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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, DC 20549


FORM 10-K



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

For the fiscal year ended December 31, 2000

OR



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

For the transition period from
                                     to

Commission File Number 333-12977

IMPSAT Fiber Networks, Inc.

IMPSAT S.A.

(Exact name of registrant as specified in its
charter)


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

Alférez Pareja 256 (1107)

Buenos Aires, Argentina


(5411) 5170-0000


(Address, including zip code, and telephone
number, including area code, of registrants principal
executive offices)


Securities registered pursuant to Section 12(b) of the
Act: None

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|                    |  | Name of Each Exchange
|Title of Each Class |  | On Which Registered  
|                    |  |                      
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Securities registered pursuant to Section 12(g) of the
Act:common stock, par value $0.01 per share

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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.

State the aggregate market value of the voting stock held by
non-affiliates of the registrants.

The aggregate market value of voting stock held by
non-affiliates of the IMPSAT Fiber Networks, Inc. based on the
closing price at which stock was sold on the Nasdaq National
Market on March 15, 2001, was approximately
$75.8 million. As of March 15, 2001, IMPSAT Fiber
Networks, Inc. had 91,428,570 shares of common stock, $0.01 par
value, outstanding.



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TABLE OF CONTENTS



|                              |                                                                                              |  |  |  |  |  |  | 
|----------------------------- | -------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                       
|                              | Item 1. Business                                                                            
|                              | Item 2. Properties                                                                          
|                              | Item 3. Legal Proceedings                                                                   
|                              | Item 4. Submission of Matters to a Vote of Security-Holders                                 
|PART II                      
|                              | Item 5. Market for Registrants Common Equity and Related Stockholder Matters               
|                              | Item 6. Selected Financial Data                                                             
|                              | Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 7a. Quantitative and Qualitative Disclosure About Market Risk                          
|                              | Item 8. Financial Statements and Supplementary Data                                         
|                              | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|PART III                     
|                              | Item 10. Directors and Officers                                                             
|                              | Item 11. Executive Compensation                                                             
|                              | Item 12. Security Ownership of Certain Beneficial Owners and Management                     
|                              | Item 13. Certain Relationships and Related Transactions                                     
|                              | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                   
|Capacity Commitment Agreement
|Capacity Purchase Agreement  



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TABLE OF CONTENTS

|                       |  |                                                                                        |    |  |    | 
|---------------------- |  | -------------------------------------------------------------------------------------- | -- |  | -- | 
|                      
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|CERTAIN CONSIDERATIONS |  |                                                                                        | 3  | 
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|PART I                 |  |                                                                                        | 9  | 
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|ITEM  1.               |  | BUSINESS                                                                               |    |  | 9  | 
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|                       |  | THE BROADBAND NETWORK                                                                  |    |  | 12 | 
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|ITEM  2.               |  | PROPERTIES                                                                             |    |  | 17 | 
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|ITEM  3.               |  | LEGAL PROCEEDINGS                                                                      |    |  | 19 | 
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|ITEM  4.               |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS                                    |    |  | 19 | 
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|PART II                |  |                                                                                        | 20 | 
|                      
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|ITEM  5.               |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
	STOCKHOLDER MATTERS                 |    |  | 20 | 
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|ITEM  6.               |  | SELECTED FINANCIAL DATA                                                                |    |  | 20 | 
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|                       |  | OUR COMPANY                                                                            |    |  | 21 | 
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|                       |  | IMPSAT ARGENTINA                                                                       |    |  | 22 | 
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|ITEM  7.               |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
	AND RESULTS OF OPERATIONS |    |  | 23 | 
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|ITEM  7A.              |  | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                              |    |  | 36 | 
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|ITEM  8.               |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                            |    |  | 37 | 
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|ITEM  9.               |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
	FINANCIAL DISCLOSURE  |    |  | 37 | 
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|PART III               |  |                                                                                        | 38 | 
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|ITEM 10.               |  | DIRECTORS AND OFFICERS                                                                 |    |  | 38 | 
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|ITEM 11.               |  | EXECUTIVE COMPENSATION                                                                 |    |  | 38 | 
|                      
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|ITEM 12.               |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                         |    |  | 38 | 
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|ITEM 13.               |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                         |    |  | 38 | 
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|ITEM 14.               |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                       |    |  | 38 | 
|                      
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|POWER OF ATTORNEY      |  |                                                                                        | 41 | 



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Outlook and Uncertainties

Certain information in this Report contains
forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical fact
are forward-looking statements for purposes of these
provisions, including any projections of earnings, revenues or
other financial items, any statements of the plans and
objectives of management for future operations, any statements
concerning proposed new products or services, any statements
regarding future economic conditions or performance, and any
statement of assumptions underlying any of the foregoing. In
some cases, forward-looking statements can be identified by the
use of terminology such as may, will,
expects, plans, anticipates,
estimates, potential, or
continue, or the negative thereof or other
comparable terminology. Although IMPSAT Fiber Networks, Inc.
believes that the expectations reflected in its forward-looking
statements are reasonable, it can give no assurance that such
expectations or any of its forward-looking statements will prove
to be correct, and actual results could differ materially from
those projected or assumed in these forward-looking statements.



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The terms VSAT®, Dataplus®, Teledatos®,
Regional Teleport®, Difusat®, Interplus®, Global
Fax®, Minidat®, ConeXia® and
Telecampus® are service marks or trademarks of
IMPSAT Fiber Networks, Inc. or its subsidiaries that are
registered or otherwise protected under the laws of various
jurisdictions. In this Report, company,
IMPSAT, we, us and
our refer to IMPSAT Fiber Networks, Inc. and its
subsidiaries.

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CERTAIN CONSIDERATIONS

In addition to other information in this Form 10-K, the
following risk factors should be carefully considered in
evaluating IMPSAT and its business because such factors
currently may have a significant impact on IMPSATs
business, operating results and financial condition. As a result
of the risk factors set forth below and elsewhere in this
Form 10-K and the risks discussed in IMPSATs other
Securities and Exchange Commission filings, actual results could
differ materially from those projected in any forward-looking
statements.

We have substantial debt and we may lack financial resources
to meet our obligations or support our business and
operations

At December 31, 2000, we had total consolidated
indebtedness of $968.2 million. Our high level of indebtedness
could have important consequences for our business, operating
results and financial condition, including:



| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | making it difficult for us to obtain future financing                                                                   
|
| |  | limiting our ability to react to changes in the marketplace                                                             
|
| |  | a substantial portion of our operating income must be allocated
	to making principal and interest payments              
|
| |  | we are more indebted than a number of our competitors and this
	may place us at a competitive disadvantage in the future

Our significant indebtedness could have a material adverse
effect on our business, results of operations and financial
condition.

We may be unable to raise the additional capital necessary to
continue growing our business

We may require significant amounts of additional capital to fund:



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | future expansions of our telecommunications networks, including
	the operation of our Broadband Network
|
| |  | the refinancing of debt as it becomes due                                                              
|
| |  | net losses                                                                                             

If we fail to obtain financing, we may have to delay or abandon
some or all of our operational plans, which could have a
material adverse effect on us. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources for
an estimate of our capital expenditure requirements.

The exact amount and timing of our future capital requirements
will depend upon many factors, including:



| |   |                                                                                 
| | - | --------------------------------------------------------------------------------
| |  | the cost, timing and extent of upgrading or expanding our
	networks and services
|
| |  | the development of new services                                                 
|
| |  | our ability to penetrate new markets                                            
|
| |  | regulatory changes                                                              
|
| |  | the status of competing services                                                
|
| |  | potential acquisitions, investments and strategic alliances                     
|
| |  | our results of operations                                                       

We and our subsidiaries may obtain new capital through
subsequent public and private equity and debt financings. If we
incur additional indebtedness, we may be subject to more
restrictive financial covenants. We

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We have a history of incurring losses which may make it
difficult to fund our future operations

We have a limited operating history compared to a number of our
larger competitors. We commenced commercial operations in 1990
and have experienced rapid growth, increasing annual revenues
from $8.2 million in 1991 to $128.4 million in 1996
and $322.1 million in 2000. We recorded net losses of
$34.0 million in 1998, $131.5 million in 1999, and
$154.1 million in 2000. While the annual rate of growth in
our telecommunications revenue increased in 2000 at a higher
rate than any year since 1994, increased competition, adverse
economic conditions in our countries of operation and other
factors could negatively affect our rates of revenue growth and
expansion. If we do not achieve and sustain profitability, our
ability to respond effectively to market conditions, to make
capital expenditures and to take advantage of business
opportunities could be negatively affected.

Continued growth of our business depends upon our ability to
manage expansion and development effectively

Our ability to manage our expansion effectively will require us
to continue to implement and improve our operating, financial
and accounting systems and to hire, train and manage new
employees. Among other things, the continued expansion and
development of our business will also depend upon our ability to:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | successfully implement our Broadband Network and related
	strategies                                               
|
| |  | design and develop integrated private telecommunications networks                                                  
|
| |  | secure financing                                                                                                   
|
| |  | install telecommunications infrastructure                                                                          
|
| |  | obtain any required government authorizations or licenses as the
	telecommunications sector continues to deregulate
|
| |  | evaluate and penetrate potential new markets                                                                       
|
| |  | hire enough qualified employees                                                                                    

In addition, we must perform these tasks in a timely manner, at
reasonable costs and on satisfactory terms and conditions.
Failure to effectively manage our planned expansion could have a
material adverse effect on our business, results of operations
and financial condition.

Our expansion may involve acquiring other companies or assets.
These acquisitions could divert our resources and management
attention and require integration with our existing operations.
We cannot assure you that these acquisitions will be successful.
We further cannot assure you that we will be successful or
timely in developing and marketing service enhancements or new
services that respond to technological change, changes in
customer requirements and emerging industry standards.

We face numerous risks that could adversely affect our
Broadband Network strategy

Operating the Broadband Network may have a negative impact
on our results of operations

Operation of the Broadband Network, which includes the expansion
into new services for our business customers, will involve:



| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | regulatory risks, including obtaining the appropriate licenses                                                                                                        
|
| |  | interconnection difficulties                                                                                                                                          
|
| |  | large amounts of capital expenditures                                                                                                                                 
|
| |  | competition from large, well-financed international
	telecommunications carriers (such as WorldCom, Inc., Telecom
	Italia, and Spains Telefonica  S.A., among others)

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| |   |                                         
| | - | ----------------------------------------
| |  | substantial start-up and marketing costs

Our operation of the Broadband Network may have a negative
impact on our results of operations, at least over the short
term.

Expansion of the Broadband Network will require
substantial additional resources that we may not have

We may need to grow and adapt the Broadband Network to respond
to:



| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | higher than expected growth in the number of our customers                                     
|
| |  | requests by our customers for coverage of our Broadband Network
	outside its existing footprint
|
| |  | changes in our customers service requirements                                                 
|
| |  | technological advances by our competitors                                                      

We may require substantial additional financial, operational and
managerial resources to expand or adapt the Broadband Network.
If we are unable to expand or adapt the Broadband Network to
respond to these developments on a timely basis and at a
commercially reasonable cost, then our business will be
materially adversely affected.

Our failure to acquire, integrate and operate new
technologies could harm our competitive position

The telecommunications industry is characterized by rapid and
significant technological advancements and the introduction of
new products and services. We do not possess significant
intellectual property rights with respect to the technologies we
use and we are dependent on third parties for the development of
and access to new technology. In addition, we generally own the
customer premises equipment we use to provide our services and
we own the fiber optic networks, including switching equipment,
that constitute the Broadband Network. Therefore, technological
changes that render our equipment and the Broadband Network out
of date, less efficient or more expensive to operate than newer
equipment could cause us to incur substantial increases in
capital expenditures to upgrade or replace such equipment.

We cannot predict the effect on our business of technological
changes, such as changes relating to emerging wireline and
wireless transmission technologies and the use of the Internet
for traditional voice, data or other broadband services. In
addition, it is impossible for us to predict with any certainty
which technology will prove to be the most economic, efficient
or capable of attracting new customers. A reduction in the
demand for data transmission services or a failure by us to
obtain and adapt to new technology in our markets could have a
material adverse effect on our ability to compete successfully.

We face significant competition in Latin America

The telecommunications network industry in Latin America is
highly competitive and is generally characterized by low
barriers to entry. We expect that competition in the industry
will increase substantially. We compete on the basis of our
experience, quality, customer service, range of services offered
and price.

We have experienced pricing pressure for some of our services in
our more mature markets, and we expect to continue to face
pricing pressure. We may further experience declining operating
profit margins as the monopoly public telephony operators, or
PTOs, in the countries in which we operate become more
competitive and place greater emphasis on data
telecommunications. In addition, we expect new competitors to
enter our markets.

PTOs have competitive advantages in the marketplace

In most of our markets, our principal competitor is the local
PTO or an affiliate of the local PTO. The PTOs generally have
significant competitive advantages. These advantages generally
include:



| |   |                                                  
| | - | -------------------------------------------------
| |  | close ties with national regulatory authorities  
|
| |  | control over connections to local telephone lines

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| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | ability to subsidize competitive services with revenues
	generated from services they provide on a monopoly or duopoly
	basis
|
| |  | reluctance of regulators to adopt policies and grant regulatory
	approvals that will result in increased competition         

For example, our principal competitors in Argentina are Telecom
Soluciones S.A. and Advance Telecomunicaciones S.A.,
which are data transmission companies controlled by Telecom
Argentina STET-France Telecom S.A. and Telefonica de
Argentina S.A., respectively. Telecom Argentina and
Telefonica are the PTOs in northern and southern Argentina,
respectively. In Brazil, our principal competitors are Embratel
and Telemar.

In the future, the PTOs may devote substantially more resources
to the sale, marketing and provision of services that compete
with us, which could have a material adverse effect on our
business, results of operations and financial condition.

International telecommunications carriers have greater
resources than we do

We compete with private operators of satellite data transmission
networks and terrestrial telecommunications links. We also
expect to face competition from large international
telecommunications carriers, such as AT&T, WorldCom and
Sprint, and from other industry participants. While
international telecommunications carriers have focused on long
distance telephony services, they may focus on the private
telecommunications network systems segment of the
telecommunications market as deregulation continues. For
example, with the introduction of full competition in
Argentinas long distance telephony in November 2000,
these large telecommunications carriers may enter the Argentine
telephony market and provide data transmission services as well.
Many of these potential competitors have substantially greater
financial and other resources than we do. In addition,
consolidation of telecommunications companies and the formation
of strategic alliances within the telecommunications industry
could give rise to significant new competitors. For example,
AT&T has formed AT&T Latin America by acquiring and
merging the operations of FirstCom Corp., which has operations
in Chile, Colombia and Peru, Brazil-based Netstream, and
Keytech LD, a local exchange carrier that is licensed to
offer wireless, high-speed internet and other telecommunications
services in Argentina. AT&T Latin America has operations in
Argentina, Brazil, Chile, Colombia and Peru.

In addition, we face competition from emerging private
telecommunications providers such as MetroRED
Telecomunicaciones S.A., Engeredes S.A., TechTel and
Diveo Broadband Networks. These companies are data transmission
service providers with expanding operations in Argentina and
Brazil. If any of our competitors or potential competitors
devote significant additional resources to the provision of
private telecommunications network services to our customers,
there could be a material adverse effect on our business,
results of operations and financial condition.

Our competitors could take advantage of new or competing
technologies to our detriment

Although we believe we have the flexibility to act quickly to
take advantage of any significant technological development, new
competing technologies may negatively affect our business. For
example, new technologies such as digital subscriber line, or
DSL, can significantly enhance the speed of traditional copper
lines. DSL or other technologies could enable our PTO
competitors to offer new high-speed services without undergoing
the expense of replacing their existing copper networks.
Widespread use of DSL in our markets could have a material
adverse effect on our last mile advantage. Our
telecommunications network services may face competition from
entities that use new or emerging voice and data transmission
services or technologies that currently are not widely available
in Latin America. Furthermore, competing technologies may gain
market and commercial acceptance. If these technologies are
successful, they may provide significant long-term competition
that could have a material adverse effect on our business,
results of operations and financial condition.

Our earnings will deteriorate if we cannot collect on our
customer accounts

We provide trade credit to our customers in the normal course of
business. As of December 31, 2000, approximately 26.4% of
our gross accounts receivable were past due more than six
months. We recorded a

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Economic and political conditions in Latin America pose
numerous risks to our operations

Substantially all of our revenues are derived from operations in
Latin America. During 1999 and 2000, we derived approximately
48.2% and 48.6% of our consolidated net revenues from services
provided by IMPSAT Argentina, approximately 26.7% and 20.8% by
IMPSAT Colombia and approximately 3.8% and 10.4% by IMPSAT
Brazil. We also have established operations in Venezuela,
Mexico, the United States and Ecuador, and in 2000 we began
operations in Chile and Peru. Other than the United States and
Mexico, each country where we have significant operations has
experienced political and economic instability in recent years.
Moreover, as events in the Latin American region have
demonstrated, negative economic or political developments in one
country in the region can lead to or exacerbate economic or
political crises elsewhere in the region. Furthermore, events in
recent years in other developing markets have placed pressures
on the stability of the currencies of a number of countries in
Latin America, including Argentina, Brazil, Colombia, Ecuador
and Venezuela. Continued pressures on the local currencies in
the countries in which we operate are likely to have an adverse
effect on many of our customers, which could in turn adversely
affect us. Volatility in regional currencies and capital markets
has also had an adverse effect on our ability and that of our
customers to gain access to international capital markets for
necessary financing and refinancing. A lack of international
capital sources for emerging market borrowers could have a
material adverse effect on us and many of our customers.

According to published reports of preliminary estimates, during
2000, Argentinas GDP fell 0.5%, while Brazil experienced a
4.2% growth in GDP in 2000, its strongest in half a decade.
Colombias and Venezuelas GDPs grew by 2.81% and
3.2%, respectively, in 2000. We do not expect fundamental
improvements in macroeconomic conditions in Latin America in the
short term. We cannot assure you that there will not be a
continuation of economic difficulties in Latin America,
including volatility in regional currencies and capital markets,
which would have a material adverse effect on our business,
results of operations and financial condition.

We are vulnerable to currency fluctuations, devaluations and
restrictions that may increase our losses and cause fluctuations
in our operating results

A substantial portion of our costs, including lease payments for
satellite and fiber optic capacity, purchases of capital
equipment, and payments of interest and principal on our
indebtedness, is payable in U.S. dollars. To date, we have not
entered into hedging or swap contracts to address currency risks
because our contracts with our customers generally provide for
payment in U.S. dollars or for payment in local currency linked
to the exchange rate between the local currency and the U.S.
dollar at the time of invoicing. These contractual provisions
are structured to reduce our risk if currency exchange rates
fluctuate. However, given that the exchange rate is generally
set at the date of invoicing and that in some cases we
experience substantial delays in collecting receivables, we are
exposed to exchange rate risk. Pursuant to Brazilian law, our
contracts with customers in Brazil cannot be denominated in
dollars or linked to the exchange rate between the Brazilian
realand the U.S. dollar. Our expansion in Brazil,
including our development of the Broadband Network in Brazil,
will increase our exposure to exchange rate risks.

We are negatively affected by currency devaluations as our
customers revenues are generally denominated in local
currencies. Substantial or continued devaluations in local
currencies relative to the U.S. dollar could have a material
adverse effect on the ability of our customers to absorb the
costs of a devaluation. This could result in our customers
seeking to renegotiate their contracts with us or, failing
satisfactory renegotiation, defaulting on or canceling their
contracts. Our competitors and potential future competitors,
including the PTOs and large, multinational telecommunications
companies, may be less exposed to currency risk or may be better
able to hedge their currency risk and could thereby gain a
relative competitive advantage in the event of a currency
devaluation. In addition, Latin American economies have
experienced shortages in foreign

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We face regulatory risks and uncertainty with respect to
local laws and regulations

Our business is dependent upon the procurement and maintenance
of licenses to provide various telecommunications network
services in the countries in which we operate. We believe that
we have all licenses required for the conduct of our current
operations. We expect that those licenses that are subject to
expiration will be renewed in due course upon our application to
the appropriate authorities. Due to the political and economic
risks associated with the countries in which we operate, we
cannot assure you that we will be able to maintain our licenses
in force or that they will be renewed upon their expiration. The
loss, or substantial limitation upon the terms, of our licenses
could have a material adverse effect on our results of
operations. We cannot assure you that we will succeed in
obtaining all requisite regulatory approvals to operate in those
countries in which we may desire to do business.

Local laws and regulations differ significantly among the
jurisdictions in which we operate and in which we may operate in
the future. The interpretation and enforcement of these laws and
regulations vary and are often based on the informal views of
the local ministries which, in some cases, are subject to
influence by the PTOs. The conditions governing our service
offerings may be altered by future legislation or regulation. In
some of our principal existing and target markets, laws and
regulations prohibit or limit our provision of certain
telecommunications services.

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PART I




Item 1.  Business

General

We are a leading provider of private telecommunications network
and Internet services in Latin America. We offer integrated
data, voice and Internet solutions, with an emphasis on
broadband transmission, for national and multinational
companies, financial institutions, governmental agencies and
other business customers. We also offer dedicated Internet
services to Internet service and content providers.

We have operations in Argentina, Colombia, Venezuela, Ecuador,
Mexico, Brazil, Chile, Peru and the United States and also
provide our services in other countries in Latin America. We
provide telecommunications and Internet services through our
networks, which consist of owned fiber optic and wireless links,
teleports, earth stations and leased fiber optic and satellite
links. We own and operate 15 metropolitan area networks in some
of the largest cities in Latin America, including Buenos Aires,
Bogotá, Caracas and São Paulo.

In the fourth quarter of 2000, we completed the construction of
an extensive pan-Latin American broadband fiber optic network
(which we call our Broadband Network) connecting major cities
across Argentina and Brazil, and the commencement of commercial
operation of the full Broadband Network in those locations. Our
Broadband Network allows us to enhance the services we presently
provide and significantly increase our transmission speed and
capacity. The Broadband Network is comprised of eight
metropolitan area fiber optic networks and wireless links, which
extends over 830 route kilometers in the largest cities in
Argentina and Brazil, and long-haul fiber optic backbones in
Brazil, Argentina, Chile and Colombia extending over 6,400 route
kilometers. It stretches from the Pacific Ocean at Valparaiso,
Chile to the Atlantic Ocean, at Las Toninas, Argentina and
between Curitiba, Rio de Janeiro and São Paulo, Brazil. Our
new network uses advanced transmission technologies, including
dense wave division multiplexing, or DWDM, asynchronous transfer
mode, or ATM, and Internet protocol, or IP.

IMPSAT Fiber Networks, Inc. was organized in 1994 as a Delaware
holding company to combine the IMPSAT businesses in Argentina,
Colombia and Venezuela. Our operations started in Argentina in
1990 under the name IMPSAT S.A. (IMPSAT Argentina). We began
operations outside of Argentina with the establishment of IMPSAT
Colombia in 1991 and the establishment of IMPSAT Venezuela in
1992. New operating subsidiaries were created in Ecuador (IMPSAT
Ecuador) and Mexico (IMPSAT Mexico) in 1994, in the United
States (IMPSAT USA) in 1995 and in Brazil (IMPSAT Brazil) in
1998. In January 2000, we changed our companys name
from IMPSAT Corporation to IMPSAT Fiber Networks, Inc.

In February 2000, we completed the initial public offering
of 11,500,000 shares of our common stock, representing
approximately 12.6% of our current total outstanding common
stock, for total proceeds after expenses and commissions of
approximately $180.8 million. In addition, we raised
approximately $48.0 million after expenses through the
simultaneous sale, through a private placement, of 2,850,000
shares of common stock to British Telecommunications plc, one of
our existing stockholders. We refer to this transaction as the
British Telecommunications private placement. We also exchanged
shares of our common stock for the minority interests in some of
our subsidiaries, and the holders of our preferred stock
converted the preferred stock into shares of our common stock.
On February 11, 2000, we completed the private placement of
our $300,000,000 12 3/4% Senior Notes due 2005 (the
Notes due 2005), pursuant to Rule 144A under
the U.S. Securities Act of 1933. On July 26, 2000, we
completed our exchange offer pursuant to which all outstanding
Notes due 2005 were exchanged for identical notes that are
registered under the Securities Act of 1933.

Services

Our comprehensive telecommunications solutions consist of any
combination of our service offerings, including the enhanced and
additional services that we are able to offer using our
Broadband Network in Argentina and Brazil. We currently classify
these service offerings into four categories: data and value
added services, Internet services, carriers carrier
services, and telephony services.

9



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Data and Value Added Services. We offer our customers a
broad range of end-to-end network service combinations for their
point-to-point and point-to-multipoint telecommunications needs,
ranging from simple connections to customized private network
solutions. We offer our network services over our existing and
planned networks, which are comprised of metropolitan area fiber
optic rings and wireless networks, fiber optic and satellite
links. We also offer value-added services, including secure web
and applications hosting services through our advanced data
center facilities located in São Paulo, Brazil; Buenos
Aires, Argentina; Santiago, Chile; Mexico City, Mexico; and Fort
Lauderdale, Florida.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Connection Services. Our customers can purchase leased
	lines, frame relay services, ATM services and Internet protocol
	digital connection services to support their specific
	transmission requirements. Leased lines are typically purchased
	by customers that constantly transmit large amounts of voice,
	data and video traffic. Frame relay and ATM services are
	typically purchased by customers requiring reliable and rapid
	transmission of variable amounts of voice, data and video
	traffic. We typically offer our leased line connection service
	from 64 Kbps to 2 Mbps, and we intend to expand this offering to
	155 Mbps of capacity. Our frame relay services are typically
	offered from 64 Kbps to 2 Mbps and we intend to offer our ATM
	services from 2 Mbps to 155 Mbps. In addition, we offer digital
	connections using Internet protocol with interfaces of 10 Mbps
	to 100 Mbps as one of our options for local data network
	solutions.
|
| |  | Private Network Services. For customers that require
	significant bandwidth and reliable data transmission between a
	number of sites, we offer customized private networks that
	combine fiber optic, fixed wireless and satellite technology. We
	also provide them with a variety of other services including
	network management services, trouble shooting reports, quality
	control and value-added services. Our consultative sales process
	ensures that each private network is designed to meet the
	evolving specific business and systems requirements of each
	customer. We also offer services such as video conferencing and
	remote learning as part of our private network services.                                                                                                                                                                                                                                                                   
|
| |  | Other Services. We offer information technology solutions
	and transactional services designed to facilitate our
	customers e-business and e-commerce needs and optimize our
	customers business processes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Information Technology Solutions. As part of our
	end-to-end solutions, we also offer a variety of information
	technology services, including the design, installation and
	integration of intranets, extranets and virtual private data
	networks, through which our customers can conduct business in a
	secure environment as well as integrate these new systems with
	their legacy telecommunications systems. In addition, we offer
	an outsourcing solution for customers that do not have the
	technical personnel or choose not to operate, manage and
	maintain their telecommunications systems and networks.                                                                                                                                   
|
| |  | Transactional Services. Our transactional services are
	designed to facilitate the e-commerce and e-business initiatives
	of our customers. For example, we provide our ConeXia service to
	customers in the healthcare sector for HMO membership
	verification, and we intend to expand our service to
	interconnect healthcare service providers (such as doctors,
	pharmacies, hospitals) to allow online prescription
	authorization for patients. We intend to provide additional
	business-to-business e-commerce solutions, primarily to retail
	businesses and financial institutions that conduct high volumes
	of transactions with their suppliers and business
	customers that increasingly want to establish on-line
	transaction capabilities.

Internet Services. We have offered Internet access
services to corporate and ISP customers since 1996. These
services are offered through our U.S.-based point of presence
that link us to the U.S. Internet backbone. We are leader in the
region in Internet services, as demonstrated by our being among
the first Internet2 carriers in Latin America and a founding
member of NAP of the Americas, which is one of only five Tier-1
Internet network access points (NAPs) in the world. With the
completion of our Broadband Network in Argentina and Brazil, we
can link our Latin American Internet backbone, as part of the
Broadband Network, to the U.S. Internet through our fiber optic
links in addition to our leased satellite links. With the
objective of positioning ourselves as the Latin America Internet
Backbone, we have deployed a series of data

10



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##### Table of Contents







| |   |                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Wholesale Internet Services. We provide a complete
	Internet service for ISPs, including managed line provisioning
	for domestic and international backbone connections between
	points of presence, access to our co-location sites and server
	services (e-mail and hosting services), managed modem and
	roaming services, as well as the use of our network operation
	and help desk services.
|
| |  | Corporate Internet Services. As part of providing our
	investors with a total telecommunications solution, we currently
	offer our corporate customers Internet access services including
	line provisioning, equipment provisioning and installation,
	primary and secondary domain registration and maintenance and
	technical support.                                                         
|
| |  | Data Center Services. We offer our clients a complete set
	of data center services ranging from housing, shared and
	dedicated hosting to more complex managed hosting solutions,
	including disaster recovery and applications management and
	outsourcing services.                                                                                                                             

Services to Carriers. Having put the Broadband Network
into operation across Argentina and Brazil, we intend to grow
our offerings of dark fiber capacity, lit fiber
services and duct capacity to ISPs and telecommunications
carriers. Our fiber optic cable will provide customers with
reliable, broadband connections between and among our
metropolitan area networks at high speeds. Customers that choose
to purchase lit capacity will be able to purchase an
initial amount of capacity (typically 45 Mbps) and increase that
capacity on demand. We also offer co-location services including
the rental of secure space, equipment provisioning and operation
and maintenance services.

In the third quarter of 2000 we entered into an agreement with
360networks, Inc., a Canadian fiber optic network provider,
which contemplated our sale to 360networks of IRUs on the
Broadband Network in Argentina and Brazil, and definitive
contracts regarding the IRU capacity were signed in the first
quarter of 2001. The sale of capacity on an IRU basis to
360networks should generate cash receipts of $96.0 million
in 2001. Earlier in 2000, the Company entered into similar
agreements with Global Crossing for our sale of IRU capacity on
the Broadband Network in Argentina, Brazil and Peru for a total
of $23.3 million, and in February 2001 the Company
announced the signing of an agreement with Nextel for the sale
of IRU capacity in Argentina for approximately $10 million.

Telephony Services. Following the completion of our
Broadband Network in Argentina and the effectiveness of our
license in Argentina to offer telephony services, we provide
switched-voice domestic and international long distance
telephony services to corporate customers and resellers in
Argentina, international long distance service in the United
States, where we have our international hub, and international
long distance service in Peru. We plan to expand these offerings
to other countries in the region, with the most significant
opportunity being the deregulation of the Brazilian telephony
market in January 2002. As components of our telephony
services, we currently offer local, national and international
long-distance services, Private Branch Exchange (PBX), toll free
services and local numbering to our corporate customers as well
as wholesale voice services to other carriers and resellers.

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The followingtable shows our companys net revenues
breakdown by service for the years ended December 31, 1998,
1999 and 2000:

|                               |                               |                                                       |        |         |         |      |     |      |       |   |        |         |         |  |      |      |       |   |        |         |         |  |      |      |       |  
|------------------------------ | ----------------------------- | ----------------------------------------------------- | ------ | ------- | ------- | ---- | --- | ---- | ----- | - | ------ | ------- | ------- |  | ---- | ---- | ----- | - | ------ | ------- | ------- |  | ---- | ---- | ----- | -
|                               |                               |                                                      
|                               |                               | December 31,                                         
|                               |                               |                                                      
|                               |                               |                                                       |        |         |         |     
|                               |                               | 1998                                                  |        | 1999    |         | 2000
|                               |                               |                                                       |        |         |         |     
|                               |                               |                                                       |        |         |         |      |     |      |       |   |        |        
|                               |                               |                                                      
|                               |                               | (dollar amounts in thousands and % of total revenues)
|                              
|                              
|                              
|                              
|Data and value added services: |                               |                                                       |        |         |         |      |     |      |       |   |        |         |         |  |      |      |       |   |        |         |         |  |      |     
|                              
|                              
|                              
|                              
|                               | Broadband                     |                                                       | $      | 32,875  |         |      |     | 15.8 | %     |   | $      | 33,714  |         |  |      | 14.7 | %     |   | $      | 41,218  |         |  |      | 12.8 | %    
|                              
|                              
|                              
|                              
|                               | Satellite                     |                                                       |        | 130,067 |         |      |     | 62.5 |       |   |        | 140,846 |         |  |      | 61.6 |       |   |        | 140,980 |         |  |      | 43.8 |      
|                              
|                              
|                              
|                              
|                               | Other value added services(2) |                                                       |        | 20,395  |         |      |     | 9.8  |       |   |        | 20,544  |         |  |      | 9.0  |       |   |        | 30,973  |         |  |      | 9.5  |      
|                               |                               |                                                       |        |         |         |      |     |      |       |   |        |         |         |  |      |      |       |   |        |         |         |  |      |     
|                               |                               | Total                                                 |        |         | 183,337 |      |     |      | 88.1  |   |        |         | 195,114 |  |      |      | 85.4  |   |        |         | 213,171 |  |      |      | 66.1  |  
|                              
|                              
|                              
|                              
|Internet                       |                               |                                                       | 20,240 |         |         |      | 9.7 |      |       |   | 26,160 |         |         |  | 11.5 |      |       |   | 35,298 |         |         |  | 11.0 |     
|                              
|                              
|                              
|                              
|Services to carriers           |                               |                                                       |       |         |         |      |    |      |       |   |       |         |         |  |     |      |       |   | 2,201  |         |         |  | 0.7  |     
|                              
|                              
|                              
|                              
|Equipment sales                |                               |                                                       | 4,512  |         |         |      | 2.2 |      |       |   | 7,177  |         |         |  | 3.1  |      |       |   | 13,797 |         |         |  | 4.3  |     
|                              
|                              
|                              
|                              
|Broadband network development  |                               |                                                       |       |         |         |      |    |      |       |   |       |         |         |  |     |      |       |   | 57,676 |         |         |  | 17.9 |     
|                               |                               |                                                       |        |         |         |      |     |      |       |   |        |         |         |  |      |      |       |   |        |         |         |  |      |     
|                               |                               | Total net revenues                                    |        | $       | 208,089 |      |     |      | 100.0 | % |        | $       | 228,451 |  |      |      | 100.0 | % |        | $       | 322,143 |  |      |      | 100.0 | %
|                               |                               |                                                       |        |         |         |      |     |      |       |   |        |         |         |  |      |      |       |   |        |         |         |  |      |     




|    |                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Compared to previous year.                                                                                                                         
|   
|(2) | Other value added services includes revenues from our
	transactional services, such as ConeXia, and our information
	technology solutions services.

