As filed with the Securities and Exchange Commission on May 29, 1998
                                                 Registration No. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                          GST TELECOMMUNICATIONS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                                     Canada
--------------------------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                       N/A
--------------------------------------------------------------------------------
                      (I.R.S. employer identification no.)

                  4001 Main Street, Vancouver, Washington      98663
--------------------------------------------------------------------------------
               (Address of principal executive offices)      (Zip Code)

                          GST TELECOMMUNICATIONS, INC.
                             1996 STOCK OPTION PLAN
                 1996 SENIOR EXECUTIVE OFFICER STOCK OPTION PLAN
                 1996 SENIOR OPERATING OFFICER STOCK OPTION PLAN
                             1997 STOCK OPTION PLAN
                            (Full title of the plan)

                    Daniel L. Trampush, Senior Vice President
                          GST Telecommunications, Inc.
                                4001 Main Street
                           Vancouver, Washington 98663
                            Telephone: (360) 906-7100
                           Telecopier: (360) 906-7150
                       (Name, Address and Telephone Number
                              of Agent for Service)

                                    Copy to:
                              David J. Adler, Esq.
                     Olshan Grundman Frome & Rosenzweig LLP
                                 505 Park Avenue
                            New York, New York 10022
                            Telephone: (212) 753-7200
                           Telecopier: (212) 755-1467

                           ---------------------------
<TABLE>
<CAPTION>
                         CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------------------------------
                                                Proposed             Proposed
          Title of                               maximum             maximum
         securities            Amount           offering            aggregate           Amount of
            to be              to be            price per            offering          registration
         registered          registered           share               price                fee
---------------------------------------------------------------------------------------------------
<S>                        <C>                 <C>                <C>                  <C>
Common Shares, no
par value                  2,788,746(1)(2)     $11.52(2)          $32,126,353.92       $ 9,477.27
---------------------------------------------------------------------------------------------------
Common Shares, no
par value                    311,254(1)(3)     $12.15625(3)       $ 3,783,681.44       $ 1,116.19
---------------------------------------------------------------------------------------------------
         Total             3,100,000                              $35,910,035.36       $10,593.46
===================================================================================================
</TABLE>
(1)      Pursuant to Rule 416 under the  Securities Act of 1933, as amended (the
         "Securities  Act"), an  indeterminate  number of Common Shares that may
         become issuable pursuant to
<PAGE>
         antidilution provisions of the Registrant's 1996 Stock Option Plan (the
         "1996  Plan"),  1996 Senior  Executive  Officer  Stock Option Plan (the
         "Senior Executive  Officer Plan"),  1996 Senior Operating Officer Stock
         Option Plan (the "Senior Operating Officer Plan") and 1997 Stock Option
         Plan (the "1997  Plan"  and,  together  with the 1996 Plan,  the Senior
         Executive  Officer  Plan and the Senior  Operating  Officer  Plan,  the
         "Plans") are also being registered.

(2)      Represents  2,788,746  shares with  respect to which  options have been
         granted under the Plans at a weighted  average exercise price of $11.52
         per share.
(3)      An  aggregate  of 311,254  shares is to be  offered  under the Plans at
         prices not  presently  determined.  Pursuant to Rule  457(h)  under the
         Securities Act, the offering price of these additional Common Shares is
         estimated  solely for the purpose of determining the  registration  fee
         and is based on  $12.15625,  the per share average of high and low sale
         prices of the Common  Shares on the Nasdaq  National  Market on May 27,
         1998.


                                       -2-

<PAGE>
PROSPECTUS

                             3,100,000 COMMON SHARES

                          GST TELECOMMUNICATIONS, INC.
                     Common Shares (no par value per share)

         This  Prospectus  relates to the reoffer and resale by certain  selling
shareholders  (the  "Selling  Shareholders"),  some of whom may be  deemed to be
"affiliates"  as defined in Rule 405 of the  Securities  Act of 1933, as amended
(the  "Securities  Act"),  of GST  Telecommunications,  Inc. (the  "Company") of
shares (the "Shares")  constituting a portion of the Common Shares, no par value
per  share  (the  "Common  Shares"),  of the  Company  that may be issued by the
Company to the Selling  Shareholders  upon the exercise of options granted or to
be granted  under (i) the  Company's  1996 Stock Option Plan (the "1996  Plan"),
(ii) the Company's  1996 Senior  Executive  Officer Plan (the "Senior  Executive
Officer Plan"),  (iii) the Company's 1996 Senior Operating  Officer Stock Option
Plan (the "Senior  Operating  Officer  Plan") or (iv) the  Company's  1997 Stock
Option Plan (the "1997 Plan") (collectively,  the "Plans"). This Prospectus also
relates to the reoffer and resale of Shares to be  acquired by  individuals  who
may be deemed to be  "affiliates"  of the  Company  (collectively,  the  "Future
Selling  Shareholders")  upon  exercise of stock options to be granted under the
Plans.  If and when such options are granted to or such Shares are  purchased by
the Future Selling Shareholders,  the Company intends to distribute a Prospectus
Supplement as required by Rule 424(b) of the  Securities  Act.  Such  Prospectus
Supplement  will specify the names of the Future  Selling  Shareholders  and the
amount of Shares to be reoffered and sold by them.

         The offer and sale of the Shares to the  Selling  Shareholders  and the
Future Selling Shareholders were previously registered under the Securities Act.
The  Shares are being  reoffered  and resold  for the  accounts  of the  Selling
Shareholders  and the  Future  Selling  Shareholders  and the  Company  will not
receive any of the proceeds from the resale of the Shares.

         The Selling  Shareholders  have  advised the Company that the resale of
their Shares may be effected  from time to time in one or more  transactions  on
the Nasdaq  National  Market in negotiated  transactions  or otherwise at market
prices prevailing at the time of the sale or at prices otherwise negotiated. The
Selling  Shareholder  may effect such  transactions  by selling the Shares to or
through  broker-dealers  who may receive  compensation in the form of discounts,
concessions or commissions from the Selling Shareholder and/or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they sell as
principal,  or both (which compensation as to a particular  broker-dealer may be
in excess of customary commissions). Any broker-dealer acquiring the Shares from
the Selling  Shareholder  may sell such  securities  in its normal market making
activities,  through other brokers on a principal or agency basis, in negotiated
transactions,  to its  customers or through a combination  of such methods.  See
"Plan of  Distribution."  The Company will bear all expenses in connection  with
the preparation of this Prospectus.

                     SEE "RISK FACTORS" BEGINNING ON PAGE 4
                       FOR A DISCUSSION OF CERTAIN FACTORS
               THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

         The Company's  Common Shares are traded on the Nasdaq  National  Market
under the  symbol  "GSTX." On May 28,  1998,  the last sale price for the Common
Shares, as reported on the Nasdaq National Market, was $12.50.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
            SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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 May 29, 1998.



<PAGE>
                              AVAILABLE INFORMATION

         The  Company  is  subject  to  the  informational  requirements  of the
Securities  Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the  "Commission").  Such reports and other information can
be inspected  and copied at the public  reference  facilities  maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,  D.C. 20549;
500 West Madison Street,  Suite 1400,  Chicago,  Illinois 60661; and Seven World
Trade Center,  Suite 1300, New York, New York 10048. Copies of such material can
be obtained  from the Public  Reference  Section of the  Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material may also be accessed  electronically  by means of the Commission's home
page on the internet at http://www.sec.gov.

                                TABLE OF CONTENTS

AVAILABLE INFORMATION.........................................................2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................3

RISK FACTORS..................................................................4

MATERIAL CHANGES.............................................................19

THE COMPANY..................................................................19

USE OF PROCEEDS..............................................................20

SELLING SHAREHOLDERS.........................................................20

PLAN OF DISTRIBUTION.........................................................21

LEGAL MATTERS................................................................21

EXPERTS  ....................................................................21

ADDITIONAL INFORMATION.......................................................22



                                       -2-

<PAGE>
                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The Company's Transition Report on Form 10-K for the three month period
ended  December 31, 1997,  Annual  Report on Form 10-K for the fiscal year ended
September  30, 1997,  Quarterly  Report on Form 10-Q for the quarter ended March
31,  1998,  and the  Company's  Current  Reports  on Form 8-K dated May 4, 1998,
February  27, 1998 and January 6, 1998 are  incorporated  by  reference  in this
Prospectus and shall be deemed to be a part hereof. All subsequent reports filed
by the Company on Forms 10-K,  10-Q, 8-K or otherwise,  prior to the termination
of this offering,  are deemed to be incorporated by reference in this prospectus
and  shall  be  deemed  to be a part  hereof  from the  date of  filing  of such
documents. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15 of the Exchange  Act,  subsequently  filed by the Company  prior to the
termination of this offering, are deemed to be incorporated by reference in this
Prospectus  and shall be deemed to be a part  hereof  from the date of filing of
such documents.

         The Company's  Application for  Registration of its Common Shares under
Section  12(g) of the  Exchange Act filed on April 13, 1998 is  incorporated  by
reference in this Prospectus and shall be deemed to be a part hereof.

         The Company hereby  undertakes to provide without charge to each person
to whom a copy of this  Prospectus  has been  delivered,  on the written or oral
request of any such person,  a copy of any or all of the  documents  referred to
above which have been or may be  incorporated  in this  Prospectus by reference,
other than exhibits to such documents.  Written  requests for such copies should
be directed to GST  Telecommunications,  Inc.  at 4001 Main  Street,  Vancouver,
Washington 98663,  Attention:  Chief Financial Officer.  Oral requests should be
directed to such individual (telephone number (360) 906-7100).

         No dealer,  salesman or other  person has been  authorized  to give any
information or to make any  representations  other than those  contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Selling Shareholders.  This Prospectus does not constitute
an offer to sell, or a solicitation  of an offer to buy, the securities  offered
hereby to any person in any state or other  jurisdiction  in which such offer or
solicitation  is unlawful.  The delivery of this Prospectus at any time does not
imply that information  contained herein is correct as of any time subsequent to
its date.


                                       -3-


<PAGE>
                                  RISK FACTORS

         THE   SECURITIES   OFFERED  HEREBY  INVOLVE  A  HIGH  DEGREE  OF  RISK.
PROSPECTIVE  INVESTORS  SHOULD  CAREFULLY  CONSIDER THE  FOLLOWING  RISK FACTORS
BEFORE  MAKING  AN  INVESTMENT  DECISION.  CERTAIN  MATTERS  DISCUSSED  IN  THIS
PROSPECTUS OR WHICH ARE INCORPORATED BY REFERENCE ARE FORWARD-LOOKING STATEMENTS
THAT ARE SUBJECT TO RISKS AND  UNCERTAINTIES  THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE PROJECTED.

HISTORICAL AND ANTICIPATED FUTURE OPERATING LOSSES AND NEGATIVE EBITDA

         The Company has  incurred  and expects to continue to incur  increasing
operating  losses and  negative  EBITDA while it expands its business and builds
its customer  base. The Company has incurred  significant  increases in expenses
associated with these  activities and there can be no assurance that an adequate
customer  base with  respect to any or all of its  services  will be achieved or
sustained. The Company does not expect to achieve a significant market share for
any of its services.  The Company had net income of approximately $19.5 million,
an operating loss of  approximately  $24.8 million and negative  EBITDA of $14.8
million for the three months  ended March 31, 1998, a net loss of  approximately
$39.6  million,  an operating loss of  approximately  $21.9 million and negative
EBITDA of $12.0  million for the three months ended  December 31, 1997 and a net
loss of approximately  $113.3 million,  an operating loss of approximately $86.5
million and negative EBITDA of $51.9 million for the fiscal year ended September
30, 1997  ("Fiscal  1997").  There can be no  assurance  that the  Company  will
achieve or sustain  profitability or generate positive EBITDA. In February 1998,
the  Company  sold  its  remaining  interest  in NACT  Telecommunications,  Inc.
("NACT") to World Access,  Inc. for net proceeds of approximately $85.0 million.
Without  NACT,  the  Company  would  have had a net loss of  $40.4  million  and
negative  EBITDA of $14.4  million for the three months ended  December 31, 1997
and a net loss of $117.8 million and negative EBITDA of $59.0 million for Fiscal
1997.  EBITDA consists of loss before interest,  income taxes,  depreciation and
amortization and other income and non-cash expenses.  EBITDA is provided because
it  is a  measure  commonly  used  in  the  telecommunications  industry.  It is
presented to enhance an understanding of the Company's  operating results and is
not intended to represent cash flow or results of operations in accordance  with
generally accepted accounting principles for the periods indicated.

         At  December  31,  1997,  the  Company had a U.S.  net  operating  loss
carryforward of  approximately  $130.4 million and a Canadian net operating loss
carryforward of approximately Cdn. $11.1 million.  While such loss carryforwards
are available to offset future taxable  income of the Company,  the Company does
not expect to  generate  sufficient  taxable  income so as to  utilize  all or a
substantial  portion  of such  loss  carryforwards  prior to  their  expiration.
Further,  the  utilization  of net operating loss  carryforwards  against future
taxable income is subject to limitation if the Company experiences an "ownership
change" as  defined in Section  382 of the  Internal  Revenue  Code of 1986,  as
amended, and the analogous provision of the Income Tax Act (Canada).

DEVELOPMENT AND EXPANSION RISK AND POSSIBLE INABILITY TO MANAGE GROWTH

         The Company is in the early  stages of its  operations.  Certain of its
networks have only recently become commercially  operational and the Company has
only  recently  begun to deploy  switches  in its  networks.  The success of the
Company will depend,  among other things,  upon the Company's  ability to assess
potential  markets,  design fiber backbone routes that provide ready access to a
substantial  customer base,  secure  financing,  obtain required  rights-of-way,
building access and governmental permits, implement expanded interconnection and
collocation  with  facilities  owned  by  incumbent  local  exchange   telephone
companies  ("ILECs") and achieve a sufficient customer base, and upon subsequent
developments in state and federal  regulations.  The Company has begun to target
Tier 1 cities and competition in such markets is expected to be significantly


                                       -4-


<PAGE>
greater  than in the Tier 2 and Tier 3 cities in which the Company is  currently
operating.  There can be no  assurance  that any  networks  to be  developed  or
further  developed will be completed on schedule,  at a commercially  reasonable
cost or within the Company's  specifications.  In addition, the expansion of the
Company's  business  has  involved  and  is  expected  to  continue  to  involve
acquisitions,  which  could  divert the  resources  and  management  time of the
Company and require  integration with the Company's existing  operations.  There
can be no assurance that any acquired  business will be successfully  integrated
into the Company's  operations or that any such business will meet the Company's
expectations.  The Company's future  performance will depend,  in part, upon its
ability to manage its growth  effectively,  which will require it to continue to
implement  and improve its  operating,  financial  and  accounting  systems,  to
expand,  train and  manage  its  employee  base and to  effectively  manage  the
integration  of acquired  businesses.  These factors and others could  adversely
affect the expansion of the Company's customer base and service  offerings.  The
Company's  inability  either to expand in accordance with its plans or to manage
its growth  could  have a material  adverse  effect on its  business,  financial
condition and results of operations.

SIGNIFICANT CAPITAL REQUIREMENTS

         The  Company   estimates   that  its  capital   expenditures   will  be
approximately  $325.0  million for the fiscal year ending  December 31, 1998 and
$400.0  million  for the fiscal  year  ending  December  31,  1999.  The Company
believes that the net proceeds  from the private  placement  consummated  in May
1998 (the "1998 Notes Offering") of $500.0 million  principal amount at maturity
of 10 1/2% Senior  Secured  Discount  Notes due 2008 (the "1998  Notes") and the
cash on hand, including the remaining proceeds from the sale of NACT, the public
offering  consummated  in November  1997 (the "1997 Public  Offering") of $144.0
million principal amount of 12 3/4% Senior  Subordinated  Accrual Notes due 2007
(the  "Accrual  Notes")  and  6,440,000  Common  Shares at $12 per share and the
private  placement  offering   consummated  in  May  1997  (the  "Secured  Notes
Offering")  of 13 1/4%  Senior  Secured  Notes  due 2007 (the  "Secured  Notes")
(which, other than the amount pledged to fund the first six interest payments on
the Secured Notes, is being used to purchase  equipment) and borrowings expected
to be available under a credit facility (the "Tomen Facility") with Tomen and an
equipment  financing agreement with Siemens Telecom Networks  ("Siemens"),  will
provide  sufficient  funds for the Company to expand its  business as  presently
planned and to fund its operating  expenses through September 2000.  Thereafter,
the  Company  expects to  require  additional  financing.  In the event that the
Company's  plans  or  assumptions  change  or  prove  to be  inaccurate,  or the
foregoing sources of funds prove to be insufficient to fund the Company's growth
and operations, or if the Company consummates  acquisitions,  the Company may be
required to seek  additional  capital (or seek  additional  capital  sooner than
currently anticipated).  Sources of financing may include public or private debt
or equity financing by the Company or its subsidiaries, sales of assets or other
financing  arrangements.  There can be no assurance  that  additional  financing
would be available to the Company or, if available, that it could be obtained on
acceptable terms or within the limitations  contained in the Company's financing
arrangements.  Failure to obtain  such  financing  could  result in the delay or
abandonment of some or all of the Company's  development and expansion plans and
expenditures  and could  have a material  adverse  effect on the  Company.  Such
failure  could also  limit the  ability of the  Company  to make  principal  and
interest payments on its outstanding  indebtedness,  which would have a material
adverse  effect on the value of the Common  Shares.  The Company has no material
working  capital or other credit  facility under which it may borrow for working
capital and other general  corporate  purposes.  There can be no assurance  that
such a facility will be available to the Company in the future or that if such a
facility  were  available,  that it would be available  on terms and  conditions
acceptable to the Company.


                                       -5-


<PAGE>
SUBSTANTIAL INDEBTEDNESS

         At March 31, 1998, the Company had outstanding on a consolidated  basis
approximately  $796.9 million of  indebtedness  and $54.6 million of mandatorily
redeemable  preference  shares.  In addition,  the  accretion of original  issue
discount will cause a $106.9  million  increase in  liabilities  by December 15,
2000  relating  to the 13 7/8%  Senior  Discount  Notes due 2005 of GST USA (the
"Senior Notes") and the 13 7/8% Convertible Senior  Subordinated  Discount Notes
due 2005 of the Company (the  "Convertible  Notes" and together  with the Senior
Notes,  the "1995 Notes") sold in December  1995, a $116.2  million  increase in
liabilities  relating  to the Accrual  Notes by  November  15, 2002 and a $200.0
million  increase in liabilities  relating to the 1998 Notes by May 1, 2003. The
indentures  relating to the 1995 Notes (the "1995  Indentures"),  the  indenture
relating to the Secured Notes (the  "Secured  Notes  Indenture"),  the indenture
relating to the Accrual Notes (the "Accrual Notes  Indenture") and the indenture
relating to the 1998 Notes (the "1998 Notes  Indenture"  and  together  with the
1995  Indentures,  the Secured Notes Indenture and the Accrual Notes  Indenture,
the  "Indentures")  limit,  but do not  prohibit,  the  incurrence of additional
indebtedness by the Company. At March 31, 1998, the Company had $30.5 million of
availability   under  the  Tomen  Facility  to  finance  the   development   and
construction  of additional  networks,  if and to the extent that  proposals for
funding projects are approved by Tomen. The Company expects to incur substantial
additional indebtedness in the future. The Company has entered into an agreement
with Siemens (the "Siemens Loan Agreement") that provides for up to an aggregate
of $226.0 million in equipment  financing,  of which $116.0 million is presently
available to the Company  (and of which $7.9 million had been  provided at March
31,  1998).  The Company may seek to increase the amount  available up to $226.0
million on an  as-needed  basis,  subject to the  negotiation  and  execution of
mutually satisfactory documentation.  The Company also entered into an agreement
(the "NTFC Loan  Agreement")  with NTFC Capital Corp. for up to $50.0 million of
additional equipment financing (all of which had been provided to the Company at
March 31, 1998). There can be no assurance that any additional financing will be
available to the Company on acceptable terms or at all.

         The  level  of  the  Company's   indebtedness   could  have   important
consequences to its future prospects,  including the following: (i) limiting the
ability  of the  Company  to obtain any  necessary  financing  in the future for
working  capital,  capital  expenditures,  debt  service  requirements  or other
purposes;  (ii) requiring that a substantial  portion of the Company's cash flow
from  operations,  if any,  be  dedicated  to the  payment of  principal  of and
interest  on  its  indebtedness  and  other  obligations;   (iii)  limiting  its
flexibility  in planning  for, or  reacting  to changes in, its  business;  (iv)
possibly placing the Company at a competitive  disadvantage,  because it will be
more highly  leveraged  than some of its  competitors;  and (v)  increasing  the
Company's vulnerability in the event of a downturn in its business.

POSSIBLE INABILITY TO SERVICE DEBT; REFINANCING RISKS

         In  connection  with the  buildout of its  networks  and  expansion  of
competitive local exchange telephone  companies  ("CLEC") services,  the Company
has been experiencing  increasing negative EBITDA. The Company's earnings before
fixed  charges  were  insufficient  to cover fixed  charges for the three months
ended March 31, 1998, the three months ended December 31, 1997,  Fiscal 1997 and
the fiscal year ended September 30, 1996 ("Fiscal 1996") by $46.7 million, $42.0
million, $127.0 million and $62.9 million, respectively and the Company's EBITDA
minus capital expenditures and interest expense for the three months ended March
31, 1998, the three months ended December 31, 1997,  Fiscal 1997 and Fiscal 1996
was negative $77.9 million,  negative $77.6 million, negative $315.3 million and
negative  $152.7  million,  respectively.  There  can be no  assurance  that the
Company will be able to improve its earnings  before fixed  charges or EBITDA or
that  the  Company  will be able to meet its debt  service  obligations.  As the
Company does not currently have a revolving credit facility, if a shortfall


                                       -6-


<PAGE>
occurs,  alternative  financing  would be  necessary in order for the Company to
meet  its  liquidity  requirements  and  there  can be no  assurance  that  such
financing would be available.  In such event, the Company could face substantial
liquidity  problems.  In addition,  the Company  anticipates that cash flow from
operations  will be  insufficient to pay interest in cash on both the 1995 Notes
when  such  interest  becomes  payable  in June  2001 and on the  Secured  Notes
starting in November 2000 once the amount pledged to fund the first six interest
payments on the Secured  Notes is utilized and to repay the 1995 Notes,  Secured
Notes,  the  Accrual  Notes  and the  1998  Notes  at  maturity  and  that  such
indebtedness  will need to be  refinanced.  There can be no  assurance  that the
Company will be able to effect such refinancings.  The ability of the Company to
meet its  obligations  and to effect such  refinancings  will be dependent upon,
among other things, the future performance of the Company, which will be subject
to prevailing economic conditions and to financial,  business and other factors,
including  factors beyond the control of the Company.  Failure by the Company to
meet its obligations could result in a default on its indebtedness,  which would
permit  the  holders  of  substantially  all of the  Company's  indebtedness  to
accelerate the maturity thereof.

