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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR

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

For the transition period from                                      to                                                   

Commission File Number 000-29085

IMPSAT Fiber Networks, Inc.

Elvira Rawson de Dellepiane 150

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

Securities registered pursuant to Section 12(g) of the Act: common stock, par value $0.01 per share

      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 o

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

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Securities Exchange Act Rule 12b-2). Yes o     No x

      Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes x     No o

      The aggregate market value of our common stock held by non-affiliates was approximately $0.3 million as of June 28, 2002, the last business day of our most recently completed second fiscal quarter (based upon the closing price for the common stock as reported on such date by the Nasdaq Over-The-Counter Bulletin Board).

      There were 10,000,000 shares of common stock outstanding on March 31, 2003.

TABLE OF CONTENTS

Outlook and Uncertainties

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

      Our Internet address is www.IMPSAT.com. We make available free of charge, on or through the investor relations section of our web site, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S. Securities and Exchange Commission (“SEC”).

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

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CERTAIN CONSIDERATIONS

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

We have emerged from Chapter 11 bankruptcy and will potentially need additional financing for working capital purposes

      On June 11, 2002, we filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On October 23, 2002, we also filed with the Bankruptcy Court our plan of reorganization (as amended, the “Plan”). By order dated December 16, 2002, the Bankruptcy Court confirmed the Plan. In accordance to the terms of the Plan, we formally emerged from bankruptcy on March 25, 2003 (the “Effective Date”). Our recent emergence from Chapter 11 bankruptcy may adversely affect our ability to negotiate favorable trade terms with lenders, suppliers and vendors.

      Our projections contained in the Plan contemplate a $20 million financing in 2005 for working capital purposes, regarding which there also can be no assurances that such financing will be achieved. In addition, the new guaranteed senior notes issued under the Plan (the “New Guaranteed Senior Notes”) must be repaid, or refinanced, upon the maturity date of such notes eight years after the Effective Date. We may be required to refinance all or a portion of such indebtedness at such time in order to repay the New Guaranteed Senior Notes because we may not have sufficient internally-generated funds to do so. In such event, we anticipate that we would be able to arrange refinancing by means of the issuance of debt or the infusion of equity at such time. However, there can be no assurances that any such refinancing will be achieved. In such event, the holders of the New Guaranteed Senior Notes will be entitled to enforce their rights and remedies under the New Guaranteed Senior Notes.

We are in default under certain of our operating subsidiary indebtedness

      Although we have emerged from bankruptcy, we remain in default under indebtedness owed to certain creditors who voted against the Plan. Under the Plan, the claims of these creditors were contingent obligations arising under guarantees by our parent holding company of certain primary indebtedness of our operating subsidiaries. In accordance with the Plan, these holders will receive, in full satisfaction of their contingent guarantee claims (“Post-Effective Date Contingencies”), a pro rata share of the 9.8 million shares of our new common stock (“New Common Stock”) issuable to our creditors under the Plan. See “Business — Chapter 11 Filing and Emergence.” Notwithstanding our settlement of the Post-Effective Date Contingencies, as a consequence of the occurrence of our Chapter 11 bankruptcy, an event of default has occurred and is continuing with respect to certain of the related primary underlying indebtedness of our operating subsidiaries. These defaults, which relate to indebtedness totaling approximately $18.6 million in outstanding principal amount, give the respective creditors the right to accelerate such indebtedness and seek the immediate repayment of all outstanding amounts and accrued interest thereon. We may lack the financial resources to meet our obligations under some or all of such defaulted indebtedness. We are currently conducting negotiations at the level of our operating subsidiaries with these creditors with a view to rescheduling or otherwise restructuring these defaulted debt obligations. There is no assurance, however, that we will be successful in these negotiations or that we will reach a definitive agreement with these creditors to reschedule or restructure such obligations. Under those circumstances, certain of our operating subsidiaries could be forced to seek protection or liquidate under the bankruptcy laws of their respective jurisdictions. Any such event would have a material adverse effect upon our entire company and could threaten our ability to continue as a going concern.

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

      We commenced commercial operations in 1990 and have experienced rapid growth, increasing our annual revenues from $8.2 million in 1991 to $128.4 million in 1996 and $230.2 million in 2002. We recorded

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As a result of the implementation of our plan of reorganization we now have a significant concentration of holders of our shares of New Common Stock

      On the Effective Date, certain holders of claims have received or will receive distributions of a significant number of shares of New Common Stock or of securities convertible into or exercisable for such New Common Stock. If such holders of significant numbers of shares of the New Common Stock were to act as a group, such holders may be in a position to control the outcome of actions requiring stockholder approval, including the election of directors. The concentration of ownership could also facilitate or hinder a negotiated change of control of the company and, consequently, affect the value of the New Common Stock.

      Further, the possibility that one or more of the holders of significant numbers of shares of the New Common Stock may determine to sell all or a large portion of their shares of New Common Stock in a short period of time may adversely affect the market price of the New Common Stock.

There is a lack of an established market for our New Common Stock

      There is currently no trading market for the New Common Stock, nor is it known whether or when one would develop. There can be no assurance that an active market will develop therefor. Further, there can be no assurance as to the degree of price volatility in a such market. No assurance can be given as to the market prices that will prevail for the New Common Stock following the Effective Date.

There is a lack of an established market for our New Guaranteed Senior Notes

      On the Effective Date, in accordance with the Plan, the company issued the New Guaranteed Senior Notes to certain impaired classes of creditors, some of whom may prefer to liquidate their investment rather than to hold it on a long-term basis. There is currently no trading market for the New Guaranteed Senior Notes, nor is it known whether or when one would develop. There can be no assurance that an active market will develop therefor. Further, there can be no assurance to the degree of price volatility in any such market.

We are restricted in our ability to issue dividends

      We do not anticipate paying any dividends on the New Common Stock in the foreseeable future. In addition, the covenants under the indentures governing our New Guaranteed Senior Notes limit (and any future financing facility to which we are a party will likely also limit) the ability of our company to pay dividends. Certain institutional investors may only invest in dividend-paying equity securities or may operate under other restrictions that may prohibit or limit their ability to invest in our New Common Stock.

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

      Substantially all of our revenues are derived from operations in Latin America. During 2001 and 2002, we derived approximately 40.2% and 24.6% of our consolidated net revenues from services provided by IMPSAT Argentina, approximately 20.4% and 25.3% by IMPSAT Colombia and approximately 14.7% and 15.6% by IMPSAT Brazil. Our company also has operations in Venezuela, Mexico, the United States, Ecuador, Chile and Peru. Other than the United States, each country where we have significant operations has experienced political and economic instability in recent years. Moreover, as events in the Latin American region have demonstrated, negative economic or political developments in one country in the region can lead to or exacerbate economic or political crises elsewhere in the region. Furthermore, events in recent years in other developing markets have placed pressures on the stability of the currencies of a number of countries in Latin America, including Argentina, Brazil, Colombia and Venezuela. Continued pressures on the local currencies in the countries in which we operate are likely to have an adverse effect on many of our customers, which, in turn, could adversely affect us. Volatility in regional currencies and capital markets has also had an adverse

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      According to published reports, during 2002, Argentina’s gross domestic product (GDP) contracted by 10.9%, while Brazil experienced 1.5% growth in GDP. During 2002, Colombia’s GDP grew by 1.8% and Venezuela’s GDP contracted by 8.9%. Published reports have forecasted 2003 GDP growth of 1.1% for Argentina, 1.8% for Brazil and 2.0% for Colombia, and a 7.6% contraction for Venezuela. We do not expect fundamental improvements in macroeconomic conditions in Latin America in the short term.

      Argentina faces a severe political and financial crisis

      A significant portion of our operations, properties and customers are located in Argentina. Revenues from services from our Argentine operations, acting through IMPSAT Argentina, for each of 2001 and 2002 represented approximately 40.2% and 24.6% of our consolidated net revenues from services during those years. Accordingly, our financial condition and results of operations depend to a significant extent on macroeconomic and political conditions prevailing from time to time in Argentina. The Argentine economy has experienced significant volatility in recent decades, characterized by periods of low or negative growth and high and variable levels of inflation.

      In the fourth quarter of 1998, the Argentine economy entered into a recession that caused the gross domestic product to decrease by 3% in 1999, 0.5% in 2000, 4.5% in 2001, and 10.9% in 2002. Beginning in the second half of 2001, Argentina’s recession worsened significantly, precipitating a severe political and economic crisis. In December 2001, the Argentine government introduced a partial freeze on bank deposits, which resulted in widespread political protests and social disturbances and the resignation of Argentina’s then president, Fernando de la Rua. Such protests and disturbances have persisted as the Argentine economy has continued to deteriorate.

      Argentina is currently trying to negotiate a multibillion-dollar financial aid package from the International Monetary Fund (the “IMF”) to help overcome that country’s debilitating economic crisis. To date, the IMF and other multilateral and official sector lenders have indicated an unwillingness to provide financial aid until a sustainable economic program has been presented. Although in January 2003 the IMF refinanced $7 billion of Argentina’s indebtedness to the IMF that had fallen due, there has since been little progress on critical reforms or on the timing of any new agreement with the IMF. It is unclear whether Argentina’s current president, Eduardo Duhalde, has the necessary support to implement the reforms required to restore economic growth and public confidence. In addition, presidential elections are scheduled in Argentina during April 2003, and a change in governmental policies in Argentina, along with investor reactions to any such changes, could have further adverse effects on the Argentine economy. The rapid and radical nature of the recent changes in the Argentine social, political, economic and legal environment and the absence of a clear political consensus in favor of any particular set of economic policies, have created an atmosphere of great uncertainty. As a result, commercial and financial activities have been disrupted, further aggravating the economic recession that precipitated the current crisis. These conditions have had, and can be expected to continue to have, a material adverse effect on IMPSAT Argentina’s and our overall financial condition and results of operations.

      The political and financial crisis has resulted in the devaluation of the Argentine peso

      In late December 2001, Argentina’s ongoing political and financial crisis deepened and the country defaulted on its massive foreign debt. In early January 2002, the government of President Eduardo Duhalde abandoned the decade-old fixed peso-dollar exchange rate and permitted the peso to float freely against the U.S. dollar. The peso free market opened on January 11, 2002 and traded at 1.65 pesos to the U.S. dollar and has traded as low as 3.87 pesos to the U.S. dollar on June 26, 2002. At March 31, 2003, the exchange rate was 2.88 pesos to the U.S. dollar. The devaluation of the Argentine pesoaffects our consolidated financial statements by generating foreign exchange transaction gains or losses on dollar-denominated monetary assets and liabilities of IMPSAT Argentina and generally results in a decrease, in U.S. dollar terms, in our revenues, costs and expenses in Argentina.

