<PAGE>   1
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                          ----------------------------


                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2001

                         Commission file number: 0-31010

                            AT&T LATIN AMERICA CORP.
             (Exact name of Registrant as Specified in Its Charter)



                                                               22-3687745
                    DELAWARE                                (I.R.S. Employer
 (State or Other Jurisdiction of Incorporation)            Identification No.)

   220 ALHAMBRA CIRCLE, CORAL GABLES, FLORIDA                         33134
    (Address of principal executive offices)                       (Zip code)



       Registrant's telephone number including area code: (305) 459-6300


                                      None
        (Former name, former address and former fiscal year, if changed
                              since last report.)

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

         As of May 14, 2001, 43,214,758 shares of the registrant's Class A
common stock, par value $0.0001 per share, and 73,081,595 shares of the
registrant's Class B common stock, par value $0.0001 per share, were
outstanding.

================================================================================




<PAGE>   2





                                      INDEX

                                                                   PAGE
                                                                 ---------

Consolidated Balance Sheets as of December 31, 2000 and

  March 31, 2001 (Unaudited).....................................    3

Unaudited Consolidated Statements of Operations for the three
  Months Ended March 31, 2000 and 2001...........................    4

Unaudited Consolidated Statement of Changes in Stockholders'
  Equity for the three Months Ended March 31, 2001...............    5

Unaudited Consolidated Statements of Cash Flows for the three
  Months Ended March 31, 2000 and 2001...........................    6

Notes to Consolidated Financial Statements (Unaudited)........... 7 - 14

Forward Looking Statements.......................................   15

Management's Discussion and Analysis............................. 16 - 21

Quantitative and Qualitative Disclosure about Market Risk........   22

Legal Proceedings................................................   23

Exhibits And Reports On Form 8-K.................................   23

Signatures.......................................................   24





                                       2
<PAGE>   3


                            AT&T LATIN AMERICA CORP.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>


                                                                     DECEMBER 31,       MARCH 31,
                                                                        2000               2001
                                                                    -----------         -----------
                                                                                        (UNAUDITED)
                                                                          (IN THOUSANDS)
<S>                                                                 <C>                 <C>
                             ASSETS
Current Assets:
  Cash and cash equivalents                                         $    14,905         $    14,228
  Accounts receivable, net                                               15,934              27,284
  Recoverable taxes                                                      27,307              31,013
  Prepaid expenses and other current assets                              29,945              35,139
                                                                    -----------         -----------
         Total current assets                                            88,091             107,664

Property and equipment, net                                             339,470             395,119
Goodwill and other intangible assets, net                               854,530             823,810
Other assets                                                             16,157              36,944
                                                                    -----------         -----------

         Total assets                                               $ 1,298,248         $ 1,363,537
                                                                    ===========         ===========

               LIABILITIES, MANDATORILY REDEEMABLE
             PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of debt                                        $   111,712         $   191,126
  Accounts payable and accrued expenses                                 106,156              97,233
  Other current liabilities                                               9,050              10,320
                                                                    -----------         -----------
         Total current liabilities                                      226,918             298,679

Long-term debt                                                           98,242             190,835
Other liabilities                                                         5,853               6,803
                                                                    -----------         -----------
         Total liabilities                                              331,013             496,317
                                                                    -----------         -----------
Minority interest                                                         2,343               2,196
                                                                    -----------         -----------
Commitments and contingencies (Note 8)                                       --                  --
                                                                    -----------         -----------
Mandatorily redeemable 15% Series B Preferred Stock                     186,205             193,101
                                                                    -----------         -----------
Stockholders' equity:
  Common stock                                                               11                  11
  Additional paid in capital                                            915,035             915,035
  Accumulated deficit                                                  (136,456)           (209,424)
  Accumulated other comprehensive income (loss)                             808             (24,192)
  Stockholder loan                                                         (711)             (9,507)
                                                                    -----------         -----------
         Total stockholders' equity                                     778,687             671,923
                                                                    -----------         -----------
         Total liabilities, mandatorily redeemable preferred
            stock and stockholders' equity                          $ 1,298,248         $ 1,363,537
                                                                    ===========         ===========
</TABLE>


            The accompanying footnotes are an integral part of these
                       consolidated financial statements.



                                       3
<PAGE>   4


                            AT&T LATIN AMERICA CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED
                                                                     MARCH 31,
                                                           --------------------------
                                                             2000             2001
                                                           --------         ---------
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                        <C>              <C>
Revenue:
  Data-Internet services                                   $  4,286         $  18,459
  Voice services                                                 78            13,211
                                                           --------         ---------
         Total revenue                                        4,364            31,670
Cost of revenue                                               6,921            25,772
Selling, general and administrative expenses                  4,232            32,756
Depreciation and amortization                                 6,160            24,699
                                                           --------         ---------
         Loss from operations                               (12,949)          (51,557)
Interest expense                                                 --            15,851
Interest income                                               1,018               270
Other income (expense), net                                     714            (5,945)
                                                           --------         ---------
         Loss before provision for income taxes and
           minority interest                                (11,217)          (73,083)
Provision for income taxes                                       --                --
Minority interest                                                --              (115)
                                                           --------         ---------
         Net loss                                          $(11,217)          (72,968)
                                                           ========         =========
Basic and diluted net loss per common share                $  (0.14)        $   (0.63)
                                                           ========         =========
Weighted average common shares outstanding                   80,000           116,296
                                                           ========         =========
</TABLE>


            The accompanying footnotes are an integral part of these
                       consolidated financial statements.


                                       4
<PAGE>   5


                            AT&T LATIN AMERICA CORP.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                               ACCUMULATED
                                                                        OTHER                                      OTHER
                                COMMON STOCK  ADDITIONAL             COMPREHENSIVE                 TOTAL       COMPREHENSIVE
                               --------------  PAID IN  ACCUMULATED    INCOME        STOCKHOLDER STOCKHOLDER'S   INCOME
                                STOCK  AMOUNT  CAPITAL     DEFICIT      (LOSS)          LOAN       EQUITY      (LOSS), NET
                               ------- ------  --------   ---------  -------------   ----------  ---------    -----------
<S>                            <C>       <C>   <C>        <C>          <C>             <C>        <C>          <C>
Balance December 31, 2000      116,296   $11   $915,035   $(136,456)   $    808        $  (711)   $ 778,687    $(135,648)


Stockholder loan                                                                        (8,796)      (8,796)


Net loss                                                    (72,968)                                (72,968)     (72,968)

Foreign currency translation
  adjustments                                                           (25,000)                    (25,000)     (25,000)
                               -------   ---   --------   ---------    --------        -------    ---------    ---------
Balance March 31, 2001         116,296   $11   $915,035   $(209,424)   $(24,192)       $(9,507)   $ 671,923    $(233,616)
                               =======   ===   ========   =========    ========        =======    =========    =========
</TABLE>

            The accompanying footnotes are an integral part of these
                       consolidated financial statements.


