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


                                  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 September 30, 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 November 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>
                                      INDEX

<TABLE>
<CAPTION>
                                                                                           PAGE
                                                                                           ----
<S>                                                                                        <C>
Consolidated Balance Sheets as of September 30, 2001 (Unaudited) and
  December 31, 2000.................................................................         3

Unaudited Consolidated Statements of Operations for the Three and Nine
  Months Ended September 30, 2001 and 2000..........................................         4

Unaudited Consolidated Statement of Changes in Stockholders' Equity
  for the Nine Months Ended September 30, 2001......................................         5

Unaudited Consolidated Statements of Cash Flows for the Nine
  Months Ended September 30, 2001 and 2000..........................................         6

Notes to Consolidated Financial Statements (Unaudited)..............................      7 - 17

Management's Discussions and Analysis of Financial Condition and
  Results of Operations.............................................................     18 - 26

Quantitative and Qualitative Disclosure about Market Risk...........................        27

Legal Proceedings...................................................................        27

Exhibits and Reports on Form 8-K....................................................        27

Signatures..........................................................................        28
</TABLE>



                                       2
<PAGE>

                            AT&T LATIN AMERICA CORP.
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                   SEPTEMBER 30,        DECEMBER 31,
                                                                       2001                 2000
                                                                   -------------        ------------
                                                                    (UNAUDITED)
<S>                                                                 <C>                 <C>
                        ASSETS                                              (IN THOUSANDS)

Current assets:
  Cash and cash equivalents ................................        $    19,325         $    14,905
  Accounts receivable, net .................................             37,941              15,934
  Recoverable taxes ........................................             18,215              10,088
  Prepaid expenses and other current assets ................             33,340              29,945
                                                                    -----------         -----------

         Total current assets ..............................            108,821              70,872

Property and equipment, net ................................            434,287             339,470
Goodwill and other intangible assets, net ..................            767,360             854,530
Other assets ...............................................             54,404              33,376
                                                                    -----------         -----------

         Total assets ......................................        $ 1,364,872         $ 1,298,248
                                                                    ===========         ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current maturities of debt ...............................        $   383,471         $   111,712
  Accounts payable and accrued expenses ....................            102,080             106,156
  Other current liabilities ................................             23,020               9,050
                                                                    -----------         -----------

         Total current liabilities .........................            508,571             226,918

Long-term debt .............................................            173,767              98,242
Other liabilities ..........................................              4,957               8,196
Mandatorily Redeemable 15% Series B Preferred Stock ........            207,626             186,205
                                                                    -----------         -----------

         Total liabilities .................................            894,921             519,561
                                                                    -----------         -----------

Commitments and contingencies (Note 9) .....................                 --                  --
                                                                    -----------         -----------

Stockholders' equity:
  Common stock .............................................                 11                  11
  Additional paid in capital ...............................            915,224             915,035
  Accumulated deficit ......................................           (362,175)           (136,456)
  Accumulated other comprehensive (loss) income ............            (73,356)                808
  Stockholder loan .........................................             (9,753)               (711)
                                                                    -----------         -----------

         Total stockholders' equity ........................            469,951             778,687
                                                                    -----------         -----------
         Total liabilities and stockholders' equity ........        $ 1,364,872         $ 1,298,248
                                                                    ===========         ===========
</TABLE>


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


                                        3
<PAGE>
                            AT&T LATIN AMERICA CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                           THREE MONTHS ENDED           NINE MONTHS ENDED
                                                              SEPTEMBER 30,                SEPTEMBER 30,
                                                        ------------------------      -----------------------
                                                          2001            2000          2001           2000
                                                        ---------      ---------      ---------      --------
                                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                     <C>            <C>            <C>            <C>
Revenue:
  Data-internet services ..........................     $  22,367      $  10,228      $  61,323      $ 20,226
  Voice services ..................................        16,893          4,568         43,254         5,079
                                                        ---------      ---------      ---------      --------
         Total revenue ............................        39,260         14,796        104,577        25,305

Cost of revenue ...................................        32,376         16,090         86,518        28,447
Selling, general and administrative expenses ......        31,948         15,833         98,683        23,994
Depreciation and amortization .....................        25,241          9,796         74,696        21,939
                                                        ---------      ---------      ---------      --------
         Loss from operations .....................        50,305         26,923        155,320        49,075

Interest expense ..................................        21,501            516         56,217           516
Interest income ...................................           109            792            872         2,495
Other expense (income), net .......................         8,172          1,065         15,492         1,238
                                                        ---------      ---------      ---------      --------
Loss before provision for income taxes and minority
  interest ........................................        79,869         27,712        226,157        48,334
Provision for income taxes ........................            --             --             --            --
Minority interest .................................          (169)           (84)          (438)          (84)
                                                        ---------      ---------      ---------      --------
         Net loss .................................     $  79,700      $ 27,628       $ 225,719      $ 48,250
                                                        =========      =========      =========      ========
Basic and diluted net loss per common share .......     $    0.69      $    0.29      $    1.94      $   0.57
                                                        =========      =========      =========      ========
Weighted average common shares outstanding ........       116,296         94,299        116,296        84,861
                                                        =========      =========      =========      ========
</TABLE>

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


                                        4

<PAGE>
                            AT&T LATIN AMERICA CORP.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                            OTHER
                                        COMMON STOCK          ADDITIONAL                 COMPREHENSIVE                    TOTAL
                                   -----------------------      PAID IN     ACCUMULATED      INCOME      STOCKHOLDER   STOCKHOLDERS'
                                     STOCK         AMOUNT       CAPITAL       DEFICIT        (LOSS)          LOAN         EQUITY
                                   ---------     ---------    ----------    ----------   -------------   -----------   ------------
<S>                                <C>           <C>          <C>           <C>          <C>             <C>           <C>
Balance December 31, 2000 ....       116,296     $      11     $ 915,035     $(136,456)     $     808      $    (711)     $ 778,687

Net loss .....................            --            --            --      (225,719)            --             --       (225,719)

Foreign currency translation
  adjustments ................            --            --            --            --        (74,037)            --        (74,037)

Net unrealized losses on
  derivative instruments .....            --            --            --            --           (127)            --           (127)

Stockholder loan .............            --            --            --            --             --         (9,042)        (9,042)

Other issuance of stock
  options ....................            --            --           189            --             --             --            189
                                   ---------     ---------     ---------     ---------      ---------      ---------      ---------

Balance September 30, 2001 ...       116,296     $      11     $ 915,224     $(362,175)     $ (73,356)     $  (9,753)     $ 469,951
                                   =========     =========     =========     =========      =========      =========      =========
</TABLE>


