PACIFIC GATEWAY EXCHANGE INC
S-3, 2000-02-11
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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   As filed with the Securities and Exchange Commission on February __, 2000
                                               Registration No.  333-
===============================================================================

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                  Form S-3
                           REGISTRATION STATEMENT
                                   Under
                         The Securities Act of 1933

                       PACIFIC GATEWAY EXCHANGE, INC.
           (Exact name of registrant as specified in its charter)

            Delaware                                      94-3134065
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification No.)


                      500 Airport Boulevard, Suite 340
                        Burlingame, California 94010
                               (650) 375-6700

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

                            Howard A. Neckowitz
                       Pacific Gateway Exchange, Inc.
                      500 Airport Boulevard, Suite 340
                        Burlingame, California 94010
                               (650) 375-6700
         (Name, address, including zip code, and telephone number,
                including area code, of agent for service)

                                 Copies To:
                              Laura D. Richman
                            Mayer, Brown & Platt
                          190 South LaSalle Street
                          Chicago, Illinois 60603
                               (312) 782-0600

      Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective as
determined by market conditions.
      If the only securities registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
      If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
      If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please
check the following box and list the Securities Act of 1933 registration
statement number of the earlier registration statement for the same
offering. |_|
      If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list
the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering. |_|
      If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|

<PAGE>

<TABLE>
<CAPTION>

                      CALCULATION OF REGISTRATION FEE
==============================================================================================================
                                                                Proposed         Proposed
                                                                Maximum          Maximum           Amount of
         Title of Class of Securities       Amount ot be     Offering Price      Aggregate       Registration
               to be Registered              Registered         Per Share      Offering Price         Fee

<S>                                          <C>               <C>              <C>                 <C>
Common Stock ($.0001 par value).....           ---                ---           $14,145,000 1/      $3,735
Common Stock ($.0001 par value).....          60,000           $20.72    2/     $ 1,243,200 2/      $  329

==============================================================================================================
</TABLE>

1/ Pursuant to Rule 457(o), the registration fee for these shares is
   calculated on the basis of the maximum aggregate offering price.

2/ Pursuant to Rule 457(h)(1), the Proposed Maximum Offering Price Per
   Share is estimated as $20.72 solely for purposes of calculating the
   registration fee on the basis of the average of the high and low
   prices of the Common Stock as reported in The Wall Street Journal on
   February 8, 2000.

      The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be
changed. The selling stockholders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it
is not soliciting an offer to buy these securities in any state where the
offer, solicitation or sale is not permitted.


<PAGE>


                           Preliminary Prospectus
                  Subject To Completion, February 11, 2000


                       PACIFIC GATEWAY EXCHANGE, INC.
                                Common Stock


    This prospectus relates to the offer and sale from time to time of
______ shares of our common stock by certain selling stockholders who
receive shares from us in connection with our asset acquisitions. The
selling stockholders are identified in this prospectus under the heading
"Selling Stockholders." We will not receive any proceeds from the sale of
common stock by the selling stockholders.

    Each of the selling stockholders may offer the shares from time to time
and in any of several different ways, including:

      o     through brokers or other agents,
      o     to underwriters or dealers,
      o     directly to one or more purchasers, and
      o     by a combination of these methods of sale.

The selling stockholders may sell their shares at whatever prices are
current at the time of a sale or at other prices to which they agree.

    The selling stockholders and any broker-dealers or other persons acting
on their behalf in connection with the sale of common stock under this
prospectus may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, and any commissions received by them and any
profits realized by them on their sale of common stock as principals may be
deemed to be underwriting compensation under the Securities Act of 1933. We
will pay all expenses with respect to this offering, except for brokerage
fees and commissions and transfer taxes for the selling stockholders, which
will be borne by the selling stockholders. See "Plan of Distribution" for a
further description of how generally selling stockholders may dispose of
the shares covered by this prospectus.

    Our common stock is traded and quoted on the Nasdaq National Market
under the symbol "PGEX." On February 7, 2000, the last sale price of the
common stock, as reported in the Wall Street Journal, was $20 3/8 per
share.

    These shares offered by this prospectus involve a high degree of risk.
See "Risk Factors" beginning on page 5 for a discussion of certain factors
that you should consider before buying shares of common stock.

    Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.

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

              The date of this prospectus is _______ __, 2000



                                    -1-

<PAGE>



    You should rely only on the information contained in this prospectus.
We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to sell
these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this
prospectus is accurate only as of the date of this prospectus. Our
business, financial condition, results of operations and prospects may have
changed since that date.

      Unless the context otherwise requires, references in this prospectus
to the "Company" shall mean Pacific Gateway Exchange, Inc. and its
subsidiaries, collectively. "We" or "our" shall refer to the Company, not
the selling stockholders. References to the "common stock" shall mean
Pacific Gateway Exchange's common stock, par value $.0001 per share.


              DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

    All statements other than statements of historical facts included, or
incorporated by reference, in this prospectus, including statements
regarding our future financial condition, business strategy, budgets,
projected costs and plans and objectives of management for future
operations, are forward- looking statements. In addition, forward-looking
statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "estimate,"
"anticipate," "believe" or "continue" or the negative thereof or variations
thereon or similar terminology. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, such
forward-looking statements are inherently subject to risks, uncertainties
and assumptions, including, among other things, the following:

    o     difficulties that may be encountered in the development of
          bandwidth services, including construction delays, regulatory
          obstacles, contract disputes or the lack of opportunities for
          additional bandwidth purchases;

    o     uncertainties in the growth of our retail operations and the
          development of our new business lines, such as our bandwidth
          and Internet operations, including uncertainties about the
          difficulty of integrating acquisitions, hiring appropriate
          personnel and competitive conditions;

    o     termination of our operating agreements with other carriers or
          our inability to enter into additional operating agreements;

    o     inaccuracies in our forecasts of traffic;

    o     changes in the availability of transmission facilities such as
          domestic, international and undersea fiber optic cable systems
          or in the feasibility, timing or expense of building or
          leasing those facilities;

    o     loss of the services of key officers;

    o     loss of a customer that provides significant revenues;



                                    -2-

<PAGE>




    o     opportunities for, and problems relating from, the acquisition of
          other companies or offshore facilities;

    o     changes in the ratios between the amount of telecommunications
          traffic we deliver and the amount we receive from foreign
          partners under our operating agreements and termination
          arrangements;

    o     Internet growth at slower rates than expected; or

    o     consolidation of our competitors within the telecommunications,
          bandwidth and Internet industries.