                                       5
<PAGE>   6


                            AT&T LATIN AMERICA CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                           THREE MONTHS ENDED
                                                                                MARCH 31,
                                                                        ------------------------
                                                                          2000           2001
                                                                        --------       ---------
                                                                             (IN THOUSANDS)
<S>                                                                     <C>            <C>
Cash flows from operating activities:
  Net loss                                                              $(11,217)      $ (72,968)
    Adjustment to reconcile net loss to net cash used in operating
      activities:
      Depreciation and amortization                                        6,160          24,699
      Unrealized foreign exchange loss                                      (777)         (3,589)
      Allowance for bad debts                                                 --           2,486
      Minority interest                                                       --            (115)
      Preferred stock accretion                                               --           6,896
      Changes in assets and liabilities, net of effect
        of acquisitions:
        Accounts receivable                                               (2,320)        (13,836)
        Recoverable taxes                                                 (1,763)         (3,706)
        Prepaid and other assets                                              88          (5,194)
        Other assets                                                          --         (20,787)
        Accounts payable and accrued expenses                              3,718          (8,923)
        Other current liabilities                                          6,266           2,220
                                                                        --------       ---------
Net cash provided by (used in) operating activities
                                                                             155         (92,817)
                                                                        --------       ---------
Cash flows from investing activities:
  Purchase of property and equipment                                     (20,437)         (4,930)
  Investment in short-term securities                                     (3,558)             --
  Cash paid for acquisitions, including acquisition expenses              (1,874)             --
                                                                        --------       ---------
Net cash used in investing activities
                                                                         (25,869)         (4,930)
                                                                        --------       ---------
Cash flows from financing:
  Proceeds (repayments) of debt, net                                       1,770         105,866
  Loans to shareholder                                                        --          (8,796)
                                                                        --------       ---------
Net cash provided by financing activities                                  1,770          97,070
                                                                        --------       ---------
Net decrease in cash and cash equivalents                                (23,944)           (677)
Cash and cash equivalents, beginning of period                            24,223          14,905
                                                                        --------       ---------
Cash and cash equivalents, end of period                                $    279       $  14,228
                                                                        ========       =========

</TABLE>


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

         During the three months ended March 31, 2001, we acquired property and
equipment amounting to approximately $66.2 million through vendor financing
arrangements. See Note 5.


            The accompanying footnotes are an integral part of these
                       consolidated financial statements.


                                       6
<PAGE>   7

                            AT&T LATIN AMERICA CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 -- NATURE OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         AT&T Latin America Corp. ("We," the "Company" or "ATTLA") was
incorporated on October 13, 1999, under the laws of the State of Delaware. We
provide broadband communications services to major metropolitan business markets
in Argentina, Brazil, Chile, Colombia and Peru. Our communication services
include data, Internet, local and long distance voice, web hosting, and managed
network services. We deliver our services mostly through own technologically
advanced networks, which interconnect with other third party networks.

         The accompanying unaudited consolidated financial statements
included in this quarterly report have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions for Form 10-Q and Rule 10-01 of Regulation S-X. They do
not include all information and notes required by generally accepted accounting
principles for complete financial statements and should be read together with
the audited financial statements and notes thereto included in our annual report
on Form 10-K for the year ended December 31, 2000. The balance sheet data as of
December 31, 2000 was derived from our audited financial statements but does not
include all disclosures required by generally accepted accounting principles.
Certain reclassifications have been made to conform to the 2001 presentation.
The financial information furnished reflects all adjustments, consisting only of
normal recurring accruals, which are, in the opinion of management, necessary
for a fair presentation of the financial position, results of operations and
cash flows for the quarterly periods presented. The results of operations for
the periods presented are not necessarily indicative of our future results of
operations for the entire year.

         Our cumulative comprehensive loss was $135.6 million and $233.6 million
as of December 31, 2000 and March 31, 2001, respectively. The components of
comprehensive loss are net loss and foreign currency translation adjustments.
During the three months ended March 31, 2001, foreign currency translations
increased our other comprehensive loss by $25.0 million due mainly to the
devaluation of the Brazilian Reais of approximately 10.6%.

NOTE 2 -- LIQUIDITY

         The unaudited consolidated financial statements have been prepared on a
basis that contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business. We have incurred
net losses of approximately $209.4 million from the period from inception
(October 13, 1999) through March 31, 2001. At March 31, 2001 we had a working
capital deficit of $191.0 million.

         Our business is capital-intensive and, as such, has required and will
continue to require substantial capital investment. We are building a high
capacity network in the countries in which we operate and are primarily focused
on data-Internet services, the fastest growing segment of the communications
market. This strategy initially increases our level of capital expenditures and
operating losses and requires us to make a substantial portion of our capital
investments before we realize any revenue from them. These capital expenditures,
together with the associated initial operating expenses, will continue to result
in negative cash flow until we are able to establish an adequate customer base.
After the initial planned build-out of our networks, we expect our capital
expenditures will become tightly related to near-term revenue growth. We believe
that this long-term strategy will enhance our near term financial performance by
increasing the capacity of, and traffic flow over, our networks.

         We expect to continue to incur operating losses and to generate
negative cash flows from operations for the next several years as we expand our
existing communications networks and develop new networks and services. We plan
to fund our 2001 capital requirements and working capital needs with borrowing
capacity under our subordinated credit facility with AT&T Corp., anticipated
proceeds from our planned equipment vendor financing and other financial support
from AT&T Corp., as necessary.



                                       7
<PAGE>   8


                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

         Although we believe that our funding plan previously mentioned in this
note will be sufficient to support working capital needs, capital expenditures
and debt service for 2001, there is no assurance that we will be able to
consummate these proposed transactions or otherwise obtain the anticipated cash
needed to fund our business plan, or obtain such funding on a timely basis, on
acceptable terms and conditions or at all. Our inability to consummate the
proposed transactions or otherwise obtain the anticipated cash needed to fund
our business plan would affect our time to market and our ability to carry out
our growth strategy and could materially and adversely affect our results of
operations.

NOTE 3 -- INVESTING ACTIVITIES

         On August 20, 1999, an indirect wholly owned subsidiary of AT&T Corp.
entered into an agreement to acquire 100% of the capital of Netstream. Netstream
was originally formed in February 1998 as a division of Promon Tecnologia S.A.,
a Brazilian engineering company. Netstream, as a separate entity, was formed on
July 14, 1998 as a wholly owned subsidiary of Promon, and the Netstream division
of Promon was subsequently transferred. Promon and other affiliated companies
provided various financing and management services for Netstream. Netstream was
a development stage company until May 1999, when it began providing services in
Brazil's two largest cities, Rio de Janeiro and Sao Paulo.

         The Netstream acquisition closed on December 8, 1999 when AT&T Corp.
acquired 100% of the issued and outstanding capital stock of Netstream, now
known as AT&T do Brasil, for $320.0 million in cash, which included settlement
of outstanding balances due to Promon and other Promon affiliates. At the
closing of the Netstream acquisition, AT&T Corp. contributed its entire equity
interest in Netstream and $10.0 million in cash to us in consideration of all of
our outstanding Class B common stock. Immediately after the Netstream
acquisition, SL Participacoes, an affiliate of Promon Ltda., contributed $40.0
million in cash to us in exchange for shares of our Class A common stock,
representing a 10% interest in our company.

         We accounted for the acquisition under the purchase method of
accounting for financial reporting purposes. Accordingly, the purchase price of
$323.2 million has been allocated to the identifiable assets and liabilities
based on fair values at the acquisition date. The excess of the purchase price
over the value of the identifiable net assets in the amount of $258.3 million
and $4.9 million has been classified as goodwill and other intangibles,
respectively. Goodwill is amortized on a straight-line basis over a twenty-year
period. The other intangible assets represent the fair value of existing service
contracts and the fair value of the work force acquired. Other intangibles are
amortized on a straight-line basis over a three-year period.

         On June 30, 2000, we completed the acquisition of Keytech LD S.A. (now
known as AT&T Argentina). We acquired all of the capital stock of Keytech in
exchange for 1,178,689 shares of our Class A common stock, plus $5.2 million in
cash. The Keytech acquisition also provides for a contingent purchase price of
up to $1.5 million one year after the acquisition, if certain operational
milestones are reached. We accounted for the acquisition of Keytech in
accordance with the purchase method for business combinations. We recorded $32.0
million of goodwill in connection with this acquisition, which represents the
excess of the purchase price over the fair value of the net assets acquired.
This goodwill is being amortized over a twenty-year period.