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      In February 2002, the Argentine government instituted the “pesification”decree. Generally, this decree mandates that all monetary obligations arising from agreements subject to Argentine law denominated in foreign currency and existing as of January 6, 2002 are mandatorily converted into monetary obligations denominated in pesos at an exchange rate of one U.S. dollar to one peso. Such obligations generally may be adjusted pursuant to an index published by the Argentine central bank called the “coeficiente de estabilización de referencia” (“CER”), which is based on the Argentine consumer price index. Contracts denominated in pesos before the decree continue to be denominated in pesos, unaffected by the decree. The devaluation and the “pesification” of agreements of our company governed by Argentine law may have adverse, unknown and unforeseeable effects on us.

      Since the “pesification” decree, a significant number of IMPSAT Argentina’s customer contracts and a large percentage of its operating cash inflows are now denominated in pesos. However, IMPSAT Argentina’s debt service payments and a significant portion of its costs (including capital equipment purchases and payments for certain leased satellite and terrestrial capacity) remain denominated and payable in U.S. dollars. Accordingly, our financial condition and results of operations in Argentina are dependent upon IMPSAT Argentina’s ability to generate sufficient pesos (in U.S. dollar terms) to pay its costs, expenses and to satisfy its debt service requirements. Because of the recent nature of these events and the significant uncertainties regarding the extent and duration of the devaluation and the direction of the fiscal policies in Argentina, management cannot presently determine or reasonably estimate the impact a continued economic crisis in Argentina could possibly have on IMPSAT Argentina’s and our consolidated cash flows, financial condition, and results of operations.

      On March 5, 2003, Argentina’s Supreme Court declared the “pesification”decree unconstitutional to the extent that it required the mandatory redenomination of U.S. dollar bank deposits to pesos. Although the ruling applies only to amounts held by the petitioner in that case on deposit at a state-owned bank, the decision will likely strengthen existing (and create a profusion of similar) claims by other depositors seeking to “redollarize” their deposits. This could force the Argentine government to issue long-term bonds in satisfaction of such claims, which, in turn, could increase Argentina’s public debt burden and cause a further deterioration of its national economy. The future judicial implementation of the Argentine Supreme Court’s decision as well as any legislative or executive response could take an unknown variety of forms. Accordingly, its potential impact on the Argentine economy and on our operations in that country presently cannot be estimated.

      Numerous uncertainties exist surrounding the ultimate resolution of Argentina’s economic and political instability, and actual results could differ from those estimates and assumptions utilized. The Argentine economic and political situation continues to evolve and the Argentine government may enact future regulations or policies that, when finalized and adopted, may adversely and materially impact, among other items: (i) the realized revenues we receive for services offered in Argentina; (ii) the timing of repatriations of any dividends or other cash flows from IMPSAT Argentina to our holding company in the United States; (iii) our asset valuations; and (iv) our peso-denominated monetary assets and liabilities.

      Brazilian economic and political conditions may have a direct impact on our operations

      Our operations in Brazil, which commenced in 1998, are less developed than in several of our other main countries of operation. However, Brazil, as the largest country and economy in Latin America, represents a significant existing and potential market for us. Our company, acting through IMPSAT Brazil, has expanded its operations in Brazil since that subsidiary’s inception. Revenues from services from our Brazilian operations for 2001 and 2002 represented approximately 14.7% and 15.6%, respectively, of our consolidated net revenues from services for such periods. For 2002, our operations in Brazil represented the third largest source of revenues among the nine countries in which we operate. Accordingly, our operations in Brazil subject our financial condition and results of operations to various additional economic and political risks.

      The Brazilian government has frequently intervened in the Brazilian economy and occasionally makes drastic changes in policy. The Brazilian government’s actions to control inflation and effect other policies have often involved wage and price controls, currency devaluations, capital controls and limits on imports, among other things. Luiz Inacio Lula da Silva, the left-wing candidate, was elected president of Brazil on October 27,

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      Our business, financial condition and result of operations in Brazil may be adversely affected by changes in policy involving factors outside of our control, such as:

	•	monetary and fiscal policies;
	•	currency fluctuations;
	•	energy shortages; and
	•	other political, social and economic developments in or affecting Brazil.

      In early 1999, the Brazilian government allowed the real to float freely, resulting in a 38% devaluation against the U.S. dollar from January 14, 1999 through December 31, 2000. During 2002, Brazil’s currency experienced further significant devaluations against the U.S. dollar. These and prior devaluations have had a negative effect on our real-denominated revenues. In addition, currency devaluations can also create inflationary pressures. Inflation itself, as well as some governmental measures to combat inflation, have had significant negative effects on the Brazilian economy in the past.

      IMPSAT Brazil’s results have been affected by the devaluation of the Brazilian real against the U.S. dollar. At December 31, 2001, the real traded at a rate of R$2.41 = $1.00. The real depreciated during 2002, reaching a low of R$4.03 = $ 1.00 during the third and fourth quarters of that year, and closing at R$3.53  = $1.00 at December 31, 2002. This volatility eroded IMPSAT Brazil’s revenues by approximately $16.0 million during 2002. At March 31, 2003, the real traded at a rate of R$3.46 = $1.00. The devaluation of the realand the decline in growth in the Brazilian economy have been caused in part by the continued recession in the region, a general aversion to emerging markets by foreign direct and financial investors and the overall decline in worldwide economic production. In addition, Brazil experienced economic uncertainty in the months leading up to the election of Mr. Lula da Silva as President of Brazil on October 27, 2002, as investors feared that the leftist Lula administration would fail to maintain fiscal discipline and that the nation would default on its debt obligations. In the aftermath of the election however, policy promises and cabinet appointments by the Lula administration have generally appeased the investor community and caused Brazilian markets to react positively. The political and economic volatility in Brazil have had, and can be expected to continue to have, a material adverse effect on IMPSAT Brazil’s and our overall financial condition and results of operations.

      Recent civil and political unrest in Venezuela may have an adverse impact on our operations

      In the first weeks of April 2002, political instability and civil unrest plagued Venezuela after the policies of that country’s head of state, President Hugo Chavez, brought him into conflict with managers at Petroleos de Venezuela SA (or, PDVSA), the state oil monopoly. The million-member Venezuelan Workers Confederation called a general strike to support PDVSA executives in protesting Mr. Chavez’s policies and demanding Mr. Chavez’s removal from office. The general strike was supported by the Venezuelan business association, Fedecamaras. Mr. Chavez was temporarily deposed and detained by military forces on April 12, 2002, after a massive opposition demonstration ended with gunmen reportedly killing at least a dozen opposition protesters and wounding hundreds others. An interim administration held office for less than two days after tens of thousands of pro-Chavez demonstrators took to the streets of Caracas to demand Mr. Chavez’s reinstatement. Mr. Chavez was restored to power on April 15, 2002.

      In December 2002, opposition groups launched a nationwide labor strike. The strike, which lasted for two months, brought the Venezuelan economy to an almost standstill and severely curtailed the production and export of oil, the major source of Venezuela’s foreign exchange. Venezuela’s recent political instability has caused the many private businesses throughout the country to close temporarily and has disrupted Venezuela’s petroleum industry, which provides the government with more than half its revenue. In response, the government imposed foreign exchange and price controls, which make it difficult for our customers in Venezuela to obtain the U.S. dollars needed to make payments due to us in U.S. dollars on a timely basis. These foreign exchange controls could also limit our ability to convert local currency into U.S. dollars and

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

      A significant portion of our costs, including lease payments for certain satellite and fiber optic capacity, purchases of capital equipment, and payments of interest and principal on our indebtedness is payable in U.S. dollars. Our results of operations and financial conditions are therefore vulnerable to currency devaluations. Following the “pesification” decree, our contracts that were governed by Argentine law, denominated in foreign currency and existing as of January 6, 2002 were mandatorily converted into monetary obligations denominated in pesos at an exchange rate of one U.S. dollar to one peso, subject to adjustment pursuant to the Argentine CER consumer price index. In Brazil, our customer contracts cannot be denominated in U.S. dollars or linked to the exchange rate between the Brazilian real and the U.S. dollar, although we are permitted to amend the pricing of our services for our long-term telecommunications service contracts with our customers annually based on changes in the consumer price index in Brazil for the prior year. The inflation adjustment provisions in these laws do not eliminate completely the currency exchange risk facing our operations in Argentina and Brazil. For example, contracts entered into between Argentine parties after the “pesification” decree’s enactment that are initially denominated in pesos may not thereafter be adjusted according to the CER or any other consumer price index. Also, changes in the consumer price indices in Argentina and Brazil may lag or be lower than changes in the exchange rate between the Argentine and Brazil local currency and the U.S. dollar and therefore may not fully allow us to address the impact of a devaluation of those currencies against the U.S. dollar. Our operations in Argentina and Brazil represented a significant proportion of our consolidated net revenues in 2002, and this can be expected to increase in future periods in connection with the progression of our operations in Brazil. Accordingly, our operations in Argentina and Brazil have exposed us, and will increase our exposure, to exchange rate risks.

      Except in Argentina (since the “pesification” decree, to the extent discussed above) and Brazil, the contracts of the company and its subsidiaries with customers generally provide for payment in U.S. dollars or for payment in local currency linked to the exchange rate between the local currency and the U.S. dollar at the time of invoicing. Accordingly, inflationary pressures on local economies in the other countries in which we operate did not have a material effect on our revenues during 2002. However, given that the exchange rate is generally set at the date of invoicing and that we in some cases experience substantial delays in collecting receivables, our operations in those other countries are also exposed to exchange rate risk.

