primarily for the purchase of telecommunications
equipment in Peru and Chile. Restricted investments are U.S. Treasury Notes that
are restricted for the repayment of interest on the senior notes, and are stated
at amortized cost, which approximated fair value at December 31, 1999. These
investments mature at various dates through October 2000. Management designated
these investments as held-to-maturity.

 PROPERTY, PLANT & EQUIPMENT

         Property, plant, and equipment is recorded at cost and is depreciated
using the straight-line method over the estimated useful life of the related
assets. Construction, engineering, interest and labor costs directly related to
the development of the Company's networks are capitalized. The Company begins
depreciating these costs when the networks become commercially operational.

         Property, plant, and equipment consists of:
<TABLE>
<CAPTION>
                                                                             December 31,                ESTIMATED
                                                                      ----------------------------         USEFUL
                                                                         1999           1998                LIFE
                                                                         ----           ----           -------------
<S>                                                                       <C>             <C>          <C>
Telecommunications equipment                                              $94,356         $15,837      5 to 20 years
Telecommunications equipment pending installation
     and construction in progress                                           1,260          27,635            --
Office equipment and furniture                                              8,363           5,104       3 to 7 years
                                                                      ------------  --------------
                                                                          103,979          48,576
Less: accumulated depreciation                                           (11,510)         (2,675)
                                                                      ------------  --------------
Property, plant, and equipment, net                                       $92,469         $45,901
                                                                      ============  ==============
</TABLE>

IMPAIRMENT OF LONG-LIVED ASSETS

         The Company assesses the carrying amount of its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Measurement of any impairment would
include a comparison of estimated future cash flows to be generated during the
remaining life of each long-lived asset to its net carrying value. When such
evaluation results in a deficiency, the asset is written down to its estimated
fair value.

 ACCOUNTING ESTIMATES

         The preparation of financial statements require management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

 OTHER ACCRUED EXPENSES

         Other accrued expenses consist of:

                                                             DECEMBER 31,
                                                        ---------------------
                                                         1999           1998
                                                        ------         ------
Telecommunication equipment ......................      $   --         $  749
Accrued compensation........................             4,680          1,214
Other ...........................................          654             --
                                                        ======         ======
                                                        $5,334         $1,963
                                                        ======         ======

                                     F-11
<PAGE>

COMMON STOCK EXCHANGED FOR OTHER THAN CASH

         Common stock exchanged for services provided by employees and former
directors and as inducements to make loans have been recorded as compensation or
interest expense and additional paid in capital based on the fair value of the
common stock at the date of grant. The grant date fair value of the common stock
was based on the NASDAQ trading price.

 REVENUE RECOGNITION

         Revenues from telecommunication services are recognized as services are
provided. The Company enters into operating agreements with telecommunications
carriers in the United States under which international long distance traffic is
both delivered to the United States and received in Chile and Peru. The Company
has recorded the revenue and cost of revenue related to this exchange of traffic
with other carriers on a net basis (see note 7).

ADVERTISING COSTS

         Advertising costs, included in selling, general and administrative
expenses, are expensed as incurred and were $3,661, $1,664 and $0 for 1999, 1998
and 1997, respectively.

 NET LOSS PER SHARE

         The computation of net loss per share of common stock is computed by
dividing net loss for the year by the weighted average number of shares
outstanding during the year. The weighted average number of shares outstanding

for the years ended December 31, 1999, 1998 and 1997 excludes 10.8 million, 16.7
million, and 15.6 million, respectively, of antidilutive stock options and
warrants.

 STOCK BASED COMPENSATION

         The Company accounts for stock-based compensation using the intrinsic
value method which requires the recognition of related expense on the grant date
when the exercise price of the stock option granted is less than the fair value
of the underlying common stock. Additionally, the Company provides pro forma
disclosure of net loss and loss per share as if the fair value based method had
been applied in measuring compensation expense for stock options granted in 1999
and 1998.

         The policy of the Company has been to grant options at an exercise
price equal to the average price of the Company's common stock for the five days
preceding the date of the grant. Had compensation costs for the Company's stock
option grants been determined based on the fair value at the grant dates of
options granted consistent with the fair value based method, the Company's loss
and loss per share would have been increased to the pro forma amounts indicated
below:

                                             1999             1998
                                          ----------      ---------
   Net loss .........   As Reported          $(41,472)    $(25,322)
   Net loss...........  Pro forma            $(55,415)    $(28,031)
   Net loss per share ... As Reported          ($1.94)      ($1.33)
   Net loss per share ... Pro forma            ($2.60)      ($1.47)

         The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions; volatility of 90%, risk-free interest rate of 6.00%, zero dividend
yield and expected lives ranging from 3 to 6 years. The weighted average fair
value of stock options granted during 1997 (i) with a strike price equivalent to
the grant date fair value of the underlying common stock was $2.60, and (ii)

                                      F-12
<PAGE>

with a strike price less than the grant date fair value of the underlying common
stock was $2.26. The weighted average fair value of stock options granted during
1998 was $0.81. The weighted average fair value of stock options granted during
1999 was $6.82.