FINANCIAL AND OPERATING RESTRICTIONS IMPOSED BY EXISTING INDEBTEDNESS

         The Company's financing  arrangements impose significant  operating and
financial  restrictions on the Company. Such restrictions affect, and in certain
cases  significantly  limit or prohibit,  among other things, the ability of the
Company to incur additional  indebtedness or to create liens on its assets, sell
assets, engage in mergers or acquisitions or make investments. Failure to comply
with any such covenant could result in a default thereunder,  which could result
in an acceleration of such indebtedness.

DIFFICULTIES IN IMPLEMENTING LOCAL AND ENHANCED SERVICES

         The Company has deployed and plans to continue to deploy high  capacity
digital  switches  in the  cities  in which  it  operates  or  plans to  operate
networks,  as well as in  certain  cities  where the  Company  will rely on ILEC
facilities  for  transmission.  This  enables  the Company to offer a variety of
switched  access  services,  enhanced  services and local dial tone. The Company
expects  negative  EBITDA from its switched  services  during the 24 to 36 month
period after a switch is deployed.  For switches  operating in conjunction  with
the Company's networks,  the Company expects operating margins to improve as the
network is expanded and larger  volumes of traffic are carried on the  Company's
network.  For  switches  operating  in cities  where the Company  relies on ILEC
facilities  for  transmission,  the Company  will  experience  lower or negative
operating  margins.  The ILECs will be required to  unbundle  local  tariffs and
permit the Company to purchase only the origination and termination  services it
needs,  thereby decreasing  operating  expenses.  There can be no assurance that
such  unbundling  will be  effected  in a timely  manner  and  result  in prices
favorable to the Company.  In addition,  the Company's  ability to  successfully
implement  its switched and enhanced  services will require the  negotiation  of
resale   agreements   with  ILECs  and  other  CLECs  and  the   negotiation  of
interconnection  agreements with ILECs, which can take considerable time, effort
and expense.

         In August  1996,  the  Federal  Communications  Commission  (the "FCC")
released  a  decision  (the   "Interconnection   Decision")   implementing   the
interconnection   portions   of  the   Telecommunications   Act  of  1996   (the
"Telecommunications  Act"). The Interconnection  Decision  establishes rules for
negotiating  interconnection  agreements  and  guidelines  for  review  of  such
agreements by state public utilities commissions. On July 18, 1997, the Court of
Appeals for the Eighth Circuit (the "Eighth  Circuit")  vacated certain portions
of the Interconnection  Decision,  including  provisions  establishing a pricing
methodology  for unbundled  elements and a procedure  permitting new entrants to
"pick  and  choose"  among  various   provisions  of  existing   interconnection
agreements between ILECs and their competitors.  On October 14, 1997, the Eighth
Circuit issued a decision vacating


                                       -7-

<PAGE>
additional  FCC rules that will likely have the effect of increasing the cost of
obtaining the use of combinations of an ILEC's unbundled network  elements.  The
Eighth Circuit decision creates  uncertainty about the rules governing  pricing,
terms and conditions of interconnection  agreements,  and could make negotiating
and enforcing  such  agreements  more  difficult and  protracted and may require
renegotiation  of existing  agreements.  The Company had  negotiated a number of
interconnection  agreements  with ILECs  prior to the Eighth  Circuit  decision.
There  can  be  no   assurance   that  the  Company   will  be  able  to  obtain
interconnection agreements on terms acceptable to the Company. The Supreme Court
has accepted for review the Eighth Circuit decisions. See "-- Competition."

         The Company will generally be dependent on ILECs for provision of local
telephone  service  through access to local loops,  termination  service and, in
some markets,  central office switches of such carriers. In addition, in certain
markets the Company intends to obtain the local  telephone  services of the ILEC
on a wholesale basis and resell that service to end users. Any successful effort
by the ILEC to deny or  substantially  limit the Company's  access to the ILEC's
network  elements or wholesale  services could have a material adverse effect on
the  Company's  ability  to  provide  local  telephone  services.  Although  the
Telecommunications Act imposes  interconnection  obligations on ILECs, there can
be no assurance  that the Company will be able to obtain  access to such network
elements  or  services at rates,  and on terms and  conditions,  that permit the
Company  to  offer  local  services  at  rates  that  are  both  profitable  and
competitive. As discussed above, the Eighth Circuit recently struck down certain
FCC rules intended to govern such rates, terms and conditions.

         Many new carriers, including the Company, have experienced difficulties
with  respect  to  provisioning,  interconnection  and the  operational  support
systems used by new carriers to order and receive network elements and wholesale
services  from the ILECs.  These  systems are necessary for new carriers such as
the Company to provide  local  service to customers on a timely and  competitive
basis.  The FCC has recently  created a task force to examine problems that have
slowed  the  development  of  local  telephone  competition.  In  addition,  the
Telecommunications  Act creates incentives for Regional Bell Operating Companies
("RBOCs") to permit  access to their  facilities  by denying  such  carriers the
ability to provide long  distance  services in their regions until they have met
specified  conditions  opening their markets to  competition at the local level.
The U.S.  District  Court for the  Northern  District  of Texas has found  these
provisions unconstitutional,  but this order has been stayed pending appeal. The
RBOCs in the Company's  markets have indicated their intent to seek authority to
provide  in-region long distance  services,  but are not yet permitted to do so.
There can be no assurance  that the RBOCs will be  accommodating  to the Company
once they are permitted to offer  in-region  long distance  service.  Should the
Company be unable to obtain the  cooperation of an ILEC in a region,  whether or
not such ILEC has been authorized to offer in-region long distance service,  the
Company's  ability  to offer  local  services  in such  region  on a timely  and
cost-effective basis would be adversely affected.

         The  Company is a recent  entrant  into the newly  created  competitive
local telecommunications  services industry. The local dial tone services market
was opened to competition due to the passage of the  Telecommunications  Act and
related  state and federal  regulatory  rulings.  There are  numerous  operating
complexities  associated with providing these services.  The Company is required
to develop new  products,  services  and  systems  and to develop new  marketing
initiatives to sell these services.

         The Company's  switched  services may not be  profitable  due to, among
other factors, lack of customer demand, inability to secure access to facilities
of ILECs at acceptable rates,  competition from other CLECs and pricing pressure
from the ILECs.  The  Company has very  limited  experience  providing  switched
access  and local  dial tone  services  and there can be no  assurance  that the
Company  will  be able to  successfully  implement  its  switched  and  enhanced
services strategy.


                                       -8-


<PAGE>
RECENT COMMENCEMENT OF INTEGRATED MARKETING EFFORT

         The Company has only recently begun an integrated  marketing  effort of
its telecommunication service offerings.  Historically, the Company has marketed
its  access  services  primarily  to  long  distance  carriers  and  significant
end-users of  telecommunications  services,  and its long  distance  services to
small businesses and consumers. Although the Company expects to market a variety
of  telecommunications  services  to  all  of  its  customers,  there  can be no
assurance  that the Company will be able to attract and retain new  customers or
retain and sell additional services to existing customers.

DEPENDENCE ON KEY CUSTOMERS

         The  Company's  five  largest  telecommunications   services  customers
accounted  for  approximately  20.5%,  16.8%,  20.8% and 46.9% of the  Company's
consolidated  telecommunications  services  revenues  for the three months ended
March 31, 1998, the three months ended December 31, 1997, Fiscal 1997 and Fiscal
1996,  respectively.   It  is  anticipated  that  during  the  early  stages  of
development  of individual  networks,  before  obtaining a sufficient  amount of
end-user  revenues,  the Company will be  dependent on a limited  number of long
distance  carriers for a significant  portion of its local revenues.  While long
distance  carriers have high volume  requirements and have utilized CLECs,  they
generally are more price sensitive than  end-users.  The loss of, or decrease of
business from, one or more  significant  customers could have a material adverse
effect on the  business,  financial  condition  and results of operations of the
Company.

RISKS RELATING TO LONG DISTANCE BUSINESS

         For the three  months  ended March 31,  1998,  the three  months  ended
December 31, 1997, Fiscal 1997 and Fiscal 1996, long distance represented 53.0%,
49.4%, 59.2% and 56.0% of the Company's consolidated telecommunications services
revenues,  respectively. The long distance business is extremely competitive and
prices have declined  substantially in recent years and are expected to continue
to decline. In addition,  the long distance industry has historically had a high
average churn rate, as customers  frequently  change long distance  providers in
response  to  the  offering  of  lower  rates  or   promotional   incentives  by
competitors.  See "--  Competition."  The  Company  relies on other  carriers to
provide  transmission  and  termination  services  for a  majority  of its  long
distance traffic.  The Company has resale agreements with long distance carriers
to provide it with transmission services.  Such agreements typically provide for
the resale of long distance  services on a per minute basis with minimum  volume
commitments. Negotiation of these agreements involves estimates of future supply
and demand for transmission capacity as well as estimates of the calling pattern
and traffic levels of the Company's future  customers.  In the event the Company
fails  to meet  its  minimum  volume  commitments,  it may be  obligated  to pay
underutilization  charges  and in the  event  it  underestimates  its  need  for
transmission  capacity,  the Company may be required to obtain capacity  through
more expensive means.

         Charges for access service for the  origination and termination of long
distance  traffic have made up a significant  portion of the  Company's  overall
cost of providing long distance service. In May 1997, the FCC adopted changes to
its  interstate  access rules that among other things reduce  per-minute  access
charges and  substitute  new per-line  flat rate monthly  charges.  The FCC also
approved  reductions  in overall  access  rates,  and  established  new rules to
recover subsidies to support  universal  service and other public policies.  The
impact on these changes on the Company or its competitors is not yet clear.  The
Company  could be  adversely  affected  if it does not  experience  access  cost
reductions  proportionally  equivalent to those of its  competitors.  Insofar as
Internet-based  competitors continue to be exempt from these charges, they could
enjoy a significant cost advantage in this area.

                                       -9-

<PAGE>
PRICING PRESSURES AND RISKS OF INDUSTRY OVER-CAPACITY

         The  long   distance   transmission   industry   has   generally   been
characterized by over-capacity and declining prices since shortly after the AT&T
Corp.  ("AT&T")  divestiture  in 1984.  The Company  believes  that, in the last
several years,  increasing  demand has  ameliorated the  over-capacity  and that
pricing pressure has been reduced.  However, the Company anticipates that prices
for its  wholesale  longhaul  services  will  continue to decline  over the next
several  years.  While demand  continues to increase,  the Company is aware that
certain long distance  carriers are expanding  their  capacity and believes that
other long distance carriers, as well as potential new entrants to the industry,
are constructing new fiber optic and other long distance  transmission  networks
in the  United  States.  Because  the cost of the  actual  fiber (as  opposed to
construction  costs) is a relatively  small  portion of the cost of building new
transmission lines, persons building such lines are likely to install fiber that
provides  substantially more transmission  capacity than will be needed over the
short or medium term. Further,  recent technological advances may greatly expand
the capacity of existing and new fiber optic cable.  Although such technological
advances  may enable the Company to increase  its  capacity,  an increase in the
capacity of the  Company's  competitors  could  adversely  affect the  Company's
business.  If  industry  capacity  expansion  results in capacity  that  exceeds
overall  demand along any of the Company's  routes,  severe  additional  pricing
pressure   could   develop.   In  addition,   strategic   alliances  or  similar
transactions,  such as the long  distance  capacity  purchasing  alliance  among
certain  RBOCs  announced  in the  spring of 1996,  could  result in  additional
pricing pressure on long distance  carriers.  Furthermore,  the marginal cost of
carrying an additional call over existing fiber optic cable is extremely low. As
a result,  within a few  years,  there may be  dramatic  and  substantial  price
reductions.

DEPENDENCE ON BILLING,  CUSTOMER  SERVICES AND  INFORMATION  SYSTEMS;  YEAR 2000
ISSUES

         Sophisticated  information  and  processing  systems  are  vital to the
Company's  growth and its ability to monitor costs,  bill  customers,  provision
customer  orders and achieve  operating  efficiencies.  Billing and  information
systems  for the  Company's  historical  lines of  business  have been  produced
largely  in-house with partial  reliance on third-party  vendors.  These systems
have generally met the Company's needs due in part to the low volume of customer
billing. As the Company transitions to the provisioning of local services and as
its long  distance  and  Internet  operations  continue to expand,  the need for
sophisticated  billing and  information  systems will continue to increase.  The
Company's plans for the development  and  implementation  of its billing systems
rely, for the most part, on the delivery of products and services by third party
vendors. Similarly, the Company is developing customer call centers to provision
service  orders.  Information  systems  are  vital  to the  success  of the call
centers,  and the  information  systems for these call centers are largely being
developed by third party vendors.  Failure of these vendors to deliver  proposed
products and services in a timely and effective manner and at acceptable  costs,
failure  of the  Company  to  adequately  identify  all of its  information  and
processing  needs,  failure of the Company's  related  processing or information
systems,  or the failure of the Company to upgrade  systems as  necessary  could
have a  material  adverse  effect on the  ability  of the  Company  to reach its
objectives, its financial condition and its results of operations.

         Many  computer  systems will  experience  difficulty  processing  dates
beyond  the year  1999  and will  need to be  modified  prior to the year  2000.
Failure  to  make  such  modifications   could  result  in  system  failures  or
miscalculations  causing  disruptions of operations,  including  among others an
inability to process  transactions,  send invoices or engage in normal  business
activities.  The  Company's  core  internal  systems  that  have  been  recently
implemented  are year 2000  compliant.  The remaining core internal  systems are
scheduled  to be replaced by the second  quarter of 1999 and are  expected to be
year 2000 compliant when

                                      -10-


<PAGE>
installed.  The Company is also completing a preliminary assessment of year 2000
issues not related to its core systems,  including  issues  surrounding  systems
that interface with those  operated by unrelated  parties.  Based on its initial
evaluation,  the Company does not believe that the cost of remedial actions will
have a  material  adverse  effect on the  Company's  results of  operations  and
financial condition. There can be no assurance,  however, that there will not be
a delay in, or increased costs associated with, the implementation of changes as
the program  progresses,  and failure to implement  such  changes  could have an
adverse effect on future results of operations.

COMPETITION

         The telecommunications industry is highly competitive. In most markets,
the Company's  principal  competitor for local exchange  services is the RBOC or
GTE  Corporation   and  its  affiliated   companies   (collectively,   the  "GTE
Companies").  Other competitors may include other CLECs, microwave and satellite
carriers,  wireless  telecommunications  providers and private networks built by
large  end-  users.   Potential   competitors   (using   similar  or   different
technologies)  include cable television  companies,  utilities and RBOCs outside
their current local service areas. In addition,  the Company  anticipates future
competition from large long distance carriers,  such as AT&T, MCI Communications
Corporation ("MCI") and Sprint Corporation ("Sprint"), which have begun to offer
integrated local and long distance  telecommunications  services.  AT&T also has
announced its intention to offer local services using a new wireless technology.
Several  companies  have  begun to offer  telecommunications  services  over the
Internet at rates  substantially  below current long distance  rates.  Companies
offering telecommunications services over the Internet could enjoy a significant
cost  advantage  because at this time they do not pay carrier  access charges or
universal service fees. The influx of competitors into the Company's markets and
into  markets  that the  Company  may  subsequently  enter  may  result  in more
participants than can ultimately be successful in a given market.  Consolidation
of telecommunications  companies and the formation of strategic alliances within
the telecommunications industry, as well as the development of new technologies,
could give rise to significant  new competitors to the Company.  In addition,  a
continuing  trend toward business  combinations  and strategic  alliances in the
telecommunications  industry  may  further  enhance  competition.  For  example,
WorldCom Inc. ("WorldCom") acquired MFS Communications Company, Inc. ("MFS") and
Brooks Fiber  Properties Inc.  ("Brooks") and has agreed to acquire MCI, each of
which  compete  with the  Company in several of the markets in which the Company
operates.  AT&T has announced its intention to acquire  Teleport  Communications
Group, Inc. ("Teleport"),  a CLEC that also competes with the Company in several
markets. The Company cannot determine what effect such acquisitions will have on
the Company's business, financial condition and results of operations.

         As a  recent  entrant  in the  integrated  telecommunications  services
industry,  the  Company  has not  achieved  and does not  expect  to  achieve  a
significant market share for any of its services. In particular,  the RBOCs, the
GTE  Companies  and  other  local   telephone   companies   have   long-standing
relationships  with their  customers,  have  financial,  technical and marketing
resources substantially greater than those of the Company, have the potential to
subsidize  competitive  services with revenues from a variety of businesses  and
currently  benefit from certain  existing  regulations that favor the ILECs over
the Company in certain  respects.  While recent  regulatory  initiatives,  which
allow CLECs such as the Company to interconnect  with ILEC  facilities,  provide
increased  business   opportunities  for  the  Company,   such   interconnection
opportunities  have been  accompanied by increased  pricing  flexibility for and
relaxation of regulatory  oversight of the ILECs.  For example,  the FCC granted
ILECs additional  flexibility in pricing their  interstate  special and switched
access services on a central office  specific basis.  Under this pricing scheme,
ILECs may  establish  pricing zones based on access  traffic  density and charge
different  prices for central offices in each zone. On February 8, 1997, new FCC
rules became effective  allowing ILECs to file  streamlined  tariffs on 15 days'
notice for rate increases


                                      -11-


<PAGE>
and seven days' notice for rate decreases. Unless the FCC acts during the notice
period,  such  tariffs  become  effective  at its end.  The Company has begun to
target  Tier 1  cities  and  competition  in  such  markets  is  expected  to be
significantly  greater  than in Tier 2 and Tier 3 cities in which the Company is
currently operating.

         To the extent the Company  interconnects with and uses ILEC networks to
service its  customers,  the Company will be dependent  upon the  technology and
capabilities  of the  ILECs  to meet  certain  telecommunications  needs  of the
Company's  customers  and to maintain  its service  standards.  The Company will
become increasingly dependent on interconnection with ILECs as switched services
become a greater percentage of the Company's  business.  The  Telecommunications
Act imposes interconnection  obligations on ILECs, but there can be no assurance
that the  Company  will be able to obtain the  interconnection  it  requires  at
rates,  and on terms and  conditions,  that permit the Company to offer switched
services at rates that are simultaneously  competitive and profitable.  See " --
Difficulties in Implementing Local and Enhanced Services." In the event that the
Company  experiences  difficulties  in  obtaining  high  quality,  reliable  and
reasonably  priced service from the ILECs, the  attractiveness  of the Company's
services to its customers could be impaired.

         The  long   distance   telecommunications   industry   has   relatively
insignificant  barriers  to  entry,  numerous  entities  competing  for the same
customers  and a high average churn rate,  as customers  frequently  change long
distance  providers  in response to the  offering of lower rates or  promotional
incentives by  competitors.  The Company  competes  with major  carriers such as
AT&T,  MCI,  Sprint,  and WorldCom,  as well as other national and regional long
distance  carriers and resellers,  many of whom are able to provide  services at
costs that are lower than the Company's current costs. Many of these competitors
have greater financial,  technological and marketing resources than the Company.
In addition, as a result of the  Telecommunications  Act, the RBOCs are expected
to become  competitors  in the long  distance  telecommunications  industry both
outside  their  service   territory  and,  upon  the   satisfaction  of  certain
conditions,  within their  service  territory.  SBC  Communications  Corporation
("SBC") has challenged the constitutionality of the provisions conditioning RBOC
entry into  in-region long distance  service.  The district court has determined
that the provision of the  Telecommunications Act that prohibits RBOC entry into
long  distance  markets is  unconstitutional.  A stay of that  decision has been
granted  pending a decision by the United  States Court of Appeals for the Fifth
Circuit (the "Fifth Circuit").

         The Company believes that the principal  competitive  factors affecting
its long distance  operations are pricing,  customer service,  accurate billing,
clear pricing policies and, to a lesser extent, variety of services. The ability
of the Company to compete  effectively will depend upon its continued ability to
maintain high quality,  market driven  services at prices  generally equal to or
below those charged by its competitors. To maintain its competitive posture, the
Company  believes that it must be in a position to reduce its prices in order to
meet reductions in rates, if any, by others. Any such reductions could adversely
affect the Company.

         The Company's longhaul business is subject to intense competition.  See
"-- Pricing Pressures and Risks of Industry Over-Capacity."

         The  Internet  services  market  is  highly  competitive.  There are no
substantial  barriers to entry,  and the Company expects that  competition  will
continue to intensify. The Company's competitors in this market include Internet
service providers, other telecommunications companies, online services providers
and  Internet  software  providers.  Many  of  these  competitors  have  greater
financial,  technological  and marketing  resources than those  available to the
Company.


                                      -12-


<PAGE>
         On  February  25,  1998,  U S WEST  Communications,  Inc.  ("U S WEST")
petitioned  the FCC to allow it to build and  operate  packet-and  cell-switched
data  networks  across LATA  boundaries,  to permit it to carry  interLATA  data
traffic  incident to its provision of digital  subscriber line services,  to not
require it to make those data  services  available on a discounted  resale basis
and to not  require  it to make the  non-bottleneck  elements  of such  services
available on an unbundled  basis.  The Company  provides  certain  services with
which U S WEST proposed services would compete if the petition is granted by the
FCC.