      Substantial or continued devaluations in local currencies relative to the U.S. dollar could have a material adverse effect on the ability of our customers to absorb the costs of a devaluation. This could result in our customers seeking to renegotiate their contracts with us or, failing satisfactory renegotiation, defaulting on or canceling their contracts. Our competitors and potential future competitors, including the monopoly public telephony operators (“PTOs”) and large, multinational telecommunications companies, may be less exposed to currency risk or may be better able to hedge their currency risk and could thereby gain a relative competitive advantage in the event of a currency devaluation. In addition, Latin American economies have experienced shortages in foreign currency reserves and restrictions on the ability to expatriate local earnings and convert local currencies into U.S. dollars. Currency devaluations in one country may have adverse effects in another country.

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

      We provide trade credit to our customers in the normal course of business. As of December 31, 2002, approximately 32.0% of our gross accounts receivable were past due more than six months. We recorded a

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Our future success depends upon our ability to implement and manage our resources effectively

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

	•	successfully exploit our Broadband Network and implement related strategies;
	•	design and effectively market integrated private telecommunications services;
	•	secure financing;
	•	install telecommunications infrastructure as our operations require;
	•	obtain any required government authorizations or licenses as the telecommunications sector continues to deregulate; and
	•	attract and retain qualified employees.

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

      We cannot provide any assurance that we will be successful or timely in developing and marketing service enhancements or new services that respond to technological change, changes in customer requirements and emerging industry standards.

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

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

      Our operation of the Broadband Network, which may include the expansion into new services for our business customers, could involve any one or more of the following:

	•	regulatory risks, including obtaining the appropriate licenses;
	•	interconnection difficulties;
	•	capital expenditures; and
	•	competition from large, well-financed international telecommunications carriers.

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

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      Our ability to obtain new capital that we might require in the future may be negatively affected by many factors beyond our control

      Our future capital requirements will depend upon many factors, including:

	•	the cost, timing and extent of upgrading or maintaining our networks and services;
	•	our enhancement and development of services, directly or through our subsidiaries;
	•	our ability to react to developments in the industry, including regulatory changes;
	•	the status of competing services; and
	•	our results of operations.

      Further development of the Broadband Network will require additional resources that we may not have

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

	•	requests by our customers for coverage of our Broadband Network beyond its existing footprint;
	•	changes in our customers’ service requirements; and
	•	technological advances by our competitors.

      We may require additional financial, operational and managerial resources to expand or adapt the Broadband Network. If we are unable to expand or adapt the Broadband Network to respond to these developments on a timely basis and at a commercially reasonable cost, then our business will be materially adversely affected. In light of our current financial condition and the political and economic crises in Latin America, we do not anticipate having the ability to make capital expenditures during 2003 to expand or enhance significantly the Broadband Network. Our inability to make such expenditures could have an adverse effect on our customer retention and expansion.

      We are negatively impacted by Global Crossing’s insolvency

      We are party to a series of agreements with several subsidiaries of Global Crossing Ltd. for the provision of telecommunications services. Pursuant to those agreements, which were initially signed in 1999, we constructed a terrestrial portion of Global Crossing’s South American network between landing points on the Atlantic Ocean in Argentina and the Pacific Ocean in Chile, granted Global Crossing a series of indefeasible rights of use (IRU) over ducts and dark fiber on our Broadband Network in Argentina, Brazil and Peru, provided Global Crossing with collocation space and related services in our data centers in Argentina, Brazil, Chile, Venezuela and Peru, and provided Global Crossing with maintenance services for their telecommunications assets in Latin America. In addition, we acquired IRU and leased capacity on Global Crossing’s South American undersea fiber optic cable system in order to connect our Broadband Network with other parts of Latin America and the world.

      In January 2002, Global Crossing Ltd. filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Although the Global Crossing subsidiaries to whom we provide services and infrastructure were not originally included in Global Crossing Ltd.’s Chapter 11 filing, during August 2002, Global Crossing Ltd. amended its Chapter 11 proceeding to include its subsidiaries that are counterparties to the agreements with us. At March 7, 2003, Global Crossing was in default for a total of $4.8 million that we invoiced to them during 2002 and for the first quarter of 2003. We have recorded a provision for doubtful accounts of $2.8 million against these receivables.

      Although Global Crossing’s reorganization plan was approved in December 2002, Global Crossing is awaiting receipt of certain regulatory approvals and satisfaction of other conditions to the effectiveness of its plan of reorganization, and there is no guaranty as to when or whether it will emerge from bankruptcy. The difficulties being experienced by Global Crossing, including Global Crossing’s Chapter 11 proceeding, have had an adverse effect on our financial condition and operations. At a minimum, Global Crossing’s bankruptcy proceedings have caused delays in our efforts to enforce our contracts with Global Crossing. In the event of a rejection of any of the contracts by Global Crossing, any pre-petition damages that we might have in respect of

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      We have filed motions in Global Crossing’s bankruptcy proceeding seeking an order that Global Crossing make payment to us of the amounts claimed by us and that Global Crossing either accept or reject its contracts with us. Global Crossing has disputed that it owes us any amounts under the contracts at issue and has filed a proceeding seeking that the bankruptcy court grant Global Crossing a property right in the IRUs that it acquired from us.

      To link our Broadband Network to other parts of Latin America and the world, we have secured IRU and leased capacity on Global Crossing’s undersea fiber optic cable systems (and associated terrestrial capacity) between the United States and Latin America, including Global Crossing’s South American network. Global Crossing has not yet affirmed or rejected these agreements. If Global Crossing rejects these contracts or is unable to successfully reorganize and were to sell or terminate its South American operations as part of its bankruptcy proceedings, it is unclear what rights we would have to continue to utilize the IRUs that we have purchased from Global Crossing. It is possible that our agreements with Global Crossing would be terminated, and we would need to seek substitute sources of IRU or other capacity from competing undersea fiber optic systems to link our operations, including our Broadband Network, to other parts of Latin America and the world. There can be no assurance that such substitute capacity would be available to us on acceptable terms or at all. If we were required to acquire such substitute capacity, we believe that our operations would be adversely affected for the period in which we reconfigured our telecommunications network. In addition, we would be required to incur additional costs for such capacity that are not currently included in our operating and capital expenditures budgets. The occurrence of these circumstances would have a material adverse effect on our business, results of operations and financial condition.

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

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

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

We face significant competition in Latin America

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

      We have experienced pricing pressure for some of our services, and we expect to continue to face pricing pressure. We may further experience declining operating profit margins as the PTOs in the countries in which we operate become more competitive and place greater emphasis on data telecommunications.

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      PTOs have competitive advantages in the marketplace

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

	•	close ties with national regulatory authorities
	•	control over connections to local telephone lines
	•	ability to subsidize competitive services with revenues generated from services they provide on a monopoly or duopoly basis
	•	reluctance of regulators to adopt policies and grant regulatory approvals that will result in increased competition

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

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

      International telecommunications carriers have greater resources than we do

      We also compete with operators of satellite data transmission networks and terrestrial telecommunications links, and face actual or potential competition from large international telecommunications carriers and from other industry participants. International telecommunications carriers, whose principal focus has traditionally been long distance telephony services, may increasingly focus on the private telecommunications network systems segment of the telecommunications market as deregulation continues. For example, since the introduction of full competition in Argentina’s long distance telephony market in November 2000, these large international telecommunications carriers can enter that market and provide data transmission services. Many of these potential competitors have substantially greater financial and other resources than we do. In addition, consolidation of telecommunications companies and the formation of strategic alliances within the telecommunications industry could give rise to significant new competitors.

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

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

      The downturn in the telecommunications industry negatively affects us

      The regional economic recession, which has persisted since 2001, has had a materially negative impact on the telecommunications market in Latin America. The rate at which the industry improves is critical to our ability to improve overall financial performance. The financial difficulties currently experienced by other participants in the telecommunications industry may result in some of our competitors being able to purchase

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

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

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

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PART I

Item 1.     Business

General

      We are a leading provider of private telecommunications network and Internet services in Latin America. We offer integrated data, voice, and Internet solutions, with an emphasis on broadband transmission, for national and multinational companies, financial institutions, governmental agencies and other business customers. We have operations in Argentina, Colombia, Brazil, Venezuela, Ecuador, Mexico, Chile, Peru and the United States and also provide our services in other countries in Latin America. We provide telecommunications and Internet services through our networks, which consist of owned fiber optic and wireless links, teleports, earth stations and leased fiber optic and satellite links. We own and operate 15 metropolitan area networks in some of the largest cities in Latin America, including Buenos Aires, Bogotá, Caracas and São Paulo.

      In the fourth quarter of 2000, we completed the construction of an extensive pan-Latin American broadband fiber optic network (which we call our Broadband Network) connecting major cities across Argentina and Brazil, and the commencement of commercial operation of the full Broadband Network in those locations. Our Broadband Network allows us to enhance the services we presently provide and significantly increase our transmission speed and capacity. At December 31, 2002, the Broadband Network comprised twelve metropolitan area fiber optic networks and wireless links, extending over 1,000 route kilometers in the largest cities in Argentina, Brazil, Colombia and Peru, and long-haul fiber optic backbones in Brazil, Argentina, Chile and Colombia extending over 8,880 route kilometers. Our Broadband Network uses advanced transmission technologies, including dense wave division multiplexing, or DWDM, asynchronous transfer mode, or ATM, and Internet protocol, or IP.

      IMPSAT Fiber Networks, Inc. was organized in 1994 as a Delaware holding company to combine the IMPSAT businesses in Argentina, Colombia and Venezuela. Our operations started in Argentina in 1990 under the name IMPSAT S.A. (IMPSAT Argentina). We began operations outside of Argentina with the establishment of IMPSAT S.A. (IMPSAT Colombia) in 1991 and the establishment of Telecomunicaciones Impsat S.A. (IMPSAT Venezuela) in 1992. New operating subsidiaries were created in Ecuador (Impsatel del Ecuador S.A., which we call IMPSAT Ecuador) and Mexico (Impsat S.A. de C.V., which we call IMPSAT Mexico) in 1994, in the United States (IMPSAT USA, Inc.) in 1995 and in Brazil (Impsat Comunicacoes Ltda., which we call IMPSAT Brazil) in 1998. In January 2000, we changed our company’s name from IMPSAT Corporation to IMPSAT Fiber Networks, Inc. During 2001, we commenced operations in Chile (Impsat Chile S.A., or IMPSAT Chile) and Peru (Impsat S.A., or IMPSAT Peru).

Chapter 11 Filing and Emergence

      On June 11, 2002, we filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court. On September 4, 2002, we filed the Plan with the Bankruptcy Court. During our bankruptcy proceedings, we operated our business and managed our assets in the ordinary course as a debtor-in-possession.