The Broadband Network

The Latin American markets in which we operate are expected to
experience compounded annual telecommunications and data
services revenue growth of approximately 14% and 30%,
respectively, from 1998 through 2004. We believe that this
forecasted growth, coupled with continued deregulation in Latin
America, will fuel demand for additional broadband capacity. To
take advantage of this demand, in the fourth quarter of 1999 we
commenced the construction of our Broadband Network, which
enables us to provide high capacity, high speed
telecommunications services across Latin America. Our Broadband
Network, which went into full commercial operation in Argentina
and Brazil at the end of 2000, consists of:



| |   |                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | fiber optic local rings and wireless access points within major
	cities in Latin America, including Buenos Aires, São Paulo
	and Rio de Janeiro                    
|
| |  | long-haul, high capacity fiber optic backbones linking major
	cities in Latin America                                                                              
|
| |  | capacity on undersea cable systems to provide connections among
	major Latin American cities, as well as global
	telecommunications connections and Internet access

We believe that our Broadband Network will enable us to:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | cost-effectively offer more bandwidth-intensive services,
	including intranet and extranet services                                   
|
| |  | substantially reduce our costs for leased satellite capacity and
	leased telecommunications links as a percentage of our net
	revenues
|
| |  | create a high capacity, pan-Latin American Internet backbone                                                                          
|
| |  | offer Latin American companies more efficient access to the U.S.
	Internet backbone                                                   
|
| |  | continue to provide consistent, high quality service by keeping
	our customer traffic on our network                                  

Our Broadband Network has the capacity to transmit up to 5.7
terabits, or 5.7 trillion bits, of data per second.

Capacity Agreements. We have signed an agreement with
Global Crossing Development Co. for the purchase of at least
$46 million in indefeasible rights of use of capacity on
Global Crossings South American fiber optic network and on
other segments of its networks. These rights enable us to
interconnect our networks

12



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Customers

Overview. We have grown rapidly since the commencement of
our operations in 1990. Our customer base has increased from 125
corporate customers in two countries at December 31, 1992
to 2,656 corporate customers in nine countries at
December 31, 2000. Larger entities, which often have
significant needs for reliable, cost-effective data
transmissions and other telecommunications services, were the
first to use our customized telecommunications services. As a
result, a significant portion of our revenues has been derived
from our largest customers. In addition, because of our
relatively short operating history outside of Argentina and
Colombia, a significant number of our customers, including our
largest customers, are located in those two countries. As our
business further matures and as we extend the operation of the
Broadband Network, we expect that the average size of our
customers will decline.

Our customers consist of major governmental agencies, financial
institutions and leading national and multinational corporations
and private sector companies, including YPF/ Repsol, Royal Dutch
Shell, Banco de Galicia y Buenos Aires, Siemens and Reuters. Our
ten largest customers accounted for approximately 22% of our
revenues in 2000 and approximately 17.1% in 1999.

Our ten largest customers as of December 31, 2000 were:



| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Government of the Province of Cordoba, Argentina                                                                                                        
|
| |  | The Government of the Province of Buenos Aires, Argentina                                                                                                   
|
| |  | CNI (Confederação Nacional de Industrias),
	Brazils national association of private industrial
	companies                                                  
|
| |  | Banco de la Nación Argentina, or BNA, a state-owned bank
	and the largest bank in Argentina, with over 500 branches
	throughout Argentina                   
|
| |  | Corporacion Nacional de Ahorro y Vivienda, or Conavi, one of
	Colombias largest financial institutions                                                     
|
| |  | YPF/ Repsol, a multinational integrated oil company that is one
	of the largest companies in Argentina and has operations in
	other Latin American countries
|
| |  | Banco Mercantil SAICA, one of the largest financial institutions
	in Venezuela                                                                              
|
| |  | O Site Entretenimentos Ltda., an Internet service provider
	subsidiary of El Sitio, Inc.                                                                    
|
| |  | Perez Companc S.A., an Argentine energy conglomerate                                                                                                        
|
| |  | Citicorp Global Technology, Inc.                                                                                                                            

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The following table shows our customer concentration by country
as of the dates indicated. Totals presented do not include
customers from our fax, store and forward service.

|          |       |                                               |     |       |  |      |      |       |   |  |     |       |  |  |      |       |   |  |       |       |  |  |      |       |  
|--------- | ----- | --------------------------------------------- | --- | ----- |  | ---- | ---- | ----- | - |  | --- | ----- |  |  | ---- | ----- | - |  | ----- | ----- |  |  | ---- | ----- | -
|          |       |                                              
|          |       | As of December 31,                           
|          |       |                                              
|          |       |                                               |     |       |  |     
|Country   |       | 1998                                          |     | 1999  |  | 2000
|          |       |                                               |     |       |  |     
|          |       |                                               |     |       |  |      |      |       |   |  |     |      
|          |       |                                              
|          |       | (number of customers and percentage of total)
|         
|         
|         
|         
|Argentina |       |                                               | 490 |       |  |      | 33.4 | %     |   |  | 687 |       |  |  | 39.3 | %     |   |  | 1,146 |       |  |  | 43.1 | %    
|         
|         
|         
|         
|Colombia  |       |                                               | 602 |       |  |      | 41.0 |       |   |  | 560 |       |  |  | 32.1 |       |   |  | 672   |       |  |  | 25.3 |      
|         
|         
|         
|         
|Brazil    |       |                                               | 48  |       |  |      | 3.4  |       |   |  | 90  |       |  |  | 5.2  |       |   |  | 238   |       |  |  | 9.0  |      
|         
|         
|         
|         
|Venezuela |       |                                               | 140 |       |  |      | 9.5  |       |   |  | 191 |       |  |  | 10.9 |       |   |  | 251   |       |  |  | 9.5  |      
|         
|         
|         
|         
|Ecuador   |       |                                               | 134 |       |  |      | 9.1  |       |   |  | 149 |       |  |  | 8.5  |       |   |  | 210   |       |  |  | 7.9  |      
|         
|         
|         
|         
|Mexico    |       |                                               | 28  |       |  |      | 1.9  |       |   |  | 31  |       |  |  | 1.8  |       |   |  | 51    |       |  |  | 1.9  |      
|         
|         
|         
|         
|USA       |       |                                               | 25  |       |  |      | 1.7  |       |   |  | 37  |       |  |  | 2.2  |       |   |  | 64    |       |  |  | 2.4  |      
|         
|         
|         
|         
|Peru      |       |                                               |    |       |  |      |     |       |   |  |    |       |  |  |     |       |   |  | 15    |       |  |  | 0.6  |      
|         
|         
|         
|         
|Chile     |       |                                               |    |       |  |      |     |       |   |  |    |       |  |  |     |       |   |  | 9     |       |  |  | 0.3  |      
|          |       |                                               |     |       |  |      |      |       |   |  |     |       |  |  |      |       |   |  |       |       |  |  |      |      
|          | Total |                                               |     | 1,467 |  |      |      | 100.0 | % |  |     | 1,745 |  |  |      | 100.0 | % |  |       | 2,656 |  |  |      | 100.0 | %
|          |       |                                               |     |       |  |      |      |       |   |  |     |       |  |  |      |       |   |  |       |       |  |  |      |      

Customer Contracts. Our contracts with our customers
typically range in duration from six months to five years and
contracts with our private telecommunications network customers
are generally for three years. Contracts generally may be
terminated by the customer without penalty. The private
telecommunications network customers generally pay a one-time
installation fee and a fixed, monthly fee. We believe that as we
further commercialize our Broadband Network, we will develop a
more flexible pricing structure, using both a usage- based
billing and fixed fee-based billing model.

Except in Brazil, our contracts generally provide for payment in
U.S. dollars or for payment in local currency linked to the
exchange rate at the time of invoicing between the local
currency and the U.S. dollar. The revenues of our customers are
generally denominated in local currencies. Although our
customers include some of the largest and most financially sound
companies and financial institutions in their markets,
devaluation of such currencies relative to the U.S. dollar could
have a material adverse effect on the ability of our customers
to pay us for our services. A currency devaluation could also
result in our customers seeking to renegotiate their contracts
with us or, alternatively, defaulting on their contracts.

Sales, Marketing and Customer Services

We view our relationship with our customers as a long-term
partnership in which customer satisfaction is of paramount
importance. For this reason, we apply an integrated approach to
our sales, marketing and customer service functions. We provide
customer service 24 hours a day, 365 days a year. We
use customer service teams to develop and maintain long-term,
cooperative relationships with our customers. These
relationships provide us with an in-depth understanding of our
customers evolving telecommunications service requirements
and levels of service satisfaction. As a result of this
approach, we achieve high levels of customer satisfaction while
being able to identify new revenue generating opportunities,
customer telecommunications solution enhancements and product or
service improvements previously overlooked or not adequately
addressed by the client.

Within each segment of our market, the respective service team
is responsible both for sales to new customers as well as for
service to existing customers. In addition, each customer is
assigned an account manager, who has overall responsibility for
relations with that customer. An important function of the
account manager is to identify new or enhanced services for
existing customers. We will use this team-oriented approach to
service our private network, Internet and other customer groups.

For our private network customers, we designate a customer
service team to oversee all phases of initial customer contact,
service planning, installation and ongoing service. After we
establish initial contact with a potential customer, the service
team conducts a thorough evaluation of the customers
telecommunications needs. Following the completion of this
evaluation, we create a plan for these customers which describes
our proposed tailor-made solution using the appropriate
components of our private telecommunications network

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To market our new and enhanced services, we are developing
several service teams, each focusing on a particular type of
services. For example, our telephony services will be marketed
to resellers by a team focused only on telephony service.

In addition to salaried sales and marketing personnel, we often
use the services of third-party sales representatives to assist
in generating sales and managing the contract process between
ourselves and our potential customers. We typically pay these
third parties a commission and royalties equal to a percentage
of the revenues we collect from any contract with those
customers obtained as a result of the efforts of the third-party
sales representative.

We observe and measure the satisfaction of our customers through
our service teams frequent customer interaction and, more
formally, through a comprehensive annual survey conducted by an
outside consultant hired by us. We use the results of these
surveys to evaluate the performance of our service teams, to
formulate annual customer service plans and to implement
improvements to meet and exceed customer expectations.

Competition

We compete on the basis of our experience, network quality,
customer service, range of services offered and price. Our
competitors fall into three broad categories:



| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | PTOs in each country where we operate                                                                                                                                                            
|
| |  | other companies that operate competing satellite and terrestrial
	data transmission businesses, including newer entrants from more
	developed telecommunications markets outside of Latin America
|
| |  | large international telecommunications carriers                                                                                                                                                  

In the past, the PTOs and international telecommunications
carriers have focused on local and long-distance telephony
services. In the future, however, they may focus on the private
telecommunications network systems segment of the
telecommunications market. These entities have significantly
greater financial and other resources than we do, including
greater access to financing. These competitors may also be able
to subsidize their private telecommunications network businesses
with revenues from public telephony.

With the first group of competitors, our further expansion into
the telecommunications services market along with continued
deregulation of the telecommunications industry in Latin
America, has brought us into more direct competition with the
PTOs. Many of the PTOs in the countries where we operate have
established and marketed large customer or
grand user business teams in an attempt to provide
dedicated services to the type of customer that represents our
most important target market.

We believe that by maintaining our position as a reliable, high
quality provider of telecommunications services, while
strengthening the quality of our network and the breadth of
service offerings through the Broadband Network, we will be able
to maintain our current customers and successfully attract new
customers. We might consider strategic alliances and other
cooperative ventures with the PTOs to take advantage of each
partners relative strengths.

In the second category, our competitors include international
satellite telecommunications providers and local data
transmission providers. We believe that we are able to compete
successfully in data transmission services because we offer a
broad array of services, provide high quality, custom-designed
services that are tailored to meet the specific needs of each
customer and have a greater geographical footprint for our
Broadband Network than all of our current competitors among
these providers. Among our competitors in this category are a
number of new market entrants, including:



| |   |                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Diveo Broadband Networks, a fixed wireless broadband services
	provider that is building a network in metropolitan Buenos Aires
	and has announced plans to enter the Brazilian
	telecommunications market

15



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| |   |                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | MetroRED Telecomunicaciones, owned by Fidelity Investments, a
	data transmission service operator in Argentina, Brazil and
	Mexico that offers local network services in the cities of
	Buenos Aires in Argentina, São Paulo and Rio de Janeiro in
	Brazil, and Mexico City in Mexico                                                                                                      
|
| |  | Engeredes S.A., an infrastructure and data services provider
	that will use both fiber optic and wireless links to connect the
	cities of Belo Horizonte, Rio de Janeiro and São Paulo in
	Brazil                                                                                                                                                                                          
|
| |  | NetUno, a local exchange carrier and provider of broadband local
	access, Internet and private network services in Venezuela, and                                                                                                                                                                                                                                                          
|
| |  | TechTel (an Argentine telecommunications company jointly owned
	by Grupo Techint SA, one of Argentinas largest industrial
	groups, and Telmex (Telefonos de Mexico S.A. de C.V.)
	Mexicos dominant telecommunications carrier), which offers
	long distance, data transmission and basic telephony services in
	Argentina and has announced plans to expand its operations into
	Uruguay.

In the third category, major telecommunications carriers have
indicated their intention to enter the market as deregulation in
Latin America and elsewhere opens new market opportunities. For
example, AT&T Latin America Corp., which is controlled by
AT&T Corporation, was formed in October 1999 by merging
the operations of FirstCom Corp., which has operations in Chile,
Colombia and Peru, Brazil-based Netstream, and Keytech LD,
a local exchange carrier that is licensed to offer wireless,
high-speed internet and other telecommunications services in
Argentina. AT&T Latin America has operations in Argentina,
Brazil, Chile, Colombia and Peru. NetStream, an established
fiber optic network service provider that AT&T recently
acquired, began providing fiber optic cable local network
services earlier this year to businesses in São Paulo and
Rio de Janeiro, Brazil and plans to build fiber optic networks
in Belo Horizonte, Curitiba, Brasília and Porto Alegre in
2000. Increasing competition may significantly affect our
pricing policies. We cannot assure you that competition from
these alliances will not adversely affect our financial
condition or results of operations.

Furthermore, we cannot assure you that competing technologies
will not become available that will negatively affect our
position, although we believe that we have the flexibility to
act quickly to take advantage of any significant technological
development. For example, new technologies such as DSL can
significantly enhance the speed of traditional copper lines.
These technologies could enable our PTO competitors to offer
customers new high speed services without undergoing the expense
of replacing their existing twisted-pair copper networks. This,
in turn, could negate our last mile advantage. Our private
telecommunications services could also face future competition
from entities using or proposing to use new or emerging voice
and data transmission services or technologies which are not
widely available in Latin America, such as space based systems
dedicated to data distribution services.

Rates are not regulated in our countries of operation, and the
prices for our services are strongly influenced by market
forces. We believe that increasing competition will result in
increased pricing pressures. We have faced and expect to
continue to face declining prices and may experience margin
pressure as the PTOs in the countries where we have operations
modernize their facilities, adapt to a competitive marketplace
and place greater emphasis on data telecommunications and as
other companies enter the Latin American telecommunications
market. These price and margin declines may accelerate if new
competitors enter our markets.

The principal barriers to entry for prospective providers of
private telecommunications network services such as ours are the
development of the requisite understanding of customer needs and
the technological and commercial experience and know-how,
infrastructure to provide quality services to meet those needs
and capital.

Regulation

Domestic Service. We are subject to regulation by the
national telecommunications authorities of the countries where
we operate, and our operations require us to procure permits and
licenses from these authorities. While we believe that we have
received all required authorizations from regulatory authorities
for

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Cross-Border Service. We provide integrated data, voice
and video transmission services under the Interplus name between
and among nineteen Latin American and Caribbean countries and
the United States. In November 2000, we were granted a
license to provide switched voice services to or from Argentina,
and expect to receive authorization to provide these services in
Brazil in 2004. International private line services such as
Interplus are traditionally provided by local carriers in each
country acting as correspondents and establishing dedicated
telecommunications links between their facilities. Due to our
pan-Latin American presence, we are often able to offer our
Interplus service using our own facilities and personnel at both
ends of the private line circuit. As a result of this end-to-end
control, we maintain customer service and quality assurance at
both ends of an Interplus link and realize better margins than
when we use a correspondent carrier.

In countries where we do not maintain customer premises
equipment or where we are not authorized to operate in that
fashion, our Interplus service uses our facilities in the
originating country to connect with a correspondent local
carrier in the destination country or vice-versa. To date, we
have signed Interplus correspondent agreements with carriers in
several Latin American and Caribbean countries. We charge
customers a monthly fee for Interplus which is based on the
capacity of the circuit provided.

Deregulation. Various countries in Latin America have
taken initial steps towards deregulation in the
telecommunications market during the last few years. Several
Latin American countries have completely or partially privatized
their national carriers, including Argentina, Brazil, Mexico and
Venezuela. Furthermore, some countries have scheduled the
demonopolization of their dominant telecommunications providers.
For example, Argentina and Venezuela completed the
demonopolization of public telephone services by their PTOs
during 2000. We believe that this trend toward deregulation,
while likely to increase competition, will also present
significant opportunities for us to expand our private
telecommunications network services to, from and within the
region, as well as to present opportunities for us in areas of
telecommunications currently permitted to be conducted only by
the PTOs.

Employees

As of December 31, 2000, we employed a total of
1,711 persons, of whom 587 were employed by IMPSAT
Argentina, 438 were employed by IMPSAT Brazil, and 261 were
employed by IMPSAT Colombia. The number of our employees has
generally increased and is expected to continue to increase as a
result of our expansion in the countries in which we operate,
including as a result of our development of the Broadband
Network. We do not have any long-term employment contracts with
any of our employees, including management, and none of our
employees are members of any union. We believe that our
relations with our employees are good.




Item 2.  Properties

Metropolitan Area Networks. We operate 15 metropolitan
area networks, composed of a combination of owned and leased
fiber optic and microwave links covering a total of
830 route kilometers. Our first metropolitan area network
was established in Buenos Aires, Argentina in 1990. In addition,
we currently provide services over our metropolitan area
networks, in Córdoba, Mendoza and Rosario, in Argentina;
Medellín and Cali, Colombia; Rio de Janeiro, Curitiba,
São Paulo and Belo Horizonte in Brazil; Caracas, Venezuela;
Quito and Guayaquil, Ecuador; and Lima, Peru. We also manage and
operate a fiber optic network covering 352 route kilometers
in Bogotá, Colombia, pursuant to a joint venture with
Empresa de Telecomunicaciones de Santafe de Bogotá, the
Colombian PTO that provides local telephone service in the
Bogotá region. In addition, we own and control several
microwave links in smaller cities in Latin America.

Fiber Optic Long-Haul Capacity. The long-haul segment of
our Broadband Network, which is currently comprised of
long-haul, high capacity fiber optic backbones extending over
6,400 route kilometers, stretches from the Pacific Ocean at
Valparaiso, Chile to the Atlantic Ocean, at Los Toninas,
Argentina and between Curitiba, Rio de Janeiro and São
Paulo, Brazil. We also own and operate a long haul fiber optic
networks

17



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In addition to our IRU capacity on Global Crossings and
360networkss undersea fiber optic networks, we are a
member of the Americas-1 and Columbus-II undersea fiber optic
cable consortia, and have purchased an initial total capacity of
2 Mbps on each system for use in our Interplus service.
Americas-1, which commenced commercial operation in
December 1994, is a 4,960 mile fiber optic cable
system connecting Vero Beach, Florida with the U.S. Virgin
Islands, Trinidad, Brazil and Venezuela. Columbus-II links
Mexico, the United States, the U.S. Virgin Islands, Spain,
Portugal and Italy with about 7,440 miles of fiber optic
cable. We also have reserved up to 18 Mbps, 4 Mbps and
24 Mbps of capacity on the Americas-II, Pan American and
Arcos I undersea fiber optic cable networks, respectively.
The Americas-II submarine cable, which is under development,
will connect St. Croix, Puerto Rico, Curacao, Venezuela and
Brazil. Pan American began operations in mid-February 1999
and runs between the U.S. Virgin Islands, Aruba, Venezuela,
Colombia, Panama, Ecuador, Peru and Chile. Arcos I, an
8,600 km fiber optic cable system under construction with a
planned third quarter 2001 completion date, is expected to
connect the United States with numerous Caribbean and Latin
American nations.

Data Centers. To complement our Broadband Network
infrastructure, during December 2000 IMPSAT inaugurated our
advanced data center hosting facilities, in Buenos Aires,
São Paulo and Santiago, with an aggregate of
160,000 square feet. Similar facilities are being
constructed in Fort Lauderdale and Mexico City. These
state-of-the-art facilities, capable of supporting the most
advanced application hosting services, will add to the
Companys existing hosting facilities in its operating
centers located in nine other cities of the Latin American
region. In addition, we have reserved approximately
70,000 square feet of operating space in our teleports for
the provision of hosting services.

Teleports. We own and operate teleports in Buenos Aires,
Argentina; São Paulo, Brazil; Bogotá, Colombia;
Caracas, Venezuela; Quito, Ecuador; Mexico City, Mexico; Lima,
Peru; and Florida, United States. In addition to the teleport in
Fort Lauderdale, Florida, which commenced operations in
January 1999, IMPSAT USA operates leased teleport
facilities in New Jersey. We also own and operate regional
teleports in Mendoza, Córdoba, Rosario, Tucumán, Mar
del Plata, La Plata and Neuquén in Argentina;
Medellín, Cali and Barranquilla in Colombia; Guayaquil,
Ecuador; and Rio de Janeiro and Curitiba, Brazil.

Satellite Capacity. Our satellite transmissions use both
C-band (4-7 GHz) and Ku-band (10-18 GHz) frequencies.
As of December 31, 2000, we had a total available leased
capacity of 1,203 MHz. Our lease payments for satellite
capacity totaled approximately $40.7 million in 2000. We
will contract for additional leased satellite capacity as
business requires. A portion of our satellite capacity is leased
by our wholly owned subsidiary, International Satellite Capacity
Holding, NG. This subsidiarys principal function is to
lease private satellite capacity from satellite carriers and
then sublease this capacity at market rates to our operating
subsidiaries. We believe that this method of centralizing our
leasing of satellite capacity provides us with better terms.

18



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Item 3.  Legal Proceedings

We are involved in or subject to various litigation and legal
proceedings incidental to the normal conduct of our business,
including with respect to regulatory matters. We were not during
2000, and currently are not, involved in any material legal
proceedings.




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

There were no matters submitted by the Company during the fourth
quarter of 2000 to a vote of security holders, through the
solicitation of proxies or otherwise.

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PART II




Item 5.  Market for Registrants
Common Equity and Related Stockholder Matters

Our common stock has been traded on the Nasdaq National Market
under the symbol IMPT since the effective date of
our initial public offering on February 1, 2000. Prior to
that time, including during the period covered by this Report,
there was no public market for our common stock. On
March 21, the last reported price of our common stock on
the Nasdaq National Market was $4.19 per share. Based upon
information supplied to us by the registrar and transfer agent
for our common stock, the number of common stockholders of
record on March 15, 2001 was 46, not including beneficial
owners in nominee or street name. We believe that a significant
number of shares of our common stock are held in nominee name
for beneficial owners.

The following table shows the high and low sales price of our
common stock for each fiscal quarter during the year ended
December 31, 2000, as reported on the NASDAQ National
Market System.

|        |  |      |        |     |  |   |        | 
|------- |  | ---- | ------ | --- |  | - | ------ | 
|        |  |     
|        |  | 2000
|        |  |     
|Quarter |  | High |        | Low
|        |  |      |        |    
|First   |  | $    | 41.188 |     |  | $ | 27.375 | 
|       
|       
|       
|       
|Second  |  |      | 26.875 |     |  |   | 9.750  | 
|       
|       
|       
|       
|Third   |  |      | 17.000 |     |  |   | 11.000 | 
|       
|       
|       
|       
|Fourth  |  |      | 12.625 |     |  |   | 4.375  | 

Our Board of Directors has not declared any dividends on our
common stock since its organization.




Item 6.  Selected Financial Data

The following selected financial and other data are for our
company on a consolidated basis and separately for IMPSAT
Argentina, in each case in accordance with U.S. GAAP. The
following financial data have been derived from our
companys audited consolidated financial statements and
IMPSAT Argentinas audited financial statements for the
respective years. The selected financial data set forth below
should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of
Operations and our financial statements and notes included
at the back of this Report.

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OUR COMPANY

|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |          |        |         | 
|----------------------------------------------------------------- | -------------------------------------- | ----------------------- | -------------------------------- | ------- | ------ | ------- | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | -------- | ------- | ------ | ------- | -------- | -------- | ------ | ------- | 
|                                                                  |                                        |                        
|                                                                  |                                        | Year Ended December 31,
|                                                                  |                                        |                        
|                                                                  |                                        | 1996                    |                                  | 1997    |        | 1998    |        | 1999    |        | 2000   
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |        
|                                                                  |                                        |                        
|                                                                  |                                        | (in thousands)         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Statement of Operations Data:                                     |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Net revenues from services:                                       |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Data and value added services          |                         | $                                | 127,106 |        |         | $      | 150,211 |        |         | $       | 183,337 |        |         | $        | 195,114 |        |         | $        | 213,171  |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Internet                               |                         |                                  | 1,262   |        |         |        | 7,621   |        |         |         | 20,240  |        |         |          | 26,160  |        |         |          | 35,298   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Services to carriers                   |                         |                                  |        |        |         |        |        |        |         |         |        |        |         |          |        |        |         |          | 2,201    |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Sales of equipment                     |                         |                                  | 25      |        |         |        | 3,233   |        |         |         | 4,512   |        |         |          | 7,177   |        |         |          | 13,797   |       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|                                                                  |                                        |                         | Total net revenues from services |         |        | 128,393 |        |         |        | 161,065 |         |         |        | 208,089 |          |         |        | 228,451 |          |          |        | 264,467 | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Broadband Network development revenues |                         |                                  |        |        |         |        |        |        |         |         |        |        |         |          |        |        |         |          | 57,676   |       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|                                                                  |                                        |                         | Total net revenues               |         |        | 128,393 |        |         |        | 161,065 |         |         |        | 208,089 |          |         |        | 228,451 |          |          |        | 322,143 | 
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Costs and expenses:                                               |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Direct costs:                          |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |          |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                        | Contracted services     |                                  |         | 11,411 |         |        |         | 16,774 |         |         |         | 17,897 |         |          |         | 21,853 |         |          |          | 29,573 |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                        | Other direct costs      |                                  |         | 10,375 |         |        |         | 12,541 |         |         |         | 16,096 |         |          |         | 31,055 |         |          |          | 21,349 |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                        | Leased capacity         |                                  |         | 13,925 |         |        |         | 19,230 |         |         |         | 31,228 |         |          |         | 49,666 |         |          |          | 74,188 |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                        | Broadband network cost  |                                  |         |       |         |        |         |       |         |         |         |       |         |          |         |       |         |          |          | 34,729 |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  |                                        | Cost of equipment sold  |                                  |         |       |         |        |         | 3,137  |         |         |         | 3,665  |         |          |         | 5,187  |         |          |          | 12,308 |        
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Salaries and wages                     |                         |                                  | 25,561  |        |         |        | 29,109  |        |         |         | 38,198  |        |         |          | 46,174  |        |         |          | 68,922   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Selling, general and administrative    |                         |                                  | 22,738  |        |         |        | 28,237  |        |         |         | 37,189  |        |         |          | 40,631  |        |         |          | 58,471   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Depreciation and amortization          |                         |                                  | 26,318  |        |         |        | 28,673  |        |         |         | 36,946  |        |         |          | 130,071 |        |         |          | 84,488   |       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Operating income (loss)                                           |                                        |                         | 18,065                           |         |        |         | 23,364 |         |        |         | 26,870  |         |        |         | (96,186  | )       |        |         | (61,885  | )       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Other income (expenses):                                          |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Interest income and investment gains   |                         |                                  | 1,985   |        |         |        | 1,336   |        |         |         | 4,686   |        |         |          | 7,418   |        |         |          | 27,394   |       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Interest expense                       |                         |                                  | (25,170 | )      |         |        | (25,608 | )      |         |         | (49,384 | )      |         |          | (62,979 | )      |         |          | (112,894 | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Net gain (loss) on foreign exchange    |                         |                                  | 910     |        |         |        | (276    | )      |         |         | 675     |        |         |          | (8,042  | )      |         |          | (10,614  | )     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Other income, net                      |                         |                                  | 1,035   |        |         |        | (151    | )      |         |         | 760     |        |         |          | 15,305  |        |         |          | 704      |       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Loss before income taxes, cumulative effect and minority interest |                                        |                         | (3,175                           | )       |        |         | (1,335 | )       |        |         | (16,393 | )       |        |         | (144,484 | )       |        |         | (157,295 | )       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|(Provision for) benefit from income taxes                         |                                        |                         | (3,542                           | )       |        |         | (5,263 | )       |        |         | (3,805  | )       |        |         | 20,733   |         |        |         | 4,547    |         
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Loss before cumulative effect and minority interest               |                                        |                         | (6,717                           | )       |        |         | (6,598 | )       |        |         | (20,198 | )       |        |         | (123,751 | )       |        |         | (152,748 | )       
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Cumulative effect of a change in accounting principle, net of tax |                                        |                         |                                 |         |        |         |       |         |        |         | (1,269  | )       |        |         |         |         |        |         |         |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|(Income) loss attributable to minority interest                   |                                        |                         | (1,766                           | )       |        |         | (993   | )       |        |         | (2,502  | )       |        |         | 6,225    |         |        |         |         |         
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Dividends on redeemable preferred stock                           |                                        |                         |                                  |         |        |         |        |         |        |         | (10,018 | )       |        |         | (14,017  | )       |        |         | (1,393   | )       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Net loss attributable to common stockholders                      |                                        | $                       | (8,483                           | )       |        | $       | (7,591 | )       |        | $       | (33,987 | )       |        | $       | (131,543 | )       |        | $       | (154,141 | )       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Net loss per common share: Basic and diluted                      |                                        | $                       | (0.18                            | )       |        | $       | (0.14  | )       |        | $       | (0.71   | )       |        | $       | (2.42    | )       |        | $       | (1.74    | )       
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         
|Weighted average number of common shares: Basic and diluted       |                                        |                         | 46,773                           |         |        |         | 53,594 |         |        |         | 47,983  |         |        |         | 54,447   |         |        |         | 88,534   |         
|                                                                  |                                        |                         |                                  |         |        |         |        |         |        |         |         |         |        |         |          |         |        |         |          |         

|                                                            |  |                    |         |      |  |      |         |      |  |      |          |   |  |   |         |  |  |   |           | 
|----------------------------------------------------------- |  | ------------------ | ------- | ---- |  | ---- | ------- | ---- |  | ---- | -------- | - |  | - | ------- |  |  | - | --------- | 
|                                                            |  |                   
|                                                            |  | As of December 31,
|                                                            |  |                   
|                                                            |  | 1996               |         | 1997 |  | 1998 |         | 1999 |  | 2000
|                                                            |  |                    |         |      |  |      |         |      |  |     
|                                                            |  |                   
|                                                            |  | (in thousands)    
|                                                           
|                                                           
|                                                           
|                                                           
|Balance Sheet Data:                                         |  |                    |         |      |  |      |         |      |  |      |          |   |  |   |         |  |  |   |           | 
|                                                           
|                                                           
|                                                           
|                                                           
|Cash and cash equivalents                                   |  | $                  | 28,895  |      |  | $    | 10,439  |      |  | $    | 90,021   |   |  | $ | 97,507  |  |  | $ | 67,737    | 
|                                                           
|                                                           
|                                                           
|                                                           
|Trading investments                                         |  |                    |        |      |  |      |        |      |  |      |         |   |  |   |        |  |  |   | 240,892   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total current assets                                        |  |                    | 68,304  |      |  |      | 65,015  |      |  |      | 159,099  |   |  |   | 179,026 |  |  |   | 458,873   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Property, plant and equipment, net                          |  |                    | 227,086 |      |  |      | 255,422 |      |  |      | 330,726  |   |  |   | 310,330 |  |  |   | 450,001   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Broadband Network, net                                      |  |                    |        |      |  |      |        |      |  |      |         |   |  |   | 71,868  |  |  |   | 295,894   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Investments                                                 |  |                    |        |      |  |      | 4,178   |      |  |      | 10,708   |   |  |   | 235,925 |  |  |   | 15,091    | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total assets                                                |  |                    | 315,230 |      |  |      | 339,916 |      |  |      | 527,218  |   |  |   | 828,332 |  |  |   | 1,374,750 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total current liabilities                                   |  |                    | 78,125  |      |  |      | 103,438 |      |  |      | 97,910   |   |  |   | 196,931 |  |  |   | 220,305   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total short-term debt and current portion of long-term debt |  |                    | 42,874  |      |  |      | 60,375  |      |  |      | 40,400   |   |  |   | 38,677  |  |  |   | 52,980    | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total long-term debt, net                                   |  |                    | 156,230 |      |  |      | 159,677 |      |  |      | 379,292  |   |  |   | 445,634 |  |  |   | 915,263   | 
|                                                           
|                                                           
|                                                           
|                                                           
|Minority interest                                           |  |                    | 30,242  |      |  |      | 10,398  |      |  |      | 13,071   |   |  |   |        |  |  |   |          | 
|                                                           
|                                                           
|                                                           
|                                                           
|Redeemable preferred stock                                  |  |                    |        |      |  |      |        |      |  |      | 135,018  |   |  |   | 149,035 |  |  |   |          | 
|                                                           
|                                                           
|                                                           
|                                                           
|Stockholders equity (deficit)                              |  |                    | 46,881  |      |  |      | 63,389  |      |  |      | (101,519 | ) |  |   | 15,341  |  |  |   | 158,585   | 

|                                 |                      |                         |        |         |   |      |        |         |   |      |         |          |   |   |         |          |   |   |         |          |  
|-------------------------------- | -------------------- | ----------------------- | ------ | ------- | - | ---- | ------ | ------- | - | ---- | ------- | -------- | - | - | ------- | -------- | - | - | ------- | -------- | -
|                                 |                      |                        
|                                 |                      | Year Ended December 31,
|                                 |                      |                        
|                                 |                      | 1996                    |        | 1997    |   | 1998 |        | 1999    |   | 2000
|                                 |                      |                         |        |         |   |      |        |         |   |     
|                                 |                      |                        
|                                 |                      | (in thousands)         
|                                
|                                
|                                
|                                
|Other Financial Data:            |                      |                         |        |         |   |      |        |         |   |      |         |          |   |   |         |          |   |   |         |         
|                                
|                                
|                                
|                                
|EBITDA(1)                        |                      | $                       | 44,383 |         |   | $    | 52,037 |         |   | $    | 63,816  |          |   | $ | 33,885  |          |   | $ | 22,603  |         
|                                
|                                
|                                
|                                
|Cash flow provided by (used in): |                      |                         |        |         |   |      |        |         |   |      |         |          |   |   |         |          |   |   |         |         
|                                
|                                
|                                
|                                
|                                 | Operating activities |                         |        | 9,843   |   |      |        | 17,139  |   |      |         | 16,740   |   |   |         | 3,849    |   |   |         | (87      | )
|                                
|                                
|                                
|                                
|                                 | Investing activities |                         |        | (53,681 | ) |      |        | (58,080 | ) |      |         | (128,155 | ) |   |         | (133,975 | ) |   |         | (511,481 | )
|                                
|                                
|                                
|                                
|                                 | Financing activities |                         |        | 66,517  |   |      |        | 22,485  |   |      |         | 191,523  |   |   |         | 139,336  |   |   |         | (485,695 | )
|                                
|                                
|                                
|                                
|Capital expenditures             |                      |                         | 53,998 |         |   |      | 56,440 |         |   |      | 109,934 |          |   |   | 155,440 |          |   |   | 447.471 |         

