IMPSAT Announces Third Quarter 2006 Results

Business Wire, Nov 15, 2006

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

THIRD QUARTER 2006 HIGHLIGHTS

* Net Revenues increased for the eleventh consecutive quarter. For the third quarter of 2006, net revenues totaled $71.1 million, an increase of $5.7 million, or 8.7% compared to the third quarter of 2005.

* EBITDA totaled $13.2 million, or 18.5% of net revenues, for the third quarter of 2006.

* Capital Expenditures for the third quarter of 2006 totaled $9.2 million.

* Impsat Brazil's revenues and EBITDA for the third quarter of 2006 as compared to the third quarter of 2005 rose by $3.7 million, or 29.9%, and $1.0 million, or 42.5%, respectively.

THIRD QUARTER 2006 RESULTS

Commenting on the results of the third quarter of 2006, Impsat CEO Ricardo Verdaguer stated, "I am proud to announce that during the third quarter of 2006 we continued to improve our revenue performance, making it our eleventh consecutive quarter of revenue growth. Such accomplishments are directly related to our strategic focus in IP and value added services. A couple of weeks ago, we announced Global Crossing's proposal to acquire Impsat, which demonstrates the value that we have created within the telecommunications industry in Latin America. Meanwhile, we continued expanding our Brazilian operations, where revenues and EBITDA grew by 29.9% and 42.5%, respectively."

Revenues

Net revenues during the third quarter of 2006 totaled $71.1 million, an increase of $5.7 million, or 8.7% compared to the third quarter of 2005. All product lines experienced increased revenues period-over-period.

* Broadband and Satellite revenues increased $1.3 million, or 2.9%, period-over-period, driven by growth of IP solutions in Brazil and Peru.

* Internet revenues increased 16.0% period-over-period due to higher managed security services and the expansion of internet access to corporate customers. Subsidiaries in Brazil, Colombia, and Venezuela realized the highest growth for the quarter.

* Value Added Services revenues increased by 47.0% as compared to the third quarter of 2005. Growth was led by housing, hosting, and managed services in our data centers, particularly in Brazil, Colombia and Chile.

* Telephony revenues grew by 5.3% compared to the third quarter of 2005, driven by higher sales to corporate customers in Peru and Brazil.

For the nine months ended September 30, 2006, net revenues totaled $209.1 million, an increase of $22.3 million, or 12.0% compared to the same period in 2005. All product lines benefited from cross-selling and up-selling, as well as an increased customer base and improved macroeconomic conditions throughout Latin America.

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Operating Expenses

Operating Expenses for the three months ended September 30, 2006 totaled $74.1 million, an increase of $9.5 million, or 14.7% compared to the third quarter of 2005. This increase is related to a $2.1 million increase in direct costs, a $4.7 million increase in salaries and wages, a $0.5 million increase in selling, general and administrative expenses, and a $2.2 million increase in depreciation and amortization charges.

Direct Costs for the third quarter of 2006 totaled $34.8 million, an increase of $2.1 million, or 6.3% compared to the third quarter of 2005. The principal components of direct costs were as follows:

Contracted Services remained relatively flat compared to the third quarter of 2005. Contracted services include installation and maintenance services.

Other Direct Costs principally include provisions for doubtful accounts, licenses and other fees, sales commissions paid to our salaried work force and to third-party sales representatives, and node expenses. Other Direct Costs for the third quarter of 2006 increased by $1.7 million compared to the third quarter of 2005. The increase is primarily due to higher services delivered to customers, an increase in energy costs related to higher data center services, doubtful accounts recoveries during 2005, and the appreciation of the local currency in Brazil.

Leased Capacity Costs increased by $0.4 million compared to the third quarter of 2005, driven by higher broadband services delivered during the period.

Salaries and Wages for the third quarter of 2006 totaled $16.8 million, a $4.7 million increase as compared to the third quarter of 2005. The increase is driven by charges related to the management incentive plan approved in December 2005, the effect of currency revaluation in Brazil, and salary adjustments related to higher cost of living in most of our subsidiaries. The charges related to the management incentive plan accounted for $3.8 million and are triggered by Global Crossing's acquisition proposal.

Selling, General and Administrative expenses totaled $6.3 million for the third quarter of 2006, an increase of 9.3% compared to the $5.8 million of the third quarter of 2005. This increase is primarily related to higher legal advisory fees.