    These factors and the risk factors and forward-looking statements
referred to under "Risk Factors" and elsewhere in this prospectus could
cause actual results or outcomes to differ materially from our
expectations. You should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which it is made and we undertake no obligation to
update any forward-looking statement to reflect events or circumstances
after the date on which such statement is made or to reflect the occurrence
of unanticipated events. New factors emerge from time to time, and it is
not possible for us to predict which factors, if any, will arise. In
addition, we cannot assess the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statement. All subsequent written and oral forward-looking statements
attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by the cautionary statements.


                          PACIFIC GATEWAY EXCHANGE

    Pacific Gateway Exchange is a diversified global, facilities-based
telecommunications company providing wholesale and retail
telecommunications services, bandwidth services and Internet services. We
own and operate a high bandwidth fiber optic network connecting key
metropolitan centers in the United States, Europe, Asia and the Pacific. As
of September 30, 1999, we had partial ownership interests in 32 digital
undersea fiber optic cable systems in service or under construction in the
Atlantic, Pacific and Caribbean regions, including investments in the
Japan-U.S. cable system and the TAT-14 trans-Atlantic cable system that are
currently being constructed. We have ten international gateway switches
located in the United States, Europe, Asia and the Pacific. Our global
network supports our three major lines of business:




                                    -3-

<PAGE>




o    Telecommunications Services. Since 1995, we have consistently earned
     profits and generated positive operating cash flow by using our own
     facilities to deliver high quality telecommunications services to a
     diverse array of customers. As of December 31, 1999, we had approximately
     210 wholesale customers, including four of the largest U.S. long distance
     carriers and major foreign carriers located around the world as well as
     small and medium sized companies that do not have their own facilities.
     We believe that these customers choose Pacific Gateway because we offer
     comprehensive, low-cost and highly reliable services. We are able to offer
     these services through our 44 operating agreements and termination
     arrangements that provide for the exchange of traffic with major foreign
     carriers, as well as our own international bandwidth and transmission
     facilities with the capacity to meet their expanding needs. In addition,
     we provide higher-margin retail end-user telecommunications services on a
     pre-subscribed and dial around basis to our customers in the United
     States.  We specialize in targeting ethnic groups residing in the United
     States that are high-volume consumers of international telecommunications
     services. We have established intensive marketing programs to Filipino,
     Japanese, Chinese, Vietnamese, Russian, Romanian and Korean communities
     resident in the United States.

o    Bandwidth Services.  We sell and lease high bandwidth fiber optic capacity
     to other global telecommunications carriers, Internet service providers
     and satellite communications providers.  We also generate on-going cash
     flow by providing maintenance services on sold and leased capacity.  Our
     network connects North America, Europe, Asia and the Pacific, as well as
     key U.S. cities.  To expand the reach of our network, we also plan to
     acquire strategic segments of domestic capacity in foreign countries.
     For example, in August 1999, we agreed to form a joint venture with KDD
     Submarine Cable Systems, Inc. to construct and operate backhaul facilities
     in Japan connecting the Maruyama, Japan cable station with Tokyo.

o    Internet Services.  To take advantage of the synergies between our
     telecommunications services and the rapid growth of the Internet, we have
     begun to offer Internet services, including general connectivity services.
     We expect to expand our connectivity services in the U.S. and offshore
     and to provide co-location services in key cities.  We will target our
     foreign partners, carrier customers, a wide range of Internet providers
     and small to medium sized multinational corporations.  We are connected
     to six major Internet peering points in the United States, are members of
     the London and Japan Internet Exchanges and are in the process of joining
     the Amsterdam and Frankfurt Internet Exchange.  In September 1999, we
     acquired Onyx Internet Ltd., an Internet service provider and Web design
     company located in England, which will serve as a springboard for the
     European expansion of our Internet operations.






                                    -4-

<PAGE>

                               RISK FACTORS

    Prospective investors should consider carefully the specific factors
set forth below, as well as the other information set forth elsewhere in
this prospectus before investing in the common stock.

Risks Relating to Our Business

    Managing Diversification--the success of our business plan depends on
our ability to enter new lines of business.

    We have recently entered into a phase of rapid diversification. We are
expanding our business lines from being a provider of international
wholesale telecommunications services to becoming a diverse supplier of
wholesale and retail telecommunications services, bandwidth services and
Internet services. These efforts require us to assume greater risks, such
as:

    o        greater demands on management's time;

    o        the ability of management to learn new skills while continuing to
             manage effectively our existing operations;

    o        investment risks associated with expenditures for new lines of
             business; and

    o        increased pressures upon our operations and financial systems.

    As we grow and expand our business, if we are unable to attract and
retain additional qualified personnel, we could be materially and adversely
affected. We expect that our expansion and diversification will lead to
increased administrative demands, such as:

    o        increased operational complexity associated with expended network
             facilities and service offerings; and

    o        administrative burdens associated with managing increased
             foreign operations, as well as with hiring, training and
             supervising new employees.

    If we do not manage our diversification effectively, our business,
financial condition or results of operations may be materially and
adversely affected. We cannot assure you that our bandwidth and Internet
business lines will be successful.

    Need for Additional Financing--Our success is significantly tied to our
ability raise additional money.

    To fulfill our long-range business plan, we will require substantial
capital for investments in additional facilities and equipment. The actual
amount and timing of our future capital requirements may differ materially
from our estimates as a result of financial, business and other factors,
many of which are beyond our control, as well as future acquisitions.




                                    -5-

<PAGE>



    In addition, our new credit facility matures on November 20, 2000. At
that time, we will need to replace it in order to fulfill our business
plan. We cannot assure you that we will be able to raise this additional
financing, or, if we are able to raise this additional financing, that the
terms of that financing will be favorable to us.

    Declining Prices--Each of our business lines is highly sensitive to
declining prices.

    Prices of telecommunications services have decreased, and are likely to
decrease in the future, for a variety of reasons, including:

    o        increased competition among existing carriers;

    o        new entrants into niche markets; and

    o        joint ventures and business combinations among large
             international carriers that facilitate targeted pricing and
             cost reductions.

As a result of declining prices, our average telecommunications price per
minute declined from $0.29 per minute during 1998 to $0.25 per minute
during the nine months ended September 30, 1999.

    The prices we charge our customers for international services may also
decrease in the future due to:

    o        the provision of international telecommunications services via
             non-traditional means
            (including the Internet); and

    o        recent technological advances that permit increases in
             transmission capacity of communications networks, including
             the rapid growth of international circuit capacity due to the
             development of new undersea fiber optic cables and new high
             capacity satellite systems in the Atlantic, Pacific and Indian
             Ocean regions.