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


                                        5
<PAGE>
                            AT&T LATIN AMERICA CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                          September 30,
                                                                                    --------------------------
                                                                                      2001              2000
                                                                                    ---------        ---------
                                                                                           (In thousands)
<S>                                                                                 <C>              <C>
Cash flows from operating activities:
   Net loss                                                                         $(225,719)       $ (48,250)
     Adjustment to reconcile net loss to net cash
       used in operating activities:
       Depreciation and amortization                                                   74,696           21,939
       Unrealized foreign exchange loss and translation adjustment                     59,927            2,045
       Other issuance of stock options                                                    189               --
       Allowance for bad debts                                                          4,383               58
       Preferred stock accretion                                                       21,421               --
       Changes in assets and liabilities net of effect of acquisitions:
        Accounts receivable                                                           (26,390)          (6,638)
        Recoverable taxes                                                              (8,127)            (741)
        Prepaid and other current assets                                               (3,395)          (1,563)
        Other assets                                                                  (26,709)
        Accounts payable and accrued expenses                                          (4,076)          10,709
        Other liabilities                                                               9,107           19,971
                                                                                    ---------        ---------
Net cash used in operating activities                                                (124,693)          (2,470)
                                                                                    ---------        ---------

Cash flows from investing activities:
   Purchase of property and equipment                                                (115,838)         (69,182)
   Investment in short-term securities                                                     --           27,032
   Cash (paid for) acquired from acquisitions, including acquisition expenses          (8,252)          15,032
                                                                                    ---------        ---------
Net cash used in investing activities                                                (124,090)         (27,118)
                                                                                    ---------        ---------

Cash flows from financing:
   Proceeds from credit facilities and demand notes                                   242,600               --
   (Repayments) proceeds on notes payable for equipment                                (5,384)             566
   Proceeds (repayments) of other bank facilities, net                                 25,736           23,813
   Proceeds from issuance of common stock                                                  --           20,000
   Proceeds from issuance of preferred shares                                              --          177,107
   Proceeds from exercise of stock options                                                 --              450
   Repayment of senior notes                                                               --         (187,605)
   Loans to shareholder                                                                (9,042)            (440)
                                                                                    ---------        ---------
Net cash provided by financing activities                                             253,910           33,891
                                                                                    ---------        ---------
Net increase in cash and cash equivalents                                               5,127            4,303
Net effect on translation on cash                                                        (707)              --
Cash and cash equivalents, beginning of period                                         14,905           24,223
                                                                                    ---------        ---------
Cash and cash equivalents, end of period                                            $  19,325        $  28,526
                                                                                    =========        =========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:


         During the nine months ended September 30, 2001, we acquired property
and equipment amounting to approximately $84.4 million through vendor financing
arrangements. See Note 5.


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


                                       6
<PAGE>
                            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. ATTLA
is a subsidiary of AT&T Corp., which owns as of September 30, 2001 approximately
62.8% of the outstanding common shares of ATTLA constituting approximately 94.4%
of the voting power of the outstanding common shares of ATTLA. We provide
broadband communications services primarily to major metropolitan business
markets in Argentina, Brazil, Chile, Colombia and Peru. Our communications
services include data, internet, local and long distance voice, web hosting, and
managed network services. We deliver our services mostly through our 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 on a basis that contemplates the
realization of assets and the satisfaction of liabilities and commitments in the
normal course of business and 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 herein presented 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 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 $435.5 million and $135.6 million
as of September 30, 2001 and December 31, 2000, respectively. Our comprehensive
loss for the three and nine months ended September 30, 2001 was $109.3 million
and $299.9 million, respectively. The components of the change in comprehensive
loss for the nine months ended September 30, 2001 are net loss of $225.7
million, foreign currency translation adjustments of $74.0 million and
unrealized losses on derivative instruments of $0.1 million. During the three
and nine months ended September 30, 2001, foreign currency translations
increased our comprehensive loss by $29.4 million and $74.0 million
respectively, due mainly to the devaluation of the Brazilian Real of
approximately 36.6%.

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 $362.2 million from the period from inception
(October 13, 1999) through September 30, 2001. At September 30, 2001 we had a
working capital deficit of $399.8 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 segments 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 flows until we are able to establish an adequate customer base.
After the initial planned build-out of our networks, our capital expenditures
will become more elastic with respect to 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 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


                                       7
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

expect to fund our capital requirements and working capital needs for at least
the next twelve months, with anticipated proceeds from our planned equipment
vendor financing, availability under our local bank facilities, additional
financing initiatives we are exploring and other financial support from AT&T
Corp., as necessary.

         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 at least the next twelve months, there is no assurance that
we will be able to consummate these proposed plans 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 planned equipment vendor financing, obtain funds from local bank
facilities, obtain additional financing initiatives we are exploring or obtain
additional financing from AT&T Corp., or otherwise to obtain the anticipated
cash needed to fund our business plan, would materially affect our ability to
carry out our growth strategy and would materially, adversely affect our
financial condition and results of operations.

NOTE 3 -- INVESTING ACTIVITIES

         In June 2000 we acquired 100% of the equity interests of Keytech LD
S.A., and in August 2000 we completed our merger with FirstCom Corporation in
transactions accounted for as purchases. The aggregate fair value of net assets
acquired in, and the aggregate consideration paid for, these acquisitions, were
as follows:

<TABLE>
<CAPTION>

                                                                                        2000
                                                                                    -------------
                                                                                    (IN THOUSANDS)
         <S>                                                                        <C>
         Fair value of net assets acquired:
         Service contracts and work force acquired...........................       $      26,000
         Accounts receivable.................................................              15,758
         Prepaid and other current assets....................................               8,059
         Property and equipment..............................................             110,557
         Other assets........................................................              15,643
                                                                                    -------------
              Fair value of non-cash assets acquired.........................             176,017
                                                                                    -------------
         Long term debt, including current maturities of debt................             155,954
         Accounts payable and accrued expenses...............................              33,549
         Deferred taxes......................................................               2,436
         Other liabilities...................................................               4,925
         Minority interest...................................................               2,840
                                                                                    -------------
              Fair value of liabilities assumed..............................             199,704
                                                                                    -------------
         Fair value of net liabilities assumed, excluding cash acquired......             (23,687)
         Cash acquired.......................................................              22,557
                                                                                    -------------
         Fair value of net liabilities assumed...............................       $      (1,130)
                                                                                    =============
</TABLE>

         The following is a reconciliation of the purchase prices and costs
associated with the acquisitions over the estimated fair value of net
liabilities assumed which has been allocated to goodwill:

<TABLE>
         <S>                                                                        <C>
         Purchase prices, including transaction costs........................       $     594,266
         Fair value of net liabilities assumed...............................               1,130
                                                                                    -------------
         Amount allocated to goodwill........................................       $     595,396
                                                                                    =============
</TABLE>


                                       8
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


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

<TABLE>
<CAPTION>
                                                                        THREE MONTHS        NINE MONTHS
                                                                           ENDED               ENDED
                                                                        SEPTEMBER 30,      SEPTEMBER 30,
                                                                            2000                2000
                                                                      ----------------    ---------------
                                                                                   (UNAUDITED)
         <S>                                                          <C>                 <C>
         Revenue..............................................        $        24,444     $        61,331
                                                                      ===============     ===============

         Operating loss.......................................        $        41,437     $       101,504
                                                                      ===============     ===============

         Net loss.............................................        $        49,700     $       123,075
                                                                      ===============     ===============

         Basic and diluted loss per common share..............        $          0.43     $          1.06
                                                                      ===============     ===============
</TABLE>


         These pro forma 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 acquisitions actually occurred as of the beginning of
the periods presented.

