INTERAMERICAS COMMUNICATIONS CORP, S-3/A, 1998-03-18

INTERAMERICAS COMMUNICATIONS CORP
S-3/A, 1998-03-18
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 18, 1998
REGISTRATION NO. 333-41839

============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

ADMENDMENT NO. 1
TO

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
INTERAMERICAS COMMUNICATIONS
CORPORATION
(Exact name of registrant as specified in its charter)

TEXAS 87-0464860
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

2600 DOUGLAS ROAD, SUITE 501
CORAL GABLES, FLORIDA 33134
(305) 448-4422

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

DOUGLAS G. GEIB II
CHIEF FINANCIAL OFFICER
INTERAMERICAS COMMUNICATIONS CORPORATION

2600 DOUGLAS ROAD, SUITE 501
CORAL GABLES, FLORIDA 33134
(305) 448-4422

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_____________

Copies of Communications to:

ANDREW HULSH, ESQ.
BAKER & MCKENZIE

701 BRICKELL AVENUE, SUITE 1600

MIAMI, FL 33131
(305) 789-8900

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
_____________

If the only securities being registered in this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be offered on
a delayed or a continuous basis pursuant to Rule 415, under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]

If this form is filed to register additional securities for an offering
pursuant to Section 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _____________

If this form is a post-effective amendment filed pursuant to Rule 462(o)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
_____________

CALCULATION OF ADDITIONAL REGISTRATION FEE

<TABLE>
<CAPTION>
==================================================================================================
AMOUNT OF
ADDITIONAL PROPOSED MAXIMUM PROPOSED MAXIMUM ADDITIONAL
TITLE OF SHARES AMOUNT TO AGGREGATE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE(2)
- ----------------------------- ---------------- ---------------- ----------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par Value 93,829 $ 2.375 $ 222,844 $ 65.74
============================= ================ ================ ================= ============

<FN>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).

(2) A registration fee of $11,973.55 was paid in connection with the initial
filing of this Registration Statement on December 10, 1997. The amount of
the additional registration fee is being paid herewith.

</TABLE>

_____________

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION DATED MARCH 18, 1998

PROSPECTUS

[INTERAMERICAS COMMUNICATIONS LOGO]

COMMON STOCK
$.001 PAR VALUE

This Prospectus relates to 18,567,432 shares (the "Shares") of Common
Stock, par value $.001 per share ("Common Stock"), of InterAmericas
Communications Corporation, a Texas corporation ("ICCA" and, together with its
subsidiaries, the "Company"), being offered from time to time by stockholders of
ICCA ("the Selling Stockholders"), including (i) Shares issued in transactions
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Section 4(2) of the Securities Act
and Regulation D promulgated thereunder and (ii) Shares issuable upon the
exercise of outstanding warrants and options to purchase shares of Common Stock.

The names of the Selling Stockholders, their respective holdings and the
duration of their respective warrants or options, as the case may be, are set
forth under "Selling Stockholders." The Shares may be sold or distributed by the
Selling Stockholders or by donees, transferees or pledges of, or the successors
in interest to, the Selling Stockholders from time to time in transactions for
their own account, in negotiated transactions, or a combination of such methods
of sale, at fixed prices which may change, at market prices prevailing at the
time of sale, at prices relating to such prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling Shares to or through broker/dealers, and such broker/dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the Shares for whom such
broker/dealers may act as agent and to whom they sell as principal or both
(which compensation as to a particular broker/dealer might be less than or in
excess of customary commissions). Except for the exercise price of the Selling
Stockholders' warrants and options, none of the proceeds from the sale of Shares
by the Selling Stockholders pursuant to this Prospectus will be received by
ICCA.
____________________

SEE "RISK FACTORS" COMMENCING ON PAGE 11 FOR CERTAIN INFORMATION THAT
SHOULD BE CONSIDERED IN CONNECTION WITH THIS OFFERING AND AN INVESTMENT IN THE
COMMON STOCK.

____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

____________________

The date of this Prospectus is , 1998

The Common Stock is traded on the Nasdaq SmallCap Market ("Nasdaq") under
the symbol "ICCA." On February 25, 1998, the last sale price for the Common
Stock as reported by Nasdaq was $2.31 per share.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and prior to the termination of this Offering
shall be deemed to be incorporated by reference into this Prospectus and to be
made a part hereof from the date of filing of such document. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OR ANY UNDERWRITER,
AGENT OR DEALER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY RESALE MADE
THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFERS OR SOLICITATION IN SUCH JURISDICTION.

THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE SECURITIES LAWS. ALL STATEMENTS REGARDING ICCA'S AND ITS SUBSIDIARIES'
EXPECTED FINANCIAL POSITION, BUSINESS AND FINANCING PLANS ARE FORWARD-LOOKING
STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, THERE CAN BE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ("CAUTIONARY
STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION,
THE INFORMATION UNDER "RISK FACTORS," "MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS." ALL SUCH
FORWARD-LOOKING STATEMENTS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS.

<PAGE>
NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS
TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT
THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS
OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER
OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

THE INFORMATION CONTAINED IN THIS PROSPECTUS HAS BEEN FURNISHED BY THE
COMPANY AND OBTAINED FROM INTERNAL COMPANY SURVEYS, INDUSTRY PUBLICATIONS AND
CURRENTLY AVAILABLE INFORMATION BELIEVED BY THE COMPANY TO BE RELIABLE. THERE
CAN BE NO ASSURANCE AS TO THE ACCURACY AND COMPLETENESS OF SUCH INFORMATION.
THIS PROSPECTUS CONTAINS SUMMARIES, BELIEVED TO BE ACCURATE, OF CERTAIN TERMS OF
CERTAIN DOCUMENTS BUT REFERENCE IS MADE TO THE ACTUAL DOCUMENTS, COPIES OF WHICH
WILL BE MADE AVAILABLE UPON REQUEST, FOR THE COMPLETE INFORMATION CONTAINED
THEREIN. ALL SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THIS REFERENCE.

2
<PAGE>
EXCHANGE RATE DATA

This Prospectus contains translations of certain Peruvian Nuevo Sol and
Chilean Peso amounts into U.S. dollars at specified rates solely for the
convenience of the reader. These translations should not be construed as
representations that the Peruvian Nuevo Sol and Chilean Peso amounts actually
represent such U.S. dollar amounts or could be converted into U.S. dollars at
the rate indicated, or at all.

PERU

The following table sets forth, for the periods ending on the date
indicated, the high, low, average and period-end free-market exchange rate. The
Federal Reserve Bank of New York does not report a noon buying rate for Peruvian
Nuevo Sol.

PERIOD-
PERIOD- HIGH LOW AVERAGE(1) END
- ---------------------------- ---- ---- ---------- -------
<S> <C> <C> <C> <C>
Year ended December 31, 1994 2.27 2.04 2.19 2.18
Year ended December 31, 1995 2.35 2.17 2.25 2.30
Year ended December 31, 1996 2.60 2.30 2.45 2.60

Year ended December 31, 1997 2.73 2.61 2.66 2.72

<FN>
Source: Extel Pricing Database.

(1) Average daily exchange rate.
</TABLE>

CHILE

PERIOD-
PERIOD- HIGH LOW AVERAGE(1) END
- ---------------------------- ------ ------ ---------- -------
<S> <C> <C> <C> <C>
Year ended December 31, 1994 433.67 398.25 419.83 400.21
Year ended December 31, 1995 418.76 367.94 396.60 406.91
Year ended December 31, 1996 424.87 402.68 412.16 424.87

Year ended December 31, 1997 439.81 411.85 419.31 439.81

<FN>
Source: Extel Pricing Database and Chilean Central Bank.

(1) Average daily exchange rate.
</TABLE>

Unless otherwise indicated, industry and demographic data used throughout
this Prospectus have been obtained from the following industry publications and
have not been independently verified by the Company: Bank of America World
Information Services (March 1997); Telecom Markets in South America, Pyramid
Research, Inc. (October 1996) (the "Pyramid Research Report"); Subsecretaria de
Telecomunicaciones of the Republic of Chile (1997); National Bureau of
Statistics of the Republic of Peru (1997); Telefonica del Peru, S.A. 1996 Annual
Report and Press Release in connection with the presentation of 2nd Quarter 1997
financial results dated July 31, 1997.

3
<PAGE>
AVAILABLE INFORMATION

ICCA has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with any amendments
thereto, the "Registration Statement") under the Securities Act with respect to
the Shares of Common Stock offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus omits certain information,
exhibits and undertakings contained in the Registration Statement. For further
information with respect to ICCA and the shares of Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto
and the financial statements, notes and schedules filed as a part thereof. In
addition, ICCA is subject to the informational and reporting requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Commission. The Registration Statement, the exhibits
and schedules thereto, reports and other information filed with or furnished to
the Commission by ICCA may be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices at 7 World Trade Center, 13th Floor,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 6061-2511. Copies of such materials may be obtained,
at prescribed rates, by mail from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 and such material may
be accessed through the web site maintained by the Commission at
http://www.sec.gov.

4
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information, including risk factors and financial statements and notes thereto,
located elsewhere in this Prospectus. Certain of the information contained in
this summary and elsewhere in this Prospectus including information with respect
to the Company's plans and strategy for its business, acquisitions and related
financings, are forward-looking statements. Such forward-looking statements are
subject to material risks, uncertainties and contingencies, many of which are
beyond the control of the Company. For a discussion of important factors that
could cause actual results to differ materially from these forward-looking
statements, see "Risk Factors." As used herein, the term "Latin America" means
Central America, South America and Mexico. Except as otherwise indicated, all
dollar amounts are expressed in United States dollars and references to
"dollars" and "$" are to United States dollars. See "Glossary of Defined Terms,"
for definitions of certain technical and industry terms used herein.

THE COMPANY

The Company is a new provider of high bandwidth integrated
telecommunications services to high volume users in Santiago, Chile and Lima,
Peru, including business customers and other telecommunications carriers. The
Company believes that the size, expected growth and increasing deregulation of
the telecommunications industry in Latin America offers the Company considerable
opportunities to broaden its existing service offerings and to expand its
recently commenced operations into additional key Latin American business
centers.

Prior to November 1996, the Company operated as a development stage company
whose activities primarily consisted of the acquisition of licenses, concessions
and rights-of-way in certain key Latin American markets. Beginning in November
1996, with the hiring of a new management team, the Company has focused on the
development and operation of high capacity fiber optic networks in Lima, Peru
and Santiago, Chile.

In May 1996, the Company acquired an operating company in Peru which holds
one of only two local concessions that compete with Telefonica del Peru S.A.
("Telefonica") to provide local private line voice and data services. The
Company intends to expand its existing service offerings to provide local public
switched telephony upon the planned 1999 liberalization of Peru's
telecommunications markets. The Company also intends to apply for a concession
to provide public switched long distance services as regulation permits. The
Company currently offers high speed data transmission services on a private line
basis, including area network interconnection, remote terminal access, dedicated
channels for access to the Internet and voice services on a private line basis.
The Company's services are provided through its 90 kilometer digital fiber optic
network in Lima, Peru, which the Company intends to expand to approximately 230
kilometers by the end of 1998. When completed, the Company's fiber optic network
will extend throughout the major commercial and industrial districts of Lima and
the port city of Callao (combined population of 7.5 million). The Company
believes that its planned fiber optic network expansion and early implementation
of private line and value-added services prior to the scheduled expiration of
Telefonica's exclusive concession for public switched local and long distance
services in July 1999 will enable the Company to develop a strong customer base
and network presence.

5
<PAGE>

In Chile, the Company currently holds concessions to provide (i) voice and
data transmission services and value-added services on a private line basis and
(ii) public switched domestic and international long distance services. The
Company also maintains a concession to own and operate satellite earth stations
throughout Chile and plans to apply for a concession to provide local public
switched telephony services in Santiago. The Company currently provides similar
services to those offered in Peru, as well as (i) private line remote analog
digital telephone access and digital links for PBX to PBX connections, (ii)
local and wide area network design and engineering and (iii) systems
installation, integration and support services. The Company's services are
provided through its 120 kilometer digital fiber optic network which currently
extends through most of Santiago's downtown business district and the outlying
industrial park and airport corridors. With the completion of last mile
connections to its existing network and approval of a local telephony
concession, the Company believes that it will be able to substantially broaden
its product and services offerings and significantly increase its revenues in
Chile.

In December 1997, the Company acquired FirstCom Long Distance, S.A.
("FirstCom Long Distance"), formerly Iusatel Chile, S.A., an operating company
in Santiago, Chile, which provides domestic and international long distance
services. FirstCom Long Distance's long distance traffic is switched and
transported, in part, through its own gateway switch and satellite earth
station, as well as through interconnections with other Chilean long distance
carriers. The Company believes that the acquisition of FirstCom Long Distance
will enable the Company to: (i) provide long distance services to its existing
corporate customers; (ii) bundle a variety of service offerings, including long
distance and data services, to attract additional customers; and (iii) access
the approximately $178.2 million Chilean international long distance market.

Local and long distance telecommunications revenues in Peru were
approximately $885.5 million in 1996 and are estimated by Pyramid Research, Inc.
("Pyramid") to increase to approximately $1.9 billion in the year 2000,
representing a compound annual growth rate of 21%. Local and long distance
telecommunications revenues in Chile were approximately $1.1 billion in 1996 and
are estimated by Pyramid to increase to approximately $2.2 billion in the year
2000, representing a compound annual growth rate of 16%.

Upon completion of its anticipated upgrades, all of the Company's existing
and planned fiber optic networks will employ ATM transmission technology with
centralized network monitoring control and maintenance. The Company believes its
networks allow it to provide its customers with uniform, reliable, high quality
services which are competitive with or exceed those services provided by former
PTTs and other carriers in the markets in which it operates.

While the Company only recently is commenced its current operations, the
Company's customers already include, among others, Xerox de Chile S.A.,
Autorentas del Pacifico (Hertz) Ltda. and Nike de Chile S.A. in Chile and Sony
Music Entertainment Peru S.A., Banco Interbank del Peru S.A. ("Interbank") and
one ISP in Peru. Upon completion of its networks the Company will be able to
market aggressively its service offerings to additional business customers and
other telecommunications carriers. The Company also believes that dedicated
access to ISPs will represent a significant source of new customer relationships
in both Chile and Peru because of the anticipated rapid increase in the number
of Internet users throughout Latin America.

BUSINESS STRATEGY

The Company's goal is to become a leading provider of high bandwidth
telecommunications services to businesses and other high volume users and
carriers operating in key Latin American business centers. The Company follows a
regional business strategy in Latin America as set forth below. The Company has
modified this strategy to adapt to the specific economic and regulatory
environments of each market in which the Company operates and intends to operate
in the future. See "Business -- Business and Services - Peru -- Country
Strategy," and " -- Chile -- Country Strategy."

6
<PAGE>

Focus on Key Markets in Latin America

The Company believes that the size and growth potential of key Latin
American business centers coupled with the ongoing liberalization of the
telecommunications markets throughout the region offer the Company considerable
growth opportunities. The Company intends to build upon its existing operations
and expertise and to leverage its existing customer base by expanding the
geographic reach and density of its existing networks as well as by entering
additional key Latin American business centers that have (i) a significant level
of unsatisfied demand for high quality, state-of-the art telecommunications
services, (ii) a favorable regulatory environment and (iii) significant
projected economic growth.

Enter Markets Early

The Company seeks to enter markets in Latin America where it can construct
or acquire fiber optic networks and offer telecommunications services in advance
of full market liberalization. The Company has already implemented this strategy
in Lima, where it is one of the first companies to have established a
telecommunications system prior to the scheduled liberalization of Peru's
telecommunications markets in July 1999, at which time the exclusivity
provisions of Telefonica's concession will expire and the local and long
distance markets are scheduled to be opened to competition by new entrants. The
Company believes that this early entry into the Lima market will enable the
Company to establish strong business relationships with its targeted customers
prior to onset of widespread competition.

Provide a Broad Range of High Quality Telecommunications Services

The Company intends to follow the strategy implemented by CLECs in the
United States of installing advanced equipment into their existing fiber optic
networks that enable interconnections with existing public networks and the
provision of switched telephone services. As regulation permits, the Company
will seek to secure a growing portion of its existing and targeted customers'
telecommunications business by adding local, long distance, enhanced voice and
data services to the private line services it currently offers. The Company
believes its customers require maximum reliability, high quality service, broad
geographic coverage, strong customer service and the opportune introduction of
innovative services delivered in a timely and cost-effective manner. The Company
believes that these needs are often left unmet by the former PTT in markets
where the Company currently operates.

Target Business Customers and Telecommunications Carriers

The Company's strategy is to target business customers and
telecommunications carriers in key Latin American business centers. These
customers are typically located in major metropolitan areas, require high
reliability, high volume data transmission and voice capabilities and, in the
case of telecommunications carriers, very large capacity to interconnect POPs.
In addition, many of the Company's existing and targeted customers have
operations in more than one key Latin American business center in which the
Company currently operates or may operate in the future. The Company believes
that by leveraging its customer base it will achieve operating synergies through
the reduction of advertising and other related costs.

Growth Through Acquisitions and New Licenses

The Company expects to opportunistically enter additional key Latin
American business centers in part by acquiring controlling interests in existing
companies that have licenses, concessions and rights-of-way to install and
operate fiber optic networks or by applying for such licenses and concessions
and negotiating such rights-of-way directly. The Company may also acquire other
telecommunications service providers in existing and targeted markets that
enable the Company to expand or enhance its current operations. The Company
believes that many emerging local and long distance carriers, cellular providers

7
<PAGE>

and recently privatized PTTs are likely to seek alliances with local access
providers with fiber optic systems, such as the Company, to compete more
effectively in the growing telecommunications markets.

Growth Through Strategic Alliances

The Company intends to establish strategic alliances with the following
entities for the following purposes: (i) to engage major international carriers
to facilitate the termination or completion of dedicated international calls to
or from the countries where carriers' customers operate and (ii) to enter into
joint bids with local turnkey integrators and equipment vendors for the sale of
value-added services, such as video-conferencing, Internet, frame relay, ATM
networks, PBX and private telephone networks.

Unify Marketing Identity

The Company intends to conduct its business under a single brand name in
the markets in which it operates to develop name recognition for its services.
In this regard, the Company has filed an application to register the name
"FirstCom" in Chile, Peru and the United States. The Company believes that the
use of a recognized brand name will facilitate customer referrals and achieve
economies of scale through a unified marketing campaign.

SENIOR NOTE OFFERING

On October 27, 1997, the Company consummated an offering ("the Senior Note
Offering") of units ("Units") consisting (i) $150.0 million aggregate principal
amount of 14% Senior Notes due October 27, 2007 (the "Senior Notes") and (ii)
5,250,000 warrants ("Warrants," or "Unit Warrants") to purchase an aggregate of
5,250,000 shares of Common Stock, at an exercise price of $4.40 per share. The
Senior Note Offering resulted in net proceeds to the Company of approximately
$142.5 million. The Units were originally issued and sold by ICCA in a
transaction which was exempt from the registration requirements of the
Securities Act. Concurrent with the filing of the Registration Statement of
which this Prospectus forms a part, the Company has filed a registration
statement on S-4 (the "Exchange Offer Registration Statement") to register 14%
Senior Notes due October 27, 2007 ("New Notes"), which are being offered (the
"Exchange Offer") in exchange for the Senior Notes. The form and terms of the
New Notes are the same as the form and terms of the Senior Notes for which they
may be exchanged pursuant to the Exchange Offer, except that the New Notes will
have been registered under the Securities Act, and hence the New Notes will not
bear legends restricting the transfer thereof. The Senior Notes and the New
Notes are sometimes referred to herein collectively as the "Senior Notes." See
"Description of Senior Notes."

The Company was incorporated in Nevada in April 1989 and reincorporated in
Texas in July 1994. The Company's principal executive offices are located at
2600 Douglas Road, Suite 501, Coral Gables, Florida 33134, and its telephone
number at such offices is (305) 448-4422.

NO CASH PROCEEDS TO THE COMPANY FROM THE SALE OF THE SHARES

This Offering is intended to satisfy certain obligations of the Company to
the Selling Stockholders. Except for the exercise price of the Selling
Stockholders' warrants and options, the Company will not receive any proceeds
from the sale of the Shares offered hereby. The Company has agreed to pay
substantially all of the expenses incident to the registration, offering and
sale of the Shares to the public other than commissions or discounts of
underwriters, broker-dealers or agents.

8
<PAGE>

RISK FACTORS

An investment in the Common Stock involves a high degree of risk.
Prospective investors should consider all of the information contained in this
Prospectus before purchasing any of the Shares of Common Stock offered hereby.
In particular, prospective investors should consider the factors set forth
herein under "Risk Factors."

PRESENTATION OF FINANCIAL INFORMATION

INTERAMERICAS COMMUNICATIONS CORPORATION

The consolidated financial statements of ICCA and its subsidiaries have
been prepared in accordance with generally accepted accounting principles in the
United States ("U.S. GAAP"). As a result, the operations of ICCA and its
consolidated subsidiaries are stated in U.S. dollars.

The financial statements of subsidiaries outside the United States are
prepared using the local currency as the functional currency. Assets and
liabilities of these subsidiaries are translated at the rate of exchange at the
balance sheet date. The resultant translation adjustments are included in equity
as cumulative translation adjustments, a separate component of stockholders'
equity. Income and expense items are translated at average monthly rates of
exchange. Gains and losses from foreign currency transactions of these
subsidiaries are included in the statement of operations.

SUMMARY CONDENSED CONSOLIDATED HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA

The following table sets forth summary condensed consolidated historical
and pro forma combined financial data of the Company. The summary condensed
consolidated historical statement of operations data for the years ended
December 31, 1994, 1995, 1996 and 1997 were derived from the consolidated
financial statements of the Company which were audited by Price Waterhouse LLP,
independent certified public accountants.

The summary condensed unaudited pro forma combined statement of operations
for the year ended December 31, 1997 gives effect to the FirstCom Long Distance
Acquisition as if it had occurred at the beginning of 1997. The FirstCom Long
Distance Acquisition is accounted for under the purchase method of accounting.

The information contained in this table should be read in conjunction with
"Selected Historical Financial Data" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
including the notes thereto appearing elsewhere in this Prospectus.

9
<PAGE>

YEAR ENDED DECEMBER 31,
--------------------------------------------------
PRO FORMA
1994 1995 1996(1) 1997(1) 1997
-------- -------- -------- --------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales. . . . . . . . . . . . . $ 34 $ 224 $ 652 1,130 $ 10,927
Operating expenses . . . . . . (2,207) (2,722) (5,009) (12,075) (23,396)
-------- -------- -------- --------- ----------
Loss from operations . . . . . (2,173) (2,498) (4,357) (10,915) (12,469)
Other income (expense) . . . . (45) (56) (23) 1,247 780
Interest expense . . . . . . . (313) (319) (246) (5,934) (24,409)
-------- -------- -------- --------- ----------
Net loss . . . . . $(2,531) $(2,873) $(4,626) $(15,632) $ (36,098)
======== ======== ======== ========= ==========
Net basic and diluted
loss per share. . . . . . . . $ (1.30) $ (0.31) $ (0.31) $ (0.94) $ (2.17)
Weighted average shares
Outstanding. . . . . . . . . 1,952 9,407 14,796 16,668 16,668

OTHER FINANCIAL DATA:
EBITDA(2). . . . . . . . . . . $(2,097) $(2,102) $(3,651) $ (9,948) $ (10,535)
Depreciation and amortization. 76 396 706 967 1,934
Capital expenditures . . . . . 1,849 720 1,453 763
</TABLE>

AT DECEMBER 31, 1997
---------------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents. . . . . . . $ 13,705
Restricted cash and investments(3) . . 117,551
---------------------
Total assets
Current portion of lease obligations,. 70,031
net of original issue discounts. . . 313
Long-term debt and lease obligations . 131,982
Total stockholders equity. . . . . . . 27,622
<FN>
____________________

(1) Historical financial data includes the operations of Resetel and FirstCom
Networks (each as defined herein) from their respective dates of acquisition.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

(2) "EBITDA" represents income (loss) from operations before interest,
depreciation and amortization. EBITDA is presented because it is commonly used
in the telecommunications industry to measure operating performance, asset value
and financial leverage. However, EBITDA should not be considered as an
alternative to net income as a measure of operating results, cash flows or as a
measure of liquidity in accordance with generally accepted accounting
principles. Also, EBITDA as defined herein may not be comparable to similarly
entitled measures reported by other companies.

(3) Restricted cash and investments represent proceeds from the Senior Note
Offering that will be disbursed in accordance with the terms of the Indenture
relating to the Senior Notes (the "Indenture"). See "Description of Senior Notes
- -- Proceeds Pledge and Escrow Agreement."

</TABLE>

10
<PAGE>

RISK FACTORS

Prospective purchasers of the Common Stock offered hereby should consider
carefully the following risk factors, as well as the other information contained
in this Prospectus, before purchasing the Common Stock offered hereby.

RISKS RELATING TO FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus including, without
limitation, statements containing the words "believes," "anticipates,"
"intends," "expects," "projects," and words of similar import constitute
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general national and international economic and
business conditions, as well as conditions in the regions in which the Company
operates; demographic change; existing government regulations and changes in, or
the failure to comply with, government regulations; competition; the loss of any
significant customers; changes in business strategy or development plans;
technological developments; the ability to attract and retain qualified
personnel; the significant indebtedness of the Company; the availability and
terms of capital to fund the expansion of the Company's business; and other
factors referenced in this Prospectus. Certain of these factors are discussed in
more detail elsewhere in this Prospectus including, without limitation, under
the captions "Prospectus Summary;" "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business." Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements. The Company disclaims any obligations to
update any such factors or publicly announce the result of any revisions to any
of the forward-looking statements contained herein to reflect future events or
developments.

SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS

The Company is highly leveraged and has substantial debt service
requirements. As of December 31, 1997, the Company has approximately $132.0
million of total long-term Indebtedness and the Company has stockholders' equity
of $27.6 million. In addition, in each year since its inception, the Company's
earnings have been inadequate to cover its fixed charges by a substantial
amount. The Company's earnings were inadequate to cover its fixed charges by
$4.6 million and $16.8 million, respectively, for the years ended December 31,
1996 and 1997. On a pro forma basis after giving effect to the consummation of
the FirstCom Long Distance Acquisition, for the year ended December 31, 1997 the
Company's earnings would have been inadequate to cover its fixed charges by
$36.9 million. The Company's annual interest obligations under the Senior Notes
substantially exceeds the Company's sales for the year ended December 31, 1997.

The ability of ICCA to make scheduled payments with respect to its
indebtedness, including the Senior Notes, will depend upon, among other things,
(i) its ability to implement its business plan, to expand its operations and to
successfully develop its customer base in its target markets, (ii) the ability
of ICCA's subsidiaries to remit cash to ICCA in a timely manner and (iii) the
future operating performance of ICCA and its subsidiaries. Each of these factors
is, to a large extent, subject to economic, financial, competitive, regulatory
and other factors, many of which are beyond the Company's control. The Company
expects that it will continue to generate cash losses for the foreseeable
future. No assurance can be given that the Company will be successful in
developing and maintaining a level of cash flow from operations sufficient to
permit it to pay the principal of, and interest on, its indebtedness, including
the Senior Notes. If the Company is unable to generate sufficient cash flow from
operations to service its indebtedness, including the Senior Notes, it may have
to modify its growth plans, restructure or refinance its indebtedness or seek
additional capital. There can be no assurance that (i) any of these strategies
could be effected on satisfactory terms, if at

11
<PAGE>

all, in light of the Company's high leverage or (ii) any such strategy would
yield sufficient proceeds to service the Company's indebtedness, including the
Senior Notes. See "-- Historical and Anticipated Operating Losses," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

HOLDING COMPANY STRUCTURE; INABILITY TO ACCESS CASH FLOW

Substantially all of ICCA's assets are held by its subsidiaries and all of
ICCA's operating revenues are derived from the operations of such subsidiaries.
Future acquisitions may be made through present or future subsidiaries of ICCA.
Accordingly, ICCA's ability to pay the principal of, and interest on, its
outstanding indebtedness is dependent upon the earnings of its subsidiaries and
the distribution of sufficient funds from its subsidiaries. ICCA's subsidiaries
will have no obligation, contingent or otherwise, to make any funds available to
ICCA for payment of the principal of, and interest on, its outstanding
indebtedness. In addition, the ability of ICCA's subsidiaries to make such funds
available to ICCA may be restricted by the terms of such subsidiaries' current
and future indebtedness, the availability of such funds and the applicable laws
of the jurisdictions under which such subsidiaries are organized. Furthermore,
ICCA's subsidiaries will be permitted under the terms of the Indenture to incur
certain additional indebtedness that may severely restrict or prohibit the
making of distributions, the payment of dividends or the making of loans by such
subsidiaries to ICCA. The failure of ICCA's subsidiaries to pay dividends or
otherwise make funds available to ICCA could have a material adverse effect upon
ICCA's ability to satisfy its debt service requirements.

HISTORICAL AND ANTICIPATED OPERATING LOSSES

The Company has never generated positive cash flow from consolidated
operations and, since its inception, has incurred significant net operating
losses and negative cash flow. As of December 31, 1997, the Company had an
accumulated deficit of $25.8 million. Since inception through December 31, 1997,
the Company's operations have resulted in losses before interest, other income
(loss), taxes, depreciation and amortization ("EBITDA") of $17.8 million. On a
pro forma basis, after giving effect to the consummation of the FirstCom Long
Distance Acquisition, the Company would have had EBITDA of ($10.5) million for
the year ended December 31, 1997. For the years ended December 31, 1996 and
1997, the Company incurred a net loss of $4.6 million and $15.6 million,
respectively, and generated negative cash flow from operations of $3.9 million
and $5.9 million, respectively. The Company expects to continue to incur
significant operating losses and negative cash flow from operations for at least
the next several years in connection with establishing its local networks and
implementing its business plan. There can be no assurance that the Company's
networks or any of its other services will ever provide a revenue base adequate
to achieve or sustain profitability or to generate positive cash flow.

SIGNIFICANT FUTURE CAPITAL REQUIREMENTS

Expansion of the Company's existing networks and services and the
development of new networks and services will require significant capital
expenditures. The Company expects to use the net proceeds of the Senior Note
Offering to meet its capital expenditure requirements. Although the Company
believes that the proceeds of the Senior Note Offering are sufficient to fund
its current plans, actual capital expenditures may vary significantly from the
Company's estimates depending on a number of factors, many of which are beyond
the Company's control, including the pace and extent of network upgrade and
expansion, the magnitude of potential acquisitions, investments or the impact of
strategic alliances, and levels of incremental sales and regulatory actions,
which, individually or collectively, could cause material changes in the
Company's capital expenditure requirements.

The Company may need additional capital to (i) finance its anticipated
growth, (ii) fund working capital needs and future debt service obligations,
(iii) take advantage of unanticipated opportunities, including more

12
<PAGE>

rapid international expansion, acquisitions of customer bases or businesses or
investments in, or strategic alliances with, companies that are complementary to
the Company's current operations, (iv) develop or expand into new services or
(v) otherwise respond to unanticipated competitive pressures. The Company
currently expects to obtain such additional capital, if necessary, through
internally generated cash flow and from offerings of additional debt or equity
securities. There can be no assurance, however, that the Company will be
successful in producing sufficient internally generated cash flow or raising
sufficient capital on terms acceptable to the Company, if at all. Moreover, the
amount of, and the terms and conditions of the instruments relating to, the
Company's current outstanding indebtedness may adversely affect the Company's
ability to raise additional capital. Failure to internally generate or raise
sufficient funds may require the Company to delay, abandon or reduce the scope
of any potential future expansion, which could have a material adverse effect on
the Company's business, financial condition and results of operations.

LIMITED OPERATING HISTORY; ENTRANCE INTO NEWLY OPENING MARKETS

The Company acquired its principal operations in Santiago, Chile in July
1994 and in Lima, Peru in May 1996, and has limited experience in operating its
business. The Company has not commenced operations in any other country.
Prospective investors therefore have limited historical financial and operating
information about the Company upon which to base an evaluation of the Company's
performance and an investment in the Common Stock.

The Company's viability, profitability and growth depend upon the
successful implementation of its business plan. A significant portion of the
Company's business plan includes the acquisition or formation of new local
operators in markets where it currently does not have operations and, in many of
its existing and future markets, offering services that have historically been
provided only by PTTs. Accordingly, the Company may face delays and problems
inherent in establishing a new business in an evolving industry, including,
among other things, hiring experienced and qualified personnel. Other risks
associated with the Company's business plan include: (i) securing necessary
licenses and adhering to regulatory requirements relating thereto; (ii)
obtaining any required zoning variances or other governmental or local
regulatory approvals; and (iii) other risks typically associated with any
business venture, such as unanticipated cost increases and the ability to
effectively implement its business strategy. There can be no assurance that the
implementation of the Company's business plan will be successful. The failure to
successfully implement its business plan would have a material adverse effect on
the Company.

RISK ASSOCIATED WITH IMPLEMENTATION OF GROWTH STRATEGY

The Company has a limited operating history and rapid growth by the Company
could place a strain on its management, operating and financial resources. In
addition, while the Company is currently a provider of telecommunications
services in Peru and Chile, the Company will, on an ongoing basis, explore
opportunities to provide additional telecommunications services in Latin
America. The Company's ability to manage growth and expansion effectively will
require continued implementation of, and improvements to, its operating and
financial systems and will require the Company to expand, train and manage its
employee base. Furthermore, the ability of the Company to expand its operations
will, among other things, depend upon its ability to identify acquisitions in
the future, or, if identified, to arrive at price and terms which are attractive
to the Company and may also depend on consents from third parties, including
regulatory authorities. Although the Company believes that it has made adequate
allowances for the costs and risks associated with future growth and expansion,
there can be no assurance that the Company's systems, procedures or controls or
financial resources will be adequate to support the Company's operations, that
management will be able to keep pace with such growth and/or expansion, and that
the Company will be able to successfully consummate future acquisitions on terms
acceptable to the Company, or at all. If the Company is unable to manage growth
and/or expansion effectively, the Company's business, operating results and
financial condition and its ability to generate sufficient cash flow to service
its indebtedness will be materially and adversely affected.

13
<PAGE>

RISKS RELATED TO POTENTIAL FUTURE ACQUISITIONS

The Company intends in the future to pursue acquisitions of complementary
services, technologies or businesses, although the Company has no present
understandings, commitments or agreements with respect to any such acquisitions
except as described in this Prospectus. Future acquisitions by the Company could
result in potentially dilutive issuances of equity securities, the incurrence of
debt and contingent liabilities and an increase in amortization expenses related
to goodwill and other intangible assets, which could have a material adverse
effect upon the Company's business, financial condition and results of
operations. Acquisitions involve numerous risks, including difficulties in the
assimilation of the operations, technologies, services and products of the
acquired companies and the diversion of management's attention from other
business concerns.

UNCERTAINTY OF MARKET ACCEPTANCE; POTENTIAL LACK OF SUBSCRIBER DEMAND

The Company's success is subject to a number of business, economic,
regulatory and competitive factors, many of which are beyond the Company's
control, including the extent to which prospective subscribers will use the
Company's services. The Company's ability to service its indebtedness, including
the Senior Notes, is subject to the successful implementation of its growth
strategy which, in turn, is premised, among other things, on the Company's
expectation that demand for its current services will increase significantly in
its existing markets and that there will be strong demand for services
introduced by the Company in the future. The Company has only recently begun
providing telecommunications services in Peru. Subscriber demand for the
Company's services in the markets in which it currently operates and in those in
which it expects to operate is uncertain. See "-- Competition" and "-- Rapid
Industry and Technological Change." Failure to gain market acceptance for, or
subscriber demand of, current or planned services would have a material adverse
effect on the Company. In addition, the Company has incurred and will continue
to incur significant operating expenses and has made, and will continue to make,
significant capital investments. Accordingly, any material miscalculation by the
Company with respect to its strategy or business plan is likely to have a
material adverse effect on the Company. See "-- Significant Future Capital
Requirements" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

CONSTRUCTION RISKS

The operating companies in which the Company invests may require
substantial construction of new, or additions to existing, network systems.
Construction activity may require the Company to obtain qualified
subcontractors, the availability of which varies significantly from country to
country. Construction projects are subject to overruns and delays not within the
control of the Company or its subcontractors, such as those caused by government
entities, financing delays and catastrophic occurrences. Delays also can arise
from design changes and material or equipment shortages or delays in delivery.
Services to buildings can be delayed if the operating companies or their
subcontractors have difficulty in obtaining easements from private parties.
Failure to complete construction on a timely basis could jeopardize a system's
subscriber contracts, franchises and licenses or the Company's ability to
preempt its competition.

COMPETITION

The international telecommunications industry is highly competitive. The
Company's success depends upon its ability to compete with a variety of other
telecommunications providers in each of its markets, including global alliances
among some of the world's largest telecommunications carriers, PTTs, wireless
telephone companies and microwave carriers. Other existing and potential
competitors include cable television companies, railway companies, electric
companies and other utilities with rights-of-way and large end-users which have
private networks. The intensity of such competition has recently increased and
the Company believes that such competition will continue to intensify as the
number of new market entrants

14
<PAGE>

increases. Many of the Company's existing and potential competitors have
substantially greater financial, marketing and other resources than the Company.
If the Company's competitors devote significant additional resources to the
provision of telecommunications services to the Company's target customer base,
such action would have a material adverse effect on the Company's business,
financial condition and/or results of operations. There can be no assurance that
the Company will be able to compete successfully against such existing and
potential competitors.

Competition for customers in the telecommunications industry is primarily
based on price and, to a lesser extent, on the type and quality of services
offered. The Company has no control over the prices set by its competitors, and
some of the Company's competitors may be able to use their financial resources
to cause severe price competition. Any such price competition would have a
material adverse effect on the Company's business, financial condition and
results of operations. Additionally, intensified competition in certain of the
Company's markets may cause the Company to reduce its prices, which may reduce
the Company's revenue and margins. See "Business -- Business and Services --
Chile -- Competition" and "-- Peru -- Competition."

RAPID INDUSTRY AND TECHNOLOGICAL CHANGE

The international telecommunications industry is changing rapidly due to,
among other things, deregulation, privatization of PTTs, technological
improvements, expansion of telecommunications infrastructure and the
globalization of the world's economies and free trade. In addition, the
telecommunications industry is in a period of rapid technological evolution. The
Company is unable to predict which of the many possible future product and
service offerings will be important to establish and maintain a competitive
position in or what expenditures will be required to develop and provide such
products and services. The Company's future financial performance will depend,
in part, upon its ability to anticipate and adapt to rapid regulatory and
technological changes occurring in the telecommunications industry and upon its
ability to offer, on a timely basis, services that meet evolving industry
standards. There can be no assurance that the Company will be able to adapt to
such technological changes or offer such services on a timely basis or establish
or maintain a competitive position. There can be no assurance that one or more
of these factors will not vary unpredictably, which could have a material
adverse effect on the Company. In addition, there can be no assurance, even if
these factors turn out as anticipated, that the Company will be able to
implement its strategy or that its strategy will be successful in this rapidly
evolving market.