    Future decreases in wholesale prices, without corresponding decreases
in the cost of our international long-distance services, would adversely
affect our margins. If we are unable to increase the volume of traffic we
handle, our business could become less profitable and may generate less
cash. We cannot assure you that we will be able to increase our wholesale
traffic volume or reduce our operating costs sufficiently to offset price
decreases, and our inability to do so may have a material adverse effect on
our business, financial condition or results of operations.

    Retail long distance prices have also recently decreased and are likely
to continue to decrease due to increased competition and decreasing
wholesale prices. We cannot assure you that we will be able to increase our
retail traffic volume or reduce our operating costs sufficiently to offset
retail price decreases. Our inability to do so may have a material adverse
effect on our business, financial condition or results of operations.



                                    -6-

<PAGE>





    A decline in the price of undersea or land-based fiber optic capacity
could impair our bandwidth services strategy and have a material adverse
effect on our business, financial condition or results of operations.
Factors that could result in a price decline include availability of
capacity and technological innovations that increase the capacity of a
particular system and provide alternative communications technologies.

    Prices for Internet services vary from country to country, but are
generally declining. Internet pricing is very competitive, and in some
cases, our competitors provide connectivity or co-location services for no
charge. We cannot assure you that these events will not have a material
adverse effect on our business, financial condition or results of
operations.

    Managing Rapid Growth--If we are unable to manage the demands that come
with rapid growth, we may be unable to compete successfully in the future.

    We are experiencing a period of rapid growth, which we expect to
continue to place a significant strain on our management and our
operational and financial resources. In order to manage our growth
effectively, we must continue to:

    o        accurately forecast demand for use of our network to optimize
             its usage in order to avoid insufficient or excessive
             transmission facilities, network capacity or disproportionate
             fixed expenses;

    o        implement and improve our operational and financial systems and
             controls; and

    o        expand, train and manage our employee base.

    If we do not have sufficient facilities to handle all of our traffic on
a given route, the overflow traffic is handled by other international
carriers on a minutes-of-use basis. We cannot predict at this time whether
the quality of these services will be satisfactory to us and our customers.
Additionally, we generally incur higher costs to handle overflow traffic.

    Our accounting and information systems and policies have been developed
as we have experienced significant growth; however, they may not have
developed at a rate consistent with the growth of our Company. We cannot assure
you that they will be adequate to support our future operations. If we are not
able to manage our growth effectively, maintain the quality of our services
and diversify our services quickly and effectively, then our ability to achieve
our business plan may be materially and adversely affected.




                                    -7-

<PAGE>



    Risks of Reduced Profitability--We may experience lower earnings due to
substantial investments in network facilities and the expansion of our
Internet operations.

    The development of network facilities entails prior planning and the
incurrence of significant costs prior to generating any revenues from such
facilities. Our planning, in large part, is based upon our expectations
concerning future revenue growth and market developments. As we expand our
network, our cost of services will increasingly consist of fixed costs
arising from the ownership and maintenance of our switches and undersea
fiber optic cables. Cost increases and a decrease in our operating margins
may occur in the short-term, resulting in lower earnings. If we handle less
traffic or otherwise fail to make optimal use of our network, our gross
margin could decline significantly, which could have a material adverse
effect on our business, financial condition or results of operations.

    The construction of undersea and land-based cable facilities is ongoing
and time sensitive. Our business plan for the expansion of our network is
based in large part upon our expectations as to the construction costs and
availability of the Japan-U.S. and TAT-14 undersea cable systems which are
currently under construction. If construction costs of these systems exceed
expectations or if planned cable system marketing efforts do not succeed,
we will be required to contribute additional capital to fund these cable
systems. If these cable systems are not available for service on a timely
basis, whether due to construction delays or otherwise, the delay in
receipt of revenues and the obligation to provide services from other
sources, perhaps at increased costs (or risk of certain customers
terminating their arrangement with us), could have a material adverse
effect on our business, financial condition or results of operations.

    The terms of our cable system consortium arrangements, including the
Japan-U.S. and TAT- 14 undersea cable systems, contain various obligations
for which we are responsible, including the payment of annual operating and
maintenance costs, compliance with operating and other technical standards
and restrictions as to the use, assignability and sale of capacity. If due
to disputes, breaches or otherwise, the cable facilities provided for in
such arrangements are not available to us, it would have a material adverse
affect on our business, financial condition or results of operations.

    The expansion of our Internet operations also will require substantial
investment in equipment, personnel and sales and marketing efforts, and may
involve substantial expenses that are not now anticipated. We expect that
these investments will decrease our profitability in the short- term.

    Risks from Internet Operations--We may not be able to successfully grow
our Internet operations.

    Our success in our new Internet operations will depend on several
factors, including our ability to:




                                    -8-

<PAGE>



    o        expand into the Internet business;

    o        negotiate the necessary interconnection agreements (so called,
             "peering agreements") with other Internet providers;

    o        achieve the "critical mass" necessary for success as an Internet
             company;

    o        compete successfully and earn profits in an increasingly
             competitive and price
             sensitive Internet marketplace;

    o        identify data center sites and install facilities in a timely and
             cost-effective manner;

    o        win customers from established vendors; and

    o        hire network, customer support, sales and marketing personnel to
             implement and manage our Internet operations.

    The expansion of our Internet operations will require us to expend
substantial resources for the lease and build out of data centers, purchase
of equipment and hiring of network, customer support, sales and marketing
personnel. We also plan to make significant investments in the sales and
marketing and the development of new services as we expand our Internet
operations. These investments will impose a substantial strain on our
financial resources and could impair our ability to pay interest and
principal on the notes. We cannot assure you that we will be able to
successfully grow our Internet operations, that our Internet operations
will become profitable or that we will remain in the Internet market.

    Substantial Leverage--Our substantial indebtedness could adversely
affect our financial health.

    We have a credit facility as well as vendor financing facilities. In
addition, we are seeking additional debt financing to fulfill our
long-range business plan. Our substantial indebtedness could have important
consequences to you. For example, it could:

    o        increase our vulnerability to general adverse economic and
             industry conditions;

    o        require us to dedicate a substantial portion of our cash flow
             from operations to make interest and principal payments on our
             indebtedness, which would reduce the availability of our cash
             flow to fund working capital (including expansion of our
             retail, telecommunications and Internet operations), capital
             expenditures, diversification efforts and other general
             corporate purposes;




                                    -9-

<PAGE>



    o        limit our flexibility in planning for, or reacting to, changes in
             our businesses and the industries in which we operate;

    o        place us at a competitive disadvantage compared to our competitors
             that have less debt;

    o        limit our ability to borrow additional funds; and

    o        subject our business to restrictive covenants.