NOTE 4 -- PROPERTY AND EQUIPMENT, NET

         Property and equipment, net is comprised of the following as of
September 30, 2001 and December 31, 2000, respectively (in thousands):

<TABLE>
<CAPTION>

                                                                                                        ESTIMATED
                                                                                                          USEFUL
                                                                    SEPTEMBER 30,      DECEMBER 31,       LIVES
                                                                         2001              2000         (IN YEARS)
                                                                   ----------------   --------------   ------------
                                                                     (UNAUDITED)
         <S>                                                       <C>                <C>              <C>
         Switching equipment....................................   $     81,201       $     74,384           5
         Transmission equipment.................................        119,585             95,363           7
         Cables.................................................         57,746             37,491          10
         Underground installation...............................         53,053             82,481          25
         Construction in progress...............................         72,238             20,600          --
         Other property and equipment...........................        102,540             48,611        3 to 10
                                                                   ------------       ------------
                                                                        486,363            358,930

         Less: Accumulated depreciation.........................        (52,076)           (19,460)
                                                                   ------------       ------------
                                                                   $    434,287       $    339,470
                                                                   ============       ============
</TABLE>

         Depreciation expense related to the property and equipment was $12.5
million and $37.1 million for the three and nine months ended September 30,
2001, respectively. Other property and equipment includes building, furniture
and fixtures, computer and software equipment, household improvements and other.


                                       9
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


NOTE 5 -- DEBT

         Debt is comprised of the following (in thousands):

<TABLE>
<CAPTION>
                                                                              SEPTEMBER 30,      DECEMBER 31,
                                                                                  2001               2000
                                                                             --------------      -------------
                                                                                (UNAUDITED)
        <S>                                                                  <C>                <C>
        Revolving credit facility, at LIBOR plus 3.75% (8.6% to 9.5%
          at September 30, 2001)........................................     $       100,000    $       100,000
        Subordinated credit facility, at LIBOR plus 6.00% (10.0% to
          12.5% at September 30, 2001)..................................             200,000             40,900
        Demand notes, at 15% fixed rate.................................              83,500                 --
        Interim notes payable for equipment, at interest rates from 12.0%
          to LIBOR plus 5.5%............................................              71,972             31,514
        Notes payable for equipment, at interest rates from 12.0% to
          LIBOR plus 7.0%...............................................              38,588                 --
        Other bank facilities...........................................              63,178             37,540
                                                                             ---------------    ---------------
        Total debt......................................................             557,238            209,954
        Less current maturities.........................................            (383,471)          (111,712)
                                                                             ---------------    ---------------
        Long-term debt..................................................     $       173,767    $        98,242
                                                                             ===============    ===============
</TABLE>

REVOLVING AND SUBORDINATED CREDIT FACILITIES AND DEMAND NOTES (RELATED PARTIES)

         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 September 30, 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
($200.0 million outstanding as of September 30, 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 of our issuances of debt or
equity.

         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 September 30, 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 September 30, 2001, the outstanding
borrowings under this facility bore interest at a weighted average annual rate
of 11.2%. We are entitled to defer interest payment on the $200.0 million
subordinated credit facility until December 31, 2003. We have deferred payment
of accrued interest of approximately $16.4 million under the $100.0 million and
$200.0 million facilities, which have been included as other current liabilities
in the accompanying balance sheet as of September 30, 2001. Deferred payment of
accrued interest on these two facilities is subject to interest accrual at the
same interest rate as the principal under the facilities.

         AT&T Corp. has provided us additional credit of up to $98.0 million
payable on demand upon thirty days' notice. The demand notes bear interest at a
fixed rate of 15.0%. Accrued interest under these demand notes amounted to $0.9
million as of September 30, 2001, which have been included as other current
liabilities in the accompanying balance sheet as of September 30, 2001. As of
September 30, 2001, there was $83.5 million outstanding under these demand
notes.


                                       10
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


INTERIM NOTES PAYABLE FOR EQUIPMENT

        In August 2000, we entered into a short-term vendor financing agreement
providing for up to $30.0 million, and in May 2001 it was increased to up to
$50.0 million. In August 2001, the total amount was reset at $39.0 million. The
facility matures on November 30, 2001. Borrowings under this short-term vendor
financing agreement bear interest at a rate based on LIBOR plus 5.25%. As of
September 30, 2001, there was $35.6 million in outstanding borrowings under
this agreement bearing interest at a weighted average annual rate of 11.9%.

        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 certain outstanding amounts on March 29, 2001,
additional equipment purchases were financed under this vendor financing
agreement on the same payment terms. On June 28, 2001, the outstanding amounts
under this financing agreement were refinanced under three new short-term
financing agreements maturing on December 31, 2001. Borrowings under this
short-term vendor financing agreement bear interest at a fixed rate of 12.0%.
As of September 30, 2001, there was $7.1 million in outstanding borrowings
under this agreement.

         In April 2001, we entered into a short-term vendor financing agreement
providing financing of $3.3 million. Borrowings under this short-term vendor
financing agreement bear interest at a rate based on LIBOR plus 5.25%. Amounts
outstanding under this vendor financing were paid in August 2001.

         In March 2001, we entered into a short-term vendor financing agreement
providing for a maximum financing of $23.9 million. As of September 30, 2001,
there was $23.9 million in outstanding borrowings under this agreement bearing
interest at a fixed annual rate of 12.0%. The facility matures on November 30,
2001.

         In June 2001, we entered into a short-term vendor financing agreement
providing for a maximum financing of $1.8 million maturing on November 30, 2001.
As of September 30, 2001, there was $1.8 million in outstanding borrowings under
this agreement bearing interest at a fixed annual rate of 12.0%.

         During August and September 2001, we entered into various short-term
vendor financing agreements providing an additional financing of $3.5 million
maturing on December 31, 2001. The amounts outstanding under these agreements
bear interest at a fixed rate of 12.0%.

         We have agreed with our vendors that, subject to the closing of our
planned long-term vendor financing, the above short-term vendor financing
agreements (including amounts already paid) will be refinanced by borrowings
under the planned long-term financing. See Note 2.

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 September 30, 2001, there was
approximately $8.5 million outstanding under this vendor financing bearing
interest at a weighted average annual rate of 9.5%. The availability period for
financing under this agreement expired on December 31, 2000.

         In July 2001, we entered into a short-term vendor financing agreement
providing for a maximum financing of $4.0 million maturing on March 2002. As of
September 30, 2001, there was $4.0 million in outstanding borrowings under this
agreement bearing interest at a LIBOR plus 7.0%, or 10.9%.


                                       11
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

         In August and September 2001, we entered into a long-term vendor
financing agreements providing for a maximum financing of $7.3 million maturing
on April 2004. As of September 30, 2001, there was $1.1 million in outstanding
borrowings under these agreements bearing interest at a LIBOR plus 7.0%, or
10.9%.