21



---



##### Table of Contents



IMPSAT ARGENTINA

|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |         |        |         | 
|------------------------------------- | -------------------------------------- | ---------------------- | -------------------------------- | ------------ | ------ | ----------------------- | ------ | ------- | ------ | ------ | ----- | ----- | --- | ----- | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | 
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |       
|                                      |                                        | Years Ended            |                                  | Month        |        |                        
|                                      |                                        | November 30,           |                                  | Ended        |        | Year Ended December 31,
|                                      |                                        |                        |                                  | December 31, |        |                        
|                                      |                                        | 1996                   |                                  | 1997         |        | 1997                    |        | 1998    |        | 1999   |       | 2000 
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |      
|                                      |                                        |                       
|                                      |                                        | (in thousands)        
|                                     
|                                     
|                                     
|                                     
|Statement of Operations Data:         |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                     
|                                     
|                                     
|                                     
|Net revenues from services:           |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Data and value added services          |                        | $                                | 87,093       |        |                         | $      | 85,387  |        |        | $     | 7,150 |     |       | $      | 92,677  |        |         | $       | 94,486  |        |         | $       | 101,532 |       
|                                     
|                                     
|                                     
|                                     
|                                      | Internet                               |                        |                                  |             |        |                         |        | 4,052   |        |        |       | 502   |     |       |        | 6,084   |        |         |         | 9,130   |        |         |         | 12,164  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Services to Carriers                   |                        |                                  |             |        |                         |        |        |        |        |       |      |     |       |        |         |        |         |         |         |        |         |         | 1,605   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Sales of equipment                     |                        |                                  |             |        |                         |        | 2,202   |        |        |       | 478   |     |       |        | 1,780   |        |         |         | 6,593   |        |         |         | 12,924  |       
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                      |                                        |                        | Total net revenues from services |              |        | 87,093                  |        |         |        | 91,641 |       |       |     | 8,130 |        |         |        | 100,541 |         |         |        | 110,209 |         |         |        | 128,225 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Broadband Network development revenues |                        |                                  |             |        |                         |        |        |        |        |       |      |     |       |        |        |        |         |         |        |        |         |         | 32,272  |       
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                      |                                        |                        | Total net revenues               |              |        | 87,093                  |        |         |        | 91,641 |       |       |     | 8,130 |        |         |        | 100,541 |         |         |        | 110,209 |         |         |        | 160,497 | 
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|Costs and expenses:                   |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Direct costs:                          |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |         |       
|                                     
|                                     
|                                     
|                                     
|                                      |                                        | Contracted services    |                                  |              | 6,097  |                         |        |         | 7,232  |        |       |       | 706 |       |        |         | 9,253  |         |         |         | 10,857 |         |         |         | 15,131 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                        | Other direct costs     |                                  |              | 10,981 |                         |        |         | 10,885 |        |       |       | 760 |       |        |         | 10,241 |         |         |         | 20,017 |         |         |         | 12,001 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                        | Leased capacity        |                                  |              | 9,503  |                         |        |         | 9,614  |        |       |       | 944 |       |        |         | 11,557 |         |         |         | 20,036 |         |         |         | 30,121 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                        | Broadband network cost |                                  |              |       |                         |        |         |       |        |       |       |    |       |        |         |       |         |         |         |       |         |         |         | 18,057 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                        | Cost of equipment sold |                                  |              |       |                         |        |         | 1,674  |        |       |       | 391 |       |        |         | 1,556  |         |         |         | 4,673  |         |         |         | 10,841 |        
|                                     
|                                     
|                                     
|                                     
|                                      | Salaries and wages                     |                        |                                  | 15,799       |        |                         |        | 15,823  |        |        |       | 1,086 |     |       |        | 16,342  |        |         |         | 19,672  |        |         |         | 29,670  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Selling, general and administrative    |                        |                                  | 10,784       |        |                         |        | 15,720  |        |        |       | 778   |     |       |        | 16,298  |        |         |         | 16,903  |        |         |         | 26,478  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Depreciation and amortization          |                        |                                  | 18,970       |        |                         |        | 18,033  |        |        |       | 1,562 |     |       |        | 20,515  |        |         |         | 59,039  |        |         |         | 38,171  |       
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|Operating income (loss)               |                                        |                        | 14,959                           |              |        |                         | 12,660 |         |        |        | 1,903 |       |     |       | 14,779 |         |        |         | (40,988 | )       |        |         | (19,973 | )      
|                                     
|                                     
|                                     
|                                     
|Other income (expenses):              |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Interest income and investment gains   |                        |                                  |             |        |                         |        |        |        |        |       |      |     |       |        | 1,749   |        |         |         | 1,199   |        |         |         | 716     |       
|                                     
|                                     
|                                     
|                                     
|                                      | Interest expense                       |                        |                                  | (12,527      | )      |                         |        | (12,617 | )      |        |       | 976   |     |       |        | (14,571 | )      |         |         | (13,690 | )      |         |         | (12,513 | )     
|                                     
|                                     
|                                     
|                                     
|                                      | Net gain (loss) on foreign exchange    |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        | 21      |        |         |         | (78     | )      |         |         | 190     |       
|                                     
|                                     
|                                     
|                                     
|                                      | Other income, net                      |                        |                                  | 624          |        |                         |        | 9       |        |        |       | 4     |     |       |        | 16      |        |         |         | 4,820   |        |         |         | 5       |       
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|Income (loss) before income taxes     |                                        |                        | 3,056                            |              |        |                         | 52     |         |        |        | 931   |       |     |       | 1,994  |         |        |         | (48,737 | )       |        |         | (31,575 | )      
|                                     
|                                     
|                                     
|                                     
|(Provision) benefit from income taxes |                                        |                        | (3,963                           | )            |        |                         | (3,247 | )       |        |        | (311  | )     |     |       |       |         |        |         | 5,982   |         |        |         | 6,986   |        
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|Minority interest                     |                                        |                        | 3                                |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        
|Net income (loss)                     |                                        | $                      | (904                             | )            |        | $                       | (3,195 | )       |        | $      | 620   |       |     | $     | 1,994  |         |        | $       | (42,755 | )       |        | $       | (24,589 | )      
|                                      |                                        |                        |                                  |              |        |                         |        |         |        |        |       |       |     |       |        |         |        |         |         |         |        |         |         |        

|                                                            |  |                    |         |                    |  |      |         |      |  |      |         |      |  |   |         |  |  |   |         |  |  |   |         | 
|----------------------------------------------------------- |  | ------------------ | ------- | ------------------ |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                            |  |                    |         |                   
|                                                            |  | As of November 30, |         | As of December 31,
|                                                            |  |                    |         |                   
|                                                            |  | 1996               |         | 1997               |  | 1997 |         | 1998 |  | 1999 |         | 2000
|                                                            |  |                    |         |                    |  |      |         |      |  |      |         |     
|                                                            |  |                   
|                                                            |  | (in thousands)    
|                                                           
|                                                           
|                                                           
|                                                           
|Balance Sheet Data:                                         |  |                    |         |                    |  |      |         |      |  |      |         |      |  |   |         |  |  |   |         |  |  |   |         | 
|                                                           
|                                                           
|                                                           
|                                                           
|Cash and cash equivalents                                   |  | $                  | 1,882   |                    |  | $    | 5,843   |      |  | $    | 6,169   |      |  | $ | 13,489  |  |  | $ | 4,199   |  |  | $ | 12,051  | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total current assets                                        |  |                    | 28,823  |                    |  |      | 38,147  |      |  |      | 40,475  |      |  |   | 50,810  |  |  |   | 58,805  |  |  |   | 120,297 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Broadband Network, net                                      |  |                    |         |                    |  |      |         |      |  |      |         |      |  |   |         |  |  |   | 28,944  |  |  |   | 118,374 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Property, plant and equipment, net                          |  |                    | 143,430 |                    |  |      | 148,786 |      |  |      | 147,431 |      |  |   | 167,653 |  |  |   | 155,045 |  |  |   | 222,341 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total assets                                                |  |                    | 174,239 |                    |  |      | 196,850 |      |  |      | 197,820 |      |  |   | 234,844 |  |  |   | 272,978 |  |  |   | 494,775 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total current liabilities                                   |  |                    | 45,038  |                    |  |      | 71,999  |      |  |      | 72,771  |      |  |   | 168,015 |  |  |   | 175,266 |  |  |   | 113,755 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Total short-term debt and current portion of long-term debt |  |                    | 25,512  |                    |  |      | 40,570  |      |  |      | 43,644  |      |  |   | 77,694  |  |  |   | 15,118  |  |  |   | 24,245  | 
|                                                           
|                                                           
|                                                           
|                                                           
|Long-term debt, net                                         |  |                    | 4,270   |                    |  |      | 63,338  |      |  |      | 63,029  |      |  |   | 1,802   |  |  |   | 46,124  |  |  |   | 127,626 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Long-term advances from parent company                      |  |                    | 69,719  |                    |  |      |        |      |  |      |        |      |  |   |        |  |  |   |        |  |  |   |        | 
|                                                           
|                                                           
|                                                           
|                                                           
|Minority interest                                           |  |                    |        |                    |  |      |        |      |  |      |        |      |  |   |        |  |  |   |        |  |  |   |        | 
|                                                           
|                                                           
|                                                           
|                                                           
|Stockholders equity                                        |  |                    | 51,457  |                    |  |      | 60,017  |      |  |      | 60,637  |      |  |   | 63,542  |  |  |   | 76,787  |  |  |   | 220,833 | 

|                                 |                      |                |        |              |   |                         |        |         |   |      |       |        |   |   |        |         |   |   |        |         |   |   |         |          |  
|-------------------------------- | -------------------- | -------------- | ------ | ------------ | - | ----------------------- | ------ | ------- | - | ---- | ----- | ------ | - | - | ------ | ------- | - | - | ------ | ------- | - | - | ------- | -------- | -
|                                 |                      |                |        |              |   |                         |        |         |   |     
|                                 |                      | Years Ended    |        | Month        |   |                        
|                                 |                      | November 30,   |        | Ended        |   | Year Ended December 31,
|                                 |                      |                |        | December 31, |   |                        
|                                 |                      | 1996           |        | 1997         |   | 1997                    |        | 1998    |   | 1999 |       | 2000  
|                                 |                      |                |        |              |   |                         |        |         |   |      |       |       
|                                 |                      |               
|                                 |                      | (in thousands)
|                                
|                                
|                                
|                                
|Other Financial Data:            |                      |                |        |              |   |                         |        |         |   |      |       |        |   |   |        |         |   |   |        |         |   |   |         |         
|                                
|                                
|                                
|                                
|EBITDA(1)                        |                      | $              | 33,929 |              |   | $                       | 30,693 |         |   | $    | 3,465 |        |   | $ | 35,294 |         |   | $ | 18,051 |         |   | $ | 18,198  |         
|                                
|                                
|                                
|                                
|Cash flow provided by (used in): |                      |                |        |              |   |                         |        |         |   |      |       |        |   |   |        |         |   |   |        |         |   |   |         |         
|                                
|                                
|                                
|                                
|                                 | Operating activities |                |        | (1,731       | ) |                         |        | 9,971   |   |      |       | (2,232 | ) |   |        | 17,381  |   |   |        | 20,407  |   |   |         | 6,515    |  
|                                
|                                
|                                
|                                
|                                 | Investing activities |                |        | (23,567      | ) |                         |        | (19,596 | ) |      |       | (207   | ) |   |        | (40,818 | ) |   |        | (48,332 | ) |   |         | (105,400 | )
|                                
|                                
|                                
|                                
|                                 | Financing activities |                |        | 26,941       |   |                         |        | 12,913  |   |      |       | 2,765  |   |   |        | 31,117  |   |   |        | 18,275  |   |   |         | 106,737  |  
|                                
|                                
|                                
|                                
|Capital expenditures             |                      |                | 22,011 |              |   |                         | 22,657 |         |   |      |      |        |   |   | 40,353 |         |   |   | 75,374 |         |   |   | 194,897 |         

(footnotes on next page)

22



---



##### Table of Contents






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | EBITDA is defined as operating income plus
	depreciation and amortization expense. We are presenting EBITDA
	because some investors use it as a measure of a companys
	ability to service its debt and as a measure of operating
	performance. However, EBITDA is not determined using generally
	accepted accounting principles, and therefore our EBITDA is not
	necessarily comparable to EBITDA of other companies. Investors
	should not view EBITDA as an alternative to cash flows
	calculated under generally accepted accounting principles, which
	we have also presented. EBITDA is not free cash
	flow, because it will be used to pay interest expense and
	remaining amounts after we pay our interest expense will be used
	to pay taxes and make capital expenditures.




Item 7.Managements Discussion and Analysis of
Financial Condition and Results of Operations

IMPSAT Fiber Networks, Inc. is a holding company whose
subsidiaries and affiliates operate in the telecommunications
industry. The following Managements Discussion and
Analysis of Financial Condition and Results of Operations should
be read in conjunction with our consolidated financial
statements and the notes accompanying them.

Results of Operations

The following table summarizes our results of operations:

|                                                  |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |      |      |  
|------------------------------------------------- | -------------------------------------- | ----------------------------------------------------------- | ------- | ------ | ------- | ---- | ----- | ---- | ---- | - | -------- | ------ | ------- |  | ----- | ---- | ---- | - | -------- | ------ | ------- |  | ----- | ---- | ---- | -
|                                                  |                                        |                                                            
|                                                  |                                        | Year Ended December 31,                                    
|                                                  |                                        |                                                            
|                                                  |                                        |                                                             |         |        |         |     
|                                                  |                                        | 1998                                                        |         | 1999   |         | 2000
|                                                  |                                        |                                                             |         |        |         |     
|                                                  |                                        |                                                             |         |        |         |      |       |      |      |   |          |       
|                                                  |                                        |                                                            
|                                                  |                                        | (in thousands and as a percentage of consolidated revenues)
|                                                 
|                                                 
|                                                 
|                                                 
|Net revenues:                                     |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Net revenues from services:            |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |      |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                        | Data and value added services                               |         | $      | 183,337 |      |       |      | 88.1 | % |          | $      | 195,114 |  |       |      | 85.4 | % |          | $      | 213,171 |  |       |      | 66.2 | %
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                        | Internet                                                    |         |        | 20,420  |      |       |      | 9.7  |   |          |        | 26,160  |  |       |      | 11.5 |   |          |        | 35,298  |  |       |      | 11.0 |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                        | Services to carriers                                        |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        | 2,201   |  |       |      | 0.7  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  |                                        | Sale of equipment                                           |         |        | 4,512   |      |       |      | 2.2  |   |          |        | 7,177   |  |       |      | 3.1  |   |          |        | 13,797  |  |       |      | 4.3  |  
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Broadband network development revenues |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          | 57,676 |         |  |       | 17.8 |     
|                                                  |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |     
|Total net revenues                                |                                        |                                                             | 208,089 |        |         |      | 100.0 |      |      |   | 228,451  |        |         |  | 100.0 |      |      |   | 322,143  |        |         |  | 100.0 |     
|                                                 
|                                                 
|                                                 
|                                                 
|Direct costs:                                     |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Contracted services                    |                                                             |         | 17,897 |         |      |       | 8.6  |      |   |          | 21,853 |         |  |       | 9.6  |      |   |          | 29,573 |         |  |       | 9.2  |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Other direct costs                     |                                                             |         | 16,096 |         |      |       | 7.7  |      |   |          | 31,055 |         |  |       | 13.6 |      |   |          | 21,349 |         |  |       | 6.6  |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Leased capacity                        |                                                             |         | 31,228 |         |      |       | 15.0 |      |   |          | 49,666 |         |  |       | 21.7 |      |   |          | 74,188 |         |  |       | 23.0 |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Broadband network cost                 |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          | 34,729 |         |  |       | 10.8 |     
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Cost of equipment sold                 |                                                             |         | 3,665  |         |      |       | 1.8  |      |   |          | 5,187  |         |  |       | 2.3  |      |   |          | 12,308 |         |  |       | 3.8  |     
|                                                  |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |     
|Total direct costs                                |                                        |                                                             | 68,886  |        |         |      | 33.1  |      |      |   | 107,761  |        |         |  | 47.2  |      |      |   | 172,147  |        |         |  | 53.4  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Salaries and wages                                |                                        |                                                             | 38,198  |        |         |      | 18.4  |      |      |   | 46,174   |        |         |  | 20.2  |      |      |   | 68,922   |        |         |  | 21.4  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Selling, general and administrative expenses      |                                        |                                                             | 37,189  |        |         |      | 17.9  |      |      |   | 40,631   |        |         |  | 17.8  |      |      |   | 58,471   |        |         |  | 18.2  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Depreciation and amortization                     |                                        |                                                             | 36,946  |        |         |      | 17.8  |      |      |   | 130,071  |        |         |  | 56.9  |      |      |   | 84,488   |        |         |  | 26.2  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Interest expense, net                             |                                        |                                                             | 44,698  |        |         |      | 21.4  |      |      |   | 55,561   |        |         |  | 24.3  |      |      |   | 85,500   |        |         |  | 26.5  |     
|                                                 
|                                                 
|                                                 
|                                                 
|Net gain (loss) on foreign exchange               |                                        |                                                             | 675     |        |         |      | 0.3   |      |      |   | (8,042   | )      |         |  | (3.5  | )    |      |   | (10,614  | )      |         |  | (3.3  | )   
|                                                 
|                                                 
|                                                 
|                                                 
|Other income, net                                 |                                        |                                                             | 760     |        |         |      | 0.4   |      |      |   | 15,305   |        |         |  | 6.7   |      |      |   | 704      |        |         |  | 0.2   |     
|                                                 
|                                                 
|                                                 
|                                                 
|(Provision for) benefit from foreign income taxes |                                        |                                                             | (3,805  | )      |         |      | (1.8  | )    |      |   | 20,733   |        |         |  | 9.1   |      |      |   | 4,547    |        |         |  | 1.4   |     
|                                                  |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |     
|Net loss attributable to common stockholders      |                                        | $                                                           | (33,987 | )      |         |      | (16.3 | )%   |      | $ | (131,543 | )      |         |  | (57.6 | )%   |      | $ | (154,141 | )      |         |  | (47.8 | )%  
|                                                  |                                        |                                                             |         |        |         |      |       |      |      |   |          |        |         |  |       |      |      |   |          |        |         |  |       |     

23



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##### Table of Contents



2000 Compared to 1999

Revenues. Our total net revenues for 1999 and 2000
equaled $228.5 million and $322.1 million. Net
revenues in 2000 were composed of net revenues from services and
Broadband Network development revenues.

Our net revenues from services for 2000 totaled
$264.5 million, an increase of $36.0 million (or
15.8%) from 1999. Our net revenues from services during 2000
included net revenues from:



| |   |                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | data and value added services, which include satellite and
	broadband data transmission services revenue, systems
	integration and other information technology services revenues
	and other value-added services                                                                                                                                                                            
|
| |  | Internet, which is composed of our Internet backbone access and
	managed modem services to ISPs and other telecommunications
	providers, and related collocation and web hosting services
	which we will be providing through our advanced hosting
	facilities                                                                                                                               
|
| |  | carriers carrier services, which consist of our wholesale
	long-haul services to other telecommunications carriers
	(including accruals from our sale of IRU capacity on our
	Broadband Network to, and our provision of switching and
	transportation of telecommunications traffic services for, such
	carriers), and related maintenance and collocation services to
	those carriers, and
|
| |  | sales of equipment.                                                                                                                                                                                                                                                                                                                                                                          

Our total net revenues for 2000 included $57.7 million of
Broadband Network development revenues, which related to our
turnkey construction on behalf of Global Crossing Development
Co. of the Trans-Andean Crossing System (also called the
TAC) that we contracted to build for Global Crossing
in the third quarter of 1999 and additional backhaul
construction that we performed for Global Crossing in Brazil and
Peru. See Note 6 to our consolidated financial statements.

The following table shows our revenues by operating subsidiary
(including intercompany transactions):

|                 |                               |                         |        |         |  |      |        |         |  |  |        |         | 
|---------------- | ----------------------------- | ----------------------- | ------ | ------- |  | ---- | ------ | ------- |  |  | ------ | ------- | 
|                 |                               |                        
|                 |                               | Year Ended December 31,
|                 |                               |                        
|                 |                               | 1998                    |        | 1999    |  | 2000
|                 |                               |                         |        |         |  |     
|                 |                               |                        
|                 |                               | (in thousands)         
|IMPSAT Argentina |                               |                         |        |         |  |      |        |         |  |  |        |        
|                
|                
|                
|                
|                 | Services                      |                         | $      | 100,541 |  |      | $      | 110,209 |  |  | $      | 128,225 | 
|                
|                
|                
|                
|                 | Broadband network development |                         |        |        |  |      |        |        |  |  |        | 32,272  | 
|                
|                
|                
|                
|IMPSAT Colombia  |                               |                         | 60,447 |         |  |      | 61,047 |         |  |  | 54,819 |        
|                
|                
|                
|                
|IMPSAT Venezuela |                               |                         | 15,436 |         |  |      | 23,232 |         |  |  | 28,126 |        
|IMPSAT Brazil    |                               |                         |        |         |  |      |        |         |  |  |        |        
|                
|                
|                
|                
|                 | Services                      |                         |        | 3,876   |  |      |        | 8,568   |  |  |        | 28,255  | 
|                
|                
|                
|                
|                 | Broadband network development |                         |        |        |  |      |        |        |  |  |        | 9,336   | 
|Other(1)         |                               |                         |        |         |  |      |        |         |  |  |        |        
|                
|                
|                
|                
|                 | Services                      |                         |        | 37,752  |  |      |        | 40,862  |  |  |        | 47,790  | 
|                
|                
|                
|                
|                 | Broadband network development |                         |        |        |  |      |        |        |  |  |        | 16,068  | 




|    |                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Other includes IMPSAT Ecuador, IMPSAT Mexico, IMPSAT USA, IMPSAT
	Chile, IMPSAT Peru and, prior to 2000, Mandic S.A. On
	October 5, 1999, we sold the retail dial-up Internet
	business of Mandic to El Sitio, Inc., and merged Mandics
	remaining operations into IMPSAT Brazil.

Our Broadband Network development revenues of $57.7 million
for 2000, which we discussed above, were recorded upon our
delivery to, and provisional acceptance by, Global Crossing of
those segments of the TAC between Global Crossings
submarine cable landing point at Las Toninas, Argentina and
Santiago, Chile and other backhaul segments in Brazil and Peru.
These revenues included a bonus payment of $4.0 million
earned under our contract with Global Crossing for early
delivery of the TAC segment. We delivered the final segment of
the TAC, between Santiago, Chile and Global Crossings
submarine landing point at Valparaiso, Chile, in March 2001.

24



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##### Table of Contents



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

|                               |           |                               |        |             |         |      |       |             |      |      |        |             |         |  |      |     |     |   |        |         |         |  |      |      |      |  
|------------------------------ | --------- | ----------------------------- | ------ | ----------- | ------- | ---- | ----- | ----------- | ---- | ---- | ------ | ----------- | ------- |  | ---- | --- | --- | - | ------ | ------- | ------- |  | ---- | ---- | ---- | -
|                               |           |                              
|                               |           | December 31,                 
|                               |           |                              
|                               |           | 1998                          |        | % change(1) |         | 1999 |       | % change(1) |      | 2000 |        | % change(1)
|                               |           |                               |        |             |         |      |       |             |      |      |        |            
|                               |           |                              
|                               |           | (dollar amounts in thousands)
|                              
|                              
|                              
|                              
|Data and value added services: |           |                               |        |             |         |      |       |             |      |      |        |             |         |  |      |     |     |   |        |         |         |  |      |     
|                              
|                              
|                              
|                              
|                               | Broadband |                               | $      | 32,875      |         |      |       | 69.0        | %    |      | $      | 33,714      |         |  |      | 2.6 | %   |   | $      | 41,218  |         |  |      | 22.3 | %   
|                              
|                              
|                              
|                              
|                               | Satellite |                               |        | 130,067     |         |      |       | 13.0        |      |      |        | 140,846     |         |  |      | 8.3 |     |   |        | 140,980 |         |  |      | 0.1  |     
|                              
|                              
|                              
|                              
|                               | Other     |                               |        | 20,395      |         |      |       | 33.0        |      |      |        | 20,554      |         |  |      | 0.8 |     |   |        | 30,973  |         |  |      | 50.7 |     
|                               |           |                               |        |             |         |      |       |             |      |      |        |             |         |  |      |     |     |   |        |         |         |  |      |     
|                               |           | Total                         |        |             | 183,337 |      |       |             | 22.0 |      |        |             | 195,114 |  |      |     | 6.4 |   |        |         | 213,144 |  |      |      | 9.3  |  
|                              
|                              
|                              
|                              
|Internet                       |           |                               | 20,240 |             |         |      | 166.0 |             |      |      | 26,160 |             |         |  | 29.2 |     |     |   | 35,298 |         |         |  | 34.9 |     
|                              
|                              
|                              
|                              
|Services to carriers           |           |                               |       |             |         |      |      |             |      |      |       |             |         |  |     |     |     |   | 2,201  |         |         |  |     |     
|                              
|                              
|                              
|                              
|Equipment sales                |           |                               | 4,512  |             |         |      | 40.0  |             |      |      | 7,177  |             |         |  | 59.1 |     |     |   | 13,797 |         |         |  | 92.2 |     
|                              
|                              
|                              
|                              
|Broadband network development  |           |                               |       |             |         |      |      |             |      |      |       |             |         |  |     |     |     |   | 57,676 |         |         |  |     |     
|                               |           |                               |        |             |         |      |       |             |      |      |        |             |         |  |      |     |     |   |        |         |         |  |      |     
|                               |           | Total net revenues            |        | $           | 208,089 |      |       |             | 29.0 | %    |        | $           | 228,451 |  |      |     | 9.8 | % |        | $       | 322,143 |  |      |      | 41.0 | %
|                               |           |                               |        |             |         |      |       |             |      |      |        |             |         |  |      |     |     |   |        |         |         |  |      |     




|    |                                               
|--- | ----------------------------------------------
|(1) | Increase (decrease) compared to previous year.

Despite the continued economic stagnation that we experienced
during 2000 in many of our countries of operation, including
Argentina and Colombia, we were able to achieve services revenue
growth of 15.8% for 2000 as compared to 1999. Our services
revenue growth was achieved principally because of an overall
increase in the number of customers and services we provided,
offset in part by decreasing prices. Excluding fax store and
forward customers, we had 2,656 customers at December 31,
2000, compared to 1,745 customers at December 31, 1999. As
we continue marketing services over our Broadband Network, we
intend to continue to aggressively market our services to
existing and new customers, including smaller and medium-sized
corporate customers who desire to contract for capacity on our
Broadband Network for their telecommunications needs. In 2000,
we gained a total of 911 new customers, an increase of 52.2%
from 1999. We expect that the average revenues from many of our
newer customers will be less than those realized in the past
from our larger corporate and governmental customers. Customer
growth was most pronounced in Argentina and Brazil, where the
bulk of our marketing and sales efforts are taking place in
connection with the introduction of service on our Broadband
Network.

Our operations in Brazil recorded the highest revenue growth
rate for services revenues among our countries of operation. Net
revenue from services relating to our Brazilian operations
during 2000 totaled $28.3 million, an increase of
$19.7 million (or 229.8%) compared to 1999. In Brazil, the
increase in our net revenues from services resulted from
increased data and value added services to our expanding
customer base and from increased revenues for Internet access
services to the U.S. Internet backbone. During 2000, we entered
into several contracts with Brazilian telecommunications
companies for access to the U.S. Internet backbone.

Our net revenue from services in Argentina for 2000 totaled
$128.2 million, an increase of $18.0 million (or
16.3%) from 1999. While our revenue in Argentina from our
satellite-based network services declined as compared to 1999,
our broadband data and value added services revenues and
Internet services revenues increased. The decline in revenue
from satellite-based network services is due to the continuing
trend among our customers and business segment for higher
bandwidth services, increased competition and continued downward
pressure on pricing for low and medium bandwidth service
offerings. The increase in Internet services resulted from
several new contracts entered into for access to the U.S.
Internet backbone. Our growth of Internet access services in
Argentina included the commencement of such service to AOL
Argentina S.R.L., an affiliate of America Online, Inc., upon AOL
Argentinas launch in August of 2000. In addition, IMPSAT
Argentinas services revenues for 2000 included
$12.9 million in equipment sales. This amount related
principally to a contract entered into in January 2000 with
the Government of the Province of Cordoba for the provision of
equipment and information technology solutions for the
automation and updating of the Provinces revenue
collection and auditing functions. It is our goal to utilize
contracts for the development of

25



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##### Table of Contents





Our improved results in Brazil and Argentina were offset by a
decrease in services revenue at IMPSAT Colombia. During the
2000, our operations in Colombia, our second oldest market,
continued to be adversely affected by that countrys
economic recession, which intensified pricing pressures. IMPSAT
Colombias services revenue totaled $54.8 million for
2000, a $6.2 million (or 10.2%) decrease from 1999. Due to
the recession in Colombia, a number of our customers either
cancelled their contracts with us or reduced the amount of
services contracted. In January 2001, we announced the
acquisition by IMPSAT Colombia of the customer contracts of
Americatel S.A., the private network telecommunications service
provider owned by the Grupo Santo Domingo, one of
Colombias largest business conglomerate. We expect that
our revenues in Colombia will improve slightly throughout the
course of 2001 as a result of our acquisition of
Americatels customer contracts and the marginal
improvement anticipated for the Colombian economy.

Direct Costs.Our direct costs for 2000 totaled
$172.1 million. This amount includes $34.7 million in
direct costs associated with the construction and delivery of
the TAC segments and other backhaul links delivered to Global
Crossing during 2000, which amounts related principally to cost
of equipment and contracted third-party construction services.
Other costs related to our turnkey contracts with Global
Crossing, including salary and SG&A expenses, have been
accrued and recorded in the periods in which such expenses were
incurred, and reported among our expenses from general
operations.

Excluding direct costs related to the Broadband Network
development for Global Crossing, our direct costs for 2000
totaled $137.4 million, an increase of $29.7 million
(or 27.5%) compared to 1999. Of these direct costs for 2000,
$68.1 million related to the operations of IMPSAT
Argentina. This compares to $55.6 million at IMPSAT
Argentina for 1999. Direct costs for our Brazilian operations
totaled $25.0 million for 2000, compared to
$5.3 million for 1999. Direct costs of our subsidiaries are
described prior to the elimination of intercompany transactions.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  Contracted Services. Contracted services costs
	include costs of maintenance and installation (and
	de-installation) services provided by outside contractors.
	During 2000, contracted services costs totaled
	$29.6 million, an increase of $7.7 million (or 35.3%)
	from 1999. Of this amount, maintenance costs for our
	telecommunications network infrastructure totaled
	$17.0 million for 2000, compared to $12.4 million
	during 1999. Our maintenance costs increased because we had more
	infrastructure. In addition, our installation costs totaled
	$12.6 million for 2000, compared to $9.4 million for 1999.                                                                                                                                                                                                                          
|
| | We expect that our contracted services costs will increase in
	2001. As we migrate clients in Argentina and Brazil to the
	Broadband Network from their existing satellite-based equipment
	and as we add new clients to the Broadband Network, we will
	incur higher de-installation and installation costs. In
	addition, we will incur associated utility and maintenance costs
	for our Broadband Network, including our state-of-the-art data
	centers and our telehouses. Management is considering whether
	such Broadband Network maintenance services will be contracted
	from third parties or whether we will hire qualified personnel
	to perform such services.                                                                                                                                                                               
|
| | (2)  Other Direct Costs. Other direct costs
	principally include licenses and other fees; sales commissions
	paid to third-party sales representatives; and our allowance for
	doubtful accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | Sales commissions paid to third-party sales representatives for
	2000 totaled $8.1 million, compared to $8.0 million
	for 1999. The majority of these commissions related to customers
	of IMPSAT Argentina.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | During 2000, we recorded a provision for doubtful accounts of
	$4.8 million compared to a provision for doubtful accounts
	of $11.2 million for 1999. During 2000, we obtained payment
	of certain past due receivables from certain customers in
	Argentina and Colombia totaling $3.9 million. The increase
	in the provision for doubtful accounts for 1999 related
	principally to a change in our provisioning policy. At
	December 31, 2000, approximately 26.4% of our gross trade
	accounts receivable were past due more than six months compared
	to approximately 19% for 1999. At December 31, 2000,
	average days of gross trade accounts receivable equaled
	71 days, compared to 90 days at December 31,
	1999. While we analyze the creditworthiness of our customers and
	potential customers prior to entering into service contracts, we

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##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | expect that as we expand our client base in the future upon the
	development of the Broadband Network, including services to
	small and medium-size corporate customers, our provisions for
	doubtful accounts will increase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (3)  Leased Capacity. Our leased capacity costs for
	2000 totaled $74.2 million, which represents an increase of
	$24.5 million (or 49.4%) from 1999. We had approximately
	1,203 MHz of leased satellite capacity at December 31, 2000
	and 801 MHz at December 31, 1999. The expansion of our
	satellite capacity was primarily attributable to contractually
	scheduled increases in satellite capacity to match anticipated
	growth in customer demand. As we migrate certain of our
	customers in Argentina and Brazil to the Broadband Network in
	2001, we expect that the increase in satellite capacity costs
	will decline in percentage terms as compared to prior years and
	as a percentage of revenues in those countries.                                                                                                                                                                                                          
|
| | In addition, to satisfy increasing customer demand for higher
	bandwidth telecommunications links, during 2000 we increased our
	leased dedicated capacity on third-party fiber optic networks,
	spending $30.8 million for 2000, an increase of
	$17.8 million (or 136.6%) from 1999. These costs were
	incurred principally in Argentina, Brazil and the United States.
	We incurred these higher costs of leased fiber optic capacity in
	Argentina and Brazil due to the continued demand by some of our
	customers for greater bandwidth while we were deploying our
	Broadband Network and in the United States due to the expansion
	of our Internet service offerings in Latin America where we
	provide a link between Latin America and the U.S. Internet
	backbone. As we further deploy the Broadband Network during
	2001, we anticipate transferring increasing amounts of our
	telecommunications traffic to the Broadband Network.
|
| | We believe that our leased satellite and fiber optic capacity
	costs will continue to increase in 2001 in absolute terms but
	that the rate of growth in such costs will decrease and that
	such costs should decrease as a percentage of 2001 revenues. We
	will continue to require leased capacity to provide
	telecommunications services to clients with facilities outside
	of the footprint of our Broadband Network in order to provide
	end-to-end telecommunications services.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | In connection with certain new services which we are offering in
	2001 as a result of the implementation of our Broadband Network
	and the effectiveness of our new license in Argentina to provide
	domestic and international long distance services, we will incur
	costs for interconnection and telephony termination costs and
	frequency rights. Pursuant to regulations adopted in Argentina
	in connection with the de-monopolization of telephony in
	November 2000, the Argentine government adopted a rate of
	$0.011 per minute for interconnection charges for new telephony
	providers to terminate calls with other providers.                                                                                                                                                                                                                                                                                                    
|
| | (4)  Costs of Equipment Sold. Excluding cost of
	equipment related to our Broadband Network development costs for
	Global Crossing, we incurred costs of equipment sold in 2000 of
	$12.3 million, a $7.1 million (or 137.3%) increase
	from 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Salaries and Wages. Salaries and wages for 2000 totaled
$68.9 million, an increase of $22.7 million (or 49.3%)
from 1999. The increase resulted primarily from:



| |   |                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in the number of employees, from 1,107 at
	December 31, 1999 to 1,711 at December 31, 2000,
	particularly in connection with the expansion of our operations
	in Brazil and the development of the Broadband Network, and
|
| |  | increases in the salaries, wages and recruiting costs of our
	personnel to match market rates for personnel with the expertise
	we require and increases in cost of living.                                                          

IMPSAT Argentina incurred salaries and wages for 2000 of
$29.1 million, an increase of $9.3 million (or 47.4%)
from 1999. IMPSAT Argentina increased its number of employees
from 385 at December 31, 1999 to 587 at December 31,
2000. Our Brazil operations incurred salaries and wages for the
fourth quarter of 2000 and during the entire year totaling
$6.1 million and $14.1 million, respectively. These
amounts represent an increase of $4.5 million and
$9.2 million (or 300.2% and 187.0%) from the corresponding
periods during 1999. IMPSAT Brazil increased its number of
employees to 438 persons at December 31, 2000, compared to
60 persons at December 31, 1999. Because many of these
new personnel commenced employment only

27



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##### Table of Contents





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



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

We incurred SG&A expenses of $58.5 million for 2000.
SG&A expenses increased $17.8 million (or 43.9%) from
1999. SG&A expenses at IMPSAT Argentina for 2000 totaled
$26.1 million, an increase of $9.2 million (or 54.3%)
from SG&A expenses incurred by IMPSAT Argentina for 1999.
Compared to 1999, the increase in SG&A expenses reflect
higher publicity and promotion expenses, travelling expenses and
advisory services related to the deployment of the Broadband
Network. We expect SG&A expenses to continue to increase as
we grow our operation of the Broadband Network and seek to
expand our customer and services base to take advantage of our
new infrastructure. The operation of the Broadband Network and
the development of a new structure for sales and customer
expansion, including sales to small and medium-size corporate
customers, will cause higher levels of SG&A expenses.