    Competition--We operate in highly competitive business sectors and
compete with many larger and better capitalized companies.

    The international telecommunications industry is highly competitive.
International telecommunications providers compete on the basis of:

    o        price;

    o        customer service;

    o        transmission quality;

    o        breadth of service offerings; and

    o        value-added services.

In addition, competition may increase due to deregulation of the
telecommunications industry in offshore markets.

    The wholesale and retail telecommunications, bandwidth and Internet
tend to be dominated by companies much larger than we are with financial
and network resources that far exceed ours. The wave of consolidation
sweeping through the telecommunications industry may increase the
competition we face.

    Competition would further intensify if the Regional Bell Operating
Companies, sometimes called "RBOCs," are permitted to offer long distance
services. Any significant increase in competition could have a material
adverse effect on our business, financial condition or results of
operations.




                                    -10-

<PAGE>



    Sufficiency of Our Network--We must be able to expand and adapt our
network infrastructures.

    We must continue to expand and adapt our network as the number of
customers we serve grows, our service portfolio expands and technology
advances. If we are unable to expand and adapt our network infrastructure,
we may lose customers. Furthermore, we only recently have deployed our
Internet services. Accordingly, it is difficult to determine if our network
will be able to handle, connect and manage large numbers of users at high
transmission speeds. We may not be able to provide our customers with the
increasing levels of data transmission capacity they may require for a
number of reasons, such as our possible inability to raise the funds needed
to develop the network infrastructure to maintain adequate data
transmission speeds or our inability to obtain additional network capacity.
We may encounter unforeseen circumstances that could require us to incur
additional costs or to delay necessary network upgrades. We may experience
equipment or software incompatibility, among other things, if we upgrade
our network to increase its capacity. This may cause delays in our attempts
to expand or improve our services.

    Technological Advances--Technological advances could impact our competitive
position.

    The communications industry is experiencing a period of rapid
technological evolution, marked by the introduction of new product and
service offerings and increasing fiber optic transmission capacity. The
technologies being developed or already introduced include:

    o       fiber optic cable systems having capacity far in excess of our
            current network capacity;

    o       satellite-based systems, such as the INTELSAT and PanAmSat systems;

    o       equipment utilizing the Internet for international
            telecommunications and data communications;

    o       digital wireless communications systems such as personal
            communications services;

    o       broadband multimedia applications; and

    o       digital subscriber line technology.

Any of these technologies could render our facilities obsolete or no longer
cost-effective.

    We are unable to predict which of the many possible future products and
service offerings will be important to maintain our competitive position or
what expenditures will be required to develop and provide those products
and services.



                                    -11-

<PAGE>



    Dependence on Operating Agreements With Foreign Partners--Termination
of our operating agreements or our inability to enter into operating
agreements in the future could materially and adversely affect our ability
to compete in foreign countries.

    We rely on operating agreements with foreign partners to terminate
telecommunications traffic in, and receive return telecommunications
traffic from, foreign countries. These operating agreements are generally
for an unspecified term in accordance with industry practice. Many of our
foreign partners have invested with us in our digital undersea fiber optic
cable systems to assure long-term telecommunications access between their
countries and the United States. While we have been successful in
negotiating and maintaining these operating agreements, the trend toward
deregulation of telecommunications in many countries and a significant
reduction in outgoing traffic carried by us, among other things, could
cause foreign partners to terminate their operating agreements or cause
these operating agreements to have substantially less value to us.
Termination of some of these operating agreements could have a material
adverse effect on our business, financial condition or results of
operations.

    We cannot assure you that we will be able to enter into additional
operating agreements in the future. In some countries that have a monopoly
carrier or very few competing carriers, it may be difficult for us to
negotiate operating agreements for the termination of traffic on reasonable
terms and at acceptable rates, if at all. In addition, when there are very
few carriers available to terminate traffic in a given country, the
transmission quality provided in that country may be unacceptable, in which
case, in order to terminate traffic in that country, we would be required
to find other carriers willing to terminate traffic or use alternative
arrangements that may be more costly. The failure to enter into these types
of additional operating agreements could limit our ability to increase our
revenues on a profitable basis.

    Dependence on Availability of Transmission Facilities--We may not be
able to obtain the additional bandwidth capacity that we need on a timely
basis, or at all, in order to implement our business plan.

    We need access to substantial amounts of additional bandwidth capacity
in order to achieve our business plan. Our ability to obtain this capacity
depends on many factors, several of which are beyond our control,
including:

    o        the formation of new fiber optic cable consortiums;

    o        the ability of the consortiums to obtain financing, the
             necessary rights of way and regulatory and environmental
             approvals;

    o        the availability of personnel and equipment to construct the
             cables; and

    o        political and economic events in the countries involved.



                                    -12-

<PAGE>




    These events could preclude or delay the construction or the completion
of facilities necessary for the achievement of our business plan and could
have a material adverse effect on our business, financial condition or
results of operations.

    System Security--We face risks associated with the security of our
systems.

    Although we expect to design and implement a variety of network
security measures, unauthorized access, computer viruses, accidental or
intentional action and other disruptions could occur. In addition, we may
incur significant costs to prevent breaches in security or to alleviate
problems caused by breaches. Any breaches that may occur could result in
liability to us, loss of existing customers and the deterrence of future
customers.

    Change in Accounting Standards--A change in accounting standards may
require us to change our timing of recognizing revenues.

    Effective June 30, 1999, the Financial Accounting Standards Board,
sometimes called "FASB," issued FASB Interpretation No. 43 "Real Estate
Sales," sometimes called "FIN 43," which affirms that sales of "integral
equipment" be accounted for in accordance with real estate accounting rules
as previously set forth in FASB No. 66. We believe that the application of
FIN 43 is likely to result in the classification of undersea and land-based
fiber optic cables and related equipment as "integral equipment" as defined
in FIN 43. This accounting for indefeasible rights to use,
sometimes called "IRUs," fiber optic capacity would not change the timing
or amount of cash proceeds or network assets we expect to receive under the
commitments we have made to sell or lease bandwidth capacity. It would
require us, however, to recognize the revenue from some agreements as
operating leases over the lives of the agreements as opposed to the
industry practice prior to the issuance of FIN 43, under which revenues
were recognized during the period in which initial access to the capacity
was provided. As a result, this accounting treatment would reduce
the revenues and income that we would recognize in the earlier years of the
agreements and spread it out over the lives of the agreements regardless of
when the cash or network assets were received or initial access to the
capacity was provided.