         In August 2001, we entered into a short-term vendor financing agreement
providing for a maximum financing of $17.9 million maturing on May 2002. As of
September 30, 2001, there was $15.0 million in outstanding borrowings under
these agreements bearing interest at a LIBOR plus 8.0%, or 11.9%.

         In September 2001, we entered into a short-term vendor financing
agreements providing for a maximum financing of $10.0 million, of which $5.0
matures on March 2002 and the remaining $5.0 matures on April 2002. As of
September 30, 2001, there was $10.0 million in outstanding borrowings under
these agreements bearing interest at a fixed rate of 12.8%.

OTHER BANK FACILITIES

         AT&T do Brasil is party to several local bank facilities providing for
borrowings of an aggregate of $40.6 million maturing through February 2004. At
September 30, 2001, there was an aggregate of $38.1 million outstanding under
these facilities. Borrowings under these facilities bear interest at a fixed
rates ranging from 6.3% 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
borrowings of an aggregate of $17.3 million maturing through May 2006. At
September 30, 2001, there was an aggregate of $13.2 million outstanding under
these facilities. Borrowings under these facilities bear interest at a fixed
rates ranging from 13.8% to 17.0% per annum and variable rates based upon
Deposito Tasa Fijo (DTF) plus a margin ranging from 3.0% to 7.0%. The average
rate for the six months Colombian peso interest rate or DTF was 12.5% during the
first nine months of 2001.

         AT&T Peru is party to several local bank facilities providing for
borrowings of an aggregate of $17.9 million. At September 30, 2001, there was an
aggregate of $10.8 million outstanding under these facilities. Borrowings under
these facilities bear interest at a fixed and variable rates ranging from 6.0%
to 12.5% per annum.

         AT&T Argentina and AT&T Chile are each party to several local bank
facilities providing for borrowings of an aggregate of $2.3 million. At
September 30, 2001, there was an aggregate of $1.1 million outstanding under
these facilities bearing interest at fixed interest rates ranging from 9.0% to
27.0%.

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 for our use service marks, including "AT&T" and the
AT&T with a fanciful globe design mark. We may also use the "AT&T" mark as part
of our trade and corporate names so long as at least half of the licensed
services meet service specifications provided by AT&T Corp.

         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. During the three
and nine months ended September 30, 2001, we have recorded approximately $1.6
million and $4.2 million, respectively, related to this service mark license
agreement.

         The initial term of the license agreement ends on August 28, 2005. The
agreement will automatically renew


                                       12
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


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 Facilities and Demand Notes. AT&T Corp and a wholly owned
subsidiary of AT&T Corp. have provided us with credit facilities and demand
notes of up to $398.0 million as of September 30, 2001. 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 Mandatorily
Redeemable 15% Series B Preferred Stock. The shares of Mandatorily 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 Redeemable 15% Series B Preferred Stock at
any time after August 28, 2004 at a redemption price equal to the liquidation
value. As of September 30, 2001, the 15% Series B Preferred Stock has an
aggregate liquidation value of $207.6 million.

         Other. As of September 30, 2001, we included in accounts payable the
amount of $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.

         Stockholder Loan. As of September 30, 2001, we have a receivable of
approximately $9.8 million, including approximately $0.3 million 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 secured by a pledge of 800,000 shares
of ATTLA Class A common stock and bear interest at a fixed annual rate of 5.41%.
The principal amount and all accrued interest are due on March 1, 2010.

NOTE 7 -- CAPITAL STOCK

         We are authorized to issue 460,000,000 shares of capital stock,
consisting of 300,000,000 shares of Class A common stock, par value $0.0001 per
share, 150,000,000 shares of Class B common stock, par value $0.0001 per share,
and 10,000,000 shares of preferred stock, par value $.0001 per share. At
September 30, 2001and December 31, 2001, approximately 43,214,758 shares of
Class A common stock were issued and outstanding. At September 30, 2001 and
December 31, 2000, approximately 73,081,595 shares of Class B common stock were
issued and outstanding. At September 30, 2001 and December 31, 2000,
approximately 100,000 shares of preferred stock were issued and outstanding.

NOTE 8 -- 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 and supporting services (available or being deployed)
allow us to implement different communications applications to support a wide
range of customers' needs. The availability of bandwidth and reliability of the
services allow customers to 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 from us their entire access infrastructure.


                                       13

<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


         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 tables set forth, for the three months and nine months
ended September 30, 2001 and 2000, certain information about segment results of
operations and segment assets (in thousands):

<TABLE>
<CAPTION>


THREE MONTHS ENDED
  SEPTEMBER 30, 2001
  (UNAUDITED)                       ARGENTINA         BRAZIL           CHILE          COLOMBIA           PERU          OTHER (1)
--------------------              -------------    ------------    -------------    -------------    -------------   -------------
<S>                               <C>              <C>             <C>              <C>              <C>             <C>
REVENUE:
  Data-internet services          $      2,007     $     9,776     $      2,904     $     4,096      $      3,584    $         --
  Voice services                         3,942           1,577            5,799              33             5,542              --
                                  ------------     -----------     ------------     -----------      ------------    ------------
TOTAL REVENUE                            5,949          11,353            8,703           4,129             9,126              --
Cost of revenue                          6,518          12,620            6,472           2,015             4,751              --
Selling, general &
  Administrative                         6,533           7,486            3,351           3,302             4,447           6,829
Depreciation and amortization            2,073           6,885            1,594           1,741             3,587           9,361
                                  ------------     -----------     ------------     -----------      ------------    ------------
Operating loss                    $      9,175     $    15,638     $      2,714     $     2,929      $      3,659    $     16,190
                                  ============     ===========     ============     ===========      ============    ============

Total assets                      $    186,701     $   363,818     $     56,043     $    64,418      $    105,260    $    588,632
Capital expenditures              $     11,634     $    19,018     $      1,816     $     7,764      $      3,139    $      8,604

<CAPTION>

THREE MONTHS ENDED
  SEPTEMBER 30, 2000
  (UNAUDITED)                       ARGENTINA        BRAZIL           CHILE           COLOMBIA           PERU           OTHER
--------------------              ------------     -----------     ------------     -----------      ------------    ------------
<S>                               <C>              <C>             <C>              <C>              <C>             <C>
REVENUE:
Data-internet services            $        214     $     6,896     $      1,426      $      817       $       875    $         --
Voice services                              --           1,123            2,018              --             1,427              --
                                  ------------     -----------     ------------     -----------      ------------    ------------
TOTAL REVENUE                              214           8,019            3,444             817             2,302              --
Cost of revenue                          1,926           9,571            2,625             267             1,562             139
Selling, general &
  Administrative                         1,190           7,460            2,061             991             1,888           2,243
Depreciation and amortization              161           6,059              269             324               435           2,548
                                  ------------     -----------     ------------     -----------      ------------    ------------
Operating loss                    $      3,063     $    15,071     $      1,511     $       765      $      1,583    $      4,930
                                   ===========     ===========     ============     ===========      ============    ============

Total assets                      $     48,636     $   385,454     $     41,556     $    42,733      $     80,612    $    570,610
Capital expenditures              $      9,697     $    16,282     $      3,718     $     2,901      $      2,891    $        498
</TABLE>