         On August 28, 2000, we completed our merger with FirstCom. Immediately
prior to the merger, all paid-in-kind dividends payable on FirstCom's Series A
convertible preferred stock were accelerated and the holders of that stock
converted all of their shares of preferred stock into common stock of FirstCom.
In the merger, each holder of FirstCom common stock, including the former
holders of FirstCom's Series A convertible preferred stock, received one share
of Class A common stock of ATTLA for each share of FirstCom common stock they
owned, resulting in an aggregate issuance of 33,715,892 shares of Class A common
stock, or approximately 29% of our outstanding capital at that time. In
addition, each option or warrant to purchase shares of FirstCom common stock was
exchanged for a warrant or option to purchase an identical number of shares of
ATTLA Class A common stock.

         We accounted for the FirstCom merger in accordance with the purchase
method for business combinations. Accordingly, the purchase price of $563.3
million has been allocated to the identifiable assets and liabilities based on
fair values at the acquisition date. The excess of the purchase price over the
fair value of the identifiable net assets in the amount of $563.4 million and
$26.0 million has been classified as goodwill and other intangibles,
respectively. Goodwill is amortized on a straight-line basis over a twenty-year
period. Other intangible assets represent the fair value of the existing service
contracts in Chile, Peru and Colombia. These other intangibles are being
amortized on a straight-line basis over a five-year period.



                                       8
<PAGE>   9
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


         The following table states, for the period presented, our unaudited pro
forma results of operations giving the effect of the FirstCom merger and the
Keytech acquisition as if the transactions had been completed as of the
beginning of the period presented (in thousands):

                                                          MARCH 31,
                                                            2000
                                                       ----------------

         Revenue...................................... $        16,255
                                                       ================

         Operating loss............................... $       (34,596)
                                                       ================
         Net loss..................................... $       (40,729)
                                                       ================
         Basic and diluted loss per common share...... $        (0.35)
                                                       ================


         These results are presented for informational purposes only and are not
necessarily indicative of our future results of operations or financial position
or our results of operations or financial position that would have been achieved
had the acquisition actually occurred as of the beginning of the periods
presented.

NOTE 4 -- PROPERTY AND EQUIPMENT

         Property and equipment is comprised of the following as of December 31,
2000 and March 31, 2001, respectively (in thousands):
<TABLE>
<CAPTION>

                                                                                                        ESTIMATED
                                                                                                         USEFUL
                                                                    DECEMBER 31,        MARCH 31,         LIVES
                                                                        2000              2001         (IN YEARS)
                                                                   ----------------   --------------   ------------

<S>                                                                <C>                <C>                    <C>
         Switching equipment....................................   $       74,384     $     76,098           5
         Transmission equipment.................................           95,363          104,975           7
         Cables.................................................           37,491           45,797          10
         Underground installation...............................           82,481           88,168          25
         Construction in progress...............................           20,600           49,630          --
         Office equipment, furniture, vehicles and other........           48,611           60,143        3 to 10
                                                                   ----------------   --------------
                                                                          358,930          424,811
         Less: Accumulated depreciation.........................          (19,460)         (29,692)
                                                                   ----------------   --------------
                                                                   $      339,470     $    395,119
                                                                   ================   ==============

</TABLE>

         Depreciation expense related to the property and equipment was $2.7
million and $11.9 million for the three months ended March 31, 2000 and 2001,
respectively.



                                       9
<PAGE>   10

                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


NOTE 5 -- DEBT

         Debt is comprised of the following (in thousands):
<TABLE>
<CAPTION>

                                                                               DECEMBER 31,       MARCH 31,
                                                                                   2000             2001
                                                                              -------------    --------------
          <S>                                                                      <C>         <C>
          Revolving credit facility, at LIBOR plus 3.75% (8.6% to
              9.5% at March 31, 2001).....................................     $   100,000      $   100,000
          Subordinated credit facility, at LIBOR plus 6.00% (10.9% to
              12.5% at March 31, 2001)....................................          40,900          167,060
          Notes payable for equipment, at interest rates from 0% to
              LIBOR plus 5.50% due in instalments through 2005............          31,514           77,372
          Other bank facilities due in instalments through 2002...........          37,540           37,529
                                                                               -------------    --------------
          Total debt......................................................         209,954          381,961

          Less current maturities.........................................        (111,712)        (191,126)
                                                                               -------------    --------------

          Long-term debt..................................................     $    98,242      $   190,835
                                                                               =============    ==============
</TABLE>

REVOLVING AND SUBORDINATED CREDIT FACILITIES

         Global Card Holdings, a wholly-owned subsidiary of AT&T Corp., and AT&T
Corp. have provided us with two credit facilities with up to an aggregate amount
of $300.0 million. Amounts outstanding under the $100.0 million revolving credit
facility ($100.0 million outstanding as of March 31, 2001) mature on August 28,
2002, except for borrowings made by AT&T do Brasil, which are due within
approximately 3 months after disbursement, but will be automatically renewed
subject to prepayment requirements in the revolving credit facility agreement.
Amounts outstanding under the $200.0 million subordinated credit facility
($167.1 million outstanding as of March 31, 2001) mature on December 1, 2008,
except for borrowings made by AT&T do Brasil, which are due within approximately
3 to 6 months after disbursement, but will be automatically renewed subject to
prepayment requirements in the subordinated note agreement. Both credit
facilities contain restrictions on capital expenditures, incurrence of
additional debt, and liens on or the disposal of assets without prior consent of
the lender and require prepayment upon certain issuances of debt or equity by
us. We had $32.9 million available under the $200.0 million revolving facility
at March 31, 2001.

         The $100.0 million credit facility is unsecured; however, the lender
may at any time require us to pledge the shares of our operating subsidiaries
and their assets as collateral for borrowings under this facility. Interest
under this credit facility accrues at a rate based on LIBOR plus 3.75%. AT&T
Corp. has permitted us to defer certain interest payments on this credit
facility until the end of this year. As of March 31, 2001, the outstanding
borrowings under this facility bore interest at a weighted average annual rate
of 9.2%. Interest under the $200.0 million subordinated credit facility accrues
at a rate based on LIBOR plus 6.00%. As of March 31, 2001, the outstanding
borrowings under this facility bore interest at a weighted average annual rate
of 11.2%. We are permitted under the subordinated note agreement to defer
certain interest payments on the $200.0 million subordinated credit facility
until December 31, 2003.

                                       10
<PAGE>   11
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


NOTES PAYABLE FOR EQUIPMENT

     In November 1998, a subsidiary of FirstCom (which we acquired in the
FirstCom merger) entered into a vendor financing agreement with one of its
equipment vendors. This vendor financing agreement, as amended provided for a
maximum financing amount of $29.5 million, an interest rate of LIBOR plus 5.5%
and is repayable in 20 consecutive quarterly payments of principal and interest
from the date of the related borrowings. The equipment being financed
collateralizes this vendor financing. As of March 31, 2001, there was
approximately $9.6 million outstanding under this vendor financing bearing
interest at a weighted average annual rate of 11.9%. The availability period for
financing under the agreement expired on December 31, 2000.

         In August 2000, we entered into a short-term vendor financing agreement
providing for a maximum financing of $30.0 million, maturing on April 9, 2001.
Borrowings under this short-term vendor financing agreement bear interest at a
rate based on LIBOR plus 5.5%. As of March 31, 2001, there was $20.7 million in
outstanding borrowings under this agreement bearing interest at a weighted
average annual rate of 11.9%. We have agreed with this vendor to extend the
maturity of this financing to July 31, 2001 and to increase the maximum amount
available to $50.0 million.