 INCOME TAXES

         The Company uses the asset and liability method of accounting for
income taxes. Under this method, deferred tax assets and liabilities are
determined based on the differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

         The Company is subject to federal, state and foreign income taxes. At
December 31, 1999 the Company has net tax operating loss carryforwards of
approximately $59,000 for U.S. income tax purposes and approximately $46,900 for
foreign income tax purposes. These carryforwards are available to offset future
taxable income, if any, and expire for U.S. income tax purposes in the years
2007 through 2018. The foreign net operating loss carryforwards related (1) to
Peru of $15,300 expire in the years 2000 through 2003 and (2) to Chile of
$31,600 do not expire.

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax asset and liability are presented below:

Deferred Tax Asset:
                                       1999          1998
                                     --------      --------
Net operating loss carryforwards     $ 29,059      $ 16,153
Accounts receivable ............          626           469
Accrued Expenses ...............          138            --
Non-cash compensation ..........          370           372
                                     --------      --------
                                       30,193        16,994
Less: valuation allowance ......      (30,112)      (16,994)
                                     ========      ========
Net deferred tax asset .........     $     81      $     --
                                     ========      ========
Deferred Tax Liability

Property, Plant and Equipment ..     $ (2,611)           --
                                     ========      ========

Net Deferred Tax Liability .....     $ (2,530)     $     --
                                     ========      ========

The following table shows the principal reasons for the difference between the
effective income tax rate and the U.S. federal statutory income tax rate:

                                              1999          1998         1997
                                            --------      --------     --------
U.S. Federal statutory income tax rate            35%           35%          35%
                                            ========      ========     ========
Federal tax at statutory income tax rate    $(14,445)     $ (8,863)    $ (5,553)
Foreign rate differential                      1,497         1,569          624
Increase in valuation allowance               13,118         7,294        4,929
                                            --------      --------     --------
Provision for income taxes                       170            --           --
                                            ========      ========     ========

1999 income tax expense includes current foreign income taxes of $618 and
deferred foreign income taxes of $(448).

         The domestic and foreign components of net loss are as follows:

                                      1999              1998              1997
                                   --------          --------          --------
Domestic .................         $(26,065)         $(18,613)         $(12,636)
Foreign ..................          (15,407)           (6,709)           (3,230)
                                   ========          ========          ========
                                   $(41,472)         $(25,322)         $(15,866)
                                   ========          ========          ========

                                      F-13
<PAGE>

         The deferred tax assets have been substantially offset by a valuation
allowance resulting from the uncertainty surrounding the future realization of
the net operating loss carryforwards.

SEGMENT REPORTING

         Based on its organizational structure, the Company operates in six
reportable segments, combined by type of services and geographical areas: long
distance and Internet/data in Chile, long distance and Internet/data in Peru,
Internet/data in Colombia, and corporate activities. The Company's reportable
segments represent business units that primarily offer similar products and
services; however, the business units are managed separately due to the
geographic dispersion of their operations.

         The Company's chief operating decision maker utilizes revenue
information in assessing performance and making overall operating decisions and
resource allocations. Communications services are generally provided utilizing
the Company's fiber optic networks, which do not make a distinction between the
types of services. As a result, the Company does not allocate costs and expenses
or assets by segment. Profit and loss information is reported only on a country
basis to the chief operating decision maker and the Company's board of
directors.