    Risks of International Telecommunications Business--We have significant
operations that are subject to risks of operating in foreign countries.

    We currently generate a substantial portion of our revenues by
providing international telecommunications services to our customers in the
United States and in six offshore markets. The international nature of our
operations subjects us to certain risks, such as:




                                    -13-

<PAGE>


    o        changes in foreign government regulations and telecommunications
             standards;

    o        enforcement actions by government agencies charging that our
             foreign carrier arrangements are inconsistent with regulatory
             policy;

    o        changes in licensing requirements;

    o        changes in taxes;

    o        establishment of other trade barriers;

    o        ability to staff and manage our foreign operations; and

    o        political and economic instability in foreign nations.


    Our revenues and costs of long distance services are sensitive to:

    o        changed in international settlement rates;

    o        differences in payment cycles between U.S. and foreign carriers;

    o        changes in the ratios between traffic we deliver and traffic we
             receive;

    o        foreign currency fluctuations; and

    o        import and expert regulations.

    In addition, our business could be adversely affected by a reversal in
the current trend toward deregulation of foreign government-owned
telecommunications carriers.

    If any dispute arises from our foreign operations, we may be subject to
the exclusive jurisdiction of foreign courts and may not be successful in
having those disputes brought to court in the United States. We also may be
hindered or prevented from enforcing our rights with respect to foreign
governments because of the doctrine of sovereign immunity.

    We cannot assure you that the laws, regulations or administrative
practices of foreign countries relating to our ability to do business in
those countries will not change. Any such change could have a material
adverse effect on our business, financial condition or results of
operations. We will be increasingly subject to these risks as we proceed
with the planned expansion of our international operations.

    Dependence on Key Personnel--Our success is significantly tied to the
continued services of certain of our officers and other key personnel.




                                    -14-

<PAGE>



    We are dependent on the efforts of certain key personnel to
successfully operate our business. These individuals include:

    o        Howard A. Neckowitz, Chairman of the Board, President and Chief
             Executive Officer,

    o        Gail E. Granton, Co-Chief Operating Officer, Global Marketing and
             Offshore Development and Secretary,

    o        Thomas J. Murphy, Co-Chief Operating Officer, Global Networks and
             IP Development, and

    o        Sandra D. Grey, Chief Financial Officer and Vice President,
             Finance,

as well as a group of employees with long-standing industry relationships
and technical knowledge of our operations. The loss of the services of one
or more of these individuals could materially and adversely affect our
business and our future prospects.

    Risks Associated with Joint Ventures, Direct Investments and
Acquisitions--We may not be able to integrate these investments
successfully with our existing business.

    An important component in our business strategy is to expand through
joint ventures, investments and acquisitions. This growth strategy depends
on the continued availability of suitable strategic opportunities and
subjects us to certain risks. Pursuing these transactions could place
significant demands on our financial and management resources and
potentially disrupt our ongoing business. Transactions also may require
integration of business and network systems and other physical facilities
and personnel. Difficulties in integration could cause system degradation,
added costs and loss of employees and customers. We cannot assure you that
we will be successful in overcoming these risks or other problems in
connection with future transactions.

    Government Regulation--We are subject to telecommunications regulation
in the United States and in foreign countries, and the manner in which such
regulation is interpreted or enforced could materially impact our business.

    As an international and U.S. domestic telecommunications company, we
are subject to varying degrees of regulation in the United States at the
federal and state level and in each of the other jurisdictions in which we
provide our services. Interpretation and enforcement of these laws and
regulations vary widely, can be unpredictable, and may be subject to the
informal views of government officials that regulate telecommunications in
each country. To the extent that the interpretation or enforcement of
applicable laws and regulations is uncertain or unclear: (1) we may provide
services or use transmission methods that violate U.S. or foreign laws or
regulations; or (2) we may fail to obtain approvals or to file certain
reports or other documents that may be required under such laws or
regulations.




                                    -15-

<PAGE>



    If we are found to be in violation of applicable laws and regulations
or if our interpretation of such laws and regulations proves incorrect, we
could be subject to enforcement actions or lose, or be unable to obtain,
regulatory approvals necessary to provide certain services or to use
certain transmission methods. We cannot assure you that we will not be
subject to fines, penalties or other sanctions, including being denied the
ability to offer products and services, as a result of any violations,
regardless or whether such violations are corrected. In addition, we cannot
assure you that future U.S. or foreign regulatory, judicial and legislative
actions or changes will not impair our operations, or that domestic or
international regulators or third parties will not raise material issues
with regard to our compliance with applicable regulations. Any of these
events could have a material adverse effect on our business, financial
condition or results of operations.

    Operating Results Subject to Significant Fluctuations--Our quarterly
operating results are subject to variation, which could cause us not to
meet the expectations of securities analysts, and should not be relied upon
as an accurate indicator or our overall performance.

    Our quarterly operating results are difficult to forecast with any
degree of accuracy because a number of factors subject these results to
significant fluctuations.

    Our quarterly operating results have fluctuated in the past and are
likely to fluctuate significantly in the future. These fluctuations could
cause our reported results to fall short of the expectations of securities
analysts and investors for such quarter, which could have a material
adverse effect on the market price of our common stock. Factors that could
lead to such fluctuations include capital costs, the introduction of new
products and services, problems associated with entering new lines of
business and announcements about us or our competitors. Additional factors
that may contribute to variability of operating results include:

    o        the pricing and mix of services we offer;

    o        our customer retention rate;

    o        changes in pricing policies and product offerings by our
             competitors;

    o        growth in demand for network and Internet access services;

    o        one-time costs associated with acquisitions and regional
             consolidation;

    o        general telecommunications services' performance and availability;
             and

    o        other factors discussed in the "Risk Factors" section of this
             prospectus.



                                    -16-

<PAGE>




    Our revenues in any given period can vary due to factors such as:

    o        delays or difficulties in the development of new products or
             programs or in the integration of business and network systems
             and other physical facilities and new management personnel;

    o        technical difficulties with or failures of portions of our network
             that impact our ability to provide services to or bill our
             customers;

    o        demand for and market acceptance of our Internet services;

    o        capacity utilization of our Internet service exchange facilities;

    o        the ability to maintain or increase peering relationships; and

    o        changes in our pricing policies and those of our competitors.

    In response to competitive pressures, we may take certain pricing or
marketing actions that could have a material adverse effect on our
business, financial condition or results of operations. Therefore, we
believe that period-to-period comparisons of our operating results are not
necessarily meaningful and cannot be relied upon as indicators of future
performance.

    Customer Concentration--Our business would be seriously impaired if we
lost one or more of our significant customers.

    Our five largest customers accounted for approximately 31.4% of our
revenues for the nine months ended September 30, 1999, and two of these
customers collectively accounted for approximately 21.2% of our revenues
for that period. Our operating and financial performance is currently
dependent, in large part, upon our relationships with these customers. We
cannot assure you that we will be able to maintain these relationships
consistent with historical levels or at all.

    Online Service Liability--We may face liability and other risks as a
result of information disseminated through our network.

    The law relating to the liability of Internet access, inter-connection
and service providers for information carried by their networks is
currently unsettled. It is possible that claims could be made against
Internet access and inter-connection providers under United States,
European Union or other foreign law for defamation, negligence, privacy,
infringement, regulated content or under other legal theories. We carry
general liability insurance, but it may not be adequate to compensate or
cover us in the event that we become liable for information carried by our
network. In addition, legislation has been recently passed, and continues
to be proposed, that imposes liability for or prohibits the transmission
over the Internet of certain types of information. The increased attention
focused upon liability issues as a result of potential lawsuits, new laws
and legislative proposals could impact the growth of Internet use.




                                    -17-

<PAGE>




    Anti-Takeover Provisions--Certain provisions of our charter, bylaws and
Delaware law may discourage or impede a change of control.

    Our board of directors has the authority to cause us to issue up to
5,000,000 shares of preferred stock and to determine the price, rights,
preferences and privileges of those shares without any further vote or
actions by the stockholders. Our board of directors authorized the issuance
of 50,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock. The rights of the holders of our common
stock will be subject to, and may be adversely affected by, the rights of
the holders of any preferred stock that we may issue in the future. The
issuance of shares of preferred stock could have the effect of making it
more difficult for a third party to acquire, or may discourage a third
party from attempting to acquire, a majority of our outstanding voting
stock. Our board is divided into three classes, each of which comes up for
election once every three years. As a result, it would not be possible for
a person to take control of our board in one election. We are subject to
the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which prohibits us from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person became an interested
stockholder unless the business combination is approved in a prescribed
manner. The application of Section 203 could have the effect of delaying or
preventing a change of control. Furthermore, certain provisions of our
bylaws, including provisions that provide that the exact number of
directors shall be determined by a majority of the board of directors, that
vacancies on the board of directors may be filled only by a majority vote
of the directors then in office, though less than a quorum, and that
stockholder meetings may only be called by the board of directors or the
chairman of the board, may have the effect of delaying or preventing a
change in control, which could adversely affect the market price of our
common stock. In addition, our stockholders rights plan would cause
substantial dilution to a person or group that attempts to acquire us on
terms not approved by our board of directors. These provisions may
discourage takeover bids for us.

    No Future Dividends -- We have not paid dividends on our common stock
and do not anticipate doing so in the foreseeable future.

    We have not paid dividends to date on our common stock and do not
anticipate paying any cash dividends on our common stock in the foreseeable
future. Our credit facility and vendor financing facility restrict our
ability to pay dividends on our common stock. Future debt instruments may
also contain provisions restricting our ability to pay dividends on our
common stock.



                                    -18-

<PAGE>



                              USE OF PROCEEDS

    Pacific Gateway Exchange will not receive any of the proceeds from the
sale of common stock by the selling stockholders.


                            SELLING STOCKHOLDERS

    The following table sets forth the number of shares of common stock
owned by each selling stockholder as of ____________, 2000, the number of
shares of common stock that may be offered for the selling stockholder's
account and the number of shares of common stock and, based on the number
of shares of common stock owned as of _______ __, 2000, the percentage of
the shares of common stock to be owned by such selling stockholder if they
elect to sell all of such selling stockholder's shares of common stock.



                                               Maximum
                                               Number of    Shares of Common
                                               Shares       Stock to be Owned
                                 Shares of   Available to   Assuming Sale of
                                 Common        be Sold         All Shares
              Name of            Stock         Pursuant     Available for Sale
        Selling Stockholder      Owned         Hereto          Hereunder(1)
     -----------------------     -----          ------      ------------------
                                                             Number     Percent
                                                             ------     -------
NOSVA Limited                                                  0           0%
Partnership(2)

The Lustigman Firm,               3,000          3,000         0           0%
PC(3)
Sonya Bly(3)                      9,000          9,000         0           0%

Robert Sorrentino(3)             48,000         48,000         0           0%

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


(1)    Assumes all stock that may be offered pursuant to this prospectus is
       sold, and no other shares owned by the selling stockholders are sold.

(2)    These shares of common stock are being issued in connection with our
       acquisition of the retail customers and assets of the international
       division of NOS Communications, Inc.

(3)    These shares of our common stock are being issued in connection with
       our acquisition of the retail customers and assets of Advantage Telecom.

                                    -19-

<PAGE>




                            PLAN OF DISTRIBUTION

       Pacific Gateway Exchange is registering the shares of common stock
on behalf of the selling stockholders.

       The selling stockholders or pledgees, donees, transferees or other
successors-in-interest selling shares received from a named selling
stockholder as a gift, partnership distribution or other non-sale- related
transfer after the date of this prospectus, may sell their shares from time
to time by any method permitted by the Securities Act of 1933. The selling
stockholders will act independently of Pacific Gateway Exchange in making
decisions with respect to the timing, manner and size of each sale.

       The selling stockholders, including their pledgees, donees,
transferees or other successors-in- interest, may sell the shares of common
stock covered by this prospectus from time to time at market prices
prevailing at the time of sale, at prices related to market prices, at a
fixed price or prices subject to change or at negotiated prices, by a
variety of methods including the following:

       o       in privately negotiated transactions;

       o       through broker-dealers, who may act as agents or principals;

       o       in a block trade in which a broker-dealer will attempt to
               sell a block of shares of common stock as agent but may
               position and resell a portion of the block as principal
               to facilitate the transaction;

       o       through one or more underwriters on a firm commitment or
               best-efforts basis;

       o       directly to one or more purchasers;

       o       through agents;

       o       through option transactions, forward contracts, equity swaps or
               other derivative transactions relating to the securities;

       o       through short sales of the securities; and

       o       in any combination of the above.

To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting
sales, broker-dealers engaged by the selling stockholders may arrange for
other broker-dealers to participate in the resales. Pursuant to an
agreement with Pacific Gateway Exchange, NOSVA Limited Partnership may not
sell on any trading day more than 30,000 shares of common stock issued to
it in connection with the acquisition of the retail customers and assets of
the international division of NOS Communications, Inc.




