IMPSAT Announces First Quarter 2006 Results

Business Wire, May 16, 2006

BUENOS AIRES, Argentina -- IMPSAT Fiber Networks, Inc. ("Impsat" or the "Company") (OTCBB:IMFN), a leading provider of integrated broadband data, Internet and voice telecommunications services in Latin America, announced its results for the first quarter of 2006. All figures are in U.S. dollars.

FIRST QUARTER 2006 HIGHLIGHTS

--Net Revenues increased for the ninth consecutive quarter. For the first quarter of 2006, net revenues totaled $68.6 million, an increase of $8.7 million or 14.5% compared to the first quarter of 2005.

--EBITDA totaled $15.5 million, or 22.7% of net revenues, for the first quarter of 2006. EBITDA increased $4.9 million, or 46.2%, as compared to first quarter of 2005.

--Capital Expenditures for the first quarter of 2006 totaled $7.1 million.

--Impsat Brazil's revenues rose by $5.6 million for the first quarter of 2006 as compared to the first quarter of 2005, an increase of 55.7%.

FIRST QUARTER 2006 RESULTS

Commenting on the results of the first quarter of 2006, Impsat CEO Ricardo Verdaguer stated: "During the first quarter of 2006 we reinforced our leadership position in Latin America thanks to sustained growth in revenues. In Brazil, we increased revenues by 55.7% as compared to the first quarter of 2005. Our strategic focus on IP services and world class Data Centers is translating into solid financial performance. Our net revenues have now increased for nine consecutive quarters. In addition, we improved our EBITDA margin from 17.8% in the first quarter of 2005 to 22.7% in the first quarter of 2006."

Revenues

Net revenues during the first quarter of 2006 totaled $68.6 million, an increase of $8.7 million, or 14.5%, compared to the first quarter of 2005. All product lines increased revenues period-over-period.

--Broadband and Satellite revenues increased $2.9 million, or 6.9%, period-over-period, driven by growth of IP services in Brazil.

--Internet revenues increased 24.3% period-over-period due to higher managed security services and the expansion of internet access to corporate customers. Brazil, USA and Argentina were the subsidiaries with the highest growth.

--Value Added Services revenues increased by 56.2% as compared to the first quarter of 2005. Growth was led by hosting and managed services in our data centers.

--Telephony revenues grew by 7.4% compared to the first quarter of 2005, led by higher sales to corporate customers.

Three Months Ended
         Line of Service                    (in thousands)
                                 -------------------------------------
                                 31-Mar-05  31-Mar-06    Variation
======================================================================
Net revenues:
Net revenues from services:
    Broadband and satellite      $  41,789  $  44,674  $ 2,885    6.9%
    Internet                     $   6,931  $   8,616  $ 1,685   24.3%
    Value added services (1)     $   5,140  $   8,029  $ 2,889   56.2%
    Telephony                    $   5,928  $   6,367  $   439    7.4%
----------------------------------------------------------------------
       Total net revenues from
        services                 $  59,788  $  67,686  $ 7,898   13.2%
----------------------------------------------------------------------
Sales of equipment               $      84  $     872  $   788  938.1%
======================================================================
Total net revenues               $  59,872  $  68,558  $ 8,686   14.5%
======================================================================

(1) Includes data center services, systems integration and other
    information technology solutions services.

The Company's growth in revenues over the prior quarters is a combination of several factors including: (a) our increased customer base, which expanded from 3,484 customers at March 31, 2005 to 4,353 on March 31, 2006; (b) cross-selling to existing and new customers; (c) bundling of existing and new services; (d) stable or improved macroeconomic conditions throughout the Latin American region; and (e) appreciation of local currencies, mainly in Brazil.

Operating Expenses

Operating Expenses for the three months ended March 31, 2006 totaled $66.9 million, an increase of $5.6 million, or 9.2%, compared to the first quarter of 2005. This increase is principally related to a $2.2 million increase in direct costs, a $1.3 million increase in salaries and wages, a $0.2 million increase in selling, general and administrative expenses, and a $1.8 million increase in depreciation and amortization charges.

Direct Costs for the first quarter of 2006 totaled $33.2 million, an increase of $2.2 million (or 7.1%) compared to the first quarter of 2005. The principal components of direct costs were as follows:

Contracted Services increased $0.4 million compared to the first quarter of 2005. Contracted services include installation and maintenance services. The increase is related to the expansion of Impsat's customer base and the impact of currency revaluation in Brazil and Colombia.