         Revenues, EBITDA (earnings before interest, taxes, depreciation and
amortization), and total assets by segment for the years ending December 31,
1999, 1998 and 1997, respectively, are as follows:

                               1999            1998            1997
                            ---------       ---------       ---------
LONG DISTANCE REVENUES
Chile                       $  22,959       $  16,445       $      --
Peru                            1,359               0              --
Colombia                           --              --              --
Corporate                          --              --              --
                            ---------       ---------       ---------
                            $  24,318       $  16,445       $       0
                            =========       =========       =========

INTERNET/DATA REVENUES
Chile                       $   5,525       $   1,568       $   1,130
Peru                            1,316             129              --
Colombia                        7,197              --              --
Corporate                          --              --              --
                            ---------       ---------       ---------
                            $  14,038       $   1,697       $   1,130
                            =========       =========       =========

EBITDA
Chile                       $  (1,385)      $  (2,643)      $  (1,580)
Peru                           (6,347)         (1,738)           (637)
Colombia                        3,779              --              --
Corporate                      (6,755)         (4,024)         (7,174)
                            ---------       ---------       ---------
                            $ (10,708)      $  (8,405)      $  (9,391)
                            =========       =========       =========

TOTAL ASSETS
Chile                       $  50,596       $  35,055       $  16,108
Peru                           57,396          28,910          12,551
Colombia                       29,288              --              --
Corporate                      34,830          90,879         148,277
                            ---------       ---------       ---------
                            $ 172,110       $ 154,844       $ 176,936
                            =========       =========       =========

Following is a reconciliation of EBITDA as, presented above, to loss from
operations as presented on the accompanying statement of operations:

                               1999            1998            1997
                            ---------       ---------       ---------
EBITDA                      $ (10,708)      $  (8,405)      $  (9,391)

Less Depreciation and
  Amortization                 10,211           2,237           1,201

Loss from operations        $ (20,919)      $ (10,642)      $ (10,592)
                            =========       =========       =========

                                      F-14
<PAGE>

COMPREHENSIVE INCOME

         During 1997, the Company had a $160 currency translation adjustment,
which is included in shareholders' equity. There are no other components of
comprehensive loss, other than the Company's net losses, for the years ending
December 31, 1998 and 1999.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the FASB issued Statement of Accounting Standards No.
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. The Company
expects to adopt the new Statement effective January 1, 2000. The Statement will
require the recognition of all derivatives on the Company's consolidated balance
sheet at fair value. The Company does not anticipate that the adoption of this
Statement will have a significant effect on its results of operations or
financial position.

 3.  CAPITALIZATION

         The Company has had transactions impacting its capitalization during
the past three years. The following information, in addition to the disclosures
in Note 4--Related Party Transactions and Note 5--Stock Options and Warrants,
describes the most significant of these transactions.

CREDIT FACILITIES

         During December 1999, one of the Companies Chilean subsidiaries
obtained a $1,400 working capital revolving credit facility (the "Working
Capital Facility") from a local bank. The Working Capital Facility is
denominated in UF's (a published inflation adjusted unit used in financing
transaction in Chile) and bears interest at the prevailing market rates at the
time of each draw down. As of December 31, 1999, there were no amounts
outstanding under the Working Capital Facility.

VENDOR FINANCING

         On November 11, 1998 a subsidiary of the Company entered into a
financing arrangement (the "First Vendor Financing") with one of the Company's
significant equipment vendors. The terms of the First Vendor Financing are as
follows: (i) maximum amount available $10,000 (ii) interest rate of LIBOR plus
5.5%, (iii) the Company may draw on the facility until December 31, 2000, (iv)
draws under the facility shall be repaid in 20 consecutive quarterly principal
and interest payments and (v) is collateralized by the equipment being financed.
On July 28, 1999 the Company increased the maximum amount available under the
First Vendor Financing from $10,000 to $29,500. As of December 31, 1999 the
Company had $4,864 outstanding under the First Vendor Financing.

         On December 24, 1998 a subsidiary of the Company entered into a
financing arrangement (the "Second Vendor Financing") with another one of the
Company's significant equipment vendors. The terms of the Second Vendor
Financing are as follows: (i) maximum amount available $10,000, (ii) interest
rate of Libor plus 4%, (iii) the Company may draw on the facility until December
31, 2000, (iv) draws under the facility shall be repaid in 20 consecutive
quarterly principal and interest payments beginning on March 31, 2001, (v)
interest only quarterly payments shall be made for each draw from the respective
date of funding through December 31, 2000 and (v) is collateralized by the
equipment being financed. As of December 31, 1999 the Company had no amounts
outstanding under the Second Vendor Financing.