                                       14
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
  SEPTEMBER 30, 2001
  (UNAUDITED)                        ARGENTINA         BRAZIL           CHILE          COLOMBIA           PERU          OTHER (1)
--------------------               -------------    ------------    -------------    -------------    -------------   -------------
<S>                                <C>              <C>             <C>              <C>              <C>             <C>
REVENUE:
  Data-internet services           $      3,685     $    29,199     $      8,702     $    10,299      $      9,438    $        --
  Voice services                          5,934           4,515           18,372              65            14,368             --
                                   ------------     -----------     ------------     -----------      ------------     ----------
TOTAL REVENUE                             9,619          33,714           27,074          10,364            23,806             --
Cost of revenue                          12,823          38,087           20,092           4,363            11,153             --
Selling, general &
  Administrative                         19,454          24,550           10,457           9,063            13,348          21,811
Depreciation and amortization             7,305          21,728            4,572           4,259             9,857          26,975
                                   ------------     -----------     ------------     -----------      ------------     -----------
Operating loss                     $     29,963     $    50,651     $      8,047     $     7,321      $     10,552     $    48,786
                                   ============     ===========     ============     ===========      ============     ===========

Total assets                       $    186,701     $   363,818     $     56,043     $    64,418      $    105,260     $   588,632
Capital expenditures (2)           $     75,410     $    62,134     $      9,791     $    19,391      $     19,838     $    13,710

<CAPTION>

NINE MONTHS ENDED
  SEPTEMBER 30, 2000
  (UNAUDITED)                        ARGENTINA         BRAZIL           CHILE          COLOMBIA           PERU          OTHER (1)
--------------------               -------------    ------------    -------------    -------------    -------------   -------------
<S>                                <C>              <C>             <C>              <C>              <C>             <C>
REVENUE:
Data-internet services             $        214     $    16,894     $      1,426      $      817       $       875    $         --
Voice services                               --           1,634            2,018              --             1,427              --
                                   ------------     -----------     ------------     -----------      ------------    ------------
TOTAL REVENUE                               214          18,528            3,444             817             2,302              --
Cost of revenue                           1,926          21,928            2,625             267             1,562             139
Selling, general &
  Administrative                          1,190          15,370            2,061             991             1,888           2,494
Depreciation and amortization               161          18,202              269             324               435           2,548
                                   ------------     -----------     ------------     -----------      ------------    ------------
Operating loss                     $      3,063     $    36,972     $      1,511     $       765      $      1,583    $      5,181
                                   ============     ===========     ============     ===========      ============    ============

Total assets                       $     48,636     $   385,454     $     41,556     $    42,733      $     80,612    $    570,610
Capital expenditures               $      9,697     $    49,477     $      3,718     $     2,901      $      2,891    $        498
</TABLE>

         (1) Consists primarily of corporate operations.
         (2) Includes property and equipment acquired through vendor financing
             arrangements of approximately $84.4 million during the nine months
             ended September 30, 2001.

         There are no significant transfers between geographic areas and
segments. Operating loss consists of revenue less cost of revenue, selling,
general and administrative expenses and depreciation and amortization. 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 9 -- 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 September 30, 2001, approximately $18.8
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.


                                       15
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)


         At September 30, 2001, AT&T Argentina had commitments for capital
expenditures relating to network construction and equipment of approximately
$24.0 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 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 10 -- RECENT PRONOUNCEMENTS

         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. If a derivative is a foreign-currency hedge, changes in the fair
value of the derivative are recognized in earnings and offset by the transaction
gain or loss on the foreign-currency denominated asset or liability being
hedged. The ineffective portion of the derivative's change in fair value is
immediately recognized in earnings.

         We have recorded an asset of approximately $17.6 million (which is
included in prepaid expenses and other current assets in the accompanying
balance sheet) representing the unrealized gains on our forward foreign currency
contracts as of September 30, 2001. We also have recorded a liability of
approximately $1.2 million (which is included in other current liabilities in
the accompanying balance sheet) representing unrealized losses on certain of our
forward foreign currency contracts as of September 30, 2001. The Company has not
made any changes to its hedge related risk management policies as a result of
adopting SFAS No. 133.

         As of September 30, 2001, the Company has no fair value hedges. Net
changes in fair value of cash flows hedges resulted in net reduction to other
comprehensive loss of $0.1 million for the three and nine months ended September
30, 2001. Net changes in fair value of foreign-currency hedges resulted in net
unrealized gains of $13.8 million for the three months ended September 30, 2001,
and $19.5 million for the nine months ended September 30, 2001.

         In July 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business Combinations
("SFAS 141") and No. 142, Goodwill and Other Intangible Assets ("SFAS 142").
SFAS 141 requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. Under SFAS 142, goodwill and intangible
assets with indefinite lives are no longer amortized but are reviewed annually
(or more frequently if impairment indicators arise) for impairment. Separable
intangible assets that are not deemed to have indefinite lives will continue to
be amortized over their useful lives (but with no


                                       16
<PAGE>
                            AT&T LATIN AMERICA CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                                   (UNAUDITED)

maximum life). The provisions of SFAS 142 apply to goodwill and intangible
assets acquired after June 30, 2001. With respect to goodwill and intangible
assets acquired prior to July 1, 2001, we are required to adopt SFAS 142
effective January 1, 2002. We expect that this standard may likely have a
significant impact on our results. We are assessing the impact of the standard
on other indefinite lived assets and the total impact, including adoption
impairment impacts, if any, of such standard on our results of operations.

         In August 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Asset Retirement Obligations." This standard requires
that obligations associated with the retirement of tangible long-lived assets be
recorded as liabilities when those obligations are incurred, with the amount of
the liability initially measured at fair value. Upon initially recognizing a
liability for an asset retirement obligation, an entity must capitalize the cost
by recognizing an increase in the carrying amount of the related long-lived
asset. Over time, this liability is accreted to its present value, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. SFAS No. 143 is
effective for financial statements issued for fiscal years beginning after June
15, 2002, which for us means the standard will be adopted on January 1, 2003. We
do not expect that the adoption of this statement will have a material impact on
our results of operations, financial position or cash flows.

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." SFAS No. 144 applies to all long-lived assets, including
discontinued operations, and consequently amends APB Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." Based on SFAS No. 121, SFAS No. 144 develops one accounting model
for long-lived assets that are to be disposed of by sale, as well as addresses
the principal implementation issues. SFAS No. 144 requires that long-lived
assets that are to be disposed of by sale be measured at the lower of book value
or fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of
discontinued operations to include all components of an entity with operations
that (1) can be distinguished from the rest of the entity and (2) will be
eliminated from the ongoing operations of the entity in a disposal transaction.
SFAS No. 144 is effective for financial statements issued for fiscal years
beginning after December 15, 2001, which for us means the standard will be
adopted on January 1, 2002. We do not expect that the adoption of SFAS No. 144
will have a material impact on our results of operations, financial position or
cash flows.


                                       17
<PAGE>

                           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:

         -        expectations regarding network expansion and our amount of
                  capital expenditures;

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

         -        expectations about sources of revenues; and

         -        future financial performance.