         In October 2000, we entered into a short-term vendor financing
agreement providing for a maximum financing of $14.1 million, maturing on
December 31, 2000. Borrowings under this short-term vendor agreement bear no
interest. The maturity date of this arrangement was extended until March 29,
2001. After payment of the outstanding borrowings as of March 29, 2001,
additional equipment purchases totaling $4.5 million were financed under this
vendor financing agreement on the same payment terms. As of March 31, 2001,
there was $4.5 million in outstanding borrowings under this agreement

         In March 2001, we entered into a short-term vendor financing agreement
providing for a maximum financing of $23.8 million all of which was outstanding
as of March 31, 2001, maturing on July 31, 2001. Borrowings under this
short-term vendor financing agreement bear interest at a fixed annual rate of
12%.

         As of March 31, 2001, there was also $18.8 million outstanding under no
specific agreement. The amount of $18.8 million bears no interest.

         We have agreed with our vendors that, subject to the closing of our
planned long-term vendor financing, the above short-term financing agreements
(with the exception of the former FirstCom facility described above) will be
refinanced by borrowings under the planned long-term financing.

OTHER BANK FACILITIES

         AT&T do Brasil is party to several local bank facilities providing for
aggregate borrowings of $30.3 million. At March 31, 2001, there was an aggregate
of $26.5 million outstanding under these facilities. Borrowings under these
facilities bear interest at a fixed rates ranging from 7.3% to 12.9% per annum
and variable rates based upon LIBOR plus a margin ranging from 0.4% to 1.8%.

         AT&T Colombia is party to several local bank facilities providing for
aggregate borrowings of $10.9 million. At March 31, 2001, there was an aggregate
of $8.4 million outstanding under these facilities. Borrowings under these
facilities bear interest at a fixed rates ranging from 11.0% to 18.2% per annum
and variable rates based on the Colombian 90 day DTF (Deposito Termino Fijo)
plus a margin ranging from 3.0% to 8.0%. The average DTF during the three months
ended March 31, 2001 was 13.3%.

         AT&T Peru is party to several local bank facilities providing for
aggregate borrowings of $17.6 million. At March 31, 2001, there was an aggregate
of $1.8 million outstanding under these facilities. Borrowings under these
facilities bear interest at a fixed and variable rates ranging from 8.0% to
10.3% per annum.

         AT&T Argentina and AT&T Chile are each party to several local bank
facilities providing for aggregatge borrowings of $1.0 million. At March 31,
2001, there was an aggregate of $0.9 million outstanding under these facilities
bearing interest at various interest rates.

NOTE 6 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         SERVICE MARK LICENSE AGREEMENT WITH AT&T CORP. We have entered into a
service mark license agreement with AT&T Corp. Under this agreement, AT&T Corp.
has agreed to license to us the use of service marks, including "AT&T" and the
AT&T logo with a fanciful globe design mark. We may also use the "AT&T" mark as
part of our trade and corporate names as long as at least half of the licensed
services meet service specifications provided by AT&T Corp.



                                       11
<PAGE>   12
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

         During the term of the service mark license agreement, we have agreed
to pay a fee to AT&T Corp. every six months equal to the greater of $2.5 million
and a designated percentage of our gross revenues. Initially the designated
percentage of gross revenues is 4%. This percentage will decrease to 3.25% in
the third year of the initial term of the license agreement and to 2.5% in the
final two years of the initial term of the license agreement. As of March 31,
2001, we have recorded approximately $2.8 million due to AT&T Corp. related to
the service mark license agreement.

         The initial term of the license agreement ends on August 28, 2005. The
agreement will automatically renew for an additional five years if we are not in
material default under or breach of the license agreement. AT&T Corp. may
terminate the license prior to the end of its scheduled term if AT&T Corp. no
longer owns shares having voting control of our company or if we misuse the
marks or otherwise materially breach our obligations under the service mark
license agreement and are not able to correct the breach in a timely fashion.

         CREDIT FACILITY. AT&T Corp and a wholly-owned subsidiary of AT&T Corp.
have provided us with two facilities of up to $300.0 million principal amount.
See Note 5.

         MANDATORILY REDEEMABLE PREFERRED STOCK. On August 28, 2000, we issued
100,000 shares to Global Card Holdings, Inc., a wholly-owned subsidiary of AT&T
Corp., of our non-voting, non-convertible and non-participating mandatory
redeemable 15% Series B Preferred Stock. The shares of mandatory redeemable 15%
Series B Preferred Stock entitle Global Card Holdings to receive dividends at an
annual rate of 15%, payable semi-annually. Either Global Card Holdings or we may
redeem all of the mandatorily reedemable 15% Series B Preferred Stock at any
time after August 28, 2004 at a redemption price equal to the liquidation value.
As of March 31, 2001, the 15% Series B Preferred Stock has an aggregate
liquidation value of $193.1 million.

         OTHER. As of March 31, 2001, we included in accounts payable $7.7
million for services provided by or paid by AT&T Corp. on our behalf. The amount
owed bears no interest and does not have a specific due date. We also have
recorded $2.8 million of reimbursable expenditures from AT&T Corp. related to
brand expenses.

         STOCKHOLDER LOAN. As of March 31, 2001, we have a receivable of
approximately $9.5 million, including approximately $98,000 of accrued interest
from our President and Chief Executive Officer, Mr. Patricio E. Northland. The
amounts loaned to Mr. Northland represented a refinancing of a loan extended
initially by FirstCom to finance Mr. Northland's purchase of 800,000 restricted
common shares of FirstCom prior to the FirstCom merger. The principal amount and
accrued interest are collateralized by a pledge of 800,000 shares of ATTLA Class
A common stock and bear interest at an annual rate of 5.41%. The principal
amount and all accrued interest are due on March 1, 2010.

NOTE 7 -- OPERATIONS BY GEOGRAPHIC AREAS AND SEGMENTS

         Our operations consist of two segments: data-Internet and voice
services.

         DATA-INTERNET SERVICES. Our data-Internet services include basic
connection services, such as point-to-point dedicated private lines, and private
multipoint network services, which consist of offering and managing
communications links among a number of locations, as wide area network services.
The basic infrastructure, plus supporting services (available or being deployed)
allows us to implement different communications applications to support a wide
range of customers' needs. The availability of bandwidth and reliability of the



                                       12
<PAGE>   13
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


services allow customers to utilize additional value-added services, such as
video conferencing. Our Internet services consist of dial-up and dedicated
access services offered primarily to businesses, as well as wholesale Internet
services offered to Internet service providers. Our integrated package of
wholesale Internet services enable Internet service providers to purchase and
lease their entire access infrastructure from us. We currently derive a
substantial portion of our revenue from data-Internet services. For the three
months ended March 31, 2000 and March 31, 2001, approximately 98.2% and 58.2% of
revenue, respectively, were generated from data-Internet services. No single
customer or group of customers accounted for more than 10% of total revenue.



         VOICE SERVICES. Our voice services include a range of services that
allow us to provide high quality, reliable voice communications. Services range
from the provisioning of office or campus services, to building a complete voice
network covering multiple locations. Through interfaces with other private and
public networks, customers can place and receive calls originating and
terminating from outside our networks.