Depreciation and Amortization. Our depreciation and
amortization expenses for 2000 totaled $84.5 million, a
decrease of $45.6 million (or 35.0%) compared to our
depreciation and amortization for 1999. Depreciation and
amortization for IMPSAT Argentina for 2000 totaled
$38.2 million. The decrease in our depreciation and
amortization expense reflects our decision at the end of the
third quarter of 1999 to change the depreciable life of some of
our customers premises telecommunications equipment in
light of technological advances, which resulted in a one-time
depreciation and amortization charge in that quarter.
Depreciation and amortization expenses will increase in future
periods due to the development of the Broadband Network and our
acquisition of additional associated customer premises
equipment. We monitor technological advances to determine
whether additional adjustments in the depreciable life of
certain of our telecommunications equipment will be appropriate
in future periods.

Interest Expense, Net. During 2000, we incurred interest
expense of $112.9 million and earned interest income of
$27.4 million. This compares to interest expense of
$63.0 million and interest income of $7.4 million
during 1999. For 2000, IMPSAT Argentinas interest expense
totaled $12.5 million ($11.1 million after eliminating
intercompany items), compared to $13.7 million
($6.1 million after eliminating intercompany items) for
1999.

Our higher levels of interest income in 2000 related to our
increased holdings of cash and other trading investments
resulting from the unused proceeds of our debt and equity
offerings completed in the first quarter of 2000. As we utilize
such cash and investments for capital expenditures and general
corporate purposes throughout 2001, we expect our interest
income to decrease.

Our total indebtedness at December 31, 2000 was
$968.2 million, compared to $484.3 million at
December 31, 1999. At December 31, 2000, total
outstanding indebtedness at IMPSAT Argentina totaled
$159.4 million ($151.9 million after eliminating
intercompany items), compared to $130.2 million
($61.2 million after eliminating intercompany items) as of
December 31, 1999. The increase in our interest expense
reflects higher interest bearing indebtedness in 2000 compared
to 1999, which resulted from increased levels of borrowing
associated with our development of the Broadband Network,
including the vendor financing

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Net (Loss) Gain on Foreign Exchange. We recorded net
losses on foreign exchange for 2000 of $10.6 million. This
compares to net losses of $8.0 million for 1999. The
increase in our net losses on foreign exchange was principally
caused by the devaluation of the Brazilian realagainst
the U.S. dollar.

Other Income, Net. We recorded other income, net, for
2000 of $0.7 million, compared to other income, net, of
$15.3 million for 1999. During 1999, we recorded other
income, net, of $13.9 million in connection with the sale
of our retail internet businesses in Argentina and Brazil to El
Sitio, Inc.

Benefit from (Provision for) Income Taxes. We recorded a
benefit for income taxes (all of which are for foreign taxes) of
$4.5 million for 2000, compared to a benefit from income
taxes of $20.7 million for 1999. The decrease in benefit
from income taxes relates to a higher net loss carry-forward
recorded in 1999 as a result of the one-time increased
depreciation expense which we realized upon a change in our
depreciation policy on certain of our customer premises
telecommunication equipment in September 1999.

Net Loss Attributable to Common Stockholders. For 2000,
we incurred a net loss attributable to common stockholders of
$154.1 million, an increase of $22.6 million (or
17.2%) from 1999.

1999 Compared to 1998

Revenues. Our net revenues for 1999 totaled
$228.5 million, an increase of $20.4 million, or 9.8%,
from net revenues for the same period in 1998. Growth in net
revenues was achieved despite a significant economic recession
through the Latin american region, especially in the countries
where most of our operations were deployed (Argentina, Colombia,
Venezuela). In addition to its general adverse effect on revenue
and client growth, the recession in certain cases accelerated
pricing pressures then existing in the Companys more
mature markets.

Our revenue growth for 1999 was attributable to an overall
increase in the number of customers and services we provided to
them offset, in part, by decreasing prices. Excluding Internet
and fax store and forward customers, we had a total of 1,745
customers at December 31, 1999, compared to 1,467 customers
at year end 1998.

Revenue figures included $8.6 million from retail internet
services in Argentina and Brazil, which were sold to El Sitio,
Inc. in the fourth quarter of 1999, and $2.0 million in
retail internet services in Colombia that was transferred to El
Sitio in April 2000.

The recessions in Argentina and Colombia and, to a lesser
extent, increased competition resulted in some of our customers
canceling their contracts or reducing the services we provided
to them. Our business in Colombia, our second oldest market, was
adversely affected by the severe economic recession experienced
during 1999.

We completed our first full year of operations in Brazil in
1999. Although IMPSAT Brazils expansion of its customer
base (90 customers as of December 31, 1999 compared to
48 customers as of the same date in 1998) and operations
continued, adverse economic conditions in Brazil, including the
devaluation of the realagainst the U.S. dollar, caused
IMPSAT Brazils revenues in U.S. dollar terms to be lower
than expected. Revenues recorded by Mandic during 1999 as
compared to 1998 were also negatively affected by the
devaluation of the Brazilian realagainst the U.S. dollar
during 1999.

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On October 5, 1999, we merged Mandic into IMPSAT Brazil,
and Mandic S.A. ceased operations. On October 6, 1999,
IMPSAT Brazil sold the retail internet business acquired in the
Mandic merger for $12.3 million to O Site Entretenimentos
Ltda., a subsidiary of El Sitio.

Direct Costs. Our direct costs for 1999 totaled
$107.8 million, an increase of $38.9 million, or
56.4%, compared to 1998. Of our total direct costs for 1999,
$54.4 million related to the operations of IMPSAT Argentina
and $20.3 million related to the operations of IMPSAT
Colombia. This compared to $32.0 million at IMPSAT
Argentina and $17.3 million at IMPSAT Colombia for 1998.
Direct costs for IMPSAT Brazil, which commenced operations
towards the end of the second quarter of 1998, totaled
$8.8 million for 1999. Direct costs of our subsidiaries are
described prior to the elimination of intercompany transactions.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  Contracted Services. In 1999, our contracted
	services costs totaled $21.9 million, compared to
	$17.9 million in 1998. Of this amount, maintenance costs
	for our telecommunications network infrastructure totaled
	$17.4 million, compared to $12.7 million for 1998.
	IMPSAT Argentinas maintenance costs totaled
	$7.8 million, compared to $5.9 million in 1998. Our
	maintenance costs increased because we had more infrastructure.
	In addition, our installation costs totaled $9.4 million,
	compared to $7.6 million for 1998. Installation costs at
	IMPSAT Argentina totaled $5.3 million for 1999 as compared
	to $4.3 million for 1998.                                                                                                                                                                  
|
| | (2)  Other Direct Costs. Other direct costs
	principally included licenses and other fees; sales commissions
	paid to third-party sales representatives; and our allowance for
	doubtful accounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Sales commissions paid to third-party sales representatives
	totaled $8.0 million, compared to $6.8 million for
	1998. Most of these commissions related to customers of IMPSAT
	Argentina.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | We recorded a provision for doubtful accounts of
	$11.2 million compared to $5.3 million for the same
	period in 1998. At December 31, 1999, excluding amounts
	owed by two large former customers (Empresa Nacional de Correos
	y Telégrafos S.A., the former Argentine national
	postal service known as ENCOTESA, and IBM de Argentina) that
	were the subject of litigation at that date, approximately 19%
	of our gross trade accounts receivable were past due more than
	six months.                                                                                                                                                                                                                                                                                                                                   
|
| | During the third quarter of 1999, we amended our provisioning
	policy to remove the discretion previously granted to the
	presidents of our operating subsidiaries to override the
	provisioning of amounts more than 180 days past due and to
	reserve 100% of our outstanding receivables due from IBM de
	Argentina. During that quarter we recognized a charge of
	approximately $1.1 million with respect to receivables due
	from IBM de Argentina and additional charges of approximately
	$4.1 million. In addition, at December 31, 1999, we
	also estimated that the net realizable value on the ENCOTESA
	receivable to be zero, and accordingly we recorded an adjustment
	of $5.1 million relating to this receivable.                                                                                            
|
| | In addition, due to a general slowdown in the collection of
	receivables that commenced in the second quarter of 1999 in
	Argentina and some of the other countries of our operations,
	which we attributed to economic difficulties experienced in
	those countries, we added approximately $2.5 million to our
	allowance for doubtful accounts in the third quarter of 1999. In
	particular, our collection of receivables in Argentina was
	adversely affected by the recession in that country during 1999.
	IMPSAT Argentinas average days outstanding for net trade
	receivables due was 90 days at December 31, 1999. This
	represented an improvement from IMPSAT Argentinas average
	days outstanding for net trade receivables due of 97 days
	at June 30, 1999, but a decline from 69 days at
	December 31, 1998.
|
| | In February, 2000, IMPSAT reached an agreement with IBM de
	Argentina for the settlement of its receivables due from that
	company, for which we received approximately $2.0 million
	of the approximately $2.3 million amount reserved.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (3)  Leased Capacity. Our leased capacity cost
	totaled $49.7 million, which represented an increase of
	$18.4 million, or 59.0%, from the corresponding period in
	1998. We had approximately 801 MHz of leased satellite capacity
	at December 31, 1999 and 650 MHz at December 31, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The expansion of our satellite capacity was primarily
	attributable to contractually scheduled increases in satellite
	capacity to match anticipated growth in customer demand. A
	portion of this increase was related to the growth in our SCPC
	services compared to our VSAT services. SCPC earth stations use
	larger amounts of satellite capacity than do VSAT microstations.
	However, we did not need as much satellite capacity as we
	contracted for, due to adverse economic conditions in Latin
	America. As a result, our satellite capacity cost as a
	percentage of revenues increased substantially from prior
	periods.
|
| | In addition, to satisfy increasing customer demand for high
	bandwidth telecommunications links, during 1999, we increased
	our leased dedicated capacity on third-party fiber optic
	networks in Argentina, spending $16.9 million compared to
	$10.0 million for 1998.                                                                                                                                                                                                                                                                                                                                                                 
|
| | (4)  Costs of Equipment Sold. We incurred costs of
	equipment sold of $5.2 million, compared to
	$3.7 million in 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Salaries and Wages. Salaries and wages totaled
$46.2 million, an increase of $8.0 million, or 20.9%,
from the 1998. The increase resulted primarily from:



| |   |                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in the number of employees, from 1,029 at
	December 31, 1998 to 1,107 at December 31, 1999,
	particularly in connection with the progression of our
	operations in Brazil, and the development of the Broadband
	Network
|
| |  | increases in the salaries and wages of our personnel to match
	market rates for personnel with the expertise we require and
	increases in cost of living                                                                            

IMPSAT Argentina incurred salaries and wages for 1999 of
$19.7 million compared to $16.3 million in 1998.
Salaries and wages for 1999 relating to the Broadband Network
totaled $3.0 million. Salaries and wages for 1999 paid with
respect to IMPSAT Brazil and Mandic totaled $4.7 million.
IMPSAT Brazil increased its number of employees by 60 persons,
or 50.4%, during 1999 in connection with the Companys
development of operations in that country.

Selling, General and Administrative Expenses. We incurred
SG&A expenses of $40.6 million for 1999. SG&A
expenses increased $3.4 million, or 9.3%, from 1998.
SG&A expenses at IMPSAT Argentina totaled
$18.1 million, an increase of $1.2 million, or 6.9%,
from SG&A expenses incurred by IMPSAT Argentina for 1998.

The increase in SG&A expenses principally reflected
increased SG&A expenses incurred by our then two newest
subsidiaries, IMPSAT Brazil and Mandic, both of which had
commenced operations around the end of the second quarter of
1998. SG&A expenses incurred by IMPSAT Brazil totaled
$5.9 million compared to $5.6 million in the
corresponding period in 1998. Mandics SG&A expenses
totaled $1.6 million compared to $2.2 million in the
corresponding period in 1998.

The increased SG&A expenses also reflected growth in our
operations and the development and implementation of the
Broadband Network. For example, the increase in our expenses for
legal, tax and consultancy advice to $8.5 million compared
to $7.1 million for 1998 was attributable to the expansion
of our operations, including the financing and development of
the Broadband Network.

Depreciation and Amortization. Our depreciation and
amortization expenses for 1999 totaled $130.1 million, an
increase of $93.1 million, or 252.1%, from 1998. The
increase primarily reflected accelerated depreciation resulting
from our decision in the third quarter of 1999 to change the
depreciable life of some of our customer premises
telecommunications equipment from 10 years to 5 years
in view of technological advances in our industry.

Interest Expense, Net. Our net interest expense totaled
$55.6 million. This consisted of interest expense of
$63.0 million and interest income of $7.4 million. Our
net interest expense increased $10.9 million, or 24.3%,
from net interest expense for 1998. Our net interest expense for
1998 was $49.4 million.

The increase in our net interest expense reflected higher
average outstanding indebtedness in 1999 compared to 1998 as a
result of our issuance in June 1998 of $225 million
principal amount of 12  3/8% Senior Notes due 2008. For
1999, the average interest rate on our indebtedness was 11.3%,
compared to an average

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Net Loss on Foreign Exchange. We recorded a net loss on
foreign exchange of $8.0 million, compared to a net gain of
$0.7 million for 1998. The increase was principally caused
by the devaluation of the Brazilian realagainst the U.S.
dollar.

Benefit from (Provision for) Income Taxes. We recorded a
benefit from income taxes (all of which are for foreign taxes)
of $20.7 million compared to a provision for income taxes
of $3.8 million for 1998. The increased benefit from income
taxes was attributable to the expected net loss carry-forwards
that we were able to use in later periods as a result of the
accelerated depreciation expense taken beginning the third
quarter of 1999 with respect to some of our customer premises
telecommunications equipment.

Net Loss Attributable to Common Stockholders. For 1999,
we incurred a net loss attributable to common stockholders of
$131.5 million, compared to $34.0 million for 1998. In
addition to other items described in the preceding paragraphs,
the principal reasons for the increase in our net loss
attributable to common stockholders as compared to prior periods
related to:



| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | our foreign exchange losses caused by the devaluation of the
	Brazilian realagainst the U.S. dollar
|
| |  | accrued dividends of $14.0 million on our preferred stock,
	compared to $10.0  million during 1998 

Liquidity and Capital Resources

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

At December 31, 2000, we had total cash, cash equivalents
and short-term investments of $308.6 million. These amounts
relate principally to:



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

On September 13, 2000, we announced plans to extend the
Broadband Network by constructing a 2,000 kilometer long-haul
link between the cities of Curitiba and Porto Alegre in Brazil
and the city of Parana in Argentina. Civil construction on the
new link was commenced in September 2000. The new link will
connect with the Broadband Network that is currently deployed in
Argentina, Brazil and Chile and will result in the creation of a
fully integrated fiber optic network connecting Santiago, Chile,
Buenos Aires, Argentina and São Paulo and Rio de Janeiro,
Brazil with points in between. We anticipate that the cost of
the new link will be approximately $100 million and will be
financed through the sale of IRUs over the link to 360networks,
vendor financing and/or from our existing cash, cash equivalents
and short-term investments. We expect to complete the link by
the end of the third quarter of 2001.

Including the costs of the new link described in the preceding
paragraph, our budget contemplates that we will need during 2001
approximately $330 million (including amounts spent to date) for
capital expenditures. We have executed definitive long-term
vendor financing agreements with



| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Nortel for commitments of up to approximately
	$297.4 million, which we are using to pay for Nortels
	construction of the segments of our Broadband Network in
	Argentina and Brazil (of which $221.6 million had been disbursed
	at December 31, 2000)
|
| |  | Lucent for commitments of up to $16.0 million for the
	purchase of fiber optic cable for the long-haul segments of the
	Broadband Network in Argentina (all of which has been disbursed
	at the end of 2000), and                                       

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| |   |                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Ericcson for commitments of up to $9.0 million for the
	purchase of telephony equipment which will be used in the
	Broadband Network in Argentina in connection with our new
	license to provide telephony services in Argentina (of which
	$3.7 million had been disbursed at December  31, 2000).

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

As set forth in our consolidated statement of cash flow, our
operating activities used $87,000 of net cash flow during 2000,
compared to $3.9 million generated during 1999. The
decrease in cash flow from operating activities in 2000 was
primarily attributable to an increase in our net loss, an
increase in our net trade receivables and other receivables and
other non-current assets and a decrease in our depreciation and
amortization expense.

Financing activities, principally our offering of our
13 3/4% Senior Notes due 2005, our initial public offering
and our private placement of common stock to British
Telecommunications, provided $486.0 million in net cash for
2000, compared with $139.3 million for 1999. For 2000, we
used $511.5 million in net cash flow for investing
activities, compared to $134.0 million in 1999. Of this
amount, $240.9 million is represented by the purchase of
high-quality short-term investments with the proceeds of our
initial public offering, private placement and the
$300 million 13  3/4% Senior Notes due 2005. We plan
to use these amounts for capital expenditures, general corporate
purposes and working capital as needed in coming periods.

In addition, we have used $203.1 million in non-cash
investing and financing activities related to the development of
the Broadband Network for 2000, principally as a result of
disbursements under the vendor financing agreements with Nortel
and Lucent.

At December 31, 2000, we had leased satellite and fiber
optic capacity with total annual rental commitments of
approximately $30.0 million through the year 2005. In
addition, at December 31, 2000, we had commitments to
purchase telecommunications equipment amounting to approximately
$25.8 million. We also have commitments of approximately
$79.5 million with respect to purchases of IRUs for
undersea submarine fiber optic capacity with which we intend to
link our telecommunications networks in our countries of
operation with and among each other and other parts of the World.

Forward Looking Statements and General Description of
Accounts

Forward Looking Statements. Some of the statements in
this Managements Discussion and Analysis of Financial
Condition and Results of Operations are forward-looking
statements. These statements involve known and unknown risks,
uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed
or implied by the forward-looking statements. Forward-looking
statements include but are not limited to:



| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our expectations and estimates as to completion dates,
	construction costs and subsequent maintenance and growth of the
	broadband network we are building
|
| |  | our ability to implement successfully our operating strategy and
	to sell capacity on our Broadband Network, and                                          
|
| |  | future financial performance, including growth in sales and
	income.                                                                                      

Factors that could cause our actual results to differ materially
from those expressed in any forward-looking statements we make
include those in the Risk Factors section of our
Annual Report on Form 10-K for the year ended
December 31, 2000, and the following factors, among others:



| |   |                                                              
| | - | -------------------------------------------------------------
| |  | the rate of expansion of our network and/or customer base    
|
| |  | inaccuracies in our forecasts of customer or market demand   
|
| |  | loss of a customer that provides us with significant revenues
|
| |  | highly competitive market conditions                         

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| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | changes in or developments under laws, regulations and licensing
	requirements   
|
| |  | changes in telecommunications technology                                         
|
| |  | currency fluctuations, and                                                       
|
| |  | changes in economic conditions in the Latin American countries
	where we operate.

These factors should not be construed as exhaustive. We will not
update or revise any forward-looking statements.

Broadband Network. During 2000, we deployed our new
Broadband Network in Argentina, Brazil and Chile. Our Broadband
Network, which is comprised of 6,455 kilometers of long-haul
fiber optic backbones and 830 kilometers of metropolitan area
fiber optic and wireless links, stretches from the Pacific Ocean
at Valparaiso, Chile to the Atlantic Ocean, at Las Toninas,
Argentina and between Curitiba, Rio de Janeiro, São Paulo
and Belo Horizonte, Brazil. The Broadband Network, which uses
advanced transmission technologies including dense wave division
multiplexing (DWDM), asynchronous transfer mode (ATM) and
Internet protocol (IP), links major metropolitan areas
throughout Argentina and Brazil along the long-haul routes and
includes fiber optic and wireless metropolitan area local loops
in those cities. In addition, we own and operate a 1,500 route
kilometer long-haul fiber optic network in Colombia.

We are currently constructing an additional link between Parana,
Argentina and Curitiba, Brazil to create the first high-speed
broadband network connecting Argentina, Brazil and Chile which
will be ready for operation by the end of 2001. At the end of
this year, we expect that the Broadband Network will extend
9,660 kilometers of long-haul fiber optic backbones and 1,160
kilometers of metropolitan area backbones.

In order to provide our customers with connectivity to other
parts of the Latin American region and worldwide and to expand
the reach of the Broadband Network, we have acquired on an
indefeasible right of use (IRU) basis capacity on undersea
submarine cables that enable us to link our Broadband Network to
other parts of Latin America, North America, Europe and Asia.

We have a total of approximately 210,000 square feet of advanced
data center space in Argentina, Brazil, Chile, Mexico and the
United States. Our data centers will complement our existing
hosting facilities, which collectively occupy approximately
70,000 square feet of building space in those countries.

Revenues. During 2000, our revenues were derived from
five principal types of services. Those telecommunications
services were (i) data and value added services;
(ii) Internet services; (iii) services to carriers;
(iv) sales of equipment; and (v) Broadband Network
development services. With the exception of the Broadband
Network development services revenues, the final installment of
which we expect to receive during the first half of 2001, our
revenues for 2001 and thereafter will be concentrated along
these lines of service.

With respect to data and value added services and Internet
services, we provide those services to our customers under
contracts which typically range from six months to five years,
but generally are for three years. Where applicable, the
customer generally pays an installation charge at the beginning
of the contract, and thereafter the customer pays a monthly fee
based on the quantity and type of equipment installed and the
type and level of telecommunications capacity provided. Except
in Brazil, the fees stipulated in the contracts are generally
denominated in U.S. dollar equivalents. Services (other than
installation fees) are billed on a monthly or quarterly,
predetermined basis, which coincide with the rendering of the
services. We report our revenues net of deductions for sales
taxes.

With the introduction and commissioning of our Broadband
Network, we have commenced the sale of wholesale connectivity
services to other telecommunications carriers on an IRU and
other long-term basis. In 2000, we entered into IRU sales with
Global Crossing over portions of our Broadband Network in
Argentina, Brazil and Peru, and in February 2001 entered
into IRU sales with 360 networks, Inc. over portions of our
Broadband Network in Argentina, Brazil and Chile. We have or
will receive fixed advance payments for the IRUs upon the
execution of the IRU capacity agreements and the initiation into
service of the IRUs and will recognize revenue from the IRU
sales ratably over the life of the IRU, which we expect
generally will cover a

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We have sold, and expect to continue to sell telecommunications
equipment to certain of our customers in connection with our
providing telecommunications solutions to those customers and as
part of a package of integrated telecommunications solutions.
Over the life of our Company, we have been able to obtain
important telecommunications services contracts as a result of
our initial implementation of a tailor-made telecommunications
solution to address the specific needs of a customer, and
several of these solutions have included the initial sale of
telecommunications equipment. We record revenue from equipment
sales upon delivery and acceptance by our customers.

Finally, during 2000, we recorded Broadband Network development
revenues from our turnkey construction for Global Crossing of
certain dedicated ducts for the terrestrial portions of Global
Crossings Southern Crossing system. These portions
included the construction of ducts and other backhaul
provisioning between the submarine cable landing points of
Global Crossings Southern Crossing in Argentina, Brazil,
Chile and Peru. Revenues relating to our Broadband Network
development for Global Crossing were recorded upon our delivery
to, and provisional acceptance by, Global Crossing of the
respective terrestrial segments. We recorded revenues of
$57.7 million for this construction in 2000 and expect to
finish the delivery of the contracted segments during the first
half of 2001. We do not currently have any additional plans to
enter into similar contracts in the future with Global Crossing
or other parties.

We have experienced, and anticipate that we will continue to
experience, downward pressure on our prices for our
telecommunications service offerings as we continue to expand
our customer base and as competition for telecommunications
services grows upon the continuing deregulation of the
telecommunications sector in Latin America. When we have renewed
and/or expanded our contracts with existing customers, the
prices we charge have generally declined. We believe, however,
that our construction and operation of the Broadband Network
will help us to improve our competitive position in the Latin
American telecommunications sector by enabling us to offer new
higher-bandwidth products and services to a wider array of
existing and new customers.

Costs and Expenses. Our costs and expenses principally
include:



| |   |                                                  
| | - | -------------------------------------------------
| |  | direct costs                                     
|
| |  | salaries and wages                               
|
| |  | selling, general and administrative expenses, and
|
| |  | depreciation and amortization.                   

Our direct costs include payments for leased satellite
transponder and fiber optic capacity, interconnection and
termination costs for our new telephony offerings and frequency
rights. Building the Broadband Network will decrease our
payments for leased capacity as a percentage of revenues.
However, we will continue to incur leased capacity and related
costs in order to address our customers telecommunications
needs in areas beyond the geographical reach of our Broadband
Network. The other principal items comprising direct costs are
contracted services costs and other direct costs. Contracted
services costs include costs of maintenance and installation
(and de-installation) services provided by outside contractors.
Beginning in 2001, we will incur additional maintenance costs
with respect to the Broadband Network. Installation and
de-installation costs are the costs we incur when we install or
remove earth stations, microstations and other equipment from
customer premises. Other direct costs principally include:



| |   |                                                                 
| | - | ----------------------------------------------------------------
| |  | Licenses and other fees                                         
|
| |  | Sales commissions paid to third-party sales representatives, and

35



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##### Table of Contents





| |   |                                
| | - | -------------------------------
| |  | Allowance for doubtful accounts

Our selling, general and administrative expenses consist
principally of:



| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | publicity and promotion costs                                       
|
| |  | professional fees and other remuneration                            
|
| |  | travel and entertainment                                            
|
| |  | rent, and                                                           
|
| |  | plant services and corporate telecommunication and energy
	expenses.

Currency Risks. Except in Brazil, our contracts with
customers generally provide for payment in U.S. dollars or for
payment in local currency linked to the exchange rate between
the local currency and the U.S. dollar at the time of invoicing.
Accordingly, inflationary pressures on local economies in the
other countries in which we operate did not have a material
effect on our revenues during 2000. Given that the exchange rate
is generally set at the date of invoicing and that we in some
cases experience substantial delays in collecting receivables,
we are exposed to exchange rate risk. Furthermore, under
Brazilian law, our contracts with customers in Brazil cannot be
linked to the exchange rate between the Brazilian realand the U.S. dollar. Our expansion in Brazil will increase
our exposure to exchange rate risks. To date, we have not hedged
any of these exposures.




Item 7a.  Quantitative and Qualitative
Disclosure About Market Risk

The sections below highlight our exposure to interest rate and
foreign exchange rate risks and change in the market values of
our investment in equity securities. The analyses presented
below are illustrative and should not be viewed as predictive of
our future financial performance. Additionally, we cannot assure
you that our actual results in any particular year will not
differ from the amounts indicated below. However, we believe
that these results are reasonable based on our financial
instrument portfolio at December 31, 2000 and assuming that the
hypothetical interest rate and foreign exchange rate changes
used in the analyses occurred during year 2000. We do not hold
or issue any market risk sensitive instruments for trading
purposes.

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

We are exposed to interest rate risk on our floating rate
indebtedness, which affects our cost of financing. Our floating
rate indebtedness has increased and is expected to increase
further as we draw down commitments under the Nortel financing
agreements to cover expenditures relating to our contracts with
Nortel to construct the Broadband Network in Argentina and
Brazil. Our actual interest rate is not quantifiable or
predictable because of the variability of future interest rates
and business requirements. We do not believe such risk is
material and we do not customarily use derivative instruments to
adjust interest rate risk.

|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |            |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|-------------------------------- |  | ---------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | ---------- |  | ----- | ------ | ---------- |  | - | ------- |  |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                 |  |                       
|                                 |  | Expected Maturity Date
|Twelve Months                    |  |                       
|Ending December 31,              |  | 2001                   |        | 2002 |  | 2003 |        | 2004 |  | 2005 |         | Thereafter |  | Total |        | Fair Value
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |           
|Senior Notes (fixed rate)        |  |                        |       |      |  |      |       |      |  | $    | 125,000 |            |  |       |       |            |  | $ | 300,000 |  |  | $ | 225,000 |  |  | $ | 650,000 |  |  | $ | 421,625 | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |            |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|Avg. interest rate               |  |                        |        |      |  |      |        |      |  |      | 12.13%  |            |  |       |        |            |  |   | 13.75%  |  |  |   | 12.38%  |  |  |   | 12.96%  |  |  |   |         | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |            |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|Term Notes (fixed rate)          |  | $                      | 16,253 |      |  | $    | 14,258 |      |  | $    | 12,212  |            |  | $     | 7,761  |            |  | $ | 3,458   |  |  | $ | 2,553   |  |  | $ | 56,495  |  |  | $ | 56,495  | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |            |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|Avg. interest rate               |  |                        | 9.38%  |      |  |      | 9.38%  |      |  |      | 9.38%   |            |  |       | 9.38%  |            |  |   | 9.38%   |  |  |   | 9.38%   |  |  |   | 9.38%   |  |  |   |         | 
|                                
|                                
|                                
|                                
|Vendor Financing (variable rate) |  | $                      | 22,124 |      |  | $    | 44,251 |      |  | $    | 44,251  |            |  | $     | 45,004 |            |  | $ | 45,510  |  |  | $ | 46,005  |  |  | $ | 247,145 |  |  | $ | 247,145 | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |            |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|Avg. interest rate               |  |                        | 10.09% |      |  |      | 10.09% |      |  |      | 10.09%  |            |  |       | 10.09% |            |  |   | 10.09%  |  |  |   | 10.09%  |  |  |   | 10.09%  |  |  |   |         | 
|                                 |  |                        |        |      |  |      |        |      |  |      |         |            |  |       |        |            |  |   |         |  |  |   |         |  |  |   |         |  |  |   |         | 

36



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##### Table of Contents



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

Pursuant to Brazilian law, our contracts with customers in
Brazil cannot be denominated in dollars or linked to the
exchange rate between the Brazilian real and the U.S. dollar.
Our expansion in Brazil, including our development of the
Broadband Network in Brazil, has, and will continue to, increase
our exposure to exchange rate risks. Revenues from services from
our Brazilian operations for 1999 and 2000 represented
approximately 6.7% and 10.4% of our total net revenues from
services for 1999 and for 2000, respectively. However, this
proportion can be expected to increase significantly in future
periods in connection with the progression of our operations in
Brazil and the development of the Broadband Network. At
March 15, 2001, the realtraded at a rate of
R$2.08 = $1.00. We do not believe that a hypothetical
10% devaluation in the market exchange rate of the realover the remaining eight and one half months ending
December 31, 2001 would result in a material reduction in
potential revenues from our Brazilian operations during 2001.

Changes in Market Value of Investment. We hold a fair
value basis investment of approximately 14.0% of the common
stock of El Sitio, Inc., which is publicly traded on the Nasdaq
National Market System. Our investment in El Sitio is subject to
equity price and overall stock market risk. See Note 4 to our
consolidated financial statements. Our El Sitio investment is
included in non-current assets and is accounted for as
available for sale securities under SFAS
No. 115 because our ownership is less than 20% and we do
not have the ability to exercise significant influence over El
Sitios operations.

Our investment in El Sitio, which is in the Internet industry,
is subject to significant fluctuations in fair market value due
to the volatility of the stock market. A hypothetical 20%
decrease in the share price of El Sitios common stock from
the price at December 31, 2000 would decrease the fair
value of our investment by $0.7 million.

On October 30, 2000, El Sitio announced that it had entered
into an agreement with affiliates of Ibero-American Media
Partners II Ltd., a joint venture between the Cisneros
Group of Companies and Hicks, Muse, Tate & Furst
Incorporated, to combine El Sitios interactive assets with
Ibero-American Media Partners media assets in the Latin
American region to form a new company to be called Claxson
Interactive Group. As part of the combination, our shares in El
Sitio would be converted into an equal number of shares in
Claxson Interactive Group. We have agreed with Ibero-American
Media Partners to vote our shares of El Sitio common stock in
favor of the combination. El Sitio has announced that it expects
that the combination will be consummated in the first half of
2001.

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




Item 8.Financial Statements and
Supplementary Data

Information required by this Item is included herein beginning
on page F-1.




Item 9.Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

None.

37



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##### Table of Contents






PART III




Item 10.  Directors and Officers

Information required by this Item is included in the
registrants definitive proxy statement, dated
March 30, 2001, under the heading Proposal
One  Election of Directors  Information as
to Directors and Nominees and Further
Information  Board of Directors and Executive
Officers, each of which is incorporated herein by
reference pursuant to General Instruction G(3).




Item 11.  Executive Compensation

Information required by this Item is included in the
registrants definitive proxy statement, dated
March 30, 2001, under the headings Further
Information  Executive Compensation, which is
incorporated herein by reference pursuant to General Instruction
G(3).






|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
	Management

Information required by this Item is included in the
registrants definitive proxy statement, dated
March 30, 2001, under the heading Security Ownership
of Management and Certain Beneficial Owners, which is
incorporated herein by reference pursuant to General Instruction
G(3).




Item 13.  Certain Relationships and Related
Transactions

Information required by this Item is included in the
registrants definitive proxy statement dated
March 30, 2001, under the heading Certain
Relationships and Related Transactions, which is
incorporated herein by reference pursuant to General Instruction
G(3).