DEPENDENCE UPON NETWORK INFRASTRUCTURE; RISK OF SYSTEM FAILURE; SECURITY RISKS

The Company's success in marketing its services to business and government
users requires that the Company provide adequate reliability, capacity and
security via its network infrastructure. The Company's networks are subject to
physical damage, power loss, capacity limitations, software defects, breaches of
security (by computer virus, break-ins or otherwise) and other factors, certain
of which may cause interruptions in service or reduced capacity for customers.
Interruptions in service, capacity limitations or security breaches could have a
material adverse effect on the Company's business, financial condition and
results of operations.

YEAR 2000 CONCERNS

The Company believes that it has prepared its computer systems and related
software to accommodate data sensitive information relating to the Year 2000.
The Company expects that any additional costs related to ensuring such systems
and software to be Year 2000-compliant will not be material to the financial
condition or results of operations of the Company. In addition, the Company is
discussing with its vendors and customers the possibility of any difficulties
which may affect the Company as a result of its vendors and

15
<PAGE>

customers ensuring that their computer systems and software are Year
2000-compliant. To date, no significant concerns have been identified.
However, there can be no assurance that no Year 2000 related computer operating
problems or expenses will arise with the Company's computer systems and software
or in the computer systems and software of the Company's vendors and customers.

GOVERNMENT REGULATORY RESTRICTIONS; DEPENDENCE ON RIGHTS-OF-WAY AND OTHER THIRD
PARTY AGREEMENTS

National and local laws and regulations differ significantly among the
countries in which the Company currently operates and plans to operate. The
interpretation and enforcement of such laws and regulations vary and could limit
the Company's ability to provide certain telecommunications services.
Furthermore, there can be no assurance that changes in current or future laws or
regulations or future judicial intervention would not have a material adverse
effect on the Company. In addition, the Company's strategy is based in large
part upon the expected deregulation of the telecommunications markets in various
countries throughout Latin America. There can be no assurance that any such
countries will proceed with the expected deregulation on schedule, or at all, or
that the trend towards deregulation will not be stopped or reversed. There may
be significant resistance to the implementation of such legislation from PTTs,
regulators, trade unions and other sources. These and other potential obstacles
to deregulation would have a material adverse effect on the Company's operations
and growth. See "Business -- Regulation."

The Company also must obtain easements, rights-of-way, franchises and
licenses (collectively, "local approvals") from various private parties, actual
and potential competitors and local governments in order to construct and
maintain its fiber optic networks. The Company does not yet have all of the
approvals required to implement its network business plan in prospective new
markets, and there can be no assurance that the Company will be able to obtain
and maintain approvals on acceptable terms or that other service providers will
not obtain similar approvals that will allow them to compete against the Company
or enter a market before the Company. Some of the agreements for approvals
obtained by the Company may be short-term or revocable at will, and there can be
no assurance that the Company will have continued access to approvals after
their expiration. If any of these agreements were terminated or could not be
renewed and the Company was forced to remove its fiber optic cable or abandon
its network in place, such termination or non-renewal would have a material
adverse effect on the Company's business, results of operations and financial
condition.

DEPENDENCE UPON SUPPLIERS; SOLE AND LIMITED SOURCES OF SUPPLY

The Company relies on other companies to supply certain key components of
its network infrastructure, including telecommunications services and networking
equipment, which, in the quality demanded by the Company, are available only
from sole or limited sources. The Company is also dependent upon incumbent local
exchange companies to provide telecommunications services to the Company and its
customers. The Company has from time to time experienced delays in receiving
telecommunications services, and there can be no assurance that the Company will
be able to obtain such services on the scale and within the time frames required
by the Company at an affordable cost, or at all. Any failure to obtain such
services or additional capacity on a timely basis at an affordable cost, or at
all, would have a material adverse effect on the Company's business, financial
condition and results of operations. The Company also is dependent on its
suppliers' ability to provide necessary products and components that comply with
various Internet and telecommunications standards and interoperate with products
and components from other vendors and function as intended when installed as
part of the network infrastructure. Any failure of the Company's sole or limited
source suppliers to provide products or components that comply with Internet
standards, interoperate with other products or components used by the Company in
its network infrastructure or by its customers or fulfill their intended
function as a part of the network infrastructure would have a material adverse
effect on the Company's business, financial condition and results of operations.

16
<PAGE>

DEPENDENCE ON KEY PERSONNEL

The Company is managed by a small number of key executive officers and
operating personnel, including Patricio E. Northland, the Company's Chief
Executive Officer, and Douglas G. Geib II, the Company's Chief Financial
Officer, the loss of certain of whom could have a material adverse effect on the
Company and the ability of the Company to fulfill its financial obligations,
including, without limitation, those under the Senior Notes. The Company
believes that its future success will depend in large part on its continued
ability to attract and retain skilled and qualified personnel with experience in
the telecommunications industry. Such employees are in great demand and are
often subject to competing offers of employment. The Company has not obtained
disability or life insurance policies covering its key executive officers.

COUNTRY RISKS

General. The Company has invested significant resources in Latin America
and intends to continue to make such investments in Latin America in the future.
Accordingly, the Company may be subject to economic, political or social
instability or other developments not typical of investments made in the United
States. Such events could adversely affect the financial condition and results
of operations of the Company, the ability of the Company to repay the Senior
Notes and the market value and liquidity of the Common Stock. During the past
several years, countries in Latin America in which the Company operates or plans
to operate have been characterized by varying degrees of inflation, uneven
growth rates and political uncertainty. The Company currently does not have
political risk insurance in the countries in which it conducts business. While
the Company carefully considers these risks when evaluating investment
opportunities and seeks to mitigate these and other risks by diversifying its
operations in a number of Latin American countries, there is no assurance that
the Company will not be materially adversely affected as a result of such risks.

Currency Risks and Exchange Controls. Although ICCA's subsidiaries have
attempted, and will continue to attempt, to match costs and revenues and
borrowings and repayments in terms of their respective local currencies, payment
for a majority of purchased equipment has been, and may continue to be, required
to be made in currencies, including US dollars, other than local currencies. In
addition, the value of ICCA's investment in a subsidiary is partially a function
of the currency exchange rate between the US dollar and the applicable local
currency. In general, the Company does not execute hedge transactions to reduce
its exposure to foreign currency exchange rate risks. Accordingly, the Company
may experience economic loss and a negative impact on earnings with respect to
its holdings solely as a result of foreign currency exchange rate fluctuations,
which include foreign currency devaluations against the dollar. The countries in
which ICCA's subsidiaries now conduct business generally do not restrict the
removal or conversion of local or foreign currency; however, there can be no
assurance that this situation will continue. See Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Inflation and
Exchange Rates" and "Business -- Regulation -- Peru -- Foreign Investment and
Exchange Controls" and "-- Chile -- Foreign Investment and Exchange Controls."

Dependence on Local Economies; Inflation. The Company's operations depend
upon the economies of the markets in which it operates. These markets include
countries with economies in various stages of development or structural reform,
some of which are subject to rapid fluctuations in terms of consumer prices,
employment levels, gross domestic product and interest and foreign exchange
rates. The Company may be subject to such fluctuations in the local economies in
which it operates. To the extent such fluctuations have an effect on the ability
of subscribers to pay for the Company's service, the growth of the Company's
services in such markets could be impacted negatively. Many of the countries in
which the Company operates, or expects to operate, do not have established
credit bureaus, thereby making it more difficult for the Company to ascertain
the creditworthiness of potential subscribers. Accordingly, the Company may
experience a higher level of bad debt expense than otherwise would be the case.

17
<PAGE>

Certain of the Company's targeted markets are in countries in which the
rate of inflation is significantly higher than that of the United States. The
Company intends to price its products and services in US dollars to mitigate any
effects of inflation; however, there can be no assurance that any significant
increase in the rate of inflation in such countries could be offset, in whole or
in part, by corresponding price increases by the Company, even over the
long-term. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation -- Inflation and Exchange Rates."

Import Duties on Equipment. The Company's operations are highly dependent
upon the successful and cost-efficient importation of infrastructure equipment
from the United States. In the Latin American markets where the Company operates
or plans to operate infrastructure equipment is subject to significant import
duties and other taxes. Any significant increase in import duties in the future
could have a material adverse effect on the Company's results of operations.

Tax Risks Associated with Foreign Operations. Distributions of earnings
and other payments, including interest, received from ICCA's subsidiaries and
affiliates may be subject to withholding taxes imposed by the jurisdictions in
which such entities are formed or operating, which will reduce the amount of
after-tax cash ICCA can receive from such entities. In general, a United States
corporation may claim a foreign tax credit against its federal income tax
expense for such foreign withholding taxes and for foreign income taxes paid
directly by foreign corporate entities in which it owns 10% or more of the
voting stock. The ability to claim such foreign tax credits and to utilize net
foreign losses is, however, subject to numerous limitations, and the Company may
incur incremental tax costs as a result of these limitations or because the
Company is not in a tax-paying position in the United States.

ICCA may also be required to include in its income for United States
federal income tax purposes its proportionate share of certain earnings of those
foreign corporate subsidiaries that are classified as "controlled foreign
corporations" without regard to whether distributions have been actually
received from such subsidiaries. See "Business -- Taxation -- Peru" and "--
Chile."

Enforcement of Agreements. A number of the agreements ICCA enters into
with its non-United States subsidiaries, dealers, subscribers and agents are
governed by the laws of, and are subject to dispute resolution in the courts of,
or through arbitration proceedings in, the country or region in which the
operation is located. The Company cannot accurately predict whether such forum
will provide it with an effective and efficient means of resolving disputes that
may arise in the future. Even if the Company is able to obtain a satisfactory
decision through arbitration or a court proceeding, it could have difficulty
enforcing any award or judgment on a timely basis. The Company's ability to
obtain or enforce relief in the United States is uncertain.

Foreign Corrupt Practices Act. As a United States corporation, ICCA is
subject to the regulations imposed by the Foreign Corrupt Practices Act (the
"FCPA"), which generally prohibits United States companies and their
intermediaries from making improper payments to foreign officials for the
purpose of obtaining or keeping business. Any determination that the Company has
violated the FCPA would have a material adverse effect on the Company.

Changes in Country Policy; Change in Regulatory Agencies and Political
Structures. The Company has obtained and is seeking to acquire licenses in
countries throughout Latin America and, accordingly, is subject to government
regulation in each market. Much of the Company's planned growth is predicated
upon the liberalization of telecommunications markets. The Company has
confronted, and is likely to continue to confront, changes in government policy
or circumstances that can affect the Company's business and results of
operations. There can be no assurance that such events in the future will not
have a material adverse effect on the Company's results of operations.

18
<PAGE>

The governments of the countries in Latin America vary widely with respect
to structure, constitution and stability. While Latin American governments have
historically exercised extensive influence over their economies, the role of
government has declined as countries have liberalized their political structures
and economies. However, there can be no assurance that future developments in
the government administration of local economies would not materially and
adversely impair the Company's business and financial condition, or the value of
the Common Stock.

Labor Issues. In most Latin American countries labor unions are considered
to be strong and influential. Accordingly, while none of the Company's
operations are currently unionized, no assurance can be given that the Company
will not encounter strikes or other types of conflicts with labor unions or the
Company's personnel in the Company's markets or that such labor disputes will
not have an adverse effect on the Company. In addition, in response to pressure
by labor unions, many Latin American governments in which the Company targets
operations have, at times, actively regulated cross-border transactions,
including placing limitations on imported goods. Such regulations may result in
delays and increased costs for the Company.

TRANSACTIONS AND RELATIONSHIPS WITH RELATED PARTIES

The Company has engaged in a large number of transactions with its
shareholders, directors, officers and other related parties. There can be no
assurance that the terms of these transactions were the same as those that would
have resulted from transactions among unrelated parties. The Indenture will
restrict the Company's ability to engage in transactions with related parties
after consummation of the Offering. See "Certain Relationships and Related Party
Transactions," "Description of Senior Notes -- Certain Covenants -- Affiliate
Transactions" and the Report of Independent Certified Public Accountants
contained in the consolidated financial statements of the Company contained
elsewhere in this Prospectus.

LACK OF DIVIDENDS

ICCA does not anticipate paying dividends on the Common Stock for the
foreseeable future, and the ability of ICCA to make dividend payments on the
Common Stock is restricted by certain covenants in the Indenture. See "Price
Range of Common Stock and Dividend Policy" and "Description of Senior Notes --
Certain Covenants -- Restricted Payments."

SHARES ELIGIBLE FOR FUTURE SALE

As of February 28, 1998, ICCA had outstanding 19,084,300 shares of Common
Stock. All of such shares may be sold upon consummation of this Offering subject
to restrictions set forth in Rule 144 ("Rule 144") promulgated under the
Securities Act, and to a lock-up agreement described below.

All of the executive officers and directors and certain shareholders of
ICCA were deemed to beneficially own 8,922,083 shares of Common Stock (including
options to purchase 3,643,333 shares) as of the Closing Date of the Senior Note
Offering, have agreed not to sell, otherwise dispose of or pledge any shares of
Common Stock or securities convertible into or exercisable or exchangeable for
such Common Stock for a period of 180 days from the commencement of the Senior
Note Offering without the prior written consent of UBS Securities LLC (the
"Initial Purchaser").

Sales of substantial amounts of Common Stock in the public market under
Rule 144, pursuant to the exercise of registration rights or otherwise, and even
the potential for such sales, may have a material adverse effect on the
prevailing market price of the Common Stock and the Warrants included in the
Units and could impair the Company's ability to raise capital through the sale
of its equity securities.

19
<PAGE>

POSSIBLE ADVERSE EFFECTS OF AUTHORIZATION OF PREFERRED STOCK

ICCA's Articles of Incorporation authorizes the issuance of 10,000,000
shares of preferred stock, par value $.001 per share ("Preferred Stock"), on
terms which may be fixed by the Board of Directors of ICCA without further
shareholder approval. The terms of any series of Preferred Stock, which may
include priority claims to assets and dividends and special voting rights, could
adversely affect the rights of holders of the Common Stock. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions, financing and other corporate transactions, could have the effect
of preventing or making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, capital stock of ICCA, which may
adversely affect the market price of the Common Stock. The Indenture limits the
ability of the Company to issue Preferred Stock. See "Description of Senior
Notes -- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock."

20
<PAGE>

USE OF PROCEEDS

This Offering is intended to satisfy certain obligations of the Company to
register the Shares under the Securities Act to holders of Shares and warrants
and options to purchase Shares. The Company will not receive any proceeds from
the sale of the Shares offered hereby and has agreed to pay the expenses of the
Offering.

21
<PAGE>

CAPITALIZATION

The following table sets forth the unaudited consolidated capitalization of
the Company as of December 31, 1997.

At
December 31,
1997
(DOLLARS IN
THOUSANDS)
<S> <C>
CASH, RESTRICTED BANK DEPOSITS AND ESCROWS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 13,705
Restricted cash and investments . . . . . . . . . . . . . . 117,551
-------------
Total cash and restricted cash and investments $ 131,256
=============
Short-term debt:
Lease obligations . . . . . . . . . . . . . . . . . . . . . 313
-------------
Total short-term debt. . . . . . . . . . . . . $ 313
=============
Long-term debt:
Senior Notes, net of original issue discount. . . . . . . . $ 131,626
Capital lease obligations . . . . . . . . . . . . . . . . . 356
Total long-term debt . . . . . . . . . . . . . $ 131,982
=============
Stockholders' equity:
Preferred Stock, $.001 par value, authorized 10,000,000
shares, none issued. . . . . . . . . . . . . . . . . . --
Common Stock, $.001 par value, authorized 50,000,000
shares, 19,084,300 shares issued and outstanding . . . $ 19
Additional paid in capital. . . . . . . . . . . . . . . . . 26,887
Outstanding warrants. . . . . . . . . . . . . . . . . . . . 26,737
Accumulated deficit . . . . . . . . . . . . . . . . . . . . (25,783)
Cumulative translation adjustments. . . . . . . . . . . . . (238)
-------------
Total stockholders' equity . . . . . . . . . . $ 27,622
=============
Total Capitalization . . . . . . . . . . . . . $ 159,917
=============
</TABLE>

22
<PAGE>

SELECTED HISTORICAL FINANCIAL DATA

ICCA

The selected historical financial data presented below as of December 31,
1995, 1996 and 1997 and for the years ended December 31, 1994, 1995, 1996 and
1997 have been derived from the consolidated financial statements of the Company
which were audited by Price Waterhouse LLP, independent certified public
accountants. The selected historical financial data set forth below are
qualified in their entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements, including the notes
thereto, and other financial information included elsewhere in this Prospectus.

The Consolidated Financial Statements of the Company have been prepared in
accordance with U.S. GAAP. The financial statements of subsidiaries outside the
United States are prepared using the local currency as the functional currency.
Assets and liabilities of these subsidiaries are translated at the rate of
exchange at the balance sheet date. The resultant translation adjustments are
included as a separate component of stockholders' equity. Income and expense
items are translated at average monthly rates of exchange. Gains and losses from
foreign currency transactions of these subsidiaries are included in the
statement of operations.

SELECTED HISTORICAL FINANCIAL DATA, CONTINUED

INTERAMERICAS COMMUNICATIONS CORPORATION
YEAR ENDED DECEMBER 31,
---------------------------------------
1994 1995 1996 1997
-------- -------- -------- ---------
AMOUNTS IN THOUSANDS OF DOLLARS,
EXCEPT NET LOSS PER COMMON SHARE
<S> <C> <C> <C> <C>
Historical Operating Data(1):
Sales. . . . . . . . . . . . . . . . . $ 34 $ 224 $ 652 $ 1,130
Operating expenses . . . . . . . . . . (2,207) (2,722) (5,009) (12,075)
-------- -------- -------- ---------
Loss from operations . . . . . . . . . (2,173) (2,498) (4,357) (10,915)
Other expense. . . . . . . . . . . . . (45) (56) (23) (68)
Interest expense . . . . . . . . . . . (313) (319) (246) (96)
-------- -------- -------- ---------
Net loss. . . . . . . . . . . . . . . $(2,531) $(2,873) $(4,626) $(15,632)
======== ======== ======== =========

Net basic and diluted
loss per share . . . . . . . . . . . $ (1.30) $ (0.31) $ (0.31) $ (0.94)
Weighted average shares outstanding. . 1,952 9,407 14,796 16,668
Cash Flows:
Cash used in operating activities. . . $ (489) $(2,150) $(3,934) $ (5,939)
Cash used in investing activities. . . (2,049) (1,170) (2,968) (8,562)
Cash provided by financing activities. 2,649 3,263 7,570 27,483
Other Financial Data:
EBITDA(2). . . . . . . . . . . . . . . $(2,097) $(2,102) $(3,651) $ (9,948)
Depreciation and amortization. . . . . 76 396 706 967
Capital expenditures.. . . . . . . . . 1,849 720 1,453 2,763
</TABLE>

23
<PAGE>

AT DECEMBER 31,
-------------------------
1995 1996 1997
------ ------- --------
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents . . . . . $ 57 $ 723 $ 13,705
Restricted cash and investments (3) -- -- 117,551
Total assets. . . . . . . . . . . . 4,347 10,354 170,031
Current debt:
Lease obligations . . . . . . . . 11 114 313
Long-term liabilities:
Lease obligations . . . . . . . . 210 248 356
Senior Notes, net 131,626
Stockholders' equity. . . . . . . 670 8,280 27,622
<FN>

1) Historical financial data includes the operations of Resetel and FirstCom
Networks from their respective dates of acquisition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

(2) "EBITDA" represents loss form operations before interest, depreciation and
amortization. EBITDA is presented because it is commonly used in the
telecommunications industry to measure operating performance, asset value and
financial leverage. However, EBITDA should not be considered as an alternative
to net income, as a measure of operating results, cash flows or as a measure of
liquidity in accordance with generally accepted accounting principles. Also,
EBITDA as defined herein may not be comparable to similarly entitled measures
reported by other companies.

(3) Restricted cash and investments represents proceeds of the Senior Note
Offering that are to be used for the purchase of telecommunications equipment in
Peru and Chile and for payment of interest on the Senior Notes.
</TABLE>

24
<PAGE>

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

The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes thereto appearing
elsewhere in this document.

OVERVIEW

General

The Company is a new provider of high bandwidth integrated telecommunication
services to high volume users through state of the art fiber optic networks
located in Santiago, Chile and Lima, Peru. The Company began development of its
networks in Chile and Peru in 1994 and 1996, respectively. As of December 31,
1997, the Company had (i) constructed a 120 kilometer fiber optic network which
extends through most of Santiago's downtown business district and the outlying
industrial and airport corridor and (ii) completed construction of 90 kilometers
of its fiber optic network in Lima. The Lima network, when completed, is
expected to be approximately 230 kilometers in length and will extend throughout
the major commercial and industrial districts of Lima, and the port city of
Callao.

The Company has historically operated as a Latin American
telecommunications development stage company, which has developed its operations
in Latin America through the acquisition of holding and operating companies that
own licenses, concessions or rights-of-way in what the Company believes to be
attractive markets. The following table sets forth the name, principal market
and date of acquisition of each entity acquired by the Company.

NAME MARKET DATE OF ACQUISITION
<S> <C> <C>
Hewster Servicios Intermedios, S.A. ("HSI") . . . . . . . . Santiago July 15, 1994
Visat, S.A. ("Visat") . . . . . . . . . . . . . . . . . . . Santiago September 23, 1994
Red de Servicios Empresariales de Telecomunicaciones, S.A.
("Resetel") . . . . . . . . . . . . . . . . . . . . . . . Lima May 7, 1996
Hewster, S.A. ("HSA "). . . . . . . . . . . . . . . . . . . Santiago July 31, 1996

Iusatel Chile, S.A. ("Iusatel"). . . . . . . . . . . . . . Santiago December 17, 1997

</TABLE>

FirstCom Networks (HSI and HSA were combined to operate under the name of
Hewster Chile, S.A. and subsequently FirstCom Networks, S.A.) currently
provides businesses in Santiago with high quality voice and data communications
services on a private line basis, including local area network interconnections,
remote terminal access, PBX to PBX connections, remote printing capabilities and
high speed access to the Internet through arrangements with a Chilean based ISP
and private line based services. In addition, FirstCom Networks provides its
customers with local and wide area network design, engineering, installation,
systems integration and support services. Visat is a Chilean corporation that
holds a government concession to provide intermediate telecommunications
services, including the installation and operation of a network of 12 satellite
earth stations and a switch throughout Chile, which allows the Company to
transmit either "C" or "KU" bands for satellite communications and broad band
distribution. Resetel is a Peruvian corporation that holds a concession to build
and operate a fiber-optic telecommunications network in Lima and Callao, Peru.
FirstCom Long Distance (formerly Iusatel) is a Chilean corporation which
provides domestic and international long distance services. FirstCom Long
Distance's long distance traffic is switched and transported, in part, through
its own

25
<PAGE>

gateway switch and satellite earth station, as well as through interconnections
with other Chilean long distance carriers. FirstCom Networks, Visat, Resetel
and FirstCom Long Distance are wholly-owned subsidiaries of the Company.

To date, the majority of the Company's revenues have been generated through
systems integration and consulting fees provided by the Company's FirstCom
Networks operations. With the proceeds of the Company's Senior Note Offering
completed in October 1997, the Company anticipates that it will have the capital
necessary to complete and leverage its networks to provide significant,
sustainable network-based telecommunications revenues. Due to the changing scope
of its operations, the Company believes that its historical operating results
and statistics may not be indicative nor representative of future results and
statistics.

Sales

Today, the Company derives its sales primarily from long distance services
provided by FirstCom Long Distance and services provided by FirstCom Networks
including voice and data communications services on a private line basis, and
local and wide-area network design, engineering, systems integration and support
services. The Company expects sales to increase significantly over the next few
years due to the recent acquisition of FirstCom Long Distance and the continued
expansion of its operations.

Costs of Sales

Cost of sales include both the cost of services provided and the cost of
equipment sold. Today, cost of sales relate principally to the Company's
operations in Chile. Such costs of services include payments under lease
agreements to install and operate the Company's fiber optic network in the
Santiago subway system. The lease agreement requires payments based on monthly
invoicing of the Company, subject to minimum amounts. The Company anticipates
that the cost of sales will increase with the expansion of its operations.
However, as a percentage of sales, the Company anticipates that the cost of
sales will decrease over time as a result of economies of scale in its
operations.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist principally of
compensation expense, professional fees, consulting services, travel costs,
office rent and other general corporate expenses. As the Company's subsidiaries
expand their operations, complete construction of their fiber optic networks and
add new customers, the Company expects a larger portion of selling, general and
administrative expenses to be incurred at the subsidiary level. The Company
expects selling, general and administrative expenses to increase over time as it
continues to expand its operations. However, selling, general, and
administrative expenses as a percentage of sales is expected to decrease over
time with the expansion of the Company's operations, although during the next
several years such costs could represent a higher percentage of sales compared
to historical amounts, as the Company funds the infrastructure necessary to
enhance sales in the future.

Depreciation and Amortization

The Company depreciates its property and equipment over their estimated
useful lives, which approximate twenty years for its fiber optic networks.
Intangible assets acquired in the acquisition of FirstCom Long Distance,
FirstCom Networks and Visat are being amortized over ten years. The concessions
purchased in the acquisitions of Resetel and FirstCom Long Distance are being
amortized over their estimated useful lives of twenty years. The Company
believes that depreciation and amortization will continue to increase with the
expansion of its operations.

26
<PAGE>

Interest Expense

The Company currently incurs interest expense on the outstanding Senior
Notes, capital leases and also incurred interest and related expenses
Attributable to convertible debentures and bridge notes that were issued during
the year ended December 31, 1997. Interest expense has been reduced for amounts
capitalized related to the Company's construction of its fiber optic networks.

Interest costs reported with respect to the Company's convertible
debentures include interest expense related to the stated coupon rate of
interest, the value attributable to the ability of the holders to convert the
debentures at a share price less than the closing bid price (as reported by the
Nasdaq SmallCap Market) at time of conversion ("beneficial conversion features")
and amortization of (i) deferred financing costs and (ii) original issue
discounts related to detachable warrants. The value attributable to the
beneficial conversion features has been expensed at date of issuance because the
agreements could allow holders of the Convertible Debentures to convert at that
date. As a result, for the year ended December 31, 1997 the Company incurred
noncash interest cost of $466,000 related to the fair value of the beneficial
conversion features.

Interest expense for the year ended December 31, 1997 also includes
non-cash costs of $852,000 related to the value of 300,000 shares of Common
Stock issued to an individual for certain financial assistance provided to the
Company.

The Company expects interest expense to increase significantly in the
future due to the interest payable on the Senior Notes.

Income Taxes

The Company is subject to federal, state and foreign income taxes but has
incurred no liability for such taxes due to net operating losses incurred. These
net operating losses could be used to offset future taxable income. The
Company's net deferred tax assets, which result primarily from the future
benefit of these net operating losses, are fully offset by a valuation allowance
for the same amount because of the uncertainty surrounding the future
realization of these net operating loss carryforwards. However, as the Company
expands its fiber optic networks in Chile and Peru, the Company expects to
generate taxable income. Certain tax benefits could expire prior to the time the
Company generates taxable income.

RESULTS OF OPERATIONS

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Sales. The Company's sales were $1,130,000 for the year ended December 31,
1997 as compared to $652,000 for the year ended December 31, 1996. This increase
of approximately $478,000, was attributable to the inclusion of a full year of
FirstCom Networks' operations, as compared to five months in 1996.

Cost of Revenues. The Company's cost of revenues, relating principally to
the Company's operations in Chile, was $1,203,000 for the year ended December
31, 1997 as compared to $958,000 for the year ended December 31, 1996. This
increase of approximately $245,000, was attributable to services provided by
FirstCom Networks.

Selling, General and Administrative Expenses. The Company's selling,
general and administrative expenses were $5,265,000 for the year ended December
31, 1997 as compared to $3,272,000 for the year ended December 31, 1996. This
increase of approximately $1,993,000, was primarily attributable to an increase
in corporate expenses related to salaries, professional fees and travel
attributable to the ongoing support of the Company's subsidiary operations, as
well as corporate development opportunities, and expenses attributable to the
Company's Resetel and FirstCom Networks subsidiaries which were acquired by the
Company in May and July 1996, respectively.

27
<PAGE>

Common Stock and Stock Option Compensation. This expense is directly
attributable to the value of shares of Common Stock and stock options issued to
certain officers and former directors of the Company during 1997.

Depreciation and Amortization. The Company's depreciation and amortization
expenses were $967,000 for the year ended December 31, 1997 as compared to
$706,000 for the year ended December 31, 1996. This increase of $261,000 was
primarily attributable to an increase in amortization expense related to the
intangible assets purchased in the acquisitions of Resetel and FirstCom
Networks.

Interest Expense. The Company's interest expense was $5,934,000 for the
year ended December 31, 1997 as compared to $246,000 for the year ended December
31, 1996. This increase of approximately $5,688,000 was due to additional
financing costs related to the Senior Notes, the issuance of convertible
debentures in February and May 1997 and the non-cash charge of $852,000 related
to the value of 300,000 shares of common stock issued to an individual for
certain financial assistance provided to the Company. Of the total interest
costs incurred by the Company for the year ended December 31, 1997, $712,000 of
such costs were capitalized in connection with the Company's construction of its
fiber optic network in Lima, Peru.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

SALES. The Company's sales were $652,000 for the year ended December 31,
1996 as compared to $224,000 for the year ended December 31, 1995. This increase
of approximately $428,000, was attributable to additional services provided by
the Company through its HSA subsidiary, which was acquired in July 1996.

COST OF SALES. The Company's cost of sales was $958,000 for the year ended
December 31, 1996 as compared to $408,000 for the year ended December 31, 1995.
This increase of approximately $550,000, was attributable to added costs
associated with the increase in sales discussed above.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. The Company's selling,
general and administrative expenses were $3,272,000 for the year ended December
31, 1996 as compared to $1,906,000 for the year ended December 31, 1995. This
increase of approximately $1,366,000, was primarily attributable to an increase
in corporate expenses related to salaries, professional fees, consulting fees
and travel attributable to the ongoing support of the Company's subsidiary
operations as well as corporate development opportunities, and expenses
attributable to the Company's Resetel and HSA subsidiaries which were acquired
by the Company in May 1996 and July 1996, respectively.

DEPRECIATION AND AMORTIZATION. The Company's depreciation and amortization
expenses were $706,000 for the year ended December 31, 1996 as compared to
$396,000 for the year ended December 31, 1995. This increase of $310,000 was
attributable to an increase in amortization expense related to the intangible
assets purchased in the acquisitions of Resetel and HSA, as well as additional
depreciation expense related to the commencement of operations of the Company's
fiber optic network in Chile.

INTEREST EXPENSE. The Company's interest expense was $246,000 for the year
ended December 31, 1996 as compared to $319,000 for the year ended December 31,
1995. This decrease of approximately $73,000, was due to a reduction in the
Company's outstanding indebtedness during 1996.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has been primarily engaged in start-up
activities requiring substantial expenditures. Consequently, the Company has
reported losses from operations, before interest, of approximately $2.5 million,
$4.4 million and $10.9 million for the years ended December 31, 1995, 1996 and
1997, respectively. In addition, the Company has reported cash used in
investing activities of approximately $1.2 million, $3.0 million and $8.6
million for the years ended December 31, 1995, 1996 and 1997, respectively. Cash
used in investing activities related primarily to the purchase of property and
equipment and the acquisitions of Visat, FirstCom Networks and FirstCom Long
Distance. Further development of the Company's business and the expansion of its
fiber optic networks, service offerings and customer base will require
significant additional expenditures, and the Company expects that it will have
significant operating losses and net cash outflows from operating and investing
activities in the foreseeable future.

Since inception, the Company has funded its cash needs through a
combination of private equity and debt placements.

On October 27, 1997, the Company consummated the Senior Note Offering of
150,000 Units consisting of an aggregate of $150.0 million aggregate principal
amount of 14% Senior Notes due October 27, 2007 and 5,250,000 Unit Warrants
to purchase 5,250,000 shares of Common Stock of the Company at an exercise
price of $4.40 per share. The Unit Warrants entitle the holders thereof to
acquire an aggregate of 5,250,000 shares of Common Stock, representing
approximately 15.2% of the Common Stock of the Company on a fully diluted
basis as of the date of the consummation of the Senior Note Offering (assuming
full vesting and exercise of all options and warrants outstanding at November
14, 1997), at an exercise price of $4.40 per share. In addition, UBS
Securities LLC, the initial purchaser of the Units in the Senior Note Offering,
was granted 2,250,000 warrants to acquire 2,250,000 shares of Common Stock of
the Company at an exercise price of $4.40 per share.

The net proceeds to the Company from the Senior Note Offering were
approximately $142.5 million, after deducting the underwriting discount and
offering expenses. Approximately $57.3 million of the proceeds were used to
purchase a portfolio of securities that was deposited in escrow for payment of
interest on the Senior Notes through October 27, 2000 and, under certain
circumstances, as security for repayment of principal of the Senior Notes.
During November and December of 1997 the Company used the net proceeds of the
Offering as follows: (i) $5.9 million for the acquisition of FirstCom Long
Distance; (ii) $4.3 million for the purchase of telecommunications equipment and
the repayment of its

28
<PAGE>

subsidiaries liabilities; (iii) $2.6 million to settle all of the Company's
outstanding obligations related to convertible debentures and (iv) $975,000 to
repay certain bridge notes. The Company expects to use the remaining proceeds
primarily to expand and operate the Company's telecommunications businesses in
Peru and Chile.

A summary of the Company's value of Common Stock issued and Common Stock and
Common Stock equivalents outstanding as of December 31, 1997 and the pro forma
effect of the exercise of such Common Stock equivalents and the concurrent
inflows of capital follows:

ACTUAL AT STOCK OPTIONS AND WARRANTS OUTSTANDING INCREMENTAL
DECEMBER 31, MANAGEMENT SENIOR NOTE OTHER OPTIONS AS
1997 AND DIRECTORS(4) WARRANTS (5) AND WARRANTS (6) ADJUSTED(7)
------------- --------------- ------------ ---------------- -----------
<S> <C> <C> <C> <C> <C>
SHARES OF COMMON STOCK. 19,084,300 4,995,000 7,500,000 3,195,171 15,690,171

VALUE OF COMMON STOCK . $ 26,906,000 $ 15,211,514 $ 33,000,000 $ 6,927,362 $ 55,142,071
ISSUED (1) (2)

PER SHARE(3). . . . . . $ 1.41 $ 3.05 $ 4.40 $ 2.17 $ 3.51
<FN>
(1) The closing price of the Common Stock on December 31, 1997 was $1.94. The exercise of stock
options and warrants as shown above assumes (i) that the fair value of the Common Stock is equal to or
above the exercise price of the respective stock options and warrants and (ii) full vesting of all stock
options and warrants.
(2) Represents the proceeds from the Company's issuance of Common Stock and Common Stock equivalents,
and is comprised of par value and additional paid in capital.
(3) Represents the amount in (2) per share of Common Stock.
(4) Represents the incremental impact on the Company's value of Common Stock issued upon the exercise
of all stock options (vested and not vested) held by the Company's management and directors as of
December 31, 1997.
(5) Represents the incremental impact on the Company's value of Common Stock issued upon the exercise
of all warrants (vested and not vested) that were issued in connection with the Senior Notes and are
outstanding as of December 31, 1997.
(6) Represents the incremental impact on the Company's value of Common Stock issued upon the exercise
of all other stock options and warrants (vested and not vested) outstanding as of December 31, 1997
(includes 1,865,000 stock options issued to former officers and directors).
(7) Represents the combined incremental impact of (4), (5) and (6) above.
</TABLE>

As part of its business strategy, the Company intends to continue to
evaluate potential acquisitions, joint ventures and strategic alliances in
companies that own existing networks or companies that provide services that
complement the Company's existing businesses. The Company continues to consider
potential acquisitions from time to time. New sources of capital such as credit
facilities and other borrowings, and additional debt and equity issuances, may
be used to fund such acquisitions and similar strategic investments.

As a result of the Senior Note Offering , the Company has become highly
leveraged and has substantial debt service requirements. In addition, in each
year since its inception the Company had net losses from operations and
therefore had insufficient earnings to cover its fixed charges. The Company's
annual interest obligations under the Senior Notes substantially exceeds the
Company's net income.

The ability of the Company to make scheduled payments with respect to its
indebtedness, including interest on the Senior Notes after October 27, 2000,
will depend upon, among other things, (i) its ability to implement its business
plan, and to expand its operations and to successfully develop its customer base
in its target markets, (ii) the ability of the Company's subsidiaries to remit
cash to the Company in a timely manner and (iii) the future operating
performance of the Company and its subsidiaries. Each of these factors is, to a
large extent, subject to economic, financial, competitive, regulatory and other
factors, many of which are beyond the Company's control. The Company expects
that it will continue to

29
<PAGE>

generate cash losses for the foreseeable future. The Company has deposited in
escrow funds representing interest payments with respect to the Senior Notes
through October 2000. However, no assurance can be given that the Company will
be successful in developing and maintaining a level of cash flow from operations
sufficient to permit it to pay the principal of, and the interest on the Senior
Notes after such time, or with respect to its other indebtedness. If the Company
is unable to generate sufficient cash flow from operations to service its
indebtedness, including the Senior Notes, it may have to modify its growth
plans, restructure or refinance its indebtedness or seek additional capital.
There can be no assurance that (i) any of these strategies can be effected on
satisfactory terms, if at all, in light of the Company's high leverage or (ii)
any such strategy would yield sufficient proceeds to service the Company's
indebtedness, including the Senior Notes. Any failure by the Company to satisfy
its obligations with respect to the Senior Notes at maturity or prior thereto
would constitute a default under the Indenture and could cause a default under
other agreements governing current or future indebtedness of the Company.