         The  recent  World  Trade  Organization   ("WTO")  agreement  on  basic
telecommunications   services  could  increase  the  Company's  competition  for
telecommunication  services both  domestically and  internationally.  Under this
agreement,  the United States and other members of the WTO committed  themselves
to opening their telecommunications markets to competition and foreign ownership
and  to   adopting   regulatory   measures   to  protect   competitors   against
anticompetitive  behavior by dominant  telephone  companies,  effective  in some
cases as early as January 1, 1998.

         The Company believes that providers of wireless  services  increasingly
will offer,  in  addition to products  that  supplement  a  customer's  wireline
communications,  wireline  replacement  products  that may  result  in  wireless
services becoming the customer's primary mode of communication. Competition with
providers of wireless services may be intense.  Many of the Company's  potential
wireless competitors have substantially greater financial, technical, marketing,
sales,  manufacturing and distribution resources than the Company.  Furthermore,
the FCC has made spectrum available through public auction over the past several
years for use in wireless  communications and began offering additional spectrum
in February 1998. This additional spectrum is intended by the FCC to be used for
broadband,  data and video  transmission  but its use in wireless  local loop is
also possible.

GOVERNMENT REGULATION

         The  Company's  networks and the provision of switched and private line
services are subject to significant  regulation at the federal,  state and local
levels.  Delays in receiving required  regulatory  approvals or the enactment of
new adverse  regulation or regulatory  requirements  may have a material adverse
effect upon the Company.  The FCC exercises  jurisdiction  over the Company with
respect to interstate  and  international  services.  Additionally,  the Company
files tariffs with the FCC. On October 29, 1996,  the FCC approved an order that
eliminates the tariff filing  requirements for interstate domestic long distance
service provided by non-dominant  carriers such as the Company.  On February 13,
1997,  the United  States Court of Appeals for the District of Columbia  Circuit
stayed  the  FCC  order.  In  addition,   the  Company  must  obtain  prior  FCC
authorization  for installation  and operation of  international  facilities and
international  long distance  services.  State regulatory  commissions  exercise
jurisdiction over the Company to the extent it provides intrastate services.  As
such a provider,  the Company is  required  to obtain  regulatory  authorization
and/or  file  tariffs  at  state  agencies  in most of the  states  in  which it
operates.  Certificates  of  authority  to provide  services  can  generally  be
conditioned,  modified,  cancelled,  terminated or revoked for failure to comply
with rules and regulations. Fines and other penalties may also be imposed. Local
authorities  regulate  the  Company's  access to  municipal  rights-of-way.  The
networks are also subject to numerous local  regulations  such as building codes
and  licensing.  Such  regulations  vary on a city by city and  county by county
basis.  There can be no assurance that the FCC or state  commissions  will grant
required  authority or refrain from taking  action  against the Company if it is
found to have provided services without obtaining the necessary  authorizations.
If authority is not obtained or if tariffs are not filed, or are not updated, or
otherwise do not fully  comply with the tariff  filing rules of the FCC or state
regulatory agencies,  third parties or regulators could challenge these actions.
Such  challenges  could  cause  the  Company  to  incur  substantial  legal  and
administrative expenses.


                                      -13-


<PAGE>
         The Telecommunications  Act provides for a significant  deregulation of
the domestic  telecommunications  industry,  including the local exchange,  long
distance and cable television  industries.  The  Telecommunications  Act remains
subject to judicial review and additional FCC and state rulemakings, and thus it
is difficult to predict what effect the legislation will have on the Company and
its operations.  There are currently many regulatory  actions underway and being
contemplated by federal and state authorities regarding  interconnection pricing
and other  issues  that could  result in  significant  changes  to the  business
conditions in the  telecommunications  industry.  There can be no assurance that
these changes will not have a material adverse effect upon the Company.

         In addition to requirements placed on ILECs, the Telecommunications Act
subjects  the  Company  to  certain  federal  regulatory  requirements  upon the
Company's  provision of local exchange service in a market.  All ILECs and CLECs
must  interconnect  with other  carriers,  provide  nondiscriminatory  access to
rights-of-way,  offer  reciprocal  compensation  for  termination of traffic and
provide dialing parity and telephone number portability.  The Telecommunications
Act also requires all telecommunications  carriers to ensure that their services
are accessible to and usable by persons with disabilities.

         On May 8, 1997, the FCC released an order  establishing a significantly
expanded  federal  telecommunications  subsidy  regime.  For  example,  the  FCC
established  new  subsidies  for  services  provided to  qualifying  schools and
libraries with an annual cap of $2.25 billion and for services provided to rural
health care providers with an annual cap of $400 million.  The FCC also expanded
the  federal  subsidies  to  low-income   consumers.   Providers  of  interstate
telecommunications  service,  such as the  Company,  as well  as  certain  other
entities,  must pay for these  programs.  The  Company's  share of these federal
subsidy funds will be based on its share of certain  defined  telecommunications
end-user  revenues.  The  revenues for the high cost and low income fund are the
Company's estimated quarterly  interstate and gross end-user  telecommunications
revenues.  The revenues for the schools and libraries and rural health care fund
are the Company's estimated quarterly  intrastate,  interstate and international
gross end-user  telecommunications  revenues. The contribution factors issued by
the FCC for  the  first  and  second  quarters  of 1998  are  3.19%  and  3.14%,
respectively,  for the  high  cost  and low  income  fund  and  .72%  and  .76%,
respectively,  for the schools, libraries and rural healthcare fund. The amounts
contributed  may be billed to  customers.  The  Company has been billed for such
contributions  and  on an  annualized  basis,  the  amounts  billed  would  have
represented  less than 1% of total  revenues  for  Fiscal  1997.  In the May 8th
order, the FCC also announced that it will soon revise its rules for subsidizing
service provided to consumers in high cost areas.  Several parties have appealed
the May 8th order.  Such appeals have been  consolidated  and transferred to the
United  States Court of Appeals for the Fifth  Circuit  where they are currently
pending.  In addition,  on July 3, 1997, several ILECs filed a petition for stay
of the May 8th order with the FCC. That petition is pending.

         The FCC released a Report to Congress on April 10, 1998  concerning its
implementation   of   the   telecommunications   subsidy   provisions   of   the
Telecommunications   Act.  The  FCC   clarified   that   entities  that  provide
transmission    capacity   to   Internet   service   providers   are   providing
telecommunications  services  subject  to  contribution  requirements.  The  FCC
indicated that it would address the issue of whether ISPs would  contribute to a
universal  service  fund  based on the  utilization  of their  own  transmission
facilities   at  a  later  date  and  whether   certain  ISP  services  such  as
phone-to-phone IP telephony are telecommunications services subject to universal
service fund contribution and access charge payments.

         In a  combined  Report  and Order and  Notice  of  Proposed  Rulemaking
released on December 24, 1996, the FCC made changes and proposed further changes
in the  interstate  access charge  structure.  In the Report and Order,  the FCC
removed  restrictions  on ILECs'  ability to lower access prices and relaxed the
regulation


                                      -14-


<PAGE>
of new switched access services in those markets where there are other providers
of access  services.  If this increased  pricing  flexibility is not effectively
monitored by federal regulators,  it could have a material adverse effect on the
Company's ability to compete in providing interstate access services. On May 16,
1997, the FCC released an order revising its access charge rate  structure.  The
new rules substantially increase the costs that ILECs subject to the FCC's price
cap rules ("price cap LECs")  recover  through  monthly,  non-traffic  sensitive
access charges and substantially  decrease the costs that price cap LECs recover
through traffic  sensitive  access charges.  In the May 16th order, the FCC also
announced  its plan to bring  interstate  access  rate  levels more in line with
cost.  The plan will include rules that grant price cap LECs  increased  pricing
flexibility  upon   demonstrations   of  increased   competition  (or  potential
competition)  in relevant  markets.  The manner in which the FCC implements this
approach to lowering  access charge  levels could have a material  effect on the
Company's ability to compete in providing  interstate  access services.  Several
parties have appealed the May 16th order.  Those appeals have been  consolidated
and  transferred  to the United  States  Court of Appeals for the Eight  Circuit
where they are currently pending.

         In  addition,   federal  regulations  impose  restrictions  on  foreign
ownership of  communications  service  providers  utilizing  radio  frequencies,
including  microwave radio facilities,  and cellular and personal  communication
service ("PCS")  facilities.  The operations of GST Telecom  Hawaii,  Inc. ("GST
Hawaii"), a wholly-owned  subsidiary of GST that conducts the Company's business
in Hawaii, use, among other transmission facilities,  microwave radio facilities
operating pursuant to FCC licenses granted to Pacwest Network,  Inc. ("PNI"), an
entity that is controlled by John Warta, the Company's Chairman of the Board and
Chief Executive Officer.  As a result of changes in federal policies,  it is the
intention  of the  Company  and PNI to  reach  an  agreement  to  transfer  such
microwave  facilities  and  associated  licenses to the Company,  subject to FCC
approval. The FCC also has the authority,  which it is not presently exercising,
to impose restrictions on foreign ownership of communications  service providers
not utilizing radio frequencies.  In the event the FCC exercises such authority,
it could  have a  material  adverse  effect  on the  Company's  CLEC  and  other
businesses.

NEED TO ADAPT TO TECHNOLOGICAL CHANGE

         The  telecommunications  industry  is subject to rapid and  significant
changes  in  technology,  with the  Company  relying  on third  parties  for the
development of and access to new technology. The effect of technological changes
on the business of the Company  cannot be  predicted.  The Company  believes its
future  success will depend,  in part,  on its ability to anticipate or adapt to
such  changes  and to offer,  on a timely  basis,  services  that meet  customer
demands.

LITIGATION RISKS

         The  Company is involved in various  legal  proceedings.  An action was
commenced against NACT alleging that its telephone systems incorporating prepaid
debit card features  infringe upon a patent issued in 1987.  The Company and GST
USA were added as a defendant to such action in August 1997. Concurrent with the
Company's  sale of NACT,  the Company and World  Access,  Inc.  entered  into an
agreement  whereby  the  Company  generally  will bear 50% of any damages in the
action,  including reasonable attorneys' fees, losses,  liabilities,  claims and
assessments, royalties and license fees provided that if a court determines that
the  patent is valid and that it has been  infringed,  the  Company's  liability
associated  with future  royalties,  license  fees,  refunds and cost of product
replacement or modification is limited to $2.0 million. An unfavorable  decision
in such action could have a material adverse effect on the Company.  Other legal
proceedings  to which the Company is a party could have an adverse effect on the
Company.


                                      -15-


<PAGE>
POSSIBLE INABILITY TO RECOVER PAYMENTS MADE TO MAGNACOM

         Magnacom  Wireless,  L.L.C.  ("Magnacom"),  a company 99% owned by PNI,
which is controlled by John Warta, the Company's Chairman of the Board and Chief
Executive Officer,  has acquired various PCS licenses.  Magnacom holds 30 MHz (C
Block) PCS licenses for eleven markets in Arizona,  Arkansas, New Mexico, Oregon
and Utah.  Magnacom  was the winning  bidder for 10 MHz  licenses in the FCC's F
Block in 13 markets in Hawaii,  Idaho,  Oregon and Washington in an FCC auction.
Magnacom currently has an application on file with the FCC requesting  authority
to  effect a  reorganization  with  PCS Plus  Holdings  Corporation  ("PCS  Plus
Holdings"),  another company  controlled by Mr. Warta and of which Mr. Warta and
Stephen Irwin, Vice Chairman of the Board and Secretary of the Company, serve as
officers and directors.

         Magnacom  and the  Company  have  entered  into a master  services  and
facilities agreement (the "Magnacom Services Agreement") with an initial term of
five years pursuant to which (i) the Company has been designated a non-exclusive
reseller of PCS telephone services in the markets in which Magnacom has obtained
licenses,  and (ii) Magnacom has granted the Company a right of first refusal to
provide   switched   local  and  long  distance   services  and  other  enhanced
telecommunications services, to all of Magnacom's resellers in markets where the
Company has  operational  networks  provided that the Company's  rates and other
terms of service are competitive. Magnacom has agreed to sell PCS minutes to the
Company at $.05 per  minute,  subject to downward  adjustment  to equal the most
favorable rates offered to Magnacom's other resellers (but in no event less than
Magnacom's  cost). In connection  with the Magnacom  Services  Agreement,  as of
December 31, 1997, the Company had paid Magnacom  approximately $14.4 million as
prepayments for future PCS services.  The Magnacom Services Agreement supersedes
a previous reseller agreement between the Company and Magnacom.

         In  addition,  the Company has been  granted an option to acquire up to
PNI's entire interest in Magnacom (currently 99%). The exercise of the option is
subject to compliance  with all  applicable  FCC  regulations  relating to prior
approval of any transfer of control of PCS licenses, including those relating to
foreign ownership or control and requirements regarding the ownership of C and F
block licenses and interests in C and F block licensees. Accordingly, until such
time as FCC  regulations or  administrative  action permit the Company to own in
excess of 25% of Magnacom,  the option by its terms is limited to a 24% interest
in Magnacom.  The Company,  Magnacom and PNI are in negotiations with respect to
modifying the option in order to provide,  among other things,  that the Company
own no more than a 25% interest in Magnacom or PCS Plus  Holdings  upon exercise
of such option.

         In  addition,  the  Company may issue a warrant to purchase up to 4% of
the then outstanding Common Shares in connection with financing for Magnacom. If
such warrant is issued, the Company will record a one-time noncash charge, in an
amount equal to the value of the warrant.

         The provision of wireless  telecommunications  service by Magnacom will
be dependent upon the ability to obtain the financing necessary to make payments
to the FCC under the terms of its  licenses,  to obtain  working  capital and to
build the required  facilities,  including  the  purchase of  telecommunications
equipment. There can be no assurance that Magnacom will obtain such financing or
be able to provide PCS  services.  In such event,  the Company  would  likely be
unable to recover its payments to Magnacom.

DEPENDENCE ON KEY PERSONNEL

         The efforts of a small number of key management and operating personnel
will largely determine the Company's success and the loss of any of such persons
could adversely  affect the Company.  The success of the Company also depends in
part upon its ability to hire and retain highly skilled and qualified operating,


                                      -16-

<PAGE>
marketing,  financial and technical  personnel.  The  competition  for qualified
personnel in the telecommunications industry is intense and, accordingly,  there
can be no assurance  that the Company  will be able to hire or retain  necessary
personnel.

DEPENDENCE ON RIGHTS-OF-WAY AND OTHER THIRD PARTY AGREEMENTS

         The Company must obtain  easements,  rights-of-way,  entry to premises,
franchises  and licenses  from various  private  parties,  actual and  potential
competitors  and state and local  governments  in order to construct and operate
its  networks.   There  can  be  no  assurance  that  the  Company  will  obtain
rights-of-way  and franchise  agreements on acceptable  terms or that current or
potential  competitors  will not  obtain  similar  rights-of-way  and  franchise
agreements  that will allow them to compete  against the Company.  If any of the
existing  franchise or license agreements were terminated or not renewed and the
Company  were forced to remove its fiber optic cables or abandon its networks in
place, such termination could have a material adverse effect on the Company.

RISK OF JOINT INVESTMENTS

         The  Company  has  invested  in one joint  venture  and may enter  into
additional  joint ventures in the future.  There are risks in  participating  in
joint ventures,  including the risk that the other joint venture partners may at
any  time  have  economic,  business  or  legal  interests  or  goals  that  are
inconsistent  with those of the joint  venture or the Company.  The risk is also
present that a joint venture partner may be unable to meet its economic or other
obligations  to the venture and that the Company may be required to fulfill some
or all of those  obligations.  In  addition,  to the  extent  that  the  Company
participates in  international  joint ventures,  the operations of such ventures
will be  subject  to  various  additional  risks not  present  in the  Company's
domestic  joint  ventures,  such as  fluctuations  in currency  exchange  rates,
nationalization or expropriation of assets,  import/export  controls,  political
instability,  limitations on foreign investment,  restrictions on the ability to
convert currencies and the additional  expenses and risks inherent in conducting
operations in geographically distant locations with customers speaking different
languages and having different cultural approaches to the conduct of business.

         As of February 28, 1998,  the Company had invested  approximately  $3.7
million in a  publicly-traded  Canadian  corporation  (subsequently  renamed GST
Global  Telecommunications  Inc.,  "Global") and held  approximately 3.6 million
shares and warrants to purchase 750,000  additional shares. At that date, Global
had approximately  14.7 million shares outstanding  (approximately  28.7 million
shares on a fully diluted  basis,  excluding any  additional  shares that may be
issued to the Company as discussed  below).  It is the  Company's  position that
Global is to issue to the Company up to an additional 5,000,000 common shares of
Global,  subject to regulatory  approval in consideration  for the assignment by
the Company to Global of its rights to acquire a  telecommunications  project in
Mexico (the  "Bestel  Project").  Global has  asserted  that the Company is only
entitled to receive up to 3,000,000 additional common shares of Global,  subject
to the  approval of its board of directors  and  regulatory  approval.  To date,
Global has not issued any of its common shares to the Company in respect of such
assignment.

VARIABILITY OF QUARTERLY OPERATING RESULTS

         As a result of the limited revenues and significant expenses associated
with the expansion  and  development  of its networks and services,  the Company
anticipates that its operating results could vary  significantly  from period to
period. In addition,  revenues relating to the Company's network  businesses are
and may continue to be dependent upon a small number of customers and contracts,
revenues under which are likely to vary significantly from period to period.

                                      -17-

<PAGE>
VOLATILITY OF MARKET PRICE OF COMMON SHARES

         Since the Common Shares have been publicly  traded,  their market price
has  fluctuated  over a wide range and may continue to do so in the future.  The
market price of the Common Shares could be subject to  significant  fluctuations
in response to various  factors and events,  including  among other things,  the
depth and liquidity of the trading  market of the Common  Shares,  variations in
the Company's  operating  results and the difference  between actual results and
the results expected by investors and analysts.  In addition,  from time to time
the stock market has experienced  broad price and volume  fluctuations that have
often been  unrelated to the operating  performance  of  companies.  These broad
market  fluctuations  also may  adversely  affect the market price of the Common
Shares.

RISKS OF INVESTMENT IN A CANADIAN CORPORATION

         The Company is a  corporation  incorporated  under the Canada  Business
Corporations  Act.  Certain  of the  directors  and the  Company's  professional
advisors are residents of Canada or otherwise  reside outside of the U.S. All or
a  substantial  portion  of the  assets of such  persons  are or may be  located
outside of the U.S. It may be difficult to effect  service of process within the
United States upon the Company or upon such directors or  professional  advisors
or to realize in the U.S. upon judgments of U.S.  courts  predicated  upon civil
liability of the Company or such persons under U.S. federal securities laws. The
Company has been advised that there is doubt as to whether Canadian courts would
(i)  enforce  judgments  of U.S.  courts  obtained  against  the Company or such
directors or professional  advisors predicated solely upon the civil liabilities
provisions  of U.S.  federal  securities  laws,  or (ii) impose  liabilities  in
original actions against the Company or such directors and professional advisors
predicated solely upon such U.S. laws.  However,  a judgment against the Company
predicated  solely  upon  civil  liabilities  provisions  of such  U.S.  federal
securities  laws may be  enforceable  in Canada if the U.S.  court in which such
judgment was obtained has a basis for  jurisdiction in that matter that would be
recognized by a Canadian court. In addition,  the Company's status as a Canadian
company  limits the  ability of the Company to hold or control  radio  frequency
licenses in the United States.

SHARES ELIGIBLE FOR FUTURE SALE

         At March 31,  1998,  the  Company  had  outstanding  35,863,008  Common
Shares. Of these shares, 31,252,170 Common Shares were freely tradeable,  except
for any Common Shares held by  "affiliates" of the Company within the meeting of
Rule 144 under the  Securities  Act,  which shares will be subject to the resale
limitation of Rule 144. The remaining  4,610,838  Common Shares were "restricted
securities,"  as that term is defined in Rule 144 and may only be sold  pursuant
to a registration  statement under the Securities Act or an applicable exemption
from registration  thereunder,  including pursuant to Rule 144. In addition,  at
March 31, 1998,  (i)  4,116,332  Common  Shares were  reserved for issuance upon
exercise of outstanding stock options at prices ranging from $5.00 to $15.00 per
share,  (ii) 596,155  Common  Shares were reserved for issuance upon exercise of
outstanding  warrants at exercise prices ranging from $6.75 to $12.96 per share,
(iii) 3,574,495  Common Shares were reserved for issuance upon conversion of the
Convertible Notes (based on the aggregate accreted value of Convertible Notes on
March 31, 1998) and (iv) 4,933,072 Common Shares were reserved for issuance upon
conversion  of the  Company's  Series  A  Preference  Shares  sold in a  private
placement in February 1997 (the  "Redeemable  Preferred  Shares")  (based on the
aggregate accreted value of the Redeemable  Preferred Shares on March 31, 1998).
The  Company  has  registered  the resale of the  Common  Shares  issuable  upon
exercise of the options and warrants (other than the Common Shares issuable upon
exercise  of  warrants  to  purchase  75,000  Common  Shares  issued to Tomen in
connection with a recent  financing and the Shares being  registered  hereby and
the Common Shares issuable upon conversion of the Convertible  Notes. The future
sale or the  expectation  of future sales of Common  Shares in the public market
could adversely


                                      -18-


<PAGE>

affect the  prevailing  market prices for the Common Shares and could impair the
Company's ability to raise capital through the sale of Common Shares.

POTENTIAL ANTI-TAKEOVER PROVISIONS

         The Company's Board of Directors has the authority, without any further
vote  or  action  by  the  Company's  shareholders,  to  issue  up to  9,999,500
Preference Shares,  without par value (the "Preference  Shares"), in one or more
series and to determine  the  designations,  powers,  preferences  and relative,
participating,  optional or other rights thereof,  including without limitation,
the dividend rate (and whether  dividends are  cumulative),  conversion  rights,
voting rights, rights and terms of redemption,  redemption price and liquidation
preference.  Although the Company has no current  plans to issue any  Preference
Shares,  the rights of the holders of Common Shares would be subject to, and may
be  adversely  affected by, the rights of the holders of any  Preference  Shares
that may be issued in the future.  Issuance of Preference  Shares could have the
effect of delaying,  deterring or preventing a change in control of the Company,
including the imposition of various procedural and other requirements that could
make it more difficult for holders of Common Shares to effect certain  corporate
actions,  including the ability to replace incumbent directors and to accomplish
transactions opposed by the incumbent Board of Directors.