         The following table sets forth, for the three months ended March 31,
2000 and 2001, certain information about segment results of operations and
segment assets (in thousands):
<TABLE>
<CAPTION>

              2000             ARGENTINA         BRAZIL           CHILE           COLOMBIA           PERU         OTHER (1)
----------------------------- -------------    ------------    -------------    -------------    -------------   -------------
<S>                           <C>              <C>             <C>               <C>              <C>            <C>
REVENUE:
Data-Internet services        $         --     $     4,286     $         --      $       --       $        --    $         --
Voice services                          --              78               --              --                --              --
                              -------------    ------------    -------------    -------------    -------------   -------------
TOTAL REVENUE                           --           4,364               --              --                --              --
Cost of revenue                         --           6,921               --              --                --              --
Selling, general &
  Administrative                        --           3,981               --              --                --             251
Depreciation and
  Amortization                          --           6,160               --              --                --              --
                              -------------    ------------    -------------    -------------    -------------   -------------
Operating loss                $         --     $   (12,698)    $         --     $        --      $         --    $        251
                              =============    ============    =============    =============    =============   =============

Total assets                  $         --     $   384,238     $         --     $        --      $         --    $         --
Capital expenditures          $         --     $    20,437     $         --     $        --      $         --    $         --


              2001             ARGENTINA         BRAZIL           CHILE           COLOMBIA           PERU         OTHER (1)
----------------------------- -------------    ------------    -------------    -------------    -------------   -------------

Revenue:
  Data-internet services      $        278     $     9,689     $      2,895      $    2,915       $     2,682    $         --
  Voice services                       714           1,551            6,515              --             4,431              --
                              -------------    ------------    -------------    -------------    -------------   -------------
TOTAL REVENUE
                                       992          11,240            9,410           2,915             7,113              --
Cost of revenue                      2,157          12,402            7,080           1,042             3,091              --
Selling, general &
  Administrative                     7,114           8,913            3,515           2,903             4,452           5,859
Depreciation and
  Amortization                       2,390           7,771            1,425           1,253             3,083           8,777
                              -------------    ------------    -------------    -------------    -------------   -------------
Operating loss
                              $    (10,669)    $   (17,846)    $     (2,610)    $    (2,283)     $     (3,513)   $    (14,636)
                              =============    ============    =============    =============    =============   =============
Total assets                  $    153,340     $   411,894     $     58,416     $    48,976      $     91,228    $    599,683
Capital expenditures (2)      $     43,404     $    11,358     $      3,781     $     2,456      $      5,142    $      4,930

</TABLE>

-------------
(1)  Consists primarily of corporate operations.
(2)  Includes property and equipment acquired through vendor financing
     arrangements of approximately $66.2 million in 2001.

         There are no significant transfers between geographic areas and
segments. Operating loss consists of revenue less operating expenses and does



                                       13
<PAGE>   14
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


not include interest expense, interest income and other income (expense),
minority interest and income taxes. Total assets are those assets used in our
operations in each geographic area. Corporate assets primarily include cash and
cash equivalents, property and equipment and intangible assets.

NOTE 8 -- COMMITMENTS AND CONTINGENCIES

         In August 2000, we entered into a capacity purchase agreement with
Global Crossing Bandwidth, Inc., which was amended in late March 2001. The
agreement with Global Crossing provides for the acquisition of indefeasible
rights of use to high-speed transmission capacity connecting each of the cities
of Sao Paulo, Buenos Aires, Santiago and Lima to our point of presence in the
United States, effective for fifteen years at an aggregate cost of $22.0 million
payable as each link is activated. As of March 31, 2001, approximately $17.2
million had been paid. Additionally, there is an initial annual maintenance cost
of approximately $1.1 million, subject to escalation at 3% per year, compounded
annually

         At March 31, 2001, AT&T Argentina had commitments for capital
expenditures relating to network construction and equipment of approximately
$50.0 million under multi-year contracts.

         In the normal course of business, we are subject to proceedings,
lawsuits and other claims. These matters are subject to many uncertainties and
outcomes that are not predictable with assurance. Consequently, we are unable to
ascertain the ultimate aggregate amount of monetary liability or financial
impact with respect to these matters. While these matters could affect operating
results of any one quarter when resolved in future periods, it is management's
opinion that after final disposition, any monetary liability or financial impact
to us would not be material to our annual consolidated financial position or
results of operations.

         In accordance with the legislation in force in Brazil, tax registers
related to federal, state and municipal taxes are subject to examination by the
respective tax authorities from 5 to 30 years.

         Our current and future operations and investments in certain foreign
countries are generally subject to the risks of political, economic or social
instability, including the possibility of expropriation, confiscatory taxation,
hyper-inflation or other adverse regulatory or legislative developments, or
limitations on the repatriation of investment income, capital and other assets.
We cannot predict whether any of such factors will occur in the future or the
extent to which such factors would have a material adverse effect on our
international operations.

NOTE 9 -- ACCOUNTING CHANGE

         Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which requires that all derivative instruments be recorded on the
balance sheet at their fair value. Derivatives that are not hedges must be
recorded at fair value through earnings. If a derivative is a fair value hedge,
changes in the fair value of the hedged derivative are offset against the
changes in the fair value of the underlying firm commitments. If a derivative is
a cash flow hedge, changes in the fair value of the derivative are recognized in
other comprehensive loss income until the underlying hedged item is recognized
in earnings. The ineffective portion of the derivative's change in fair value is
immediately recognized in earnings. For the three months ended March 31, 2001,
all net changes in fair value of the fair value hedges and the cash flow hedges
were immaterial, as were any ineffective portions of these hedges.

         The Company has not made any changes to its hedge-related risk
management policies as a result of adopting SFAS No. 133.



                                       14
<PAGE>   15




                           FORWARD-LOOKING STATEMENTS

         Some of the statements under "Management's Discussion & Analysis of
Financial Condition and Results of Operations" and elsewhere in this quarterly
report on Form 10-Q are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are based on management's
beliefs as well as on a number of assumptions concerning future events made by,
and information currently available to, management. These statements involve
known and unknown risks, uncertainties and other factors, that may cause our
actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed in or implied by the
forward-looking statements.

         Forward-looking statements include but are not limited to statements
and references about the following matters:

         o  expectations and estimates of completion dates, construction costs,
            subsequent maintenance expenses and network expansion;

         o  expectations and estimates as to the amount of cash requirements to
            implement our growth strategy and as to our ability to obtain
            financing;

         o  expectations about the sources of revenues and the percentage
            breakdown of sources of revenues; and

         o  future financial performance, including growth in sales and income.

          In addition to matters that are described in this quarterly report on
Form 10-Q and the exhibits hereto and our Annual Report on Form 10-K and the
exhibits thereto, the following factors, among others, could cause AT&T Latin
America's actual results to differ materially from those expressed in or implied
by any forward-looking statements contained in this quarterly report on Form
10-Q or its exhibits:

         o  inaccurate forecasts of customer or market demand;

         o  the rate of expansion of our networks and customer base;

         o  changes in communications technology and/or the pricing of
            competitive products and services;

         o  highly competitive market conditions;

         o  access to financing on acceptable terms and conditions;

         o  loss of one or more important customers;

         o  acquisitions by us and our ability to integrate successfully any
            acquired businesses or technologies into our operations;

         o  changes in or developments affecting laws, regulations and licensing
            requirements in the countries in which we operate;

         o  our ability to obtain and retain rights of ways and permits
            necessary for the expansion and maintenance of our networks;

         o  volatility of our stock price;

         o  currency fluctuations; and

         o  changes in economic and political conditions in the countries in
            which we operate.



                                       15
<PAGE>   16

         AT&T Latin America undertakes no obligation to publicly release any
updates or revisions to any forward-looking statements, which are made as of the
date of this quarterly report on Form 10-Q, to reflect events or circumstances
after the date of this quarterly report on Form 10-Q.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES INCLUDED
ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q AND OUR ANNUAL REPORT ON FORM
10-K.