Substantially all of the Company's assets are held by its subsidiaries and
substantially all of the Company's sales are derived from operations of such
subsidiaries. Future acquisitions may be made through present or future
subsidiaries of the Company. Accordingly, the Company's ability to pay the
principal of, and interest and liquidated damages, if any, when due, on the
Senior Notes is dependent upon the earnings of its subsidiaries and the
distribution of sufficient funds from its subsidiaries. the Company's
subsidiaries will have no obligation, contingent or otherwise, to make funds
available to the Company for payment of the principal of, and interest and
liquidated damages on, if any, the Senior Notes. In addition, the ability of the
Company's subsidiaries to make such funds available to the Company may be
restricted by the terms of such subsidiaries' current and future indebtedness,
the availability of such funds and the applicable laws of the jurisdictions
under which such subsidiaries are organized. Furthermore, the Company's
subsidiaries will be permitted under the terms of the Indenture to incur
indebtedness that may severely restrict or prohibit the making of distributions,
the payment of dividends or the making of loans by such subsidiaries to the
Company. The failure of the Company's subsidiaries to pay dividends or otherwise
make funds available to the Company could have a material adverse effect upon
the Company's ability to satisfy its debt service requirements including its
ability to make payments on the Senior Notes.

In addition to the deposit of a portion of the proceeds from the Senior
Note Offering to fund interest payments on the Senior Notes through October
2000, the Company deposited $62 million of the proceeds from the Senior
Note Offering in a separate account under a trustee's control pending
application of such funds by the Company for the payment of, as such
terms are defined in the Indenture: (a) Permitted Expenditures; (b) in the event
of a Change in Control of the Company, the Change in Control Payment and (c) in
the event of a Special Offer to Purchase, or a Special Mandatory Redemption, the
purchase or redemption price in connection therewith.

The Company believes the net proceeds from the Senior Note Offering will be
sufficient to satisfy the Company's liquidity needs through the end of 1999;
however, there can be no assurance that the Company will have sufficient
resources to meet its subsequent liquidity requirements.

To accelerate its growth rate and to finance the launch or build-out of
additional markets, the Company will consider obtaining financing from various
sources, including vendor financing provided by equipment suppliers, project
financing from commercial banks and international agencies, bank lines of credit
and the sale of equity and debt securities. To the extent that the Company or
any of its subsidiaries issues debt, its leverage and debt service obligations
will increase. There can be no assurance that the Company will be able to raise
such capital on satisfactory terms, if at all. In addition, the Indenture
related to the Senior Notes will limit the ability of the Company and its
subsidiaries to incur additional indebtedness.

30
<PAGE>

INFLATION AND EXCHANGE RATES

Inflation and exchange rate variations may have substantial effects on the
Company's results of operations and financial condition. Generally, the effects
of inflation in many Latin American countries, including Chile and Peru, have
been offset in part by a devaluation of the local countries' currencies relative
to the U.S. dollar. Nevertheless, the devaluation of each country's currency may
have an adverse effect on the Company.

A substantial portion of the Company's purchases of capital equipment and
interest on the Senior Notes is payable in U.S. dollars. To date, the Company
has not had significant foreign currency exposure with third parties and
generally intends to be paid for its services in U.S. dollars or in local
currencies with a pricing adjustment that is structured to protect the Company
against the risk of fluctuations in exchange rates. However, a portion of sales
to customers of the Company will be denominated in local currencies, and
substantial or continued devaluations in such currencies relative to the U.S.
dollar could have a negative effect on the ability of customers of the Company
to absorb the costs of devaluation. This could result in the Company's customers
seeking to renegotiate their contracts with the Company or, failing satisfactory
renegotiation, defaulting on such contracts.

In addition, from time to time, Latin American countries have experienced
shortages in foreign currency reserves and restrictions on the ability to
expatriate local earnings and convert local currencies into U.S. dollars. Also,
currency devaluations in one country may have adverse effects in another
country, as in late 1994 and 1995, when several Latin American countries were
adversely impacted by the devaluation of the Mexican peso. Any devaluation of
local currencies in the country where the Company operates, or restrictions on
the expatriation of earnings or capital from such countries, could have a
material adverse effect on the business, results of operations and financial
condition of the Company. See "Risk Factors - Country Risks."

NET OPERATING LOSS CARRYFORWARDS

At December 31, 1997, the Company had net operating loss carry forwards
("NOLs") of approximately $16.1 million for U.S. income tax purposes and
approximately $21.3 million for foreign income tax purposes. These carryforwards
are available to offset future taxable income, if any, and expire for U.S.
income tax purposes in the years 2007 through 2012. The foreign net operating
loss carryforwards related to (1) Peru, $665,000, expire in the years 2000
through 2001 and (2) to Chile, $20.6 million, do not expire.

EFFECTS OF NEW ACCOUNTING STANDARDS

During June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131 "Disclosures About Segments of an Enterprise and
Related Information" effective for fiscal years beginning after December 1997.
Management does not expect Statements No. 130 and 131 to have a significant
impact on the Company's reporting and disclosure requirements in 1998.

Statement No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. Statement No. 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports issued to shareholders.

31
<PAGE>

BUSINESS

OVERVIEW

Prior to November 1996, the Company operated as a development stage company
whose activities primarily consisted of the acquisition of licenses, concessions
and rights-of way in certain key Latin American markets. Beginning in November
1996, with the hiring of a new management team, the Company has focused on the
development and operation of high capacity fiber optic networks in Lima, Peru
and Santiago, Chile.

In May 1996, the Company acquired an operating company in Lima, Peru which
holds one of only two local concessions that compete with Telefonica to
provide local private line voice and data services. The Company intends to
expand its existing service offerings to provide local public switched telephony
upon the planned 1999 liberalization of Peru's telecommunications markets. The
Company also intends to apply for a concession to provide public switched long
distance services as regulation permits. The Company currently offers high speed
data transmission services on a private line basis, including area network
interconnection, remote terminal access, dedicated channels for access to the
Internet and voice services on a private line basis. The Company's services are
provided through its 90 kilometer digital fiber optic network in Lima, Peru,
which the Company intends to expand to approximately 230 kilometers by the end
of 1998. When completed, the Company's fiber optic network will extend
throughout the major commercial and industrial districts of Lima and the port
city of Callao (combined population of 7.5 million). The Company believes that
its planned fiber optic network expansion and early implementation of private
line and value-added services prior to the scheduled expiration of Telefonica's
exclusive concession for public switched local and long distance services in
July 1999 will enable the Company to develop a strong customer base and network
presence.

In Chile, the Company currently holds concessions to provide (i) voice and
data transmission services and value-added services on a private line basis and
(ii) public switched domestic and international long distance services. The
Company also maintains a concession to own and operate satellite earth stations
throughout Chile and plans to apply for a concession to provide local public
switched telephony services in Santiago. The Company currently provides similar
services to those offered in Peru, as well as (i) private line remote analog
digital telephone access and digital links for PBX to PBX connections, (ii)
local and wide area network design and engineering and (iii) systems
installation, integration and support services. The Company's services are
provided through its 120 kilometer digital fiber optic network which currently
extends through most of Santiago's downtown business district and the outlying
industrial park and airport corridors. With the completion of last mile
connections to its existing network and approval of a local telephony
concession, the Company believes that it will be able to substantially broaden
its product and service offerings and significantly increase its revenues in
Chile.

In December 1997, the Company acquired FirstCom Long Distance, formerly
Iusatel Chile, S.A., an operating company in Santiago, Chile, which provides
domestic and international long distance services. FirstCom Long Distance's
long distance traffic is switched and transported, in part, through its own
gateway switch and satellite earth station, as well as through interconnections
with other Chilean long distance carriers. The Company believes that the
acquisition of FirstCom Long Distance will enable the Company to: (i) provide
long distance services to its existing corporate customers; (ii) bundle a
variety of service offerings, including long distance and data services, to
attract additional customers; and (iii) access the approximately $178.2 million
Chilean international long distance market.

32
<PAGE>

Local and long distance telecommunications revenues in Peru were
approximately $885.5 million in 1996 and are estimated by Pyramid to increase to
approximately $1.9 billion in the year 2000, representing a compound annual
growth rate of 21%. Local and long distance telecommunications revenues in Chile
were approximately $1.1 billion in 1996 and are estimated by the Pyramid to
increase to approximately $2.2 billion in the year 2000, representing a compound
annual growth rate of 16%.

While the Company only recently commenced its current operations, the
Company's customers already include, among others, Xerox de Chile S.A.,
Autorentas del Pacifico (Hertz) Ltda, and Nike de Chile S.A. in Chile and Sony
Music Entertainment Peru S.A., Interbank and one ISP in Peru. Upon completion
of its networks, the Company will be able to market aggressively its service
offerings to additional business customers and other telecommunications
carriers. The Company also believes that dedicated access to ISPs will
represent a significant source of new customer relationships in both Chile and
Peru because of the anticipated rapid increase in the number of Internet users
throughout Latin America.

BUSINESS STRATEGY

The Company's goal is to become a leading provider of high bandwidth
telecommunications services to business and other high volume users and carriers
operating in key Latin American business centers. The Company follows a regional
business strategy in Latin America as set forth below. The Company has modified
this strategy to adapt to the specific economic and regulatory environments of
each market in which the Company operates. See "-- Business and Services -- Peru
- - Country Strategy" and "-- Chile - Country Strategy."

Focus on Key Markets in Latin America

Enter Markets Early

The Company seeks to enter markets where it can construct or acquire fiber
optic networks and offer telecommunications services in advance of full market
liberalization. The Company has already implemented this strategy in Lima, Peru
where it is one of the first companies to have established a telecommunications
system prior to the scheduled liberalization of Peru's telecommunications
markets in July 1999, at which time the exclusivity provisions of Telefonica's
concession will expire and the local and long distance markets are scheduled to
be opened to competition by new entrants. The Company believes that this early
entry into the Lima market will enable the Company to establish strong business
relationships with its targeted customers prior to onset of widespread
competition.

33
<PAGE>

Provide a Broad Range of High Quality Telecommunications Services

The Company intends to follow the strategy implemented by CLECs in the
United States of installing advanced equipment into their existing fiber optic
networks that enable interconnections with existing public networks and the
provision of switched telephone services. As regulation permits, the Company
will seek to secure a growing portion of its customers' existing and targeted
telecommunications business by adding local, long distance, enhanced voice and
data services to the private line services it currently offers. The Company
believes its customers require maximum reliability, high quality service, broad
geographic coverage, strong customer service and the opportune introduction of
innovative services delivered in a timely and cost-effective manner. The Company
believes that these needs are often left unmet by the former PTT in markets
where the Company currently operates.

Target Business Customers and Telecommunications Carriers

Growth Through Acquisitions and New Licenses

The Company expects to opportunistically enter additional key Latin
American business centers in part by acquiring controlling interests in existing
companies that have licenses, concessions and rights-of-way to install and
operate fiber optic networks or by applying for such licenses and concessions
and negotiating for such rights-of-way directly. The Company may also acquire
other telecommunications service providers in existing and targeted markets that
enable the Company to expand or enhance its current operations. The Company
believes that many emerging local and long distance carriers, cellular providers
and recently privatized PTTs are likely to seek alliances with local access
providers with fiber optic systems, such as the Company, to compete more
effectively in the growing telecommunications markets.

Growth Through Strategic Alliances

Unify Marketing Identity

34
<PAGE>

SENIOR NOTE OFFERING

On October 27, 1997, the Company consummated the Senior Note Offering of
150,000 Units pursuant to Rule 144A and Regulation S under the Securities Act,
consisting of (i) $150.0 million aggregate principal amount of 14% Senior Notes
due October 27, 2007 and (ii) 5,250,000 Unit Warrants to purchase an aggregate
of 5,250,000 shares of Common Stock, at an exercise price of $4.40 per share.
The Senior Note Offering resulted in net proceeds to the Company of
approximately $142.5 million. The Units were originally issued and sold by the
Company in a transaction which was exempt from the registration requirements of
the Securities Act. The Company has filed Form S-4 and Form S-3 Registration
Statements with the SEC to register under the Securities Act (i) New Notes which
contain substantially identical terms as the Senior Notes and are being offered
in exchange for the Senior Notes and (ii) the Common Stock underlying the Unit
Warrants, respectively. The form and terms of the New Notes are the same as the
form and terms of the Senior Notes for which they may be exchanged, except that
the New Notes will have been registered under the Securities Act, and hence the
New Notes will not bear legends restricting the transfer thereof. See
"Description of Senior Notes."

INDUSTRY OVERVIEW

General

The continuing liberalization of the telecommunications industry and
technological change have resulted in an increasingly information-intensive
business environment. Regulatory, technological, marketing and competitive
trends have significantly expanded the Company's opportunities in the converging
voice and data telecommunications markets. Rapid liberalization of the
telecommunications industry in Latin America is expected to expand opportunities
in the local telecommunications services market. Technological advances,
including growth of the Internet, the increased use of packet switching
technology for voice communications and the growth of multimedia applications,
are expected to result in growth in the high-speed data services market. The
Company believes that the current deregulation in many Latin American countries,
coupled with technological innovation, will lead to market developments similar
to those that occurred upon deregulation of long distance telecommunications
services in the United States and the United Kingdom, including an increase in
traffic volume and the continued introduction of new providers of
telecommunications services of varying sizes.

Telecommunications traffic of business customers and telecommunications
carriers has increased dramatically and these customers now insist upon the
quality and high capacity inherent in fiber optic transmission technology such
as the technology used by the Company. As customers require increased bandwidth
capabilities to handle complex voice, video and data telecommunications, the
Company believes that demand for transmission capacity will continue to
increase. Digital signals carried over optical fibers are superior in many
respects to analog signals carried over copper wires, an older technology which
many PTTs continue to use for parts of their networks, although many PTTs are
using fiber optic technology to expand their existing networks. In addition to
offering faster and more accurate transmission of voice and data communications,
digital fiber optic networks generally require less maintenance than comparable
copper wire networks, thereby decreasing operating costs. The capacity of fiber
optic cable is determined in part by the interface of electronic equipment with
the network, thereby allowing network capacity to be increased through a change
in electronics, rather than the fiber itself. Fiber optic cable also provides
enhanced transmission quality as signals are largely immune to electromagnetic
interference.

35
<PAGE>

Latin American Markets

Many countries in Latin America, and most of the region's major
metropolitan markets, have economies that are growing faster than many other
areas of the world. The Company believes that this growth is attributable in
part to an increase in foreign investments, new trade agreements, such as the
NAFTA, Mercosur and the Andean Pact, and the privatization of many industries,
including the telecommunications industry. Many of Latin America's major
metropolitan centers are among the largest cities in the world, are centers of
trade and commerce for a wide region or for an entire country, and are home to a
high concentration of large domestic and multinational corporations that require
advanced telecommunications services. Following the economic recovery of many
Latin American countries in the early 1990's, multinational corporations
headquartered in North America, Europe and Asia began to invest in Latin America
by either establishing new operations or expanding existing operations. In
conducting their activities in Latin America, these multinational corporations
require state-of-the-art telecommunications networks to handle the flow of
information between their headquarters and their branches throughout Latin
America. The telecommunications infrastructure in many of these markets is very
limited or obsolete, resulting in significant unmet demand for advanced
telecommunications services including reliable, high capacity data circuits,
private line LANs and domestic and international long distance connectivity. The
telecommunications industry in Latin America has experienced rapid growth in
large part because most Latin American governments are opening their
telecommunications markets to competition. By the year 2000, the
telecommunications markets in most countries in the region are expected to be
deregulated.

36
<PAGE>

The following table sets forth certain historical and projected economic
data and selected information regarding the telecommunications markets in the
Latin American countries where the Company operates:

PERU

1993 1994 1995 1996 1997 1998 1999 2000
------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ECONOMIC DATA*
Population (millions) . . . . . 22.5 22.9 23.4 23.8 24.3 24.8 25.3 25.8
Real GDP (in constant 1990 US$
billions) . . . . . . . . . . 36.5 41.2 44.1 45.3 47.6 50.2 53.1 56.5
Inflation (%) . . . . . . . . . 39.5 15.4 10.2 11.8 10.0 9.1 8.3 7.5
TELECOMMUNICATIONS DATA**
Main Lines in Service (in
thousands). . . . . . . . . . 673.0 772.4 1,109.2 1,435.1 1,595.5 1,850.8 2,093.6 2,437.7
Penetration Rate (main lines
per 100 pop). . . . . . . . . 2.9 3.4 4.7 5.9 6.6 7.5 8.3 9.4
Service Revenues (US$
millions) . . . . . . . . . . 655.8 590.7 825.9 880.4 1,216.2 1,410.8 1,595.9 1,858.2
Local Services (US$
millions) . . . . . . . . . 190.7 251.4 459.1 506.9 676.0 784.2 887.1 1,032.9
Toll Services (US$
millions) . . . . . . . . . . 235.2 123.2 130.9 143.1 192.8 223.6 253.0 294.5
International Services (US$
millions) . . . . . . . . . . 229.9 216.1 235.9 230.5 347.4 403.0 455.8 530.8

CHILE

1993 1994 1995 1996 1997 1998 1999 2000
------ ------ ------- ------- ------- ------- ------- -------
ECONOMIC DATA*
Population (in millions). . . . 13.8 14.0 14.3 14.5 14.7 15.0 15.2 15.4
Real GDP (constant 1990 US$
billions) . . . . . . . . . . 38.2 39.8 43.1 46.1 48.8 52.3 55.9 59.8
Inflation (%) . . . . . . . . . 12.2 8.9 8.2 6.6 5.7 5.0 5.1 4.7
TELECOMMUNICATIONS DATA**
Main Lines in Service (in
millions) . . . . . . . . . . 1.5 1.6 1.8 2.2 2.6 3.0 3.5 3.9
Penetration Rate (main lines
per 100 pop). . . . . . . . . 11.0 11.6 13.0 14.9 17.8 20.3 22.9 25.4
Service Revenues (US$
millions) . . . . . . . . . . 714.10 765.10 1,016.0 1,186.7 1,443.1 1,668.4 1,911.7 2,157.1
Local Services (US$
millions) . . . . . . . . . 479.0 560.6 627.8 733.3 891.7 1,030.9 1,181.3 1,332.9
Toll Services (US$
millions) . . . . . . . . . 135.2 118.9 235.6 275.2 334.6 386.9 443.3 500.2
International Services (US$
millions) . . . . . . . . . 99.9 85.6 152.6 178.2 216.8 250.6 287.1 324.0
<FN>
- ---------------

Sources: Bank of America World Information Services (March 1997) and Pyramid
Research Report (October 1996)
* Economic Data includes historical information for the years 1993-1996 and projections for the years
1997-2000.
** Telecommunications Data includes historical information for the years 1993-1995 and projections for
the years 1996-2000.
</TABLE>

37
<PAGE>

Competitive Local Market Access

Once the domain of PTTs, the local access market in both developed and
emerging countries is increasingly open to competition. Where permitted, local
markets may be entered via any combination of (i) construction of proprietary
wired network infrastructure, (ii) construction of wireless local loop, PCS or
cellular networks and (iii) resale of the existing local carrier's network.
Companies gaining local access through the use of a fiber optic rings using ATM
technology are uniquely positioned to provide services for large business
customers due to the high capacity of such systems.

In the United States and other developed countries, CAPs have been allowed
to enter markets in advance of complete deregulation through their provision of
special access services and private line services. Typically, CAPs begin
providing such services through their own fiber optic loop networks, which are
built over existing facilities and often exceed existing providers in terms of
bandwidth, reliability and enhanced service capability. Frequently, fixed
wireless technologies are used to cost effectively extend the network from the
fiber optic network to customer locations. Special access services provide high
capacity voice, data and video circuits to connect long distance carriers with
their respective customers. Private line services provide high capacity circuits
to transmit voice, data and video between two or more end-user locations locally
or internationally.

Long distance carriers have traditionally been the first customers for
CAPs. Local access in the markets in which the Company operates in some cases
comprises over forty percent of the cost of a long distance call. For this
reason, long distance carriers, as well as high volume corporate customers, have
great demand for the lower cost local access provided by CAPs. In addition, as
any communications failure can result in significant expenses and/or lost
revenue to businesses, corporate and carrier customers often utilize CAPs as a
back-up to their primary carrier. CAPs typically market their private line and
special access services by offering lower prices, higher network reliability and
higher quality transmissions and customer service. Corporate customers utilize
such private lines to interconnect their branch offices and computer networks,
and even to connect their internal PBX networks with the local PTT.
Telecommunications carrier networks utilize CAPs to interconnect their switching
centers, to connect major customers to their networks, and to connect their
cellular, microwave and satellite transmitters. With direct connection to
customers, CAPs may also market higher margin value-added services such as
Internet access, database access and Centrex. Depending on local regulation, the
CAP may also provide dial tone for any calls made to points outside of the local
market. In most markets, corporate customers will begin by transferring a small
portion of their telecommunications requirements to the CAP. As these customers
experience the CAP's competitive cost and superior service, they often transfer
increasing amounts of their business to the new operator.

As deregulation has permitted, most CAPs have attempted to expand their
services from the provision of private line and special access services to the
provision of CLEC switched or dial tone services that are provided through a
combination of the CAP's own network and through interconnection with the local
PTT network. This evolution has enabled CAPs to achieve increased gross margins
over time. Typically, private line services are provided on a flat fee, monthly
rental basis. Switched services, on the other hand, are billed on a volume or
minutes of use basis which generally generates substantially higher revenues and
margins. Through interconnection with the local PTT, new carriers are able to
offer services immediately to any customer on the PTT's network, thereby
significantly increasing the number of customers and markets that they serve
without physically expanding their own networks. The PTTs receive a volume-based
payment for the use of their network.

Although the Company has based its strategy in part on the experiences of
CAPs and CLECs in the United States and other developed countries, there can be
no assurance that the liberalizing Latin American markets will be characterized
by the same trends as were found in such other markets.

38
<PAGE>

BUSINESS AND SERVICES

Peru

Country Overview. Peru is the fourth largest country in South America with
an estimated population of 23.9 million people. Lima, the capital of Peru and
the major economic center in Peru, has a population of approximately 6.8 million
people. According to the 1996 report issued by the Peruvian National Bureau of
Statistics, as of 1993, approximately 70.1% of Peru's population lived in
cities. In 1990, Alberto Fujimori, a political outsider, was elected President
and embarked on a series of economic and political measures to curtail inflation
and restore economic stability. From 1991 through 1996, GDP increased by an
average annual growth rate of 5.2%, although GDP increased by only 2.8% in 1996.
The lower GDP growth rate in 1996 has been largely attributed to the Peruvian
government's effort to reduce expenditures to avoid an overheated economy and to
reduce Peru's current account deficit. Inflation has been dramatically curtailed
as a result of President Fujimori's economic plan, falling from 7,649.7% in 1990
to 11.8% in 1996. GDP is expected to grow at a compound annual growth rate of
6.2% from 1997 to 2002.

Market Overview. The Company believes that demand for telephone service in
Peru has historically been unmet due to lack of investment, high prices, poor
service and long waiting periods for service. One of the goals of the
privatization of Peru's former local and long distance PTT, Telefonica, in 1994
(the "Privatization") was to expand significantly the national
telecommunications network and improve service quality. The number of lines in
service has increased since the Privatization from approximately 772,000 to over
1.4 million at December 31, 1996. Notwithstanding the significant recent growth
in lines in service, Peru continues to have a relatively low penetration rate
with 5.9 lines in service per 100 inhabitants at December 31, 1996. The Company
believes that continued growth in demand for telecommunication services in Peru
will be influenced by the growth of the Peruvian economy, foreign investment and
international trade, the continued expansion of the telecommunications network
and the re-balancing of tariffs. Based on 1996 operating results for Telefonica,
the local and long distance telecommunications markets in Peru are estimated to
have accounted for approximately $880.5 million in total revenues, of which
approximately $506.9 million are local access and service revenues and
approximately $373.6 million are domestic and international long distance
revenues. The Company believes that Peru's telecommunications market offers an
excellent environment for telecommunications business growth. The Company
believes that the Peruvian economy is also a source of growing demand for
telecommunication services with growing domestic and multinational businesses
attracting significant foreign investment. The following chart presents certain
historical and projected information with respect to the telecommunications
market in Peru for the periods indicated:

39
<PAGE>
<TABLE>
<CAPTION>

TELECOMMUNICATIONS DATA -- PERU*

1993 1994 1995 1996 1997 1998
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
TELEPHONE
Minutes (in millions)
Local Services . . . . . . . . . . . 3,600.0(1) 4,240.0(1) 4,954.0(1) 7,806.2(2) 4,193.4(3) n/a
Long Distance Domestic . . . . . . . 388.0(1) 394.0(1) 461.0(1) 577.0(2) 326.4(3) n/a
Long Distance International. . . . . 179.2(1) 232.4(1) 262.1(1) 294.5(2) 164.6(3) n/a
MAIN LINES IN SERVICE (IN THOUSANDS) . 673.0(2) 772.4(2) 1,109.2(2) 1,435.1(2) 1,595.5(1) 1,850.8(1)
PENETRATION RATE
(main lines per 100 pop) . . . . . . 2.9(4) 3.4(4) 4.7(4) 5.9(2) 6.6(1) 7.5(1)
SERVICE REVENUES
Local Services (US$millions) . . . . 190.7(1) 251.4(4) 459.1(4) 506.9(3) 676.0(1) 784.2(1)
Toll Services (US$millions). . . . . 235.2(1) 123.2(4) 130.9(4) 143.15(3) 192.8(1) 223.6(1)
International Services (US$millions) 229.9(1) 216.1(4) 235.9(4) 230.5(3) 347.4(1) 403.0(1)
DATA
X-25/Frame Relay Ports (in thousands). 0.5(1) 0.7(1) 0.9(1) 1.2(1) 1.5(1) 14.0(1)
ISP Host Penetration
(main lines per 100 pop) . . . . . . 0.000(5) 0.001(5) 0.003(5) 0.021(5) 0.084(5) 0.208(5)

1999 2000
------------------- ----------
<S> <C> <C>
TELEPHONE
Minutes (in millions)
Local Services . . . . . . . . . . . n/a n/a
Long Distance Domestic . . . . . . . n/a n/a
Long Distance International. . . . . n/a n/a
MAIN LINES IN SERVICE (IN THOUSANDS) . 2,093.6(1) 2,437.7(1)
PENETRATION RATE
(main lines per 100 pop) . . . . . . 8.3(1) 9.4(1)
SERVICE REVENUES
Local Services (US$millions) . . . . 887.1(1) 1,032.9(1)
Toll Services (US$millions). . . . . 253.0(1) 294.5(1)
International Services (US$millions) 455.8(1) 530.8(1)
DATA
X-25/Frame Relay Ports (in thousands). 29.9(1) 46.6(1)
ISP Host Penetration
(main lines per 100 pop) . . . . . . 0.361(5) 0.515(5)
<FN>
- ---------------

(1) Source: Pyramid Research Report.
(2) Source: Telefonica del Peru, S.A. 1996 Annual Report.
(3) Source: Telefonica del Peru S.A., 2nd Quarter Report: July 31, 1997. Translations from 6/30/97 Peruvian
Nuevo Sol into US$ at the 6/30/97 exchange rate of 0.377 US$/Peruvian Nuevo Sol.
(4) Source: Telefonica del Peru 1995 Annual Report. Translations from 12/31/95 Peruvian Nuevo Sol into US$
at the 12/29/95 exchange rate of 0.4341 US$/Peruvian Nuevo Sol.
(5) Source: Calculations based on Pyramid Research Report estimates of ISP hosts and of population for Peru.

(*) Includes historical information for the years 1993-1995 and projections for the years 1996-2000.
</TABLE>

Operating Company Overview. The Company conducts its business in Peru
through its wholly-owned subsidiary, Resetel, which was acquired by the Company
in May 1996. Resetel offers to multinational, national and local businesses a
broad array of high quality data, video and voice communications services,
including LAN interconnection, remote terminal access and dedicated channels for
access to the Internet, on a private line basis through a digital fiber optic
network in metropolitan Lima, Peru. The Company has installed and in operation
90 kilometers of its fiber optic network, and plans to expand its network to
approximately 230 kilometers by the end of 1998. The Company anticipates that
its fiber optic network will travel through the major commercial and industrial
districts of Lima and the adjacent port city of Callao (combined population of
approximately 7.5 million people) upon its scheduled completion in 1998. The
Company is one of only two companies which is currently permitted to compete in
the provision of its services with Telefonica.

The Company intends to expand its existing service offerings to provide
local public switched telephony service in Lima upon liberalization of Peru's
telecommunications markets and the expiration of Telefonica's exclusive
concession to provide public switched local and long distance telephony
services, which is scheduled to occur in July 1999. Resetel also intends to seek
approval to provide long distance services as regulation permits. By
implementing its private line and value-added services prior to the expiration
of Telefonica's exclusive concession in 1999, the Company believes that it will
be able to develop a strong customer base and network presence that will enable
it to rapidly enter the local telephony and long distance markets upon
deregulation.

40
<PAGE>

Country Strategy. The Company intends to leverage Resetel's existing
customer base, its cost efficient, state-of-the-art infrastructure and its
market knowledge to expand its Peruvian operations. The Company is currently
directing its marketing efforts in Lima towards a number of Peru's leading
financial institutions and multinational companies with a strong presence in
Peru.

The Company also intends to expand the focus of its marketing efforts to
include medium- and small-sized businesses which are located in the major
commercial and industrial districts in Lima and in the port city of Callao. The
Company believes, based upon an independent market survey, that a large number
of its targeted business customers are located in commercial buildings which are
not connected to a fiber optic network, but rather are connected to networks
based on older, copper technology with limited capacity. The Company intends to
take advantage of this opportunity by directly offering its services to
businesses identified by management as having a need for the Company's services.
The Company also intends to (i) use an independent marketing firm to identify
commercial multi-tenant buildings in which a critical mass of occupants are
located that have or will have an interest in acquiring the Company's services,
(ii) rapidly connect many of these buildings to the Company's existing fiber
optic network, (iii) offer an extensive selection of high quality voice and data
services on a private line basis and (iv) pursue an aggressive sales and
marketing strategy that includes (A) an advertising and marketing campaign
designed to increase customer awareness of the Company's services, (B) holding
educational seminars which explain the benefits of using the telecommunications
services offered by the Company and (C) employing a highly qualified sales force
with extensive knowledge of the local market. The Company believes that
customers in Peru are seeking to utilize new communications technologies in
order to more effectively compete in the global market. By helping to educate
its customers on the use of the latest technologies and by providing turn-key
corporate networks and telecommunications solutions, the Company expects to
develop strong customer relationships that will help it to increase customer
revenues. The Company believes that this strategy will enable it to gain early
mover advantages, build its customer base and expand the range of services
provided to its customers to include local and long distance telephony upon the
expiration of Telefonica's exclusive concession in July 1999.

The Company believes that the quality of its private line services compares
favorably to similar services offered by its competitors. Accordingly, as part
of its marketing strategy, the Company is offering its services on a trial basis
to several major financial institutions in Lima. Upon completion of the trial
with Interbank in July 1997, the Company was hired to link ten of Interbank's
Lima branches through the Company's network.

In addition, the Company believes that the rapid growth of Internet use in
Peru will provide it with a significant opportunity to further develop its
customer base through the strategic referral of customers between ISPs and the
Company.

Concessions. Resetel provides its services pursuant to a renewable local
carrier concession expiring in 2016. Resetel's concession can be renewed for an
additional 20 years upon prior approval by the Peruvian Ministry of Transport
and Communications. After July 1999, when the local telephony services market
opens for competition, Resetel and other carriers will be able to provide local
telephony services as regulations permit. At such time, Resetel intends to seek
approval to also provide long distance services.

Network Infrastructure. The Company provides its services in Peru through
its 90 kilometer fiber optic digital switched network, which is expected to
expand to approximately 230 kilometers by the end of 1998. The Company
anticipates that its fiber optic network will extend throughout the major
commercial and industrial districts of Lima and the port city of Callao
(combined population of approximately 7.5 million people) upon its scheduled
completion in 1998. The Company's Lima network will be implemented using
self-healing rings equipped with fully redundant ATM technology.

41
<PAGE>

The Company has utility pole rights-of-way contracts with two of the
Peruvian utility companies which allows the Company to use utility poles to
route cable throughout most of its existing and planned network.

In conjunction with its sales initiatives, the Company expects to invest in
the "last mile" network links that connect commercial buildings and customer
offices with the Company's fiber optic network by installing fiber optic cable
in selected commercial buildings in the Lima business district.

Customers. Resetel currently services 30 customers in Peru, including
Interbank and Sony Music Entertainment Peru S.A. Resetel will seek to enter into
contracts with new customers for a term of at least two years. Prices charged to
customers will vary in accordance with the customer's requirements based on the
number of locations, type of services, transmission rates and length of service
contracts.

Competition. Peru's telecommunications market is dominated by Telefonica,
a company formed by the merger in 1994 of the former local telephone service
PTT, Compania Peruana de Telefonos and ENTEL, the former long distance telephone
service PTT. Telefonica is 35% owned by Telefonica de Espana S.A. Telefonica has
announced plans to devote a large amount of its resources over the next few
years to install hundreds of thousands of telephone lines to provide basic
telephone service. The Company believes that the focus of Telefonica on
expanding basic telephone services has created an opportunity for the Company to
capture market share by providing value-added, high bandwidth services to
business customers on a private line basis. Currently, Peru's only other
wireline telecommunications carrier is Tele2000, approximately 58.7% of which is
owned by BellSouth Corporation. Tele2000 currently operates cellular, public pay
phone and cable television services in Lima and other Peruvian cities. Although
Tele2000 has to date focused largely on providing cellular and cable television
services, it owns and operates a small fiber optic loop which may be utilized to
compete directly with the Company.

Management believes that following the deregulation of local and domestic
and international long-distance telephony in July 1999, competition in these
services may arise from a variety of new entrants, including telecommunications
carriers providing services in other countries as well as companies currently
providing services in other industries previously liberalized in Peru. Existing
telecommunications service providers may have established customer relationships
as well as other capabilities and resources to expand their current service
offerings and include local carriers, wireless telephone operators, the
providers of data services, cable television network operators and operators of
existing private network infrastructure, such as electric power companies. The
Company believes that other companies have filed applications for local
concessions, including COMSAT whose license was recently granted.

The identity of new entrants and the scope of increased competition, and
any corresponding adverse effect on the Company's results, will depend on a
variety of factors. Among such factors are the business strategies and financial
and technical capabilities of potential competitors, prevailing market
conditions at the time competition is permitted, applicable Peruvian regulations
with respect to new entrants and the Company, as well as the effectiveness of
the Company's strategy to prepare for increased competition. See "Risk Factors -
Competition."

CHILE

Country Overview. Chile is a highly urbanized country, with a population
of approximately 14.7 million in 1996, of which 85.0% are estimated to live in
cities. Santiago, the capital of Chile and a major international economic
center, has a population of approximately 5.1 million people. The Chilean
government has implemented a strategy to encourage foreign investment in Chile
and it has privatized and deregulated many industries, including transportation,
energy and telecommunications. Since 1991, the Chilean economy has experienced
high rates of economic growth. From 1991 through 1996, GDP increased by an
average annual rate of 7.3%. Inflation has been dramatically curtailed during
this period, falling from 18.7% in 1991 to 6.6% in 1996. GDP is expected to grow
at a compounded annual growth rate of 7.0% from 1997 through the year 2002.

42
<PAGE>

Market Overview. As the first telecommunications market to commence
deregulation in Latin America, Chile has experienced substantial growth in
telecommunications revenue and telephone density. Total international long
distance revenues have grown from $99.9 million in 1993 to $178.2 million in
1996, representing a compound annual growth rate of 21.0%. Chile's
telecommunications markets continue to be dominated by the former PTTs, although
new entrants have begun to reduce the former PTTs' market share. In the long
distance market, Entel, the former long distance PTT, faces competition from
eight other carriers, and its market share has been reduced to approximately
40.4% for domestic long distance and 37.5% for international long-distance. As a
result of its open telecommunications market, Chilean subscribers enjoy some of
the lowest prices in the world for long distance telephony services. In the
local telephony market, CTC, the former local services PTT, controls
approximately 96% of the local telephony market. The Company believes that the
full implementation of its business strategy will enable it to penetrate this
market and further develop its customer base.

The following table provides some general information on the historical
size and estimated growth of Chile's telecommunications market.

TELECOMMUNICATIONS DATA -- CHILE
----------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998 1999 2000
-------- -------- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TELEPHONE MINUTES
Local Service . . . . . . . . . . . . -- -- -- -- -- -- -- --
Long Distance Domestic (millions) . . n/a n/a 1,847.2(1) 2,259.0(2) n/a n/a n/a n/a
Long Distance International
(millions). . . . . . . . . . . . . . n/a n/a 136.9(3) 172.9(2) n/a n/a n/a n/a
MAIN LINES IN SERVICE
(in thousands). . . . . . . . . . . . 1,513(4) 1,626(4) 1,846(4) 2,157(4) 2,623(4) 3,032(4) 3,474(4) 3,920(4)
PENETRATION RATE
(main lines per 100 pop). . . . . . . 11.0(4) 11.6(4) 13.0(4) 14.9(4) 17.8(4) 20.3(4) 22.9(4) 25.4(4)
SERVICE REVENUES
(US$millions)
Local Services (US$millions). . . . . 479.0(4) 560.6(4) 627.8(4) 733.3(4) 891.7(4) 1,030.9(4) 1,181.3(4) 1,332.9(4)
Toll Services (US$millions) . . . . . 135.2(4) 118.9(4) 235.6(4) 275.2(4) 334.6(4) 386.9(4) 443.3(4) 500.2(4)
International Services (US$millions). 99.9(4) 85.6(4) 152.6(4) 178.2(4) 216.8(4) 250.6(4) 287.1(4) 324.0(4)
DATA
X-25/Frame Relay Ports (in thousands) 3.3(4) 3.6(4) 4.7(4) 10.2(4) 17.5(4) 25.8(1) 33.9(4) 39.7(4)
ISP Host Penetration
(main lines per 100 pop). . . . . . . 0.020(5) 0.022(5) 0.063(5) 0.157(5) 0.279(5) 0.413(5) 0.525(5) 0.601(5)
<FN>

n/a -- Information not publicly available.