Item 14.  Exhibits, Financial Statement
Schedules, and Reports on Form 8-K

(a)(1) List of Financial
Statements

Consolidated Financial Statements of IMPSAT Fiber Networks,
Inc. and Subsidiaries

| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | Consolidated Balance Sheets as of December 31, 2000 and 1999                                                      
| |  | Consolidated Statements of Operations for Each of the Three
	Years in the Period Ended December 31, 2000          
| |  | Consolidated Statements of Comprehensive Loss for Each of the
	Three Years in the Period Ended December 31, 2000. 
| |  | Consolidated Statements of Stockholders Equity for Each of
	the Three Years in the Period Ended December 31, 2000
| |  | Consolidated Statements of Cash Flows for Each of the Three
	Years in the Period Ended December 31, 2000          

Consolidated Financial Statements of IMPSAT S.A. and
Subsidiaries

| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | Balance Sheets as of December 31, 2000 and 1999                                                      
| |  | Statements of Operations for Each of the Three Years in the
	Period Ended December 31, 2000          
| |  | Statements of Comprehensive Loss for Each of the Three Years in
	the Period Ended December 31, 2000. 
| |  | Statements of Stockholders Equity for Each of the Three
	Years in the Period Ended December 31, 2000
| |  | Statements of Cash Flows for Each of the Three Years in the
	Period Ended December 31, 2000          

(a)(2) List of
Schedules.

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

38



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##### Table of Contents



(a)(3) Exhibits

The exhibits listed in the accompanying Exhibit Index and
required by Item 601 of Regulation S-K (numbered in
accordance with Item 601 of Regulation S-K) are filed
or incorporated by reference as part of this Report.

(b) Reports on
Form 8-K.

During the period covered by this Report, the registrants filed
with the Commission the following current reports on
Form 8-K:



| |   |                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On February 16, 2000, announcing the consummation on
	February 16, 2000 of the sale of IMPSAT Fiber Networks,
	Inc.s $300,000,000 13- 3/4% Senior Notes due 2005
	pursuant to Rule 144A under the U.S. Securities Act of
	1933, as amended
|
| |  | On March 1, 2000, announcing IMPSAT Fiber Networks,
	Inc.s consolidated operating results for the fourth
	quarter and full year 1999                                                                                                      
|
| |  | On May 2, 2000, announcing IMPSAT Fiber Networks,
	Inc.s consolidated operating results for the first quarter
	2000                                                                                                                       

39



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, each of the
registrants has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, in the City
of Buenos Aires in the Republic of Argentina, on March 30,
2001.



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



| |     |                        
| | --- | -----------------------
| | By: | /s/RICARDO A. VERDAGUER

| |                      
| | ---------------------
| |                      
| | Ricardo A. Verdaguer,
| | President and Chief  
| | Executive Officer    



| |       |               
| | ----- | --------------
| | Date: | March 30, 2001

| |            
| | -----------
| |            
|
| | IMPSAT S.A.



| |     |                   
| | --- | ------------------
| | By: | /s/MARCELO GIROTTI

| |                              
| | -----------------------------
| |                              
| | Marcelo Girotti              
| | Director and Regional Manager



| |       |               
| | ----- | --------------
| | Date: | March 30, 2001

| | 
| | 
| | 



40



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POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below (each, a Signatory)
constitutes and appoints Guillermo Jofré and José R.
Torres and Enrique Diz (each, an Agent, and
collectively, Agents) or either of them, his true
and lawful attorney-in-fact and agent, each with full power of
substitution and resubstitution, for and in his name, place and
stead, in any and all capacities, to sign this Report and any
and all amendments thereto and to file the same, with all
exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission. Each
Signatory further grants to the Agents, and each of them, full
power and authority to do and perform each and every act and
thing requisite and necessary, in the judgment of such Agent, to
be done in connection with any such signing and filing, as full
to all intents and purposes as he might or could do in person,
and hereby ratifies and confirms all that said Agents, or any of
them, or their or his other substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report has been signed by the following
persons in the capacities and on the dates indicated.

|                                               |  |                                                                                              |  |                |  | 
|---------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                      |  | Title                                                                                        |  | Date          
|                                               |  |                                                                                              |  |               
|/s/ ENRIQUE M. PESCARMONAEnrique M. Pescarmona |  | Chairman of the Board of Directors
	of IMPSAT Fiber Networks, Inc.                           |  | March 30, 2001
|                                              
|/s/ RICARDO A. VERDAGUERRicardo A. Verdaguer   |  | Director, President and Chief
	Executive Officer of IMPSAT
	Fiber Networks, Inc.             |  | March 30, 2001
|                                              
|/s/ GUILLERMO JOFRÉGuillermo Jofré             |  | Chief Financial Officer of IMPSAT
	Fiber Networks, Inc.                                      |  | March 30, 2001
|                                              
|/s/ JOSÉ R. TORRESJosé R. Torres               |  | Vice President, Administration and
	Chief Accounting Officer of
	IMPSAT Fiber Networks, Inc. |  | March 30, 2001
|                                              
|/s/ ROBERTO VIVO CHANETONRoberto Vivo Chaneton |  | Director of IMPSAT Fiber
	Networks, Inc.                                                     |  | March 30, 2001
|                                              
|/s/ ALEXANDER RIVELISAlexander Rivelis         |  | Director and Vice President, Carriers
	Carrier of IMPSAT Fiber
	Networks, Inc.              |  | March 30, 2001
|                                              
|/s/ LUCAS PESCARMONALucas Pescarmona           |  | Director of IMPSAT Fiber
	Networks, Inc.                                                     |  | March 30, 2001
|                                              
|/s/ SOFIA PESCARMONASofia Pescarmona           |  | Director of IMPSAT Fiber
	Networks, Inc.                                                     |  | March 30, 2001
|                                              
|/s/ STEPHEN R. MUNGERStephen R. Munger         |  | Director of IMPSAT Fiber
	Networks, Inc.                                                     |  | March 30, 2001

41



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##### Table of Contents



|                                 |  |                                          |  |                |  | 
|-------------------------------- |  | ---------------------------------------- |  | -------------- |  | 
|Signature                        |  | Title                                    |  | Date          
|                                 |  |                                          |  |               
|/s/ JERÓNIMO BOSCHJerónimo Bosch |  | Director of IMPSAT Fiber
	Networks, Inc. |  | March 30, 2001
|                                
|Carlos Zamora                    |  | Director of IMPSAT Fiber
	Networks, Inc. |  | March 30, 2001
|                                
|John McElligott                  |  | Director of IMPSAT Fiber
	Networks, Inc. |  | March 30, 2001
|                                
|/s/ ENRIQUE DIZEnrique Diz       |  | Attorney-in-Fact                         |  | March 30, 2001

42



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##### Table of Contents



POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below (each, a Signatory)
constitutes and appoints Guillermo Jofre, Jose R. Torres
and Enrique Diz (each, an Agent, and collectively,
Agents) and each or any of them, his true and lawful
attorney-in-fact and agent, each with full power of substitution
and resubstitution, for and in his name, place and stead, in any
and all capacities, to sign this Report and any and all
amendments thereto and to file the same, with all exhibits
thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission. Each Signatory further
grants to the Agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and
necessary, in the judgment of such Agent, to be done in
connection with any such signing and filing, as full to all
intents and purposes as he might or could do in person, and
hereby ratifies and confirms all that said Agents, or any of
them, or their or his other substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report has been signed by the following
persons in the capacities and on the dates indicated.

|                                               |  |                                                                              |  |                |  | 
|---------------------------------------------- |  | ---------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                      |  | Title                                                                        |  | Date          
|                                               |  |                                                                              |  |               
|/s/ RICARDO A. VERDAGUERRicardo A. Verdaguer   |  | Chairman of the Board of Directors
	of IMPSAT Argentina                      |  | March 30, 2001
|                                              
|/s/ ENRIQUE M. PESCARMONAEnrique M. Pescarmona |  | Director of IMPSAT Argentina                                                 |  | March 30, 2001
|                                              
|/s/ ROBERTO VIVO CHANETONRoberto Vivo Chaneton |  | Director of IMPSAT Argentina                                                 |  | March 30, 2001
|                                              
|Pedro Mayol                                    |  | Director of IMPSAT Argentina                                                 |  | March 30, 2001
|                                              
|/s/ MARCELO GIROTTIMarcelo Girotti             |  | Director of IMPSAT Argentina                                                 |  | March 30, 2001
|                                              
|/s/ JOSE R. TORRESJose R. Torres               |  | Director of IMPSAT Argentina
	(principal financial officer)                  |  | March 30, 2001
|                                              
|/s/ JORGE PATERNOSTROJorge Paternostro         |  | Manager, Administration of
	IMPSAT Argentina (principal
	accounting officer) |  | March 30, 2001
|                                              
|/s/ ENRIQUE DIZEnrique Diz                     |  | Attorney-in-Fact                                                             |  | March 30, 2001

43



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders of IMPSAT Fiber
Networks, Inc.:

We have audited the accompanying consolidated balance sheets of
IMPSAT Fiber Networks, Inc. and its subsidiaries (the
Company) as of December 31, 1999 and 2000, and
the related consolidated statements of operations, comprehensive
loss, stockholders equity and cash flows for each of the
three years in the period ended December 31, 2000. These
consolidated financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. 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, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company at December 31, 1999 and 2000, and the results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of
America.

DELOITTE & TOUCHE LLP







F-1



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars)


|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |          |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | -------- | ------- | - | --------- | -------- | ------- | 
|                                                                                                                                                                             |                                                                                                                                                                                                   |                           
|                                                                                                                                                                             |                                                                                                                                                                                                   | December 31,              
|                                                                                                                                                                             |                                                                                                                                                                                                   |                           
|                                                                                                                                                                             |                                                                                                                                                                                                   | 1999                       |         | 2000    
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|ASSETS                                                                                                                                                                      
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|CURRENT ASSETS:                                                                                                                                                              |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Cash and cash equivalents                                                                                                                                                                         |                            | $       | 97,507   |         |   | $         | 67,737   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Trading investments                                                                                                                                                                               |                            |         |          |         |   |           | 240,892  |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Trade accounts receivable, net                                                                                                                                                                    |                            |         | 52,176   |         |   |           | 83,351   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Other receivables                                                                                                                                                                                 |                            |         | 27,640   |         |   |           | 63,171   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Prepaid expenses                                                                                                                                                                                  |                            |         | 1,703    |         |   |           | 3,722    |        
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                             |                                                                                                                                                                                                   | Total current assets       |         |          | 179,026 |   |           |          | 458,873 | 
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|BROADBAND NETWORK, Net                                                                                                                                                       |                                                                                                                                                                                                   |                            | 71,868  |          |         |   | 295,894   |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|PROPERTY, PLANT AND EQUIPMENT, Net                                                                                                                                           |                                                                                                                                                                                                   |                            | 310,330 |          |         |   | 450,001   |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|NON-CURRENT ASSETS:                                                                                                                                                          |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Investments                                                                                                                                                                                       |                            |         | 235,925  |         |   |           | 15,091   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Intangible assets                                                                                                                                                                                 |                            |         | 442      |         |   |           | 87,693   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Deferred income taxes, net                                                                                                                                                                        |                            |         |          |         |   |           | 33,059   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Deferred financing costs, net                                                                                                                                                                     |                            |         | 8,985    |         |   |           | 14,804   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Other non-current assets                                                                                                                                                                          |                            |         | 21,756   |         |   |           | 19,335   |        
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                             |                                                                                                                                                                                                   | Total non-current assets   |         |          | 267,108 |   |           |          | 169,982 | 
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|TOTAL                                                                                                                                                                        |                                                                                                                                                                                                   | $                          | 828,332 |          |         | $ | 1,374,750 |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|CURRENT LIABILITIES:                                                                                                                                                         |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Accounts payable  trade                                                                                                                                                                          |                            | $       | 53,678   |         |   | $         | 113,516  |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Short-term debt                                                                                                                                                                                   |                            |         | 15,670   |         |   |           | 14,603   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Current portion of long-term debt                                                                                                                                                                 |                            |         | 23,007   |         |   |           | 38,377   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Accrued and other liabilities                                                                                                                                                                     |                            |         | 29,506   |         |   |           | 53,809   |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Deferred income taxes, net                                                                                                                                                                        |                            |         | 51,870   |         |   |           |          |        
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                             |                                                                                                                                                                                                   | Total current liabilities  |         |          | 173,731 |   |           |          | 220,305 | 
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|LONG-TERM DEBT, Net                                                                                                                                                          |                                                                                                                                                                                                   |                            | 445,634 |          |         |   | 915,263   |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|OTHER LONG-TERM LIABILITIES                                                                                                                                                  |                                                                                                                                                                                                   |                            | 21,391  |          |         |   | 28,307    |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|DEFERRED REVENUES                                                                                                                                                            |                                                                                                                                                                                                   |                            | 23,200  |          |         |   | 52,290    |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|COMMITMENTS AND CONTINGENCIES (Note 15)                                                                                                                                      |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|REDEEMABLE PREFERRED STOCK, Convertible, Series A, 10%,
	cumulative dividend; 25,000 shares authorized, issued and
	outstanding; converted and redeemed on
	February 4, 2000 |                                                                                                                                                                                                   |                            | 149,035 |          |         |   |           |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|STOCKHOLDERS EQUITY:                                                                                                                                                        |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Common Stock, $0.01 par value; 300,000,000 shares authorized,
	71,605,991 shares issued and outstanding at December 31,
	1999, and 91,428,570 shares issued and outstanding at
	December 31, 2000 |                            |         | 716      |         |   |           | 914      |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Additional paid in capital                                                                                                                                                                        |                            |         | 221,013  |         |   |           | 541,615  |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Accumulated deficit                                                                                                                                                                               |                            |         | (202,934 | )       |   |           | (357,075 | )      
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Treasury stock, 14,917,915 shares, at cost                                                                                                                                                        |                            |         | (125,000 | )       |   |           |          |        
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Amount paid in excess of carrying value of assets acquired from
	related party                                                                                                                    |                            |         | (4,827   | )       |   |           | (4,259   | )      
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Deferred stock-based compensation                                                                                                                                                                 |                            |         |          |         |   |           | (5,438   | )      
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                            
|                                                                                                                                                                             | Accumulated other comprehensive income (loss)                                                                                                                                                     |                            |         | 126,373  |         |   |           | (17,172  | )      
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|                                                                                                                                                                             |                                                                                                                                                                                                   | Total stockholders equity |         |          | 15,341  |   |           |          | 158,585 | 
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         
|TOTAL                                                                                                                                                                        |                                                                                                                                                                                                   | $                          | 828,332 |          |         | $ | 1,374,750 |         
|                                                                                                                                                                             |                                                                                                                                                                                                   |                            |         |          |         |   |           |         

See notes to consolidated financial statements.

F-2



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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


|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |          |        |         |  
|------------------------------------------- | -------------------------------------- | ------------------------ | -------------------------------- | ------- | ------ | ------- | ------- | -------- | ------ | ------- | ------- | -------- | ------ | ------- | -
|                                            |                                        |                         
|                                            |                                        | Years Ended December 31,
|                                            |                                        |                         
|                                            |                                        | 1998                     |                                  | 1999    |        | 2000   
|                                            |                                        |                          |                                  |         |        |        
|NET REVENUES:                               |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Data and value added services          |                          | $                                | 183,337 |        |         | $       | 195,114  |        |         | $       | 213,171  |       
|                                           
|                                           
|                                           
|                                           
|                                            | Internet                               |                          |                                  | 20,240  |        |         |         | 26,160   |        |         |         | 35,298   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Services to carriers                   |                          |                                  |         |        |         |         |          |        |         |         | 2,201    |       
|                                           
|                                           
|                                           
|                                           
|                                            | Sales of equipment                     |                          |                                  | 4,512   |        |         |         | 7,177    |        |         |         | 13,797   |       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                            |                                        |                          | Total net revenues from services |         |        | 208,089 |         |          |        | 228,451 |         |          |        | 264,467 |  
|                                           
|                                           
|                                           
|                                           
|                                            | Broadband network development revenues |                          |                                  |         |        |         |         |          |        |         |         | 57,676   |       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                            |                                        |                          | Total net revenues               |         |        | 208,089 |         |          |        | 228,451 |         |          |        | 322,143 |  
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|COSTS AND EXPENSES:                         |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Direct costs:                          |                          |                                  |         |        |         |         |          |        |         |         |          |       
|                                           
|                                           
|                                           
|                                           
|                                            |                                        | Contracted services      |                                  |         | 17,897 |         |         |          | 21,853 |         |         |          | 29,573 |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                        | Other direct costs       |                                  |         | 16,096 |         |         |          | 31,055 |         |         |          | 21,349 |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                        | Leased capacity          |                                  |         | 31,228 |         |         |          | 49,666 |         |         |          | 74,188 |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                        | Broadband network cost   |                                  |         |        |         |         |          |        |         |         |          | 34,729 |        
|                                           
|                                           
|                                           
|                                           
|                                            |                                        | Cost of equipment sold   |                                  |         | 3,665  |         |         |          | 5,187  |         |         |          | 12,308 |        
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                            |                                        |                          | Total direct costs               |         |        | 68,886  |         |          |        | 107,761 |         |          |        | 172,147 |  
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                            | Salaries and wages                     |                          |                                  | 38,198  |        |         |         | 46,174   |        |         |         | 68,922   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Selling, general and administrative    |                          |                                  | 37,189  |        |         |         | 40,631   |        |         |         | 58,471   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Depreciation and amortization          |                          |                                  | 36,946  |        |         |         | 130,071  |        |         |         | 84,488   |       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                            |                                        |                          | Total costs and expenses         |         |        | 181,219 |         |          |        | 324,637 |         |          |        | 384,028 |  
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|Operating income (loss)                     |                                        |                          | 26,870                           |         |        |         | (96,186 | )        |        |         | (61,885 | )       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|OTHER INCOME (EXPENSES):                    |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | Interest income and investment gains   |                          |                                  | 4,686   |        |         |         | 7,418    |        |         |         | 27,394   |       
|                                           
|                                           
|                                           
|                                           
|                                            | Interest expense                       |                          |                                  | (49,384 | )      |         |         | (62,979  | )      |         |         | (112,894 | )     
|                                           
|                                           
|                                           
|                                           
|                                            | Net gain (loss) on foreign exchange    |                          |                                  | 675     |        |         |         | (8,042   | )      |         |         | (10,614  | )     
|                                           
|                                           
|                                           
|                                           
|                                            | Other income, net                      |                          |                                  | 760     |        |         |         | 15,305   |        |         |         | 704      |       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                            |                                        |                          | Total other expenses             |         |        | (43,263 | )       |          |        | (48,298 | )       |          |        | (95,410 | )
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|LOSS BEFORE INCOME TAXES, CUMULATIVE EFFECT |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | AND MINORITY INTEREST                  |                          |                                  | (16,393 | )      |         |         | (144,484 | )      |         |         | (157,295 | )     
|                                           
|                                           
|                                           
|                                           
|(PROVISION FOR) BENEFIT FROM INCOME TAXES   |                                        |                          | (3,805                           | )       |        |         | 20,733  |          |        |         | 4,547   |         
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|LOSS BEFORE CUMULATIVE EFFECT AND MINORITY  |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | INTEREST                               |                          |                                  | (20,198 | )      |         |         | (123,751 | )      |         |         | (152,748 | )     
|CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | PRINCIPLE, NET OF TAX                  |                          |                                  | (1,269  | )      |         |         |          |        |         |         |          |       
|(INCOME) LOSS ATTRIBUTABLE TO MINORITY      |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | INTEREST                               |                          |                                  | (2,502  | )      |         |         | 6,225    |        |         |         |          |       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|LOSS BEFORE DIVIDENDS ON REDEEMABLE         |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | PREFERRED STOCK                        |                          |                                  | (23,969 | )      |         |         | (117,526 | )      |         |         | (152,748 | )     
|                                           
|                                           
|                                           
|                                           
|DIVIDENDS ON REDEEMABLE PREFERRED STOCK     |                                        |                          | (10,018                          | )       |        |         | (14,017 | )        |        |         | (1,393  | )       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|NET LOSS ATTRIBUTABLE TO COMMON             |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | STOCKHOLDERS                           |                          | $                                | (33,987 | )      |         | $       | (131,543 | )      |         | $       | (154,141 | )     
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|NET LOSS PER COMMON SHARE:                  |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | BASIC AND DILUTED                      |                          | $                                | (0.71   | )      |         | $       | (2.42    | )      |         | $       | (1.74    | )     
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|WEIGHTED AVERAGE NUMBER OF COMMON SHARES:   |                                        |                          |                                  |         |        |         |         |          |        |         |         |         
|                                           
|                                           
|                                           
|                                           
|                                            | BASIC AND DILUTED                      |                          |                                  | 47,983  |        |         |         | 54,447   |        |         |         | 88,534   |       
|                                            |                                        |                          |                                  |         |        |         |         |          |        |         |         |         

See notes to consolidated financial statements.

F-3



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars)


|                                               |                                                                                  |                          |         |      |      |      |          |         |         |   |          |          |          |  
|---------------------------------------------- | -------------------------------------------------------------------------------- | ------------------------ | ------- | ---- | ---- | ---- | -------- | ------- | ------- | - | -------- | -------- | -------- | -
|                                               |                                                                                  |                         
|                                               |                                                                                  | Years Ended December 31,
|                                               |                                                                                  |                         
|                                               |                                                                                  | 1998                     |         | 1999 |      | 2000
|                                               |                                                                                  |                          |         |      |      |     
|NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS   |                                                                                  | $                        | (33,987 | )    |      | $    | (131,543 | )       |         | $ | (154,141 | )       
|                                              
|                                              
|                                              
|                                              
|OTHER COMPREHENSIVE INCOME (LOSS), net of tax: |                                                                                  |                          |         |      |      |      |          |         |         |   |          |         
|                                              
|                                              
|                                              
|                                              
|                                               | Foreign currency translation adjustment                                          |                          |         | (526 | )    |      |          | (1,724  | )       |   |          | (4,167   | )       
|                                              
|                                              
|                                              
|                                              
|                                               | Change on unrealized gain (loss) on investment available
	for sale, net of taxes |                          |         |      |      |      |          | 128,623 |         |   |          | (139,378 | )       
|                                               |                                                                                  |                          |         |      |      |      |          |         |         |   |          |         
|                                               |                                                                                  | TOTAL                    |         |      | (526 | )    |          |         | 126,899 |   |          |          | (143,545 | )
|                                               |                                                                                  |                          |         |      |      |      |          |         |         |   |          |         
|COMPREHENSIVE LOSS                             |                                                                                  | $                        | (34,513 | )    |      | $    | (4,644   | )       |         | $ | (297,686 | )       
|                                               |                                                                                  |                          |         |      |      |      |          |         |         |   |          |         

See notes to consolidated financial statements

F-4



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands of U.S. dollars)


|                             |                                                                                                                                                                              |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|---------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | ---------- | ----------- | - | ----------- | --- | ------- |  | - | ------- | ------- | - | - | -------- | -------- | -
|                             |                                                                                                                                                                              |              |            |             |   |            
|                             |                                                                                                                                                                              | Common Stock |            | Additional  |   |            
|                             |                                                                                                                                                                              |              |            | Paid In     |   | Accumulated
|                             |                                                                                                                                                                              | Shares       |            | Stock       |   | Capital     |     | Deficit
|                             |                                                                                                                                                                              |              |            |             |   |             |     |        
|BALANCE AT DECEMBER 31, 1997 |                                                                                                                                                                              |              | 59,671,661 |             |   | $           | 597 |         |  | $ | 100,196 |         |   | $ | (37,404  | )       
|                            
|                            
|                            
|                            
|                             | Acquisition of treasury stock                                                                                                                                                |              |            | (14,917,915 | ) |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Acquisition of IMPSAT Brazil Dividends on redeemable preferred
	stock                                                                                                        |              |            |             |   |             |     |         |  |   |         |         |   |   |          | (10,018  | )
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of carrying value of net
	assets acquired from related party                                                                           |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                                                                                                      |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Net loss for the year                                                                                                                                                        |              |            |             |   |             |     |         |  |   |         |         |   |   |          | (23,969  | )
|                             |                                                                                                                                                                              |              |            |             |   |             |     |         |  |   |         |         |   |   |          |         
|BALANCE AT DECEMBER 31, 1998 |                                                                                                                                                                              |              | 44,753,746 |             |   |             | 597 |         |  |   | 100,196 |         |   |   | (71,391  | )       
|                            
|                            
|                            
|                            
|                             | Dividends on redeemable preferred stock                                                                                                                                      |              |            |             |   |             |     |         |  |   |         |         |   |   |          | (14,017  | )
|                            
|                            
|                            
|                            
|                             | Common stock issuance                                                                                                                                                        |              |            | 11,934,330  |   |             |     | 119     |  |   |         | 120,817 |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of carrying value of net
	assets acquired from related party Change on unrealized gain on
	investment available for sale, net of taxes |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                                                                                                      |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Net loss for the year                                                                                                                                                        |              |            |             |   |             |     |         |  |   |         |         |   |   |          | (117,526 | )
|                             |                                                                                                                                                                              |              |            |             |   |             |     |         |  |   |         |         |   |   |          |         
|BALANCE AT DECEMBER 31, 1999 |                                                                                                                                                                              |              | 56,688,076 |             |   |             | 716 |         |  |   | 221,013 |         |   |   | (202,934 | )       
|                            
|                            
|                            
|                            
|                             | Dividends on redeemable preferred stock                                                                                                                                      |              |            |             |   |             |     |         |  |   |         |         |   |   |          | (1,393   | )
|                            
|                            
|                            
|                            
|                             | Issuance of common shares in Initial Public Offering, net of
	offering expenses                                                                                              |              |            | 14,350,000  |   |             |     | 144     |  |   |         | 229,206 |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Issuance of common stock in exchange for minority interest in
	IMPSAT Argentina, Colombia and Venezuela                                                                      |              |            | 5,472,579   |   |             |     | 54      |  |   |         | 92,980  |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Issuance of common stock upon conversion of Series A
	preferred shares                                                                                                       |              |            | 14,917,915  |   |             |     |         |  |   |         | (7,022  | ) |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Deferred stock-based compensation                                                                                                                                            |              |            |             |   |             |     |         |  |   |         | 5,438   |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of carrying value of net
	assets acquired from related party                                                                           |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Change on unrealized loss on investment available for sale, net
	of taxes                                                                                                    |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                                                                                                      |              |            |             |   |             |     |         |  |   |         |         |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Net loss for the year                                                                                                                                                        |              |            |             |   |             |     |         |  |   |         |         |   |   |          | (152,748 | )
|                             |                                                                                                                                                                              |              |            |             |   |             |     |         |  |   |         |         |   |   |          |         
|BALANCE AT DECEMBER 31, 2000 |                                                                                                                                                                              |              | 91,428,570 |             |   | $           | 914 |         |  | $ | 541,615 |         |   | $ | (357,075 | )       
|                             |                                                                                                                                                                              |              |            |             |   |             |     |         |  |   |         |         |   |   |          |         

F-5



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands of U.S. dollars)


|                             |                                                                                                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          |          |  
|---------------------------- | ------------------------------------------------------------------------------------------------------- | -------- | -------- | ------------- | - | ------------ | ------ | ------------- | - | ----- | ------ | ------ | - | - | ------- | -------- | - | - | -------- | -------- | -
|                             |                                                                                                         |          |          | Amount Paid   |   |              |        |               |   |      
|                             |                                                                                                         |          |          | In Excess of  |   |              |        |               |   |      
|                             |                                                                                                         |          |          | Carrying      |   |              |        | Accumulated   |   |      
|                             |                                                                                                         |          |          | Value         |   |              |        | Other         |   |      
|                             |                                                                                                         |          |          | Of Net Assets |   | Deferred     |        | Comprehensive |   |      
|                             |                                                                                                         | Treasury |          | Acquired From |   | Stock-Based  |        | (Loss)        |   |      
|                             |                                                                                                         | Stock    |          | Related Party |   | Compensation |        | Income        |   | Total
|                             |                                                                                                         |          |          |               |   |              |        |               |   |      
|BALANCE AT DECEMBER 31, 1997 |                                                                                                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   | $ | 63,389   |         
|                            
|                            
|                            
|                            
|                             | Acquisition of treasury stock                                                                           |          | $        | (125,000      | ) |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (125,000 | )
|                            
|                            
|                            
|                            
|                             | Acquisition of IMPSAT Brazil                                                                            |          |          |               |   |              | $      | (5,679        | ) |       |        |        |   |   |         |          |   |   |          | 5,679    | )
|                            
|                            
|                            
|                            
|                             | Dividends on redeemable preferred stock                                                                 |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (10,018  | )
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of carrying value of net
	assets acquired from related party      |          |          |               |   |              |        | 284           |   |       |        |        |   |   |         |          |   |   |          | 284      |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                                 |          |          |               |   |              |        |               |   |       |        |        |   |   | $       | (526     | ) |   |          | (526     | )
|                            
|                            
|                            
|                            
|                             | Net loss for the year                                                                                   |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (23,969  | )
|                             |                                                                                                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          |         
|BALANCE AT DECEMBER 31, 1998 |                                                                                                         |          | (125,000 | )             |   |              | (5,395 | )             |   |       |        |        |   |   | (526    | )        |   |   | (101,519 | )       
|                            
|                            
|                            
|                            
|                             | Dividends on redeemable preferred stock                                                                 |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (14,017  | )
|                            
|                            
|                            
|                            
|                             | Common stock issuance                                                                                   |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | 120,936  |  
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of Carrying value of net
	assets acquired from related party      |          |          |               |   |              |        | 568           |   |       |        |        |   |   |         |          |   |   |          | 568      |  
|                            
|                            
|                            
|                            
|                             | Change on unrealized gain on investment available for sale, net
	of taxes                               |          |          |               |   |              |        |               |   |       |        |        |   |   |         | 128,623  |   |   |          | 128,623  |  
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                                 |          |          |               |   |              |        |               |   |       |        |        |   |   |         | (1,724   | ) |   |          | (1,724   | )
|                            
|                            
|                            
|                            
|                             | Net loss for the year                                                                                   |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (117,526 | )
|                             |                                                                                                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          |         
|BALANCE AT DECEMBER 31, 1999 |                                                                                                         |          | (125,000 | )             |   |              | (4,827 | )             |   |       |        |        |   |   | 126,373 |          |   |   | 15,341   |         
|                            
|                            
|                            
|                            
|                             | Dividends on redeemable preferred Stock                                                                 |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (1,393   | )
|                            
|                            
|                            
|                            
|                             | Issuance of common shares in Initial Public Offering, net of
	offering expenses                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | 229,350  |  
|                            
|                            
|                            
|                            
|                             | Issuance of common stock in exchange for minority interest in
	IMPSAT Argentina, Colombia and Venezuela |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | 93,034   |  
|                            
|                            
|                            
|                            
|                             | Issuance of common stock upon conversion of Series A
	preferred shares                                  |          |          | 125,000       |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | 117,978  |  
|                            
|                            
|                            
|                            
|                             | Deferred stock-based compensation                                                                       |          |          |               |   |              |        |               |   |       | $      | (5,438 | ) |   |         |          |   |   |          |          |  
|                            
|                            
|                            
|                            
|                             | Amortization of amount paid in excess of carrying value of net
	assets acquired from related party      |          |          |               |   |              |        | 568           |   |       |        |        |   |   |         |          |   |   |          | 568      |  
|                            
|                            
|                            
|                            
|                             | Change on unrealized loss on investment available for sale, net
	of taxes                               |          |          |               |   |              |        |               |   |       |        |        |   |   |         | (139,378 | ) |   |          | (139,378 | )
|                            
|                            
|                            
|                            
|                             | Foreign currency translation adjustment                                                                 |          |          |               |   |              |        |               |   |       |        |        |   |   |         | (4,167   | ) |   |          | (4,167   | )
|                            
|                            
|                            
|                            
|                             | Net loss for the year                                                                                   |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          | (152,748 | )
|                             |                                                                                                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          |         
|BALANCE AT DECEMBER 31, 2000 |                                                                                                         |          |          |               |   | $            | (4,259 | )             |   | $     | (5,438 | )      |   | $ | (17,172 | )        |   | $ | 158,585  |         
|                             |                                                                                                         |          |          |               |   |              |        |               |   |       |        |        |   |   |         |          |   |   |          |         

See notes to consolidated financial statements.