OVERVIEW

         We provide broadband communications services to major metropolitan
business markets in Argentina, Brazil, Chile, Colombia and Peru. Broadband
communications services are communications services delivered over high speed,
high capacity transmission systems. Our objective is to be a leading
facilities-based provider of high bandwidth communications services to
businesses in key Latin American markets in the countries in which we operate.
We focus primarily on business customers with growing and diverse broadband
communications needs. These customers include multinational corporations,
financial services companies, media and content providers, technology companies,
government entities, Internet service providers and communications carriers, as
well as small and medium size businesses. We deliver our services mostly through
our own technologically advanced networks which interconnect primarily with
other third party networks.

         BASIS OF PRESENTATION. Because our historical financial information is
limited, in order to provide a meaningful presentation of our results of
operations, the following discussion and analysis presents the pro forma results
of operations for the three months ended March 31, 2000, as if the companies
acquired had been combined as of the beginning of the period presented.

         AT&T LATIN AMERICA. We were incorporated in October 1999 by AT&T Corp.
The countries in which we may operate under our certificate of incorporation and
the terms of our regional vehicle agreement with AT&T Corp. include the
countries in South America and the Caribbean plus Panama, but excluding Cuba and
Venezuela.

         AT&T DO BRASIL. We acquired our Brazilian subsidiary, Netstream, now
named AT&T do Brasil, in December 1999 from AT&T Corp., which contributed its
entire equity interest in Netstream and $10.0 million in cash to us in exchange
for shares of our Class B common stock. Immediately after the Netstream
acquisition, SL Participacoes contributed $40.0 million in cash to us in
exchange for shares of our Class A common stock that represented a 10% ownership
interest at that time.

         AT&T ARGENTINA. In June 2000, we acquired Keytech LD, now named AT&T
Argentina.

         FIRSTCOM. In August 2000, we completed our merger with FirstCom, which
had operations in Chile, Colombia and Peru. In the merger, the holders of
FirstCom common shares received one share of our Class A common stock in
exchange for each share of FirstCom.

RESULTS OF OPERATIONS

         The following table includes a summary of actual and pro forma results
of operations for the periods indicated below. Pro forma results are presented
to show our results of operations given the effect of the FirstCom merger and
Keytech acquisition as if these transactions had been completed as of the
beginning of the period presented. The pro forma financial information is
presented for informational purposes only and is not necessarily indicative of
the future results of operations or financial position of ATTLA or the results
of operations or financial position of ATTLA that would have been achieved had
the acquisition occurred at the beginning of the period presented.



                                       16
<PAGE>   17


                            AT&T LATIN AMERICA CORP.
                   ACTUAL AND PRO FORMA RESULTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                     ACTUAL              PRO FORMA             ACTUAL
                                                 ----------------     ----------------     ----------------
                                                  FOR THE THREE        FOR THE THREE        FOR THE THREE
                                                  MONTHS ENDED         MONTHS ENDED         MONTHS ENDED
                                                 MARCH 31, 2000       MARCH 31, 2000       MARCH 31, 2001
                                                 ----------------     ----------------     ----------------
                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                        (UNAUDITED)
<S>                                              <C>                  <C>                  <C>
Revenue                                          $      4,364         $     16,255         $      31,670
Cost of revenue                                         6,921               12,436                25,772
Selling, general and administrative
  Expenses                                              4,232               20,920                32,756
Depreciation and amortization                           6,160               17,495                24,699
                                                 ----------------     ----------------     ----------------
                                                      (12,949)             (34,596)              (51,557)
Loss from operations
Interest expense                                           --                8,504                15,851
Other income (expense), net                             1,732                2,371                (5,675)
                                                 ----------------     ----------------     ----------------
Loss before provision for income
  taxes and minority interest                         (11,217)             (40,729)              (73,083)
Provision for income taxes                                 --                   --                    --
Minority interest                                          --                   --                  (115)
                                                 ----------------     ----------------     ----------------
                                                 $    (11,217)        $    (40,729)        $     (72,968)
Net loss
                                                 ================     ================     ================
Basic and diluted net loss per share             $      (0.14)        $      (0.35)        $      (0.63)
                                                 ================     ================     ================
Weighted average shares outstanding                    80,000              116,096               116,296
                                                 ================     ================     ================
</TABLE>

         The following table includes selected pro forma revenue by country and
the pro forma operating loss in dollars and as a percentage of revenue for the
three months ended March 31, 2000 and the actual results by country and actual
operating loss in dollars and as a percentage of revenue for the three months
ended March 31, 2001:
<TABLE>
<CAPTION>

                                                                                          THREE MONTHS ENDED
                                                                                              MARCH 31,
                                                                        -------------------------------------------------------
                                                                            2000            %             2001            %
                                                                         PRO FORMA                       ACTUAL
                                                                        -------------     -------     -------------    --------
                                                                                            (IN THOUSANDS)
                                                                                             (UNAUDITED)

<S>                                                                     <C>                 <C>       <C>                <C>
Revenue:
  Argentina...................................................          $       142         0.9%      $       992        3.1%
  Brazil......................................................                4,363        26.8%           11,240       35.5%
  Chile.......................................................                6,645        40.9%            9,410       29.7%
  Colombia....................................................                2,208        13.6%            2,915        9.2%
  Peru........................................................                2,897        17.8%            7,113       22.5%
                                                                        -------------     -------     -------------    --------
            Total revenue.....................................               16,255       100.0%           31,670      100.0%
Cost of revenue...............................................               12,436        76.5%           25,772       81.4%
Selling, general and administrative expenses..................               20,920       128.7%           32,756      103.4%
Depreciation and amortization.................................               17,495       107.6%           24,699      77..9%
                                                                        -------------     -------     -------------    --------


            Total operating loss..............................          $   (34,596)      (212.8%)    $   (51,557)     (162.7%)
                                                                        =============     =======     =============    ========

</TABLE>

                                       17
<PAGE>   18


         ACTUAL THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO PRO FORMA THREE
         MONTHS ENDED MARCH 31, 2000

<TABLE>
<CAPTION>

                                                         THREE MONTHS ENDED                     CHANGE
                                                             MARCH 31,
                                                   -------------------------------    ----------------------------
                                                       2000             2001                $              %
                                                   -------------    --------------    --------------   -----------
                                                    PRO FORMA          ACTUAL
                                                                            (UNAUDITED)

<S>                                                <C>              <C>               <C>                 <C>
   PRO FORMA REVENUE
     Data-internet services................        $      9,527     $     18,459      $      8,932        93.8%
     Voice services........................               6,728           13,211             6,483        96.4%
                                                   -------------    --------------    --------------
            Total revenue..................        $     16,255     $     31,670      $     15,415        94.8%
                                                   =============    ==============    ==============
</TABLE>

         REVENUE. Revenue for the three months ended March 31, 2001 was $31.7
million, compared to pro forma revenue of $16.3 million for the same period in
2000, representing an increase of $15.4 million or 94.8%. This increase in
revenue was mainly generated in Brazil and Peru, which combined accounted for
$11.1 million or 71.9% of the total revenue increase. Revenue increases in
Brazil and Peru resulted from increases in customers, ports in service and
buildings connected which in turn reflected both up-selling of services to
existing customers and additions of new customers.

         Our data-Internet services segment grew from a pro forma $9.5 million
during the three months ended March 31, 2000, to $18.5 million for the same
period in 2001, representing an increase of $8.9 million or 93.8%. The increase
in our data-Internet services was mainly due to increased demand for bandwidth
from our existing business customers and to an increase in our customer base.

         Data-Internet services accounted for 58.3% of our revenue in 2001. We
anticipate that over the long-term, data-Internet services revenue will continue
to represent a majority of total revenue.

         Revenue from voice services grew from pro forma $6.7 million during the
three months ended March 31, 2000, to $13.2 million for the same period in 2001,
representing an increase of $6.5 million or 96.4%. The increase in our
voice-related revenue was mainly due to the increase in our customer base as
well as an increase in total minutes sold.

         COST OF REVENUE. Cost of revenue was $25.8 million for the three months
ended March 31, 2001, compared to pro forma cost of revenue of $12.4 million for
the same period in 2000, representing an increase of $13.3 million or 107.2%.
Cost of revenue consist of leased line costs, maintenance costs, and network and
operating system costs, including labor and other direct costs. We expect cost
of revenue to continue to increase in absolute terms as we continue to add
capacity to our networks and build or lease capacity on additional networks.
However, we expect to continue to increase our service offerings over our
existing network capacity and to obtain better pricing from third party network
providers, resulting in gross margin improvement for the remainder of 2001.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses were $32.8 million during the three months ended March
31, 2001, compared to pro forma selling, general and administrative expenses of
$20.9 million for the same period in 2000, representing an increase of $11.8
million or 56.7%. The increase in selling, general and administrative expenses
resulted primarily from an increase in headcount and higher marketing and
advertising expenses. We anticipate that selling, general and administrative
expenses will continue to increase in absolute terms in future periods to the
extent that we continue to experience growth and to expand our service
offerings. However, we expect that selling, general and administrative expenses
as a percentage of revenue will continue to decrease as we continue to manage
our growth. Selling, general and administrative expenses are comprised primarily
of compensation, professional fees, travel expenses, marketing, office space and
indirect labor expenses.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
was $24.7 million during the three months ended March 31, 2001, compared to pro
forma depreciation and amortization of $17.5 million for the same period in
2000, representing an increase of $7.2 million or 41.2%. The increase in
depreciation



                                       18
<PAGE>   19
and amortization expense was due mainly to the increase in capital expenditures
for the build out of our networks over the year. Depreciation and amortization
expense includes amortization of goodwill and other intangible assets related to
the FirstCom merger, and the acquisitions of Netstream and Keytech. We expect
that depreciation and amortization expense will continue to increase as we
continue to invest in the installation and expansion of our networks.

         INTEREST EXPENSE. Interest expense was $15.9 million during the three
months ended March 31, 2001, compared to pro forma interest expense of $8.5
million during the same period in 2000, representing an increase of $7.3 million
or 86.4%. This increase in interest expense was due mainly to the increase in
interest bearing debt over the period. Interest expense is mainly comprised of
dividends relating to our mandatorily redeemable 15% Series B Preferred Stock
and interest expense related to our credit facilities provided by AT&T Corp., as
well as notes payable for equipment and other bank loans.

         NET LOSS. Net loss was $72.9 million during the three months ended
March 31, 2001, compared to pro forma net loss of $40.7 million for the same
period in 2000, representing an increase of $32.2 million or 44.2%. We expect to
continue to incur net losses in the next several years, because the total of our
operating expenses, interest expense and non-cash expenses (primarily
depreciation and amortization) will continue to exceed our revenues.

LIQUIDITY AND CAPITAL RESOURCES

         Our primary liquidity needs are for working capital, capital
expenditures and debt service. Our primary sources of liquidity are credit
facilities from our major stockholder, revenue and various financing
arrangements with equipment vendors and from local Latin American credit
markets. The unaudited consolidated financial statements have been prepared on a
basis that contemplates the realization of assets and the satisfaction of
liabilities and commitments in the normal course of business.

         Our business is capital intensive and, as such, has required and will
continue to require substantial capital investment. We are building a high
capacity network in the countries in which we operate and are primarily focused
on data-Internet services, the fastest growing segment of the communications
market. This strategy initially increases our level of capital expenditures and
operating losses and requires us to make a substantial portion of our capital
investments before we realize significant revenue from them. These capital
expenditures, together with the associated initial operating expenses, will
continue to result in negative cash flow unless and until we are able to
establish an adequate customer base. After the initial planned build-out of our
networks, we expect our capital expenditures will become tightly related to
near-term revenue growth. We believe that this long-term strategy will enhance
our financial performance by increasing the capacity of, and traffic flow over,
our networks.

         We have incurred net losses of approximately $209.4 million from the
period from inception (October 13, 1999) through March 31, 2001, and at March
31, 2001 we had a working capital deficit of $191.0 million. We expect to
continue incurring operating losses and generate negative cash flows from
operations as we expand our existing communications networks and develop new
networks and services.

CAPITAL USES

         During the three months ended March 31, 2001, our net cash decreased by
$0.7 million. The decrease in cash reflected cash used in operating activities
of $92.8 million, offset by cash provided by financing activities of $97.1
million. Our uses of cash in operations were mainly the result of our net loss
of $72.9 million during the three months ended March 31, 2001 and the increase
in our working capital deficit, offset by non-cash activities like depreciation
and amortization and preferred stock accretion.

         We expect to continue to make capital expenditures during 2001 and
thereafter relating to our existing and planned network development and
operations. These expenditures may include the purchase and installation of
fiber optic cable and electronic equipment, including switches, routers, servers
and other data transmission equipment, to expand existing networks and develop



                                       19
<PAGE>   20

new networks, including the connection of new buildings; and developing and
implementing our integrated regional information technology platform. During
2001, we expect that capital expenditures will range from $200.0 million to
$220.0 million. As of March 31, 2001 we have invested approximately $71.0
million.

         In addition, we expect to use capital resources to fund operating
losses and working capital. We also expect interest expense to increase in the
near term as a result of increased amounts outstanding under our facilities from
AT&T Corp. and expected usage of our planned equipment vendor financing.

         In August 2000, we entered into a capacity purchase agreement with
Global Crossing Bandwidth, Inc., which was amended in late March 2001. The
agreement with Global Crossing provides for the acquisition of indefeasible
rights of use to high-speed transmission capacity connecting each of the cities
of Sao Paulo, Buenos Aires, Santiago and Lima to our point of presence in the
United States, effective for fifteen years at an aggregate cost of $22.0 million
payable as each link is activated. As of March 31, 2001, approximately $17.2
million had been paid. Additionally, there is an initial annual maintenance cost
of approximately $1.1 million, subject to escalation at 3% per year, compounded
annually.

         At March 31, 2001, AT&T Argentina had commitments for capital
expenditures relating to network construction and equipment of approximately
$50.0 million under multi-year contracts.

CAPITAL RESOURCES

         As of March 31, 2001 we had cash and cash equivalents of $14.2 million.
As of March 31, 2001 our $100.0 million credit facility from AT&T Corp. was
fully drawn, and we had $32.9 million available under our $200.0 million
subordinated credit facility from AT&T Corp. Advances from these credit
facilities have been used for capital expenditures, operations and working
capital. As of May 14, 2001, $9.6 million was available under our subordinated
credit facility with AT&T Corp. Interest on the $100.0 million facility is
payable quarterly at a rate of LIBOR plus 3.75%. AT&T Corp. has permitted us to
defer certain interest payment on this credit facility until the end of this
year. For the $200.0 million subordinated credit facility interest is payable at
a rate of LIBOR plus 6.0%. AT&T Corp. has permitted us to defer certain interest
payments on the $200.0 million subordinated credit facility until December 31,
2003. AT&T Corp. recently agreed to provide to us $20.0 million of funding to
support near term working capital needs on terms to be determined.

LOCAL BANK FACILITIES


         AT&T do Brasil is party to several local bank facilities providing for
aggregate borrowings of $30.3 million. At March 31, 2001, there was an aggregate
of $26.5 million outstanding under these facilities. Borrowings under these
facilities bear interest at a fixed rates ranging from 7.3% to 12.9% per annum
and variable rates based upon LIBOR plus a margin ranging from 0.4% to 1.8%.