                                MATERIAL CHANGES

         In May 1998, the Company,  through an indirect wholly-owned subsidiary,
completed the 1998 Notes Offering of $500.0 million principal amount at maturity
of 1998 Notes.  The 1998 Notes will fully  accrete to face value on May 1, 2003.
From and after May 1, 2003,  the 1998 Notes  will bear  interest,  which will be
payable in cash,  at a rate of 10 1/2% per annum on each May 1 and  November  1,
commencing  November 1, 2003.  The Company  intends to use the net proceeds from
the 1998 Notes Offering,  aggregating  approximately $288.5 million, to purchase
telecommunications  equipment for the continued expansion of its infrastructure,
including the development and  construction of additional  networks and longhaul
fiber optic facilities.

                                   THE COMPANY

         The  Company  provides a broad range of  integrated  telecommunications
products and services,  primarily to business  customers  located in the western
continental  United States and Hawaii. As a  facilities-based  CLEC, the Company
operates state-of-the-art, digital telecommunications networks that represent an
alternative  to ILECs.  The  Company's  full  line of  products,  which  offer a
"one-stop"  solution to  customers'  telecommunications  services  requirements,
include local dial tone, long distance,  Internet, data transmission and private
line services.

         The Company's  digital networks  currently serve 40 markets in Arizona,
California,  Hawaii, Idaho, New Mexico, Texas and Washington.  In addition,  the
Company has networks under construction  which, when completed,  will expand its
regional footprint to Oregon.  The Company also constructs,  markets and manages
longhaul fiber optic facilities in Arizona, California and Hawaii. The Company's
longhaul  fiber  optic  facilities  currently  extend  over 900 route  miles and
approximately  1,700 route miles are under  construction  and expected to become
operational over the next 12 months.

         Management  believes  that  the  formation  of an  integrated  regional
network through the  interconnection of the Company's  individual  networks with
longhaul  fiber  optic  facilities  will  provide  significant  competitive  and
economic  advantages.  In  addition  to  providing  the  Company  with a  larger
addressable market, the interconnection of its networks is expected to allow the
Company  to carry a portion  of its  intra-regional  telecommunications  traffic
on-net,  thereby  improving  operating  margins by  reducing  payments  to other
carriers for use of

                                      -19-

<PAGE>
their facilities. In addition, increasing demand for high bandwidth capacity has
created  opportunities  for the Company to sell or lease capacity on its network
to other communications carriers.

                                 USE OF PROCEEDS

         The  Company  will  receive  the  exercise  price of the  options  when
exercised  by the  holders  thereof.  The  Company  will not  receive any of the
proceeds  from the reoffer and resale of the Shares by the Selling  Shareholders
and the Future Selling Shareholders.

                              SELLING SHAREHOLDERS

         This  Prospectus  relates to the reoffer and resale of Shares issued or
that may be issued to the Selling Shareholders under the Plans.

         The  following  table  sets  forth  (i) the  number  of  Common  Shares
beneficially  owned by each Selling  Shareholder as of April 30, 1998,  (ii) the
number of Shares to be offered for resale by each Selling  Shareholder and (iii)
the  number  and  percentage  of  Common  Shares  to be  held  by  each  Selling
Shareholder after completion of the offering.

<TABLE>
<CAPTION>

                                                                                                      Number of Common
                                                                                Number of           Shares/Percentage of
                                                   Number of Common           Shares to be           Class to be Owned
                                                  Shares Owned as of           Offered for          After Completion of
                   Name                             April 30, 1998               Resale                 the Offering
----------------------------------------      ------------------------     -----------------     ------------------------
<S>                                                  <C>                            <C>                   <C>
John Warta(1)                                        1,741,163(2)                   200,000               1,541,163/4.29%
Stephen Irwin(3)                                       443,011(4)                   200,000                  243,011/*
Joseph A. Basile, Jr.(5)                                  150,000                   450,000                          0
Daniel L. Trampush(6)                                      33,334                   210,000                          0
Clifford V. Sander(7)                                  366,100(8)                   108,000                  258,100/*
Robert H. Hanson(9)                                   160,481(10)                    35,000                  125,481/*
Joseph G. Fogg, III(11)                                         0                    10,000                          0
Mitsuhiro Naoe(12)                                              0                    10,000                          0
Jack G. Armstrong(13)                                  50,500(14)                    30,000                   20,500/*
Peter E. Legault(15)                                  128,250(16)                    35,000                   93,250/*
A. Roy Megarry(17)                                          5,000                    25,000                    5,000/*
Robert A. Ferchat(18)                                           0                    15,000                          0
</TABLE>

--------------------
*  Less than 1%.

(1)      Mr.  Warta has been  Chairman of the Board of the  Company  since March
         1997, Chief Executive Officer and a director of the Company since March
         1995.  He was the  President  of the  Company  from March 1995 to March
         1997.
(2)      Includes 191,666 Common Shares issuable upon exercise of options.  Does
         not include 133,334 Common Shares issuable upon the exercise of options
         that are not  exercisable  until the market price of the Common  Shares
         reaches certain levels for certain prescribed periods.
(3)      Mr.  Irwin has been Vice  Chairman  of the Board and a director  of the
         Company  since  September  1995  and  Secretary  of the  Company  since
         November  1992.
(4)      Includes (i) 166,666  Common  Shares  issuable upon exercise of options
         and (ii) 200,000 Common Shares issuable upon exercise of an outstanding
         warrant.  Does not include (i) 133,334 Common Shares  issuable upon the
         exercise of options that are not exercisable until the closing price of
         the Common Shares reaches certain levels for certain prescribed periods
         and (ii) 100,000 Common Shares issuable upon exercise of an outstanding
         warrant.
(5)      Mr.  Basile  has been  President  and Chief  Operating  Officer  of the
         Company since March 1997 and a director of the Company since  September
         1997.
(6)      Mr. Trampush has been Senior Vice President and Chief Financial Officer
         of the Company since March 1997.
(7)      Mr. Sander has been Senior Vice  President and Treasurer of the Company
         since March 1995.
(8)      Includes 62,000 Common Shares issuable upon exercise of options.
(9)      Mr. Hanson has been Senior Vice President - Corporate Development since
         October 1993.
(10)     Includes 60,416 Common Shares issuable upon exercise of options.
(11)     Mr. Fogg has been a director of the Company since June 1997.
(12)     Mr. Naoe has been a director of the Company since June 1997.
(13)     Mr. Armstrong has been a director of the Company since July 1994.


                                      -20-

<PAGE>
(14)     Includes 42,500 Common Shares issuable upon exercise of options.
(15)     Mr. Legault has been a director of the Company since April 1993.
(16)     Includes 53,750 Common Shares issuable upon exercise of options.
(17)     Mr. Megarry has been a director of the Company since September 1997.
(18)     Mr. Ferchat has been a director of the Company since March 1998.

                              PLAN OF DISTRIBUTION

         This offering is self-underwritten; neither the Company nor the Selling
Shareholders  have employed an underwriter  for the sale of Common Shares by the
Selling Shareholders.  The Company will bear all expenses in connection with the
preparation of this Prospectus.  The Selling Shareholders will bear all expenses
associated with the sale of the Common Shares.

         The  Common  Shares  may be sold  from  time  to  time  by the  Selling
Shareholders,  or by  pledgees,  donees,  transferees  or  other  successors  in
interest on the Nasdaq National  Market,  at fixed prices that may be changed or
at negotiated prices.  The Selling  Shareholders may effect such transactions by
selling shares to or through  broker-dealers,  and all such  broker-dealers  may
receive compensation in the form of discounts,  concessions, or commissions from
the Selling  Shareholders  and/or the  purchasers of Common Shares for whom such
broker-dealers  may act as agents or to whom  they sell as  principals,  or both
(which  compensation  as to a  particular  broker-dealer  might be in  excess of
customary commissions).

         Any broker-dealer acquiring Common Shares from the Selling Shareholders
may sell the shares either  directly,  in its normal  market-making  activities,
through or to other brokers on a principal or agency basis or to its  customers.
Any such sales may be at prices then prevailing on the Nasdaq National Market or
at prices related to such  prevailing  market prices or at negotiated  prices to
its customers or a combination of such methods. The Selling Shareholders and any
broker-  dealers  that act in  connection  with the  sale of the  Common  Shares
hereunder  might be deemed to be  "underwriters"  within the  meaning of Section
2(11) of the Securities Act; any commissions  received by them and any profit on
the resale of shares as principal might be deemed to be  underwriting  discounts
and commissions under the Securities Act. Any such commissions, as well as other
expenses incurred by the Selling Shareholders and applicable transfer taxes, are
payable by the Selling Shareholders.

                                  LEGAL MATTERS

         Certain  legal  matters in  connection  with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs.  Olshan Grundman
Frome &  Rosenzweig  LLP,  505 Park Avenue,  New York,  New York 10022.  Stephen
Irwin,  counsel to Olshan  Grundman  Frome &  Rosenzweig  LLP, is an officer and
director of the  Company and holds  76,345  Common  Shares and has been  granted
options and  warrants  to  purchase an  additional  600,000  Common  Shares.  In
addition,  other  attorneys  affiliated with such firm hold Common Shares and/or
options to purchase Common Shares.

                                     EXPERTS

         The consolidated balance sheets of GST Telecommunications, Inc. and its
subsidiaries  as of December  31, 1997 and  September  30, 1997 and 1996 and the
consolidated  statements of operations,  shareholders' equity (deficit) and cash
flows for the three month period  ended  December 31, 1997 and each of the years
in the three year period ended September 30, 1997, have been incorporated herein
by reference in reliance  upon the report of KPMG Peat Marwick LLP,  independent
certified public accountants,  and upon the authority of said firm as experts in
accounting and auditing.


                                      -21-


<PAGE>
                             ADDITIONAL INFORMATION

         The Company has filed with the Commission a  Registration  Statement on
Form S-8 under the Securities Act with respect to the Shares offered hereby. For
further  information  with  respect to the  Company and the  securities  offered
hereby, reference is made to the Registration Statement. Statements contained in
this  Prospectus  as to the contents of any  contract or other  document are not
necessarily  complete,  and in each  instance,  reference is made to the copy of
such  contract or document  filed as an exhibit to the  Registration  Statement,
each such statement being qualified in all respects by such reference.


                                      -22-


<PAGE>
                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS REFERENCE

         The  following  documents  filed by GST  Telecommunications,  Inc. (the
"Company") with the Securities and Exchange  Commission are incorporated  herein
by reference:

         1. The  Company's  Annual Report on Form 10-K for the fiscal year ended
September 30, 1997.

         2. The Company's  Transitional Report on Form 10-K for the three months
ended December 31, 1997.

         3. The  Company's  Quarterly  Report on Form 10-Q for the quarter ended
March 31, 1998.

         4. The  Company's  Current  Reports  on Form  8-K  dated  May 4,  1998,
February 27, 1998 and January 6, 1998.

         5. The  description of the Company's  Common  Shares,  no par value per
share,  in the Company's  Registration  Statement on Form 8-A filed on April 13,
1998.

         All  reports  and other  documents  subsequently  filed by the  Company
pursuant to Sections 13(a),  13(c), 14 and 15(d) of the Securities  Exchange Act
of 1934, as amended, after the effective date of this registration statement and
prior to the  filing of a  post-effective  amendment  which  indicates  that all
securities offered hereunder have been sold or which de-registers all securities
then remaining  unsold,  shall be deemed to be incorporated by reference  herein
and to be a part hereof from the date of filing of such documents.

ITEM 4.  DESCRIPTION OF SECURITIES

         Not applicable.

ITEM 5.  INTEREST OF NAMED EXPERTS AND COUNSEL

         Certain  legal  matters in  connection  with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs.  Olshan Grundman
Frome &  Rosenzweig  LLP,  505 Park Avenue,  New York,  New York 10022.  Stephen
Irwin,  counsel to Olshan  Grundman  Frome &  Rosenzweig  LLP, is an officer and
director of the  Company and holds  76,345  Common  Shares and has been  granted
options and  warrants  to  purchase an  additional  600,000  Common  Shares.  In
addition,  other  attorneys  affiliated with such firm hold Common Shares and/or
options to purchase Common Shares.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Except  as  hereinafter  set  forth,  there  is  no  statute,   charter
provision,  by-law,  contract or other  arrangement  under which any controlling
person,  director  or officer of the  Company is insured or  indemnified  in any
manner against liability which he may incur in his capacity as such.

         The  Company's  authority to indemnify  its  directors  and officers is
governed by the  provisions of Section 124 of the Canada  Business  Corporations
Act, as follows:


                                      II-1

<PAGE>
         (1) INDEMNIFICATION.  Except in respect of an action by or on behalf of
the  corporation  or body  corporate  to  procure a  judgment  in its  favor,  a
corporation  may  indemnify a director or officer of the  corporation,  a former
director  or  officer  of the  corporation  or a person who acts or acted at the
corporation's  request as a director or officer of a body corporate of which the
corporation  is or was a  shareholder  or  creditor,  and his  heirs  and  legal
representatives,  against all costs,  charges and expenses,  including an amount
paid to settle an action or satisfy a  judgment,  reasonably  incurred by him in
respect of any civil,  criminal or administrative  action or proceeding to which
he is made a party by reason of being or having  been a  director  or officer of
such corporation or body corporate, if

         (a)  he  acted  honestly  and in good  faith  with a view  to the  best
              interests of the corporation; and

         (b)  in the case of a criminal or  administrative  action or proceeding
              that is enforced by a monetary penalty,  he had reasonable grounds
              for believing that his conduct was lawful.

         (2)  INDEMNIFICATION IN DERIVATIVE  ACTIONS. A corporation may with the
approval of a court  indemnify a person referred to in subsection (1) in respect
of an action by or on behalf of the  corporation  or body corporate to procure a
judgment in its favor,  to which he is made a party by reason of being or having
been a director or an officer of the corporation or body corporate,  against all
costs,  charges and expenses  reasonably incurred by him in connection with such
action if he fulfills the conditions set out in paragraphs (1)(a) and (b).

         (3) INDEMNITY AS OF RIGHT.  Notwithstanding anything in this section, a
person  referred  to in  subsection  (1)  is  entitled  to  indemnity  from  the
corporation in respect of all costs, charges and expenses reasonably incurred by
him in  connection  with the defense of any civil,  criminal  or  administrative
action  or  proceeding  to which he is made a party by reason of being or having
been a director or officer of the corporation or body  corporate,  if the person
seeking indemnity

         (a)  was  substantially  successful on the merits in his defense of the
              action or proceeding, and

         (b)  fulfills the conditions set out in paragraphs (1)(a) and (b).

         (4) DIRECTORS' AND OFFICERS' INSURANCE.  A corporation may purchase and
maintain  insurance  for the benefit of any person  referred to  subsection  (1)
against any liability incurred by him

         (a)  in his  capacity  as a director  or  officer  of the  corporation,
              except where the liability  relates to his failure to act honestly
              and in  good  faith  with a view  to  the  best  interests  of the
              corporation; or

         (b)  in his capacity as a director or officer of another body corporate
              where  he acts or  acted  in that  capacity  at the  corporation's
              request,  except where the liability relates to his failure to act
              honestly  and in good faith with a view to the best  interests  of
              the body corporate.

         (5)  APPLICATION  TO COURT.  A corporation  or a person  referred to in
subsection  (1) may apply to a court for an order  approving an indemnity  under
this  section  and the court may so order and make any  further  order it thinks
fit.


                                      II-2


<PAGE>
         (6) NOTICE TO DIRECTOR.  An applicant  under  subsection (5) shall give
the Director  notice of the  application  and the Director is entitled to appear
and be heard in person or by counsel.

         (7) OTHER NOTICE. On an application under subsection (5), the court may
order notice to be given to any interested person and such person is entitled to
appear and be heard in person or by counsel.

         The Company's  by-laws  provide that every  director and officer of the
Company  and his  heirs,  executors,  administrators  and other  legal  personal
representatives  shall be indemnified and held harmless from and against (a) any
liability  and all costs,  charges  and  expenses  that he sustains or incurs in
respect of any action,  suit or proceeding that is proposed or commenced against
him for or in respect of  anything  done or  permitted  by him in respect of the
execution  of the  duties of his  office and (b) all other  costs,  charges  and
expenses that he sustains or incurs in respect of the affairs of the Company.

         The Company  maintains a $25,000,000  directors and officers  liability
insurance policy.

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         Not Applicable.

ITEM 8.  EXHIBITS.

EXHIBIT INDEX

     *4(a)    1996 Stock Option Plan, as amended to date.

     *4(b)    1996 Senior  Executive  Officer  Stock Option Plan,  as amended to
              date.

     *4(c)    1996 Senior  Operating  Officer  Stock Option Plan,  as amended to
              date.

      4(d)    1997  Stock  Option  Plan,  as amended  to date,  incorporated  by
              reference to Exhibit 10(ii) to the Company's  Transition Report on
              Form 10-K for the three months ended December 31, 1997.

     *5       Opinion of Olshan  Grundman Frome & Rosenzweig LLP with respect to
              the securities registered hereunder.

     23(a)    Consent of Olshan Grundman Frome & Rosenzweig LLP (included in its
              opinion filed as Exhibit 5).

    *23(b)    Consent of KPMG Peat Marwick LLP.

    *23(c)    Consent of KPMG Peat Marwick LLP.

     24       Powers  of  Attorney  (included  on the  signature  page  to  this
              Registration Statement).

--------------------------
*        Filed herewith

ITEM 9.  UNDERTAKINGS

         The undersigned registrant hereby undertakes:

              a. To file,  during any period in which  offers or sales are being
made, a post-effective  amendment to this registration  statement to include any
material information with respect to the plan of distribution not previously


                                      II-3


<PAGE>
disclosed  in  the  registration  statement  or  any  material  change  to  such
information in the registration statement.

              b. That,  for the purpose of determining  any liability  under the
Securities Act of 1933, 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.

              c. 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.

         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.

         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  foregoing  provisions,   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 registrant 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-8 and has duly caused this  amendment  to the
registration statement to be signed on its behalf by the undersigned,  thereunto
duly authorized in the City of Vancouver,  State of Washington, on this 28th day
of May 1998.

                                        GST TELECOMMUNICATIONS, INC.
                                                   (Registrant)

                                        By:       /S/ JOHN WARTA
                                           ------------------------------------
                                            John Warta, Chairman of the Board

                       POWERS OF ATTORNEY AND SIGNATORIES

Pursuant to the  requirements  of the Securities  Act of 1933, as amended,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities  and on the date  indicated.  Each of the  undersigned  officers  and
directors of GST  Telecommunications,  Inc. hereby constitutes and appoints John
Warta, Stephen Irwin, Daniel L. Trampush and Clifford V. Sander and each of them
singly,  as true and  lawful  attorneys-in-fact  and  agents  with full power of
substitution and resubstitution,  for him in his name in any and all capacities,
to sign any and all  amendments  (including  post-effective  amendments) to this
Registration  Statement and any related registration statement filed pursuant to
Rule 462(b) of the Securities Act of 1933, as amended and to file the same, with
all exhibits  thereto,  and other  documents in connection  therewith,  with the
Securities and Exchange  Commission and to prepare any and all exhibits thereto,
and other documents in connection  therewith,  and to make any applicable  state
securities law or blue sky filings,  granting unto said  attorneys-in-  fact and
agents,  full power and authority to do and perform each and every act and thing
requisite  or  necessary  to be done to enable GST  Telecommunications,  Inc. to
comply with the provisions of the  Securities  Act of 1933, as amended,  and all
requirements of the Securities and Exchange Commission,  as fully to all intents
and purposes as he might or could do in person,  hereby ratifying and confirming
all that said  attorneys-in-fact and agents, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

     SIGNATURE                            TITLE                         DATE
     ---------                            -----                         ----

/S/ JOHN WARTA                Chairman of the Board, Chief          May 28, 1998
-------------------------     Executive Officer (Principal
   (John Warta)               Executive Officer) and Director


/S/ DANIEL TRAMPUSH           Senior Vice President and Chief       May 28, 1998
-------------------------     Financial Officer (Principal
    (Daniel Trampush)         Financial Officer)


/S/ CLIFFORD V. SANDER        Senior Vice President, Treasurer      May 28, 1998
-------------------------     and Chief Accounting Officer
   (Clifford V. Sander)       (Principal Accounting Officer)



/S/ STEPHEN IRWIN             Vice Chairman of the Board,           May 28, 1998
------------------------      Secretary and Director
     (Stephen Irwin)

/S/ JOSEPH A. BASILE, JR.     President, Chief Operating Officer    May 28, 1998
-------------------------     and Director
(Joseph A. Basile, Jr.)


 /S/ PETER E. LEGAULT         Director                              May 28, 1998
-------------------------     Member of Compensation Committee
(Peter E. Legault)


                                      II-5


<PAGE>
     SIGNATURE                            TITLE                         DATE
     ---------                            -----                         ----


    /S/ ROY MEGARRY           Director                              May 28, 1998
------------------------
     (Roy Megarry)

  /S/ ROBERT A. FERCHAT       Director                              May 28, 1998
------------------------
   (Robert A. Ferchat)

  /S/ JACK G. ARMSTRONG       Director                              May 28, 1998
------------------------      Member of Compensation Committee
   (Jack G. Armstrong)



   /S/ MITSUHIRO NAOE         Director                              May 28, 1998
-----------------------
     (Mitsuhiro Naoe)  


/S/ JOSEPH G. FOGG, III       Director                              May 28, 1998
------------------------      Member of Compensation Committee
  (Joseph G. Fogg, III)

The Company's Authorized Representative
in the United States

    /S/ DANIEL L TRAMPUSH                                           May 28, 1998
--------------------------
   Daniel L. Trampush

165133.7

                                      II-6
[{"type": "S-8", "sequence": "1", "description": "FORM S-8", "secsgml_size_bytes": 112854}]
{"company-data": {"conformed-name": "GST TELECOMMUNICATIONS INC", "cik": "0000911522", "assigned-sic": "4813", "irs-number": "830310464", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-53981", "film-number": "98634709"}, "business-address": {"street1": "4001 MAIN ST", "city": "VANCOUVER", "state": "WA", "zip": "98663", "phone": "3602544700"}, "mail-address": {"street1": "431 NE THURSTON WAY", "street2": "STE 400", "city": "VANCOUVER", "state": "WA", "zip": "98662"}, "former-company": {"former-conformed-name": "GREENSTAR TELECOMMUNICATIONS INC", "date-changed": "19930901"}}
As filed with the Securities and Exchange Commission on May 29, 1998
                                                 Registration No. 333-
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                          GST TELECOMMUNICATIONS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                                     Canada
--------------------------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                       N/A
--------------------------------------------------------------------------------
                      (I.R.S. employer identification no.)