(1) Statistical measures were changed in 1994 due to the multicarrier system implementation.
(2) Source: Calculations based on monthly market share data provided by the Subsecretaria de Telecomunicaciones ("SUBTEL") as of
August 1997.
(3) Source: Calculations based on Pyramid Research Report estimates of lines in services -- includes historical information for
the years 1993-1995 and projections for the years 1996-2000.
(4) Source: Pyramid Research Report -- includes historical information for the years 1993-1995 and projections for the years
1996-2000.
(5) Source: Calculations based on Pyramid Research Report estimates of ISP hosts and population for Chile.
</TABLE>

Operating Company Overview. The Company conducts its business in Santiago
through its wholly-owned subsidiaries, FirstCom Networks, S.A. ("FirstCom
Networks"), formerly Hewster Chile, S.A., and FirstCom Long Distance. FirstCom
Networks currently provides businesses in Santiago with high quality voice and
data communications services on a private line basis, including local area
network

43
<PAGE>

interconnections, remote terminal access, PBX to PBX connections, remote
printing capabilities and high speed access to the Internet through arrangements
with a Chilean based ISP and private line based services. In addition, FirstCom
Networks provides its customers with local and wide area network design,
engineering, installation, systems integration and support services. FirstCom
Long Distance provides domestic and international long distance services in
Santiago. FirstCom Long Distance's long distance traffic is switched and
transported, in part, through its own gateway switch and satellite earth station
as well as through interconnection with other Chilean long distance carriers.
The Company's Chilean customer base currently includes approximately 40 large-
and medium-sized businesses such as Xerox de Chile S.A., Autorentas del Pacifico
(Hertz) Ltda., Iberia Airlines, The Aetna Life Insurance Company, Nike de Chile
S.A. and one ISP. The Company believes that its high quality transmission
capabilities, responsive customer service and domestic and international long
distance services have become important elements in many of its customers'
telecommunications network and operational strategies. The Company provides
network services through its 120 kilometer digital fiber optic network which
covers the downtown business district and outlying industrial park and airport
corridor. This network utilizes advantageous rights-of-way through Santiago's
underground subway system (the "Metro") as well as through certain facilities of
ENERSIS, a Chilean power company.

The Company is in the process of filing an application to obtain a license
for local telephony. However, there can be no assurance that the Company will
secure such license, be able to make the necessary network enhancements to
provide such services or successfully market such services to potential
customers.

Country Strategy. The Company's new management team intends to leverage
FirstCom Networks' and FirstCom Long Distance's existing customer base, its cost
efficient state-of-the-art infrastructure and its market knowledge to expand its
Chilean operations. The Company is currently directing its marketing efforts in
Santiago towards medium-and small-sized businesses. Large businesses in Santiago
are typically located in single-tenant buildings and are currently the focus of
Chile's major carriers. Therefore, the Company believes that a substantial
opportunity exists to provide services to medium- and small-sized businesses
which are currently underserved. These businesses are typically located in
multi-tenant buildings throughout downtown Santiago and the outlying industrial
district. The Company believes that, based upon an independent market survey, a
large number of its targeted business customers are located in commercial
buildings which are not connected to a fiber optic network, but rather are
connected to networks through older, copper technology with limited capacity.
The Company intends to take advantage of this opportunity by (i) using an
independent marketing firm to identify commercial, multi-tenant buildings in
which a critical mass of occupants are located that have or will have an
interest in acquiring the Company's services, (ii) rapidly connecting many of
these buildings to the Company's existing fiber optic network, (iii) offering
high quality voice and data services on a private line basis as well as long
distance telephony and (iv) pursuing a sales and marketing strategy that
includes a combination of direct sales calls, telemarketing and direct mail
campaigns and an increased advertising budget.

Concessions. In 1991, Hewster Servicios Intermedios, S.A., FirstCom
Networks' predecessor, was granted a concession with an unlimited duration to
provide intermediate telecommunications services (the "FirstCom Networks
Concession"). The FirstCom Networks Concession authorized the installation and
operation of the Company's fiber optic cable local network in metropolitan
Santiago. Pursuant to the FirstCom Networks Concession, FirstCom Networks is
authorized to provide voice and data transmission services and certain
value-added services on a private line basis. The FirstCom Networks Concession
may not be transferred, assigned or leased, nor may control of FirstCom Networks
be transferred or assigned, without the prior approval of SUBTEL. The Company,
through a wholly-owned subsidiary, Visat, also holds a concession with an
unlimited duration to construct and operate a network of satellite earth
stations throughout Chile that can provide national and international long
distance telecommunications services (the "Visat Concession"). In addition, the
Company is authorized to

44
<PAGE>

provide services based on 38 GHz wireless technology in Santiago. FirstCom Long
Distance holds a concession with an unlimited duration to provide public,
switched national and international long distance services in Chile. FirstCom
Long Distance's concession was issued by the Chilean Ministry of Transport and
Communications in 1993.

Network Infrastructure. FirstCom Networks provides network services in
Chile through its 120 kilometer fiber optic network which currently covers the
majority of Santiago's downtown business district and the outlying industrial
park and airport corridors. The Company's 120 kilometer digital fiber optic
network travels through the traditional commercial center of Santiago, where
many established businesses are headquartered, and the rapidly growing expansion
areas, including outlying industrial parks, and the airport corridor where many
branch offices and new companies have located. FirstCom Long Distance provides
domestic and international long distance services in Santiago through its own
gateway switch and satellite earth station and through interconnections with
other Chilean long distance carriers.

The Company is in the process of upgrading its fiber optic network in Chile
by replacing the existing PDH and SDH nodes with ATM node equipment (the "ATM
Upgrade"). The planned ATM Upgrade is expected to be completed by December 1998.

The portion of the Company's network that passes through the downtown
business and financial district has been installed in Santiago's Metro subway
tunnels. The Metro subway tunnels protect the network from hazards such as
severe weather and vandalism. Metro access points, such as ventilation shafts
and platform entrances, are available every approximately 250 meters along the
subway route. These facilities serve as the "insert" points for last mile
connections between the Company's network and customer buildings. In addition to
its agreement with the Metro, the Company has a utility pole right-of-way
contract with one of Chile's electric companies which allows the Company to use
utility poles to route cable to outlying areas of Santiago.

The Company plans to invest in the "last mile" network links that connect
commercial buildings and customer offices with the Company's fiber optic
network. Where customers are operating in newly developed areas of Santiago, the
Company intends to install its own last mile network infrastructure to connect
those customers with its fiber optic network. In areas of Santiago where the
telecommunications infrastructure is more developed, the Company believes that
it may grow most efficiently by leasing such last mile connections from other
network operators.

The Company recently installed its first 38 GHz wireless connection between
its fiber optic network and an ISP. The Company intends to utilize this wireless
technology to connect customers more rapidly and efficiently to its fiber optic
network. This wireless connection is deployed by installing wireless
transceivers on rooftops, towers or windows where line-of-sight can be
established between the connected points. This technology will enable the
Company to develop POPs that serve buildings not currently reached by its fiber
optic network without paying interconnection fees to the local telephone
company. 38 GHz technology provides network connections similar to fiber optic
circuits in terms of both bandwidth and service quality.

The Company intends to invest in FirstCom Long Distance to improve the
quality of its service through the continuing upgrade of FirstCom Long
Distance's switching infrastructure and customer service platforms. In addition,
the Company plans to acquire or install an additional satellite antenna which
will enable FirstCom Long Distance to interconnect with additional international
long distance carriers, subject to regulatory approval. Such additional
satellite capability is expected to enable FirstCom Long Distance to obtain
lower prices for international transmission services.

45
<PAGE>

FirstCom Long Distance obtains local access services through
interconnection agreements with the following operators or their subsidiaries:
CTC Mundo, Complejo Manufacturero de Equipos Telefonicos S.A.C.I. ("CMET"),
Entel, BellSouth Chile S.A., Telefonica Manquehue S.A., Lucsic and Compania
Nacional de Telefonos S.A. ("CNT"). In 1997, FirstCom Long Distance installed a
new Excel NS 2000 international long distance gateway switch to handle all
international long distance calls as well as credit card and callback services.
FirstCom Long Distance operates a 9.1 meter satellite earth station located in
Santiago through which it links with Satelitron, a Mexican carrier, which then
links with a number of other carriers through the Mexican Solidaridad I
satellite. FirstCom Long Distance's satellite earth station is linked with its
gateway switch via a 18-19 GHz microwave link. FirstCom Long Distance currently
operates a 24-hour network control and operator service center in Santiago to
monitor its network and handle customer service calls.

Customers. FirstCom Networks currently services approximately 43 customers
in Santiago, including Xerox de Chile S.A., Iberia Airlines, Autorentas del
Pacifico (Hertz) Ltda., Nike de Chile S.A. and The Aetna Life Insurance Company.
FirstCom Networks charges a monthly fee for its services based on the length of
the contract and the type and quantity of services provided. FirstCom Long
Distance provides domestic and international long distance services to
approximately eight large corporations, 800 medium and small-size corporations
and 400 residential customers through annual service contract arrangements. In
addition, during the past three months, FirstCom Long Distance provided casual
dialing services to approximately 20,000 non-subscriber users. FirstCom Long
Distance also provides routing services to a number of other long distance
carriers including Entel.

Competition. Chile's local and long distance markets were both opened to
competition in 1994, with the only constraint being a four-year long distance
market share cap imposed on Chile's former local services monopoly, CTC. There
are currently five telecommunications groups that provide both local and long
distance services, three of which also provide data services. There are also
three other licensed providers of local telephony services and four other
licensed providers of domestic and international long distance services. In the
long distance market, Entel, the former long distance PTT, has a market share of
approximately 40.4% for domestic long distance and 37.5% for international long
distance. In the local telephony market, CTC, the former local services PTT, has
a market share of approximately 96%. Both CTC and Entel operate fiber optic
loops in Santiago, while Teleductos S.A. operates a passive point-to-point
network built using a star topology.

The Company believes it can successfully compete in the Santiago
telecommunications market by providing customers a competitively priced, bundled
service offering consisting of data, long distance and other value-added
services. In addition, the Company intends to begin offering local services
during 1998 after it receives a license, as to which there can be no assurance.
Such services will be delivered over the Company's digital fiber optic network
which will help the Company control operating costs and minimize the need to
rely on other carriers' networks. The Company believes that it is
well-positioned to develop and increase its customer base in Santiago because
(i) it will be able to gain a "first mover" advantage in offering services to
its targeted customer base of medium and small-sized businesses which the
Company believes have significant unmet demand for advanced telecommunications
services and (ii) its services are provided via a digital fiber optic network
that utilizes the ATM protocol and "drop and insert" technology, which enables
the Company to offer an extensive range of advanced telecommunications services.
The Company believes that its size and the entrepreneurial culture of its
management team will allow it to react quickly to changes in the marketplace and
that, coupled with its strong commitment to customer service, will differentiate
FirstCom Networks and FirstCom Long Distance from its larger, less flexible
competitors.

46
<PAGE>

REGULATION

PERU

Peruvian Telecommunications Laws and Regulations. The principal features
of Peruvian regulation of telecommunications services include the General
Telecommunications Law (the "Peruvian Telecommunications Law"), State Contracts,
the General Regulation to the Telecommunications Law (the "General Regulation"),
and the Regulation (the "OSIPTEL Regulation") for the Organization for
Supervision of Private Investments in Telecommunications ("OSIPTEL"). These laws
and their related governmental authorities constitute the legal and regulatory
framework within which the Company provides services in Peru.

The Peruvian Telecommunications Law sets out the basic framework for the
provision and regulation of telecommunications services, and has the stated
objective of providing a competitive market in telecommunications. The law
grants the Peruvian government the ability to oversee telecommunications
services through the Ministry of Transportation, Communications, Housing and
Construction (the "Ministry of Transportation" or the "Ministry"). The Ministry
has the authority to grant concessions and impose sanctions for the violation of
telecommunications laws. Pursuant to Supreme Decree No. 007-97-MTC, the
Specialized Telecommunications Concession Unit ("STCU") became the government
agency within the Ministry charged with the following functions previously
performed by OSIPTEL: (i) grant, renew and cancel concessions, authorizations,
permits and licenses; (ii) manage the electric spectrum and approve the
assignment of frequencies; and (iii) discontinue the rendering of value added
services offered by concessionaires when such services cause any damage or harm
to the public telecommunications network.

Concessions. A private entity may only provide telecommunications services
in Peru pursuant to a concession granted by STCU and in accordance with a state
contract (the "State Contract") to be entered between the STCU and the
concessionaire. Such concessions, including the concession held by the Company
through Resetel, have a maximum period of twenty years and can be renewed for an
equal term without limitation subject to the submission of an application for
renewal two years prior to the expiration of the concession and compliance with
the requirements under the concession. The State Contract outlines, among other
obligations: (i) a minimum expansion plan for the operator; (ii) required fees
and tariffs; (iii) technology standards for all equipment; and (iv) quality
standards of service.

State Contracts are treated under Peruvian law the same as contracts
between private parties. For this reason, such contracts cannot be modified or
terminated by any subsequent regulation or legislation. The Ministry may,
however, if it is deemed in the public interest, modify the terms of State
Contracts unilaterally if such terms relate to the international
telecommunications policy of the Ministry, or if it is necessary to modify the
contract to comply with international laws, treaties or conventions. These
changes can only take place through an administrative process that provides for
public comment on any proposed changes.

Local and Long Distance Services. Dial tone and public switched local and
long distance services in Peru will be provided exclusively by Telefonica until
May 1999, at which time the exclusivity provisions in Telefonica's concession
will expire and the local and long distance markets are scheduled to be opened
to competition by new entrants. The Company operates under a concession which
permits it to provide private line, special access and value-added services
within the local telecommunications markets of Lima and Callao. Beginning in
1999, the Company may seek to obtain authorization to begin providing dial tone
as well as public local and long distance switched services.

Technical Requirements. The Company is required to comply with regulations
and detailed technical plans promulgated by the OSIPTEL that apply to such
matters as the transmission, routing, signaling and assignment of numbers in the
Peruvian telephone network as well as use of the radio frequency

47
<PAGE>

spectrum. Before concessionaires initiate service, their facilities must have
been authorized by the Ministry of Communications and must be in full compliance
with the applicable regulations and technical plans. Failure to comply with the
technical plans can be grounds for terminating a concession if the holder does
not comply within a period of time prescribed by the OSIPTEL.

Both Telefonica and operators of private networks must make their networks
available for interconnection with other carriers' networks in order to promote
competition within Peru's telecommunications marketplace.

Fees, Tariffs and Other Charges. In conformity with the Telecommunications
Law, the General Regulation, and the OSIPTEL Regulation, telephone operators,
including the Company, must pay certain fees, tariffs, and other charges which
are primarily comprised of: (i) a concession fee; (ii) annual tariffs; (iii)
payment to OSIPTEL for supervisory services; and (iv) contribution to the Fund
for Private Investment in Telecommunications (FITEL). The Company may set its
own tariff levels for its private line service, subject to certain maximum
tariff levels set by the OSIPTEL.

Foreign Investment and Exchange Controls. The basic legal framework to
attract foreign investment to Peru is provided by the Foreign Investment
Promotion Law. The Law provides for specific rules that guarantee
nondiscriminatory treatment of foreign investors investing in Peru, and provides
mechanisms to stimulate and secure foreign capital. Specifically, under the Law,
foreign investors may freely remit all profit and repatriate all capital
invested in Peru, and may freely convert such local currency proceeds into U.S.
dollars. No registration with any government authority of such profit remittance
or capital repatriation is required under Peruvian law irrespective of whether
the original investment was made in the form of a capital contribution or
intercompany loans. Notwithstanding the low level of restrictions on foreign
investment, Peruvian law provides that if the foreign investor's home country
imposes foreign investment restrictions on investments made by Peruvian
companies in that country, the Peruvian government is authorized to impose
similar restrictions with respect to investments made by companies from that
country. For this reason, foreign investors are encouraged to enter into a legal
stabilization agreement (the "Legal Stability Agreement") with the Peruvian
government to guarantee certain rights with respect to their foreign investment
in Peruvian companies.

Legal Stability Agreements are entered into for a term of ten years.
Foreign investors who execute such agreements are guaranteed the following
rights, as of the date of the execution of the agreement: (i) maintenance of the
existing tax treatment of the foreign investment; (ii) legal stability as to the
availability of foreign currency for the remittance of profits and repatriation
of capital and (iii) non-discriminatory treatment of the foreign investor.

Foreign investors may enter into the Legal Stability Agreement by
submitting an application to the National Commission on Foreign Investments,
provided that the capital contribution is made in the following manner: (i) a
capital contribution in cash of at least $2.0 million within two years of the
date of execution of the agreement; or (ii) a capital contribution in cash of at
least $500,000 and creation of at least 20 employment positions within two years
from the date of the execution of the agreement.

CHILE

Telecommunications Laws and Regulations. The Ley General de
Telecomunicaciones (General Law of Telecommunications), Law No. 18.168 (1982)
(the "Chilean Telecommunications Law") and various decrees issued by the
Ministry of Transportation and Telecommunications and other Chilean governmental
authorities, constitute the legal and regulatory framework within which the
Company provides services in Chile.

48
<PAGE>

In 1994, the Chilean Telecommunications Law was amended to promote greater
competition in the telecommunications sector and to establish a framework for a
multicarrier dialing system. The most significant amendments were: (i) in the
case of local telephone carriers, only their affiliates or other related
companies, rather than the local telephone carriers themselves, can now provide
public long distance services and (ii) the establishment of all carriers'
maximum market shares in the domestic long distance market for a four-year
period and in the international long distance market for three years, each
period measured from the inception of the multicarrier dialing system, as set
forth in the following table. Companies that carry traffic above these units
will be subject to substantial financial penalties and the Undersecretary of
Telecommunications may suspend their service.

MAXIMUM MARKET SHARE CAPS

YEAR 1 YEAR 2 YEAR 3 YEAR 4
--------- ------- ------- --------
(IN MINUTES)
<S> <C> <C> <C> <C>
Carriers Affiliated with Local Operators:
Domestic Long Distance. . . . . . . . . 35% 45% 55% 60%
International Long Distance . . . . . . 20 30 40 --
Other Carriers:
Domestic Long Distance. . . . . . . . . 80 70 60 60
International Long Distance . . . . . . 70 65 60 --
</TABLE>

The Chilean Telecommunications Law also requires providers of public
telephone services to conform to a multicarrier system in which end-users,
rather than local telephone carriers, will determine on a call-by-call or
contractual basis the long distance carrier they want to use. In addition, long
distance carriers are authorized to establish direct connections to end users
through their own networks.

The Chilean Telecommunications Law provides for substantial fines, the
suspension of service and other penalties for violations of the multicarrier
dialing system. The routing of calls by a local telephone company to a long
distance carrier other than the carrier selected by the end user or the
obstruction or delay of an interconnection between the local telephone carrier
and any long distance carrier would constitute violations, and the local
telephone carrier may be required to indemnify the provider of long distance
services for any such violations.

Concessions. The Chilean Telecommunications Law specifies which
telecommunications services require that a provider obtain a concession or
permit from the Ministry of Transportation and Telecommunications. Such
concessions or permits are granted by the Undersecretary of Telecommunications.
Concessions, which may be granted only to entities constituted and domiciled in
Chile, are necessary to provide the following services, among others: (i) public
telecommunications services which are provided to satisfy the telecommunications
needs of the general public and (ii) intermediate telecommunications services
which are transmission and switching services offered by third parties to other
concession holders who provide public telecommunications services or other
services to end-users. Permits, which are granted following a simplified
procedure and may have a shorter duration than concessions, are required to
provide limited services, which are services necessary to satisfy specialized
needs of businesses or other institutions, but do not entail carrying traffic
across public international and certain telecommunications networks.

Concessions and permits are granted by the Chilean government for a fixed
term which is presently 30 years. These concessions and permits can be renewed
for the same period if so requested by the concessionaire. However, because the
Company's concession was granted before the establishment of

49
<PAGE>

fixed terms, such concession is deemed to be indefinite in accordance with its
terms and with Transitory Article 3 of such Law. Concessions and permits cannot
be assigned, transferred or leased without the prior authorization of the
Undersecretary of Telecommunications, which authorization cannot be denied
without reasonable cause.

Holders of concessions to provide public telecommunications services must
establish and accept interconnection with others, in accordance with technical
requirements established by the Undersecretary of Telecommunications, to ensure
that users have access to all public services. Concession holders may establish
their own systems or use facilities of other entities.

Any telephone service outage must be corrected within 12 hours or users are
entitled to indemnification and the concession holder is subject to fines.

The Undersecretary of Telecommunications may suspend a concession holder's
service for up to thirty days for failure to comply with technical requirements,
which action may be challenged in the courts within a term of five days as of
the notification to the holder of the concession.

The Chilean Telecommunications Law provides that holders of concessions and
permits shall have access, on equal economic and technical basis, to satellite
systems and international cables.

Existing concessions may be terminated if the concession holder does not
fulfill certain of its obligations, including: (i) fulfillment of the technical
framework applicable to the service; (ii) reiterative sanctions because of the
suspension of transmissions; (iii) nonpayment of a fine imposed on the
concession holder for more than 30 days; and (iv) the unauthorized change of any
of the essential elements of the concession. The holder of the concession can
appeal such termination to the Chilean Supreme Court within ten days if it
believes that the termination was illegal.

Tariff System. Currently, providers of domestic and international long
distance services are subject to maximum tariffs fixed by the Chilean
government.

The Company's services are presently subject to maximum tariffs under the
Chilean Telecommunications Law. The Chilean government establishes the maximum
tariffs of regulated services by using a methodology that provides for the
recovery of investments and the costs of operations of such services, as well as
a profit based on the cost of capital. Under the Chilean Telecommunications Law,
the structure, level and mechanism for indexing the affected services are fixed
every five years by a joint decree issued by the Ministry of Transportation and
Telecommunications and the Ministerio de Economia, Fomento y Reconstruccion (the
"Ministry of the Economy") on the basis of the incremental costs of providing
the tariffed service in each geographical service area where the service is
provided, including capital costs taking into account the expansion plans of the
regulated companies over the five year period. In the absence of expansion
plans, the structure and level of rates are set on the basis of marginal
long-term costs. Maximum tariffs are established on the basis of an economic
model that relies on the costs of an ideally efficient enterprise that offers
only the service subject to tariff. The tariff for each service that is subject
to tariff regulation reflects the theoretical cost components associated with
such service.

Tariffs for domestic long distance telephone services must include the
prices of long distance transmission and switching as well as the price of local
telephone service. Tariffs for international long distance services must include
such price components as the price of domestic and international services, the
cost of access to the local network, as well as the settlement costs with
foreign correspondents.

Providers of telecommunications services are prohibited from discriminating
among similarly situated users in the price charged for tariffed services. Each
tariff is subject to its own index, which is calculated

50
<PAGE>

using the prices of its principal components. A concessionaire must give two
months notice to the Subsecretaria de Telecomunicaciones (the Undersecretary of
Telecommunications) of changes to the maximum tariff resulting from changes in
the applicable index (including inflation adjustments) and that tariff, upon
readjustment, is the maximum price that users may be charged for the service.

Because the tariff-setting process takes place every five years, providers
of long distance services subject to tariff regulation have to prepare a special
study for each regulated service included in their geographic concession areas.
The purpose of the study is to calculate the total and marginal long-term costs
with respect to each such service and to determine on the basis of such
calculation the structure and level of future tariffs. New tariff proposals must
be presented to the Ministries of Transportation and Telecommunications and of
Economy 180 days prior to the end of each five-year period. The Company and
other intermediate service providers are subject to the maximum tariffs
established by the corresponding authorities for the principal intermediate
service provider.

Encaje or deposit requirement. Thirty percent of amounts borrowed from
abroad must be placed on deposit with the Central Bank for a period equal to the
average term of the loan, with a minimum period of 90 days and a maximum period
of 1 year. These funds do not earn interest. In lieu of making this deposit, the
recipient may comply with the encaje through the purchase of special Central
Bank promissory notes equal to 30% of the principal, which the Central Bank
repurchases on the same date, prior to deduction of an interest rate equal to
LIBOR + 4% for one year. In addition to the 30% deposit requirement, payments
made by a Chilean company on interest in connection with a loan by a foreign
shareholder of such company are treated as dividends for purposes of the
imposition of a 35% withholding tax on the value of the payment of interest.

Foreign Investment and Exchange Controls. Complete foreign ownership of
investments in Chilean entities is possible and there is no minimum period
within which the foreign investments must remain in Chile. Foreign investment
capital may be remitted overseas one year after entering Chile.

The Central Bank requires most transactions relating to foreign investment
to be effected in a "formal" currency market. Appropriate approvals and
registrations must be obtained when foreign investment capital enters the
country to ensure the right to acquire foreign currency to pay for imports,
repatriate capital and profits and pay interest and capital due on foreign
currency loans.

Foreign investment capital may be remitted overseas one year after entering
Chile, but only from the proceeds of sale or liquidation of all or part of the
assets, business, shares or rights representing the investment. Capital
comprising reinvested profits are not subject to the one year restriction.

Annual profits may be remitted overseas at any time. Interim profits and
dividends can be remitted quarterly if supported by audited financial statements
and permitted by the foreign investment contract with the government.

Normally, foreign currency required to repatriate capital and profits must
be obtained in the local formal currency market. Certificates authorizing the
purchase of the foreign currency are issued by the Foreign Investment Committee,
normally within 48 hours in the case of profits. Investors may be able to
operate offshore foreign currency accounts which may be used to repatriate
capital profits directly.

The Foreign Investment Statute guarantees that restrictions applicable to
the remittance of capital and profits will not be less favorable than those
applying generally to the acquisition of foreign currency to pay for imports.

51
<PAGE>

TAXATION

PERU

The tax structure of Peru is composed of several broad based taxes, a
consumption tax on certain products (e.g. gasoline), a general income tax, an
alternative minimum tax based on a business' assets, a property tax, and a
simplified import tariff. In addition, withholding taxes are imposed on interest
and salary income, and Peru has a recently expanded value added tax (VAT) that
covers certain products and services.

Income Tax. Peruvian corporations or foreign corporations domiciled in
Peru are subject to an income tax at a rate of 30% on the net income realized by
the company during the fiscal year. There is no departmental, regional or
municipal income tax.

Payment of Dividends. Under applicable Peruvian law, amounts paid as
dividends or distributed as profits are not deemed to be taxable income and,
consequently, are not subject to any taxation.

Extraordinary Asset Tax. Peruvian corporations are subject to an annual
extraordinary asset tax calculated at a rate of 0.5% over the value of the net
assets of the corporation. The amount of the net extraordinary asset tax which
is due may be credited against the corporation's income tax.

Value Added Tax. Peruvian corporations are subject to a value added tax
calculated at a rate of 18% over the value of services rendered to customers,
goods imported into Peru, sale of personal or real property and assignment of
fixed assets to an affiliate. Companies are entitled to an off-setting credit
against the value added taxes imposed on the sales of goods and services.

CHILE

Taxation. Generally, foreign investors and local businesses are treated
equally, although foreign investors are given the benefit of certain fixed rate
tax options which allow them to limit the impact of future adverse tax changes.

To promote savings and investment, the income of business entities is taxed
in two stages, initially when income is earned and finally when profits are
distributed to the ultimate business owners. The effective rate payable on
foreign investment profits remitted abroad is normally 35%, 15% being payable at
the time profits are earned with the balance due on payment overseas.
Considerable emphasis is placed on indirect taxation through a 18% Value-Added
Tax which contributes about 60% of fiscal revenue.

First Category Income Tax, often referred to as the corporate tax, is paid
by all entities on accrued income from business operations at a rate of 15%.
Chile has a fully integrated tax system allowing this corporate tax to be
credited against personal income taxes payable by resident investors when
business profits are withdrawn by them or, in the case of foreign investors,
against withholding tax payable when profits are remitted overseas. Profit
distributions received by a resident business entity as an investor in another
business entity are not liable to tax until distributed to a non-business or
overseas entity.

Withholding Tax. Additional Withholding Income Tax of 35% is payable by
non-resident individuals and entities on Chilean-source business income
withdrawn or remitted overseas. This tax is withheld by the paying business
entity.

52
<PAGE>

The 15% corporate tax is allowed as a credit against the Additional
Withholding Income Tax payable. As a result, the effective rate payable on
foreign investment profits remitted abroad is normally 35%, 15% being payable at
the time profits are earned with the 20% balance due on payment overseas.

Withholding tax is also imposed on most other payments made abroad. For
example:

1. 30% for royalty payments and patents, license and similar fees;

2. 4% for interest payments to a foreign or international banking institution or
to a foreign or international financial institution registered with the Central
Bank of Chile. A 35% rate applies to interest payments to all other entities;

3. 35% for rental payments, this rate can be reduced to 1.75% for equipment
rental payments; and

4. 20% withholding tax applied to remuneration of foreign individuals not
resident in Chile for "technical assistance" or "engineering services" rendered
in Chile or abroad.

These rates can be increased to 80% for royalties or fees for technical
services considered unproductive or unnecessary for the economic development of
the country. All these payments are tax deductible if necessary to produce
income.

Thin Capitalization Rules. Although the tax regime does not impose
restrictions on debt/equity ratios, the Foreign Investment Committee currently
limits borrowing levels when approving investments. The current debt to equity
ratio is 70:30.

Capital Gains. Gain recognized on the sale of shares will be subject to
both the First Category Income Tax and the Additional Withholding Income Tax, if
either (i) the foreign holder has held the shares for less than one year or (ii)
the foreign holder acquired and sold the shares in the ordinary course of
business or as an habitual trader of shares. In all other cases, gain on the
sale of shares will be subject to a sole 15% First Category Tax.

For purposes of determining the capital gains on the disposition of the
shares of the Chilean companies, the tax basis will be the acquisition value
adjusted by the variation of the Chilean Consumer Price Index between the last
day of the month prior to the purchase of the shares and the last day of the
month prior to the disposition of the shares. If the investment in the shares
has been made through DL 600, upon total or partial liquidation of the
investment, no taxes will be applied on gains up to the U.S. dollar equivalent
of the foreign investment.

Income Tax Payment. Chile has a calendar tax year and returns must be
lodged by April 30 of the following year. Business entities are required to make
monthly provisional payments of corporate tax equal to a percentage of the
previous month's gross revenue. The percentage is determined by the ratio of
gross revenue to First Category Income Tax for the business entity for the
preceding year. Any further tax due must be paid on filing of the relevant tax
return. Excess tax paid is recoverable after filing.

53
<PAGE>

EMPLOYEES

As of February 25, 1998, the Company had 128 full-time employees, of whom
approximately 32 are in Resetel, 34 are in FirstCom Networks, 57 are in FirstCom
Long Distance and five are in the Company's headquarters. The Company's
employees are not represented by any labor union. The Company believes that
relations with its employees are good.

PROPERTIES

ICCA's corporate offices are located at 2600 Douglas Road Suite 501, Coral
Gables, Florida. These offices are occupied under a lease that expires on
November 30, 1998 (the "ICCA Lease") at a rent of approximately $3,000 per
month. The ICCA Lease does not specify the conditions for its renewal, but the
Company believes that the current lease may be renewed for an additional one
year term without unreasonable effort or additional expense. The Company's
offices in Santiago, Chile are occupied under a lease which expire through
September 2006, at a rent of approximately $14,000 per month. The Company's
offices in Lima, Peru are occupied under a two year lease terminating on October
14, 1998 at a rent of approximately $3,500 per month. The Company believes that
its current facilities, together with other contiguous rental space, are
adequate to provide for its current needs and that its current facilities and
planned lease of replacement facilities in Chile will be adequate for its
current and anticipated needs and anticipated growth.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

54
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning each of the
executive officers and directors of ICCA:

NAME AGE POSITION WITH THE COMPANY
- --------------------- --- ---------------------------------------------
<S> <C> <C>
Patricio E. Northland 42 President, Chairman of the Board of Directors
and Chief Executive Officer
Douglas G. Geib II. . 41 Chief Financial Officer and Director
David C. Kleinman . . 62 Director
George A. Cargill . . 56 Director

Andrew Hulsh. . . . . 37 Director

</TABLE>

Patricio E. Northland has over sixteen years of experience as an
international telecommunications executive and entrepreneur. Mr. Northland has
been President, Chairman of the Board of Directors and Chief Executive Officer
of ICCA since November 1996. Born in Chile, Mr. Northland is a U.S. citizen who
brings to the Company many relationships with telecommunications carriers and
potential customers throughout Latin America. In 1991, Mr. Northland founded
AmericaTel Corporation ("AmericaTel"), a Miami-based international
telecommunications carrier focused on traffic originating and terminating in
Latin America, and in 1993, Mr. Northland successfully completed a joint venture
agreement between AmericaTel and Entel, Chile's major long distance carrier.
Under Mr. Northland's leadership, AmericaTel grew to provide satellite-based
voice, data and fax telecommunications services to corporate customers in
several Latin American nations. Prior to his involvement with AmericaTel, Mr.
Northland held key management positions with PanamSat and IntelSat. In 1996, Mr.
Northland sold his interest in AmericaTel to Entel. Mr. Northland holds
engineering degrees from the University of Chile, a master's degree in
communications from George Washington University, and an M.B.A. from The
University of Chicago.

Douglas G. Geib II has been the Chief Financial Officer and a Director of
ICCA since May 1997. For almost 20 years prior thereto, Mr. Geib worked with
Ernst & Young LLP and had been a Partner since 1989. While at Ernst & Young, Mr.
Geib provided corporate finance and audit services, as well as coordinated and
managed various consulting services to clients involved in telecommunications,
healthcare, manufacturing, real estate and consumer products. Mr. Geib holds an
undergraduate business degree from The Ohio State University and an M.B.A. from
The University of Chicago. Mr. Geib is a Certified Public Accountant.

David C. Kleinman has been a Director of ICCA since May 1997. Mr. Kleinman
is currently Senior Lecturer in Business Policy at the Graduate School of
Business of The University of Chicago where he has taught since 1971. Mr.
Kleinman serves as a member of the Board of Directors of Irex Corporation which
trades its stock in the over-the-counter market. Mr. Kleinman is also a member
of the Board of Directors of the Acorn Fund, the Acorn International Fund and
the Acorn USA Fund which are registered under the Investment Company Act of
1940.

George A. Cargill has been a Director of ICCA since July 1994. Mr. Cargill
has been the President and owner of Telectronic S.A., a major Chilean systems
integrator and the Northern Telecom equipment distributor in Chile since 1976.
Prior thereto, Mr. Cargill spent seven years with CTC as a network engineer and
manager of quality control.

Andrew Hulsh has been a Director of ICCA since December 1997. Mr. Hulsh has
been a partner with the law firm of the law firm of Baker & McKenzie since
January 1997. For more than five years prior thereto, Mr. Hulsh was an attorney
with the law firm of Greenberg, Trauig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
most recently as a shareholder.

55
<PAGE>

KEY EMPLOYEES OR CONSULTANTS

Luis Thais Diaz, age 54, has been Chairman of the Board of Directors of
Resetel since November 1996. Since July 1996, he has also been Chairman of the
Board of Directors of Drake Beam Morin-Chile, a human resources consulting
company based in the United States. From 1972 through 1996, Mr. Thais served as
representative of the United Nations Secretary General in Central America,
Argentina, Panama, Colombia, Venezuela and Chile. Mr. Thais has supervised
various telecommunications projects in those countries on behalf of the
International Telecommunications Organization.

Moises Blumen Cohen, age 28, has been the Chief Executive Officer of
Resetel since October 1996 and its Administrative Manager since August 1996.
From July 1993 until July 1996, Mr. Blumen was President of Compania Central
911, a Peruvian security alarm installation company founded by Mr. Blumen in
July 1993.

Ivan Van de Wyngard, age 53, has been a consultant to the Company since
October 1997. From 1986 to 1994, Mr. Van de Wyngard was Chief Executive Officer
of Entel. From 1995 to August 1997, Mr. Van de Wyngard was President of
Consultora Internacional de Telecomunicaciones VamCon Ltda., a Chilean
telecommunications consulting company.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of the Company has an Audit and Compensation
Committee. The members of each committee have been appointed by the Board of
Directors to serve until their respective successors are elected and qualified.

Audit Committee. The Audit Committee reviews the scope and results of the
audit of the financial statements of the Company and reviews the internal
accounting, financial and operating control procedures of the Company. The Audit
Committee also recommends the appointment of auditors and oversees the
accounting and audit functions of the Company. The Audit Committee is currently
composed of Messrs. Kleinman and Cargill, all of whom, in accordance with the
rules of the Nasdaq SmallCap Market, is independent of management and free from
any relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a committee member.

Compensation Committee. The Compensation Committee determines the cash and
other incentive compensation to be paid to the Company's executive officers,
including the award of stock options under the Company's stock option plans as
well as the award of non-qualified stock options and warrants issued pursuant to
individual stock option and warrant agreements. The Compensation Committee is
composed of Messrs. _________ and Kleinman, who is a "disinterested person"
within the meaning of Rule 16b-3 under the Exchange Act.

DIRECTORS COMPENSATION

Each non-employee director of ICCA, or of any of its subsidiaries, is
entitled to be paid such compensation for his or her services and reimbursed for
such expenses as fixed by ICCA's Board of Directors. Currently, non-employee
directors of ICCA are entitled to receive annual compensation consisting of
stock options to acquire 50,000 shares of Common Stock at a price calculated on
the average closing price of the Common Stock for the five trading days
immediately preceding the date of such grant.

56
<PAGE>

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information regarding the annual
compensation earned by the Chief Executive Officer of ICCA, and the other most
highly compensated executive officer of ICCA during 1997 (such persons are
hereinafter referred to as the "Named Executive Officers").

LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ------------------------- ----------
OTHER LONG-TERM
ANNUAL RESTRICTED NUMBER OF INCENTIVE ALL OTHER
NAME AND PRINCIPAL COMPENSA- STOCK OPTIONS PLAN COMPENSA-
POSITION(S) YEAR SALARY($) BONUS($) TION($)(1) AWARDS($) (#) PAYOUTS($) TION($)(1)
- -------------------------- ---- --------- -------- --------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Patricio E. Northland. . . 1997 300,000 630,000 -- -- 1,614,000(2) -- --
Chairman of the Board, . 1996 50,000 -- -- -- 1,000,000 -- --
President and CEO(2) . . 1995 -- -- -- -- -- -- --
Douglas G. Geib II(3). . . 1997 166,667 170,000 -- -- 1,036,000 -- --
Chief Financial Officer. 1996 -- -- -- -- -- -- --
1995 -- -- -- -- -- -- --
<FN>
_________

(1) Perquisites to each officer did not exceed the lesser of $50,000 or 10% of the total salary and bonus for any officer.
(2) Effective as of November 23, 1996.
(3) Mr. Geib commenced employment with the Company on May 1, 1997. See "-- Employment and Consultants Agreements."

</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information concerning options
granted in 1997 to ICCA's Named Executive Officers. The Company has no
outstanding stock appreciation rights. None of the Named Executive Officers
exercised options during 1997.

INDIVIDUAL GRANTS
-------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM($)
----------------------
PERCENT OF
TOTAL OPTIONS
NUMBER OF GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICES EXPIRATION
NAME GRANTED FISCAL 1997 PER SHARE DATE 5% 10%
- --------------------- --------- -------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patricio E. Northland 1,614,000 57% $ 3.85 Oct. 2007 3,907,000 9,903.000
Douglas G. Geib II 1,036,000 36% $ 2.90 Oct. 2007 1,889,000 4,788,000
</TABLE>

57
<PAGE>

OPTION EXERCISES IN FISCAL 1997 AND
OPTION VALUES AT THE END OF FISCAL 1997

The following table sets forth information with respect to ICCA's Named
Executive Officers concerning the exercise of options during 1997 and
unexercised options held as of the end of 1997.

VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NUMBER OF DECEMBER 31, 1997 DECEMBER 31, 1997($)
SHARES --------------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------- ----------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C>
Patricio E. Northland -- -- 1,538,000 / 1,076,000 --/--
Douglas G. Geib, II -- -- 345,000 / 691,000 --/--
</TABLE>

EMPLOYMENT AND CONSULTANTS AGREEMENTS

In September 1997, the Company entered into an employment and severance
agreement (the "Northland Agreement") with Patricio E. Northland, President,
Chief Executive Officer and Chairman of the Board of Directors of the Company,
which replaced his former employment agreement with the Company. The Northland
Agreement has a term of three years unless terminated earlier for cause, death
or disability, and provides for an initial annual base salary of $350,000,
subject to an increase of $50,000 in each of the second and third year of the
agreement. In addition, Mr. Northland was granted non-qualified stock options to
purchase 300,000 shares of ICCA's Common Stock in the following manner: 100,000
shares which vest on the date of employment at an exercise price of $4.00 per
share; 100,000 shares which vest one year thereafter at an exercise price of
$6.00 per share; and 100,000 shares which vest two years after the date of
employment at an exercise price of $8.00 per share. In consideration of Mr.
Northland's agreement to terminate his former employment agreement with the
Company, which would have provided for a substantial bonus to Mr. Northland upon
consummation of the Offering, the Company agreed to pay Mr. Northland a
performance bonus of $250,000 and vest all of his existing options to acquire
1,000,000 shares of Common Stock granted under his prior employment agreement.

During May 1997, the Company entered into an employment and severance
agreement (the "Geib Agreement") with Douglas G. Geib II, Chief Financial
Officer of ICCA. The Geib Agreement has a term of three years unless terminated
earlier for cause, death or disability, and provides for an annual salary of
$250,000. In addition to the base salary, the Geib Agreement provides for a
primary performance award based upon business criteria which is designed to
enhance shareholder value during each year up to a maximum of 100 percent of the
base salary payable thereunder. Mr. Geib was also granted non-qualified stock
options to purchase 500,000 shares of ICCA's Common Stock at an exercise price
of $2.42 per share. One-third of such options became exercisable on date of
employment, and the remainder vest in equal annual installments over the first
two years of Mr. Geib's three-year employment period.

During October 1997, the Company entered into an agreement with Mr. Ivan
Van de Wyngard (the "Van de Wyngard Agreement) for the performance of certain
management, consulting and advisory services to the Company. Under the Van de
Wyngard Agreement, Mr. Van de Wyngard will receive a monthly fee of $7,500 as
compensation for his services. The Van de Wyngard Agreement has a term of one
year and may be extended upon mutual agreement between the parties.

58
<PAGE>

STOCK OPTIONS

As of December 31, 1997 ICCA has outstanding options to purchase
7,295,000 shares of Common Stock.

During 1996, 2,060,000 stock options were granted by ICCA to its executive
officers and directors. On May 29, 1997, the Board of Directors of ICCA granted
stock options in an aggregate amount of 200,000 shares of Common Stock to Mr.
Kleinman of which 50,000 shares vested on May 29, 1997 and the remainder vest in
equal annual installments over a three year period. During September 1997, ICCA
agreed to grant the following stock options to the following officers of ICCA at
an exercise price of $2.13 per share, the then market value of the Common Stock:
(i) Patricio E. Northland, President, Chief Executive Officer and Chairman, was
granted options to acquire 600,000 shares; and (ii) Douglas G. Geib II, Chief
Financial Officer and a director of ICCA, was granted options to acquire 250,000
shares. In addition, in October 1997, ICCA agreed upon consummation of the
Initial Offering to grant options to acquire an additional 714,000 and 286,000
shares to Mr. Northland and Mr. Geib, respectively, at an exercise price of
$4.40 per share. See "Certain Relationships and Related Party Transactions."

LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION

ICCA's Articles of Incorporation and By-laws contain certain provisions
that eliminate the liability of its directors and officers to the fullest extent
permitted by the Texas Business Corporation Act, except that they do not
eliminate liability for: (i) any breach of the duty of loyalty to the Company or
its shareholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) an act or omission
for which the liability of a director is expressly provided by an applicable
statute; or (iv) any transaction from which the director derived an improper
personal benefit. The Texas Business Corporation Act provides that Texas
corporations may indemnify any director, officer or employee made or threatened
to be made a party to a proceeding, by reason of the former or present official
capacity of such person, if such person (i) conducted himself in good faith and
(ii) reasonably believed that his conduct was in the corporation's best
interests or, in the case of any criminal proceeding, that his conduct was not
unlawful and opposed to the corporation's best interests. The indemnification
provision does not permit indemnification of officers, directors and employees
(i) when such persons are found liable to the corporation or (ii) for any
transaction from which such persons derive improper personal benefits. The
foregoing provisions may reduce the likelihood of derivative litigation against
directors, officers and employees of the Company and may discourage or deter
shareholders or management from bringing a lawsuit against directors and
officers for breaches of their fiduciary duties, even though such an action, if
successful, might otherwise have benefited the Company and its shareholders.

The Company has entered into an indemnification agreement with each
director (an "Indemnitee"). Pursuant to the indemnification agreement, the
Company will indemnify an Indemnitee to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by the
agreement, ICCA's Articles of Incorporation and By-laws, or statute. In
addition, the Company will indemnify each Indemnitee against any and all
expenses incurred in connection with claims relating to the fact that such
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company or any subsidiary of the Company, and the Company will advance all such
expenses. The Company maintains directors' and officers' liability insurance.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling ICCA pursuant to
the foregoing provisions, ICCA has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and therefore unenforceable.

59
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

TELECTRONIC S.A.

During the three years ended December 31, 1997, the Company entered into
certain transactions with Telectronic S.A. and its founders, Mr. George A.
Cargill and Mr. Eleazar Donaso. Mr. Cargill and Mr. Donoso are both Company
shareholders. Mr. Cargill is also a current director of the Company.

From 1994 to 1996, the Company granted Mr. Cargill 290,000 stock options
with a weighted average exercise price of $2.09.

The Company purchased approximatedly $205,000, $172,000 and $77,000 of
certain telecommunication equipment in 1995, 1996 and 1997, respectively, from
Teletronic, S.A. In October 1997 the Company issued 300,000 shares of Common
Stock to Mr. Donoso for certain financial assistance provided to the Company
during its development stage. The Company recognized interest expense of
$852,000 related to the aggregate fair value of such shares of Common Stock.
During 1997 the Company issued and redeemed $200,000 of bridge notes from Mr.
Cargill. In connection with such bridge notes Mr. Cargill received 20,000
warrants to purchase the Company's common stock at an exercise price of $2.56
per warrant.

MR. HERNAN STREETER

During the three years ended December 31, 1997, the Company entered into
several transactions with Mr. Herman Streeter. Mr. Streeter formerly served the
Company as its Chief Executive Officer and its Chairman of the Board. In
addition, he is a principal shareholder of the Company. The Company paid
salaries to Mr. Streeter of $120,000 and $110,000 during 1995 and 1996,
respectively.

From 1994 to 1996, the Company granted Mr. Streeter 510,000 stock options
with a weighted average exercise price of $1.91, respectively.

From 1995 and 1996, approximately $1.6 million was loaned to the Company by
Laura Investments, Ltd., a company owned by Mr. Streeter. On March 31, 1996 the
loans, plus accrued interest, were converted into 839,235 shares of Company
Common Stock.

Mr. Streeter was the founder and Chief Executive Officer of Hewster, which
was acquired by the Company during 1996. Prior to its acquisition, Hewster
provided approximately $237,000 of telecommunications services to the Company.
Mr. Streeter also was the primary shareholder and General Manager of FirstCom
Long Distance, which was acquired by the Company during 1997. Prior to this
acquisition, the Company made sales of $162,000 to FirstCom Long Distance.
Pursuant to provisions of the FirstCom Long Distance purchase agreement, the
Company agreed to pay Mr. Streeter a consulting fee of $120,000 during 1998. The
Company believes that each of the foregoing transaction was an arm's-length
transaction entered into under normal market conditions and in the ordinary
course of business.

MAROON BELLS CAPITAL PARTNERS ("MBCP")

During the three years ended December 31, 1997, the Company entered into
certain transactions with MBCP. Two former directors of the Company, Paul Moore
and Phillip Magiera, are principals in MBCP. MBCP has provided certain
consulting and financial advisory services to the Company during the past three
years.

60
<PAGE>

From 1994 to 1996, the Company granted MBCP and its principals 1,015,000
stock options with a weighted average exercise price of $2.12.

During 1995, the Company recognized $100,000 as a financial advisory fee to
MBCP. During 1996, the Company purchased $493,000 in equipment whereby MBCP
acted as a broker.

During 1996 and 1997, the Company converted $316,000 and $240,000,
respectively, of outstanding liabilities to MBCP into 172,506 and 80,000 shares,
respectively, of the Company's Common Stock.

During October 1997, the Company entered into an agreement with MBCP and
its principals, Theodore Swindells, Paul Moore and Phillip Magiera, to
compensate them for services rendered to the Company. Pursuant to such
agreement, the Company made a cash payment to MBCP of $500,000 at the closing of
the Senior Note offering and issued to each of Messrs. Moore and Magiera 250,000
shares of Common Stock and options to acquire 250,000 shares of Common Stock at
an exercise price of $2.13 per share. The Company recognized non-cash consulting
expense related to the Common Stock and Stock Options of approximately $1.8
million. Messrs. Moore and Magiera resigned from the Company's board of
Directors effective as of the date of the agreement.

OTHER RELATED PARTY TRANSACTIONS

The Company paid approximately $865,000 in legal fees in 1997 to a firm
having a Senior Partner who is also a current director of the Company.

In connection with the FirstCom Long Distance Acquisition, the Company
issued to Mr. Silva, a former director of the Company, a fee in the aggregate
amount of 100,000 shares of Common Stock for his services in facilitating the
transaction.

During September 1997, ICCA's Board of Directors ratified the issuance of
the following shares of Common Stock to the following officers of ICCA: (i)
600,000 shares of Common Stock to Patricio E. Northland, President, Chief
Executive Officer and Chairman of the Board and (ii) 250,000 shares of Common
Stock to Douglas G. Geib II, Chief Financial Officer of ICCA. In addition, on
the same date, the Company granted the following stock options to the following
officers of ICCA at an exercise price of $2.13 per share: (i) Patricio E.
Northland, President, Chief Executive Officer and Chairman of the Board, was
granted options to acquire 600,000 shares of Common Stock, one-third of which
vested immediately and the remainder in equal annual installments over the next
two years; and (ii) Douglas G. Geib II, Chief Financial Officer and a director
of ICCA, was granted options to acquire 250,000 shares of Common Stock, one
third of which vested immediately and the remainder vest in equal annual
installments over the next two years. In addition, in October 1997, ICCA agreed
upon consummation of the Offering to grant options to acquire an additional
714,000 and 286,000 shares to Mr. Northland and Mr. Geib, respectively, at an
exercise price of $4.40 per share -- One third of such options vested
immediately and the remainder vest in equal annual installments over the next
two years.

61
<PAGE>

SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock by the Selling Stockholders as of March 10, 1998
and the number of shares of Common Stock which may be offered pursuant to this
Prospectus for the account of each of the Selling Stockholders or their
transferees from time to time. See "Plan of Distribution." However, such Selling
Stockholders are under no obligation to sell all or any portion of the Common
Stock being offered hereby, nor are the Selling Stockholders obligated to sell
any such shares of Common Stock immediately under this Prospectus. Because the
Selling Stockholders may sell all or part of their shares of Common Stock, no
estimate can be given as to the number of shares of Common Stock that will be
held by any Selling Stockholder upon termination of the Offering made hereby. As
described in the footnotes below, certain of the Selling Stockholders have
occupied a position, office or other material relationship with the Company or
its affiliates within the past three years.

SHARES BENEFICIALLY OWNED
-------------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING OFFERED HEREBY (1)
- ----------------------------------------- ------------------------- ----------------
<S> <C> <C>
Patricio E. Northland(2). . . . . . . . . 3,214,000 3,214,000
Douglas G. Geib II(3) . . . . . . . . . . 1,286,000 1,286,000
Paul Moore(4) . . . . . . . . . . . . . . 880,000 880,000
Philip Magiera(5) . . . . . . . . . . . . 860,000 860,000
Maroon Bells Capital Partners, Inc.(6). . 355,000 355,000
Eleazar Donoso. . . . . . . . . . . . . . 1,139,235 1,139,235
Patricio Silva Echenique(7) . . . . . . . 460,000 460,000
Dong K. Byun(8) . . . . . . . . . . . . . 388,900 388,900
UBS Securities LLC(9) . . . . . . . . . . 2,250,000 2,250,000
Hernan Streeter Rios(10). . . . . . . . . 1,899,515 510,000
George Cargill(11). . . . . . . . . . . . 2,000,000 310,000
David C. Kleinman(12) . . . . . . . . . . 200,000 200,000
Moises Blumen Cohen(13) . . . . . . . . . 100,000 100,000
Jeffery Wattenberg(14). . . . . . . . . . 100,000 100,000
Windmill Corp.(15). . . . . . . . . . . . 100,000 100,000
Santiago Boza(16) . . . . . . . . . . . . 97,000 97,000
Douglas MacLellan(17) . . . . . . . . . . 115,000 115,000
Rodrigo Garcia(18). . . . . . . . . . . . 65,000 65,000
Luis Thais Diaz(19) . . . . . . . . . . . 50,000 50,000
Dinton Trader (UK) Ltd.(20) . . . . . . . 43,171 43,171
Robert Richman(21). . . . . . . . . . . . 35,000 35,000
Rudy Beeck(22). . . . . . . . . . . . . . 20,000 20,000
Alisha O'Hanlon(23) . . . . . . . . . . . 14,500 14,500
Ganzalo Cuevas(24). . . . . . . . . . . . 9,000 9,000
Juan Gabriel Valdez(25) . . . . . . . . . 5,250 5,250
Aurelia Martinez(26). . . . . . . . . . . 4,000 4,000
Paulina Swinburn(27). . . . . . . . . . . 4,000 4,000
Huberto Ewert(28) . . . . . . . . . . . . 2,000 2,000
Cede & Co.(29). . . . . . . . . . . . . . 5,250,000 5,250,000
United International Properties, Inc.(30) 200,000 200,000
Mainstreet Limited(31). . . . . . . . . . 50,000 50,000
Arcadia Importers & Exporters, Inc.(32) . 851,182 851,182
</TABLE>

62
<PAGE>

SHARES BENEFICIALLY OWNED
------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING OFFERED HEREBY(1)
- -------------------------------- ----------------- -----------------
<S> <C> <C>
KA Investments, LDC(33). . . . . 140,248 140,248
NU Investments, LLC(34). . . . . 210,372 210,372
Kevin Kimberlin(35). . . . . . . 814 814
John Steinmetz(36) . . . . . . . 7,835 7,835
Spencer Trask Holdings, Inc.(37) 7,322 7,322
Carol Zervoulei(38). . . . . . . 300 300
Andrew Hulsh(39) . . . . . . . . 50,000 50,000
Jose Segrera(40) . . . . . . . . 45,000 45,000
<FN>

(1) Assumes that each Selling Stockholder will sell all of the shares of Common
Stock offered pursuant to this Prospectus, but not any other shares of Common
Stock beneficially owned by such Selling Stockholder. However, none of the
Selling Stockholders has indicated their intention to sell any of the shares of
Common Stock owned by them as of the date of this Prospectus.
(2) Mr. Northland is the President, Chairman of the Board of Directors and
Chief Executive Officer of the Company. Includes 2,614,000 shares of Common
Stock issuable upon the exercise of outstanding stock options, 1,538,000 of
which are fully vested and 538,000 vest on October 7, 1998 and 1999. Unless
exercised, options to purchase 1,000,000 shares of Common Stock will expire on
October 31, 2006 and options to purchase 1,614,000 shares of Common Stock will
expire on October 6, 2007.
(3) Mr. Geib is the Chief Financial Officer and a director of the Company.
Includes 1,036,000 shares of Common Stock issuable upon the exercise of
outstanding stock options, 345,334 of which are fully vested and 166,667 vest
on April 8, 1998 and 1999 and 178,666 vest on October 7, 1998 and 1999. Unless
exercised, options to purchase 500,000 shares of Common Stock will expire on
April 8, 2007 and options to purchase 536,000 shares of Common Stock will
expire on October 6, 2007.
(4) Mr. Moore is a former director of the Company. Includes 630,000 shares of
Common Stock issuable upon the exercise of outstanding stock options which are
fully vested. Unless exercised, options to purchase 80,000 shares of Common
Stock will expire on August 1, 2004, options to purchase 100,000 shares of
Common Stock will expire on December 19, 2005, options to purchase 200,000
shares of Common Stock will expire on March 13, 2006 and options to purchase
250,000 shares of Common Stock will expire on October 3, 2007.
(5) Mr. Magiera is a former director of the Company. Includes 610,000 shares of
Common Stock issuable upon the exercise of outstanding stock options which are
fully vested. Unless exercised, options to purchase 160,000 shares of Common
Stock will expire on December 19, 2005, options to purchase 200,000 shares of
Common Stock will expire on March 13, 2006 and options to purchase 250,000
shares of Common Stock will expire on October 3, 2007.
(6) Maroon Bells Capital Partners, Inc. is a former provider of financial
advisory and consulting services to the Company. Includes 275,000 shares of
Common Stock issuable upon the exercise of outstanding stock options which are
fully vested. Unless exercised, options to purchase 200,000 shares of Common
Stock will expire on March 14, 2006 and options to purchase 75,000 shares of
Common Stock will expire on June 30, 2004.
(7) Mr. Silva is a director of the Company. Includes 360,000 shares of Common
Stock issuable upon the exercise of outstanding stock options which are fully
vested. Unless exercised, options to purchase 160,000 shares of Common Stock
will expire on December 19, 2005 and options to purchase 200,000 shares of
Common Stock will expire on March 13, 2006.
</TABLE>

63
<PAGE>

(8) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on June 30, 1998.
(9) The shares of Common Stock are issuable upon the exercise of outstanding
warrants which are exercisable upon the earliest to occur of: (i) April 27,
1998; (ii) such earlier date as may be determined by UBS Securities LLC; (iii)
the occurrence of a Change of Control (as defined in the Indenture) and (iv) the
date of effectiveness of a registration statement to register the Senior Notes
under the Securities Act. See "Description of Senior Notes" and "Description of
Capital Stock."
(10) Mr. Streeter is the former Chairman of the Board of Directors and Chief
Executive Officer of the Company. Includes 510,000 shares of Common Stock
issuable upon the exercise of outstanding stock options which are fully vested.
Unless exercised, options to purchase 100,000 shares of Common Stock will
expire on July 12, 2004, options to purchase 185,000 shares of Common Stock
will expire on July 31, 2004, options to purchase 100,000 shares of Common
Stock will expire on December 19, 2005 and options to purchase 125,000 shares
of Common Stock will expire on March 13, 2006.
(11) Mr. Cargill is a director of the Company. Includes 290,000 shares of Common
Stock issuable upon the exercise of outstanding stock options which are fully
vested and 20,000 shares of Common Stock issuable upon the exercise of
outstanding warrants. Unless exercised, options to purchase 80,000 shares of
Common Stock will expire on July 31, 2004, options to purchase 160,000 shares
of Common Stock will expire on December 19, 2005 and the warrants will expire
on October 21, 2002.
(12) Mr. Kleinman is a director of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 50,000 of which are
fully vested and 50,000 vest on May 29, 1998, 1999 and 2000. Unless exercised,
the options will expire on May 29, 2007.
(13) Mr. Blumen is the Chief Executive Officer and Administrative Manager of
Resetel. The options vest ratably over a five-year period commencing on October
9, 1998. The amount of options which have vested is subject to reduction to the
extent that certain target earnings of Resetel are not attained.
(14) The shares of Common Stock are issuable upon the exercise of outstanding
stock options which are fully vested. Unless exercised, the options will
automatically expire on December 19, 2005.
(15) The shares of Common Stock are issuable upon the exercise of outstanding
stock options which are fully vested. Unless exercised, the options will expire
on March 13, 2006.
(16) Mr. Boza is an employee of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 66,667 of which are
fully vested and the remainder of which vest in equal monthly increments over
one year commencing January 1998. Unless exercised, the options will expire on
December 19, 2005.
(17) Mr. MacLellan is a former director of the Company. The shares of Common
Stock are issuable upon the exercise of outstanding stock options which are
fully vested. Unless exercised, options to purchase 80,000 shares of Common
Stock will expire on July 31, 2004 and options to purchase 10,000 shares of
Common Stock will expire on December 19, 2005.
(18) Mr. Garcia is an employee of Hewster. The shares of Common Stock are
issuable upon the exercise of outstanding stock options which are fully vested.
Unless exercised, the options will expire on July 31, 2004.
(19) Mr. Thias is the Chairman of the Board of Directors of Resetel. The options
vest ratably over a five-year period commencing on October 9, 1998. The amount
of options which have vested is subject to reduction to the extent that certain
target earnings of Resetel are not attained.

64
<PAGE>

(20) The shares of Common Stock are issuable upon the exercise of outstanding
stock options and warrants which are fully vested. Unless exercised, the
options will expire on June 16, 2001 and the warrants will expire on October
21, 2002.
(21) The shares of Common Stock are issuable upon the exercise of outstanding
stock options which are fully vested. Unless exercised, the options will expire
on March 14, 2006.
(22) The shares of Common Stock are issuable upon the exercise of outstanding
stock options which are fully vested. Unless exercised, the options will expire
on December 19, 2005.

(23) Ms. O'Hanlon is a former employee of Hewster. The shares of Common Stock
are issuable upon the exercise of outstanding stock options, 9,667 of which are
fully vested and the remainder of which vest in equal monthly increments over
one year commencing January 1998. Unless exercised, the options will expire on
December 19, 2005.
(24) Mr. Cuevas is an employee of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 6,000 of which are
fully vested and the remainder of which vest in equal monthly increments over
one year commencing January 1998. Unless exercised, the options will expire on
December 19, 2005.
(25) Mr. Valdez is an employee of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 3,500 of which are
fully vested and the remainder vest in equal monthly increments over one year
commencing January 1998. Unless exercised, the options will expire on December
19, 2005.
(26) Ms. Martinez is a former employee of the Company. The shares of Common
Stock are issuable upon the exercise of outstanding stock options, 2,667 of
which are fully vested and the remainder of which vest in equal monthly
increments over one year commencing January 1998. Unless exercised, the options
will expire on December 19, 2005.
(27) Mr. Swinburn is an employee of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 2,667 of which are
fully vested and the remainder of which vest in equal monthly increments over
one year commencing January 1998. Unless exercised, the options will expire on
December 19, 2005.
(28) Mr. Ewert is an employee of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 1,333 of which are
fully vested and the remainder of which vest in equal monthly increments over
one year commencing January 1998. Unless exercised, the options will expire on
December 19, 2005.
(29) The shares of Common Stock are issuable upon the exercise of outstanding
warrants which are exercisable upon the earliest to occur of: (i) April 27,
1998; (ii) such earlier date as may be determined by UBS Securities LLC; (iii)
the occurrence of a Change of Control and (iv) the date of effectiveness of a
registration statement to register the Senior Notes under the Securities Act.
See "Description of Senior Notes" and "Description of Capital Stock."
(30) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on May 1, 2000.
(31) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on October 21, 2002.
(32) Includes outstanding warrants to purchase 20,000 shares of Common Stock.
Unless exercised, the warrants will expire on June 30, 2002.
(33) Includes outstanding warrants to purchase 40,000 shares of Common Stock.
Unless exercised, the warrants will expire on February 2, 2002.
(34) Includes outstanding warrants to purchase 60,000 shares of Common Stock.
Unless exercised, the warrants will expire on February 2, 2002.
(35) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on June 30, 2000.
(36) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on June 30, 2000.

65
<PAGE>

(37) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on June 30, 2000.
(38) The shares of Common Stock are issuable upon the exercise of outstanding
warrants. Unless exercised, the warrants will expire on June 30, 2000.

(39) Mr. Hulsh is a director of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options, 6,000 of which are
fully vested.
(40) Mr. Segrera is an employee of the Company. The shares of Common Stock are
issuable upon the exercise of outstanding stock options of which 15,000 vest on
December 15, 1998, 1999 and 2000.

66
<PAGE>

DESCRIPTION OF SENIOR NOTES

The Senior Notes were issued under the Indenture, dated as of October 27,
1996, between the Company, as issuer, and State Street Bank and Trust Company,
N.A., as Trustee. A copy of the Indenture has been filed as an Exhibit to the
Registration Statement of which this Prospectus is a part. The following summary
of certain provisions of the Indenture does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the provisions
of the Indenture, including the definitions of certain terms therein and those
terms made a part thereof by reference to the Trust Indenture Act of 1939, as
amended. Whenever particular defined terms of the Indenture not otherwise
defined herein are referred to, such defined terms are incorporated herein by
reference. For definitions of certain capitalized terms used in the following
summary, see "-- Certain Definitions."

GENERAL

The Senior Notes were issued pursuant to an Indenture (the "Indenture")
between the Company and State Street Bank and Trust Company, N.A. as trustee
(the "Trustee"). The terms of the Senior Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Senior Notes
are subject to all such terms, and Holders of Senior Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of the material provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. Copies of the
proposed form of Indenture, Proceeds Pledge and Escrow Agreement and
Registration Rights Agreement will be made available to prospective investors as
set forth under "Available Information." The definitions of certain terms used
in the following summary are set forth below under " -- Certain Definitions."
For purposes of this "Description of Senior Notes," the term "Company" refers
only to InterAmericas Communications Corporation and not to any of its
Subsidiaries.

RANKING

The Senior Notes rank senior in right of payment to all subordinated
Indebtedness of the Company incurred in the future, if any. The Senior Notes
will rank pari passu in right of payment to all senior Indebtedness of the
Company incurred in the future, if any. The Senior Notes will be secured by a
first priority pledge pursuant to the Proceeds Pledge and Escrow Agreement of
(1) securities purchased with a portion of the proceeds from the sale of the
Senior Notes (the "Pledged Securities"), which initially consist of Government
Securities, and the account established with the Trustee for the deposit of the
Pledged Securities (the "Pledge Account"), which will be released to the Company
upon payment in full of the first six scheduled interest payments due on the
Senior Notes and (2) $62.0 million of the net proceeds of the Offering, which
have been invested in Cash Equivalents (the "Collateral Funds") and placed in an
escrow account (the "Collateral Account") to be held by the Trustee, as
Collateral Agent, pending application of such funds by the Company for the
payment of (a) Permitted Expenditures (as defined below), (b) in the event of a
Change of Control, the Change of Control Payment and (c) in the event of a
Special Offer to Purchase or a Special Mandatory Redemption, the purchase or
redemption price in connection therewith. See " -- Proceeds Pledge and Escrow
Agreement."

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The operations of the Company are conducted through its Subsidiaries and,
therefore, the Company is dependent upon the cash flow of its Subsidiaries to
meet its obligations, including its obligations under the Senior Notes. The
ability of the Company's Subsidiaries to make payments will be subject to, among
other things, the terms of such Subsidiaries' Indebtedness, the availability of
such funds and the applicable laws of the jurisdictions under which such
Subsidiaries are organized.

The Obligations under the Senior Notes will be effectively subordinated to
all Indebtedness and other liabilities and commitments (including trade payables
and lease obligations) of the Company's Subsidiaries. Any right of the Company
to receive assets of any of its Subsidiaries upon the latter's liquidation or
reorganization (and the consequent right of the Holders of the Senior Notes to
participate in those assets) will be effectively subordinated to the claims of
that Subsidiary's creditors, except to the extent that the Company is itself
recognized as a creditor of such Subsidiary, in which case the claims of the
Company would still be subordinate to any security in the assets of such
Subsidiary and any Indebtedness of such Subsidiary senior to that held by the
Company. As of December,31,1997, the Company's Subsidiaries have approximately $
5,049,000 million of Indebtedness and $ 679,000 of trade payables and other
liabilities outstanding. In addition, under the Indenture, the Company's
Subsidiaries are permitted to incur certain additional Indebtedness the terms of
which may restrict the ability of the Company's Subsidiaries to pay dividends to
the Company. See "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock."

PRINCIPAL MATURITY AND INTEREST

The Senior Notes are limited to $150.0 million in aggregate principal
amount and will mature on October 27, 2007. Interest on the Senior Notes will
accrue at the rate of 14% per annum and will be payable in cash semi-annually on
April 27 and October 27 (each, an "Interest Payment Date"), commencing on April
27, 1998 to holders of record on the immediately preceding April 12 and October
12. Interest on the Senior Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The Senior Notes will be payable as to
principal, interest and Liquidated Damages, if any, at the office or agency of
the Company maintained for such purpose within the City and State of New York
or, at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders of the Senior Notes at their
respective addresses set forth in the register of Holders of Senior Notes;
provided that all payments with respect to Senior Notes the Holders of which
have given wire transfer instructions to the Company will be required to be made
by wire transfer of same day funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, its office or agency in New
York will be the office of the Trustee maintained for such purpose. The Senior
Notes were issued in registered form, without coupons, and in denominations of
$1,000 and integral multiples thereof.

PROCEEDS PLEDGE AND ESCROW AGREEMENT

Pursuant to the Proceeds Pledge and Escrow Agreement, upon the closing of
the Senior Note Offering (the "Closing"), the Company purchased and pledged to
the Trustee for the benefit of the Holders of the Senior Notes the Pledged
Securities in such amount as is sufficient upon receipt of scheduled interest
and principal payments of such securities, in the opinion of a nationally
recognized firm of independent public accountants selected by the Company, to
provide for payment in full of the first six scheduled interest payments due on
the Senior Notes. The

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Company used approximately $63.0 million of the net proceeds of the Initial
Offering to acquire the Pledged Securities. The Pledged Securities were pledged
by the Company to the Trustee for the benefit of the Holders of Senior Notes
pursuant to the Proceeds Pledge and Escrow Agreement and are being held by the
Trustee in the Pledge Account. Pursuant to the Proceeds Pledge and Escrow
Agreement, immediately prior to an interest payment date on the Senior Notes,
the Company may either deposit with the Trustee from funds otherwise available
to the Company cash sufficient to pay the interest scheduled to be paid on such
date or the Company may direct the Trustee to release from the Pledge Account
proceeds sufficient to pay interest then due. In the event that the Company
exercises the former option, the Company may thereafter direct the Trustee to
release to the Company proceeds or Pledged Securities from the Pledge Account in
like amount. A failure by the Company to pay interest on the Senior Notes within
five days of an Interest Payment Date through October 27, 2000 will constitute
an immediate Event of Default under the Indenture.

Interest earned on the Pledged Securities will be added to the Pledge
Account. In the event that the funds or Pledged Securities held in the Pledge
Account exceed the amount sufficient, in the opinion of a nationally recognized
firm of independent public accountants selected by the Company, to provide for
payment in full of the first six scheduled interest payments due on the Senior
Notes (or, in the event an interest payment or payments have been made, an
amount sufficient to provide for payment in full of any interest payments
remaining, up to and including the sixth scheduled interest payment) the Trustee
will be permitted to release to the Company at the Company's request any such
excess amount. The Senior Notes will be secured by a first priority security
interest in the Pledged Securities and in the Pledge Account and, accordingly,
the Pledged Securities and the Pledge Account will also secure all Obligations
of the Company under the Senior Notes and the Indenture to the extent of such
security.

Under the Proceeds Pledge and Escrow Agreement, if the Company makes the
first six scheduled interest payments on the Senior Notes in a timely manner,
all of the remaining Pledged Securities, if any, will be released from the
Pledge Account and thereafter the Senior Notes will be secured only by the
Collateral Funds and the Collateral Account described below to the extent that
Collateral Funds remain in the Collateral Account pursuant to the terms of the
Proceeds Pledge and Escrow Agreement.

In addition to the pledge by the Company of the Pledged Securities, the
Proceeds Pledge and Escrow Agreement required the Company to (i) deposit $62.0
million of the net proceeds of the Senior Note Offering in an account under the
Trustee's exclusive dominion and control pending application of such funds by
the Company for the payment of (a) Permitted Expenditures, (b) in the event of a
Change of Control, the Change of Control Payment and (c) in the event of a
Special Offer to Purchase or a Special Mandatory Redemption, the purchase or
redemption price in connection therewith and (ii) grant to the Trustee, as
Collateral Agent, for the benefit of Holders of the Senior Notes and itself as
Trustee, a first priority security interest in the Collateral Funds and the
Collateral Account securing all Obligations of the Company under the Senior
Notes and the Indenture. The Collateral Funds are required to be invested in
Cash Equivalents, as directed from time to time by the Company. The Company will
be permitted to obtain release of the Collateral Funds as follows: (a) any
amount of Collateral Funds for Permitted Expenditures, (b) in the event of a
Change of Control, the Change of Control Payment and (c) in the event of a
Special Offer to Purchase or a Special Mandatory Redemption, the purchase or
redemption price in connection therewith; provided that at least 60% of the
aggregate amount of Collateral Funds released from the Collateral Account for
Permitted Expenditures must be released in connection with Acquisition Costs or
Systems Costs directly related to Telecommunications Businesses in Peru.

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"Permitted Expenditures" means (1)(A) the purchase price and related
expenses of any acquisition of (i) long-term assets used or useful in a
Permitted Business or (ii) a controlling interest in a Permitted Business
(collectively, "Acquisition Costs") or (B) expenditures by the Company or any
Restricted Subsidiary of the Company directly related to the engineering,
design, construction, installation or development of assets and systems used or
useful in a Permitted Business ("Systems Costs"), in each of clauses (A) and
(B), in connection with Telecommunications Businesses in Chile or Peru; (2) the
repayment of Indebtedness of any Restricted Subsidiary; provided that the
commitments with respect thereto in the case of revolving borrowings are
correspondingly reduced and (3) other general corporate purposes in an amount
not to exceed $20.0 million.

The Proceeds Pledge and Escrow Agreement allows the Company to withdraw
from the Collateral Account such amounts as are estimated by the Company in good
faith and set forth in a written request (as such request may be amended from
time to time), accompanied by a supporting budget or other supporting
documentation, submitted to the Collateral Agent to be necessary for Permitted
Expenditures for the succeeding three months.

In the event that on or after October 27, 2000 Collateral Funds remain in
the Collateral Account, the Company shall make an offer to each Holder of Senior
Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Notes (the "Special Offer to Purchase") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest thereon to the date of purchase and Liquidated
Damages, if any; provided that, if after the Special Offer to Purchase is
consummated at least $20.0 million in aggregate principal amount of Senior Notes
does not remain outstanding, the Company will be required by the terms of the
Indenture to redeem all of the Senior Notes (the "Special Mandatory Redemption")
at a redemption price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the date of purchase. If required by the terms of the Indenture to make a
Special Offer to Purchase, the Company will mail a notice to each Holder
offering to repurchase Senior Notes in the Special Offer to Purchase pursuant to
the procedures required by the Indenture and described in such notice. If
required by the terms of the Indenture, within ten days following the
consummation of the Special Offer to Purchase, the Company will mail a notice to
each Holder setting forth the terms of the Special Mandatory Redemption pursuant
to the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the Special Offer to Purchase.

In the event that the Indenture does not require the Company to make a
Special Mandatory Redemption, after the consummation of the Special Offer to
Purchase, the Company shall apply all funds held in the Collateral Account not
previously released pursuant to the terms of the Indenture and the Proceeds
Pledge and Escrow Agreement, at its option, to the acquisition of a controlling
interest in a Permitted Business, the making of a capital expenditure or the
acquisition of other assets, in each case, in a Permitted Business or to the
reduction of senior Indebtedness of the Company or Indebtedness of any
Restricted Subsidiary of the Company.

In the event of the Company's bankruptcy, the Company, as a debtor in
possession under Chapter 11 of the Bankruptcy Code, would be entitled to
petition the United States Bankruptcy Court having jurisdiction over its case
for permission, under Section 363 of the Bankruptcy Code, to use the Pledged
Securities pledged by it pursuant to the Proceeds Pledge and Escrow

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Agreement and the Collateral Funds pledged by it pursuant to the Proceeds Pledge
and Escrow Agreement to fund its operations during the pendency of the
reorganization proceedings. Permission for such use is likely to be granted so
long as the interests of the Trustee, as Collateral Agent, for the benefit of
the Holders of Senior Notes and itself as Trustee, are "adequately protected." A
secured creditor's interest in cash collateral to be used by a debtor in
possession may be adequately protected by, among other means, the granting of
liens on substitute collateral which may be substantially less liquid than Cash
Equivalents and Government Securities.

OPTIONAL REDEMPTION

The Senior Notes are not redeemable at the Company's option prior to
October 27, 2002. Thereafter, the Senior Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on October 27 of the
years indicated below:

YEAR PERCENTAGE
- ------------------- -----------
<S> <C>
2002. . . . . . . . 107.000%
2003. . . . . . . . 104.666%
2004. . . . . . . . 102.333%
2005 and thereafter 100.000%
</TABLE>

Notwithstanding the foregoing, at any time on or before October 27, 2000,
the Company may on any one or more occasions redeem up to a maximum of 33 1/3%
of the aggregate principal amount of Senior Notes at a redemption price equal to
114% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net cash
proceeds received by the Company after the date of the Indenture from the
issuance and sale of its Qualified Capital Stock to the public in a registered
public offering or to one or more Strategic Equity Investors to the extent that
such net cash proceeds have been, and continue to be, designated as Designated
Equity Proceeds to be used for such purpose as provided in the definition
thereof; provided that at least 66 2/3% of the original aggregate principal
amount of the Senior Notes remain outstanding immediately after the occurrence
of each such redemption; and provided, further, that such redemption shall occur
within 45 days of the date of the closing of any such public offering or sale to
such Strategic Equity Investors.

SELECTION AND NOTICE

If less than all of the Senior Notes are to be redeemed at any time,
selection of Senior Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Senior Notes are listed, or, if the Senior Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate; provided that no Senior Notes of $1,000 or less shall be
redeemed in part. Notices of redemption shall be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each Holder of
Senior Notes to be redeemed at its registered address. Notices of redemption may
not be conditional. If any Senior Note is to be redeemed in part only, the
notice of redemption that relates to such Senior Note shall state the portion of
the principal amount thereof to be redeemed. A new Senior Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Senior Note. Senior Notes
called for redemption become due on the date fixed for redemption. On and after
the redemption date, interest ceases to accrue on Senior Notes or portions of
them called for redemption.