                                      F-15
<PAGE>

SENIOR NOTE OFFERING

         On October 27, 1997, the Company completed a private offering (the
"Senior Note Offering") pursuant to Rule 144A and Regulation S promulgated under
the U.S. Securities Act of 1933 of 150,000 Units, consisting of an aggregate of
$150,000 aggregate principal amount of 14% Senior Notes due October 27, 2007
("Senior Notes") and 5,250,000 warrants (the "Unit Warrants") to purchase
5,250,000 shares of Common Stock of the Company at an exercise price of $4.40
per share. In addition, UBS Securities LLC, the initial purchaser of the Units
in the Senior Note Offering, was granted 2,250,000 warrants (the "Initial
Warrants") to acquire 2,250,000 shares of Common Stock of the Company at an
exercise price of $4.40 per share. The Unit Warrants are and the Initial
Warrants are currently exercisable and both expire on October 27, 2007. Interest
is payable semi-annually beginning on April 1, 1998.

         The fair value of the Unit Warrants which is approximately $18,500 is
reflected as an original issue discount on the Senior Notes. Additionally, the
Company incurred direct financing costs of approximately $14,900, including the
fair value of $7,900 of the Initial Warrants, as determined by an investment
bank. The original issue discount and direct financing costs are being amortized
to interest expense over ten years using the level yield method with an
effective interest rate of 18.9 percent. The fair value of the Unit Warrants and
Initial Warrants was determined by an investment banking firm using the
Black-Scholes option pricing model with the following assumptions: volatility of
90%, risk-free interest rate of 6.24%, zero dividend yield and an expected life
of 10 years.

         The Senior Notes are redeemable on or after October 27, 2002 at the
option of the Company, in whole or in part from time to time, at specified
redemption prices declining annually to 100% of the principal amount on or after
October 27, 2005, plus accrued and unpaid interest. Upon a change in control,
the Company is required to make an offer to purchase the Senior Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any. The Senior Notes contain certain
restrictive covenants that, among other things, limit the ability of the Company
to incur additional debt or issue preferred stock, pay dividends, enter into
related party transactions or make certain other restricted payments.

         The net proceeds to the Company from the Senior Note Offering were
approximately $142,500, after deducting the underwriting discount and offering
expenses. Approximately $57,300 of the proceeds were used to purchase a
portfolio of securities that was deposited in escrow for payment of interest on
the Senior Notes through October 27, 2000 and, under certain circumstances, as
security for repayment of principal of the Senior Notes.

         In addition to the deposit of a portion of the proceeds from the Senior
Note Offering to fund interest payments on the Senior Notes through October
2000, the Company deposited $62 million of the proceeds from the Senior Note
Offering in a separate account under a trustee's control pending application of
such funds by the Company for the payment of: (a) Permitted Expenditures; (b) in
the event of a Change in Control of the Company, the Change in Control Payment
and (c) in the event of a Special Offer to Purchase, or a Special Mandatory
Redemption, the purchase or redemption price in connection therewith.

CONVERTIBLE DEBENTURES

         On February 3, 1997, the Company issued $1,500 aggregate principal
amount of 7% Convertible Debentures due February 3, 2000 and warrants to
purchase an aggregate 100,000 shares of the Company's Common Stock. Pursuant to
the terms of the 7% Convertible Debentures (i) the conversion price was
equivalent to the lesser of the fair value of the Company's common stock on the
date the debt was issued or 83% of the fair value of the Company's common stock
at the date of conversion, (ii) the Company was obligated to register with the

                                      F-16
<PAGE>

SEC all shares of common stock underlying the warrants and debentures, and (iii)
the failure to register such shares of common stock by June 30, 1997 would
result in an additional weekly interest charge of 0.1 percent on the outstanding
principal balance. On May 6, 1997 the Company issued $2,000 aggregate principal
amount of 8% Convertible Debentures due April 30, 1998 and warrants to purchase
an aggregate 20,000 shares of the Company's Common Stock (collectively the
"Convertible Debentures"). Pursuant to the terms of the 8% Convertible
Debentures (i) the conversion price was equivalent to the lesser of the fair
value of the Company's common stock on the date the debt was issued or 80% of
the fair value of the Company's common stock on the date of conversion, (ii) the
Company was obligated to register with the SEC all shares of common stock
underlying the warrants and debentures, and (iii) the failure to register such
shares of common stock by August 6, 1997 would result in an additional cash
payment every 30 days thereafter of 3% of the original principal amount.

         The Convertible Debentures were issued with beneficial conversion
features due to the fact that the holders could convert the debt at any time
prior to the maturity at a conversion price less than the conversion date fair
value of the Company's common stock. As a result, the Company recorded $810 as
interest cost and additional paid in capital related to the value of the
beneficial conversion feature in 1997.

         During 1997, the Company issued 1,101,782 shares of Common Stock in
connection with the conversion of $1,950 aggregate principal amount of the
Convertible Debentures, plus related accrued interest. Effective December 31,
1997 the Company entered into an agreement for early extinguishment of the
Company's remaining financial obligations related to the Convertible Debentures
for $2,600 in cash. The cash payment was made on January 5 and 8, 1998.