                  4001 Main Street, Vancouver, Washington      98663
--------------------------------------------------------------------------------
               (Address of principal executive offices)      (Zip Code)

                          GST TELECOMMUNICATIONS, INC.
                             1996 STOCK OPTION PLAN
                 1996 SENIOR EXECUTIVE OFFICER STOCK OPTION PLAN
                 1996 SENIOR OPERATING OFFICER STOCK OPTION PLAN
                             1997 STOCK OPTION PLAN
                            (Full title of the plan)

                    Daniel L. Trampush, Senior Vice President
                          GST Telecommunications, Inc.
                                4001 Main Street
                           Vancouver, Washington 98663
                            Telephone: (360) 906-7100
                           Telecopier: (360) 906-7150
                       (Name, Address and Telephone Number
                              of Agent for Service)

                                    Copy to:
                              David J. Adler, Esq.
                     Olshan Grundman Frome & Rosenzweig LLP
                                 505 Park Avenue
                            New York, New York 10022
                            Telephone: (212) 753-7200
                           Telecopier: (212) 755-1467

                           ---------------------------
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------------------------------
                                                Proposed             Proposed
          Title of                               maximum             maximum
         securities            Amount           offering            aggregate           Amount of
            to be              to be            price per            offering          registration
         registered          registered           share               price                fee
---------------------------------------------------------------------------------------------------
Common Shares, no
par value                  2,788,746(1)(2)     $11.52(2)          $32,126,353.92       $ 9,477.27
---------------------------------------------------------------------------------------------------
Common Shares, no
par value                    311,254(1)(3)     $12.15625(3)       $ 3,783,681.44       $ 1,116.19
---------------------------------------------------------------------------------------------------
         Total             3,100,000                              $35,910,035.36       $10,593.46
===================================================================================================
(1)      Pursuant to Rule 416 under the  Securities Act of 1933, as amended (the
         "Securities  Act"), an  indeterminate  number of Common Shares that may
         become issuable pursuant to
antidilution provisions of the Registrant's 1996 Stock Option Plan (the
         "1996  Plan"),  1996 Senior  Executive  Officer  Stock Option Plan (the
         "Senior Executive  Officer Plan"),  1996 Senior Operating Officer Stock
         Option Plan (the "Senior Operating Officer Plan") and 1997 Stock Option
         Plan (the "1997  Plan"  and,  together  with the 1996 Plan,  the Senior
         Executive  Officer  Plan and the Senior  Operating  Officer  Plan,  the
         "Plans") are also being registered.

(2)      Represents  2,788,746  shares with  respect to which  options have been
         granted under the Plans at a weighted  average exercise price of $11.52
         per share.
(3)      An  aggregate  of 311,254  shares is to be  offered  under the Plans at
         prices not  presently  determined.  Pursuant to Rule  457(h)  under the
         Securities Act, the offering price of these additional Common Shares is
         estimated  solely for the purpose of determining the  registration  fee
         and is based on  $12.15625,  the per share average of high and low sale
         prices of the Common  Shares on the Nasdaq  National  Market on May 27,
         1998.

                                       -2-
PROSPECTUS

                             3,100,000 COMMON SHARES

                          GST TELECOMMUNICATIONS, INC.
                     Common Shares (no par value per share)

         This  Prospectus  relates to the reoffer and resale by certain  selling
shareholders  (the  "Selling  Shareholders"),  some of whom may be  deemed to be
"affiliates"  as defined in Rule 405 of the  Securities  Act of 1933, as amended
(the  "Securities  Act"),  of GST  Telecommunications,  Inc. (the  "Company") of
shares (the "Shares")  constituting a portion of the Common Shares, no par value
per  share  (the  "Common  Shares"),  of the  Company  that may be issued by the
Company to the Selling  Shareholders  upon the exercise of options granted or to
be granted  under (i) the  Company's  1996 Stock Option Plan (the "1996  Plan"),
(ii) the Company's  1996 Senior  Executive  Officer Plan (the "Senior  Executive
Officer Plan"),  (iii) the Company's 1996 Senior Operating  Officer Stock Option
Plan (the "Senior  Operating  Officer  Plan") or (iv) the  Company's  1997 Stock
Option Plan (the "1997 Plan") (collectively,  the "Plans"). This Prospectus also
relates to the reoffer and resale of Shares to be  acquired by  individuals  who
may be deemed to be  "affiliates"  of the  Company  (collectively,  the  "Future
Selling  Shareholders")  upon  exercise of stock options to be granted under the
Plans.  If and when such options are granted to or such Shares are  purchased by
the Future Selling Shareholders,  the Company intends to distribute a Prospectus
Supplement as required by Rule 424(b) of the  Securities  Act.  Such  Prospectus
Supplement  will specify the names of the Future  Selling  Shareholders  and the
amount of Shares to be reoffered and sold by them.

         The offer and sale of the Shares to the  Selling  Shareholders  and the
Future Selling Shareholders were previously registered under the Securities Act.
The  Shares are being  reoffered  and resold  for the  accounts  of the  Selling
Shareholders  and the  Future  Selling  Shareholders  and the  Company  will not
receive any of the proceeds from the resale of the Shares.

         The Selling  Shareholders  have  advised the Company that the resale of
their Shares may be effected  from time to time in one or more  transactions  on
the Nasdaq  National  Market in negotiated  transactions  or otherwise at market
prices prevailing at the time of the sale or at prices otherwise negotiated. The
Selling  Shareholder  may effect such  transactions  by selling the Shares to or
through  broker-dealers  who may receive  compensation in the form of discounts,
concessions or commissions from the Selling Shareholder and/or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they sell as
principal,  or both (which compensation as to a particular  broker-dealer may be
in excess of customary commissions). Any broker-dealer acquiring the Shares from
the Selling  Shareholder  may sell such  securities  in its normal market making
activities,  through other brokers on a principal or agency basis, in negotiated
transactions,  to its  customers or through a combination  of such methods.  See
"Plan of  Distribution."  The Company will bear all expenses in connection  with
the preparation of this Prospectus.

                     SEE "RISK FACTORS" BEGINNING ON PAGE 4
                       FOR A DISCUSSION OF CERTAIN FACTORS
               THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

         The Company's  Common Shares are traded on the Nasdaq  National  Market
under the  symbol  "GSTX." On May 28,  1998,  the last sale price for the Common
Shares, as reported on the Nasdaq National Market, was $12.50.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
            SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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 May 29, 1998.
AVAILABLE INFORMATION

         The  Company  is  subject  to  the  informational  requirements  of the
Securities  Exchange  Act of 1934,  as  amended  (the  "Exchange  Act"),  and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the  "Commission").  Such reports and other information can
be inspected  and copied at the public  reference  facilities  maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W.,  Washington,  D.C. 20549;
500 West Madison Street,  Suite 1400,  Chicago,  Illinois 60661; and Seven World
Trade Center,  Suite 1300, New York, New York 10048. Copies of such material can
be obtained  from the Public  Reference  Section of the  Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material may also be accessed  electronically  by means of the Commission's home
page on the internet at http://www.sec.gov.

                                TABLE OF CONTENTS

AVAILABLE INFORMATION.........................................................2

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................3

RISK FACTORS..................................................................4

MATERIAL CHANGES.............................................................19

THE COMPANY..................................................................19

USE OF PROCEEDS..............................................................20

SELLING SHAREHOLDERS.........................................................20

PLAN OF DISTRIBUTION.........................................................21

LEGAL MATTERS................................................................21

EXPERTS  ....................................................................21

ADDITIONAL INFORMATION.......................................................22

                                       -2-
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         The Company's Transition Report on Form 10-K for the three month period
ended  December 31, 1997,  Annual  Report on Form 10-K for the fiscal year ended
September  30, 1997,  Quarterly  Report on Form 10-Q for the quarter ended March
31,  1998,  and the  Company's  Current  Reports  on Form 8-K dated May 4, 1998,
February  27, 1998 and January 6, 1998 are  incorporated  by  reference  in this
Prospectus and shall be deemed to be a part hereof. All subsequent reports filed
by the Company on Forms 10-K,  10-Q, 8-K or otherwise,  prior to the termination
of this offering,  are deemed to be incorporated by reference in this prospectus
and  shall  be  deemed  to be a part  hereof  from the  date of  filing  of such
documents. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15 of the Exchange  Act,  subsequently  filed by the Company  prior to the
termination of this offering, are deemed to be incorporated by reference in this
Prospectus  and shall be deemed to be a part  hereof  from the date of filing of
such documents.

         The Company's  Application for  Registration of its Common Shares under
Section  12(g) of the  Exchange Act filed on April 13, 1998 is  incorporated  by
reference in this Prospectus and shall be deemed to be a part hereof.

         The Company hereby  undertakes to provide without charge to each person
to whom a copy of this  Prospectus  has been  delivered,  on the written or oral
request of any such person,  a copy of any or all of the  documents  referred to
above which have been or may be  incorporated  in this  Prospectus by reference,
other than exhibits to such documents.  Written  requests for such copies should
be directed to GST  Telecommunications,  Inc.  at 4001 Main  Street,  Vancouver,
Washington 98663,  Attention:  Chief Financial Officer.  Oral requests should be
directed to such individual (telephone number (360) 906-7100).

         No dealer,  salesman or other  person has been  authorized  to give any
information or to make any  representations  other than those  contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Selling Shareholders.  This Prospectus does not constitute
an offer to sell, or a solicitation  of an offer to buy, the securities  offered
hereby to any person in any state or other  jurisdiction  in which such offer or
solicitation  is unlawful.  The delivery of this Prospectus at any time does not
imply that information  contained herein is correct as of any time subsequent to
its date.

                                       -3-
RISK FACTORS

         THE   SECURITIES   OFFERED  HEREBY  INVOLVE  A  HIGH  DEGREE  OF  RISK.
PROSPECTIVE  INVESTORS  SHOULD  CAREFULLY  CONSIDER THE  FOLLOWING  RISK FACTORS
BEFORE  MAKING  AN  INVESTMENT  DECISION.  CERTAIN  MATTERS  DISCUSSED  IN  THIS
PROSPECTUS OR WHICH ARE INCORPORATED BY REFERENCE ARE FORWARD-LOOKING STATEMENTS
THAT ARE SUBJECT TO RISKS AND  UNCERTAINTIES  THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE PROJECTED.

HISTORICAL AND ANTICIPATED FUTURE OPERATING LOSSES AND NEGATIVE EBITDA

         The Company has  incurred  and expects to continue to incur  increasing
operating  losses and  negative  EBITDA while it expands its business and builds
its customer  base. The Company has incurred  significant  increases in expenses
associated with these  activities and there can be no assurance that an adequate
customer  base with  respect to any or all of its  services  will be achieved or
sustained. The Company does not expect to achieve a significant market share for
any of its services.  The Company had net income of approximately $19.5 million,
an operating loss of  approximately  $24.8 million and negative  EBITDA of $14.8
million for the three months  ended March 31, 1998, a net loss of  approximately
$39.6  million,  an operating loss of  approximately  $21.9 million and negative
EBITDA of $12.0  million for the three months ended  December 31, 1997 and a net
loss of approximately  $113.3 million,  an operating loss of approximately $86.5
million and negative EBITDA of $51.9 million for the fiscal year ended September
30, 1997  ("Fiscal  1997").  There can be no  assurance  that the  Company  will
achieve or sustain  profitability or generate positive EBITDA. In February 1998,
the  Company  sold  its  remaining  interest  in NACT  Telecommunications,  Inc.
("NACT") to World Access,  Inc. for net proceeds of approximately $85.0 million.
Without  NACT,  the  Company  would  have had a net loss of  $40.4  million  and
negative  EBITDA of $14.4  million for the three months ended  December 31, 1997
and a net loss of $117.8 million and negative EBITDA of $59.0 million for Fiscal
1997.  EBITDA consists of loss before interest,  income taxes,  depreciation and
amortization and other income and non-cash expenses.  EBITDA is provided because
it  is a  measure  commonly  used  in  the  telecommunications  industry.  It is
presented to enhance an understanding of the Company's  operating results and is
not intended to represent cash flow or results of operations in accordance  with
generally accepted accounting principles for the periods indicated.

         At  December  31,  1997,  the  Company had a U.S.  net  operating  loss
carryforward of  approximately  $130.4 million and a Canadian net operating loss
carryforward of approximately Cdn. $11.1 million.  While such loss carryforwards
are available to offset future taxable  income of the Company,  the Company does
not expect to  generate  sufficient  taxable  income so as to  utilize  all or a
substantial  portion  of such  loss  carryforwards  prior to  their  expiration.
Further,  the  utilization  of net operating loss  carryforwards  against future
taxable income is subject to limitation if the Company experiences an "ownership
change" as  defined in Section  382 of the  Internal  Revenue  Code of 1986,  as
amended, and the analogous provision of the Income Tax Act (Canada).

DEVELOPMENT AND EXPANSION RISK AND POSSIBLE INABILITY TO MANAGE GROWTH

         The Company is in the early  stages of its  operations.  Certain of its
networks have only recently become commercially  operational and the Company has
only  recently  begun to deploy  switches  in its  networks.  The success of the
Company will depend,  among other things,  upon the Company's  ability to assess
potential  markets,  design fiber backbone routes that provide ready access to a
substantial  customer base,  secure  financing,  obtain required  rights-of-way,
building access and governmental permits, implement expanded interconnection and
collocation  with  facilities  owned  by  incumbent  local  exchange   telephone
companies  ("ILECs") and achieve a sufficient customer base, and upon subsequent
developments in state and federal  regulations.  The Company has begun to target
Tier 1 cities and competition in such markets is expected to be significantly

                                       -4-
greater  than in the Tier 2 and Tier 3 cities in which the Company is  currently
operating.  There can be no  assurance  that any  networks  to be  developed  or
further  developed will be completed on schedule,  at a commercially  reasonable
cost or within the Company's  specifications.  In addition, the expansion of the
Company's  business  has  involved  and  is  expected  to  continue  to  involve
acquisitions,  which  could  divert the  resources  and  management  time of the
Company and require  integration with the Company's existing  operations.  There
can be no assurance that any acquired  business will be successfully  integrated
into the Company's  operations or that any such business will meet the Company's
expectations.  The Company's future  performance will depend,  in part, upon its
ability to manage its growth  effectively,  which will require it to continue to
implement  and improve its  operating,  financial  and  accounting  systems,  to
expand,  train and  manage  its  employee  base and to  effectively  manage  the
integration  of acquired  businesses.  These factors and others could  adversely
affect the expansion of the Company's customer base and service  offerings.  The
Company's  inability  either to expand in accordance with its plans or to manage
its growth  could  have a material  adverse  effect on its  business,  financial
condition and results of operations.

SIGNIFICANT CAPITAL REQUIREMENTS

         The  Company   estimates   that  its  capital   expenditures   will  be
approximately  $325.0  million for the fiscal year ending  December 31, 1998 and
$400.0  million  for the fiscal  year  ending  December  31,  1999.  The Company
believes that the net proceeds  from the private  placement  consummated  in May
1998 (the "1998 Notes Offering") of $500.0 million  principal amount at maturity
of 10 1/2% Senior  Secured  Discount  Notes due 2008 (the "1998  Notes") and the
cash on hand, including the remaining proceeds from the sale of NACT, the public
offering  consummated  in November  1997 (the "1997 Public  Offering") of $144.0
million principal amount of 12 3/4% Senior  Subordinated  Accrual Notes due 2007
(the  "Accrual  Notes")  and  6,440,000  Common  Shares at $12 per share and the
private  placement  offering   consummated  in  May  1997  (the  "Secured  Notes
Offering")  of 13 1/4%  Senior  Secured  Notes  due 2007 (the  "Secured  Notes")
(which, other than the amount pledged to fund the first six interest payments on
the Secured Notes, is being used to purchase  equipment) and borrowings expected
to be available under a credit facility (the "Tomen Facility") with Tomen and an
equipment  financing agreement with Siemens Telecom Networks  ("Siemens"),  will
provide  sufficient  funds for the Company to expand its  business as  presently
planned and to fund its operating  expenses through September 2000.  Thereafter,
the  Company  expects to  require  additional  financing.  In the event that the
Company's  plans  or  assumptions  change  or  prove  to be  inaccurate,  or the
foregoing sources of funds prove to be insufficient to fund the Company's growth
and operations, or if the Company consummates  acquisitions,  the Company may be
required to seek  additional  capital (or seek  additional  capital  sooner than
currently anticipated).  Sources of financing may include public or private debt
or equity financing by the Company or its subsidiaries, sales of assets or other
financing  arrangements.  There can be no assurance  that  additional  financing
would be available to the Company or, if available, that it could be obtained on
acceptable terms or within the limitations  contained in the Company's financing
arrangements.  Failure to obtain  such  financing  could  result in the delay or
abandonment of some or all of the Company's  development and expansion plans and
expenditures  and could  have a material  adverse  effect on the  Company.  Such
failure  could also  limit the  ability of the  Company  to make  principal  and
interest payments on its outstanding  indebtedness,  which would have a material
adverse  effect on the value of the Common  Shares.  The Company has no material
working  capital or other credit  facility under which it may borrow for working
capital and other general  corporate  purposes.  There can be no assurance  that
such a facility will be available to the Company in the future or that if such a
facility  were  available,  that it would be available  on terms and  conditions
acceptable to the Company.

                                       -5-
SUBSTANTIAL INDEBTEDNESS

         At March 31, 1998, the Company had outstanding on a consolidated  basis
approximately  $796.9 million of  indebtedness  and $54.6 million of mandatorily
redeemable  preference  shares.  In addition,  the  accretion of original  issue
discount will cause a $106.9  million  increase in  liabilities  by December 15,
2000  relating  to the 13 7/8%  Senior  Discount  Notes due 2005 of GST USA (the
"Senior Notes") and the 13 7/8% Convertible Senior  Subordinated  Discount Notes
due 2005 of the Company (the  "Convertible  Notes" and together  with the Senior
Notes,  the "1995 Notes") sold in December  1995, a $116.2  million  increase in
liabilities  relating  to the Accrual  Notes by  November  15, 2002 and a $200.0
million  increase in liabilities  relating to the 1998 Notes by May 1, 2003. The
indentures  relating to the 1995 Notes (the "1995  Indentures"),  the  indenture
relating to the Secured Notes (the  "Secured  Notes  Indenture"),  the indenture
relating to the Accrual Notes (the "Accrual Notes  Indenture") and the indenture
relating to the 1998 Notes (the "1998 Notes  Indenture"  and  together  with the
1995  Indentures,  the Secured Notes Indenture and the Accrual Notes  Indenture,
the  "Indentures")  limit,  but do not  prohibit,  the  incurrence of additional
indebtedness by the Company. At March 31, 1998, the Company had $30.5 million of
availability   under  the  Tomen  Facility  to  finance  the   development   and
construction  of additional  networks,  if and to the extent that  proposals for
funding projects are approved by Tomen. The Company expects to incur substantial
additional indebtedness in the future. The Company has entered into an agreement
with Siemens (the "Siemens Loan Agreement") that provides for up to an aggregate
of $226.0 million in equipment  financing,  of which $116.0 million is presently
available to the Company  (and of which $7.9 million had been  provided at March
31,  1998).  The Company may seek to increase the amount  available up to $226.0
million on an  as-needed  basis,  subject to the  negotiation  and  execution of
mutually satisfactory documentation.  The Company also entered into an agreement
(the "NTFC Loan  Agreement")  with NTFC Capital Corp. for up to $50.0 million of
additional equipment financing (all of which had been provided to the Company at
March 31, 1998). There can be no assurance that any additional financing will be
available to the Company on acceptable terms or at all.

         The  level  of  the  Company's   indebtedness   could  have   important
consequences to its future prospects,  including the following: (i) limiting the
ability  of the  Company  to obtain any  necessary  financing  in the future for
working  capital,  capital  expenditures,  debt  service  requirements  or other
purposes;  (ii) requiring that a substantial  portion of the Company's cash flow
from  operations,  if any,  be  dedicated  to the  payment of  principal  of and
interest  on  its  indebtedness  and  other  obligations;   (iii)  limiting  its
flexibility  in planning  for, or  reacting  to changes in, its  business;  (iv)
possibly placing the Company at a competitive  disadvantage,  because it will be
more highly  leveraged  than some of its  competitors;  and (v)  increasing  the
Company's vulnerability in the event of a downturn in its business.