         AT&T Colombia is party to several local bank facilities providing for
aggregate borrowings of $10.9 million. At March 31, 2001, there was an aggregate
of $8.4 million outstanding under these facilities. Borrowings under these
facilities bear interest at a fixed rates ranging from 11.0% to 18.2% per annum
and variable rates based on the Colombian 90 day DTF (Deposito Termino Fijo)
plus a margin ranging from 3.0% to 8.0%. The average DTF during the three months
ended March 31, 2001 was 13.3%.

         AT&T Peru is party to several local bank facilities providing for
aggregate borrowings of $17.6 million. At March 31, 2001, there was an aggregate
of $1.8 million outstanding under these facilities. Borrowings under these
facilities bear interest at a fixed and variable rates ranging from 8.0% to
10.3% per annum.

         AT&T Argentina and AT&T Chile are each party to several local bank
facilities providing for aggregatge borrowings of $1.0 million. At March 31,
2001, there was an aggregate of $0.9 million outstanding under these facilities
bearing interest at various interest rates.

         EQUIPMENT VENDOR FINANCING COMMITMENTS. During March 2001, we received
commitment letters from our major equipment vendors, Cisco Systems Inc., Lucent
Technologies Inc. and Nortel Networks Ltd. to provide an initial tranche of
approximately $300.0 million under a secured long-term floating-rate credit
facility. The facility will finance our purchases of electronic equipment and
related services, software and integration. We expect to close the facility in



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the third quarter of 2001. The vendors' commitments and the closing of the
facility are subject to customary conditions, including completion of the
vendors' due diligence on our operations and business plans, effectiveness of
our licenses and permits, regulatory approvals and the absence of material
adverse changes. The facility will be secured by a first priority security
interest in favor of the lenders over most of our material assets, including the
shares of capital stock we own in our operating subsidiaries.

LIQUIDITY ASSESSMENT

         We estimate capital requirements of approximately $510.0 million from
the beginning of 2001 through the first half of 2002. Our capital requirements
will be utilized to develop and expand communications networks and services and
fund working capital needs, operating losses and debt service obligations. We
expect that capital expenditures and debt service obligations will increase in
the future in connection with these capital requirements. We expect that our
needs for external funding to implement our growth strategy will continue
through 2004.

       Our cash needs in the next several years will be affected by several
factors, including, but not limited to:

         o  the amount of cash expected to be used in our operations;

         o  our ability to increase revenue;

         o  the level of competitive pressure on the pricing of our services;

         o  our ability to manage and contain costs associated with the expected
            growth;

         o  whether we change our plans for building and expanding our networks;
            and

         o  whether we use cash, issue common stock or increase our debt to
            complete acquisitions and ventures beyond those currently
            anticipated.

        We expect to fund our 2001 capital requirements with borrowing capacity
under our subordinated credit facility with AT&T Corp., anticipated proceeds
from our planned equipment vendor financing and other financial support from
AT&T Corp., as necessary. We cannot assure that we will be able to consummate
these proposed transactions or otherwise obtain the anticipated cash needed to
fund our business plan, or obtain such funding on a timely basis, on acceptable
terms and conditions or at all. Our inability to consummate one or more of these
proposed transactions or otherwise to obtain the anticipated cash needed to fund
our business plan would affect our time to market and our ability to carry out
our growth strategy and could materially adversely affect our results of
operations.

SEASONALITY

         To date we have not experienced significant seasonality in our services
offerings.

IMPACT OF INFLATION

         Inflation in the countries in which we operate may affect our business
through increased labor costs and increases in the cost of third-party
communications capacity and other third-party services. We have not experienced
significant increases in these costs to date. In addition to the effect of
inflation, competition for qualified personnel could increase labor costs for us
in the future. Our international operations may, at times in the future, expose
our business to high inflation in certain foreign countries. We generate all of
our revenue from international operations that are susceptible to currency
fluctuations. The likelihood and extent of currency depreciation in Latin
America, and deteriorating economic conditions in Latin American countries and
the resulting impact on our results of operations, financial position and cash
flows cannot now be determined.

         Our customer contracts in Brazil provide for payment in local currency
and are generally indexed to various inflation indicators specific to Brazil.
During the three months ended March 31, 2001, our Brazilian operations were
negatively affected by a currency depreciation of approximately 10.6%.



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<PAGE>   22

            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Our operations are exposed to market risks principally from
fluctuations in foreign currency exchange rates and interest rates. We seek to
minimize these risks through our regular operating and financing activities and
when considered appropriate, through the use of derivative financial
instruments. Our policy is to not use financial instruments for trading or other
speculative purposes.

         EXPOSURE TO FOREIGN CURRENCY EXCHANGE RATES. Our primary foreign
currency exchange risk relates to our operations in Latin America, which operate
in currencies other than U.S. Dollars. Management continue to monitor such items
to determine if any actions, such as the issuance of additional foreign currency
denominated debt or other financial instruments, would be warranted to reduce
such risk. During the three months ended March 31, 2001, Brazil's currency
deteriorated in value against the U.S. dollar by approximately 10.6%, resulting
in lower revenues and expenses in our Brazilian operations when translated into
our reporting U.S. dollar currency.

         At March 31, 2001, we had foreign currency forward contracts which
hedge certain activities with notional amounts of $164.9 million, maturing in
various dates through October 2002. The fair value of these contracts was $176.2
million at March 31, 2001. Based upon a 10% strengthening of the U.S. dollar,
the fair value of these contracts would have resulted in additional unrealized
losses of $17.6 million. Because these contracts are entered into for hedging
purposes, we believe that these losses would be largely offset by gains on the
underlying firmly committed or anticipated transactions. For purposes of this
calculation, we have assumed that the maturity of these contracts are the same
and the effect of the U.S. dollar strengthening would be the same for each
contract.

         Management considers its operations in foreign subsidiaries and
affiliates to be long-term in nature. Accordingly, we do not typically hedge
foreign currency exchange rate risk, except for fixed liabilities denominated in
a currency other than the functional currency of a given country operation.

         EXPOSURE TO INTEREST RATES. At March 31, 2001, our long-term debt had a
carrying value of $381.9 million. Based upon a hypothetical 10% decrease or
increase in the period end market interest rate, the fair value of this
liability would increase or decrease by approximately $38.2 million. This
hypothetical amount is determined by considering the impact of the hypothetical
interest rates on our existing debt. This analysis does not consider the effects
of the changes in the level of overall economic activity that could exist in
such environments.

         Currently, we do not use interest rate swaps to fix the interest cost
over the short term. We will continue to monitor our exposure to interest rates
to determine if any actions, such as the interest rates swaps agreements would
be warranted to reduce our interest rate risk.



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                                LEGAL PROCEEDINGS

         In the normal course of business, we are subject to proceedings,
lawsuits and other claims. These matters are subject to many uncertainties and
outcomes that are not predictable with assurance. Consequently, we are unable to
ascertain the ultimate aggregate amount of monetary liability or financial
impact with respect to these matters at March 31, 2001. While these matters
could affect operating results of any one quarter when resolved in future
periods, it is management's opinion that after final disposition, any monetary
liability or financial impact to us would not be material to our annual
consolidated financial position or results of operations.

                        EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         10.1     Promissory Note, dated as of January 26, 2001, by Patricio E.
                  Northland as borrower.

         (b) Reports on Form 8-K

         None.



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                                   SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act, as
amended, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Coral Gables,
Florida on May 15, 2001.

                                   AT&T Latin America Corp.
                                   By: /s/ NELSON A. MURPHY
                                       ----------------------------------------
                                   Name: Nelson A. Murphy
                                   Title: Chief Financial Officer
                                   (Principal Financial Officer)


                                   By: /s/ LOURDES Z. MENESES
                                       ----------------------------------------
                                   Name: Lourdes Z.Meneses
                                   Title: Corporate Controller
                                   (Principal Accounting Officer)




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