         Such settlement, including the related loss on extinguishment of $255
classified as interest expense, has been accrued for as of December 31, 1997 and
related to the following items:

Outstanding principal ................      $1,550
Accrued interest .....................         128
Redemption premiums ..................         335
Penalties ............................         587
                                            ------

                                            $2,600
                                            ======

         The above redemption premiums and penalties have been included in
interest expense in the accompanying statement of operations. As a result of
such settlement and redemption of outstanding principal, $344 of paid-in capital
related to the beneficial conversion feature was reversed.

 PRIVATE ISSUANCES OF COMMON AND PREFERRED STOCK

         During October 1999, Patricio E. Northland, the Company's chairman of
the board, president and chief executive officer purchased from the Company
800,000 restricted common shares of the Company and received options to purchase
2.2 million common shares of the Company. The purchase price per share for the
restricted common shares, and the exercise price per share of the options, was
$10.70. These options vest, subject to Mr. Northland's continued employment,
one-ninth on March 1, 2001 and three-ninths on each of March 1, 2002 and 2003,
and one-ninth on each of March 1, 2004 and 2005. The restricted shares are
subject to repurchase rights by the Company at $10.70 per share; the number of
these shares subject to that repurchase right is progressively reduced at the
same rate as the rate at which Mr. Northland's 2.2 million options vest. As of
December 31, 1999 the Company had a shareholder loan receivable from Mr.
Northland related to the 800,000 shares in the amount of $8,645, including
accrued interest. During January 2000 this shareholder loan receivable was paid
to the Company.

         On June 30, 1999, the Company issued 1,250,000 shares of 15%
Convertible Redeemable Preferred Stock (the "Preferred Stock") for an aggregate
amount of $10 million. The Preferred Stock is convertible at any time at the

                                      F-17
<PAGE>

option of the holders into the Company's common stock on a one for one basis,
subject to adjustment. Beginning June 30, 2001, if the closing price of the
Company's common stock ,as quoted on the NASDAQ Stock Market, exceeds $15 per
share for 30 consecutive trading days, the Preferred Stock must be converted
into the Company's common stock. The holders of the Preferred Stock also have
certain preemptive, redemption, anti-dilution, tag along and registration
rights.

         During September 1997, the Company's Board of Directors authorized the
issuance of 850,000 shares of common stock to two officers and the Company
recognized related non-cash compensation expense of $2,338.

4.  RELATED PARTY TRANSACTIONS

 TELECTRONIC S.A. AND MR. HERNAN STREETER

         During the three years ended December 31, 1999, the Company entered
into certain transactions with Telectronic S.A. and its founders, Mr. George A.
Cargill and Mr. Eleazar Donoso. Mr. Cargill and Mr. Donoso are both Company
shareholders. Mr. Cargill has been a director of the Company since 1994.

         During the two years ended December 31, 1997, the Company entered into
several transactions with Mr. Hernan Streeter. Mr. Streeter formerly served the
Company as its Chief Executive Officer and its Chairman of the Board.

        The Company purchased approximately $104, $52, and $77 of certain
telecommunication equipment in 1999, 1998 and 1997, respectively, from
Telectronic, S.A.

         On July 24, 1995, Mr. Donoso received 1,425,000 shares of Common Stock
(the "Donoso Shares") from the Company in exchange for his ownership interest in
Hewster Servicios Intermedio S.A., a company which was acquired by the Company,
in a transaction which was exempt from the registration requirements of the
Securities Act pursuant to Regulation S and Section 4(2) thereof. On September
14, 1995, Mr. Donoso loaned the Donoso Shares to Laura Investments, Ltd., a
company owned and controlled by Mr. Streeter.

         From September 14, 1995 to March 1996, Laura Investments, Ltd. loaned
the Company an aggregate amount of $1,632. During March 1996, the Company
converted the original principal amount of $1,632 plus accrued interest of $7
into 839,235 shares of Common Stock which were registered in the name of Laura
Investments, Ltd. and issued in a transaction which was exempt from the
registration requirements of the Securities Act pursuant to Regulation S and
Section 4(2) thereof.