      By order dated December 16, 2002, the Bankruptcy Court confirmed the Plan. In accordance with the terms of the Plan, we formally emerged from bankruptcy on the Effective Date, March 25, 2003.

      Under the Plan, we issued shares of New Common Stock to holders of our 13 3/4% Senior Notes due 2005 and 12 3/8% Senior Notes due 2008 (the “2005/2008 Holders”) in full satisfaction of their claims thereunder, including the outstanding principal and all accrued and unpaid interest. The 2005/2008 Holders received their ratable portion of 9.8 million shares of New Common Stock, as may be decreased to allow for the allocation of a ratable number of such shares of New Common Stock to the holders of the Post-Effective Date Contingencies and certain other claims of unsecured creditors of our parent holding company. (See “Certain Considerations — We are in default under certain of our operating subsidiary indebtedness.”) Under the Plan, the dollar value of the Post-Effective Date Contingencies and other unsecured claims is to be determined after

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      In addition, on or shortly after the Effective Date of the Plan, we consummated several transactions pursuant to the Plan. We:

	•	filed with the Delaware Secretary of State a Restated Certificate of Incorporation (the “Certificate of Incorporation”);
	•	amended and restated our Bylaws (the “Bylaws”)
	•	cancelled all Old Common Stock, and all other existing securities and agreements to issue or purchase any equity interests;
	•	issued $67,531,000 in aggregate principal amount of Series A 6% Senior Guaranteed Convertible Notes due 2011 (initially convertible, in the aggregate, into 22.8% of the New Common Stock on a fully diluted basis) (the “Series A Notes”) to holders of our former 12 1/8% Senior Guaranteed Notes due 2003 (the “2003 Noteholders”), in full satisfaction of the claims of the 2003 Noteholders, including the outstanding principal and all accrued and unpaid interest thereon;
	•	issued to (i) holders of debt under our pre-Effective Date Broadband Network vendor financing agreements (the “Original Vendor Financing Agreements”) and (ii) other creditors of our operating subsidiaries holding guarantees by our parent holding company of such indebtedness who voted to accept the Plan, a combination of new senior secured indebtedness totaling $143.8 million, $23.9 million in the aggregate of new Series B 6% Senior Guaranteed Notes due 2011 (“Series B Notes”) (initially convertible in the aggregate into 5.3% of the New Common Stock on a fully diluted basis), and eight-year warrants to acquire 15.3% in the aggregate of the New Common Stock (on a fully diluted basis);
	•	issued 200,000 shares of New Common Stock to certain officers of the Company in accordance with our 2003 Stock Incentive Plan (the “2003 Stock Incentive Plan”); and
	•	agreed, subject to our compensation committee’s approval, to issue options for 1,646,332 shares of New Common Stock to senior officers.

      Under our Certificate of Incorporation, our authorized capital stock as of the Effective Date consists of (i) 50,000,000 shares of the New Common Stock, with a par value of $0.01 per share and (ii) 5,000,000 shares of Preferred Stock, with a par value of $0.01 per share (the “Preferred Stock”). No Preferred Stock has been issued. Pursuant to the Certificate of Incorporation, Preferred Stock may be issued in one or more series as determined from time to time by our board of directors (the “Board”) without further approval of our stockholders. Upon issuance of any series of Preferred Stock, the Board will fix the voting powers, designations, preferences, and relative, participating, optional, redemption, conversion, exchange or other special rights, qualifications, limitations or restrictions of such Preferred Stock, to the extent permitted by law. Pursuant to the Certificate of Incorporation, we may not create, designate, authorize or cause to be issued any

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      In connection with the reorganization our Board was reconstituted and is composed of seven directors. In accordance with the Plan and the Certificate of Incorporation, the directors (the “Directors”) consist of (1) our Chief Executive Officer; (2) two individuals (the “Category 2 Directors”) elected by the initial holders of Series A Notes issued under the Plan (the “Initial Series A Noteholders”) for so long as the sum of (x) the aggregate number of shares of New Common Stock issuable upon conversion of Series A Notes issued to and held by the Initial Series A Noteholders or any of their respective affiliates, and (y) the aggregate number of shares of New Common Stock issued to and held by the Initial Series A Noteholders or such affiliates upon conversion of such Series A Notes continues to represent in the aggregate 7.5% or more of the New Common Stock on a fully diluted basis (but excluding for purposes of this calculation shares of New Common Stock issued or issuable pursuant to our 2003 Stock Incentive Plan or subsequent stock plan adopted by the Board, or any modification, renewal or extension thereof) (a “Fully Diluted Basis”); (3) one individual elected by Nortel Networks Limited (“Nortel”), as an initial holder of Series B Notes and warrants to purchase New Common Stock (the “Warrants”) issued to Nortel under the Plan, for so long as the sum of (x) the aggregate number of shares of New Common Stock issuable upon conversion of Series B Notes and Warrants issued to and held by Nortel or any of its affiliates, and (y) the aggregate number of shares of New Common Stock issued to and held by Nortel or such affiliate upon conversion of such Series B Notes and Warrants, continues to represent in the aggregate 4.5% or more of the New Common Stock on a Fully Diluted Basis; and (4) three individuals (the “Category 4 Directors”) elected by the initial 2005/2008 Holders who received New Common Stock under the Plan (the “Initial 2005/2008 Common Stock”), for so long as the holders of the Initial 2005/2008 Common Stock or any of their respective affiliates continue to beneficially own Initial 2005/2008 Common Stock equal, in the aggregate, to 15% or more of the New Common Stock on a Fully Diluted Basis; provided that, for so long as the Initial Series A Noteholders have the right to elect the Category 2 Directors, no more than two of the Category 4 Directors may be persons who are affiliates of Morgan Stanley & Co. Incorporated. The initial term of the Category 2 Directors and the Category 4 Directors will end on the date of the annual meeting to be held in 2004. Thereafter, the Category 2 and Category 4 Directors will be elected each year for a term ending on the date of the annual meeting of stockholders in the following year. Subject to the rights of certain parties, a director may be removed with or without cause in accordance with the procedures set forth in the Certificate of Incorporation.

Our Services

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

      Data Transmission and Value Added Services. We offer our customers a broad range of end-to-end network service combinations for their point-to-point and point-to-multipoint telecommunications needs, ranging from simple connections to customized private network solutions. We offer our network services over our proprietary and leased networks, which are comprised of metropolitan area fiber optic rings and wireless networks, fiber optic and satellite links. We also offer value-added services, including secure web and applications hosting services through our advanced data center facilities.

	•	Connection Services. Our customers can purchase clear channels, frame relay services, ATM services and Internet protocol digital connection services to support their specific transmission requirements. Clear channels are typically purchased by customers that constantly transmit large amounts of voice, data and video traffic. Frame relay and ATM services are typically purchased by customers requiring reliable and rapid transmission of variable amounts of voice, data and video traffic. We typically offer our clear channel connection services from 64 Kbps to 2 Mbps, and we intend to expand this offering to 155 Mbps of capacity. Our frame relay services are typically offered from 64 Kbps to 2 Mbps and we intend to offer our ATM services from 2 Mbps to 155 Mbps. In addition, we offer digital connections

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		using Internet protocol with interfaces of 10 Mbps to 100 Mbps as one of our options for local data network solutions.
	•	Private Network Services. For customers that require significant bandwidth and reliable data transmission between a number of sites, we offer customized private networks that combine fiber optic, fixed wireless and satellite technology. We also provide them with a variety of other services including network management services, trouble shooting reports, quality control and value-added services. Our consultative sales process ensures that each private network is designed to meet the evolving specific business and systems requirements of each customer. We also offer services such as video conferencing and remote learning as part of our private network services.
	•	Other Value-Added Services. We offer information technology solutions and data center services designed to facilitate our customer’s e-business and e-commerce needs and optimize our customers’ business processes.

	•	Data Center Services. We have established 14 data center facilities that offer hosting services by integrating our broadband services with advanced value-added solutions in the region. We offer our clients a complete set of data center services ranging from housing, shared and dedicated hosting to more complex managed hosting solutions, including disaster recovery and applications management and outsourcing services. We also offer co-location services to carriers, including the rental of secure space, equipment provisioning and operation and maintenance services.
	•	Information Technology Solutions. As part of our end-to-end solutions, we also offer a variety of information technology services, including the design, installation and integration of intranets, extranets and virtual private data networks, through which our customers can conduct business in a secure environment as well as integrate these new systems with their legacy telecommunications systems. In addition, we offer an outsourcing solution for customers that do not have the technical personnel or choose not to operate, manage and maintain their telecommunications systems and networks.

      Internet Services. We have offered Internet access services to corporate and ISP customers since 1996. Our Broadband Network in Argentina and Brazil links our Latin American Internet backbone, as part of the Broadband Network, to the U.S. Internet through our U.S.-based point of presence using our fiber optic links in addition to our leased satellite links. With the objective of positioning ourselves as the Latin America Internet Backbone, we have deployed a series of data centers within the region.

	•	Corporate Internet Services. As part of providing our customers with a total telecommunications solution, we currently offer our corporate customers Internet access services including line provisioning, equipment provisioning and installation, primary and secondary domain registration and maintenance and technical support.
	•	Wholesale Internet Services. We provide a complete Internet service for ISPs, including managed line provisioning for domestic and international backbone connections between points of presence, access to our co-location sites and server services (e-mail and hosting services), managed modem and roaming services, as well as the use of our network operation and help desk services.

      Services to Carriers. We offer dark fiber capacity, “lit” fiber services and duct capacity to ISPs and telecommunications carriers. Our network provides customers with reliable broadband connections between and among our metropolitan area networks at high speeds. Customers that choose to purchase “lit” capacity are able to purchase an initial amount of capacity (typically 45 Mbps) and increase that capacity on demand.

      Telephony Services. We provide switched-voice domestic and international long distance telephony services to corporate customers and resellers in Argentina, international long distance service in the United States, where we have our international hub, and international long distance service in Peru. We plan to further expand these offerings to other countries in the region, of which Brazil is expected to provide the most significant market opportunities. In November 2002, we received a license to provide switched voice services to or from Brazil. As components of our telephony services, we currently offer local, national and international

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      The following table shows our company’s net revenues breakdown by service for the years ended December 31, 2000, 2001 and 2002:

The Broadband Network

      Our Broadband Network, enables us to provide high capacity, high speed telecommunications services across Latin America. Our Broadband Network consists of:

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

      We believe that our Broadband Network enables us to:

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

      Our Broadband Network is a fully integrated terrestrial fiber optic network connecting Santiago, Chile; Buenos Aires, Argentina; and São Paulo and Rio de Janeiro, Brazil with points in between.