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MANDATORY REDEMPTION

Except as set forth above under " -- Proceeds Pledge and Escrow Agreement"
and as set forth below under " -- Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Senior Notes.

REPURCHASE AT THE OPTION OF HOLDERS

Change of Control

Upon the occurrence of a Change of Control, each Holder of Senior Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Senior Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash (the "Change of Control Payment") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the date of repurchase. Within ten days
following any Change of Control, the Company will mail a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Senior Notes on the date specified in such notice
(the "Change of Control Payment Date"), which date shall be no earlier than 30
days and no later than 60 days from the date such notice is mailed, pursuant to
the procedures required by the Indenture and described in such notice. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the Senior
Notes as a result of a Change of Control.

On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Senior Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Senior
Notes or portions thereof so tendered and (iii) deliver or cause to be delivered
to the Trustee the Senior Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Senior Notes or portions
thereof being purchased by the Company. The Paying Agent will promptly mail to
each Holder of Senior Notes so tendered the Change of Control Payment for such
Senior Notes, and the Trustee will promptly authenticate and mail (or cause to
be transferred by book entry) to each Holder a new New Note equal in principal
amount to any unpurchased portion of the Senior Notes surrendered, if any;
provided that each such new New Note will be in a principal amount of $1,000 or
an integral multiple thereof. The Company will publicly announce the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.

The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Senior Notes to require that the
Company repurchase or redeem the Senior Notes in the event of a takeover,
recapitalization or similar transaction.

The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of (a) "all or substantially
all" of the assets of the Company and its Restricted Subsidiaries taken as a
whole and (b) "all or substantially all" of the assets of the Company and its
Restricted Subsidiaries taken as a whole that are related or ancillary to the
business conducted by the Company and its Restricted Subsidiaries in Peru.
Although there is a

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developing body of case law interpreting the phrase "substantially all," there
is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a Holder of Senior Notes to require the Company to
repurchase such Senior Notes as a result of a sale, lease, transfer, conveyance
or other disposition of less than (a) all of the assets of the Company and its
Restricted Subsidiaries taken as a whole or (b) all of the assets of the Company
and its Restricted Subsidiaries taken as a whole that are related or ancillary
to the business conducted by the Company and its Restricted Subsidiaries in Peru
to another Person or group may be uncertain.

The terms of any Indebtedness incurred by the Company's Subsidiaries and
the applicable laws of the jurisdictions under which the Company's Subsidiaries
are organized may restrict the Company's current and future Subsidiaries from
paying any dividends or making any other distribution to the Company. Thus, in
the event a Change of Control occurs, the Company could seek the consent of its
Subsidiaries' lenders to the purchase of the Senior Notes or could attempt to
repay or refinance the borrowings that contain such restrictions. If the Company
did not obtain such a consent or repay or refinance such borrowings or if the
applicable laws of the jurisdictions under which the Company's Subsidiaries are
organized restrict such Subsidiaries' ability to pay dividends or make other
distributions to the Company, the Company would likely not have the financial
resources to purchase the Senior Notes and the Subsidiaries would be restricted
in paying dividends to the Company for the purpose of such purchase. In
addition, any future Indebtedness may prohibit the Company from purchasing
Senior Notes prior to their maturity, and may also provide that certain change
of control events with respect to the Company would constitute a default
thereunder. In the event a Change of Control occurs at a time when the Company
is prohibited from purchasing Senior Notes, the Company could seek the consent
of its lenders to the purchase of Senior Notes or could attempt to repay or
refinance the borrowings that contain such prohibition. If the Company did not
obtain such consent or repay or refinance such borrowings, the Company would
remain prohibited from purchasing Senior Notes. In such event, the Company would
be required to seek to refinance the Senior Notes or such other borrowings, and
there can be no assurance that the Company would be able to consummate any such
refinancing. See "Risk Factors -- Substantial Leverage; Ability to Service
Indebtedness" and " -- Holding Company Structure; Inability to Access Cash
Flow."

The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Senior Notes validly tendered and not withdrawn under such Change
of Control Offer.

Asset Sales

The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 80% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided that the amount of (x) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet) of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Senior Notes or any
guarantee thereof) that are assumed by the

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transferee of any such assets or Equity Interests pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary from
further liability and (y) any securities, notes or other obligations received by
the Company or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary into cash (to
the extent of the cash received), shall be deemed to be cash for purposes of
this provision.

Within 270 days after the Company's or any Restricted Subsidiary's receipt
of any Net Proceeds from an Asset Sale, the Company or such Restricted
Subsidiary may apply such Net Proceeds, at its option, (a) to repay Indebtedness
under a Credit Facility (and to correspondingly reduce commitments with respect
thereto in the case of revolving borrowings) or (b) to the acquisition of a
Permitted Business or a controlling interest in a Permitted Business or the
making of a capital expenditure or the acquisition of other long-term assets, in
each case, in a Permitted Business. Pending the final application of any such
Net Proceeds, the Company may temporarily reduce Indebtedness under any Credit
Facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Senior Notes (an "Asset Sale Offer") to purchase the maximum
principal amount of Senior Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate principal amount of Senior Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Senior Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Notes
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.

CERTAIN COVENANTS

Restricted Payments

The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company) to the direct or indirect holders of the Company's or any
of its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or such Restricted Subsidiary or dividends or
distributions payable to the Company or any Wholly Owned Restricted Subsidiary);
(ii) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company; (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Senior Notes, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:

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(a) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and

(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness (other than Permitted Debt)
pursuant to the Debt to Cash Flow Ratio test set forth in the first paragraph of
the covenant described below under the caption " -- Incurrence of Indebtedness
and Issuance of Preferred Stock;" and

(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments declared or made after the date of Indenture (other
than Restricted Payments permitted by clauses (ii), (iii) or (iv) of the
following paragraph) shall not exceed, at the date of determination, the sum of
(i) 50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter commencing
after the date of the Indenture to the end of the Company's most recently ended
fiscal quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus (ii) an amount equal to the net
cash proceeds received by the Company after the date of the Indenture from the
issuance and sale of its Qualified Capital Stock to the extent such net cash
proceeds have been, and continue to be, designated as Designated Equity Proceeds
to be added to the cumulative amount calculated pursuant to this clause (c) as
provided in the definition thereof, plus (iii) an amount equal to the net cash
proceeds received by the Company from the sale of Disqualified Stock or debt
securities of the Company that have been converted into Equity Interests (other
than Equity Interests or convertible debt securities sold to a Subsidiary of the
Company and other than Disqualified Stock or convertible debt securities that
have been converted into Disqualified Stock), plus (iv) to the extent that any
Restricted Investment that was made after the date of the Indenture is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (1) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (2) the initial amount of such Restricted Investment.

The foregoing provisions will not prohibit the following Restricted
Payments: (i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture; (ii) the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated Indebtedness or
Equity Interests of the Company in exchange for, or out of the net cash proceeds
(other than any such net cash proceeds that constitute Designated Equity
Proceeds) of the substantially concurrent sale (other than to a Subsidiary of
the Company) of, other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c)(ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the payment of any dividend by a
Subsidiary of the Company to the holders of its common Equity Interests on a pro
rata basis; (v) the payment of cash (in lieu of the issuance of fractional
shares of Common Stock) to holders of Warrants at the time of exercise of such
Warrants as required by the terms of the Warrant Agreement entered into in
connection with the Initial Offering; (vi) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any member of the Company's (or
any of its

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Restricted Subsidiaries') management pursuant to any management equity
subscription agreement, stock option agreement or other similar agreement;
provided that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $250,000 in any
twelve-month period and no Default or Event of Default shall have occurred and
be continuing immediately after such transaction; and (vii) any payments
specifically described in this Prospectus under the caption "Use of Proceeds."

The amount of all Restricted Payments (other than cash) shall be the Fair
Market Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the Indenture.

The Board of Directors may designate any Restricted Subsidiary (other than
any Subsidiary of the Company that owns all or a material portion of the assets
(i) owned by the Company or any Subsidiary of the Company on the date of the
Indenture or (ii) owned by any Person described in this Prospectus under the
caption "The Iusatel Acquisition" on the date of the acquisition by the Company
of such Person) to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation will only be permitted if such Restricted Payment
would be permitted at such time and if such Restricted Subsidiary otherwise
meets the definition of an Unrestricted Subsidiary.

Incurrence of Indebtedness and Issuance of Preferred Stock

The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) and the Company may issue shares of Disqualified Stock if the Company's
Debt to Cash Flow Ratio would have been no greater than 5.5 to 1, in the case of
any such incurrence or issuance on or before December 31, 2000, or no greater
than 5.0 to 1, in the case of any such incurrence or issuance at any time
thereafter, in each case, determined on a pro forma basis (including a pro forma
application of the net proceeds thereof), as if the additional Indebtedness had
been incurred, or the Disqualified Stock had been issued, as the case may be, at
the beginning of the applicable four full fiscal quarter period.

The Indenture also provides that the Company will not incur any
Indebtedness that is contractually subordinated to any other Indebtedness of the
Company unless such Indebtedness is also contractually subordinated to the
Senior Notes on substantially identical terms; provided, however, that no
Indebtedness of the Company shall be deemed to be contractually subordinated to
any other Indebtedness of the Company solely by virtue of being unsecured.

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The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):

(i) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness under Credit Facilities; provided that the aggregate principal
amount of all Indebtedness (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
thereunder) outstanding under all Credit Facilities after giving effect to such
incurrence, including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this clause
(i), does not exceed an amount equal to $40.0 million less the aggregate amount
of all Net Proceeds of Asset Sales that have been applied since the date of the
Indenture to repay Indebtedness under Credit Facilities (or any such Permitted
Refinancing Indebtedness) pursuant to the covenant described above under the
caption " -- Repurchase at the Option of Holders -- Asset Sales;" provided,
further, that the aggregate principal amount of Indebtedness at any one time
outstanding under Credit Facilities that is incurred by, or secured by the
Capital Stock or assets of, any Restricted Subsidiary that is located, or that
derives substantially all of its revenue from the conduct of business, in Peru
shall not exceed $15.0 million;

(ii) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;

(iii) the incurrence by the Company of Indebtedness represented by the
Senior Notes;

(iv) the incurrence by the Company or any of its Restricted Subsidiaries of
Indebtedness in connection with the acquisition of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred by the prior owner of
such assets or such Subsidiary prior to such acquisition by the Company or such
Restricted Subsidiary and was not incurred in connection with, or in
contemplation of, such acquisition by the Company or such Restricted Subsidiary;
and provided further that the principal amount (or accreted value, as
applicable) of such Indebtedness (or accreted value, as applicable), including
all Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any other Indebtedness incurred pursuant to this clause (iv), does not exceed
$5.0 million at any time outstanding;

(v) Indebtedness of the Company not to exceed, at any one time outstanding,
two times the sum of (A) the Current Market Value as of the date of issue of any
Qualified Capital Stock of the Company issued to the seller(s) of a Permitted
Business as consideration for the acquisition of such business and (B) the net
cash proceeds received by the Company after the date of the Indenture from the
issuance and sale of its Qualified Capital Stock to the extent that such net
cash proceeds have been, and continue to be, designated as Designated Equity
Proceeds to be used for the purpose of incurring additional Indebtedness
pursuant to this clause (v) as provided in the definition thereof; provided
that, to the extent that any such Qualified Capital Stock ceases to be
outstanding for any reason, any Indebtedness that was incurred as a result of
the receipt of net cash proceeds from the issuance of such Qualified Capital
Stock shall cease (as of the date on which such Qualified Capital Stock ceases
to be outstanding) to be permitted by virtue of this clause (v);

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(vi) the incurrence by the Company or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which
are used to refund, refinance or replace Indebtedness (other than intercompany
Indebtedness or Indebtedness pursuant to a Credit Facility) that was permitted
by the Indenture to be incurred;

(vii) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its Wholly
Owned Restricted Subsidiaries; provided, however, that (A) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the Senior
Notes and (B)(1) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the Company
or a Wholly Owned Restricted Subsidiary and (2) any sale or other transfer of
any such Indebtedness to a Person that is not either the Company or a Wholly
Owned Restricted Subsidiary shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as
the case may be;

(viii) the guarantee by the Company of Indebtedness of the Company or a
Restricted Subsidiary of the Company that was permitted to be incurred by
another provision of this covenant;

(ix) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company;

(x) Indebtedness of the Company or any Restricted Subsidiary of the Company
(A) in respect of statutory obligations, performance, surety or appeal bonds or
other obligations of a like nature incurred in the ordinary course of business
or (B) under Hedging Obligations; provided that such agreements (1) are designed
solely to protect the Company or its Restricted Subsidiaries against
fluctuations in foreign currency exchange rates or interest rates and (2) do not
increase the Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest rates or
by reason of fees, indemnities and compensation payable thereunder; and

(xi) the incurrence by the Company of additional Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any other Indebtedness incurred pursuant to this
clause (xi), not to exceed $5.0 million.

For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. Accrual of interest and the accretion of accreted
value will not be deemed to be an incurrence of Indebtedness for purposes of
this covenant.

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Sale and Leaseback Transactions

The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided that the Company may enter into a sale and leaseback
transaction if (i) the Company could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the Debt to Cash Flow Ratio test set forth in the first paragraph of
the covenant described above under the caption " -- Incurrence of Indebtedness
and Issuance of Preferred Stock" and (b) incurred a Lien to secure such
Indebtedness pursuant to the covenant described below under the caption " --
Liens," (ii) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value of the property that is the subject of
such sale and leaseback transaction and (iii) the transfer of assets in such
sale and leaseback transaction is permitted by, and the Company applies the
proceeds of such transaction in compliance with, the covenant described above
under the caption " -- Repurchase at the Option of Holders -- Asset Sales."

Liens

The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.

Dividend and Other Payment Restrictions Affecting Subsidiaries

The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) the terms of any
Permitted Debt permitted to be incurred by any Restricted Subsidiary of the
Company, (b) Existing Indebtedness as in effect on the date of the Indenture or
by reason of any agreement or instrument in effect on the date of the Indenture,
(c) the Indenture and the Senior Notes, (d) applicable law or regulation, (e)
any instrument governing Indebtedness or Capital Stock of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that impose
restrictions of the nature described in clause (iii) above on the property so
acquired, (h) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing Indebtedness
are no more restrictive than those contained in the agreements governing the
Indebtedness being refinanced, (i) any mortgage or other Lien on real property
acquired or improved by the Company or any Restricted Subsidiary after the date
of the

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Indenture that prohibit transfers of the type described in (iii) above with
respect to such real property, (j) any such customary encumbrance or restriction
contained in a security document creating a Permitted Lien to the extent related
to the property or assets subject to such Permitted Lien, and (k) with respect
to a Restricted Subsidiary, an agreement that has been entered into for the sale
or disposition of all or substantially all of the Company's Equity Interests in,
or substantially all of the assets of, such Restricted Subsidiary.

Merger, Consolidation, or Sale of Assets

The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Senior Notes and the Indenture pursuant to a supplemental
indenture in a form reasonably satisfactory to the Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; (iv) such
transaction will not result in the loss or suspension or material impairment of
any licenses or other authorizations that are material to the future prospects
of the Company and its Subsidiaries, taken as a whole; and (v) except in the
case of a merger of the Company with or into a Wholly Owned Subsidiary of the
Company or into a parent corporation the principal purpose of which transaction
is to change the state of incorporation of the Company, the Company or the
entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Debt to Cash Flow Ratio test set forth in the first
paragraph of the covenant described above under the caption " -- Incurrence of
Indebtedness and Issuance of Preferred Stock."

Transactions with Affiliates

The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $250,000, (1) a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i)

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above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors or (2) an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $2.0
million, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that (w) the Iusatel
Acquisition, (x) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business having terms
consistent with industry practice for reasonably similar companies, (y)
transactions between or among the Company and/or its Restricted Subsidiaries and
(z) Restricted Payments that are permitted by the provisions of the Indenture
described above under the caption " -- Certain Covenants -- Restricted
Payments," in each case, shall not be deemed Affiliate Transactions.

Limitation on Issuances and Sales of Capital Stock of the Company

The Indenture provides that the Company will not transfer, convey, sell,
lease or otherwise dispose of any Equity Interest of the Company to any Person
unless the consideration received therefor is at least equal to the Fair Market
Value of such Equity Interests and all of such consideration is in the form of
cash.

The provisions of the first paragraph of this covenant does not apply to:

(i) the transfer, conveyance, sale, lease or other disposition of all or
substantially all of the Equity Interests of the Company; provided that the
transfer, conveyance, sale, lease or other disposition of all or substantially
all of the Equity Interest of the Company will be governed by the provisions of
the Indenture described above under the caption " -- Repurchase at the Option of
Holders -- Change of Control" and/or the provisions described above under the
caption " -- Merger, Consolidation or Sale of Assets" and not by the provisions
of this covenant;

(ii) the transfer, conveyance, sale, lease or other disposition of Equity
Interests of the Company in exchange for long-term assets used or useful in a
Permitted Business or a controlling interest in a Permitted Business; provided
that the Company delivers to the Trustee (a) with respect to any such transfer,
conveyance, sale, lease or other disposition or series of related transfers,
conveyances, sales, leases or other dispositions involving Equity Interests with
a fair market value less than $5.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such transfer,
conveyance, sale, lease or other disposition is fair to the Company's
shareholders and (b) with respect to any such transfer, conveyance, sale, lease
or other disposition or series of related transfers, conveyances, sales, leases
or other dispositions involving Equity Interests with a fair market value equal
to or in excess of $5.0 million, an opinion as to the fairness to the Company's
shareholders of such transfer, conveyance, sale, lease or other disposition from
a financial point of view issued by UBS Securities or any other investment
banking firm of national standing chosen by the Company; and

(iii) (A) the grant or issuance of options, warrants or other rights to
acquire Capital Stock of the Company ("Options") pursuant to a stock option plan
which (a) shall have been approved by the Company's stockholders, (b) shall
prohibit the granting of Options prior to

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June 30, 1998 (other than to directors or employees of the Company or any
Subsidiary of the Company appointed or hired subsequent to the date of the
Indenture), (c) shall limit the aggregate number of shares of common stock of
the Company issuable in any fiscal year upon the exercise of Options to 1.0
million (subject to adjustments for stock splits and other customary events) and
(d) shall provide that any Option must have an exercise price equal to or in
excess of the market price for the underlying common stock of the Company on the
date such Option is granted by the Company and (B) the issuance of Capital Stock
of the Company upon the exercise of any such Option.

Limitation on Issuances and Sales of Capital Stock of Wholly Owned Restricted
Subsidiaries

The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Equity Interest of any Wholly Owned
Restricted Subsidiary of the Company to any Person (other than the Company or a
Wholly Owned Restricted Subsidiary of the Company), unless (a) such transfer,
conveyance, sale, lease or other disposition is of all the Equity Interests of
such Wholly Owned Restricted Subsidiary owned by the Company or any of its
Subsidiaries and (b) the Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the covenant described
above under the caption" -- Repurchase at the Option of Holders -- Asset Sales,"
and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Company
to issue any of its Equity Interests (other than, if required by applicable law,
shares of Capital Stock (y) constituting directors' qualifying shares and (z) of
non-U.S. Restricted Subsidiaries sold to non-U.S. nationals as required by the
laws of the jurisdiction of incorporation of such non-U.S. Restricted
Subsidiary) to any Person other than to the Company or a Wholly Owned Restricted
Subsidiary of the Company.

Limitations on Issuances of Guarantees of Indebtedness by Subsidiaries

The Indenture provides that the Company will not permit any Subsidiary,
directly or indirectly, to guarantee or pledge any assets to secure the payment
of any other Indebtedness of the Company unless such Subsidiary simultaneously
executes and delivers a supplemental indenture to the Indenture providing for
the guarantee of the payment of the Senior Notes by such Subsidiary, which
guarantee shall be senior to or pari passu with such Subsidiary's guarantee of
or pledge to secure such other Indebtedness. Notwithstanding the foregoing, any
such guarantee by a Subsidiary of the Senior Notes shall provide by its terms
that it shall be automatically and unconditionally released and discharged upon
any sale, exchange or transfer, to any Person not an Affiliate of the Company,
of all of the Company's stock in, or all or substantially all the assets of,
such Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions of the Indenture. A form of such guarantee is attached as
an exhibit to the Indenture.

Business Activities

The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than a Permitted Business.

Payments for Consent

The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder of any Senior Notes for or
as an inducement to any consent, waiver or amendment

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of any of the terms or provisions of the Indenture or the Senior Notes unless
such consideration is offered to be paid or is paid to all Holders of the Senior
Notes that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.

Reports

The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Senior Notes are outstanding, the
Company will furnish to the Holders of Senior Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Form 10-Q or, if the Company is eligible to file such Form,
Form 10-QSB and Form 10-K or, if the Company is eligible to file such Form, Form
10-KSB if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports, in each case, within the time
periods set forth in the Commission's rules and regulations. In addition,
commencing after the consummation of the Exchange Offer, whether or not required
by the rules and regulations of the Commission, the Company will file a copy of
all such information and reports with the Commission for public availability
(unless the Commission will not accept such a filing) within the time periods
set forth in the Commission's rules and regulations and make such information
available to securities analysts and prospective investors upon request. In
addition, the Company has agreed that, for so long as any Senior Notes remain
outstanding, it will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.

Events of Default and Remedies

The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest and
Liquidated Damages, if any, on the Senior Notes, provided, however, that prior
to October 27, 2000, the failure by the Company to pay interest on the Senior
Notes within five days of an Interest Payment Date will constitute an immediate
Event of Default; (ii) default in payment when due of the principal of or
premium, if any, on the Senior Notes; (iii) failure by the Company to comply
with the provisions described under the captions " -- Proceeds Pledge and Escrow
Agreement," " -- Repurchase at the Option of Holders -- Change of Control," " --
Repurchase at the Option of Holders -- Asset Sales," " -- Certain Covenants --
Restricted Payments," " -- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock" or " -- Certain Covenants -- Merger, Consolidation
or Sale of Assets;" (iv) failure by the Company for 60 days after notice to
comply with any of its other agreements in the Indenture or the Senior Notes;
(v) breach by the Company of any material representation, warranty or agreement
set forth in the Proceeds Pledge and Escrow Agreement, or repudiation by the
Company of its obligations under the Proceeds Pledge and Escrow Agreement or the
unenforceability of the Proceeds Pledge and Escrow Agreement against the Company
for any reason; (vi) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or
is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace

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period provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (vii) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $5.0 million, which judgments are not paid, discharged or stayed for a period
of 60 days; (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Subsidiary shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and (ix) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken together, would constitute a Significant Subsidiary.

If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior Notes
may declare all the Senior Notes to be due and payable immediately. Upon such
declaration, the principal of, premium, if any, and accrued and unpaid interest
and Liquidated Damages, if any, on the Senior Notes shall be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to the
Company, any Significant Subsidiary or any group of Subsidiaries that, taken
together, would constitute a Significant Subsidiary, the foregoing amount shall
ipso facto become due and payable without further action or notice. Holders of
the Senior Notes may not enforce the Indenture or the Senior Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Senior Notes may direct the Trustee
in its exercise of any trust or power. The Trustee may withhold from Holders of
the Senior Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest or
Liquidated Damages, if any) if it determines that withholding notice is in their
interest.

In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Senior Notes pursuant to
the optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Senior Notes. If an Event of Default occurs prior
to October 27, 2002 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Senior Notes prior to October 27, 2002, then
the premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Senior
Notes.

The Holders of a majority in aggregate principal amount of the Senior Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Senior Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of principal or premium, if any, interest or Liquidated Damages,
if any on the Senior Notes.

The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

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No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Senior Notes, the Subsidiary Guarantees, the Indenture or the Proceeds Pledge
and Escrow Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Senior Notes by accepting a
Senior Note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Senior Notes. Such waiver may not
be effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.

Legal Defeasance and Covenant Defeasance

The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Senior Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Senior Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Senior Notes when such payments are due
from the trust referred to below, (ii) the Company's obligations with respect to
the Senior Notes concerning issuing temporary Senior Notes, registration of
Senior Notes, mutilated, destroyed, lost or stolen Senior Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Senior Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Senior Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Senior Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Senior Notes on the stated
maturity or on the applicable redemption date, as the case may be, and the
Company must specify whether the Senior Notes are being defeased to maturity or
to a particular redemption date; (ii) in the case of Legal Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Senior Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Senior Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would

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have been the case if such Covenant Defeasance had not occurred; (iv) no Default
or Event of Default shall have occurred and be continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing
of funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance will not result in a breach or violation of, or constitute a default
under any material agreement or instrument (other than the Indenture) to which
the Company or any of its Restricted Subsidiaries is a party or by which the
Company or any of its Restricted Subsidiaries is bound; (vi) the Company must
have delivered to the Trustee an opinion of counsel to the effect that after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (vii) the Company must deliver to the
Trustee an Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Senior Notes over the other
creditors of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and (viii) the Company must
deliver to the Trustee an Officers' Certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.

Transfer and Exchange

A Holder may transfer or exchange Senior Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any New Note selected for redemption. Also, the Company is not required to
transfer or exchange any New Note for a period of 15 days before a selection of
Senior Notes to be redeemed.

The registered Holder of a Senior Note will be treated as the owner of it
for all purposes.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the Indenture,
the Senior Notes or the Proceeds Pledge and Escrow Agreement may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Senior Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Senior Notes), and any existing default or compliance with any
provision of the Indenture, the Senior Notes or the Proceeds Pledge and Escrow
Agreement may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Senior Notes (including consents
obtained in connection with a tender offer or exchange offer for Senior Notes).

Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Senior Notes held by a non-consenting Holder): (i) reduce
the principal amount of Senior Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the principal of or change the fixed maturity
of any New Note or alter the provisions with respect to the redemption of the
Senior Notes (other than provisions relating to the covenants described above
under the caption " -- Repurchase at the Option of Holders" and certain
provisions set forth under the caption "-- Proceeds Pledge and Escrow
Agreement"), (iii) reduce the rate of or change the time for payment of interest
on any New Note, (iv) waive a Default or Event of Default in the

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payment of principal of or premium, if any, or interest or Liquidated Damages,
if any, on the Senior Notes (except a rescission of acceleration of the Senior
Notes by the Holders of at least a majority in aggregate principal amount of the
Senior Notes and a waiver of the payment default that resulted from such
acceleration), (v) make any New Note payable in money other than that stated in
the Senior Notes, (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders of Senior Notes to
receive payments of principal of or premium, if any, or interest or Liquidated
Damages, if any, on the Senior Notes, (vii) waive a redemption payment with
respect to any New Note (other than a payment required by one of the covenants
described above under the caption " -- Repurchase at the Option of Holders" and
certain provisions set forth under the caption "-- Proceeds Pledge and Escrow
Agreement") or (viii) make any change in the foregoing amendment and waiver
provisions. In addition, any amendment to the covenants described under the
caption " -- Proceeds Pledge and Escrow Agreement," including the related
definitions will require the consent of the Holders of at least 75% in aggregate
principal amount of the Senior Notes then outstanding if such amendment would
adversely affect the rights of Holders of Senior Notes.

Notwithstanding the foregoing, without the consent of any Holder of Senior
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Senior Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Senior Notes in addition to or in place of certificated Senior
Notes, to provide for the assumption of the Company's obligations to Holders of
Senior Notes in the case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders of Senior Notes
or that does not adversely affect the legal rights under the Indenture of any
such Holder, or to comply with requirements of the Commission in order to effect
or maintain the qualification of the Indenture under the Trust Indenture Act.

Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.

The Holders of a majority in principal amount of the then outstanding
Senior Notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder of Senior Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.

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Additional Information

Anyone who receives this Prospectus may obtain a copy of the Indenture,
Proceeds Pledge and Escrow Agreement and Registration Rights Agreement without
charge by writing to InterAmericas Communication Corporation, 2600 Douglas Road,
Suite 501, Coral Gables, Florida 33134, Attention: Chief Financial Officer.

Registration Rights; Liquidated Damages

The Company and the Initial Purchaser entered into the Registration Rights
Agreement on the Closing Date. Pursuant to the Registration Rights Agreement,
the Company agreed to file with the Commission the Exchange Offer Registration
Statement on the appropriate form under the Securities Act with respect to the
Senior Notes. Upon the effectiveness of the Exchange Offer Registration
Statement, the Company will offer to the Holders of Transfer Restricted
Securities pursuant to the Exchange Offer who are able to make certain
representations the opportunity to exchange their Transfer Restricted Securities
for New Senior Notes. If (i) the Company is not permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any Holder of Transfer Restricted Securities notifies
the Company prior to the 20th day following consummation of the Exchange Offer
that (A) it is prohibited by law or Commission policy from participating in the
Exchange Offer or (B) that it may not resell the Senior Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales or (C) that it is a broker-dealer and
owns Senior Notes acquired directly from the Company or an affiliate of the
Company, the Company will file with the Commission a Shelf Registration
Statement to cover resales of the Senior Notes by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. The Company will use its best
efforts to cause the applicable registration statement to be declared effective
as promptly as possible by the Commission. For purposes of the foregoing,
"Transfer Restricted Securities" means each Senior Note until (i) the date on
which such Senior Note has been exchanged by a person other than a broker-dealer
for a new Senior Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of an existing Senior Note for a new Senior
Note, the date on which such new Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Senior Note has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Senior Note is distributed to the public pursuant to Rule 144
under the Act.

The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 45
days after the Closing Date, (ii) the Company will use its best efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 120 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, New Senior Notes in exchange for all
Senior Notes tendered prior thereto in the Exchange Offer and (iv) if obligated
to file the Shelf Registration Statement, the Company will use its best efforts
to file the Shelf Registration Statement with the Commission on or prior to 45
days after such filing obligation arises and to cause the Shelf Registration to
be declared effective by the Commission on or prior to 120 days after such
obligation arises. If (a) the Company fails to file

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any of the Registration Statements required by the Registration Rights Agreement
on or before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), or (c) the
Company fails to consummate the Exchange Offer within 30 business days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Company will pay Liquidated Damages to each Holder of Existing Notes,
with respect to the first 90-day period immediately following the occurrence of
the first Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Existing Notes held by such Holder. The amount of the
Liquidated Damages will increase by an additional $.05 per week per $1,000
principal amount of Existing Notes with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Existing
Notes. All accrued Liquidated Damages will be paid by the Company on each
Damages Payment Date to the Global Note Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated
Securities by wire transfer to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.

Holders of Senior Notes are required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and are required to deliver information to be
used in connection with the Shelf Registration Statement and to provide comments
on the Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Senior Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.

"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management

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or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; provided that beneficial ownership of 5% or more of
the voting securities of a Person shall be deemed to be control.

"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business (provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole will be governed by
the provisions of the Indenture described above under the caption "-- Repurchase
at the Option of Holders -- Change of Control" and/or the provisions described
above under the caption "-- Certain Covenants -- Merger, Consolidation or Sale
of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests of
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions (a) that
have a fair market value in excess of $1.0 million or (b) for net proceeds in
excess of $1.0 million. Notwithstanding the foregoing: (i) a transfer of assets
by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned
Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary,
(iii) a Restricted Payment that is permitted by the covenant described above
under the caption "-- Certain Covenants -- Restricted Payments," and (iv) sales
of property or equipment that has become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be, will not be deemed to be Asset
Sales.

"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).

"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.

"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.

"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any domestic commercial bank having
capital and surplus in excess of $500 million and a Thompson Bankwatch, Inc.
rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses

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(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within six months after the date of
acquisition.

"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), (ii) the sale, lease, transfer, conveyance or other
disposition (other than to the Company or a Wholly Owned Restricted Subsidiary
of the Company), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries,
taken as a whole, that are related or ancillary to the business conducted by the
Company and its Restricted Subsidiaries in Peru to any "person" (as defined
above), (iii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iv) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
35% of the Voting Stock of the Company (measured by voting power rather than
number of shares) or (iv) the first day on which a majority of the members of
the Board of Directors of the Company are not Continuing Directors.

"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended to the

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Company by such Restricted Subsidiary without prior governmental approval (that
has not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its stockholders.

"Consolidated Indebtedness" means, with respect to any Person as of any
date of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the total
amount of Indebtedness of any other Person, to the extent that such Indebtedness
has been guaranteed by the referent Person or one or more of its Restricted
Subsidiaries, plus (iii) the aggregate liquidation value of all Disqualified
Stock of such Person and all preferred stock of Restricted Subsidiaries of such
Person, in each case, determined on a consolidated basis in accordance with
GAAP.

"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof,
(ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent
that the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.

"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.

"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

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"Credit Facility" means, with respect to the Company or any of its
Restricted Subsidiaries, one or more debt facilities or commercial paper
facilities with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.

"Current Market Value" means, with respect to any shares of Qualified
Capital Stock, (i) the last reported bid price of such Qualified Capital Stock
on the principal national securities exchange on which such Qualified Capital
Stock is then being traded on the fifth Business Day following the consummation
of the acquisition of the applicable Permitted Business or (ii) if such
Qualified Capital Stock is not then listed or traded on a national securities
exchange, the value as determined in good faith by the board of directors of the
issuer of such Qualified Capital Stock (whose determination shall be supported
by a concurring valuation opinion from a nationally recognized investment
banking firm if such Current Market Value exceeds $5.0 million).

"Debt to Cash Flow Ratio" means, as of any date of determination, the ratio
of (a) the Consolidated Indebtedness of the Company as of such date to (b) the
Consolidated Cash Flow of the Company for the four most recent full fiscal
quarters ending immediately prior to such date for which internal financial
statements are available, determined on a pro forma basis after giving effect to
all acquisitions or dispositions of assets made by the Company and its
Restricted Subsidiaries from the beginning of such four-quarter period through
and including such date of determination (including any related financing
transactions) as if such acquisitions and dispositions had occurred at the
beginning of such four-quarter period. In addition, for purposes of calculating
Consolidated Cash Flow for the computation referred to above, (i) acquisitions
that have been made by the Company or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related financing
transactions, during the four-quarter reference period or subsequent to such
reference period and on or prior to the date on which the event for which the
calculation of the Debt to Cash Flow Ratio is made (the "Calculation Date")
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the definition
of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded.

"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.

"Designated Equity Proceeds" means any net cash proceeds received by the
Company after the date of the Indenture from the issuance and sale of its
Qualified Capital Stock (other than Qualified Capital Stock sold to a Subsidiary
of the Company) providing the basis for (i) a redemption of Senior Notes in a
transaction consummated in compliance with the second paragraph of the section
captioned "-- Optional Redemption," (ii) an addition to the cumulative account
calculated pursuant to clause (c) of the first paragraph of the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments,"
(iii) the incurrence of additional Indebtedness pursuant to clause (v) of the
second paragraph of the covenant described above under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" or (iv)
an Investment pursuant to clause (f) of the definition of "Permitted
Investments," in each case, as designated by a written resolution of the Board
of Directors of the Company filed with the Trustee on or prior to the date on
which such net cash proceeds are received by the

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Company. In no event shall the same net cash proceeds be treated as Designated
Equity Proceeds for more than one purpose under the Indenture. Once designated
for a particular purpose, such net cash proceeds may not be redesignated for an
alternative purpose. In addition, to the extent that any such Qualified Capital
Stock ceases to be outstanding for any reason, any Indebtedness, Restricted
Payment or Investment that was incurred or made as a result of the receipt of
net cash proceeds from the issuance of such Qualified Capital Stock shall cease
(as of the date on which such Qualified Capital Stock ceases to be outstanding)
to be permitted by virtue of the issuance of such Qualified Capital Stock.

"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Senior Notes mature.

"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

"Existing Indebtedness" means up to $1.0 million in aggregate principal
amount of (a) Indebtedness of the Company and its Restricted Subsidiaries in
existence on the date of the Indenture and (b) Acquired Debt incurred by the
Company and its Restricted Subsidiaries in connection with the Iusatel
Acquisition, until such amounts are repaid.

"Fair Market Value" means, with respect to assets, Equity Interests or any
other securities having a fair market value (a) of less than $5.0 million, the
fair market value of such assets, Equity Interests or any other securities
determined in good faith by the Board of Directors of the Company (including a
majority of the Independent Directors thereof) and evidenced by a board
resolution and (b) equal to or in excess of $5.0 million, the fair market value
of such assets, Equity Interests or any other securities as determined by an
investment banking firm of national standing; provided that the fair market
value of the assets purchased in an arm's-length transaction by an Affiliate of
the Company (other than a Subsidiary) from a third party that is not also an
Affiliate of the Company or such purchaser and contributed to the Company within
five Business Days of the consummation of the acquisition of such assets by such
Affiliate shall be deemed to be the aggregate consideration paid by such
Affiliate (which may include the fair market value of any non-cash consideration
to the extent that the valuation requirements of this definition are complied
with as to any such non-cash consideration); provided, further, that the fair
market value of Equity Interests issued and sold to the public in a registered
public offering or to one or more Strategic Equity Investors shall be deemed to
be the aggregate cash consideration paid to the Company in such public offering
or by such Strategic Equity Investors.

"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.

"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States of America is
pledged.

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"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

"Hedging Obligation" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements and other agreements and
arrangements designed to protect such Person against fluctuations in interest
rates and (ii) foreign exchange swap agreements, foreign exchange option
agreements, foreign exchange futures agreements and other agreements and
arrangements designed to protect such Person against fluctuations in foreign
currency exchange rates.

"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.

"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Subsidiary of the Company sells or otherwise disposes of
any Equity Interests of any direct or indirect Subsidiary of the Company such
that, after giving effect to any such sale or disposition, such Person is no
longer a Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the penultimate paragraph of the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments."

"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

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"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).

"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
in connection with such Asset Sale, and any reserve for adjustment in respect of
the sale price of such asset or assets established in accordance with GAAP.

"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary (i) as
to which neither the Company nor any of its Restricted Subsidiaries (a) provides
credit support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise) or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Senior Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.

"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

"Permitted Business" means any Telecommunications Business that operates
primarily in Latin American or Caribbean markets or any Telecommunications
Business reasonably related or ancillary thereto.