         During September 1997, Laura Investments Ltd. agreed to transfer
839,235 shares of the Company's Common Stock to Mr. Donoso in an attempt to
satisfy its obligations to Mr. Donoso in connection with the transfer of the
Donoso Shares to Laura Investments, Ltd. which occurred on September 14, 1995.
However, Mr. Donoso claimed that the Company owed him additional shares of
Common Stock in consideration of the initial transaction between Mr. Donoso and
Laura Investments Ltd. on September 14, 1995 (or the equivalent monetary
consideration). The Company issued 300,000 shares of Common Stock to Mr. Donoso
in October 1997 in settlement of all outstanding claims by Mr. Donoso against
the Company. The Company recognized interest expense of $852 related to the
aggregate fair value of such shares of Common Stock issued to Mr. Donoso. This
transaction was exempt from the registration requirements of the Securities Act
pursuant to Sections 4(2) and 4(6) thereof.

         During 1997, the Company issued and redeemed $200 of bridge notes from
Mr. Cargill. In connection with such bridge notes Mr. Cargill received 20,000
warrants to purchase the Company's common stock at an exercise price of $2.56
per warrant. The fair value, $21, of such warrants (determined using the
Black-Scholes option pricing model with the following assumptions: volatility of
90% risk free interest rate of 6.7%, zero dividend yield and expected life of

                                      F-18
<PAGE>

two years) was recorded as original issue discount and subsequently expensed
upon repayment of the bridge notes.

         Mr. Streeter was the primary shareholder and General Manager of
FirstCom Long Distance, which was acquired by the Company during 1997. Prior to
this acquisition, the Company made sales of $162 to FirstCom Long Distance.
Pursuant to provisions of the FirstCom Long Distance purchase agreement, the
Company paid Mr. Streeter a consulting fee of $120 during 1998.

 MAROON BELLS CAPITAL PARTNERS ("MBCP")

         During the year ended December 31, 1997, the Company entered into
certain transactions with MBCP. Two former directors of the Company, Paul Moore

and Phillip Magiera, are principals in MBCP. MBCP provided certain consulting
and financial advisory services to the Company during 1997.

         During 1997, the Company made expense reimbursements of $132 to MBCP
and its principals.

         During 1997, the Company converted $316, plus accrued interest
of $240 of outstanding liabilities to MBCP into 80,000 shares of the Company's
Common Stock.

         During October 1997, the Company entered into an agreement with MBCP
and its principals, Theodore Swindells, Paul Moore and Phillip Magiera, to
compensate them for services rendered to the Company. The services provided by
Messrs. Moore and Magiera related to their functions as directors of the
Company. Pursuant to such agreement, the Company made a cash payment to MBCP of
$500 at the closing of the Senior Note offering and issued to each of Messrs.
Moore and Magiera 250,000 shares of Common Stock and options to acquire 250,000
shares of Common Stock at an exercise price of $2.13 per share. The Company
recognized non-cash consulting expense related to (i) the grant date fair value
of the Common Stock of $1,420 and (ii) the intrinsic value of the stock options
of $355. Messrs. Moore and Magiera resigned from the Company's Board of
Directors effective as of the date of the agreement.

 OTHER RELATED PARTY TRANSACTIONS

         During April 1998 the Company loaned certain officers $606 (the
"Shareholder Loans") related to federal and state income tax liabilities arising
from shares of the Company's common stock granted to such officers during 1997.
The Shareholder Loans (i) bear an annual interest state of 7%, (ii) are due on
April 9, 2018 and (iii) are collateralized by 336,600 shares of the Company's
common stock.

           During October 1999, the Shareholder Loans, including accrued and
unpaid interest were forgiven by the Company. As a result of the forgiveness,
during 1999 the Company recorded compensation expense of $606.

         The Company paid approximately $1,012 and $604 in legal fees in 1999
and 1998, respectively, to a law firm having a senior partner who is also a
current Director of the Company.

         The Company's Colombian subsidiary, FirstCom Colombia, recorded revenue
of approximately $430 related to data transmission services provided to its
minority shareholder during 1999.

 5.  STOCK OPTIONS AND WARRANTS

         On October 18, 1999, the Company adopted the 1999 Stock Option and
Restricted Stock Purchase Plan (the "Plan") which provides for the granting of
incentive and non qualified stock options to purchase shares of Common Stock of
the Company and the granting of rights to purchase shares of Common Stock on a
restricted stock basis to selected employees, officers and directors of the
Company and its subsidiaries. The Plan

                                      F-19
<PAGE>

authorizes 3,000,000 shares of Common Stock for issuance upon the exercise of
stock options or rights to purchase shares of Common Stock on a restricted stock
basis, of which 2,745,000 common shares have been granted as of December 31,
1999. The vesting period of the stock options granted are established by a
committee of the Board of Directors (the "Committee"). The options granted vest
ratably over a four year period with the vesting beginning on the first
anniversary of the date of grant. The exercise price of common stock purchasable
under a stock option shall be determined by the Committee at the time of grant
but shall not be less than 100% of the fair market value of the underlying
stock; nor shall the exercise price be less than par value.