                                    -20-

<PAGE>




       As mentioned above, the selling stockholders may enter into hedging
transactions with broker- dealers in connection with distributions of the
shares or otherwise. In such transactions, broker- dealers may engage in
short sales of the shares in the course of hedging the positions they
assume with selling stockholders. The selling stockholders also may sell
shares short and redeliver the shares to close out such short positions.
The selling stockholders may enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the
shares. The broker-dealer may then resell or otherwise transfer such shares
pursuant to this prospectus. The selling stockholders also may loan or
pledge the shares to a broker-dealer. The broker-dealer may sell the shares
so loaned, or upon a default the broker-dealer may sell the pledged shares
pursuant to this prospectus.

       Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders.
Broker-dealers or agents may also receive compensation from the purchasers
of the shares for whom they act as agents or to whom they sell as
principals, or both. Each particular broker-dealer will receive
compensation in amounts negotiated in connection with the sale, which might
be in excess of customary commissions. Broker-dealers or agents and any
other participating broker-dealers or the selling stockholders may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933 in connection with sales of the shares. Accordingly,
any such commission, discount or concession received by them and any profit
on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act of 1933.
Because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, the selling
stockholders will be subject to the prospectus delivery requirements of the
Securities Act of 1933. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 promulgated under
the Securities Act of 1933 may be sold under Rule 144 rather than pursuant
to this prospectus. The selling stockholders have advised Pacific Gateway
Exchange that they have not entered into any agreements, understandings or
arrangements with any underwriters or broker- dealers regarding the sale of
their securities. As of the date of this prospectus, there are no special
selling arrangements between any broker-dealer or other person and the
selling stockholders. No period of time has been fixed within which the
shares will be offered or sold.

       If required under applicable state securities laws, the selling
stockholders will sell the shares only through registered or licensed
brokers or dealers. In addition, in certain states the selling stockholders
may not sell the shares unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.

       Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to our
common stock for a period of two business days prior to the commencement of
the distribution. In addition, each selling stockholder will be subject to
applicable provisions of the Securities Exchange Act of 1934 and the
associated rules and regulations under the Securities Exchange Act of 1934,
including Regulation M, which provisions may limit the timing of purchases
and sales of shares of our common stock by the selling stockholders.
Pacific Gateway Exchange will make copies of this prospectus available to
the selling stockholders and has informed them of the need for delivery of
copies of this prospectus to purchasers at or prior to the time of any sale
of the shares.




                                    -21-

<PAGE>




       When a selling stockholder elects to make a particular offer of the
shares which are the subject of this prospectus, a prospectus supplement,
if required, will be distributed which will identify any underwriters,
dealers or agents and any discounts, commissions and other terms
constituting compensation such selling stockholder and any other required
information.

       In addition, upon being notified by a selling stockholder that a
donee or pledgee intends to sell more than 500 shares, Pacific Gateway
Exchange will file a supplement to this prospectus.

       Pacific Gateway Exchange will bear all costs, expenses and fees in
connection with the registration of the shares. The selling stockholders
will bear all commissions and discounts, if any, attributable to the sales
of the shares, except in the case of certain underwriting discounts and
expenses relating to the sale of NOSVA Limited Partnership's shares which
will be paid by Pacific Gateway Exchange. Pacific Gateway Exchange and
NOSVA Limited Partnership have agreed to indemnify each other and certain
other persons in connection with the offering of the shares of common
stock, including some liabilities under the Securities Act of 1933.

                    WHERE YOU CAN FIND MORE INFORMATION

       We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act of 1934.
You may read and copy any of this information at the SEC's public reference
rooms at:

Public Reference Room    New York Regional Office   Chicago Regional Office
450 Fifth Street, N.W.    7 World Trade Center      500 West Madison Street
    Room 1024                  Suite 1300                 Suite 1400
Washington, D.C. 20549   New York, New York 10048  Chicago, Illinois 60661-2511

       You may call the SEC at 1-800-SEC-0330 for further information about
the public reference rooms. Copies of filed documents can also be obtained
by mail from the Public Reference Room at the above address or may be
accessed at the SEC's web site at http://www.sec.gov. The SEC filing number
for our documents filed under the Securities Exchange Act of 1934 is
0-21043.




                                    -22-

<PAGE>



       We are "incorporating by reference" information into this
prospectus, which means we are disclosing important information to you
simply by referring you to another document filed separately with the SEC.
This prospectus incorporates by reference the following documents that
contain important information about us and our financial condition:

       o       our Annual Report on Form 10-K, as amended, for our
               fiscal year ended December 31, 1998;

       o       our Proxy Statement dated July 2, 1999;

       o       our Quarterly Reports on Form 10-Q for the quarterly
               periods ended March 31, 1999, June 30, 1999 and September
               30, 1999; and

       o       all documents filed by us under Sections 13(a), 13(c), 14
               and 15(d) of the Securities Exchange Act of 1934 after
               the date of this prospectus effective the date those
               documents are filed.

       If these documents or this prospectus contain conflicting
information, the information in the latest filed document or, if
applicable, this prospectus should be considered correct.

       You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have
authorized no one to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than the date on
the front of the document.

       You can obtain the documents incorporated by reference at no cost by
contacting us at Pacific Gateway Exchange, Inc., 500 Airport Boulevard,
Suite 340, Burlingame, California 94010, telephone number: (650) 375-6700,
Attention: Kimberly Croxson, or on our Web site at www.pgexch.com.

                               LEGAL MATTERS

       The validity of the shares of common stock was passed upon for the
Company by Mayer, Brown & Platt, Chicago, Illinois.


                                  EXPERTS

       The financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of Pacific Gateway Exchange,
Inc. for the year ended December 31, 1998 have been so incorporated in
reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.




                                    -23-

<PAGE>



                                  PART II
                                  -------

                   INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.          Other Expenses of Issuance and Distribution
                  -------------------------------------------

       The following table sets forth various fees and estimated expenses
in connection with the sale and distribution of the securities being
registered, all of which are being borne by the Registrant.

SEC registration fee ............................................. $ 4,064
Printing expenses ................................................       *
Legal fees and expenses ..........................................       *
Accounting fees and expenses...................................... $ 9,000
Miscellaneous ....................................................       *
                                                                   ----------
                                Total...........................   $     *
                                                                   ==========

- ----------------------------------
*    to be filed by amendment.