"Permitted Investments" means (a) any Investment in the Company or in a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business; (b) any Investment in Cash Equivalents; (c) any Investment by the
Company in a Person, if as a result of such Investment (i) such Person becomes a
Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted
Business or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Wholly Owned Restricted Subsidiary of the
Company and that is engaged in a Permitted Business; (d) any Restricted
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with the covenant

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described above under the caption "-- Repurchase at the Option of Holders --
Asset Sales;" (e) any acquisition of assets solely in exchange for the issuance
of Equity Interests (other than Disqualified Stock) of the Company; (f)
Investments (measured as of the time made and without giving effect to
subsequent changes in value) in a Person engaged in a Permitted Business, having
an aggregate fair market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (f) that are at
the time outstanding, not to exceed the sum of (A) $5.0 million plus (B) 100% of
the aggregate net cash proceeds received by the Company after the date of the
Indenture from the issuance and sale of its Qualified Capital Stock to the
extent that such net cash proceeds have been, and continue to be, designated as
Designated Equity Proceeds to be applied to make Investments pursuant to this
clause (f) as provided in the definition thereof; provided that, to be extent
that any such Qualified Capital Stock ceases to be outstanding for any reason,
any Investment that was made as a result of the receipt of net cash proceeds
from the issuance of such Qualified Capital Stock shall cease to be permitted by
virtue of this clause (f) as of the date on which such Qualified Capital Stock
ceases to be outstanding; (g) any Investment in prepaid expenses, negotiable
instruments held for collection, and lease, utility, workers' compensation,
performance and other similar deposits; (h) loans and advances to employees made
in the ordinary course of business in an aggregate amount not to exceed $1.0
million at any one time outstanding; and (i) Investments made in connection with
Hedging Obligations.

"Permitted Liens" means, without duplication, each of the following:

(i) Liens in favor of the Company or any of its Wholly Owned Restricted
Subsidiaries;

(ii) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Restricted Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or such Restricted
Subsidiary;

(iii) Liens on property existing at the time of acquisition thereof by the
Company or any Restricted Subsidiary of the Company, provided that such Liens
were in existence prior to the contemplation of such acquisition;

(iv) Liens existing on the date of the Indenture;

(v) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business;

(vi) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;

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(vii) Liens securing Indebtedness of any Restricted Subsidiary of the
Company that does not exceed $5.0 million at any one time outstanding
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case incurred for the purpose of financing all or any part
of the purchase price or cost of construction or improvement of property, plant
or equipment used in the business of such Restricted Subsidiary;

(viii) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;

(ix) Liens created pursuant to the Proceeds Pledge and Escrow Agreement;

(x) Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Restricted Subsidiary;

(xi) Liens securing the Senior Notes;

(xii) easements, rights-of-way, zoning and similar restrictions and other
similar encumbrances or title defects which, in the aggregate, are not material
in amount, and which do not, in any case, materially detract from the value of
the property subject thereto (as such property is used by the Company or any of
its Restricted Subsidiaries) or interfere with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries;

(xiii) Liens arising by reason of any judgment, decree or order or any
court so long as such Lien is adequately bonded and any appropriate legal
proceedings that may have been initiated for the review of such judgment, decree
or order shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;

(xiv) any interest or title of a lessor under any Capital Lease Obligation;
and

(xv) any extension, renewal or replacement, in whole or in part, of any
Permitted Lien, provided that any such extension, renewal or replacement shall
be no more restrictive in any material respects that the Lien so extended,
renewed or replaced and shall not extend to any additional property or assets.

"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Subsidiaries; provided
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the

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final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Senior Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Senior Notes on terms
at least as favorable to the Holders of Senior Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

"Principals" means Patricio E. Northland, the current President of the
Company, and Douglas G. Geib II, the current Chief Financial Officer of the
Company.

"Proceeds Pledge and Escrow Agreement" means the Proceeds Pledge and Escrow
Agreement, dated as of the date of the Indenture, by and between the Company and
the Trustee, as Collateral Agent, governing the disbursement of funds from the
Pledge Account and the Collateral Account.

"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) or trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).

"Restricted Investment" means an Investment other than a Permitted
Investment.

"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.

"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.

"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

"Strategic Equity Investor" means a corporation, partnership or other
entity engaged in one or more Telecommunications Businesses that has, or 80% or
more of the voting power of the Capital Stock of which is owned by a Person that
has an equity market capitalization, at the time of its initial Investment in
the Company, in excess of $2.0 billion.

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"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity (x) of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) or (y) which such Person either alone or together with one
or more Restricted Subsidiaries of such Person has the absolute right, pursuant
to law, contract or otherwise, to direct the payment of dividends or the making
of other distributions, loans or advances by such corporation, association or
other business entity and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).

"Subsidiary Guarantee" means any guarantee of payment of the Senior Notes
by a Subsidiary issued by such Subsidiary pursuant to the covenant described
above under the caption "-- Certain Covenants -- Limitations on Issuances of
Guarantees of Indebtedness by Subsidiaries."

"Telecommunications Business" means any business that derives substantially
all of its revenue from the business of (i) transmitting, or providing services
relating to the transmission of, voice, video or data through owned or leased
transmission facilities, (ii) creating, developing or marketing communications
related network equipment for use in a telecommunications business or (iii)
evaluating, participating in or pursuing any other activity or opportunity that
is primarily related to those identified in (i) or (ii) above; provided that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the Board of Directors of the Company.

"Unrestricted Subsidiary" means any Subsidiary (other than any Subsidiary
of the Company that owns all or a material portion of the assets (i) owned by
the Company or any Subsidiary of the Company on the date of the Indenture or
(ii) owned by any Person described in this Prospectus under the caption "The
Iusatel Acquisition" on the date of the acquisition by the Company of such
Person) that is designated by the Board of Directors as an Unrestricted
Subsidiary pursuant to a Board Resolution; but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "-- Certain Covenants -- Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing

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requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption "--
Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred
Stock," the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," calculated on a pro forma basis
as if such designation had occurred at the beginning of the four-quarter
reference period, and (ii) no Default or Event of Default would be in existence
following such designation.

"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.

"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than (i) directors' qualifying shares or
(ii) shares of non-U.S. Restricted Subsidiaries held by non-U.S. nationals as
required by the laws of the jurisdiction of incorporation of such non-U.S.
Restricted Subsidiary) shall at the time be owned by such Person or by one or
more Wholly Owned Restricted Subsidiaries of such Person; provided, that no
Restricted Subsidiary of such Person, all of the outstanding Capital Stock or
other ownership interests of which are not owned by such Person, shall in any
case be a "Wholly Owned Restricted Subsidiary" under the Indenture unless such
Person either alone or together with one or more Wholly Owned Restricted
Subsidiaries of such Person has the absolute right, pursuant to law, contract or
otherwise, to direct the payment of dividends or the making of other
distributions, loans or advances by such Restricted Subsidiary.

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DESCRIPTION OF CAPITAL STOCK

The following statements are qualified in their entirety by reference to
ICCA's Certificate of Incorporation and By-laws, copies of which are available
from the Company.

The authorized capital stock of ICCA consists of 50,000,000 shares of
Common Stock and 10,000,000 shares of Preferred Stock.

COMMON STOCK

As of March 10, 1998, there were 19,084,300 outstanding shares of Common
Stock held of record by approximately 200 persons or entities. Holders of the
Common Stock are entitled to cast one vote for each share held of record on all
matters acted upon at any meeting of ICCA's shareholders. Holders of Common
Stock are entitled to receive ratably such dividends if and when declared by the
Board of Directors out of funds legally available therefor, subject to
preferences that may be applicable to any outstanding Preferred Stock. There are
no cumulative voting rights, the absence of which will, in effect, allow the
holders of a majority of the outstanding shares of the Common Stock to elect all
of the directors then standing for election. In the event of any liquidation,
dissolution or winding up of ICCA, each holder of Common Stock will be entitled
to participate, subject to the rights of any outstanding Preferred Stock,
ratably in all assets of ICCA remaining after payment of liabilities. Holders of
Common Stock have no preemptive or conversion rights. All outstanding shares of
Common Stock are fully paid and non-assessable.

PREFERRED STOCK

As of March 10, 1998, there were no outstanding shares of Preferred Stock.
The Board of Directors has the authority to issue shares of Preferred Stock in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, redemption rights, liquidation preferences and the number of shares
constituting any series, without any further vote or action by the shareholders.
The issuance of Preferred Stock with voting and conversion rights may adversely
affect the voting power of the holders of Common Stock. In addition, because the
terms of such Preferred Stock may be fixed by the Board of Directors without
shareholder action, the Preferred Stock could be designated and issued quickly
in the event ICCA requires additional equity capital. The Preferred Stock could
also be designated and issued with terms calculated to defeat a proposed
take-over of the Company or with terms that may have the effect of delaying,
deferring or preventing a change of control of ICCA. Under certain
circumstances, this could have the effect of decreasing the market price of the
Common Stock.

FEBRUARY 1997 WARRANTS

ICCA has outstanding warrants (the "February 1997 Warrants") to purchase an
aggregate of 100,000 shares of Common Stock, exercisable through February 2,
2002 at an exercise price of $5.00 per share, which price is subject to
adjustment under certain circumstances. The February 1997 Warrants were issued
in connection with the private placement of $1.5 million aggregate principal
amount of the 7% Convertible Debentures.

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<PAGE>

MAY 1997 WARRANTS

ICCA has outstanding warrants (the "May 1997 Warrants") to purchase an
aggregate of 20,000 shares of Common Stock, exercisable through June 30, 2002 at
an exercise price of $2.37 per share, which price is subject to adjustments
under certain circumstances. The May 1997 Warrants were issued in connection
with the private placement of $2.0 million aggregate principal amount of the 8%
Convertible Debentures.

TELEPORT CHILE UNIT WARRANTS

ICCA has outstanding warrants (the "Teleport Warrants") to purchase an
aggregate of 388,900 shares of Common Stock of ICCA, exercisable through June
30, 1998, at an exercise price of $3.00 a share or at a price at which any of
ICCA's Common Stock is sold through a private placement or registered offering
through the expiration date of the Teleport Warrants. The Teleport Warrants were
issued in connection with the assignment to Teleport Chile of a loan in the
aggregate principal amount of $1.0 million made to the Company by Cablex
Electronique Ltd. dated July 8, 1994.

VISAT NOTE WARRANTS

ICCA has outstanding warrants (the "VISAT Note Warrants") to purchase an
aggregate of 200,000 shares of Common Stock at an exercise price of $3.50 a
share. The VISAT Note Warrants were issued in connection with a loan to ICCA
dated May 2, 1995.

BRIDGE WARRANTS

The Company has outstanding warrants (the "Bridge Warrants") to purchase an
aggregate of 95,000 shares of Common Stock at exercise prices between $2.56 and
$3.06 per share. The Bridge Warrants were issued in connection with the Bridge
Notes.

UNIT WARRANTS

The Company has outstanding Unit Warrants to purchase an aggregate of
5,250,000 shares of Common Stock. The Unit Warrants were issued pursuant to a
Unit Warrant Agreement (the "Unit Warrant Agreement") between the Company and
State Street Bank and Trust Company, as Unit Warrant Agent (the "Unit Warrant
Agent"), a copy of which is available for inspection at InterAmericas
Communication Corporation, 2600 Douglas Road, Suite 501, Coral Gables, Florida
33134, Attn: Chief Financial Officer. The following summary of certain
provisions of the Unit Warrant Agreement does not purport to be complete and is
qualified in its entirety by reference to the Unit Warrant Agreement, including
the definitions therein of certain terms used below.

General
- -------

Each Unit Warrant, when exercised, will entitle the holder thereof to
receive one fully paid and non-assessable share of Common Stock of the Company,
par value $.001 per share ("Unit Warrant Share"), at an exercise price of $4.40
per share, subject to adjustment (the "Exercise Price"). The Exercise Price and
the number of Unit Warrant Shares are both subject to adjustment in certain
cases referred to below. The Unit Warrants will entitle the holders thereof to
purchase in

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<PAGE>

the aggregate 5,250,000 Unit Warrant Shares, or approximately 15.2% of the
Company's Common Stock on a fully diluted basis as of the closing of the
Offering.

The Unit Warrants will become exercisable after the Separation Date. Unless
exercised, the Unit Warrants will automatically expire on October 27, 2007 (the
"Expiration Date"). The Company will give notice of expiration not less than 90
and not more than 120 days prior to the Expiration Date to the registered
holders of the then outstanding Unit Warrants. If the Company fails to give such
notice, the Unit Warrants will not expire until 90 days after the Company gives
such notice. In no event will holders be entitled to any damages or other remedy
for the Company's failure to give such notice other than any such extension.

The Unit Warrants may be exercised by surrendering to the Company the
warrant certificates evidencing the Unit Warrants to be exercised with the
accompanying form of election to purchase properly completed and executed,
together with payment of the Exercise Price. Payment of the Exercise Price may
be made (A) by tendering Senior Notes having an aggregate principal amount, plus
accrued and unpaid interest, if any, thereon, to the date of exercise equal to
the Exercise Price, (B) by tendering Unit Warrants having a fair market value
(as determined in good faith by the Company's Board of Directors) equal to the
Exercise Price or (C) by a combination of Senior Notes and Unit Warrants. Upon
surrender of the warrant certificate and payment of the Exercise Price, the
Company will deliver or cause to be delivered, to or upon the written order of
such holder, stock certificates representing the number of whole shares of
Common Stock to which the holder is entitled. If less than all of the Unit
Warrants evidenced by a warrant certificate are to be exercised, a new warrant
certificate will be issued for the remaining number of Unit Warrants.

No fractional shares of Common Stock will be issued upon exercise of the
Unit Warrants. The Company will pay to the holder of the Unit Warrant at the
time of exercise an amount in cash equal to the current market value of any such
fractional share of Common Stock less a corresponding fraction of the Exercise
Price.

The holders of the Unit Warrants will have no right to vote on matters
submitted to the stockholders of the Company and will have no right to receive
dividends. The holders of the Unit Warrants will not be entitled to share in the
assets of the Company in the event of liquidation, dissolution or the winding up
of the Company. In the event of bankruptcy or reorganization is commenced by or
against the Company, a bankruptcy court may hold \that unexercised Unit Warrants
are executory contracts which may be subject to rejection by the Company with
approval of the bankruptcy court, and the holders of the Unit Warrants may, even
if sufficient funds are available, receive nothing or a lesser amount as a
result of any such bankruptcy case than they would be entitled to if they had
exercised their Unit Warrants prior to the commencement of any such case.

In the event of a taxable distribution to holders of Common Stock that
results in an adjustment to the number of shares of Common Stock or other
consideration for which a Unit Warrant may be exercised, the holders of the Unit
Warrants may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend.

Adjustments
- -----------

The number of shares of Common Stock purchasable upon exercise of Unit
Warrants and the Exercise Price will be subject to adjustment in certain events
including: (i) the payment by the Company of dividends and other distributions
on its Common Stock in Common Stock, (ii)

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<PAGE>

subdivisions, combinations and reclassifications of the Common Stock, (iii) the
issuance to all holders of Common Stock of rights, options or warrants entitled
them to subscribe for Common Stock or securities convertible into, or
exchangeable or exercisable for, Common Stock at an offering price (or with an
initial conversion, exchange or exercise price) which is less than the Fair
Value per share (as defined) of Common Stock, (iv) the distribution to all
holders of Common Stock of any of the Company's assets (including cash), debt
securities, preferred stock or any rights or warrants to purchase any such
securities (excluding those rights and warrants referred to in clause (iii)
above), (v) the issuance of shares of Common Stock for a consideration per share
less than the Fair Value per share of Common Stock (excluding securities issued
in transactions referred to in clauses (i) through (iv) above), (vi) the
issuance of securities convertible into or exchangeable for Common Stock for a
conversion or exchange price plus consideration received upon issuance less than
the Fair Value per share of Common Stock (excluding securities issued in
transactions referred to in clauses (i) through (iv) above), and (vii) certain
other events that could have the effect of depriving holders of the Unit
Warrants of the benefit of all or a portion of the purchase rights evidenced by
the Unit Warrants.

"Fair Value" per security at any date of determination shall be (l) in
connection with a sale to a party that is not an Affiliate of the Company in an
arm's-length transaction (a "Non-Affiliate Sale"), the price per security at
which such security is sold and (2) in connection with any sale to an Affiliate
of the Company, (a) the last price per security at which such security was sold
in a Non-Affiliate Sale within the three-month period preceding such date of
determination or (b) if clause (a) is not applicable, the fair market value of
such security determined in good faith by a nationally recognized investment
banking, appraisal or valuation firm, which is not an Affiliate of the Company,
in each case, taking into account, among all other factors deemed relevant by
the Board of Directors or such investment banking, appraisal or valuation firm,
the trading price and volume of such security on any national securities
exchange or automated quotation system on which such security is traded.

No adjustment in the Exercise Price will be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Exercise Price; provided however, that any adjustment that is not made will be
carried forward and taken into account in any subsequent adjustment.

In the case of certain consolidations or mergers of the Company, or the
sale of all or substantially all of the assets of the Company to another
corporation, each Unit Warrant will thereafter be exercisable for the right to
receive the kind and amount of shares of stock or other securities or property
to which such holder would have been entitled as a result of such consolidation,
merger or sale had the Unit Warrants been exercised immediately prior thereto.

Reservation of Shares
- -----------------------

The Company has authorized and reserved for issuance and will at all times
reserve and keep available such number of shares of Common Stock as will be
issuable upon the exercise of all outstanding Unit Warrants. Such shares of
Common Stock, when paid for and issued, will be duly and validly issued, fully
paid and non-assessable, free of preemptive rights and free from all taxes,
liens, charges and security interests with respect to the issuance thereof.

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<PAGE>

Amendments
- ----------

From time to time, the Company and the Warrant Agent, without the consent
of the holders of the Unit Warrants, may amend or supplement the Warrant
Agreement for certain purposes, including curing defects or inconsistencies or
making any change that does not materially adversely affect the rights of any
holder. Any amendment or supplement to the Warrant Agreement that has a material
adverse effect on the interests of the holders of the Unit Warrants will require
the written consent of the holders of a majority of the then outstanding Unit
Warrants (excluding Unit Warrants held by the Company or any of its Affiliates).
The consent of each holder of the Unit Warrants affected will be required for
any amendment pursuant to which the Exercise Price would be increased or the
number of shares of Common Stock purchasable upon exercise of Unit Warrants
would be decreased (other than pursuant to adjustments provided in the Warrant
Agreement).

Registration Rights
- --------------------

The holders of the Unit Warrants and the Unit Warrant Shares are entitled
to certain rights with respect to the registration of the Unit Warrant Shares
under the Securities Act, including the right to have the Unit Warrant Shares
included in the Registration Statement of which this Prospectus forms a part.

TRANSFER AGENT AND REGISTRAR

The transfer agent for the Common Stock and warrant agent for the warrants
(other than the Unit Warrants) is OTC Transfer, Inc., Salt Lake City, Utah.

106
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this Offering, the Company will have outstanding
19,084,300 shares of Common Stock. All of such shares may be sold under Rule
144, subject to the volume and manner of sale limitations contained in Rule 144
and to the lock-up agreement referred to below.

During October 1997, the Company issued 851,162 shares of Common Stock in
connection with the conversion of $1.45 million aggregate principal amount of
its 8% Convertible Debentures, plus related accrued interest and issued 250,620
shares of Common Stock in connection with the conversion of $500,000 aggregate
principal amount of its 7% Convertible Debentures, plus, related accrued
interest.

All of the executive and directors and certain shareholders of ICCA were
deemed to beneficially own 8,922,083 shares of Common Stock (including options
to purchase 3,643,333 shares) upon consummation of the Senior Note Offering have
agreed not to sell, otherwise dispose of or pledge any shares of Common Stock or
securities convertible into or exercisable or exchangeable for such Common Stock
for a period of 180 days from the commencement of the Senior Note Offering
without the prior written consent of UBS Securities.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), who has beneficially owned restricted securities
within the meaning of Rule 144 ("Restricted Shares") for at least one year, is
entitled to sell within any three-month period a number of shares that does not
exceed the greater of (i) 1% of the then outstanding shares of Common Stock and
(ii) the average weekly trading volume of the Common Stock on the Nasdaq
SmallCap market during the four calendar weeks preceding the date on which
notice of the sale is filed with the Commission. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. Any person (or
persons whose shares are aggregated) who is not deemed to have been an
"affiliate" of the Company at any time during the 90 days preceding a sale, and
who owns restricted shares that were purchased from the Company (or any
affiliate) at least two years previously, will be entitled to sell such shares
under Rule 144(k) without regard to the volume limitations, manner of sale
provisions, public information requirements or notice requirements.

No prediction can be made as to the effect, if any, that future sales of
shares, the availability of shares for future sale, or the registration of
substantial amounts of currently restricted shares will have on the market price
of the Common Stock prevailing from time to time. Sales of substantial amounts
of Common Stock in the public market, under Rule 144, pursuant to the exercise
of registration rights or otherwise, and even the potential for such sales,
could have a material adverse effect on the prevailing market price of the
Common Stock and impair the Company's ability to raise capital through the sale
of its equity securities. See "Risk Factors -- Shares Eligible for Future Sale."

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PLAN OF DISTRIBUTION

The Shares are being offered hereby on behalf of the Selling Stockholders.
Except for the exercise price of the Selling Stockholders' warrants and options,
none of the proceeds from the sale of the Shares by the Selling Stockholders
pursuant to this Prospectus will be received by the Company. The Shares may be
sold or distributed by the Selling Stockholders or by donees, transferees or
pledges of, or the successors in interest to, the Selling Stockholders from time
to time in transactions for their own account, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may change, at market
prices prevailing at the time of sale, at prices relating to such prevailing
market prices or at negotiated prices. The sale of the Shares may be effected in
one or more of the following methods: (i) ordinary brokers' transactions, which
may include long or short sales; (ii) transactions involving cross or block
trades or otherwise on the Nasdaq Stock Market; (iii) purchases by brokers,
dealers or underwriters as principal and resale by such purchasers for their own
accounts pursuant to this Prospectus; (iv) "at the market" to or through market
makers or into established trading markets, including direct sales to purchasers
or sales effected through agents; or (v) any combination of the foregoing, or by
any other legally available means. In addition, the Selling Stockholders or
their successors in interest may enter into hedging transactions with
broker-dealers who may engage in short sales of the Shares in the course of
hedging the position they assume with the Selling Stockholders. The Selling
Stockholders or their successors in interest may also enter into option or other
transactions with broker-dealers that require the delivery by such
broker-dealers of the Shares, which Shares may be resold thereafter pursuant to
this Prospectus. There can be no assurance that all or any of the Shares will be
issued to, or sold by, the Selling Stockholders.

Brokers-dealers, underwriters or agents participating in the sale of the
Shares may receive compensation in the form of commissions, discounts or
concessions from the Selling Stockholders and/or purchasers of the Shares for
whom such broker-dealers may act as agent, or to whom they may sell as
principal, or both (which compensation to a particular broker-dealer may be less
than or in excess of customary commissions). The Selling Stockholders and any
broker-dealers or other persons who act in connection with the sale of the
Shares hereunder may be deemed to be "Underwriters" within the meaning of the
Securities Act, and any commission they receive and proceeds of any sale of the
Shares may be deemed to be underwriting discounts and commission under the
Securities Act. Neither the Company nor any Selling Stockholders can presently
estimate the amount of such compensation. The Company knows of no existing
arrangements between any Selling Stockholder any other stockholders, broker,
dealer, underwriter or agent relating to the sale or distribution of the Shares.

The Selling Stockholders and any other persons participating in the sale or
distribution of the Shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders or any other such persons. The foregoing may affect the
marketability of the Shares.

The Company will pay substantially all of the expenses incident to the
registration, offering and sale of the Shares to the public other than
commissions or discounts of underwriters, broker-dealers or agents. The Company
has also agreed to indemnify certain of the Selling Stockholders and certain
related persons against certain liabilities, including liabilities under the
Securities Act.

108
<PAGE>

LEGAL MATTERS

Legal matters with respect to the Common Stock offered hereby will be
passed upon for the Company by Baker & McKenzie, Miami, Florida.

109
<PAGE>

EXPERTS

The consolidated financial statements of InterAmericas Communications
Corporation and its subsidiaries as of December 31, 1996 and 1995 and for each
of the three years in the period ended December 31, 1997, included in this
Prospectus, have been so included in reliance on the report (which contain an
explanatory paragraph relating to the terms of transactions and relationships
with related parties as described in Note 4 to the Consolidated Financial
Statements) of Price Waterhouse LLP, independent certified public accountants,
given on the authority of said firm as experts in accounting and auditing.

110
<PAGE>

GLOSSARY OF DEFINED TERMS

ATM (Asynchronous Transfer Mode): An information transfer standard that is
one of a general class of packet technologies that relay traffic by way of an
address contained within the first five bytes of a standard 53 byte-long packet
or cell. The ATM format can be used by many different information systems,
including LANs, to deliver traffic at varying rates, permitting a mix of data,
voice and video.

Backbone: Refers to the major fiber cable carrying the accumulated
transmissions of many businesses connected to a network system. Similar to a
water main, the backbone is the high volume conduit for transmissions input by
multiple smaller connections (last-mile connections) from business offices.

Bandwidth: The range of frequencies that can be passed through a medium,
such as glass fibers, without distortion. The greater the bandwidth, the greater
the information carrying capacity of such medium. For fiber optic transmission,
electronic transmitting devices determine the bandwidth, not the fibers
themselves.

CAP (Competitive Access Provider): A company that provides its customers
with an alternative to the local telephone company for local transport of
private line, special access telecommunications services and switched access
services. CAPs are also referred to in the industry as alternative access
vendors, alternative local telecommunications service providers (ALTS) and
metropolitan area network providers (MANs).

Carrier's carrier: Refers to a telecommunications network that provides
wholesale telecommunications transmission to other major telecommunications
networks such as long distance, local and cellular telephone companies.

Centrex: Refers to the switching capability provided by a telephone
company's central office to a customer over telephone lines on a subscription
basis. Centrex allows a customer to receive such services as intra-office call
routing and voice mail from a telephone company's switch, thereby avoiding the
purchase of a private switch known as PBX.

CLEC (competitive local exchange carrier): A company that provides local
exchange services in competition with the incumbent local exchange carrier.

CTC: Compania de Telefonos de Chile, S.A., the PTT of Chile which was
privatized in 1987.

Dedicated lines: Telecommunications lines reserved for use by particular
customers along predetermined routes (in contrast to telecommunications lines
within the local telephone PTT's public switched network).

Digital: Describes a method of storing, processing and transmitting
information through the use of distinct electronic or optical pulses that
represent the binary digits 0 and 1. Digital transmission and switching
technologies employ a sequence of these pulses to represent information, as
opposed to the continuously variable analog signal. The precise digital numbers
preclude any distortion (such as graininess or snow, in the case of video
transmission, or static or other background distortion, in the case of audio
transmission).

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Drop and insert: Refers to a network's capability to share capacity among
users without dedicating any fiber strand to a single end user.

Earth station: A parabolic antenna and associated electronics for
receiving or transmitting satellite signals.

Enhanced services: Refers to private line services, and LAN and WAN
connectivity services.

Entel: Empresa Nacional de Telefonos, S.A. Privatized in 1989, Entel has
historically been Chile's national long distance company. Under the Multicarrier
Agreement, Entel is now licensed to provide all types of telecommunications
services within Chile.

ESN (Enhanced Services Network): The name used to describe the
communication services providing digital connectivity, primarily for data
applications via frame relay, ATV, or digital interexchange private line
facilities.

Fiber optics: Fiber optic technology involves sending laser light pulses
across glass strands in order to transmit digital information. Fiber optic cable
currently is the medium of choice for the telecommunications and cable
industries. Fiber is resistant to electrical interference and many environmental
factors that affect copper wiring and satellite transmission.

Frame relay: A form of data communications packet switching that uses
smaller packets and requires less error checking than traditional technologies
such as X.25 or SNA. Frame Relay is used in wide area networks to interconnect
LANs and computer systems. Frame Relay was designed to operate at higher speeds
on modern fiber optic networks.

Gateway Switch: A switch which is used to establish connection with other
carriers.

GHz or Gigahertz: A unit of frequency equal to one billion cycles or hertz
per second.

ILEC (incumbent local exchange carrier): The name used to describe a
company which is the principal local exchange carrier.

Interconnection: Interconnection of facilities between or among local
exchange carriers, including potential physical collocation of one carrier's
equipment in the other carrier's premises to facilitate such interconnection.

ISP (Internet Service Provider): The name used for those companies which
provide its subscribers with access to the Internet.

Internet: The name used to describe the global open network of computers
that permits a person with access to exchange information with any other
computer connected to the network.

LAN (Local Area Network): Refers to the interconnection of computers for
the purpose of sharing files, programs and printers. LANs may include dedicated
computers or file servers that provide a centralized source of shared files and
programs.

Last mile: A shorthand reference to the last section of a
telecommunications path to the ultimate end-user which may be less than or
greater than one mile.

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LEC (local exchange carrier): A company providing local telephone
services.

Long distance carriers (interexchange carriers): Long distance carriers
provide services between local exchanges on an interstate or intrastate basis. A
long distance carrier may offer services over its own or another carrier's
facilities.

Long exchange services: Services provided within a geographic area
determined by the appropriate state regulatory authority which calls are
transmitted without toll charges to the calling or called party.

Ministry of Transportation and Telecommunications: Chile's government body
which, through the Undersecretariat of Telecommunications, is responsible for
regulating and registering all telecommunications equipment and services. Its
role is equivalent to that of the Federal Communications Commission in the
United States.

Ministry of Transportation, Communications, Housing and Construction: The
Peruvian government entity with the authority to regulate telecommunications and
with the authority to grant concessions and licenses for telecommunications
service providers such as the Company.

Multicarrier Agreement: The legislation passed by Chile's Ministry of
Telecommunications in 1994 which opens Chile's long distance market to
competition while temporarily limiting the market share in that market which may
be held by the CTC.

Node: Devices on a network that demand or supply services or where
transmission paths are connected.

PBX (private branch exchange): A customer owned and operated switch on
customer premises, typically used by large businesses with multiple telephone
lines.

PDH (Plesiochronous Digital Hierarchy): Refers to a digital transmission
system that operates as a Time Division Multiplexing (TDM) system by combining
multiple signals of 2 Mbit/s through the use of a multiplexor that operates by
adding "dummy" bits (otherwise known as justification bits). The justification
bits are recognized as such when multiplexing occurs, and discarded as original
signals. This process is known as plesiosynchronous operation. The use of
plesiosynchronous operation has led to the adoption of the term
plesiosynchronous digital hierarchy, or PDH.

POPs (points of presence): Locations where a long distance carrier has
installed transmission equipment in a service area that serves as, or relays
calls to, a network switching center of that long distance carrier.

PTT (Public Telephone and Telegraph): A government or privately-owned
monopoly carrier of telecommunications services or having a dominant market
share such as CTC. Private Line: Refers to a private, dedicated
telecommunications connection between different locations (excluding long
distance carriers' POPs).

Public switched network: Refers to traditional public (not dedicated) LEC
networks that switch calls between different customers.

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Redundant electronics: Describes a telecommunications facility using two
separate electronic devices to transmit the telecommunications signal so that if
one device malfunctions, the signal may continue without interruption.

Right-of-way: Rights negotiated with the appropriate entity, such as a
utility company or transportation agency, to secure access to poles, ducts,
conduits or subway tunnels, as the case may be, to install the fiber optic
lines.

SONET (Synchronous Optical Network Technology): Refers to a set of
standards for optical communications transmission systems that define the
optical rates and formats, signal characteristics, performance, management and
maintenance information to be embedded within the signals and the multiplexing
techniques to be employed in optical communications transmission systems. SONET
facilitates the interoperability of dissimilar vendors equipment. SONET benefits
business customers by minimizing the equipment necessary for various
telecommunications applications and supports networking diagnostic and
maintenance features. Allows selective adding and dropping of signals.

Switch: A device that opens or closes circuits or selects the paths or
circuits to be used for transmission of information. Switching is the process of
interconnecting circuits to form a transmission path between users.

Switched services: Refers to transportation of switched traffic along
dedicated lines between the local telephone company's central offices and the
long distance carrier's POPs.

SDH (Synchronous digital hierarchy): An open standard for signals used in
optical fiber networks. It provides a basic data transport format that can be
used for all types of digital information (voice, video, data, facsimile and
graphics) and is used internationally. The specified base rate is 51.48 MBPS
(called synchronous transport signal level 1, or STS-1), and specifications
exist for data speeds up to 2.4 Gbps.

Teleport: Refers to a facility capable of transmitting and receiving
satellite signals for other users.

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ITEM 7. FINANCIAL STATEMENTS
- ---------------------------------

INDEX TO FINANCIAL STATEMENTS

PAGE
<S> <C>
INTERAMERICAS COMMUNICATIONS CORPORATION
Report of Independent Certified Public
Accountants. . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Balance Sheets as of December 31, 1996 and
1997 . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations for the years
ended December 31, 1995, 1996 and 1997 . . . . . . . . F-4
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1995, 1996 and.1997 . . . . . F-5
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1996 and 1997 . . . . . . . . F-6
Notes to Consolidated Financial Statements. . . . . . . F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of InterAmericas Communications Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
InterAmericas Communications Corporation and its subsidiaries at December 31,
1997 and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As described in Note 4, during 1996 and 1995, the Company had significant
transactions and relationships with related parties. Because of these
relationships, it is possible that the terms of these transactions may not be
the same as those that would result from transactions among among wholly
unrelated parties.

/s/ Price Waterhouse LLP
- ----------------------
Price Waterhouse LLP

Miami, Florida
March 2, 1998

F-2
<PAGE>
<TABLE>
<CAPTION>

INTERAMERICAS COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

DECEMBER 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
ASSETS

Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . $ 723 $ 13,705
Restricted cash . . . . . . . . . . . . . . . . . . . . - 59,659
Restricted investments. . . . . . . . . . . . . . . . . - 20,404
Accounts receivable, net of allowance of $168 in 1997 . 113 2,367
Prepaid expenses and other current assets . . . . . . . 491 1,208
--------- ---------
Total current assets. . . . . . . . . . . . . . 1,327 97,343

Restricted investments. . . . . . . . . . . . . . . . . . - 37,488
Telecommunications networks, net. . . . . . . . . . . . . 3,956 9,348
Intangible assets, net. . . . . . . . . . . . . . . . . . 5,029 10,881
Deferred financing costs. . . . . . . . . . . . . . . . . 42 14,971
--------- ---------
Total assets. . . . . . . . . . . . . . . . . . $ 10,354 $170,031
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . $ 299 $ 4,023
Accrued interest. . . . . . . . . . . . . . . . . . . . 83 3,797
Other accrued expenses. . . . . . . . . . . . . . . . . 591 1,709
Due to related parties. . . . . . . . . . . . . . . . . 416 263
Lease obligations, current. . . . . . . . . . . . . . . 114 313
Other current liabilities . . . . . . . . . . . . . . . 323 322
--------- ---------
Total current liabilities . . . . . . . . . . . 1,826 10,427

Senior notes, net . . . . . . . . . . . . . . . . . . . . - 131,626
Lease obligations, less current portion . . . . . . . . . 248 356
--------- ---------
Total liabilities . . . . . . . . . . . . . . . 2,074 142,409
--------- ---------

Commitments and contingencies . . . . . . . . . . . . . . - -
--------- ---------

Stockholders' equity
Preferred stock, $.001 par value, authorized 10,000,000
shares, none issued
Common stock, $.001 par value, authorized 50,000,000
shares, issued and outstanding as of December 31,
1996 and 1997 16,152,518 and
19,084,300 shares, respectively. . . . . . . . . . . 16 19
Additional paid in capital. . . . . . . . . . . . . . . 18,493 26,887
Warrants. . . . . . . . . . . . . . . . . . . . . . . . - 26,737
Accumulated deficit . . . . . . . . . . . . . . . . . . (10,151) (25,783)
Cumulative translation adjustments . . . . . . . . . . . (78) (238)
--------- ---------
Total stockholders' equity. . . . . . . . . . . 8,280 27,622
--------- ---------

Total liabilities and stockholders' equity. . . $ 10,354 $170,031
========= =========

<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>

F-3
<PAGE>
<TABLE>
<CAPTION>

INTERAMERICAS COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

YEAR ENDED DECEMBER 31,
------------------------------------------------
1995 1996 1997
------------- --------------- ----------------
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . $ 224 $ 652 $ 1,130
------------- --------------- ----------------
Operating expenses:
Cost of revenues . . . . . . . . . . . . . . 408 958 1,203
Selling, general and administrative. . . . . 1,906 3,272 5,265
Non-cash compensation and consulting
12 73 4,640
Depreciation and amortization. . . . . . . . 396 706 967
------------- --------------- ----------------
______2,722 __ _5,009 __ _12,075
------------- --------------- ----------------

Loss from operations . . . . . . . . . . . . . (2,498) (4,357) (10,945)

Interest expense . . . . . . . . . . . . . . . (319) (246) (5,934)
Interest income. . . . . . . . . . . . . . . . 10 80 1,315
Other expense, net . . . . . . . . . . . . . . (66) (103) (68)
------------- --------------- ----------------

Net loss . . . . . . . . . . . . . . . . . . . $ (2,873) $ (4,626) $ (15,632)
============= =============== ================

Net basic and diluted loss per share . . . . . $ (.31) $ (.31) $ (.94)
============= =============== ================
Weighted average common shares outstanding . .
9,407,000 14,795,660 16,667,719
============= =============== ================

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

F-4
<PAGE>
<TABLE>
<CAPTION>

INTERAMERICAS COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

ADDITIONAL ACCRUED CUMULATIVE
COMMON STOCK PAID-IN DISTRIBUTIONS ACCUMULATED TRANSLATION
--------------------
SHARES AMOUNTS CAPITAL AND WARRANT DEFICIT ADJUSTMENT TOTAL
---------- -------- -------- ------------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994 . . . . . . 6,316,024 $ 6 $ 2,637 $ (6,088) $ (2,652) $ (14) $ (6,111)

Common stock issued in private
placements. . . . . . . . . . . . . . . 635,761 1 1,962 - - - 1,963
Conversion of debt. . . . . . . . . . . . 4,888,900 5 1,126 6,088 - - 7,219
Stock issued for acquisitions . . . . . . 111,000 - 400 - - - 400
Imputed interest on related party
notes . . . . . . . . . . . . . . . . . - - 16 - - - 16
Stock option grants . . . . . . . . . . . - - 12 - - - 12
Currency translation adjustment . . . . . - - - - - 44 44
Net loss. . . . . . . . . . . . . . . . . - - - - (2,873) - (2,873)
---------- -------- -------- ------------- --------- ------------ ---------

Balances at December 31, 1995 . . . . . . 11,951,685 12 6,153 - (5,525) 30 670

Common stock issued in private
placements. . . . . . . . . . . . . . . 1,939,042 2 7,430 - - - 7,432
Conversion of debt. . . . . . . . . . . . 1,011,791 1 1,985 - - - 1,986
Stock issued for acquisitions . . . . . . 1,250,000 1 2,812 - - - 2,813
Imputed interest on related party
notes . . . . . . . . . . . . . . . . . - - 40 - - - 40
Stock option grants . . . . . . . . . . . - - 73 - - - 73
Currency translation adjustment . . . . . - - - - - (108) (108)
Net loss. . . . . . . . . . . . . . . . . - - - - (4,626) - (4,626)
---------- -------- -------- ------------- --------- ------------ ---------

Balances at December 31, 1996 . . . . . . 16,152,518 16 18,493 - (10,151) (78) 8,280

Conversion of debt. . . . . . . . . . . . 1,101,782 1 2,459 - - - 2,459
Stock issued to certain officers, related
parties and former directors . . . . . . 1,830,000 2 5,935 - - - 5,937
Warrants to purchase common stock .. . . - - - 26,737 - - 26,737
Currency translation adjustment . . . . . - - - - - (160) (160)
Net loss. . . . . . . . . . . . . . . . . - - - - (15,632) - (15,632)
---------- -------- -------- ------------- --------- ------------ ---------

Balances at December 31, 1997. . . . . . 19,084,300 $ 19 $ 26,887 $ 26,737 $(25,783) $ (238) $ 27,622
========== ======== ======== ============= ========= ============ =========

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

F-5
<PAGE>
<TABLE>
<CAPTION>

INTERAMERICAS COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- -------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . $ (2,873) $(4,626) (15,632)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense. . . . . . 396 706 967
Amortization of deferred financing costs and
original issue discounts . . . . . . . . . . . - - 518
Beneficial conversion features on convertible
debentures . . . . . . . . . . . . . . . . . . - - 466
Capitalized interest related to network
construction . . . . . . . . . . . . . . . . . - - (712)
Services exchanged for common stock. . . . . . . 12 73 852
Non-cash compensation and consulting expense . . - - 4,640
Interest converted to equity . . . . . . . . . . 183 49 45
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . (70) (105) (29)
Prepaid expenses and other current assets. . . 202 (197) (258)
Other assets . . . . . . . . . . . . . . . . . 76 (53) (64)
Accounts payable and accrued expenses. . . . . (4) 299 3,552
Due to related parties . . . . . . . . . . . . (66) (251) (179)
Other current liabilities. . . . . . . . . . . - 171 (105)
Deferred taxes . . . . . . . . . . . . . . . . (6) - -
--------- -------- ----------

Cash used in operating activities . . . . . (2,150) (3,934) (5,939)
--------- -------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of telecommunications network . . . . . . (720) (1,453) (2,763)
Acquisition of FirstCom Long Distance. . . . . . . - - (5,799)
Acquisition of Visat . . . . . . . . . . . . . . . (450) - -
Acquisition of FirstCom Networks . . . . . . . . . - (1,515) -
--------- -------- ----------

Cash used in investing activities . . . . . (1,170) (2,968) (8,562)
--------- -------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Senior Notes . . . . . . . . . . . . . - - 150,000
Deferred financing costs . . . . . . . . . . . . . - - (7,000)
Restricted cash and investments. . . . . . . . . . - - (117,551)
Net proceeds from convertible debentures . . . . . - - 1,950
Issuance of common stock . . . . . . . . . . . . . 1,963 7,430 -
Net proceeds from issuance of (repayments to)
notes payable and Bridge Notes . . . . . . . . . 893 (1,061) -
Additions to notes payable to related party. . . . 407 1,232 -
(Payments under) proceeds from leasing
obligations. . . . . . . . . . . . . . . . . . . - (31) 84
--------- -------- ----------

Cash provided by financing activities, net. 3, 263 7,570 27,483
--------- -------- ----------

Net increase (decrease) in cash and cash
equivalents. . . . . . . . . . . . . . . . . . . . (57) 668 12,982
Effect of exchange rate changes on cash. . . . . . . - (2) -
Cash and cash equivalents at beginning of year . . . 114 57 723
--------- -------- ----------
Cash and cash equivalents at end of year . . . . . . $ 57 $ 723 $ 13,705
========= ======== ==========

Supplemental cash flow information
Cash paid for interest. . . . . . . . . . . . . . . $ 2 $ 153 $ 545
========= ======== ==========
<FN>
Capital lease obligations of $221 and $172 were incurred in 1995 and 1996
respectively.

During 1997, the Company capitalized $712 of interest costs related to the
construction of a fiber optic network.

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

</TABLE>

F-6
<PAGE>

INTERAMERICAS COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THOUSANDS OF US DOLLARS, EXCEPT SHARE DATA)

1. ORGANIZATION AND BUSINESS FORMATION

InterAmericas Communications Corporation ("the Company") is a provider of
telecommunications services in Chile and Peru. The Company has historically
operated as a Latin American telecommunications development stage company which
has developed its operations in Latin America through the acquisition of holding
and operating companies that own licenses, concessions or rights-of-way in what
the Company believes to be attractive markets. The Company operates in Chile as
Visat, S.A. ("Visat"), FirstCom Networks, S.A. ("FirstCom Networks"), formerly
Hewster Chile, S.A., and FirstCom Long Distance, S.A. ("FirstCom Long
Distance"), formerly Iusatel Chile, S.A., and in Peru as Red de Servicios de
Telecomunicaciones, S.A. ("Resetel").

Visat holds a government concession to provide intermediate
telecommunications services, including the installation and operation of a
network of 12 satellite earth stations and a switch throughout Chile, which
allows the Company to transmit either "C" or "KU" bands for satellite
communications and broad band distribution. FirstCom Networks is engaged in the
development of a fiber optic network and provides various network installation
and systems integration services in Santiago, Chile. FirstCom Long Distance
provides domestic and international long distance services in Chile. FirstCom
Long Distance's long distance traffic switched and transported, in part, through
its own gateway switch and satellite earth station, as well as through
interconnections with other long distance carriers. Resetel is building a fiber
optic telecommunications network in Lima and Callao, Peru.

During the three years ended December 31, 1997, the Company made the following
acquisitions, each of which was accounted for as a purchase. The consolidated
financial statements include the operating results from the effective date of
acquisition.

ACQUISITION OF RESETEL

On May 7, 1996, the Company acquired 100% of Resetel's outstanding stock in
exchange for 1,250,000 shares of Common Stock of the Company. The purchase price
of approximately $2,800 has been substantially allocated to a local carrier
concession. A fair value of $2.25 was assigned to each share issued to the
shareholders of Resetel based on the net proceeds per share of the Company's
March 1996 private placement.

ACQUISITION OF FIRSTCOM NETWORKS

On July 31 and September 2, 1996 the Company acquired 99% and 1%,
respectively, of FirstCom Networks' outstanding stock for $1,500 in cash.
Goodwill of approximately $1,300 was recorded representing the excess cost over
the fair value of net assets acquired in the transaction.

ACQUISITION OF FIRSTCOM LONG DISTANCE

On December 17, 1997, the Company acquired 100% of FirstCom Long Distance's
outstanding stock for $5,900 million in cash. In addition, the Company incurred
other direct acquisition costs totaling approximately $300, which includes the
fair market value of 100,000 shares of Company Common Stock paid to a former
director for his services in facilitating the transaction. The purchase
agreement provides for an additional payment of up to $850 if FirstCom Long
Distance achieves certain operating results for the year ending December 31,
1998.

F-7
<PAGE>

The excess purchase price, of approximately $6,200, over the fair value of
the net assets acquired has been allocated to FirstCom Long Distance's telephone
carrier concession. The Company has accounted for the acquisition of FirstCom
Long Distance as if it occurred on December 31, 1997, since FirstCom Long
Distance's estimated operating results for the period from December 17, 1997 to
December 31, 1997 were not material.

OTHER RELATED ACQUISITION DISCLOSURES

The results of operations of Resetel and FirstCom Networks for the period
from January 1, 1996 to the respective date of acquisition were not significant.
The following unaudited pro forma summary presents the consolidated results of
operations as if the acquisition of FirstCom Long Distance had occurred at the
beginning of the periods presented, and do not purport to be indicative of the
results that actually would have occurred if the acquisition had been
consummated as of those dates or of results which may occur in the future:

(UNAUDITED)
DECEMBER 31,
--------------
1996 1997
--------- ---------
<S> <C> <C>
Revenue. . . . . . $ 8,474 $ 10,927
Net loss . . . . . (31,630) (39,895)
Net loss per share $ (2.14) $ (2.40)
</TABLE>

The Company assesses the carrying amount of its long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Measurement of any impairment would
include a comparison of estimated future cash flows to be generated during the
remaining life of each intangible asset to its net carrying value. Following is
a summary of the intangible assets resulting from the Company's acquisitions:

ESTIMATED
DECEMBER 31, USEFUL
-------------
1996 1997 LIFE
------- -------- --------
<S> <C> <C> <C>
Satellite transmission rights . $1,166 $ 1,166 10 years
Concessions . . . . . . . . . . 2,819 9,095 20 years
Goodwill. . . . . . . . . . . . 1,289 1,289 10 years
------- --------
5,274 11,550
Less: accumulated amortization (245) (669)
------- --------
$5,029 $10,881
======= ========
</TABLE>

F-8
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED ITEMS

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities are translated at end-of-period exchange rates.
Income, expense and cash flows are translated at weighted average exchange rates
for the period. The resulting currency translation adjustments are accumulated
and reported as a component of stockholders' equity.

Primarily as a result of the Company's U.S. dollar denominated senior note
financing during October 1997, effective January 1, 1998 the Company's
subsidiaries will use the U.S. dollar as their functional currency. Management
does not expect this change to have a significant impact on the Company's
results of operations.

RECLASSIFICATIONS

Certain amounts in the 1995 and 1996 consolidated financial statements were
reclassified to conform with the 1997 presentation.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, restricted cash, accounts
receivable and accounts payable approximated fair value based on the short
maturity of these financial instruments. The carrying amount of debt and
capital leases approximated fair value based on the prevailing market rates
currently available to the Company for similar financial instruments.

CASH AND CASH EQUIVALENTS

The Company considers all certificates of deposit and highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.

RESTRICTED CASH AND INVESTMENTS

Restricted cash represents proceeds from the senior note offering (see Note
3) to be used, in accordance with the terms of the related indenture agreement,
primarily for the purchase of the telecommunications equipment in Peru and
Chile. Restricted investments are U.S. Treasury Notes that are restricted for
the repayment of interest on the senior notes, and are stated at amortized cost,
which approximated fair value at December 31, 1997. These investments mature at
various dates through October 2000. Management designated these investments as
held-to-maturity.

TELECOMMUNICATIONS NETWORKS

Telecommunications networks are recorded at cost and are depreciated on a
straight-line method over the estimated useful lives of the related assets.
Construction, engineering, interest and labor costs directly related to the
development of the Company's networks are capitalized. The Company begins
depreciating these costs when the networks become commercially operational.

F-9
<PAGE>

Telecommunications networks consists of:

ESTIMATED
DECEMBER 31, USEFUL
-----------------
1996 1997 LIFE
------- -------- --------
<S> <C> <C> <C>
Telecommunications equipment. . . . . . . . . . . . . $2,868 $ 6,547 10 to 20
Telecommunications equipment pending installation and
construction in progress. . . . . . . . . . . . . . . 1,021 2,627 -
Office equipment and furniture. . . . . . . . . . . . 1,007 1,663 3 to 7
------- --------
4,896 10,837
Less: accumulated depreciation
(940) (1,489)
------- --------
$3,956 $ 9,348
======= ========
</TABLE>

ACCOUNTING ESTIMATES

The preparation of financial statements require management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

ACCRUED EXPENSES

Accrued expenses consist of:

DECEMBER 31,
-------------
1996 1997
----- ------
<S> <C> <C>
Purchases of telecommunication equipment $ 376 $ -
Professional fees. . . . . . . . . . . . 63 622
Payroll. . . . . . . . . . . . . . . . . 14 447
Other. . . . . . . . . . . . . . . . . . 138 640
----- ------
$ 591 $1,709
===== ======
</TABLE>

COMMON STOCK EXCHANGED FOR OTHER THAN CASH

Common stock exchanged for services and as inducements to make loans have
been recorded as consulting, compensation or interest expense and additional
paid in capital at the fair value of the common stock.

REVENUE RECOGNITION

Revenue is recognized as services are provided.

NET LOSS PER SHARE

The computation of net loss per share of common stock is computed by
dividing net loss for the year by the weighted average number of shares
outstanding during the year. The weighted average number of shares outstanding
for the years ended December 31, 1995, 1996 and 1997 excludes approximately 2.2
million, 4.3 million and 15.6 million, respectively of antidilutive stock
options and warrants.

F-10
<PAGE>

STOCK BASED COMPENSATION

The Company accounts for stock-based compensation using the intrinsic value
method which requires the recognition of related expense on the grant date when
the exercise price of the stock option granted is less then the fair value of
the underlying common stock. Additionally, the Company provides pro forma
disclosure of net loss and loss per share as if the fair value based method had
been applied in measuring compensation expense for stock options granted in 1997
and 1996.

The policy of the Company has been to grant options at an exercise price
equal to the estimated market value of the Company's common stock at the date of
the grant, except for certain grants made in 1995 and 1997 for which $12 and
$882, respectively was charged to expense. Had compensation costs for the
Company's stock option grants been determined based on the fair value at the
grant dates of options granted consistent with the fair value based method, the
Company's loss and loss per share would have been increased to the pro forma
amounts indicated below:

1996 1997
-------- ---------
<S> <C> <C> <C>
Net loss . . . . . As Reported $(4,626) $(15,632)
Pro forma (7,510) (21,237)

Net loss per share As Reported (.31) (.94)
Pro forma (.51) (1.27)
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions; volatility of 90%, risk-free interest rate of 6.72%, zero dividend
yield and expected lives ranging from 4 to 8 years. The weighted average fair
value of options granted in 1996 and 1997 were $2.38 and $2.47, respectively.

INCOME TAXES

The Company uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on the differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

The Company is subject to federal, state and foreign income taxes but has
not incurred a liability for such taxes due to losses incurred. At December 31,
1997 the Company has net tax operating loss carryforwards of approximately
$16,100 for U.S. income tax purposes and approximately $21,300 for foreign
income tax purposes. These carryforwards are available to offset future taxable
income, if any, and expire for U.S. income tax purposes in the years 2007
through 2012. The foreign net operating loss carryforwards related (1) to Peru,
$665 expire in the years 2000 through 2001 and (2) to Chile, $20,600, do not
expire.

The Company has deferred tax assets of approximately, $1,900 and $9,700 at
December 31, 1996 and 1997, respectively, consisting primarily of net operating
loss carryforwards. The deferred tax assets have been fully offset by a
valuation allowance resulting from the uncertainty surrounding the future
realization of the net operating loss carryforwards.

F-11
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

Statement No. 130 establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purposes financial statement. Statement No. 131
establishes standards for the way public business enterprises report information
about operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders.

3. CAPITALIZATION

The Company has had material transactions impacting its capitalization
during the past three years. The following information, in addition to the
disclosures in Note 4 - Related Party Transactions and Note 5 - Stock Options
and Warrants, describes the most significant of these transactions.

SENIOR NOTE OFFERING

On October 27, 1997, the Company completed a private offering (the "Senior
Note Offering") pursuant to Rule 144A and Regulation S promulgated under the
U.S. Securities Act of 1933 of 150,000 Units, consisting of an aggregate of
$150,000 aggregate principal amount of 14% Senior Notes due October 27, 2007
("Senior Notes") and 5,250,000 warrants (the "Unit Warrants") to purchase
5,250,000 shares of Common Stock of the Company at an exercise price of $4.40
per share. In addition, UBS Securities LLC, the initial purchaser of the Units
in the Senior Note Offering, was granted 2,250,000 warrants (the "Initial
Warrants") to acquire 2,250,000 shares of Common Stock of the Company at an
exercise price of $4.40 per share. The Unit Warrants are exercisable on the
earlier of April 27, 1998 or the registration with the SEC of the Senior Notes
and the Initial Warrants are immediately exercisable and both expire on October
27, 2007. Interest is payable semi-annually beginning on April 1, 1998.

The fair value of the Unit Warrants, approximately $18,500 is reflected as
an original issue discount on the Senior Notes in the accompanying consolidated
balance sheet. Additionally, the Company incurred direct financing costs of
approximately $14,900, including the fair value of $7,900 of the Initial
Warrants. The original issue discount and direct financing costs are being
amortized to interest expense over ten years.

The Senior Notes are redeemable on or after October 27, 2002 at the option
of the Company, in whole or in part from time to time, at specified redemption
prices declining annually to 100% of the principal amount on or after October
27, 2005, plus accrued and unpaid interest. Upon a change in control, the
Company is required to make an offer to purchase the Senior Notes at a purchase
price equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest, if any. The Senior Notes contain certain restrictive covenants
that, among other things, limit the ability of the Company to incur additional
debt or issue preferred stock, pay dividends, enter into related party
transactions or make certain other restricted payments.

F-12
<PAGE>

The net proceeds to the Company from the Senior Note Offering were
approximately $142,500, after deducting the underwriting discount and offering
expenses. Approximately $57,300 of the proceeds were used to purchase a
portfolio of securities that was deposited in escrow for payment of interest on
the Senior Notes through October 27, 2000 and, under certain circumstances, as
security for repayment of principal of the Senior Notes. During November and
December of 1997, the Company used the net proceeds of the Senior Note Offering
as follows: (i) $5,900 for the acquisition of FirstCom Long Distance, (ii)
$4,300 for the purchase of telecommunications equipment and the repayment of its
subsidiaries liabilities, (iii) $2,600 to settle all of the Company's
outstanding obligations related to convertible debentures and (iv) $975 to repay
certain bridge notes. The Company expects to use the remaining proceeds
primarily to expand and operate the Company's telecommunications businesses in
Peru and Chile.

In addition to the deposit of a portion of the proceeds from the Senior
Note Offering to fund interest payments on the Senior Notes through October
2000, the Company deposited $62 million of the proceeds from the Senior
Note Offering in a separate account under a trustee's control pending
application of such funds by the Company for the payment of, as such terms are
defined in the Indenture: (a) Permitted Expenditures; (b) in the event of a
Change in Control of the Company, the Change in Control Payment and (c) in the
event of a Special Offer to Purchase, or a Special Mandatory Redemption, the
purchase or redemption price in connection therewith.

CONVERTIBLE DEBENTURES

On February 3, 1997, the Company issued $1,500 aggregate principal amount
of 7% Convertible Debentures due February 3, 2000 and warrants to purchase an
aggregate 100,000 shares of the Company's Common Stock. On May 6, 1997 the
Company issued $2,000 aggregate principal amount of 8% Convertible Debentures
due April 30, 1998 and warrants to purchase an aggregate 20,000 shares of the
Company's Common Stock (collectively the "Convertible Debentures").

During 1997, the Company issued 1,101,782 shares of Common Stock in
connection with the conversion of $1,950 aggregate principal amount of the
Convertible Debentures, plus related accrued interest. Effective December 31,
1997 the Company settled all of the Company's remaining financial obligations
related to the Convertible Debentures for $2,600 in cash.

PRIVATE ISSUANCES OF COMMON STOCK

In October 1994, the Company commenced a private offering of its common
stock. The Company issued 315,714 shares of common stock and raised $1,100 prior
to December 31, 1994. In early 1995, the Company closed the private placement,
having issued a total of 951,476 shares of common stock and raised a total of
$3,000, net of expenses of $260.

In February 1996, the Company commenced a private offering of its common
stock. The Company issued 500,000 shares of common stock and raised $1,120
through March 31, 1996, net of expenses of $80. In June 1996, the Company
commenced a private offering of its common stock. The Company issued 1,439,000
shares of common stock and raised $6,400 through August 1996, net of expenses of
$520.

During 1997, the Company issued 850,000 shares of common stock to two
officers and recognized related non-cash compensation expense of approximately
$2,300.

F-13
<PAGE>

4. RELATED PARTY TRANSACTIONS

TELECTRONIC S.A.

During the three years ended December 31, 1997, the Company entered into
certain transactions with Telectronic S.A. and its founders, Mr. George A.
Cargill and Mr. Eleazar Donoso. Mr. Cargill and Mr. Donoso are both Company
shareholders. Mr. Cargill has been a director of the Company since 1994.

From 1994 to 1997, the Company granted Mr. Cargill 290,000 stock options
with a weighted average exercise price of $2.09. The exercise price of such
grants was equal to the grant date fair value of the underlying Common Stock.

The Company purchased approximately $205, $172 and $77 of certain
telecommunication equipment in 1995, 1996 and 1997, respectively, from
Telectronic, S.A.

In October 1997, the Company issued 300,000 shares of Common Stock to Mr.
Donoso for certain financial assistance provided to the Company during its
development stage. The Company recognized interest expense of $852 related to
the aggregate fair value of such shares of Common Stock.

During 1997, the Company issued and redeemed $200 of bridge notes from Mr.
Cargill. In connection with such bridge notes Mr. Cargill received 20,000
warrants to purchase the Company's common stock at an exercise price of $2.56
per warrant.

MR. HERNAN STREETER

During the three years ended December 31, 1997, the Company entered into
several transactions with Mr. Hernan Streeter. Mr. Streeter formerly served the
Company as its Chief Executive Officer and its Chairman of the Board. In
addition, he is a principal shareholder of the Company. The Company paid
salaries to Mr. Streeter of $120 and $110 during 1995 and 1996, respectively.

From 1994 to 1996, the Company granted Mr. Streeter 510,000 stock options
with a weighted average exercise price of $1.91. The exercise price of such
grants was equal to the grant date fair value of the underlying Common Stock.

During 1995 and 1996, approximately $1,600 was loaned to the Company by
Laura Investments, Ltd., a company owned by Mr. Streeter. During 1996, the
Company paid $86 of interest to Laura Investments, Ltd. On March 31, 1996 the
loans, plus accrued interest, were converted into 839,235 shares of Company
Common Stock.

Mr. Streeter was the founder and Chief Executive Officer of FirstCom
Networks, which was acquired by the Company during 1996. Prior to its
acquisition, FirstCom Networks provided approximately $237 of telecommunication
services to the Company. Mr. Streeter also was the primary shareholder and
General Manager of FirstCom Long Distance, which was acquired by the Company
during 1997. Prior to this acquisition, the Company made sales of $162 to
FirstCom Long Distance. Pursuant to provisions of the FirstCom Long Distance
purchase agreement, the Company agreed to pay Mr. Streeter a consulting fee of
$120 during 1998.

F-14
<PAGE>

MAROON BELLS CAPITAL PARTNERS ("MBCP")

From 1994 to 1996, the Company granted MBCP and its principals 1,015,000
stock options with a weighted average exercise price of $2.12. The exercise
price of such grants was equal to the grant date fair value of the underlying
Common Stock.

During 1995, the Company recognized $100 as a financial advisory fee to
MBCP. During 1996, the Company purchased $493 in equipment whereby MBCP acted as
a broker. Additionally, during 1996 and 1997, the Company made expense
reimbursements of $219 and $132, respectively, to MBCP and its principals.

During 1996 and 1997, the Company converted $316 and $240, respectively, of
outstanding liabilities to MBCP into 172,506 and 80,000 shares, respectively, of
the Company's Common Stock.

During October 1997, the Company entered into an agreement with MBCP and
its principals, Theodore Swindells, Paul Moore and Phillip Magiera, to
compensate them for services rendered to the Company. Pursuant to such
agreement, the Company made a cash payment to MBCP of $500 at the closing of the
Senior Note offering and issued to each of Messrs. Moore and Magiera 250,000
shares of Common Stock and options to acquire 250,000 shares of Common Stock at
an exercise price of $2.13 per share. The Company recognized non-cash consulting
expense related to the Common Stock and stock options of approximately $1,800.
Messrs. Moore and Magiera resigned from the Company's Board of Directors
effective as of the date of the agreement.

OTHER RELATED PARTY TRANSACTIONS

The Company paid approximately $865 in legal fees in 1997 to a law firm
having a senior partner who is also a current director of the Company.

F-15
<PAGE>

5. STOCK OPTIONS AND WARRANTS

Under the terms of the Company's stock option agreements, options have a
maximum term of ten years from the date of the grant. The options vesting period
varies from full vesting upon issuance of options to one forty eighth per month
to the end of the option term. A summary of the Company's stock option activity
is as follows:

1995 1996 1997
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 605,000 $ 2.13 1,565,000 $ 2.03 3,625,000 $ 2.31
Granted. . . . . . . . . . . . . 960,000 1.96 2,060,000 2.52 3,670,000 3.15
Exercised. . . . . . . . . . . . - - - - - -
Cancelled. . . . . . . . . . . . - - - - - -
--------- --------- --------- --------- --------- ---------
Outstanding at end of year . . . 1,565,000 $ 2.03 3,625,000 $ 2.31 7,295,000 $ 2.73
========= ========= ========= ========= ========= =========

Options exercisable at year-end. 1,250,350 $ 2.57 2,754,734 $ 2.54 4,970,365 $ 2.50
========= ========= ========= ========= ========= =========
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 1997:

OPTIONS OUTSTANDING
-----------------------

WEIGHTED
AVERAGE
REMAINING OPTIONS EXERCISABLE
-----------------------------------
EXERCISE NUMBER CONTRACTUAL NUMBER EXERCISE
PRICE OUTSTANDING LIFE EXERCISABLE PRICE
- ------------- ----------- ----------- ------------------- --------------
<S> <C> <C> <C> <C>
.35. . . . . 100,000 7 100,000 $ .35
1.83 to 1.96. 1,110,000 8 1,063,194 1.83 to 1.96
2.00 to 2.42. 3,130,000 9 1,465,786 2.00 to 2.42
2.50 to 2.81. 1,655,000 8 1,511,917 2.50 to 2.81
4.00 to 4.40. 1,100,000 10 493,518 4.00 to 4.40
6.00 to 8.00. 200,000 10 -- 6.00 to 8.00
----------- -------------------

7,295,000 4,970,365
=========== ===================
</TABLE>

Included in the preceding table are 1,350,000 stock options, of which
452,952 are exercisable at December 31, 1997 with an exercise price of $2.13 and
a weighted average remaining contractual life of 10 years. The exercise price
of such stock options was less than the grant date fair value of the underlying
Common Stock.

F-16
<PAGE>

During 1997 the Company granted two officers 2,650,000 stock options that
vest over a two year period. The Company recognized non-cash compensation
expense of $527 related to certain of these stock option grants. The terms of
1,000,000 stock options granted during 1996 were modified during 1997 to provide
for immediate vesting.

Including the Initial and Note Warrants described in Capitalization above,
the following is a summary of warrants granted by the Company:

1995 1996 1997
------------------ ------------------ --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- --------- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 75,000 $ 1.25 680,171 $ 2.97 680,171 $ 2.97
Granted. . . . . . . . . . . . . 605,171 3.18 - - 7,715,000 4.35
Exercised. . . . . . . . . . . . - - - - - -
Cancelled. . . . . . . . . . . . - - - - - -
------- --------- ------- --------- --------- ---------
Outstanding at end of year . . . 680,171 $ 2.97 680,171 $ 2.97 8,395,171 $ 4.24
======= ========= ======= ========= ========= =========

Options exercisable at year-end. 680,171 $ 2.97 680,171 $ 2.97 895,171 $ 2.80
======= ========= ======= ========= ========= =========
</TABLE>

These warrants resulted from the Company's financing activities from 1994 to
1997.

6. COMMITMENTS AND CONTINGENCIES

The Company entered into an operating agreement in 1993 with Metro S.A. to
install and operate the Company's optical fiber telecommunication network in the
tunnels, conduits and stations of lines 1 and 2 of the Santiago subway system.
The Company has given Metro S.A. a $50 performance bond relating to these
leases. The monthly lease rental is equivalent to 15% of the net monthly
invoicing of the company for services rendered in the metropolitan region of
Chile, subject to minimum amounts. The lease expires in the year 2003. Under the
agreement, the Company is obligated to provide certain telecommunications
services to Metro, S.A.

The following summarizes future minimum payments under non-cancelable
operating lease agreements at December 31, 1997:

Rental expense under operating leases was $255, $508 and $961 for the years
ended December 31, 1995, 1996 and 1997, respectively.

The Company has entered into employment agreements with key members of
management that expire in 2000. These agreements provide for annual compensation
and payments upon death, disability and certain changes in control.

F-17
<PAGE>

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE MAKING OF THE
EXCHANGE OFFER PURSUANT TO THIS PROSPECTUS NOR THE ACCEPTANCE OF THE EXISTING
NOTES FOR SURRENDER FOR EXCHANGE PURSUANT THERETO SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------

TABLE OF CONTENTS

PAGE
----
<S> <C>
Notice to New Hampshire Residents. . 2
Exchange Rate Data . . . . . . . . . 3
Available Information. . . . . . . . 4
Prospectus Summary . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . 11
Use of Proceeds. . . . . . . . . . . 21
Capitalization . . . . . . . . . . . 22
Selected Historical Financial Data . 23
Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . 25
Business . . . . . . . . . . . . . . 32
Management . . . . . . . . . . . . . 55
Certain Relationships and Related
Party Transactions . . . . . . . . 60
Selling Stockholders . . . . . . . . 62
Description of Senior Notes. . . . . 67
Description of Capital Stock . . . . 102
Shares Eligible for Future Sale. . . 107
Plan of Distribution . . . . . . . . 108
Legal Matters. . . . . . . . . . . . 109
Experts. . . . . . . . . . . . . . . 110
Glossary of Defined Terms. . . . . . 111
Index to Financial Statements. . . . F-1
- ------------------------------------ ----
</TABLE>

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

[INTERAMERICAS COMMUNICATIONS LOGO]

------------------------
COMMON STOCK
------------------------

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

, 1998

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses of this offering, all of which are to be paid by the
Registrant, in connection with the issuance and distribution of the securities
registered hereby are as follows:

<S> <C>
SEC Registration Fee. . . . . . *
Printing and Engraving Expenses *
Legal Fees and Expenses . . . . *
Accounting Fees and Expenses. . *
Miscellaneous Expenses. . . . . *
Total . . . . . . $*
<FN>
- ---------------

* To be provided by amendment.
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

ICCA's Certificate of Incorporation and By-laws contain certain provisions
that eliminate the liability of its director and officers to the fullest extent
permitted by the Texas Business Corporation Act, except that they do not
eliminate liability for: (i) any breach of the duty of loyalty to the Company or
its shareholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) an act or omission
for which the liability of a director is expressly provided by an applicable
statute; or (iv) any transaction from which the director derived an improper
personal benefit. The Texas Business Corporation Act provides that Texas
corporations may indemnify any director, officer or employee made or threatened
to be made a party to a proceeding, by reason of the former or present official
capacity of such person, if such person (i) conducted himself in good faith and
(ii) reasonably believed that his conduct was not unlawful and opposed to the
corporation's best interests. The indemnification provision does not permit
indemnification of officers, directors and employees (i) when such persons are
found liable to the corporation or (ii) for any transaction from which such
person derive improper personal benefits. The foregoing provisions may reduce
the likelihood of derivative litigation against directors, officers and
employees of the Company and may discourage or deter shareholders or management
from bringing a lawsuit against directors and officers for breaches of their
fiduciary duties, even though such an action, if successful, might otherwise
have benefited the Company and its shareholders.

II-1
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

EXHIBIT
NUMBER EXHIBIT
- ---------- -------
<S> <C>
3.1 -- Articles of Incorporation of InterAmericas Communications Corporation previously
filed as an exhibit to the Registrant's Form 8-A Registration Statement, filed with the
Commission on November 29, 1994 and incorporated herein by reference.
3.2 -- By-laws of InterAmericas Communications Corporation previously filed as an Exhibit
to the Registrant's Form 8-A Registration Statement, filed with the Commission on
November 29, 1994 and incorporated herein by reference.
4.1 -- Purchase Agreement, dated as of October 21, 1997 by and among InterAmericas
Communications Corporation, Hewster Chile S.A. Red de Servicios Empresariales
de Telecomunicaciones S.A. and UBS Securities LLC previously filed as an exhibit
to Registrant's Registration Statement on Form S-4, filed with the Commission on
December 10, 1997 and incorporated herein by reference.
4.2 -- Form of Existing Note previously filed as an exhibit to Registrant's Registration
Statement on Form S-4, filed with the Commission on December 10, 1997 and
incorporated herein by reference.
4.3 -- Indenture, dated as of October 27, 1997 between InterAmericas Communications
Corporation and State Street Bank & Trust Company, N.A. previously filed as an
exhibit to Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
4.4 -- A/B Exchange Registration Rights Agreement, dated as of October 27, 1997,
between InterAmericas Communications Corporation and UBS Securities LLC
previously filed as an exhibit to Registrant's Registration Statement on Form S-4,
filed with the Commission on December 10, 1997 and incorporated herein by
reference.
4.5 -- Warrant Agreement, dated as of October 27, 1997, between the Registrant and
State Street Bank & Trust Company, N.A. previously filed as an exhibit to
Registrant's Registration Statement on Form S-4, filed with the Commission on
December 10, 1997 and incorporated herein by reference.
4.6 -- Warrant Registration Rights Agreement, dated as of October 27, 1997 between
InterAmericas Communications Corporation and UBS Securities LLC previously
filed as an exhibit to Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
4.7 -- Specimen of InterAmericas Communications Corporation 14% Senior Note due
October 27, 2007 previously filed as an exhibit to Registrant's Registration
Statement on Form S-4, filed with the Commission on December 10, 1997 and
Incorporated herein by reference.
4.8 -- Proceeds Pledge and Escrow Agreement, dated as of October 27, 1997 between
InterAmericas Communications Corporation and State Street Bank and Trust
Company, N.A., previously filed as an exhibit to Registrant's Registration Statement
on Form S-4, filed with the Commission on December 10, 1997 and incorporated
herein by reference.

5.1 -- Opinion of Baker & McKenzie (to be filed by amendment).
10.1 -- Stock Purchase Agreement, dated as of September 9, 1997, as amended, between
InterAmericas Communications Corporation and Inversiones Druma S.A. for the
acquisition of 99.9% of the Outstanding shares of capital of Iusatel Chile S.A.,
previously filed as an exhibit to Registrant's Current Report on Form 8-K, filed with
the Commission on January 5, 1998 and incorporated herein by reference.

10.2 -- Employment and Severance Agreement, dated as of October 7, 1997, between
InterAmericas Communications Corporation and Patricio E. Northland, previously
filed as an exhibit to Registrant's Current Report on Form 8-K filed with the
Commission on October 16, 1997 and incorporated herein by reference.

II-2
<PAGE>

</TABLE>
<TABLE>
<CAPTION>

EXHIBIT
NUMBER EXHIBIT
- ---------- -------
<S> <C>

10.3 -- Settlement Agreement, dated as of October 4, 1997, between InterAmericas
Communications Corporation and each of Maroon Bells Capital Partners, Inc.,
Theodore Swindells, Paul A. Moore and Philip Magiera, previously filed as an exhibit
to Registrant's Current Report on Form 8-K filed with the Commission on October
16, 1997 and incorporated herein by reference.
10.4 -- Settlement Agreement, dated as of October 3, 1997, between InterAmericas
Communications Corporation and Eleazar Donoso, previously filed as an exhibit to
Registrant's Current Report on Form 8-K filed with the Commission on October 16,
1997 and incorporated herein by reference.

10.5 -- Employment and Severance Agreement, dated as of April 14, 1997, between
InterAmericas Communications Corporation and Douglas G. Geib, previously filed
as an exhibit to Registrant's Quarterly Report on Form 10-QSB filed with
the Commission on May 15, 1997 and incorporated herein by reference.
21.1 -- Subsidiaries of the Registrant previously filed as an exhibit to Registrant's
Form 10-KSB, filed with the Commission on March 10, 1998 and incorporated herein
by reference.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Baker & Mckenzie (included in Exhibit 5.1).

25.1 -- Statement of Eligibility of State Street Bank and Trust Company, N.A. previously
filed as an exhibit to Registrant's Registration Statement on Form S-4, filed with the
Commission on December 10, 1997 and incorporated herein by reference.
99.1 -- Form of Letter of Transmittal previously filed as an exhibit to Registrant's
Registration Statement on Form S-4, filed with the Commission on December 10,
1997 and incorporated herein by reference.
99.2 -- Form of Notice of Guaranteed Delivery previously filed as an exhibit to Registrant's
Registration Statement on Form S-4, filed with the Commission on December 10,
1997 and incorporated herein by reference.
99.3 -- Form of Exchange Agent Agreement previously filed as an exhibit to Registrant's
Registration Statement on Form S-4, filed with the Commission on December 10,
1997 and incorporated herein by reference.
99.4 -- Form of Information Agent Agreement previously filed as an exhibit to Registrant's
Registration Statement on Form S-4, filed with the Commission on December 10,
1997 and incorporated herein by reference.
</TABLE>

ITEM 17. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

II-3
<PAGE>

(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions of its Articles of Incorporation and
By-Laws, of the Texas Business Corporation Act, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the issuer of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Miami, State of Florida on March 17, 1998.

INTERAMERICAS COMMUNICATIONS
CORPORATION

By: /s/ DOUGLAS G. GEIB II
-----------------------------------
Name: Douglas G. Geib II
Title: Chief Financial Officer

SIGNATURE TITLE DATE
- --------------------------- ------------------------------- -------------
<S> <C> <C>
/s/ PATRICIO E. NORTHLAND*. Chairman of the Board of March 17, 1998
- ---------------------------
Patricio E. Northland . . . Directors, President and Chief
Executive Officer (Principal
Executive Officer)

/s/ DOUGLAS G. GEIB II. . . Chief Financial Officer and March 17, 1998
- ---------------------------
Douglas G. Geib II. . . . . Director (Principal Financial
and Accounting Officer)

/s/ DAVID C. KLEINMAN*. . . Director March 17, 1998
- ---------------------------
David C. Kleinman

/s/ GEORGE A. CARGILL*. . . Director March 17, 1998
- ---------------------------
George A. Cargill

/s/ ANDREW HULSH. . . . . . Director March 17, 1998
- ---------------------------
Andrew Hulsh

*By: /s/ DOUGLAS G. GEIB II March 17, 1998
- ---------------------------
Douglas G. Geib II
Attorney in Fact
</TABLE>

II-5
<PAGE>

INDEX TO EXHIBITS
<TABLE>
<CAPTION>

EXHIBIT
NUMBER
- ----------
<S> <C>
23.1 -- Consent of Price Waterhouse LLP.
</TABLE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of InterAmericas Communications Corporation
of our report dated March 2, 1998 relating to the financial statements of
InterAmericas Communications Corporation, which appears in such Prospectus. We
also consent to the references to us under the headings "Experts", "Summary
Condensed Consolidated Historical and Pro Forma Combined Financial Data" and
"Selected Historical Financial Data" in such Prospectus. However, it should be
noted that Price Waterhouse LLP has not prepared or certified such "Summary
Condensed Consolidated Historical and Pro Forma Combined Financial Data" and
"Selected Historical Financial Data."

/s/ Price Waterhouse LLP
- ---------------------------
Price Waterhouse LLP
Miami, Florida
March 13, 1998