          In addition to matters that are described in this quarterly report on
Form 10-Q 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:

         -        inaccurate forecasts of customer or market demand;

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

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

         -        highly competitive market conditions;

         -        access to financing on acceptable terms and conditions;

         -        loss of one or more important customers;

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

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

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

         -        volatility of our stock price;

         -        currency fluctuations; and

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


                                       18
<PAGE>


         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 primarily 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 and nine months ended September 30, 2000, as
if the companies acquired had been combined as of the beginning of the periods
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 pro forma results of
operations for the three months and nine months ended September 30, 2000, and
actual results of operations for the same periods in 2001. Pro forma results are
presented to show our results of operations giving effect to the FirstCom merger
and Keytech acquisition as if these transactions had been completed as of the
beginning of the periods 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 periods presented.


                                       19
<PAGE>
                            AT&T LATIN AMERICA CORP.
                   ACTUAL AND PRO FORMA RESULTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                     THREE MONTHS ENDED            NINE MONTHS ENDED
                                                        SEPTEMBER 30,                 SEPTEMBER 30,
                                                  ------------------------      ------------------------
                                                    2001           2000           2001           2000
                                                  ---------      ---------      ---------      ---------
                                                   ACTUAL        PRO FORMA       ACTUAL        PRO FORMA
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                       (UNAUDITED)
<S>                                               <C>            <C>            <C>            <C>
Revenue .....................................     $  39,260      $  24,444      $ 104,577      $  61,331
Cost of revenue .............................        32,376         20,999         86,518         45,710
Selling, general and administrative
  expenses ..................................        31,948         27,065         98,683         64,106
Depreciation and amortization ...............        25,241         17,817         74,696         53,019
                                                  ---------      ---------      ---------      ---------
     Loss from operations ...................        50,305         41,437        155,320        101,504
Interest expense, net .......................        21,392          7,284         55,345         21,521
Other expense (income), net .................         8,172          1,165         15,492            369
                                                  ---------      ---------      ---------      ---------
     Loss before provision for income
        taxes and minority interest .........        79,869         49,886        226,157        123,394
Provision for income taxes ..................            --             --             --             --
Minority interest ...........................          (169)          (186)          (438)          (319)
                                                  ---------      ---------      ---------      ---------
Net loss ...................................      $  79,700      $  49,700      $ 225,719      $ 123,075
                                                  =========      =========      =========      =========
Basic and diluted net loss per share ........     $    0.69      $    0.43      $    1.94      $    1.06
                                                  =========      =========      =========      =========
Weighted average shares outstanding .........       116,296        116,096        116,296        116,096
                                                  =========      =========      =========      =========
</TABLE>

         The following table includes selected actual revenue and actual
operating loss by country in dollars and as a percentage of revenue for the
three months and nine months ended September 30, 2001 and the pro forma revenue
and the pro forma operating loss by country in dollars and as a percentage of
revenue for the same periods ended September 30, 2000:

<TABLE>
<CAPTION>

                                                THREE MONTHS ENDED                                  NINE MONTHS ENDED
                                                  SEPTEMBER 30,                                       SEPTEMBER 30,
                                  ----------------------------------------------     -----------------------------------------------
                                   2001          %          2000           %           2001          %          2000           %
                                  -------    ---------     -------     ---------     --------    ---------     --------    ---------
                                  ACTUAL                   PRO FORMA                 ACTUAL                    PRO FORMA
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                             (UNAUDITED)
<S>                              <C>        <C>           <C>         <C>           <C>         <C>           <C>         <C>
Revenue:
  Argentina .................    $ 5,949         15.2%    $   223           0.9%    $  9,619          9.2%    $    507          0.8%
  Brazil ....................     11,353         28.9%      8,018          32.8%      33,714         32.2%      18,527         30.2%
  Chile .....................      8,703         22.2%      8,858          36.2%      27,074         25.9%      23,438         38.2%
  Colombia ..................      4,129         10.5%      2,310           9.5%      10,364          9.9%       6,556         10.7%
  Peru ......................      9,126         23.2%      5,035          20.6%      23,806         22.8%      12,303         20.1%
                                 -------    ---------     -------     ---------     --------    ---------     --------    ---------
     Total revenue ..........     39,260        100.0%     24,444         100.0%     104,577        100.0%      61,331        100.0%
Cost of revenue .............     32,376         82.5%     20,999          85.9%      86,518         82.7%      45,710         74.5%
Selling, general and
 administrative expenses ....     31,948         81.4%     27,065         110.7%      98,683         94.3%      64,106        104.5%
Depreciation and amortization     25,241         64.3%     17,817          72.9%      74,696         71.4%      53,019         86.5%
                                 -------    ---------     -------     ---------     --------    ---------     --------    ---------
     Loss from operations ...    $50,305        128.2%    $41,437         169.5%    $155,320        148.5%    $101,504        165.5%
                                 =======    =========     =======     =========     ========    =========     ========    =========
</TABLE>


                                       20
<PAGE>
       ACTUAL THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO PRO FORMA
                      THREE MONTHS ENDED SEPTEMBER 30, 2000

<TABLE>
<CAPTION>

                                                        THREE MONTHS ENDED
                                                            SEPTEMBER 30,                     CHANGE
                                                   -----------------------------      ------------------------
                                                       2001             2000              $              %
                                                   -------------    ------------      -----------     --------
                                                       ACTUAL        PRO FORMA
                                                           (UNAUDITED)
   <S>                                             <C>              <C>               <C>               <C>
   REVENUE
     Data-internet services................        $   22,367       $     14,874      $     7,493       50.4%
     Voice services........................            16,893              9,570            7,323       76.5%
                                                   ----------       ------------      -----------
            Total revenue..................        $   39,260       $     24,444      $    14,816       60.6%
                                                   ==========       ============      ===========
</TABLE>

         Revenue. Revenue for the three months ended September 30, 2001 was
$39.3 million, compared to pro forma revenue of $24.4 million for the same
period in 2000, representing an increase of $14.8 million or 60.6%. This
increase in revenue was mainly generated in Argentina, Brazil and Peru, which
combined accounted for $13.2 million or 88.8% of the total revenue increase.
Revenue increase 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 $14.9 million
during the three months ended September 30, 2000, to $22.4 million for the same
period in 2001, representing an increase of $7.5 million or 50.4%. 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 56.9% of our revenue for the three
months ended September 30, 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 $9.6 million during the
three months ended September 30, 2000, to $16.9 million for the same period in
2001, representing an increase of $7.3 million or 76.5%. 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 $32.4 million for the three months
ended September 30, 2001, compared to pro forma cost of revenue of $21.0 million
for the same period in 2000, representing an increase of $11.4 million or 54.2%.
Cost of revenue consists 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 as well as to obtain better pricing from third party
network providers, resulting in gross margin improvement in future periods.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $31.9 million during the three months ended
September 30, 2001, compared to pro forma selling, general and administrative
expenses of $27.1 million for the same period in 2000, representing an increase
of $4.9 million or 18.0%. The increase in selling, general and administrative
expenses resulted primarily from higher bad debts expense, an increase in
headcount, professional fees and higher marketing and advertising expenses. We
anticipate that selling, general and administrative expenses will likely
continue to increase in absolute terms in future periods to the extent that we
continue to experience growth and to expand our service offerings. We also
anticipate that selling, general and administrative expenses as a percentage of
revenue will decrease in future periods. Selling, general and administrative
expenses are comprised primarily of compensation, professional fees, travel
expenses, marketing, office space and indirect labor expenses.