Item 15.     Indemnification of Directors and Officers
             -----------------------------------------

     (a)     The Delaware General Corporation Law (the "Delaware GCL")
             (Section 145) gives Delaware corporations broad powers to
             indemnify their present and former directors and officers and
             those of affiliated corporations against expenses incurred in
             the defense of any lawsuit to which they are made parties by
             reason of being or having been such directors or officers,
             subject to specified conditions and exclusions, gives a director
             or officer who successfully defends an action the right to be so
             indemnified, and authorizes the Company to buy directors' and
             officers' liability insurance.  Such indemnification is not
             exclusive of any other rights to which those indemnified may be
             entitled under any by-laws, agreement, vote of stockholders or
             otherwise.

       (b)   Article 10 of the Certificate of Incorporation of the
             Company and Article 8 of the Company's By-laws provides
             for indemnification of directors and officers to the
             fullest extent permitted by law. The Company has entered
             or expects to enter into Indemnity Agreements with each
             of its directors, a copy of which has been filed as
             Exhibit 3.2 to the Company's Annual Report on Form 10-K
             for the year ended December 31, 1997 (Commission File No.
             000-21043). The Company presently maintains Director's
             and Officer's insurance with limits up to $10 million.

       (c)   In accordance with Section 102(b)(7) of the Delaware GCL,
             the Company's Certificate of Incorporation provides that
             directors shall not be personally liable to the Company
             or its stockholders for monetary damages for breaches of
             their fiduciary duty as directors except for (1) breaches
             of their duty of loyalty to the Company or



                                    II-1

<PAGE>



              its stockholders, (2) acts or omissions not in good faith
              or which involve intentional misconduct or knowing
              violations of law, (3) under Section 174 of the Delaware
              GCL (unlawful payment of dividends) or (4) transactions
              from which a director derives an improper personal
              benefit.

Item 16.          Exhibits
                  --------

       A list of exhibits filed herewith is included on the Exhibit Index
immediately following the signature page and is incorporated herein by
reference.

Item 17.          Undertakings.
                  ------------

       (a)        The undersigned Registrant hereby undertakes:

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

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

                           (ii)       To reflect in the prospectus any facts
                                      or events arising after the effective
                                      date of the Registration Statement (or
                                      the most recent post-effective amendment
                                      thereof) which, individually or in the
                                      aggregate, represent a fundamental
                                      change in the information set forth in
                                      the Registration Statement.
                                      Notwithstanding the foregoing, any
                                      increase or decrease in volume of
                                      securities offered (if the total dollar
                                      value of securities offered would not
                                      exceed that which was registered)
                                      and any deviation from the low or high
                                      end of the estimated maximum offering
                                      range may be reflected in the form of
                                      prospectus filed with the Commission
                                      pursuant to Rule 424(b) if, in the
                                      aggregate, the changes in volume and
                                      price represent no more than a 20%
                                      change in the maximum aggregate offering
                                      price set forth in the "Calculation of
                                      Registration Fee" table in the effective
                                      registration statement.

                           (iii)      To include any material
                                      information with respect to the
                                      plan of distribution not
                                      previously disclosed in the
                                      Registration Statement or any
                                      material change to such
                                      information in the Registration
                                      Statement;




                                   II-2

<PAGE>



                                      provided, however, that paragraphs
                                      (a)(1)(i) and (a)(1)(ii) do not apply
                                      if the information required to be
                                      included in a post- effective amendment
                                      by those paragraphs is contained in
                                      periodic reports filed by the Registrant
                                      pursuant to Section 13 or Section 15(d)
                                      of the Securities Exchange Act of 1934
                                      that are incorporated by reference in
                                      this Registration Statement.

                  (2)      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.

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

       (b)        The undersigned registrant hereby undertakes that, for
                  purposes of determining any liability under the Securities
                  Act of 1933, each filing of the registrant's annual report
                  pursuant to Section 13(a) or Section 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.

       (c)        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-3

<PAGE>

                                 SIGNATURES

       Each person whose signature appears below hereby constitutes and
appoints Howard A. Neckowitz, Gail E. Granton or James J. Junewicz, the
true and lawful attorney-in-fact and agents of the undersigned, with full
power of substitution and resubstitution, for and in the name, place and
stead of the undersigned, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.

       Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this amended Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Burlingame, State of
California, on February 10, 2000.


                                PACIFIC GATEWAY EXCHANGE, INC.


                                By:  /s/ Howard A. Neckowitz
                                    ---------------------------------------
                                      Howard A. Neckowitz
                                      President, Chief Executive Officer and
                                      Chairman of the Board


       Pursuant to the requirements of the Securities Act of 1933, this
amended Registration Statement has been signed by the following persons in
the capacities indicated on February 10, 2000.


Signature                             Title
- ---------                             -----


/s/ Howard A. Neckowitz               President, Chief Executive Officer and
- -------------------------             Chairman of the Board and Director
Howard A. Neckowitz                   (Principal Executive Officer)


/s/ Gail E. Granton                   Chief Operating Officer, Global Marketing
- -------------------------             and Offshore Development,
Gail E. Granton                       Secretary and Director


/s/ Sandra Grey                       Chief Financial Officer
- -------------------------             (Principal Financial Officer)
Sandra Grey                           (Principal Accounting Officer)


/s/ Robert Calafell                   Director
- -------------------------
Robert Calafell


/s/ Charles M. Dalfen                 Director
- -------------------------
Charles M. Dalfen


/s/ James J. Junewicz                 Director
- -------------------------
James J. Junewicz


/s/ Barry J. Volante                  Director
- -------------------------
Barry J. Volante

                                    II-4

<PAGE>



                               EXHIBIT INDEX


Exhibit No.          Description of Document                         Page No.
- -----------          -----------------------                         --------

   5.1               Opinion of Mayer, Brown & Platt regarding
                     legality of shares*/

                     of common stock

  23.1               Consent of PricewaterhouseCoopers LLP

  23.2               Consent of Mayer, Brown & Platt (to be
                     included in Exhibit 5.1)

  24.1               Power of Attorney (included on the signature
                     page of the Registration Statement)


- ------------------------------
*/   To be filed by amendment.










                     CONSENT OF INDEPENDENT ACCOUNTANTS
                     ----------------------------------


We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 19, 1999, except for
Note 10, as to which the date is March 2, 1999, relating to the financial
statements, which appears in the 1998 Annual Report to Shareholders, which
is incorporated by reference in Pacific Gateway Exchange, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent
to the incorporation by reference of our report dated February 19, 1999,
relating to the financial statement schedules, which appears in such Annual
Report on Form 10-K. We also consent to the references to us under the
headings "Experts" in such Registration Statement.


PricewaterhouseCoopers LLP

San Francisco, California
February 10, 2000













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