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Customers

      Overview. We have grown rapidly since the commencement of our operations in 1990. Our customer base has increased from 125 corporate customers in two countries at December 31, 1992 to 2,649 corporate customers in nine countries at December 31, 2002. Larger entities, which often have significant needs for reliable, cost-effective data transmissions and other telecommunications services, were the first to use our customized telecommunications services. As a result, a significant portion of our revenues has been derived from our largest customers. A significant number of our customers, including our largest customers, are in Argentina and Colombia, which, having commenced in 1990 and 1992, respectively, are the locations of our longest-standing operations. Our customer base in Brazil has grown from 48 at the end of 1998 to 366 at the end of 2002. As our business further matures and as we extend the operation of the Broadband Network, we expect that the average size of our customers will decline.

      Our customers consist of financial institutions, major governmental agencies, and leading national and multinational corporations and private sector companies, including Repsol YPF, Petroleo Brasileiro S.A. — Petrobras, Siemens and Reuters. Our ten largest customers accounted for approximately 20.8% of our revenues in 2002 and approximately 22.9% in 2001.

      Our ten largest customers as of December 31, 2002 were:

	•	subsidiaries of Global Crossing Ltd., a Bermuda-headquartered corporation that constructs, and offers carrier’s carrier services over, worldwide terrestrial and submarine fiber optic networks
	•	Instituto Nacional de Hipodromos (INH), a Venezuelan horse racing track
	•	Confederaçaõ Nacional da Industria, Brazil’s national association of private industrial companies
	•	Corporacion Nacional de Ahorro y Vivienda, or Conavi, one of Colombia’s largest financial institutions
	•	Citicorp Global Technology, Inc.
	•	OpenTech S.A., a communications equipment and software distributor based in Venezuela.
	•	Empresa de Telecomunicaciones de Bogotá S.A., E.S.P., one of Colombia’s largest telecommunications companies
	•	HSBC Bank Brasil S.A., the third-largest privately-owned bank in Brazil
	•	Perez Companc S.A., an Argentine energy conglomerate
	•	Gobierno de la Provincia de Buenos Aires, the local government of the province of Buenos Aires

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

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      Customer Contracts. Our contracts with our customers have in the past typically ranged in duration from six months to five years and contracts with our private telecommunications network customers have generally been three-year contracts. Under the Argentine “pesification” decree, if a contract denominated in pesos is entered into after the decree’s enactment, payments under that contract are not entitled to be adjusted according to the CER or any other consumer price index. Accordingly, in order to mitigate our inflation risk, our new peso-denominated contracts in Argentina are typically for shorter terms ranging from three to six months. Contracts generally may be terminated by the customer without penalty. The private telecommunications network customers generally pay a one-time installation fee and a fixed, monthly fee. We believe that as we further commercialize our Broadband Network, we may develop a more flexible pricing structure, using both a usage-based billing and fixed fee-based billing model.

      The ongoing severe economic downturn in Argentina and recessionary economic conditions in Latin America as a whole, has adversely affected many of our customers and caused a number of them to terminate their contracts with us, fail to renew their contracts, or reduce the amount of services contracted.

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

Sales, Marketing and Customer Services

      We view our relationship with our customers as a long-term partnership in which customer satisfaction is of paramount importance. For this reason, we apply an integrated approach to our sales, marketing and customer service functions. We emphasize the highest quality in our sales, marketing and customer services and an enduring commitment to providing fast and flexible responses to customer demands. In order to efficiently meet these challenges, we adapt and tailor our customer service function to match the scale and complexity of the solutions we provide.

      Customers who require or are better-suited to standardized or bundled solutions are serviced by dedicated sales teams with shared centralized support, along with available assistance from our 24 hours a day, 365 days a year call centers. Customers that utilize complex, customized solutions composed of a variety of different services are assigned to designated multi-task customer service teams that develop and maintain long-term, cooperative relationships with these customers. These relationships provide us with an in-depth understanding of the customer’s evolving telecommunications service requirements and levels of service satisfaction. The customer service team oversees all phases of initial customer contact, service planning, installation and ongoing service. After we establish initial contact with a potential customer, the customer service team conducts a thorough evaluation of the customer’s telecommunications needs. As a result of this team-oriented approach, we believe that we have achieved high levels of customer satisfaction while being able to identify new revenue generating opportunities, customer telecommunications solution enhancements and product or service improvements previously overlooked or not adequately addressed by the client.

      To market our new and enhanced services, such as telephony and data centers, we have developed several sales and marketing teams, each focusing on a particular type of service. In addition to salaried sales and marketing personnel, we often use the services of third-party sales representatives to assist in generating sales and managing the contract process between us and our potential customers. We typically pay these third parties a commission and royalties equal to a percentage of the revenues we collect from any contract with those customers obtained as a result of the efforts of the third-party sales representative.

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Competition

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

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

      In the past, the PTOs and international telecommunications carriers have focused on local and long-distance telephony services. More recently, however, they have focused a degree of attention and resources towards the private telecommunications network systems segment of the telecommunications market, and may be expected to increasingly do so in the future. Several of these entities have significantly greater financial and other resources than we do, including greater access to financing. These competitors may also be able to subsidize their private telecommunications network businesses with revenues from their other business lines.

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

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

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

	•	MetroRED Telecomunicaciones, owned by Fidelity Investments, a data transmission service operator in Argentina, Brazil and Mexico that offers local network services in the cities of Buenos Aires in Argentina, São Paulo and Rio de Janeiro in Brazil, and Mexico City in Mexico
	•	Pegasus Telecom S.A., a provider of broadband data transmission services throughout 25 cities in Brazil and an affiliate of Brazilian fixed line and wireless operator, Telemar Participacoes S.A.
	•	Engenharia de Redes S.A., a Brazilian infrastructure and data services provider that uses both fiber optic and wireless links
	•	NetUno, a local exchange carrier and provider of broadband local access, Internet and private network services in Venezuela
	•	TechTel (an Argentine telecommunications company jointly owned by Grupo Techint SA, one of Argentina’s largest industrial groups, and Telmex (Telefonos de Mexico S.A. de C.V.), Mexico’s dominant telecommunications carrier), which offers long distance, data transmission and basic telephony services in Argentina and has announced plans to expand its operations into Uruguay

      In the third category, major telecommunications carriers have entered or indicated their intention to enter the market as deregulation in Latin America and elsewhere opens new market opportunities. Increasing competition may significantly affect our pricing policies. We cannot assure you that any future competition arising from major telecommunications carriers will not adversely affect our financial condition or results of operations.

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

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

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

Regulation

      Domestic Service. We are subject to regulation by the national telecommunications authorities of the countries where we operate, and our operations require us to procure permits and licenses from these authorities. While we believe that we have received all required authorizations from regulatory authorities for us to offer our services in the countries in which we operate, the conditions governing our service offerings may be altered by future legislation or regulation that could affect our business and operations.

      Cross-Border Service. We provide integrated data, voice and video transmission under the Interplus name between and among nineteen Latin American and Caribbean countries and the United States. In November 2000, we were granted a license to provide switched voice services to or from Argentina, and in November 2002 we received authorization to provide these services in Brazil. International private line services such as Interplus are traditionally provided by local carriers in each country acting as correspondents and establishing dedicated telecommunications links between their facilities. Due to our pan-Latin American presence, we are often able to offer our Interplus service using our own facilities and personnel at both ends of the private line circuit. As a result of this end-to-end control, we maintain customer service and quality assurance at both ends of an Interplus link and realize better margins than when we use a correspondent carrier.

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

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

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Employees

      As of December 31, 2002, we employed a total of 1,271 persons, of whom 453 were employed by IMPSAT Argentina, 225 by IMPSAT Brazil, and 229 by IMPSAT Colombia. Except with respect to our Chief Executive Officer and our Chief Financial Officer, we do not have any long-term employment contracts with any of our employees, including management, and none of our employees are members of any union. We believe that our relations with our employees are good.

Item 2.     Properties

      Metropolitan Area Networks. We operate 15 metropolitan area networks, composed of a combination of owned and leased fiber optic and microwave links covering a total of 1,000 route kilometers. Our first metropolitan area network was established in Buenos Aires, Argentina in 1990. In addition, we currently provide services over our metropolitan area networks in Córdoba, Mendoza and Rosario, in Argentina; Bogotá, Medellín and Cali, Colombia; Rio de Janeiro, Curitiba, São Paulo and Belo Horizonte in Brazil; Caracas, Venezuela; Quito and Guayaquil, Ecuador; and Lima, Peru. We also manage and operate data transmission services offered over a fiber optic network covering 352 route kilometers in Bogotá, Colombia, pursuant to a joint venture with Empresa de Telecomunicaciones de Santafe de Bogotá, the Colombian PTO that provides local telephone service in the Bogotá region. In addition, we own and control several microwave links in smaller cities in Latin America.

      Fiber Optic Long-Haul Capacity. The long-haul segment of our Broadband Network, which comprises a seamless long-haul, high capacity fiber optic backbone extending over 8,880 route kilometers, stretches from the Pacific Ocean at Valparaiso, Chile to the Atlantic coast in Buenos Aires, Argentina, and from there into Curitiba, Rio de Janeiro and São Paulo, Brazil. We also own and operate a long haul fiber optic network connecting the cities of Cali, Medellín and Bogotá in Colombia. To link the Broadband Network to other parts of Latin America and the world, we have purchased IRU capacity on Global Crossing Ltd.’s undersea digital fiber optic cable systems (and associated terrestrial capacity) between the United States and Latin America, including Global Crossing’s South American network, as well as leased capacity from other undersea fiber optic cable operations, including on the submarine system between Latin America and the United States of Latin American Nautilus S.A., an affiliate of the Telecom Italia Group. This capacity enables our company to transmit telecommunications traffic seamlessly from the United States to major countries in South America using the latest fiber optic technology. For a discussion of certain risks that could adversely affect our rights to IRU capacity on Global Crossing’s network, see “Certain Considerations — We are negatively impacted by Global Crossing’s insolvency.”