                                       21
<PAGE>

         Depreciation and Amortization. Depreciation and amortization was $25.2
million during the three months ended September 30, 2001, compared to pro forma
depreciation and amortization of $17.8 million for the same period in 2000,
representing an increase of $7.4 million or 41.7%. The increase in depreciation
and amortization was due mainly to the increase in capital expenditures for the
build out of our networks over the year. Depreciation and amortization include
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 will continue to increase as we continue to invest
in the installation and expansion of our networks.

         Interest Expense. Interest expense, net of interest income, was $21.4
million during the three months ended September 30, 2001, compared to pro forma
interest expense of $7.3 million during the same period in 2000, representing an
increase of $14.1 million or 193.7%. 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 and demand notes provided by AT&T Corp., as well as notes payable for
equipment and other bank loans.

         Other expense (income), net. Other expense (income), net was $8.2
million during the three months ended September 30, 2001. Other expense
(income), net is mainly comprised of remeasurement losses on foreign-currency
transactions of $22.5 million partially offset by gains on foreign-currency
hedges of $19.0 million (realized gains of $5.2 million and unrealized gains of
approximately $13.8 million). We also recorded approximately $2.8 million
related to write-downs of certain lease hold improvements in Brazil.

         Net Loss. Net loss was $79.7 million during the three months ended
September 30, 2001, compared to pro forma net loss of $49.7 million for the same
period in 2000, representing an increase of $30.0 million or 60.4%. 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.


        ACTUAL NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO PRO FORMA
                      NINE MONTHS ENDED SEPTEMBER 30, 2000


<TABLE>
<CAPTION>

                                                         NINE MONTHS ENDED
                                                            SEPTEMBER 30,                       CHANGE
                                                   -------------------------------    ----------------------------
                                                       2001             2000                $              %
                                                   -------------    --------------    --------------   -----------
                                                       ACTUAL          PRO FORMA
                                                            (UNAUDITED)
   <S>                                             <C>              <C>               <C>              <C>
   REVENUE
     Data-internet services................        $     61,323     $     36,638      $     24,685        67.4%
     Voice services........................              43,254           24,693            18,561        75.2%
                                                   ------------     ------------      ------------
            Total revenue..................        $    104,577     $     61,331      $     43,246        70.5%
                                                   ============     ============      ============
</TABLE>

         Revenue. Revenue for the nine months ended September 30, 2001 was
$104.6 million, compared to pro forma revenue of $61.3 million for the same
period in 2000, representing an increase of $43.2 million or 70.5%. This
increase in revenue was mainly generated in Argentina, Brazil and Peru, which
combined accounted for $35.8 million or 82.8% of the total revenue increase.
Revenue increase 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 $36.6 million
during the nine months ended September 30, 2000, to $61.3 million for the same
period in 2001, representing an increase of $24.7 million or 67.4%. 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 58.6% 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.


                                       22
<PAGE>

         Revenue from voice services grew from pro forma $24.7 million during
the nine months ended September 30, 2000, to $43.3 million for the same period
in 2001, representing an increase of $18.6 million or 75.2%. 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 $86.5 million for the nine months
ended September 30, 2001, compared to pro forma cost of revenue of $45.7 million
for the same period in 2000, representing an increase of $40.8 million or 89.3%.
Cost of revenue consists 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 as well as to obtain better pricing from third party
network providers, resulting in gross margin improvement in future periods.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $98.7 million during the nine months ended
September 30, 2001, compared to pro forma selling, general and administrative
expenses of $64.1 million for the same period in 2000, representing an increase
of $34.6 million or 53.9%. The increase in selling, general and administrative
expenses resulted primarily from higher bad debts expense, an increase in
headcount, professional fees and higher marketing and advertising expenses. We
anticipate that selling, general and administrative expenses will likely
continue to increase in absolute terms in future periods to the extent that we
continue to experience growth and to expand our service offerings. We also
anticipate that selling, general and administrative expenses as a percentage of
revenue will decrease in future periods. 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 was $74.7
million during the nine months ended September 30, 2001, compared to pro forma
depreciation and amortization of $53.0 million for the same period in 2000,
representing an increase of $21.7 million or 40.9%. The increase in depreciation
and amortization was due mainly to the increase in capital expenditures for the
build out of our networks over the year. Depreciation and amortization include
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 will continue to increase as we continue to invest
in the installation and expansion of our networks.

         Interest Expense. Interest expense, net of $0.9 million of interest
income, was $55.3 million during the nine months ended September 30, 2001,
compared to pro forma interest expense of $21.5 million during the same period
in 2000, representing an increase of $33.8 million or 157.2%. 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 and demand notes provided by AT&T Corp., as well as
notes payable for equipment and other bank loans.

         Other expense (income), net. Other expense (income), net was $15.5
million during the nine months ended September 30, 2001. Other expense (income),
net is mainly comprised of remeasurement losses on foreign-currency transaction
of $49.4 million partially offset by gains on foreign-currency hedges of $36.8
million (realized gains of $17.3 million and unrealized gains of $19.5 million).

         Net Loss. Net loss was $225.7 million during the nine months ended
September 30, 2001, compared to pro forma net loss of $123.1 million for the
same period in 2000, representing an increase of $102.6 million or 83.4%. 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, various financing arrangements
with equipment vendors and from local Latin American credit markets. The
unaudited consolidated financial statements


                                       23
<PAGE>
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 segments 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 until we are able to establish an
adequate customer base. After the initial planned build-out of our networks, our
capital expenditures will become more elastic with respect to 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 $362.2 million from the
period from inception (October 13, 1999) through September 30, 2001. At
September 30, 2001 we had a working capital deficit of $399.8 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. We expect to continue to incur losses in the next several
years and our inability to obtain additional cash to fund our business plan
would materially, adversely affect our financial condition and results of
operations.

CAPITAL USES

         During the nine months ended September 30, 2001, our net cash increased
by $4.4 million (after the effect of translation of $0.7 million). The increase
in cash reflected cash used in operating and investing activities of $248.8
million, offset by cash provided by financing activities of $253.9 million. Our
uses of cash in operations were mainly as a result of our net loss of $225.7
million during the nine months ended September 30, 2001 and the increase on our
working capital deficit, offset by non-cash activities such as depreciation and
amortization, unrealized foreign exchange losses and preferred stock accretion.

         We expect to continue to make capital expenditures during the fourth
quarter of 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 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
$230.0 million to $250.0 million. As of September 30, 2001 we have invested
approximately $200.3 million, of which $84.4 million has been financed through
vendor financing arrangements. During 2002, we expect our aggregate capital
expenditures to be significantly less than capital expenditures in 2001.