         Under the terms of the Company's currently outstanding stock option
agreements, options have a maximum term ranging from five to ten years from the
date of the grant. The options vesting period varies from full vesting upon
issuance of options to one forty eighth per month to the end of the option term.
A summary of the Company's stock option activity is as follows:
<TABLE>
<CAPTION>
                                    1999                          1998                       1997
                                                        ------------------------    -----------------------
                                             WEIGHTED                   WEIGHTED                   WEIGHTED
                                             AVERAGE                    AVERAGE                     AVERAGE
                                            EXERCISE                    EXERCISE                   EXERCISE
                               SHARES        PRICE        SHARES          PRICE        SHARES       PRICE
                            -----------     --------    -----------     --------    -----------    --------
<S>                           <C>           <C>           <C>           <C>           <C>          <C>
Outstanding at beginning
of year ................      8,499,584     $   2.54      7,295,000     $   2.73      3,625,000    $   2.31
  Granted ..............      3,917,000         9.32      1,708,334         1.61      3,670,000        3.15
  Exercised ............     (1,526,685)        2.15             --        --                --          --
  Cancelled ............       (546,399)        2.10       (503,750)        1.38             --          --
                            -----------     --------    -----------     --------    -----------    --------
Outstanding at
    end of year ........     10,343,500     $   5.19      8,499,584     $   2.55      7,295,000    $   2.73
                            ===========     ========    ===========     ========    ===========    ========
Options exercisable
    at year-end ........      6,197,391     $   3.08      6,335,918     $   2.54      4,970,365    $   2.50
                            ===========     ========    ===========     ========    ===========    ========
</TABLE>

         The following table summarizes information about stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING                            OPTIONS EXERCISABLE
                                        --------------------------------  ------------------------------------------------
                                                            WEIGHTED
                                          WEIGHTED          AVERAGE                            WEIGHTED
                                          AVERAGE          REMAINING                            AVERAGE
    EXERCISE             NUMBER           EXERCISE        CONTRACTUAL          NUMBER          EXERCISE         EXERCISE
      PRICE            OUTSTANDING         PRICE              LIFE          EXERCISABLE          PRICE           PRICE
------------------   ----------------   -------------    ---------------   ---------------    ------------  ---------------
<S>       <C>               <C>                 <C>                 <C>          <C>                <C>       <C>
     $ 1.01                   190,000           $1.01               10             190,000           $1.01         $1.01
  1.27 to  1.96             1,536,000            1.65                9           1,151,833            1.72      1.27 to  1.96
  2.00 to  2.42             2,470,000            2.29                8           2,086,667            2.22      2.00 to  2.42
  2.50 to  3.00             1,455,000            2.77                9           1,215,560            2.77      2.50 to  3.00
  4.00 to  4.40             1,102,500            4.36               10           1,100,000            4.36      4.00 to  4.40
  5.23 to  9.74               645,000            7.77                7             223,331            6.83      5.23 to  9.74
 10.01 to 10.70             2,615,000           10.65                9              40,000           10.70     10.01 to 10.70
 11.30 to 13.21               330,000           11.42                8             190,000           11.30     11.30 to 13.21
                           ----------                                            ---------
                           10,343,500                                            6,197,391
                           ==========                                            =========
</TABLE>

         Included in the preceding table are 1,020,000 stock options, of which
1,020,000 are exercisable at December 31, 1999, with an exercise price of $2.13
and a weighted average remaining contractual life of 8 years. The exercise price
of such stock options was less than the grant date fair value of the underlying
Common Stock.

         During 1997 the Company granted two officers 2,650,000 stock options
that vest over a two year period. The exercise price of such grants was equal to
the grant date fair market value of the underlying Common Stock, except for
850,000 options with an exercise price of $2.13. The Company recognized non-cash
compensation expense of $527 related to the 850,000 options. The terms of
1,000,000 stock options granted during 1996 were modified during 1997 to provide
for immediate vesting.

                                      F-20
<PAGE>

Including the Initial and Note Warrants described in Note. 3 - Capitalization,
the following is a summary of warrants granted by the Company:
<TABLE>
<CAPTION>
                                       1999             1998              1997
                               ----------------------------------------------------------------
                                SHARES     WEIGHTED    SHARES    WEIGHTED     SHARES    WEIGHTED
                                           AVERAGE                AVERAGE               AVERAGE
                                           EXERCISE               EXERCISE              EXERCISE
                                             PRICE                 PRICE                 PRICE
                               -----------------------------------------------------------------
<S>                            <C>            <C>      <C>          <C>       <C>          <C>
Outstanding at beginning of     8,487,226     $4.10    8,487,226    $4.10       697,226    $1.23
year
 Granted                               --                     --              7,790,000    $4.35
 Exercised                     (4,847,541)     4.08           --                     --       --
 Cancelled                        (34,914      5.75           --                     --       --
                               ----------     -----    ---------    -----    ----------    -----

 Outstanding at end of year     3,604,771      4.32     8,487,22    $4.10     8,487,226    $4.10
                               ==========     =====    =========    =====    ==========    =====

Exercisable at year-end         3,604,771     $4.32     8,487,22    $4.10       987,226    $1.86
                               ==========     =====    =========    =====    ==========    =====
</TABLE>

         These warrants resulted from the Company's financing activities from
1994 to 1997. The weighted average grant date fair value of warrants granted
during 1997 was $3.52.

         Non-cash compensation and consulting expenses relate to various stock
and stock options issued to employees and consultants for payment of services
rendered. These expenses are shown separately on the accompanying statements of
operations and all relate to selling, general and administrative expense.

6.  COMMITMENTS AND CONTINGENCIES

         One of the Company's subsidiaries entered into an operating agreement
in 1993 with Metro S.A. to install and operate the Company's optical fiber
telecommunication network in the tunnels, conduits and stations of lines 1 and 2
of the Santiago subway system. The Company has given Metro S.A. a $50
performance bond relating to these leases. The monthly lease rental is
equivalent to 15% of the net monthly invoicing of the company for services
rendered in the metropolitan region of Chile, subject to minimum amounts. The
lease expires in the year 2003. Under the agreement, the Company is obligated to
provide certain telecommunications services to Metro, S.A.

         The following summarizes future minimum payments under non-cancelable
operating lease agreements at December 31, 1999:

  2000 ..............       $1,532
  2001...............        1,513
  2002 ..............        1,545
  2003 ..............        1,589
  2004 and 2005 .........    2,172
                            ------
                            $8,351
                            ======

         Rental expense under operating leases was $919, $1,095, and $961 for
the years ended December 31, 1999, 1998 and 1997, respectively.

         In September 1997, the Company entered into an employment and severance
agreement (the "Northland Agreement") with Patricio E. Northland, President,
Chief Executive Officer and Chairman of the Board of Directors of the Company,
which replaced his former employment agreement with the Company. The Northland
Agreement has a term of three years unless terminated earlier for cause, death
or disability, and provides for an initial annual base salary of $350,000,
subject to an increase of $50,000 in each of the second and third year of the
agreement. In addition, Mr. Northland was granted non-qualified stock options to
purchase 300,000 shares of the Company's Common Stock in the following manner:
100,000 shares which vest on the date of employment at an exercise price of
$4.00 per share; 100,000 shares which vest one year thereafter at an exercise
price of $6.00 per share; and 100,000 shares which vest two years after the date
of employment at an exercise price of $8.00 per share. In consideration of Mr.
Northland's agreement to terminate his former employment agreement with the
Company, which would have provided for a substantial bonus to Mr. Northland upon
consummation of an equity Offering, the Company agreed to pay Mr. Northland a
performance bonus of $250,000 and vest all of his existing options to acquire
1,000,000 shares of Common Stock granted under his prior employment agreement.
As a result of this transaction, the Company recognized compensation expense of
$250 related to the performance bonus. The strike price of the vested options
was equivalent to the fair value of the underlying Common Stock on the date of
the Northland Agreement.

                                      F-21
<PAGE>


7. YEAR-END ADJUSTMENTS

         The Company has changed its method of reporting revenues and cost of
revenues from the exchange of international long distance traffic with other
carriers. The Company has retroactively reduced revenues and cost of revenues in
the amount of $7,014 and $917, for the years ending December 31, 1999 and 1998,
respectively, to reflect the trading of international long distance traffic on a
net basis. These adjustments have no effect on net losses in these two years.

                                      F-22

<PAGE>

                                 EXHIBIT INDEX

EXHIBIT             DESCRIPTION

23.1           Consent of Ernst & Young, LLP

27.0           Financial Data Schedule