      In addition to our IRU capacity on Global Crossing’s undersea fiber optic networks, we are a member of the Americas-1 and Columbus-II undersea fiber optic cable consortia, and have purchased an initial total capacity of 2 Mbps on each system. Americas-1, which commenced commercial operation in December 1994, is a 4,960 mile fiber optic cable system connecting Vero Beach, Florida with the U.S. Virgin Islands, Trinidad, Brazil and Venezuela. Columbus-II links Mexico, the United States, the U.S. Virgin Islands, Spain, Portugal and Italy with about 7,440 miles of fiber optic cable. We also have reserved up to 18 Mbps, 4 Mbps and 24 Mbps of capacity on the Americas-II, Pan American and Arcos I undersea fiber optic cable networks, respectively. The 8,300 km Americas-II fiber optic submarine cable connects St. Croix, Puerto Rico, Curacao, Venezuela and Brazil. Pan American runs between the U.S. Virgin Islands, Aruba, Venezuela, Colombia, Panama, Ecuador, Peru and Chile. Arcos I, an 8,600 km fiber optic cable system, connects the United States with 14 Caribbean and Latin American nations.

      Data Centers. To complement our Broadband Network infrastructure, we operate in major cities in Latin America 14 advanced data center hosting facilities with an aggregate of approximately 500,000 gross square feet. These state-of-the-art facilities, which are capable of supporting the most advanced application hosting services, are located in Buenos Aires, Mendoza, Córdoba and Rosario in Argentina; São Paulo, Rio de Janeiro and Curitiba in Brazil; Santiago, Chile; Fort Lauderdale, United States; Mexico City, Mexico; Bogotá, Colombia; Caracas, Venezuela; Quito, Ecuador; and Lima, Peru.

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

      Satellite Capacity. Our satellite transmissions use both C-band (4-7 GHz) and Ku-band (10-18 GHz) frequencies. As of December 31, 2002, we had a total available leased capacity of 143.0 MHz. Our lease payments for satellite capacity totaled approximately $32.1 million in 2002. We will contract for additional leased satellite capacity if business requires. A portion of our satellite capacity is leased by our wholly-owned subsidiary, International Satellite Capacity Holding, Ltd. This subsidiary’s principal function is to lease private telecommunications capacity from telecommunications carriers and then sublease this capacity at market rates to our operating subsidiaries. We believe that this method of centralizing our leasing of telecommunications capacity provides us with better terms.

Item 3.     Legal Proceedings

      As more fully described in Item 1 — “Business” and Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we sought protection under Chapter 11 of the United States Bankruptcy Code on June 11, 2002. We developed a Plan that was approved by the Bankruptcy Court on December 16, 2002. On March 25, 2003, the Plan became effective and we emerged from the proceedings under Chapter 11 of the United States Bankruptcy Code pursuant to the terms of the Plan.

      We are also involved in or subject to various litigation and legal proceedings incidental to the normal conduct of our business, including with respect to regulatory matters.

      IPO Allocations Class Action. As previously reported, on November 1, 2001, a lawsuit (the “IPO Class Action”) was filed in the United States District Court for the Southern District of New York against our company, certain individuals who were then officers and directors of our company, and the underwriters to our initial public offering (IPO). This lawsuit alleged on behalf of a proposed class of all shareholders that our company and its underwriters violated various provisions of the securities laws in connection with the IPO in February 2000. Pursuant to the Plan, the plaintiffs in the IPO Class Action received in connection with their claims the assignment of any insurance proceeds that we receive in connection with the litigation, but otherwise the claims of the plaintiffs against us or any of our other assets have been discharged as part of our Chapter 11 proceedings.

      360networks, Inc. During June 2001, we terminated a series of contracts that we had signed in the first quarter of 2001 with 360americas network (Bermuda) Ltd., a subsidiary of 360networks, Inc., and certain other subsidiaries of 360networks, Inc. (collectively, “360networks”), to construct and provide IRU dark fiber, capacity services and conduit to 360networks over the Broadband Network in Argentina and Brazil, including the new Argentina-Brazil link, as a result of the breach by 360networks of its payment obligations under those contracts. Between March and May 2001, we made segments of the IRU dark fiber and capacity services available to 360networks for acceptance, but 360networks failed to make certain payments as required by our contracts with them. 360networks also failed to make certain payments for collocation space in our telehouses in Sao Paulo and Rio de Janeiro, Brazil and Buenos Aires, Argentina, and we terminated those contracts as well. We also terminated a contract with 360networks for collocation space in Caracas, Venezuela, also for payment default by 360networks.

      Our IRU dark fiber, capacity services and construction contracts with 360networks contemplated total payments of approximately $98.8 million in advance upon delivery of the IRU dark fiber, capacity services and conduit construction to 360networks and additional recurring payments, totaling approximately $45.0 million over the term of the contracts, for maintenance services. As of the termination of the contracts, 360networks had paid us a total of $25.8 million and was in default on additional payments totaling $32.0 million. In addition, 360networks was in default on payments for collocation services totaling $0.8 million.

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      We commenced arbitration and litigation proceedings against 360networks for damages under the terminated contracts for the provision of IRU dark fiber and capacity services, as contemplated by the relevant agreements. During November 2002, we reached an agreement (the “Settlement Agreement”) with 360networks pursuant to which we agreed to dismiss our arbitration and litigation proceedings against 360networks and, in return, we became entitled to certain funds totaling $22.6 million that 360networks had advanced to us in connection with the contracts between us and 360networks. These funds had been recorded by us as deferred revenues during the pendency of the litigation and arbitration proceedings. In addition, under the Settlement Agreement, we received from 360networks assets with a fair value of approximately $1.6 million. The Settlement Agreement became effective on December 20, 2002.

      Global Crossing Ltd. Global Crossing Ltd. filed for protection under Chapter 11 of the Bankruptcy Code in January 2002, and the Global Crossing subsidiaries to whom our company provides services and infrastructure, as described below, were included in Global Crossing’s Chapter 11 proceedings during August 2002. We are party to a series of agreements with Global Crossing for the provision of telecommunications services. Pursuant to those agreements, our company constructed a terrestrial portion of Global Crossing’s South American network between landing points on the Atlantic Ocean in Argentina and the Pacific Ocean in Chile, granted Global Crossing a series of indefeasible rights of use (IRU) over ducts and dark fiber on its broadband telecommunication network in Argentina, Brazil and Peru, provided Global Crossing with collocation space and related services in its telehouses in Argentina, Brazil, Chile, Venezuela and Peru and provided Global Crossing with maintenance services for their telecommunications assets in Latin America. In addition, we acquired IRU and leased capacity on Global Crossing’s South American undersea fiber optic cable system in order to connect our Broadband Network with other parts of Latin America and the world.

      Commencing in the first quarter of 2002 and subsequent to the filing of Global Crossing’s petition under Chapter 11, Global Crossing has disputed a number of invoices that we have delivered to it in connection with the services which we are rendering to Global Crossing and has failed to make full payment in accordance with the terms of our invoices. The principal disputed matters include the following:

      Beginning in the first quarter of 2002, Global Crossing disputed certain of our invoices sent to its Argentine and Brazilian subsidiaries for collocation and related services in our telehouses in those countries. On January 15, 2003, we filed a motion in the Global Crossing Chapter 11 proceeding seeking an order that Global Crossing either irrevocably reject or assume the telehouse agreements and that Global Crossing make payment of all shortfalls under the telehouse agreements after the respective petition dates of the Global Crossing debtors through December 31, 2002, in the aggregate amount of $1,069,051.57, plus interest on the past due amounts, as administrative expense claims. On February 19, 2003, Global Crossing responded to our motion. In its response, Global Crossing stated its intention to assume the Brazil and Argentina telehouse agreements, along with three other telehouse agreements covering collocation space in Santiago, Chile, Lima, Peru and Caracas, Venezuela, although it also stated its right under its plan of reorganization to reconsider its assumption of such agreements at any time prior to the effective date of the Global Crossing plan of reorganization. Global Crossing denied that it owed any unpaid amounts with respect to the Argentine or Brazilian telehouse agreements. We and Global Crossing are currently seeking to agree to a schedule for evidence, briefing and adjudication of the disputes regarding the Argentine and Brazilian telehouse agreements.

      In October 2002, Global Crossing failed to make payment of the full amount of recurring service charges for operation and maintenance of the IRUs that Global Crossing acquired under the TAC Turnkey Construction and IRU Agreement dated September 22, 1999 (the “TAC Agreement”). During the first quarter of 2003, Global Crossing also paid recurring service charges under the TAC Agreement and the other backhaul agreements in amounts less than we assert to be contractually required. As part of our January 15, 2003 motion in Global Crossing’s bankruptcy proceeding, we requested that the bankruptcy court find that Global Crossing has failed to make the full recurring service charges required by the TAC Agreement and order Global Crossing to make payment of such amounts as administrative expenses through December 31, 2002, in the amount of $614,470.50, plus interest on the past due amounts as set forth in the TAC Agreement. In its response to our motion, Global Crossing requested that the bankruptcy court defer determination of our

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      On March 26, 2003, Global Crossing filed an adversary proceeding with the bankruptcy court overseeing its Chapter 11 case asserting a proprietary interest in the IRUs granted to them under the TAC Agreement and other backhaul agreements entered into between the two companies. Our response to Global Crossing’s complaint is due on April 25, 2003. Our company and Global Crossing are currently seeking to agree to a schedule for evidence, briefing and adjudication of Global Crossing’s asserted proprietary interest in the IRUs arising under the TAC Agreement and other backhaul agreements.

      On March 26, 2003, Global Crossing Bandwidth, Inc., one of the debtors in Global Crossing’s Chapter 11 proceeding, filed an adversary proceeding in the Global Crossing Chapter 11 case claiming IMPSAT USA had failed to pay Global Crossing Bandwidth, Inc. a total of $466,820 for IP transit services pursuant to a Carrier Service Agreement dated January 19, 2001 between IMPSAT USA and Global Crossing Bandwidth, Inc. We intend to dispute Global Crossing Bandwidth’s complaint on the basis that IMPSAT USA has paid in full all amounts owed by it under the Carrier Services Agreement. Our answer to the complaint in this matter is due on April 25, 2003.