         In addition, we expect to use capital resources to fund operating
losses and working capital needs. We also expect interest expense to increase in
the near term as a result of increased debt amounts.

         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 September 30, 2001, $18.8 million had
been prepaid. Additionally, there is an initial annual maintenance cost of
approximately $1.1 million, subject to escalation at 3% per year, compounded
annually.

         At September 30, 2001, AT&T Argentina had commitments for capital
expenditures relating to network construction and equipment of approximately
$24.0 million under multi-year contracts.


                                       24
<PAGE>
CAPITAL RESOURCES

         As of September 30, 2001 we had cash and cash equivalents of $19.3
million. As of September 30, 2001 our $100.0 million and $200.0 million credit
facilities from AT&T Corp. were fully drawn. Advances from these credit
facilities were used for capital expenditures, operations and working capital.
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 payments on
the $100.0 million credit facility until the end of this year. We intend to
defer interest payments on the $100.0 million credit facility through December
31, 2001. For the $200.0 million subordinated credit facility interest is
payable at a rate of LIBOR plus 6.0%. We are entitled to defer interest payments
on the $200.0 million subordinated credit facility until December 31, 2003. We
intend to defer interest payments on the $200.0 million credit facility through
December 31, 2003. We have deferred payment of accrued interest of approximately
$16.4 million under the $100.0 million and $200.0 million facilities, which have
been included as other liabilities in the accompanying balance sheet as of
September 30, 2001. Deferred payment of accrued interest on these two facilities
is subject to interest accrual at the same interest rate as the principal under
the facilities.

         AT&T Corp. has recently provided us additional financing in an
aggregate principal amount of up to $98.0 million under demand notes. As of
September 30, 2001, $83.5 million was outstanding under these notes, which bear
interest at a fixed rate of 15.0%. Principal and all accrued interest are
payable within 30 days after demand. Accrued interest under these demand notes
amounted to $0.9 million as of September 30, 2001. We intend to extend principal
and interest payments on these demand notes to the extent permitted by AT&T
Corp. The availability under these demand notes of $98.0 million was fully drawn
as of November 14, 2001.

Local Bank Facilities

         AT&T do Brasil is party to several local bank facilities providing for
borrowings of an aggregate of $40.6 million maturing through February 2004. At
September 30, 2001, there was an aggregate of $38.1 million outstanding under
these facilities. Borrowings under these facilities bear interest at a fixed
rates ranging from 6.3% 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
borrowings of an aggregate of $17.3 million maturing through May 2006. At
September 30, 2001, there was an aggregate of $13.2 million outstanding under
these facilities. Borrowings under these facilities bear interest at a fixed
rates ranging from 13.8% to 17.0% per annum and variable rates based upon
Deposito Tasa Fijo (DTF) plus a margin ranging from 3.0% to 7.0%. The average
rate for the six months Colombian peso interest rate or DTF was 12.5% during the
first nine months of 2001.

         AT&T Peru is party to several local bank facilities providing for
borrowings of an aggregate of $17.9 million. At September 30, 2001, there was an
aggregate of $10.8 million outstanding under these facilities. Borrowings under
these facilities bear interest at a fixed and variable rates ranging from 6.0%
to 12.5% per annum.

         AT&T Argentina and AT&T Chile are each party to several local bank
facilities providing for borrowings of an aggregate of $2.3 million. At
September 30, 2001, there was an aggregate of $1.1 million outstanding under
these facilities bearing interest at fixed interest rates ranging from 9.0% to
27.0%.

Equipment Vendor Financing

         We expect to close and begin using an equipment vendor financing
facility of approximately $300.0 million with our strategic equipment vendors
before year-end or during the first quarter of 2002. The closing of the facility
will be 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 expect to have significant additional capital requirements in the
next several years, which we plan to use to develop further and expand our
communications networks and services and to fund working capital needs,


                                       25
<PAGE>

operating losses and debt service obligations. We expect that debt service
obligations will increase in the future in connection with these capital
requirements. We expect that our external funding needs to implement our growth
strategy will continue for the next several years; however, to the extent we
effectively implement our growth strategy the capital requirements will be
reduced significantly after 2002.

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

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

         -        our ability to increase revenue;

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

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

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

         -        whether we use cash, issue common stock or increase our debt
                  to complete acquisitions and ventures.

         We expect to fund our capital requirements and working capital needs
for at least the next twelve months with anticipated proceeds from our planned
equipment vendor financing, availability under our local bank facilities, other
financing initiatives we are exploring and additional financial support from
AT&T Corp., as necessary. We cannot assure that we will be able to consummate
these proposed plans 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 planned equipment vendor
financing, obtain funds from local bank facilities or obtain additional
financing from AT&T Corp., or otherwise to obtain the anticipated cash needed to
fund our business plan, would materially affect our ability to carry out our
growth strategy and would materially, adversely affect our financial condition
and results of operations.

         As of September 30, 2001 we had available approximately $48.7 million,
through our cash and cash equivalents balances, available funds under the AT&T
Corp. demand notes and availability under our local bank lines of credit.

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. To date we have not
experienced significant increases in these costs due to inflation. 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 future
currency depreciation in Latin America, future 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 as well as certain direct costs in Brazil
provide for payment in local currency and are generally indexed to various
inflation indicators specific to Brazil. During the nine months ended September
30, 2001, our Brazilian operations were affected by a currency depreciation of
approximately 36.6%.


                                       26
<PAGE>
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         Our operations are exposed to market risks principally from
fluctuations in foreign currency exchange 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 risk
management policy is a transaction oriented policy and it 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, were we
conduct business with more than one currency. We do not expect that the impact
of fluctuations in the foreign currency exchange rate on our foreign currency
denominated revenues and expenses to materially affect our results of operations
due primarily to the natural hedges which are expected to exist within our
operations. Management continues to monitor foreign currency risk 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 nine months ended September 30, 2001, Brazil's currency deteriorated
in value against the U.S. dollar by approximately 36.6%, resulting in lower
revenues and lower expenses in our Brazilian operations when translated into our
reporting U.S dollar currency.

         At September 30, 2001, we had foreign currency forward contracts that
hedge certain activities with notional amounts of $325.6 million, maturing in
various dates through May 2003. Based upon a 10% strengthening or weakening of
the U.S. dollar compared to the currencies that we currently hedge the estimated
fair value of these contracts would have resulted in additional unrealized gains
of $11.6 million or unrealized losses of $24.1 million, respectively, for the
three and nine months ended September 30, 2001. Because these contracts are
entered into for hedging purposes, we believe that these additional unrealized
gains or losses would have been largely offset by losses or gains on the foreign
underlying commitments resulting in no net dollar impact to us.

         Management considers its operations in foreign subsidiaries and
affiliates to be long-term in nature. Accordingly, we do not hedge foreign
currency exchange rate risk related to translation risk.


                                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 September 30, 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 would not material to our annual consolidated
financial position or results of operations.


                        EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

         None.


         (b) Reports on Form 8-K

         None.


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<PAGE>


                                   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 November 14, 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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