F-6



---



##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)


|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |          |         |         |          |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------------------------------------- | --------------------------------------------------- | ------ | ------- | -------- | -------- | ------- | ------- | -------- | -------- | ------- | ------- | -------- | -
|                                                                      |                                                                                                                      |                                                      
|                                                                      |                                                                                                                      | Years Ended December 31,                             
|                                                                      |                                                                                                                      |                                                      
|                                                                      |                                                                                                                      | 1998                                                  |                                                            | 1999                                                |        | 2000   
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |        
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net loss                                                                                                             |                                                       | $                                                          | (23,969                                             | )      |         | $        | (117,526 | )       |         | $        | (152,748 | )      
|                                                                      | Adjustments to reconcile net loss to net cash provided by (used
	in)                                                 |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | operating activities, net of acquisition:                                                                            |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Cumulative effect of a change in accounting principle |                                                            |                                                     | 1,269  |         |          |          |         |         |          |          |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Amortization and depreciation                         |                                                            |                                                     | 36,946 |         |          |          | 130,071 |         |          |          | 84,488  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Deferred income tax benefit                           |                                                            |                                                     | (127   | )       |          |          | (23,790 | )       |          |          | (3,036  | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Gross profit from broadband network development       |                                                            |                                                     |        |         |          |          |         |         |          |          | (27,639 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Changes in assets and liabilities:                    |                                                            |                                                     |        |         |          |          |         |         |          |          |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Increase in trade accounts receivable, net                 |                                                     |        | (10,128 | )        |          |         | (5,202  | )        |          |         | (31,175 | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Decrease (increase) in prepaid expenses                    |                                                     |        | 75      |          |          |         | 291     |          |          |         | (2,019  | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Increase in other receivables and other non-current assets |                                                     |        | (1,443  | )        |          |         | (17,679 | )        |          |         | (33,110 | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Increase in accounts payable  trade                       |                                                     |        | 4,204   |          |          |         | 20,212  |          |          |         | 59,838  |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Increase in deferred revenues                              |                                                     |        |         |          |          |         | 23,200  |          |          |         | 87,757  |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Increase in accrued and other liabilities                  |                                                     |        | 6,979   |          |          |         | 4,532   |          |          |         | 24,303  |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      |                                                       | Increase (decrease) in other long-term liabilities         |                                                     |        | 2,934   |          |          |         | (10,260 | )        |          |         | (6,746  | )       
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      |                                                                                                                      |                                                       |                                                            | Net cash provided by (used in) operating activities |        |         | 16,740   |          |         |         | 3,849    |          |         |         | (87      | )
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net increase in trading investments                                                                                  |                                                       |                                                            |                                                     |        |         |          |          |         |         |          | (240,892 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Build-out of broadband network                                                                                       |                                                       |                                                            |                                                     |        |         |          | (11,833  | )       |         |          | (56,325  | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of property, plant and equipment                                                                           |                                                       |                                                            | (107,461                                            | )      |         |          | (97,388  | )       |         |          | (213,827 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash paid in Mandic S.A. acquisition, net                                                                            |                                                       |                                                            | (8,485                                              | )      |         |          | (3,700   | )       |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash paid in IMPSAT Brazil merger                                                                                    |                                                       |                                                            | (5,679                                              | )      |         |          |          |         |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of available for sale investment                                                                           |                                                       |                                                            |                                                     |        |         |          | (21,527  | )       |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | (Increase) decrease in other investment                                                                              |                                                       |                                                            | (6,530                                              | )      |         |          | 473      |         |         |          | (437     | )      
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      |                                                                                                                      |                                                       |                                                            | Net cash used in investing activities               |        |         | (128,155 | )        |         |         | (133,975 | )        |         |         | (511,481 | )
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net (payments on) borrowings from short-term debt                                                                    |                                                       |                                                            | (31,358                                             | )      |         |          | (3,592   | )       |         |          | (1,067   | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from long-term debt, net of deferred financing costs                                                        |                                                       |                                                            | 228,097                                             |        |         |          | 46,101   |         |         |          | 321,453  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Repayments of long-term debt                                                                                         |                                                       |                                                            | (5,216                                              | )      |         |          | (24,109  | )       |         |          | (31,271  | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from issuance of common stock, net                                                                          |                                                       |                                                            |                                                     |        |         |          | 120,936  |         |         |          | 229,350  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Acquisition of treasury stock                                                                                        |                                                       |                                                            | (125,000                                            | )      |         |          |          |         |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash paid in redemption of preferred stock                                                                           |                                                       |                                                            |                                                     |        |         |          |          |         |         |          | (32,500  | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from issuance of redeemable preferred stock                                                                 |                                                       |                                                            | 125,000                                             |        |         |          |          |         |         |          |          |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      |                                                                                                                      |                                                       |                                                            | Net cash provided by financing activities           |        |         | 191,523  |          |         |         | 139,336  |          |         |         | 485,965  |  
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH                       |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | EQUIVALENTS                                                                                                          |                                                       |                                                            | (526                                                | )      |         |          | (1,724   | )       |         |          | (4,167   | )      
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|NET INCREASE (DECREASE) IN CASH AND CASH                              |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | EQUIVALENTS                                                                                                          |                                                       |                                                            | 79,582                                              |        |         |          | 7,486    |         |         |          | (29,770  | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                        |                                                                                                                      |                                                       | 10,439                                                     |                                                     |        |         | 90,021   |          |         |         | 97,507   |         
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|CASH AND CASH EQUIVALENTS AT END OF YEAR                              |                                                                                                                      | $                                                     | 90,021                                                     |                                                     |        | $       | 97,507   |          |         | $       | 67,737   |         
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|SUPPLEMENTAL CASH FLOW INFORMATION:                                   |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest paid                                                                                                        |                                                       | $                                                          | 45,967                                              |        |         | $        | 63,127   |         |         | $        | 93,532   |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Foreign income taxes paid                                                                                            |                                                       | $                                                          | 1,901                                               |        |         | $        | 1,751    |         |         | $        | 2,264    |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
	ACTIVITIES: |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Accrued dividends on redeemable preferred stock                                                                      |                                                       | $                                                          | 10,018                                              |        |         | $        | 14,017   |         |         | $        | 1,393    |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Fair value of net assets acquired in Mandic S.A.                                                                     |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |          |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                                      | Acquisition                                           |                                                            | $                                                   | 1,794  |         |          |          |         |         |          |          |         |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Change to unrealized gain on investment available for sale, net
	of tax                                              |                                                       |                                                            |                                                     |        |         | $        | 128,623  |         |         | $        | (139,378 | )      
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Rights of way agreements                                                                                             |                                                       |                                                            |                                                     |        |         | $        | 15,134   |         |         | $        | 18,697   |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Broadband network vendor financing                                                                                   |                                                       |                                                            |                                                     |        |         | $        | 46,219   |         |         | $        | 184,397  |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Issuance of treasury stock upon conversion of preferred stock                                                        |                                                       |                                                            |                                                     |        |         |          |          |         |         | $        | 117,978  |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         
|                                                                      | Issuance of common stock in exchange of minority interest of
	IMPSAT Argentina, IMPSAT Colombia and IMPSAT Venezuela |                                                       |                                                            |                                                     |        |         |          |          |         |         | $        | 93,034   |        
|                                                                      |                                                                                                                      |                                                       |                                                            |                                                     |        |         |          |          |         |         |          |         

See notes to consolidated financial statements.

F-7



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tables in thousands of U.S. dollars, except for per share
amounts)


1.  General

IMPSAT Fiber Networks, Inc., a Delaware holding company (the
Company), is a leading integrated provider of
broadband Internet, data and voice services in Latin America.
The Company offers integrated telecommunications solutions, with
an emphasis on end-to-end broadband data transmission, for
national and multinational companies, financial institutions,
governmental agencies and other business customers. In addition,
the Company has built an extensive pan-Latin American high
capacity fiber optic network (Broadband Network) and
is currently undertaking its second phase of extension which it
expects to complete during 2001.

The Company currently provides telecommunications services to
its customers using its local access and long haul fiber optic
and satellite networks. The deployed facilities include 15
metropolitan area networks in the largest cities of the region,
long haul networks across Argentina, Brazil, Chile and Colombia,
and leased submarine capacity to link South America to the
United States. Finally, during 2000 the Company deployed 210,000
square feet of advanced data centers in Argentina, Brazil,
Chile, Mexico and United States to complement its existing
hosting facilities of 70,000 square feet.

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

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

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

2.  Initial Public Offering

The Company completed an initial public offering
(IPO) of 11,500,000 shares of common stock on
February 4, 2000. On the same date, British
Telecommunications plc (BT) purchased 2,850,000
shares of the Companys common stock simultaneously with
the IPO to maintain its approximate current ownership share in
the Company. In anticipation of the IPO, on January 11,
2000, the Companys Board of Directors (the
Board) amended and restated the articles of
incorporation of the Company to change the name of the Company
to IMPSAT Fiber Networks, Inc. and authorized 300,000,000 shares
of common stock, $0.01 par value, and 5,000,000 shares of
blank check preferred stock, $0.01 par value. In
addition, the Board approved a .592 for 1 reverse common stock
split (see Note 3), adopted a stockholders rights plan and
approved the issuance of 5,472,579 shares of common stock to the
minority shareholders in IMPSAT Argentina, IMPSAT Venezuela and
IMPSAT Colombia in exchange for their minority interests in
those subsidiaries. The acquisition of these minority interests
was accounted for under the purchase method and resulted in
approximately $88.1 million in goodwill.

F-8



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

In addition, the Company redeemed approximately
$32.5 million of the redeemable preferred stock and the
holders converted their remaining preferred shares into
14,917,915 shares of common stock.

3.  Summary of Significant Accounting Policies

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

Use of Estimates  The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America (generally
accepted accounting principles) requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

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

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

No single customer accounted for greater than 10% of total net
revenues from services for the years ended December 31,
1998, 1999 or 2000.

Broadband Network  Portions of the Broadband
Network are under construction. Costs in connection with the
construction, installation and expansion of the Broadband
Network are capitalized. Depreciation will be computed using the
straight-line method over the life of the rights of way for the
related network. Rights of way agreements represent the fees
paid and the net present value of fees to be paid per signed
agreements entered into for obtaining rights of way and other
permits for the Broadband Network. These capitalized agreements
are being amortized over the term of the rights of way, which
range from 10 to 20 years.

In addition, the Company during 2000 acquired IRUs from other
entities for its own purposes. Such IRU investments are
capitalized and amortized over their estimated useful lives, not
to exceed 15 years. The acquired IRUs have a 25-year term.
In those cases where the right of use has been acquired for a
longer period of time (25 years) management believes that,
due to anticipated advances in technology, the Companys
IRUs are not likely to be productive assets beyond 15 years.

F-9



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The components of the Broadbond Network are depreciated and
amortized over the following estimated useful lines:

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

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

|                                        |  |            
|--------------------------------------- |  | -----------
|                                       
|                                       
|                                       
|                                       
|Buildings and improvements              |  | 10-25 years
|                                       
|                                       
|                                       
|                                       
|Operating communications equipment      |  | 5-10 years 
|                                       
|                                       
|                                       
|                                       
|Furniture, fixtures and other equipment |  | 2-10 years 

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

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

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

Intangible Assets  Intangible assets consist
of goodwill of $88.1 million, created in the acquisition of
the minority interest of certain operating subsidiaries
discussed in Note 2, and $4.9 million, created by the
acquisition of certain assets, licenses and permits by IMPSAT
Colombia. These intangible assets are being amortized on a
straight-line basis over a period of 15 and 4 years,
respectively.

The Company reviews the carrying value of goodwill on an ongoing
basis. If such review indicates that these values may not be
recoverable, the Companys carrying value will be reduced
to its estimated fair value.

Long-Lived Assets  Long-lived assets are
reviewed on an ongoing basis for impairment based on comparison
of carrying value against undiscounted future cash flows. If an
impairment is identified, the assets carrying amount is adjusted
to fair value. No such adjustments were recorded for the years
ended December 31, 1998, 1999, and 2000.

Income Taxes  Deferred income taxes result
from temporary differences in the recognition of expenses for
tax and financial reporting purposes and are accounted for in
accordance with SFAS No. 109, Accounting for Income
Taxes, which requires the liability method of computing
deferred income taxes. Under the liability method, deferred
taxes are adjusted for tax rate changes as they occur.

Foreign Currency Translation  The
Companys subsidiaries generally use the U.S. dollar as the
functional currency. Accordingly, the financial statements of
the subsidiaries were remeasured. The effects of foreign
currency transactions and of remeasuring the financial position
and results of operations into the

F-10



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

functional currency are included as net gain or loss on foreign
exchange, except for IMPSAT Brazil, which uses the local
currency as the functional currency and which is included in
accumulated other comprehensive income (loss) in
stockholders equity.

Fair Value of Financial Instruments  The
Companys financial instruments include receivables,
investments, payables, short- and long-term debt. The
Companys Senior Guaranteed Notes, Senior Notes 2005 and
2008 and trading and available for sale investments, were valued
at market closing prices at December 31, 1999 and 2000. The
fair value of all other financial instruments, which approximate
their carrying value, have been determined using available
market information and interest rates as of December 31,
1999 and 2000.

At December 31, 1999 and 2000, the fair value of the
Companys financial instruments was as follows:

|                                         |  |      |         |      |  |   |         | 
|---------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                         |  | 1999 |         | 2000
|                                         |  |      |         |     
|12.125% Senior Guaranteed Notes due 2003 |  | $    | 119,000 |      |  | $ | 98,750  | 
|                                        
|                                        
|                                        
|                                        
|13.75% Senior Notes due 2005             |  |      |         |      |  |   | 198,000 | 
|                                        
|                                        
|                                        
|                                        
|12.375% Senior Notes due 2008            |  |      | 205,000 |      |  |   | 124,875 | 
|                                        
|                                        
|                                        
|                                        
|Trading Investments                      |  |      |         |      |  |   | 240,892 | 
|                                        
|                                        
|                                        
|                                        
|Available for sale investments           |  |      | 225,700 |      |  |   | 7,166   | 

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

Stock Split  On January 11, 2000, the
Companys Board approved a .592 to 1 reverse common stock
split (see Note 2). Retroactive restatement has been made
to all share amounts to reflect the stock split.

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

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

|                             |  |             |        |               |  |       |          |   |  |   |          |  
|---------------------------- |  | ----------- | ------ | ------------- |  | ----- | -------- | - |  | - | -------- | -
|                             |  |             |        | Unrealized    |  |      
|                             |  |             |        | Gain (Loss)   |  |      
|                             |  | Foreign     |        | Available for |  |      
|                             |  | Currency    |        | Sale          |  |      
|                             |  | Translation |        | Investment    |  | Total
|                             |  |             |        |               |  |      
|Balance at December 31, 1998 |  | $           | (526   | )             |  |       |          |   |  | $ | (526     | )
|                            
|                            
|                            
|                            
|Change during the year       |  |             | (1,724 | )             |  | $     | 128,623  |   |  |   | 126,899  |  
|                             |  |             |        |               |  |       |          |   |  |   |          |  
|Balance at December 31, 1999 |  |             | (2,250 | )             |  |       | 128,623  |   |  |   | 126,373  |  
|                            
|                            
|                            
|                            
|Change during the year       |  |             | (4,167 | )             |  |       | (139,378 | ) |  |   | (143,545 | )
|                             |  |             |        |               |  |       |          |   |  |   |          |  
|Balance at December 31, 2000 |  | $           | (6,417 | )             |  | $     | (10,755  | ) |  | $ | (17,172  | )
|                             |  |             |        |               |  |       |          |   |  |   |          |  

F-11



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Reclassifications  Certain amounts in the 1998
and 1999 consolidated financial statements have been
reclassified to conform with the 2000 presentation.

New Accounting Pronouncement  In
June 1998, the Financial Accounting Standards Board
(FASB) issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. Among other
provisions, SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging
activities. It also requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
In June 1999, the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging
Activities  Deferral of the Effective Date of FASB
Statement No. 133, an amendment to SFAS No. 133.
SFAS No. 137 deferred the effective date of adoption of
SFAS No. 133 to fiscal years beginning after June 15,
2000. The adoption of SFAS No. 133 on January 1, 2001
did not have a material impact on the Companys
consolidated financial statements.

4.  Investments

The Companys investments consist of the following at
December 31, 1999 and 2000:

|                                                                                       |       |      |         |         |  |   |         |        | 
|-------------------------------------------------------------------------------------- | ----- | ---- | ------- | ------- |  | - | ------- | ------ | 
|                                                                                       |       | 1999 |         | 2000   
|                                                                                       |       |      |         |        
|Trading investments, at fair value                                                     |       | $    |        |         |  | $ | 240,892 |       
|                                                                                       |       |      |         |         |  |   |         |       
|Investment, at cost                                                                    |       | $    | 10,235  |         |  | $ | 7,925   |       
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Investment in common stock, at fair value (cost: $21,527 in
	1999 and $24,275 in 2000) |       |      | 225,690 |         |  |   | 7,166   |       
|                                                                                       |       |      |         |         |  |   |         |       
|                                                                                       | Total |      | $       | 235,925 |  |   | $       | 15,091 | 
|                                                                                       |       |      |         |         |  |   |         |       

The Companys trading investments consist of high-quality,
short-term investments with maturities of less than
360 days. The Companys trading investments represent
the unused proceeds of the IPO and Senior Notes 2005.

The Companys cost basis investment represents a less than
1% ownership in an unaffiliated entity established for the
purchase and leasing of satellite capacity time. The
Companys investment in common stock is subject to equity
price risk. The Company has not taken any actions to hedge this
market risk exposure.

5.  Trade Accounts Receivable

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

|                                      |       |              |         |        |  |   |         |         | 
|------------------------------------- | ----- | ------------ | ------- | ------ |  | - | ------- | ------- | 
|                                      |       |             
|                                      |       | December 31,
|                                      |       |             
|                                      |       | 1999         |         | 2000  
|                                      |       |              |         |       
|IMPSAT Argentina                      |       | $            | 49,989  |        |  | $ | 75,116  |        
|                                     
|                                     
|                                     
|                                     
|IMPSAT Brasil                         |       |              | 1,791   |        |  |   | 6,553   |        
|                                     
|                                     
|                                     
|                                     
|IMPSAT Colombia                       |       |              | 6,655   |        |  |   | 6,662   |        
|                                     
|                                     
|                                     
|                                     
|IMPSAT Venezuela                      |       |              | 7,074   |        |  |   | 6,311   |        
|                                     
|                                     
|                                     
|                                     
|All other countries                   |       |              | 6,487   |        |  |   | 11,218  |        
|                                      |       |              |         |        |  |   |         |        
|                                      | Total |              |         | 71,996 |  |   |         | 105,860 | 
|                                     
|                                     
|                                     
|                                     
|Less: allowance for doubtful accounts |       |              | (19,820 | )      |  |   | (22,509 | )      
|                                      |       |              |         |        |  |   |         |        
|Trade accounts receivable, net        |       | $            | 52,176  |        |  | $ | 83,351  |        
|                                      |       |              |         |        |  |   |         |        

F-12



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

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

The activity for the allowance for doubtful accounts for the
years ended December 31, 1998, 1999 and 2000 is as follows:

|                                |  |              |        |      |  |      |        |   |  |   |        |  
|------------------------------- |  | ------------ | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                |  |             
|                                |  | December 31,
|                                |  |             
|                                |  | 1998         |        | 1999 |  | 2000
|                                |  |              |        |      |  |     
|Beginning balance               |  | $            | 5,933  |      |  | $    | 10,109 |   |  | $ | 19,820 |  
|                               
|                               
|                               
|                               
|Provision for doubtful accounts |  |              | 5,312  |      |  |      | 11,232 |   |  |   | 4,806  |  
|                               
|                               
|                               
|                               
|Write-offs, net of recoveries   |  |              | (1,136 | )    |  |      | (1,521 | ) |  |   | (2,117 | )
|                                |  |              |        |      |  |      |        |   |  |   |        |  
|Ending balance                  |  | $            | 10,109 |      |  | $    | 19,820 |   |  | $ | 22,509 |  
|                                |  |              |        |      |  |      |        |   |  |   |        |  

6.  Other Receivables

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

|                    |       |              |        |        |  |   |        |        | 
|------------------- | ----- | ------------ | ------ | ------ |  | - | ------ | ------ | 
|                    |       |             
|                    |       | December 31,
|                    |       |             
|                    |       | 1999         |        | 2000  
|                    |       |              |        |       
|IMPSAT Argentina    |       | $            | 13,606 |        |  | $ | 33,678 |       
|                   
|                   
|                   
|                   
|IMPSAT Brazil       |       |              | 1,122  |        |  |   | 12,538 |       
|                   
|                   
|                   
|                   
|IMPSAT Colombia     |       |              | 5,269  |        |  |   | 4,149  |       
|                   
|                   
|                   
|                   
|IMPSAT Venezuela    |       |              | 1,757  |        |  |   | 2,156  |       
|                   
|                   
|                   
|                   
|All other countries |       |              | 5,886  |        |  |   | 10,650 |       
|                    |       |              |        |        |  |   |        |       
|                    | Total |              | $      | 27,640 |  |   | $      | 63,171 | 
|                    |       |              |        |        |  |   |        |       

7.  Broadband Network and Agreements

Broadband network and related equipment consists of the
following at December 31, 2000:

|                                            |       |              |        |        |  |   |         |         | 
|------------------------------------------- | ----- | ------------ | ------ | ------ |  | - | ------- | ------- | 
|                                            |       |             
|                                            |       | December 31,
|                                            |       |             
|                                            |       | 1999         |        | 2000  
|                                            |       |              |        |       
|Network infrastructure                      |       |              |        |        |  | $ | 199,274 |        
|                                           
|                                           
|                                           
|                                           
|Right of ways                               |       | $            | 15,134 |        |  |   | 33,266  |        
|                                           
|                                           
|                                           
|                                           
|Equipment and materials                     |       |              | 4,018  |        |  |   | 43,906  |        
|                                           
|                                           
|                                           
|                                           
|IRU investments                             |       |              |        |        |  |   | 20,010  |        
|                                            |       |              |        |        |  |   |         |        
|                                            | Total |              |        | 19,152 |  |   |         | 296,456 | 
|                                           
|                                           
|                                           
|                                           
|Less: accumulated depreciation              |       |              | (1,318 | )      |  |   | (5,383  | )      
|                                            |       |              |        |        |  |   |         |        
|                                            | Total |              |        | 17,834 |  |   |         | 291,073 | 
|                                           
|                                           
|                                           
|                                           
|Under construction  Network infrastructure |       |              | 51,966 |        |  |   | 3,424   |        
|                                           
|                                           
|                                           
|                                           
|Under construction  Global Crossing ducts  |       |              | 2,068  |        |  |   | 1,397   |        
|                                            |       |              |        |        |  |   |         |        
|                                            | Total |              | $      | 71,868 |  |   | $       | 295,894 | 
|                                            |       |              |        |        |  |   |         |        

F-13



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The recap of accumulated depreciation for the years ended
December 31, 1998, 1999 and 2000, is as follows:

|                          |  |              |     |      |  |      |       |  |  |   |       |  
|------------------------- |  | ------------ | --- | ---- |  | ---- | ----- |  |  | - | ----- | -
|                          |  |             
|                          |  | December 31,
|                          |  |             
|                          |  | 1998         |     | 1999 |  | 2000
|                          |  |              |     |      |  |     
|Beginning balance         |  |              |     |      |  | $    | 296   |  |  | $ | 1,318 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  | $            | 296 |      |  |      | 1,022 |  |  |   | 4,365 |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |              |     |      |  |      |       |  |  |   | (300  | )
|                          |  |              |     |      |  |      |       |  |  |   |       |  
|Ending balance            |  | $            | 296 |      |  | $    | 1,318 |  |  | $ | 5,383 |  
|                          |  |              |     |      |  |      |       |  |  |   |       |  

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

On October 25, 1999, each of IMPSAT Argentina and IMPSAT
Brazil signed definitive agreements with Nortel to borrow an
aggregate of up to approximately $149.1 million and
$148.3 million, respectively, of long term vendor
financing. The financing, which will be disbursed over a two
year period with final maturity in 2006, will be used to finance
Nortels construction of the segments of the Broadband
Network in Argentina and Brazil as well as additional purchases
of telecommunications equipment. The Company has guaranteed the
obligations of each of IMPSAT Argentina and IMPSAT Brazil under
the Nortel financing agreements. Additionally, the Company has
obtained additional vendor financing from Lucent Technologies,
Ericsson and Tellabs OY for the acquisition of fiber optic cable
and other telecommunications equipment for the Broadband Network
for an aggregate of up to approximately $28.2 million. The
Company had amounts due under Broadband Network vendor financing
totaling approximately $60.0 million and
$247.1 million as of December 31, 1999 and 2000,
respectively.

Agreements with Global Crossing  The Company
during 1999 and 2000 entered into a series of definitive
agreements with Global Crossing Ltd. and its subsidiaries
(Global Crossing) in connection with the development
of the Broadband Network and with Global Crossings
development of its South American Crossing undersea cable
project (South American Crossing).

On September 22, 1999, the Company entered into an
agreement with Global Crossing to construct the terrestrial
portion of the South American Crossing between Las Toninas,
Argentina on the Atlantic Ocean and Valparaiso, Chile on the
Pacific Ocean (the Trans-Andean Crossing System), as
follows:



| |   |                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | construction of three ducts (the Global Crossing
	Ducts) and related facilities over 230 route miles
	between Las Toninas and Buenos Aires, Argentina and over
	290 route miles between Mendoza, Argentina and Valparaiso,
	Chile for approximately $39 million.
|
| |  | licensing to Global Crossing of one duct on our Broadband
	Network between the cities of Buenos Aires and Mendoza in
	Argentina for approximately $25 million.                                                                                                    

The Company commenced construction of the Trans-Andean Crossing
System in September 1999. The Company accumulated
construction costs for the Global Crossing Ducts in projects
under construction and deferred recognition of all payments
received from Global Crossing until completion and delivery of
the respective ducts. In September 2000, the Company
completed and delivered to Global Crossing the portion of the
Trans-Andean Crossing System connecting Las Toninas, Argentina
and Santiago, Chile. The Company expects to complete the
delivery of a final segment between Santiago, Chile and Global
Crossings landing point in Valparaiso, Chile in the first
quarter of 2001. As part of the Broadband Network and the South
American Crossing, the Company also constructed turnkey backhaul
segments and granted IRUs to Global Crossing in Peru and Brazil
between Global Crossings landing points in those countries
and its metropolitan

F-14



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

points of presence located at the Companys telehouses in
Lima, Peru and Sao Paulo and Rio de Janeiro, Brazil. In
connection with the delivery of such infrastructure to Global
Crossing during 2000, the Company recognized revenues and direct
costs totaling $57.7 million and $34.7 million,
respectively.

As part of its arrangements with Global Crossing, the Company
has agreed to purchase from Global Crossing indefeasible rights
of use of capacity valued at not less than $46 million on
any of Global Crossings fiber optic cable networks
worldwide. These rights enable the Company to interconnect the
Companys networks in Argentina and Brazil and give the
Company global international access. The Company had purchased
approximately $12.6 million under this agreement as of
December 31, 2000.

Agreements with 360networks  In addition to
its agreements with Global Crossing, during the year ended
December 31, 2000, the Company entered into a framework
agreement with 360networks, Inc. with respect to the grant of
IRUs of up to 25 years on the Companys Broadband
Network, including network maintenance services and telehousing
space. During 2000, the Company received approximately
$5 million from 360networks related to these agreements.

8.  Property, Plant and Equipment

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

|                                        |       |              |          |         |  |   |          |         | 
|--------------------------------------- | ----- | ------------ | -------- | ------- |  | - | -------- | ------- | 
|                                        |       |             
|                                        |       | December 31,
|                                        |       |             
|                                        |       | 1999         |          | 2000   
|                                        |       |              |          |        
|Land                                    |       | $            | 3,985    |         |  | $ | 10,398   |        
|                                       
|                                       
|                                       
|                                       
|Building and improvements               |       |              | 31,102   |         |  |   | 55,792   |        
|                                       
|                                       
|                                       
|                                       
|Operating communications equipment      |       |              | 486,528  |         |  |   | 622,664  |        
|                                       
|                                       
|                                       
|                                       
|Furniture, fixtures and other equipment |       |              | 21,337   |         |  |   | 33,703   |        
|                                        |       |              |          |         |  |   |          |        
|                                        | Total |              |          | 542,952 |  |   |          | 722,557 | 
|                                       
|                                       
|                                       
|                                       
|Less: accumulated depreciation          |       |              | (242,706 | )       |  |   | (306,404 | )      
|                                        |       |              |          |         |  |   |          |        
|                                        | Total |              |          | 300,246 |  |   |          | 416,153 | 
|                                       
|                                       
|                                       
|                                       
|Equipment in transit                    |       |              | 5,339    |         |  |   | 15,285   |        
|                                       
|                                       
|                                       
|                                       
|Works in process                        |       |              | 4,745    |         |  |   | 18,563   |        
|                                        |       |              |          |         |  |   |          |        
|Property, plant and equipment, net      |       | $            | 310,330  |         |  | $ | 450,001  |        
|                                        |       |              |          |         |  |   |          |        

The recap of accumulated depreciation for the years ended
December 31, 1998, 1999 and 2000 is as follows:

|                          |  |              |         |      |  |      |         |   |  |   |         |  
|------------------------- |  | ------------ | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                          |  |             
|                          |  | December 31,
|                          |  |             
|                          |  | 1998         |         | 1999 |  | 2000
|                          |  |              |         |      |  |     
|Beginning balance         |  | $            | 92,255  |      |  | $    | 126,728 |   |  | $ | 242,706 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  |              | 36,027  |      |  |      | 118,834 |   |  |   | 74,156  |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |              | (1,554  | )    |  |      | (2,856  | ) |  |   | (10,458 | )
|                          |  |              |         |      |  |      |         |   |  |   |         |  
|Ending balance            |  | $            | 126,728 |      |  | $    | 242,706 |   |  | $ | 306,404 |  
|                          |  |              |         |      |  |      |         |   |  |   |         |  

9.  Short-Term Debt

Several of the Companys subsidiaries maintain short-term
credit facilities with local banks. These credit facilities are
denominated in U.S. dollars, with interest rates ranging
from 7.95% to 18.40%. The Companys subsidiaries have
historically refinanced these short term credit facilities on an
annual basis. As of

F-15



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

December 31, 1999 and 2000, amounts outstanding under these
credit facilities totaled approximately $15.7 million and
$14.6 million, respectively.

10.  Long-Term Debt

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

|                                                                                                                                                         |                                                 |                      |         |        |         |   |         |        |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | -------------------- | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                                                                                                                                                         |                                                 |                     
|                                                                                                                                                         |                                                 | December 31,        
|                                                                                                                                                         |                                                 |                     
|                                                                                                                                                         |                                                 | 1999                 |         | 2000  
|                                                                                                                                                         |                                                 |                      |         |       
|12.125% Senior Guaranteed Notes due 2003                                                                                                                 |                                                 | $                    | 125,000 |        |         | $ | 125,000 |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|13.75% Senior Notes due 2005                                                                                                                             |                                                 |                      |         |        |         |   | 300,000 |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|12.375% Senior Notes due 2008                                                                                                                            |                                                 |                      | 225,000 |        |         |   | 225,000 |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Term notes payable, maturing from 2001 through 2004;
	collateralized by equipment, the assignment of customer
	contracts and investment; denominated in: |                                                 |                      |         |        |         |   |         |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                         | U.S. dollars (interest rates 6.30%  12.50%)    |                      |         | 35,886 |         |   |         | 27,959 |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                         | Local currency (interest rates 10.47%  20.53%) |                      |         | 15,509 |         |   |         | 17,177 |        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Eximbank notes payable (9.30%), maturing semiannually through
	2001 and 2004.                                                                            |                                                 |                      | 7,285   |        |         |   | 11,359  |       
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Vendor financing (8.30%  11.87%), maturing 2004 to
	2008                                                                                                |                                                 |                      | 59,961  |        |         |   | 247,145 |       
|                                                                                                                                                         |                                                 |                      |         |        |         |   |         |       
|                                                                                                                                                         |                                                 | Total long-term debt |         |        | 468,641 |   |         |        | 953,640 | 
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|                                                                                                                                                        
|Less: current portion                                                                                                                                    |                                                 |                      | (23,007 | )      |         |   | (38,377 | )     
|                                                                                                                                                         |                                                 |                      |         |        |         |   |         |       
|Long-term debt, net                                                                                                                                      |                                                 | $                    | 445,634 |        |         | $ | 915,263 |       
|                                                                                                                                                         |                                                 |                      |         |        |         |   |         |       

The scheduled maturities of long-term debt at December 31,
2000 are as follows:

|                    |       |   |         |         | 
|------------------- | ----- | - | ------- | ------- | 
|Fiscal Year         |       |  
|                    |       |  
|2001                |       | $ | 38,377  |        
|                   
|                   
|                   
|                   
|2002                |       |   | 58,509  |        
|                   
|                   
|                   
|                   
|2003                |       |   | 181,463 |        
|                   
|                   
|                   
|                   
|2004                |       |   | 52,765  |        
|                   
|                   
|                   
|                   
|2005 and thereafter |       |   | 622,526 |        
|                    |       |   |         |        
|                    | Total |   | $       | 953,640 | 
|                    |       |   |         |        

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

F-16



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

11.  Income Taxes

The composition of the (provision for) benefit from income
taxes, all of which are for foreign taxes, for the years ended
December 31, 1998, 1999 and 2000 is as follows:

|         |       |              |        |        |   |      |        |        |  |   |       |       | 
|-------- | ----- | ------------ | ------ | ------ | - | ---- | ------ | ------ |  | - | ----- | ----- | 
|         |       |             
|         |       | December 31,
|         |       |             
|         |       | 1998         |        | 1999   |   | 2000
|         |       |              |        |        |   |     
|Current  |       | $            | (3,932 | )      |   | $    | (3,765 | )      |  | $ | 1,511 |      
|        
|        
|        
|        
|Deferred |       |              | 127    |        |   |      | 24,498 |        |  |   | 3,036 |      
|         |       |              |        |        |   |      |        |        |  |   |       |      
|         | Total |              | $      | (3,805 | ) |      | $      | 20,733 |  |   | $     | 4,547 | 
|         |       |              |        |        |   |      |        |        |  |   |       |      

The foreign statutory tax rates range from 15% to 35% depending
on the particular country. There is no provision or benefit for
U.S. income taxes, as the Company has net operating loss
carryforwards in the amount of approximately $41.4 million,
which begin to expire in the year 2010. Deferred taxes result
from temporary differences in revenue recognition, depreciation
methods and net operating loss carryforwards. The composition of
net deferred tax (liability) asset at December 31 is as
follows:

|                                   |                                   |          |         |        |        |   |         |        |        | 
|---------------------------------- | --------------------------------- | -------- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                   |                                   | 1999     |         | 2000  
|                                   |                                   |          |         |       
|Deferred tax assets:               |                                   |          |         |        |        |   |         |       
|                                  
|                                  
|                                  
|                                  
|                                   | Net operating loss carryforwards: |          |         |        |        |   |         |        |       
|                                  
|                                  
|                                  
|                                  
|                                   |                                   | Domestic |         | $      | 18,127 |   |         | $      | 41,364 | 
|                                  
|                                  
|                                  
|                                  
|                                   |                                   | Foreign  |         |        | 13,889 |   |         |        | 35,850 | 
|                                  
|                                  
|                                  
|                                  
|                                   | Allowance for doubtful accounts   |          |         | 4,263  |        |   |         | 2,895  |       
|                                  
|                                  
|                                  
|                                  
|                                   | Property, plant and equipment     |          |         | 11,919 |        |   |         | 13,670 |       
|                                  
|                                  
|                                  
|                                  
|                                   | Services to carriers              |          |         |        |        |   |         | 6,549  |       
|                                  
|                                  
|                                  
|                                  
|                                   | Other                             |          |         | 1,138  |        |   |         | 2,716  |       
|                                   |                                   |          |         |        |        |   |         |       
|Gross deferred tax assets          |                                   |          | 49,336  |        |        |   | 103,044 |       
|                                  
|                                  
|                                  
|                                  
|Less: valuation allowance          |                                   |          | (25,666 | )      |        |   | (76,338 | )     
|                                   |                                   |          |         |        |        |   |         |       
|Net deferred tax asset             |                                   |          | 23,670  |        |        |   | 26,706  |       
|                                  
|                                  
|                                  
|                                  
|Available for sale investments     |                                   |          | (75,540 | )      |        |   | 6,353   |       
|                                   |                                   |          |         |        |        |   |         |       
|Net deferred tax (liability) asset |                                   | $        | (51,870 | )      |        | $ | 33,059  |       
|                                   |                                   |          |         |        |        |   |         |       

As there is no assurance that the Company will generate
sufficient earnings to utilize its available tax assets, a
valuation allowance has been established to offset deferred tax
assets.

12.  Stock Option Plans

1998 Plan  In December 1998, the Company
adopted the 1998 Stock Option Plan (the 1998 Plan),
pursuant to which 4,776,016 shares of Companys common
stock were reserved for issuance upon exercise of options. The
1998 Plan is designed as a means to retain and motivate key
employees and directors. The Companys compensation
committee, or in the absence thereof, the Board, administers and
interprets the 1998 Plan and is authorized to grant options
thereunder to all eligible employees of the Company, including
executive officers and directors (whether or not they are
employees) of the Company or affiliated companies. Options
granted under the 1998 Plan are on such terms and at such prices
as determined by the compensation committee, except that the per
share exercise price of incentive stock options cannot be less
than the fair market value of the common stock on the date of
grant. The 1998 Plan will terminate on December 1, 2008,
unless sooner terminated by the Companys Board.