      See “Certain Considerations — We are negatively impacted by Global Crossing’s insolvency” for more information concerning our commercial relationships and current disputes with Global Crossing.

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

      On or around November 1, 2002, ballots respecting the Plan and the related disclosure statement dated as of October 23, 2002 were circulated to our security holders and other persons entitled to vote on the Plan. Notice of the Plan was also mailed to our equity holders. The majority of holders of the Class 2 and Class 3 claims voted in favor of the restructuring set forth in the Plan, which was confirmed by the Bankruptcy Court on December 16, 2002. No vote was taken of the equity holders as they were not entitled to vote in accordance with the United States Bankruptcy Code.

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PART II

Item 5.     Market for Registrant’s Common Equity and Related Stockholder Matters

      Our Old Common Stock had been traded on the Nasdaq National Market under the symbol “IMPT” since the effective date of our initial public offering on February 4, 2000. On May 15, 2002, the Old Common Stock was delisted from the Nasdaq National Market because the Old Common Stock failed to maintain a minimum market value of $3 over 30 consecutive trading days and failed to maintain a minimum market value of public float of $15,000,000. Since May 15, 2002, the Old Common Stock was traded on the Nasdaq Over-The-Counter Bulletin Board under the symbol “IMPTQ.”

      The following tables shows the high and low sales price of the Old Common Stock for each fiscal quarter between January 1, 2001 through May 15, 2002 as reported on Nasdaq National Market System and, after May 15, 2002 through December 31, 2002, on the Nasdaq Over-The-Counter Bulletin Board.

      In accordance with the Plan, all pre-existing equity interests of IMPSAT Fiber Networks, Inc. were cancelled on the Effective Date. We anticipate the New Common Stock to trade on the Nasdaq Over-The-Counter Bulletin Board some time during the second quarter of 2003. As of March 31, 2003 there was no market for our New Common Stock and there were approximately nine holders of record of our New Common Stock, not including beneficial owners in nominee or street name. Our board of directors has not declared any dividends on our Old Common Stock in past, and we do not anticipate paying any cash dividends on the New Common Stock in the foreseeable future. In addition, the terms of our Series A Notes and Series B Notes restrict our ability to pay dividends on the New Common Stock.

      The information required concerning compensation plans under which equity securities of our company are authorized for issuance is set forth in Item 12 of this Report under the caption “Equity Compensation Plan Information.”

Item 6.     Selected Financial Data

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

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

Overview

      Reorganization. As discussed above under “Business — Chapter 11 Filing and Emergence,” the Bankruptcy Court confirmed the Plan on December 16, 2002. In accordance to the terms of the Plan, we formally emerged from bankruptcy on the Effective Date, March 25, 2003. Pursuant to the Plan, on the Effective Date, all of the shares of our Old Common Stock, options granted under our stock option plans and any other equity interests were cancelled, retired and eliminated with no consideration paid thereon. We also adopted a new 2003 Stock Incentive Plan and terminated our 1998 Stock Option Plan and our 1999 Stock Option Plan. Also under the Plan, we restructured our obligations with certain holders of our Original Vendor Financing Agreements and the holders of our former Senior Notes. On the Effective Date, in full satisfaction of the claims of the 2005/2008 Holders, we issued 9.8 million shares of New Common Stock (as decreased by the number of shares necessary to allow for the allocation of the Common Stock Reserve Pool to Post-Effective Date Contingencies and other general unsecured claims (see “Business — Chapter 11 Filing and Emergence”)) in accordance with the Plan. Each holder of our Notes Due 2003 has received, in full satisfaction of its claims, including the outstanding principal and all accrued and unpaid interest thereon, its ratable portion of our $67,531,000 aggregate principal amount of Series A Notes. In full satisfaction of their claims, the holders of the Original Vendor Financing Agreements and other creditors of our operating subsidiaries holding guarantees by our parent holding company of such indebtedness who voted to accept the Plan have received, inter alia, $23.9 million in aggregate principal amount of our new Series B Notes and restructured senior debt of one or more of our operating subsidiaries in the amounts provided for in the Plan, and an aggregate of 3,155,244 New Warrants. We also issued, pursuant to the Plan 200,000 shares of New Common Stock to certain of our officers in accordance with our 2003 Stock Incentive Plan.

      Pursuant to our reorganization, we have substantially reduced our outstanding debt and annual interest expense and increased our liquidity. At December 31, 2002, prior to the reorganization, our long-term debt,

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      Upon our emergence from bankruptcy on March 25, 2003, we have adopted “fresh start” reporting as required by “American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”). Under SOP 90-7 fresh start reporting, a new reporting entity is considered to be created and the recorded amounts of assets and liabilities are adjusted to reflect their estimated fair values at the date fresh start reporting is applied. Among other things, this requires us to allocate the reorganization value of our reorganized company to its specific tangible and identifiable assets and liabilities. The effect of the reorganization and the implementation of SOP 90-7 fresh start reporting on our consolidated financial statements as if we had formally emerged from bankruptcy on December 31, 2002 is discussed in detail in Note 17 (unaudited) to our audited consolidated financial statements included elsewhere in this Report. As a result of the implementation of SOP 90-7 fresh start reporting, the consolidated financial statements of our company from and after its emergence from bankruptcy will not be comparable to the consolidated financial statements of prior periods.

      Revenues. Our contracts with our customers have in the past typically ranged in duration from six months to five years and contracts with our private telecommunications network customers have generally been three-year contracts. Under the Argentine “pesification” decree, if a contract denominated in pesosis entered into after the decree’s enactment, payments under that contract are not entitled to be adjusted according to the CER or any other consumer price index. Accordingly, in order to mitigate our inflation risk, our new peso-denominated contracts in Argentina will typically be for shorter terms ranging from three to six months. The customer generally pays an installation charge at the beginning of the contract and a monthly fee based on the quantity and type of equipment installed. Except in Brazil and, since the “pesification” decree, in Argentina, the fees stipulated in the contracts are generally denominated in U.S. dollar equivalents. See “Certain Considerations — We are vulnerable to currency fluctuations . . .” and “— Currency Risks.” Services (other than installation fees) are billed on a monthly, predetermined basis, which coincide with the rendering of the services. We report our revenues net of deductions for sales taxes.

      We have experienced, and anticipate that we will continue to experience, downward pressure on our prices as we expand our customer base, confront growing competition for private telecommunications network services, and endure the effects of economic downturns in our countries of operation. When we have renewed and/or expanded our contracts with existing customers, the prices we charge have generally declined.

      Although we believe that our geographic diversification provides some protection against economic downturns in any particular country, our results of operations and business prospects depend upon the overall financial and economic conditions in Latin America. Most of the countries in which we operate are undergoing, or have experienced in recent years, political and economic volatility. With the exception of the United States, each of the countries in which we operate have suffered in recent years and, in some cases, continue to experience, economic recession. In particular, Argentina (our largest market in terms of revenues generated) and Venezuela are experiencing severe economic and political crises. See “Certain Considerations — Economic and political conditions in Latin America pose numerous risks to our operations.” These conditions may have material adverse effects on our business, results of operation and financial condition.

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      Costs and Expenses. Our costs and expenses principally include:

	•	direct costs
	•	salaries and wages
	•	selling, general and administrative expenses
	•	depreciation and amortization

      Our direct costs include payments for leased satellite transponder and fiber optic capacity. The completion of the Broadband Network has decreased our payments for leased capacity as we have shifted transmission from leased satellite facilities to our Broadband Network after satellite contracts expire. The other principal items composing direct costs are contracted services costs, and other direct costs. Contracted services costs include costs of maintenance and installation (and de-installation) services provided by outside contractors. Installation and de-installation costs are the costs we incur when we install or remove earth stations, microstations and other equipment from customer premises. Other direct costs include:

	•	licenses and other fees
	•	sales commissions paid to third-party sales representatives
	•	allowance for doubtful accounts

      Our selling, general and administrative expenses consist principally of:

	•	publicity and promotion costs
	•	fees and other remuneration
	•	travel and entertainment
	•	rent
	•	plant services, insurance and corporate telecommunication and energy expenses

      Currency Risks. Except in Argentina (since the “pesification” decree, to the extent discussed below) and Brazil, our contracts with customers generally provide for payment in U.S. dollars or for payment in local currency linked to the exchange rate between the local currency and the U.S. dollar at the time of invoicing. Accordingly, inflationary pressures on local economies in the other countries in which we operate did not have a material effect on our revenues during 2002. Nevertheless, given that the exchange rate is generally set at the date of invoicing and that we in some cases experience substantial delays in collecting receivables, we are exposed to exchange rate risk, even in countries other than Argentina and Brazil. Furthermore, under Brazilian law and to the extent discussed above, under Argentina’s “pesification” decree, our contracts with customers in Brazil cannot and, under certain circumstances, our contracts with customers in Argentina may not, be linked to the exchange rate between the local currency and the U.S. dollar. Accordingly, operations in Argentina and Brazil increase our exposure to exchange rate risks. In addition, the foreign currency exchange and transfer controls established by the Venezuelan government in February 2003 are likely to adversely affect the collectibility of our dollar-denominated contracts in Venezuela.

      In early January 2002, the government of President Eduardo Duhalde, who abandoned the decade-old fixed peso-dollar exchange rate and permitted the pesoto float freely against the U.S. dollar. The peso free market opened on January 11, 2002 and traded at 1.65 pesos to the U.S. dollar and has traded as low as 3.87 pesos to the U.S. dollar on June 26, 2002. As of March 31, 2003, the floating exchange rate was 2.88 pesos to the U.S. dollar. The devaluation of the Argentine peso will generally affect our consolidated financial statements by generating foreign exchange gains or losses on dollar-denominated monetary liabilities and assets of IMPSAT Argentina and will generally result in a decrease, in U.S. dollar terms, in our revenues, costs and expenses in Argentina.