POSSIBLE INABILITY TO SERVICE DEBT; REFINANCING RISKS

         In  connection  with the  buildout of its  networks  and  expansion  of
competitive local exchange telephone  companies  ("CLEC") services,  the Company
has been experiencing  increasing negative EBITDA. The Company's earnings before
fixed  charges  were  insufficient  to cover fixed  charges for the three months
ended March 31, 1998, the three months ended December 31, 1997,  Fiscal 1997 and
the fiscal year ended September 30, 1996 ("Fiscal 1996") by $46.7 million, $42.0
million, $127.0 million and $62.9 million, respectively and the Company's EBITDA
minus capital expenditures and interest expense for the three months ended March
31, 1998, the three months ended December 31, 1997,  Fiscal 1997 and Fiscal 1996
was negative $77.9 million,  negative $77.6 million, negative $315.3 million and
negative  $152.7  million,  respectively.  There  can be no  assurance  that the
Company will be able to improve its earnings  before fixed  charges or EBITDA or
that  the  Company  will be able to meet its debt  service  obligations.  As the
Company does not currently have a revolving credit facility, if a shortfall

                                       -6-
occurs,  alternative  financing  would be  necessary in order for the Company to
meet  its  liquidity  requirements  and  there  can be no  assurance  that  such
financing would be available.  In such event, the Company could face substantial
liquidity  problems.  In addition,  the Company  anticipates that cash flow from
operations  will be  insufficient to pay interest in cash on both the 1995 Notes
when  such  interest  becomes  payable  in June  2001 and on the  Secured  Notes
starting in November 2000 once the amount pledged to fund the first six interest
payments on the Secured  Notes is utilized and to repay the 1995 Notes,  Secured
Notes,  the  Accrual  Notes  and the  1998  Notes  at  maturity  and  that  such
indebtedness  will need to be  refinanced.  There can be no  assurance  that the
Company will be able to effect such refinancings.  The ability of the Company to
meet its  obligations  and to effect such  refinancings  will be dependent upon,
among other things, the future performance of the Company, which will be subject
to prevailing economic conditions and to financial,  business and other factors,
including  factors beyond the control of the Company.  Failure by the Company to
meet its obligations could result in a default on its indebtedness,  which would
permit  the  holders  of  substantially  all of the  Company's  indebtedness  to
accelerate the maturity thereof.

FINANCIAL AND OPERATING RESTRICTIONS IMPOSED BY EXISTING INDEBTEDNESS

         The Company's financing  arrangements impose significant  operating and
financial  restrictions on the Company. Such restrictions affect, and in certain
cases  significantly  limit or prohibit,  among other things, the ability of the
Company to incur additional  indebtedness or to create liens on its assets, sell
assets, engage in mergers or acquisitions or make investments. Failure to comply
with any such covenant could result in a default thereunder,  which could result
in an acceleration of such indebtedness.

DIFFICULTIES IN IMPLEMENTING LOCAL AND ENHANCED SERVICES

         The Company has deployed and plans to continue to deploy high  capacity
digital  switches  in the  cities  in which  it  operates  or  plans to  operate
networks,  as well as in  certain  cities  where the  Company  will rely on ILEC
facilities  for  transmission.  This  enables  the Company to offer a variety of
switched  access  services,  enhanced  services and local dial tone. The Company
expects  negative  EBITDA from its switched  services  during the 24 to 36 month
period after a switch is deployed.  For switches  operating in conjunction  with
the Company's networks,  the Company expects operating margins to improve as the
network is expanded and larger  volumes of traffic are carried on the  Company's
network.  For  switches  operating  in cities  where the Company  relies on ILEC
facilities  for  transmission,  the Company  will  experience  lower or negative
operating  margins.  The ILECs will be required to  unbundle  local  tariffs and
permit the Company to purchase only the origination and termination  services it
needs,  thereby decreasing  operating  expenses.  There can be no assurance that
such  unbundling  will be  effected  in a timely  manner  and  result  in prices
favorable to the Company.  In addition,  the Company's  ability to  successfully
implement  its switched and enhanced  services will require the  negotiation  of
resale   agreements   with  ILECs  and  other  CLECs  and  the   negotiation  of
interconnection  agreements with ILECs, which can take considerable time, effort
and expense.

         In August  1996,  the  Federal  Communications  Commission  (the "FCC")
released  a  decision  (the   "Interconnection   Decision")   implementing   the
interconnection   portions   of  the   Telecommunications   Act  of  1996   (the
"Telecommunications  Act"). The Interconnection  Decision  establishes rules for
negotiating  interconnection  agreements  and  guidelines  for  review  of  such
agreements by state public utilities commissions. On July 18, 1997, the Court of
Appeals for the Eighth Circuit (the "Eighth  Circuit")  vacated certain portions
of the Interconnection  Decision,  including  provisions  establishing a pricing
methodology  for unbundled  elements and a procedure  permitting new entrants to
"pick  and  choose"  among  various   provisions  of  existing   interconnection
agreements between ILECs and their competitors.  On October 14, 1997, the Eighth
Circuit issued a decision vacating

                                       -7-
additional  FCC rules that will likely have the effect of increasing the cost of
obtaining the use of combinations of an ILEC's unbundled network  elements.  The
Eighth Circuit decision creates  uncertainty about the rules governing  pricing,
terms and conditions of interconnection  agreements,  and could make negotiating
and enforcing  such  agreements  more  difficult and  protracted and may require
renegotiation  of existing  agreements.  The Company had  negotiated a number of
interconnection  agreements  with ILECs  prior to the Eighth  Circuit  decision.
There  can  be  no   assurance   that  the  Company   will  be  able  to  obtain
interconnection agreements on terms acceptable to the Company. The Supreme Court
has accepted for review the Eighth Circuit decisions. See "-- Competition."

         The Company will generally be dependent on ILECs for provision of local
telephone  service  through access to local loops,  termination  service and, in
some markets,  central office switches of such carriers. In addition, in certain
markets the Company intends to obtain the local  telephone  services of the ILEC
on a wholesale basis and resell that service to end users. Any successful effort
by the ILEC to deny or  substantially  limit the Company's  access to the ILEC's
network  elements or wholesale  services could have a material adverse effect on
the  Company's  ability  to  provide  local  telephone  services.  Although  the
Telecommunications Act imposes  interconnection  obligations on ILECs, there can
be no assurance  that the Company will be able to obtain  access to such network
elements  or  services at rates,  and on terms and  conditions,  that permit the
Company  to  offer  local  services  at  rates  that  are  both  profitable  and
competitive. As discussed above, the Eighth Circuit recently struck down certain
FCC rules intended to govern such rates, terms and conditions.

         Many new carriers, including the Company, have experienced difficulties
with  respect  to  provisioning,  interconnection  and the  operational  support
systems used by new carriers to order and receive network elements and wholesale
services  from the ILECs.  These  systems are necessary for new carriers such as
the Company to provide  local  service to customers on a timely and  competitive
basis.  The FCC has recently  created a task force to examine problems that have
slowed  the  development  of  local  telephone  competition.  In  addition,  the
Telecommunications  Act creates incentives for Regional Bell Operating Companies
("RBOCs") to permit  access to their  facilities  by denying  such  carriers the
ability to provide long  distance  services in their regions until they have met
specified  conditions  opening their markets to  competition at the local level.
The U.S.  District  Court for the  Northern  District  of Texas has found  these
provisions unconstitutional,  but this order has been stayed pending appeal. The
RBOCs in the Company's  markets have indicated their intent to seek authority to
provide  in-region long distance  services,  but are not yet permitted to do so.
There can be no assurance  that the RBOCs will be  accommodating  to the Company
once they are permitted to offer  in-region  long distance  service.  Should the
Company be unable to obtain the  cooperation of an ILEC in a region,  whether or
not such ILEC has been authorized to offer in-region long distance service,  the
Company's  ability  to offer  local  services  in such  region  on a timely  and
cost-effective basis would be adversely affected.

         The  Company is a recent  entrant  into the newly  created  competitive
local telecommunications  services industry. The local dial tone services market
was opened to competition due to the passage of the  Telecommunications  Act and
related  state and federal  regulatory  rulings.  There are  numerous  operating
complexities  associated with providing these services.  The Company is required
to develop new  products,  services  and  systems  and to develop new  marketing
initiatives to sell these services.

         The Company's  switched  services may not be  profitable  due to, among
other factors, lack of customer demand, inability to secure access to facilities
of ILECs at acceptable rates,  competition from other CLECs and pricing pressure
from the ILECs.  The  Company has very  limited  experience  providing  switched
access  and local  dial tone  services  and there can be no  assurance  that the
Company  will  be able to  successfully  implement  its  switched  and  enhanced
services strategy.

                                       -8-
RECENT COMMENCEMENT OF INTEGRATED MARKETING EFFORT

         The Company has only recently begun an integrated  marketing  effort of
its telecommunication service offerings.  Historically, the Company has marketed
its  access  services  primarily  to  long  distance  carriers  and  significant
end-users of  telecommunications  services,  and its long  distance  services to
small businesses and consumers. Although the Company expects to market a variety
of  telecommunications  services  to  all  of  its  customers,  there  can be no
assurance  that the Company will be able to attract and retain new  customers or
retain and sell additional services to existing customers.

DEPENDENCE ON KEY CUSTOMERS

         The  Company's  five  largest  telecommunications   services  customers
accounted  for  approximately  20.5%,  16.8%,  20.8% and 46.9% of the  Company's
consolidated  telecommunications  services  revenues  for the three months ended
March 31, 1998, the three months ended December 31, 1997, Fiscal 1997 and Fiscal
1996,  respectively.   It  is  anticipated  that  during  the  early  stages  of
development  of individual  networks,  before  obtaining a sufficient  amount of
end-user  revenues,  the Company will be  dependent on a limited  number of long
distance  carriers for a significant  portion of its local revenues.  While long
distance  carriers have high volume  requirements and have utilized CLECs,  they
generally are more price sensitive than  end-users.  The loss of, or decrease of
business from, one or more  significant  customers could have a material adverse
effect on the  business,  financial  condition  and results of operations of the
Company.

RISKS RELATING TO LONG DISTANCE BUSINESS

         For the three  months  ended March 31,  1998,  the three  months  ended
December 31, 1997, Fiscal 1997 and Fiscal 1996, long distance represented 53.0%,
49.4%, 59.2% and 56.0% of the Company's consolidated telecommunications services
revenues,  respectively. The long distance business is extremely competitive and
prices have declined  substantially in recent years and are expected to continue
to decline. In addition,  the long distance industry has historically had a high
average churn rate, as customers  frequently  change long distance  providers in
response  to  the  offering  of  lower  rates  or   promotional   incentives  by
competitors.  See "--  Competition."  The  Company  relies on other  carriers to
provide  transmission  and  termination  services  for a  majority  of its  long
distance traffic.  The Company has resale agreements with long distance carriers
to provide it with transmission services.  Such agreements typically provide for
the resale of long distance  services on a per minute basis with minimum  volume
commitments. Negotiation of these agreements involves estimates of future supply
and demand for transmission capacity as well as estimates of the calling pattern
and traffic levels of the Company's future  customers.  In the event the Company
fails  to meet  its  minimum  volume  commitments,  it may be  obligated  to pay
underutilization  charges  and in the  event  it  underestimates  its  need  for
transmission  capacity,  the Company may be required to obtain capacity  through
more expensive means.

         Charges for access service for the  origination and termination of long
distance  traffic have made up a significant  portion of the  Company's  overall
cost of providing long distance service. In May 1997, the FCC adopted changes to
its  interstate  access rules that among other things reduce  per-minute  access
charges and  substitute  new per-line  flat rate monthly  charges.  The FCC also
approved  reductions  in overall  access  rates,  and  established  new rules to
recover subsidies to support  universal  service and other public policies.  The
impact on these changes on the Company or its competitors is not yet clear.  The
Company  could be  adversely  affected  if it does not  experience  access  cost
reductions  proportionally  equivalent to those of its  competitors.  Insofar as
Internet-based  competitors continue to be exempt from these charges, they could
enjoy a significant cost advantage in this area.

                                       -9-
PRICING PRESSURES AND RISKS OF INDUSTRY OVER-CAPACITY

         The  long   distance   transmission   industry   has   generally   been
characterized by over-capacity and declining prices since shortly after the AT&T
Corp.  ("AT&T")  divestiture  in 1984.  The Company  believes  that, in the last
several years,  increasing  demand has  ameliorated the  over-capacity  and that
pricing pressure has been reduced.  However, the Company anticipates that prices
for its  wholesale  longhaul  services  will  continue to decline  over the next
several  years.  While demand  continues to increase,  the Company is aware that
certain long distance  carriers are expanding  their  capacity and believes that
other long distance carriers, as well as potential new entrants to the industry,
are constructing new fiber optic and other long distance  transmission  networks
in the  United  States.  Because  the cost of the  actual  fiber (as  opposed to
construction  costs) is a relatively  small  portion of the cost of building new
transmission lines, persons building such lines are likely to install fiber that
provides  substantially more transmission  capacity than will be needed over the
short or medium term. Further,  recent technological advances may greatly expand
the capacity of existing and new fiber optic cable.  Although such technological
advances  may enable the Company to increase  its  capacity,  an increase in the
capacity of the  Company's  competitors  could  adversely  affect the  Company's
business.  If  industry  capacity  expansion  results in capacity  that  exceeds
overall  demand along any of the Company's  routes,  severe  additional  pricing
pressure   could   develop.   In  addition,   strategic   alliances  or  similar
transactions,  such as the long  distance  capacity  purchasing  alliance  among
certain  RBOCs  announced  in the  spring of 1996,  could  result in  additional
pricing pressure on long distance  carriers.  Furthermore,  the marginal cost of
carrying an additional call over existing fiber optic cable is extremely low. As
a result,  within a few  years,  there may be  dramatic  and  substantial  price
reductions.

DEPENDENCE ON BILLING,  CUSTOMER  SERVICES AND  INFORMATION  SYSTEMS;  YEAR 2000
ISSUES

         Sophisticated  information  and  processing  systems  are  vital to the
Company's  growth and its ability to monitor costs,  bill  customers,  provision
customer  orders and achieve  operating  efficiencies.  Billing and  information
systems  for the  Company's  historical  lines of  business  have been  produced
largely  in-house with partial  reliance on third-party  vendors.  These systems
have generally met the Company's needs due in part to the low volume of customer
billing. As the Company transitions to the provisioning of local services and as
its long  distance  and  Internet  operations  continue to expand,  the need for
sophisticated  billing and  information  systems will continue to increase.  The
Company's plans for the development  and  implementation  of its billing systems
rely, for the most part, on the delivery of products and services by third party
vendors. Similarly, the Company is developing customer call centers to provision
service  orders.  Information  systems  are  vital  to the  success  of the call
centers,  and the  information  systems for these call centers are largely being
developed by third party vendors.  Failure of these vendors to deliver  proposed
products and services in a timely and effective manner and at acceptable  costs,
failure  of the  Company  to  adequately  identify  all of its  information  and
processing  needs,  failure of the Company's  related  processing or information
systems,  or the failure of the Company to upgrade  systems as  necessary  could
have a  material  adverse  effect on the  ability  of the  Company  to reach its
objectives, its financial condition and its results of operations.

         Many  computer  systems will  experience  difficulty  processing  dates
beyond  the year  1999  and will  need to be  modified  prior to the year  2000.
Failure  to  make  such  modifications   could  result  in  system  failures  or
miscalculations  causing  disruptions of operations,  including  among others an
inability to process  transactions,  send invoices or engage in normal  business
activities.  The  Company's  core  internal  systems  that  have  been  recently
implemented  are year 2000  compliant.  The remaining core internal  systems are
scheduled  to be replaced by the second  quarter of 1999 and are  expected to be
year 2000 compliant when

                                      -10-
installed.  The Company is also completing a preliminary assessment of year 2000
issues not related to its core systems,  including  issues  surrounding  systems
that interface with those  operated by unrelated  parties.  Based on its initial
evaluation,  the Company does not believe that the cost of remedial actions will
have a  material  adverse  effect on the  Company's  results of  operations  and
financial condition. There can be no assurance,  however, that there will not be
a delay in, or increased costs associated with, the implementation of changes as
the program  progresses,  and failure to implement  such  changes  could have an
adverse effect on future results of operations.

COMPETITION

         The telecommunications industry is highly competitive. In most markets,
the Company's  principal  competitor for local exchange  services is the RBOC or
GTE  Corporation   and  its  affiliated   companies   (collectively,   the  "GTE
Companies").  Other competitors may include other CLECs, microwave and satellite
carriers,  wireless  telecommunications  providers and private networks built by
large  end-  users.   Potential   competitors   (using   similar  or   different
technologies)  include cable television  companies,  utilities and RBOCs outside
their current local service areas. In addition,  the Company  anticipates future
competition from large long distance carriers,  such as AT&T, MCI Communications
Corporation ("MCI") and Sprint Corporation ("Sprint"), which have begun to offer
integrated local and long distance  telecommunications  services.  AT&T also has
announced its intention to offer local services using a new wireless technology.
Several  companies  have  begun to offer  telecommunications  services  over the
Internet at rates  substantially  below current long distance  rates.  Companies
offering telecommunications services over the Internet could enjoy a significant
cost  advantage  because at this time they do not pay carrier  access charges or
universal service fees. The influx of competitors into the Company's markets and
into  markets  that the  Company  may  subsequently  enter  may  result  in more
participants than can ultimately be successful in a given market.  Consolidation
of telecommunications  companies and the formation of strategic alliances within
the telecommunications industry, as well as the development of new technologies,
could give rise to significant  new competitors to the Company.  In addition,  a
continuing  trend toward business  combinations  and strategic  alliances in the
telecommunications  industry  may  further  enhance  competition.  For  example,
WorldCom Inc. ("WorldCom") acquired MFS Communications Company, Inc. ("MFS") and
Brooks Fiber  Properties Inc.  ("Brooks") and has agreed to acquire MCI, each of
which  compete  with the  Company in several of the markets in which the Company
operates.  AT&T has announced its intention to acquire  Teleport  Communications
Group, Inc. ("Teleport"),  a CLEC that also competes with the Company in several
markets. The Company cannot determine what effect such acquisitions will have on
the Company's business, financial condition and results of operations.

         As a  recent  entrant  in the  integrated  telecommunications  services
industry,  the  Company  has not  achieved  and does not  expect  to  achieve  a
significant market share for any of its services. In particular,  the RBOCs, the
GTE  Companies  and  other  local   telephone   companies   have   long-standing
relationships  with their  customers,  have  financial,  technical and marketing
resources substantially greater than those of the Company, have the potential to
subsidize  competitive  services with revenues from a variety of businesses  and
currently  benefit from certain  existing  regulations that favor the ILECs over
the Company in certain  respects.  While recent  regulatory  initiatives,  which
allow CLECs such as the Company to interconnect  with ILEC  facilities,  provide
increased  business   opportunities  for  the  Company,   such   interconnection
opportunities  have been  accompanied by increased  pricing  flexibility for and
relaxation of regulatory  oversight of the ILECs.  For example,  the FCC granted
ILECs additional  flexibility in pricing their  interstate  special and switched
access services on a central office  specific basis.  Under this pricing scheme,
ILECs may  establish  pricing zones based on access  traffic  density and charge
different  prices for central offices in each zone. On February 8, 1997, new FCC
rules became effective  allowing ILECs to file  streamlined  tariffs on 15 days'
notice for rate increases

                                      -11-
and seven days' notice for rate decreases. Unless the FCC acts during the notice
period,  such  tariffs  become  effective  at its end.  The Company has begun to
target  Tier 1  cities  and  competition  in  such  markets  is  expected  to be
significantly  greater  than in Tier 2 and Tier 3 cities in which the Company is
currently operating.

         To the extent the Company  interconnects with and uses ILEC networks to
service its  customers,  the Company will be dependent  upon the  technology and
capabilities  of the  ILECs  to meet  certain  telecommunications  needs  of the
Company's  customers  and to maintain  its service  standards.  The Company will
become increasingly dependent on interconnection with ILECs as switched services
become a greater percentage of the Company's  business.  The  Telecommunications
Act imposes interconnection  obligations on ILECs, but there can be no assurance
that the  Company  will be able to obtain the  interconnection  it  requires  at
rates,  and on terms and  conditions,  that permit the Company to offer switched
services at rates that are simultaneously  competitive and profitable.  See " --
Difficulties in Implementing Local and Enhanced Services." In the event that the
Company  experiences  difficulties  in  obtaining  high  quality,  reliable  and
reasonably  priced service from the ILECs, the  attractiveness  of the Company's
services to its customers could be impaired.

         The  long   distance   telecommunications   industry   has   relatively
insignificant  barriers  to  entry,  numerous  entities  competing  for the same
customers  and a high average churn rate,  as customers  frequently  change long
distance  providers  in response to the  offering of lower rates or  promotional
incentives by  competitors.  The Company  competes  with major  carriers such as
AT&T,  MCI,  Sprint,  and WorldCom,  as well as other national and regional long
distance  carriers and resellers,  many of whom are able to provide  services at
costs that are lower than the Company's current costs. Many of these competitors
have greater financial,  technological and marketing resources than the Company.
In addition, as a result of the  Telecommunications  Act, the RBOCs are expected
to become  competitors  in the long  distance  telecommunications  industry both
outside  their  service   territory  and,  upon  the   satisfaction  of  certain
conditions,  within their  service  territory.  SBC  Communications  Corporation
("SBC") has challenged the constitutionality of the provisions conditioning RBOC
entry into  in-region long distance  service.  The district court has determined
that the provision of the  Telecommunications Act that prohibits RBOC entry into
long  distance  markets is  unconstitutional.  A stay of that  decision has been
granted  pending a decision by the United  States Court of Appeals for the Fifth
Circuit (the "Fifth Circuit").

         The Company believes that the principal  competitive  factors affecting
its long distance  operations are pricing,  customer service,  accurate billing,
clear pricing policies and, to a lesser extent, variety of services. The ability
of the Company to compete  effectively will depend upon its continued ability to
maintain high quality,  market driven  services at prices  generally equal to or
below those charged by its competitors. To maintain its competitive posture, the
Company  believes that it must be in a position to reduce its prices in order to
meet reductions in rates, if any, by others. Any such reductions could adversely
affect the Company.

         The Company's longhaul business is subject to intense competition.  See
"-- Pricing Pressures and Risks of Industry Over-Capacity."

         The  Internet  services  market  is  highly  competitive.  There are no
substantial  barriers to entry,  and the Company expects that  competition  will
continue to intensify. The Company's competitors in this market include Internet
service providers, other telecommunications companies, online services providers
and  Internet  software  providers.  Many  of  these  competitors  have  greater
financial,  technological  and marketing  resources than those  available to the
Company.

                                      -12-
On  February  25,  1998,  U S WEST  Communications,  Inc.  ("U S WEST")
petitioned  the FCC to allow it to build and  operate  packet-and  cell-switched
data  networks  across LATA  boundaries,  to permit it to carry  interLATA  data
traffic  incident to its provision of digital  subscriber line services,  to not
require it to make those data  services  available on a discounted  resale basis
and to not  require  it to make the  non-bottleneck  elements  of such  services
available on an unbundled  basis.  The Company  provides  certain  services with
which U S WEST proposed services would compete if the petition is granted by the
FCC.

         The  recent  World  Trade  Organization   ("WTO")  agreement  on  basic
telecommunications   services  could  increase  the  Company's  competition  for
telecommunication  services both  domestically and  internationally.  Under this
agreement,  the United States and other members of the WTO committed  themselves
to opening their telecommunications markets to competition and foreign ownership
and  to   adopting   regulatory   measures   to  protect   competitors   against
anticompetitive  behavior by dominant  telephone  companies,  effective  in some
cases as early as January 1, 1998.

         The Company believes that providers of wireless  services  increasingly
will offer,  in  addition to products  that  supplement  a  customer's  wireline
communications,  wireline  replacement  products  that may  result  in  wireless
services becoming the customer's primary mode of communication. Competition with
providers of wireless services may be intense.  Many of the Company's  potential
wireless competitors have substantially greater financial, technical, marketing,
sales,  manufacturing and distribution resources than the Company.  Furthermore,
the FCC has made spectrum available through public auction over the past several
years for use in wireless  communications and began offering additional spectrum
in February 1998. This additional spectrum is intended by the FCC to be used for
broadband,  data and video  transmission  but its use in wireless  local loop is
also possible.

GOVERNMENT REGULATION

         The  Company's  networks and the provision of switched and private line
services are subject to significant  regulation at the federal,  state and local
levels.  Delays in receiving required  regulatory  approvals or the enactment of
new adverse  regulation or regulatory  requirements  may have a material adverse
effect upon the Company.  The FCC exercises  jurisdiction  over the Company with
respect to interstate  and  international  services.  Additionally,  the Company
files tariffs with the FCC. On October 29, 1996,  the FCC approved an order that
eliminates the tariff filing  requirements for interstate domestic long distance
service provided by non-dominant  carriers such as the Company.  On February 13,
1997,  the United  States Court of Appeals for the District of Columbia  Circuit
stayed  the  FCC  order.  In  addition,   the  Company  must  obtain  prior  FCC
authorization  for installation  and operation of  international  facilities and
international  long distance  services.  State regulatory  commissions  exercise
jurisdiction over the Company to the extent it provides intrastate services.  As
such a provider,  the Company is  required  to obtain  regulatory  authorization
and/or  file  tariffs  at  state  agencies  in most of the  states  in  which it
operates.  Certificates  of  authority  to provide  services  can  generally  be
conditioned,  modified,  cancelled,  terminated or revoked for failure to comply
with rules and regulations. Fines and other penalties may also be imposed. Local
authorities  regulate  the  Company's  access to  municipal  rights-of-way.  The
networks are also subject to numerous local  regulations  such as building codes
and  licensing.  Such  regulations  vary on a city by city and  county by county
basis.  There can be no assurance that the FCC or state  commissions  will grant
required  authority or refrain from taking  action  against the Company if it is
found to have provided services without obtaining the necessary  authorizations.
If authority is not obtained or if tariffs are not filed, or are not updated, or
otherwise do not fully  comply with the tariff  filing rules of the FCC or state
regulatory agencies,  third parties or regulators could challenge these actions.
Such  challenges  could  cause  the  Company  to  incur  substantial  legal  and
administrative expenses.

                                      -13-
The Telecommunications  Act provides for a significant  deregulation of
the domestic  telecommunications  industry,  including the local exchange,  long
distance and cable television  industries.  The  Telecommunications  Act remains
subject to judicial review and additional FCC and state rulemakings, and thus it
is difficult to predict what effect the legislation will have on the Company and
its operations.  There are currently many regulatory  actions underway and being
contemplated by federal and state authorities regarding  interconnection pricing
and other  issues  that could  result in  significant  changes  to the  business
conditions in the  telecommunications  industry.  There can be no assurance that
these changes will not have a material adverse effect upon the Company.

         In addition to requirements placed on ILECs, the Telecommunications Act
subjects  the  Company  to  certain  federal  regulatory  requirements  upon the
Company's  provision of local exchange service in a market.  All ILECs and CLECs
must  interconnect  with other  carriers,  provide  nondiscriminatory  access to
rights-of-way,  offer  reciprocal  compensation  for  termination of traffic and
provide dialing parity and telephone number portability.  The Telecommunications
Act also requires all telecommunications  carriers to ensure that their services
are accessible to and usable by persons with disabilities.

         On May 8, 1997, the FCC released an order  establishing a significantly
expanded  federal  telecommunications  subsidy  regime.  For  example,  the  FCC
established  new  subsidies  for  services  provided to  qualifying  schools and
libraries with an annual cap of $2.25 billion and for services provided to rural
health care providers with an annual cap of $400 million.  The FCC also expanded
the  federal  subsidies  to  low-income   consumers.   Providers  of  interstate
telecommunications  service,  such as the  Company,  as well  as  certain  other
entities,  must pay for these  programs.  The  Company's  share of these federal
subsidy funds will be based on its share of certain  defined  telecommunications
end-user  revenues.  The  revenues for the high cost and low income fund are the
Company's estimated quarterly  interstate and gross end-user  telecommunications
revenues.  The revenues for the schools and libraries and rural health care fund
are the Company's estimated quarterly  intrastate,  interstate and international
gross end-user  telecommunications  revenues. The contribution factors issued by
the FCC for  the  first  and  second  quarters  of 1998  are  3.19%  and  3.14%,
respectively,  for the  high  cost  and low  income  fund  and  .72%  and  .76%,
respectively,  for the schools, libraries and rural healthcare fund. The amounts
contributed  may be billed to  customers.  The  Company has been billed for such
contributions  and  on an  annualized  basis,  the  amounts  billed  would  have
represented  less than 1% of total  revenues  for  Fiscal  1997.  In the May 8th
order, the FCC also announced that it will soon revise its rules for subsidizing
service provided to consumers in high cost areas.  Several parties have appealed
the May 8th order.  Such appeals have been  consolidated  and transferred to the
United  States Court of Appeals for the Fifth  Circuit  where they are currently
pending.  In addition,  on July 3, 1997, several ILECs filed a petition for stay
of the May 8th order with the FCC. That petition is pending.

         The FCC released a Report to Congress on April 10, 1998  concerning its
implementation   of   the   telecommunications   subsidy   provisions   of   the
Telecommunications   Act.  The  FCC   clarified   that   entities  that  provide
transmission    capacity   to   Internet   service   providers   are   providing
telecommunications  services  subject  to  contribution  requirements.  The  FCC
indicated that it would address the issue of whether ISPs would  contribute to a
universal  service  fund  based on the  utilization  of their  own  transmission
facilities   at  a  later  date  and  whether   certain  ISP  services  such  as
phone-to-phone IP telephony are telecommunications services subject to universal
service fund contribution and access charge payments.

         In a  combined  Report  and Order and  Notice  of  Proposed  Rulemaking
released on December 24, 1996, the FCC made changes and proposed further changes
in the  interstate  access charge  structure.  In the Report and Order,  the FCC
removed  restrictions  on ILECs'  ability to lower access prices and relaxed the
regulation

                                      -14-
of new switched access services in those markets where there are other providers
of access  services.  If this increased  pricing  flexibility is not effectively
monitored by federal regulators,  it could have a material adverse effect on the
Company's ability to compete in providing interstate access services. On May 16,
1997, the FCC released an order revising its access charge rate  structure.  The
new rules substantially increase the costs that ILECs subject to the FCC's price
cap rules ("price cap LECs")  recover  through  monthly,  non-traffic  sensitive
access charges and substantially  decrease the costs that price cap LECs recover
through traffic  sensitive  access charges.  In the May 16th order, the FCC also
announced  its plan to bring  interstate  access  rate  levels more in line with
cost.  The plan will include rules that grant price cap LECs  increased  pricing
flexibility  upon   demonstrations   of  increased   competition  (or  potential
competition)  in relevant  markets.  The manner in which the FCC implements this
approach to lowering  access charge  levels could have a material  effect on the
Company's ability to compete in providing  interstate  access services.  Several
parties have appealed the May 16th order.  Those appeals have been  consolidated
and  transferred  to the United  States  Court of Appeals for the Eight  Circuit
where they are currently pending.

         In  addition,   federal  regulations  impose  restrictions  on  foreign
ownership of  communications  service  providers  utilizing  radio  frequencies,
including  microwave radio facilities,  and cellular and personal  communication
service ("PCS")  facilities.  The operations of GST Telecom  Hawaii,  Inc. ("GST
Hawaii"), a wholly-owned  subsidiary of GST that conducts the Company's business
in Hawaii, use, among other transmission facilities,  microwave radio facilities
operating pursuant to FCC licenses granted to Pacwest Network,  Inc. ("PNI"), an
entity that is controlled by John Warta, the Company's Chairman of the Board and
Chief Executive Officer.  As a result of changes in federal policies,  it is the
intention  of the  Company  and PNI to  reach  an  agreement  to  transfer  such
microwave  facilities  and  associated  licenses to the Company,  subject to FCC
approval. The FCC also has the authority,  which it is not presently exercising,
to impose restrictions on foreign ownership of communications  service providers
not utilizing radio frequencies.  In the event the FCC exercises such authority,
it could  have a  material  adverse  effect  on the  Company's  CLEC  and  other
businesses.

NEED TO ADAPT TO TECHNOLOGICAL CHANGE

         The  telecommunications  industry  is subject to rapid and  significant
changes  in  technology,  with the  Company  relying  on third  parties  for the
development of and access to new technology. The effect of technological changes
on the business of the Company  cannot be  predicted.  The Company  believes its
future  success will depend,  in part,  on its ability to anticipate or adapt to
such  changes  and to offer,  on a timely  basis,  services  that meet  customer
demands.

LITIGATION RISKS

         The  Company is involved in various  legal  proceedings.  An action was
commenced against NACT alleging that its telephone systems incorporating prepaid
debit card features  infringe upon a patent issued in 1987.  The Company and GST
USA were added as a defendant to such action in August 1997. Concurrent with the
Company's  sale of NACT,  the Company and World  Access,  Inc.  entered  into an
agreement  whereby  the  Company  generally  will bear 50% of any damages in the
action,  including reasonable attorneys' fees, losses,  liabilities,  claims and
assessments, royalties and license fees provided that if a court determines that
the  patent is valid and that it has been  infringed,  the  Company's  liability
associated  with future  royalties,  license  fees,  refunds and cost of product
replacement or modification is limited to $2.0 million. An unfavorable  decision
in such action could have a material adverse effect on the Company.  Other legal
proceedings  to which the Company is a party could have an adverse effect on the
Company.

                                      -15-
POSSIBLE INABILITY TO RECOVER PAYMENTS MADE TO MAGNACOM

         Magnacom  Wireless,  L.L.C.  ("Magnacom"),  a company 99% owned by PNI,
which is controlled by John Warta, the Company's Chairman of the Board and Chief
Executive Officer,  has acquired various PCS licenses.  Magnacom holds 30 MHz (C
Block) PCS licenses for eleven markets in Arizona,  Arkansas, New Mexico, Oregon
and Utah.  Magnacom  was the winning  bidder for 10 MHz  licenses in the FCC's F
Block in 13 markets in Hawaii,  Idaho,  Oregon and Washington in an FCC auction.
Magnacom currently has an application on file with the FCC requesting  authority
to  effect a  reorganization  with  PCS Plus  Holdings  Corporation  ("PCS  Plus
Holdings"),  another company  controlled by Mr. Warta and of which Mr. Warta and
Stephen Irwin, Vice Chairman of the Board and Secretary of the Company, serve as
officers and directors.

         Magnacom  and the  Company  have  entered  into a master  services  and
facilities agreement (the "Magnacom Services Agreement") with an initial term of
five years pursuant to which (i) the Company has been designated a non-exclusive
reseller of PCS telephone services in the markets in which Magnacom has obtained
licenses,  and (ii) Magnacom has granted the Company a right of first refusal to
provide   switched   local  and  long  distance   services  and  other  enhanced
telecommunications services, to all of Magnacom's resellers in markets where the
Company has  operational  networks  provided that the Company's  rates and other
terms of service are competitive. Magnacom has agreed to sell PCS minutes to the
Company at $.05 per  minute,  subject to downward  adjustment  to equal the most
favorable rates offered to Magnacom's other resellers (but in no event less than
Magnacom's  cost). In connection  with the Magnacom  Services  Agreement,  as of
December 31, 1997, the Company had paid Magnacom  approximately $14.4 million as
prepayments for future PCS services.  The Magnacom Services Agreement supersedes
a previous reseller agreement between the Company and Magnacom.

         In  addition,  the Company has been  granted an option to acquire up to
PNI's entire interest in Magnacom (currently 99%). The exercise of the option is
subject to compliance  with all  applicable  FCC  regulations  relating to prior
approval of any transfer of control of PCS licenses, including those relating to
foreign ownership or control and requirements regarding the ownership of C and F
block licenses and interests in C and F block licensees. Accordingly, until such
time as FCC  regulations or  administrative  action permit the Company to own in
excess of 25% of Magnacom,  the option by its terms is limited to a 24% interest
in Magnacom.  The Company,  Magnacom and PNI are in negotiations with respect to
modifying the option in order to provide,  among other things,  that the Company
own no more than a 25% interest in Magnacom or PCS Plus  Holdings  upon exercise
of such option.

         In  addition,  the  Company may issue a warrant to purchase up to 4% of
the then outstanding Common Shares in connection with financing for Magnacom. If
such warrant is issued, the Company will record a one-time noncash charge, in an
amount equal to the value of the warrant.

         The provision of wireless  telecommunications  service by Magnacom will
be dependent upon the ability to obtain the financing necessary to make payments
to the FCC under the terms of its  licenses,  to obtain  working  capital and to
build the required  facilities,  including  the  purchase of  telecommunications
equipment. There can be no assurance that Magnacom will obtain such financing or
be able to provide PCS  services.  In such event,  the Company  would  likely be
unable to recover its payments to Magnacom.

DEPENDENCE ON KEY PERSONNEL

         The efforts of a small number of key management and operating personnel
will largely determine the Company's success and the loss of any of such persons
could adversely  affect the Company.  The success of the Company also depends in
part upon its ability to hire and retain highly skilled and qualified operating,

                                      -16-
marketing,  financial and technical  personnel.  The  competition  for qualified
personnel in the telecommunications industry is intense and, accordingly,  there
can be no assurance  that the Company  will be able to hire or retain  necessary
personnel.

DEPENDENCE ON RIGHTS-OF-WAY AND OTHER THIRD PARTY AGREEMENTS

         The Company must obtain  easements,  rights-of-way,  entry to premises,
franchises  and licenses  from various  private  parties,  actual and  potential
competitors  and state and local  governments  in order to construct and operate
its  networks.   There  can  be  no  assurance  that  the  Company  will  obtain
rights-of-way  and franchise  agreements on acceptable  terms or that current or
potential  competitors  will not  obtain  similar  rights-of-way  and  franchise
agreements  that will allow them to compete  against the Company.  If any of the
existing  franchise or license agreements were terminated or not renewed and the
Company  were forced to remove its fiber optic cables or abandon its networks in
place, such termination could have a material adverse effect on the Company.

RISK OF JOINT INVESTMENTS

         The  Company  has  invested  in one joint  venture  and may enter  into
additional  joint ventures in the future.  There are risks in  participating  in
joint ventures,  including the risk that the other joint venture partners may at
any  time  have  economic,  business  or  legal  interests  or  goals  that  are
inconsistent  with those of the joint  venture or the Company.  The risk is also
present that a joint venture partner may be unable to meet its economic or other
obligations  to the venture and that the Company may be required to fulfill some
or all of those  obligations.  In  addition,  to the  extent  that  the  Company
participates in  international  joint ventures,  the operations of such ventures
will be  subject  to  various  additional  risks not  present  in the  Company's
domestic  joint  ventures,  such as  fluctuations  in currency  exchange  rates,
nationalization or expropriation of assets,  import/export  controls,  political
instability,  limitations on foreign investment,  restrictions on the ability to
convert currencies and the additional  expenses and risks inherent in conducting
operations in geographically distant locations with customers speaking different
languages and having different cultural approaches to the conduct of business.

         As of February 28, 1998,  the Company had invested  approximately  $3.7
million in a  publicly-traded  Canadian  corporation  (subsequently  renamed GST
Global  Telecommunications  Inc.,  "Global") and held  approximately 3.6 million
shares and warrants to purchase 750,000  additional shares. At that date, Global
had approximately  14.7 million shares outstanding  (approximately  28.7 million
shares on a fully diluted  basis,  excluding any  additional  shares that may be
issued to the Company as discussed  below).  It is the  Company's  position that
Global is to issue to the Company up to an additional 5,000,000 common shares of
Global,  subject to regulatory  approval in consideration  for the assignment by
the Company to Global of its rights to acquire a  telecommunications  project in
Mexico (the  "Bestel  Project").  Global has  asserted  that the Company is only
entitled to receive up to 3,000,000 additional common shares of Global,  subject
to the  approval of its board of directors  and  regulatory  approval.  To date,
Global has not issued any of its common shares to the Company in respect of such
assignment.

VARIABILITY OF QUARTERLY OPERATING RESULTS

         As a result of the limited revenues and significant expenses associated
with the expansion  and  development  of its networks and services,  the Company
anticipates that its operating results could vary  significantly  from period to
period. In addition,  revenues relating to the Company's network  businesses are
and may continue to be dependent upon a small number of customers and contracts,
revenues under which are likely to vary significantly from period to period.

                                      -17-
VOLATILITY OF MARKET PRICE OF COMMON SHARES

         Since the Common Shares have been publicly  traded,  their market price
has  fluctuated  over a wide range and may continue to do so in the future.  The
market price of the Common Shares could be subject to  significant  fluctuations
in response to various  factors and events,  including  among other things,  the
depth and liquidity of the trading  market of the Common  Shares,  variations in
the Company's  operating  results and the difference  between actual results and
the results expected by investors and analysts.  In addition,  from time to time
the stock market has experienced  broad price and volume  fluctuations that have
often been  unrelated to the operating  performance  of  companies.  These broad
market  fluctuations  also may  adversely  affect the market price of the Common
Shares.

RISKS OF INVESTMENT IN A CANADIAN CORPORATION

         The Company is a  corporation  incorporated  under the Canada  Business
Corporations  Act.  Certain  of the  directors  and the  Company's  professional
advisors are residents of Canada or otherwise  reside outside of the U.S. All or
a  substantial  portion  of the  assets of such  persons  are or may be  located
outside of the U.S. It may be difficult to effect  service of process within the
United States upon the Company or upon such directors or  professional  advisors
or to realize in the U.S. upon judgments of U.S.  courts  predicated  upon civil
liability of the Company or such persons under U.S. federal securities laws. The
Company has been advised that there is doubt as to whether Canadian courts would
(i)  enforce  judgments  of U.S.  courts  obtained  against  the Company or such
directors or professional  advisors predicated solely upon the civil liabilities
provisions  of U.S.  federal  securities  laws,  or (ii) impose  liabilities  in
original actions against the Company or such directors and professional advisors
predicated solely upon such U.S. laws.  However,  a judgment against the Company
predicated  solely  upon  civil  liabilities  provisions  of such  U.S.  federal
securities  laws may be  enforceable  in Canada if the U.S.  court in which such
judgment was obtained has a basis for  jurisdiction in that matter that would be
recognized by a Canadian court. In addition,  the Company's status as a Canadian
company  limits the  ability of the Company to hold or control  radio  frequency
licenses in the United States.

SHARES ELIGIBLE FOR FUTURE SALE

         At March 31,  1998,  the  Company  had  outstanding  35,863,008  Common
Shares. Of these shares, 31,252,170 Common Shares were freely tradeable,  except
for any Common Shares held by  "affiliates" of the Company within the meeting of
Rule 144 under the  Securities  Act,  which shares will be subject to the resale
limitation of Rule 144. The remaining  4,610,838  Common Shares were "restricted
securities,"  as that term is defined in Rule 144 and may only be sold  pursuant
to a registration  statement under the Securities Act or an applicable exemption
from registration  thereunder,  including pursuant to Rule 144. In addition,  at
March 31, 1998,  (i)  4,116,332  Common  Shares were  reserved for issuance upon
exercise of outstanding stock options at prices ranging from $5.00 to $15.00 per
share,  (ii) 596,155  Common  Shares were reserved for issuance upon exercise of
outstanding  warrants at exercise prices ranging from $6.75 to $12.96 per share,
(iii) 3,574,495  Common Shares were reserved for issuance upon conversion of the
Convertible Notes (based on the aggregate accreted value of Convertible Notes on
March 31, 1998) and (iv) 4,933,072 Common Shares were reserved for issuance upon
conversion  of the  Company's  Series  A  Preference  Shares  sold in a  private
placement in February 1997 (the  "Redeemable  Preferred  Shares")  (based on the
aggregate accreted value of the Redeemable  Preferred Shares on March 31, 1998).
The  Company  has  registered  the resale of the  Common  Shares  issuable  upon
exercise of the options and warrants (other than the Common Shares issuable upon
exercise  of  warrants  to  purchase  75,000  Common  Shares  issued to Tomen in
connection with a recent  financing and the Shares being  registered  hereby and
the Common Shares issuable upon conversion of the Convertible  Notes. The future
sale or the  expectation  of future sales of Common  Shares in the public market
could adversely

                                      -18-
affect the  prevailing  market prices for the Common Shares and could impair the
Company's ability to raise capital through the sale of Common Shares.

POTENTIAL ANTI-TAKEOVER PROVISIONS

         The Company's Board of Directors has the authority, without any further
vote  or  action  by  the  Company's  shareholders,  to  issue  up to  9,999,500
Preference Shares,  without par value (the "Preference  Shares"), in one or more
series and to determine  the  designations,  powers,  preferences  and relative,
participating,  optional or other rights thereof,  including without limitation,
the dividend rate (and whether  dividends are  cumulative),  conversion  rights,
voting rights, rights and terms of redemption,  redemption price and liquidation
preference.  Although the Company has no current  plans to issue any  Preference
Shares,  the rights of the holders of Common Shares would be subject to, and may
be  adversely  affected by, the rights of the holders of any  Preference  Shares
that may be issued in the future.  Issuance of Preference  Shares could have the
effect of delaying,  deterring or preventing a change in control of the Company,
including the imposition of various procedural and other requirements that could
make it more difficult for holders of Common Shares to effect certain  corporate
actions,  including the ability to replace incumbent directors and to accomplish
transactions opposed by the incumbent Board of Directors.

                                MATERIAL CHANGES

         In May 1998, the Company,  through an indirect wholly-owned subsidiary,
completed the 1998 Notes Offering of $500.0 million principal amount at maturity
of 1998 Notes.  The 1998 Notes will fully  accrete to face value on May 1, 2003.
From and after May 1, 2003,  the 1998 Notes  will bear  interest,  which will be
payable in cash,  at a rate of 10 1/2% per annum on each May 1 and  November  1,
commencing  November 1, 2003.  The Company  intends to use the net proceeds from
the 1998 Notes Offering,  aggregating  approximately $288.5 million, to purchase
telecommunications  equipment for the continued expansion of its infrastructure,
including the development and  construction of additional  networks and longhaul
fiber optic facilities.

                                   THE COMPANY

         The  Company  provides a broad range of  integrated  telecommunications
products and services,  primarily to business  customers  located in the western
continental  United States and Hawaii. As a  facilities-based  CLEC, the Company
operates state-of-the-art, digital telecommunications networks that represent an
alternative  to ILECs.  The  Company's  full  line of  products,  which  offer a
"one-stop"  solution to  customers'  telecommunications  services  requirements,
include local dial tone, long distance,  Internet, data transmission and private
line services.

         The Company's  digital networks  currently serve 40 markets in Arizona,
California,  Hawaii, Idaho, New Mexico, Texas and Washington.  In addition,  the
Company has networks under construction  which, when completed,  will expand its
regional footprint to Oregon.  The Company also constructs,  markets and manages
longhaul fiber optic facilities in Arizona, California and Hawaii. The Company's
longhaul  fiber  optic  facilities  currently  extend  over 900 route  miles and
approximately  1,700 route miles are under  construction  and expected to become
operational over the next 12 months.

         Management  believes  that  the  formation  of an  integrated  regional
network through the  interconnection of the Company's  individual  networks with
longhaul  fiber  optic  facilities  will  provide  significant  competitive  and
economic  advantages.  In  addition  to  providing  the  Company  with a  larger
addressable market, the interconnection of its networks is expected to allow the
Company  to carry a portion  of its  intra-regional  telecommunications  traffic
on-net,  thereby  improving  operating  margins by  reducing  payments  to other
carriers for use of

                                      -19-
their facilities. In addition, increasing demand for high bandwidth capacity has
created  opportunities  for the Company to sell or lease capacity on its network
to other communications carriers.

                                 USE OF PROCEEDS

         The  Company  will  receive  the  exercise  price of the  options  when
exercised  by the  holders  thereof.  The  Company  will not  receive any of the
proceeds  from the reoffer and resale of the Shares by the Selling  Shareholders
and the Future Selling Shareholders.

                              SELLING SHAREHOLDERS

         This  Prospectus  relates to the reoffer and resale of Shares issued or
that may be issued to the Selling Shareholders under the Plans.

         The  following  table  sets  forth  (i) the  number  of  Common  Shares
beneficially  owned by each Selling  Shareholder as of April 30, 1998,  (ii) the
number of Shares to be offered for resale by each Selling  Shareholder and (iii)
the  number  and  percentage  of  Common  Shares  to be  held  by  each  Selling
Shareholder after completion of the offering.
Number of Common
                                                                                Number of           Shares/Percentage of
                                                   Number of Common           Shares to be           Class to be Owned
                                                  Shares Owned as of           Offered for          After Completion of
                   Name                             April 30, 1998               Resale                 the Offering
----------------------------------------      ------------------------     -----------------     ------------------------
John Warta(1)                                        1,741,163(2)                   200,000               1,541,163/4.29%
Stephen Irwin(3)                                       443,011(4)                   200,000                  243,011/*
Joseph A. Basile, Jr.(5)                                  150,000                   450,000                          0
Daniel L. Trampush(6)                                      33,334                   210,000                          0
Clifford V. Sander(7)                                  366,100(8)                   108,000                  258,100/*
Robert H. Hanson(9)                                   160,481(10)                    35,000                  125,481/*
Joseph G. Fogg, III(11)                                         0                    10,000                          0
Mitsuhiro Naoe(12)                                              0                    10,000                          0
Jack G. Armstrong(13)                                  50,500(14)                    30,000                   20,500/*
Peter E. Legault(15)                                  128,250(16)                    35,000                   93,250/*
A. Roy Megarry(17)                                          5,000                    25,000                    5,000/*
Robert A. Ferchat(18)                                           0                    15,000                          0
--------------------
*  Less than 1%.

(1)      Mr.  Warta has been  Chairman of the Board of the  Company  since March
         1997, Chief Executive Officer and a director of the Company since March
         1995.  He was the  President  of the  Company  from March 1995 to March
         1997.
(2)      Includes 191,666 Common Shares issuable upon exercise of options.  Does
         not include 133,334 Common Shares issuable upon the exercise of options
         that are not  exercisable  until the market price of the Common  Shares
         reaches certain levels for certain prescribed periods.
(3)      Mr.  Irwin has been Vice  Chairman  of the Board and a director  of the
         Company  since  September  1995  and  Secretary  of the  Company  since
         November  1992.
(4)      Includes (i) 166,666  Common  Shares  issuable upon exercise of options
         and (ii) 200,000 Common Shares issuable upon exercise of an outstanding
         warrant.  Does not include (i) 133,334 Common Shares  issuable upon the
         exercise of options that are not exercisable until the closing price of
         the Common Shares reaches certain levels for certain prescribed periods
         and (ii) 100,000 Common Shares issuable upon exercise of an outstanding
         warrant.
(5)      Mr.  Basile  has been  President  and Chief  Operating  Officer  of the
         Company since March 1997 and a director of the Company since  September
         1997.
(6)      Mr. Trampush has been Senior Vice President and Chief Financial Officer
         of the Company since March 1997.
(7)      Mr. Sander has been Senior Vice  President and Treasurer of the Company
         since March 1995.
(8)      Includes 62,000 Common Shares issuable upon exercise of options.
(9)      Mr. Hanson has been Senior Vice President - Corporate Development since
         October 1993.
(10)     Includes 60,416 Common Shares issuable upon exercise of options.
(11)     Mr. Fogg has been a director of the Company since June 1997.
(12)     Mr. Naoe has been a director of the Company since June 1997.
(13)     Mr. Armstrong has been a director of the Company since July 1994.

                                      -20-
(14)     Includes 42,500 Common Shares issuable upon exercise of options.
(15)     Mr. Legault has been a director of the Company since April 1993.
(16)     Includes 53,750 Common Shares issuable upon exercise of options.
(17)     Mr. Megarry has been a director of the Company since September 1997.
(18)     Mr. Ferchat has been a director of the Company since March 1998.

                              PLAN OF DISTRIBUTION

         This offering is self-underwritten; neither the Company nor the Selling
Shareholders  have employed an underwriter  for the sale of Common Shares by the
Selling Shareholders.  The Company will bear all expenses in connection with the
preparation of this Prospectus.  The Selling Shareholders will bear all expenses
associated with the sale of the Common Shares.

         The  Common  Shares  may be sold  from  time  to  time  by the  Selling
Shareholders,  or by  pledgees,  donees,  transferees  or  other  successors  in
interest on the Nasdaq National  Market,  at fixed prices that may be changed or
at negotiated prices.  The Selling  Shareholders may effect such transactions by
selling shares to or through  broker-dealers,  and all such  broker-dealers  may
receive compensation in the form of discounts,  concessions, or commissions from
the Selling  Shareholders  and/or the  purchasers of Common Shares for whom such
broker-dealers  may act as agents or to whom  they sell as  principals,  or both
(which  compensation  as to a  particular  broker-dealer  might be in  excess of
customary commissions).

         Any broker-dealer acquiring Common Shares from the Selling Shareholders
may sell the shares either  directly,  in its normal  market-making  activities,
through or to other brokers on a principal or agency basis or to its  customers.
Any such sales may be at prices then prevailing on the Nasdaq National Market or
at prices related to such  prevailing  market prices or at negotiated  prices to
its customers or a combination of such methods. The Selling Shareholders and any
broker-  dealers  that act in  connection  with the  sale of the  Common  Shares
hereunder  might be deemed to be  "underwriters"  within the  meaning of Section
2(11) of the Securities Act; any commissions  received by them and any profit on
the resale of shares as principal might be deemed to be  underwriting  discounts
and commissions under the Securities Act. Any such commissions, as well as other
expenses incurred by the Selling Shareholders and applicable transfer taxes, are
payable by the Selling Shareholders.

                                  LEGAL MATTERS

         Certain  legal  matters in  connection  with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs.  Olshan Grundman
Frome &  Rosenzweig  LLP,  505 Park Avenue,  New York,  New York 10022.  Stephen
Irwin,  counsel to Olshan  Grundman  Frome &  Rosenzweig  LLP, is an officer and
director of the  Company and holds  76,345  Common  Shares and has been  granted
options and  warrants  to  purchase an  additional  600,000  Common  Shares.  In
addition,  other  attorneys  affiliated with such firm hold Common Shares and/or
options to purchase Common Shares.

                                     EXPERTS

         The consolidated balance sheets of GST Telecommunications, Inc. and its
subsidiaries  as of December  31, 1997 and  September  30, 1997 and 1996 and the
consolidated  statements of operations,  shareholders' equity (deficit) and cash
flows for the three month period  ended  December 31, 1997 and each of the years
in the three year period ended September 30, 1997, have been incorporated herein
by reference in reliance  upon the report of KPMG Peat Marwick LLP,  independent
certified public accountants,  and upon the authority of said firm as experts in
accounting and auditing.

                                      -21-
ADDITIONAL INFORMATION

         The Company has filed with the Commission a  Registration  Statement on
Form S-8 under the Securities Act with respect to the Shares offered hereby. For
further  information  with  respect to the  Company and the  securities  offered
hereby, reference is made to the Registration Statement. Statements contained in
this  Prospectus  as to the contents of any  contract or other  document are not
necessarily  complete,  and in each  instance,  reference is made to the copy of
such  contract or document  filed as an exhibit to the  Registration  Statement,
each such statement being qualified in all respects by such reference.

                                      -22-
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.  INCORPORATION OF DOCUMENTS REFERENCE

         The  following  documents  filed by GST  Telecommunications,  Inc. (the
"Company") with the Securities and Exchange  Commission are incorporated  herein
by reference:

         1. The  Company's  Annual Report on Form 10-K for the fiscal year ended
September 30, 1997.

         2. The Company's  Transitional Report on Form 10-K for the three months
ended December 31, 1997.

         3. The  Company's  Quarterly  Report on Form 10-Q for the quarter ended
March 31, 1998.

         4. The  Company's  Current  Reports  on Form  8-K  dated  May 4,  1998,
February 27, 1998 and January 6, 1998.

         5. The  description of the Company's  Common  Shares,  no par value per
share,  in the Company's  Registration  Statement on Form 8-A filed on April 13,
1998.

         All  reports  and other  documents  subsequently  filed by the  Company
pursuant to Sections 13(a),  13(c), 14 and 15(d) of the Securities  Exchange Act
of 1934, as amended, after the effective date of this registration statement and
prior to the  filing of a  post-effective  amendment  which  indicates  that all
securities offered hereunder have been sold or which de-registers all securities
then remaining  unsold,  shall be deemed to be incorporated by reference  herein
and to be a part hereof from the date of filing of such documents.

ITEM 4.  DESCRIPTION OF SECURITIES

         Not applicable.

ITEM 5.  INTEREST OF NAMED EXPERTS AND COUNSEL

         Certain  legal  matters in  connection  with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs.  Olshan Grundman
Frome &  Rosenzweig  LLP,  505 Park Avenue,  New York,  New York 10022.  Stephen
Irwin,  counsel to Olshan  Grundman  Frome &  Rosenzweig  LLP, is an officer and
director of the  Company and holds  76,345  Common  Shares and has been  granted
options and  warrants  to  purchase an  additional  600,000  Common  Shares.  In
addition,  other  attorneys  affiliated with such firm hold Common Shares and/or
options to purchase Common Shares.

ITEM 6.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Except  as  hereinafter  set  forth,  there  is  no  statute,   charter
provision,  by-law,  contract or other  arrangement  under which any controlling
person,  director  or officer of the  Company is insured or  indemnified  in any
manner against liability which he may incur in his capacity as such.

         The  Company's  authority to indemnify  its  directors  and officers is
governed by the  provisions of Section 124 of the Canada  Business  Corporations
Act, as follows:

                                      II-1
(1) INDEMNIFICATION.  Except in respect of an action by or on behalf of
the  corporation  or body  corporate  to  procure a  judgment  in its  favor,  a
corporation  may  indemnify a director or officer of the  corporation,  a former
director  or  officer  of the  corporation  or a person who acts or acted at the
corporation's  request as a director or officer of a body corporate of which the
corporation  is or was a  shareholder  or  creditor,  and his  heirs  and  legal
representatives,  against all costs,  charges and expenses,  including an amount
paid to settle an action or satisfy a  judgment,  reasonably  incurred by him in
respect of any civil,  criminal or administrative  action or proceeding to which
he is made a party by reason of being or having  been a  director  or officer of
such corporation or body corporate, if

         (a)  he  acted  honestly  and in good  faith  with a view  to the  best
              interests of the corporation; and

         (b)  in the case of a criminal or  administrative  action or proceeding
              that is enforced by a monetary penalty,  he had reasonable grounds
              for believing that his conduct was lawful.

         (2)  INDEMNIFICATION IN DERIVATIVE  ACTIONS. A corporation may with the
approval of a court  indemnify a person referred to in subsection (1) in respect
of an action by or on behalf of the  corporation  or body corporate to procure a
judgment in its favor,  to which he is made a party by reason of being or having
been a director or an officer of the corporation or body corporate,  against all
costs,  charges and expenses  reasonably incurred by him in connection with such
action if he fulfills the conditions set out in paragraphs (1)(a) and (b).

         (3) INDEMNITY AS OF RIGHT.  Notwithstanding anything in this section, a
person  referred  to in  subsection  (1)  is  entitled  to  indemnity  from  the
corporation in respect of all costs, charges and expenses reasonably incurred by
him in  connection  with the defense of any civil,  criminal  or  administrative
action  or  proceeding  to which he is made a party by reason of being or having
been a director or officer of the corporation or body  corporate,  if the person
seeking indemnity

         (a)  was  substantially  successful on the merits in his defense of the
              action or proceeding, and

         (b)  fulfills the conditions set out in paragraphs (1)(a) and (b).

         (4) DIRECTORS' AND OFFICERS' INSURANCE.  A corporation may purchase and
maintain  insurance  for the benefit of any person  referred to  subsection  (1)
against any liability incurred by him

         (a)  in his  capacity  as a director  or  officer  of the  corporation,
              except where the liability  relates to his failure to act honestly
              and in  good  faith  with a view  to  the  best  interests  of the
              corporation; or

         (b)  in his capacity as a director or officer of another body corporate
              where  he acts or  acted  in that  capacity  at the  corporation's
              request,  except where the liability relates to his failure to act
              honestly  and in good faith with a view to the best  interests  of
              the body corporate.

         (5)  APPLICATION  TO COURT.  A corporation  or a person  referred to in
subsection  (1) may apply to a court for an order  approving an indemnity  under
this  section  and the court may so order and make any  further  order it thinks
fit.

                                      II-2
(6) NOTICE TO DIRECTOR.  An applicant  under  subsection (5) shall give
the Director  notice of the  application  and the Director is entitled to appear
and be heard in person or by counsel.

         (7) OTHER NOTICE. On an application under subsection (5), the court may
order notice to be given to any interested person and such person is entitled to
appear and be heard in person or by counsel.

         The Company's  by-laws  provide that every  director and officer of the
Company  and his  heirs,  executors,  administrators  and other  legal  personal
representatives  shall be indemnified and held harmless from and against (a) any
liability  and all costs,  charges  and  expenses  that he sustains or incurs in
respect of any action,  suit or proceeding that is proposed or commenced against
him for or in respect of  anything  done or  permitted  by him in respect of the
execution  of the  duties of his  office and (b) all other  costs,  charges  and
expenses that he sustains or incurs in respect of the affairs of the Company.

         The Company  maintains a $25,000,000  directors and officers  liability
insurance policy.

ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

         Not Applicable.

ITEM 8.  EXHIBITS.

EXHIBIT INDEX

     *4(a)    1996 Stock Option Plan, as amended to date.

     *4(b)    1996 Senior  Executive  Officer  Stock Option Plan,  as amended to
              date.

     *4(c)    1996 Senior  Operating  Officer  Stock Option Plan,  as amended to
              date.

      4(d)    1997  Stock  Option  Plan,  as amended  to date,  incorporated  by
              reference to Exhibit 10(ii) to the Company's  Transition Report on
              Form 10-K for the three months ended December 31, 1997.

     *5       Opinion of Olshan  Grundman Frome & Rosenzweig LLP with respect to
              the securities registered hereunder.

     23(a)    Consent of Olshan Grundman Frome & Rosenzweig LLP (included in its
              opinion filed as Exhibit 5).

    *23(b)    Consent of KPMG Peat Marwick LLP.

    *23(c)    Consent of KPMG Peat Marwick LLP.

     24       Powers  of  Attorney  (included  on the  signature  page  to  this
              Registration Statement).

--------------------------
*        Filed herewith

ITEM 9.  UNDERTAKINGS

         The undersigned registrant hereby undertakes:

              a. To file,  during any period in which  offers or sales are being
made, a post-effective  amendment to this registration  statement to include any
material information with respect to the plan of distribution not previously

                                      II-3
disclosed  in  the  registration  statement  or  any  material  change  to  such
information in the registration statement.

              b. That,  for the purpose of determining  any liability  under the
Securities Act of 1933, 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.

              c. 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.

         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.

         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  foregoing  provisions,   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 registrant 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
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-8 and has duly caused this  amendment  to the
registration statement to be signed on its behalf by the undersigned,  thereunto
duly authorized in the City of Vancouver,  State of Washington, on this 28th day
of May 1998.

                                        GST TELECOMMUNICATIONS, INC.
                                                   (Registrant)

                                        By:       /S/ JOHN WARTA
                                           ------------------------------------
                                            John Warta, Chairman of the Board

                       POWERS OF ATTORNEY AND SIGNATORIES

Pursuant to the  requirements  of the Securities  Act of 1933, as amended,  this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities  and on the date  indicated.  Each of the  undersigned  officers  and
directors of GST  Telecommunications,  Inc. hereby constitutes and appoints John
Warta, Stephen Irwin, Daniel L. Trampush and Clifford V. Sander and each of them
singly,  as true and  lawful  attorneys-in-fact  and  agents  with full power of
substitution and resubstitution,  for him in his name in any and all capacities,
to sign any and all  amendments  (including  post-effective  amendments) to this
Registration  Statement and any related registration statement filed pursuant to
Rule 462(b) of the Securities Act of 1933, as amended and to file the same, with
all exhibits  thereto,  and other  documents in connection  therewith,  with the
Securities and Exchange  Commission and to prepare any and all exhibits thereto,
and other documents in connection  therewith,  and to make any applicable  state
securities law or blue sky filings,  granting unto said  attorneys-in-  fact and
agents,  full power and authority to do and perform each and every act and thing
requisite  or  necessary  to be done to enable GST  Telecommunications,  Inc. to
comply with the provisions of the  Securities  Act of 1933, as amended,  and all
requirements of the Securities and Exchange Commission,  as fully to all intents
and purposes as he might or could do in person,  hereby ratifying and confirming
all that said  attorneys-in-fact and agents, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

     SIGNATURE                            TITLE                         DATE
     ---------                            -----                         ----

/S/ JOHN WARTA                Chairman of the Board, Chief          May 28, 1998
-------------------------     Executive Officer (Principal
   (John Warta)               Executive Officer) and Director

/S/ DANIEL TRAMPUSH           Senior Vice President and Chief       May 28, 1998
-------------------------     Financial Officer (Principal
    (Daniel Trampush)         Financial Officer)

/S/ CLIFFORD V. SANDER        Senior Vice President, Treasurer      May 28, 1998
-------------------------     and Chief Accounting Officer
   (Clifford V. Sander)       (Principal Accounting Officer)

/S/ STEPHEN IRWIN             Vice Chairman of the Board,           May 28, 1998
------------------------      Secretary and Director
     (Stephen Irwin)

/S/ JOSEPH A. BASILE, JR.     President, Chief Operating Officer    May 28, 1998
-------------------------     and Director
(Joseph A. Basile, Jr.)

 /S/ PETER E. LEGAULT         Director                              May 28, 1998
-------------------------     Member of Compensation Committee
(Peter E. Legault)

                                      II-5
SIGNATURE                            TITLE                         DATE
     ---------                            -----                         ----

    /S/ ROY MEGARRY           Director                              May 28, 1998
------------------------
     (Roy Megarry)

  /S/ ROBERT A. FERCHAT       Director                              May 28, 1998
------------------------
   (Robert A. Ferchat)

  /S/ JACK G. ARMSTRONG       Director                              May 28, 1998
------------------------      Member of Compensation Committee
   (Jack G. Armstrong)

   /S/ MITSUHIRO NAOE         Director                              May 28, 1998
-----------------------
     (Mitsuhiro Naoe)  

/S/ JOSEPH G. FOGG, III       Director                              May 28, 1998
------------------------      Member of Compensation Committee
  (Joseph G. Fogg, III)

The Company's Authorized Representative
in the United States

    /S/ DANIEL L TRAMPUSH                                           May 28, 1998
--------------------------
   Daniel L. Trampush

165133.7

                                      II-6