F-17



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

Under the 1998 Plan, the Company granted options for 441,650
shares at an exercise price of $8.38 during the year ended
December 31, 1998 and options for 393,340 shares at an
exercise price of $10.47 during the year ended December 31, 1999
and options for 507,100 shares at an exercise price of $17.00
during the year ended December 31, 2000. These options vest
on each of the first, second and third anniversaries of the date
of grant, as to 10%, 30%, and 30%, respectively, of the granted
shares. On the fourth anniversary of the date of grant, the
option vests as to the remainder of the granted shares. The
options vest fully upon a change of control of the Company.

1999 Plan  On January 5, 2000, the
Companys Board adopted the 1999 Stock Option Plan (the
1999 Plan), which provides for the grants to its key
officers and employees of stock options that are non- qualified
for U.S. federal income tax purposes. The terms of the 1999 Plan
are otherwise identical to those of the 1998 Plan except that:



| |   |                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The total number of shares of the Companys common stock
	for which options may be and were granted pursuant to the 1999
	Plan is 355,214;                                                                                                
|
| |  | The exercise price is $1.69 per share of common stock; and                                                                                                                                                                                
|
| |  | Ten percent, twenty percent, thirty percent and forty percent of
	the options granted vest on each of the fourth, fifth, sixth and
	seventh anniversaries, respectively, of the date of grant or
	upon a change of control of the Company.

The expiration date of the 1999 Plan is January 5, 2010.

In connection with the stock options granted under the 1999
Plan, the Company recorded $5.4 million in
stockholders equity as deferred compensation during
January 2000. The deferred compensation will be amortized
to expense over the vesting period, which commences four years
after the date of grant.

A summary of stock option transactions during each of the three
years in the period ended December 31, 2000 is presented
below:

|                                              |                 |           |           |                |   |   |      |       | 
|--------------------------------------------- | --------------- | --------- | --------- | -------------- | - | - | ---- | ----- | 
|                                              |                 |           |           | Weighted      
|                                              |                 | Number    |           | Average       
|                                              |                 | of Shares |           | Exercise Price
|                                              |                 |           |           |               
|Granted and outstanding at December 31, 1998. |                 |           | 441,650   |                |   |   | 8.38 |      
|                                             
|                                             
|                                             
|                                             
|                                              | Granted         |           |           | 393,340        |   |   |      | 10.47 | 
|                                              |                 |           |           |                |   |   |      |      
|Outstanding at December 31, 1999              |                 |           | 834,990   |                |   |   | 9.36 |      
|                                             
|                                             
|                                             
|                                             
|                                              | Granted         |           |           | 862,314        |   |   |      | 10.70 | 
|                                             
|                                             
|                                             
|                                             
|                                              | Cancelled       |           |           | (29,427        | ) |   |      | 14.48 | 
|                                              |                 |           |           |                |   |   |      |      
|Outstanding at December 31, 2000              |                 |           | 1,667,877 |                |   |   | 9.96 |      
|                                              |                 |           |           |                |   |   |      |      
|Stock Options                                 |                 |           |           |                |   |   |      |      
|                                             
|                                             
|                                             
|                                             
|                                              | Exercisable at: |           |           |                |   |   |      |       | 
|                                             
|                                             
|                                             
|                                             
|December 31, 1998                             |                 |           |          |                |   |   |     |      
|                                              |                 |           |           |                |   |   |      |      
|December 31, 1999                             |                 |           | 44,165    |                |   | $ | 8.38 |      
|                                              |                 |           |           |                |   |   |      |      
|December 31, 2000                             |                 |           | 170,692   |                |   | $ | 8.85 |      
|                                              |                 |           |           |                |   |   |      |      

F-18



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

The following table summarizes information concerning
outstanding stock options at December 31, 2000:

|               |  |                     |           |             |  |                |         |                     |  |                |       |  |  |  |         |  |  |   |       | 
|-------------- |  | ------------------- | --------- | ----------- |  | -------------- | ------- | ------------------- |  | -------------- | ----- |  |  |  | ------- |  |  | - | ----- | 
|               |  |                     |           |             |  |               
|               |  | Options Outstanding |           |             |  |               
|               |  |                     |           |            
|               |  |                     |           | Weighted    |  |                |         | Options Exercisable
|               |  |                     |           | Average     |  |                |         |                    
|               |  | Number of           |           | Remaining   |  | Weighted       |         | Number              |  | Weighted      
|Range of       |  | Options             |           | Contractual |  | Average        |         | of Options          |  | Average       
|Exercise Price |  | Outstanding         |           | Life        |  | Exercise Price |         | Outstanding         |  | Exercise Price
|               |  |                     |           |             |  |                |         |                     |  |               
|$1.69-$8.38    |  |                     | 796,864   |             |  |                | 8 Years |                     |  | $              | 5.40  |  |  |  | 132,495 |  |  | $ | 8.38  | 
|              
|              
|              
|              
|$10.47         |  |                     | 381,973   |             |  |                | 8 Years |                     |  |                | 10.47 |  |  |  | 38,197  |  |  |   | 10.47 | 
|              
|              
|              
|              
|$17.00         |  |                     | 489,040   |             |  |                | 8 Years |                     |  |                | 17.00 |  |  |  |        |  |  |   |      | 
|               |  |                     |           |             |  |                |         |                     |  |                |       |  |  |  |         |  |  |   |       | 
|               |  |                     | 1,667,877 |             |  |                | 8 Years |                     |  | $              | 9.96  |  |  |  | 170,692 |  |  | $ | 8.85  | 
|               |  |                     |           |             |  |                |         |                     |  |                |       |  |  |  |         |  |  |   |       | 

The Company has adopted the disclosure-only provisions of SFAS
No. 123. Had compensation costs been recognized based on
the fair value at the date of grant for options awarded under
the 1998 and 1999 Plans, the pro forma amounts of the
Companys net loss attributable to common stockholders and
net loss per common share for the years ended December 31,
1998, 1999 and 2000 would have been as follows:

|                                              |  |      |         |      |  |      |          |   |  |   |          |  
|--------------------------------------------- |  | ---- | ------- | ---- |  | ---- | -------- | - |  | - | -------- | -
|                                              |  | 1998 |         | 1999 |  | 2000
|                                              |  |      |         |      |  |     
|Net loss attributable to common stockholders: |  |      |         |      |  |      |          |   |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|As reported                                   |  | $    | (33,987 | )    |  | $    | (131,543 | ) |  | $ | (154,141 | )
|                                             
|                                             
|                                             
|                                             
|Pro Forma                                     |  |      | (33,987 | )    |  |      | (131,892 | ) |  |   | (156,715 | )
|                                             
|                                             
|                                             
|                                             
|Net loss per common share:                    |  |      |         |      |  |      |          |   |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|As reported                                   |  | $    | (0.71   | )    |  | $    | (2.42    | ) |  | $ | (1.74    | )
|                                             
|                                             
|                                             
|                                             
|Pro Forma                                     |  |      | (0.71   | )    |  |      | (2.42    | ) |  |   | (1.77    | )

The fair value of the options granted in 1998 and 1999 was
estimated using the minimum value method prescribed by SFAS
No. 123 for nonpublic entities and the fair value of the
options granted in 2000 was estimated using the Black-Scholes
option-pricing model assuming no dividend yield and the
following weighted average assumptions:

|                               |  |      |     |      |  |      |     |   |  |  |      |  
|------------------------------ |  | ---- | --- | ---- |  | ---- | --- | - |  |  | ---- | -
|                               |  | 1998 |     | 1999 |  | 2000
|                               |  |      |     |      |  |     
|Risk-free interest rate        |  |      | 7.0 | %    |  |      | 7.0 | % |  |  | 10.8 | %
|                              
|                              
|                              
|                              
|Expected option lives in years |  |      | 4   |      |  |      | 4   |   |  |  | 4    |  
|                              
|                              
|                              
|                              
|Volatility                     |  |      |    |      |  |      |    |   |  |  | 155  | %

The weighted average fair value of options granted during 1998,
1999 and 2000 was $1.21, $1.51 and $14.95, respectively.

F-19



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

13.  Operating Segment Information

The Companys operating segment information, by subsidiary,
is as follows for the years ended December 31, 1998, 1999
and 2000:

|                               |           |                                  |         |         |         |          |         |           |         |           |       |              |         |       |       |        |        |  |         |        |         |  |        |         |         |   |         |         |           | 
|------------------------------ | --------- | -------------------------------- | ------- | ------- | ------- | -------- | ------- | --------- | ------- | --------- | ----- | ------------ | ------- | ----- | ----- | ------ | ------ |  | ------- | ------ | ------- |  | ------ | ------- | ------- | - | ------- | ------- | --------- | 
|                               |           |                                  |         |         |         |          |         |           |         | All other |       |              |         |      
|2000                           |           | Argentina                        |         | Brazil  |         | Colombia |         | Venezuela |         | countries |       | Eliminations |         | Total
|                               |           |                                  |         |         |         |          |         |           |         |           |       |              |         |      
|Net Revenues                   |           |                                  |         |         |         |          |         |           |         |           |       |              |         |       |       |        |        |  |         |        |         |  |        |         |         |   |         |        
|                              
|                              
|                              
|                              
|Data and value added services: |           |                                  |         |         |         |          |         |           |         |           |       |              |         |       |       |        |        |  |         |        |         |  |        |         |         |   |         |        
|                              
|                              
|                              
|                              
|                               | Broadband |                                  | $       | 24,481  |         |          | $       | 2,322     |         |           | $     | 11,337       |         |       | $     | 1,896  |        |  | $       | 1,350  |         |  | $      | (168    | )       |   | $       | 41,218  |          
|                              
|                              
|                              
|                              
|                               | Satellite |                                  |         | 58,824  |         |          |         | 12,946    |         |           |       | 29,503       |         |       |       | 23,191 |        |  |         | 25,729 |         |  |        | (9,213  | )       |   |         | 140,980 |          
|                              
|                              
|                              
|                              
|                               | Other     |                                  |         | 18,227  |         |          |         | 1,909     |         |           |       | 11,036       |         |       |       | 1,572  |        |  |         | 6,321  |         |  |        | (8,092  | )       |   |         | 30,973  |          
|                              
|                              
|                              
|                              
|                               | Subtotal  |                                  |         | 101,532 |         |          |         | 17,177    |         |           |       | 51,876       |         |       |       | 26,659 |        |  |         | 33,400 |         |  |        | (17,473 | )       |   |         | 213,171 |          
|                              
|                              
|                              
|                              
|Internet                       |           |                                  | 12,164  |         |         |          | 10,149  |           |         |           | 2,943 |              |         |       | 1,392 |        |        |  | 13,925  |        |         |  | (5,275 | )       |         |   | 35,298  |        
|                              
|                              
|                              
|                              
|Services to carriers           |           |                                  | 1,605   |         |         |          | 596     |           |         |           |       |              |         |       |       |        |        |  |         |        |         |  |        |         |         |   | 2,201   |        
|                              
|                              
|                              
|                              
|Sales of equipment             |           |                                  | 12,924  |         |         |          | 333     |           |         |           |       |              |         |       | 75    |        |        |  | 465     |        |         |  |        |         |         |   | 13,797  |        
|                              
|                              
|                              
|                              
|                               |           | Total net revenues from services |         |         | 128,225 |          |         |           | 28,255  |           |       |              | 54,819  |       |       |        | 28,126 |  |         |        | 47,790  |  |        |         | (22,748 | ) |         |         | 264,467   | 
|                              
|                              
|                              
|                              
|Broadband network              |           |                                  | 32,272  |         |         |          | 9,336   |           |         |           |       |              |         |       |       |        |        |  | 16,068  |        |         |  |        |         |         |   | 57,676  |        
|                              
|                              
|                              
|                              
|                               |           | Total net revenues               |         |         | 160,497 |          |         |           | 37,591  |           |       |              | 54,819  |       |       |        | 28,126 |  |         |        | 63,858  |  |        |         | (22,748 | ) |         |         | 322,143   | 
|                              
|                              
|                              
|                              
|Operating income (loss)        |           |                                  | (19,973 | )       |         |          | (26,867 | )         |         |           | 4,765 |              |         |       | 92    |        |        |  | (19,902 | )      |         |  |        |         |         |   | (61,885 | )      
|                              
|                              
|                              
|                              
|                               |           | Total assets                     |         |         | 494,775 |          |         |           | 223,766 |           |       |              | 115,584 |       |       |        | 55,760 |  |         |        | 484,865 |  |        |         |         |   |         |         | 1,374,750 | 

|                               |           |                                  |         |        |         |          |         |           |        |           |         |              |        |       |        |        |        |  |         |        |         |  |        |         |         |   |         |         |         | 
|------------------------------ | --------- | -------------------------------- | ------- | ------ | ------- | -------- | ------- | --------- | ------ | --------- | ------- | ------------ | ------ | ----- | ------ | ------ | ------ |  | ------- | ------ | ------- |  | ------ | ------- | ------- | - | ------- | ------- | ------- | 
|                               |           |                                  |         |        |         |          |         |           |        | All other |         |              |        |      
|1999                           |           | Argentina                        |         | Brazil |         | Colombia |         | Venezuela |        | countries |         | Eliminations |        | Total
|                               |           |                                  |         |        |         |          |         |           |        |           |         |              |        |      
|Net Revenues                   |           |                                  |         |        |         |          |         |           |        |           |         |              |        |       |        |        |        |  |         |        |         |  |        |         |         |   |         |        
|                              
|                              
|                              
|                              
|Data and value added services: |           |                                  |         |        |         |          |         |           |        |           |         |              |        |       |        |        |        |  |         |        |         |  |        |         |         |   |         |        
|                              
|                              
|                              
|                              
|                               | Broadband |                                  |         | 19,036 |         |          |         | 304       |        |           |         | 11,679       |        |       |        | 1,428  |        |  |         | 1,382  |         |  |        | (115    | )       |   |         | 33,714  |        
|                              
|                              
|                              
|                              
|                               | Satellite |                                  |         | 64,453 |         |          |         | 5,366     |        |           |         | 39,241       |        |       |        | 18,484 |        |  |         | 20,330 |         |  |        | (7,028  | )       |   |         | 140,846 |        
|                              
|                              
|                              
|                              
|                               | Other     |                                  |         | 10,997 |         |          |         | 1,093     |        |           |         | 7,248        |        |       |        | 1,770  |        |  |         | 4,163  |         |  |        | (4,717  | )       |   |         | 20,554  |        
|                              
|                              
|                              
|                              
|                               | Subtotal  |                                  |         | 94,486 |         |          |         | 6,763     |        |           |         | 58,168       |        |       |        | 21,682 |        |  |         | 25,875 |         |  |        | (11,860 | )       |   |         | 195,114 |        
|                              
|                              
|                              
|                              
|Internet                       |           |                                  | 9,130   |        |         |          | 1,740   |           |        |           | 2,879   |              |        |       | 1,290  |        |        |  | 14,728  |        |         |  | (3,607 | )       |         |   | 26,160  |        
|                              
|                              
|                              
|                              
|Sales of equipment             |           |                                  | 6,593   |        |         |          | 65      |           |        |           |         |              |        |       | 260    |        |        |  | 259     |        |         |  |        |         |         |   | 7,177   |        
|                              
|                              
|                              
|                              
|                               |           | Total net revenues from services |         |        | 110,209 |          |         |           | 8,568  |           |         |              | 61,047 |       |        |        | 23,232 |  |         |        | 40,862  |  |        |         | (15,467 | ) |         |         | 228,451 | 
|                              
|                              
|                              
|                              
|Operating income (loss)        |           |                                  | (40,988 | )      |         |          | (16,213 | )         |        |           | (10,120 | )            |        |       | (2,786 | )      |        |  | (26,079 | )      |         |  |        |         |         |   | (96,186 | )      
|                              
|                              
|                              
|                              
|                               |           | Total assets                     |         |        | 272,978 |          |         |           | 79,064 |           |         |              | 83,691 |       |        |        | 40,407 |  |         |        | 352,192 |  |        |         |         |   |         |         | 828,332 | 

F-20



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

|                               |           |                                  |        |        |         |          |        |           |        |           |        |              |         |       |     |        |        |  |        |        |         |  |        |        |        |   |        |         |         | 
|------------------------------ | --------- | -------------------------------- | ------ | ------ | ------- | -------- | ------ | --------- | ------ | --------- | ------ | ------------ | ------- | ----- | --- | ------ | ------ |  | ------ | ------ | ------- |  | ------ | ------ | ------ | - | ------ | ------- | ------- | 
|                               |           |                                  |        |        |         |          |        |           |        | All other |        |              |         |      
|1998                           |           | Argentina                        |        | Brazil |         | Colombia |        | Venezuela |        | countries |        | Eliminations |         | Total
|                               |           |                                  |        |        |         |          |        |           |        |           |        |              |         |      
|Net Revenues                   |           |                                  |        |        |         |          |        |           |        |           |        |              |         |       |     |        |        |  |        |        |         |  |        |        |        |   |        |        
|                              
|                              
|                              
|                              
|Data and value added services: |           |                                  |        |        |         |          |        |           |        |           |        |              |         |       |     |        |        |  |        |        |         |  |        |        |        |   |        |        
|                              
|                              
|                              
|                              
|                               | Broadband |                                  |        | 15,942 |         |          |        | 58        |        |           |        | 15,437       |         |       |     | 837    |        |  |        | 667    |         |  |        | (66    | )      |   |        | 32,875  |        
|                              
|                              
|                              
|                              
|                               | Satellite |                                  |        | 64,983 |         |          |        | 1,477     |        |           |        | 36,493       |         |       |     | 11,821 |        |  |        | 19,397 |         |  |        | (4,104 | )      |   |        | 130,067 |        
|                              
|                              
|                              
|                              
|                               | Other     |                                  |        | 11,752 |         |          |        | 2,199     |        |           |        | 4,153        |         |       |     | 2,140  |        |  |        | 3,229  |         |  |        | (3,078 | )      |   |        | 20,395  |        
|                              
|                              
|                              
|                              
|                               | Subtotal  |                                  |        | 92,677 |         |          |        | 3,734     |        |           |        | 56,083       |         |       |     | 14,798 |        |  |        | 23,293 |         |  |        | (7,248 | )      |   |        | 183,337 |        
|                              
|                              
|                              
|                              
|Internet                       |           |                                  | 6,084  |        |         |          | 142    |           |        |           | 2,949  |              |         |       | 421 |        |        |  | 13,359 |        |         |  | (2,715 | )      |        |   | 20,240 |        
|                              
|                              
|                              
|                              
|Sales of equipment             |           |                                  | 1,780  |        |         |          |        |           |        |           | 1,415  |              |         |       | 217 |        |        |  | 1,100  |        |         |  |        |        |        |   | 4,512  |        
|                              
|                              
|                              
|                              
|                               |           | Total net revenues from services |        |        | 100,541 |          |        |           | 3,876  |           |        |              | 60,447  |       |     |        | 15,436 |  |        |        | 37,752  |  |        |        | (9,963 | ) |        |         | 208,089 | 
|                              
|                              
|                              
|                              
|Operating income (loss)        |           |                                  | 14,779 |        |         |          | (7,611 | )         |        |           | 21,458 |              |         |       | 366 |        |        |  | (2,122 | )      |         |  |        |        |        |   | 26,870 |        
|                              
|                              
|                              
|                              
|                               |           | Total assets                     |        |        | 234,844 |          |        |           | 27,348 |           |        |              | 105,187 |       |     |        | 36,269 |  |        |        | 123,570 |  |        |        |        |   |        |         | 527,218 | 

14.  Related Party Transactions

The Company in the normal course of its business provides
telecommunications network services to affiliates of
stockholders. During the years ended December 31, 1998,
1999 and 2000, such services totaled approximately
$10.1 million, $11.0 million and $18.9 million,
respectively. In addition, the Company also enters into
transactions with such affiliates, which primarily include
financial (borrowings), insurance, and employee benefits
services. During the years ended December 31, 1998, 1999
and 2000, such transactions totaled approximately
$4.3 million, $9.1 million and $10.7 million,
respectively.

During 2000, the Company made approximately $1.1 million in
payments to BT for satellite capacity.

Investment banking fees amounting to $5.9 million,
$4.1 million and $18.3 million, respectively were paid to
representative affiliates of the former holders of the
Companys redeemable preferred stock during 1998, 1999 and
2000. These representative affiliates are current stockholders
of the Company.

15.  Commitments and Contingencies

Commitments  The Company leases satellite
capacity with average annual rental commitments of approximately
$30.0 million, through the year 2005. The Company has
commitments to purchase communications equipment amounting to
approximately $25.8 million at December 31, 2000, and
was not obligated under any letters of credit at
December 31, 2000. The Company has commitments for
additional IRU investments totaling approximately
$79.5 million in the aggregate under its various IRU
agreements.

Guarantees  The Company is a third party
guarantor of up to 75% of a $6.0 million credit facility
provided to IMPSAT Venezuela by a regional development fund. At
December 31, 2000, the balance outstanding on the credit
facility amounted to approximately $0.4 million.

IMPSAT Brazil has entered into a $5.9 million term note
with El Camino Resources, which is guaranteed by the Company and
IMPSAT Argentina. At December 31, 2000, the balance
outstanding was approximately $4.2 million.

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

In November 1996, IMPSAT Argentina filed suit against a
former customer, ENCOTESA, for amounts due and arising under
IMPSAT Argentinas contracts with ENCOTESA, the Argentine
national postal

F-21



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##### Table of Contents



IMPSAT FIBER NETWORKS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
(Continued)

service for $7.3 million. The ultimate ability of the
Company to collect on this matter continues to be negotiated for
settlement; however, the Company has valued this receivable at a
net realizable value of zero.

Reciprocal service agreements  During the
first quarter of 2000, IMPSAT Argentina signed agreements with
Movicom/ Bell South for the exchange of capacity on the two
companies respective networks in Argentina. This agreement
will enable IMPSAT Argentina to expand its footprint in the
Buenos Aires metropolitan area beyond that originally included
in the Broadband Network.

16.  Selected Quarterly Financial Information
(Unaudited)

Selected financial information for the quarterly periods in 2000
and 1999 is presented below:

|                                             |  |               |         |        |  |       |         |        |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------- | ------- | ------ |  | ----- | ------- | ------ |  | - | ------- | - |  | - | ------- | -
|                                             |  |              
|                                             |  | 2000 Quarters
|                                             |  |              
|                                             |  | First         |         | Second |  | Third |         | Fourth
|                                             |  |               |         |        |  |       |         |       
|Total net revenue                            |  | $             | 58,763  |        |  | $     | 64,754  |        |  | $ | 110,676 |   |  | $ | 87,950  |  
|                                            
|                                            
|                                            
|                                            
|Operating income (loss)                      |  |               | (13,463 | )      |  |       | (18,916 | )      |  |   | (1,933  | ) |  |   | (27,573 | )
|                                            
|                                            
|                                            
|                                            
|Net loss attributable to common stockholders |  |               | (29,067 | )      |  |       | (39,825 | )      |  |   | (26,660 | ) |  |   | (58,589 | )
|                                            
|                                            
|                                            
|                                            
|Net loss per common share basic and diluted  |  |               | (0.36   | )      |  |       | (0.44   | )      |  |   | (0.29   | ) |  |   | (0.65   | )

|                                             |  |               |         |        |  |       |         |        |  |   |         |   |  |   |         |  
|-------------------------------------------- |  | ------------- | ------- | ------ |  | ----- | ------- | ------ |  | - | ------- | - |  | - | ------- | -
|                                             |  |              
|                                             |  | 1999 Quarters
|                                             |  |              
|                                             |  | First         |         | Second |  | Third |         | Fourth
|                                             |  |               |         |        |  |       |         |       
|Total net revenue                            |  | $             | 53,560  |        |  | $     | 57,658  |        |  | $ | 55,911  |   |  | $ | 61,322  |  
|                                            
|                                            
|                                            
|                                            
|Operating income (loss)                      |  |               | 1,625   |        |  |       | 42      |        |  |   | (64,637 | ) |  |   | (33,216 | )
|                                            
|                                            
|                                            
|                                            
|Net loss attributable to common Stockholders |  |               | (20,496 | )      |  |       | (17,452 | )      |  |   | (63,029 | ) |  |   | (30,566 | )
|                                            
|                                            
|                                            
|                                            
|Net loss per common share basic and diluted  |  |               | (0.42   | )      |  |       | (0.24   | )      |  |   | (0.88   | ) |  |   | (0.39   | )

Since there are changes in the weighted average number of shares
outstanding each quarter, the sum of net loss per common share
by quarter may not equal the total net loss per common share for
the applicable year.

*  *  *  *  *  *

F-22



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareholders of IMPSAT S.A.:

We have audited the accompanying balance sheets of IMPSAT S.A.
(the Company) as of December 31, 1999 and 2000,
and the related statements of operations, stockholders
equity and cash flow for each of the three years in the period
ended December 31, 2000. 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 audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. 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, such financial statements present fairly, in all
material respects, the financial position of the Company as of
December 31, 1999 and 2000, and the results of its
operations and its cash flows for each of the three years in the
period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of
America.

DELOITTE & TOUCHE





F-23



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##### Table of Contents



IMPSAT S.A.

BALANCE SHEETS

(In thousands of U.S. dollars)


|                                        |                                                                                                                                                         |                            |         |        |         |   |         |         |         | 
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------ | ------- | - | ------- | ------- | ------- | 
|                                        |                                                                                                                                                         |                           
|                                        |                                                                                                                                                         | December 31,              
|                                        |                                                                                                                                                         |                           
|                                        |                                                                                                                                                         | 1999                       |         | 2000  
|                                        |                                                                                                                                                         |                            |         |       
|ASSETS                                  |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|CURRENT ASSETS:                         |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                                                                                               |                            | $       | 4,199  |         |   | $       | 12,051  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Trade accounts receivable, net                                                                                                                          |                            |         | 36,046 |         |   |         | 58,680  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Receivable from affiliated companies                                                                                                                    |                            |         | 4,130  |         |   |         | 13,303  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other receivables                                                                                                                                       |                            |         | 13,605 |         |   |         | 33,679  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Prepaid expenses                                                                                                                                        |                            |         | 825    |         |   |         | 2,584   |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                        |                                                                                                                                                         | Total current assets       |         |        | 58,805  |   |         |         | 120,297 | 
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|BROADBAND NETWORK, Net                  |                                                                                                                                                         |                            | 28,944  |        |         |   | 118,374 |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|PROPERTY, PLANT AND EQUIPMENT, Net      |                                                                                                                                                         |                            | 155,045 |        |         |   | 222,341 |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|NON-CURRENT ASSETS:                     |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Investments                                                                                                                                             |                            |         | 10,235 |         |   |         | 11,829  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred income taxes, net                                                                                                                              |                            |         | 3,622  |         |   |         | 8,262   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other non-current assets                                                                                                                                |                            |         | 16,327 |         |   |         | 13,672  |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                        |                                                                                                                                                         | Total non-current assets   |         |        | 30,184  |   |         |         | 33,763  | 
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|TOTAL                                   |                                                                                                                                                         | $                          | 272,978 |        |         | $ | 494,775 |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|LIABILITIES AND STOCKHOLDERS EQUITY    |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|CURRENT LIABILITIES:                    |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable  trade                                                                                                                                |                            | $       | 32,732 |         |   | $       | 71,362  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Short-term debt                                                                                                                                         |                            |         | 10,707 |         |   |         | 8,860   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Advances from affiliated companies                                                                                                                      |                            |         | 68,959 |         |   |         | 7,523   |        
|                                       
|                                       
|                                       
|                                       
|                                        | Current portion of long-term debt                                                                                                                       |                            |         | 4,411  |         |   |         | 15,385  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued and other liabilities                                                                                                                           |                            |         | 9,548  |         |   |         | 10,625  |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                        |                                                                                                                                                         | Total current liabilities  |         |        | 126,357 |   |         |         | 113,755 | 
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|LONG-TERM DEBT, Net                     |                                                                                                                                                         |                            | 46,124  |        |         |   | 127,626 |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|OTHER LONG-TERM LIABILITIES             |                                                                                                                                                         |                            | 510     |        |         |   | 0       |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|DEFERRED REVENUES                       |                                                                                                                                                         |                            | 23,200  |        |         |   | 32,561  |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|COMMITMENTS AND CONTINGENCIES (Note 11) |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|STOCKHOLDERS EQUITY:                   |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                       
|                                       
|                                       
|                                       
|                                        | Common stock, $0.01 per value 5,123 shares issued and
	outstanding at December 31, 1999; and 14,755 shares issued
	and outstanding at December 31, 2000 |                            |         | 3      |         |   |         | 3       |        
|                                       
|                                       
|                                       
|                                       
|                                        | Paid in capital                                                                                                                                         |                            |         | 82,442 |         |   |         | 250,326 |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained earnings (accumulated deficit)                                                                                                                 |                            |         | (5,658 | )       |   |         | (30,247 | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive income                                                                                                                  |                            |         |       |         |   |         | 751     |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|                                        |                                                                                                                                                         | Total stockholders equity |         |        | 76,787  |   |         |         | 220,833 | 
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        
|TOTAL                                   |                                                                                                                                                         | $                          | 272,978 |        |         | $ | 494,775 |        
|                                        |                                                                                                                                                         |                            |         |        |         |   |         |        

See notes to financial statements.

F-24



---



##### Table of Contents



IMPSAT S.A.

STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars)


|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |         |        |         |  
|--------------------------------- | -------------------------------------- | ------------------------ | -------------------------------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | -
|                                  |                                        |                         
|                                  |                                        | Years Ended December 31,
|                                  |                                        |                         
|                                  |                                        | 1998                     |                                  | 1999    |        | 2000   
|                                  |                                        |                          |                                  |         |        |        
|NET REVENUES FROM SERVICES:       |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Data and value added services          |                          | $                                | 92,677  |        |         | $       | 94,486  |        |         | $       | 101,532 |       
|                                 
|                                 
|                                 
|                                 
|                                  | Internet                               |                          |                                  | 6,084   |        |         |         | 9,130   |        |         |         | 12,164  |       
|                                 
|                                 
|                                 
|                                 
|                                  | Services to carriers                   |                          |                                  |         |        |         |         |         |        |         |         | 1,605   |       
|                                 
|                                 
|                                 
|                                 
|                                  | Sales of equipment                     |                          |                                  | 1,780   |        |         |         | 6,593   |        |         |         | 12,924  |       
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  |                                        |                          | Total net revenues from services |         |        | 100,541 |         |         |        | 110,209 |         |         |        | 128,225 |  
|                                 
|                                 
|                                 
|                                 
|                                  | Broadband network development revenues |                          |                                  |         |        |         |         |         |        |         |         | 32,272  |       
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  |                                        |                          | Total net revenues               |         |        | 100,541 |         |         |        | 110,209 |         |         |        | 160,497 |  
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|COSTS AND EXPENSES:               |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                 
|                                 
|                                 
|                                 
|Direct Costs:                     |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                        | Contracted services      |                                  |         | 9,253  |         |         |         | 10,857 |         |         |         | 15,131 |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                        | Other direct costs       |                                  |         | 10,241 |         |         |         | 20,017 |         |         |         | 12,001 |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                        | Leased capacity          |                                  |         | 11,557 |         |         |         | 20,036 |         |         |         | 30,121 |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                        | Broadband network cost   |                                  |         |        |         |         |         |        |         |         |         | 18,057 |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                        | Cost of equipment sold   |                                  |         | 1,556  |         |         |         | 4,673  |         |         |         | 10,841 |        
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  |                                        |                          | Total direct costs               |         |        | 32,607  |         |         |        | 55,583  |         |         |        | 86,151  |  
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  | Salaries and wages                     |                          |                                  | 16,342  |        |         |         | 19,672  |        |         |         | 29,670  |       
|                                 
|                                 
|                                 
|                                 
|                                  | Selling, general and administrative    |                          |                                  | 16,298  |        |         |         | 16,903  |        |         |         | 26,478  |       
|                                 
|                                 
|                                 
|                                 
|                                  | Depreciation and amortization          |                          |                                  | 20,515  |        |         |         | 59,039  |        |         |         | 38,171  |       
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  |                                        |                          | Total costs and expenses         |         |        | 85,762  |         |         |        | 151,197 |         |         |        | 180,470 |  
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  |                                        |                          | Operating income (loss)          |         |        | 14,779  |         |         |        | (40,988 | )       |         |        | (19,973 | )
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|OTHER INCOME (EXPENSES):          |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Interest income and investment gains   |                          |                                  | 1,749   |        |         |         | 1,199   |        |         |         | 716     |       
|                                 
|                                 
|                                 
|                                 
|                                  | Interest expense                       |                          |                                  | (14,571 | )      |         |         | (13,690 | )      |         |         | (12,513 | )     
|                                 
|                                 
|                                 
|                                 
|                                  | Net gain (loss) on foreign exchange    |                          |                                  | 21      |        |         |         | (78     | )      |         |         | 190     |       
|                                 
|                                 
|                                 
|                                 
|                                  | Other income, net                      |                          |                                  | 16      |        |         |         | 4820    |        |         |         | 5       |       
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|                                  |                                        |                          | Total other expense              |         |        | (12,785 | )       |         |        | (7,749  | )       |         |        | (11,602 | )
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|INCOME (LOSS) BEFORE INCOME TAXES |                                        |                          | 1,994                            |         |        |         | (48,737 | )       |        |         | (31,575 | )      
|                                 
|                                 
|                                 
|                                 
|BENEFIT FROM INCOME TAXES         |                                        |                          |                                 |         |        |         | 5,982   |         |        |         | 6,986   |        
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        
|NET INCOME (LOSS)                 |                                        | $                        | 1,994                            |         |        | $       | (42,755 | )       |        | $       | (24,589 | )      
|                                  |                                        |                          |                                  |         |        |         |         |         |        |         |         |        

See notes to financial statements.

F-25



---



##### Table of Contents



IMPSAT S.A.

STATEMENT OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars)


|                                                      |                                                                           |                          |       |      |  |      |         |   |  |   |         |     | 
|----------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------ | ----- | ---- |  | ---- | ------- | - |  | - | ------- | --- | 
|                                                      |                                                                           |                         
|                                                      |                                                                           | Years Ended December 31,
|                                                      |                                                                           |                         
|                                                      |                                                                           | 1998                     |       | 1999 |  | 2000
|                                                      |                                                                           |                          |       |      |  |     
|NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS |                                                                           | $                        | 1,994 |      |  | $    | (42,755 | ) |  | $ | (24,589 | )  
|                                                     
|                                                     
|                                                     
|                                                     
|OTHER COMPREHENSIVE INCOME (LOSS), net of tax:        |                                                                           |                          |       |      |  |      |         |   |  |   |         |    
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Change on unrealized gain on investment available for sale,
	net of taxes |                          |       |      |  |      |         |   |  |   |         | 751 | 
|                                                      |                                                                           |                          |       |      |  |      |         |   |  |   |         |    
|TOTAL                                                 |                                                                           |                          |       |      |  |      |         |   |  |   | 751     |    
|                                                      |                                                                           |                          |       |      |  |      |         |   |  |   |         |    
|COMPREHENSIVE LOSS                                    |                                                                           | $                        | 1,994 |      |  | $    | (42,755 | ) |  | $ | (23,838 | )  
|                                                      |                                                                           |                          |       |      |  |      |         |   |  |   |         |    

See notes to financial statements.

F-26



---



##### Table of Contents



IMPSAT S.A.

STATEMENT OF STOCKHOLDERS EQUITY

(In thousands of U.S. dollars)


|                                                                          |                         |        |   |                 |  |             |         |               |  |       |         |         |   |   |     |   |  |   |         |         |  
|------------------------------------------------------------------------- | ----------------------- | ------ | - | --------------- |  | ----------- | ------- | ------------- |  | ----- | ------- | ------- | - | - | --- | - |  | - | ------- | ------- | -
|                                                                          |                         |        |   |                 |  |             |         | Accumulated   |  |      
|                                                                          |                         |        |   |                 |  |             |         | Other         |  |      
|                                                                          |                         | Common |   |                 |  | Retained    |         | Comprehensive |  |      
|                                                                          |                         | Stock  |   | Paid-in Capital |  | Earnings(*) |         | Income        |  | Total
|                                                                          |                         |        |   |                 |  |             |         |               |  |      
|BALANCE AT DECEMBER 31, 1997                                              |                         | $      | 3 |                 |  | $           | 46,319  |               |  | $     | 14,315  |         |   |   |     |   |  | $ | 60,637  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Resis Ingeniería S.A. increased paid in capital                           |                         |        |   |                 |  |             | 911     |               |  |       |         |         |   |   |     |   |  |   | 911     |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Resis Ingeniería S.A. loss absorption                                     |                         |        |   |                 |  |             | (20,788 | )             |  |       | 20,788  |         |   |   |     |   |  |   |         |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Net income for the year |        |   |                 |  |             |         |               |  |       |         | 1,994   |   |   |     |  |  |   |         | 1,994   |  
|                                                                          |                         |        |   |                 |  |             |         |               |  |       |         |         |   |   |     |   |  |   |         |        
|BALANCE AT DECEMBER 31, 1998                                              |                         |        | 3 |                 |  |             | 26,442  |               |  |       | 37,097  |         |   |   |     |   |  |   | 63,542  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Shareholders contribution                                                |                         |        |   |                 |  |             | 56,000  |               |  |       |         |         |   |   |     |   |  |   | 56,000  |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Net loss for the year   |        |   |                 |  |             |         |               |  |       |         | (42,755 | ) |   |     |  |  |   |         | (42,755 | )
|                                                                          |                         |        |   |                 |  |             |         |               |  |       |         |         |   |   |     |   |  |   |         |        
|BALANCE AT DECEMBER 31, 1999                                              |                         |        | 3 |                 |  |             | 82,442  |               |  |       | (5,658  | )       |   |   |     |   |  |   | 76,787  |        
|                                                                          |                         |        |   |                 |  |             |         |               |  |       |         |         |   |   |     |   |  |   |         |        
|Shareholders contribution                                                |                         |        |   |                 |  |             | 167,884 |               |  |       |         |         |   |   |     |   |  |   | 167,884 |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Change on unrealized gain on investment available for sale, net
	of taxes |                         |        |   |                 |  |             |         |               |  |       |         |         |   | $ | 751 |   |  |   | 751     |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Net loss for the year   |        |   |                 |  |             |         |               |  |       |         | (24,589 | ) |   |     |  |  |   |         | (24,589 | )
|                                                                          |                         |        |   |                 |  |             |         |               |  |       |         |         |   |   |     |   |  |   |         |        
|BALANCE AT DECEMBER 31, 2000                                              |                         | $      | 3 |                 |  | $           | 250,326 |               |  | $     | (30,247 | )       |   | $ | 751 |   |  | $ | 220,833 |        
|                                                                          |                         |        |   |                 |  |             |         |               |  |       |         |         |   |   |     |   |  |   |         |        




|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(*) | Includes an appropriation of retained earnings, amounting to
	$1,622 in 1998, and $1,890 in 1999 and 2000, to comply with
	legal reserve requirements in Argentina.

See notes to financial statements.

F-27



---



##### Table of Contents



IMPSAT S.A.

STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)


|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |         |        |        |         |          |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------- | ---------------------------------------------------------------------- | ----------------------------------------- | ------ | ------ | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | -------- | -
|                                                                      |                                                                                                    |                                                                          
|                                                                      |                                                                                                    | Year Ended December 31,                                                  
|                                                                      |                                                                                                    |                                                                          
|                                                                      |                                                                                                    | 1998                                                                      |                                    | 1999                                                                   |                                           | 2000  
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |       
|CASH FLOWS FROM OPERATING ACTIVITIES:                                 |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net income (loss)                                                                                  |                                                                           | $                                  | 1,994                                                                  |                                           |        | $      | (42,755 | )      |        | $       | (24,589 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Adjustment to reconcile net (loss) income to net cash
	provided by (used in) operating activities: |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |         |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           | Amortization and depreciation      |                                                                        |                                           | 20,515 |        |         |        | 59,039 |         |         |        | 38,171 |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           | Deferred income tax benefit        |                                                                        |                                           |        |        |         |        | (7,923 | )       |         |        | (4,640 | )      
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           | Changes in assets and liabilities: |                                                                        |                                           |        |        |         |        |        |         |         |        |        |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | Increase in trade accounts receivable, net                             |                                           |        | (6,034 | )       |        |        | (7,978  | )       |        |        | (22,634 | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | Decrease (increase) in prepaid expenses                                |                                           |        | 427    |         |        |        | (463    | )       |        |        | (1,759  | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | Decrease (increase) in other receivables and other
	non-current assets |                                           |        | 3,016  |         |        |        | (19,858 | )       |        |        | (26,592 | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | (Increase) decrease in accounts payable  trade                        |                                           |        | (2,535 | )       |        |        | 13,629  |         |        |        | (38,630 | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | (Increase) decrease in accrued and other liabilities                   |                                           |        | (104   | )       |        |        | 4,491   |         |        |        | (1,077  | )       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | Increase in unearned revenues                                          |                                           |        |        |         |        |        | 23,200  |         |        |        | 9,361   |         
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    |                                                                           |                                    | Increase (decrease) in other long-term liabilities                     |                                           |        | 102    |         |        |        | (975    | )       |        |        | (510    | )       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        | Net cash provided by operating activities |        |        | 17,381  |        |        |         | 20,407  |        |        |         | 6,515    |  
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                 |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of property, plant and equipment                                                         |                                                                           |                                    | (34,288                                                                | )                                         |        |        | (45,570 | )      |        |         | (99,379 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Purchases of broadband network                                                                     |                                                                           |                                    |                                                                        |                                           |        |        | (3,235  | )      |        |         | (5,178  | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | (Increase) decrease in investment                                                                  |                                                                           |                                    | (6,530                                                                 | )                                         |        |        | 473     |        |        |         | (843    | )     
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        | Net cash used in investing activities     |        |        | (40,818 | )      |        |         | (48,332 | )      |        |         | (105,400 | )
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net payments of short-term debt                                                                    |                                                                           |                                    | (27,850                                                                | )                                         |        |        | (2,293  | )      |        |         | (1,847  | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Changes in advances from - to affiliates                                                           |                                                                           |                                    | 57,383                                                                 |                                           |        |        | 6,238   |        |        |         | (61,436 | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Repayment of long-term debt                                                                        |                                                                           |                                    | (4,513                                                                 | )                                         |        |        | (48,955 | )      |        |         | (4,498  | )     
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Proceeds from long-term debt                                                                       |                                                                           |                                    | 5,186                                                                  |                                           |        |        | 7,285   |        |        |         | 6,634   |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Capital contribution                                                                               |                                                                           |                                    | 911                                                                    |                                           |        |        | 56,000  |        |        |         | 167,884 |       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        | Net provided by financing activities      |        |        | 31,117  |        |        |         | 18,275  |        |        |         | 106,737  |  
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|NET INCREASE (DECREASE) IN CASH AND CASH                              |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | EQUIVALENTS                                                                                        |                                                                           |                                    | 7,680                                                                  |                                           |        |        | (9,650  | )      |        |         | 7,852   |       
|CASH AND CASH EQUIVALENTS AT BEGINNING OF                             |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | PERIOD                                                                                             |                                                                           |                                    | 6,169                                                                  |                                           |        |        | 13,849  |        |        |         | 4,199   |       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                        |                                                                                                    | $                                                                         | 13,849                             |                                                                        |                                           | $      | 4,199  |         |        | $      | 12,051  |        
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|SUPPLEMENTAL CASH FLOW INFORMATION:                                   |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest paid                                                                                      |                                                                           | $                                  | 9,066                                                                  |                                           |        | $      | 12,639  |        |        | $       | 7,853   |       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                      | Income taxes paid                                                                                  |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        | $       | 1,900   |       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
	ACTIVITIES: |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                                    | Change to unrealized gain on investment available for sale, net
	of taxes |                                    |                                                                        |                                           |        |        |         |        |        |         | $       | 751    |       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        
|                                                                      |                                                                                                    | Vendor financing                                                          |                                    |                                                                        |                                           |        |        | $       | 25,709 |        |         | $       | 90,340 |       
|                                                                      |                                                                                                    |                                                                           |                                    |                                                                        |                                           |        |        |         |        |        |         |        

See notes to financial statements.

F-28



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##### Table of Contents



IMPSAT S.A.

NOTES TO FINANCIAL STATEMENTS

(In thousands of U. S. dollars)


1.  General

IMPSAT S.A. (the Company) provides and operates
private networks of integrated data and voice telecommunications
systems in Argentina. The Companys principal line of
business comprises the provision of data transmission services
for large national and multinational companies, financial
institutions, governmental agencies and other business customers
in Argentina. It provides its services through its advanced
telecommunications networks comprised of owned teleports, earth
stations, fiber optic and microwave links and leased satellite
capacity. During the year ended December 31, 2000 IMPSAT
Fiber Networks, Inc., a Delaware Holding company (the
Parent Company), exchanged shares of its common
stock for the minority interests in the Company. As of
December 31, 2000, the Company is a 100% owned subsidiary
of the Parent Company.

2.  Summary of Significant Accounting Policies

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

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

Revenue Recognition  Revenues from services is
recognized monthly as the services are provided. Equipment sales
are recorded upon deliver and acceptance by customer.

The Company enters into agreements granting indefeasible rights
of use (IRU) to portions of its broadband network
capacity. Pursuant to these agreements, the Company will receive
fixed advance payments for the IRU and will recognize the
revenue from the IRU ratably over the life of the IRU. Amounts
received in advance are recorded as deferred revenue in the
accompanying consolidated balance sheets.

No single customer accounted for greater than 10% of total net
revenues from services for the years ended December 31,
1998, 1999 and 2000.

In December 1999, the Securities and Exchange Commission
(the SEC) issued Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in
Financial Statements. SAB No. 101 summarizes the
SECs views on the application of generally accepted
accounting principles to revenue recognition. The Company has
reviewed SAB No. 101 and believes that it is in compliance
with the SECs interpretation of revenue recognition.

In connection with the Companys construction of the
Broadband Network, the Company has entered into agreements with
Global Crossing Development Co., a subsidiary of Global
Crossings Ltd. (Global Crossing), granting
indefeasible right of use (IRU) to portions of its
broadband network capacity (see Note 5). Pursuant to these
agreements, the Company received fixed advance payments from the
IRU and will recognize the revenue from the IRU ratably over the
life of the IRU. In addition to the IRU granted to Global
Crossing, the Company has entered into a framework agreement
with 360networks, Inc., which contemplates the grant of an IRU
over the Broadband Network, and expects to have other similar
transactions in the future.

F-29



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

Broadband Network  The Broadband Network has
been finished during the fourth quarter of 2000. These assets
are recorded at cost and depreciated using the straight-line
method over the following estimated useful lives:

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

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

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

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

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

Long-Lived Assets  Long-lived assets are
reviewed on an ongoing basis for impairment based on comparison
of carrying value against undiscounted future cash flows. If an
impairment is identified, the assets carrying amount is adjusted
to fair value. No such adjustments were recorded for the years
ended December 31, 1998, 1999 and 2000.

Income Taxes  Deferred income taxes result
from temporary differences in the recognition of expenses for
tax and financial reporting purposes and are accounted for in
accordance with Statements of Financial Accounting Standards
(SFAS) No. 109, Accounting for Income
Taxes, which requires the liability method of computing
deferred income taxes. Under the liability method, deferred
taxes are adjusted for tax rate changes as they occur.

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

Fair Value of Financial Instruments  The
Companys financial instruments include receivables,
payables, short- and long-term debt. The available for sale
investments were valued at market closing prices at
December 31, 2000. The fair value of all other financial
instruments which approximate their carrying (or contract)
values have been determined using interest rates as of
December 31, 1999 and 2000.

Reclassifications  Certain amounts in the 1998
and 1999 financial statements have been reclassified to conform
with the 2000 presentation.

F-30



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

New Accounting Pronouncement  In
June 1998, the Financial Accounting Standards Board
(FASB) issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. Among other
provisions, SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging
activities. It also requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
In June 1999, the FASB issued SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities
 Deferral of the Effective Date of FASB Statement
No. 133, an amendment to SFAS No. 133. SFAS
No. 137 deferred the effective date of adoption of SFAS
No. 133 to fiscal years beginning after June 15, 2000.
The adoption of SFAS No. 13 on January 1, 2001 did not
have a material impact on the Companys financial
statements.

3.  Trade Accounts Receivable

Trade accounts receivable at December 31 are summarized as
follows:

|                                      |  |              |         |      |  |   |         |  
|------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                                      |  |             
|                                      |  | December 31,
|                                      |  |             
|                                      |  | 1999         |         | 2000
|                                      |  |              |         |     
|Trade accounts receivable             |  | $            | 49,989  |      |  | $ | 75,116  |  
|                                     
|                                     
|                                     
|                                     
|Less: allowance for doubtful accounts |  |              | (13,943 | )    |  |   | (16,436 | )
|                                      |  |              |         |      |  |   |         |  
|Trade accounts receivable, net        |  | $            | 36,046  |      |  | $ | 58,680  |  
|                                      |  |              |         |      |  |   |         |  

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

The activity for the allowance for doubtful accounts for the
years ended December 31, 1998, 1999 and 2000 is as follows:

|                                |  |              |       |      |  |      |        |   |  |   |        |  
|------------------------------- |  | ------------ | ----- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                |  |             
|                                |  | December 31,
|                                |  |             
|                                |  | 1998         |       | 1999 |  | 2000
|                                |  |              |       |      |  |     
|Beginning balance               |  | $            | 5,497 |      |  | $    | 8,310  |   |  | $ | 13,943 |  
|                               
|                               
|                               
|                               
|Provision for doubtful accounts |  |              | 3,453 |      |  |      | 6,280  |   |  |   | 3,035  |  
|                               
|                               
|                               
|                               
|Write-offs, net of recoveries   |  |              | (640  | )    |  |      | (647   | ) |  |   | (542   | )
|                                |  |              |       |      |  |      |        |   |  |   |        |  
|Ending balance                  |  | $            | 8,310 |      |  | $    | 13,943 |   |  | $ | 16,436 |  
|                                |  |              |       |      |  |      |        |   |  |   |        |  

4.  Other Receivables

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

F-31



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

5.  Broadband Network and Agreements

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

|                                            |       |              |        |        |  |   |        |         | 
|------------------------------------------- | ----- | ------------ | ------ | ------ |  | - | ------ | ------- | 
|                                            |       |             
|                                            |       | December 31,
|                                            |       |             
|                                            |       | 1999         |        | 2000  
|                                            |       |              |        |       
|Network Infrastructure                      |       | $            |        |        |  | $ | 91,206 |        
|                                           
|                                           
|                                           
|                                           
|Equipment and materials                     |       |              |        |        |  |   | 24,127 |        
|                                           
|                                           
|                                           
|                                           
|IRU investments                             |       |              |        |        |  |   | 4,395  |        
|                                            |       |              |        |        |  |   |        |        
|                                            | Total |              |        |        |  |   |        | 119,728 | 
|                                           
|                                           
|                                           
|                                           
|Less: accumulated depreciation              |       |              |        |        |  |   | (2,321 | )      
|                                            |       |              |        |        |  |   |        |        
|                                            | Total |              |        |        |  |   |        | 117,407 | 
|                                           
|                                           
|                                           
|                                           
|Under construction  Network infrastructure |       |              | 26,967 |        |  |   | 967    |        
|                                           
|                                           
|                                           
|                                           
|Under construction  Global Crossing ducts  |       |              | 1,977  |        |  |   |        |        
|                                            |       |              |        |        |  |   |        |        
|                                            | Total |              | $      | 28,944 |  |   | $      | 118,374 | 
|                                            |       |              |        |        |  |   |        |        

The recap of accumulated depreciation for the year ended
December 31, is as follows:

|                                  |  |              |       | 
|--------------------------------- |  | ------------ | ----- | 
|                                  |  | December 31,
|                                  |  | 2000        
|                                  |  |             
|Depreciation expense for the year |  | $            | 2,321 | 
|                                  |  |              |       | 
|Ending balance                    |  | $            | 2,321 | 
|                                  |  |              |       | 

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

On October 25, 1999, the Company signed a definitive
agreement with an affiliate of Nortel Networks to borrow an
aggregate of up to approximately $149.1 million of long
term vendor financing. The financing, which will be disbursed
over a two year period with final maturity in 2006, will be used
to finance Nortels construction of the segments of the
Broadband Network in Argentina and the purchase of additional
equipment to be used by the Company in connection with the
operation of the Broadband Network. The Parent Company has
agreed to guarantee the obligations of the Company under the
Nortel financing agreements. The Company had amounts due under
Broadband Network vendor financing totaled $39.5 million
and $123.2 million as of December 31, 1999 and 2000,
respectively.

Framework Agreement with Global Crossing  On
July 27, 1999, the Parent Company entered into an agreement
with Global Crossing that contemplates the Parent Company or its
affiliates entering into a series of definitive agreements. As
part of these arrangements, Parent Company or its affiliates
will purchase from Global Crossing indefeasible rights of use of
capacity valued at not less than $46 million on any of
Global Crossings fiber optic cable networks worldwide. The
Parent Company has purchased approximately $12.6 million
under this agreement as of December 31, 2000.

On September 22, 1999, the Company entered into a
definitive agreement with Global Crossing to construct the
terrestrial portion of the Global Crossings South American
network between Las Toninas, Argentina on the Atlantic Ocean and
Frontier with Chile, a portion of the Trans-Andean
Crossing System.

F-32



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

Construction of the Trans-Andean Crossing System commenced in
September 1999. Payments expected for the turnkey
construction of this portion of Trans-Andean Crossing System,
are as follows:



| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | construction of three ducts and related facilities over 230
	route miles between Las Toninas and Buenos Aires, Argentina and
	between Mendoza, Argentina and Frontier with Chile, for
	approximately $26  million.
|
| |  | licensing to Global Crossing of one duct on our Broadband
	Network between the cities of Buenos Aires and Mendoza in
	Argentina, for approximately $25 million.                                                   

The Company accumulated all construction costs for the Global
Crossing Ducts in projects under construction and deferred all
payment received from Global Crossing until completion and
deliver of the respective ducts. The Company will lease space in
its telehouse in Buenos Aires to Global Crossing for Global
Crossings network operations.

On September 2000, the Company completed and delivered the
Global Crossing ducts of the Trans-Andean Crossing System
between Los Toninas and the border crossing with Chile. In
connection with the delivery, the Company recognized revenues
and costs totalling $32.3 million and $18.1 million,
respectively.

In August 2000, the Parent Company entered into a framework
agreement with 360networks whereby the Company will provide
360networks with IRUs for a period of 20-25 years on the
Companys Broadband Network and maintenance services and
telehousing space in the Company facilities. During the year
ended December 31, 2000, the Company received
$5.0 million of advance payments from 360networks, which
payments have been recorded as part of Customer Advances on
Broadband Network.

6.  Property, Plant and Equipment

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

|                                         |       |              |          |         |  |   |          |         | 
|---------------------------------------- | ----- | ------------ | -------- | ------- |  | - | -------- | ------- | 
|                                         |       |             
|                                         |       | December 31,
|                                         |       |             
|                                         |       | 1999         |          | 2000   
|                                         |       |              |          |        
|Land                                     |       | $            | 1,538    |         |  | $ | 3,160    |        
|                                        
|                                        
|                                        
|                                        
|Building, installations and improvements |       |              | 19,536   |         |  |   | 37,369   |        
|                                        
|                                        
|                                        
|                                        
|Operating communications equipment       |       |              | 265,276  |         |  |   | 322,643  |        
|                                        
|                                        
|                                        
|                                        
|Furniture, fixtures and other equipment  |       |              | 10,403   |         |  |   | 16,594   |        
|                                         |       |              |          |         |  |   |          |        
|                                         | Total |              |          | 296,753 |  |   |          | 379,766 | 
|                                        
|                                        
|                                        
|                                        
|Less: accumulated depreciation           |       |              | (145,564 | )       |  |   | (171,141 | )      
|                                         |       |              |          |         |  |   |          |        
|                                         | Total |              |          | 151,189 |  |   |          | 208,625 | 
|                                        
|                                        
|                                        
|                                        
|Equipment in transit                     |       |              | 2,686    |         |  |   | 12,928   |        
|                                        
|                                        
|                                        
|                                        
|Projects in process                      |       |              | 1,170    |         |  |   | 788      |        
|                                         |       |              |          |         |  |   |          |        
|Property, plant and equipment, net       |       | $            | 155,045  |         |  | $ | 222,341  |        
|                                         |       |              |          |         |  |   |          |        

The recap of accumulated depreciation for the years ended
December 31, 1998, 1999 and 2000 is as follows:

|                          |  |                         |        |      |  |      |         |   |  |   |         |  
|------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------- | - |  | - | ------- | -
|                          |  |                        
|                          |  | Year Ended December 31,
|                          |  |                        
|                          |  | 1998                    |        | 1999 |  | 2000
|                          |  |                         |        |      |  |     
|Beginning balance         |  | $                       | 68,654 |      |  | $    | 87,641  |   |  | $ | 145,564 |  
|                         
|                         
|                         
|                         
|Depreciation expense      |  |                         | 20,515 |      |  |      | 59,039  |   |  |   | 35,850  |  
|                         
|                         
|                         
|                         
|Disposals and retirements |  |                         | (1,528 | )    |  |      | (1,116  | ) |  |   | (10,273 | )
|                          |  |                         |        |      |  |      |         |   |  |   |         |  
|Ending balance            |  | $                       | 87,641 |      |  | $    | 145,564 |   |  | $ | 171,141 |  
|                          |  |                         |        |      |  |      |         |   |  |   |         |  

F-33



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

7.  Investments

The Companys investments consist of the following at
December 31, 1999 and 2000:

|                                                                                   |       |              |        |        |  |   |       |        | 
|---------------------------------------------------------------------------------- | ----- | ------------ | ------ | ------ |  | - | ----- | ------ | 
|                                                                                   |       |             
|                                                                                   |       | December 31,
|                                                                                   |       |             
|                                                                                   |       | 1999         |        | 2000  
|                                                                                   |       |              |        |       
|Investment, at cost                                                                |       | $            | 10,235 |        |  | $ | 7,925 |       
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Investment in common stock, at fair value New Skies Satellites
	N.V. ($2,748 cost) |       |              |        |        |  |   | 3,904 |       
|                                                                                   |       |              |        |        |  |   |       |       
|                                                                                   | Total |              | $      | 10,235 |  |   | $     | 11,829 | 
|                                                                                   |       |              |        |        |  |   |       |       

The Companys cost basis investment represents a less than
1% ownership in an unaffiliated entity established for the
purchase and leasing of satellite capacity time. The
Companys investment in common stock is subject to equity
price risk. The Company has not taken any actions to hedge this
market risk exposure.

8.  Short-Term Debt

The Companys short-term debt consists of short-term credit
facilities, denominated in U.S. dollars with interest rates
ranging from 11% to 17%. Amounts outstanding under these
facilities totaled approximately $10.7 million and
$8.8 million at December 31, 1999 and 2000. The
Company has historically refinanced its short-term credit
facilities on an annual basis.

9.  Long-Term Debt

The Company long-term debt is detailed as follows:

|                                                                                            |                      |              |        |        |  |   |         |         | 
|------------------------------------------------------------------------------------------- | -------------------- | ------------ | ------ | ------ |  | - | ------- | ------- | 
|                                                                                            |                      |             
|                                                                                            |                      | December 31,
|                                                                                            |                      |             
|                                                                                            |                      | 1999         |        | 2000  
|                                                                                            |                      |              |        |       
|Term notes payable (6.30%  7.28%) maturing through
	2004, collateralized by certain assets |                      | $            | 3,799  |        |  | $ | 1,861   |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Eximbank notes payable (9.30%), maturing semiannually through
	2001 and 2004                |                      |              | 7,285  |        |  |   | 11,359  |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Broadband Network vendor financing (11.78%) due 2006                                        |                      |              | 39,451 |        |  |   | 126,024 |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Telephony equipment vendor financing (8.30%), maturing
	semiannually through 2004 to 2008   |                      |              |        |        |  |   | 3,767   |        
|                                                                                            |                      |              |        |        |  |   |         |        
|                                                                                            | Total long-term debt |              |        | 50,535 |  |   |         | 143,011 | 
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Less: current portion                                                                       |                      |              | (4,411 | )      |  |   | (15,385 | )      
|                                                                                            |                      |              |        |        |  |   |         |        
|Long-term debt, net                                                                         |                      | $            | 46,124 |        |  | $ | 127,626 |        
|                                                                                            |                      |              |        |        |  |   |         |        

The scheduled maturities of debt and credit facilities at
December 31, 2000 are as follows:

|                    |       |        |        |         | 
|------------------- | ----- | ------ | ------ | ------- | 
|Fiscal year:        |       | Amount
|                    |       |       
|2001                |       |        | 15,385 |        
|                   
|                   
|                   
|                   
|2002                |       |        | 25,978 |        
|                   
|                   
|                   
|                   
|2003                |       |        | 25,762 |        
|                   
|                   
|                   
|                   
|2004                |       |        | 26,333 |        
|                   
|                   
|                   
|                   
|2005 and thereafter |       |        | 49,553 |        
|                    |       |        |        |        
|                    | Total |        | $      | 143,011 | 
|                    |       |        |        |        

F-34



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

10.  Income Taxes

The components of the (provision for) benefit from income taxes,
for the years ended December 31, 1998, 1999 and 2000 is as
follows:

|         |       |              |   |      |  |      |        |       |  |   |       |       | 
|-------- | ----- | ------------ | - | ---- |  | ---- | ------ | ----- |  | - | ----- | ----- | 
|         |       |             
|         |       | December 31,
|         |       |             
|         |       | 1998         |   | 1999 |  | 2000
|         |       |              |   |      |  |     
|Current  |       |              |   |      |  | $    | (1,941 | )     |  | $ | 1,941 |      
|        
|        
|        
|        
|Deferred |       | $            | 0 |      |  |      | 7,923  |       |  |   | 5,045 |      
|         |       |              |   |      |  |      |        |       |  |   |       |      
|         | Total |              | $ | 0    |  |      | $      | 5,982 |  |   | $     | 6,986 | 
|         |       |              |   |      |  |      |        |       |  |   |       |      

The statutory tax rate in Argentina was 35% in 1998, 1999 and
2000.

11.  Commitments and Contingencies

Commitments The Company leases
telecommunications link with annual rental commitments of
approximately $8.1 million through the year 2005. In
addition, the Company has commitments to purchase communications
equipment amounting to approximately $14.9 million at
December 31, 2000.

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

IMPSAT Brazil has entered into a $5.9 million term note
with El Camino Resources, which is guaranteed by the Company and
Impsat Fiber Networks, Inc. At December 31, 2000, the
balance outstanding was approximately $4.2 million.

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

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

Reciprocal service agreements  During the
first quarter of 2000, the Company signed agreements with
Movicom/ Bell South for the exchange of capacity on the two
companies respective networks in Argentina. This agreement
will enable the Company to expand its footprint in the Buenos
Aires metropolitan area beyond that originally included in the
Broadband Network.

F-35



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##### Table of Contents



IMPSAT S.A.


NOTES TO FINANCIAL STATEMENT  (Continued)

EXHIBIT INDEX

|            |       |             |  |                                                                                                                                                                                                                                                                                                                
|----------- | ----- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description
|            |       |            
|            | 3.1   |             |  | Amended and Restated Certificate of Incorporation of the Company
	(filed on January 14, 2000 as Exhibit No. 3.1 to
	the Companys Registration Statement on Form S-1
	(No.  333-88389) and incorporated herein by reference).                                                                                  
|            | 3.2   |             |  | Amended and Restated Bylaws of the Company (filed on
	January 14, 2000 as Exhibit No. 3.2 to the
	Companys Registration Statement on Form S-1
	(No. 333-88389) and incorporated herein by reference).                                                                                                         
|            | 4.1   |             |  | Indenture for the Notes, dated as of February 16, 2000,
	among the Company, The Bank of New York, as Trustee and Banque
	Internationale a Luxembourg (including form of Note) (filed on
	March 10, 2000 as an exhibit to the Companys 1999
	Annual Report on Form 10K and incorporated herein by
	reference). 
|            | 4.2   |             |  | Indenture for the Notes, dated as of June 17, 1998, between
	the Company and The Bank of New York, as Trustee (including form
	of Note) (filed on July 21, 1998 as an exhibit to the
	Companys Registration Statement on Form S-4
	(No.  333-59469) and incorporated herein by reference).                    
|            | 4.3   |             |  | Securityholders Agreement dated as of March 19, 1998, among
	Nevasa Holdings, the Morgan Stanley investors and certain other
	parties (filed on April 15, 1998, as an exhibit to the
	Companys Annual Report on Form 10-K for 1997 and
	incorporated herein by reference).                                    
|            | 4.4   |             |  | Supplemental Indenture dated as of May 13, 1997 among
	IMPSAT Corporation, IMPSAT S.A. and The Bank of New York (filed
	on April 15, 1998 as an exhibit to the Companys
	Annual Report on Form 10-K for 1997 and incorporated herein
	by reference).                                                          
|            | 4.5   |             |  | Indenture dated as of July 31, 1996, among the Company,
	IMPSAT Argentina as Guarantor and the Bank of New York as
	Trustee (including form of Note) (filed on November 20,
	1996 as an exhibit to the Companys Registration Statement
	on Form S-4 (No. 333-12977) and incorporated herein by
	reference).   
|            | 4.6   |             |  | Shareholders Agreement dated as of March 10, 1999 (filed on
	January 14, 2000 as an exhibit to the Companys
	Registration Statement on Form S-1 (No. 333-88389) and
	incorporated herein by reference).                                                                                                       
|            | 4.7   |             |  | Specimen Stock Certificate (filed on January 14, 2000 as an
	exhibit to the Companys Registration Statement on
	Form S-1 (No. 333-88389) and incorporated herein by
	reference).                                                                                                                              
|            | 4.8   |             |  | Form of Stockholder Rights Plan Agreement between the Company
	and The Bank of New York, as Rights Agent (filed on
	June 21, 2000 as an exhibit to the Companys
	Registration Statement on Form S-4 (No. 333-34954) and
	incorporated herein by reference).                                                   
|            | 4.9   |             |  | Certificate of Designations dated as of June 7, 2000 (filed
	on June 21, 2000 as an exhibit to the Companys
	Registration Statement on Form S-4 (No. 333-34954) and
	incorporated herein by reference).                                                                                                       
|            | 9.1   |             |  | 1998 Stock Option Plan (filed on March 31, 1999 as an
	exhibit to the Companys 1998 Annual Report on
	Form 10-K and incorporated herein by reference).                                                                                                                                                        
|            | 9.2   |             |  | 1999 Stock Option Plan (filed on January 14, 2000 as an
	exhibit to the Companys Registration Statement on
	Form S-1 (No. 333-88389) and incorporated herein by
	reference).                                                                                                                                  
|            | 10.1 |             |  | Global Crossing Framework Agreement (filed on October 4,
	1999 as an exhibit to the Companys Registration Statement
	on Form S-1 (No. 333-88389) and incorporated herein by
	reference).                                                                                                                      
|            | 10.2 |             |  | Turnkey Backhaul Construction and IRU Agreement between IMPSAT
	Brazil and South American Crossing, Ltd. (Rio de Janeiro), dated
	as of February 17, 2000 (filed on April  17, 2000 as
	an exhibit to the Companys Registration Statement on
	Form S-4 (No. 333-34954) and incorporated herein by
	reference).



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##### Table of Contents



|            |       |             |  |                                                                                                                                                                                                                                                                                                                                                             
|----------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |       | Description
|            |       |            
|            |       |             |  | In accordance with Instruction 2 to Item 601 of
	Regulation S-K, the following agreement was not filed as an
	exhibit because it is substantially identical in all material
	respects to Exhibit 10.2: Turnkey Backhaul Construction and
	IRU Agreement between IMPSAT Brazil and South American Crossing,
	Ltd. (São Paolo), dated as of February 17, 2000.
|            | 10.3 |             |  | Turnkey Project Agreement between IMPSAT Argentina and Nortel
	(filed on October 4, 1999 as an exhibit to the
	Companys Registration Statement on Form S-1
	(No.  333-88389) and incorporated herein by reference).                                                                                                                                        
|            |       |             |  | In accordance with Instruction 2 to Item 601 of
	Regulation  S-K, the following agreement was not filed as
	an exhibit because it is substantially identical in all material
	respects to Exhibit 10.3: Turnkey Project Agreement between
	IMPSAT Brazil and Nortel.                                                                                        
|            | 10.4 |             |  | TAC Turnkey Construction and IRU Agreement among IMPSAT
	Argentina, IMPSAT Chile and South American Crossing Ltd. (filed
	on October 4, 1999 as an exhibit to the Companys
	Registration Statement on Form S-1 (No. 333-88389) and
	incorporated herein by reference).                                                                                     
|            | 10.5  |             |  | Financing Agreement between IMPSAT Argentina and Nortel (filed
	on January 14, 2000 as an exhibit to the Companys
	Registration Statement on Form S-1 (No. 333-88389) and
	incorporated herein by reference).                                                                                                                                              
|            |       |             |  | In accordance with Instruction 2 to Item 601 of
	Regulation  S-K, the following agreement was not filed as
	an exhibit because it is substantially identical in all material
	respects to Exhibit 10.5: Vendor Financing Agreement
	between IMPSAT Brazil and Nortel.                                                                                       
|            | 10.6 |             |  | Capacity Commitment Agreement dated as of November 10,
	2000, between South American Crossing Ltd. and IMPSAT Fiber
	Networks, Inc. Filed herewith.                                                                                                                                                                                                         
|            | 10.7 |             |  | Capacity Purchase Agreement dated as of November 10, 2000,
	between Global Crossing Bandwidth, Inc. and International
	Satellite Communication Holding Ltd. Filed herewith.                                                                                                                                                                                 
|            | 21.1  |             |  | List of subsidiaries of the registrants (incorporated by
	reference to the Business  General
	section of this report).                                                                                                                                                                                                                                   
|            | 24.1  |             |  | Power of Attorney (included on the signature page hereto).                                                                                                                                                                                                                                                                                                  




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