      Since the “pesification” decree, IMPSAT Argentina’s customer contracts and operating cash inflows are now predominantly denominated in pesos. However, IMPSAT Argentina’s debt service payments and a

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      Our operations in Brazil have also been affected by currency devaluation during 2002. Investors became increasingly uneasy about Brazil due to, among other factors, an increasingly uncertain political environment leading up to the election at the end of October 2002 of Luiz Inacio Lula da Silva. The markets are awaiting further clarification as to the policies that will be implemented by his administration and the effect of these policies, although there has been a positive market reaction to Mr. da Silva’s actions and appointments thus far. The election was preceded by the rapid decline in the value of Brazil’s currency compared to the U.S. dollar and speculation about the ability of Brazil to service its approximately $239 billion of public debt, much of which must be refinanced in the next several years. At December 31, 2001, the real traded at a rate of R$2.41 = $1.00. The real depreciated during 2002, reaching a low of R$4.03 = $ 1.00 during the third and fourth quarters of that year, and closing at R$3.53 = $1.00 at December 31, 2002. At March 31, 2003, the real traded at a rate of R$3.46 = $1.00.

      Widespread discontent with the policies of the current Venezuelan government produced a country-wide strike in the beginning of December 2002 that lasted two months and seriously disrupted economic activity in Venezuela and severely curtailed the production and export of oil, the major source of Venezuela’s foreign exchange. In response, on February 5, 2003, the Venezuelan government imposed foreign exchange and price controls, making it difficult for our customers in that country to obtain the U.S. dollars needed to make payments due to us in U.S. dollars on a timely basis. These foreign exchange controls could also limit our ability to convert local currency into U.S. dollars and transfer funds out of Venezuela. At December 31, 2001, the bolivartraded at a rate of Bs.769.00 = $1.00, at December 31, 2002, it traded at a rate of Bs.1,392.00 = $1.00, and at February 5, 2003, it traded at the rate of Bs.1,924 = $1.00. On February 6, 2003, the Venezuelan government set a single fixed exchange rate for the bolivar against the U.S. dollar of approximately Bs.1,600 = $1.00 as part of the new currency controls.

      Global Crossing Insolvency. We are party to a series of agreements with several subsidiaries of Global Crossing Ltd. for the provision of telecommunications services. Pursuant to those agreements, which were initially signed in 1999, we constructed a terrestrial portion of Global Crossing’s South American network between landing points on the Atlantic Ocean in Argentina and the Pacific Ocean in Chile, granted Global Crossing a series of indefeasible rights of use (IRU) over ducts and dark fiber on our Broadband Network in Argentina, Brazil and Peru, provided Global Crossing with collocation space and related services in our data centers in Argentina, Brazil, Chile, Venezuela and Peru and provided Global Crossing with maintenance services for their telecommunications assets in Latin America. In addition, we acquired IRU and leased capacity on Global Crossing’s South American undersea fiber optic cable system in order to connect our Broadband Network with other parts of Latin America and the world.

      During 2002, we recognized revenues totaling $14.8 million from Global Crossing for the services provided under our agreements with Global Crossing. Of this amount, $10.6 million represented services that were billed on a quarterly basis, and $4.2 million represented the recognition of revenue that had been deferred under the IRUs that we granted to Global Crossing. In 2002, Global Crossing invoiced us a total of $2.0 million, principally for maintenance services on the IRUs that we have acquired from Global Crossing. In general, invoices under our agreements with Global Crossing are submitted quarterly in advance and are payable 30 days after receipt.

      In January 2002, Global Crossing Ltd. filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Although the Global Crossing subsidiaries to whom we provide services and infrastructure were not originally included in Global Crossing Ltd.’s Chapter 11 filing, during August 2002 Global Crossing Ltd.

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      As of December 31, 2002, Global Crossing owed us $3.3 million that we invoiced to them during 2002. We have recorded a provision for doubtful accounts of $2.1 million against these receivables. As of March 7, 2003, Global Crossing owed us $4.8 million that we invoiced them during 2002 and the first quarter of 2003. We have recorded a provision for doubtful accounts of $2.8 million against these receivables.

      We have disputed a total of $[0.1] million that Global Crossing has invoiced us for services through the end of 2002. The amounts that we owe Global Crossing are principally owed to Global Crossing Bandwidth, Inc., a subsidiary of Global Crossing that is among the Global Crossing parties that have filed for relief under Chapter 11.

      Global Crossing’s reorganization plan was approved in December 2002. Global Crossing is awaiting receipt of certain regulatory approvals and satisfaction of other conditions to the effectiveness of its plan of reorganization, and there is no guaranty as to when or whether it will emerge from bankruptcy. The difficulties being experienced by Global Crossing, including Global Crossing’s Chapter 11 proceeding, have had an adverse effect on our financial condition and operations. At a minimum, Global Crossing’s bankruptcy proceedings have caused delays in our efforts to enforce our contracts with Global Crossing. In the event of a rejection of any of the contracts by Global Crossing, any pre-petition damages that we might have in respect of such rejected contracts would be treated as claims in the applicable Global Crossing bankruptcy proceedings, which claims may not realize any meaningful recovery to us. In this regard, in connection with Global Crossing’s filing at the end of August 2002 to include certain of its subsidiaries in its Chapter 11 proceedings, Global Crossing rejected one of its agreements with us, pursuant to which agreement IMPSAT Colombia had agreed to lease space in its telehouse in Bogota, Colombia to Global Crossing. More recently, Global Crossing has indicated in its filings related to its Chapter 11 proceeding that it might reject some or all of the other agreements that it has with us.

      We are monitoring the Global Crossing commercial relationship and the outcome of its bankruptcy proceedings carefully. We have filed motions in Global Crossing’s bankruptcy proceeding seeking an order that Global Crossing make payment to us of the amounts claimed by us and that Global Crossing either accept or reject its contracts with us. Global Crossing has disputed that it owes us any amounts under the contracts at issue and has filed a proceeding seeking that the bankruptcy court grant Global Crossing a property right in the IRUs that it acquired from us. See “Certain Considerations — We are negatively impacted by Global Crossing’s insolvency” and “Legal Proceedings — Global Crossing.”

Critical Accounting Policies

      In the ordinary course of business, our company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”). We use our best judgment based on our knowledge of existing facts and circumstances and actions that we may undertake in the future, as well as the advice of external experts in determining the estimates that affect our consolidated financial statements. Actual results could differ significantly from those estimates under different assumptions and conditions. Our most critical accounting policies are:

      Revenue Recognition. We record revenues from data, value-added telephony, IT solutions and Internet services monthly as the services are provided. Equipment sales are recorded upon delivery to and acceptance by the customer.

      We have entered into agreements with carriers granting indefeasible rights of use (“IRUs”) and access to portions of our Broadband Network capacity and infrastructure. Pursuant to these agreements, we receive fixed advance payments for the IRUs and recognize the revenue from the IRUs ratably over the life of the IRUs. Amounts received in advance are recorded as deferred revenue.

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      Non-Monetary Transactions. We may exchange capacity on our Broadband Network for capacity from other carriers through the exchange of IRUs. We account for these transactions as an exchange of similar IRUs at historical carryover basis with no revenue, gain or loss recognized.

      Broadband Network and Property, Plant and Equipment. Our business is capital intensive. We record at cost our telecommunications network assets and other improvements that, in management’s opinion, extend the useful lives of the underlying assets, and depreciate such assets and improvements over their estimated useful lives. Our telecommunications network is highly complex and, due to innovation and enhancements, certain components of the network may lose their utility faster than anticipated. We periodically reassess the economic lives of these components and make adjustments to their expected lives after considering historical experience and capacity requirements, consulting with the vendors, and assessing new product and market demands and other factors. When these factors indicate that network components may not be useful for as long as anticipated, we depreciate their remaining book values over their residual useful lives. The timing and deployment of new technologies could affect the estimated remaining useful lives of our telecommunications network assets, which could have a significant impact on our results of operations in the future.

      Impairment of Long-Lived Assets. We periodically review the carrying amounts of our Broadband Network and property, plant, and equipment to determine whether current events or circumstances warrant adjustments to the carrying amounts. As part of this review, we analyze the projected undiscounted cash flows associated with our Broadband Network and property, plant, and equipment. Considerable management judgment is required in establishing the assumptions necessary to complete this analysis. Although we believe these estimates to be reasonable, they could vary significantly from actual results and our estimates could change based on market conditions. Variances in results or estimates could cause changes to the carrying value of our assets including, but not limited to, recording additional impairment charges for some of these assets in future periods. During the year ended December 31, 2001, we recorded a $381.9 million impairment charge primarily related to our telecommunications network.

      Basis for Translation. IMPSAT maintains its accounts in U.S. dollars. The accounts of our subsidiaries are maintained in the currencies of the respective countries. In accordance with Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation,” the accounts of our subsidiaries are translated from local currency amounts to U.S. dollars. The method of translation is determined by the functional currency of our subsidiaries. A subsidiary’s functional currency is defined as the currency of the primary environment in which a subsidiary operates and is determined based on management’s judgment. When a subsidiary’s accounts are not maintained in the functional currency, the financial statements must be remeasured into the functional currency. This involves remeasuring monetary assets and liabilities using current exchange rates and non-monetary assets and liabilities using historical exchange rates. The adjustments generated by remeasurement are included in our consolidated statement of operations.

      When the local currency of a subsidiary is determined to be the functional currency, the statements are translated into U.S. dollars using the current rate method. The adjustments generated by translation using the current rate method are accumulated in an equity account entitled “Accumulated other comprehensive loss” within our consolidated balance sheets.

      Financial Reporting by Entities in Reorganization under the Bankruptcy Code. Our consolidated financial statements have been prepared in accordance with AICPA Statement of Position (“SOP”) 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code.” Pursuant to SOP 90-7, an objective of financial statements issued by an entity in Chapter 11 is to reflect its financial evolution during the proceeding. For that purpose, the consolidated financial statements for periods including and subsequent to filing of our Chapter 11 petition should distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of our business. Expenses and other items not directly related to ongoing operations are reflected separately in the consolidated statement of operations as reorganization items.

      Upon consummation of the Plan, we will apply “Fresh-Start” reporting in accordance with GAAP and the requirements of SOP 90-7. Under Fresh Start reporting, the reorganization value of our company, which generally represents its going concern value, is ultimately determined pursuant to the approval of the Plan by its creditors and confirmation of the Plan by the Bankruptcy Court. Upon the Effective Date, a new capital

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      These policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often are a result of the need to make estimates about the effect of matters that are inherently uncertain. We have not made any changes in any of these critical accounting policies during 2002, nor have we made any material changes in any of the critical accounting estimates underlying these accounting policies during 2002.

Results of Operations

      The following table summarizes our results of operations: