IXC COMMUNICATIONS INC
S-1/A, 1996-06-13
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>   1
 
   
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 13, 1996
    
   
                                                       REGISTRATION NO. 333-4061
    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
   
                                AMENDMENT NO. 1
    
   
                                       TO
    
 
                                    FORM S-1
 
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
 
                            IXC COMMUNICATIONS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                            ------------------------
 
<TABLE>
<S>                               <C>                               <C>
             DELAWARE                            4813                           74-2644120
 (STATE OR OTHER JURISDICTION OF     (PRIMARY STANDARD INDUSTRIAL            (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)     CLASSIFICATION CODE NUMBER)           IDENTIFICATION NO.)
</TABLE>
 
                            ------------------------
 
                       5000 PLAZA ON THE LAKE, SUITE 200
                              AUSTIN, TEXAS 78746
                                 (512) 328-1112
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                            ------------------------
 
                               JOHN J. WILLINGHAM
                            IXC COMMUNICATIONS, INC.
                       5000 PLAZA ON THE LAKE, SUITE 200
                              AUSTIN, TEXAS 78746
                                 (512) 328-1112
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                            ------------------------
 
                                   COPIES TO:
 
<TABLE>
<S>                                                <C>
              MICHAEL P. WHALEN, ESQ.                            JERRY V. ELLIOTT, ESQ.
               ELAINE R. LEVIN, ESQ.                               SHEARMAN & STERLING
                RIORDAN & MCKINZIE                                599 LEXINGTON AVENUE
         695 TOWN CENTER DRIVE, SUITE 1500                         NEW YORK, NY 10022
               COSTA MESA, CA 92626                                  (212) 848-4000
                  (714) 433-2900
</TABLE>
 
                            ------------------------
 
     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
                            ------------------------
 
     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, check the following box. / /
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
     If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
 
   
                            ------------------------
    
 
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>   2
 
                            IXC COMMUNICATIONS, INC.
 
                             CROSS-REFERENCE SHEET
 
                   PURSUANT TO ITEM 501(B) OF REGULATION S-K
  SHOWING LOCATION IN PROSPECTUS OF INFORMATION REQUIRED BY ITEMS OF FORM S-1
 
<TABLE>
<CAPTION>
          ITEM NUMBER AND HEADING IN FORM S-1               HEADING OR LOCATION IN PROSPECTUS
- --------------------------------------------------------  -------------------------------------
<S>   <C>                                                 <C>
1.    Forepart of the Registration Statement and Outside
        Front Cover Page of Prospectus..................  Outside Front Cover Page
2.    Inside Front and Outside Back Cover Pages of
        Prospectus......................................  Inside Front Cover Page; Additional
                                                            Information; Outside Back Cover
                                                            Page
3.    Summary Information, Risk Factors and Ratio of
        Earnings to Fixed Charges.......................  Prospectus Summary; Risk Factors
4.    Use of Proceeds...................................  Prospectus Summary; Use of Proceeds
5.    Determination of Offering Price...................  Outside Front Cover Page;
                                                          Underwriters
6.    Dilution..........................................  Risk Factors; Dilution
7.    Selling Security Holders..........................  Not Applicable
8.    Plan of Distribution..............................  Outside Front Cover Page;
                                                          Underwriters
9.    Description of Securities to be Registered........  Prospectus Summary; Dividend Policy;
                                                            Capitalization; Description of
                                                            Capital Stock
10.   Interests of Named Experts and Counsel............  Legal Matters; Experts
11.   Information with Respect to the Registrant........  Outside Front Cover Page; Prospectus
                                                            Summary; Risk Factors; Dividend
                                                            Policy; Capitalization; Selected
                                                            Historical and Pro Forma Financial
                                                            Data; Management's Discussion and
                                                            Analysis of Financial Condition and
                                                            Results of Operations; Business;
                                                            Management; Certain Transactions;
                                                            Principal Stockholders; Shares
                                                            Eligible for Future Sale;
                                                            Description of Certain
                                                            Indebtedness; Consolidated
                                                            Financial Statements
12.   Disclosure of Commission Position on
        Indemnification for Securities Act
        Liabilities.....................................  Not Applicable
</TABLE>
<PAGE>   3
 
                                EXPLANATORY NOTE
 
     This Registration Statement contains two forms of Prospectus: (i) one to be
used in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and (ii) the other to be used in a concurrent offering outside the
United States and Canada (the "International Prospectus"). The two prospectuses
are identical in all material respects except for the front cover page. The form
of U.S. Prospectus is included herein and is followed by the alternate page to
be used in the International Prospectus. The alternate page for the
International Prospectus included herein is labeled "Alternate Page for
International Prospectus." Final forms of each Prospectus will be filed with the
Securities and Exchange Commission under Rule 424(b).
<PAGE>   4
 
PROSPECTUS (Subject to Completion)
   
Issued June 13, 1996
    
   
                                5,600,000 Shares
    
LOGO                        IXC Communications, Inc.
                                  COMMON STOCK
                            ------------------------
 
   
ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY.
OF THE 5,600,000 SHARES OF COMMON STOCK BEING OFFERED, 4,480,000 SHARES ARE
 BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
 UNDERWRITERS AND 1,120,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE THE
  UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. PRIOR TO THIS
  OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK.
   IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE PER SHARE
   WILL BE BETWEEN $17.00 AND $19.00. SEE "UNDERWRITERS" FOR INFORMATION
     RELATING TO THE METHOD OF DETERMINING THE INITIAL PUBLIC OFFERING
     PRICE.
    
 
   
  CONCURRENTLY WITH THE CLOSING OF THIS OFFERING, THE COMPANY WILL SELL TO THE
  TRUSTEES OF THE GENERAL ELECTRIC PENSION TRUST, AN AFFILIATE OF THE COMPANY,
$12.5 MILLION OF COMMON STOCK. FOR A DESCRIPTION OF THE TERMS AND CONDITIONS OF
                     SUCH SALE, SEE "CERTAIN TRANSACTIONS."
    
 
                            ------------------------
 
   
  THE COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NASDAQ NATIONAL MARKET
                            UNDER THE SYMBOL "IIXC."
    
 
                            ------------------------
 
   
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR INFORMATION THAT SHOULD BE CONSIDERED
                           BY PROSPECTIVE INVESTORS.
    
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
     EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
        SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
        COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
          PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
              CRIMINAL OFFENSE.
                            ------------------------
 
                           PRICE $            A SHARE
 
                            ------------------------
 
<TABLE>
<CAPTION>
                                                                     UNDERWRITING
                                                     PRICE TO       DISCOUNTS AND      PROCEEDS TO
                                                      PUBLIC        COMMISSIONS(1)      COMPANY(2)
                                                ------------------------------------------------------
<S>                                             <C>               <C>               <C>
Per Share.......................................         $                $                 $
Total(3)........................................         $                $                 $
</TABLE>
 
- ------------
    (1) The Company has agreed to indemnify the Underwriters against certain
        liabilities, including liabilities under the Securities Act of 1933, as
        amended. See "Underwriters."
   
    (2) Before deducting expenses payable by the Company, estimated at
        $1,500,000.
    
   
    (3) The Company has granted to the U.S. Underwriters an option, exercisable
        within 30 days of the date hereof, to purchase up to an aggregate of
        840,000 additional shares of Common Stock at the price to public less
        underwriting discounts and commissions, for the purpose of covering
        over-allotments, if any. If the U.S. Underwriters exercise such option
        in full, the total price to public, underwriting discounts and
        commissions and proceeds to Company will be $        , $        and
        $        , respectively. See "Underwriters."
    
 
                            ------------------------
 
    The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters and subject to approval of certain legal matters by Shearman &
Sterling, counsel for the Underwriters. It is expected that delivery of the
Shares will be made on or about             , 1996, at the office of Morgan
Stanley & Co. Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
                            ------------------------
 
MORGAN STANLEY & CO.
    Incorporated
                     CS FIRST BOSTON
 
                                       DILLON, READ & CO. INC.
 
            , 1996
 
     Information contained herein is subject to completion or amendment. A
     registration statement relating to these securities has been filed with the
     Securities and Exchange Commission. These securities may not be sold nor
     may offers to buy be accepted prior to the time the registration statement
     becomes effective. This prospectus shall not constitute an offer to sell or
     the solicitation of an offer to buy nor shall there be any sale of these
     securities in any State in which such offer, solicitation or sale would be
     unlawful prior to registration or qualification under the securities laws
     of any such State.
<PAGE>   5
 
     NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE COMMON STOCK OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY
SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
                            ------------------------
 
     UNTIL       , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING
AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
                            ------------------------
 
     For investors outside the United States: No action has been or will be
taken in any jurisdiction by the
Company or by any Underwriter that would permit a public offering of the Common
Stock or possession or distribution of this Prospectus in any jurisdiction where
action for that purpose is required, other than in the United States. Persons
into whose possession this Prospectus comes are required by the Company and the
Underwriters to inform themselves about and to observe any restrictions as to
the offering of the Common Stock and the distribution of this Prospectus.
 
     In this Prospectus references to "dollars" and "$" are to United States
Dollars, and the terms "United States" and "U.S." mean the United States of
America, its states, its territories, its possessions and all areas subject to
its jurisdiction.
                            ------------------------
 
   
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET, OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH
PERSONS PARTICIPATING IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR
OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO
EXEMPTIONS FROM RULES 10B-6, 10B-7 AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT
OF 1934.
    
 
                                        2
<PAGE>   6
Map of IXC Communications, Inc. Fiber Expansion Plan showing:

        IXC owned digital network;
        IXC long-term leased or exchanged-fiber network;
        IXC owned fiber network;
        IXC switch sites;
        Phase I Expansion; and
        Phase II Expansion.

<PAGE>   7
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        -----
<S>                                                                                     <C>
Prospectus Summary.....................................................................     4
Risk Factors...........................................................................     9
Use of Proceeds........................................................................    17
Dividend Policy........................................................................    17
Capitalization.........................................................................    18
Dilution...............................................................................    19
Selected Historical and Pro Forma Financial Data.......................................    20
Management's Discussion and Analysis of Financial Condition and Results of
  Operations...........................................................................    22
Industry Overview......................................................................    30
Business...............................................................................    33
Management.............................................................................    47
Certain Transactions...................................................................    51
Principal Stockholders.................................................................    53
Description of Capital Stock...........................................................    55
Shares Eligible for Future Sale........................................................    57
Description of Certain Indebtedness....................................................    58
Underwriters...........................................................................    59
Legal Matters..........................................................................    61
Experts................................................................................    62
Additional Information.................................................................    62
Glossary...............................................................................   A-1
Index to Financial Statements..........................................................   F-1
</TABLE>
    
 
                            ------------------------
 
     The Company intends to furnish its shareholders with annual reports
containing consolidated financial statements examined by an independent public
accounting firm and quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
 
                                        3
<PAGE>   8
 
                               PROSPECTUS SUMMARY
 
     Certain of the information contained in this Prospectus, including
information regarding the Company's Fiber Expansion (as defined below) and
switched long distance services and related strategy and financing, are
forward-looking statements. For a discussion of important factors that could
cause actual results to differ materially from the matters described in the
forward-looking statements, see "Risk Factors." Prospective investors should
carefully consider such factors and the other matters set forth under "Risk
Factors."
 
   
     The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and the Consolidated
Financial Statements (including the Notes thereto), appearing elsewhere in this
Prospectus. As used herein, unless the context otherwise requires, the term
"Company" refers to IXC Communications, Inc. ("IXC Communications") and its
subsidiaries, including predecessor corporations. Industry data was obtained
from a report issued in March 1996 from the FCC and from reports dated April
1995 and January 1996 from International Data Corporation (an industry research
organization), which the Company has not independently verified. Unless
otherwise indicated, all information in this Prospectus assumes that the U.S.
Underwriters' over-allotment option will not be exercised and has been adjusted
to reflect stock splits through the date of this Prospectus.
    
 
     Certain terms used herein are defined in the Glossary at page A-1.
 
                                  THE COMPANY
 
     The Company provides two principal services to long distance companies: (i)
long-haul transmission of voice and data over dedicated circuits; and (ii)
switched long distance services. The Company is one of only five carriers to own
a digital telecommunications network extending from coast-to-coast (the other
carriers are AT&T, MCI, Sprint and WorldCom). Its facilities include digital
switches located in Los Angeles, Dallas, Chicago, Philadelphia and Atlanta. The
Company is currently engaged in a major expansion of its network, as described
below.
 
     The Company had revenues of approximately $91 million in 1995,
substantially all of which were generated by its long-haul business. The Company
has long-haul circuit contracts with over 200 long distance carriers, including
AT&T, MCI, Sprint, WorldCom, Cable & Wireless, Frontier and LCI. As of April 30,
1996, the Company had "take or pay" commitments from its long-haul customers of
approximately $160.0 million (consisting of approximately $90.0 million relating
to circuits currently in service and approximately $70.0 million relating to
circuits not yet ordered that the Company expects will be carried over leased
routes or routes being constructed). Long-haul transmission service is also
provided to customers after contract expiration on a month-to-month basis. The
Company's long-haul contracts provide for fixed monthly payments, generally in
advance. The Company has provided services to nine of its ten largest customers
for at least six years and, although sales volumes from particular customers
vary from year to year, has historically enjoyed a high customer retention rate
(annual customer retention has averaged over 90% from 1992-1995).
 
   
     The Company recently expanded into the business of selling switched long
distance services to long distance resellers in order to complement its
long-haul business and to capitalize on its ability to provide switched services
over its own network. Switched long distance services are telecommunications
services that are processed through the Company's digital switches and carried
over long-haul circuits and other transmission facilities owned or leased by the
Company. During 1995, the Company set up the infrastructure for its switched
long distance business by installing its switches, connecting them to its
network and to the LECs, acquiring software, hiring personnel and entering into
contracts with customers. The Company's switched network became fully
operational in February 1996. The Company sells switched long distance services
on a per-call basis, charging by minutes of use ("MOUs"), with payment due
monthly after services are rendered. The Company believes that it is
well-positioned to attract long distance resellers as customers for its switched
long distance services because: (i) it is not currently a significant competitor
for sales to end users;
    
 
                                        4
<PAGE>   9
 
   
and (ii) it provides more focused service to its reseller customers, since
servicing such customers is its primary business, unlike its major competitors
whose main business is selling retail long distance service to end users.
    
 
   
     The Company has entered into switched long distance services contracts with
over 30 long distance resellers including Excel and GE Capital Communication.
Excel, a rapidly growing long distance reseller, first utilized the Company's
switched long distance services in February 1996. Excel has contracted to
increase its volume on the Company's network to a minimum of 70 million minutes
of traffic per month no later than October 1996. The Company's switched long
distance business has grown rapidly since its switched network became fully
operational in February 1996, with Excel accounting for most of the growth. The
Company's switched long distance revenues amounted to approximately $3.6 million
in the quarter ended March 31, 1996, (with $0.7 million in January 1996, $1.3
million in February 1996 and $1.6 million in March 1996), $3.1 million in April
1996 and $6.4 million in May 1996. Excel accounted for 17%, 67% and 76% of such
revenues for the quarter ended March 31, 1996, the month of April 1996 and the
month of May 1996, respectively. See "Business -- Switched Long Distance
Services."
    
 
   
     The Company's primary business objectives over the near term are: (i) to
rapidly increase revenue from its switched long distance services business; (ii)
to substantially complete the backbone of the first phase of its planned network
expansion in the first quarter of 1997; and (iii) to utilize its expanded
network to increase its revenues and profitability.
    
 
                               INDUSTRY OVERVIEW
 
   
     The domestic long distance market generated revenues of approximately $75.9
billion in 1995. In 1995, the first-tier long distance providers (AT&T, MCI and
Sprint) accounted for approximately 85.6% of such revenue, the second-tier
companies (WorldCom, Frontier, Cable & Wireless, LCI and others) accounted for
approximately 8.9%, and the third-tier companies (approximately 400 companies)
accounted for the remaining 5.5% of the long distance market. According to data
included in an FCC report issued in March 1996, while total long distance
revenues grew at a compound annual rate of over 8% during the period from 1989
through 1995, the revenues of all carriers other than the first-tier carriers
grew in the aggregate at an annual compound rate of over 22% during the same
period. Such analysis also stated that the second-tier and third-tier carriers
increased their market share sixfold over a ten-year period, increasing from
less than 3% in 1984 to more than 17% in 1994. In addition, industry sources
estimate that combined revenues of second-tier and third-tier carriers grew by
17.9% in 1995. The Company provides long-haul services to companies in all three
tiers and switched long distance services to companies in the third tier.
    
 
                                FIBER EXPANSION
 
   
     The Company owns a coast-to-coast network containing over 1,700 fiber optic
route miles and over 5,000 digital microwave route miles. Because of geographic
limitations and capacity constraints, the Company currently supplements its own
facilities with a significant amount of fiber optic capacity obtained from other
carriers to service customers that require capacity not available on the
Company's own network.
    
 
   
     The Company is currently undertaking a major expansion of its network by
adding a substantial number of additional fiber route miles (the "Fiber
Expansion") to increase the Company's geographic scope and network capacity. The
Company believes the Fiber Expansion will improve profitability and cash flow
through increasing revenues and decreasing certain costs. The Fiber Expansion is
planned to include two phases. The first phase ("Phase I") will include
approximately 4,000 high-capacity fiber optic route miles from Philadelphia via
Chicago, Dallas and Phoenix to Los Angeles and a later phase ("Phase II") will
include approximately 3,100 high-capacity fiber optic route miles from New York
via Atlanta to Houston, with spurs to Florida, Louisiana and Texas. The Company
expects to substantially complete the backbone of Phase I in the first quarter
of 1997, meeting the cost of its construction with cash on hand and the proceeds
of this offering (the "Offering"). The Company seeks to realize significant cost
savings and offsets to the estimated cost of the Fiber Expansion through a
cooperative arrangement with WorldCom and cost-saving arrangements
    
 
                                        5
<PAGE>   10
 
with other carriers and large users of fiber capacity. The Company has had
experience with arrangements of this type with several major carriers, including
MCI, Sprint, Cable & Wireless and WorldCom.
 
   
     Phase I of the Fiber Expansion will connect four of the Company's five
switches with high-capacity long-haul circuits on its own network, utilizing
advanced fiber optic technology capable of efficiently transmitting
capacity-intensive services, such as Internet and multimedia applications, frame
relay and ATM. Phase I is expected to deliver significant strategic and
financial benefits to the Company through: (i) producing substantial savings by
allowing the Company to move a portion of its excess long-haul traffic from
leased circuits on the networks of other carriers to its own expanded network;
(ii) providing high-capacity new routes and substantially increasing the
capacity of certain existing routes, allowing the Company to increase revenues
by leasing additional circuits to its customers; (iii) allowing the Company to
improve profitability in its switched long distance services business by
reducing its underlying costs of long-haul transmission; and (iv) creating
sufficient capacity to support increased demand which may result from Internet
and multimedia applications, frame relay and ATM.
    
 
                                  THE OFFERING
 
   
<TABLE>
<S>                                                                   <C>
Common Stock offered
  United States offering............................................  4,480,000 shares
  International offering............................................  1,120,000 shares
     Total..........................................................  5,600,000 shares
Common Stock outstanding immediately after this offering............  30,679,968 shares(1)
Use of proceeds.....................................................  For the Fiber Expansion.
                                                                      See "Use of Proceeds."
Nasdaq National Market symbol.......................................  IIXC
</TABLE>
    
 
   
     In addition, Trustees of General Electric Pension Trust ("GEPT"), an
affiliate of the Company which presently owns approximately 30.6% of the Common
Stock, has agreed to acquire $12.5 million of restricted Common Stock from the
Company (the "GEPT Private Placement") simultaneously with the closing of this
Offering. See "Certain Transactions."
    
- ---------------
   
(1) Reflects the issuance of 744,713 shares of Common Stock in the GEPT Private
    Placement (assuming a Price to Public of $18.00 per share) and excludes: (i)
    1,212,450 shares of Common Stock reserved for issuance under the 1994 Stock
    Plan (as defined herein), of which options to purchase 1,075,080 shares were
    outstanding as of March 31, 1996 at a weighted average exercise price of
    $3.01 per share; and (ii) 2,121,787 shares of Common Stock reserved for
    issuance under the 1996 Stock Plan (as defined herein), of which no options
    to purchase shares were outstanding as of March 31, 1996.
    
 
                                        6
<PAGE>   11
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
 
   
     The following table sets forth certain summary consolidated financial data
of the Company. The historical financial data as of and for the years ended
December 31, 1993, 1994 and 1995 has been derived from the audited Consolidated
Financial Statements of the Company. The historical financial data for the three
months ended March 31, 1995 and 1996 is derived from unaudited financial
statements. The unaudited financial statements include all adjustments,
consisting of normal recurring accruals, which management considers necessary
for a fair presentation of the financial position and the results of operations
for this period. Results of operations for the interim periods are not
necessarily indicative of the results of operations for the full year. The pro
forma data has been derived from the Unaudited Pro Forma Condensed Consolidated
Statement of Operations, which is included elsewhere herein. The pro forma
financial information is presented for informational purposes only and is not
necessarily indicative of the operating results that would have occurred, nor
are they necessarily indicative of future operations.
    
 
     The summary consolidated financial data set forth below is qualified in its
entirety by, and should be read in conjunction with, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements, the Notes thereto and other financial
information included elsewhere in this Prospectus.
 
   
<TABLE>
<CAPTION>
                                                                                               HISTORICAL
                                                                                           -------------------
                                                   HISTORICAL
                                       ----------------------------------   PRO FORMA(1)      THREE MONTHS
                                                                            ------------          ENDED
                                            YEAR ENDED DECEMBER 31,          YEAR ENDED         MARCH 31,
                                       ----------------------------------   DECEMBER 31,   -------------------
                                         1993         1994         1995         1995         1995       1996
                                       --------     --------     --------   ------------   --------   --------
                                                    (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                    <C>          <C>          <C>        <C>            <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Net operating revenues.............  $ 71,123     $ 80,663     $ 91,001     $ 91,001     $ 21,766   $ 26,250
  Operating income (loss)............   (10,596)      14,085        1,429          312        3,716     (5,777)
  Interest expense...................     4,943        6,105       14,597       14,597        1,873      9,870
  Income (loss) before extraordinary
    items............................   (31,812)(2)    5,017       (3,218)      (7,605)       1,267    (11,699)
  Net income (loss) per common
    share............................  $  (1.04)    $    .22     $   (.27)                 $    .03   $   (.48)
  Net income (loss) per common share,
    as adjusted(3)...................                            $   (.22)                            $   (.39)
BALANCE SHEET DATA:
  Cash(4)............................  $  6,230     $  6,048     $205,181                  $  6,293   $193,076
  Total assets.......................    94,281      105,409      336,475                   104,742    346,467
  Total debt(5)......................    59,954       69,124      298,794                    66,686    311,331
  Stockholders' equity (deficit).....     6,871       14,189        6,858                    16,856     (4,841)
OTHER FINANCIAL AND OPERATIONS DATA:
  EBITDA(6)..........................  $ 10,175     $ 26,400     $ 27,124     $ 21,674     $  7,725   $  2,818
  Capital expenditures...............    27,008        7,087       23,670       23,670        2,571     13,564
  Ratio of EBITDA to interest
    expense(7).......................     2.06x        4.32x        1.86x        1.48x        4.12x         --
  Minutes of use (in millions).......        --           --         12.8         12.8           --       33.9
</TABLE>
    
 
- ------------
   
(1) The pro forma statement of operations data and the other financial and
    operations data for the year ended December 31, 1995 reflect the acquisition
    by the Company of the minority interest in Switched Services Communications,
    L.L.C. as if the acquisition (which actually occurred as of January 1, 1996)
    had occurred as of January 1, 1995. See Note 17 to the Consolidated
    Financial Statements.
    
 
(2) After giving effect to a $37,960 non-cash charge in 1993 relating to a
    write-down of microwave equipment. (As of March 31, 1996, the remaining net
    depreciated book value of microwave equipment was less than 6% of total
    assets.) See Note 8 to the Consolidated Financial Statements.
 
                                         (Footnotes continued on following page)
                                        7
<PAGE>   12
 
   
(3) Net income (loss) per common share as adjusted reflects the 744,713 shares
    issued in the GEPT Private Placement and the 5,600,000 shares issued in this
    Offering (assuming a Price to Public of $18.00 per share).
    
 
   
(4) Including $198,266 at December 31, 1995 and $187,584 at March 31, 1996 held
    in an escrow account. See Note 3 to the Consolidated Financial Statements.
    
 
   
(5) Total debt consists of long-term debt, capital lease obligations and
    deferred lease obligations, including the current portions thereof.
    
 
   
(6) Represents net income before depreciation, amortization, interest expense,
    income taxes and extraordinary items ("EBITDA"). For the year ended December
    31, 1993, EBITDA does not reflect a $37,960 write-down of microwave
    equipment recorded by the Company. (As of March 31, 1996, the remaining net
    depreciated book value of microwave equipment was less than 6% of total
    assets.) See Note 8 to the Consolidated Financial Statements. EBITDA for
    1995 and the three months ended March 31, 1996 includes the negative EBITDA
    of IXC Long Distance, Inc., the Company's switched long distance services
    subsidiary. Such amounts principally relate to start-up and operating
    expenses incurred before the Company began generating material revenues from
    its switched long distance business. Had the Company excluded the negative
    EBITDA of the switched long distance business, EBITDA would have been
    $36,916 in 1995 and $8,675 and $11,143 for the three months ended March 31,
    1995 and 1996, respectively. The Company has included information concerning
    EBITDA because it believes that EBITDA is used by certain investors as one
    measure of an issuer's historical ability to service its debt. EBITDA is not
    a measurement determined in accordance with GAAP and should not be
    considered in isolation or as a substitute for measures of performance
    prepared in accordance with GAAP. For 1995 and the three months ended March
    31, 1996, EBITDA included $2,552 and $2,557, respectively, of interest
    income relating to amounts held in escrow. See the Consolidated Financial
    Statements.
    
 
   
(7) For the three months ended March 31, 1996, EBITDA was insufficient to cover
    interest expense by $7,052. The Company paid the interest accrued during
    such period with funds from the escrow account referred to in footnote (4).
    
 
                                        8
<PAGE>   13
 
                                  RISK FACTORS
 
     An investment in the Common Stock offered hereby is speculative in nature
and involves a high degree of risk. Accordingly, the following risk factors
should be considered carefully in evaluating the Company and its business before
purchasing shares of Common Stock offered hereby.
 
NEGATIVE CASH FLOW AND CAPITAL REQUIREMENTS
 
   
     The Fiber Expansion will require significant capital expenditures before
producing significant reductions in expenses. The Company anticipates meeting
the costs of Phase I of the Fiber Expansion, which will require estimated cash
expenditures subsequent to April 30, 1996 of $213.0 million, with the proceeds
of this Offering and a portion of its cash held in an escrow account ($152.9
million at May 31, 1996). Such escrow account was funded with a portion of the
proceeds of the $285.0 million of 12 1/2% Senior Notes due 2005 issued by the
Company in October 1995 (the "Senior Notes"). The Company estimates that its
total capital expenditures for the last three quarters of 1996 will be $200.0
million (including capital expenditures relating to the Fiber Expansion). The
amount of actual capital expenditures may vary materially as a result of
cost-saving arrangements, unexpected costs and other factors. The successful
completion of Phase II of the Fiber Expansion, which is estimated to cost $275.0
million (before any cost-saving arrangements) is dependent upon the Company's
ability to enter into cost-saving arrangements with carriers or other large
users of fiber capacity, to raise the significant capital required and/or to
significantly increase its cash flow. The failure of the Company to accomplish
any of the foregoing may significantly delay or prevent the completion of the
Fiber Expansion. Failure to complete Phase I would have a material adverse
effect on the Company and the value of the Common Stock. Failure to complete
Phase II could have a material adverse effect on the value of the Common Stock.
    
 
   
     The development of the Company's switched long distance business will also
require significant capital. In order to offer switched long distance services,
the Company has installed switches, connected them to its network and to the
LECs, acquired software and hired the personnel needed to establish a national
switched network. Operating expenses and capital expenditures will result in the
Company's switched long distance business incurring negative cash flow until the
Company's customers route sufficient traffic over the network to cover the costs
of its operation, which the Company does not expect to occur before the end of
1996. For a discussion of important factors that could cause the Company's
switched long distance business to fail to generate positive cash flows, see
"-- Development Risks and Dependence on Switched Long Distance Business." The
Company anticipates that its cash requirements relating to the switched long
distance services business will be approximately $22.6 million in 1996, which
includes funding negative cash flow from, and making capital expenditures (net
of financing) for, its switched long distance business. A delay in the
completion of the Fiber Expansion, or larger than anticipated capital
expenditures for the Fiber Expansion or negative cash flow from the switched
long distance business could impair the ability of the Company to meet its
obligations under the Senior Notes and other indebtedness or to access
additional sources of funding and adversely affect the value of the Common
Stock. For 1995 and the three months ended March 31, 1996, the Company's EBITDA
minus interest expense and capital expenditures (adjusted for the change in
working capital deficit) was negative $4.8 million and negative $38.5 million,
respectively.
    
 
   
     The Company is required to make annual interest payments of $35.6 million
with respect to the Senior Notes. Although the Company intends to utilize funds
in the escrow account ($152.9 million at May 31, 1996) to make such interest
payments in the short term, the Company is currently unable to satisfy such
obligations solely with its cash flow. Accordingly, the Company's ability to
meet its debt service requirements over the long term is dependent on a
significant increase in its cash flow and/or its ability to raise additional
capital.
    
 
     The forward-looking statements set forth above with respect to the cost of
Phase I of the Fiber Expansion, the Company's ability to meet such costs, the
amount of the Company's cash requirements in 1996, and the Company's ability to
generate positive cash flows in its switched long distance business are based on
certain assumptions, including that there will be no significant cost overruns,
the Company's contractors and partners in cost-saving arrangements will perform
their obligations, rights-of-way can be
 
                                        9
<PAGE>   14
 
obtained on a timely, cost-effective basis, the backbone of Phase I is
substantially completed on schedule in the first quarter of 1997, the Company
generates significant levels of MOUs and that the Company can successfully
provide switched long distance services on a cost effective basis (including the
provision of billing information in an accurate and timely manner) for volumes
that it has not previously handled. See "-- Risks Relating to Completion of the
Fiber Expansion," "-- Development Risks and Dependence on Switched Long Distance
Business," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- The Company's Network."
 
RECENT AND EXPECTED LOSSES
 
   
     The Company reported a loss before extraordinary items of $3.2 million for
the year ended December 31, 1995 and an operating loss of $5.8 million and a net
loss of $11.7 million for the three months ended March 31, 1996. As of March 31,
1996 the Company had an accumulated deficit of $34.5 million. The Company
expects a net loss for the year ending December 31, 1996 primarily as a result
of interest expense associated with the Senior Notes and start-up and
operational expenses costs associated with the switched long distance business.
Thereafter, the Company's profitability depends to a great extent on demand for
the long-haul circuits constructed in the Fiber Expansion and the success of the
Company's switched long distance services. There can be no assurance that the
Company will return to profitability in the future. Failure to be profitable
could impair the Company's ability to meet its obligations under the Senior
Notes, expand its switched long distance business and raise additional equity or
debt financing which will be necessary to complete Phase II of the Fiber
Expansion or which may be required for other reasons. Such events could have a
material adverse effect on the Company and the value of the Common Stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
    
 
RISKS RELATING TO COMPLETION OF THE FIBER EXPANSION
 
     The Fiber Expansion is an essential element of the Company's future
success. The Company commenced construction of Phase I of the Fiber Expansion in
November 1995. The Company has substantial existing commitments to purchase
materials and labor for such construction, and will need to obtain additional
materials and labor to complete Phase I of the Fiber Expansion, which materials
and labor may cost more than anticipated. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources." The successful completion of each phase of the Fiber
Expansion is dependent, among other things, on the Company's ability: (i) to
obtain rights-of-way; (ii) to manage effectively the construction of the new
fiber routes; and (iii) with respect to Phase II of the Fiber Expansion, to
enter into additional cost-saving arrangements, obtain additional financing
and/or significantly increase its cash flow. In addition, the successful
construction of the Fiber Expansion will depend to a significant extent on third
party contractors retained by the Company. Difficulties or delays with respect
to any of the foregoing may significantly delay or prevent the completion of the
Fiber Expansion, which would have a material adverse effect on the Company and
the value of the Common Stock.
 
   
     The Company has entered into the WorldCom Fiber Build Agreement (as defined
below) with WorldCom, relating to the construction by each party of a fiber
route approximately 1,100 miles long and the placing of fiber for both parties
in such route. WorldCom's route is to extend from Akron through Indianapolis to
a suburb of St. Louis, with a spur from Indianapolis to a suburb of Chicago. The
Company's route is to extend from Dallas to Phoenix with a spur to Ft. Worth.
The WorldCom Fiber Build Agreement provides for substantial penalties ($400,000
per month) to either party that does not complete construction of its route by
October 1, 1996, but only after a grace period and only in the event that the
other party has completed construction of its route. No assurance can be given
that the Company will be able to complete its route in time to avoid such
penalties. Although the Company does not anticipate undue difficulty in
acquiring the necessary rights-of-way or in managing the construction for either
Phase I or Phase II of the Fiber Expansion, no assurance can be given that such
rights will be acquired or that the Fiber Expansion will be completed without
significant delays, within its budget or at all. In addition, no assurance can
be given that WorldCom will be able to complete its route under the WorldCom
Fiber Build Agreement without significant delays or at all. Increased costs or
significant delays in the completion of Phase I of the Fiber Expansion,
including the
    
 
                                       10
<PAGE>   15
 
portion to be constructed by WorldCom, or of the remainder of the Fiber
Expansion could have a material adverse effect on the Company and the value of
the Common Stock. See "Business -- The Company's Network."
 
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 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 services will continue to
decline over the next several years. 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
considering the construction of new fiber optic and other long distance
transmission networks. However, the Company believes that there are significant
barriers to entry for new entrants that may consider building a new fiber optic
network, such as substantial construction costs, and the difficulty and expense
of securing appropriate rights-of-way, establishing and maintaining a sufficient
customer base, recruiting and retaining appropriate personnel and maintaining a
reliable network. Since the cost of the actual fiber is a relatively small
portion 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 have shown the potential to greatly expand the capacity of existing and
new fiber optic cable. In addition, the Company's cost-saving arrangements with
other carriers, which may involve the sale or lease of capacity or fibers on the
Fiber Expansion, may result in competitors having capacity on the Company's
routes along the Fiber Expansion, which may in turn result in pricing pressures
with respect to traffic carried along these routes. If industry capacity
expansion results in capacity that exceeds overall demand in general or along
any of the Company's routes, severe additional pricing pressure could develop.
In addition, strategic alliances or similar transactions, such as the recently
announced long distance capacity purchasing alliance among certain RBOCs, could
result in additional pricing pressure on long distance carriers. Such pricing
pressure could have a material adverse effect on the Company and the value of
the Common Stock. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview."
    
 
DEVELOPMENT RISKS AND DEPENDENCE ON SWITCHED LONG DISTANCE BUSINESS
 
   
     The success of the Company in the switched long distance business is
dependent on the Company's ability to generate significant customer traffic, to
manage an efficient switched long distance network and related customer service
and the timely completion of Phase I of the Fiber Expansion. The Company has not
previously managed a switched long distance network and there can be no
assurance that its switched long distance services can be sold at a profit. The
failure of the Company to generate significant customer traffic, to complete
Phase I of the Fiber Expansion in a timely manner, or to effectively manage the
switched network and related customer service or to operate it at a profit would
have a material adverse effect on the Company and the value of the Common Stock.
Because the Company recently entered into the switched long distance business,
with its five switches becoming fully operational in February 1996, the Company
expects substantial operating losses relating to its switched long distance
business unless and until larger volumes of traffic are carried on the Company's
switched long distance network. In addition, to the extent that LECs grant
volume discounts with respect to local access charges, the Company may have a
cost disadvantage versus the larger carriers. The Company's operating loss in
the first quarter of 1996 was primarily attributable to its switched services
operations. The Company anticipates that its switched long distance business
will incur negative cash flow until the Company's customers route sufficient
traffic over the network to cover the costs of its operation, which the Company
does not expect to occur before the end of 1996. The preceding forward-looking
statement is based on certain assumptions as to the growth of traffic on the
Company's network and the control of its operating expenses. Such assumptions
may prove to be inaccurate due to changes in the businesses of the Company's
reseller customers, an inability to attract new customers, the loss of existing
customers, problems in the operation of the switched network, the Company's lack
of experience with switched long distance services, increases in operating
expenses or other factors affecting the Company's revenue or expenses. If such
traffic does not increase, there can be no assurance that the switched long
    
 
                                       11
<PAGE>   16
 
distance business will ever generate positive cash flows. In addition, the
credit risk for the Company's switched long distance business will be
substantially greater than the credit risk for the Company's long-haul business,
because switched long distance customers will be charged in arrears on the basis
of MOUs (which are frequently subject to dispute). See "Business -- Switched
Long Distance Services."
 
RISKS INHERENT IN RAPID GROWTH
 
   
     Part of the Company's strategy is to achieve rapid growth through entering
the switched long distance business and through completing the Fiber Expansion.
Rapid growth would require: (i) the retention and training of new personnel;
(ii) the satisfactory performance by the Company's customer interface and
billing systems; (iii) the development and introduction of new products; and
(iv) the control of the Company's expenses related to the expansion into the
switched long distance business and the Fiber Expansion. The failure by the
Company to satisfy these requirements, or otherwise to manage its growth
effectively, would have a material adverse effect on the Company and the value
of the Common Stock. See "Business -- Long-Haul Services" and
"Business -- Switched Long Distance Services."
    
 
SUBSTANTIAL INDEBTEDNESS
 
   
     The Company is highly leveraged. As of March 31, 1996, the Company had
approximately $311.3 million of long-term debt (including the current portion
thereof) and a stockholders' deficit of approximately $4.8 million. On a pro
forma basis, assuming this Offering and the GEPT Private Placement were
consummated as of March 31, 1996 at a Price to Public of $18.00 per share, there
would have been at such date approximately $100.1 million of stockholders'
equity and a debt-to-equity ratio of 3.1 to 1. The Company's significant debt
burden could have several important consequences to the Company, including, but
not limited to: (i) the cash received from operations may be insufficient to
meet the principal and interest on the Senior Notes, in addition to paying the
other indebtedness of the Company as it becomes due; (ii) a significant portion
of the Company's cash flow from operations must be used to service its debt
instead of being used in the Company's business; and (iii) the Company's
flexibility to obtain additional financing in the future, as needed for Phase II
of the Fiber Expansion or any other reason, may be impaired by the amount of
debt outstanding and the restrictions imposed by the covenants contained in the
indenture for the Senior Notes. See "Description of Certain Indebtedness." The
ability of the Company to meet its obligations will be subject to financial,
business and other factors, including factors beyond its control, such as
prevailing economic conditions. There can be no assurance that the Company's
cash flow from operations will be sufficient to meet its obligations under the
Senior Notes or other indebtedness as payments become due or that the Company
will be able to refinance the Senior Notes or other indebtedness at maturity.
    
 
RELIANCE ON MAJOR CUSTOMERS
 
   
     The Company's ten largest customers in 1995 accounted for approximately 78%
of its revenues, with WorldCom and Frontier as its two largest customers. During
1993, 1994 and 1995, WorldCom accounted for approximately 23%, 25% and 20%
respectively, of the Company's revenues (with no revenues in 1993 or 1994 and
approximately 4% of the Company's revenues in 1995 relating to capacity-exchange
arrangements between WorldCom and the Company), and Frontier (including Allnet)
accounted for 24%, 23% and 21%, respectively, of the Company's revenues.
WorldCom has grown substantially in recent years, largely through acquisitions,
including the acquisition of certain customers of the Company. In 1995, WorldCom
acquired WilTel, a facilities-based carrier that has been both a long-term
customer of, and supplier to, the Company. The Company believes that as a result
of WorldCom's ownership of the WilTel long-haul transmission network, WorldCom
is likely to transfer long-haul circuits now leased from the Company, other than
the long-haul circuits under capacity exchange arrangements with the Company, to
its own network when its leases expire. During the first quarter of 1996, the
Company had revenues from WorldCom of approximately $4.2 million. Of such
revenues, approximately 38% related to capacity-exchange agreements, 3% related
to leases expiring in 1996, 15% related to leases expiring in 1997, 21% related
to leases expiring after 1997, and 23% related to month-to-month leases. Prior
to its acquisition in 1995 by Frontier (which is also a customer of the
Company), Allnet was a large customer of the Company, accounting for
approximately 18% and 17% of
    
 
                                       12
<PAGE>   17
 
   
the Company's revenues in 1993 and 1994, respectively. Although: (i) Frontier
had "take or pay" commitments to the Company for the period 1996 through 2000 of
over $30.0 million as of March 31, 1996; (ii) Frontier does not currently own
significant long-haul network capacity; and (iii) the Company believes that the
acquisition of Allnet by Frontier will not affect the combined carrier's
requirements for long-haul circuits, the Company cannot predict whether the
acquisition of Allnet by Frontier will affect the relationship of the combined
carrier with the Company or whether Frontier will renew its contracts with the
Company after its commitments expire. Although there can be no assurance, the
Company believes that if revenues from WorldCom or from Frontier do not continue
or are reduced, they can be replaced over time with revenues generated from
other customers. However, in such event, the Company's revenues may in the
short-term be adversely affected and if such revenues are not replaced, then the
loss of WorldCom, Frontier or other significant customers could have a material
adverse effect on the Company and the value of the Common Stock. In addition,
construction by the Company's customers of their own facilitates or further
consolidations in the telecommunications industry involving the Company's
customers could have a material adverse effect on the Company and the value of
the Common Stock. See "Business -- Long-Haul Services."
    
 
   
     The Company's strategy for establishing and growing its switched long
distance business is based in large part on its relationship with Excel. The
failure by the Company to fulfill its obligations to provide a reliable switched
network for use by Excel or the failure by Excel: (i) to fulfill its obligations
to utilize the Company's switched long distance services (even though such
failure could give rise in certain circumstances to claims by the Company); or
(ii) to utilize the volume of MOUs that the Company expects it to utilize, could
result in a material adverse effect on the Company and the value of the Common
Stock. In addition to its commitments to its other suppliers, Excel recently
announced that it has entered into a four-year, $900 million contract to
purchase switched long distance services from WorldCom. Although the Company
believes that Excel's commitment to WorldCom will not impair Excel's
relationship with the Company, WorldCom will be a significant competitor to the
Company for Excel's business. In the event the Company is not able to
effectively compete with WorldCom or other Excel suppliers, it may not continue
to obtain revenues from Excel after Excel's commitment to the Company has been
satisfied. The loss of Excel as a customer after Excel's commitment has been
satisfied or a significant reduction by Excel of its commitment to the Company
(as is permitted in certain circumstances by the terms of its contract with the
Company) could have a material adverse effect on the Company and the value of
the Common Stock. See "Business -- Switched Long Distance Services."
    
 
COMPETITION
 
   
     The telecommunications industry is highly competitive. Many of the
Company's competitors (such as AT&T, MCI, Sprint, WorldCom and others) and
potential competitors have substantially greater financial, personnel,
technical, marketing and other resources than those of the Company and a far
more extensive transmission network than the Company. Such competitors may build
additional fiber capacity in the geographic areas to be served by the Fiber
Expansion. The Company is aware that at least one other company is considering
building a new nationwide long distance fiber optic network. In addition, many
telecommunications companies are acquiring switches and users of switches will
have an increasing number of alternative providers of switched long distance
services. The Company competes primarily on the basis of pricing, availability,
transmission quality, customer service (including the capability of making rapid
additions to add end users and access to end-user traffic records) and variety
of services. The ability of the Company to compete effectively will depend on
its ability to maintain high-quality services at prices generally equal to or
below those charged by its competitors.
    
 
     In the United States, price competition in the long distance business has
generally been intensive. The FCC has, on several occasions since 1984, approved
or required price decreases by AT&T through the imposition of "price cap"
regulations. However, the FCC recently classified AT&T as a "non-dominant
interexchange carrier," with the effect that AT&T is no longer subject to price
regulation of its long distance services. Since the Company believes that its
customers generally price their service offerings at or below the prices charged
by AT&T for its telecommunications services, reductions by AT&T in its rates may
necessitate similar price decreases by the Company. In addition, the
Telecommunications Act of 1996 (the "Telecommu-
 
                                       13
<PAGE>   18
 
   
nications Act") will allow the RBOCs and others such as electric utilities and
cable television companies to enter the long distance market, and has reduced
restraints on GTE. Further, a continuing trend toward consolidation, mergers,
acquisitions and strategic alliances in the telecommunications industry could
also give rise to significant new competitors to the Company or to the Company's
customers. See "-- Recent Legislation and Regulatory Uncertainty," "Industry
Overview," "Business -- Long-Haul Services," "Business -- Switched Long Distance
Services" and "Business -- Regulation."
    
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company's businesses are managed by a small number of key executive
officers, the loss of whom could have a material adverse effect on the Company.
The Company believes that its growth and future success will depend in large
part on its continued ability to attract and retain highly skilled and qualified
personnel. The loss of senior management or the failure to recruit additional
qualified personnel in the future could significantly impede attainment of the
Company's financial, expansion, marketing and other objectives. With the
exception of contracts with two of its Executive Vice Presidents, the Company
does not have employment contracts and does not presently intend to enter into
contracts, with other members of senior management. See "Management" and
"Certain Transactions."
 
RECENT LEGISLATION AND REGULATORY UNCERTAINTY
 
   
     Certain of the Company's operations are subject to regulation by the FCC
under the Communications Act of 1934, as amended (the "Communications Act"). In
addition, certain of the Company's businesses are subject to regulation by state
public utility or public service commissions. Changes in the regulation of, or
the enactment or changes in interpretation of legislation affecting, the
Company's operations could have a material adverse affect on the Company and the
value of the Common Stock. Recently, the federal government enacted the
Telecommunications Act, which, among other things, allows the RBOCs and others
to enter the long distance business. Entry of the RBOCs or other entities such
as electric utilities and cable television companies into the long distance
business may have a negative impact on the Company or its customers. The Company
anticipates that certain of such entrants will be strong competitors because,
among other reasons, they may enjoy one or more of the following advantages:
they may (i) be well capitalized; (ii) already have substantial end-user
customer bases; or (iii) enjoy cost advantages relating to local loops and
access charges. The introduction of additional strong competitors into the
switched long distance business would mean that the Company and its customers
would face substantially increased competition. This could have a material
adverse effect on the Company and the value of the Common Stock. In addition,
the Telecommunications Act provides that state proceedings may in certain
instances determine access charges the Company and its customers are required to
pay to the LECs. No assurance can be given that such procedings will not result
in increases in such rates. Such increases could have a material adverse effect
on the Company or its customers and on the value of the Common Stock. See
"Industry Overview" and "Business -- Regulation."
    
 
RISKS RELATED TO RAPID TECHNOLOGICAL CHANGES
 
   
     The telecommunications industry is subject to rapid and significant changes
in technology. For example, there have been recent technological advances that
show the potential to greatly expand the capacity of existing and new fiber
optic cable, which could greatly increase supply. There can be no assurance that
the Company will maintain competitive services or that the Company will obtain
appropriate new technologies on a timely basis or on satisfactory terms. Such an
increase in supply or failure by the Company to maintain competitive services or
obtain new technologies could have a material adverse effect on the Company and
the value of the Common Stock. See "Industry Overview -- Technology."
    
 
CONCENTRATION OF STOCK OWNERSHIP
 
   
     Upon completion of this Offering and the GEPT Private Placement (assuming a
Price to Public of $18.00 per share), GEPT will beneficially own approximately
26.7% of the outstanding Common Stock, Grumman Hill Investments, L.P. ("GHI")
and Richard D. Irwin together will beneficially own approxi-
    
 
                                       14
<PAGE>   19
 
   
mately 28.5% of the outstanding Common Stock, and four of the members of senior
management and their affiliates will beneficially own approximately 22.8% of the
outstanding Common Stock. Such stockholders also control a majority of IXC
Communications' 10% Junior Series 3 Preferred Stock (the "Series 3 Preferred
Stock"). See "Certain Transactions." As a result, certain of these stockholders,
if they act together, generally would be able to elect all directors elected by
the holders of the Common Stock (and the director elected by the holders of the
Series 3 Preferred Stock) and exercise control over the business, policies and
affairs of IXC Communications, and would have the power to approve or disapprove
most actions requiring stockholder approval, including amendments to IXC
Communications' charter and by-laws, certain mergers or similar transactions and
sales of all or substantially all of IXC Communications' assets. This
concentration of stock ownership could have the effect of delaying or preventing
a change of control of IXC Communications or the removal of existing management
and may discourage attempts to do so. See "Principal Stockholders."
    
 
NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
 
     Prior to this Offering, there has been no public market for the Common
Stock. Although it is anticipated that the Common Stock will be approved for
inclusion in the Nasdaq National Market, there can be no assurance that an
active public market for the Common Stock will develop or be sustained after
this Offering or that purchasers of the Common Stock will be able to resell
their Common Stock at prices equal to or greater than the initial public
offering price. The initial public offering price will be determined by
negotiation between IXC Communications and the representatives of the
Underwriters and may not be indicative of future market prices. See
"Underwriters" for the method of determining the initial public offering price.
The trading price of the Common Stock after this Offering could be subject to
wide fluctuations in response to numerous factors, including, but not limited
to, quarterly variations in operating results, competition, announcements of
technological innovations or new products by IXC Communications or its
competitors, product enhancements by IXC Communications or its competitors,
regulatory changes, any difference in actual results and results expected by
investors and analysts, changes in financial estimates by securities analysts
and other events or factors. In addition, the stock market has experienced
volatility that has affected the market prices of equity securities of many
companies and that often has been unrelated to the operating performance of such
companies. These broad market fluctuations may adversely affect the market price
of the Common Stock. See "Underwriters."
 
IMMEDIATE AND SUBSTANTIAL DILUTION
 
   
     The estimated initial public offering price is substantially higher than
the net tangible book value per share of Common Stock. As a result, investors
participating in this Offering will incur immediate, substantial dilution of
$15.38 per share (assuming a Price to Public of $18.00 per share and after
giving effect to the GEPT Private Placement). The existing stockholders of IXC
Communications, including certain officers and directors, will realize an
immediate increase in the net tangible book value of their shares of Common
Stock upon completion of this Offering. See "Dilution," "Certain Transactions"
and "Principal Stockholders."
    
 
ANTI-TAKEOVER PROVISIONS
 
   
     IXC Communications' Restated Certificate of Incorporation permits the Board
of Directors to establish the rights, preferences, privileges and restrictions
of, and to issue, up to an additional 2,987,450 shares of Preferred Stock
without any further vote or action by IXC Communications' stockholders. Although
IXC Communications has no present plans to issue any additional shares of
Preferred Stock, the issuance of additional Preferred Stock could adversely
affect the holders of Common Stock. See "Description of Capital Stock." In
addition, under certain circumstances, the Senior Notes can require the Company
to repurchase the Senior Notes upon the occurrence of a Change of Control (as
defined in the indenture for the Senior Notes). See "Description of Certain
Indebtedness." The issuance of additional preferred stock or the existence of
such provisions of such indenture could have the effect of delaying or
preventing a change in control of IXC Communications and may discourage attempts
to do so.
    
 
                                       15
<PAGE>   20
 
SHARES ELIGIBLE FOR FUTURE SALE
 
   
     Following this Offering and the GEPT Private Placement, all 24,335,255
shares of the Common Stock outstanding prior to this Offering (plus the shares
to be issued in the GEPT Private Placement) will be "restricted securities" and
may in the future be sold in compliance with Rule 144 adopted under the
Securities Act. Rule 144 generally provides that beneficial owners of Common
Stock who have held such Common Stock for two years may sell within a
three-month period a number of shares not exceeding the greater of 1% of the
total outstanding shares or the average weekly trading volume of the shares
during the four calendar weeks preceding such sale. All, or substantially all,
of the outstanding restricted Common Stock, other than the shares of Common
Stock issued in the GEPT Private Placement, will have met the two-year holding
period requirement under Rule 144, and could begin to be sold 90 days after this
Offering, subject to the conditions of Rule 144. Future sales of Common Stock
could negatively impact the market price of the Common Stock. However, pursuant
to the terms of certain lock-up agreements, the Common Stock owned by executive
officers, directors, GEPT (including the shares to be purchased in the GEPT
Private Placement) and GHI may not be sold until 180 days from the date of this
Prospectus, without the prior written consent of Morgan Stanley & Co.
Incorporated. Also, certain holders of Common Stock have or will have
registration rights with respect to the shares of Common Stock held by them,
which registration rights become exercisable on March 1, 1997. In connection
with the GEPT Private Placement, GEPT and certain other stockholders will be
granted registration rights with respect to all of the Common Stock owned by it.
See "Description of Capital Stock -- Registration Rights." In addition, the
Company intends, as soon as practicable after consummation of this Offering, to
register approximately 1,212,450 shares and 2,121,787 shares of Common Stock
reserved for issuance to its employees, directors, consultants and advisors
under the Company's 1994 Stock Plan and 1996 Stock Plan, respectively. As of
March 31, 1996, options to purchase 1,075,080 shares of Common Stock were
outstanding under the 1994 Stock Plan and no options were outstanding under the
1996 Stock Plan. See "Management -- 1996 Stock Plan," "Management -- 1994 Stock
Plan," "Description of Capital Stock -- Registration Rights" and "Shares
Eligible for Future Sale."
    
 
                                       16
<PAGE>   21
 
                                USE OF PROCEEDS
 
   
THIS OFFERING AND GEPT PRIVATE PLACEMENT
    
 
   
     The net proceeds to IXC Communications from the sale of the shares of
Common Stock offered hereby at an assumed initial public offering price of
$18.00 per share are estimated to be $92.5 million ($106.6 million if the U.S.
Underwriters' over-allotment option is exercised in full), after deducting
underwriting discounts and commissions and offering expenses. IXC Communications
expects to use substantially all of the net proceeds of this Offering (together
with a portion of the funds remaining from the sale of the Senior Notes) to fund
the Fiber Expansion and the balance for general corporate purposes. The net
proceeds to the Company from the GEPT Private Placement are estimated to be
$12.5 million ($14.4 million if GEPT acquires additional stock as a result of
the exercise of the U.S. Underwriters' over-allotment option). The Company
intends to use such net proceeds for general corporate purposes, including, if
the Company so elects, to pursue a joint venture in Marca-Tel, S.A. de C.V.
("Marca-Tel") to provide certain telecommunication services in Mexico. See
"Business -- Mexican Joint Venture." Pending such uses, the Company intends to
deposit all such net proceeds in interest-bearing bank accounts, or invest such
proceeds in United States government securities or other highly liquid
investments.
    
 
   
1995 SENIOR NOTE OFFERING
    
 
   
     In October 1995, IXC Communications received net proceeds from the sale of
the Senior Notes of approximately $267.7 million. Of such net proceeds, $200.0
million were placed into an escrow account to be used for the Fiber Expansion,
debt service on the Senior Notes and other capital expenditures. As of May 31,
1996, approximately $152.9 million remained in such escrow account. Of the
remaining proceeds of $67.7 million from the sale of the Senior Notes: (i)
approximately $54.8 million was used to repay or acquire existing indebtness;
(ii) approximately $3.7 million was used to redeem preferred stock; and (iii)
approximately $9.2 million was or will be used for general corporate purposes.
See "Description of Certain Indebtedness."
    
 
                                DIVIDEND POLICY
 
   
     IXC Communications has never paid any cash dividends on its Common Stock
and does not expect to pay cash dividends on its Common Stock in the foreseeable
future. The terms of the indenture under which the Senior Notes were issued
restrict the payment of cash dividends. As of March 31, 1996 there were 12,550
shares of the Company's Series 3 Preferred Stock outstanding (liquidation
preference of $1,000 per share). Dividends on the Series 3 Preferred Stock
cumulate at an annual rate 10% (based on the liquidation preference) plus
interest. As of March 31, 1996, $5.2 million of accrued and unpaid dividends on
the Series 3 Preferred Stock were outstanding. IXC Communications anticipates
paying the dividends on the Series 3 Preferred Stock (and related interest) when
cash is available after funding its cash needs for operations and capital
expenditures and provided that the amount of such payment is permitted under the
terms of the indenture for the Senior Notes and applicable provisions of state
law. In addition to paying such dividends, IXC Communications currently intends
to retain future earnings, if any, to finance its operations and fund the growth
of its business. Any payment of future dividends on its Common Stock will be at
the discretion of the Board of Directors of IXC Communications and will depend
upon, among other things, IXC Communications' earnings, financial condition,
capital requirements, level of indebtedness, contractual and legal restrictions
with respect to the payment of dividends and other factors that IXC
Communications' Board of Directors deems relevant.
    
 
                                       17
<PAGE>   22
 
                                 CAPITALIZATION
 
   
     The following table sets forth the cash and the capitalization of IXC
Communications as of March 31, 1996, restated to reflect stock splits completed
prior to this Offering, and as adjusted to reflect the sale by IXC
Communications of 5,600,000 shares of Common Stock offered hereby at an assumed
Price to Public of $18.00 per share, and the sale by IXC Communications of
744,713 shares of Common Stock in the GEPT Private Placement. No exercise of the
over-allotment option by the U.S. Underwriters has been reflected herein. See
"Use of Proceeds." This table should be read in conjunction with the
Consolidated Financial Statements, the Notes thereto and other financial
information included elsewhere in this Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                            MARCH 31, 1996
                                                                         ---------------------
                                                                                         AS
                                                                          ACTUAL      ADJUSTED
                                                                         --------     --------
                                                                              (DOLLARS IN
                                                                              THOUSANDS)
<S>                                                                      <C>          <C>
Cash(1)................................................................  $193,076     $298,047
                                                                         ========     ========
Current portion of long-term debt......................................  $ 10,426     $ 10,426
Long-term debt, excluding current portion:
  12 1/2% Senior Notes due 2005........................................   277,336      277,336
  Other senior long-term debt and lease obligations....................    17,405       17,405
  Senior subordinated debt.............................................     2,688        2,688
  Subordinated debt....................................................     3,476        3,476
                                                                         --------     --------
     Total long-term debt, less current portion........................   300,905      300,905
Stockholders' equity:
  Preferred stock, $.01 par value; 3,000,000 shares authorized:
     10% Junior Series 3 Cumulative Preferred Stock, $.01 par value;
      12,550 shares issued and outstanding (aggregate liquidation
      preference, including accrued and unpaid dividends, of
      $17,754).........................................................        13           13
  Common stock, $.01 par value; 100,000,000 shares authorized (actual);
     24,335,255 shares issued and outstanding (actual); and 30,679,968
     shares issued and outstanding (as adjusted)(2)....................       243          307
  Additional paid-in capital...........................................    29,430      134,337
  Accumulated deficit..................................................   (34,527)     (34,527)
                                                                         --------     --------
     Total stockholders' equity (deficit)..............................    (4,841)     100,130
                                                                         --------     --------
Total capitalization...................................................  $306,490     $411,461
                                                                         ========     ========
</TABLE>
    
 
- ------------
(1) Includes $187,584 held in an escrow account. See Note 3 to the Consolidated
    Financial Statements.
   
(2) Does not include 1,075,080 shares of Common Stock issuable upon the exercise
    of employee stock options outstanding as of March 31, 1996 under the
    Company's 1994 Stock Plan (of which, options covering 130,337 shares were
    exercisable as of March 31, 1996).
    
 
                                       18
<PAGE>   23
 
                                    DILUTION
 
   
     The net tangible book value deficit of IXC Communications at March 31, 1996
was approximately $24,462,000, or $1.01 per share of Common Stock. Net tangible
book value deficit per share represents the amount of IXC Communications' total
tangible assets less total liabilities, divided by the total number of
outstanding shares of Common Stock. After giving effect to the sale by IXC
Communications of 5,600,000 shares of Common Stock offered hereby at an assumed
initial public offering price of $18.00 per share (after deduction of
underwriting discounts and commissions and estimated offering expenses and
assuming no exercise of the U.S. Underwriters' over-allotment option) and the
GEPT Private Placement and the receipt of the net proceeds therefrom, the pro
forma net tangible book value of IXC Communications at March 31, 1996 would have
been approximately $80,509,000, or $2.62 per share. This represents an immediate
increase in net tangible book value of $3.63 per share to existing stockholders
and an immediate dilution in net tangible book value of $15.38 per share to new
investors purchasing shares of Common Stock in this Offering. The following
table illustrates this per share dilution:
    
 
   
<TABLE>
    <S>                                                                   <C>      <C>
    Assumed initial public offering price per share.....................           $ 18.00
      Net tangible book value deficit per share at March 31, 1996.......  $(1.01)
      Increase in net tangible book value attributable to new investors
         and the GEPT Private Placement.................................    3.63
                                                                          ------
    Pro forma net tangible book value per share after this Offering and
      the GEPT Private Placement........................................              2.62
                                                                                    ------
    Dilution of net tangible book value per share to new investors......           $ 15.38
                                                                                    ======
</TABLE>
    
 
   
     The following table summarizes, on a pro forma basis as of March 31, 1996
the number of shares of Common Stock purchased from, the total consideration
paid to, and the average price per share paid to, IXC Communications by the
existing stockholders and by the new investors purchasing the Common Stock
offered hereby (assuming an initial public offering price of $18.00 per share
and before deduction of underwriting discounts and commissions and estimated
offering expenses and no exercise of the U.S. Underwriters' over-allotment
option) and in the GEPT Private Placement:
    
 
   
<TABLE>
<CAPTION>
                                              SHARES PURCHASED      TOTAL CONSIDERATION
                                            --------------------   ----------------------
                                                                                            AVERAGE PRICE
                                              NUMBER     PERCENT      AMOUNT      PERCENT     PER SHARE
                                            ----------   -------   ------------   -------   -------------
<S>                                         <C>          <C>       <C>            <C>       <C>
Existing stockholders.....................  24,335,255     79.3%   $      5,832       --(1)         --(2)
New investors.............................   5,600,000     18.3     100,800,000       89%      $ 18.00
GEPT (GEPT Private Placement only)........     744,713      2.4      12,500,000       11         16.79
                                            ----------     ----      ----------     ----
  Total...................................  30,679,968      100%   $113,305,832      100%
                                            ==========     ====      ==========     ====
</TABLE>
    
 
- ---------------
 
   
(1) Less than 1%.
    
 
   
(2) Less than $.01 per share.
    
 
   
     The above tables assume no exercise of any outstanding stock options. There
were 1,212,450 shares of Common Stock reserved for issuance under the 1994 Stock
Plan, of which options to purchase an aggregate of 1,075,080 shares were
outstanding at March 31, 1996, with a weighted average exercise price of
approximately $3.01 per share. There were 2,121,787 shares of Common Stock
reserved for issuance under the 1996 Stock Plan, of which no options to purchase
shares were outstanding as of March 31, 1996. See "Management -- 1996 Stock
Plan," "Management -- 1994 Stock Plan" and Note 6 to Consolidated Financial
Statements.
    
 
   
     At March 31, 1996, there were 12,550 shares of 10% Series 3 Preferred Stock
outstanding which may be redeemed by the Company in whole or in part at any
time, subject to certain debt covenants and applicable provisions of state laws,
at a price of $1,000 per share plus any accumulated and unpaid dividends,
including accrued interest. The accumulated dividends in arrears on such
preferred stock (including accrued interest) as of March 31, 1996 were
approximately $5.2 million. Payment of these dividends would result in
additional dilution to the new investors of approximately $.17 per share.
    
 
                                       19
<PAGE>   24
 
                SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
 
   
     The following table sets forth certain selected historical and pro forma
financial data of the Company and its predecessor. The historical financial data
for the Company has been derived from the audited Consolidated Financial
Statements of the Company as of and for the periods ended December 31, 1992,
1993, 1994 and 1995. The historical financial data for the year ended December
31, 1991, and the period January 1, 1992 through August 14, 1992 relates to the
"Company's Predecessor", IXC Carrier, Inc., formerly known as Communications
Transmission Group, Inc., and has been derived from unaudited financial
statements. The historical financial data for the Company for the three-month
periods ended March 31, 1995 and 1996 has also been derived from unaudited
financial statements. The unaudited financial statements include all
adjustments, consisting of normal recurring accruals, which management considers
necessary for a fair presentation of the financial position and the results of
operations for such periods. Results of operations for the interim periods are
not necessarily indicative of the results of operations for the full year. The
pro forma data has been derived from the Unaudited Pro Forma Condensed
Consolidated Statement of Operations, which is included elsewhere herein. The
pro forma financial information is presented for informational purposes only and
is not necessarily indicative of the operating results that would have occurred,
nor are they necessarily indicative of future operations. The data should be
read in conjunction with the Consolidated Financial Statements, related Notes,
and other financial information included herein.
    
   
<TABLE>
<CAPTION>
                                             THE COMPANY'S PREDECESSOR                     THE COMPANY
                                             -------------------------   ------------------------------------------------
                                                                              HISTORICAL
                                             ----------------------------------------------------------------------------
                                                 YEAR       JANUARY 1     AUGUST 15
                                                ENDED        THROUGH       THROUGH           YEAR ENDED DECEMBER 31,
                                             DECEMBER 31,   AUGUST 14,   DECEMBER 31,   ---------------------------------
                                                 1991          1992          1992         1993          1994       1995
                                             ------------   ----------   ------------   --------      --------   --------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                          <C>            <C>          <C>            <C>           <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Net operating revenues.....................   $ 67,611     $ 42,081      $ 23,893     $ 71,123      $ 80,663   $ 91,001
  Operating expenses:
    Cost of services.........................     43,578       26,116        13,588       37,823        33,896     39,852
    Operations and administration............     20,721       11,226         6,759       22,835        20,561     32,282
    Depreciation and amortization............     20,135       10,517         8,033       21,061        12,121     17,438
                                               --------      --------       -------     --------       -------   --------
    Operating income (loss)..................    (16,823)      (5,778)       (4,487)     (10,596)       14,085      1,429
  Interest income............................        200           45            --          215           211        468
  Interest income on amounts in escrow.......         --           --            --           --            --      2,552
  Interest expense...........................    (31,461)     (18,749)       (1,398)      (4,943)       (6,105)   (14,597)
  Contract settlement costs..................         --           --        (2,000)         (59)           --         --
  Write-down of property and equipment.......         --           --            --      (37,960)           --         --
  Equity in net income (loss) of
    unconsolidated subsidiaries..............         --           --            --           --           (94)        19
  Benefit (provision) for income taxes.......          4          (77)        2,847       21,977        (3,157)     1,693
  Minority interest..........................         --           --           710         (446)           77      5,218
                                               --------      --------       -------     --------       -------   --------
  Income (loss) before extraordinary items...   $(48,080)    $(24,559)     $ (4,328)    $(31,812)(2)  $  5,017   $ (3,218)
  Extraordinary gain (loss)(3)...............         --           --            --        8,495         2,298     (1,747)
                                               --------      --------       -------     --------       -------   --------
  Net income (loss)..........................   $(48,080)    $(24,559)     $ (4,328)    $(23,317)     $  7,315   $ (4,965)
                                               ========      ========       =======     ========       =======   ========
  Income (loss) per common share, historical
    and pro forma:
    Before extraordinary items...............                                           $  (1.39)     $    .13   $   (.20)
    Extraordinary gain (loss)................                                                .35           .09       (.07)
                                                                                        --------       -------   --------
    Net income (loss)........................                                           $  (1.04)     $    .22   $   (.27)
                                                                                        ========       =======   ========
  Weighted average shares outstanding,
    historical...............................                                             24,026        25,011     25,128
                                                                                        ========       =======   ========
  Income (loss) per common share,
    as adjusted(4):
    Before extraordinary items...............                                                                    $   (.16)
    Extraordinary gain (loss)................                                                                        (.06)
                                                                                                                 --------
    Net income (loss)........................                                                                    $   (.22)
                                                                                                                 ========
  Weighted average shares outstanding,
    as adjusted(4)...........................                                                                      31,473
                                                                                                                 ========
 
<CAPTION>
 
                                                   PRO
                                                                  HISTORICAL
                                                              ------------------
                                                 FORMA(1)
                                               ------------   THREE MONTHS ENDED
                                                   YEAR
                                                  ENDED           MARCH 31,
                                               DECEMBER 31,   ------------------
                                                   1995        1995       1996
                                               ------------   -------   --------
 
<S>                                          <C<C>            <C>       <C>
STATEMENT OF OPERATIONS DATA:
  Net operating revenues.....................    $ 91,001     $21,766   $ 26,250
  Operating expenses:
    Cost of services.........................      39,852       8,175     15,600
    Operations and administration............      32,282       6,256     10,417
    Depreciation and amortization............      18,555       3,619      6,010
                                                 --------     -------   --------
    Operating income (loss)..................         312       3,716     (5,777)
  Interest income............................         468         111        126
  Interest income on amounts in escrow.......       2,552          --      2,557
  Interest expense...........................     (14,597)     (1,873)    (9,870)
  Contract settlement costs..................          --          --         --
  Write-down of property and equipment.......          --          --         --
  Equity in net income (loss) of
    unconsolidated subsidiaries..............          19          (4)        (5)
  Benefit (provision) for income taxes.......       3,873        (966)     1,363
  Minority interest..........................        (232)        283        (93)
                                                 --------     -------   --------
  Income (loss) before extraordinary items...    $ (7,605)    $ 1,267   $(11,699)
                                                 ========
  Extraordinary gain (loss)(3)...............                      --         --
                                                              -------   --------
  Net income (loss)..........................                 $ 1,267   $(11,699)
                                                              =======   ========
  Income (loss) per common share, historical
    and pro forma:
    Before extraordinary items...............    $   (.38)    $   .03   $   (.48)
                                                 ========
    Extraordinary gain (loss)................                      --         --
                                                              -------   --------
    Net income (loss)........................                 $   .03   $   (.48)
                                                              =======   ========
  Weighted average shares outstanding,
    historical...............................                  25,226     25,029
                                                              =======   ========
  Income (loss) per common share,
    as adjusted(4):
    Before extraordinary items...............    $   (.30)              $   (.39)
                                                 ========
    Extraordinary gain (loss)................                                 --
                                                                        --------
    Net income (loss)........................                           $   (.39)
                                                                        ========
  Weighted average shares outstanding,
    as adjusted(4)...........................                             31,373
                                                                        ========
</TABLE>
    
 
                                       20
<PAGE>   25
 
          SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA (CONTINUED)
   
<TABLE>
<CAPTION>
                                             THE COMPANY'S PREDECESSOR                     THE COMPANY
                                             -------------------------   ------------------------------------------------
                                                                              HISTORICAL
                                             ----------------------------------------------------------------------------
                                                 YEAR       JANUARY 1     AUGUST 15
                                                ENDED        THROUGH       THROUGH           YEAR ENDED DECEMBER 31,
                                             DECEMBER 31,   AUGUST 14,   DECEMBER 31,   ---------------------------------
                                                 1991          1992          1992         1993          1994       1995
                                             ------------   ----------   ------------   --------      --------   --------
                                                            (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                          <C>            <C>          <C>            <C>           <C>        <C>
BALANCE SHEET DATA:
  Cash(5)....................................   $  2,666     $  2,039      $  2,746     $  6,230      $  6,048   $205,181
  Total assets...............................    203,664      195,288       117,741       94,281       105,409    336,475
  Total debt(6)..............................    304,592      329,242        32,891       59,954        69,124    298,794
  Stockholders' equity (deficit).............   (137,990)    (164,432)       30,028        6,871        14,189      6,858
OTHER FINANCIAL AND OPERATIONS DATA:
  EBITDA(7)..................................      3,512        4,784         2,256       10,175        26,400     27,124
  Capital expenditures.......................        952           18         1,435       27,008         7,087     23,670
  Ratio of EBITDA to interest expense(8).....         --           --         1.61x        2.06x         4.32x      1.86x
  Minutes of use (in millions)...............         --           --            --           --            --       12.8
 
<CAPTION>
 
                                                                                
                                                   PRO                          
                                                 FORMA(1)         HISTORICAL    
                                               ------------   ------------------
                                                   YEAR       THREE MONTHS ENDED
                                                  ENDED           MARCH 31,
                                               DECEMBER 31,   ------------------
                                                   1995        1995       1996
                                               ------------   -------   --------
 
<S>                                            <C>            <C>       <C>
BALANCE SHEET DATA:
  Cash(5)....................................                 $ 6,293   $193,076
  Total assets...............................                 104,742    346,467
  Total debt(6)..............................                  66,686    311,331
  Stockholders' equity (deficit).............                  16,856     (4,841)
OTHER FINANCIAL AND OPERATIONS DATA:
  EBITDA(7)..................................      21,674       7,725      2,818
  Capital expenditures.......................      23,670       2,571     13,564
  Ratio of EBITDA to interest expense(8).....       1.48x       4.12x         --
  Minutes of use (in millions)...............        12.8          --       33.9
</TABLE>
    
 
- ------------
   
(1) The pro forma statement of operations data and the other financial and
    operations data for the year ended December 31, 1995 reflect the acquisition
    by the Company of the minority interest in SSC as if the acquisition (which
    actually occurred as of January 1, 1996) had occurred as of January 1, 1995.
    See Note 17 to the Consolidated Financial Statements.
    
 
   
(2) After giving effect to a $37,960 non-cash charge in 1993 relating to a
    write-down of microwave equipment. (As of March 31, 1996, the remaining net
    depreciated book value of microwave equipment was less than 6% of total
    assets.) See Note 8 to the Consolidated Financial Statements.
    
 
   
(3) The extraordinary items for all periods result from early extinguishment of
    debt (involving a related party in 1994) or lease obligations, net of
    applicable income taxes.
    
 
   
(4) Net income (loss) per common share as adjusted and weighted average shares
    outstanding as adjusted reflect the 744,713 shares issued in the GEPT
    Private Placement and the 5,600,000 shares issued in this Offering (assuming
    a Price to Public of $18.00 per share).
    
 
(5) Including $198,266 at December 31, 1995 and $187,584 at March 31, 1996 held
    in an escrow account. See Note 3 to the Consolidated Financial Statements.
 
(6) Total debt consists of long-term debt, capital lease obligations and
    deferred lease obligations, including the current portions thereof.
 
   
(7) EBITDA represents net income before depreciation, amortization, interest
    expense, income taxes and extraordinary items. For the year ended December
    31, 1993, EBITDA does not reflect the $37,960 write-down of microwave
    equipment recorded by the Company. (As of March 31, 1996, the remaining net
    depreciated book value of microwave equipment was less than 6% of total
    assets.) See Note 8 to the Consolidated Financial Statements. EBITDA for
    1995 and the three months ended March 31, 1996 includes the negative EBITDA
    of IXC Long Distance, Inc., the Company's switched long distance services
    subsidiary. Such amounts principally relate to start-up and operating
    expenses incurred before the Company began generating material revenues from
    its switched long distance business. Had the Company excluded the negative
    EBITDA of the switched long distance business, EBITDA would have been
    $36,916 in 1995 and $8,675 and $11,143 for the three months ended March 31,
    1995 and 1996, respectively. The Company has included information concerning
    EBITDA because it believes that EBITDA is used by certain investors as one
    measure of an issuer's historical ability to service its debt. EBITDA is not
    a measurement determined in accordance with GAAP and should not be
    considered in isolation or as a substitute for measures of performance
    prepared in accordance with GAAP. For 1995 and the three months ended March
    31, 1996, EBITDA included $2,552 and $2,557, respectively, of interest
    income relating to amounts held in escrow. See the Consolidated Financial
    Statements.
    
 
   
(8) For the year ended December 31, 1991, the period January 1 through August
    14, 1992 and the three months ended March 31, 1996, EBITDA was insufficient
    to cover interest expense by $27,949, $13,965 and $7,052, respectively. For
    the three months ended March 31, 1996, the Company paid the interest accrued
    with funds from the escrow account referred to in footnote (5).
    
 
                                       21
<PAGE>   26
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company provides two principal services to long distance companies: (i)
long-haul transmission of voice and data over dedicated circuits and (ii)
switched long distance services. The Company is one of only five carriers to own
a digital telecommunications network extending from coast-to-coast. Its
facilities include digital switches located in Los Angeles, Dallas, Chicago,
Philadelphia and Atlanta.
 
     Long-Haul Business.  Substantially all of the Company's revenues in 1995
and prior years were generated by its long-haul business, which has historically
provided positive cash flow (even in years when the Company had net losses, as
in 1993 and 1995). The Company provides long-haul service to customers either on
a "take or pay" long-term basis or, after contract expiration, on a
month-to-month basis. The Company's long-haul transmission agreements are
generally long-term leases which provide for monthly payment in advance on a
fixed-rate basis, calculated according to the capacity and length of the circuit
used. As of April 30, 1996, the Company had "take or pay" commitments from its
long-haul customers of approximately $160.0 million (consisting of approximately
$90.0 million relating to circuits currently in service and approximately $70.0
million relating to circuits not yet ordered that the Company expects will be
carried over leased routes or routes being constructed). During 1995, the
Company leased transmission capacity to 212 customers, with the ten largest
customers during that year accounting for approximately 78% of revenues. The
Company's two largest customers, WorldCom and Frontier, accounted for
approximately 20% and 21%, respectively, of the Company's revenues in 1995. See
"Risk Factors -- Dependence on Major Customers."
 
   
     Substantially all of the costs of communication services of the long-haul
business are fixed. The largest component of such costs for the long-haul
business is the expense of leasing off-net capacity from other carriers to meet
customer needs which the Company cannot meet with its own network due to
capacity or geographic constraints. In the normal course of business, the
Company enters into capacity-exchange agreements with other carriers. Pursuant
to such agreements, the Company exchanges excess capacity on its network where
required by the other carrier for capacity on the other carrier's network where
the Company requires it. As such agreements generally do not provide for cash
payments to be made, they allow the Company to substantially reduce the cash
payments it must make for off-net capacity from other carriers. Such exchanges
are accounted for at the fair value of the capacity exchanged, as non-cash
revenue and expense in equal amounts, which reduces the Company's overall gross
margin as a percentage of revenues. In 1995, the Company recorded revenue and
expense of $13.8 million relating to such exchanges. In addition, certain
right-of-way arrangements in connection with the Fiber Expansion constitute
operating leases and will contribute to the cost of communications services in
the future. The amount of such operating leases for prior periods has been
immaterial.
    
 
   
     Switched Long Distance Business.  The Company has recently expanded into
the business of selling switched long distance services to long distance
resellers. The Company sells switched long distance services on a per-call
basis, charging by MOUs, with payments due monthly in arrears after services are
rendered. The Company's rates for calls generally vary with the duration of the
call, the day and time of day the call was made and whether the traffic is
intrastate, interstate or international. The Company has contracts with over 30
long distance resellers. See "Business -- Switched Long Distance Services."
    
 
   
     The three main components of the costs of the switched long distance
business are LEC access charges, long-haul network leasing costs and operations
and administration expenses. The LEC access charges, which are variable,
represent a significant majority of the total cost for the switched long
distance business. After the Fiber Expansion is placed in service, the Company
expects to realize cost savings for the switched long distance business because
it will be able to reduce the amount of long-haul network capacity that
otherwise would be required to be leased from other parties. However, even after
the Fiber Expansion is complete, the Company anticipates that it will need to
lease a significant amount of capacity from other carriers as traffic increases
and that, as a result, its total transmission lease costs will continue to
increase. Because the switched
    
 
                                       22
<PAGE>   27
 
long distance business generally has lower margins than the long-haul business,
increases in switched long distance volumes should cause a decrease in the
Company's overall margins.
 
   
     During 1995, the Company set up the infrastructure for its switched long
distance business by installing its switches, connecting them to its network and
to the LECs, leasing related long-haul circuits, acquiring software and hiring
personnel and entering into contracts with customers. The Company's switched
network became fully operational in February 1996 and the Company did not have
material revenues from the switched long distance business during 1995. The
development and further expansion of the Company's switched long distance
business requires significant expenditures, a substantial portion of which will
be incurred before the realization of cash flow from such activities. The
Company anticipates that its switched long distance business will incur negative
cash flow until the Company's customers route sufficient traffic over the
network to cover the costs of its operation, which the Company does not expect
to occur before the end of 1996. For a discussion of important factors that
could cause the Company's switched long distance business to fail to generate
positive cash flows as described, see "Risk Factors -- Development Risks and
Dependence on Switched Long Distance Business." The Company will fund such
negative cash flow from cash flow from its long-haul business and cash on hand.
If such traffic does not increase, there can be no assurance that the switched
long distance business will ever generate positive cash flows. See "Risk
Factors -- Negative Cash Flow and Capital Requirements," "Risk
Factors -- Development Risks and Dependence on Switched Long Distance Business"
and "Risk Factors -- Recent and Expected Losses."
    
 
   
     Capital Expenditures.  The Company has spent significant amounts of capital
to develop its coast-to-coast network to service its long-haul and switched long
distance businesses. It is currently undertaking the Fiber Expansion of its
network in two phases. The Company estimates that it will spend approximately
$200.0 million for capital expenditures in the remaining three quarters of 1996
and significant amounts thereafter. However, the amount of actual capital
expenditures may vary materially as a result of cost-saving arrangements,
unexpected costs and other factors. See "-- Liquidity and Capital Resources."
    
 
   
     Pricing; Net Losses.  The Company expects that, as competition increases,
prices for both long-haul and switched services will decline. The Company
incurred an operating loss during the first quarter of 1996 and expects to incur
an operating loss for the full year due to the switched long distance business.
After the Fiber Expansion is placed in service, the Company expects to realize
cost savings by reducing the amount of off-net capacity it leases from other
carriers. However, reductions in lease expense as a result of the Fiber
Expansion will be offset to some extent by increased depreciation expense as the
investment in the Fiber Expansion is depreciated.
    
 
   
     Acquisition and Financing Transactions. In 1994, the Company and Excel, a
large long distance reseller, formed Switched Services Communications, L.L.C.
("SSC"), a joint venture, to lease, install and operate the five switches
incorporated into the Company's network and to provide switched long distance
services to the Company and Excel. In January 1996, the Company purchased
Excel's interest in SSC for a short-term non-interest bearing note for
approximately $6.2 million, to be paid in installments through August 1996.
Excel continues to have a contractual commitment to use the Company's network.
See "Business -- Switched Long Distance Services -- Excel."
    
 
     In August 1994, IXC Communications acquired an 85% interest in MSM
Associates, Limited Partnership ("MSM"), which owns fiber capacity in Michigan
and Indiana, from GE Capital Corporation. Frontier, the owner of the remaining
15% minority interest of MSM, is a customer of the Company. See Note 1 to
Consolidated Financial Statements.
 
     In October 1995, the Company issued $285.0 million of Senior Notes
primarily to finance a portion of Phase I of the Fiber Expansion. See
"Description of Certain Indebtedness."
 
   
     Marca-Tel, a joint venture in which the Company indirectly holds a minority
interest, has been successful in obtaining a license from the Mexican government
to provide certain telecommunication services in Mexico, but is not currently
providing such services. See "Business -- Mexican Joint Venture."
    
 
                                       23
<PAGE>   28
 
QUARTERLY RESULTS OF OPERATIONS
 
   
     The following table presents certain unaudited quarterly financial
information for each of the Company's last five fiscal quarters. In the opinion
of the Company's management, this quarterly information has been prepared on the
same basis as the audited financial statements appearing elsewhere in this
Prospectus and includes all adjustments (which consist only of normal recurring
adjustments) necessary to present fairly the unaudited quarterly results set
forth herein. The Company's quarterly results have in the past been subject to
fluctuations, and thus, the operating results for any quarter are not
necessarily indicative of results for any future period. The Company may
experience substantial fluctuations in quarterly results in the future as a
result of customer turnover, variations in the success of its customers'
businesses and price competition. These fluctuations may be particularly large
as a percentage of revenue over the near term, because the Company has recently
entered the switched long distance business. In addition, delays in completion
of the Fiber Expansion could cause quarterly results to vary.
    
 
   
<TABLE>
<CAPTION>
                                                                   QUARTER ENDED
                                             ----------------------------------------------------------
                                                                  1995                           1996
                                             -----------------------------------------------   --------
                                             MARCH 31   JUNE 30   SEPTEMBER 30   DECEMBER 31   MARCH 31
                                             --------   -------   ------------   -----------   --------
                                                   (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                          <C>        <C>       <C>            <C>           <C>
STATEMENT OF OPERATIONS DATA:
  Net operating revenues:
     Long-haul circuits....................  $21,766    $22,721     $ 22,772       $22,304     $ 22,628
     Switched long distance................       --         --           --         1,438        3,622
                                             -------    -------      -------       -------     --------
       Net operating revenues..............   21,766     22,721       22,772        23,742       26,250
  Operating expenses:
     Cost of services......................    8,175      8,210       10,423        13,044       15,600
     Operations and administration.........    6,256      6,987        8,604        10,435       10,417
     Depreciation and amortization.........    3,619      3,995        4,645         5,179        6,010
                                             -------    -------      -------       -------     --------
       Total operating expenses............   18,050     19,192       23,672        28,658       32,027
                                             -------    -------      -------       -------     --------
  Operating income.........................  $ 3,716    $ 3,529     $   (900)      $(4,916)    $ (5,777)
                                             =======    =======      =======       =======     ========
  Income before extraordinary gain
     (loss)................................  $ 1,267    $ 1,502     $   (307)      $(5,680)    $(11,699)
                                             =======    =======      =======       =======     ========
  Net income (loss)........................  $ 1,267    $   496     $   (307)      $(6,421)    $(11,699)
                                             =======    =======      =======       =======     ========
  Income loss per common share
     Before extraordinary gain (loss)......  $   .03    $   .04     $   (.03)      $  (.24)    $   (.48)
     Extraordinary gain (loss).............       --       (.04)          --          (.03)          --
                                             -------    -------      -------       -------     --------
     Net income (loss).....................  $   .03    $    --     $   (.03)      $  (.27)    $   (.48)
                                             =======    =======      =======       =======     ========
OTHER FINANCIAL AND OPERATIONS DATA:
  EBITDA (1)...............................  $ 7,725    $ 8,223     $  5,884       $ 5,292     $  2,818
                                             =======    =======      =======       =======     ========
</TABLE>
    
 
- ------------
(1) EBITDA represents net income before depreciation, amortization, interest
    expense, income taxes and extraordinary items. The Company has included
    information concerning EBITDA because it believes that EBITDA is used by
    certain investors as one measure of an issuer's historical ability to
    service its debt. EBITDA is not a measurement determined in accordance with
    GAAP and should not be considered in isolation or as a substitute for
    measures of performance prepared in accordance with GAAP. For the quarters
    ended December 31, 1995 and March 31, 1996, EBITDA included $2,552 and
    $2,557, respectively, of interest income relating to amounts held in escrow.
    See the Consolidated Financial Statements.
 
RESULTS OF OPERATIONS
 
   
     Net operating revenues for April 1996 were $10.9 million, an increase of
49.3% from $7.3 million in April 1995. The increase in revenues is primarily a
result of Excel beginning to use the Company's network on February 15, 1996 and
the provision of switched long distance services to other customers. By October
1996, Excel is required to utilize at least 70 million minutes of traffic per
month over the Company's network. See "Business -- Switched Long Distance
Services -- Excel."
    
 
                                       24
<PAGE>   29
 
THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1995
 
     Net operating revenues for the three months ended March 31, 1996 increased
20.6% to $26.3 million from $21.8 million in the three months ended March 31,
1995. The increase is primarily a result of the implementation of the switched
long distance business (particularly for Excel), leading to switched long
distance services revenues of $3.6 million, together with a volume increase from
the long-haul business of $.9 million or 4%.
 
   
     Cost of communication services consists principally of access charges paid
to LECs and transmission lease payments to, and exchanges with, other carriers.
For the three months ended March 31, 1996 cost of communication services
increased 90.2% to $15.6 million from $8.2 million in the three months ended
March 31, 1995. The increase is primarily a result of the addition of long-haul
leases of $4.5 million relating to the switched long distance business, an
aggregate of $2.9 million of per minute overflow charges paid to other carriers
and access charges paid to LECs in connection with the switched long distance
business. The Company did not incur these expenses for the switched long
distance business in the first quarter of 1995. The Company has historically had
a relatively low cost of communications services as a percentage of revenues
because substantially all its revenues were derived from the sale of long-haul
transmission, which were generally made at a relatively low cost over its own
network. The Company expects that, in the event it achieves increases in
long-haul revenues, its cost of communications services as a percentage of such
revenues will increase (at least until Phase I of the Fiber Expansion is
complete) because additional leases (or exchanges) of capacity from other
carriers at a relatively high cost will be required. The cost of communications
services as a percentage of revenues in the switched long distance business is
substantially greater than that in the long-haul business due to the relatively
high cost of LEC access charges and leases for long-haul circuits supporting the
switched network. Accordingly, increases in switched long distance revenues will
further increase the Company's cost of communications services as a percentage
of revenues.
    
 
     Operations and administration expenses for the three months ended March 31,
1996 increased 65.1% to $10.4 million from $6.3 million in the three months
ended March 31, 1995. This increase is primarily the result of operating
expenses associated with the Company's switched network. The Company anticipates
that as it implements the Fiber Expansion and expands its switched service
business, operations and administration expenses will continue to increase.
 
     Depreciation and amortization for the three months ended March 31, 1996
increased 66.7% to $6.0 million from $3.6 million in the three months ended
March 31, 1995. The increase is primarily the result of depreciation related to
capital expenditures associated with the Company's expansion and improvement of
its switched network. Depreciation and amortization will increase in subsequent
periods, as the Company's investment in the Fiber Expansion is depreciated.
 
     Interest income for the three months ended March 31, 1996 increased to $2.7
million from $.1 million in the three months ended March 31, 1995. The increase
is primarily related to interest earned on the investment of the proceeds from
the sale of the Senior Notes.
 
     Interest expense for the three months ended March 31, 1996 increased to
$9.9 million from $1.9 million in the three months ended March 31, 1995. The
increase is primarily the result of interest expense attributable to the Senior
Notes, which were issued during the fourth quarter of 1995.
 
     Income taxes for the three months ended March 31, 1996 resulted in a $1.4
million tax benefit as opposed to a provision for income taxes of $1.0 million
in the three months ended March 31, 1995. The difference between the tax benefit
recorded for the first quarter of 1996 and the expected benefit at the federal
statutory rate is primarily due to losses incurred by a subsidiary that provides
switched long distance services. The related tax benefits have not been
recognized as a result of uncertainty regarding future profitability.
 
     The Company experienced a net loss of $11.7 million for the three months
ended March 31, 1996 as opposed to net income of $1.3 million in the first three
months ended March 31, 1995 as a result of the factors discussed above.
 
                                       25
<PAGE>   30
 
1995 COMPARED WITH 1994
 
   
     The year ended December 31, 1995 was a period of increased revenues, but a
net loss for the Company, primarily due to start-up and operational expenses
related to the Company's switched long distance business. Reduced operating
income and a significant increase in interest expense because of the issuance of
the Senior Notes during the fourth quarter of 1995 resulted in a net loss for
the year.
    
 
   
     Net operating revenues for 1995 increased 12.8% to $91.0 million from $80.7
million in 1994. The increase is primarily the result of: (i) an increase in
non-cash revenues attributable to network capacity exchanged with other carriers
from $8.0 million in 1994 to $13.8 million in 1995; (ii) additional revenue in
the amount of $5.4 million associated with MSM (IXC Communications' 85% interest
in MSM was acquired in August 1994); and (iii) increased long-haul traffic in
the amount of $1.6 million due to the Company's expansion of its fiber optic
network in South Texas. These increases were partially offset by $2.5 million in
proceeds from an escrow account used to supplement lease payments in 1994, which
did not occur in 1995 (see Note 5 to the Consolidated Financial Statements).
    
 
   
     Cost of communication services for 1995 increased 17.7% to $39.9 million
(or 43.8% of net operating revenues) from $33.9 million (or 42.0% of net
operating revenues) in 1994. The increase is primarily a result of an increase
in transmission lease expense (to $38.7 million in 1995 from $29.3 million in
1994) associated with: (i) an increase of $3.6 million in leases for
transmission services primarily to support the switched long distance business;
and (ii) an increase in non-cash expense attributable to network capacity
exchanged with other carriers from $8.0 million in 1994 to $13.8 million in
1995. These increases were partially offset by a non-recurring decrease in lease
expenses under certain operating equipment leases as a result of a May 1994
lease restructuring (such leases generated no expense in 1995 as opposed to $3.4
million in 1994).
    
 
     Operations and administration expenses for 1995 increased 56.8% to $32.3
million from $20.6 million in 1994. The increase is primarily the result of $9.4
million of start-up and operating expenses associated with the Company's
implementation of its switched network and the inclusion in the Company's
results of operations of an increase in the Company's operating expenses of $1.1
million associated with the MSM network.
 
     Depreciation and amortization for 1995 increased 43.8% to $17.4 million
from $12.1 million in 1994. The increase is primarily the result of depreciation
associated with the MSM network, together with increased depreciation associated
with the Company's development of its switched network.
 
     Interest income for 1995 increased to $3.0 million from $.2 million in
1994. The increase is primarily related to interest earned on investment of the
proceeds from the sale of the Senior Notes issued in the fourth quarter of 1995.
 
     Interest expense for 1995 increased to $14.6 million from $6.1 million in
1994. The increase is primarily the result of interest expense attributable to
the Senior Notes issued in the fourth quarter of 1995.
 
     Income taxes for 1995 resulted in a $1.7 million tax benefit as opposed to
a provision for income taxes of $3.2 million in 1994. In 1995 and 1994, the
Company's effective tax rate did not significantly differ from the federal
statutory rate.
 
     Minority interest during 1995 was $5.2 million resulting primarily from
Excel's share of operations and administration expenses and the cost of
communications services associated with its minority share of SSC, a joint
venture formed in 1995. In January 1996 the Company purchased Excel's interest
in SSC, thereby eliminating the minority interest in SSC for 1996 and future
years.
 
     In 1994, the Company exercised a debt prepayment option in connection with
financing of debt that resulted in a net extraordinary gain of $2.3 million.
 
     The Company experienced a net loss of $5.0 million in 1995 as opposed to
net income of $7.3 million in 1994 as a result of the factors discussed above.
 
                                       26
<PAGE>   31
 
   
1994 COMPARED WITH 1993
    
 
   
     Net operating revenues for 1994 increased 13.5% to $80.7 million from $71.1
million in 1993. The increase is primarily attributable to: (i) an increase in
non-cash revenues generated from network capacity exchanged with other carriers
from $3.7 million in 1993 to $8.0 million in 1994; (ii) the acquisition of an
85% interest in MSM in August 1994 resulting in an additional $2.7 million of
net operating revenues; and (iii) the extension of the Company's fiber optic
network in South Texas.
    
 
   
     Cost of communications services in 1994 decreased 10.3% to $33.9 million
(or 42.0% of net operating revenue) from $37.8 million (or 53.2% of net
operating revenue) in 1993. The decrease is primarily the result of significant
reductions in certain operating equipment lease expenses due to the acquisition
of such equipment by the Company in May 1994 resulting in the elimination of all
future expense charges associated with such operating leases (such lease expense
for 1994 was $3.4 million as opposed to $11.2 million in 1993) partially offset
by an increase of $4.2 million in network capacity exchanged with other carriers
in 1994 as compared to 1993. During 1993, the Company capitalized $2.0 million
for long term contracts with a common carrier for capacity on such carrier's
nationwide fiber optic communications system, which purchase price and related
costs were deferred and are being recognized over the five year term of the
contract. See Note 11 to the Consolidated Financial Statements.
    
 
     Operations and administration expenses for 1994 decreased 9.6% to $20.6
million from $22.8 million in 1993. The decrease is primarily the result of
certain nonrecurring deferred compensation obligations of the Company incurred
in 1993.
 
     Depreciation and amortization in 1994 decreased 42.7% to $12.1 million from
$21.1 million in 1993. The decrease primarily is the result of a write-down of
$38.0 million of the carrying value of certain dated microwave equipment to its
estimated fair value in 1993. The write-down resulted from the Company's
assessment of estimated future net cash flows expected to be produced by the
equipment in relation to its net historical cost of the system. See Note 8 to
the Consolidated Financial Statements.
 
     Interest expense in 1994 increased 24.5% to $6.1 million from $4.9 million
in 1993. The increase is the result of increased average debt balances in 1994,
primarily associated with the acquisition of MSM and the construction of the
South Texas fiber extension.
 
     Income taxes for 1994 resulted in a provision for income taxes of $3.2
million as opposed to a tax benefit of $22.0 million in 1993. The increase is
primarily attributable to a tax benefit related to the equipment write-down in
1993.
 
     Extraordinary gains in 1994 decreased to $2.3 million from $8.5 million in
1993 in connection with the refinancing of certain operating lease arrangements
(see Note 5 to the Consolidated Financial Statements). In connection with such
transaction, financing was obtained which provided for a prepayment option. The
prepayment option was exercised by the Company in 1994 resulting in additional
gains.
 
     Net income increased $30.6 million in 1994 to $7.3 million from a net loss
of $23.3 million in 1993 as a result of the factors discussed above.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Except for the historical information contained below, the matters
discussed in this section are forward-looking statements that involve a number
of risks and uncertainties. The Company's actual liquidity needs, capital
resources and results may differ materially from the discussion set forth below
in such forward-looking statements. For a discussion of the factors that could
materially affect such matters, see "Risk Factors," particularly "Risk
Factors -- Negative Cash Flow and Capital Requirements."
 
   
     The Company's operations have historically provided positive cash flow
(even in years of net losses, as in 1993 and 1995), which to date has provided
adequate liquidity to meet the Company's operational needs. However, for 1995
and the three months ended March 31, 1996, the Company's EBITDA minus interest
expense and capital expenditures (adjusted for the change in working capital
deficit) was negative $4.8 million and negative $38.5 million, respectively. The
Company had $152.9 million of the net proceeds received from
    
 
                                       27
<PAGE>   32
 
   
the sale of the Senior Notes in an escrow account at May 31, 1996 to be used at
the Company's discretion for the Fiber Expansion, debt service of the Senior
Notes and other capital expenditures.
    
 
   
     Cash provided by operating activities in 1995 decreased 32.6% to $9.1
million from $13.5 million in 1994, primarily as a result of start-up and
operational expenses associated with the Company's development of its switched
services business in advance of related revenue. In order to offer switched
services, the Company set up the infrastructure for its switched long distance
business by installing switches, connecting them to its network and to the LECs,
leasing related long-haul circuits, acquiring software, hiring personnel and
entering into contracts with customers, which caused the Company's switched long
distance business to incur negative cash flow in 1995. The Company anticipates
that its switched long distance business will incur negative cash flow until the
Company's customers route sufficient traffic over the network to cover the costs
of its operation, which the Company does not expect to occur before the end of
1996. For a discussion of important factors that could cause the Company's
switched long distance business to fail to generate positive cash flows as
described, see "Risk Factors -- Development Risks and Dependence on Switched
Long Distance Business" and "Risk Factors -- Negative Cash Flow and Capital
Requirements."
    
 
   
     Cash used in investing activities increased to $219.4 million in 1995 from
$18.8 million in 1994 due to the Company investing the proceeds of the sale of
the Senior Notes in liquid securities and increased capital expenditures
associated with the Company's implementation of its switch network. The
Company's total capital expenditures were $23.7 million for 1995 and $13.6
million the first quarter of 1996. The Company anticipates making additional
capital expenditures for the remaining three quarters of 1996 of approximately
$200.0 million (including capital expenditures relating to the Fiber Expansion).
The Company expects to make such capital expenditures with the proceeds of this
Offering, together with a portion of the cash held in an escrow account ($152.9
million at May 31, 1996), cash generated by the long-haul business and vendor
financing which the Company may seek. The Company will also make additional
capital expenditures for various improvements and upgrades, such as adding
capacity to its switches and adding new switches, as demand warrants.
    
 
   
     Cash generated from financing activities increased to $211.2 million in
1995 from $5.1 million in 1994 as a result of the proceeds of the sale of the
Senior Notes and capital contributions of $6.0 million from Excel to support its
minority interest in the SSC joint venture. In January 1996, the Company
purchased Excel's interest in the joint venture for a short-term, non-interest
bearing promissory note in an original principal amount of approximately $6.2
million, an amount equal to Excel's total capital contribution. Such amount is
being paid in installments through August 1996. As of March 31, 1996, $5.7
million was outstanding under such note. The Company currently anticipates that
such installment payments will be made from the Company's current cash balances
and from operating cash flow from the long-haul business.
    
 
   
     The Company anticipates that Phase I of the Fiber Expansion will require
estimated cash expenditures subsequent to April 30, 1996 of $213.0 million. The
Company anticipates meeting the construction costs for the Phase I of the Fiber
Expansion (net of certain cost-saving arrangements) by utilizing all the funds
remaining from the Senior Notes being held in an escrow account (after reserving
certain funds to cover a portion of the interest payments in 1996 and 1997) and
the proceeds from this Offering. For a discussion of important factors that may
cause actual capital expenditures and the Company's ability to fund Phase I to
differ materially from the foregoing forward looking statements, see "Risk
Factors -- Negative Cash Flow and Capital Requirements." The Company has entered
into one such cost-saving arrangement with WorldCom in which each company is
constructing a fiber route and placing fibers for both companies in the route.
See "Business -- The Company's Network." The Company will seek to meet the costs
of construction of Phase II, which it estimates to be $275.0 million (before any
cost-savings arrangements), through additional cost-saving arrangements, its
operating cash flow and additional debt or equity financing. In the event
sufficient cost-saving arrangements are not entered into, the Company
anticipates that it will be necessary either: (i) to meet the remaining costs of
Phase II of the Fiber Expansion through a combination of additional sales of
equity securities, incurrence of debt (subject to the restrictions set forth in
the indenture for the Senior Notes) and utilization of operating cash flow; or
(ii) to slow or delay the construction of the Fiber Expansion until sufficient
funds are available. See "Risk Factors -- Risks Relating to Completion of the
Fiber Expansion."
    
 
                                       28
<PAGE>   33
 
     The Company is required to make interest payments in the amount of $35.6
million on the Senior Notes each year. See "Description of Certain
Indebtedness." EBITDA is currently insufficient to cover the Company's debt
service requirements under the Senior Notes. The Company currently anticipates,
but no assurance can be given, that a portion of such payments during 1996 and
1997 will be made from funds held in the escrow account and the balance of such
payments will be made from operating cash flow. For a discussion of important
factors, including the Company's assumption that increases in its operating cash
flow will occur as a result of the successful completion and utilization of
Phase I of the Fiber Expansion and growth in the switched long distance
business, that may cause actual results to differ materially from the foregoing
forward-looking statements, see "Risk Factors -- Negative Cash Flow and Capital
Requirements" and "Risk Factors -- Development Risks and Dependence on Switched
Long Distance Business." In addition, at March 31, 1996, there were
approximately $5.2 million of accrued and unpaid dividends on the Series 3
Preferred Stock. Such dividends cumulate at an annual rate of 10% (based on the
liquidation preference) plus interest.
 
     The Company is also required to make minimum annual lease payments for
facilities, equipment and transmission capacity used in its operations. In 1996,
the Company is required to make payments of approximately $4.4 million on
capital leases and $10.6 million on operating leases. The Company expects to
incur additional operating lease costs in connection with obtaining rights of
way for the Fiber Expansion. See Note 5 to Consolidated Financial Statements.
 
     In connection with the Fiber Expansion, the Company has committed to pay
contractors to construct and install a portion of the fiber optic cable. As of
May 15, 1996 these commitments amounted to approximately: (i) $20.7 million for
construction and installation in Texas and (ii) $13.6 million for construction
and installation in Arizona. Also, under an agreement entered into in January
1996, the Company has a commitment to purchase $32.0 million of fiber optic
cable during a three-year term, with $25.0 million remaining as of May 15, 1996.
In June 1995, the Company entered into a three-year agreement with a common
carrier to purchase communication services, under which the Company is required
to purchase a monthly minimum of $350,000 in services. In September 1994, the
Company entered into an agreement with a common carrier to purchase dedicated
digital telecommunication services. Under the terms of the agreement, the
Company is required to purchase services with remaining monthly minimum
commitments of $.5 million through March 1998. The minimum commitments under
this agreement will be cancelled when the Company has paid a total of $22.5
million for services under the agreement. See Note 14 to Consolidated Financial
Statements.
 
   
     The Company is proceeding with the initial development and implementation
of a business plan for the Marca-Tel Mexican license. If implemented, the
development of the Marca-Tel business will require significant amounts of cash.
Although the Company cannot accurately predict its share of the amount of cash
that would be needed to pursue this opportunity, it estimates that at least
$30.0 million (and possibly significantly more) would be required by Marca-Tel
during 1996 - 1997. The $12.5 million proceeds of the GEPT Private Placement
will be available, if the Company so elects, to pursue the opportunity in
Mexico. The Company anticipates that the costs of pursuing such opportunity, if
they can be met at all, will be met through some combination of the following:
(i) offerings of debt or equity securities of the Mexican joint venture; (ii)
other incurrences of debt by the Mexican joint venture; (iii) joint venture
arrangements with third parties; (iv) vendor financing of equipment purchases;
and (v) further equity offerings or, subject to the restrictions imposed by the
indenture for the Senior Notes, debt incurrences by the Company or from working
capital. See "Business -- Mexican Joint Venture."
    
 
                                       29
<PAGE>   34
 
                               INDUSTRY OVERVIEW
 
DEVELOPMENT AND REGULATION
 
     The development of the long distance telecommunications industry was
strongly influenced by a 1982 court decree requiring the divestiture by AT&T of
its seven RBOCs and dividing the country into approximately 200 LATAs. The seven
RBOCs were allowed to provide local telephone service, local access service to
long distance carriers and intra-LATA long distance service (service within a
LATA), but were prohibited from providing inter-LATA service (service between
LATAs). The right to provide inter-LATA service was given to AT&T and the other
interexchange carriers, including the LECs that are not RBOCs. The FCC requires
all interexchange carriers to allow the resale of their inter-LATA services to
long distance carriers, and the 1982 court decree substantially eliminated
different access arrangements as distinguishing features among long distance
carriers. These and other legislative and judicial factors have helped smaller
long distance carriers emerge as alternatives to AT&T, MCI and Sprint for long
distance services.
 
   
     Recently, the federal government enacted the Telecommunications Act, which,
among other things, allows the RBOCs and others such as electric utilities and
cable television companies to enter the long distance business. The Company
expects that the Telecommunications Act will substantially alter the way in
which the telecommunications industry is regulated. Such changes are, however,
difficult to predict accurately, because the FCC has not yet developed the
numerous regulations necessary to implement the Telecommunications Act. Entry of
the RBOCs or other entities such as electric utilities and cable television
companies into the long distance business may result in reduced market shares
for existing long distance companies and additional pricing pressure on long
distance providers such as the Company. See "Risk Factors -- Competition," "Risk
Factors -- Recent Legislation and Regulatory Uncertainty" and
"Business -- Regulation."
    
 
MARKET AND COMPETITION
 
     General.  Companies in the domestic long distance market had estimated
revenues of $75.9 billion in 1995. AT&T is the largest long distance carrier,
with an estimated 56.5% of total market revenues in 1995, while MCI and Sprint
had an estimated 19.7% and 9.4%, respectively, of total market revenues in that
year. These three carriers constitute what generally is referred to as the
"first tier" in the long distance market. Medium-sized long distance companies,
some with national capabilities, such as WorldCom, Frontier, Cable & Wireless
and LCI, constitute the "second tier" of the industry and, cumulatively, are
believed to have accounted for approximately 8.9% of total market revenues in
1995. The remainder of the market share is held by smaller companies, which are
known as "third-tier" carriers. The Company provides long-haul services to
companies in all three tiers and switched long distance services to companies in
the third tier.
 
     According to data included in Long Distance Market Shares, Fourth Quarter
1995, an FCC report issued in March 1996, while long distance revenues grew at a
compound annual rate of over 8% during the period from 1989 through 1995, the
revenues of all carriers other than the first tier grew in the aggregate at a
compound annual rate of over 22% during the same period. Such analysis also
stated that the smaller second-tier and third-tier carriers increased their
market share sixfold over a ten-year period, increasing from less than 3% in
1984 to more than 17% in 1994. In addition, industry sources estimate that
combined revenues of second-tier and third-tier carriers grew by 17.9% in 1995.
 
     Competition among the Company's customers and other retail long distance
providers for end-user customers is based upon advertising, pricing, customer
service, network quality and value-added services. The Company believes that
AT&T, MCI and Sprint engage in only limited direct sales to small and
medium-sized commercial users, generally focusing on residential and large
commercial accounts, thus creating opportunities for smaller long distance
providers. Industry observers estimate that over 400 smaller companies have
emerged to compete in the long distance business. See "Risk
Factors -- Competition."
 
     Long-Haul Services.  Long distance companies may be categorized as
facilities-based carriers and non-facilities-based carriers. Sellers of
long-haul services are generally facilities-based carriers that own long-haul
transmission facilities, such as fiber optic cable or digital microwave
equipment. The first-tier and some second-tier long distance companies are
facilities-based carriers offering long-haul service nationwide.
 
                                       30
<PAGE>   35
 
   
Facilities-based carriers in the third tier of the market generally offer
long-haul services only in a limited geographic area. Customers using long-haul
services include: (i) facilities-based carriers that require long-haul capacity
where they have geographic gaps in their facilities, need additional capacity or
require geographically different alternative routing; and (ii)
non-facilities-based carriers requiring long-haul capacity to carry their
customers' long distance traffic. The Company's competitors in the long-haul
business include AT&T, MCI, Sprint and WorldCom and certain regional carriers.
Important competitive factors in the long-haul business are price, customer
service, network location and quality, reliability and availability. See
"Business -- Long-Haul Services."
    
 
   
     Switched Long Distance Services.  Long distance companies may be
characterized as switched or switchless carriers. Sellers of switched long
distance services are generally switched carriers, such as the Company, that own
one or more switches that direct telecommunications traffic. Facilities-based
carriers are generally switched carriers. However, many non-facilities based
carriers (i.e., many long distance resellers) have switches. The Company's
customers are switchless carriers that depend on switched carriers to provide
switched long distance services to their end users. The Company's competitors in
the switched long distance business include AT&T, MCI, Sprint, WorldCom and
Frontier and many non-facilities-based switched carriers. Important competitive
factors in the switched long distance business are customer service
(particularly with respect to speed in delivery of computer billing records and
set-up of new end users with the LECs), ability of the network to complete calls
with a minimum of network-caused busy signals, scope of services offered, price,
reliability and transmission quality.
    
 
CALL ROUTING
 
   
     An inter-LATA long distance telephone call begins with the caller's LEC
transmitting the call by means of its local switched network to a point of
connection with an interexchange carrier. The interexchange carrier, through its
switches and long-haul network, transmits the call to the called party's LEC,
which then completes the call over its local facilities. For each long distance
call, the originating LEC charges an access fee. The interexchange carrier also
charges a fee for its transmission of the call, a portion of which consists of a
fee charged by the LEC used to deliver the call. Under the Telecommunications
Act, state proceedings may in certain instances determine LEC access charge
rates. It is uncertain at this time what effect such proceedings may have on
such rates.
    
 
     The following diagram illustrates the routing of an inter-LATA telephone
call (the diagram assumes the carrier switches are not within the local dialing
areas of either the caller or called party.
 




                            [CALL ROUTING DIAGRAM]






                                       31
<PAGE>   36
 
TECHNOLOGY
 
     Telecommunications long-haul traffic generally is transmitted through
digital microwave or fiber optic equipment.
 
     Fiber Optic Systems.  Fiber optic systems use laser-generated light to
transmit voice and data in digital format through fine strands of glass. Fiber
optic systems are characterized by large circuit capacity, good sound quality,
resistance to external signal interference and direct interface to digital
switching equipment. A pair of modern fiber optic strands, using current
technology, is capable of carrying 192 DS-3s or over 129,000 simultaneous
telephone calls. Because fiber optic signals disperse over distance, they must
be regenerated at sites located along the fiber optic cable (on older fiber
optic systems the interval is 20 to 25 miles; on newer systems that utilize
modern fiber optic cable and splicing methods, such as will be used in the Fiber
Expansion, it is approximately 50 to 75 miles).
 
     Microwave Systems.  Although limited in capacity in comparison with fiber
optic systems (generally, no more than 28 DS-3s can be transmitted by microwave
between two antennae), digital microwave systems offer an effective and reliable
means of transmitting voice and data signals over intermediate and longer
distances. Microwaves are very high frequency radio waves that can be reflected,
focused and beamed in a line-of-sight transmission path. Because of their
electro-physical properties, microwaves can be used to transmit signals through
the air, with relatively little power. To create a communications circuit,
microwave signals are transmitted through a focusing antenna, received by an
antenna at the next station in the network, then amplified and retransmitted.
Because microwaves attenuate as they travel through the air, this transmission
process must be repeated at repeater stations, which consist of radio equipment,
antennae and back-up power sources, located on average every 25 miles along the
transmission network. As of March 31, 1996, the remaining net depreciated book
value of the Company's microwave equipment was less than 6% of total assets.
 
                                       32
<PAGE>   37
 
                                    BUSINESS
 
COMPANY OVERVIEW
 
     The Company provides two principal services to long distance companies: (i)
long-haul transmission of voice and data over dedicated circuits; and (ii)
switched long distance services. The Company is one of only five carriers to own
a digital telecommunications network extending from coast-to-coast (the other
carriers are AT&T, MCI, Sprint and WorldCom). Its facilities include digital
switches located in Los Angeles, Dallas, Chicago, Philadelphia and Atlanta. The
Company is currently engaged in a major expansion of its network, as described
below.
 
     The Company had revenues of approximately $91 million in 1995,
substantially all of which were generated by its long-haul business. The Company
has long-haul circuit contracts with over 200 long distance carriers, including
AT&T, MCI, Sprint, WorldCom, Cable & Wireless, Frontier and LCI. As of April 30,
1996, the Company had "take or pay" commitments from its long-haul customers of
approximately $160.0 million (consisting of approximately $90.0 million relating
to circuits currently in service and approximately $70.0 million relating to
circuits not yet ordered that the Company expects will be carried over leased
routes or routes being constructed). Long-haul transmission service is also
provided to customers after contract expiration on a month-to-month basis. The
Company's long-haul contracts provide for fixed monthly payments, generally in
advance. The Company has provided services to nine of its ten largest customers
for at least six years and, although sales volumes from particular customers
vary from year to year, has historically enjoyed a high customer retention rate
(annual customer retention has averaged over 90% from 1992-1995).
 
   
     The Company recently expanded into the business of selling switched long
distance services to long distance resellers in order to complement its
long-haul business and to capitalize on its ability to provide switched services
over its own network. Switched long distance services are telecommunications
services such as residential long distance services that are processed through
the Company's digital switches and carried over long-haul circuits and other
transmission facilities owned or leased by the Company. During 1995, the Company
set up the infrastructure for its switched long distance business by installing
its switches, connecting them to its network and to the LECs, acquiring
software, hiring personnel and entering into contracts with customers. The
Company's switched network became fully operational in February 1996. The
Company sells switched long distance services on a per-call basis, charging by
minutes of use ("MOUs"), with payment due monthly after services are rendered.
The Company believes that it is well-positioned to attract long distance
resellers as customers for its switched long distance services because: (i) it
is not currently a significant competitor for sales to end users; and (ii) it
provides more focused service to its reseller customers, since servicing such
customers is its primary business, unlike its major competitors whose main
business is selling retail long distance service to end-users.
    
 
   
     The Company has entered into switched long distance services contracts with
over 30 long distance resellers including Excel and GE Capital Communications.
Excel, a rapidly growing long distance reseller, first utilized the Company's
switched long distance services in February 1996. Excel has contracted to
increase its volume on the Company's network to a minimum of 70 million minutes
of traffic per month no later than October 1996. The Company's switched long
distance business has grown rapidly since its switched network became fully
operational in February 1996, with Excel accounting for most of the growth. The
Company's switched long distance revenues amounted to approximately $3.6 million
in the quarter ended March 31, 1996, (with $0.7 million in January 1996, $1.3
million in February 1996 and $1.6 million in March 1996), $3.1 million in April
1996 and $6.4 million in May 1996. Excel accounted for 17%, 67% and 76% of such
revenues for the quarter ended March 31, 1996, the month of April 1996 and the
month of May 1996, respectively. See "-- Switched Long Distance Services."
    
 
   
     The Company owns a coast-to-coast network containing over 1,700 fiber optic
route miles and over 5,000 digital microwave route miles. In addition, the
Company currently supplements its own facilities with a significant amount of
fiber optic capacity obtained from other carriers to service customers that
require capacity not available on the Company's own network.
    
 
                                       33
<PAGE>   38
 
   
     The Company is currently undertaking a major expansion of its network by
adding a substantial number of additional fiber route miles to increase the
Company's network capacity, allowing it: (i) to increase revenues by offering
its customers significantly more capacity on certain existing routes and
high-capacity on new routes; and (ii) to reduce costs by moving traffic from
capacity leased from other carriers to its own network. In this way, the Company
seeks to improve profitability and cash flow through increasing revenues and
decreasing certain costs. In addition, the Company seeks to create sufficient
capacity through the Fiber Expansion to support increased long-haul demand which
may result in the future from frame relay, ATM, multimedia, Internet and other
capacity-intensive applications. The Company seeks to construct the Fiber
Expansion over routes where one or more of the following factors are present:
(i) customer demand or historical demographic factors indicate a demand for
high-capacity fiber network on the route; (ii) the route is attractive as a
complement to the routes of other carriers, which may enable the Company to
lease its new capacity on the route to other carriers or exchange a portion of
its new capacity on the route for capacity from another carrier; or (iii) the
capacity will replace capacity otherwise leased by the Company from other
carriers.
    
 
     The principal executive offices of IXC Communications are located at 5000
Plaza on the Lake, Suite 200, Austin, Texas, 78746 and its telephone number is
(512) 328-1112.
 
BUSINESS STRATEGY
 
     The Company's primary business objectives over the near term are: (i) to
rapidly increase revenue from its switched long distance services business; (ii)
to substantially complete the backbone of Phase I of the Fiber Expansion in the
first quarter of 1997; and (iii) to utilize the expanded network to increase its
revenues and profitability.
 
     The key elements of the Company's strategy to achieve these objectives are:
 
   
     Reducing Costs.  The Company seeks to achieve substantial cost savings
through the Fiber Expansion by reducing the amount of capacity it would
otherwise obtain from other carriers. The Company incurred costs (including
through capacity exchanges) of $38.7 million for off-net fiber optic capacity
from other carriers in 1995. In the event the Company achieves revenue growth in
the long-haul business and the switched long distance business, its usage of
long-haul capacity (including capacity leased from other carriers) will
increase. The Company believes the Fiber Expansion will enable it to reduce
expenditures for capacity now leased off-net (and to reduce the additional
expenses for leasing capacity that would otherwise be required to support
revenue growth) and thereby increase its operating cash flow, because the new
fiber routes: (i) should carry much of the traffic that would otherwise be
transmitted over off-net circuits and (ii) may enable the Company to enter into
additional exchanges of fiber capacity with other carriers. See "-- The
Company's Network" and "Risk Factors -- Risks Relating to Completion of the
Fiber Expansion."
    
 
     Increasing Long-Haul Circuit Revenues.  The Company's ability to expand its
long-haul business has previously been limited because the existing network
owned by the Company is geographically limited and because the digital microwave
portion of its network has been utilized at or near its maximum practical
capacity. The Company seeks through the Fiber Expansion to install high-capacity
new routes and substantially increase the capacity of certain existing routes,
allowing the Company to lease additional circuits to its customers.
 
     Establishing a Platform for Capacity-Intensive Data Applications.  The
Company is using advanced (though commercially tested) fiber optic technology in
the Fiber Expansion. The expanded network will have SONET technology and the
broadband capabilities to provide a platform to support advanced, capacity-
intensive products such as frame relay, ATM, multimedia and Internet related
applications. See "-- The Company's Network" and "Risk Factors -- Risks Relating
to Completion of the Fiber Expansion."
 
     Providing Backup Routing for Major Carriers.  An area of substantial growth
in certain markets for the Company in recent years has been the provision of
circuits to facilities-based carriers such as AT&T, MCI, Sprint and WorldCom
(the other four companies that own coast-to-coast digital networks), to be used
as alternative routes by such carriers in the event of a service outage. Such
companies prefer alternative routes
 
                                       34
<PAGE>   39
 
separated geographically from their routes to increase the possibility that the
alternative route will be functional in the event of a natural disaster. The
Company has planned the Fiber Expansion to be separated geographically as far as
practicable from the existing fiber routes of such carriers. The Company
believes that the Fiber Expansion, with the resulting significant increase in
fiber optic geographic coverage and capacity, will greatly increase the
attractiveness of the Company's network as alternative routing to certain major
carriers as a backup to their own networks.
 
   
     Capitalizing on Excel Relationship.  The Company views Excel as the "anchor
tenant" of its switched network, potentially providing the Company with
significant traffic volumes on which to base its entry into the switched long
distance services business. The Company seeks to increase its share of the
traffic of Excel, which currently obtains the bulk of the switched long distance
services it requires from other carriers, through customer service, network
quality and geographic availability. See "-- Switched Long Distance Services --
Customers and Marketing." Excel recently announced that it entered into a
four-year, $900 million contract to purchase switched long distance services
from WorldCom. Although the Company believes that Excel's commitment to WorldCom
will not impair Excel's relationship with the Company, WorldCom will be a
significant competitor for Excel's business. See "Risk Factors -- Reliance on
Major Customers."
    
 
     Establishing Other Long-Term Relationships.  The Company seeks to establish
a dependable revenue stream through long-term relationships with its customers.
The Company has long-haul contracts (generally on a long-term basis) with over
200 long distance carriers, including AT&T, MCI, Sprint, WorldCom, Cable &
Wireless, Frontier and LCI. The Company has provided services to nine of its ten
largest customers for at least six years and, although sales volumes from
particular customers vary from year to year, has historically enjoyed a high
customer retention rate (annual customer retention has averaged over 90% from
1992-1995). Although the Company's five switches first became operational in the
fourth quarter of 1995, the Company has already entered into contracts with over
30 long distance resellers, including GE Capital Communication.
 
     Providing an Automated Software Interface.  The Company seeks to increase
its attractiveness to existing and potential customers of switched long distance
services by providing a sophisticated automated interface to the Company's
computer system through its proprietary IXC Online software. Utilizing IXC
Online, customers are able to access up-to-date information regarding their
end-user customers and the calls made by such end-users. IXC Online is designed
to allow each of the Company's carrier customers to: (i) download call detail
records for its end-users for billing purposes; (ii) arrange with the
appropriate LEC to register the carrier as the designated long distance carrier
for its new end-users; and (iii) file trouble reports for resolution.
 
   
     Acting as an Alternative Switched Long Distance Services Provider.  The
Company believes that it is well positioned to attract long distance resellers
as customers for its switched long distance services because: (i) it is not
currently a significant competitor for sales to end users; and (ii) it provides
more focused service to its reseller customers, since servicing such customers
is its primary business, unlike its major competitors (AT&T, MCI, Sprint, World
Com and Frontier) whose main business is selling retail long distance service to
end-users. See "-- Switched Long Distance Services" and "Risk
Factors -- Development Risks and Dependence on Switched Long Distance Business."
    
 
THE COMPANY'S NETWORK
 
  SERVICES
 
     The Company provides two basic services: (i) long-haul services; and (ii)
switched long distance services.
 
     Long-Haul Services.  A long-haul circuit is an unswitched
telecommunications transmission circuit used by customers, such as
non-facilities-based carriers that have switches but do not own transmission
facilities, to transport their already-switched traffic between LATAs. Calls
being transmitted over a long-haul circuit for a customer are generally routed
by the customer through a switch to a receiving terminal in the Company's
network. The Company transmits the signals over a long-haul circuit to the
terminal where the signals are to exit the Company's network. The signals are
then routed by the customer through another switch and to the
 
                                       35
<PAGE>   40
 
call recipient through a LEC. The Company typically bills the customers a fixed
monthly rate depending on the capacity and length of the circuit, regardless of
the amount the circuit is actually used. See "-- Long-Haul Services."
 
     Switched Long Distance Services.  Switched long distance services are
telecommunications services such as residential and commercial long distance
service that involve processing calls through the switches of a carrier. Among
the Company's switched long distance services product offerings are two basic
services: (i) call origination and termination services and (ii) call
termination services. For non-facilities-based carriers such as switchless
carriers, the Company provides call origination and termination. This generally
includes: (i) arranging with the caller's LEC to connect the call to the
Company's switching center (this is referred to as "origination") and (ii)
transmitting the call to another Company switching center or a hub connecting
the call to the recipient's LEC and arranging with the LEC to connect the call
to the recipient (this is referred to as "termination"). Other customers (for
example, non-facilities based carriers with regional switches in certain areas
but not in others) require termination but not origination services. In this
case, the customer delivers a call to the Company's switching center and the
Company terminates the call. The Company typically bills the customer at a
variable rate depending on the duration, day and time of day of the call and
whether the call is intrastate, interstate or international. See "-- Switched
Long Distance Services."
 
  FACILITIES
 
   
     The Company is one of only five carriers to own a coast-to-coast digital
network. The Company's owned network presently includes five digital switches
and over 6,800 route miles with a capacity of over 171,000 DS-3 miles (including
over 1,700 fiber optic route miles with capacity of over 114,000 DS-3 miles and
over 5,000 digital microwave route miles with a capacity of over 57,000 DS-3
miles). The Fiber Expansion, when completed, should increase the capacity
available to the Company to lease to its customers to over 300,000 DS-3 miles,
with significant additional capacity available when needed by the Company. See
the map depicting the network on the inside front cover of this Prospectus.
    
 
   
     The Company's own facilities are supplemented with over 87,000 DS-3 miles
of fiber optic capacity obtained from other carriers. Of such capacity, over
48,000 DS-3 miles are leased by the Company. Approximately 39,000 DS-3 miles of
such capacity are obtained by the Company through long-term capacity-exchange
agreements with MCI and WorldCom whereby the Company trades capacity or fibers
on its fiber network for capacity on the other carriers' networks. The Company
has been able to negotiate these significant exchange agreements because of the
placement of the Company's existing networks in locations where other
facilities-based carriers require additional capacity and the comparatively
large expense to such other carriers of constructing new fiber optic facilities.
Such exchange agreements increase the scope of the Company's network through the
addition of the exchanged capacity while reducing the Company's cash
expenditures for off-net facilities.
    
 
     The Company's network includes five digital switches located in Los
Angeles, Dallas, Chicago, Philadelphia and Atlanta, each directly connected over
either on-net or off-net long-haul circuits: (i) to at least two other switching
centers; (ii) to certain of the Company's over 30 Hubs (local connection
points); and (iii) to certain LEC Central Office switches. The Hubs are
connected (generally by off-net circuits) to LEC Central Office switches, which
in turn are connected to end-user telephone lines. The switches utilize common
channel signaling (SS7), which reduces connect time delays and directs calls
using least cost routing. The Company's switched operations are supplemented by
agreements with Allnet and WorldCom. Under such agreements, Allnet and WorldCom
supply switched capacity to the Company, automatically handling calls routed
through LEC Central Offices not connected to the Company's Hubs or switches and
calls which exceed the capacity of the Company's switched network.
 
   
     The capacity of the Company's switches may be expanded with processor
upgrades, additional memory and ports. The Company plans to add more ports and
other equipment for its existing switches and to add additional switches as
required to accommodate customer demand. While the Company cannot yet ascertain
the capital cost of such ports, additional equipment and switches, the Company
anticipates that it will be able,
    
 
                                       36
<PAGE>   41
 
subject to certain restrictions under the indenture relating to the Senior
Notes, to obtain such equipment under capital leases.
 
  NETWORK RELIABILITY
 
     The Company's network offers a reliable means of transmitting large volumes
of voice and data signals. To assist in providing reliable and high-quality
transmission service, all important functions of the network are monitored
during regular business hours from regional operations centers in Columbus,
Kansas City, Fort Worth and Tucson. Thereafter, monitoring is conducted from the
Company's national operations center in its Austin headquarters. The national
center also provides overall system monitoring on a 24-hour basis. This system
alerts the Company to situations which could affect customer transmission and
generally allows the Company to take remedial actions before customer service is
affected. In addition, the Company employs approximately 100 operations
personnel who are based along the network to perform preventative maintenance as
well as repair functions on its long-haul network. Company operations personnel
conduct annual system performance testing and make periodic unannounced visits
to terminal sites to evaluate technician performance. In addition, the Company
maintains a staff of 55 technicians to provide maintenance and other technical
support services for switched long distance services.
 
  FIBER EXPANSION
 
   
     The Company currently supplements its own facilities with over 87,000 DS-3
miles of fiber optic capacity leased from other carriers and incurred costs
(including through capacity exchanges) of $38.7 million in 1995 for such
capacity. This capacity is required because the digital microwave portion of the
Company's network is utilized at or near its maximum capacity and because the
Company's customers require capacity not available on the Company's own network.
The Company is currently undertaking the Fiber Expansion to add a substantial
number of additional route miles to increase its network capacity and geographic
scope. The Fiber Expansion will allow the Company to: (i) increase revenues by
offering to its customers significantly more capacity on certain existing routes
and high-capacity new routes; (ii) reduce costs by moving long-haul traffic from
circuits leased from other carriers to its own network; and (iii) support
increased long-haul circuit demand which may result in the future from frame
relay, ATM, multimedia, Internet and other capacity-intensive applications. The
Company estimates that the Fiber Expansion will produce additional cost savings
by supporting growth in its long-haul business and switched long distance
business which would otherwise require significant off-net capacity usage. The
Fiber Expansion will enable the Company to avoid increased expenditures for
leasing off-net capacity because the new fiber routes: (i) should carry much of
the traffic that would otherwise be transmitted over off-net circuits and (ii)
may enable the Company to enter into additional exchanges of fiber capacity with
other carriers. In this way, the Company seeks to improve cash flow through
increasing revenues and decreasing certain costs.
    
 
   
     Construction.  The Company has planned the Fiber Expansion to cover, to the
greatest extent practicable, routes where one or more of the following factors
are present: (i) customer demand indicates a need for high-capacity fiber
network on the route; (ii) the route is attractive as a complement to the routes
of other carriers, which may enable the Company to lease its new capacity on the
route to other carriers or exchange a portion of its new capacity on the route
for capacity from other carriers; or (iii) the capacity will replace capacity
leased by the Company from other carriers. The Company plans to complete the
Fiber Expansion in two phases along the following routes, which the Company
believes to be generally geographically diverse from the existing long-haul
fiber networks of AT&T, MCI, Sprint and WorldCom (the routes are subject to
change depending on the availability of certain cost-saving arrangements and the
Company's ability to reduce construction costs and enhance the benefits from the
routes to be constructed):
    
 
   
     (i)   Phase I will provide an approximately 4,000 mile fiber optic route to
supplement the Company's existing New York-Los Angeles route, which consists
primarily of digital microwave facilities. Phase I is planned to extend the
Company's existing New York-Philadelphia fiber optic route to Los Angeles over
new fiber optic cable through Chicago, Dallas and Phoenix.
    
 
                                       37
<PAGE>   42
 
   
     (ii)   Phase II is planned to include an approximately 3,100 mile fiber
optic route from New York via Atlanta to Houston, with spurs to Florida,
Louisiana and Texas.
    
 
     The proposed routes for the Fiber Expansion are set forth on a map on the
inside front cover page of this Prospectus.
 
     The Company intends to install and maintain a minimum of 48 fibers along
the backbone of the Fiber Expansion route. Because of the relatively low
incremental cost of additional strands of fiber, the Company may install
additional fiber in some segments of the Fiber Expansion route. The Company
plans generally to light initially only four of the new fibers (which will add
an aggregate of approximately 300,000 DS-3 miles to the Company's network).
Certain of the remaining fibers will be reserved and used as a platform to
support emerging capacity-intensive data and multimedia applications. The
Company intends to light certain additional fibers as needed in the future and
may use the other additional fibers for sale or exchange arrangements. See
" -- Business Strategy" and "Risk Factors -- Risks Relating to Completion of the
Fiber Expansion."
 
   
     The Company has already begun the Fiber Expansion, with the backbone of
Phase I scheduled to be substantially completed and in service in the first
quarter of 1997. A portion of Phase I is being constructed in connection with an
agreement entered into with WorldCom in December 1995 (the "WorldCom Fiber Build
Agreement"). Pursuant to this agreement, each company is constructing a fiber
route approximately 1,100 miles long and placing fibers for both companies in
the route. WorldCom's route is to extend from Akron through Indianapolis to a
suburb of St. Louis, with a spur from Indianapolis to a suburb of Chicago. The
Company's route is to extend from Dallas to Phoenix with a spur to Ft. Worth.
Each party will maintain the fiber in its route at no cost to the other party.
This arrangement will result in substantial savings for the Company as opposed
to constructing both routes by itself. The WorldCom Fiber Build Agreement
provides for substantial penalties ($400,000 per month) for either party which
does not complete construction of the applicable route by October 1, 1996, but
only after a grace period and only in the event the other party has already
completed its route. No assurance can be given that the Company will be able to
complete its route in time to avoid such penalties.
    
 
     Phase I of the Fiber Expansion will connect four of the Company's five
switches with high-capacity long-haul circuits on its own network, utilizing
advanced fiber optic technology capable of efficiently transmitting
capacity-intensive services, such as Internet and multimedia applications, frame
relay and ATM. Phase I is expected to deliver significant strategic and
financial benefits to the Company as a result of: (i) producing substantial
savings by allowing the Company to move a portion of its excess long-haul
traffic from leased circuits on the networks of other carriers to its own
expanded network; (ii) providing high-capacity new routes and substantially
increasing the capacity of certain existing routes, allowing the Company to
increase revenues by leasing additional circuits to its customers; (iii)
allowing the Company to improve profitability in its switched long distance
services business by reducing underlying costs of long-haul transmission; and
(iv) creating sufficient capacity to support increased demand which may result
from Internet and multimedia applications, frame relay and ATM.
 
   
     Cost.  The principal components of the cost of the Fiber Expansion will
include: (i) fiber optic cable; (ii) engineering and construction; (iii)
electronics; and (iv) rights-of-way. The rights-of-way will be provided pursuant
to long-term leases or other arrangements (some of which may provide for
substantial continuing payments) entered into with railroads, highway
commissions, pipeline owners, utilities or others. The Company anticipates that
such rights-of-way will be available along the planned routes of the Fiber
Expansion. The Company will seek to realize significant cost savings and offsets
to the cost of the Fiber Expansion through the WorldCom Fiber Build Agreement
and through one or more of the following cost-saving arrangements: (i) including
additional fibers in the Fiber Expansion for lease or sale to other carriers;
(ii) exchanging excess fibers or capacity on the Company's expanded network for
excess fibers or capacity on other carriers' networks; and (iii) obtaining the
right to install Company-owned fibers in new fiber optic routes being
constructed by other carriers along the proposed Fiber Expansion routes in
exchange for the Company (a) sharing construction costs with the other carrier,
(b) allowing the other carrier to use excess Company fiber elsewhere in the
Company's network, or (c) allowing the other carrier to add its own fibers to
segments
    
 
                                       38
<PAGE>   43
 
of the Fiber Expansion. There can be no assurance that the Company will enter
into additional cost-saving arrangements. See "Risk Factors -- Negative Cash
Flow and Capital Requirements." The Company has had experience with arrangements
of this type with several major carriers, including MCI, Sprint, Cable &
Wireless and WorldCom.
 
   
     The Company anticipates that Phase I of the Fiber Expansion will cost
approximately $225.0 million (taking into account the effect of cost-saving
arrangements it has already entered into, including the WorldCom Fiber Build
Agreement). As of April 30, 1996, the Company had spent approximately $12.0
million of such amount for Phase I. The Company expects to substantially
complete the backbone of Phase I in the first quarter of 1997, meeting the cost
of its construction with cash on hand (including, as of May 31, 1996,
approximately $152.9 million from the escrow account described herein) and the
proceeds of this Offering.
    
 
   
     Following Phase I, the Company plans to complete Phase II, consisting of
approximately 3,100 route miles. The Company anticipates that Phase II, if
constructed without any cost-saving arrangements, would cost approximately
$275.0 million. The Company will seek to meet the costs of Phase II through: (i)
additional cost-saving arrangements; (ii) cash flow from its existing
operations; (iii) increased cash flow resulting from reduced off-net capacity
costs as segments of the Fiber Expansion are completed; and (iv) if the Company
is able to successfully develop the switched-products business, increased cash
flow from the switched-products business. In the event no other cost-saving
arrangements are entered into, and the sources of cash referred to above are not
available as soon as desired, the Company anticipates that, to proceed with
Phase II, it will be necessary either: (i) to meet the remaining costs of the
Fiber Expansion through a combination of debt or equity funding (subject to the
restrictions set forth in the indenture for the Senior Notes); or (ii) to slow
or delay the construction of the Fiber Expansion until sufficient funds are
available. No assurance can be given that cash will in fact be available from
any of the sources listed above. See "-- The Company's Network," "-- Business
Strategy," "Risk Factors -- Negative Cash Flow and Capital Requirements," "Risk
Factors -- Risks Relating to Completion of the Fiber Expansion," "Risk
Factors -- Substantial Indebtedness," and "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
    
 
   
     Construction Management.  The Company's management and staff have
substantial experience in the construction of long-haul telecommunications
systems. The Company's existing nationwide digital network, its 346-mile Texas
fiber optic network constructed in 1993 and the recent 58-mile extension of its
Michigan fiber optic network to Indiana were engineered and constructed by the
Company. The Texas network and the Michigan-Indiana extension incorporated
modern fiber optic cable and SONET optronics. In addition, the Company
successfully closed contracts on its Texas network with AT&T, MCI and Sprint
after such companies carefully reviewed the Company's engineering and operations
capabilities. The Company believes that its experienced engineering and
operations management and staff have the requisite skills and experience to
successfully complete the Fiber Expansion.
    
 
LONG-HAUL SERVICES
 
     OVERVIEW
 
     Substantially all of the Company's 1995 revenues were generated by its
long-haul business. The Company has long-haul circuit contracts with over 200
long distance carriers.
 
     STRATEGY
 
     The Company is seeking to increase revenues in its long-haul business
through meeting these primary objectives: (i) expanding its network to provide
additional capacity on its existing routes and high-capacity new routes to
provide access to major population centers (including routes which may be
attractive to major carriers) as backup routes; (ii) providing high-quality,
reliable transmission services on a fixed-cost basis at rates generally below
those currently offered by AT&T and competitive with those offered by other
carriers; and (iii) use the expanded network as a platform to support increased
long-haul circuit demand which may result in the future from frame relay, ATM,
multimedia, Internet and other capacity-intensive applications.
 
                                       39
<PAGE>   44
 
     The Company is seeking to decrease expenses in its long-haul business
through the Fiber Expansion, which the Company anticipates will allow it to move
traffic from circuits leased from other carriers to its own network.
 
     CUSTOMERS AND MARKETING
 
     The Company has long-haul circuit contracts with over 200 long distance
carriers, including AT&T, MCI, Sprint, WorldCom, Cable & Wireless, Frontier and
LCI. As of April 30, 1996, the Company had "take or pay" commitments from its
long-haul customers aggregating over $160.0 million (consisting of approximately
$90.0 million relating to circuits currently in service and approximately $70.0
million relating to circuits not yet ordered that the Company expects will be
carried over leased routes or routes being constructed). The Company also
provides long-haul transmission to customers after contract expiration on a
month-to-month basis. The Company's long-haul contracts provide for fixed
monthly payments, generally in advance. The Company has provided services to
nine of its ten largest customers for at least six years and, although sales
volumes from particular customers vary from year to year, has historically
enjoyed a high customer retention rate (annual customer retention has averaged
over 90% from 1992-1995).
 
   
     The Company markets its long-haul circuit capacity generally to: (i)
facilities-based carriers that require long-haul capacity where they have
geographic gaps in their facilities, need additional capacity or require
geographically different, alternative routing; and (ii) non-facilities-based
carriers requiring long-haul capacity to carry their customers' long distance
traffic. The Company focuses most of its direct sales efforts on providing
customer support services to existing customers and on adding new customers. The
Company's long-haul circuit sales force presently consists of ten account
managers based at the Company's headquarters in Austin and at direct sales
offices in or near Washington, D.C., New Haven, San Francisco, Kansas City,
Chicago, St. Louis, Houston and Sunrise Beach, Missouri.
    
 
   
     During 1993, 1994, 1995 and the first quarter of 1996, WorldCom and
Frontier, the Company's two largest customers, accounted for 23% and 24%, 25%
and 23%, 20% and 21%, and 16% and 19% respectively, of the Company's revenues.
During fiscal 1995, the Company leased transmission capacity to 212 customers.
The ten largest customers during that year accounted for approximately 78% of
revenues. See "Risk Factors -- Reliance on Major Customers."
    
 
     PRICES AND CONTRACTS
 
     The Company's strategy is to offer prices generally lower than those of
AT&T and competitive with the prices of other carriers, to permit the Company's
customers, through a stable, long-term fixed pricing structure, to maintain
control over transmission costs. The Company's long-haul transmission agreements
with its customers generally provide for original terms of one to three years
and for monthly payment in advance on a fixed-rate basis, calculated according
to the capacity and length of the circuit. The agreements generally provide that
the customer may terminate the affected service without penalty "for cause" in
the event of substantial and prolonged outages arising from causes within the
Company's control, and for certain other defined causes. Generally, the lease
agreements further provide that the customer may terminate the agreement "for
convenience" at its discretion at any time upon notice to the Company. However,
termination for convenience generally requires either full payment of all
charges through the end of the lease term or the payment of substantial
termination fees intended to allow the Company to recover certain costs and, in
some cases, lost profits. Damages attributable to a customer's termination of
the agreement are generally reduced, however, by an offset for any income the
Company earns from re-leasing the terminated capacity during the remaining
portion of the lease term.
 
  COMPETITION
 
     In providing bulk long-haul circuit capacity, the Company competes with
AT&T, which is the largest supplier of long distance voice and data transmission
services in the United States, MCI, WorldCom and Sprint, all of which have
substantially greater financial resources than the Company and a far more
extensive transmission network than the Company's network. As a result of the
Telecommunications Act, the Company
 
                                       40
<PAGE>   45
 
   
and its customers will also face competition from the RBOCs, GTE and others such
as electric utilities and cable television companies. The Company also competes
on a regional basis with major regional carriers. Important competitive factors
in the long-haul business are price, customer service, network location and
quality, reliability and availability. See "Risk Factors -- Competition."
    
 
SWITCHED LONG DISTANCE SERVICES
 
     OVERVIEW
 
   
     The Company has recently expanded into the business of selling switched
long distance services to long distance resellers in order to complement its
long-haul business and to capitalize on its ability to provide switched services
over its own network. During 1995, the Company set up the infrastructure for its
switched long distance business by installing its switches, connecting them to
its network and to the LECs, acquiring software, hiring personnel and entering
into contracts with customers. Although the Company's five switches first became
operational in the fourth quarter of 1995, the Company has already entered into
contracts with over 30 long distance resellers, including Excel and GE Capital
Communication. Pursuant to these contracts, the Company sells switched long
distance services on a per-call basis, charging by MOUs, with payment due
monthly after services are rendered. The Company believes that it is well
positioned to attract long distance resellers as customers for its switched long
distance services because: (i) it is not currently a significant competitor for
sales to end users; and (ii) it provides more focused service to its reseller
customers, since servicing such customers is its primary business, unlike its
major competitors whose main business is selling retail long distance services
to end-users.
    
 
     STRATEGY
 
     The Company seeks to rapidly increase revenues from its switched long
distance business through: (i) long-term arrangements with significant customers
and customers the Company considers likely to grow quickly; (ii) providing a
sophisticated automated software interface with its customers; and (iii)
offering pricing which is generally lower than that charged by AT&T and
competitive with that of other long distance service providers. The Company
seeks to increase the profitability of its switched long distance services
business by decreasing its average cost per MOU through efficiencies achieved
with higher volumes and through reducing network costs through the Fiber
Expansion. See "-- Business Strategy."
 
     CUSTOMERS AND MARKETING
 
     The Company focuses its sales efforts on directly contacting large reseller
customers with monthly volumes of at least $1 million and smaller, growing
resellers with volumes between $50,000 and $250,000 per month that the Company
expects to be reasonably likely to grow to the $1 million per month level. The
Company's switched-products sales force includes ten sales executives based at
the Company's headquarters in Austin and at direct sales offices in Atlanta,
Dallas, Denver and Los Angeles. Although sales of switched long distance
services to end-user customers do not currently account for a significant
portion of the Company's switched long distance business, the Company may, from
time to time, consider acquiring long distance resellers or end-user customer
bases. Even if this does occur, however, the Company does not expect to change
its focus from its reseller customers.
 
     Excel.  In 1994, the Company and Excel, a large long distance reseller,
formed the SSC joint venture to lease, install and operate the five switches
incorporated into the Company's network and to provide switched long distance
services to the Company and Excel. As of January 1, 1996, the Company became the
sole owner of SSC by purchasing Excel's minority interest and certain
contractual arrangements were modified so that, among other things: (i) the
Company is permitted to sell switched long distance services to Excel at a
positive margin (the joint venture had been required to sell to Excel at a price
approximately equal to its cost); and (ii) Excel is permitted to reduce its
minimum commitment to the Company by inviting the Company to bid along with
other carriers to provide long-haul circuits to Excel (as described below). The
parties modified their relationship because: (i) Excel desired to sell its
interest in the joint venture because the continuing growth of its business led
it to consider acquiring its own switches to supplement the services it will
receive
 
                                       41
<PAGE>   46
 
from other carriers; and (ii) the Company desired to sell switched long distance
services to Excel at a positive margin and have the opportunity to bid on the
long-haul transmission for any new switches that Excel may acquire. On February
15, 1996, Excel started to transfer traffic to the Company's network. By October
1996, Excel is required to use at least 70 million minutes of traffic per month.
Excel's commitment continues through the earlier of the date on which Excel has
routed 4.2 billion minutes over the Company's network, or five years from the
date Excel first routes 70 million minutes per month over the Company's network.
The minimum commitment is subject to reduction or termination: (i) if Excel
installs its own switches and invites the Company to bid along with other
carriers (to win such bids, the Company would have to be the lowest bidder) to
provide Excel with the long-haul circuits utilized by such switches (even if
this did occur, Excel would still have to meet the minimum commitment of 70
million minutes per month until the expiration of the 24-month period after the
date Excel first routes 70 million minutes per month over the Company's
network); or (ii) for breach of contract by the Company or for other reasons
which the Company believes should be under its control.
 
     Customer Contracts.  The Company's rates for switched long distance
services generally vary with the duration of the call, the day and the time of
day the call was made and whether the traffic is intrastate, interstate or
international. The rates charged are not affected by which facilities are
selected by the Company's switching centers for transmission of the call or by
the distance of the call. Different rates are applied to combined origination
and termination services than are applied to termination services. The
agreements between the Company and its customers for switched long distance
services generally provide for payment in arrears based on MOUs. The agreements
generally also provide that the customer may terminate the affected service
without penalty in the event of substantial and prolonged outages arising from
causes within the Company's control, and for certain other defined causes.
Generally, the agreements provide that the customer, in order to avoid being
obligated to pay higher rates (or, in some cases, penalties), must utilize at
least a minimum dollar amount (measured by dollars or minutes of use) of
switched long distance services per month for the term of the agreement.
 
   
     Customer Care.  The Company believes that customer support will prove to be
an important factor in attracting and retaining customers for its switched long
distance services. Customer service for switched long distance services includes
processing new accounts, responding to inquiries and disputes relating to
billing, credit adjustments and cancellations and conducting technical repair
and other support services. IXC Online is designed to allow each of the
Company's carrier customers to: (i) download current call detail records for its
end-users for billing purposes; (ii) arrange with the appropriate LEC to
register the carrier as the designated long distance carrier for its new end
users; and (iii) file trouble reports for resolution. The Company employed 15
people in its switched long distance services customer service group as of March
31, 1996.
    
 
     DECREASED COSTS THROUGH INCREASED VOLUMES
 
     Large MOU volumes should enable the Company to spread its fixed costs over
more MOUs and to more efficiently configure its network, reducing the cost per
MOU. The Company seeks to efficiently configure the circuits available so that
calls are completed on a cost-effective basis. The Company periodically analyzes
calling patterns using mathematical formulas to determine the circuit capacity
required to cost-effectively service the expected call volume. For example, if
there is sufficient calling traffic available, the Company may upgrade
transmission circuitry in an area from DS-1 to DS-3. A similar analysis will be
made when deciding whether to install a new switch in a region.
 
     SERVICES
 
     The Company markets a variety of switched long distance services, including
operator services, directory assistance, international service and the
following:
 
     1 Plus Switched Service.  Provides end users with direct-dial service over
the Company's digital network.
 
     1 Plus Dedicated Service.  Provides direct-dial service over the Company's
digital network for end users that have arranged to connect to the Company's
nearest hub through a local loop. This service is less expensive than 1 Plus
Switched Service because the access charges of the end-user's LEC are reduced.
 
                                       42
<PAGE>   47
 
     800/888 Switched Service.  Provides customers with 800/888 service over the
Company's digital network.
 
     800/888 Dedicated Service.  Provides 800/888 service over the Company's
digital network for end users that have arranged to connect to the Company's
nearest hub through a local loop. This service is less expensive than 800/888
Switched Service because the access charges of the end-user's LEC are reduced.
 
     Calling Card Service.  Provides telephone card service.
 
     Debit Card Service.  Provides prepaid telephone card service.
 
     Switched Termination Service.  Provides carrier customers having use of a
switch in one area with termination services in other areas.
 
     COMPETITION
 
   
     The Company competes with numerous facilities-based interexchange carriers,
some of which are substantially larger, have substantially greater financial,
technical and marketing resources and utilize larger transmission systems than
the Company. AT&T is the largest supplier of switched long distance services in
the United States inter-LATA market. The Company also competes in selling
switched long distance services with: (i) other facilities-based carriers, such
as MCI, Sprint, WorldCom and certain regional carriers, and (ii) certain
non-facilities-based carriers. As a result of the Telecommunications Act, the
Company will also now face competition from the RBOCs, GTE and others such as
electric utilities and cable television companies. The Company believes that the
principal competitive factors affecting it are customer service (particularly
with respect to speed in delivery of computer billing records and set-up of new
end users with the LECS), ability of the network to complete calls with a
minimum of network-caused busy signals, scope of services offered, price,
reliability and transmission quality. The Company seeks to compete effectively
with other interexchange carriers and resellers on the basis of these factors.
The ability of the Company to compete effectively will depend upon its ability
to maintain high-quality services at prices generally equal to or below those
charged by its competitors. In the United States, price competition in the long
distance business has been intensive over the last five years. The FCC has, on
several occasions since 1984, approved or required price decreases by AT&T
through the imposition of "price cap" regulations. However, the FCC recently
classified AT&T as a "non-dominant interexchange carrier," with the effect that
AT&T is no longer subject to price regulation of its long distance services.
Since the Company believes that its customers generally price their service
offerings at or below the prices charged by AT&T for its telecommunications
services, reductions by AT&T in its rates may necessitate similar price
decreases by the Company. See "Risk Factors -- Competition."
    
 
REGULATION
 
   
     Certain subsidiaries of the Company operate as communications common
carriers in providing service to their customers that are other common carriers.
These subsidiaries are subject to applicable FCC regulations under the
Communications Act, some of which may be affected by the Telecommunications Act.
See "Risk Factors -- Recent Legislation and Regulatory Uncertainty." In
addition, those subsidiaries which operate the common carrier point-to-point
microwave network are subject to applicable FCC regulations for use of the radio
frequencies. The FCC issues licenses to use certain radio frequency spectrum at
transmitter site locations. Each license gives the Company the right to operate
the microwave radio station for the term of the license. Currently, the Company
holds licenses to operate the microwave sites in the Company's network. The
licenses all expire in 2001. These licenses are renewable upon application
containing a statement that they are used in compliance with the applicable FCC
rules. The Company expects that the FCC will renew its licenses in due course.
The Company, as a point-to-point common carrier microwave license holder, is
subject to regulation by the Federal Aviation Administration with respect to the
construction of transmission towers and to certain local zoning regulation
affecting construction of towers and other facilities.
    
 
     Recent court decisions (which were issued before the Telecommunications
Act) require the FCC to require carriers to file tariffs. However, the FCC
currently does not actively exercise its authority to regulate such carriers'
rates and services. Moreover, the Telecommunications Act gives the FCC authority
to forebear
 
                                       43
<PAGE>   48
 
from applying provisions of the Communications Act, including the requirement
that carriers file tariffs. The FCC has released a Notice of Proposed
Rulemaking, proposing a mandatory detariffing policy to eliminate the tariff
requirements for non-dominant interstate, interexchange carriers. However, the
FCC will retain jurisdiction to act upon complaints against any common carrier
for failure to comply with its statutory obligations as a common carrier.
 
     The FCC regulates many of the rates, charges and services provided by the
local exchange carriers. This regulation may affect the Company because it
leases local access transmission facilities from local telephone companies. The
FCC's price cap regulation of the RBOCs and other LECs provides them with
considerable flexibility in pricing their services. In addition, the FCC
recently freed AT&T from price cap regulation. This FCC action may affect the
Company, because it competes with AT&T. The FCC's current and future actions
could result in decreases in the rates charged to end-user customers by AT&T and
other competitors for their services. Thus, one effect of the FCC's action may
be to intensify further price competition among long distance companies.
 
     Regulation can also affect the costs of business for the Company, its
customers and its competitors. In order to provide services, carriers such as
the Company must purchase local access services from local exchange carriers to
originate or terminate calls. Presently, the pricing of such transport service
is under an interim rate structure which is a transitional step toward
pro-competitive, cost-based transport rates. The FCC has recently initiated two
rulemaking proceedings with respect to a final cost-based transport rate
structure. The pleadings cycles in both proceedings have closed, but no order
has yet been issued by the FCC. Moreover, the Telecommunications Act may affect
how access charges are to be set and structured, so future changes with respect
to access charges are likely.
 
     The ability of the Company to provide long distance services within any
State is generally subject to regulation by a regulatory board in that State. As
of May 1996, the Company has obtained the requisite licenses and approvals in
over 45 States. It is in the process of obtaining licenses and approvals in the
remaining States (other than Alaska and Hawaii) and expects to obtain all such
licenses and approvals by the third quarter of 1996. Although the Company has
not yet obtained licenses or approvals in such remaining States, the Company is
able to offer its switched long distance services in such States to its carrier
customers through its contracts with other carriers.
 
     The Telecommunications Act, among other things, allows the RBOCs and others
to enter the long distance business. Entry of the RBOCs or other entities such
as electric utilities and cable television companies into the long distance
business may have a negative impact on the Company or its customers. In
addition, the Telecommunications Act provides that State proceedings may in
certain instances determine access charge rates the Company and its customers
are required to pay to the LECs. It is uncertain at this time what effect such
proceedings may have on such rates. No assurance can be given that such rates
will not be increased. Such increases could have a material adverse effect on
the Company and its customers. See "Risk Factors -- Recent Legislation and
Regulatory Uncertainty" and "Industry Overview."
 
EMPLOYEES
 
     As of March 31, 1996, the Company employed 338 people, of whom 149 provided
operational and technical services, 29 provided engineering services and the
balance were engaged in administration and marketing. The Company's employees
are not represented by any labor union. The Company considers its employee
relations to be good and has not experienced any work stoppages.
 
PROPERTIES AND LEASES
 
     The principal properties owned by the Company consist of: (i) the Michigan,
Texas and New York to Washington, D.C. fiber optic systems, consisting of the
fiber optic cable and associated electronics and other equipment; (ii) the
portion of the Fiber Expansion under construction; and (iii) the coast-to-coast
microwave system, consisting of microwave transmitters, receivers, towers and
antennae, auxiliary power equipment, transportation equipment, equipment
shelters and miscellaneous components. Generally, the Company's fiber
 
                                       44
<PAGE>   49
 
optic system and microwave relay system components are standard commercial
products available from a number of suppliers.
 
   
     The principal offices of the Company are located in approximately 44,000
square feet of space in Austin. The Company leases approximately 38,000 square
feet of such space under an agreement which expires in December 1999, at a
current annual base rental of approximately $707,000, and has an option to renew
the lease for a five-year term at the then-prevailing market rate (but not less
than the then-current rental rate) at the time of renewal, and leases
approximately 6,000 square feet of such space under an agreement which expires
in November 2000 at a current annual base rental of approximately $121,000. The
Company has additional offices in two other locations in Austin, consisting of
approximately 16,000 square feet and 102,000 square feet. The Company leases the
space in the first location under an agreement which expires in the year 2000,
at a current annual base rental of approximately $163,000, and subleases the
space in the second location under an agreement which expires in 1997, at a
current annual base rental of approximately $289,000.
    
 
     The Company leases sites for its switches in or near Los Angeles, Dallas,
Chicago, Atlanta, and Philadelphia under lease agreements that expire between
2000 and 2005. The total current rental commitments for the switch site leases
are approximately $27,000 per month. The Company's five switches are leased
under capital leases from DSC Finance Corporation over a term of five years.
 
LITIGATION
 
     The Company is involved in various legal proceedings, all of which have
arisen in the ordinary course of business and some of which are covered by
insurance. In the opinion of the Company's management, none of the claims
relating to such proceedings will have a material adverse effect on the
financial condition or results of operations of the Company.
 
   
MEXICAN JOINT VENTURE
    
 
     The Company formed a subsidiary in August 1993 to provide international
long distance service. The subsidiary and a third party, Westel International,
Inc., formed Progress International in July 1994. Progress International,
together with Fomento Radio Beep, S.A. de C.V., a large Mexican paging company,
has obtained a license from the Mexican Federal government to provide
telecommunication services in Mexico. Such application was made by Marca-Tel, a
Mexican corporation formed by such parties. The Company owns an indirect 24.5%
interest in Marca-Tel. Marca-Tel is not currently generating revenues.
 
   
     The Company is proceeding with the initial development and implementation
of a business plan for the opportunity presented by the Mexican license, and is
comparing (i) the potential benefits of the joint venture, including possible
profits in Marca-Tel and a possible increase in traffic on the Company's network
from cross-border traffic from Marca-Tel, with (ii) the costs associated with
proceeding with the joint venture and the Company's ability to meet its share of
such costs. The Company anticipates that pursuing such opportunity could require
significant amounts of cash. Although the Company cannot accurately predict its
share of the amount of cash that would be needed to pursue this opportunity, it
estimates that at least $30.0 million (and possibly significantly more) would be
required by Marca-Tel during 1996 - 1997. The $12.5 million proceeds of the GEPT
Private Placement will be available, if the Company so elects, to pursue the
opportunity in Mexico. Because of other anticipated needs for the Company's
available liquidity, limitations imposed by the indenture for the Senior Notes
and for other reasons, the Company anticipates that, without further capital it
will not be able to provide significant additional cash as its share of the cash
needed by the joint venture. The Company anticipates that the costs of pursuing
such opportunity, if they can be met at all, will be met through some
combination of the following: (i) offerings of debt or equity securities of
Progress International or Marca-Tel; (ii) other incurrences of debt by Progress
International or Marca-Tel; (iii) joint venture arrangements with third parties;
(iv) vendor financing of equipment purchases; and (v) subject to the
restrictions imposed by the indenture for the Senior Notes, further equity
offerings or debt incurrences of the Company or from working capital. No
assurance can be given that the Company will be successful in meeting such costs
through the foregoing methods or, consequently, that the Company will have
sufficient liquidity to pursue the opportunity presented by the Mexican license.
In the event that the joint venture does not appear to
    
 
                                       45
<PAGE>   50
 
   
be economically viable, the Company will have the opportunity to withdraw from
Progress International and Marca-Tel without incurring any material penalty.
    
 
HISTORY
 
     IXC Communications, a holding company formed in July 1992, acquired a
one-half interest in Electra Communications Corporation ("Electra"), the owner
of a fiber optic network in Texas, for $9.0 million. IXC Communications became
the sole owner of Electra in 1993 when stock held by the other stockholder was
redeemed for $13.7 million. IXC Communications acquired I-Link, Inc., the owner
of another fiber optic network in Texas, in 1994 in a stock-for-stock merger. At
the same time, it also acquired IXC Carrier, Inc. ("IXC Carrier"), in a
stock-for-stock merger. IXC Carrier has certain subsidiaries that have been
active in the communications business for over 25 years, initially serving as
analog microwave carriers for television signals for cable operators in Ohio and
Texas. Commencing in 1979, IXC Carrier, then a subsidiary of The Times Mirror
Company ("Times Mirror"), entered into long-term circuit lease agreements with
various carriers such as MCI in Texas and Sprint in the Ohio Valley and began
the development of a coast-to-coast network through the acquisition,
construction and leasing of microwave and fiber optic facilities. IXC Carrier
was acquired in a leveraged buy-out in 1986 by Communications Transmission, Inc.
("CTI"), a holding company that also acquired substantial interests in several
other telecommunications companies, including Allnet (a large long distance
reseller and long-term customer of the Company), MSM, and Electra Communications
Corporation ("Electra"). CTI encountered financial difficulties as a result of
its need to convert its facilities from analog to digital and its high degree of
leverage and disposed of all or substantially all its assets for the benefit of
its creditors in 1992. The Company, through IXC Carrier, carries on certain of
the telecommunications businesses of CTI. See Note 1 to the Consolidated
Financial Statements. Certain directors and officers of the Company were
directors or officers of CTI.
 
                                       46
<PAGE>   51
 
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
   
     The directors and executive officers of IXC Communications and their ages
as of June 12, 1996 are as follows:
    
 
   
<TABLE>
<CAPTION>
          NAME            AGE                          POSITION
- ------------------------  ---   -------------------------------------------------------
<S>                       <C>   <C>
Ralph J. Swett..........  61    Chairman, President, Chief Executive Officer and
                                Director
Richard D. Irwin........  61    Director
Wolfe H. Bragin.........  51    Director
Carl W. McKinzie........  56    Director
Phillip L. Williams.....  73    Director
Joe C. Culp.............  62    Director
Kenneth F. Hinther......  52    Executive Vice President
John R. Fleming.........  42    Executive Vice President
John J. Willingham......  39    Senior Vice President, Chief Financial Officer and
                                Secretary
David J. Thomas.........  45    Executive Vice President
James F. Guthrie........  52    Executive Vice President
</TABLE>
    
 
   
     Each director holds office until his successor has been elected and
qualified. Officers serve at the pleasure of the Board of Directors. The Company
intends to nominate an additional director prior to the next annual meeting of
stockholders.
    
 
     Mr. Swett has served as Chairman, Chief Executive Officer and President of
IXC Communications since its formation in July 1992. Prior to that, Mr. Swett
served as Chairman of the Board and Chief Executive Officer of CTI from 1986 to
1992. From 1969 to 1986, Mr. Swett served in increasingly senior positions (Vice
President, President and Chairman) of Times Mirror Cable Television ("TMCT"), a
subsidiary of Times Mirror and a previous owner of IXC Carrier, and as a Vice
President of Times Mirror from 1981 to 1986. Mr. Swett has served as Chairman of
IXC Carrier since 1979, its Chief Executive Officer since 1986 and its President
since 1991. Mr. Swett has managed communications businesses for the past 26
years.
 
   
     Mr. Irwin has served as a director of IXC Communications since its
formation in July 1992. He has served as the President of Grumman Hill Company,
L.L.C. or its predecessor ("Grumman Hill"), a merchant banking firm and the
general partner of GHI, since 1985. Prior to the formation of Grumman Hill, Mr.
Irwin was a Managing Director of Dillon, Read & Co. Inc., from 1983 to 1985.
Prior to that, he served as Chief Executive Officer of Fotomat Corporation for
12 years. Mr. Irwin is also a member of the Board of Directors of PharmChem
Laboratories, Inc. and was the Chairman of ALC from August 1988 through August
1995.
    
 
     Mr. Bragin has served as a director of IXC Communications since May 1993.
Mr. Bragin has served since 1985 as Vice President of GEIC, a subsidiary of GE
that acts as an investment advisor to GEPT. Prior to joining GEIC in 1984, Mr.
Bragin served in numerous equipment leasing, investment and portfolio management
positions for General Electric Credit Corporation, now known as General Electric
Capital Corporation. Mr. Bragin is a member of the Board of Directors of Home
Express, Inc.
 
     Mr. McKinzie has served as a director of IXC Communications since May 1993.
Mr. McKinzie has been a principal of Riordan & McKinzie, a Professional Law
Corporation ("Riordan & McKinzie"), since 1980.
 
   
     Mr. Williams was elected a director of IXC Communications in June 1996. Mr.
Williams has been a private investor and business advisor since May 1993. Prior
to that, Mr. Williams served as Vice Chairman of the Board of Times Mirror from
1987 to May 1993. Mr. Williams is a member of the Board of Directors of Tejon
Ranch Company.
    
 
   
     Mr. Culp was elected a director of IXC Communications in June 1996. Mr.
Culp has been President of Culp Communications Associates, a management and
marketing consulting firm, since 1990. From 1989 to 1990 Mr. Culp served as
Executive Vice President of CTI. Prior to that, Mr. Culp served as President and
    
 
                                       47
<PAGE>   52
 
   
Chief Executive Officer of Lightnet, Inc. from 1988 to 1989 and as President of
Rockwell International's Telecommunications Group from 1982 until 1988. Mr. Culp
has over 40 years experience in the communications industry.
    
 
     Mr. Hinther has served as Executive Vice President of IXC Communications
since March 1996 and as Senior Vice President of IXC Communications from July
1992 through March 1996. Prior to that, Mr. Hinther served as Senior Vice
President -- Engineering and Operations of CTI from 1989 to July 1992 and as
Vice President -- Network Operations of CTI from 1986 to 1989. Mr. Hinther
served IXC Carrier as a Manager of Engineering from 1979 to 1982, and as
Director of Business Development from 1982 to 1986, and as a Vice President
since 1986. Mr. Hinther was Product Manager, Satellite Communications at
Rockwell International prior to joining IXC Carrier. He has over 24 years of
experience in the telecommunications industry.
 
     Mr. Fleming has served as Executive Vice President of IXC Communications
since March 1996 and as Senior Vice President of IXC Communications from October
1994 through March 1996. He served as Vice President of Sales and Marketing of
IXC Communications from its formation in July 1992 until October 1994. Prior to
that, Mr. Fleming served as Director of Business Development and Director of
Carrier Sales of CTI from 1986 to March 1990 and as Vice President -- Marketing
and Sales of CTI from March 1990 to July 1992. Mr. Fleming was a Branch Manager
for Satellite Business Systems from 1983 to 1986. Mr. Fleming has been employed
with IXC Carrier since 1986 and a Vice President of IXC Carrier since 1990. Mr.
Fleming has over 16 years experience in the telecommunications industry.
 
     Mr. Willingham has served as Vice President, Chief Financial Officer, and
Secretary of IXC Communications since July 1992 and as Senior Vice President
since October 1994. Mr. Willingham served as Vice President and Controller from
September 1989 to June 1990 and as Vice President and Chief Financial Officer
from June 1990 to July 1992 of CTI. Prior to joining CTI, Mr. Willingham was
employed by Ernst & Young LLP for eight years as a certified public accountant.
Mr. Willingham has been a Vice President of IXC Carrier since 1989 and Chief
Financial Officer of IXC Carrier since 1990. Mr. Willingham has over 10 years
experience in the telecommunications industry.
 
   
     Mr. Thomas has served as Executive Vice President of IXC Communications
since March 1996 and as Senior Vice President of IXC Communications from August
1995 through March 1996. He was employed with ALC from 1983 to 1995, serving as
Vice President from 1991 to 1995 and as Treasurer from 1989 to 1995. Mr. Thomas
has over 13 years experience in the telecommunications industry.
    
 
   
     Mr. Guthrie has served as Executive Vice President of IXC Communications
since March 1996 and as Senior Vice President, Strategic Planning of IXC
Communications from December 1995 through March 1996. Prior to that, Mr. Guthrie
served as Vice President and Chief Financial Officer of Times Mirror from 1993
to 1995 and as the Chief Financial Officer of TMCT from 1982 to 1993.
    
 
DIRECTOR COMPENSATION
 
   
     Non-employee directors receive annual compensation of $10,000 in cash and,
upon the effectiveness of this Offering, certain non-employee directors will
receive a $20,000 annual contribution by the Company under the Phantom Stock
Plan (described below) for service to the Company as members of the Board of
Directors. All directors receive reimbursement of reasonable out-of-pocket
expenses incurred in connection with meetings of the Board. Mr. Culp was granted
an option in connection with consulting services provided for the Company which
is fully exercisable to purchase 60,622 shares of Common Stock at a purchase
price of $3.01 per share. Mr. Swett receives no compensation for services
rendered as a director. The Company adopted a Phantom Stock Plan in May 1996 for
its outside directors, pursuant to which $20,000 per director per year of their
director's fees will be automatically deferred and treated as if it were
invested in Common Stock. No stock will be actually purchased under the plan,
and the participants will receive cash benefits equal to the value of the shares
that they are deemed to have purchased under the plan, with such value to be
determined on the date of distribution. The distribution of the benefits
generally will occur three years after the deferral. The Phantom Stock Plan will
be administered by Messrs. Swett, Irwin and McKinzie, none of whom are
participants in the plan.
    
 
                                       48
<PAGE>   53
 
   
     Audit Committee. The Board of Directors established the Audit Committee in
June 1996 to: (i) make recommendations concerning the engagement of independent
public accountants; (ii) review with the independent public accountants the
plans for, and scope of, the audit procedures to be utilized and results of the
audit; (iii) approve the professional services provided by the independent
public accountants; (iv) review the independence of the independent public
accountants; and (v) review the adequacy and effectiveness of the Company's
internal accounting controls. Mr. Williams, Mr. Culp and Mr. McKinzie are the
members of the Audit Committee.
    
 
   
     Compensation Committee. The Board of Directors established the Compensation
Committee in June of 1996 consisting of Mr. Irwin, Mr. Bragin and Mr. McKinzie,
none of whom are employees of the Company. The Compensation Committee will
determine the compensation for the Company's executive officers and administer
the 1996 Stock Plan and the 1994 Stock Plan.
    
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
   
     For the last three years IXC Communications did not have a compensation
committee or any other committee of the Board of Directors performing equivalent
functions. All decisions regarding executive compensation were made by the Board
of Directors of IXC Communications, none of whom, other than Mr. Swett, was an
executive officer of IXC Communications. Decisions with respect to Mr. Swett's
compensation were approved by all members of the Board other than Mr. Swett.
    
 
EXECUTIVE COMPENSATION
 
     The following table sets forth all compensation awarded to, earned by or
paid to the Chief Executive Officer and certain other executive officers (the
"Named Executive Officers") for their services to the Company for the year ended
December 31, 1995.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                       ANNUAL COMPENSATION
                                                  ------------------------------
                                                                 OTHER ANNUAL            ALL OTHER
          NAME AND PRINCIPAL POSITION             SALARY $     COMPENSATION $(1)     COMPENSATION $(2)
- ------------------------------------------------  --------     -----------------     -----------------
<S>                                               <C>          <C>                   <C>
Ralph J. Swett..................................   285,000           10,000              883,813(3)
  Chairman, President and Chief Executive
  Officer
Kenneth F. Hinther..............................   212,083(4)         7,500              444,739(5)
  Executive Vice President
John R. Fleming.................................   212,083(4)         7,500              444,739(5)
  Executive Vice President
John J. Willingham..............................   183,417(6)         7,500              442,871(5)
  Senior Vice President and Chief Financial
  Officer
</TABLE>
 
- ------------
(1) These amounts represent automobile allowances paid to the Named Executive
    Officers in 1995.
 
(2) Includes payments of $862,027 (with respect to Mr. Swett) and $431,014 (with
    respect to each of Mr. Hinther, Mr. Fleming and Mr. Willingham) made in
    connection with a prior incentive arrangement. The incentive payments were
    earned in 1993 but did not become payable until 1995.
 
(3) Includes an employer contribution of $13,500 under the 401(k) Plan (as
    defined herein) and payments of $8,286 for term life insurance premiums.
 
(4) Represents $153,750 in salary and an additional amount of $58,333 in
    compensation earned and deferred in prior years but paid in 1995.
 
(5) Includes employer contributions of $13,725 for Mr. Hinther and Mr. Fleming
    and $11,858 for Mr. Willingham under the 401(k) Plan.
 
(6) Represents $131,750 in salary and an additional amount of $51,667 in
    compensation earned and deferred in prior years but paid in 1995.
 
                                       49
<PAGE>   54
 
1996 STOCK PLAN
 
   
     In May 1996, IXC Communications adopted the IXC Communications, Inc. 1996
Stock Plan (the "1996 Stock Plan"), a stock incentive plan covering 2,121,787
shares of Common Stock of IXC Communications that may be awarded in order to
attract, retain and reward employees, directors and other persons providing
services to the Company. The Compensation Committee administers the 1996 Stock
Plan. Any employee, director or other person providing services to the Company
is eligible to receive awards under the 1996 Stock Plan, at the discretion of
the Board of Directors. Awards available under the 1996 Stock Plan include
Common Stock options with exercise prices at least equal to the fair market
value of the Common Stock on the date of grant. No stock options have been
granted under the 1996 Stock Plan.
    
 
1994 STOCK PLAN
 
   
     In November 1994, IXC Communications adopted a stock incentive plan (the
"1994 Stock Plan") covering 1,212,450 shares of Common Stock of IXC
Communications to attract, retain and reward employees, directors and other
persons providing services to the Company. The Compensation Committee
administers the 1994 Stock Plan. Any employee, director or other person
providing services to the Company is eligible to receive awards under the 1994
Stock Plan, at the Board's discretion. Awards available under the 1994 Stock
Plan include Common Stock purchase options and restricted Common Stock. None of
the Named Executive Officers hold options to acquire stock of IXC Communications
or was granted options to acquire such stock in 1995. Mr. Culp is the only
director who holds options to acquire stock.
    
 
401(K) PLAN
 
     The IXC Carrier, Inc. 401(k) and Pension Plan and Trust (the "401(k) Plan")
is a tax-qualified retirement plan. In general, all employees of IXC Carrier
(substantially all the employees of the Company) who have attained age 18 and
completed one year of service are eligible to participate in the 401(k) Plan.
Participants may make pre-tax contributions to the 401(k) Plan, in an amount
currently not to exceed $9,500 per year. IXC Carrier may elect to make matching
contributions each year, which are allocated among participants depending on the
amount that they contribute to the 401(k) Plan. IXC Carrier may also elect to
make profit-sharing contributions to the 401(k) Plan, which are allocated among
participants as a percentage of compensation.
 
INDEMNIFICATION AND EXCULPATION ARRANGEMENTS
 
     The Restated Certificate of Incorporation of IXC Communications limits the
liability of directors to IXC Communications or its stockholders to the fullest
extent permitted by the Delaware General Corporation Law (the "DGCL").
Accordingly, pursuant to the provisions of the DGCL presently in effect,
directors of IXC Communications will not be personally liable for monetary
damages for breach of a director's fiduciary duty as a director, except for
liability: (i) for any breach of the director's duty of loyalty to the Company
or its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the DGCL; or (iv) for any transaction from which the director
derived an improper personal benefit. In addition, the bylaws of IXC
Communications require IXC Communications to indemnify its directors and
officers to the fullest extent permitted by the laws of the State of Delaware.
 
                                       50
<PAGE>   55
 
                              CERTAIN TRANSACTIONS
 
   
     Prior to the sale of the Senior Notes: (i) GHI, a partnership whose general
partner is Grumman Hill, a limited liability company of which Mr. Irwin is a
member, and GEPT each held 598 shares of IXC Communications' 10% Senior Series 1
Cumulative Redeemable Preferred Stock ("Series 1 Preferred Stock"); (ii) Messrs.
Swett, Williams, Hinther and Fleming owned 78, 60, 13 and 13 shares of Series 1
Preferred Stock, respectively; and (iii) Mr. McKinzie, a director of IXC
Communications and a principal of Riordan & McKinzie, the law firm that will
pass upon the validity of the issuance of the Common Stock in this Offering,
owned 100 shares of Series 1 Preferred Stock. The Series 1 Preferred Stock was
redeemed with a portion of the proceeds of the sale of the Senior Notes at a
price equal to the amount paid for such stock plus accrued but unpaid dividends
at 10% per annum. The approximate amounts received by such persons with respect
to such redemption were: (i) GHI, $813,544; (ii) GEPT, $813,544; (iii) Mr.
Swett, $106,114; (iv) Mr. Williams, $76,229; (v) Mr. Hinther, $17,686; (vi) Mr.
Fleming, $17,686; and (vii) Mr. McKinzie, $120,554.
    
 
     Prior to the sale of the Senior Notes, GHI and GEPT held shares of
preferred stock of a subsidiary of IXC Communications. Such preferred stock was
redeemed with a portion of the proceeds of the sale of the Senior Notes at a
price equal to the amount paid for such stock plus accrued but unpaid dividends
at 10% per annum. The approximate amounts received by such persons with respect
to such redemption were: (i) GHI, $905,934; and (ii) GEPT, $897,115.
 
     Certain debentures of IXC Communications and one of its subsidiaries also
were redeemed at the original purchase price plus accrued but unpaid interest
with a portion of the proceeds of the sale of the Senior Notes. The approximate
amounts received by the following persons with respect to such redemption were:
(i) GEPT, $6,760,602; (ii) GHI, $6,788,635; (iii) Mr. Swett, $301,400; (iv) Mr.
Hinther, $50,233; and (v) Mr. Fleming, $50,233.
 
     In 1994, IXC Communications and ALC (which has since been acquired by
Frontier) formed a corporation to acquire all of the equity interests in MSM for
an aggregate purchase price of $1,500,000 from a wholly owned subsidiary of
General Electric Credit Corporation, an affiliate of GEIC. In addition, in 1995,
IXC Communications entered into a ten-year agreement with GE Capital
Communication, an affiliate of GEIC, to supply it with switched products to be
resold by GE Capital Communication. Mr. Bragin, a director of IXC
Communications, is Vice President of GEIC, which is the investment advisor to
GEPT. "See Business -- Switched Long Distance Services."
 
   
     Prior to the sale of the Senior Notes, a subsidiary of IXC Communications
was indebted to GEPT under the terms of a note agreement (the "GEPT Note
Agreement"). Certain stockholders of IXC Communications, including Messrs.
Swett, Hinther, Fleming, Williams, Willingham and Irwin and GHI, had pledged
their stock and debentures of IXC Communications (and, in the case of GHI, its
stock and debentures of a subsidiary of IXC Communications) as security for such
indebtedness. Such indebtedness, in the approximate principal amount of
$5,571,348, was repaid with a portion of the proceeds of the sale of the Senior
Notes and such pledges were released.
    
 
     Mr. Swett, Mr. Hinther, Mr. Fleming, GEPT and GHI purchased Senior Notes in
the amounts of $250,000, $50,000, $50,000, $20,000,000 and $5,000,000,
respectively, on October 5, 1995.
 
     For the years ended December 31, 1993, 1994 and 1995, the law firm of
Riordan & McKinzie, of which Mr. McKinzie, a director and stockholder of IXC
Communications, is a principal, provided certain legal services to IXC
Communications in the amount of approximately $1.1 million, $1.4 million, and
$2.6 million, respectively.
 
   
     Grumman Hill, a corporation whose president is Mr. Irwin, receives an
annual fee of $100,000 from the Company for performing certain advisory services
with respect to the management, operation and business development activities of
IXC Communications.
    
 
   
     Culp Communications Associates, of which Mr. Culp is President, received
approximately $19,100 and $100,600 in connection with Mr. Culp's consulting
services provided to the Company in 1994 and 1995, respectively. Mr. Culp is
continuing to provide such consulting services to the Company in 1996.
    
 
   
     Mr. Williams received fees for serving as an advisor to the Company's Board
of Directors of $12,500 in each of 1993, 1994 and 1995.
    
 
                                       51
<PAGE>   56
 
   
     Mr. Thomas entered into an employment agreement with IXC Communications in
August 1995 for a term of three years pursuant to which Mr. Thomas is entitled
to an annual base salary of $160,000, subject to adjustment in accordance with
IXC Communications' policies and procedures, and an annual bonus of up to
$75,000 if approved by the Board of Directors. Mr. Thomas was granted stock
options on August 28, 1995 for 243,353 shares of Common Stock at a price of
$3.01 per share vesting over a three-year period which, subject to certain
conditions, vest immediately upon a change of control of IXC Communications as
set forth in his employment agreement and stock option agreement. Additionally,
Mr. Thomas receives an annual automobile allowance of $8,000 and is entitled to
receive reimbursement of certain relocation costs.
    
 
   
     Mr. Guthrie entered into an employment agreement with IXC Communications in
December 1995 for a term of three years pursuant to which Mr. Guthrie is
entitled to an annual base salary of $200,000, subject to adjustment in
accordance with IXC Communications' policies and procedures, and an annual bonus
of up to $75,000 if approved by the Board of Directors. Mr. Guthrie was granted
stock options on January 19, 1996 for 242,490 shares of Common Stock at a price
of $3.01 per share vesting over a three-year period which, subject to certain
conditions, vest immediately upon a change of control of IXC Communications as
set forth in his employment agreement and stock option agreement. Additionally,
Mr. Guthrie receives an annual automobile allowance of $8,000 and is entitled to
receive reimbursement of certain relocation costs.
    
 
   
     In order to reduce the dilution of GEPT's current stock ownership caused by
this Offering, GEPT has agreed to acquire $12.5 million of Common Stock in the
GEPT Private Placement from the Company simultaneously with the closing of this
Offering. The price per share for such Common Stock will be the lower of: (i)
the price per share paid by the Underwriters in this Offering, that is, the
public offering price per share less Underwriters' discounts and commissions;
and (ii) $20 per share less a per share amount equal to the Underwriters'
discounts and commissions that would be payable if the public offering price in
this Offering were $20 per share. Assuming a public offering price of $18.00 per
share in the Offering, GEPT's price would be approximately $16.79 per share and
it would purchase 744,713 shares of Common Stock. Although GEPT will receive
Common Stock which has not been registered under the Securities Act, it will
also receive registration rights with respect to such stock and all other
Company Common Stock it owns, which rights are not exercisable until March 1,
1997. See "Description of Capital Stock -- Registration Rights." In the event
the amount of Common Stock purchased by the Underwriters in this Offering
increases through exercise of the U.S. Underwriters' over-allotment option, GEPT
will, subject to certain market conditions, also increase proportionately the
amount of Common Stock it purchases from the Company. The Company will be able
to use the $12.5 million proceeds, if it so elects, to pursue the Marca-Tel
opportunity in Mexico. See "Business -- Mexican Joint Venture." The closing of
this Offering and the GEPT Private Placement are each conditioned on the
concurrent closing of the other.
    
 
   
     In connection with the Offering and the GEPT Private Placement, GEPT, GHI
and Messrs. Irwin, Swett, Hinther, Fleming, Willingham, McKinzie and Williams
have entered into an agreement with IXC Communications pursuant to which they
were granted registration rights effective March 1, 1997 with respect to shares
of IXC Communications Common Stock held by them. See "Description of Capital
Stock -- Registration Rights."
    
 
                                       52
<PAGE>   57
 
                             PRINCIPAL STOCKHOLDERS
 
   
     The following table sets forth certain information as of June 12, 1996
regarding the beneficial ownership of: (i) each class of IXC Communications'
voting securities by each person who is known by IXC Communications to be the
beneficial owner of more than 5% of any class of IXC Communications' voting
securities, and (ii) each class of equity securities of IXC Communications by
(a) each director of IXC Communications, (b) each of IXC Communications' Named
Executive Officers (as defined under the heading "Management -- Executive
Compensation"), and (c) all directors and executive officers of IXC
Communications as a group. The table also gives effect to this Offering and the
GEPT Private Placement and assumes that no other person or entity listed in the
table purchases shares of Common Stock in this Offering.
    
 
   
<TABLE>
<CAPTION>
                                                            OWNERSHIP OF SERIES 3         AMOUNT OF SHARES
                                    AMOUNT OF SHARES       PREFERRED NOT AFFECTED      BENEFICIALLY OWNED(1)
                                 BENEFICIALLY OWNED(1)        BY THIS OFFERING       AFTER THE OFFERING AND THE
                                 PRIOR TO THE OFFERING     -----------------------   GEPT PRIVATE PLACEMENT(2)
                                ------------------------               PERCENT OF    --------------------------
                                             PERCENT OF                OUTSTANDING                PERCENTAGE OF
                                             OUTSTANDING   SERIES 3     SERIES 3                   OUTSTANDING
      NAME AND ADDRESS OF         COMMON       COMMON      PREFERRED    PREFERRED      COMMON        COMMON
       BENEFICIAL OWNER           STOCK         STOCK      STOCK(3)       STOCK        STOCK          STOCK
- ------------------------------- ----------   -----------   ---------   -----------   ----------   -------------
<S>                             <C>          <C>           <C>         <C>           <C>          <C>
Ralph J. Swett(4)(5)...........  3,037,061       12.5%         25.00          *       3,037,061         9.9%
Kenneth F. Hinther(4)(6).......  1,353,739        5.6             --         --       1,353,739         4.4
John R. Fleming(4).............  1,353,739        5.6             --         --       1,353,739         4.4
John J. Willingham(4)(7).......  1,272,568        5.2             --         --       1,272,568         4.1
Richard D. Irwin(8)............  8,745,760       35.9         995.58        7.9%      8,745,760        28.5
Carl W. McKinzie(9)............    231,917          *             --         --         231,917           *
  300 S. Grand Avenue,
  29th Floor
  Los Angeles, CA 90071
Phillip L. Williams(10)........    139,150          *             --         --         139,150           *
  633 West Fifth Street,
  Suite 4000
  Los Angeles, CA 90071-2007
Joe C. Culp(11)................     60,622          *             --         --          60,622           *
  #5 Hedge Lane
  Austin, TX 78746
Grumman Hill Investments,
  L.P.(12).....................  6,636,990       27.3             --         --       6,636,990        21.6
  191 Elm Street
  New Canaan, CT 06840
Grumman Hill Associates,
  Inc. ........................         --         --         915.42        7.3              --          --
  191 Elm Street
  New Canaan, CT 06840
Trustees of General Electric
  Pension Trust................  7,449,205       30.6       6,725.00       53.6       8,193,918        26.7
  3003 Summer Street
  Stamford, CT 06905
All directors and executive
  officers of IXC
  Communications as a group (11
  persons)..................... 16,194,511       66.0       1,020.58        8.1      16,194,511        66.0
</TABLE>
    
 
- ------------
  *  Less than 1%
 
   
 (1) Beneficial ownership is determined in accordance with the rules of the
     Commission and generally includes voting or investment power with respect
     to securities. Shares of common stock relating to options currently
     exercisable or exercisable within 60 days of June 12, 1996, are deemed
     outstanding for computing the percentage of the person holding such
     securities but are not deemed outstanding for computing the percentage of
     any other person. Except as indicated by footnote, and subject to community
     property laws where applicable, the persons named in the table above have
     sole voting and investment power with respect to all shares shown as
     beneficially owned by them.
    
 
                                       53
<PAGE>   58
 
   
 (2) Assumes no exercise of the U.S. Underwriters' over-allotment option. GEPT
     is assumed to purchase shares in the GEPT Private Placement based on a
     Price to Public in this Offering of $18.00 per share.
    
 
 (3) The shares of Series 3 Preferred Stock vote together with the shares of
     Common Stock as a class, except where otherwise required by law, and have
     the right to elect one member of the Board of Directors. See "Description
     of Capital Stock -- Preferred Stock."
 
 (4) The address of such persons is c/o IXC Communications, Inc. 5000 Plaza on
     the Lake, Suite 200, Austin, Texas 78746.
 
   
 (5) Includes 484,980 shares held by Ralph J. Swett, Trustee of the EMS 1994
     Trust and 484,980 shares held by Ralph J. Swett, Trustee of the RJS 1994
     Trust.
    
 
   
 (6) Includes 181,867 shares held by Kenneth F. Hinther, Trustee of LISA's 1994
     Trust, 181,867 shares held by Lisa Hinther, Trustee of KEN's 1994 Trust and
     121,245 shares held by Craig A. Hinther, Trustee for the Kenneth A. Hinther
     1996 Trust.
    
 
   
 (7) Includes 121,245 shares held by John McC. Witherspoon, Trustee of trust for
     the benefit of Jonica Lynn Willingham and 121,245 shares held by John McC.
     Witherspoon, Trustee of trust for the benefit of Russell Dennis Willingham.
    
 
   
 (8) Includes 1,628,216 shares held by The Irwin Family Limited Partnership
     dated January 4, 1995 and 341,341 shares held by The Irwin Family Limited
     Partnership #2. Also includes 21.16 shares of Series 3 Preferred Stock held
     by Richard D. Irwin Revocable Living Trust dated January 4, 1995, 915.42
     shares of Series 3 Preferred Stock held by Grumman Hill and 6,636,990
     shares of Common Stock held by GHI. Mr. Irwin is President of Grumman Hill,
     and Mr. Irwin may be deemed a beneficial owner of the shares owned by such
     entity.
    
 
 (9) Such shares are held by Trust for the Riordan & McKinzie Profit Sharing and
     Savings Plan for the benefit of Carl W. McKinzie.
 
   
(10) Such shares are held by Phillip L. Williams, as Trustee of the Phillip and
     Jane Williams Living Trust, UDT August 20, 1985.
    
 
   
(11) Represents shares issuable with respect to the exercise of options. See
     "Management -- Director Compensation."
    
 
   
(12) The sole general partner of Grumman Hill Investments, L.P. is Grumman Hill
     Company, L.L.C., a Delaware limited liability company, of which Mr. Irwin,
     a director of the Company, is the general manager and a beneficial owner of
     a membership interest. Mr. Irwin may be deemed to have voting and
     investment power with respect to the shares held of record by Grumman Hill
     Investments, L.P.
    
 
                                       54
<PAGE>   59
 
                          DESCRIPTION OF CAPITAL STOCK
 
   
     The Company's authorized capital stock consists of 100,000,000 shares of
Common Stock, par value $.01 per share, and 3,000,000 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"). The following summary of
certain provisions of the Common Stock and the Preferred Stock of IXC
Communications does not purport to be complete and is subject to, and qualified
in its entirety by, the Restated Certificate of Incorporation and Bylaws of IXC
Communications, as amended, which have been filed as Exhibits to the
Registration Statement of which this Prospectus is a part, and the provisions of
applicable law.
    
 
COMMON STOCK
 
   
     As of May 31, 1996, there were 24,335,255 outstanding shares of Common
Stock held by 77 holders of record. Each holder of Common Stock or Series 3
Preferred Stock (described below) is entitled to one vote per share on all
matters to be voted on by the stockholders, voting together as a single class.
Subject to the rights of the holders of the Preferred Stock, each holder of
Common Stock is entitled to receive ratably such dividends as may be declared
from time to time by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." In the event of the liquidation, dissolution or
winding up of IXC Communications, the holders of the Common Stock are entitled
to share ratably in all assets, if any, remaining, after payment of liabilities,
subject to the prior liquidation rights of holders of the Preferred Stock
described below. The Common Stock has no preemptive or other similar rights, and
there are no redemption or sinking fund provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock are, and the shares of
Common Stock offered hereby will be, when issued and delivered, validly issued,
fully paid and non-assessable.
    
 
PREFERRED STOCK
 
     IXC Communications has designated 2,000 shares of Preferred Stock as Series
1 Preferred Stock and 12,550 shares of Preferred Stock as Series 3 Preferred
Stock. All of the 12,550 shares of Series 3 Preferred Stock are issued and
outstanding, all of the previously outstanding shares of Series 1 Preferred
Stock have been redeemed and no other shares of Preferred Stock are outstanding.
The shares of Series 3 Preferred Stock were purchased upon the formation of IXC
Communications at a purchase price of $1.00 per share. The holders of Preferred
Stock, subject to the terms of the Restated Certificate of Incorporation, are
entitled to receive a liquidation preference of $1,000 per share, plus an amount
equal to all accrued and unpaid dividends and IXC Communications may voluntarily
redeem the Preferred Stock for $1,000 per share, plus an amount equal to all
accrued and unpaid dividends. In addition, the holders of Preferred Stock are
entitled to receive annual dividends, subject to the limitations of the Restated
Certificate of Incorporation and in the indenture relating to the Senior Notes,
in an amount equal to $100 per share, plus an amount determined by applying a
10% annual rate compounded annually, to any accrued but unpaid dividend amount
from the last day of the period when such dividend accrues to the actual date of
payment. Cumulative dividends, including accrued but unpaid interest, with
respect to the Series 3 Preferred Stock, as of March 31, 1996 were approximately
$5.2 million and as of December 31, 1996 will be $6.5 million, assuming that no
dividends are paid. The holders of the Series 3 Preferred Stock have the right
to elect one member of the Board of Directors.
 
     The Board of Directors of IXC Communications has the authority to issue the
Preferred Stock in one or more series and to fix the price, rights, preferences,
privileges and restrictions thereof, including dividend rights, dividend rates,
conversion rights, terms of redemption, redemption prices, liquidation
preferences, voting rights and the number of shares consisting of any series or
the designation of such series without further vote or action by the
stockholders. The issuance of Preferred Stock (or the ability of the Board of
Directors to issue Preferred Stock) may have the effect of delaying, deferring
or preventing a change in control of IXC Communications without further action
by the stockholders and may adversely affect the voting and other rights of the
holders of Common Stock. The issuance of Preferred Stock with voting or
conversion rights may adversely affect the voting power of the holders of Common
Stock. IXC Communications has no present intention to issue additional shares of
Preferred Stock.
 
REGISTRATION RIGHTS
 
   
     In June 1996, IXC Communications granted certain registration rights to
GEPT, GHI and Messrs. Irwin, Swett, Hinther, Fleming, Willingham, McKinzie and
Williams, in consideration of the GEPT
    
 
                                       55
<PAGE>   60
 
   
Private Placement and the lock-up arrangements each of the parties entered into
in connection with this Offering. Such registration rights cover all the shares
of Common Stock of IXC Communications held by such persons and are effective
from March 1, 1997 through April 30, 2000. Subject to certain exceptions,
whenever IXC Communications registers any of its Common Stock under the
Securities Act during the period the agreement is effective, whether or not for
sale for its own account, the holders of such registration rights are entitled
to written notice of the registration and are entitled to include (at IXC
Communications' expense) such Common Stock in such registration. GEPT also has
the right, subject to certain limitations, to require IXC Communications to use
its best efforts to file registration statements under the Securities Act
covering Common Stock held by GEPT. All fees, costs and expenses of such
registrations (other than underwriting discounts and commissions) will be borne
by IXC Communications.
    
 
   
     In August 1992, Telecom Services Group, Inc., a predecessor-in-interest to
IXC Communications ("TSGI"), granted certain registration rights under the
Securities Act to 20 former stockholders of TSGI with respect to certain shares
of Common Stock of the Company held by them (the "Registrable Securities").
Subject to certain limitations, if IXC Communications registers any of its
securities under the Securities Act, whether or not for sale for its own
account, the holders of such registration rights are entitled to written notice
of the registration and are entitled to include (at IXC Communications' expense)
such Registrable Securities in such registration. Such registration rights have
been amended in connection with this Offering to delay their effectiveness until
March 1, 1997. The holders of at least 25% of the Registrable Securities also
have the right to require IXC Communications, at any time after 180 days
following the effective date of IXC Communications' last registration, to file a
registration statement under the Securities Act with respect to such Registrable
Securities and IXC Communications is required to use its best efforts to effect
such registration, subject to certain conditions and limitations; provided,
however, that no registration rights are exercisable prior to March 1, 1997. All
fees, costs and expenses of such registrations (other than underwriting
discounts, commissions and transfer taxes) will be borne by IXC Communications.
    
 
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE CHARTER, THE BYLAWS AND THE
INDENTURE
 
     The Bylaws of IXC Communications provide that stockholders may call a
special meeting of stockholders only upon a request of stockholders owning at
least 50% of IXC Communications' outstanding capital stock entitled to vote. In
addition, in the event of a Change of Control (as such term is defined in the
indenture for the Senior Notes), holders of the Senior Notes will have the right
to require IXC Communications to purchase their Senior Notes, in whole or in
part, at a price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, Additional Payments and Liquidated Damages (as such
terms are defined in the indenture for the Senior Notes), if any, to the date of
purchase. These provisions, as well as the authorized and unissued preferred
stock described above, could discourage potential acquisition proposals and
could delay or prevent a change in control or management of IXC Communications.
 
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
 
     IXC Communications is subject to Section 203 of the DGCL which, subject to
certain exceptions, prohibits a Delaware corporation from engaging in certain
"business combinations" with any "interested stockholder" for a period of three
years following the date that such stockholder became an interested stockholder,
unless the transaction is approved in a prescribed manner. The business
combinations to which Section 203 applies include a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholders. In
general, Section 203 defines an "interested stockholder" as a person who,
together with affiliates and associates, owns (or within three years, did own)
15% or more of the outstanding voting stock of the corporation.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is U.S. Stock
Transfer Corporation.
 
LISTING
 
   
     The Common Stock has been approved for listing on the Nasdaq National
Market under the symbol "IIXC."
    
 
                                       56
<PAGE>   61
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
   
     Upon completion of this Offering and the GEPT Private Placement (assuming
no exercise of the U.S. Underwriters' over-allotment option), IXC Communications
will have a total of 30,679,968 shares of Common Stock outstanding. Of these
shares, the 5,600,000 shares of Common Stock offered hereby (6,440,000 shares if
the U.S. Underwriters' over-allotment option is exercised in full) will be
freely tradeable without restriction or registration under the Securities Act if
held by persons other than "affiliates" of the Company, as defined under the
Securities Act. The remaining 25,079,968 shares of Common Stock outstanding
(including the 744,713 shares assumed to be issued in the GEPT Private
Placement) will be "restricted securities" as that term is defined by Rule 144
promulgated under the Securities Act.
    
 
   
     In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) which has beneficially owned restricted securities
for at least two years, including persons who may be deemed "affiliates" of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of one percent of the number of shares
of Common Stock then outstanding (approximately 307,000 shares upon completion
of this Offering) or the average weekly trading volume of the Common Stock
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. An affiliate of IXC Communications may sell securities that are
not restricted without regard to the period of beneficial ownership but subject
to the volume restrictions described above. Sales under Rule 144 are also
subject to certain manner-of-sale provisions and notice requirements, and to the
availability of current public information about IXC Communications. In
addition, a person who is not deemed to have been an affiliate of the Company at
any time during the 90 days preceding a sale, and who has beneficially owned the
shares proposed to be sold for at least three years, would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above.
    
 
   
     Under Rule 144 (and subject to the conditions thereof), substantially all
of the 24,335,255 restricted shares, excluding the 744,713 shares of Common
Stock assumed to be issued in the GEPT Private Placement, will become eligible
for sale 90 days after this Offering. However, 23,643,716 of such shares, plus
the 744,713 shares issued in the GEPT Private Placement, are subject to lock-up
restrictions. Pursuant to these lock-up restrictions, certain of IXC
Communications' current stockholders, including its executive officers and
directors, have agreed that, subject to certain exceptions, they will not,
directly or indirectly, sell, offer or sell any shares of Common Stock without
the prior written consent of Morgan Stanley & Co. Incorporated, on behalf of the
Underwriters, for a period of 180 days from the date of this Prospectus. See
"Underwriters." Certain of the Company's existing stockholders have registration
rights with respect to their Common Stock. See "Description of Capital
Stock -- Registration Rights."
    
 
     In addition, the Commission has published a notice of proposed rule making
which, if adopted as proposed, would shorten the applicable holding periods
under Rule 144(d) and Rule 144(k) to one and two years, respectively (from the
current periods of two and three years). IXC Communications cannot predict
whether such amendments will be adopted or the effect thereof on the trading
market for its Common Stock.
 
   
     The preceding description does not include shares of Common Stock acquired
upon exercise of options under the 1994 Stock Plan or the 1996 Stock Plan. Rule
701 under the Securities Act provides that shares of Common Stock acquired on
the exercise of outstanding options may be resold by persons other than
affiliates, beginning 90 days after the date of this Prospectus, subject only to
the manner-of-sale provisions of Rule 144, and by affiliates beginning 90 days
after the date of this Prospectus, subject to all provisions of Rule 144 except
its two-year minimum holding period. As of the date of this Prospectus, IXC
Communications had reserved an aggregate of 1,212,450 and 2,121,787 shares of
Common Stock for issuance pursuant to the 1994 Stock Plan and the 1996 Stock
Plan, respectively. Options to purchase 1,047,800 shares were outstanding under
the 1994 Stock Plan and no options were outstanding under the 1996 Stock Plan.
As soon as practicable following this Offering, IXC Communications intends to
file a registration statement under the Securities Act to register shares of
Common Stock reserved for issuance under the 1994 Stock Plan and the 1996 Stock
Plan, thus permitting the resale of such shares by non-affiliates upon issuance
in the public market without restriction under the Securities Act. Such
registration statement will automatically become effective immediately upon
filing.
    
 
                                       57
<PAGE>   62
 
     Prior to this Offering, there has been no public market for the Common
Stock and no prediction can be made of the effect, if any, that the sale or
availability for sale of shares of additional Common Stock will have on the
market price of the Common Stock. Nevertheless, sales of substantial amounts of
such shares in the public market, or the perception that such sales could occur,
could materially and adversely affect the market price of the Common Stock and
could impair IXC Communications' future ability to raise capital through an
offering of its equity securities.
 
                      DESCRIPTION OF CERTAIN INDEBTEDNESS
 
   
     On October 5, 1995, IXC Communications issued and sold its Senior Notes in
the aggregate principal amount of $285.0 million to a group of institutional and
accredited investors. Of the approximately $268.8 million net proceeds of such
sale, IXC Communications placed $200.0 million into an escrow account to be used
for the Fiber Expansion, debt service of the Senior Notes and other capital
expenditures. The escrow agreement is an exhibit to the Registration Statement
of which this Prospectus is a part. As of May 31, 1996, approximately $152.9
million remained in such escrow account. On April 1, 1996, IXC Communications
filed a Registration Statement on Form S-4 with the Commission relating to the
exchange by IXC Communications in connection with the Senior Notes as required
by a registration rights agreement among IXC Communications and the initial
purchasers named therein. The indenture for the Senior Notes contains certain
covenants that, among other things, limit the ability of IXC Communications and
certain of its subsidiaries (the "Restricted Subsidiaries") to incur additional
indebtedness and issue preferred stock, pay dividends or make other
distributions, repurchase Equity Interests (as defined in the indenture for the
Senior Notes) or subordinated indebtedness, create certain liens, enter into
certain transactions with affiliates, sell assets of IXC Communications or its
Restricted Subsidiaries, issue or sell Equity Interests of IXC Communications'
Restricted Subsidiaries or enter into certain mergers and consolidations. In
addition, under certain limited circumstances, IXC Communications will be
required to offer to purchase Senior Notes at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest, Additional Payments
and Liquidated Damages, if any, to the date of purchase, with the excess
proceeds of certain Asset Sales (as defined in the indenture for the Senior
Notes). In the event of a Change of Control, holders of the Senior Notes will
have the right to require IXC Communications to purchase their Senior Notes, in
whole or in part, at a price equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, Additional Payments and Liquidated
Damages, if any, to the date of purchase. The indenture relating to the Senior
Notes is an exhibit to the Registration Statement of which this Prospectus is a
part.
    
 
   
     In addition, the Company may seek to obtain a revolving credit facility
under which it will be able to borrow up to a certain percentage of the amount
of qualifying accounts receivable of its subsidiaries. The indenture for the
Senior Notes limits the Company from borrowing under such facility in excess of
85% of the amount of such qualifying accounts receivable. The Company
anticipates that its obligations under such revolving credit facility, if it is
obtained, will be secured by intercompany notes from the subsidiaries owning the
accounts receivable, which notes will in turn be secured by such accounts
receivable. As of December 31, 1995, the Company's accounts receivable (net of
allowance for doubtful accounts) were approximately $5.5 million.
    
 
                                       58
<PAGE>   63
 
                                  UNDERWRITERS
 
     Under the terms and subject to the conditions of the Underwriting Agreement
dated the date hereof (the "Underwriting Agreement") the U.S. Underwriters named
below for whom Morgan Stanley & Co. Incorporated, CS First Boston Corporation
and Dillon, Read & Co. Inc. are acting as U.S. Representatives, and the
International Underwriters for whom Morgan Stanley & Co. International Limited,
CS First Boston Limited and Dillon, Read & Co. Inc. are acting as International
Representatives, have severally agreed to purchase, and IXC Communications has
agreed to sell to them severally, the respective number of shares of Common
Stock set forth opposite the names of each Underwriter below.
 
   
<TABLE>
<CAPTION>
                                                               NUMBER                     
                             UNDERWRITER                      OF SHARES                   
    --------------------------------------------------------- ---------            
    <S>                                                       <C>                         
    U.S. Underwriters:                                                                    
      Morgan Stanley & Co. Incorporated......................          
      CS First Boston Corporation............................          
      Dillon, Read & Co. Inc.................................          
                                                              ---------                   
              Subtotal....................................... 4,480,000
                                                              ---------                   
    International Underwriters:                                                           
      Morgan Stanley & Co. International Limited.............          
      CS First Boston Limited................................          
      Dillon, Read & Co. Inc. ...............................          
                                                              ---------                   
              Subtotal....................................... 1,120,000
                                                              ---------                   
                   Total..................................... 5,600,000
                                                              =========                   
</TABLE>
    
 
     The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives are collectively referred
to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the Underwriters to pay
for and accept delivery of the shares of Common Stock offered hereby are subject
to the approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all of the shares
of Common Stock offered hereby (other than those covered by the U.S.
Underwriters' over-allotment option described below) if any such shares are
taken.
 
     Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (a)
it is not purchasing any U.S. Shares (as defined herein) for the account of
anyone other than a United States or Canadian Person (as defined herein) and (b)
it has not offered or sold, and will not offer or sell, directly or indirectly,
any U.S. Shares or distribute any prospectus relating to the U.S. Shares outside
of the United States or Canada or to anyone other than a United States or
Canadian Person. Pursuant to the Agreement between U.S. and International
Underwriters, each International Underwriter has represented and agreed that,
with certain exceptions: (i) it is not purchasing any International Shares (as
defined herein) for the account of any United States or Canadian Person and (ii)
it has not offered or sold, and will not offer or sell, directly or indirectly,
any International Shares or distribute any prospectus relating to the
International Shares in the United States or in any province or territory of
Canada or to any United States or Canadian Person. The foregoing limitations do
not apply to stabilization transactions or to certain other transactions
specified in the Agreement between U.S. and International Underwriters. As used
herein, "United States or Canadian Person" means any national or
 
                                       59
<PAGE>   64
 
resident of the United States or of any province or territory of Canada, or any
corporation, pension, profit-sharing or other trust or other entity organized
under the laws of the United States or Canada or of any political subdivision
thereof (other than a branch located outside the United States and Canada of any
United States or Canadian Person) and includes any United States or Canadian
branch of a person who is otherwise not a United States or Canadian Person. All
shares of Common Stock to be purchased by the U.S. Underwriters and the
International Underwriters are referred to herein as the "U.S. Shares" and the
"International Shares," respectively.
 
     Pursuant to the Agreement between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price of any
shares sold shall be the Price to Public set forth on the cover page hereof, in
United States dollars, less an amount not greater than the per share amount of
the concession to dealers set forth below.
 
     Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any shares of Common Stock, directly or indirectly, in any
province or territory of Canada in contravention of the securities laws thereof
and has represented that any offer of Common Stock in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
shares of Common Stock a notice stating in substance that, by purchasing such
Common Stock, such dealer represents and agrees that it has not offered or sold,
and will not offer or sell, directly or indirectly, any of such Common Stock in
any province or territory of Canada or to, or for the benefit of, any resident
of any province or territory of Canada in contravention of the securities laws
thereof and that any offer of Common stock in Canada will be made only pursuant
to an exemption from the requirement to file a prospectus in the province or
territory of Canada in which such offer is made, and that such dealer will
deliver to any other dealer to whom it sells any of such Common Stock a notice
to the foregoing effect.
 
   
     Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and during the period of six months after the date hereof will not offer
to sell any shares of Common Stock to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (the "U.K. Regulations"); (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the U.K. Regulations (to the extent applicable) with
respect to anything done by it in relation to the shares of Common Stock offered
hereby in, from or otherwise involving the United Kingdom; and (iii) it has only
issued or passed on and will only issue or pass on to any person in the Untied
Kingdom any document received by it in connection with the issue of the shares
of Common Stock, other than any document which consists of, or is a part of,
listing particulars, supplementary listing particulars or any other document
required or permitted to be published by listing rules under Article IV of the
Financial Services Act 1986, if that person is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995, or is a person to whom the document may otherwise
lawfully be issued or passed on.
    
 
     The Underwriters initially propose to offer the shares of Common Stock
directly to the public at the Price to Public set forth on the cover page of
this Prospectus and part to certain dealers at a price that represents a
concession of not in excess of $          per share under the Price to Public.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $          per share to other Underwriters or to certain dealers.
After the initial offering of the shares of Common Stock, the offering price and
other selling terms may from time to time be varied by the Representatives.
 
   
     Pursuant to the Underwriting Agreement, IXC Communications has granted to
the U.S. Underwriters, an option exercisable for 30 days after the date of this
Prospectus, to purchase up to 840,000 additional shares of Common Stock at the
Price to Public set forth on the cover page hereof, less underwriting discounts
and
    
 
                                       60
<PAGE>   65
 
commissions. To the extent such option is exercised, each U.S. Underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of such additional shares of Common Stock as the number set
forth next to such U.S. Underwriter's name in the preceding table bears to the
total number of shares of U.S. Shares offered by the U.S. Underwriters hereby.
 
     IXC Communications and each of the executive officers and directors of IXC
Communications, GHI, certain trusts and partnerships and GEPT have agreed that
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the Underwriters, it will not (A) register for sale, issue, offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (B) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (A) or (B) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise for a period of 180 days after the date of this Prospectus, other than
(A) the shares of Common Stock to be sold hereunder, (B) any shares of Common
Stock issued by the Company upon the exercise of an option issued pursuant to
the Company's 1994 Stock Plan or 1996 Stock Plan and (C) the issuance of
additional options to purchase shares of Common Stock pursuant to the Company's
1994 Stock Plan or 1996 Stock Plan. See "Shares Eligible for Future Sale."
 
     IXC Communications has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.
 
     The Underwriters have informed IXC Communications that they do not intend
sales to discretionary accounts to exceed 5% of the total number of shares of
Common Stock offered by them.
 
     Dillon, Read & Co. Inc. and CS First Boston Corporation acted as the
initial purchasers of the Senior Notes and received customary compensation in
connection therewith.
 
   
     At the Company's request, the Underwriters have reserved for sale up to
five percent of the Common Stock offered hereby, at the Price to Public, to
certain persons designated by the Company. Such shares generally will be
eligible for immediate resale. The number of shares of Common Stock for sale to
the general public will be reduced to the extent such persons purchase such
reserved shares. Any reserved shares not so purchased will be offered by the
Underwriters to the general public on the same basis as the other shares offered
hereby.
    
 
PRICING OF THE OFFERING
 
     Prior to this Offering, there has been no public market for the Common
Stock of IXC Communications. The initial public offering price will be
determined by negotiations between IXC Communications and the Representatives.
Among the factors considered in determining the initial public offering price
will be the future prospects of the Company and its industry in general, sales,
earnings and certain other financial and operating information of the Company in
recent periods, and certain ratios and market prices of securities and certain
financial and operating information of companies engaged in activities similar
to those of the Company. The estimated initial public offering price range set
forth on the cover page of this Preliminary Prospectus is subject to change as a
result of market conditions and other factors.
 
                                 LEGAL MATTERS
 
     The validity of the issuance of the Common Stock offered hereby will be
passed upon for IXC Communications by Riordan & McKinzie. Certain legal matters
in connection with the Common Stock offered hereby will be passed upon for the
Underwriters by Shearman & Sterling. Carl W. McKinzie, a director and
stockholder of IXC Communications, is a stockholder of Riordan & McKinzie. IXC
Communications has granted an option covering shares of Common Stock to another
stockholder of Riordan & McKinzie.
 
                                       61
<PAGE>   66
 
                                    EXPERTS
 
     The consolidated financial statements of IXC Communications at December 31,
1994 and 1995, and for each of the three years in the period ended December 31,
1995, appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
 
                             ADDITIONAL INFORMATION
 
     IXC Communications has filed with the Commission a Registration Statement
on Form S-1 under the Securities Act for the registration of the Common Stock
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to IXC Communications and the Common Stock offered hereby, reference is
made to the Registration Statement and to the exhibits thereto. Statements
contained in this Prospectus concerning the contents of any contract or other
document are not necessarily complete. With respect to each such contract or
other document that is an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such reference.
 
     IXC Communications has also filed with the Commission a Registration
Statement on Form S-4 under the Securities Act relating to an exchange of
12 1/2% Series A Senior Notes due 2005 for 12 1/2% Series B Senior Notes due
2005 pursuant to the indenture for the Senior Notes.
 
     Such Registration Statements, the exhibits and schedules forming a part
thereof and the reports and other information filed by IXC Communications with
the Commission in accordance with the Exchange Act may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also be
available for inspection and copying at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained upon written request from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
 
     Following the offerings covered by such Registration Statements, IXC
Communications will comply with the information and reporting requirements of
the Securities Exchange Act of 1934, as amended, and, in accordance therewith
will file periodic reports, proxy statements and other information with the
Commission.
 
                                       62
<PAGE>   67
 
                                    GLOSSARY
 
     Access charges -- The fees paid by long distance carriers to LECs for
originating and terminating long distance calls on their local networks.
 
     ALC -- ALC Communications Corporation.
 
   
     Allnet -- Allnet Communication Services, Inc.
    
 
     ATM (asynchronous transfer mode) -- An information transfer standard that
is one of a general class of technologies that relay traffic by way of an
address contained within the first five bytes of a standard 53-byte-long packet
or cell. The ATM format can be used by many different information systems,
including local area networks, to deliver traffic at varying rates, permitting a
mix of voice, video and data (multimedia).
 
     AT&T -- AT&T Corp.
 
     Backbone -- The through-portions of a transmission network, as opposed to
spurs which branch off the through-portions.
 
     Bandwidth -- The range of frequencies that can be transmitted through a
medium, such as glass fibers, without distortion. The greater the bandwidth, the
greater the information-carrying capacity of such medium.
 
     Capacity-intensive -- Refers to products which use comparatively large
amounts of bandwidth.
 
     Broadband -- Broadband communications systems can transmit large quantities
of voice, data and video. Examples of broadband communication systems include
DS-3 fiber optic systems, which can transmit 672 simultaneous voice
conversations, or a broadcast television station signal, that transmits high
resolution audio and video signals into the home. Broadband connectivity is also
an essential element for interactive multimedia applications.
 
   
     Cable & Wireless -- Cable & Wireless, P.L.C.
    
 
     CAP (Competitive Access Provider) -- A company that provides its customers
with an alternative to the LEC for local transport of private line, special
access and interstate transport of switched access telecommunications service.
 
     Carriers -- Companies that provide telecommunications transmission
services.
 
     Central Offices -- The switching centers or central switching facilities of
the LECs.
 
     Dedicated -- Refers to telecommunications lines dedicated or reserved for
use by particular customers along predetermined routes.
 
     Digital -- A method of storing, processing and transmitting information
through the use of distinct electronic or optical pulses that represent the
binary digits 0 and 1. Digital transmission and switching technologies (both
fiber and microwave) employ a sequence of these pulses to represent information
as opposed to the continuously variable analog signal. The precise digital
numbers minimize distortion (such as graininess or snow in the case of video
transmission, or static or other background distortion in the case of audio
transmission).
 
     DS-1, DS-3 -- Standard telecommunications industry digital signal formats,
which are distinguishable by bit rate (the number of binary digits (0 and 1)
transmitted per second). DS-0 service has a bit rate of 64 kilobits per second
and can transmit only one voice conversation at a time. DS-1 service has a bit
rate of 1.544 megabits per second and can transmit 24 simultaneous voice
conversations. DS-3 service has a bit rate of 45 megabits per second and can
transmit 672 simultaneous voice conversations.
 
     DS-3 miles -- A measure of the total capacity and length of a transmission
path, calculated as the capacity of the transmission path in DS-3s multiplied by
the length of the path in miles.
 
     800/888 Service -- A telecommunications service for businesses that allows
calls to be made to a specific location at no charge to the calling party. Use
of the "800" or "888" service code denotes calls that are to be
 
                                       A-1
<PAGE>   68
 
billed to the receiving party. A computer database in the provider's network
translates the 800 or 888 number into a conventional telephone number.
 
     Enhanced data services -- Products and services designed for the transport
and delivery of integrated information to include voice, data and video and any
combination thereof.
 
   
     Excel -- EXCEL Communications, Inc.
    
 
     Facilities-based carrier -- Carriers who own transmission facilities.
 
     FCC -- Federal Communications Commission.
 
     Frame Relay -- A high-speed, data-packet switching service used to transmit
data between computers. Frame Relay supports data units of variable lengths at
access speeds ranging from 56 kilobits per second to 1.5 megabits per second.
This service is well-suited for connecting local area networks, but is not
appropriate for voice and video applications due to the variable delays which
can occur. Frame Relay was designed to operate at high speeds on modern fiber
optic networks.
 
     Frontier -- Frontier Corporation.
 
     GAAP -- Generally Accepted Accounting Principles
 
     GE Capital Communication -- GE Capital Communication Services Corporation.
 
     GTE -- GTE Corporation.
 
     ISDN (Integrated Services Digital Network) -- A complex networking concept
designed to provide a variety of voice, data and digital interface standards.
Incorporated into ISDN are many new enhanced services, such as high-speed data
file transfer, desktop video conferencing, telepublishing, telecommuting,
telepresence learning-remote collaboration, data network linking and home
information services.
 
     Hubs -- Collection centers located centrally in an area where
telecommunications traffic can be aggregated for transport and distribution.
 
     Interexchange Carrier -- A company providing inter-LATA or long distance
services between LATAs on an intrastate or interstate basis.
 
     Inter-LATA -- InterLATA calls are calls that pass from one LATA to another.
Typically, these calls are referred to as long distance calls.
 
     Intra-LATA -- IntraLATA calls are those local calls that originate and
terminate within the same LATA.
 
     Kilobit -- One thousand bits of information. The information-carrying
capacity (i.e., bandwidth) of a circuit may be measured in "kilobits per
second."
 
     LATAs (local access and transport areas) -- The approximately 200
geographic areas that define the areas between which the RBOCs were prohibited
from providing long distance services prior to the Telecommunications Act.
 
     LCI -- LCI International, Inc.
 
     LEC (local exchange carrier) -- A company providing local telephone
services.
 
     Local loop -- A circuit within a LATA.
 
     Long-Haul Circuit -- A private, dedicated telecommunications circuit
between locations in different LATAs.
 
   
     MCI -- MCI Communications Corporation.
    
 
     Megabit -- One million bits of information. The information-carrying
capacity (i.e., bandwidth) of a circuit may be measured in "megabits per
second."
 
                                       A-2
<PAGE>   69
 
     MOU -- Minutes of use of long distance service.
 
     Off-net -- Refers to circuits on transmission facilities not owned by the
Company.
 
     On-net -- Refers to circuits on transmission facilities owned by the
Company.
 
     Optronic -- a combination of optical and electronic equipment.
 
     RBOCs (regional Bell operating companies) -- The seven local telephone
companies (formerly part of AT&T) established by court decree in 1982.
 
     Rockwell International -- Rockwell International Corp.
 
     Route Miles -- The measure of the length of a transmission path in miles.
 
     SONET (synchronous optical network technology) -- An electronics and
network architecture for variable-bandwidth products which enables transmission
of voice, video and data (multimedia) at very high speeds.
 
   
     Sprint -- Sprint Corp.
    
 
     Switch -- A device that opens or closes circuits or selects the paths or
circuits to be used for transmission of information. Switching is a process of
interconnecting circuits to form a transmission path between users.
 
     Switched long distance services -- Telecommunications services such as
residential long distance services that are processed through digital switches
and delivered over long-haul circuits and other transmission facilities.
 
     WilTel -- WilTel Network Services, Inc.
 
     WorldCom -- WorldCom, Inc.
 
                                       A-3
<PAGE>   70
 
                            IXC COMMUNICATIONS, INC.
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        -----
<S>                                                                                     <C>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED
  DECEMBER 31, 1995...................................................................  F-2
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors........................................................  F-3
Consolidated Balance Sheets as of December 31, 1994 and 1995 and as of March 31, 1996
  (unaudited).........................................................................  F-4
Consolidated Statements of Operations for the years ended December 31, 1993, 1994 and
  1995 and for the three months ended March 31, 1995 and 1996 (unaudited).............  F-5
Consolidated Statements of Changes in Stockholders' Equity for the years ended
  December 31, 1993, 1994 and 1995 and for the three months ended March 31, 1996
  (unaudited).........................................................................  F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994 and
  1995 and for the three months ended March 31, 1995 and 1996 (unaudited).............  F-7
Notes to Consolidated Financial Statements............................................  F-9
</TABLE>
 
                                       F-1
<PAGE>   71
 
                            IXC COMMUNICATIONS, INC.
 
                         UNAUDITED PRO FORMA CONDENSED
                      CONSOLIDATED STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 1995
   
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
    
 
     Effective January 1, 1996, IXC Communications, Inc. acquired the minority
interest of Switched Services Communications, L.L.C. ("SSC") previously owned by
Excel Telecommunications, Inc. The acquisition has been accounted for using the
purchase method of accounting for business combinations.
 
     The unaudited pro forma condensed consolidated statement of operations of
IXC Communications, Inc. ("IXC" or the "Company") for the year ended December
31, 1995 reflects the acquisition by the Company of the minority interest of SSC
as if the acquisition had occurred on January 1, 1995.
 
     The unaudited pro forma condensed consolidated statement of operations
should be read in conjunction with the historical financial statements of IXC,
related notes to financial statements and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" appearing elsewhere in this
Prospectus. The pro forma information is not necessarily indicative of the
results that would have resulted had the acquisition of the minority interest of
SSC actually occurred on the dates assumed herein, nor is the pro forma
information indicative of the future results of IXC and its consolidated
subsidiaries.
 
   
<TABLE>
<CAPTION>
                                                               IXC                            IXC
                                                            HISTORICAL                     PRO FORMA
                                                            ----------     ADJUSTMENTS     ---------
                                                                           -----------
                                                                            (NOTE 1)
<S>                                                         <C>            <C>             <C>
Net operating revenues..................................     $  91,001            --       $  91,001
Operating expenses......................................        89,572       $ 1,117(a)       90,689
                                                              --------       -------        --------
                                                                 1,429        (1,117)            312
Interest income.........................................         3,020            --           3,020
Interest expense........................................       (14,597)           --         (14,597)
Equity in net income of unconsolidated subsidiaries.....            19            --              19
Minority interest.......................................         5,218        (5,450)(b)        (232)
                                                              --------       -------        --------
Loss before income taxes and extraordinary item.........        (4,911)       (6,567)        (11,478)
Income tax benefit......................................         1,693         2,180(c)        3,873
                                                              --------       -------        --------
Loss before extraordinary item..........................     $  (3,218)      $(4,387)      $  (7,605)
                                                              ========       =======        ========
Loss per common share before extraordinary item.........     $    (.20)                    $    (.38)
                                                              ========                      ========
Weighted average common shares..........................        25,128                        25,128
                                                              ========                      ========
</TABLE>
    
 
NOTE 1 -- PRO FORMA ADJUSTMENTS
 
     The following pro forma adjustments reflect the impact of purchase
accounting related to the acquisition of the minority interest of SSC, as if it
had been acquired on January 1, 1995 (in thousands):
 
<TABLE>
    <S>                                                                        <C>
    Amortization of goodwill...............................................    $ 1,117(a)
    Elimination of minority interest in net loss of SSC....................    $ 5,450(b)
    Tax benefit of additional net losses of SSC (at 40%)...................    $ 2,180(c)
</TABLE>
 
                                       F-2
<PAGE>   72
 
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Directors
IXC Communications, Inc.
 
     We have audited the accompanying consolidated balance sheets of IXC
Communications, Inc. and its subsidiaries as of December 31, 1994 and 1995, and
the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of IXC
Communications, Inc. and its subsidiaries at December 31, 1994 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
 

                                          [SIG]
 
Austin, Texas
   
March 1, 1996, except for Note 18,
    
   
  as to which the date is June 12, 1996
    
 
                                       F-3
<PAGE>   73
 
                            IXC COMMUNICATIONS, INC.
 
                          CONSOLIDATED BALANCE SHEETS
   
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
    
 
   
<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                                  --------------------     MARCH 31,
                                                                                    1994        1995         1996
                                                                                  --------    --------    -----------
                                                                                                          (UNAUDITED)
<S>                                                                               <C>         <C>         <C>
ASSETS
Current assets:
  Cash and cash equivalents....................................................   $  6,048    $  6,915     $   5,492
  Accounts receivable:
    Trade, net of allowance for doubtful accounts of $762 in 1994, $1,769 in
     1995 and $1,490 in 1996...................................................      3,421       5,537         6,213
    Note receivable -- related party...........................................         --         238           227
    Other......................................................................        295         544           531
                                                                                  --------    --------      --------
                                                                                     3,716       6,319         6,971
  Income tax receivable........................................................         --       1,296           381
  Net current deferred tax asset (Note 10).....................................        118         450           450
  Prepaid expenses.............................................................      1,038       1,069         1,689
                                                                                  --------    --------      --------
    Total current assets.......................................................     10,920      16,049        14,983
Property and equipment:
  Land.........................................................................      2,284       2,344         2,344
  Buildings and improvements...................................................        896       5,167         5,424
  Transmission system..........................................................    108,564     138,659       150,996
  Construction in progress.....................................................      5,943       5,658        14,094
                                                                                  --------    --------      --------
                                                                                   117,687     151,828       172,858
  Less: accumulated depreciation...............................................    (28,822)    (45,429)      (50,696)
                                                                                  --------    --------      --------
                                                                                    88,865     106,399       122,162
Prepaid contract costs (Note 11)...............................................      1,399         989           887
Escrow under Senior Notes (Note 3).............................................         --     198,266       187,584
Deferred charges and other assets..............................................      4,225      14,772        20,851
                                                                                  --------    --------      --------
         Total assets..........................................................   $105,409    $336,475     $ 346,467
                                                                                  ========    ========      ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable -- trade....................................................   $  1,596    $  6,792     $   8,232
  Accrued taxes................................................................      3,864       2,924         3,138
  Unearned income..............................................................        988       1,693         1,859
  Accrued interest.............................................................         76       8,748        18,010
  Current portion of long-term debt -- related parties (Note 4)................      6,850       1,371         1,394
  Current portion of long-term debt and lease obligations (Notes 4 and 5)......     11,688       3,163         9,032
  Other current liabilities....................................................      1,757         941           788
                                                                                  --------    --------      --------
    Total current liabilities..................................................     26,819      25,632        42,453
Long-term debt -- related parties, less current portion (Note 4)...............     24,653       6,446         6,164
Long-term debt and lease obligations, less current portion (Notes 4 and 5).....     25,933     287,814       294,741
Net noncurrent deferred tax liability (Note 10)................................      9,818       8,303         6,949
Other noncurrent liabilities...................................................      2,429         469           621
Commitments and contingencies (Notes 5, 6, 9 and 14)
Minority interest..............................................................        168         953           380
Preferred stock of consolidated subsidiary held by minority interests (Note
  6)...........................................................................      1,400          --            --
Stockholders' equity (deficit) (Note 6):
  Preferred stock; 3,000 shares authorized:
    10% Senior Series 1 cumulative preferred stock, $.01 par value; 1 share
     issued and outstanding in 1994, none in 1995 and 1996.....................      1,460          --            --
    10% Junior Series 3 cumulative preferred stock, $.01 par value; 13 shares
     issued and outstanding in 1994, 1995 and 1996 (aggregate liquidation
     preference of $17,326 at December 31, 1995 and $17,754 at March 31,
     1996).....................................................................         13          13            13
  Common Stock, $.01 par value; 100,000 shares authorized; 24,335 shares issued
    and outstanding in 1994, 1995 and 1996.....................................        243         243           243
  Additional paid-in capital...................................................     29,430      29,430        29,430
  Accumulated deficit..........................................................    (16,957)    (22,828)      (34,527)
                                                                                  --------    --------      --------
  Total stockholders' equity (deficit).........................................     14,189       6,858        (4,841)
                                                                                  --------    --------      --------
         Total liabilities and stockholders' equity (deficit)..................   $105,409    $336,475     $ 346,467
                                                                                  ========    ========      ========
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-4
<PAGE>   74
 
                            IXC COMMUNICATIONS, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
   
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
    
 
   
<TABLE>
<CAPTION>
                                                                                        THREE MONTHS ENDED
                                                 YEAR ENDED DECEMBER 31,                     MARCH 31,
                                         ---------------------------------------     -------------------------
                                           1993           1994           1995           1995           1996
                                         ---------     ----------     ----------     ----------     ----------
                                                                                            (UNAUDITED)
<S>                                      <C>           <C>            <C>            <C>            <C>
Net operating revenues (Note 11).......  $  71,123     $   80,663     $   91,001     $   21,766     $   26,250
Operating expenses:
  Cost of services.....................     37,823         33,896         39,852          8,175         15,600
  Operations and administration........     22,835         20,561         32,282          6,256         10,417
  Depreciation and amortization........     21,061         12,121         17,438          3,619          6,010
                                         ----------    -----------    -----------    -----------    -----------
                                           (10,596)        14,085          1,429          3,716         (5,777)
Interest income........................        215            211            468            111            126
Interest income on escrow under Senior
  Notes................................         --             --          2,552             --          2,557
Interest expense -- related parties....     (1,026)        (2,649)        (2,468)          (792)          (149)
Interest expense -- other..............     (3,917)        (3,456)       (12,129)        (1,081)        (9,721)
Contract settlement costs..............        (59)            --             --             --             --
Write-down of property and equipment
  (Note 8).............................    (37,960)            --             --             --             --
Equity in net income (loss) of
  unconsolidated subsidiaries..........         --            (94)            19             (4)            (5)
                                         ----------    -----------    -----------    -----------    -----------
Income (loss) before (provision)
  benefit for income taxes and minority
  interest and extraordinary items.....    (53,343)         8,097        (10,129)         1,950        (12,969)
Benefit (provision) for income taxes
  (Note 10)............................     21,977         (3,157)         1,693           (966)         1,363
Minority interest......................       (446)            77          5,218            283            (93)
                                         ----------    -----------    -----------    -----------    -----------
Income (loss) before extraordinary
  items................................    (31,812)         5,017         (3,218)         1,267        (11,699)
Extraordinary items:
  Extraordinary gain (loss) on early
     extinguishment of debt (involving
     a related party in 1994), less
     applicable (provision) benefit for
     income taxes of ($1,472) in 1994
     and $1,164 in 1995 (Note 4).......         --          2,298         (1,747)            --             --
  Extraordinary gain on forgiveness of
     deferred lease obligations, less
     applicable income taxes of $5,848
     (Note 5)..........................      8,495             --             --             --             --
                                         ----------    -----------    -----------    -----------    -----------
Net income (loss)......................    (23,317)         7,315         (4,965)         1,267        (11,699)
Dividends applicable to preferred
  stock................................      1,567          1,752          1,843            479            433
                                         ----------    -----------    -----------    -----------    -----------
Net income (loss) applicable to common
  stockholders.........................  $ (24,884)    $    5,563     $   (6,808)    $      788     $  (12,132)
                                         ==========    ===========    ===========    ===========    ===========
Income (loss) per common share:
  Before extraordinary items...........  $   (1.39)    $      .13     $     (.20)    $      .03     $     (.48)
  Extraordinary gain (loss)............        .35            .09           (.07)            --             --
                                         ----------    -----------    -----------    -----------    -----------
  Net income (loss)....................  $   (1.04)    $      .22     $     (.27)    $      .03     $     (.48)
                                         ==========    ===========    ===========    ===========    ===========
Weighted average common shares.........     24,026         25,011         25,128         25,226         25,029
                                         ==========    ===========    ===========    ===========    ===========
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-5
<PAGE>   75
 
                            IXC COMMUNICATIONS, INC.
 
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
   
                                 (IN THOUSANDS)
    
 
   
<TABLE>
<CAPTION>
                                                   10% SENIOR SERIES 1      10% JUNIOR 3
                                 COMMON STOCK        PREFERRED STOCK      PREFERRED STOCK
                              ------------------   -------------------   ------------------   ADDITIONAL
                              NUMBER OF            NUMBER OF             NUMBER OF             PAID-IN     ACCUMULATED
                               SHARES     AMOUNT    SHARES     AMOUNT     SHARES     AMOUNT    CAPITAL       DEFICIT      TOTAL
                              ---------   ------   ---------   -------   ---------   ------   ----------   -----------   --------
<S>                           <C>         <C>      <C>         <C>       <C>         <C>      <C>          <C>           <C>
Balance at December 31,
  1992......................    21,974     $219         1      $ 1,300       13       $ 13     $ 29,451     $    (955)   $ 30,028
  Issuance of preferred
    stock...................        --       --                    160       --         --           --            --         160
  Issuance of common
    stock...................     2,300       23        --           --       --         --          (23)           --          --
  Net loss..................        --       --        --           --       --         --           --       (23,317)    (23,317)
                               -------
                                   ---
                                           ----    ---- ---    -------   ---- ---     ----      -------     ---------    ---------
Balance at December 31,
  1993......................    24,274      242         1        1,460       13         13       29,428       (24,272)      6,871
  Issuance of common
    stock...................        61        1        --           --       --         --            2            --           3
  Net income................        --       --        --           --       --         --           --         7,315       7,315
                               -------
                                   ---
                                           ----    ---- ---    -------   ---- ---     ----      -------     ---------    ---------
Balance at December 31,
  1994......................    24,335      243         1        1,460       13         13       29,430       (16,957)     14,189
  Redemption of preferred
    stock...................        --       --        (1)      (1,460)      --         --           --            --      (1,460)
  Net income................        --       --        --           --       --         --           --        (4,965)     (4,965)
  Dividends
    paid -- preferred
    stock -- 10% Senior
    Series 1................        --       --        --           --       --         --           --          (505)       (505)
  Dividends
    paid -- preferred stock
    of consolidated
    subsidiary..............        --       --        --           --       --         --           --          (401)       (401)
                               -------
                                   ---
                                           ----    ---- ---    -------   ---- ---     ----      -------     ---------    ---------
Balance at December 31,
  1995......................    24,335      243        --           --       13         13       29,430       (22,828)      6,858
  Net loss (unaudited)......        --       --        --           --       --         --           --       (11,699)    (11,699)
                               -------
                                   ---
                                           ----    ---- ---    -------   ---- ---     ----      -------     ---------    ---------
Balance at March 31, 1996
  (unaudited)...............    24,335     $243        --      $    --       13       $ 13     $ 29,430     $ (34,527)   $ (4,841)
                              ==========   ====    =======     =======   =======      ====      =======     =========    =========
</TABLE>
    
 
                            See accompanying notes.
 
                                       F-6
<PAGE>   76
 
                            IXC COMMUNICATIONS, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                         THREE MONTHS ENDED
                                                      YEAR ENDED DECEMBER 31,                MARCH 31,
                                                -----------------------------------     --------------------
                                                  1993         1994         1995         1995         1996
                                                --------     --------     ---------     -------     --------
                                                                                            (UNAUDITED)
<S>                                             <C>          <C>          <C>           <C>         <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss).............................  $(23,317)    $  7,315     $  (4,965)    $ 1,267     $(11,699)
Adjustments to reconcile net income (loss) to
  cash provided by operating activities:
  Depreciation................................    20,651       11,131        16,608       3,444        5,267
  Amortization................................       410          990           830         175          743
  Amortization of debt issue costs and Senior
     Note discount............................       130          472           858         215          361
  Interest income on escrow under Senior
     Notes....................................        --           --        (2,552)         --       (2,557)
  Provision for doubtful accounts.............       447        1,565         1,505         150          176
  Equity in net (income) loss of
     unconsolidated subsidiaries..............        --           94           (19)          4            5
  Minority interest in net income (loss) of
     subsidiaries.............................       446          (77)       (5,218)       (283)          93
  Extraordinary (gain) loss on early
     extinguishment of debt...................        --       (3,770)        2,911          --           --
  Gain on sale of property and equipment......      (330)         (90)           --          --           --
  Write-down of property and equipment........    37,960           --            --          --           --
  Extraordinary gain on forgiveness of
     deferred lease obligations...............   (14,343)          --            --          --           --
  Deferred operating lease costs..............     8,910           --            --          --           --
  Changes in assets and liabilities, net of
     effects of acquisitions:
     Decrease (increase) in accounts
       receivable.............................      (206)      (1,000)       (4,108)        (17)        (828)
     Decrease (increase) in other current
       assets.................................     1,349          141        (1,466)         38          391
     Increase (decrease) in accounts
       payable................................     2,777       (4,619)        5,196        (152)       1,440
     Increase (decrease) in accrued taxes,
       unearned income, accrued interest and
       other current liabilities..............      (712)         139         7,503          (3)       9,368
     Increase (decrease) in deferred income
       taxes..................................   (17,227)       2,847        (1,847)         65       (1,354)
     Decrease in other assets.................    (2,045)        (854)       (4,092)       (338)      (1,186)
     Increase (decrease) in noncurrent other
       liabilities............................       587         (752)       (2,089)        689          226
                                                --------     --------      --------     -------     --------
          Total adjustments...................    38,804        6,217        14,020       3,987       12,145
                                                --------     --------      --------     -------     --------
Net cash provided by operating activities.....    15,487       13,532         9,055       5,254          446
</TABLE>
 
                                       F-7
<PAGE>   77
 
                            IXC COMMUNICATIONS, INC.
 
              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                         THREE MONTHS ENDED
                                                      YEAR ENDED DECEMBER 31,                MARCH 31,
                                                -----------------------------------     --------------------
                                                  1993         1994         1995         1995         1996
                                                --------     --------     ---------     -------     --------
                                                                                            (UNAUDITED)
<S>                                             <C>          <C>          <C>           <C>         <C>
CASH FLOW FROM INVESTING ACTIVITIES:
Release of funds from escrow under Senior
  Notes.......................................        --           --         4,300          --       13,225
Purchase of restricted short-term
  investments.................................        --           --      (200,000)         --           --
Purchase of property and equipment............   (27,008)      (7,087)      (23,670)     (2,571)     (13,564)
Sale of property and equipment................        49          235            --          --           --
Payments for businesses acquired, net of cash
  received....................................   (14,025)     (11,976)           --          --           --
                                                --------     --------      --------     -------     --------
Net cash used in investing activities.........   (40,984)     (18,828)     (219,370)     (2,571)        (339)
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Senior Notes,
  net of discount.............................  $     --     $     --     $ 277,148     $    --     $     --
Capital contribution in subsidiary by minority
  shareholders................................        --           --         6,002         490           --
Proceeds from long-term debt..................    50,671       12,999        18,695         692           --
Payments on long-term debt and lease
  obligations.................................   (19,990)      (7,837)      (76,490)     (3,620)      (1,359)
Payments from (to) escrow.....................    (1,500)       1,500            --          --           --
Payment of debt issue costs...................    (1,760)      (1,551)      (10,407)         --         (171)
Redemption of preferred stock.................        --           --        (1,460)         --           --
Redemption of preferred stock of consolidated
  subsidiary held by minority interests.......        --           --        (1,400)         --           --
Dividend payments.............................        --           --          (906)         --           --
Issuance of common stock......................        --            3            --          --           --
Proceeds from sale of preferred stock.........       160           --            --          --           --
Proceeds from sale of preferred stock of
  subsidiary..................................     1,400           --            --          --           --
                                                --------     --------      --------     -------     --------
Net cash provided by (used in) financing
  activities..................................    28,981        5,114       211,182      (2,438)      (1,530)
                                                --------     --------      --------     -------     --------
Net increase (decrease) in cash and cash
  equivalents.................................     3,484         (182)          867         245       (1,423)
Cash and cash equivalents at beginning of
  period......................................     2,746        6,230         6,048       6,048        6,915
                                                --------     --------      --------     -------     --------
Cash and cash equivalents at end of period....  $  6,230     $  6,048     $   6,915     $ 6,293     $  5,492
                                                ========     ========      ========     =======     ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
  Cash paid (received) for:
     Income taxes.............................  $   (746)    $    891     $   1,240     $   293     $   (908)
                                                ========     ========      ========     =======     ========
     Interest.................................  $  1,683     $  4,496     $   4,955     $   890     $    304
                                                ========     ========      ========     =======     ========
</TABLE>
 
                            See accompanying notes.
 
                                       F-8
<PAGE>   78
 
                            IXC COMMUNICATIONS, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1995
 
1.  ORGANIZATION AND ACQUISITIONS
 
     IXC Communications, Inc. ("IXC" or the "Company") is an Austin, Texas based
supplier of telecommunications services. IXC provides two basic products to
other long distance carriers: (i) long-haul voice and data circuits and (ii)
switched long distance services. Consistent with industry practice, the Company
considers itself to be operating in one business segment.
 
     IXC, a Delaware corporation, was incorporated in 1992 and began operations
by acquiring 50% of the outstanding common stock of Electra Communications
Holding Corporation ("ECHC") which owned Electra Communication Corporation
("ECC"). ECC owned and operated a regional fiber optic transmission system in
Texas. ECHC became a wholly-owned subsidiary of IXC in 1993, when ECHC redeemed
all its outstanding stock not held by IXC.
 
     Also during 1992 and 1993, the stockholders of IXC formed Telecom Services
Group, Inc. ("TSGI") and I-Link Communications Inc. ("ILCI").
 
     TSGI acquired Communications Transmission Group, Inc. ("CTGI") from
Communications Transmission, Inc. ("CTI") in 1992. CTI was controlled by a
majority of the same shareholders as that of TSGI; therefore, the acquisition of
CTGI was a transaction among entities under common control and was accounted for
in a manner similar to the pooling of interests method.
 
     ILCI acquired I-Link Holdings, Inc. ("ILHI") in 1993. The transaction was
accounted for in a manner similar to the pooling of interests method of
accounting as both entities were under common ownership by the same shareholder
group.
 
     Effective February 22, 1994, TSGI and ILCI became wholly-owned subsidiaries
of IXC through a stock-for-stock merger, whereby IXC issued common and
redeemable preferred stock in exchange for all of the outstanding common and
preferred stock of TSGI and ILCI. IXC, TSGI and ILCI were controlled by the same
shareholder group, therefore the assets and liabilities acquired from the
controlling shareholders were recorded at their historical cost. The minority
interest acquired was recorded at fair value. The accompanying consolidated
financial statements of IXC have been restated to include the accounts and
operations of TSGI and ILCI since their acquisitions from third parties and the
elimination of all intercompany accounts and transactions.
 
     On August 5, 1994, IXC, through its newly formed majority-owned (85%)
subsidiary, Mutual Signal Holding Corporation ("MSHC"), acquired MSM Associates,
Limited Partnership ("MSM"). MSHC purchased all of the issued and outstanding
common stock of Mutual Signal Corporation ("MSC"), the sole general partner of
MSM, for $1,050,000 and all of the outstanding limited partnership units of MSM
from the sole limited partner for $450,000. The acquisition was accounted for as
a purchase. Accordingly, the assets and liabilities of MSM at the date of
acquisition were adjusted to reflect the purchase price, using an allocation
based upon the fair values of the acquired assets. The operating results of MSM
have been included in the consolidated financial statements from the date of
acquisition. The owner of the remaining 15% minority interest of MSHC, Frontier
Corporation ("Frontier"), is a customer of IXC. Frontier, which is considered a
related party because of its miniority interest in MSHC, generated revenue to
IXC of $16.9 million in 1993, $18.7 million in 1994 and $19.1 million in 1995.
 
                                       F-9
<PAGE>   79
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Unaudited pro forma results for 1993 and 1994 assuming the acquisitions of
MSC and MSM occurred as of January 1, 1993 are as follows (in thousands):
 
   
<TABLE>
<CAPTION>
                                                                    1993        1994
                                                                  --------     -------
        <S>                                                       <C>          <C>
        Operating revenues......................................  $ 77,727     $82,290
        Income (loss) before extraordinary items................  $(30,142)    $ 5,574
        Net income (loss).......................................  $(21,647)    $ 7,872
        Income (loss) per common share before extraordinary
          items.................................................  $  (1.25)    $  0.22
</TABLE>
    
 
     The pro forma financial information is presented for informational purposes
only and is not necessarily indicative of the operating results that would have
occurred had the acquisition been consummated as of the above dates, nor are
they necessarily indicative of future operations.
 
     On September 15, 1994, IXC formed IXC Long Distance, Inc. Together with
Excel Telecommunications, Inc. ("Excel"), IXC Long Distance, Inc. then formed
Switched Services Communications, L.L.C. ("SSC") on September 19, 1994 for the
purpose of owning and operating a nationwide long distance switch network. As of
December 31, 1995 IXC Long Distance, Inc. owned a majority interest of SSC which
is consolidated as a majority-owned subsidiary.
 
     Effective January 1, 1996, IXC Long Distance, Inc. entered into an
agreement with Excel to acquire its minority interest in SSC for $6.2 million.
In connection with the purchase agreement, Excel executed a second amended and
restated Service Agreement with SSC, requiring Excel to purchase certain minimum
communications services from SSC. (See Note 17)
 
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Principles of Consolidation
 
     The consolidated financial statements of IXC include the accounts of IXC
and its wholly-owned and majority-owned subsidiaries. All minority owned
subsidiaries are accounted for by the equity method. Significant intercompany
accounts and transactions have been eliminated in the consolidated financial
statements.
 
  Revenues
 
     Long-haul voice and data circuit revenues are primarily generated from
providing capacity on the Company's fiber optic and microwave transmission
network at rates established under long-term contractual arrangements. Revenues
are recognized as services are provided.
 
     Switched long-distance service revenues are primarily generated by
providing voice and data communications. Customers are billed on monthly cycle
dates. Revenues are recognized as services are provided.
 
     The Company accounts for exchange agreements with other carriers by
recognizing the fair value of the revenue earned and expense incurred under the
respective agreements (see Note 11).
 
  Cash and Cash Equivalents
 
     Cash and cash equivalents include cash on hand, money market funds and all
investments with an initial maturity of three months or less. Short-term
investments held in the Company's escrow related to the Senior Notes (see Note
3) are not included as a cash equivalent.
 
  Property and Equipment
 
     Property and equipment is recorded at cost, adjusted for the writedown
discussed in Note 8. Depreciation is provided using the straight-line method
over the estimated useful lives of the various assets, generally 3 to
 
                                      F-10
<PAGE>   80
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
20 years. Maintenance and repairs are charged to operations as incurred.
Amortization of assets recorded under capital leases is included in depreciation
expense. Property and equipment recorded under capital leases are included with
the Company's owned assets.
 
     In March 1995, the FASB issued Statement No. 121, Accounting for Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. (See Note 17)
 
  Capitalization of Interest
 
     Interest costs are capitalized as part of the cost of constructing the
Company's fiber optic network. Interest costs capitalized during construction
periods are computed by determining the average accumulated expenditures for
each interim capitalization period and applying the interest rate related to the
specific borrowings associated with each construction project. Interest
capitalized during the years ended December 31, 1993, 1994 and 1995 was
approximately $379,000, $34,000 and $361,000, respectively.
 
  Income Taxes
 
     The Company accounts for income taxes using the liability method as
required by Statement No. 109, Accounting for Income Taxes, issued by the
Financial Accounting Standards Board.
 
     Deferred income taxes are provided for temporary differences between the
basis of assets and liabilities for financial reporting and income tax
reporting. Investment tax credits are accounted for by the flow-through method.
 
  Deferred Charges and Other Assets
 
     Costs incurred in connection with obtaining long-term financing have been
deferred and are being amortized to interest expense over the terms of the
related debt agreements. The costs relating to long-term financing for the years
ended December 31, 1994 and 1995 were $2.8 million and $10.4 million,
respectively. Accumulated amortization for these costs for the years ended
December 31, 1994 and 1995 was $534,000 and $467,000, respectively (see Note 4
regarding extraordinary items).
 
     Costs incurred in connection with the acquisition of certain lease
agreements (see Note 5) have been deferred and are being amortized over the
terms of the related agreements.
 
     Costs incurred to obtain certain regulatory licenses are amortized on a
straight-line basis over 10 to 40 years.
 
     Certain costs incurred in connection with installation of the nationwide
long distance network have been deferred and amortized on a straight-line basis
over 4 years. The network costs for the year ended December 31, 1995 were
$1,836,000, with accumulated amortization of $95,000.
 
   
     The acquisition cost of customer accounts obtained through an outside sales
organization have been deferred and amortized over two years, the estimated
average of the term of the related customer contracts.
    
 
  Stock-Based Compensation
 
     The Company accounts for its stock compensation arrangements under the
provisions of APB 25, Accounting for Stock Issued to Employees, and intends to
continue to do so.
 
                                      F-11
<PAGE>   81
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Income (Loss) Per Common Share
 
   
     Income (loss) per common share is based on net income (loss) less preferred
stock dividend requirements divided by the weighted average common shares
outstanding during the period, as adjusted for applicable stock options. Income
(loss) per share on a fully diluted basis is not presented as the fully diluted
effect is either antidilutive or not material.
    
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Reclassifications
 
     Certain amounts in prior years have been reclassified to conform to the
1995 presentation.
 
3.  ESCROW UNDER SENIOR NOTES
 
     Under the terms of the Company's Senior Notes, issued in October 1995, the
Company was required to place $200 million of Senior Note proceeds in an escrow
account, which proceeds and the earnings thereon are restricted in their use to
fiber expansion, capital expenditures, certain interest, principal and other
payments on the Senior Notes and other permitted uses (see Note 4). Such funds
have been invested in short-term, investment-grade, interest-bearing securities
at December 31, 1995 as follows (in thousands):
 
<TABLE>
                <S>                                                 <C>
                Overnight investments.............................  $ 96,975
                U.S. Government securities........................   101,291
                                                                    --------
                                                                    $198,266
                                                                    ========
</TABLE>
 
     The escrow account is subject to a security interest under the Company's
Senior Notes. The investments in the escrow account at December 31, 1995, by
contractual maturity, were all due in three months or less and are classified as
held-to-maturity.
 
                                      F-12
<PAGE>   82
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4.  LONG-TERM DEBT
 
     Long-term debt and lease obligations of IXC and its consolidated
subsidiaries at December 31, 1994 and 1995 consisted of the following (in
thousands):
 
<TABLE>
<CAPTION>
                                                                       1994         1995
                                                                      -------     --------
    <S>                                                               <C>         <C>
    Senior Notes -- 12.5%, net of unamortized discount of $7,762 at
      December 31, 1995.............................................  $    --     $277,238
    Senior term loans -- 8.23% to 9.9%..............................   14,405           --
    Senior secured notes -- 9.93%...................................   12,150           --
    Variable rate senior secured note due to stockholder (10.63% at
      December 31, 1994)............................................    9,750           --
    Senior subordinated note due to related party -- 7%.............    5,694        4,416
    Promissory note due to related party -- 9%......................    3,111        3,401
    Subordinated debentures due to stockholders -- 10%..............   12,948           --
    Capital lease obligations (see Note 5)..........................    6,560       13,697
    Deferred lease obligations (see Note 5).........................    4,432           --
    Other debt......................................................       74           42
                                                                      -------     --------
         Total long-term debt and lease obligations.................  $69,124     $298,794
                                                                      =======     ========
</TABLE>
 
     These amounts are included in the balance sheets of the Company as follows
(in thousands):
 
<TABLE>
<CAPTION>
                                                           1994         1995
                                                          -------     --------
                <S>                                       <C>         <C>
                Long-term debt -- related parties:
                  Current portion.......................  $ 6,850     $  1,371
                  Long-term portion.....................   24,653        6,446
                Long-term debt and lease obligations:
                  Current portion.......................   11,688        3,163
                  Long-term portion.....................   25,933      287,814
                                                          -------     --------
                                                          $69,124     $298,794
                                                          =======     ========
</TABLE>
 
  Senior Notes
 
     On October 5, 1995, the Company issued $285 million of 12 1/2% Senior Notes
(effective rate 13%) due October 1, 2005, with interest payable semi-annually.
The Company has agreed to file a registration statement and to exchange the
Senior Notes for registered Senior Notes, or to register the Senior Notes on a
shelf registration statement. Until such exchange offer is consummated, or such
shelf registration statement is declared effective, the Company is required to
make additional interest payments at the rate of .5% per annum of the principal
amount thereof.
 
     The Senior Notes may be redeemed at the option of the Company, in whole or
in part, on or after October 1, 2000 at a premium declining to zero in 2004. At
any time prior to October 1, 1998, the Company may redeem Senior Notes with an
aggregate principal amount of up to $100 million at a redemption price of 112.5%
of the principal amount from the net proceeds of a sale of Capital Stock of the
Company, provided that at least $100 million in aggregate principal amount of
Senior Notes remains outstanding immediately after the occurrence of such
redemption and that the redemption occurs within 35 days of the date of the
closing of the offering of such equity securities. Also, the Senior Notes
contain provisions that, in the event of a Change in Control (which meets the
definition set forth in the Indenture) of the Company, provide their holders the
right to require the Company to repurchase all or any part of the Senior Notes
at a price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest.
 
                                      F-13
<PAGE>   83
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Of the net proceeds of approximately $277 million, $200 million has
initially been deposited into an escrow account primarily restricted for the
construction of a major fiber optic expansion program (see Note 3).
Approximately $53 million of the net proceeds was used to repay or repurchase
existing indebtedness (resulting in an extraordinary loss on early
extinguishment of debt of $1.7 million, net of applicable income tax benefit of
$1.2 million) and approximately $3.7 million was used to redeem certain
preferred stock.
 
   
     The Senior Notes are senior unsecured obligations of the Company, except
for a security interest in the escrow account (see Note 3), and are guaranteed
on a senior unsecured basis by all wholly owned direct and indirect subsidiaries
(other than SSC) of IXC. The obligations of each guarantor are limited to the
minimum extent necessary to prevent the guarantee from violating or becoming
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally.
    
 
     The Senior Notes contain certain covenants that limit the ability of the
Company and its subsidiaries to incur additional indebtedness and issue
preferred stock, pay dividends or make other distributions, repurchase equity
interests or subordinated indebtedness, engage in sale and leaseback
transactions, create certain liens, enter into certain transactions with
affiliates, sell assets of the Company or its subsidiaries, issue or sell equity
interests of the Company's subsidiaries or enter into certain mergers and
consolidations.
 
  Senior Term Loans
 
     During 1993, to finance the construction of the Company's fiber optic
transmission system, the Company entered into a senior term loan agreement to
obtain $11 million in construction financing at 8.23% plus up to $750,000 of
capitalized interest during the construction period. During 1994, to finance an
extension of the Company's fiber optic transmission system, the Company entered
into a senior term loan agreement to obtain approximately $7.5 million in
construction financing at 9.9%, plus up to $750,000 of capitalized interest
during the construction period. These senior term loans were repaid or
repurchased from the proceeds of the issuance of the Senior Notes.
 
  Senior Secured Notes
 
     During 1993, to finance the redemption of the ECHC common stock not owned
by IXC (see Note 1), the Company issued $15 million of 9.63% senior secured
notes. During 1994, IXC and the senior secured note holder signed an agreement
which amended and restated the notes. In connection with this agreement, IXC was
released from certain restrictive covenants, the interest rate on the notes was
increased to 9.93%, $1,500,000 held in escrow was applied to the notes and the
escrow account was terminated. As the terms of the original notes were
substantively modified, the related unamortized original debt issuance costs of
$174,000 (net of $114,000 income tax benefit) are shown as an extraordinary loss
on early extinguishment of debt. The senior secured notes were repaid from the
proceeds of the issuance of the Senior Notes.
 
  Variable Senior Secured Note Due to Stockholder
 
     During 1993, to finance the acquisition of the rights, title and interest
in certain equipment lease agreements (see Note 5), the Company issued an 8.5%
senior secured note in the original principal amount of $17,000,000. During
1994, the note was purchased by a stockholder of IXC under a prepayment option.
The stockholder exchanged the note for a note that was amended (including a
reduction in its principal amount to $11,143,000) and restated in the form of a
variable rate senior secured note. This transaction resulted in an extraordinary
gain of approximately $2,472,000, net of applicable income taxes of $1,586,000.
The variable rate senior secured note due to stockholder was repaid from the
proceeds of the issuance of the Senior Notes.
 
                                      F-14
<PAGE>   84
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Senior Subordinated Note Due to Minority Investor in Subsidiary
 
     During 1994, the Company issued a $6.2 million 7% senior subordinated
promissory note to a minority investor in MSHC, one of IXC Communications'
subsidiaries. Under the terms of the senior subordinated promissory note,
principal and interest are due and payable in 53 consecutive monthly
installments of $136,000 commencing August 31, 1994 through December 31, 1998.
 
  Promissory Note Due to Minority Investor in Subsidiary
 
     During 1994, to facilitate the acquisition of MSM, the Company issued a $3
million 9% promissory note to a minority investor in MSHC. Under the terms of
the promissory note, principal and interest payments of $560,000 are due
quarterly beginning March 31, 1998 through December 31, 1999. Thus, accrued
interest is reflected in the balance of the note.
 
  Subordinated Debentures Due to Stockholders
 
     During 1992, to finance the acquisition of a 50% interest in ECHC, IXC
issued $3.7 million of 10% subordinated debentures to certain stockholders.
During 1993, IXC issued an additional $2 million of 10% subordinated debentures
to certain stockholders. The debentures were unsecured general obligations of
IXC.
 
     In addition, in connection with the construction of the Company's fiber
optic transmission system, IXC issued $5.1 million of 10% subordinated
debentures to certain stockholders.
 
     All of the subordinated debentures due to stockholders were repaid from the
proceeds of the issuance of the Senior Notes.
 
     Annual maturities of long-term debt at December 31, 1995 are as follows (in
thousands):
 
<TABLE>
                <S>                                                 <C>
                1996..............................................  $  1,412
                1997..............................................     1,470
                1998..............................................     2,854
                1999..............................................     2,123
                2000..............................................        --
                Thereafter........................................   277,238
                                                                    --------
                                                                    $285,097
                                                                    ========
</TABLE>
 
5.  CAPITAL AND OPERATING LEASES
 
     On August 14, 1992, in connection with the acquisition of CTGI, all
existing equipment lease obligations were restructured to provide for the
deferrals of future lease obligations that were otherwise payable. A provision
was also made for an escrow account to provide additional collateral for certain
equipment lease obligations. This escrow account was initially funded in March
1993 with excess collateral held by a creditor of CTGI's prior parent.
 
     As of October 12, 1993, certain equipment lessors sold to IXC their
respective rights, title and interest in certain equipment lease agreements with
the Company. In connection with this transaction, a substantial portion of the
escrow account was withdrawn to pay certain deferred lease obligations to
another lessor. This resulted in an extraordinary gain of approximately
$8,495,000, net of applicable income taxes of $5,848,000. Certain equipment
lease agreements were not purchased by IXC and remained in effect as operating
leases. The escrow account (discussed in the preceding paragraph) was used to
supplement lease payments due under certain of the remaining leases (the "Escrow
Secured Leases") during 1993 and 1994. The Company recorded
 
                                      F-15
<PAGE>   85
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
income of approximately $731,000 and $1,444,000 to reflect nonrefundable
proceeds used from the escrow account during the years ended December 31, 1993
and 1994, respectively.
 
     During 1994, the Escrow Secured Leases were amended and the future basic
rental obligations due under the remaining leases (which were classified as
operating leases) were satisfied with approximately $18 million in proceeds from
the escrow account. The amendments to the Escrow Secured Leases resulted in the
leases meeting the criteria for capitalization under FAS No. 13. The present
value of the residual lease obligations approximated the fair value of the
leased assets which were both recorded at $6,031,000. The company made principal
payments of $550,000 during 1995 and repaid $1,120,000 of the obligations using
proceeds from the issuance of the Senior Notes. The remainder of the lease
obligations become due in installments in the years 1996 and 1997.
 
     In connection with the satisfaction of the remaining Escrow Secured Leases,
the escrow account was terminated in 1994 and the residual balance in the
account, approximately $888,000, was distributed to the Company and recognized
as income.
 
     Future minimum annual lease payments for facilities, equipment and
transmission capacity used in its operations at December 31, 1995, net of
sublease revenue, are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                  CAPITAL     OPERATING
                                                                  LEASES       LEASES
                                                                  -------     ---------
        <S>                                                       <C>         <C>
        1996....................................................  $ 3,707      $ 9,915
        1997....................................................    5,697        7,725
        1998....................................................    2,862        4,733
        1999....................................................    2,467        2,591
        2000....................................................    1,588          795
        Thereafter..............................................       --        2,615
                                                                  -------      -------
                                                                   16,321      $28,374
                                                                               =======
        Less amounts related to interest........................   (2,624)
                                                                  -------
        Present value of capital lease obligations..............   13,697
        Less current portion....................................   (2,735)
                                                                  -------
        Net long-term capital lease obligations.................  $10,962
                                                                  =======
</TABLE>
 
     The gross amount of assets recorded under capital leases at December 31,
1994 and 1995 were $7,648,000 and $17,946,000, respectively. The related
accumulated amortization was $1,388,000 and $4,078,000 at December 31, 1994 and
1995, respectively.
 
     Expenses relating to facilities, equipment and transmission capacity leases
were approximately $37,183,000, $28,710,000 and $29,130,000 for the years ended
December 31, 1993, 1994 and 1995, respectively.
 
     The Company had certain deferred lease obligations payable through 1998
that were not settled as part of the October 12, 1993 transaction discussed
above. On November 29, 1994, IXC entered into an agreement whereby these
obligations were restructured resulting in all the deferred obligations,
$4,432,000, being due during 1995. These obligations were repaid in 1995 from
the proceeds the Company received from the issuance of the Senior Notes.
 
     In February 1995, the Company entered into a five-year equipment lease for
network switching equipment, for which the lease obligations had a present value
of $9,800,000. (See Note 17)
 
                                      F-16
<PAGE>   86
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6.  COMMON AND PREFERRED STOCK
 
     IXC's 10% Senior Series 1 Cumulative Redeemable Preferred Stock was
non-voting and was redeemed on October 6, 1995, from the proceeds of the Senior
Notes for $1,965,000, including cumulative dividends in arrears and related
interest of $505,000.
 
     The 10% Junior Series 3 Cumulative Redeemable Preferred Stock ("Series 3
Preferred Stock") is voting (as a single class with IXC's common stock), is
entitled to elect one director and may be redeemed by the Company in whole or in
part at any time, subject to certain debt covenants, at a price of $1,000 per
share, plus accumulated and unpaid dividends and accrued interest. The
liquidation value of each Series 3 Preferred share is $1,000 plus any
accumulated and unpaid dividends including accrued interest. The Series 3
Preferred Stock is nonparticipatory and has no mandatory redemption
requirements. Dividends are payable at the determination of the Board of
Directors, subject to debt covenants. Interest accrues on unpaid dividends at a
rate of 10%. Cumulative preferred dividends in arrears, including interest, at
December 31, 1994 and 1995 were $3,201,000 and $4,776,000, respectively.
 
   
     In November 1994, the Board of Directors adopted the IXC Communications,
Inc. Stock Plan ("IXC Stock Plan"), which provides for the issuance of
restricted stock or the granting of stock options for up to 1,212,450 shares of
common stock to key employees and others. Options granted may be either
"incentive stock options," within the meaning of Section 422(a) of the Internal
Revenue Code, or non-qualified options. The options are for 10 years and
generally vest at a rate of 25% per year commencing one year after the date of
grant and 25% on each anniversary thereafter, with the exception of two options
covering 84,872 shares which were 100% vested upon grant. The IXC Stock Plan was
adopted and approved by the majority of stockholders of IXC by written consent
on May 4, 1995.
    
 
     The Company has not issued any restricted stock under the IXC Stock Plan.
All options granted under the IXC Stock Plan were granted at estimated market
value at the date of grant, based on annual appraisals obtained from an
independent party. In the event of a change of control of the Company, the
optionees, immediately following the consummation of such change of control,
fully vest, and the options may be exercised in full to purchase the total
number of shares covered by the option.
 
     Option activity for the two years ended December 31, 1995 was as follows:
 
   
<TABLE>
<CAPTION>
                                                                   NUMBER         PRICE
                                                                  OF SHARES     PER SHARE
                                                                  ---------     ---------
        <S>                                                       <C>           <C>
        Options granted in 1994 and outstanding at
          December 31, 1994.....................................   206,113        $3.01
        Options granted in 1995.................................   439,767         3.01
                                                                   -------        -----
        Options outstanding at December 31, 1995................   645,880        $3.01
                                                                   =======        =====
        Options exercisable at December 31, 1995................   121,243
                                                                   =======
        Available for grant at December 31, 1995................   566,570
                                                                   =======
</TABLE>
    
 
     During 1993, an indirect subsidiary of IXC issued 1,400 shares of 10%
Senior Series 1 Cumulative Redeemable Preferred Stock (the "ILHI Series 1
Preferred Stock") at $1,000 per share to stockholders of IXC. The ILHI Series 1
Preferred Stock was redeemed on October 6, 1995 from the proceeds of the Senior
Notes, for $1,801,000, including cumulative dividends in arrears and related
interest of $401,000.
 
                                      F-17
<PAGE>   87
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7.  MAJOR CUSTOMERS
 
     Long-haul services are provided to domestic common carriers under long-term
contractual arrangements. Sales to certain customers exceeded 10% of total
revenues for each of the years ended December 31, 1993, 1994 and 1995. The
percentages of revenue represented by these customers are as follows:
 
<TABLE>
<CAPTION>
                                                                  1993     1994     1995
                                                                  ----     ----     ----
        <S>                                                       <C>      <C>      <C>
        WorldCom, Inc...........................................   23%      25%      20%
        Frontier Communications.................................   24%      23%      21%
</TABLE>
 
     Trade receivables are primarily due from a limited customer base including
these major customers. Although the Company has a concentration of credit risk,
the Company has not experienced significant collection losses from these
respective customers. Additionally, the Company bills in advance which further
minimizes any potential losses due to concentration of credit risk.
 
8.  IMPAIRMENT OF LONG-TERM ASSETS
 
     Due to rate reductions in the long-haul business, in 1993 the Company
assessed the estimated future net cash flows expected to be produced by the
digital microwave system property and equipment. As a result, on December 31,
1993, the Company projected it would be unable to recover the recorded values of
such equipment and therefore reduced the carrying value of the digital microwave
system property and equipment by $37,960,000.
 
9.  EMPLOYEE BENEFIT PLANS
 
     The Company has a defined contribution retirement and 401(k) savings plan
which covers all full-time employees with one year of service. The Company
contributes 6% of eligible compensation, as defined in the plan, and matches 50%
of the employee's contributions up to a maximum of 6% of the employee's
compensation. Employees vest in the Company's contribution over five years.
Benefit expense for the years ended December 31, 1993, 1994 and 1995 was
approximately $394,000, $468,000 and $522,000, respectively.
 
10.  INCOME TAXES
 
     Deferred income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                                     -----------------
                                                                      1994       1995
                                                                     ------     ------
        <S>                                                          <C>        <C>
        Deferred tax assets:
          Tax credit carryforwards.................................  $1,764     $2,411
          Net operating loss carryforwards.........................      --      2,489
          Accrued expenses.........................................   1,768        908
          Other....................................................     929      1,286
                                                                     ------     ------
                                                                      4,461      7,094
        Deferred tax liabilities:
          Tax over book depreciation...............................   6,978      8,384
          Other liability accruals.................................   5,062      5,090
          Other....................................................   2,121      1,473
                                                                     ------     ------
                                                                     14,161     14,947
                                                                     ------     ------
        Net deferred tax liability.................................  $9,700     $7,853
                                                                     ======     ======
</TABLE>
 
                                      F-18
<PAGE>   88
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     At December 31, 1995, the Company has net operating loss carryforwards of
approximately $7,775,000 for income tax purposes that will expire in 2010. The
Company has minimum tax and investment tax credit carryforwards at December 31,
1995 of approximately $1,721,000 and $690,000, respectively. The minimum tax
credits can be carried forward indefinitely and the investment tax credits
expire in 2001.
 
     A valuation allowance was not provided for deferred tax assets at December
31, 1993, 1994 or 1995.
 
     Significant components of the provision (benefit) for income taxes
(excluding the effect attributable to extraordinary items) are as follows (in
thousands):
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                        -------------------------------
                                                          1993        1994       1995
                                                        --------     ------     -------
        <S>                                             <C>          <C>        <C>
        Current:
          Federal.....................................  $    561     $1,188     $  (381)
          State.......................................       432        404          --
                                                        --------     ------     -------
        Total current.................................       993      1,592        (381)
        Deferred:
          Federal.....................................   (19,121)     1,131      (1,144)
          State.......................................    (3,849)       434        (168)
                                                        --------     ------     -------
        Total deferred................................   (22,970)     1,565      (1,312)
                                                        --------     ------     -------
        Provision (benefit) for income taxes..........  $(21,977)    $3,157     $(1,693)
                                                        ========     ======     =======
</TABLE>
 
     The reconciliation of income tax expense (benefit) attributable to
continuing operations (excluding the effect attributable to extraordinary items)
computed at the U.S. federal statutory tax rates to income tax expense (benefit)
is as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                        -------------------------------
                                                          1993        1994       1995
                                                        --------     ------     -------
        <S>                                             <C>          <C>        <C>
        Tax provision (benefit) at federal statutory
          rates.......................................  $(18,288)    $2,780     $(1,670)
        State income tax provision (benefit) net of
          federal effect..............................    (3,141)       432        (302)
        Permanent and other differences...............      (548)       (55)        279
                                                        ---------    ------     -------
        Provision (benefit) for income taxes..........  $(21,977)    $3,157     $(1,693)
                                                        =========    ======     =======
</TABLE>
 
11.  EXCHANGE AGREEMENTS
 
     During 1993, IXC entered into long-term contracts with a common carrier
which provides IXC with capacity on the carrier's nationwide fiber optic
communications system. For this capacity, the Company paid $2,000,000 and
provided the common carrier with access to and use of certain regional fiber
optic communication systems. The $2,000,000 paid and related costs incurred in
connection with the contract have been deferred and are being recognized over
the five-year term of the contract. Accumulated amortization relating to the
contract costs as of December 31, 1994 and 1995 was $648,000 and $1,058,000,
respectively.
 
     In the normal course of business, IXC enters into long-term facilities
exchange agreements with other carriers to exchange capacity on the carrier's
network for access to the Company's regional fiber optic communication systems.
These exchanges are accounted for at fair value (see Note 2). These exchange
agreements accounted for noncash revenue and expense (in equal amounts) of
$3,743,000, $7,980,000 and $13,839,000 for 1993, 1994 and 1995.
 
                                      F-19
<PAGE>   89
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  RELATED PARTY TRANSACTIONS
 
     A law firm, of which a director and stockholder of the Company was a
principal, provided certain legal services to the Company and received fees from
the Company in the amount of approximately $1.1 million in 1993, $1.4 million in
1994 and $2.6 million in 1995.
 
13.  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
 
     Cash and cash equivalents:  The carrying amount reported in the balance
     sheets for cash and cash equivalents approximates fair value.
 
     Accounts receivable and accounts payable:  The carrying amounts reported in
     the balance sheets for accounts receivable and accounts payable approximate
     fair value.
 
     Restricted short-term investments:  The carrying amount reported in the
     balance sheets for restricted short-term investments held in escrow
     approximates fair value.
 
     Long-term debt:  The fair value of the Senior Notes has not been determined
     due to the impracticability of such a calculation based on the limited
     market of the privately issued notes and the lack of an actively quoted
     price.
 
14.  COMMITMENTS AND CONTINGENCIES
 
     On September 1, 1994, IXC entered into an agreement with a common carrier
to purchase dedicated digital telecommunication services, superseding all prior
agreements. Under the terms of the agreement, IXC is required to purchase
services with remaining monthly minimum commitments of $500,000 through March
1998. Upon IXC paying a total of $22,548,000 for service subsequent to the
September 1, 1994 agreement, the minimum commitments under this agreement will
be canceled. Actual expenses under this and previous agreements for the years
ended December 31, 1993, 1994 and 1995 were $11,996,000, $12,552,000 and
$11,353,000, respectively.
 
     In June 1995, IXC entered into a three-year agreement with a common carrier
to purchase communication services, under which, by April 1996, the Company is
required to purchase a monthly minimum of $350,000 in services. Actual expenses
under this agreement for the year ended December 31, 1995 were $1,471,000.
 
     The Company plans to substantially expand its network beginning in 1996 to
include a coast-to-coast fiber optic system. In order to achieve this objective,
in November 1995, IXC entered into an agreement with a contractor to perform
construction and installation of fiber optic cable from Fort Worth, Texas to
Abilene, Texas. The approximate length of this project is 160 miles. The total
commitment under this agreement is approximately $6,487,000. As of December 31,
1995, no capital expenditures had yet been made under this agreement.
 
     In January 1996, IXC also entered into an agreement with a supplier to
purchase fiber optic cable equipment to be used in the network expansion. Under
this agreement, the Company has a commitment to purchase a minimum number of
fiber kilometers during an initial three-year term, for a total commitment of
$32,000,000. In the event that IXC orders an amount of fiber less than the
commitment amount during the term of this agreement, the supplier may elect to
charge the Company the aggregate difference between the amount which would have
been billed to the Company for fiber based upon the commitment amount and the
amount actually billed to the Company. This agreement will automatically be
renewed for a period of one year unless one party has given the other party
notice at least 60 days in advance of such renewal that it elects to terminate
this agreement. As of December 31, 1995 no fiber purchases had been made under
this agreement.
 
                                      F-20
<PAGE>   90
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     In December 1995, IXC entered into a long-term indefeasible right to use
("IRU") agreement with a common carrier in which the Company will realize
significant cost savings to the cost of the planned fiber expansion. Under the
IRU, both parties will construct a fiber optic communications system and will
grant unrestricted rights to each other to use certain fiber on each others'
constructed communications systems. The scheduled completion date of all
construction, installation and fiber acceptance testing of each system is
October 1, 1996. The agreement provides for substantial penalties ($400,000 per
month) for either party which does not complete construction of the applicable
route by October 1, 1996, but only after a grace period and only in the event
the other party has already completed its route. The initial term of this
agreement is 20 years from July 1, 1997. The agreement may be renewed for two
terms of 10 years each. The agreement states that beginning at the end of the
first full calendar quarter after the final construction acceptance date, each
party shall pay the other a usage fee during the term in an annual amount of
$2.0 million payable in four equal installments at the end of each calendar
quarter.
    
 
     The Company is involved in various legal proceedings, all of which have
arisen in the ordinary course of business and some of which are covered by
insurance. In the opinion of the Company's management, none of the claims
relating to such proceedings will have material adverse effect on the financial
condition or results of operations of the Company.
 
15.  VALUATION AND QUALIFYING ACCOUNTS
 
     Activity in the Company's allowance for doubtful accounts for the years
ended December 31, 1993, 1994 and 1995 was as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                 BALANCE AT   CHARGED TO                 BALANCE
                                                 BEGINNING    COSTS AND                 AT END OF
                  FOR THE YEARS ENDED            OF PERIOD     EXPENSES    DEDUCTIONS    PERIOD
        ---------------------------------------  ----------   ----------   ----------   ---------
        <S>                                      <C>          <C>          <C>          <C>
        December 31, 1993......................    $1,024       $  447       $1,042      $   429
        December 31, 1994......................    $  429       $1,565       $1,232      $   762
        December 31, 1995......................    $  762       $1,505       $  498      $ 1,769
</TABLE>
 
                                      F-21
<PAGE>   91
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
     SUBSIDIARIES
 
   
     IXC conducts a significant portion of its business through subsidiaries.
The Senior Notes are unconditionally guaranteed, jointly and severally, by all
of IXC's wholly-owned direct and indirect subsidiaries except for SSC (the
"Subsidiary Guarantors"). The obligations of each Guarantor are limited to the
minimum extent necessary to prevent the guarantee from violating or becoming
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally. IXC's
subsidiaries that were not wholly-owned at the time the Senior Notes were
issued, do not guarantee the Senior Notes (the "Non-Guarantor Subsidiaries").
The claims of creditors of Non-Guarantor Subsidiaries have priority over the
rights of IXC to receive dividends or distributions from such subsidiaries.
    
 
     Presented below is condensed consolidating financial information for IXC,
the Subsidiary Guarantors and the Non-Guarantor Subsidiaries as of and for the
fiscal years ended December 31, 1994 and 1995 and the quarter ended March 31,
1996 (unaudited). All of the non-guarantor subsidiaries were acquired or formed
in 1994. Accordingly, the Company's audited consolidated financial statements
prior to January 1, 1994 do not include any direct or indirect consolidated
subsidiaries which are not guarantors. As a result, the aggregate net assets,
earnings and equity of IXC and the Subsidiary Guarantors for the year ended 1993
would be equivalent to the aggregate net assets, earnings and equity of the
Company. Accordingly, condensed consolidating financial information for such
periods is not presented.
 
     The equity method has been used by IXC and the Subsidiary Guarantors with
respect to investments in Non-Guarantor Subsidiaries. Separate financial
statements for Subsidiary Guarantors are not presented based on management's
determination that they do not provide additional information that is material
to investors.
 
   
     The following table sets forth the Guarantor and Non-Guarantor
subsidiaries:
    
 
<TABLE>
<CAPTION>
             GUARANTOR SUBSIDIARIES                        NON-GUARANTOR SUBSIDIARIES
    -----------------------------------------        ---------------------------------------
    <S>                                              <C>
    Tower Communications Systems Corp.               Mutual Signal Holding Corporation
    West Texas Microwave Company                     Mutual Signal Corporation
    Western States Microwave Transmission            Mutual Signal Corporation of Michigan
      Company                                        MSM Associates, Limited Partnership
    Atlantic States Microwave Transmission           Switched Services Communications,
      Company                                        L.L.C.
    Central States Microwave Transmission            Progress International L.L.C.
      Company                                        US Advantage Long Distance, Inc.
    IXC Carrier, Inc.                                Marca-Tel S.A. de C.V.
    IXC Long Distance, Inc.
    Link Net International, Inc.
    Rio Grande Transmission, Inc.
    Telcom Engineering, Inc.
</TABLE>
 
                                      F-22
<PAGE>   92
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                     CONDENSED CONSOLIDATING BALANCE SHEET
 
   
<TABLE>
<CAPTION>
                                                                  DECEMBER 31, 1994
                                    -----------------------------------------------------------------------------
                                               SUBSIDIARY   NON-GUARANTOR
                                      IXC      GUARANTORS   SUBSIDIARIES    ELIMINATIONS             CONSOLIDATED
                                    --------   ----------   -------------   ------------             ------------
                                                               (DOLLARS IN THOUSANDS)
<S>                                 <C>        <C>          <C>             <C>                      <C>
Current assets:
  Cash and cash equivalents.......  $    146    $  4,619       $   934        $    349(a)              $  6,048
  Accounts receivable and other,
    net...........................        10       3,674           529            (497)(e)                3,716
  Other current assets............       187         845           124              --                    1,156
                                    --------    --------       -------        --------                 --------
Total current assets..............       343       9,138         1,587            (148)                  10,920
Property and equipment, net.......        --      74,508        14,547            (190)(d)               88,865
Prepaid contract costs............        --       1,399            --              --                    1,399
Due from affiliate................     4,091       3,809            --          (7,900)(e)                   --
Other assets......................    20,718       3,873         2,248         (22,614)(b)                4,225
                                    --------    --------       -------        --------                 --------
Total assets......................  $ 25,152    $ 92,727       $18,382        $(30,852)                $105,409
                                    ========    ========       =======        ========                 ========
Current liabilities:
  Accounts payable, accrued
    interest and other current
    liabilities...................  $    134    $  7,378       $   815        $    (46)(a)(e)          $  8,281
  Due to affiliate................     3,800         283           114          (4,197)(e)                   --
  Current portion of long-term
    debt and lease obligations....        --      17,035         1,503              --                   18,538
                                    --------    --------       -------        --------                 --------
Total current liabilities.........     3,934      24,696         2,432          (4,243)                  26,819
Long-term debt and lease
  obligations, less current
  portion.........................     7,029      32,651        14,017          (3,111)(e)               50,586
Net deferred tax liability........        --      11,458            --          (1,640)(e)                9,818
Other noncurrent liabilities......        --       2,429         1,332          (1,332)(e)                2,429
Minority interest.................        --          --            --             168(c)                   168
Preferred stock of consolidated
  subsidiary held by minority
  interests.......................        --       1,400            --              --                    1,400
Stockholders' equity:
  Common stock....................       243           3             1              (4)(b)                  243
  Preferred stock.................     1,473          --             1              (1)(b)                1,473
  Additional paid-in capital......    29,430      39,760           500         (40,260)(b)               29,430
  Retained earnings (accumulated
    deficit)......................   (16,957)    (19,670)           99          19,571(b)(c)(d)(e)      (16,957)
                                    --------    --------       -------        --------                 --------
Total stockholders' equity........    14,189      20,093           601         (20,694)                  14,189
                                    --------    --------       -------        --------                 --------
    Total liabilities and
      stockholders'
      equity......................  $ 25,152    $ 92,727       $18,382        $(30,852)                $105,409
                                    ========    ========       =======        ========                 ========
</TABLE>
    
 
- ---------------
(a) Eliminations of intercompany settlements in transit.
(b) Eliminations of investments in consolidated subsidiaries
(c) Recording of minority interest in equity operations.
(d) Eliminations of intercompany capitalized labor.
   
(e) Eliminations of intercompany receivables and lease obligations.
    
 
                                      F-23
<PAGE>   93
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                               DECEMBER 31, 1994
                                    -----------------------------------------------------------------------
                                             SUBSIDIARY   NON-GUARANTOR
                                     IXC     GUARANTORS   SUBSIDIARIES    ELIMINATIONS         CONSOLIDATED
                                    ------   ----------   -------------   ------------         ------------
                                                            (DOLLARS IN THOUSANDS)
<S>                                 <C>      <C>          <C>             <C>                  <C>
Net operating revenues............  $   --    $ 78,448       $ 3,410        $ (1,195)(a)         $ 80,663
Operating expenses:
  Cost of services................      --      33,848           810            (762)(a)(b)        33,896
  Operations and administration...     570      19,336           898            (243)(a)           20,561
  Depreciation and amortization...      32      11,166           923              --               12,121
                                    ------     -------        ------         -------              -------
                                      (602)     14,098           779            (190)              14,085
Interest income...................     139         194             8            (130)(a)              211
Interest expense..................    (653)     (5,141)         (441)            130(a)            (6,105)
Equity in net income (loss) of
  unconsolidated subsidiaries.....   7,864          83            --          (8,041)(c)              (94)
                                    ------     -------        ------         -------              -------
Income (loss) before provision
  (benefit) for income taxes and
  minority interest in net loss of
  subsidiaries....................   6,748       9,234           346          (8,231)               8,097
Benefit (provision) for income
  taxes...........................     567      (3,477)         (247)             --               (3,157)
Minority interest.................      --          --            --              77(d)                77
                                    ------     -------        ------         -------              -------
Income before extraordinary
  item............................   7,315       5,757            99          (8,154)               5,017
Extraordinary gain, net...........      --       2,298            --              --                2,298
                                    ------     -------        ------         -------              -------
     Net income...................  $7,315    $  8,055       $    99        $ (8,154)            $  7,315
                                    ======     =======        ======         =======              =======
</TABLE>
 
- ---------------
(a) Eliminations of intercompany administration services, communication services
    and interest charges.
(b) Eliminations of capitalized intercompany labor.
(c) Eliminations of equity (income) loss from consolidated subsidiaries.
   
(d) Recording of minority interest in equity or earnings loss of non-guarantor
    subsidiaries.
    
 
                                      F-24
<PAGE>   94
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31, 1994
                                 --------------------------------------------------------------------------
                                           SUBSIDIARY   NON-GUARANTOR
                                   IXC     GUARANTORS   SUBSIDIARIES    ELIMINATIONS           CONSOLIDATED
                                 -------   ----------   -------------   ------------           ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                              <C>       <C>          <C>             <C>                    <C>
Net cash provided by (used in)
  operating activities.........  $(1,262)   $  9,935      $   1,199       $  3,660(a)(b)(c)      $ 13,532
Cash flows from investing
  activities
Purchase of property and
  equipment....................       --      (3,545)        (3,732)           190(b)              (7,087)
Sale of property and
  equipment....................       --         235             --             --                    235
Payments for businesses
  acquired, net of cash
  received.....................       --          --        (11,976)            --                (11,976)
                                 -------     -------       --------        -------                -------
Net cash provided by (used in)
  investing activities.........       --      (3,310)       (15,708)           190                (18,828)
Cash flows from financing
  activities
Payments from (advances to)
  affiliates, net..............    1,411      (1,525)           114             --                     --
Proceeds from long-term debt...       --         229         15,770         (3,000)(a)             12,999
Payments on long-term debt and
  lease obligations............       --      (7,331)          (506)            --                 (7,837)
Payments from escrow...........       --       1,500             --             --                  1,500
Payments of debt issue costs...     (139)       (976)          (436)            --                 (1,551)
Capital contribution in
  subsidiary by minority
  shareholders.................       --          --            500           (500)(c)                 --
Issuance of common stock.......        3          --              1             (1)(c)                  3
                                 -------     -------       --------        -------                -------
Net cash provided by (used in)
  financing activities.........    1,275      (8,103)        15,443         (3,501)                 5,114
Net increase (decrease) in cash
  and cash equivalents.........       13      (1,478)           934            349                   (182)
Cash and cash equivalents at
  beginning of period..........      133       6,097             --             --                  6,230
                                 -------     -------       --------        -------                -------
Cash and cash equivalents at
  end of period................  $   146    $  4,619      $     934       $    349               $  6,048
                                 =======     =======       ========        =======                =======
</TABLE>
 
- ---------------
(a) Eliminations of intercompany receivables, debt and lease obligations.
(b) Eliminations of intercompany capitalized labor.
   
(c) Eliminations of intercompany capital contribution.
    
 
                                      F-25
<PAGE>   95
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                     CONDENSED CONSOLIDATING BALANCE SHEET
 
   
<TABLE>
<CAPTION>
                                                           DECEMBER 31, 1995
                             ------------------------------------------------------------------------------
                                        SUBSIDIARY   NON-GUARANTOR
                               IXC      GUARANTORS   SUBSIDIARIES    ELIMINATIONS              CONSOLIDATED
                             --------   ----------   -------------   ------------              ------------
                                                         (DOLLARS IN THOUSANDS)
<S>                          <C>        <C>          <C>             <C>                       <C>
Current assets:
  Cash and cash
     equivalents...........  $  1,418    $  3,332      $   1,742      $      423(a)              $  6,915
  Accounts receivable and
     other, net............        --       6,717          1,148          (2,328)(e)                6,319
  Other current assets.....     6,565       4,481            358          (7,807)(e)                2,815
                             --------    --------      ---------      ----------                 --------
Total current assets.......     7,983      14,530          3,248          (9,712)                  16,049
Property and equipment,
  net......................        --      76,804         29,910            (315)(d)              106,399
Prepaid contract costs.....        --         989             --              --                      989
Escrow under Senior
  Notes....................   198,266          --             --              --                  198,266
Due from affiliate.........    74,604       3,351            568         (78,523)(e)                   --
Other assets...............    12,997      15,959          4,191         (18,375)(b)               14,772
                             --------    --------      ---------      ----------                 --------
Total assets...............  $293,850    $111,633      $  37,917      $ (106,925)                $336,475
                             ========    ========      =========      ==========                 ========
Current liabilities:
  Accounts payable, accrued
     interest and other
     current liabilities...  $  8,984    $ 13,922      $   2,720      $   (4,528)(a)(e)          $ 21,098
  Due to affiliate.........       258       6,458          1,832          (8,548)(e)                   --
  Current portion of
     long-term debt and
     lease obligations.....        --       1,511          3,023              --                    4,534
                             --------    --------      ---------      ----------                 --------
Total current
  liabilities..............     9,242      21,891          7,575         (13,076)                  25,632
Long-term debt and lease
  obligations, less current
  portion..................   277,238       3,207         17,215          (3,400)(e)              294,260
Net noncurrent deferred tax
  liability................       222      10,997             --          (2,916)(e)                8,303
Due to affiliate/parent....        --      70,384          3,878         (74,262)(e)                   --
Other noncurrent
  liabilities..............        --         469             --              --                      469
Minority interest..........        --           1             --             952(c)                   953
Preferred stock of
  consolidated subsidiary
  held by minority
  interests................        --          --             --              --                       --
Stockholders' equity:
  Preferred stock..........        13          --             --              --                       13
  Common stock.............       243           3              1              (4)(b)                  243
  Additional paid-in
     capital...............    29,430      30,051         20,750         (50,801)(b)               29,430
  Retained earnings
     (accumulated
     deficit)..............   (22,538)    (25,370)       (11,502)         36,582(b)(c)(d)(e)      (22,828)
                             --------    --------      ---------      ----------                 --------
Total stockholders'
  equity...................     7,148       4,684          9,249         (14,223)                   6,858
                             --------    --------      ---------      ----------                 --------
        Total liabilities
          and stockholders'
           equity..........  $293,850    $111,633      $  37,917      $ (106,925)                $336,475
                             ========    ========      =========      ==========                 ========
</TABLE>
    
 
- ---------------
(a) Eliminations of intercompany settlements in transit.
(b) Eliminations of investments in consolidated subsidiaries
(c) Recording of minority interest in equity operations.
(d) Eliminations of intercompany capitalized labor.
(e) Eliminations of intercompany receivables, and lease obligations.
 
                                      F-26
<PAGE>   96
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31, 1995
                                  -------------------------------------------------------------------------
                                             SUBSIDIARY   NON-GUARANTOR
                                    IXC      GUARANTORS   SUBSIDIARIES    ELIMINATIONS         CONSOLIDATED
                                  --------   ----------   -------------   ------------         ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                               <C>        <C>          <C>             <C>                  <C>
Net operating revenues..........  $    404    $ 89,339      $  12,155       $(10,897)(a)         $ 91,001
Operating expenses:
  Cost of services..............        --      38,950         10,075         (9,173)(a)(b)        39,852
  Operations and
     administration.............     1,116      26,155          6,322         (1,311)(a)           32,282
  Depreciation and
     amortization...............        57      12,728          4,653             --               17,438
                                  --------     -------       --------       --------             --------
                                      (769)     11,506         (8,895)          (413)               1,429
Interest income.................     3,766         399             67         (3,764)(a)              468
Interest income on escrow under
  Senior Notes..................     2,552          --             --             --                2,552
Interest expense................   (10,982)     (5,838)        (1,541)         3,764(a)           (14,597)
Equity in net income (loss) of
  unconsolidated subsidiaries...    (1,185)     (7,678)            --          8,882(c)                19
                                  --------     -------       --------       --------             --------
Income (loss) before provision
  (benefit) for income taxes and
  minority interest in net loss
  of subsidiaries...............    (6,618)     (1,611)       (10,369)         8,469              (10,129)
Benefit (provision) for income
  taxes.........................     2,246         546         (1,099)            --                1,693
Minority interest...............        --          --             --          5,218(d)             5,218
                                  --------     -------       --------       --------             --------
Income (loss) before
  extraordinary items...........    (4,372)     (1,065)       (11,468)        13,687               (3,218)
Extraordinary gain, net.........      (304)     (1,309)          (134)            --               (1,747)
                                  --------     -------       --------       --------             --------
Net income......................  $ (4,676)   $ (2,374)     $ (11,602)      $ 13,687             $ (4,965)
                                  ========     =======       ========       ========             ========
</TABLE>
 
- ---------------
(a) Eliminations of intercompany administration services, communication services
    and interest charges.
(b) Eliminations of capitalized intercompany labor.
(c) Eliminations of equity (income) loss from consolidated subsidiaries.
(d) Recording of minority interest in equity or earnings loss of non-guarantor
    subsidiaries.
 
                                      F-27
<PAGE>   97
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31, 1995
                                   ------------------------------------------------------------------------
                                               SUBSIDIARY   NON-GUARANTOR                          IXC
                                      IXC      GUARANTORS   SUBSIDIARIES    ELIMINATIONS       CONSOLIDATED
                                   ---------   ----------   -------------   ------------       ------------
                                                            (DOLLARS IN THOUSANDS)
<S>                                <C>         <C>          <C>             <C>                <C>
Net cash provided by (used in)
  operating activities...........  $ (10,876)   $ 24,272       $(8,333)       $  3,992(a)(b)    $    9,055
Cash flows from investing
  activities
Release of funds from escrow
  under Senior Notes.............      4,300          --            --              --               4,300
Purchase of restricted short-term
  investments....................   (200,000)         --            --              --            (200,000)
Purchase of property and
  equipment......................         --     (14,282)       (9,565)            177(b)          (23,670)
                                   ---------    --------       -------        --------          ----------
Net cash provided by (used in)
  investing activities...........   (195,700)    (14,282)       (9,565)            177            (219,370)
Cash flow from financing
  activities
Net proceeds from issuance of
  Senior Notes, net of
  discount.......................    277,148          --            --              --             277,148
Capital contributions in
  subsidiary by minority
  shareholders...................         --     (14,248)       20,250              --               6,002
Payments from (advances to)
  affiliates, net................    (50,827)     50,827            --              --                  --
Proceeds from long-term debt.....         --      17,150         1,545              --              18,695
Payments on long-term debt and
  lease obligations..............     (5,700)    (63,606)       (3,089)         (4,095)(a)         (76,490)
Payments of debt issue costs.....    (10,407)         --            --              --             (10,407)
Redemption of preferred stock....     (1,460)     (1,400)           --              --              (2,860)
Payments of preferred stock
  dividends......................       (906)         --            --              --                (906)
                                   ---------    --------       -------        --------           ---------
Net cash provided by (used in)
  financing activities...........    207,848     (11,277)       18,706          (4,095)            211,182
Net increase (decrease) in cash
  and cash equivalents...........      1,272      (1,287)          808              74                 867
Cash and cash equivalents at
  beginning of period............        146       4,619           934             349               6,048
                                   ---------    --------       -------        --------          ----------
Cash and cash equivalents at end
  of period......................  $   1,418    $  3,332       $ 1,742        $    423          $    6,915
                                   =========    ========       =======        ========          ==========
</TABLE>
 
- ---------------
(a) Eliminations of intercompany receivables, debt and lease obligations.
(b) Eliminations of intercompany capitalized labor.
 
                                      F-28
<PAGE>   98
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                     CONDENSED CONSOLIDATING BALANCE SHEET
 
   
<TABLE>
<CAPTION>
                                                               MARCH 31, 1996
                               ------------------------------------------------------------------------------
                                          SUBSIDIARY   NON-GUARANTOR
                                 IXC      GUARANTORS   SUBSIDIARIES    ELIMINATIONS              CONSOLIDATED
                               --------   ----------   -------------   ------------              ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                            <C>        <C>          <C>             <C>                       <C>
Current assets:
  Cash and cash
     equivalents.............  $  2,505    $  1,113      $   1,031      $      843(a)              $  5,492
  Accounts receivable and
     other, net..............        --       9,118          2,623          (4,770)(e)                6,971
  Other current assets.......     2,430       4,781            576          (5,267)(e)                2,520
                               --------    --------      ---------      ----------                 --------
Total current assets.........     4,935      15,012          4,230          (9,194)                  14,983
Property and equipment,
  net........................         1      83,321         39,154            (314)(d)              122,162
Escrow under Senior Notes....   187,584          --             --              --                  187,584
Due from affiliate...........    91,914       3,095             --         (95,009)(e)                   --
Other assets.................     7,167      24,601         10,276         (20,306)(b)               21,738
                               --------    --------      ---------      ----------                 --------
Total assets.................  $291,601    $126,029      $  53,660      $ (124,823)                $346,467
                               ========    ========      =========      ==========                 ========
Current liabilities:
  Accounts payable, accrued
     interest and other
     current liabilities.....  $ 18,216    $ 16,342      $   4,765      $   (7,296)(a)(e)          $ 32,027
  Due to affiliate...........       436         228          1,696          (2,360)(e)                   --
  Current portion of
     long-term debt and lease
     obligations.............        --       9,207          3,087          (1,868)(e)               10,426
                               --------    --------      ---------      ----------                 --------
Total current liabilities....    18,652      25,777          9,548         (11,524)                  42,453
Long-term debt and lease
  obligations, less current
  portion....................   277,336       3,270         20,299              --                  300,905
Net noncurrent deferred tax
  liability..................        --       9,791             --          (2,842)(e)                6,949
Due to affiliate/parent......        --      88,438          6,571         (95,009)(e)                   --
Other noncurrent
  liabilities................        --         621            707            (707)(e)                  621
Minority interest............        --          --             --             380(c)                   380
Stockholders' equity:
  Preferred stock............        13          --          2,584          (2,584)(b)                   13
  Common stock...............       243           3              1              (4)(b)                  243
  Additional paid-in
     capital.................    29,430      30,052         32,249         (62,301)(b)               29,430
  Retained earnings
     (accumulated deficit)...   (34,073)    (31,923)       (18,299)         49,768(b)(c)(d)(e)      (34,527)
                               --------    --------      ---------      ----------                 --------
Total stockholders' equity
  (deficit)..................    (4,387)     (1,868)        16,535         (15,121)                  (4,841)
                               --------    --------      ---------      ----------                 --------
          Total liabilities
            and stockholders'
            equity...........  $291,601    $126,029      $  53,660      $ (124,823)                $346,467
                               ========    ========      =========      ==========                 ========
</TABLE>
    
 
- ---------------
 
(a) Eliminations of intercompany settlements in transit.
(b) Eliminations of investments in consolidated subsidiaries
(c) Recording of minority interest in equity operations.
(d) Eliminations of intercompany capitalized labor.
(e) Eliminations of intercompany receivables, and lease obligations.
 
                                      F-29
<PAGE>   99
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                               MARCH 31, 1996
                                  -------------------------------------------------------------------------
                                             SUBSIDIARY   NON-GUARANTOR
                                    IXC      GUARANTORS   SUBSIDIARIES    ELIMINATIONS         CONSOLIDATED
                                  --------   ----------   -------------   ------------         ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                               <C>        <C>          <C>             <C>                  <C>
Net operating revenues..........  $     --    $ 27,853      $   5,246      $   (6,849)(a)        $ 26,250
Operating expenses:
  Cost of services..............        --      14,635          7,452          (6,487)(a)(b)       15,600
  Operations and
     administration.............       834       7,984          1,797            (198)(a)          10,417
  Depreciation and
     amortization...............        14       3,793          2,203              --               6,010
                                  --------    --------       --------        --------            --------
                                      (848)      1,441         (6,206)           (164)             (5,777)
Interest income.................     2,327         197             30          (2,428)(a)             126
Interest income on escrow under
  Senior Notes..................     2,557          --             --              --               2,557
Interest expense................    (9,623)     (2,098)          (577)          2,428(a)           (9,870)
Equity in net income (loss) of
  unconsolidated subsidiaries...    (6,553)     (6,895)            --          13,443(c)               (5)
                                  --------    --------       --------        --------            --------
Income (loss) before provision
  (benefit) for income taxes and
  minority interest in net loss
  of subsidiaries...............   (12,140)     (7,355)        (6,753)         13,279             (12,969)
Benefit (provision) for income
  taxes.........................       605         802            (44)             --               1,363
Minority interest...............        --          --             --             (93)(d)             (93)
                                  --------    --------       --------        --------            --------
Income (loss) before
  extraordinary items...........  $(11,535)   $ (6,553)     $  (6,797)     $   13,186            $(11,699)
                                  ========    ========       ========        ========            ========
</TABLE>
 
- ---------------
(a) Eliminations of intercompany administration services, communication services
    and interest charges.
(b) Eliminations of capitalized intercompany labor.
(c) Eliminations of equity (income) loss from consolidated subsidiaries.
(d) Recording of minority interest in equity or earnings loss of non-guarantor
    subsidiaries.
 
                                      F-30
<PAGE>   100
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
16.  FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES (CONTINUED)
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                               MARCH 31, 1996
                                 --------------------------------------------------------------------------
                                             SUBSIDIARY   NON-GUARANTOR                            IXC
                                   IXC       GUARANTORS   SUBSIDIARIES    ELIMINATIONS         CONSOLIDATED
                                 --------    ----------   -------------   ------------         ------------
                                                           (DOLLARS IN THOUSANDS)
<S>                              <C>         <C>          <C>             <C>                  <C>
Net cash provided by (used in)
  operating activities.........  $  3,934     $  4,338       $(4,752)       $ (3,074)(a)(b)      $    446
Investing activities
Release of funds from escrow
  under Senior Notes...........    13,225           --            --              --               13,225
Purchase of restricted
  short-term
  investments..................        --           --            --              --                   --
Purchase of property and
  equipment....................        (1)     (10,092)       (3,731)            260(b)           (13,564)
                                 --------     --------       -------         -------             --------
Net cash provided by (used in)
  investing activities.........    13,224      (10,092)       (3,731)            260                 (339)
Financing activities
Payments from (advances to)
  affiliates, net..............   (15,900)       7,400         8,500              --                   --
Payments on long-term debt and
  lease obligations............        --       (3,865)         (728)          3,234(a)            (1,359)
Payments of debt issue costs...      (171)          --            --              --                 (171)
                                 --------     --------       -------         -------             --------
Net cash provided by (used in)
  financing activities.........   (16,071)       3,535         7,772           3,234               (1,530)
Net increase (decrease) in cash
  and cash equivalents.........     1,087       (2,219)         (711)            420               (1,423)
Cash and cash equivalents at
  beginning of period..........     1,418        3,332         1,742             423                6,915
                                 --------     --------       -------         -------             --------
Cash and cash equivalents at
  end of period................  $  2,505     $  1,113       $ 1,031        $    843             $  5,492
                                 ========     ========       =======         =======             ========
</TABLE>
 
- ---------------
(a) Eliminations of intercompany receivables, debt and lease obligations.
   
(b) Eliminations of intercompany capitalized labor.
    
 
                                      F-31
<PAGE>   101
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
17.  UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION
 
     Basis of Presentation and Significant Accounting Policies
 
     The interim financial data as of March 31, 1996 and for the three month
periods ended March 31, 1995 and 1996 is unaudited. The information reflects all
adjustments, consisting only of normal recurring adjustments, that, in the
opinion of management, are necessary to present fairly the financial position
and results of operations of the Company for the periods indicated. Results of
operations for the interim periods are not necessarily indicative of the results
of operations for the full year.
 
     As of January 1, 1996, the Company adopted FASB Statement No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of. The adoption had no effect on the results of operations of the
Company.
 
     Acquisition of Minority Interest in SSC
 
     Effective January 1, 1996, IXC Long Distance, Inc. entered into an
agreement with Excel to acquire its minority interest in SSC for $6.25 million.
The purchase price was paid by the issuance of a non-interest bearing promissory
note due in monthly installments over six months. The acquisition was accounted
for as a purchase and the operating results of SSC have been included in the
consolidated financial statements from the date of acquisition. The purchase
price was allocated based on estimated fair values at the date of acquisition.
The excess of purchase price over assets acquired was $5,583,000 and is being
amortized on a straight-line basis over five years. Pro forma operating results
for the three month period ended March 31, 1995 as if SSC had been acquired as
of January 1, 1995, are as follows (in thousands, except per share amounts):
 
   
<TABLE>
<CAPTION>
                                                            MARCH 31                       
                                                    ------------------------               
                                                    HISTORICAL     PRO FORMA               
                                                    ----------     ---------               
        <S>                                         <C>            <C>                     
        Operating revenues.........................  $ 21,766       $21,766                
        Net income.................................  $  1,267       $ 1,228                
        Earnings per share.........................  $    .03       $   .03                
</TABLE>
    
 
     Income Taxes
 
     The Company has determined that a valuation allowance should be applied
against the net operating loss it expects to incur in 1996. The difference
between the tax benefit recorded for the first quarter of 1996 and the expected
benefit at the federal statutory rate is primarily due to losses incurred by a
subsidiary that provides switched long distance services. The related tax
benefits have not been recognized as a result of uncertainty regarding future
profitability.
 
     Capital and Operating Leases
 
     In March 1996, the Company entered into five-year equipment leases for
network switching equipment for which the lease obligations have a present value
of $7,038,000.
 
     Issuance of Stock Options
 
   
     During the quarter ended March 31, 1996, the Company granted stock options
covering 429,200 shares of common stock at $3.01 per share under the IXC Stock
Plan.
    
 
                                      F-32
<PAGE>   102
 
                            IXC COMMUNICATIONS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
   
18.  SUBSEQUENT EVENTS
    
 
   
     From January 1, 1996 through June 12, 1996, the Company effected stock
splits resulting in a 2.4249 for 1 split of the Company's common stock (with
fractional shares to be paid in cash). The Company also increased the number of
authorized shares of its common stock to 100,000,000 and the number of
authorized shares of its preferred stock to 3,000,000. The accompanying
financial statements have been retroactively adjusted to reflect the stock
splits and the increase in authorized shares.
    
 
   
     On May 14, 1996, the Board of Directors adopted, and on June 6, 1996
stockholders approved, the IXC Communications, Inc. 1996 Stock Plan (the "1996
Stock Plan"), a stock incentive plan covering 2,121,788 shares of common stock.
Awards under the 1996 Stock Plan are given at the discretion of the Board of
Directors and include common stock options with exercise prices at least equal
to the fair market value at the date of grant.
    
 
   
     Additionally on May 14, 1996 the Board of Directors adopted the IXC
Communications, Inc. Outside Directors' Phantom Stock Plan (the "Directors'
Plan"), pursuant to which $20,000 per director per year of outside director's
fees are deferred and treated as if it were invested in shares of the Company's
common stock. No shares of common stock will be actually purchased and the
participants will receive cash benefits equal to the value of the shares that
they are deemed to have purchased under the Directors' Plan, with such value to
be determined on the date of distribution. Distribution of benefits generally
will occur three years after the deferral. Compensation expense will be
determined based on increases in the market price of the number of shares deemed
to have been purchased and will be charged to expense over the related period.
On June 6, 1996 the stockholders approved the Directors' Plan.
    
 
                                      F-33
<PAGE>   103
 
                                   [IXC LOGO]
                            IXC COMMUNICATIONS, INC.
<PAGE>   104
 
                 [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS (Subject to Completion)
   
Issued June 13, 1996
    
 
   
                                5,600,000 Shares
    
 
LOGO                        IXC Communications, Inc.
                                  COMMON STOCK
                            ------------------------
 
   
ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY.
OF THE 5,600,000 SHARES OF COMMON STOCK BEING OFFERED, 1,120,000 SHARES ARE
    BEING OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE
    INTERNATIONAL UNDERWRITERS AND 4,480,000 SHARES ARE BEING OFFERED
       INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
       UNDERWRITERS. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC
          MARKET FOR THE COMPANY'S COMMON STOCK. IT IS CURRENTLY
          ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE PER
             SHARE WILL BE BETWEEN $17.00 AND $19.00. SEE
             "UNDERWRITERS" FOR INFORMATION RELATING TO THE
                 METHOD OF DETERMINING THE INITIAL PUBLIC
                 OFFERING PRICE.
    
 
   
  CONCURRENTLY WITH THE CLOSING OF THE OFFERING, THE COMPANY WILL SELL TO THE
  TRUSTEES OF THE GENERAL ELECTRIC PENSION TRUST, AN AFFILIATE OF THE COMPANY,
$12.5 MILLION OF COMMON STOCK. FOR A DESCRIPTION OF THE TERMS AND CONDITIONS OF
                     SUCH SALE, SEE "CERTAIN TRANSACTIONS."
    
 
                            ------------------------
 
   
  THE COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NASDAQ NATIONAL MARKET
                            UNDER THE SYMBOL "IIXC."
    
 
                            ------------------------
 
   
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR INFORMATION THAT SHOULD BE CONSIDERED
                           BY PROSPECTIVE INVESTORS.
    
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
     EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
        SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
        COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
          PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
              CRIMINAL OFFENSE.
                            ------------------------
 
                           PRICE $            A SHARE
 
                            ------------------------
 
<TABLE>
<CAPTION>
                                                                     UNDERWRITING
                                                     PRICE TO       DISCOUNTS AND      PROCEEDS TO
                                                      PUBLIC        COMMISSIONS(1)      COMPANY(2)
                                                ------------------------------------------------------
<S>                                             <C>               <C>               <C>
Per Share.......................................         $                $                 $
Total(3)........................................         $                $                 $
</TABLE>
 
- ------------
    (1) The Company has agreed to indemnify the Underwriters against certain
        liabilities, including liabilities under the Securities Act of 1933. See
        "Underwriters."
   
    (2) Before deducting expenses payable by the Company, estimated at
        $1,500,000.
    
   
    (3) The Company has granted to the U.S. Underwriters an option, exercisable
        within 30 days of the date hereof, to purchase up to an aggregate of
        additional 840,000 shares of Common Stock at the price to public less
        underwriting discounts and commissions, for the purpose of covering
        over-allotments, if any. If the U.S. Underwriters exercise such option
        in full, the total price to public, underwriting discounts and
        commissions and proceeds to the Company, will be $        , $        and
        $        , respectively. See "Underwriters."
    
 
                            ------------------------
 
    The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters and subject to approval of certain legal matters by Shearman &
Sterling, counsel for the Underwriters. It is expected that delivery of the
Shares will be made on or about           , 1996, at the office of Morgan
Stanley & Co. Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
                            ------------------------
 
MORGAN STANLEY & CO.
   International
                    CS FIRST BOSTON
 
                                       DILLON, READ & CO. INC.
 
          , 1996
 
     Information contained herein is subject to completion or amendment. A
     registration statement relating to these securities has been filed with the
     Securities and Exchange Commission. These securities may not be sold nor
     may offers to buy be accepted prior to the time the registration statement
     becomes effective. This prospectus shall not constitute an offer to sell or
     the solicitation of an offer to buy nor shall there be any sale of these
     securities in any State in which such offer, solicitation or sale would be
     unlawful prior to registration or qualification under the securities laws
     of any such State.
<PAGE>   105
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses and costs (other than
underwriting discounts and commissions) expected to be incurred in connection
with the sale and distribution of the securities being registered. All of the
amounts shown are estimated except the registration fee of the Securities and
Exchange Commission (the "Commission") and the filing fee for the National
Association of Securities Dealers, Inc. ("NASD").
 
   
<TABLE>
<CAPTION>
                                       ITEM                                          AMOUNT
  -------------------------------------------------------------------------------  ----------
  <S>                                                                              <C>
  Commission registration fee....................................................  $   42,193
  NASD filing fee................................................................      12,092
  Nasdaq National Market listing fee.............................................      50,000
  Printing and engraving expenses................................................     255,000
  Legal fees and expenses (excluding Blue Sky)...................................     350,000
  Blue Sky fees and expenses.....................................................      25,000
  Offering-related premium increase on D&O insurance.............................     250,000
  Accounting fees and expenses...................................................     300,000
  Transfer agent and registrar fees..............................................      10,000
  Miscellaneous..................................................................     205,715
                                                                                   ----------
            Total................................................................  $1,500,000
                                                                                   ==========
</TABLE>
    
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     IXC Communications, Inc. ("IXC Communications") is a Delaware corporation.
Article VII, Section 8 of IXC Communications' Bylaws provides that IXC
Communications shall indemnify its officers, directors, employees and agents to
the fullest extent permitted by the Delaware General Corporation Law ("DGCL").
Section 145 of the DGCL provides that a Delaware corporation has the power to
indemnify its officers and directors in certain circumstances.
 
     Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation),
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding provided that such director or officer acted in good faith in
a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, provided that such director or officer had no cause to believe his
or her conduct was unlawful.
 
     Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses actually and reasonably incurred in connection with the
defense or settlement of such action or suit provided that such director or
officer acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such director or officer shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery or
the court in which such action was brought shall determine that despite the
adjudication of liability, but in view of all the circumstances of the case,
such
 
                                      II-1
<PAGE>   106
 
director or officer is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
 
     Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding
referred to in subsections (a) and (b) or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
therewith; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the corporation shall have power to purchase and maintain insurance on
behalf of a director or officer of the corporation against any liability
asserted against him or her or incurred by him or her in any such capacity or
arising out of his or her status as such whether or not the corporation would
have the power to indemnify him or her against such liabilities under Section
145.
 
     Article Tenth of the Restated Certificate of Incorporation of IXC
Communications currently provides that each director shall not be personally
liable to IXC Communications or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability: (i) for any breach of the
director's duty of loyalty to IXC Communications or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for unlawful payment of dividends or unlawful
stock repurchases or redemptions as provided under Section 174 of the DGCL; or
(iv) for any transaction from which the director derived an improper personal
benefit.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
   
     In the three years preceding the filing of this Registration Statement, IXC
Communications has sold the following unregistered securities (share amounts for
the Common Stock, par value $.01 (the "Common Stock") have been adjusted to
reflect a stock split of 4,782-to-1 effective January 31, 1994 but not the stock
splits that were effected in June 1996).
    
 
     In late 1993, the Trust for the Riordan & McKinzie Profit Sharing and
Savings Plan for the benefit of Carl W. McKinzie (the "McKinzie Trust") paid IXC
Communications $100,020 for the purchase of 95,640 shares of Common Stock par
value $.01 per share at a purchase price of less than $0.01 per share and 100
shares of 10% Senior Series 1 Cumulative Redeemable Preferred Stock ("Series 1
Preferred Stock") at a purchase price of $1,000 per share. Certificate for such
shares were issued on January 31, 1994.
 
     On February 22, 1994, IXC Communications issued an aggregate of 1,287,020
shares of its Common Stock to four of its executive officers (one of whom is
also a director). Such shares were issued pursuant to the conversion of shares
of common stock of I-Link Communications, Inc., a Delaware corporation ("IL"),
and Telecom Services Group, Inc., a Delaware corporation ("TSGI"), at the
effective date (February 22, 1994) of the merger of IL and I-Link Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of IXC
Communications, and the merger of TSGI and TSGI Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of IXC Communications (the
"TSGI Merger"). Also on February 22, 1994, IXC Communications issued an
aggregate of 3,133,380 shares of Common Stock and 12,550 shares of 10% Junior
Series 3 Cumulative Preferred Stock, $.01 par value (the "Series 3 Preferred
Stock") in exchange for common and preferred shares of TSGI, to former
stockholders of TSGI (who include Ralph J. Swett, Richard D. Irwin, General
Electric Pension Trust and Grumman Hill Investments, L.P.) at the effective date
of the TSGI Merger.
 
     On May 26, 1994, IXC Communications issued and sold 25,026 shares of Common
Stock to American Business Development Corporations for an aggregate purchase
price of $2,502.
 
   
     During the period from December 16, 1994 through March 15, 1996, IXC
Communications granted stock options to 26 individuals (including two executive
officers) covering an aggregate of 443,356 shares of Common Stock. No
consideration was paid for such options. Such grants were exempt from the
registration requirement of the Securities Act of 1933 as not involving the sale
of a security.
    
 
     On October 5, 1995, IXC Communications issued and sold 12.5% Series A
Senior Notes due 2005 (the "Series A Notes") in the aggregate principal amount
of $285.0 million to an aggregate of 82 purchasers each
 
                                      II-2
<PAGE>   107
 
   
of which was either an "accredited investor" or "qualified institutional buyer"
(as such terms are defined in Rule 501(a) and Rule 144A(a) of the Securities
Act) for proceeds to IXC Communications of approximately $268.8 million, net of
original issue discount and placement fees of approximately $8.3 million. The
aggregate offering price of the Series A Notes was approximately $277.1 million.
On April 1, 1996, IXC Communications and various of its subsidiaries filed a
registration statement on Form S-4 with the SEC pursuant to which IXC
Communications will offer to exchange registered 12.5% Series B Senior Notes due
2005 for the Series A Notes. Dillon, Read & Co. Inc. and CS First Boston
Corporation acted as placement agents in connection with the sale of the Series
A Notes.
    
 
     The sales and issuances of the Common Stock, Series 1 Preferred Stock,
Series 3 Preferred Stock and the Series A Notes described above were deemed to
be exempt from registration under the Securities Act in reliance upon Section
4(2) thereof, as transactions not involving a public offering. The purchasers in
such private offerings of stock represented their intention to acquire the
securities for investment only and not with a view to the distribution thereof.
The purchasers of Series A Notes represented that they were not acquiring the
Series A Notes with a view to of for sale in connection with any distribution
thereof or with any present intention of offering or selling any of the Senior
Notes in a transaction that would violate the Securities Act. Appropriate
legends were affixed to the certificates representing the securities issued in
such transactions. All purchasers had adequate access, through their employment
or other relationships or otherwise, to sufficient information about IXC
Communications to make an informed investment decision. No underwriter or
placement agent was employed with respect to any such sales, other than the
firms named above which participated as placement agents in connection with the
sale of the Series A Notes.
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
(A) EXHIBITS
 
   
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                        DESCRIPTION
- -------   -----------------------------------------------------------------------------------
<C>       <S>
  *1.1    Form of Underwriting Agreement
   3.1    Restated Certificate of Incorporation of IXC Communications, Inc., as amended.
   3.2    Bylaws of IXC Communications, Inc., as amended.
 **4.1    Specimen certificate representing shares of Common Stock of IXC Communications,
          Inc.
   4.2    Indenture dated as of October 5, 1995 by and among IXC Communications, Inc., on its
          behalf and as successor-in-interest to I-Link Holdings, Inc. and IXC Carrier Group,
          Inc., each of IXC Carrier, Inc., on its behalf and as successor-in-interest to
          I-Link, Inc., CTI Investments, Inc., Texas Microwave, Inc. and WTM Microwave, Inc.,
          Atlantic States Microwave Transmission Company, Central States Microwave
          Transmission Company, Telcom Engineering, Inc., on its behalf and as
          successor-in-interest to SWTT Company and Microwave Network, Inc., Tower
          Communication Systems Corp., West Texas Microwave Company, Western States Microwave
          Transmission Company, Rio Grande Transmission, Inc., IXC Long Distance, Inc., Link
          Net International, Inc. (collectively, the "Guarantors"), and IBJ, Schroder Bank &
          Trust Company, as Trustee, with respect to the 12 1/2% Series A and Series B Senior
          Notes due 2005 (incorporated by reference to Exhibit 4.1 of IXC Communications,
          Inc.'s and each of the Guarantor's Registration Statement on Form S-4 filed with
          the Commission on April 11, 1996 (File No. 333-2936) (the "S-4").
   4.3    Purchase Agreement dated October 5, 1995 by and among IXC Communications, Inc. and
          the Purchasers named therein (incorporated by reference to Exhibit 4.2 of the S-4).
   4.4    A/B Exchange Registration Rights Agreement dated as of October 5, 1995 by and among
          IXC Communications, Inc., the Guarantors and the Purchasers named therein
          (incorporated by reference to Exhibit 4.3 of the S-4).
   4.5    Escrow Account and Disbursement Agreement dated as of October 5, 1995 by and among
          IXC Communications, Inc., IBJ Schroder Bank & Trust Company, as Escrow Holder, and
          IBJ Schroder Bank & Trust Company, as Collateral Agent (incorporated by reference
          to Exhibit 4.4 of the S-4).
</TABLE>
    
 
                                      II-3
<PAGE>   108
 
   
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                        DESCRIPTION
- -------   -----------------------------------------------------------------------------------
<C>       <S>
   4.6    Escrow Account Security Agreement dated as of October 5, 1995 by and between IXC
          Communications, Inc. and IBJ Schroder Bank & Trust Company (incorporated by
          reference to Exhibit 4.5 of the S-4).
   4.7    Form of 12 1/2% Series A Senior Notes due 2005 (incorporated by reference to
          Exhibit 4.6 of the S-4).
   4.8    Form of 12 1/2% Series B Senior Notes due 2005 and Subsidiary Guarantee.
   4.9    Registration Rights Agreement dated as of August 6, 1992 by and among Telecom
          Services Group, Inc., predecessor-in-interest to IXC Communications, Inc., and each
          of the signatories thereto.
   4.10   Amendment to Registration Rights Agreement dated as of May 1, 1996 by and among IXC
          Communications, Inc. and each of the signatories thereto.
   4.11   Amendment No. 1 to Indenture and Subsidiary Guarantee dated as of June 4, 1996 by
          and among IXC Communications, Inc., the Guarantors and the Trustee.
   4.12   Stock Exchange Agreement dated as of June 10, 1996 by and between IXC
          Communications, Inc., and Trustees of General Electric Pension Trust ("GEPT").
   4.13   Registration Rights Agreement dated as of June 10, 1996 by and among IXC
          Communications, Inc., GEPT and certain stockholders of IXC Communications, Inc.
 **5.1    Opinion of Riordan & McKinzie, a Professional Law Corporation regarding the
          validity of the issuance of the securities registered hereunder.
  10.1    Office Lease dated June 21, 1989 with USAA Real Estate Company, as amended
          (incorporated by reference to Exhibit 10.1 of the S-4).
  10.2    Equipment Lease dated as of December 1, 1994 by and between DSC Finance Corporation
          and Switched Services Communications, L.L.C.; Assignment Agreement dated as of
          December 1, 1994 by and between Switched Services Communications, L.L.C. and DSC
          Finance Corporation; and Guaranty dated December 1, 1994 made in favor of DSC
          Finance Corporation by IXC Communications, Inc. (incorporated by reference to
          Exhibit 10.2 of the S-4).
  10.3    Amended and Restated 1994 Stock Plan of IXC Communications, Inc.
  10.4    Form of Non-Qualified Stock Option Agreement under the 1994 Stock Plan of IXC
          Communications, Inc. (incorporated by reference to Exhibit 10.4 of the S-4).
  10.5    Form of IXC Communications, Inc. Restricted Stock Agreement (incorporated by
          reference to Exhibit 10.5 of the S-4).
  10.6    Form of IXC Communications, Inc. Restricted Stock Agreement (incorporated by
          reference to Exhibit 10.6 of the S-4).
  10.7    Amended and Restated Development Agreement by and between Intertech Management
          Group, Inc. and IXC Long Distance, Inc. (incorporated by reference to Exhibit 10.7
          of the Amendment No. 1 to the Registration Statement on Form S-4 filed with the
          Commission on May 20, 1996 (File No. 333-2936) (the "S-4 Amendment").
  10.8    Second Amended and Restated Service Agreement dated as of January 1, 1996 by and
          between Switched Services Communications, L.L.C. and Excel Telecommunications, Inc.
          (incorporated by reference to Exhibit 10.8 of the S-4).
  10.9    Equipment Purchase Agreement dated as of January 16, 1996 by and between Siecor
          Corporation and IXC Carrier, Inc. (incorporated by reference to Exhibit 10.9 of the
          S-4).
  10.10   1996 Stock Plan of IXC Communications, Inc.
  10.11   IRU Agreement dated as of November 1995 between WorldCom, Inc. and IXC Carrier,
          Inc. (incorporated by reference to Exhibit 10.11 of the S-4 Amendment).
  10.12   IXC Communications, Inc. Outside Directors' Phantom Stock Plan.
</TABLE>
    
 
                                      II-4
<PAGE>   109
 
   
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                        DESCRIPTION
- -------   -----------------------------------------------------------------------------------
<C>       <S>
  10.13   Business Consultant and Management Agreement dated as of January 3, 1995 by and
          between IXC Communications, Inc. and Culp Communications Associates.
  10.14   Employment Agreement dated December 28, 1995 by and between IXC Communications,
          Inc. and James F. Guthrie.
  10.15   Employment Agreement dated August 28, 1995, by and between IXC Communications, Inc.
          and David J. Thomas.
  11.1    Statement of Computation of Earnings per Share.
  21.1    Subsidiaries of IXC Communications, Inc. (incorporated by reference to Exhibit 21.1
          of the S-4).
**23.1    Consent of Riordan & McKinzie (contained in Exhibit 5.1).
  23.2    Consent of Ernst & Young LLP.
 *24.1    Powers of Attorney.
  24.2    Powers of Attorney for Joe C. Culp and Phillip L. Williams.
  27.1    Financial Data Schedule.
</TABLE>
    
 
- ------------
   
 * Previously filed.
    
   
** To be filed by amendment.
    
 
(B) FINANCIAL STATEMENT SCHEDULES
 
     All schedules are omitted since the required information is inapplicable or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the Consolidated Financial
Statements and Notes thereto.
 
ITEM 17.  UNDERTAKINGS.
 
     (a) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
 
     (b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") 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 Commission
such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
 
     (c) The undersigned the registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this registration statement in reliance upon Rule 430A and contained in the
     form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
                                      II-5
<PAGE>   110
 
                                   SIGNATURES
 
   
     Pursuant to the requirements of the Securities Act of 1933, the registrant
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 Austin,
State of Texas, on June 12, 1996.
    
 
                                          IXC Communications, Inc.,
                                          a Delaware corporation
 
                                          By: /s/  JOHN J. WILLINGHAM
                                             ----------------------------------
                                             John J. Willingham
                                             Senior Vice President, Chief
                                             Financial Officer
                                             and Secretary
 
   
     Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
    
 
   
<TABLE>
<CAPTION>

                  SIGNATURE                                 TITLE                     DATE
- ---------------------------------------------  --------------------------------  ---------------
<C>                                            <S>                               <C>
                      *                        Chairman, President and Chief      June 12, 1996
- ---------------------------------------------  Executive Officer, and Director
               Ralph J. Swett                  (Principal Executive Officer)


           /s/  JOHN J. WILLINGHAM             Senior Vice President, Chief       June 12, 1996
- ---------------------------------------------  Financial Officer and Secretary
             John J. Willingham                (Principal Financial and
                                               Accounting Officer)


                      *                        Director                           June 12, 1996
- ---------------------------------------------
              Richard D. Irwin


                      *                        Director                           June 12, 1996
- ---------------------------------------------
               Wolfe H. Bragin


                      *                        Director                           June 12, 1996
- ---------------------------------------------
              Carl W. McKinzie


                      *                        Director                           June 12, 1996
- ---------------------------------------------
             Phillip L. Williams


                      *                        Director                           June 12, 1996
- ---------------------------------------------
                 Joe C. Culp


*By:      /s/  JOHN J. WILLINGHAM
- ---------------------------------------------
             John J. Willingham
              Attorney-in-Fact
                                                                                  June 12, 1996
</TABLE>
    
 
                                      II-6
<PAGE>   111
 
                                 EXHIBIT INDEX
 
   
<TABLE>
<CAPTION>
                                                                                     SEQUENTIALLY
EXHIBIT                                                                                NUMBERED
NUMBER                                  DESCRIPTION                                      PAGE
- ------   --------------------------------------------------------------------------  ------------
<C>      <S>                                                                         <C>
 *1.1    Form of Underwriting Agreement
  3.1    Restated Certificate of Incorporation of IXC Communications, Inc., as
         amended.
  3.2    Bylaws of IXC Communications, Inc., as amended.
**4.1    Specimen certificate representing shares of Common Stock of IXC
         Communications, Inc.
  4.2    Indenture dated as of October 5, 1995 by and among IXC Communications,
         Inc., on its behalf and as successor-in-interest to I-Link Holdings, Inc.
         and IXC Carrier Group, Inc., each of IXC Carrier, Inc., on its behalf and
         as successor-in-interest to I-Link, Inc., CTI Investments, Inc., Texas
         Microwave, Inc. and WTM Microwave, Inc., Atlantic States Microwave
         Transmission Company, Central States Microwave Transmission Company,
         Telcom Engineering, Inc., on its behalf and as successor-in-interest to
         SWTT Company and Microwave Network, Inc., Tower Communication Systems
         Corp., West Texas Microwave Company, Western States Microwave Transmission
         Company, Rio Grande Transmission, Inc., IXC Long Distance, Inc., Link Net
         International, Inc. (collectively, the "Guarantors"), and IBJ, Schroder
         Bank & Trust Company, as Trustee, with respect to the 12 1/2% Series A and
         Series B Senior Notes due 2005 (incorporated by reference to Exhibit 4.1
         of IXC Communications, Inc.'s and each of the Guarantor's Registration
         Statement on Form S-4 filed with the Commission on April 11, 1996 (File
         No. 333-2936) (the "S-4").
  4.3    Purchase Agreement dated October 5, 1995 by and among IXC Communications,
         Inc. and the Purchasers named therein (incorporated by reference to
         Exhibit 4.2 of the S-4).
  4.4    A/B Exchange Registration Rights Agreement dated as of October 5, 1995 by
         and among IXC Communications, Inc., the Guarantors and the Purchasers
         named therein (incorporated by reference to Exhibit 4.3 of the S-4).
  4.5    Escrow Account and Disbursement Agreement dated as of October 5, 1995 by
         and among IXC Communications, Inc., IBJ Schroder Bank & Trust Company, as
         Escrow Holder, and IBJ Schroder Bank & Trust Company, as Collateral Agent
         (incorporated by reference to Exhibit 4.4 of the S-4).
  4.6    Escrow Account Security Agreement dated as of October 5, 1995 by and
         between IXC Communications, Inc. and IBJ Schroder Bank & Trust Company
         (incorporated by reference to Exhibit 4.5 of the S-4).
  4.7    Form of 12 1/2% Series A Senior Notes due 2005 (incorporated by reference
         to Exhibit 4.6 of the S-4).
  4.8    Form of 12 1/2% Series B Senior Notes due 2005 and Subsidiary Guarantee.
  4.9    Registration Rights Agreement dated as of August 6, 1992 by and among
         Telecom Services Group, Inc., predecessor-in-interest to IXC
         Communications, Inc., and each of the signatories thereto.
 4.10    Amendment to Registration Rights Agreement dated as of May 1, 1996 by and
         among IXC Communications, Inc. and each of the signatories thereto.
 4.11    Amendment No. 1 to Indenture and Subsidiary Guarantee dated as of June 4,
         1996 by and among IXC Communications, Inc., the Guarantors and the
         Trustee.
</TABLE>
    
<PAGE>   112
 
   
<TABLE>
<CAPTION>
                                                                                     SEQUENTIALLY
EXHIBIT                                                                                NUMBERED
NUMBER                                  DESCRIPTION                                      PAGE
- ------   --------------------------------------------------------------------------  ------------
<C>      <S>                                                                         <C>
 4.12    Stock Exchange Agreement dated as of June 10, 1996 by and between IXC
         Communications, Inc., and Trustees of General Electric Pension Trust
         ("GEPT").
 4.13    Registration Rights Agreement dated as of June 10, 1996 by and among IXC
         Communications, Inc., GEPT and certain stockholders of IXC Communications,
         Inc.
**5.1    Opinion of Riordan & McKinzie, a Professional Law Corporation regarding
         the validity of the issuance of the securities registered hereunder.
 10.1    Office Lease dated June 21, 1989 with USAA Real Estate Company, as amended
         (incorporated by reference to Exhibit 10.1 of the S-4).
 10.2    Equipment Lease dated as of December 1, 1994 by and between DSC Finance
         Corporation and Switched Services Communications, L.L.C.; Assignment
         Agreement dated as of December 1, 1994 by and between Switched Services
         Communications, L.L.C. and DSC Finance Corporation; and Guaranty dated
         December 1, 1994 made in favor of DSC Finance Corporation by IXC
         Communications, Inc. (incorporated by reference to Exhibit 10.2 of the
         S-4).
 10.3    Amended and Restated 1994 Stock Plan of IXC Communications, Inc.
 10.4    Form of Non-Qualified Stock Option Agreement under the 1994 Stock Plan of
         IXC Communications, Inc. (incorporated by reference to Exhibit 10.4 of the
         S-4).
 10.5    Form of IXC Communications, Inc. Restricted Stock Agreement (incorporated
         by reference to Exhibit 10.5 of the S-4).
 10.6    Form of IXC Communications, Inc. Restricted Stock Agreement (incorporated
         by reference to Exhibit 10.6 of the S-4).
 10.7    Amended and Restated Development Agreement by and between Intertech
         Management Group, Inc. and IXC Long Distance, Inc. (incorporated by
         reference to Exhibit 10.7 of the Amendment No. 1 to the Registration
         Statement on Form S-4 filed with the Commission on May 20, 1996 (File No.
         333-2936) (the "S-4 Amendment").
 10.8    Second Amended and Restated Service Agreement dated as of January 1, 1996
         by and between Switched Services Communications, L.L.C. and Excel
         Telecommunications, Inc. (incorporated by reference to Exhibit 10.8 of the
         S-4).
 10.9    Equipment Purchase Agreement dated as of January 16, 1996 by and between
         Siecor Corporation and IXC Carrier, Inc. (incorporated by reference to
         Exhibit 10.9 of the S-4).
10.10    1996 Stock Plan of IXC Communications, Inc.
10.11    IRU Agreement dated as of November 1995 between WorldCom, Inc. and IXC
         Carrier, Inc. (incorporated by reference to Exhibit 10.11 of the S-4
         Amendment).
10.12    IXC Communications, Inc. Outside Directors' Phantom Stock Plan.
10.13    Business Consultant and Management Agreement dated as of January 3, 1995
         by and between IXC Communications, Inc. and Culp Communications
         Associates.
10.14    Employment Agreement dated December 28, 1995 by and between IXC
         Communications, Inc. and James F. Guthrie.
10.15    Employment Agreement dated August 28, 1995, by and between IXC
         Communications, Inc. and David J. Thomas.
 11.1    Statement of Computation of Earnings per Share.
</TABLE>
    
<PAGE>   113
 
   
<TABLE>
<CAPTION>
                                                                                     SEQUENTIALLY
EXHIBIT                                                                                NUMBERED
NUMBER                                  DESCRIPTION                                      PAGE
- ------   --------------------------------------------------------------------------  ------------
<C>      <S>                                                                         <C>
 21.1    Subsidiaries of IXC Communications, Inc. (incorporated by reference to
         Exhibit 21.1 of the S-4).
**23.1   Consent of Riordan & McKinzie (contained in Exhibit 5.1).
 23.2    Consent of Ernst & Young LLP.
*24.1    Powers of Attorney.
 24.2    Powers of Attorney for Joe C. Culp and Phillip L. Williams.
 27.1    Financial Data Schedule.
</TABLE>
    
 
- ------------
   
 * Previously filed.
    
   
** To be filed by amendment.
    

<PAGE>   1
                                                                    EXHIBIT 3.1


                              RESTATED CERTIFICATE
                                       OF
                                 INCORPORATION


         Fiber Optic Communications, Inc., a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:

         1.      The name of this corporation is Fiber Optic Communications,
Inc.  Fiber Optic Communications, Inc. was originally incorporated under the
same name.  The original Certificate of Incorporation of this corporation was
filed with the Secretary of State of the State of Delaware on July 27, 1992.

         2.      Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of Incorporation has
been duly adopted and restates, integrates and further amends the provisions of
the Certificate of Incorporation of this corporation.

         3.      This Restated Certificate of Incorporation was duly consented
to, and adopted by, the holders of (i) a majority of the outstanding shares of
common stock, par value $.01 per share, of the Corporation and 10% Senior
Series 1 Cumulative Redeemable Preferred Stock, par value $.01 per share, of
this corporation ("Series 1 Preferred Stock"), consenting together as a class
and by (ii) over three-fourths (3/4s) of the outstanding shares of Series 1
Preferred Stock, acting without a meeting by unanimous written consent pursuant
to Section 228 of the General Corporation Law of the State of Delaware.

         4.      The text of the Restated Certificate of Incorporation as
heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:

         FIRST:  The name of this corporation (the "Corporation") is "IXC
Communications, Inc."

         SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, Delaware 19801.  The name of its
registered agent at such address is The Corporation Trust Company.

         THIRD:  The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may now or hereafter be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code.

         FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is one hundred and three million (103,000,000)
consisting of (i) one



                                       1


<PAGE>   2
hundred million (100,000,000) shares of common stock, par value $.01 per share,
and (ii) three million (3,000,000) shares of preferred stock, par value $.01
per share.  The preferred stock may be issued at any time, and from time to
time, in one or more series pursuant hereto or to a resolution or resolutions
providing for such issue duly adopted by the board of directors (the "Board")
of the Corporation (authority to do so being hereby expressly vested in the
Board), and such resolution or resolutions shall also set forth the voting
powers, full or limited, or none, of each such series of preferred stock and
shall fix the designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions of each
such series of preferred stock.

                 Upon the filing of this Second Amendment to Restated
Certificate of Incorporation which amends Article FOURTH to read as set forth
above, and without any further action on the part of the holders thereof, each
issued and outstanding share of common stock will be reclassified and changed 
into 0.8083 shares of common stock.

         FIFTH:  The business and affairs of the Corporation shall be managed
by and under the direction of the Board.  The exact number of directors of the
Corporation shall be fixed by or in the manner provided in the Bylaws of the
Corporation (the "Bylaws").

         SIXTH:  In furtherance and not in limitation of the powers conferred
by statute, the Board is expressly authorized:

         (a)     to adopt, repeal, rescind, alter or amend in any respect the
Bylaws, and to confer in the Bylaws powers and authorities upon the directors
of the Corporation in addition to the powers and authorities expressly
conferred upon them by statute;

         (b)     from time to time to set apart out of any funds or assets of
the Corporation available for dividends an amount or amounts to be reserved as
working capital or for any other lawful purpose and to abolish any reserve so
created and to determine whether any, and, if any, what part, of the surplus of
the Corporation or its net profits applicable to dividends shall be declared in
dividends and paid to its stockholders, and all rights of the holders of stock
of the Corporation in respect of dividends shall be subject to the power of the
Board so to do;

         (c)     subject to the laws of the State of Delaware, from time to
time to sell, lease or otherwise dispose of any part or parts of the properties
of the Corporation and to cease to conduct the business connected therewith or
again to resume the same, as it may deem best; and

         (d)     in addition to the powers and authorities hereinbefore and by
the laws of the State of Delaware conferred upon the Board, to execute all such
powers and to do all acts and things as may be exercised or done by the
Corporation; subject, nevertheless, to the express provisions of such laws, of
the Restated Certificate of Incorporation of the Corporation and its Bylaws.





                                       2


<PAGE>   3
         SEVENTH:  Meetings of stockholders of the Corporation may be held 
within or without the State of Delaware, as the Bylaws provide.  The books 
of the Corporation may be kept (subject to any provision of applicable law)
outside the State of Delaware at such place or places as may be designated 
from time to time by the Board or in the Bylaws.

         EIGHTH:  The Corporation reserves the right to adopt, repeal, rescind,
alter or amend in any respect any provision contained in this Restated
Certificate of Incorporation in the manner now or hereafter prescribed by
applicable laws, and all rights conferred on stockholders herein are granted
subject to this reservation.

         NINTH:  The Corporation is to have perpetual existence.

         TENTH:  A director of this Corporation shall not be personally liable
to the Corporation or its stockholder for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, as the same exists or hereafter may be amended, or (iv) for
any transaction from which the director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitation on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Delaware Corporation Law.  No amendment to or repeal
of this Article Tenth shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.

         ELEVENTH:

         A.      Designation of Two Series of Preferred Stock.  There are
hereby provided two series of preferred stock designated and to be known as
"10% Senior Series 1 Cumulative Redeemable Preferred Stock" and "10% Junior
Series 3 Cumulative Redeemable Preferred Stock."

         B.      Definitions.  As used in this Eleventh Article, the following
terms shall have the meanings indicated:

                 1.       "Common Stock" shall mean the common stock, $.01 par
value per share, issued or to be issued by the Corporation.

                 2.       "Original Issue Date" shall mean, with respect to any
share of Series Preferred Stock, the date of the original issuance of such
shares.





                                       3
<PAGE>   4
                 3.       "Preferred Stock" shall mean the preferred stock,
$.01 par value per share, issued or to be issued by the Corporation.

                 4.       "Series 1 Preferred Stock" shall mean the 10% Senior
Series 1 Cumulative Redeemable Preferred Stock, $.01 par value per share,
issued or to be issued by the Corporation.

                 5.       "Series 3 Preferred Stock" shall mean the 10% Junior
Series 3 Cumulative Redeemable Preferred Stock, $.01 par value per share,
issued or to be issued by the Corporation.

                 6.       "Series Preferred Stock" shall mean, collectively,
the Series 1 Preferred Stock and the Series 3 Preferred Stock.

         C.      Number of Shares.  The number of shares constituting the
Series 1 Preferred Stock shall be 2,000.  The number of shares constituting the
Series 3 Preferred Stock shall be 12,550.

         D.      Rights, Preferences, Privileges and Restrictions.  The voting
powers and relative rights, preferences, restrictions and other mattes relating
to the Series Preferred Stock are as follows:

                 1.       Dividends.

                          (a)     The holders of shares of Series 1 Preferred
Stock then outstanding shall be entitled to receive, prior to the payment of
any dividend on any other Preferred Stock of the Corporation or the Common
Stock of the Corporation, when, as and if declared by the Board, out of funds
legally available for the payment of dividends, cumulative dividends in an
annual amount equal to $100 per share, plus an amount determined by applying a
10% annual rate, compounded annually, to any accrued but unpaid dividend amount
from the last day of the period when such dividend accrues to the actual date
of payment of such dividend, and no more.  The holders of shares of Series 3
Preferred Stock then outstanding shall be entitled to receive, prior to the
payment of any dividend on any other Preferred Stock of the Corporation (other
than the Series 1 Preferred Stock) or the Common Stock of the Corporation, when
as and if declared by the Board, out of funds legally available for the payment
of dividends, cumulative dividends in an annual amount equal to $100 per share,
plus an amount determined by applying a 10% annual rate, compounded annually,
to any accrued but unpaid dividend amount from the last day of the period when
such dividend accrues to the actual date of payment of such dividend, and no
more.  Such dividends on the outstanding shares of Series Preferred Stock shall
be payable on such date as the Board may from time to time determine (each such
date being a "dividend payment date").  The Board may fix a record date for the
determination of holders of shares of Series Preferred Stock entitled to
receive payment of a dividend declared thereon, which record date shall not be
more than sixty (60) days prior to the date fixed for





                                       4
<PAGE>   5
the payment thereof.  Each such annual dividend shall be fully cumulative and
shall accrue from day to day (whether or not declared) from the first day of
each period in which such dividend may be payable as herein provided, except
that the first annual dividend with respect to each share of Series Preferred
Stock shall accrue from the Original Issue Date of such share or such other
date as determined by the Board, except that dividends with respect to each
share of Series 3 Preferred Stock shall accrue from August 14, 1992.
Dividends, when, as and if declared, shall be payable in cash.

                          (b)     The holder of each outstanding fractional
share of Series Preferred Stock shall be entitled to a ratably proportionate
amount of all dividends accruing with respect to each outstanding share of
Series Preferred Stock with the same Original Issue Date and all such dividends
with respect to each such outstanding fractional share shall be fully
cumulative and shall accrue (whether or not declared) and shall be payable in
the same manner and at such times as provided for in Section 1(a).

                          (c)     All dividends paid with respect to the
outstanding shares of Series Preferred Stock pursuant to Section 1(a) shall be
paid pro rata to the holders of each class entitled thereto.  Each Series 1
Preferred Stock holder's pro rata share of such dividends shall be calculated
by multiplying the total dividends to be paid by the percentage of (i) the
aggregate accrued but unpaid dividends to the date such payment is made on all
issued and outstanding shares of Series 1 Preferred Stock represented by (ii)
the aggregate accrued but unpaid dividends to the date such payment is made on
all shares (including fractional shares) of Series 1 Preferred Stock held by
such holder, and no more.  Each Series 3 Preferred Stock holder's pro rata
share of such dividends shall be calculated by multiplying the total dividends
to be paid by the percentage of (i) the aggregate accrued but unpaid dividends
to the date such payment is made on all issued and outstanding shares of Series
3 Preferred Stock represented by (ii) the aggregate accrued but unpaid
dividends to the date such payment is made on all shares (including fractional
shares) of Series 3 Preferred Stock held by such holder, and no more.

                 2.       Liquidation Rights of Series Preferred Stock:

                          (a)     In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of outstanding shares of Series Preferred Stock shall be entitled to be paid
out of the assets of the Corporation available for distribution to its
stockholders, whether such assets are capital, surplus, or earnings, before any
payment or declaration and setting apart for payment of any amount shall be
made in respect of the outstanding shares of any other Preferred Stock of the
Corporation or Common Stock of the Corporation, an amount equal to $1,000 per
share of Series Preferred Stock then outstanding, plus all accrued but unpaid
dividends thereon to the date such payment is actually made, and no more.  If
upon any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of the
outstanding shares of Series Preferred Stock shall be insufficient to permit
the payment to such stockholders of the full preferential amounts set forth
above, then





                                       5
<PAGE>   6
the entire assets of the Corporation to be distributed shall be distributed (i)
first, ratably among the holders of outstanding shares of Series 1 Preferred
Stock based on the full preferential amounts for the number of outstanding
shares of Series 1 Preferred Stock held by each holder and (ii) second, ratably
among the holders of outstanding shares of Series 3 Preferred Stock based on
the full preferential amounts for the number of outstanding shares of Series 3
Preferred Stock held by each holder.  The Corporation will mail written notice
of such liquidation, dissolution or winding up, not less than sixty (60) days
prior to the payment date stated therein, to each record holder of Series
Preferred Stock.

                          (b)     A consolidation or merger of the Corporation
with or into any other corporation or corporations or a sale of all or
substantially all of the assets of the Corporation shall not be deemed to be a
liquidation, dissolution, or winding up of the Corporation as those terms are
used in this Section 2 unless such consolidation, merger or sale shall be in
connection with a dissolution or winding up of the Corporation.

                          (c)     The payment of preferential amounts pursuant
to this Section 2 with respect to each outstanding fractional share of Series 1
Preferred Stock shall be equal to a ratably proportionate amount of the
preferential amount payable with respect to each outstanding share of Series 1
Preferred Stock with the same Original Issue Date.  The payment of preferential
amounts pursuant to this Section 2 with respect to each outstanding fractional
share of Series 3 Preferred Stock shall be equal to the ratably proportionate
amount of the preferential amount payable with respect to each outstanding
share of Series 3 Preferred Stock with the same Original Issue Date.

                 3.       Voluntary Redemption by the Corporation.

                          (a)     The Corporation, at the option of the Board,
may at any time or from time to time redeem the outstanding shares of Series 1
Preferred Stock in whole or in part from any source of funds legally available
therefor.  The Corporation, at the option of the Board, may at any time or from
time to time redeem the outstanding shares of Series 3 Preferred Stock in whole
or in part from any source of funds legally available therefor, provided that
there shall then be no outstanding shares of Series 1 Preferred Stock.

                          (b)     The redemption price for each outstanding
share of Series Preferred Stock shall be equal to $1,000 plus an amount equal
to any accrued and unpaid dividends on such share through the Redemption Date
(as defined below), whether or not declared (the "Redemption Price").

                          (c)     In the event of a redemption of only a part
of the outstanding shares of a class of Series Preferred Stock, the Corporation
shall effect such redemption pro rata according to the number of shares held by
each holder of outstanding shares of such class of Series Preferred Stock.





                                       6
<PAGE>   7
                          (d)     At least ten (10) days and not more than
sixty (60) days prior to the date fixed for any redemption of shares of a class
of Series Preferred Stock (the "Redemption Date"), written notice (the
"Redemption Notice," and the class of Series Preferred Stock referenced in such
Redemption Notice shall be referred to herein as the "Redeemed Stock") shall be
sent, by registered mail, to each holder of record of the outstanding shares of
Redeemed Stock at his or her mailing address last shown on the records of the
Corporation.  Any notice which is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
received the notice, and failure duly to give the notice by mail, or any defect
in the notice, to any holder of shares of such class of Series Preferred Stock
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of such class of Series Preferred Stock.
The Redemption Notice shall state:

                                  (i)      whether all or less than all of the
outstanding shares of the class of Series Preferred Stock are to be redeemed
and the total number of shares being redeemed;

                                  (ii)     the number of outstanding shares of
Redeemed Stock held by the holder which the Corporation intends to redeem;

                                  (iii)    the Redemption Date and the
Redemption Price;

                                  (iv)     that from and after the Redemption
Date, dividends shall cease to accrue; and

                                  (v)      that the holder is to surrender to
the Corporation, in the manner and at the place designated, the certificate or
certificates representing the outstanding shares of Redeemed Stock to be
redeemed.

                          (e)     On or before the Redemption Date, each holder
of outstanding shares of Redeemed Stock shall surrender the certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price for such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be cancelled and retired.  In the event less than
all of the shares represented by any such certificate or certificates are
redeemed, a new certificate or certificates shall be issued representing the
unredeemed shares.  All shares of the class of Series Preferred Stock called
for redemption will cease to accrue dividends as of the Redemption Date.  After
the Redemption Date, holders of such class of Series Preferred Stock shall no
longer be treated as stockholders of the Corporation with respect to the shares
of Series Preferred Stock being redeemed, except with respect to the right to
receive the Redemption Price, without interest, upon the surrender of their
respective certificates.





                                       7
<PAGE>   8
                        (f)      The Corporation may, at its option, on or 
prior to the Redemption Date, deposit with its transfer agent or other 
redemption agent selected by the Board of Directors of the Corporation, as a 
trust fund, a sum sufficient to redeem the shares called for redemption, with 
irrevocable instructions and authority to such transfer agent or other 
redemption agent to give or complete the Redemption Notice and to pay to the 
respective holders of such shares, as evidenced by a list of such holders 
certified by an officer of the Corporation, the Redemption Price upon 
surrender of their respective share certificates.  Such deposit shall be 
deemed to constitute full payment of such shares to their holders.  In case 
the holders of any shares shall not, within five (5) years after such deposit,
claim the amount deposited for redemption thereof, such transfer agent or 
other redemption agent shall, upon demand, pay over to the Corporation the 
balance of such amount so deposited and shall thereupon be relieved of all 
responsibility to the holders thereof.  Any interest accrued on any funds so 
deposited shall belong to the Corporation, and shall be paid to it from time 
to time on demand.

                        (g)      All shares of Series 1 Preferred Stock which 
shall have been redeemed pursuant to this Section 3 shall thereupon be 
restored to the status of authorized but unissued shares of Series 1 Preferred
Stock.

                        (h)      All shares of Series 3 Preferred Stock which 
shall have been redeemed pursuant to this Section 3 shall thereupon be 
restored to the status of authorized but unissued shares of Series 3 Preferred
Stock.

         4.      Voting Rights.  Except as otherwise provided herein or by the
General Corporation Law of the State of Delaware, holders of outstanding shares
of Series 1 Preferred Stock shall have no voting rights.  At all meetings of
the stockholders of the Corporation and in the case of any actions of
stockholders in lieu of a meeting, each share of Series 3 Preferred Stock shall
entitle the holder thereof to one vote.  Except as otherwise provided herein or
by the General Corporation Law of the State of Delaware, the holders of Common
Stock and Series 3 Preferred Stock shall vote together as a single class, and
neither the Common Stock nor Series 3 Preferred Stock shall be entitled to vote
as a separate class on any matter to be voted on by shareholders of the
Corporation, except that the holders of the Series 3 Preferred Stock shall be
entitled to vote as a separate class to elect one member of the Board of
Directors of the Corporation.

         5.      Restrictions and Limitations.  Except as otherwise provided by
the General Corporation Law of the State of Delaware, no amendment to this
Restated Certificate of Incorporation shall be made by the Corporation which
would change any of the terms, rights, preferences, privileges or restrictions
provided herein so as to affect adversely any shares of Series Preferred Stock
without the prior written consent of the holders of at least a majority of each
of the Series 1 Preferred Stock and the Series 3 Preferred Stock entitled to
vote thereon and outstanding at the time such action is taken; provided that no
amendment will change (i) the rate or times at which or the manner in which
dividends on any series of the Series Preferred Stock accrue or become payable,
(ii) the preferences with





                                       8
<PAGE>   9
respect to dividends and liquidation payments set forth in Section 1 and 2 or
(iii) the percentage of the holders of the Series Preferred Stock required to
approve any changes described in clauses (i) or (ii) above, without the prior
written consent of the holders of at least three-fourths (3/4s) of each of the
Series 1 Preferred Stock and the Series 3 Preferred Stock, as applicable, then
outstanding; and, provided further, that no change in the terms hereof may be
accomplished by merger or consolidation of the Corporation with another
corporation unless the Corporation has obtained the prior written consent of
the holders of the applicable percentages of the Series 1 Preferred Stock and
the Series 3 Preferred Stock then outstanding.

         IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be signed and attested by its duly authorized
officers this 31st day of January 1994.


                                                  /s/  Ralph J. Swett 
                                            -------------------------------
                                               Ralph J. Swett, President

Attest:


  /s/ John J. Willingham                     
- -----------------------------
John J. Willingham, Secretary







                                       9


<PAGE>   1
                                                                    EXHIBIT 3.2

                            IXC COMMUNICATIONS, INC.
                                     BYLAWS



                                    ARTICLE I

                                     OFFICES

                  Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.

                  Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.


                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

                  Section 1. All meetings of the stockholders for the election
of directors shall be held at such place either within or without the State of
Delaware as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.

                  Section 2. Annual meetings of stockholders shall be held at
such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which the stockholders
shall elect directors by a plurality vote, and transact such other business as
may properly be brought before the meeting.

                  Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten (10) nor more than sixty (60) days
before the date of the meeting.

                  Section 4. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified,
<PAGE>   2
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present.

                  Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of stockholders owning a
majority in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.

                  Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten (10) nor more than sixty
(60) days before the date of the meeting, to each stockholder entitled to vote
at such meeting.

                  Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.

                  Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty (30) days, or if at the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

                  Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.

                  Section 10. Unless otherwise provided in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by



                                       2.
<PAGE>   3
proxy for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted on after three years from its date,
unless the proxy provides for a longer period.

                  Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.


                                   ARTICLE III

                                    DIRECTORS

                  Section 1. The number of directors may be fixed from time to
time by resolution of the Board of Directors, but shall be not less than five
(5) and not more than seven (7). The initial number of directors which shall
constitute the whole Board shall be six (6). The directors shall be elected at
the annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.

                  Section 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy of any newly created directorship, the directors
then in office shall constitute less than a majority of the whole Board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least ten percent
(10%) of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any
such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office.




                                       3.
<PAGE>   4
                  Section 3. The business of the corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the certificate of incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.

                       MEETINGS OF THE BOARD OF DIRECTORS

                  Section 4. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.

                  Section 5. The first meeting of each newly elected Board of
Directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.

                  Section 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board.

                  Section 7. Special meetings of the Board may be called by the
president on one (1) day's notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two directors unless
the Board consists of only one director; in which case special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of the sole director.

                  Section 8. At all meetings of the Board a majority of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

                  Section 9. Unless otherwise restricted by the certificate of
incorporation or these Bylaws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if all members of the



                                       4.
<PAGE>   5
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee.

                  Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.

                             COMMITTEES OF DIRECTORS

                  Section 11. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such person or persons constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.

                  Any such committee, to the extent provided in the resolution
of the Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, removing or
indemnifying directors or amending the Bylaws of the corporation; and, unless
the resolution or the certificate of incorporation expressly so provides, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.

                  Section 12. Unless the Board of Directors otherwise provides,
each committee designated by the Board of Directors may adopt, amend and repeal
rules for the conduct of its business. In the absence of a provision by the
Board of Directors or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such vote if a
quorum



                                       5.
<PAGE>   6
is then present shall be the act of such committee, and in other respects each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article III of these Bylaws. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.

                            COMPENSATION OF DIRECTORS

                  Section 13. Unless otherwise restricted by the certificate of
incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

                              REMOVAL OF DIRECTORS

                  Section 14. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.


                                   ARTICLE IV

                                     NOTICES

                  Section 1. Whenever, under the provisions of the statutes or
of the certificate of incorporation or of these Bylaws, notice is required to be
given to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing and will be deemed to have been
duly given if personally delivered or sent by United States mail (addressed to
such director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid), or by telegram, telex or facsimile
confirmed by letter, and will be deemed given, unless earlier received, if by
mail, at the time when the same shall be deposited in the United States mail,
and if by telegram, telex or facsimile, on the day such confirmation letter
shall be deposited in the United States mail.

                  Section 2. Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.



                                       6.
<PAGE>   7
                                    ARTICLE V

                                    OFFICERS

                  Section 1. The officers of the corporation shall be a
president, a chief financial officer, one or more vice presidents and a
secretary. The corporation may also have, at the discretion of the Board of
Directors, a chief executive officer, a corporate controller, one or more
assistant vice presidents, one or more assistant secretaries and such other
officers as may be appointed in accordance with the provisions hereof. One
person may hold two or more offices. The salaries of all officers of the
corporation shall be fixed by the Board of Directors.

                  Section 2. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article V, shall be chosen annually by the Board of Directors,
and each shall hold his office until he shall resign or shall be removed or
otherwise disqualified to serve, or his or her successor shall be elected and
qualified.

                  Section 3. The Board of Directors may appoint such other
officers as the business of the corporation may require, each of whom shall have
such authority and perform such duties as are provided in these Bylaws or as the
Board of Directors or the president may from time to time specify, and shall
hold office until he or she shall resign or shall be removed or otherwise
disqualified to serve.

                  Section 4. Any officer may be removed, either with or without
cause, by the Board of Directors at any regular or special meeting of the Board
of Directors or, except in case of an officer chosen by the Board of Directors,
by any officer upon whom such power or removal may be conferred by the Board of
Directors.

                  Any officer may resign at any time by giving written notice to
the Board of Directors, the chairman of the Board of Directors, if any, the
president or the secretary of the corporation. Any such resignation shall take
effect at the date of the receipt of such notice or at any later time specified
therein; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.

                  Section 5. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for the regular appointments to such office.




                                       7.
<PAGE>   8
                           THE CHIEF EXECUTIVE OFFICER

                  Section 6. The chief executive officer (if there is such an
officer) of the corporation shall, subject to the control of the Board of
Directors, have general supervision, direction and control of the business and
affairs of the corporation. He or she shall preside at all meetings of
stockholders and the Board of Directors. He or she shall have the general powers
and duties of management usually vested in the chief executive officer of a
corporation, and shall have such other powers and duties with respect to the
administration of the business and affairs of the corporation as may from time
to time be assigned to him or her by the Board of Directors or as prescribed by
these Bylaws. In the absence or disability of the president, the chief executive
officer, in addition to his or her assigned duties and powers, shall perform all
the duties of the president and when so acting shall have all the powers and be
subject to all the restrictions upon the president.

                                  THE PRESIDENT

                  Section 7. The president shall exercise and perform such
powers and duties with respect to the administration of the business and affairs
of the corporation as may from time to time be assigned to him or her by the
chief executive officer (unless the president is also the chief executive
officer) or by the Board of Directors or as is prescribed by these Bylaws. In
the absence or disability of the chief executive officer, the president shall
perform all of the duties of the chief executive officer and when so acting
shall have all of the powers and be subject to all the restrictions upon the
chief executive officer.

                               THE VICE PRESIDENTS

                  Section 8. The vice presidents shall exercise and perform such
powers and duties with respect to the administration of the business and affairs
of the corporation as may from time to time be assigned to each of them by the
chief executive officer, the president, by the Board of Directors or as is
prescribed by these Bylaws. In the absence or disability of the chief executive
officer (if there is such an officer) and of the president, the vice presidents,
in order of their rank as fixed by the Board of Directors, or if not ranked, the
vice president designated by the Board of Directors, shall perform all of the
duties of the president and when so acting shall have all of the powers of and
be subject to all the restrictions upon the president.

                      THE SECRETARY AND ASSISTANT SECRETARY

                  Section 9. The secretary shall keep, or cause to be kept, a
book of minutes at the principal office for the transaction of the business of
the corporation, or such other place as the Board of Directors may order, of all
meetings of directors and stockholders, with the time and place of holding,
whether regular or special, and if special, how authorized and the



                                       8.
<PAGE>   9
notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at stockholders' meetings and the
proceedings thereof.

                  Section 10. The secretary shall keep, or cause to be kept, at
the principal offices for the transaction of the business of the corporation or
at the office of the corporation's transfer agent, a share register, or a
duplicate share register, showing the names of the stockholders and their
addresses, the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.

                  Section 11. The secretary shall give, or cause to be given,
notice of all the meetings of the stockholders and of the Board of Directors
required by these Bylaws or by law to be given, and he or she shall keep the
seal of the corporation in safe custody, and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors or
these Bylaws. If for any reason the secretary shall fail to give notice of any
special meeting of the Board of Directors called by one or more of the persons
identified in Section 7 of Article III of these Bylaws, or if he or she shall
fail to give notice of any special meeting of the stockholders called by one or
more of the persons identified in Section 5 of Article II of these Bylaws, then
any such person or persons may give notice of any such special meeting.

                           THE CHIEF FINANCIAL OFFICER

                  Section 12. The chief financial officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct accounts of
the properties and business transactions of the corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses, capital,
surplus and shares. Any surplus, including earned surplus, paid-in surplus and
surplus arising from a reduction of capital, shall be classified according to
source and shown in a separate account. The books of account shall at all
reasonable times be open to inspection by any director.

                  The chief financial officer shall deposit, or cause to be
deposited, all moneys and other valuables in the name and to the credit of the
corporation with such depositories as may be designated by the Board of
Directors. He or she shall disburse the funds of the corporation as may be
ordered by the Board of Directors, shall render to the chief executive officer
(if there is such an officer), to the president and to the directors, whenever
they request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the corporation, and shall have such
other powers and perform such other duties as may be prescribed by the Board of
Directors or the Bylaws.





                                       9.
<PAGE>   10
                                   ARTICLE VI

                              CERTIFICATE OF STOCK

                  Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by,
the chairman or vice chairman of the Board of Directors, or the chief executive
officer, president or a vice president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by such holder in the corporation.

                  Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.

                                LOST CERTIFICATES

                  Section 3. The corporation may issue a new certificate of
stock in the place of any certificate theretofore issued by it, alleged to have
been lost, stolen or destroyed, and the corporation may require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give the
corporation a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.

                                TRANSFER OF STOCK

                  Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.

                               FIXING RECORD DATE

                  Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be



                                       10.
<PAGE>   11
at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of stockholders
of record entitled to notice of or to vote at a meeting of stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.

                  Section 6. In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten (10) days
after the date upon which the resolution fixing the record date is adopted by
the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.

                  Section 7. In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall be not more than sixty (60)
days prior to such action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto.

                             REGISTERED STOCKHOLDERS

                  Section 8. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or



                                       11.
<PAGE>   12
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.


                                   ARTICLE VII

                               GENERAL PROVISIONS

                                    DIVIDENDS

                  Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.

                  Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for repairing or
maintaining any property of the corporation, or for such other purpose as the
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.

                                ANNUAL STATEMENT

                  Section 3. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition of
the corporation.

                                     CHECKS

                  Section 4. All checks for demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

                                   FISCAL YEAR

                  Section 5. The fiscal year of the corporation shall be fixed
by resolution of the Board of Directors.




                                       12.
<PAGE>   13
                                      SEAL

                  Section 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal." The seal may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.

                                WAIVER OF NOTICE

                  Section 7. Whenever notice is required to be given by law or
under any provision of the Certificate of Incorporation or these Bylaws, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or these Bylaws. Unless either proper notice of a meeting of
the Board of Directors, or any committee thereof, has been given or else the
persons entitled thereto have waived such notice (either in writing or by
attendance as set forth above), any business transacted at such meeting shall be
null and void.

                                 INDEMNIFICATION

                  Section 8. The corporation shall indemnify its officers,
directors, employees and agents to the fullest extent permitted by the General
Corporation Law of Delaware.

                                  ARTICLE VIII

                                   AMENDMENTS

                  Section 1. These Bylaws may be altered, amended or repealed,
or new Bylaws may be adopted by the stockholders or by the Board of Directors,
when such power is conferred upon the Board of Directors by the certificate of
incorporation, at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors, if notice of such alteration, amendment, repeal or adoption of new
Bylaws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal Bylaws is conferred upon the Board of Directors by the
certificate of



                                       13.
<PAGE>   14
incorporation, it shall not divest or limit the power of the stockholders to
adopt, amend or repeal Bylaws.






                                       14.

<PAGE>   1
                                                                    EXHIBIT 4.8

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

                             (Face of Senior Note)

                     12 1/2% Series B Senior Notes due 2005


  No.                                                               $__________
  CUSIP # 450713 AC 6



                            IXC COMMUNICATIONS, INC.

promises to pay to __________________ or registered assigns, the principal sum
of _________________________ ($___________.00) Dollars on October 1, 2005.

Interest Payment Dates:  April 1, and October 1

Record Dates:  March 15, and September 15


                                           Dated: __________________, _____



                                           IXC COMMUNICATIONS, INC.


                                           By:______________________________ 
                                           Name: 
                                           Title:

                                                      (SEAL)

This is one of the Global
Senior Notes referred to in the
within-mentioned Indenture:

IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee


By:__________________________________



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

<PAGE>   2
                             (Back of Senior Note)

                     12 1/2% Series B Senior Notes due 2005


        Unless and until it is exchanged in whole or in part for Senior Notes
in definitive form, this Senior Note may not be transferred except as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.  Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.

        FOR PURPOSES OF SECTION 1272, 1273 AND 1275 OF THE INTERNAL REVENUE 
        CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL 
        ISSUE DISCOUNT; FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE
        ISSUE PRICE IS $972.45, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS 
        $27.55, THE ISSUE DATE IS OCTOBER 5, 1995 AND THE YIELD TO MATURITY IS
        13.00% PER ANNUM, COMPOUNDED SEMI-ANNUALLY.

        Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

        1.  INTEREST.  IXC Communications, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Senior
Note at 12.50% per annum from _________, _____ until maturity.  The Company
shall pay interest semi-annually in arrears on April 1 and October 1 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date").  Interest on the Senior Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of the original issuance; provided that
if there is no existing Default in the payment of interest, and if this Senior
Note is authenticated between a Record Date referred to on the face hereof and
the next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be April 1, 1996.  The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect, to the extent permitted by law;
it shall pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful.  Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

        2.  METHOD OF PAYMENT.  The Company shall pay interest on the Senior
Notes (except defaulted interest) to the Persons who are registered Holders of
Senior Notes at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date, even if such Senior Notes are cancelled
after such Record Date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest. 
The Senior Notes will be





<PAGE>   3
payable as to principal, premium and interest at the office or agency of the
Company maintained for such purpose within or without the City and State of New
York, or, at the option of the Company, payment of interest may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of, and premium, if any, and
interest on, all Global Senior Notes and all other Senior Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent.  Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.

        3.  PAYING AGENT AND REGISTRAR.  Initially, IBJ Schroder Bank & Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar.  The Company may change any Paying Agent or Registrar without notice
to any Holder.  The Company or any of its Restricted Subsidiaries may act in
any such capacity.

        4.  INDENTURE AND SECURITY AGREEMENT.  The Company issued the Senior
Notes under an Indenture dated as of October 5, 1995, as amended ("Indenture"),
by and among the Company, the Guarantors and the Trustee.  The terms of the
Senior Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb).  The Senior Notes are subject to all such terms,
and Holders are referred to the Indenture and such Act for a statement of such
terms.  Except for the security interest granted to the Collateral Agent in the
Escrow Account pursuant to the Security Agreement, the Senior Notes are
unsecured obligations of the Company limited to $285,000,000 in aggregate
principal amount.  The Senior Notes are secured in part by the grant to the
Collateral Agent of a security interest in the Escrow Account pursuant to the
Security Agreement referred to in the Indenture.

        5.  OPTIONAL REDEMPTION.

        (a) Except as set forth in clause (b) of this paragraph 5, the Company
shall not have the option to redeem the Senior Notes prior to October 1, 2000.
Thereafter, the Company shall have the option to redeem the Senior Notes, in
whole or in part, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon, if
any, to the applicable redemption date, if redeemed during the twelve-month
period beginning on October 1 of the years indicated below:

     YEAR                                              PERCENTAGE    
     ----                                              ----------    
     2000 . . . . . . . . . . . . . . . . . . . .       106.250%  
     2001 . . . . . . . . . . . . . . . . . . . .       104.686%  
     2002 . . . . . . . . . . . . . . . . . . . .       103.125%  
     2003 . . . . . . . . . . . . . . . . . . . .       101.563%  
     2004 and thereafter  . . . . . . . . . . . .       100.000%  

        (b)  Notwithstanding the provisions of clause (a) of this paragraph 5,
at any time prior to October 1, 1998, the Company may redeem Senior Notes with
an aggregate principal of up to $100,000,000 with the net proceeds of offerings
of the Company's Capital Stock at a redemption price equal to 112.50% of the
principal amount thereof plus accrued and unpaid interest thereon, if any;
provided that at least $100,000,000 in aggregate principal amount of the Senior
Notes originally issued remain outstanding immediately after the occurrence of
such redemption and that such redemption occurs within 35 days of the date of
the closing of such applicable offerings of Capital Stock of the Company.





<PAGE>   4
        6.  MANDATORY REDEMPTION

        Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Senior
Notes.

        7.  REPURCHASE AT OPTION OF HOLDER.

        (a)  Upon the occurrence of a Change of Control, the Company shall make
an offer (a "Change of Control Offer") to each Holder to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Senior
Notes at a purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest thereon, if any, to the date of repurchase (the
"Change of Control Payment").  Within 10 days following any Change of Control,
the Company shall mail a notice to the Trustee and to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.  Notwithstanding the foregoing the Company shall not be required to
make a Change of Control Offer upon a Change of Control if a third party makes
the Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth above and purchases all Senior Notes
validly tendered and not withdrawn under such Change of Control Offer.

        (b)  If the Company or any of its Restricted Subsidiaries consummates
any Asset Sales, within five Business Days of each date on which the aggregate
amount of the Net Proceeds from such Asset Sale that are not applied or
invested within 365 days in accordance with Section 4.10 of the Indenture (the
"Excess Proceeds") exceeds $10,000,000, the Company shall commence a pro rata
Asset Sale Offer pursuant to Section 3.09 of the Indenture to purchase the
maximum principal amount of Senior Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date fixed for the closing of such offer in accordance with the procedures
set forth in Section 3.09 of the Indenture.  To the extent that the aggregate
amount of Senior Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use such remaining Excess Proceeds for
general corporate purposes.  Upon completion of such offer to purchase, the
amount of Excess Proceeds will be deemed to be reset at zero.  If the aggregate
principal amount of Senior Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Senior Notes to be
purchased on a pro rata basis, by lot or in accordance with any other method
the Trustee considers fair and appropriate.  Holders of Senior Notes that are
the subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Senior
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Notes.

        (c)    At any time after October 1, 1996, the Company shall have the
option to repurchase that portion of the outstanding Senior Notes purchasable
with the Collateral remaining in the Escrow Account (an "Escrow Account Offer")
at a price equal to 112.50% of the principal amount thereof plus accrued and
unpaid interest, if any, to the repurchase date; provided that at least
$100,000,000 in aggregate principal amount of Senior Notes remain outstanding
immediately after such repurchase.  To the extent that the aggregate amount of
Senior Notes tendered pursuant to an Escrow Account Offer is less than the
amount of such repurchase offer, then the funds remaining in the Escrow Account
after such repurchase shall be distributed to the Company, the Escrow Account
shall be terminated and the Company may use such funds for general corporate
purposes.  If the aggregate principal amount of Senior Notes tendered by the
Holders thereof exceeds the amount of Collateral remaining in the Escrow
Account, the Trustee shall select the Senior Notes to be purchased on a pro
rata basis, by lot or by such other method as the Trustee shall deem fair and
appropriate; provided that no Senior Notes with a principal amount of $1,000 or
less shall be reduced in part.  Holders of Senior Notes that are the subject of
an offer to purchase will receive an Escrow Account Offer from the Company
prior to any related purchase date and may elect to have such Senior Notes
purchased





<PAGE>   5
by completing the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Senior Notes.

        8.  NOTICE OF REDEMPTION.  Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Senior Notes are to be redeemed at its registered address.  Senior Notes
in denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Senior Notes held by a Holder are to be
redeemed.  On and after the redemption date interest ceases to accrue on Senior
Notes or portions thereof called for redemption.

        9.  DENOMINATIONS, TRANSFER, EXCHANGE.  The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000.  The transfer of Senior Notes may be registered and Senior
Notes may be exchanged as provided in the Indenture.  The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture.  The Company
need not exchange or register the transfer of any Senior Note or portion of a
Senior Note selected for redemption, except for the unredeemed portion of any
Senior Note being redeemed in part.  Also, it need not exchange or register the
transfer of any Senior Notes for a period of 15 days before a selection of
Senior Notes to be redeemed or during the period between a Record Date and the
corresponding Interest Payment Date.

        10.  PERSONS DEEMED OWNERS.  The registered Holder of a Senior Note may
be treated as its owner for all purposes.

        11.  AMENDMENT, SUPPLEMENT AND WAIVER.  Subject to certain exceptions,
the Indenture or the Senior Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Senior
Notes then outstanding (including consents obtained in connection with a tender
offer or exchange offer for the Senior Notes) and, subject to Sections 6.04 and
6.07 of the Indenture, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of, and premium, if
any, or interest on the Senior Notes, except a payment default resulting from
an acceleration that has been rescinded) or compliance with any provision of
the Indenture or the Senior Notes may be waived with the consent of the Holders
of a majority in principal amount of the then outstanding Senior Notes
(including consents obtained in connection with a tender offer or exchange
offer for the Senior Notes).  Without the consent of any Holder of a Senior
Note, the Indenture or the Senior Notes may be amended or supplemented to cure
any ambiguity, defect or inconsistency, to provide for uncertificated Senior
Notes in addition to or in place of certificated Senior Notes, to provide for
the assumption of the Company's obligations to Holders of the Senior Notes in
case of a merger or consolidation pursuant to Article Five of the Indenture, to
make any change that would provide any additional rights or benefits to the
Holders of the Senior Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, or to comply with the requirements of
the Securities and Exchange Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.  Notwithstanding
the foregoing, without the consent of at least 75% in principal amount of the
Senior Notes then outstanding (including consents obtained in connection with a
tender offer or exchange offer for such Senior Notes), no waiver or amendment
to the Indenture may make any change in the provisions of Section 3.09, 4.10,
or 4.15 thereof that adversely affects the rights of any Holder of Senior
Notes.

        12.  DEFAULTS AND REMEDIES.  An Event of Default occurs if: (a) the
Company defaults in the payment when due of interest on the Senior Notes and
such default continues for a period of 30 days; (b) the Company defaults in the
payment when due of principal of or premium, if any, on the Senior Notes when
the same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase under the Indenture) or otherwise; (c) the
Company fails to comply with





<PAGE>   6
any of the provisions of Section 3.09, 4.07, 4.09, 4.10 or 4.15 of the
Indenture; (d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in the Indenture or the Senior
Notes for 60 days after written notice to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of the Senior Notes then
outstanding (such notice shall specify such Default, demand that it be remedied
and state that such notice is a "Notice of Default" under the Indenture); (e) a
default occurs under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries,
whether such Indebtedness now exists, or is created after the date of the
Indenture, which default (i) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (ii) results in the acceleration of any such Indebtedness
prior to its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or maturity of which
has been so accelerated, aggregates $5,000,000 or more; (f) a final judgment or
final judgments for the payment of money are entered by a court or courts of
competent jurisdiction against the Company or any of its Restricted
Subsidiaries and such judgment or judgments are not paid, discharged, or stayed
for a period (during which execution shall not be effectively stayed) of 60
days, provided that the aggregate of all such judgments that are not paid,
discharged or stayed exceeds $5,000,000; (g) the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of
an order for relief against it in an involuntary case, (iii) consents to the
appointment of a custodian of it or for all or substantially all of its
property, (iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; (h) a court of
competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary in an involuntary case; (ii) appoints a custodian of the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or (iii) orders the liquidation of the
Company or any of its Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary; and the
order or decree remains unstayed and in effect for 60 consecutive days; (i) the
Company shall breach any material representation or warranty or default in the
performance of any covenant set forth in the Security Agreement (as defined in
the Indenture) or repudiate its obligations under the Security Agreement or the
Security Agreement shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and effect; (j)
any Subsidiary Guaranty, as amended ("Subsidiary Guaranty"), shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guaranty; or (k) the Company or any of its Restricted Subsidiaries
uses any amounts disbursed from the Escrow Account for any purpose other than
the "Permitted Uses" defined in the Escrow Account and Disbursement Agreement.

        If any Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.01 of the Indenture with respect to the Company,
any Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Senior Notes may declare all the Senior Notes to be due and payable
immediately by a notice in writing to the Company (and to the Trustee if given
by the Holders).  Upon any such declaration, the Senior Notes shall become due
and payable immediately.  Notwithstanding the foregoing, if an Event





<PAGE>   7
of Default specified in clause (g) or (h) of Section 6.01 of the Indenture
occurs with respect to the Company, any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary, all outstanding Senior Notes shall be due and payable immediately
without further action or notice.  Holders may not enforce the Indenture or the
Senior Notes except as provided in the Indenture.  Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Senior Notes may direct the Trustee in its exercise of any trust or power.
However, the Trustee may refuse to follow any direction that conflicts with law
or the Indenture that the Trustee determines may be unduly prejudicial to the
rights of other Holders of Senior Notes or that may involve the Trustee in
personal liability.  The Trustee may withhold from Holders of the Senior Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal of, and premium, if any, or
interest on the Senior Notes) if a committee of Responsible Officers (as
defined in the Indenture) in good faith determines that withholding the notice
is in the interests of Holders of the Senior Notes.  The Holders of a majority
in aggregate principal amount of the then outstanding Senior Notes by written
notice to the Trustee may on behalf of all of the Holders waive an existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of the principal of, and
premium, if any, and interest on the Senior Notes.  The Company is required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.

        13.  TRUSTEE DEALINGS WITH COMPANY.  The Trustee in its individual or
any other capacity may become the owner or pledgee of Senior Notes and may
otherwise deal with the Company or any Affiliate of the Company with the same
rights it would have if it were not Trustee.

        14.  NO RECOURSE AGAINST OTHERS.  No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any of its
Subsidiaries, as such, shall have any liability for any obligations of the
Company or its Subsidiaries under the Senior Notes, the Indenture, the
Subsidiary Guarantees, the Escrow and Disbursement Agreement or the Security
Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation.  Each Holder by accepting a Senior Note waives
and releases all such liability.  The waiver and release are part of the
consideration for the issuance of the Senior Notes.

        15.  AUTHENTICATION.  This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

        16.  ABBREVIATIONS.  Customary abbreviations may be used in the name of
a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

        17.  CUSIP NUMBERS.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders.  No
representation is made as to the accuracy of such numbers either as printed on
the Senior Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.




<PAGE>   8
        The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture.  Requests may be made to:

               IXC Communications, Inc.
               5000 Plaza on the Lake, Suite 200
               Austin, TX  78746
               Attention: Chief Executive Officer





<PAGE>   9
                                ASSIGNMENT FORM


        To assign this Senior Note, fill in the form below: (I) or (we) assign
and transfer this Senior Note to


- -------------------------------------------------------------------------------
                    (Insert assignee's soc. sec. or tax I.D. no.)


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



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



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



- -------------------------------------------------------------------------------
                 (Print or type assignee's name, address and zip code)

and irrevocably appoint________________________________________________________
to transfer this Senior Note on the books of the Company.  The agent may 
substitute another to act for him.

________________________________________________________________________________


Date: _________________________


                                   Your Signature: 
                                                   ---------------------------
                                                   (Sign exactly as your name
                                                   appears on the face of this
                                                   Senior Note)

Signature Guarantee.


<PAGE>   10
                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Senior Note purchased by the
Company pursuant to Section 3.09, 4.10 or 4.15 of the Indenture, check the box
below:

          [ ]  Section 3.09      [ ]  Section 4.10       [ ]  Section 4.15

          If you want to elect to have only part of the Senior Note purchased
by the Company pursuant to Sections 3.09, 4.10 or Section 4.15 of the
Indenture, state the amount you elect to have purchased:  $___________


Date:__________________________ 


                                    Your Signature:
                                                    --------------------------
                                                    (Sign exactly as your name 
                                                    appears on the Senior Note)


                                    Tax Identification No.:
                                                           --------------------

Signature Guarantee.




<PAGE>   11
                SCHEDULE OF EXCHANGES OF DEFINITIVE SENIOR NOTE

        The following exchanges of a part of this Global Senior Note for
Definitive Senior Notes have been made:

<TABLE>
<CAPTION>

                                                                                                             Signature of    
                          Amount of decrease in     Amount of increase in         Principal Amount of     authorized officer 
                           Principal Amount of      Principal Amount of           this Global Senior        of Trustee or    
                           this Global Senior        this Global Senior           Note following such        Senior Note     
   Date of Exchange              Note                      Note                 decrease (or increase)        Custodian      
 -------------------      ---------------------     ---------------------       ----------------------    ------------------
<S>                       <C>                       <C>                         <C>                       <C>



</TABLE>


<PAGE>   12
                              SUBSIDIARY GUARANTEE

          The Guarantors listed below (hereinafter referred to as the
"Guarantors," which term includes any successors or assigns under the Indenture
(the "Indenture") and any additional Guarantors), have irrevocably and
unconditionally guaranteed on an unsecured basis (i) the due and punctual
payment of the principal of, and premium and interest on the 12 1/2% Senior
Notes due 2005 (the "Notes") of IXC Communications, Inc., a Delaware
corporation (the "Company"), whether at stated maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, and premium if any, and (to the extent permitted by law) interest on the
Senior Notes, and the due and punctual performance of all other obligations of
the Company, to the Holders or the Trustee all in accordance with the terms set
forth in the Indenture, (ii) in case of any extension of time of payment or
renewal of any Senior Notes or any such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise, and (iii) the payment of any and all costs and expenses (including
reasonable attorneys' fees) incurred by the Trustee or any Holder in enforcing
any rights under this Subsidiary Guarantee.

          The obligations of each Guarantor to the Holders and to the Trustee
pursuant to this Subsidiary Guarantee and the Indenture are expressly set forth
in Article 11 of the Indenture and reference is hereby made to such Indenture
for the precise terms of this Guarantee.

          No stockholder, officer, director, or incorporator, as such, past,
present or future of each Guarantor shall have any liability under this
Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.

          This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the
Senior Notes and Indenture and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders, and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This is a Guarantee of payment and not of collectibility.

          This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Senior Note upon which
this Subsidiary Guarantee is noted shall have been executed by the Trustee
under the Indenture by the manual signature of one of its authorized officers.

          Any term or provision of this Guarantee to the contrary
notwithstanding, the aggregate amount of the Obligations guaranteed hereunder
shall be reduced to the minimum extent necessary to prevent this Guarantee from
violating or becoming voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally.

          The Obligations of each Guarantor under its Subsidiary Guarantee
pursuant to Article 11 of the Indenture shall be senior to the Indebtedness of
such Guarantor on the same basis as the Senior Notes are senior to the
Indebtedness of the Company.  For purposes of the foregoing sentence, (a) each
Guarantor may make, and the Trustee and the Holders of the Notes have the right
to receive and/or retain, payments by any of the Guarantors only at such times
as they may receive and/or retain payments in respect of the Senior Notes
pursuant to the Indenture, including Article 11 thereof, and (b) the rights and
obligations of the relevant parties relative to the Subsidiary Guarantees and
such



<PAGE>   13
Guarantor's Indebtedness shall be the same as their respective rights and
obligations relative to the Senior Notes of the Company pursuant to Article 11
of the Indenture.

          THE TERMS OF ARTICLE 11 OF THE INDENTURE ARE INCORPORATED HEREIN BY
REFERENCE.

          Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.


                                         Guarantors:                   
                                                                       
                                                                       
                                         ATLANTIC STATES MICROWAVE     
                                           TRANSMISSION COMPANY        
                                         CENTRAL STATES MICROWAVE      
                                           TRANSMISSION COMPANY           
                                         TELCOM ENGINEERING, INC.         
                                         TOWER COMMUNICATION SYSTEMS CORP.
                                         WEST TEXAS MICROWAVE COMPANY     
                                         WESTERN STATES MICROWAVE         
                                           TRANSMISSION COMPANY           
                                         RIO GRANDE TRANSMISSION, INC.    
                                         IXC CARRIER, INC.                
                                         IXC LONG DISTANCE, INC.          
                                         LINK NET INTERNATIONAL, INC.     
                                                                          
                                                                          
                                                                          
                                         By:                              
                                            -------------------------------     
                                            Name:                         
                                            Title:                        

<PAGE>   1
                                                                  Exhibit 4.9


                          REGISTRATION RIGHTS AGREEMENT


                  REGISTRATION RIGHTS AGREEMENT, dated as of August 6, 1992, by
and between Telecom Services Group, Inc., a Delaware corporation ("Telecom"),
and each of the other undersigned parties (individually, a "Purchaser").

                  1. Background. Telecom is a party to that certain Common and
Preferred Stock Purchase Agreement made and entered into as of August 6, 1992
(the "Stock Purchase Agreement") by and among Telecom and the purchasers who are
signatories thereto, pursuant to which Telecom has agreed to issue an aggregate
of 1,100 shares of its common stock, par value $0.01 per share (the "Common
Stock"), and an aggregate of 12,550 shares of its Series 1 10% Cumulative
Preferred Stock, par value $0.01 per share (the "Series 1 Preferred Stock").
Certain capitalized terms used herein have the respective meanings set forth in
Section 3.

                  2. Registration under Securities Act.

                  2.1 Registration on Request.

                           (a) Request. At any time or from time to time after
August 6, 1994 and, if Telecom previously has registered any of its Common Stock
(other than a registration of securities on Forms S-8 or S-4, or any successor
or similar forms thereto) and the Initiating Holders had the right to have such
Registrable Securities included in such Registration, after 180 days have
elapsed since the effective date of the last such registration, upon the written
request of one or more Initiating Holders requesting that Telecom effect the
registration under the Securities Act of all or part of such Initiating Holders'
Registrable Securities, specifying the intended method of disposition thereof
and stating either that all remaining Registrable Securities then held by such
Initiating Holders are to be registered or the aggregate price that such
Initiating Holders in their reasonable judgment expect to receive upon sale of
the Registrable Securities for which they are requesting registration, which
aggregate price (unless all remaining Registrable Securities then held by such
Initiating Holders are to be registered) shall be not less than $3,000,000,
Telecom will promptly give written notice of such requested registration to all
registered holders of Registrable Securities, and thereupon Telecom will use its
best efforts to effect the registration under the Securities Act of

                                    (i) the Registrable Securities which Telecom
has been so requested to register by such Initiating Holders, and

                                    (ii) all other Registrable Securities which
Telecom has been requested to register by the holders thereof by written request
given to Telecom within 30 days after the giving of such written notice by
Telecom (which request shall specify the intended method of disposition of such
Registrable Securities), all to the extent requisite to
<PAGE>   2
permit the disposition (in accordance with the intended methods thereof as
aforesaid) of the Registrable Securities so to be registered; provided that such
Initiating Holders, by written notice to Telecom within 10 business days after
their receipt of a copy of a notice from the managing underwriter delivered
pursuant to Section 2.1(f), may withdraw such request if less than all
Registrable Securities that they have requested be registered will be included
in such registration and, on receipt of such notice from such Initiating
Holders, Telecom may elect not to effect such registration, and, provided
further, that Telecom may elect not to effect such registration if Telecom is
not obligated pursuant to Section 2.1(c) to pay the Registration Expenses of
such Initiating Holders and the Board of Directors determines that effecting
such registration is not in the best interest of Telecom. Subject to Section
2.1(f), Telecom may include in such registration other securities for sale for
its own account or for the account of any other Person. If the Board of
Directors in its good faith judgment determines that registration of Registrable
Securities pursuant hereto would be seriously detrimental to the best interests
of Telecom and its stockholders, Telecom may delay such registration so long as
it files with the Commission a registration statement with respect to such
Registrable Securities not later than 120 days after its receipt of a request
therefor.

                           (b) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission (i) as shall be selected by Telecom and as shall be reasonably
acceptable to the holders of at least 51% (by number of shares) of the
Registrable Securities so to be registered and (ii) as shall permit the
disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in the request for their
registration. Telecom agrees to include in any such registration statement all
information which holders of Registrable Securities being registered shall
reasonably request. Telecom may, if permitted by law, effect any registration
requested under this Section 2.1 by the filing of a registration statement on
Form S-3 (or any successor or similar short form registration statement) unless
the holders holding at least 51% (by number of shares) of the Registrable
Securities as to which such registration has been requested (and, if such
registration involves an underwritten public offering of such Registrable
Securities, the managing underwriter of such public offering) shall notify
Telecom in writing that, in the judgment of such holders (and, if applicable,
such managing underwriter), the use of a more detailed form specified in such
notice is of material importance to the success of the public offering of such
Registrable Securities, in which case such registration shall be effected on the
form so specified.

                           (c) Expenses. Telecom will pay all Registration
Expenses in connection with any registration requested pursuant to this Section
2.1 by any Initiating Holders of Registrable Securities.

                           (d) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective,
provided that a registration which does not become effective after Telecom has
filed a registration statement with respect thereto solely by reason of the
refusal to proceed of the Initiating Holders (other than a refusal to proceed
based upon the advice of counsel relating to a matter with respect to Telecom or
the withdrawal of a request for registration pursuant to Section 


                                       2
<PAGE>   3
2.1(a)) shall be deemed to have been effected by Telecom at the request of such
Initiating Holders unless the Initiating Holders shall have elected to pay all
Registration Expenses in connection with such registration, (ii) if, after it
has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason, or (iii) if the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied, other than solely on the part of some
act or omission by such Initiating Holders.

                           (e) Selection of Underwriters. If a requested
registration pursuant to this Section 2.1 involves an underwritten offering, the
underwriter or underwriters thereof shall be of nationally recognized stature,
shall be selected by the holders of at least 51% (by number of shares) of the
Initiating Holders' Registrable Securities so to be registered, and shall be
reasonably acceptable to the holders of at least 51% (by number of shares) of
the Registrable Securities so to be registered; provided, however, that so long
as a Purchaser affiliated with General Electric Company shall hold any
Registrable Securities, if such firm of underwriters is affiliated with such
Purchaser, such Purchaser shall have the absolute right to approve or disapprove
the use of such firm of underwriters.

                           (f) Priority in Requested Registrations. If a
requested registration pursuant to this Section 2.1 involves an underwritten
offering, and the managing underwriter shall advise Telecom in writing (with a
copy to each holder of Registrable Securities requesting registration) that, in
its opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Initiating Holders, Telecom will include in such
registration to the extent of the number which Telecom is so advised can be sold
in such offering (i) first, Registrable Securities held by the Initiating
Holders, pro rata on the basis of the number of Registrable Securities requested
to be registered by such holders, (ii) second, the remaining Registrable
Securities other than those held by the Initiating Holders, pro rata on the
basis of the number of securities requested by such non-Initiating Holders and
(iii) third, securities Telecom proposes to sell and other securities of Telecom
included in such registration by the holders thereof.

                  2.2 Incidental Registration. If Telecom at any time proposes
to register any of its securities under the Securities Act (other than by a
registration on Form S-4 or S-8 or any successor or similar forms and other than
pursuant to Section 2.1), whether or not for sale for its own account, it will
each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2.2. Upon the written request of any such holder made within 30 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), Telecom will use its best efforts to
effect the registration under the Securities Act of all Registrable Securities
which Telecom has been so requested to register by the holders thereof, to the
extent requisite to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be registered,
provided that if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, 


                                       3
<PAGE>   4
Telecom shall determine for any reason not to register or to delay registration
of such securities, Telecom may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any holder or holders
of Registrable Securities entitled to do so to request that such registration be
effected as a registration under Section 2.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering such
other securities. No registration effected under this Section 2.2 shall relieve
Telecom of its obligation to effect any registration upon request under Section
2.1. Telecom will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this Section 2.2.

                  2.3 Registration Procedures. If and whenever (a) Telecom is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2 or (b)
there is a Requesting Holder in connection with any other proposed registration
by Telecom under the Securities Act, Telecom will as expeditiously as possible:

                                    (i) prepare and (subject to the last
                  sentence of Section 2.1(a)), within 60 days after the end of
                  the period within which requests for registration may be given
                  to Telecom or in any event as soon thereafter as possible)
                  file with the Commission the requisite registration statement
                  to effect such registration and thereafter use its best
                  efforts to cause such registration statement to become
                  effective, provided, however, that Telecom may discontinue any
                  registration of its securities which are not Registrable
                  Securities (and, under the circumstances specified in Sections
                  2.1(a) and 2.2, its securities which are Registrable
                  Securities) at any time prior to the effective date of the
                  registration statement relating thereto;

                                    (ii) prepare and file with the Commission
                  such amendments and supplements to such registration statement
                  and the prospectus used in connection therewith as may be
                  necessary to keep such registration statement effective and to
                  comply with the provisions of the Securities Act with respect
                  to the disposition of all securities covered by such
                  registration statement until the earlier of (A) such time as
                  all of such securities have been disposed of in accordance
                  with the intended methods of disposition by the seller or
                  sellers thereof set forth in such registration statement and
                  (B) 270 days after the effective date of such registration
                  statement;

                                    (iii) furnish to each seller of Registrable
                  Securities covered by such registration statement and each
                  Requesting Holder such number of conformed copies of such
                  registration statement and of each such amendment and
                  supplement thereto (in each case including all exhibits), such
                  number of copies of the prospectus contained in such
                  registration statement (including each preliminary prospectus
                  and any summary prospectus) and any other


                                       4
<PAGE>   5
                  prospectus filed under Rule 424 under the Securities Act, in
                  conformity with the requirements of the Securities Act, and
                  such other documents, as such seller or such holder may
                  reasonably request;

                                    (iv) use its best efforts to register or
                  qualify all Registrable Securities and other securities
                  covered by such registration statement under such other
                  applicable securities or blue sky laws of such jurisdictions
                  as each seller thereof and each Requesting Holder shall
                  reasonably request, to keep such registration or qualification
                  in effect for so long as such registration statement remains
                  in effect, and take any other action which may be reasonably
                  necessary or advisable to enable such seller to consummate the
                  disposition in such jurisdictions of the securities owned by
                  such seller, except that Telecom shall not for any such
                  purpose be required to qualify generally to do business as a
                  foreign corporation in any jurisdiction wherein it would not
                  but for the requirements of this subdivision (iv) be obligated
                  to be so qualified or to consent to general service of process
                  in any such jurisdiction;

                                    (v) use its best efforts to cause all
                  Registrable Securities covered by such registration statement
                  to be registered with or approved by such other governmental
                  agencies or authorities as may be necessary to enable the
                  seller or sellers thereof to consummate the disposition of
                  such Registrable Securities;

                                    (vi) furnish to each seller of Registrable
                  Securities and each Requesting Holder a signed counterpart,
                  addressed to such seller and such holder (and the
                  underwriters, if any) of

                                              (x) an opinion of counsel for
                  Telecom, dated the effective date of such registration
                  statement (and, if such registration includes an underwritten
                  public offering, dated the date of the closing under the
                  underwriting agreement), reasonably satisfactory in form and
                  substance to such seller and such holder, and

                                              (y) a "comfort" letter, dated the
                  effective date of such registration statement (and, if such
                  registration includes an underwritten public offering, dated
                  the date of the closing under the underwriting agreement),
                  signed by the independent public accountants who have
                  certified Telecom's financial statements included in such
                  registration statement,

covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities;

                                    (vii) notify each seller of Registrable
                  Securities covered by such registration statement and each
                  Requesting Holder, at any time when a 


                                        5
<PAGE>   6
                  prospectus relating thereto is required to be delivered under
                  the Securities Act, upon discovery that, or upon the happening
                  of any event as a result of which, the prospectus included in
                  such registration statement, as then in effect, includes an
                  untrue statement of a material fact or omits to state any
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in the light of the
                  circumstances under which they were made, and at the request
                  of any such seller or holder promptly prepare and furnish to
                  such seller or holder a reasonable number of copies of a
                  supplement to or an amendment of such prospectus as may be
                  necessary so that, as thereafter delivered to the purchasers
                  of such securities, such prospectus shall not include an
                  untrue statement of a material fact or omit to state a
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in the light of the
                  circumstances under which they were made;

                                    (viii) otherwise use its best efforts to
                  comply with all applicable rules and regulations of the
                  Commission, and make available to its security holders, as
                  soon as reasonably practicable, an earnings statement covering
                  the period of at least twelve months, but not more than
                  eighteen months, beginning with the first full calendar month
                  after the effective date of such registration statement, which
                  earnings statement shall satisfy the provisions of Section
                  11(a) of the Securities Act, and furnish to each such seller
                  and each Requesting Holder at least five business days prior
                  to the filing thereof a copy of any amendment or supplement to
                  such registration statement or prospectus and shall not file
                  any thereof to which any such seller or any Requesting Holder
                  shall have reasonably objected on the grounds that such
                  amendment or supplement does not comply in all material
                  respects with the requirements of the Securities Act or of the
                  rules or regulations thereunder;

                                    (ix) provide and cause to be maintained a
                  transfer agent and registrar for all Registrable Securities
                  covered by such registration statement from and after a date
                  not later than the effective date of such registration
                  statement;

                                    (x) use its best efforts to list all
                  Registrable Securities covered by such registration statement
                  on any securities exchange on which any of the Registrable
                  Securities is then listed; and

                                    (xi) enter into such agreements and take
                  such other actions as sellers of such Registrable Securities
                  holding at least 51% of the shares so to be sold shall
                  reasonably request in order to expedite or facilitate the
                  disposition of such Registrable Securities.

Telecom may require each seller of Registrable Securities as to which any
registration is being effected to furnish Telecom such information regarding
such seller and the distribution of such securities as Telecom may from time to
time reasonably request in writing.


                                       6
<PAGE>   7
                  Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that upon receipt of any notice from Telecom of the
happening of any event of the kind described in subdivision (vii) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vii) of this
Section 2.3 and, if so directed by Telecom, will deliver to Telecom (at
Telecom's expense) all copies, other than permanent file copies, then in such
holder's possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice.

                  2.4 Underwritten Offerings.

                           (a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by holders of Registrable
Securities pursuant to a registration requested under Section 2.1, Telecom will
enter into a firm-commitment underwriting agreement with such underwriters for
such offering, such agreement to be satisfactory in substance and form to each
such holder and the underwriters and to contain such representations and
warranties by Telecom and such other terms as are customary in agreements of
this type, including, without limitation, indemnities to the effect and to the
extent provided in Section 2.7. The holders of the Registrable Securities will
cooperate with Telecom in the negotiation of the underwriting agreement and will
give consideration to the reasonable suggestions of Telecom regarding the form
thereof, provided that nothing herein contained shall diminish the foregoing
obligations of Telecom. The holders of Registrable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, Telecom to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. Except
as set forth in this Agreement, any such holder of Registrable Securities shall
not be required to make any representations or warranties to or agreements with
Telecom or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required by law.

                           (b) Incidental Underwritten Offerings. If Telecom at
any time proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, Telecom will, if requested by any holder of
Registrable Securities as provided in Section 2.2 and subject to the provisions
of this Section 2.4(b), use its best efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder
among the securities to be distributed by such underwriters, provided that if
the managing underwriter of such underwritten offering shall inform the holders
of the Registrable Securities requesting such registration and the holders of
any other shares of Common Stock which shall have exercised, in respect of such
underwritten offering, registration rights comparable to the rights under
Section 2.2, by letter of its belief that inclusion in 


                                       7
<PAGE>   8
such underwritten distribution of all or a specified number of such Registrable
Securities or of such other shares of Common Stock so requested to be included
would interfere with the successful marketing of the Common Stock (other than
the Registrable Securities and other shares of Common Stock so requested to be
included) by the underwriters (such writing to state the basis of such belief
and the approximate number of such Registrable Securities and shares of other
Common Stock so requested to be included which may be included in such
underwritten offering without such effect), then Telecom may, upon written
notice to all holders of such Registrable Securities and of such other shares of
Common Stock so requested to be included, exclude pro rata from such
underwritten offering (if and to the extent stated by such managing underwriter
to be necessary to eliminate such effect) first, the number of such shares of
such other Common Stock, and second, if necessary, the number of such
Registrable Securities, so requested to be included the registration of which
shall have been requested by the holders of such other Common Stock, and by each
holder of Registrable Securities so that the resultant aggregate number of such
Registrable Securities and of such other shares of Common Stock so requested to
be included which are included in such underwritten offering shall be equal to
the approximate number of shares stated in such managing underwriter's letter.
The holders of Registrable Securities to be distributed by such underwriters
shall be parties to the underwriting agreement between Telecom and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
Telecom to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of such
holders of Registrable Securities. Except as otherwise set forth in this
Agreement, no holder of Registrable Securities shall be required to make any
representations or warranties to or agreements with Telecom or the underwriters
other than representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.

                           (c) Holdback Agreements.

                                    (i) Each holder of Registrable Securities
                  will agree upon acquisition of such Registrable Securities, if
                  so required by the managing underwriter, not to effect any
                  public sale or distribution of any equity securities of
                  Telecom, during the seven days prior to and the 90 days after
                  any underwritten registration pursuant to Section 2.1 or 2.2
                  has become effective, except as part of such underwritten
                  registration.

                                    (ii) Telecom agrees (x) not to effect any
                  public sale or distribution of its equity securities or
                  securities convertible into or exchangeable or exercisable for
                  any of such securities during the seven days prior to and the
                  90 days after any underwritten registration pursuant to
                  Section 2.1 has become effective, except as part of such
                  underwritten registration and except pursuant to registrations
                  on Form S-4 or S-8 (or other registrations of securities with
                  respect to an employee benefit plan) or any successor or
                  similar forms thereto, and (y) to cause each holder of its
                  equity 


                                        8
<PAGE>   9
                  securities or any securities convertible into or exchangeable
                  or exercisable for any of such securities, in each case
                  purchased from Telecom at any time after the date of this
                  Agreement (other than in a public offering) to agree not to
                  effect any such public sale or distribution of such
                  securities, during such period.

                  2.5 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, Telecom will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, each Requesting Holder and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of
Telecom with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.

                  2.6 Rights of Requesting Holders. Telecom will not file any
registration statement under the Securities Act (other than by a registration on
Forms S-8 or Form S-4, or any successor form thereto), unless it shall first
have given to each Person which holds 10% or more of the Common Stock at the
time outstanding (other than any such Person who acquired all such securities
held by such Person in a public offering registered under the Securities Act or
as the direct or indirect transferee of shares initially issued in such an
offering), at least 30 days prior written notice thereof. Any such Person who
shall so request within 30 days after such notice (a "Requesting Holder") shall
have the rights of a Requesting Holder provided in Sections 2.3, 2.5 and 2.7. In
addition, if any registration statement refers to any Requesting Holder by name
or otherwise as the holder of any securities of Telecom, then such holder shall
have the right to require (a) the insertion therein of language, in form and
substance satisfactory to such holder, to the effect that the holding by such
holder of such securities does not necessarily make such holder a "controlling
person" of Telecom within the meaning of the Securities Act and is not to be
construed as a recommendation by such holder of the investment quality of
Telecom's debt or equity securities covered thereby and that such holding does
not imply that such holder will assist in meeting any future financial
requirements of Telecom, or (b) in the event that such reference to such holder
by name or otherwise is not required by the Securities Act or any rules and
regulations promulgated thereunder, the deletion of the reference to such
holder.

                  2.7 Indemnification.

                           (a) Indemnification by Telecom. In the event of any
registration of any securities of Telecom under the Securities Act, Telecom
will, and hereby does, indemnify and hold harmless (i) in the case of any
registration statement filed pursuant to Section 2.1 or 2.2, the seller of any
Registrable Securities covered by such registration statement, its directors and
officers, each other Person who participates as an underwriter in the offering
or sale of such securities and each other Person, if any, who controls such


                                        9
<PAGE>   10
seller or any such underwriter within the meaning of the Securities Act, and
(ii) in the case of any registration statement of Telecom, any Requesting
Holder, its directors and officers and each other Person, if any, who controls
such Requesting Holder within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such seller
or Requesting Holder or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation under the Securities Act applicable to the Company in connection with
such registration, and Telecom will reimburse such seller, such Requesting
Holder and each such director, officer, underwriter and controlling person for
any legal or any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided that Telecom shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to Telecom through an instrument duly
executed by such seller or Requesting Holder, as the case may be, specifically
stating that it is for use in the preparation thereof and, provided further that
Telecom shall not be liable to any Person who participates as an underwriter, in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller or such Requesting Holder or any such director,
officer, underwriter or controlling person and shall survive the transfer of
such securities by such seller.

                           (b) Indemnification by the Sellers. Telecom may
require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 2.3, that Telecom shall have
received an undertaking satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this Section 2.7) Telecom, each
director of Telecom, each officer of Telecom and each other person, if any, who
controls Telecom within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from such
registration statement,


                                       10
<PAGE>   11
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to Telecom through an instrument
duly executed by such seller specifically stating that it is for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of Telecom or any such director, officer or controlling person and shall
survive the transfer of such securities by such seller.

                           (c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section 2.7,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.7, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.

                           (d) Other Indemnification. Indemnification similar to
that specified in the preceding subdivisions of this Section 2.7 (with
appropriate modifications) shall be given by Telecom and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any Federal or state law or regulation of any
governmental authority other than the Securities Act.

                           (e) Indemnification Payments. The indemnification
required by this Section 2.7 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.

                  3. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:

                                       11
<PAGE>   12
                  Commission: The Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.

                  Common Stock: As defined in Section 1.

                  Exchange Act: The Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular Section of the Securities Exchange Act of 1934, as amended, shall
include a reference to the comparable section, if any, of any such similar
Federal statute.

                  Initiating Holders: Any holder or holders of Registrable
Securities holding at least 25% of the Registrable Securities (by number of
shares at the time issued and outstanding), and initiating a request pursuant to
Section 2.1 for the registration of all or part of such holder's or holders'
Registrable Securities.

                  NASD: National Association of Securities Dealers, Inc.

                  Person: A corporation, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

                  Registrable Securities: Any shares of Common Stock issued
pursuant to the Stock Purchase Agreement, and any securities issued or issuable
with respect to any such Common Stock by way of stock dividends or stock splits
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (ii) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (iii) they shall have
been exchanged for new certificates not bearing a legend restricting further
transfer and their subsequent disposition shall not require registration or
qualification under the Securities Act or any similar state law then in force,
or (iv) they shall have ceased to be outstanding.

                  Registration Expenses: All expenses incident to Telecom's
performance of or compliance with Section 2, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for Telecom and of its independent public accountants, including the expenses of
any special audits or "cold comfort" letters required by or incident to such
performance and compliance, the fees and disbursements of not more than one
counsel and not more than one firm of accountants retained by the holder or
holders of the Registrable Securities being registered (if such counsel or
accountants are approved for such purpose by at least 51% of the Initiating
Holders in the case of a registration under Section 2.1, or by the holder or
holders of at least 51% of the Registrable Securities 


                                       12
<PAGE>   13
being registered in the case of a registration under Section 2.2), premiums and
other costs of policies of insurance against liabilities arising out of the
public offering of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and transfer
taxes, if any.

                  Requesting Holder: As defined in Section 2.6.

                  Securities Act: The Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular Section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such similar Federal
statute.

                  Series 1 Preferred Stock: As defined in Section 1.

                  Stock Purchase Agreement: As defined in Section 1.

                  4. Rule 144. If Telecom shall have filed a registration
statement pursuant to the requirements of Section 12 of the Exchange Act or a
registration statement pursuant to the requirements of the Securities Act,
Telecom will file the reports required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations adopted by the Commission
thereunder (or, if Telecom is not required to file such reports, will, upon the
request of any holder of Registrable Securities, make publicly available other
information) and will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, Telecom will deliver to such
holder a written statement as to whether it has complied with such requirements.

                  5. Amendments and Waivers. This Agreement may be amended and
Telecom may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if Telecom shall have obtained the written
consent to such amendment, action or omission to act, of the holder or holders
of 51% or more of the shares of Registrable Securities; provided that, if such
amendment, action or omission shall not affect the rights and benefits of
holders of each of the kinds of Registrable Securities specified in the
preceding clause, then such amendment, action or omission shall require the
approval only of the holder or holders of each kind of Registrable Securities
whose rights and benefits are affected. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 5, whether or not such Registrable Securities shall
have been marked to indicate such consent.

                  6. Nominees for Beneficial Owners. In the event that any
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election, be treated as the holder of
such Registrable Securities for 


                                       13
<PAGE>   14
purposes of any request or other action by any holder or holders of Registrable
Securities pursuant to this Agreement or any determination of any number or
percentage of shares of Registrable Securities held by any holder or holders of
Registrable Securities contemplated by this Agreement. If the beneficial owner
of any Registrable Securities so elects, Telecom may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.

                  7. Notices. All notices, demands or other communications
provided for hereunder to be given or delivered under or by reason of the
provisions of this Agreement will be in writing and will be deemed to have been
duly given if personally delivered or sent by United States mails or by
telegram, telex or facsimile confirmed by letter and will be deemed given,
unless earlier received: (i) if sent by certified or registered mail, return
receipt requested, or by first-class mail, five calendar days after being
deposited in the United States mail, postage prepaid; (ii) if sent by United
States Express Mail, two calendar days after being deposited in the United
States mail, postage prepaid; (iii) if sent by telegram, telex or facsimile, on
the day sent; and (iv) if delivered by hand, on the date of receipt. Any
notification to a Purchaser shall be at the address of Purchaser set forth in
the books and records of Company or such other mailing address of which
Purchaser shall give to Company in writing. Any notice to Company shall be sent
to the address indicated below:

                                            Telecom Services Group, Inc.
                                            5000 Plaza on the Lake, Suite 100
                                            Austin, Texas 78746
                                            Attention: President
                                            Telecopy: (512) 328-7859

                           With a copy to:

                                            Jenkens & Gilchrist,
                                            A Professional Corporation
                                            2200 One American Center
                                            600 Congress Avenue
                                            Austin, Texas 78701
                                            Attention:  Rod Edens, Jr.
                                            Telecopy:  (512) 404-3520

                  8. Assignment. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than Telecom shall also be for the benefit of and
enforceable by any subsequent holder of any Registrable Securities, subject to
the provisions respecting the minimum numbers or percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein.

                                       14
<PAGE>   15
                  9. Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for reference
only and shall not limit or otherwise affect the meaning hereof.

                  10. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws and not the law of conflicts, of
the State of Delaware.

                  11. Counterparts. To facilitate execution, this Agreement may
be executed in any number of counterparts as may be convenient or necessary, and
it shall not be necessary that the signatures of all parties hereto be contained
on any one counterpart hereof. Additionally, the parties hereto hereby covenant
and agree that, for purposes of facilitating the execution of this Agreement,
(a) the signature pages taken from separate individually executed counterparts
of this Agreement may be combined to form multiple fully executed counterparts
and (b) a facsimile transmission shall be deemed to be an original signature.
All executed counterparts of this Agreement shall be deemed to be originals, but
all such counterparts taken together or collectively, as the case may be, shall
constitute one and the same agreement.

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.


                                       TELECOM SERVICES GROUP, INC.


                                       By:  /s/ Ralph J. Swett
                                            -------------------------
                                            Ralph J. Swett, President


                                       15
<PAGE>   16
                 Signature Page to Registration Rights Agreement


                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  Trustees of General Electric
                                  Pension Trust, a New York Trust

                                  By:  General Electric Investment
                                       Corporation, as Investment
                                       Advisor


                                       By: /s/ Michael M. Pastore
                                          ---------------------------------
                                              Michael M. Pastore,
                                              Vice President

                                       Address: 3003 Summer Street
                                                Stamford, Connecticut 06905


                                       16
<PAGE>   17
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  GRUMMAN HILL INVESTMENTS, L.P.,
                                  a Delaware limited partnership

                                  By: Grumman Hill Associates, Inc.,
                                      Its General Partner


                                      By: /s/ Richard D. Irwin
                                         ---------------------------------
                                         Richard D. Irwin, President

                                      Address:  95 Grumman Hill Road
                                                Wilton, Connecticut 06897


                                       17
<PAGE>   18
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  THE PRUDENTIAL INSURANCE COMPANY OF
                                  AMERICA, a New Jersey corporation


                                  By: /s/ GARY HARRIS
                                      -----------------------------------
                                  Its: Vice President

                                  Address:  Four Gateway Center
                                            One Hundred Mulberry Street
                                            Newark, New Jersey 07102-4069


                                       18
<PAGE>   19
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                          PURCHASER:
 
                                          DOUGERY & WILDER II


                                          By:           [sig]
                                             _______________________________
                                          Its: General Partner


                                       19
<PAGE>   20
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  _______________________________________
                                  Charles M. Edwards III,
                                  by Richard D. Irwin as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       20
<PAGE>   21
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  ________________________________________
                                  Tully M. Friedman, Trustee of
                                  Tully M. Friedman Revocable Trust,
                                  by Richard D. Irwin, as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       21
<PAGE>   22
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ James T. Kelsey
                                  _______________________________________
                                  James T. Kelsey

                                  Address:  10 Spring House Road
                                            Greenwich, Connecticut 06830


                                       22
<PAGE>   23
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  FWH Associates, a California limited
                                  partnership


                                  By:  F. Warren Hellman
                                  Its: General Partner


                                  By: /s/ Richard D. Irwin
                                     ---------------------------------
                                       Richard D. Irwin as
                                       Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       23
<PAGE>   24
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  ----------------------------------------
                                  Robert R. Lanning, by Richard D. Irwin
                                  as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       24
<PAGE>   25
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  ---------------------------------------
                                  J. Michael Murray, by Richard D. Irwin
                                  as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       25
<PAGE>   26
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  -----------------------------------------
                                  M. Timothy Murray, by Richard D. Irwin
                                  as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       26
<PAGE>   27
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  ---------------------------------------
                                  Arthur Rock, by Richard D. Irwin
                                  as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       27
<PAGE>   28
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin
                                  --------------------------------------
                                  Fayez Sarofim, by Richard D.
                                  Irwin as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       28
<PAGE>   29
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  J. F. SHEA CO., INC.


                                  By:  /s/ Richard D. Irwin
                                     --------------------------------
                                       Richard D. Irwin,
                                       Attorney-in-Fact

                                  Address:  655 Brea Canyon Road
                                            P.O. Box 489
                                            Walnut, California 91789-0489


                                       29
<PAGE>   30
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Richard D. Irwin 
                                  _________________________________________
                                  George M. Batsche, by Richard D. Irwin
                                  as Attorney-in-Fact

                                  Address:  95 Grumman Hill Road
                                            Wilton, Connecticut 06897


                                       30
<PAGE>   31
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Ralph J. Swett
                                  _______________________________________
                                  Ralph J. Swett

                                  Address:  3700 Misty Creek Drive
                                            Austin, Texas 78746


                                       31
<PAGE>   32
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ John J. Willingham
                                  _______________________________________
                                  John J. Willingham

                                  Address:  10704 Seven Oaks Cove
                                            Austin, Texas 78759


                                       32
<PAGE>   33
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ Kenneth F. Hinther
                                  _______________________________________
                                  Kenneth F. Hinther

                                  Address:  5200 Deerwood Court
                                            Austin, Texas 78730


                                       33
<PAGE>   34
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  /s/ John R. Fleming
                                  ________________________________________
                                  John R. Fleming

                                  Address:  1927 Ruede St. Tropez, #9
                                            Austin, Texas 78746



                                       34
<PAGE>   35
                 Signature Page to Registration Rights Agreement



                  The undersigned hereby agrees to be bound to the terms and
conditions of this Agreement.


Dated as of August 6, 1992.


                                  PURCHASER:

                                  Texcom Ventures, Ltd. I

                                  By:  Texcom Venture Capital, Inc.
                                       Its General Partner


                                       By:  /s/ Richard D. Irwin
                                            _________________________________
                                            Richard D. Irwin,
                                            Attorney-in-Fact

                                       Address:  95 Grumman Hill Road
                                                 Wilton, Connecticut 06897


                                       35




<PAGE>   1
                                                                   EXHIBIT 4.10


                                  AMENDMENT TO

                         REGISTRATION RIGHTS AGREEMENT


         This Amendment (this "Amendment") is made as of May 1, 1996 (the
"Effective Date"), by and among Trustees of General Electric Pension Trust, a
New York trust, Grumman Hill Investments, L.P., a Delaware limited partnership,
Ralph J. Swett, Kenneth F. Hinther, John R. Fleming, John J. Willingham and
Richard D. Irwin (the foregoing entities and individuals are collectively
referred to herein as the "Amending Purchasers") and IXC Communications Inc.
("IXC"), a Delaware corporation and the successor-by-merger to Telecom Services
Group, Inc. ("Telecom").


                                   BACKGROUND

         This Amendment is made with reference to the following facts:

         A.      IXC and the Amending Purchasers are parties to that certain
Telecom Services Group Inc., Registration Rights Agreement dated August 6, 1992
(the "Registration Rights Agreement").  Each capitalized term not otherwise
defined herein shall have the meaning for such term set forth in the
Registration Rights Agreement.

         B.      Telecom was acquired by IXC on February 22, 1994 in a merger
transaction in which the stockholders of Telecom received IXC stock in exchange
for their Telecom shares.  The total number of shares of IXC common stock
received by all the Purchasers (as defined in the Registration Rights
Agreement) with respect to Telecom Registrable Securities was 2,200,000 shares.
Such IXC shares now constitute all the Registrable Securities, except to the
extent such shares have ceased to meet the requirements for Registrable
Securities set forth in the Registration Rights Agreement.

         C.      Telecom was merged with and into IXC on November 30, 1995.

         D.      Section 5 of the Registration Rights Agreement allows for an
amendment to the Registration Rights Agreement if the holders of fifty-one
percent (51%) or more of the Registrable Securities provide their written
consent to the amendment.

         E.      As illustrated in Schedule I, the Amending Purchasers
currently hold approximately seventy-five percent (75%) of the Registrable
Securities and accordingly can, together with IXC, amend the Registration
Rights Agreement.

         F.      IXC is preparing for an initial public offering of its common
stock (the "Public Offering").  The Public Offering will be of benefit to IXC
and each Purchaser.  The parties hereto believe it is expedient, necessary and
appropriate in order to allow IXC to complete the Public Offering to delay the
earliest date on which certain rights under the Registration Rights




<PAGE>   2
Agreement can be exercised.  Accordingly, the parties hereto desire to amend
the Agreement pursuant to the terms set forth below.


                               TERMS OF AMENDMENT

         In consideration of the foregoing premises, the parties hereto hereby
agree as follows:

         1.      Delay of Rights.  The Registration Rights Agreement is hereby
amended so that no Purchaser or other holder of Registrable Securities shall
have any rights under Section 2 of the Registration Rights Agreement until
March 1, 1997.

         2.      All other provisions of the Agreement shall remain unchanged
and in full force and effect.


                                       2



<PAGE>   3
         IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.



 IXC Communications, Inc.

 By:      /s/ JOHN J. WILLINGHAM                     /s/ RALPH J. SWETT      
          -------------------------------       -------------------------------
 Name:    John J. Willingham                             Ralph J. Swett
          -------------------------------
 Title:   Senior Vice President and 
          Chief Financial Officer              
          -------------------------------

                                                   /s/ KENNETH F. HINTHER  
                                                -------------------------------
 Trustees of General Electric Pension Trust,           Kenneth F. Hinther
 a New York Trust

 By:      /s/ JOHN H. MYERS                                                
          -------------------------------
 Name:    John H. Myers                             /s/ JOHN R. FLEMING 
          -------------------------------       -------------------------------
                                                        John R. Fleming 
 Title:   Trustee                                               
          -------------------------------



 Grumman Hill Investments, L.P.                    /s/ JOHN J. WILLINGHAM
                                                -------------------------------
                                                       John J. Willingham
 By:      Grumman Hill Associates, Inc.
 Its:     General Partner

 By:      /s/ RICHARD D. IRWIN                                     
          -------------------------------
 Name:    Richard D. Irwin                                              
          -------------------------------
 Title:   President                                             
          -------------------------------






                                       3
<PAGE>   4
                                   SCHEDULE I

              AMENDING PURCHASERS' OWNERSHIP OF FORMER TSGI SHARES



                                                               No. of IXC    
                                                              Common Shares  
                                                              Constituting   
                                                               Registrable   
                  Investor                                    Securities(1)  
                  --------                                    -------------  
 Trustees of General Electric Pension Trust  . . . . . . . .     558,000     
                                                                             
 Grumman Hill Investments, L.P.  . . . . . . . . . . . . . .     290,000     

 Richard D. Irwin  . . . . . . . . . . . . . . . . . . . . .     197,420(2)  
                                                                             
 Ralph J. Swett  . . . . . . . . . . . . . . . . . . . . . .     282,020     

 Kenneth F. Hinther  . . . . . . . . . . . . . . . . . . . .      90,000(3)  
                                                                             
 John R. Fleming . . . . . . . . . . . . . . . . . . . . . .     140,000     
                                                                             
 John J. Willingham  . . . . . . . . . . . . . . . . . . . .      90,000(4)  
                                                               ---------
       Total . . . . . . . . . . . . . . . . . . . . . . . .   1,647,440     
                                                               =========
                                                                             
 Total Registrable Securities  . . . . . . . . . . . . . . .   2,200,000     

 1,647,440 / 2,200,000 . . . . . . . . . . . . . . . . . . .       74.88%    

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

1     Issued pursuant to the merger of TSGI Acquisition Corp. with and into    
      Telecom Services Group, Inc. on February 22, 1994 (the "Merger").        
                                                                               
2     Richard D. Irwin was originally issued 204,920 IXC Common Shares         
      pursuant to the Merger.  These shares were surrendered on January 4,     
      1995 and 197,420 were reissued to Mr. Irwin and 7,500 were issued to     
      an individual who is not a party to the Registration Rights Agreement    
      or this Amendment.                                                       
                                                                               
3     Kenneth F. Hinther was originally issued 140,000 IXC Common Shares       
      pursuant to the Merger.  A Certificate for 100,000 shares was            
      surrendered on April 19, 1996 and of those shares, 50,000 were           
      reissued to Mr. Hinther and 50,000 were issued to a trust formed for     
      the benefit of one of his children.                                      
                                                                               
4     John J. Willingham was originally issued 140,000 IXC Common Shares       
      pursuant to the Merger.  One hundred thousand (100,000) of the 140,000   
      shares were surrendered on January 20, 1995 and 50,000 shares were       
      reissued to Mr. Willingham and 50,000 shares were reissued to an         
      individual who is not a party to the Registration Rights Agreement or    
      this Amendment.                                                          

<PAGE>   1
                                                                EXHIBIT 4.11



                                AMENDMENT NO. 1
                                       TO
                       INDENTURE AND SUBSIDIARY GUARANTEE


                 This Amendment No. 1 to Indenture and Subsidiary Guarantee is
dated as of June 4, 1996 (the "Amendment") and amends that certain Indenture,
Exhibit B thereto and the Subsidiary Guarantee appurtenant to the Senior Notes
dated as of October 5, 1995 (the "Indenture") by and among IXC Communications,
Inc., a Delaware corporation (the "Company"), the Guarantors listed therein
(the "Guarantors") and IBJ Schroder Bank & Trust Company, a New York banking
corporation, as trustee (the "Trustee").

                 This Amendment is entered into by and among the Company, the
Guarantors and the Trustee with reference to the following recitals of fact:


                                R E C I T A L S

                 WHEREAS, the Company and the Guarantors (with certain
of the Guarantors being successors by merger to other guarantors listed on the
signature page of the Indenture) wish to amend certain terms and conditions of
the Indenture, Exhibit B thereto and the Subsidiary Guarantee appurtenant to
the Senior Notes without the consent of the Holders of the Senior Notes
pursuant to Section 9.01 of the Indenture.

                 NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, the Indenture, Exhibit B
thereto and the Subsidiary Guarantee appurtenant to the Senior Notes are hereby
amended as follows:


                               A G R E E M E N T

                 1.       Defined Terms.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Indenture.

                 2.       Amendment of Section 11.05.  Section 11.05 of the
Indenture is hereby deleted in its entirety and the following is hereby
substituted therefor:

                          "Any term or provision of the Guarantee to the
                 contrary notwithstanding, the aggregate amount of the
                 Obligations under this Indenture guaranteed hereunder shall be
                 reduced to the minimum extent necessary to prevent the
                 Guarantee from violating or becoming voidable under applicable
                 law relating to fraudulent conveyance or fraudulent transfer
                 or similar laws affecting the rights of creditors generally."
<PAGE>   2
                 3.       Amendment of Paragraph Six of Exhibit B and the
Subsidiary Guarantee Appurtenant to the Senior Notes.  The sixth paragraph of
Exhibit B attached to the Indenture and the sixth paragraph of the Subsidiary
Guarantee appurtenant to the Senior Notes which reads as follows:

                 "Notwithstanding the foregoing, in no event shall the
                 obligations of any Guarantor under the Guarantee exceed 95% of
                 the equity of such Guarantor."

are hereby deleted in their entirety and the following is hereby substituted
therefor:

                          "Any term or provision of this Guarantee to the
                 contrary notwithstanding, the aggregate amount of the
                 Obligations guaranteed hereunder shall be reduced to the
                 minimum extent necessary to prevent this Guarantee from
                 violating or becoming voidable under applicable law relating
                 to fraudulent conveyance or fraudulent transfer or similar
                 laws affecting the rights of creditors generally."

                 4.       No Action Required by Holders of Senior Notes.  This
Amendment shall be self-executing and the Indenture and the Subsidiary
Guarantees attached thereto are hereby deemed amended in accordance with the
terms hereof.  The Holders of the Senior Notes need not turn in their Senior
Notes or take any other action with respect to this Amendment.

                 5.       Full Force and Effect.  Except as provided in this
Amendment, all of the terms and provisions of the Indenture shall remain
unmodified and in full force and effect and are hereby ratified and confirmed.

                 6.       Governing Law.  THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS AMENDMENT WITHOUT GIVING REGARD
TO PRINCIPLES OF CONFLICT OF LAWS THEREOF.

                 7.       Counterparts.  This Amendment may be executed in
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.




                                      2



<PAGE>   3
                                   SIGNATURES


                                           IXC COMMUNICATIONS, INC.



                                           By:  /s/  John J. Willingham
                                                ------------------------------
                                                Name:   John J. Willingham
                                                Title:  Senior Vice President 
                                                        and Chief Financial 
Attest:                                                 Officer


/s/  Ralph J. Swett                                                  
- --------------------------------
Name:   Ralph J. Swett
Title:  President and                      ATLANTIC STATES MICROWAVE
        Chief Executive Officer              TRANSMISSION COMPANY
                                           CENTRAL STATES MICROWAVE
                                             TRANSMISSION COMPANY
                                           TELCOM ENGINEERING, INC.
                                           TOWER COMMUNICATION SYSTEMS CORP.
                                           WEST TEXAS MICROWAVE COMPANY
                                           WESTERN STATES MICROWAVE
                                             TRANSMISSION COMPANY
                                           RIO GRANDE TRANSMISSION, INC.
                                           IXC CARRIER, INC.
                                           IXC LONG DISTANCE, INC.
                                           LINK NET INTERNATIONAL, INC.





                                           By:  /s/  John J. Willingham
                                              --------------------------------
                                              Name:   John J. Willingham
                                              Title:  Senior Vice President 
                                                      and Chief Financial 
Attest:                                               Officer


/s/  Ralph J. Swett                                                  
- -------------------------------
Name:  Ralph J. Swett
Title: President and                       IBJ SCHRODER BANK & TRUST COMPANY
       Chief Executive Officer


                                           By:  /s/  Irene Teutonico
                                              --------------------------------
                                              Name:  Irene Teutonico
                                              Title: Assistant Vice President
Attest:

/s/  Max Volmar
- -------------------------------
Name:  Max Volmar
Title: Assistant Secretary






                                      3



<PAGE>   1
                                                                    EXHIBIT 4.12


                            STOCK EXCHANGE AGREEMENT

                 STOCK EXCHANGE AGREEMENT, dated as of June 10, 1996, between
the Trustees of General Electric Pension Trust, a New York common law trust
("GEPT"), and IXC Communications, Inc., a Delaware corporation ("IXC")

                 WHEREAS, GEPT is the sole stockholder of Summer Street
Communications, Inc., a Delaware corporation ("Summer Street"); and

                 WHEREAS, IXC wishes to acquire Summer Street by exchanging
shares of IXC common stock, par value $0.01 per share ("ISC Common Stock") for
all of the shares of the capital stock of Summer Street, on the terms set forth
below;

                 NOW, THEREFORE, the parties agree as follows:

                 1.       Exchange of Shares.  Subject to the terms and
conditions set forth herein, at the Closing referred to in Section 2 below:

                          (a)     IXC will deliver to GEPT one or more
certificates representing a number of shares of IXC Common Stock determined by
dividing (i) $12,500,000 by (ii) the lower of (x) the per share consideration
paid for IXC Common Stock by the underwriters in the public offering (the
"IPO") of IXC Common Stock contemplated by the Registration Statement on Form
S-1 (together with any amendments thereto, the "Form S-1") filed by IXC with
the Securities and Exchange Commission on May 20, 1996 (the IPO price per share
less underwriters' discounts and commissions); and (y) $20 less a per share
amount equal to the underwriters' discounts and commissions that would be
payable if the IPO price were $20 per share.

                          (b)     GEPT will deliver to IXC a certificate for
100 shares of common stock, par value $0.01 per share of Summer Street ("Summer
Street Common Stock").

                 2.       Closing.  The transactions contemplated hereby shall
be consummated at a closing (the "Closing") to be held at the same time and
location as the closing of the IPO.  IXC shall provide to GEPT not less than
four business days' notice of such time and location.
<PAGE>   2
                 3.       Representations and Warranties of GEPT.

                          GEPT hereby represents and warrants to IXC as follows:
        
                          (a)     Title to Shares.  The authorized capital
stock of Summer Street consists of 100 shares of Summer Street Common Stock,
all of which are owned beneficially and of record by GEPT.  No third party has
any right, title or interest in, or claim to, any such shares.  Summer Street
has no other securities, options or warrants outstanding.

                          (b)     Assets and Liabilities of Summer Street.  At
the Closing, the assets of Summer Street shall consist of $12,500,000 in cash
and Summer Street shall have no liabilities.

                          (c)     Investment Purposes.  GEPT will acquire the
shares of IXC Common Stock to be acquired by it pursuant hereto for its own
account and not with a view to or for sale in connection with any distribution
of such shares.

                          (d)     Access to Information.  GEPT (i) is familiar
with the business of IXC; (ii) has had an opportunity to discuss with
representatives of IXC the condition of and prospects for the operation and
financing of IXC and such other matters as GEPT has deemed appropriate in
considering whether to invest in IXC; (iii) has been provided access to all
information about IXC requested by GEPT; and (iv) has received copies of IXC's
Form S-1.

                          (e)     Shares not Registered.  GEPT understands that
the shares of common stock to be acquired by it pursuant hereto have not been
registered under the Securities Act of 1933, as amended (the "1993 Act"), or
registered or qualified under the securities laws of any state.  GEPT will not
sell, transfer, assign or otherwise dispose of (collectively, "Transfer") the
shares of common stock to be acquired by it unless they are subsequently
registered under the 1933 Act and registered or qualified under applicable
state securities laws, or unless an exemption is available which permits
Transfers without such registration and qualification.

                          (f)     QIB.  GEPT has such knowledge and experience
in financial and business matters that GEPT is capable of evaluating the risks
of the proposed investment in the shares of common stock to be acquired by it
pursuant hereto and is able to bear the economic risk of the investment in such
shares.  GEPT is a "qualified institutional buyer" as the term is used in Rule
144A(a)(l) under the 1933 Act.





                                       2
<PAGE>   3
                 4.       Representations and Warranties of IXC.  IXC hereby
represents and warrants to GEPT as follows:

                          (a)     IXC Common Stock.  The shares of IXC Common
Stock to be issued to GEPT pursuant hereto will, at the Closing, be duly
authorized and fully paid and shall be issued in the name of GEPT (or its
designee).  No third party has, or at the Closing will have, any right, title
or interest in, or claim to, any such shares.  The IXC Common Stock was split
three-for-one on June 7, 1996.

                          (b)     No Conflict.  The execution and delivery by
IXC of this Agreement and the consummation by IXC of the transactions
contemplated hereby do not and will not (i) breach, violate or result in any
default under, or give rise to any right of acceleration or other right of
action or consequence under, any contract, agreement, instrument, understanding
or undertaking to which IXC or any of its subsidiaries is a party or by which
it or any of its subsidiaries or any of its properties is bound, or (ii)
contravene any law, rule, regulation, order, judgment or decree applicable to
or binding upon IXC.

                          (c)     Form S-1.  IXC has delivered to GEPT a copy
of the Form S-1 and all amendments thereto filed through the date hereof, and
will promptly deliver to GEPT a copy of all amendments thereto filed after the
date hereof.  The Form S-1 does not, and will not at the time of the Closing,
contain any misstatement of a material fact.  The Form S-1 does not, and will
not at the time of the Closing, omit to state any fact necessary to make any
statement made therein not misleading.

                 5.       Conditions of Obligations of Both Parties.

                 The obligations of both parties under this Agreement shall be
subject to the condition that the closing of the IPO shall occur simultaneously
with the Closing.


                 6.       Conditions of Obligation of GEPT.  The obligations of
GEPT hereunder shall be subject to the following additional conditions:

                          (a)     GEPT shall have received an opinion of
Riordan & McKinzie, counsel to IXC, in form and substance reasonably
satisfactory to GEPT, with respect to (i) the matters set forth in Section 4
above and (ii) the matters addressed in the opinion of such counsel delivered
to the underwriters in connection with the IPO.





                                       3

<PAGE>   4
                          (b)     IXC shall have delivered to GEPT a
certificate, executed by its chief executive officer, confirming that the
representations and warranties of IXC set forth herein are true and correct as
of the time of the Closing.


                 7.       Indemnification.  Whether or not the Closing shall
occur, each party shall indemnify and hold the other (and the other's
affiliates, officers, directors, employees, trustees, agents and
representatives) harmless from any claims, liabilities, losses, costs or
expenses (including without limitation reasonable attorneys' fees and expenses)
arising out of any breach or alleged breach of any representation, warranty,
covenant or agreement made herein (or in any document or instrument delivered
pursuant hereto) by the indemnifying party.


                 8.       Over-Allotment.  If the underwriters for the IPO
exercise their "Green Shoe" over-allotment option in connection with the IPO,
GEPT shall purchase a number of shares of IXC Common Stock equal to the Green
Shoe Amount (as defined below) simultaneously with the closing of the
underwriters option, provided that GEPT shall not purchase such shares if the
closing bid price for shares of IXC Common Stock on the last trading day before
the closing of the Green Shoe over-allotment option is less than the IPO price.
In the event the underwriters notify IXC that they intend to exercise their
option IXC shall immediately provide notice thereof to GEPT.  The price per
share payable by GEPT shall be the lower of (x) the net per share consideration
paid for IXC Common Stock by the underwriters in the IPO (the IPO price per
share less underwriters' discounts and commissions); and (y) $20 less a per
share amount equal to the underwriters' discounts and commissions that would be
payable if the IPO price were $20 per share.  The "Green Shoe Amount" shall
mean a number of shares of IXC Common Stock equal to the product of (i) the
number of shares acquired by GEPT hereunder at the Closing, and (ii) a fraction
the numerator of which is the number of shares purchased by the underwriters
for the IPO pursuant to the Green Shoe over-allotment option and the
denominator of which is the number of shares purchased by the underwriters for
the IPO at the closing of the IPO.





                                       4
<PAGE>   5
                 9.       Miscellaneous.

                          (a)     Governing Law.  This Agreement shall be
governed by, and enforceable in accordance with, the laws of the State of New
York, without reference to principles of conflict of laws.

                          (b)     Termination.  This Agreement may be
terminated by either party if the IPO shall not have been consummated by August
31, 1996.

                          (c)     Notices.  Any notice hereunder shall be given
in accordance with the provisions of Section 12(c) of the Registration Rights
Agreement.

                 IN WITNESS WHEREOF, the parties have executed this Agreement
as of the 10th day of June, 1996.

                                           TRUSTEES OF GENERAL ELECTRIC
                                            PENSION TRUST

                                           By:  /s/ MICHAEL PASTORE
                                               -----------------------------

                                           IXC COMMUNICATIONS, INC.


                                           By: /s/ JOHN J. WILLINGHAM
                                               -----------------------------




                                       5

<PAGE>   1
                                                                    EXHIBIT 4.13
        

                      REGISTRATION RIGHTS AGREEMENT


                 REGISTRATION RIGHTS AGREEMENT dated as of June 10, 1996 made
and entered into by and among the TRUSTEES OF GENERAL ELECTRIC PENSION TRUST, a
New York common law trust ("GEPT"), the persons listed on Schedule 1 hereto
(collectively, the "Stockholders") and IXC COMMUNICATIONS, INC. a Delaware
corporation (the "Company")

                 WHEREAS, the Company proposes to conduct an initial public
offering of shares of its common stock, par value $0.01 per share (the "Common
Stock");

                 WHEREAS, GEPT and the other Stockholders are holders of shares
of Common Stock;

                 WHEREAS, GEPT has agreed to acquire additional shares of
Common Stock simultaneously with the Company's public offering; and

                 WHEREAS, the Company has agreed to grant registration rights
on the terms set forth below with respect to the shares of Common Stock held by
the Stockholders;

                 NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Registration Rights Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                 1.       Certain Terms.   The following terms (whether or not
underscored) when used in this Registration Rights Agreement shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):

                 "Business Day" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York, New York.

                 "Exchange Act" means the Securities Exchange Act of 1934 (and
any successor law), and the rules and regulations thereunder, all as amended
from time to time.

                 "Participating Stockholder" means a Stockholder conducting or
participating in an offering pursuant to Paragraph 2 or Paragraph 3 hereof.





<PAGE>   2
                 "Registrable Stock" means the shares of Common Stock held by
the Stockholders on the date hereof and, in the case of GEPT, the shares of
Common Stock to be acquired by GEPT simultaneously with the Company's public
offering.

                 "Person" means any natural person, corporation, limited or
general partnership, firm, limited liability company, association, trust,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.

                 "Securities Act" means the Securities Act of 1933 (and any
successor law), and the rules and regulations thereunder, all as amended from
time to time.

                 "Underwriter" means a securities dealer who purchases any
Common Stock as a principal in connection with a distribution of Common Stock
and not as part of such dealer's market making activities.

                 2.  Demand Registration.

                 (a)  Request for Registration.  Promptly upon the written
request by GEPT made at any time prior to March 1, 2000 (the "Registration
Period") and, in any event, not later than 60 days after any such request, the
Company shall file a registration statement under the Securities Act and any
applicable state securities laws covering the shares of Common Stock that GEPT
desires to register, and the Company shall use its best efforts to cause the
related registration statement to become effective as soon as reasonably
practicable after such filing (but not prior to March 1, 1997 or prior to 180
days since the effectiveness of the Company's last registration statement
demanded by GEPT hereunder) and to remain in effect until the earlier of (i)
one hundred and eighty (180) days after the effective date of such registration
statement or (ii) completion of the distribution contemplated by the
registration statement; provided that if the Company shall furnish to GEPT a
certificate signed by the Chief Executive Officer of the Company stating that
in the good faith judgment of the board of directors of the Company it would be
significantly disadvantageous to the Company and its shareholders for such a
registration statement to be filed on or before the date filing would be
required or to become effective, the Company shall have an additional period of
not more than 60 days within which to file (or before which it requests the
effectiveness of) such registration statement.  Such request shall specify the
number of shares of Common Stock proposed to be sold by GEPT and the intended
method of disposition.  Except as provided herein, no other persons (including
the Company) shall be entitled to include any securities in any registration
pursuant to this Paragraph 2 without the prior written consent of GEPT, which
consent may be withheld for any reason or for no reason.  The limitation on the
number of registration requests which may be made pursuant hereto is three,
provided that if, after the third (or any subsequent) demand registration
hereunder, GEPT shall hold shares of Common Stock representing more than 10% of
such shares outstanding,





                                       2
<PAGE>   3
then GEPT may exercise additional demand rights hereunder until the shares held
by it no longer represent more than 10% of the shares outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to effect a
registration of shares of Common Stock unless the market value of the shares to
be registered exceeds $20,000,000.

                 (b)  Effective Registration.  The Company shall be deemed to
have satisfied an obligation to register Common Stock pursuant to Paragraph
2(a) hereof only when a registration statement covering all of the Common Stock
specified in the request, for sale in accordance with the method of disposition
specified in the request, shall have become effective under the Securities Act
and remained effective throughout the shorter of (i) the period during which
the distribution contemplated by the registration statement is completed or
(ii) the period during which the Company is required to maintain the
registration statement in effect.

                 (c)  Underwriting.  If GEPT so elects, the offering of Common
Stock pursuant to Paragraph 2(a) shall be in the form of an underwritten
offering.  GEPT shall select the book-running managing Underwriter in
connection with such offering and any additional investment bankers and
managers to be used in connection with the offering.

                 3.  Piggy-Back Registration.  If at any time prior to March 1,
2000 the Company proposes to file a registration statement under the Securities
Act (other than on Form S-4 or S-8, or any substitute form that may be adopted
by the SEC, or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing shareholders) with respect to a
public offering of Common Stock by the Company (or with respect to an offering
by GEPT pursuant to a demand registration under Paragraph 2(a) hereof), then
the Company shall offer the Stockholders (or, in the case of a demand
registration by GEPT, the Company shall have the right, and shall offer the
other Stockholders) the right to register shares of Common Stock for sale in
such offering on the same terms as shares to be sold by the Company (or by
GEPT, provided that in the case of an offering by GEPT, no other Stockholder
shall be entitled to include in the offering a larger percent of the shares
held by it than the percent of GEPT's shares included by GEPT in the offering
except with GEPT's written consent) (a "Piggyback Registration"), subject to
the discretion of the managing Underwriter to limit or exclude shares of Common
Stock from the offering if it determines that the inclusion thereof would
adversely affect the marketing of the securities to be sold by the Company (or
GEPT) therein; provided, however, that if the managing Underwriter shall impose
a limit on the number of shares so included, the number of shares to be
included by the Company shall be reduced first, if necessary to zero, and
thereafter the number of shares to be included by any Participating Stockholder
shall be reduced proportionately based on the number of shares held by the
Participating Stockholders respectively.  There shall be no limitation on the
number of registration requests which may be made pursuant to this Paragraph 3.





                                       3
<PAGE>   4
                 4.  Expenses.  The Company shall pay all the expenses incurred
in connection with the registration of Common Stock pursuant to a Demand
Registration under Paragraph 2 hereof or a Piggyback Registration under
Paragraph 3 hereof.  The expenses described in the preceding sentence shall
include, but not be limited to, all registration and filing fees, printing
expenses, and reasonable fees, expenses and disbursements of counsel and
accountants for the Company, fees and expenses (including reasonable counsel
fees) incurred in connection with complying with state securities or "blue sky"
laws, fees of the National Association of Securities Dealers, Inc., fees of a
national securities exchange or the Nasdaq National Market, transfer taxes,
fees of transfer agents and registrars, costs of securities act liability
insurance if obtained by the Company and reasonable fees and disbursements of
one counsel for the Participating Stockholder or Stockholders (but not
including underwriting discounts and selling commissions applicable to the sale
of the Common Stock), whether or not any such registration statement becomes
effective, to the extent permitted by applicable law.

                 5.  Registration Procedures.  Whenever the Company is required
to effect the registration of Common Stock pursuant to Paragraph 2 or 3 the
Company will use its best efforts to effect the registration in accordance with
the intended method of disposition thereof as quickly as practicable, and in
connection with any such registration:

                 (a)  Filing of Registration Statement.  In connection with a
         registration pursuant to Paragraph 2, the Company will as
         expeditiously as possible, and within the period specified in such
         Paragraph 2, prepare and file with the Securities and Exchange
         Commission (the "SEC") a registration statement on any form for which
         the Company then qualifies or which counsel for the Company shall deem
         appropriate and which form shall be available for the sale of the
         Common Stock to be registered thereunder in accordance with the
         intended method of distribution thereof, and use its best efforts to
         cause such filed registration statement to become and remain effective
         for the period specified in Paragraph 2(a).

                 (b)  Filing of Amendments.  The Company shall file such
         amendments and supplements to the registration statement and the
         related prospectus and take such other action as may be necessary to
         keep the registration statement effective and to comply with the
         Securities Act with respect to the disposition of all securities
         covered by such registration statement.

                 (c)  Notice of Amendments.  At any time when a prospectus
         relating to the sale of Common Stock is required to be delivered under
         the Securities Act, the Company will immediately notify the
         Participating Stockholders of the occurrence of an event requiring the
         preparation of a supplement or amendment to such prospectus so that,
         as thereafter delivered to the purchasers of such Common Stock, such
         prospectus will





                                       4
<PAGE>   5
         not contain an untrue statement of a material fact or omit to state
         any material fact required to be stated therein or necessary to make
         the statements therein not misleading and promptly make available to
         the Participating Stockholders any such supplement or amendment.  The
         Participating Stockholders agree that upon receipt of any notice from
         the Company of the happening of any event of the kind described in the
         preceding sentence, the Participating Stockholders will forthwith
         discontinue the offer and sale of Common Stock pursuant to the
         registration statement covering such Common Stock until receipt of the
         copies of such supplemented or amended prospectus and, if so directed
         by the Company, the Participating Stockholders will deliver to the
         Company all copies, other than permanent file copies then in the
         possession of the Participating Stockholders, of the most recent
         prospectus covering such Common Stock at the time of receipt of such
         notice.  In the event that the Company shall give such notice, the
         Company shall extend the period during which such registration
         statement shall be maintained effective as provided in Paragraph 2(a)
         hereof by the number of days during the period from and including the
         date of the giving of such notice to the date when the Company shall
         make available to the Participating Stockholders such supplemented or
         amended prospectus.

                 (d)  Copies of Registration Statement.  The Company will
         furnish to the Participating Stockholders two copies each of the
         registration statement, each amendment and supplement thereto (in each
         case including all exhibits thereto and documents incorporated by
         reference therein), the prospectus included in such registration
         statement (including each preliminary prospectus).

                 (e)  Stop Orders.  After the filing of the registration
         statement, the Company will promptly notify the Participating
         Stockholders of any stop order issued or threatened by the SEC and
         will take all reasonable actions required to prevent the entry of such
         stop order or to remove it if entered.

                 (f)  Blue Sky.  In connection with a registration pursuant to
         Paragraph 2, the Company shall (i) take such action under the
         securities laws of such states as GEPT shall reasonably request and
         (ii) cause such Common Stock to be registered with or approved by such
         other governmental agencies or authorities as may be necessary by
         virtue of the business and operations of the Company; provided,
         however, that the Company shall not be required (1) to qualify to do
         business as a foreign corporation in any state where it would not
         otherwise be required to qualify but for this Paragraph 5(f), (2) to
         subject itself to taxation in any such state other than taxation
         arising with respect to the registration of securities or (3) to file
         any general consent to service of process in any state.





                                       5
<PAGE>   6
                 (g)  Further Assurances.  In connection with a registration
         pursuant to Paragraph 2, the Company will enter into customary
         agreements (including an underwriting agreement in form reasonably
         acceptable to the Agent) and take such other actions as are reasonably
         required in order to expedite or facilitate the disposition of the
         Common Stock.

                 (h)  Opinions and Comfort Letters.  On the effective date of a
         registration statement filed in connection with an underwritten
         offering, the Company will use its best efforts to furnish to the
         Participating Stockholders a signed counterpart, addressed to the
         Participating Stockholders, of (i) an opinion dated such date of
         counsel representing the Company for the purposes of such
         registration, stating that such registration statement has become
         effective under the Securities Act and that (A) to the best knowledge
         of such counsel, no stop order suspending the effectiveness thereof
         has been issued and no proceedings for that purpose have been
         instituted or are pending or contemplated under the Securities Act,
         (B) the registration statement, the related prospectus, and each
         amendment or supplement thereof, comply as to form in all material
         respects with the requirements of the Securities Act and the
         applicable rules and regulations of the Commission thereunder (except
         that such counsel need not express any opinion as to financial
         statements or financial or statistical information contained therein),
         (C) during the course of such counsel's participation in the
         preparation of the registration statement, no facts came to the
         attention of such counsel that caused such counsel to believe that the
         registration statement, the related prospectus, or any amendment or
         supplement thereof (other than the financial statements and financial
         and statistical information) includes any untrue statement of a
         material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading in the light of the circumstances then existing, and (D) to
         such other effects as may reasonably be requested by the Participating
         Stockholders, provided, however, in no event shall such counsel be
         requested to render any opinion to the Participating Stockholders not
         also requested by the managing Underwriter and (ii) a letter dated
         such date from the independent public accountants retained by the
         Company, addressed to the Participating Stockholders stating that they
         are independent public accountants within the meaning of the
         Securities Act and that, in the opinion of such accountants, the
         financial statements of the Company included in the registration
         statement or the prospectus, or any amendment or supplement thereof,
         comply as to the form in all material respects with the applicable
         accounting requirements of the Securities Act, and such letter shall
         additionally cover such other financial matters (including information
         as to the period ending no more than five business days prior to the
         date of such letter) with respect to the registration in respect of
         which such letter is being given as the Participating Stockholders may
         reasonably request; provided, however, in no event shall such
         accountants be requested to address any matter to the Participating
         Stockholders not also requested by the managing Underwriter.

                 (i)  Earnings Statement.  The Company will otherwise comply
         with all applicable rules and regulations of the SEC, and make
         available to its securityholders, as soon as reasonably practicable,
         an earnings statement covering a period of at least 12 months,
         beginning within three months after the effective date of the
         registration statement, which earnings statement shall satisfy the
         provisions of Section 11(a) of the Securities Act and Rule 158 of the
         SEC's regulations thereunder.





                                       6
<PAGE>   7
                 (j)  Securities Exchange Listing.  If and so long as the
         Common Stock is listed or admitted for trading on any national
         securities exchange or other national market system, the Company will,
         at its expense, obtain promptly and maintain the approval for listing
         or admission for trading on each such exchange or system of the shares
         of Common Stock held by the Stockholders.

                 (k)  Indemnification.  (i)  The Company shall indemnify and
         hold harmless the Participating Stockholders, each person who under
         the Securities Act or the Exchange Act is deemed a controlling person
         of the Participating Stockholders, and their respective shareholders,
         officers, directors, partners, trustees, employees and agents, against
         any losses, claims, damages, liabilities or actions to which the
         Participating Stockholders, their respective controlling persons, or
         their respective shareholders, officers, directors, partners,
         trustees, employees or agents, may become subject under the Securities
         Act or otherwise, insofar as such losses, claims, damages or
         liabilities (or actions in respect thereof) shall arise out of, or be
         based upon, any untrue or allegedly untrue statement of any material
         fact contained in the registration statement, any related prospectus
         or preliminary prospectus or any amendment or supplement to the
         registration statement or any prospectus or preliminary prospectus, or
         the omission or alleged omission to state therein a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading, and shall reimburse any legal or other
         expenses reasonably incurred by the Participating Stockholders, their
         respective controlling persons, and their respective shareholders,
         officers, directors, partners, trustees, employees and agents, in
         connection with investigating or defending against any such loss,
         claim, damage, liability or action; provided, however, that the
         Company shall not be liable to the Participating Stockholders, their
         respective controlling persons, or their respective shareholders,
         officers, directors, partners, trustees, employees or agents, for any
         losses, claims, damages, liabilities or actions insofar as the same
         shall arise out of or be based upon any such untrue statement or
         omission made in reliance upon and in conformity with written
         information furnished by the Participating Stockholders, their
         respective controlling persons, or by their respective shareholders,
         officers, directors, partners, trustees, employees or agents, seeking
         indemnification hereunder to the Company for use in the registration
         statement, prospectus, preliminary prospectus, amendment or
         supplement.





                                       7
<PAGE>   8
                 (ii)  Each Participating Stockholder shall similarly indemnify
         and hold harmless the Company, its controlling persons and their
         respective shareholders, officers, directors, partners, trustees,
         employees and agents, against any such losses, claims, damages,
         liabilities or actions but only insofar as the same shall arise out of
         or be based upon any untrue statement or omission made in reliance
         upon and in conformity with written information furnished by such
         Participating Stockholder to the Company for use in the registration
         statement, prospectus, preliminary prospectus, amendment or
         supplement; provided, however, that in no event shall any
         Participating's Stockholder liability under any provision of this
         Section 5 exceed the amount of proceeds received by such Participating
         Stockholder.

                 (iii)  Each party entitled to indemnification under this
         Paragraph 5(k) (the "Indemnified Party") shall give notice to the
         party required to provide indemnification (the "Indemnifying Party")
         promptly after such Indemnified Party has actual knowledge of any
         claim as to which indemnity may be sought, and shall permit the
         Indemnifying Party to assume the defense of any such claim or any
         litigation resulting therefrom, provided, that counsel for the
         Indemnifying Party, who shall conduct the defense of such claim or
         litigation, shall be approved by the Indemnified Party (whose approval
         shall not be unreasonably withheld); provided, further, that the
         failure of any Indemnified Party to give notice as provided herein
         shall not relieve the Indemnifying Party of its obligations under this
         Paragraph 5(k) except to the extent the Indemnifying Party is actually
         prejudiced thereby.  The Indemnified Party may participate in such
         defense at such party's expense; provided, however, that the
         Indemnifying Party shall pay such expense if representation of such
         Indemnified Party by the counsel retained by the Indemnifying Party
         would be inappropriate due to actual or potential differing interests
         between the Indemnified Party and any other party represented by such
         counsel in such proceeding.  No Indemnifying Party, in the defense of
         any such claim or litigation shall, except with the consent of each
         Indemnified Party, consent to entry of any judgment or enter into any
         settlement which does not (1) include as an unconditional term thereof
         the giving by the claimant or plaintiff to such Indemnified Party of a
         release from all liability in respect of such claim or litigation and
         (2) provide that such Indemnified Party does not admit any fault or
         guilt with respect to the subject matter of such claim or litigation;
         and no Indemnified Party shall consent to entry of any





                                       8
<PAGE>   9
         judgment or settle such claim or litigation without the prior written
         consent of the Indemnifying Party, which shall not be unreasonably
         withheld.

                 (l)  Contribution.  If the indemnification provided for herein
         is for any reason unavailable to any Indemnified Party in respect of
         any losses, claims, damages, liabilities or actions referred to
         herein, then each Indemnifying Party, in lieu of indemnifying such
         Indemnified Party, shall contribute to the amount paid or payable by
         such Indemnified Party as a result of such losses, claims, damages,
         liabilities or actions in such proportion as is appropriate to reflect
         the relative benefits from the offering of the securities received by,
         and the relative fault in connection with the statements or omissions
         which resulted in such losses, claims, damages, liabilities or actions
         of, said Indemnifying Party, as well as any other relevant equitable
         considerations.  The relative benefits received by a party shall be
         deemed to be in the same proportion as the total proceeds from the
         offering (net of underwriting discounts and commissions but before
         deducting expenses) or underwriting discounts and commissions, as the
         case may be, received by such party bear to the total proceeds from
         the offering received by all parties (including underwriting discounts
         and commissions by the Underwriters).  The relative fault of a party
         shall be determined by reference to, among other things, whether the
         untrue or alleged untrue statement of a material fact or the omission
         or alleged omission to state a material fact relates to information
         supplied by such party and the parties' relative intent, knowledge,
         access to information and opportunity to correct or prevent such
         statement or omission.


                 (m)  Information.  In connection with any registration
         hereunder, each Participating Stockholder shall furnish to the Company
         such information regarding such Participating Stockholder and the plan
         of distribution proposed by such Participating Stockholder as the
         Company may reasonably request in writing or as shall be legally
         required in connection with any registration, qualification or
         compliance referred to herein.

                 (n)  Participating Stockholder Action.  All actions taken by
         the Participating Stockholders in connection with a registration
         pursuant to Paragraph 3 shall be authorized by the holders of a
         majority of the shares of Common Stock held by Participating
         Stockholders and included in the registration.





                                       9
<PAGE>   10
                 6.  Reports Under the Exchange Act.  With a view to making
available to the Stockholders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit the Stockholders to sell Common Stock to the public without registration
or pursuant to a registration on Form S-3, the Company agrees to:

                 (a)  file any reports and other documents required to be filed
         by it under the Securities Act and the Exchange Act in a timely
         manner; and

                 (b)  furnish to the Stockholders forthwith upon request (i) a
         written statement by the Company as to whether or not it has complied
         with the reporting requirements of SEC Rule 144, the Securities Act
         and the Exchange Act, or as to whether it qualifies as a registrant
         whose securities may be resold pursuant to Form S-3 (at any time after
         it so qualifies), and (ii) such other information as may be reasonably
         requested in availing the Stockholders of any rule or regulation of
         the SEC which permits the selling of any such securities without
         registration or pursuant to such form.

                 7.  Representations and Warranties.  (a) The Company, GEPT and
each Stockholder which is not an individual represents as to itself as follows:

                 (i)  It is duly organized, validly existing and in good
         standing under the laws of the jurisdiction of its organization, and
         it has full power and authority and has taken all action now necessary
         to execute and deliver this Registration Rights Agreement, to fulfill
         its obligations hereunder, and to consummate the transactions
         contemplated hereby.

                 (ii)  The making and performance by it of this Registration
         Rights Agreement and all documents required to be executed and
         delivered by it hereunder do not and will not (i) violate any law or
         regulation of the jurisdiction of its organization or any other law or
         regulation applicable to it, any provision of its organizational
         documents or any order or judgment of any court or governmental
         authority applicable to it or (ii) result in a breach of, or
         constitute a default under, require any consent under or result in the
         creation of any lien upon any of its property or assets under, any
         agreement or other instrument to which it is a party or by which it or
         any of its property or assets is bound.





                                       10
<PAGE>   11
                 (iii)  This Registration Rights Agreement has been duly
         authorized, executed and delivered by it and constitutes its legal,
         valid and binding obligation, enforceable in accordance with its
         terms.


                 (b)      Each Stockholder who is an individual represents as 
follows:

                 (i)      The making and performance by him of this
Registration Rights Agreement and all documents required to be executed and
delivered by him hereunder do not and will not result in a breach of,
constitute a default under, or require any consent under, any agreement or
other instrument to which he is a party.

                 (ii)     This Registration Rights Agreement constitutes his
legal, valid and binding obligation, enforceable in accordance with its terms.

                 8.  Assignment of Registration Rights.  The right to cause the
Company to register the Common Stock may be assigned by GEPT in whole or in
part to any transferee or assignee of shares of Common Stock held by GEPT.
Within a reasonable time after such transfer or assignment, the Company shall
be given a written notice stating the name and address of the transferee or
assignee and identifying the Common Stock with respect to which such
registration rights are being assigned and the transferee or assignee shall
deliver to the Company a written instrument by which transferee or assignee
agrees to be bound by the obligations imposed upon the Stockholders by this
Registration Rights Agreement.  A failure to give written notice to the Company
as specified above shall not affect the validity of (or otherwise limit) any
such assignment by GEPT of its rights to cause the Company to register the
Common Stock.  No such assignment shall divest GEPT of its rights hereunder
with respect to any shares of Common Stock retained by it.  The other
Stockholders shall not be entitled to assign any of their rights hereunder.





                                       11
<PAGE>   12
                 9.  No Inconsistent Agreements.  The Company will not
hereafter enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Stockholders in this Agreement.

                 10.  Participation in Underwritten Registrations.  Each
Stockholder agrees that as a condition of its participation in any underwritten
registration hereunder it shall (a) agree to sell its securities on the basis
provided in any underwriting arrangements entered into in accordance with this
Agreement , and (b) complete and execute all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

                 11.  Amendment of Registration Rights.  Any provision of these
registration rights may be amended, supplemented or modified (either generally
or in a particular instance and either retroactively or prospectively), only by
a written instrument duly executed by or on behalf of each of the Company and
GEPT.

                 12.  Miscellaneous.

                 (a)  Governing Law.  THIS REGISTRATION RIGHTS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

                 (b)  Entire Agreement.  This Registration Rights Agreement
constitutes the full and entire understanding and agreement among the parties
with regard to the subject matter hereof, and supersede any and all prior
discussions or agreements between the parties with respect to the subject
matter hereof.

                 (c)  Notices, etc.  All notices and other communications
required or permitted hereunder (collectively, "notices") shall be in writing
and shall be mailed by first-class mail, postage prepaid, or sent by telecopy,
or sent by private overnight express courier, such as Federal Express, or
delivered either by hand or by messenger, addressed to the party at the address
or telecopy number set forth below or at such other address or telecopy number
as such party shall have furnished to the other party in writing:





                                       12
<PAGE>   13
                 If to the Company:

                 IXC Communications, Inc.
                 5000 Plaza on the Lake
                 Suite 200
                 Austin, Texas  78746
                 Attn:  John J. Willingham
                 Telecopy No:


                 with a copy to:

                 Riordan & McKinzie
                 695 Town Center Drive
                 Suite 1500
                 Costa Mesa, CA  92626
                 Attn:  Michael P. Whalen, Esq.
                 Telecopy No:  714-549-3244


                 If to GEPT:

                 c/o GE Investment Corporation
                 3003 Summer Street
                 6th Floor
                 Stamford, CT  06905
                 Attn:  Michael M. Pastore, Esq.
                 Telecopy No.:   (203) 326-4177


                 with a copy to:

                 Dewey Ballantine
                 1301 Avenue of the Americas
                 New York, NY  10019
                 Attention:  E. Ann Gill, Esq.
                 Telecopy:   (212) 259-6333


                 If to any other Stockholder, to the address set forth for such
Stockholder on Schedule 1.

All notices shall be deemed to be properly given or made upon actual delivery.

                 (d)  Recapitalizations, Exchanges, etc., Affecting the
Company's Capital Stock.  The provisions of this Registration Rights Agreement
shall apply to the full extent set forth herein with respect to any and all
shares of capital stock of the Company or any successor or assignee of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in





                                       13
<PAGE>   14
exchange for or in substitution of, any Common Stock owned by the Stockholders.

                 (e)      Lock Out Period.  During the period of 90 days after
the effectiveness of any registration statement requested by GEPT pursuant to
Section 2 hereof, none of the other Stockholders shall initiate or participate
in any public offering of shares of IXC Common Stock.

                 (f)  Successors and Assigns.  This Registration Rights
Agreement is binding upon, and inures to the benefit of and is enforceable by
the parties hereto and their respective successors and permitted assigns.

                 (g)  Titles and Subtitles.  The titles of the Paragraphs and
subparagraphs of this Registration Rights Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning or
construction of any provisions of this Registration Rights Agreement.

                 (h)  Invalid Provisions.  If any provision of this
Registration Rights Agreement is held to be illegal, invalid or unenforceable
under any present or future law (i) such provision will be fully severable,
(ii) this Registration Rights Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Registration Rights Agreement
will remain in full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom and (iv) in
lieu of such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Registration Rights Agreement a legal, valid
and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.

                 (i)  Remedies.  The parties hereto acknowledge that
irreparable damage would result if this Registration Rights Agreement is not
specifically enforced and that, therefore, the rights and obligations of the
parties under this Registration Rights Agreement may be enforced by a decree of
specific performance issued by a court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith.  Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Registration Rights Agreement or otherwise.

                 (j)  Counterparts.  This Registration Rights Agreement may be
executed in any number of counterparts, each of which shall be an original, all
of which together shall constitute one and the same instrument.





                                       14
<PAGE>   15
                 (k)      Effectiveness.  This Agreement shall be effective as
of the date it is executed and delivered by the Company and GEPT.  It shall be
effective as to each remaining Stockholder as of the date such Stockholder
executes and delivers it to the Company.

                 IN WITNESS WHEREOF, this Registration Rights Agreement has
been duly executed and delivered by of each party hereto as of the date first
above written.

                            IXC COMMUNICATIONS, INC.


                            By: /s/ JOHN J. WILLINGHAM
                                --------------------------------
                            Name: John J. Willingham
                                  ------------------------------
                            Title: Senior Vice President
                                   -----------------------------
                                   

                            TRUSTEES OF GENERAL ELECTRIC
                            PENSION TRUST, a New York
                            common law trust



                            By: /s/ MICHAEL M. PASTORE
                                --------------------------------
                            Name: Michael M. Pastore
                                  ------------------------------
                            Title: Vice President
                                   -----------------------------



                            ------------------------------------
                            RICHARD D. IRWIN


                            GRUMMAN HILL INVESTMENTS, L.P.


                            By:
                                --------------------------------
                            Name:
                                  ------------------------------
                            Title:
                                   -----------------------------



                                       15
<PAGE>   16

                                       ---------------------------------------
                                       RALPH J. SWETT


                                       ---------------------------------------
                                       KENNETH F. HINTHER


                                       ---------------------------------------
                                       JOHN R. FLEMING


                                       ---------------------------------------
                                       JOHN J. WILLINGHAM


                                       TRUST FOR THE RIORDAN & MCKINZIE
                                       PROFIT SHARING AND SAVINGS PLAN
                                       FOR THE BENEFIT OF CARL W. MCKINZIE


                                       ---------------------------------------
                                       By:
                                       Name:


                                       ---------------------------------------
                                       PHILLIP L. WILLIAMS


                                       ---------------------------------------
                                       JOE C. CULP





                                       16
<PAGE>   17
                                                                     Schedule 1
                                                                     ----------


                               Other Stockholders
                               ------------------


Ralph J. Swett
Kenneth F. Hinther
John R. Fleming
John J. Willingham
 5000 Plaza on the Lake
 Suite 200
 Austin, TX  78746


Richard D. Irwin
 191 Elm Street
 New Canaan, CT  06840


Trust for the Riordan & McKinzie
Profit Sharing and Savings Plan
for the benefit of Carl W. McKinzie
 300 S. Grand Avenue
 29th Floor
 Los Angeles, CA  90071


Phillip L. Williams
 633 West Fifth Street
 Suite 4000
 Los Angeles, CA  90071-2007


Grumman Hill Investments, L.P.
 191 Elm Street
 New Canaan, CT  06840





                                       17

<PAGE>   1
                                                                   EXHIBIT 10.3


                            IXC COMMUNICATIONS, INC.
                      AMENDED AND RESTATED 1994 STOCK PLAN


        1.       PURPOSE.  The purpose of the IXC Communications, Inc. Amended
and Restated 1994 Stock Plan ("Plan") is to promote the interests of IXC
Communications, Inc. ("Company") and its shareholders by enabling it to offer
grants of stock to better attract, retain, and reward employees, directors, and
other persons providing services to it and, accordingly, to strengthen the
mutuality of interests between those persons and the Company's shareholders by
providing those persons with a proprietary interest in pursuing the Company's
long-term growth and financial success.

        2.       DEFINITIONS.  For purposes of this Plan, the following terms
shall have the meanings set forth below.

                 (a)     "Board" means the Board of Directors of IXC 
        Communications, Inc.

                 (b)     "Code" means the Internal Revenue Code of 1986, as 
        amended.  Reference to any specific section of the Code shall be 
        deemed to be a reference to any successor provision.

                 (c)     "Committee" means the administrative Committee of 
        this Plan that is provided in Section 3 below.

                 (d)     "Common Stock" means the common stock of the Company 
        or any security issued in substitution, exchange, or in lieu thereof.

                 (e)     "Company" means IXC Communications, Inc., a Delaware 
        corporation, or any successor corporation.  Except where the context 
        indicates otherwise, the term "Company" shall include its Parent and 
        Subsidiaries.

                 (f)     "Disabled" means permanent and total disability, as 
        defined in Code Section 22(e)(3).

                 (g)     "Exchange Act" means the Securities Exchange Act of 
        1934.

                 (h)     "Fair Market Value" of Common Stock shall be 
        determined in accordance with the following rules.

                         (i)      If the Common Stock is admitted to trading 
                or listed on a national securities exchange, the closing price
                for any day shall be the last reported sale price regular way,
                or if no such reported sale takes place on that day, the 
                average of the last reported bid and ask prices regular way, in
                either case on the principal national securities exchange on 
                which the Common Stock is admitted to trading or listed.



<PAGE>   2
                          (ii)    If not listed or admitted to trading on any
                 national securities exchange, the last sale price on that day
                 of the Common Stock reported on the Nasdaq National Market of
                 the Nasdaq Stock Market ("Nasdaq National Market") or, if no
                 such reported sale takes place on that day, the average of the
                 closing bid and ask prices on that day.

                          (iii)   If not included in the Nasdaq National
                 Market, the average of the closing bid and ask prices of the
                 Common Stock on that day reported by the Nasdaq Stock Market,
                 or any comparable system on that day.

                          (iv)    If the Common Stock is not included in the
                 Nasdaq Stock Market or any comparable system, the closing bid
                 and ask prices on that day as furnished by any member of the
                 National Association of Securities Dealers, Inc. selected from
                 time to time by the Company for that purpose.

         In the case of an Incentive Stock Option, "Fair Market Value" shall be
         determined without reference to any restriction other than one that,
         by its terms, will never lapse.

                 (i)      "Incentive Stock Option" means an option to purchase
         Common Stock that is intended to be an incentive stock option within
         the meaning of Section 422 of the Code.

                 (j)      "Insider" means a person who is subject to Section 16
         of the Exchange Act.

                 (k)      "Non-Qualified Stock Option" means any option to
         purchase Common Stock that is not an Incentive Stock Option.

                 (l)      "Option" means an Incentive Stock Option or a
         Non-Qualified Stock Option.

                 (m)      "Parent" shall mean any corporation (other than the
         Company) in an unbroken chain of corporations ending with the Company
         if each of the corporations (other than the Company) owns stock
         possessing fifty percent (50%) or more of the total combined voting
         power of all classes of stock in one of the other corporations in the
         chain, as determined in accordance with the rules of Code Section
         424(e).

                 (n)      "Participant" means a person who was been granted an
         Option or Restricted Stock.

                 (o)      "Plan" means this IXC Communications, Inc. Amended
         and Restated 1994 Stock Plan, as it may be amended from time to time.


                                       -2-

<PAGE>   3
                 (p)      "Restricted Stock" means shares of Common Stock
         issued under Section 8 below that are subject to restrictions upon
         assignment or alienation prior to vesting.

                 (q)      "Severance" means, with respect to a Participant, the
         termination of the Participant's provision of services to the Company
         as an employee, director, or independent contractor, whether by reason
         of death, disability, or any other reason.  For purposes of
         determining the exercisability of an Incentive Stock Option, a
         Participant who is on a leave of absence that exceeds ninety (90) days
         will be considered to have incurred a Severance on the ninety-first
         (91st) day of the leave of absence, unless the Participant's rights to
         reemployment are guaranteed by statute or contract.  However, a
         Participant will not be considered to have incurred a Severance
         because of a transfer of employment between the Company and a
         Subsidiary or Parent (or vice versa).

                 (r)      "Subsidiary" means any corporation or entity in which
         the Company, directly or indirectly, controls fifty percent (50%) or
         more of the total voting power of all classes of its stock having
         voting power, as determined in accordance with the rules of Code
         Section 424(f).

                 (s)      "Ten Percent Shareholder" means any person who owns
         (after taking into account the constructive ownership rules of Section
         424(d) of the Code) more than ten percent (10%) of the stock of the
         IXC Communications, Inc. or of any of its Parents or Subsidiaries.

         3.      ADMINISTRATION.

                 (a)      This Plan shall be administered by a Committee
         appointed by the Board.  The Board may remove members from, or add
         members to, the Committee at any time.  To the extent possible and
         advisable, the Committee shall be composed of individuals that satisfy
         Rule 16b-3 under the Exchange Act and Code Section 162(m).

                 (b)      The Committee may conduct its meetings in person or
         by telephone.  A majority of the members of the Committee shall
         constitute a quorum, and any action shall constitute the action of the
         Committee if it is authorized by:

                          (i)     A majority of the members present at any
                 meeting conducted in accordance with the Company's bylaws; or

                          (ii)    The unanimous consent of all of the members
                 in writing without a meeting.

                 (c)      The Committee is authorized to interpret this Plan
         and to adopt rules and procedures relating to the administration of
         this Plan.  All actions of the Committee in connection with the
         interpretation and administration of this Plan shall be binding upon
         all parties.


                                       -3-


<PAGE>   4
                 (d)      Subject to the limitations of Sections 10 and 13 
         below, the Committee is expressly authorized to make such 
         modifications to this Plan and the grants of Restricted Stock and 
         Options hereunder as are necessary to effectuate the intent of this 
         Plan as a result of any changes in the tax, accounting, or securities
         laws treatment of Participants and the Plan.

                 (e)      The Committee may delegate its responsibilities to
         others under such conditions and limitations as it may prescribe,
         except that the Committee may not delegate its authority with regard
         to the granting of Options or Restricted Stock to Insiders.

         4.      DURATION OF PLAN.

                 (a)      The effective date of this Plan shall be November 1,
         1994.

                 (b)      In the event that this Plan is not so approved, this
         Plan shall terminate and any Options granted under this Plan shall be
         void.

                 (c)      This Plan shall terminate on October 31, 2003, except
         with respect to Options then outstanding.

         5.      NUMBER OF SHARES.

                 (a)      The aggregate number of shares of Common Stock which
         may be issued pursuant to this Plan shall be five hundred thousand
         (500,000).  This aggregate number may be adjusted from time to time as
         set forth in Section 12 below.  The maximum number of shares that may
         be issued to a single Participant is one hundred thousand (100,000).

                 (b)      Upon the expiration or termination of an outstanding
         Option which shall not have been exercised in full, the shares of
         Common Stock remaining unissued under the Option shall again become
         available for use under the Plan.

                 (c)      Upon the forfeiture of shares of Restricted Stock,
         the forfeited shares of Common Stock shall again become available for
         use under the Plan.

                 (d)      The payment of part or all of the exercise price of
         an Option in the form of Common Stock shall not be considered to
         reduce the number of shares issuable upon the exercise of the Option
         for purposes of determining the maximum number of shares that may be
         issued under the Plan.



                                       -4-


<PAGE>   5
         6.      ELIGIBILITY.

                 (a)      Persons eligible for Options under this Plan shall
         consist of employees, directors, and other persons providing services
         to the Company.  However, Incentive Stock Options may only be granted
         to employees.

                 (b)      In the event that the Company acquires another
         entity, the Committee may authorize the issuance of Options
         ("Substitute Options") to the individuals performing services for the
         acquired entity in substitution of stock options previously granted to
         those individuals in connection with their performance of services for
         such entity upon such terms and conditions as the Committee shall
         determine, taking into account the limitations of Code Section 424(a)
         in the case of a Substitute Option that is intended to be an Incentive
         Stock Option.

         7.      FORM OF OPTIONS.

                 (a)      Options shall be granted under this Plan on such
         terms and in such form as the Committee may approve, which shall not
         be inconsistent with the provisions of this Plan.

                 (b)      The exercise price per share of Common Stock
         purchasable under an Option shall be set forth in the Option, which in
         all cases shall be at least equal to the Fair Market Value of the
         Common Stock on the date of the grant.

                 (c)      The exercise price of an Incentive Stock Option,
         determined on the date of the grant, shall be no less than one hundred
         ten percent (110%) of the Fair Market Value of the Common Stock in the
         case of a Ten Percent Shareholder.

         8.      EXERCISE OF OPTIONS.

                 (a)      An Option shall be exercisable at such time or times
         and be subject to such terms and conditions as may be set forth in the
         Option.

                 (b)      The aggregate Fair Market Value (determined as of the
         date of grant) of the number of shares of Common Stock with respect to
         which Incentive Stock Options are exercisable for the first time by a
         Participant during any calendar year shall not exceed one hundred
         thousand dollars ($100,000) or such other limit as may be required by
         Section 422 of the Code.

                 (c)      Options shall only be exercisable for whole numbers
         of shares.

                 (d)      Options are exercised by payment of the full amount
         of the purchase price to the Company.



                                       -5-



<PAGE>   6
                          (i)     The payment shall be in the form of cash or 
                 such other forms of consideration as the Committee shall deem
                 acceptable, such as the surrender of outstanding shares of 
                 Common Stock owned by the Participant or by withholding shares
                 that would otherwise be issued upon the exercise of the Option.

                          (ii)    If the payment is made by means of the 
                 surrender of Restricted Stock, a number of shares issued upon
                 the exercise of the Option equal to the number of shares of 
                 Restricted Stock surrendered shall be subject to the same
                 restrictions as the Restricted Stock that was surrendered.

                          (iii)   After giving due considerations of the 
                 consequences under Rule 16b-3 under the Exchange Act and 
                 under the Code, the Committee may also authorize the exercise
                 of Options by the delivery to the Company or its designated 
                 agent of an irrevocable written notice of exercise form 
                 together with irrevocable instructions to a broker-dealer to 
                 sell or margin a sufficient portion of the shares of Common 
                 Stock and to deliver the sale or margin loan proceeds directly
                 to the Company to pay the exercise price of the Option.

         9.      RESTRICTED STOCK.

                 (a)      The Committee may issue grants of Restricted Stock,
         upon such terms and conditions as it may deem appropriate, which need
         not be the same for each such grant.

                 (b)      Restricted Stock may not be sold to Participants for
         less than Fair Market Value.

                 (c)      A Participant shall not have a vested right to the
         shares subject to the grant of Restricted Stock until satisfaction of
         the vesting requirements specified in the grant.  The Participant may
         not assign or alienate the Participant's interest in the shares of
         Restricted Stock prior to vesting.

                 (d)      The following rules apply with respect to events that
         occur prior to the date on which the Participant obtains a vested
         right to the Restricted Stock.

                          (i)     Stock dividends, shares resulting from stock
                 splits, etc. that are issued with respect to the shares
                 covered by a grant of Restricted Stock shall be treated as
                 additional shares received under the grant of Restricted
                 Stock.

                          (ii)    Cash dividends constitute taxable
                 compensation to the Participant that is deductible by the 
                 Company.
                 
                 
                                       -6-


<PAGE>   7
         10.     MODIFICATION OF OPTIONS.

                 (a)      The Committee may modify an existing Option,
         including the right to:

                          (i)     Accelerate the right to exercise it;

                          (ii)    Extend or renew it; or

                          (iii)   Cancel it and issue a new Option.

         However, no modification may be made to an Option that would impair
         the rights of the Participant holding the Option without the
         Participant's consent.  Similar modifications can be made to grants of
         Restricted Stock.

                 (b)      Whether a modification of an existing Incentive Stock
         Option will be treated as the issuance of a new Incentive Stock Option
         will be determined in accordance with the rules of Code Section
         424(h).

                 (c)      Whether a modification of an existing grant of
         Restricted Stock or of an Option granted to an Insider will be treated
         as a new grant will be determined in accordance with Rule 16b-3 under
         the Exchange Act.

         11.     TERMINATION OF OPTIONS.

                 (a)      Except to the extent the terms of an Option require
         its prior termination, each Option shall terminate on the earliest of
         the following dates.

                          (i)      The date which is ten (10) years from the
                 date on which the Option is granted or five (5) years in the
                 case of an Incentive Stock Option granted to a Ten Percent
                 Shareholder.

                          (ii)     The date which is one (1) year from the date
                 of the Severance of the Participant to whom the Option was
                 granted, if the Participant was Disabled at the time of
                 Severance.

                          (iii)    The date which is one (1) year from the date
                 of the Severance of the Participant to whom the Option was
                 granted, if the Participant's death occurs:

                                  (A)      While the Participant is employed by
                           the Company; or

                                  (B)      Within three (3) months following
                           the Participant's Severance.


                                       -7-



<PAGE>   8
                          (iv)    In the case of any Severance other than one
                 described in Subparagraphs (ii) or (iii) above, the date that
                 is three (3) months from the date of the Participant's
                 Severance.

         12.     NON-TRANSFERABILITY OF OPTIONS.

                 (a)      No Option under this Plan shall be assignable or
         transferable except by will or the laws of descent and distribution.


                 (b)      Grants of Restricted Stock shall be subject to such
         restrictions on transferability as may be imposed in such grants.

         13.     ADJUSTMENTS

                 (a)      In the event of any change in the capitalization of
         the Company affecting its Common Stock (e.g., a stock split, reverse
         stock split, stock dividend, recapitalization, combination, or
         reclassification), the Committee shall authorize such adjustments as
         it may deem appropriate with respect to:

                          (i)     The aggregate number of shares of Common
                   Stock that may be issued under this Plan;

                          (ii)    The number of shares of Common Stock covered
                   by each outstanding Option; and

                          (iii)   The exercise price per share in respect of 
                   each outstanding Option.

                 (b)      The Committee may also make such adjustments in the
         event of a spin-off or other distribution) of Company assets to
         shareholders (other than normal cash dividends.

         14.     AMENDMENT AND TERMINATION.

                 (a)      The Board may at any time amend or terminate this
         Plan.  However, no modification may be made to the Plan that would
         impair the rights of the Participant holding an Option without the
         Participant's consent.

                 (b)      Without the approval of the majority of the
         shareholders of the Company, the Board may not amend the provisions of
         this Plan regarding:

                          (i)     The class of individuals entitled to receive
                 Incentive Stock Options; or



                                       -8-


<PAGE>   9
                          (ii)    The aggregate number of shares of Common
                 Stock that may be issued under the Plan, except as provided in
                 Section 12 above.

                 (c)      Except as may otherwise be permitted under Rule 16b-3
         under the Exchange Act, no amendment to the Plan may be adopted
         without the approval of the shareholders that would materially:

                          (i)     Increase the number of shares that may be
                 issued to Insiders;

                          (ii)    Increase the benefits accruing to Insiders;
                 or

                          (iii)   Modify the requirements for Insiders to
                 participate.

         15.     TAX WITHHOLDING.

                 (a)      The Company shall have the right to take such actions
         as may be necessary to satisfy its tax withholding obligations
         relating to the operation of this Plan.

                 (b)      If Common Stock that was surrendered by the
         Participant is used to satisfy the Company's tax withholding
         obligations, the stock shall be valued based on its Fair Market Value
         when the tax withholding is required to be made.

         16.     NO ADDITIONAL RIGHTS.

                 (a)      Neither the adoption of this Plan nor the granting
         (or exercise) of any Option or Restricted Stock shall:

                          (i)     Affect or restrict in any way the power of
                 the Company to undertake any corporate action otherwise
                 permitted under applicable law; or

                          (ii)    Confer upon any Participant the right to
                 continue performing services for the Company, nor shall it
                 interfere in any way with the right of the Company to
                 terminate the services of any Participant at any time, with or
                 without cause.

                 (b)      No Participant shall have any rights as a shareholder
         with respect to any shares covered by an Option granted to the
         Participant or subject to a grant of Restricted Stock until the date a
         certificate for such shares has been issued to the Participant.

         17.     SECURITIES LAW RESTRICTIONS.

                 (a)      No shares of Common Stock shall be issued under this
         Plan unless the Committee shall be satisfied that the issuance will be
         in compliance with applicable federal and state securities laws.




                                       -9-

<PAGE>   10
                 (b)      The Committee may require certain investment (or
         other) representations and undertakings by the Participant (or other
         person exercising an Option or purchasing Restricted Stock by reason
         of the death of the Participant) in order to comply with applicable
         law.

                 (c)      Certificates for shares of Common Stock delivered
         under this Plan may be subject to such restrictions as the Committee
         may deem advisable.  The Committee may cause a legend to be placed on
         the certificates to refer to these restrictions.

         18.     INDEMNIFICATION.  To the maximum extent permitted by law, the
Company shall indemnify each member of the Board and of the Committee, as well
as any other employee of the Company with duties under this Plan, against
expenses (including any amount paid in settlement) reasonably incurred by the
individual in connection with any claims against him or her by reason of the
performance of the individual's duties under this Plan, unless the losses are
due to the individual's gross negligence or lack of good faith.

         19.     GOVERNING LAW.  This Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware.



                                          IXC COMMUNICATIONS, INC.,    
                                          A DELAWARE CORPORATION       
                                                                       
                                                                       
                                          BY: /s/ John J. Willingham
                                              --------------------------------
                                                                         
                                          ITS: Senior Vice President and
                                                Chief Financial Officer
                                               -------------------------------
                                                                               
                                          DATE: June 4, 1996
                                                ------------------------------
                                                                              



                                       -10-



<PAGE>   1
                                                                  EXHIBIT 10.10


                            IXC COMMUNICATIONS, INC.
                                1996 STOCK PLAN


         1.      PURPOSE.  The purpose of the IXC Communications, Inc. 1996
Stock Plan ("Plan") is to promote the interests of IXC Communications, Inc.
("Company") and its shareholders by enabling it to offer grants of stock to
better attract, retain, and reward its employees, directors, and other persons
providing services to it and, accordingly, to strengthen the mutuality of
interests between those persons and the Company's shareholders by providing
those persons with a proprietary interest in pursuing the Company's long-term
growth and financial success.

         2.      DEFINITIONS.  For purposes of this Plan, the following terms
shall have the meanings set forth below.

                 (a)      "Board" means the Board of Directors of IXC
         Communications, Inc.

                 (b)      "Code" means the Internal Revenue Code of 1986, as
         amended.  Reference to any specific section of the Code shall be
         deemed to be a reference to any successor provision.

                 (c)      "Committee" means the administrative Committee of
         this Plan that is provided in Section 3 below.

                 (d)      "Common Stock" means the common stock of the Company
         or any security issued in substitution, exchange, or in lieu thereof.

                 (e)      "Company" means IXC Communications, Inc., a Delaware
         corporation, or any successor corporation.  Except where the context
         indicates otherwise, the term "Company" shall include its Parent and
         Subsidiaries.

                 (f)      "Disabled" means permanent and total disability, as
         defined in Code Section 22(e)(3).

                 (g)      "Exchange Act" means the Securities Exchange Act of
         1934.

                 (h)      "Fair Market Value" of Common Stock shall be
         determined in accordance with the following rules.

                          (i)     If the Common Stock is admitted to trading or
                 listed on a national securities exchange, the closing price
                 for any day shall be the last reported sale price regular way,
                 or if no such reported sale takes place on that day, the
                 average of the last reported bid and ask prices regular way,
                 in either case on the principal national securities exchange
                 on which the Common Stock is admitted to trading or listed.





<PAGE>   2
                          (ii)    If not listed or admitted to trading on any
                 national securities exchange, the last sale price on that day
                 of the Common Stock reported on the Nasdaq National Market of
                 the Nasdaq Stock Market ("Nasdaq National Market") or, if no
                 such reported sale takes place on that day, the average of the
                 closing bid and ask prices on that day.

                          (iii)   If not included in the Nasdaq National
                 Market, the average of the closing bid and ask prices of the
                 Common Stock on that day reported by the Nasdaq Stock Market,
                 or any comparable system on that day.

                          (iv)    If the Common Stock is not included in the
                 Nasdaq Stock Market or any comparable system, the closing bid
                 and ask prices on that day as furnished by any member of the
                 National Association of Securities Dealers, Inc. selected from
                 time to time by the Company for that purpose.

         In the case of an Incentive Stock Option, "Fair Market Value" shall be
         determined without reference to any restriction other than one that,
         by its terms, will never lapse.

                 (i)      "Incentive Stock Option" means an option to purchase
         Common Stock that is an incentive stock option within the meaning of
         Section 422 of the Code.

                 (j)      "Insider" means a person who is subject to Section 16
         of the Exchange Act.

                 (k)      "Non-Qualified Stock Option" means any option to
         purchase Common Stock that is not an Incentive Stock Option.

                 (l)      "Option" means an Incentive Stock Option or a
         Non-Qualified Stock Option.

                 (m)      "Parent" shall mean any corporation (other than the
         Company) in an unbroken chain of corporations ending with the Company
         if each of the corporations (other than the Company) owns stock
         possessing fifty percent (50%) or more of the total combined voting
         power of all classes of stock in one of the other corporations in the
         chain, as determined in accordance with the rules of Code Section
         424(e).

                 (n)      "Participant" means a person who was been granted an
         Option or Restricted Stock.

                 (o)      "Plan" means this IXC Communications, Inc. 1996 Stock
         Plan, as it may be amended from time to time.

                 (p)      "Restricted Stock" means shares of Common Stock
         issued under Section 9 below that are subject to restrictions upon
         assignment or alienation prior to vesting.





                                       -2-


<PAGE>   3
                 (q)      "Severance" means, with respect to a Participant, the
         termination of the Participant's provision of services to the Company
         as an employee, director, or independent contractor, whether by reason
         of death, disability, or any other reason.  For purposes of
         determining the exercisability of an Incentive Stock Option, a
         Participant who is on a leave of absence that exceeds ninety (90) days
         will be considered to have incurred a Severance on the ninety-first
         (91st) day of the leave of absence, unless the Participant's rights to
         reemployment are guaranteed by statute or contract.  However, a
         Participant will not be considered to have incurred a Severance
         because of a transfer of employment between the Company and a
         Subsidiary or Parent (or vice versa).

                 (r)      "Subsidiary" means any corporation or entity in which
         the Company, directly or indirectly, controls fifty percent (50%) or
         more of the total voting power of all classes of its stock having
         voting power, as determined in accordance with the rules of Code
         Section 424(f).

                 (s)      "Ten Percent Shareholder" means any person who owns
         (after taking into account the constructive ownership rules of Section
         424(d) of the Code) more than ten percent (10%) of the stock of the
         IXC Communications, Inc. or of any of its Parents or Subsidiaries.

         3.      ADMINISTRATION.

                 (a)      This Plan shall be administered by a Committee
         appointed by the Board.  The Board may remove members from, or add
         members to, the Committee at any time.  To the extent possible and
         advisable, the Committee shall be composed of individuals that satisfy
         Rule 16b-3 under the Exchange Act and Code Section 162(m).

                 (b)      The Committee may conduct its meetings in person or
         by telephone.  A majority of the members of the Committee shall
         constitute a quorum, and any action shall constitute the action of the
         Committee if it is authorized by:

                          (i)     A majority of the members present at any
                 meeting conducted in accordance with the Company's bylaws; or

                          (ii)    The unanimous consent of all of the members
                 in writing without a meeting.

                 (c)      The Committee is authorized to interpret this Plan
         and to adopt rules and procedures relating to the administration of
         this Plan.  All actions of the Committee in connection with the
         interpretation and administration of this Plan shall be binding upon
         all parties.





                                       -3-


<PAGE>   4
                 (d)      Subject to the limitations of Sections 10 and 14 
         below, the Committee is expressly authorized to make such 
         modifications to this Plan, and to the grants of Options and 
         Restricted Stock hereunder as are necessary to effectuate the intent 
         of this Plan as a result of any changes in the tax, accounting, or 
         securities laws treatment of Participants and the Plan.

                 (e)      The Committee may delegate its responsibilities to
         others under such conditions and limitations as it may prescribe,
         except that the Committee may not delegate its authority with regard
         to the granting of Options or Restricted Stock to Insiders.

         4.      DURATION OF PLAN.

                 (a)      This Plan shall be effective as of May 14, 1996,
         provided it is approved by the majority of the Company's shareholders,
         in accordance with the provisions of Code Section 422, within twelve
         (12) months before or after the date of its adoption by the Board of
         Directors.

                 (b)      In the event that this Plan is not so approved, this
         Plan shall terminate and any Options granted under this Plan shall be
         void.

                 (c)      This Plan shall terminate on May 13, 2006, except
         with respect to Options then outstanding.

         5.      NUMBER OF SHARES.

                 (a)      The aggregate number of shares of Common Stock which
         may be issued pursuant to this Plan shall be eight hundred
         seventy-five thousand (875,000).  This aggregate number may be
         adjusted from time to time as set forth in Section 13 below.  The
         maximum number of shares that may be issued to a single Participant is
         one hundred thousand (100,000).

                 (b)      Upon the expiration or termination of an outstanding
         Option which shall not have been exercised in full, the shares of
         Common Stock remaining unissued under the Option shall again become
         available for use under the Plan.

                 (c)      Upon the forfeiture of shares of Restricted Stock,
         the forfeited shares of Common Stock shall again become available for
         use under the Plan.

                 (d)      The payment of part or all of the exercise price of
         an Option in the form of surrendering Common Stock owned by the
         Participant shall not be considered to reduce the number of shares
         issuable upon the exercise of the Option for purposes of determining
         the maximum number of shares that may be issued under the Plan.





                                       -4-



<PAGE>   5
         6.      ELIGIBILITY.

                 (a)      Persons eligible for Options under this Plan shall
         consist of employees, directors, and other persons providing services
         to the Company.  However, Incentive Stock Options may only be granted
         to employees.

                 (b)      In the event that the Company acquires another
         entity, the Committee may authorize the issuance of Options
         ("Substitute Options") to the individuals performing services for the
         acquired entity in substitution of stock options previously granted to
         those individuals in connection with their performance of services for
         such entity upon such terms and conditions as the Committee shall
         determine, taking into account the limitations of Code Section 424(a)
         in the case of a Substitute Option that is intended to be an Incentive
         Stock Option.

         7.      FORM OF OPTIONS.

                 (a)      Options shall be granted under this Plan on such
         terms and in such form as the Committee may approve, which shall not
         be inconsistent with the provisions of this Plan.

                 (b)      The exercise price per share of Common Stock
         purchasable under an Option shall be set forth in the Option, which in
         all cases shall be at least equal to the Fair Market Value of the
         Common Stock on the date of the grant.

                 (c)      The exercise price of an Incentive Stock Option
         granted to a Ten Percent Shareholder shall be no less than one hundred
         ten percent (110%) of the Fair Market Value of the Common Stock on the
         date of the grant.

         8.      EXERCISE OF OPTIONS.

                 (a)      An Option shall be exercisable at such time or times
         and be subject to such terms and conditions as may be set forth in the
         Option.

                 (b)      The aggregate Fair Market Value (determined as of the
         date of grant) of the number of shares of Common Stock with respect to
         which Incentive Stock Options are exercisable for the first time by a
         Participant during any calendar year shall not exceed one hundred
         thousand dollars ($100,000) or such other limit as may be required by
         Section 422 of the Code.

                 (c)      Options shall only be exercisable for whole numbers
         of shares.

                 (d)      Options are exercised by payment of the full amount
         of the purchase price to the Company.





                                       -5-


<PAGE>   6
                          (i)     The payment shall be in the form of cash or
                 such other forms of consideration as the Committee shall deem
                 acceptable, such as the surrender of outstanding shares of
                 Common Stock owned by the Participant or by withholding shares
                 that would otherwise be issued upon the exercise of the
                 Option.

                          (ii)    If the payment is made by means of the
                 surrender of Restricted Stock, a number of shares issued upon
                 the exercise of the Option equal to the number of shares of
                 Restricted Stock surrendered shall be subject to the same
                 restrictions as the Restricted Stock that was surrendered.

                          (iii)   After giving due considerations of the
                 consequences under Rule 16b-3 under the Exchange Act and under
                 the Code, the Committee may also authorize the exercise of
                 Options by the delivery to the Company or its designated agent
                 of an irrevocable written notice of exercise form together
                 with irrevocable instructions to a broker-dealer to sell or
                 margin a sufficient portion of the shares of Common Stock and
                 to deliver the sale or margin loan proceeds directly to the
                 Company to pay the exercise price of the Option.

         9.      RESTRICTED STOCK.

                 (a)      The Committee may issue grants of Restricted Stock
         upon such terms and conditions as it may deem appropriate, which need
         not be the same for each such grant.

                 (b)      Restricted Stock may not be sold to Participants for
         less than Fair Market Value.

                 (c)      A Participant shall not have a vested right to the
         shares subject to the grant of Restricted Stock until satisfaction of
         the vesting requirements specified in the grant.  The Participant may
         not assign or alienate the Participant's interest in the shares of
         Restricted Stock prior to vesting.

                 (d)      The following rules apply with respect to events that
         occur prior to the date on which the Participant obtains a vested
         right to the Restricted Stock.

                          (i)     Stock dividends, shares resulting from stock
                 splits, etc. that are issued with respect to the shares
                 covered by a grant of Restricted Stock shall be treated as
                 additional shares received under the grant of Restricted
                 Stock.

                          (ii)    Cash dividends constitute taxable
                 compensation to the Participant that is deductible by the 
                 Company.






                                       -6-


<PAGE>   7
         10.     MODIFICATION OF GRANTS.

                 (a)      The Committee may modify an existing Option,
         including the right to:

                          (i)     Accelerate the right to exercise it;

                          (ii)    Extend or renew it; or

                          (iii)   Cancel it and issue a new Option.

         However, no modification may be made to an Option that would impair
         the rights of the Participant holding the Option without the
         Participant's consent.  Similar modifications can be made to grants of
         Restricted Stock.

                 (b)      Whether a modification of an existing Incentive Stock
         Option will be treated as the issuance of a new Incentive Stock Option
         will be determined in accordance with the rules of Code Section
         424(h).

                 (c)      Whether a modification of an existing grant of
         Restricted Stock or of an Option granted to an Insider will be treated
         as a new grant will be determined in accordance with Rule 16b-3 under
         the Exchange Act.

         11.     TERMINATION OF OPTIONS.

                 (a)      Except to the extent the terms of an Option require
         its prior termination, each Option shall terminate on the earliest of
         the following dates.

                          (i)     The date which is ten (10) years from the
                 date on which the Option is granted or five (5) years in the
                 case of an Incentive Stock Option granted to a Ten Percent
                 Shareholder.

                          (ii)    The date which is one (1) year from the date
                 of the Severance of the Participant to whom the Option was
                 granted, if the Participant was Disabled at the time of
                 Severance.

                          (iii)   The date which is one (1) year from the date
                 of the Severance of the Participant to whom the Option was
                 granted, if the Participant's death occurs:

                                  (A)      While the Participant is employed by
                          the Company; or

                                  (B)      Within three (3) months following
                          the Participant's Severance.

                          (iv)    In the case of any Severance other than one
                 described in Subparagraphs (ii) or (iii) above, the date that
                 is three (3) months from the date of the Participant's
                 Severance.





                                       -7-



<PAGE>   8
         12.     NON-TRANSFERABILITY OF GRANTS.

                 (a)      No Option under this Plan shall be assignable or
         transferable except by will or the laws of descent and distribution.


                 (b)      Grants of Restricted Stock shall be subject to such
         restrictions on transferability as may be imposed in such grants.

         13.     ADJUSTMENTS

                 (a)      In the event of any change in the capitalization of
         the Company affecting its Common Stock (e.g., a stock split, reverse
         stock split, stock dividend, recapitalization, combination, or
         reclassification), the Committee shall authorize such adjustments as
         it may deem appropriate with respect to:

                          (i)     The aggregate number of shares of Common
                   Stock that may be issued under this Plan;

                          (ii)    The number of shares of Common Stock covered
                   by each outstanding Option; and

                          (iii)   The exercise price per share in respect of
                   each outstanding Option.

                 (b)      The Committee may also make such adjustments in the
         event of a spin-off or other distribution of Company assets to
         shareholders, other than normal cash dividends.

         14.     AMENDMENT AND TERMINATION.

                 (a)      The Board may at any time amend or terminate this
         Plan.  However, no modification may be made to the Plan that would
         impair the rights of the Participant holding an Option without the
         Participant's consent.

                 (b)      Without the approval of the majority of the
         shareholders of the Company, the Board may not amend the provisions of
         this Plan regarding:

                          (i)     The class of individuals entitled to receive
                 Incentive Stock Options; or

                          (ii)    The aggregate number of shares of Common
                 Stock that may be issued under the Plan, except as provided in
                 Section 13 above.

                 (c)      Except as may otherwise be permitted under Rule 16b-3
          under the





                                       -8-


<PAGE>   9
         Exchange Act, no amendment to the Plan may be adopted without the 
         approval of the shareholders that would materially:

                          (i)     Increase the number of shares that may be
              issued to Insiders;

                          (ii)    Increase the benefits accruing to Insiders;
              or

                          (iii)   Modify the requirements for Insiders to
              participate.

         15.     NOTICE OF DISQUALIFYING DISPOSITION.  A Participant must
notify the Company if the Participant disposes of stock acquired pursuant to
the exercise of an Incentive Stock Option issued under the Plan prior to the
expiration of the holding periods required to qualify for long-term capital
gains treatment on the sale.

         16.     TAX WITHHOLDING.

                 (a)      The Company shall have the right to take such actions
         as may be necessary to satisfy its tax withholding obligations
         relating to the operation of this Plan.

                 (b)      If Common Stock that was surrendered by the
         Participant is used to satisfy the Company's tax withholding
         obligations, the stock shall be valued based on its Fair Market Value
         when the tax withholding is required to be made.

         17.     NO ADDITIONAL RIGHTS.

                 (a)      Neither the adoption of this Plan nor the granting
         (or exercise) of any Option or Restricted Stock shall:

                          (i)     Affect or restrict in any way the power of
                 the Company to undertake any corporate action otherwise
                 permitted under applicable law; or

                          (ii)    Confer upon any Participant the right to
                 continue performing services for the Company, nor shall it
                 interfere in any way with the right of the Company to
                 terminate the services of any Participant at any time, with or
                 without cause.

                 (b)      No Participant shall have any rights as a shareholder
         with respect to any shares covered by an Option granted to the
         Participant or subject to a grant of Restricted Stock until the date a
         certificate for such shares has been issued to the Participant.

         18.     SECURITIES LAW RESTRICTIONS.

                 (a)      No shares of Common Stock shall be issued under this
         Plan unless the





                                       -9-



<PAGE>   10
         Committee shall be satisfied that the issuance will be in compliance 
         with applicable federal and state securities laws.

                 (b)      The Committee may require certain investment (or
         other) representations and undertakings by the Participant (or other
         person exercising an Option or purchasing Restricted Stock by reason
         of the death of the Participant) in order to comply with applicable
         law.

                 (c)      Certificates for shares of Common Stock delivered
         under this Plan may be subject to such restrictions as the Committee
         may deem advisable.  The Committee may cause a legend to be placed on
         the certificates to refer to these restrictions.

         19.     INDEMNIFICATION.  To the maximum extent permitted by law, the
Company shall indemnify each member of the Board, as well as any other employee
of the Company with duties under this Plan, against expenses (including any
amount paid in settlement) reasonably incurred by the individual in connection
with any claims against him or her by reason of the performance of the
individual's duties under this Plan, unless the losses are due to the
individual's gross negligence or lack of good faith.

         20.     GOVERNING LAW.  This Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware.

                                         IXC COMMUNICATIONS, INC.,
                                         A DELAWARE CORPORATION

                                                                      
                                         BY: /s/ John J. Willingham
                                             --------------------------------

                                         ITS: Senior Vice President and
                                               Chief Financial Officer
                                              -------------------------------
                                          
                                         DATE: June 4, 1996
                                               ------------------------------
                                          



                                       -10-




<PAGE>   1
                                                                  EXHIBIT 10.12


                            IXC COMMUNICATIONS, INC.
                     OUTSIDE DIRECTORS' PHANTOM STOCK PLAN


         1.      PURPOSES.

                 (a)      The purpose of the IXC Communications, Inc. Outside
         Directors' Phantom Stock Plan ("Plan") is to provide stock-based cash
         compensation to certain Outside Directors of IXC Communications, Inc.
         ("Company") to better attract, retain, and reward those Outside
         Directors and, accordingly, to strengthen the mutuality of interests
         between those Outside Directors and the Company's stockholders by
         providing those Outside Directors with a proprietary interest in
         pursuing the Company's long-term growth and financial success.

                 (b)      It is expressly intended that the benefits under the
         Plan qualify for the exemption from the definition of "derivative
         security" under Rule 16a-1(c)(3) promulgated by the Securities and
         Exchange Commission under the Securities Exchange Act of 1934 by
         reason of being cash-only rights.

                 (c)      Because the Plan only benefits certain Outside
         Directors, it is intended that the Plan be exempt from the Employee
         Retirement Income Security Act of 1974 ("ERISA").

         2.      EFFECTIVE DATE.  The effective date ("Effective Date") of the
Plan shall be the date on which the Registration Statement for the initial
public offering of the Common Stock becomes effective.  Notwithstanding the
preceding sentence, if the initial public offering does not close, the Plan
shall automatically terminate retroactively to its Effective Date.

         3.      DEFINITIONS.  For purposes of this Plan, each of the following
terms shall have the meanings set forth below:

                 (a)      "Account" means the unfunded account established for
         each Participant.

                 (b)      "Annual Stockholders' Meeting" means the annual
         meeting of the Stockholders at which the members of the Board of
         Directors are elected.

                 (c)      "Board of Directors" means the Board of Directors of
         IXC Communications, Inc.

                 (d)      "Change in Control" means any of the following:

                          (i)     A sale of all or substantially all of the
                 assets of the Company;



<PAGE>   2
                          (ii)    A successful tender offer for greater than
                 fifty percent (50%) of the outstanding capital stock of the
                 Company; or

                          (iii)   A merger or consolidation of the Company with
                 any other corporation in which the parties who were
                 Stockholders immediately preceding such merger or
                 consolidation will not hold a majority of the outstanding
                 capital stock of the surviving corporation (whether or not the
                 Company is the surviving corporation) immediately after such
                 merger or consolidation.

                 (e)      "Class Year" means the period commencing on the
         Outside Director's Participation Commencement Date and ending on the
         date of the next Annual Stockholders' Meeting.

                 (f)      "Committee" means the committee designated in
         accordance with Section 4 below that is responsible for the
         administration of the Plan.

                 (g)      "Common Stock" means the common stock of the Company
         or any security issued in substitution, exchange, or in lieu thereof.

                 (h)      "Company" means IXC Communications, Inc., a Delaware
         corporation, or any successor corporation.

                 (i)      "Director" means a director of the Company.

                 (j)      "Disabled" means permanent and total disability, as
         defined in Internal Revenue Code Section 22(e)(3).

                 (k)      The "Fair Market Value" of Common Stock shall be
         determined in accordance with the general rules stated in Subparagraph
         (i) below and the special rules stated in Subparagraph (ii) below.

                          (i)     The following general rules shall apply for
                    valuation purposes.

                                  (A)      If the Common Stock is admitted to
                          trading or listed on a national securities exchange,
                          its value for any day shall be the last reported sale
                          price regular way, or if no such reported sale takes
                          place on that day, the average for the last reported
                          bid and ask prices regular way, in either case, on
                          the principal national securities exchange on which
                          the Common Stock is admitted to trading or listed.





                                     -2-

<PAGE>   3
                                  (B)      If the Common Stock is not admitted
                          to trading or listed on any national securities
                          exchange, its value for any day shall be the last
                          sale price on that day that is reported on the Nasdaq
                          National Market of the Nasdaq Stock Market ("Nasdaq
                          National Market") or, if no such reported sale takes
                          place on that day, the average of the closing bid and
                          ask prices on that day.

                                  (C)      If the Common Stock is not included
                          in the Nasdaq National Market, its value for any day
                          shall be the average of the closing bid and ask
                          prices of the Common Stock on that day reported by
                          the Nasdaq Stock Market, or any comparable system on
                          that day.

                                  (D)      If the Common Stock is not included
                          in the Nasdaq Stock Market or any comparable system,
                          its value for any day shall be the closing bid and
                          ask prices on that day as furnished by any member of
                          the National Association of Securities Dealers, Inc.
                          selected from time to time by the Company for that
                          purpose.

                          (ii)    Notwithstanding the provisions of
                 Subparagraph (i) above, the following special valuation rules 
                 shall apply.

                                  (A)      The Fair Market Value of the Common
                          Stock on the Effective Date shall be the price at
                          which the Company effects its initial underwritten
                          public offering of the Common Stock, as set forth on
                          the cover page to the final prospectus relating to
                          such offering under the caption "Price to the
                          Public."

                                  (B)      After the Effective Date, the Fair
                          Market Value of Common Stock for purposes of
                          calculating the number of shares that are deemed to
                          be purchased with a Participant's Fixed Credit under
                          Section 9 below or the amount of the cash benefit
                          payable to the Participant under Section 12 below,
                          the Fair Market Value of the Common Stock will be the
                          average value of the Common Stock for the five (5)
                          trading days preceding the relevant date.

                                  (C)      In the case of a Change in Control,
                          the Fair Market Value of the Common Stock shall be
                          the value of the consideration paid for it in the
                          transaction that effects the Change in Control.

                 (l)      "Fixed Credit" means the amount that is credited to
         the Participant's Account pursuant to the rules of Section 8 below
         for services rendered as an Outside Director.





                                       -3-

<PAGE>   4
                 (m)      "Inside Director" means a Director who is also an
         employee of the Company or of one of its subsidiaries.

                 (n)      "Outside Director" means a Director who is not an
         employee of the Company or of one of its subsidiaries.

                 (o)      "Participant" means an Outside Director who has an
         Account in the Plan.

                 (p)      "Participation Commencement Date" means the date that
         an Outside Director commences participation in the Plan, as determined
         in accordance with Section 5 below.  An Outside Director's
         Participation Commencement Date will be determined separately for each
         Class Year.

                 (q)      "Plan" means this IXC Communications, Inc. Outside
         Directors' Phantom Stock Plan, as it may be amended from time to time.

                 (r)      "Stockholders" mean the stockholders of the Company.

         4.      ADMINISTRATION.

                 (a)      This Plan shall be administered by a committee
         ("Committee") composed of Directors who (i) are Inside Directors and
         (ii) are Outside Directors but who have elected not to participate in
         the Plan in accordance with Section 5 below.  At the Effective Date,
         such Committee shall consist of Ralph J. Swett, an Inside Director, as
         well as Richard D. Irwin and Carl W. McKinzie, Outside Directors who
         have elected not to participate in the Plan.

                 (b)      The Committee may conduct its meetings in person or
         by telephone.  A majority of the members of the Committee shall
         constitute a quorum, and any action shall constitute the action of the
         Committee if it is authorized by:

                          (i)     A majority of the members present at any
                meeting conducted in accordance with the Company's bylaws; or

                          (ii)    The unanimous consent of all of the members
                in writing without a meeting.

                 (c)      The Committee is authorized to interpret this Plan
         and to adopt rules and procedures relating to the administration of
         this Plan.  All actions of the Committee in connection with the
         interpretation and administration of this Plan shall be binding upon
         all parties.





                                       -4-

<PAGE>   5
                 (d)      The Committee is expressly authorized to make such
         modifications to this Plan as are necessary to effectuate the intent
         of this Plan as a result of any changes in the tax, accounting, or
         securities laws treatment of the Participants, Plan, or the Company.

                 (e)      The Committee may delegate its responsibilities to
         others under such conditions and limitations as it may determine.

         5.      PARTICIPATION.

                 (a)      The persons eligible to participate in this Plan
         shall be limited to Outside Directors.

                 (b)      Each Outside Director shall automatically commence
         participation in the Plan upon his or her Participation Commencement
         Date, determined in accordance with the following rules.

                          (i)     In the case of an individual who was an
                 Outside Director on the Effective Date, the Participation
                 Commencement Date shall be the Effective Date.

                          (ii)    In the case of an individual who is elected
                 at a meeting of the Stockholders, the Participation
                 Commencement Date shall be the date of that meeting.

                          (iii)   In the case of an individual who is appointed
                 to the Board of Directors, the Participation Commencement Date
                 shall be the effective date of the appointment.

                          (iv)    In the case of an individual who ceases to be
                 an Inside Director and becomes an Outside Director, the
                 Participation Commencement Date shall be the date of the
                 termination of his or her employment with the Company or a
                 subsidiary.

                          (v)     In the case of an Outside Director who
                 revokes a prior waiver of participation, the Participation
                 Commencement Date shall be the effective date of the
                 revocation, determined in accordance with Section 6 below.

         6.      WAIVERS OF PARTICIPATION.

                 (a)      Outside Directors may elect not to participate in the
         Plan in accordance with such rules and procedures as the Committee may
         prescribe.  Outside Directors who elect not to participate in the Plan
         will not be granted any compensation in lieu of participation in this
         Plan.





                                       -5-

<PAGE>   6
                 (b)      At the Effective Date, Outside Directors Richard D.
         Irwin and Carl W. McKinzie have elected not to participate in the
         Plan.

                 (c)      After the Effective Date, Outside Directors who elect
         not to participate in the Plan must provide the Company with written
         notice of such election:

                          (i)     Within thirty (30) days of election or
                 appointment to the Board of Directors, in the case of an
                 individual who becomes an Outside Director after the Effective
                 Date; or

                          (ii)    Within thirty (30) days after an Inside
                 Director becomes an Outside Director.

                 (d)      An Outside Director who waives participation in the
         Plan may later revoke such waiver only with the consent of all other
         Directors.  The effective date of the revocation will be set forth in
         the minutes of the meeting of the Board of Directors at which all
         other Directors consent to such revocation.

         7.      ACCOUNTS.

                 (a)      For each Class Year, each Participant's Account will
         be credited using the Participant's Fixed Credit, determined in
         accordance with Section 8 below.

                 (b)      The Fixed Credit will be deemed to be credited to a
         Participant's Account on the individual's Participation Commencement
         Date.

         8.      FIXED CREDIT.

                 (a)      The initial amount used to establish the Fixed Credit
         for a Class Year shall be twenty thousand dollars ($20,000), which
         amount may be adjusted from time to time by the Committee.

                 (b)      The amount used to establish the Fixed Credit shall
         be prorated in the case of any individual whose Participation
         Commencement Date does not coincide with the Annual Shareholders'
         Meeting.

         9.      INVESTMENTS.

                 (a)      The amount credited on a Participant's Account for a
         Class Year will be the deemed maximum number of whole and partial
         shares of Common Stock that could be purchased with the Participant's
         Fixed Credit for the Class Year, based on the Fair Market Value of the
         Common Stock on the date on which the amount was deemed credited to
         the Participant's Account under the rules of Section 7 above.





                                       -6-

<PAGE>   7
                 (b)      If the company pays cash dividends on its shares of
         Common Stock, each Participant's Account shall be credited with a
         deemed dividend payment on the shares credited to the Participant's
         Account using the dividend per share amount established by the
         Company.

                 (c)      Any cash dividends that are deemed to be paid on the
         shares of Common Stock held in a Participant's Account will be deemed
         to be used to purchase additional whole and partial shares of Common
         Stock.  The Fair Market Value of the Common Stock for this purpose
         will be determined as of the date on which the dividends are paid.

         10.     VESTING.

                 (a)      Each Participant shall earn a vested right to the
         amount of shares deemed to be credited to the Participant's Account
         for a Class Year on a monthly basis, over the remaining term of the
         Class Year, starting on the individual's Participation Commencement
         Date.

                 (b)      A Participant will cease vesting in the shares deemed
         to be credited to the Participant's Account for a Class Year, if the
         Participant becomes an Inside Director.

                 (c)      If a Participant ceases serving as a Director prior
         to the last day of a Class Year for a reason other than death or
         Disability, the Participant will forfeit the nonvested portion of the
         Participant's Account attributable to that Class Year.

                 (d)      Any additional shares of Common Stock deemed to be
         acquired during the Class Year (e.g., as a result of cash or stock
         dividends paid on Common Stock) shall be subject to the vesting rules
         of this Section 10, treating such additional shares as if they had
         been deemed acquired on the individual's Participation Commencement
         Date of that applicable Class Year.

         11.     TIMING OF BENEFIT PAYMENTS.

                 (a)      The entire vested amount in a Participant's Account
         attributable to a Class Year shall be paid to the Participant as soon
         as reasonably practicable following the third Annual Stockholders'
         Meeting that occurs after the individual's Participation Commencement
         Date.

                 (b)      In the event that the Participant dies or becomes
         Disabled before the date specified in Paragraph (a) above, the entire
         amount of the Participant's benefit under the Plan (i.e., the amount
         attributable to all Class Years) will be paid as soon as reasonably
         practicable after that date, but in no event later than ninety (90)
         days after that date, based on the Fair Market Value on the date of
         the Participant's death





                                       -7-
                                       
<PAGE>   8
         or Disability (whichever is applicable).

                 (c)      Except as provided in Paragraph (b) above, no
         benefits will be payable at the time of termination of a Participant's
         status as a Director, but, rather, the Participant's benefit will be
         paid solely in accordance with Paragraph (a) above.

         12.     FORM OF BENEFIT PAYMENTS.  Benefits will be paid in the form
of a lump sum distribution of cash equal to the Fair Market Value of the Common
Stock deemed to be held in the Participant's Account on the date of the event
on which the amount of the benefit is to be determined.

         13.     EFFECT OF CHANGE IN CONTROL.  Notwithstanding anything in this
Plan to the contrary, upon a Change in Control:

                 (a)      All Accounts shall become fully vested as of that
         date; and

                 (b)      All benefits under the Plan shall become payable as
         soon after that date as is reasonably practicable, but in no event
         later than ten (10) business days after that event.

         14.     DESIGNATION OF BENEFICIARY.  In the event of the death of a
Participant prior to the date on which the Participant's entire benefit under
the Plan is paid, the benefit (or the remaining portion thereof) shall be paid
to the Participant's estate, unless the Participant has designated a
beneficiary in accordance with such rules and procedures as the Committee may
prescribe.

         15.     PAYEES UNDER LEGAL DISABILITY.  If any payee is a minor, or if
the Committee reasonably believes that any payee is legally incapable of giving
a valid receipt and discharge for any payment due the payee, the Committee may
have the payment made to the person (or persons or institution) whom it
believes is caring for or supporting the payee.  Any such payment shall be a
payment for the benefit of the payee and shall be a complete discharge of any
liability under the Plan to the payee.

         16.     PAYMENT OF BENEFITS.  All payments under the Plan shall be
delivered in person or mailed to the last address of the Participant (or, in
the case of the death of the Participant, to that of the Participant's estate
or of the Participant's designated beneficiary, whichever is applicable).  Each
Participant shall be responsible for furnishing the Committee with his or her
current address and that of his or her beneficiary (if applicable).

         17.     CHANGES IN CAPITALIZATION.  In the event of any change in the
capitalization of the Company affecting its Common Stock (e.g., a stock split,
reverse stock split, stock dividend, recapitalization, combination, or
reclassification), the Committee shall make such adjustments as it may deem
appropriate with respect to the aggregate number of shares of Common Stock
deemed to be held in Participants' Accounts.





                                       -8-

<PAGE>   9
         18.     NON-TRANSFERABILITY OF GRANTS.  Benefits under this Plan are
not assignable or transferable except by will or the laws of descent and
distribution.

         19.     FUNDED STATUS OF BENEFITS.

                 (a)      The Plan is intended to be an unfunded deferred
         compensation arrangement, with the benefits payable, when due, by the
         Company out of its general assets.

                 (b)      All rights created under the Plan shall be mere
         unsecured contractual rights of Participants against the Company.

                 (c)      Nothing in this Plan shall in any way diminish any
         rights of a Participant to pursue his or her rights as a general
         creditor of Company with respect to his or her benefit under the Plan.

         20.     AMENDMENT AND TERMINATION.  The Board may amend or terminate
this Plan at any time.

         21.     TAX WITHHOLDING.  Any payments from the Plan shall be subject
to such withholding for taxes as may be required by applicable federal or state
law.

         22.     NO ADDITIONAL RIGHTS.  Neither the adoption of this Plan nor
the participation of any Outside Director in this Plan shall:

                 (a)      Affect or restrict in any way the power of the
         Company to undertake any corporate action otherwise permitted under
         applicable law; or

                 (b)      Confer upon any Participant the right to continue
         performing services for the Company as a Director, nor shall it
         interfere in any way with the right of the Stockholders to terminate
         the services of any Participant as a Director at any time, with or
         without cause.

         23.     INDEMNIFICATION.  To the maximum extent permitted by law, the
Company shall indemnify each member of the Board, as well as any other employee
of the Company with duties under this Plan, against any and all liabilities and
expenses (including any amount paid in judgment or settlement) reasonably
incurred by the individual in connection with any claims against the individual
by reason of the performance of the individual's duties under this Plan, unless
the losses are due to the individual's gross negligence or lack of good faith.





                                       -9-

<PAGE>   10
         24.     GOVERNING LAW.  This Plan and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware.


                                         IXC COMMUNICATIONS, INC.,
                                         A DELAWARE CORPORATION



                                         BY: /s/ Ralph J. Swett
                                            ----------------------------------
                                                 Ralph J. Swett


                                         ITS: Chairman, President and
                                                Chief Executive Officer
                                              --------------------------------  


                                         DATE: June 4, 1996
                                               -------------------------------


ATTEST:


      /s/ Richard J. Irwin
- -----------------------------------
        Richard J. Irwin


      /s/ Carl W. McKinzie
- -----------------------------------
        Carl W. McKinzie





                                       -10-


<PAGE>   1
                                                                  EXHIBIT 10.13


                         Culp Communications Associates
                                  5 Hedge Lane
                              Austin, texas 78746
                                 (512) 327-4338


                              Business Consultant
                                      and
                              Management Agreement

Agreement made this the 03 day of January, 1995, between IXC Communications,
Inc., hereinafter referred to as the Corporation, and Culp Communications
Associates, hereinafter referred to as CCA.

In consideration of the mutual promises herein contained, the parties hereto
agree as follows:

1.  Term:  This Agreement will be for an initial period of One Year commencing
on 03 January 1995 and will be extended for an additional periods unless
terminated by either party in writing.

2.  Duties:  The duties of CCA will include the rendering of consultation and
management services.  CCA will make itself available to consult with the Board
of Directors, the officers, and department heads of the Corporation ("Corporate
Management"), at reasonable times to be agreed upon between the parties.

3.  Hours:  CCA shall make itself available to the Corporate Management an
average of ten days per month for the performance of its duties under this
Agreement.

4.  Conflicts:  CCA will be free to represent or perform services for any other
clients, provided that it does not interfere or conflict with its duties under
this Agreement.  CCA shall inform Corporation of its current client list and
shall inform Corporation of any potential conflicts which may develop during
the term of this Agreement.

5.  Compensation:  For services rendered hereunder CCA will receive a
reasonable daily sum that shall be at least $800.00 per day.  A detailed
statement of services rendered, specifying the number of days, will be
submitted to Corporation by CCA.

In addition to the compensation specified herein, Corporation shall also
reimburse CCA for all out of pocket expenses incurred by CCA arising out of its
performance under the terms of this Agreement, including all travel expenses.
Allowable travel expenses shall include reimbursement for all travel expenses
normally reimbursable to the senior executives of Corporation.  All costs to
CCA for said out of pocket expenses and travel expenses shall be chargeable to
the Corporation, and the Corporation shall reimburse and pay over to CCA said
costs upon receipt of written invoices itemizing such costs.




<PAGE>   2
Furthermore, stock options to acquire twenty-five thousand (25,000) shares of
common stock in the Corporation will be issued to Joe C. Culp under the IXC
Communications Stock Plan.  Such options will be fully vested on the date of
the grant.

6.  Office Space:  Corporation will make available to CCA, for the term of this
Agreement, suitable office space.  Corporation will also provide for reasonable
secretarial support and phone service during the term of this Agreement.

7.  Assignment:  Because of the personal nature of the services to be rendered,
this Agreement may not be assigned by CCA without Corporation's prior written
consent, which may be withheld for any reason or no reason at all.  However,
this Agreement will inure to the benefit of and be binding on Corporation's
successors and assigns.

8.  Early Termination:  It is agreed that CCA may terminate this Agreement upon
14 days written notice to Corporation in the event that Joe Culp accepts full
time employment during the term of this Agreement or any extension thereof.

9.  Assistants:  If it is reasonably necessary for CCA to have the aid of
assistants or the services of other persons, companies or firms in order to
properly perform the duties and obligations required of CCA to complete the
Project, CCA may from time to time, with the prior approval of the Corporation,
employ engage or retain the same.  All costs to CCA for said services shall be
chargeable to the Corporation, assuming that the Corporation has given prior
approval, and the Corporation shall reimburse and pay over to CCA said costs
upon receipt of written invoices itemizing such costs.

10.  Limited Liability:  With regards to the services to be performed by CCA
pursuant to the terms of this Agreement, neither CCA nor any employee or agent
of CCA, shall be liable to the Corporation, or to anyone who may claim any
right due to this relationship with the Corporation for any act or omissions in
the performance of said services on the part of the CCA or on the part of the
agents or employees of CCA, except when said acts or omissions of CCA are due
to willful misconduct or culpable negligence.  The Corporation shall hold CCA
free and harmless from any obligations, costs, claims, judgments, attorneys
fees and attachments arising from or growing out of the services rendered to
the Corporation pursuant to the terms of this Agreement or in any way connected
with the rendering of said services, except when the same shall arise due to
the willful misconduct or culpable negligence of CCA, and CCA is adjudged to be
guilty of willful misconduct or culpable negligence by a court of competent
jurisdiction.

11.  Remedies:  If any action at law or equity is necessary to enforce the
terms of this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees, costs, and necessary disbursements in addition to any other
relief to which he may be entitled.

12.  Texas Law.  This Agreement shall be construed under and in accordance with
the laws of the State of Texas.  In case any one or more of the provisions
contained in this





                                       2


<PAGE>   3
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provision thereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.

13.  Other Provisions:
                       --------------------------------------------------------
                                  None
- -------------------------------------------------------------------------------

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

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

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

14.  Prior Agreements Superseded.  This Agreement constitutes the sole and only
Agreement of the parties hereto with regard to your consulting duties as
outlined herein.  This Agreement supersedes any prior understandings or written
or oral agreements between the parties with regards to the subject matter of
this Agreement.

         Executed this the 03 day of January, 1995.


Culp Communication Associates


By   /s/ JOE C. CULP
     -----------------------------
     Joe C. Culp, President


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

By   /s/ JOHN J. WILLINGHAM
     -----------------------------

Title  Senior Vice President
       and Chief Financial Officer
       ----------------------------
       



                                       3

<PAGE>   1
                                                                  EXHIBIT 10.14


                              Employment Agreement


         This Employment Agreement ("Agreement") is entered into effective as
of December 28, 1995 ("Commencement Date") by and between IXC Communications,
Inc., a Delaware corporation ("Company"), and James F. Guthrie ("Employee").


                                  Article I
                                  Employment


         The Company hereby employs Employee and Employee hereby accepts
employment with the Company upon the terms and conditions set forth below.

         1.1     TERM.  The employment of Employee will commence on the
Commencement Date and will continue for three (3) years, provided Employee has
permanently relocated himself and his immediate family to Austin, Texas within
twelve (12) months of the Commencement Date, and Employee and Employee's
immediate family remain permanent residents of Austin, Texas until the
expiration of such three (3) year term.  This Agreement will terminate on the
first anniversary of the Commencement Date if, as of that date, Employee has
not permanently relocated himself and Employee's immediate family to Austin,
Texas, or at such time thereafter before the expiration of such three (3) year
term, if Employee and his immediate family cease to be permanent residents of
Austin, Texas.  The Company will not enter into any merger, acquisition, or
other business combination with any other party in which the Company will not
be the surviving entity unless the other party to that agreement consents to be
bound by the terms of this Agreement.

         1.2     DUTIES.  Employee agrees to serve as Senior Vice President -
Strategic Planning of Company and of its affiliated companies, or in such other
capacity or capacities as the Board of Directors of the Company may require.
Employee shall report directly to the President of the Company.


                                   Article II
                           Compensation and Benefits


         2.1     COMPENSATION.  As compensation for services rendered under
this Agreement, Employee will be entitled to receive from the Company an annual
base salary of two hundred thousand dollars ($200,000), payable bi-weekly, and
an annual bonus goal of seventy-five thousand dollars ($75,000).  Bonuses, if
any, are awarded by, and at the direction of, the Board of Directors of the
Company.  Employee's base salary may be increased from time to time in
accordance with the Company's policies and procedures.



<PAGE>   2
         2.2     BENEFITS.  The Company will make available to Employee the
same fringe benefits that are available to the other Senior Vice Presidents of
the Company, on the same terms and conditions as such benefits are available to
those other officers.  Such benefits shall include medical and dental
insurance, participation in the Company's 401(k) and Pension Plan and Trust,
and reimbursement of reasonable and appropriate business expenses, including
the use of a cellular phone, all in accordance with the Company's stated
policies.  Specific benefits to be provided to the Employee include the
following:

                 (a)      An automobile allowance of eight thousand dollars
         ($8,000) per year, payable monthly; and

                 (b)      Three (3) weeks of vacation pay with respect to
         Employee's first complete year of service with the Company, and
         thereafter in accordance with the Company's stated policy.  This
         vacation benefit shall be immediately available to Employee.

         2.3     RELOCATION COSTS.  The Company will reimburse the Employee
for:

                 (a)      The reasonable costs of moving Employee's household
         goods to Austin, Texas; and

                 (b)      The closing costs of selling Employee's house in
         Newport Coast, California, not to exceed the lesser of five percent
         (5%) of the sales price or one hundred thousand dollars ($100,000).

         2.4     STOCK OPTIONS.

                 (a)      The Company will grant a stock option to Employee
         allowing Employee to purchase one hundred thousand (100,000) shares of
         common stock of the Company.

                 (b)      The exercise price per share under the stock option
         will be seven dollars and thirty-one cents ($7.31), which the Board of
         Directors of the Company has determined to be the current fair market
         value of the stock.

                 (c)      The option will become exercisable in equal
         installments over a three (3) year period, on the first, second, and
         third anniversaries of the Commencement Date, provided Employee and
         his immediate family have become permanent residents of Austin, Texas
         within twelve (12) months of the Commencement Date.  If Employee and
         his immediate family have not become permanent residents of Austin,
         Texas within twelve (12) months of the Commencement Date, the option
         will become exercisable in equal installments over a three (3) year
         period on the first, second, and third anniversaries of the date that
         Employee and his immediate family satisfactorily demonstrate to the
         Company that they have become permanent residents of Austin, Texas,
         provided that such permanent residency occurs before the expiration of
         the term of this Agreement.



                                      -2-



<PAGE>   3
                 (d)      If Employee shall voluntarily resign or be terminated
         for cause prior to the expiration of this Agreement, Employee can
         exercise the vested portion of the option not later than the ninetieth
         (90th) day following the effective date of the resignation or
         termination, at which time the unexercised portion of the option
         (whether vested or not) shall be forfeited.  However, if Employee is
         terminated for a reason that does not constitute cause prior to the
         expiration of this Agreement, the entire Option will become
         immediately exercisable.

                 (e)      If there is a Change in Control of the Company (as
         that term is defined in the Company's Stock Plan), the stock option
         will become immediately vested, unless the Company desires to use, and
         the acceleration of vesting would prevent the Company from using, the
         "pooling of interests" accounting method in connection with the Change
         in Control.  Notwithstanding that acceleration in the vesting of the
         stock option would be available, the Employee may elect not to have
         the vesting accelerated.

                 (f)      Although no anti-dilutive rights are granted to the
         Employee, should any such rights subsequently be granted to the other
         Senior Vice Presidents of the Company, such rights will be similarly
         extended to Employee, provided that Employee is functioning as, and
         holds the office of, a Senior Vice President of the Company or a
         higher position at that time.

         2.5     WITHHOLDING.  Any amounts payable hereunder will be subject to
all applicable legal requirements with respect to the withholding of federal,
state, and local taxes and other normal withholdings.


                                  Title III
                                   Fidelity


         3.1     CONFIDENTIAL INFORMATION.

                 (a)      Employee agrees not to disclose any Confidential
         Information (as defined below) or proprietary information (such as
         trade secrets) of the Company, including information received in
         confidence from the Company or others whether before, during, or after
         Employee's employment with the Company, except upon the prior written
         consent of the Company.

                 (b)      Employee acknowledges that the Confidential
         Information and proprietary information of the Company includes
         matters conceived or developed by Employee, as well as matters learned
         by Employee from other employees or agents of the Company.





                                     - 3 -
<PAGE>   4
                 (c)      Any Confidential Information that Employee may
         prepare, use, or come into contact with will be and remain the
         Company's sole property and will not be removed from the Company's
         premises without its written consent, except as required in accordance
         with Employee's performance of Employee's duties hereunder, and will
         be returned to the Company, together with all copies, summaries, and
         extracts thereof, upon termination of this Agreement.

                 (d)      Except as the Company may otherwise consent or direct
         in writing, Employee will not, sell, use, lecture upon, or publish any
         Confidential Information or proprietary information of the Company or
         authorize anyone else to do those things at any time either before or
         after the expiration of this Agreement.

                 (e)      For purposes of this Agreement, the term
         "Confidential Information" means information (i) disclosed to or known
         by Employee as a consequence of or through Employee's employment by
         the Company, (ii) not generally known outside the Company, and (iii)
         that relates to the Company.

                 (f)      Because the remedy at law for any breach of the
         provisions of this Section 3.1 would be inadequate, Employee hereby
         consents to the granting of an injunction or other equitable relief
         enjoining any breach of these provisions by any court having
         jurisdiction without the necessity of proving actual monetary loss.
         In addition to such injunctive relief, the Company may pursue at law
         any remedies available to it.

                 (g)      This Section 3.1 will continue in full force and
         effect after the expiration of this Agreement.

         3.2     COMPETITION.

                 (a)      Employee expressly covenants and agrees that for the
         period during which Employee is receiving compensation under Article
         II of this Agreement, Employee will not, without the prior written
         consent of the Board of Directors of the Company, either acting alone
         or in conjunction with others, directly or indirectly:

                           (i)    Engage in any competition with the Company;

                          (ii)    Solicit business of any type engaged in by
                 Company (or any subsidiary or affiliate of Company) from any
                 person or business which is an account, customer, or client of
                 Company (or any subsidiary or affiliate of Company), except in
                 connection with Employee's employment hereunder;

                          (iii)   Induce or attempt to influence any such
                 account, customer, or client to curtail or cancel his or its
                 business with Company (or any subsidiary or affiliate of
                 Company).  This Subparagraph (iii) shall not apply to the
                 Employee's enforcement of normal credit and collection
                 policies for the benefit of the Company; or





                                     - 4 -
<PAGE>   5
                          (iv)    Induce or attempt to influence any employee
                 to terminate his or her employment with the Company (or any
                 subsidiary or affiliate of Company).

                 (b)      Because the remedy at law for any breach of the
         provisions of this Section 3.2 would be inadequate, Employee hereby
         consents to the granting of an injunction or other equitable relief
         enjoining any breach of these provisions by any court having
         jurisdiction without the necessity of proving actual monetary loss.
         In addition to such injunctive relief, the Company may pursue at law
         any remedies available to it.

                 (c)      The provisions of this Section 3.2 will apply for
         three (3) years from the Commencement Date, regardless of the prior
         termination of this Agreement, but it will not apply if Employee's
         employment is terminated for a reason other than his voluntary
         resignation.


                                   Article IV
                             Miscellaneous Matters


         4.1     NO ASSIGNMENT.  Except as required by law, Employee may not
assign or alienate (voluntarily or involuntarily) any right to receive payments
under this Agreement.

         4.2     GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without reference
to the conflict of laws provisions thereof.

         4.3     CAPTIONS.  The captions of this Agreement are included solely
for convenience of reference and shall have no force or effect.

         4.4     AMENDMENTS.  This Agreement may not be amended, modified, or
waived in any manner other than by a written agreement executed by the parties
hereto.  The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by the other
party of any provision of this Agreement.

         4.5     NOTICES.  All notices and other communications hereunder shall
be sufficient if in writing and either hand-delivered or mailed by registered
or certified mail, return receipt requested, with postage prepaid, to the
parties at the following addresses (or to such other address or addresses as
either party shall have designated in writing to the other party hereto):





                                     - 5 -


<PAGE>   6

                 If to the Company:
                 ----------------- 

                 IXC Communications, Inc.
                 5000 Plaza on the Lake, Suite 200
                 Austin, Texas 78746
                 Attn:  Ralph J. Swett, President

                 If to Employee:
                 -------------- 

                 James F. Guthrie
                 10 Fair Harbor
                 Newport Coast, California 92657

         4.6     SEVERABILITY.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

         4.7     ENTIRE AGREEMENT AND MODIFICATION.  This Agreement constitutes
the full and complete understanding and agreement of the parties and supersedes
all prior understandings and agreements between the parties.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year indicated above.


                                           IXC Communications, Inc.


                                           By:    /s/ RALPH J. SWETT
                                                  -----------------------------
                                           Its:   President
                                                  -----------------------------


                                           James F. Guthrie,
                                           an individual

                                           /s/ JAMES F. GUTHRIE
                                           ------------------------------------




                                     - 6 -

<PAGE>   1
                                                                  EXHIBIT 10.15


                              Employment Agreement


         This Employment Agreement ("Agreement") is entered into effective as
of August 28, 1995 ("Commencement Date") by and between IXC Communications, 
Inc., a Delaware corporation ("Company"), and David J. Thomas ("Employee").


                                  Article I
                                  Employment


         The Company hereby employs Employee and Employee hereby accepts
employment with the Company upon the terms and conditions set forth below.

         1.1     TERM.  The employment of Employee will commence on the
Commencement Date and will continue for three (3) years, provided Employee has
permanently relocated himself and his immediate family to Austin, Texas within
twelve (12) months of the Commencement Date, and Employee and Employee's
immediate family remain permanent residents of Austin, Texas until the
expiration of such three (3) year term.  This Agreement will terminate on the
first anniversary of the Commencement Date if, as of that date, Employee has
not permanently relocated himself and Employee's immediate family to Austin,
Texas, or at such time thereafter before the expiration of such three (3) year
term, if Employee and his immediate family cease to be permanent residents of
Austin, Texas.  The Company will not enter into any merger, acquisition, or
other business combination with any other party in which the Company will not
be the surviving entity unless the other party to that agreement consents to be
bound by the terms of this Agreement.

         1.2     DUTIES.  Employee agrees to serve as Senior Vice President of
Company and Executive Vice President of IXC Long Distance, or in such other
capacity or capacities as the Board of Directors of the Company may require.
Employee shall report directly to the President of the Company.


                                   Article II
                           Compensation and Benefits


         2.1     COMPENSATION.  As compensation for services rendered under
this Agreement, Employee will be entitled to receive from the Company an annual
base salary of one hundred sixty thousand dollars ($160,000), payable
bi-weekly, and an annual bonus goal of seventy-five thousand dollars ($75,000).
Bonuses, if any, are awarded by, and at the direction of, the Board of
Directors of the Company.  Employee's base salary may be increased from time to
time in accordance with the Company's policies and procedures.




<PAGE>   2
         2.2     BENEFITS.  The Company will make available to Employee the
same fringe benefits that are available to the other Senior Vice Presidents of
the Company, on the same terms and conditions as such benefits are available to
those other officers.  Such benefits shall include medical and dental
insurance, participation in the Company's 401(k) and Pension Plan and Trust,
and reimbursement of reasonable and appropriate business expenses, including
the use of a cellular phone, all in accordance with the Company's stated
policies.   Specific benefits to be provided to the Employee include the
following:

                 (a)      An automobile allowance of eight thousand dollars
         ($8,000) per year, payable monthly; and

                 (b)      Three (3) weeks of vacation pay with respect to
         Employee's first complete year of service with the Company, and
         thereafter in accordance with the Company's stated policy.  This
         vacation benefit shall be immediately available to Employee.

         2.3     RELOCATION COSTS.  The Company will reimburse the Employee
for:

                 (a)      The reasonable costs of moving Employee's household
         goods to Austin, Texas; and

                 (b)      The closing costs of selling Employee's house in
         Farmington Hills, Michigan, not to exceed an amount equal to six
         percent (6%) of the sales price.

         2.4     STOCK OPTIONS.

                 (a)      The Company will grant a stock option to Employee
         allowing Employee to purchase stock equal to one hundred thousand,
         three hundred fifty-six (100,356) shares of common stock of the
         Company, which is one percent of the outstanding common stock of the
         Company.

                 (b)      The exercise price per share under the stock option
         will be seven dollars and thirty-one cents ($7.31), which the Board of
         Directors of the Company has determined to be the current fair market
         value of the stock.

                 (c)      The option will become exercisable in equal
         installments over a three (3) year period, on the first, second, and
         third anniversaries of the Commencement Date, provided Employee and
         his immediate family have become permanent residents of Austin, Texas
         within twelve (12) months of the Commencement Date.  If Employee and
         his immediate family have not become permanent residents of Austin,
         Texas within twelve (12) months of the Commencement Date, the option
         will become exercisable in equal installments over a three (3) year
         period on the first, second, and third anniversaries of the date that
         Employee and his immediate family satisfactorily demonstrate to the
         Company that they have become permanent residents of Austin, Texas,
         provided that such permanent residency occurs before the expiration of
         the term of this Agreement.


                                     - 2 -

<PAGE>   3
                 (d)      If Employee shall voluntarily resign or be terminated
         for cause prior to the expiration of this Agreement, Employee can
         exercise the vested portion of the option not later than the ninetieth
         (90th) days following the effective date of the resignation or
         termination, at which time the unexercised portion of the option
         (whether vested or not) shall be forfeited.  However, if Employee is
         terminated for a reason that does not constitute cause prior to the
         expiration of this Agreement, the entire Option will become
         immediately exercisable.

                 (e)      If there is a Change in Control of the Company (as
         that term is defined in the Company's Stock Plan), the stock option
         will become immediately vested, unless the Company desires to use, and
         the acceleration of vesting would prevent the Company from using, the
         "pooling of interests" accounting method in connection with the Change
         in Control.  Notwithstanding that acceleration in the vesting of the
         stock option would be available, the Employee may elect not to have
         the vesting accelerated.

                 (f)      Although no anti-dilutive rights are granted to the
         Employee, should any such rights subsequently be granted to the other
         Senior Vice Presidents of the Company, such rights will be similarly
         extended to Employee, provided that Employee is functioning as, and
         holds the office of, a Senior Vice President of the Company or a
         higher position at that time.

         2.5     WITHHOLDING.  Any amounts payable hereunder will be subject to
all applicable legal requirements with respect to the withholding of federal,
state, and local taxes and other normal withholdings.


                                   Title III
                                   Fidelity


         3.1     CONFIDENTIAL INFORMATION.

                 (a)      Employee agrees not to disclose any Confidential
         Information (as defined below) or proprietary information (such as
         trade secrets) of the Company, including information received in
         confidence from the Company or others whether before, during, or after
         Employee's employment with the Company, except upon the prior written
         consent of the Company.

                 (b)      Employee acknowledges that the Confidential
         Information and proprietary information of the Company includes
         matters conceived or developed by Employee, as well as matters learned
         by Employee from other employees or agents of the Company.

                 (c)      Any Confidential Information that Employee may
         prepare, use, or come





                                     - 3 -
<PAGE>   4
         into contact with will be and remain the Company's sole property and 
         will not be removed from the Company's premises without its written 
         consent, except as required in accordance with Employee's 
         performance of Employee's duties hereunder, and will be returned to 
         the Company, together with all copies, summaries, and extracts 
         thereof, upon termination of this Agreement.

                 (d)      Except as the Company may otherwise consent or direct
         in writing, Employee will not, sell, use, lecture upon, or publish any
         Confidential Information or proprietary information of the Company or
         authorize anyone else to do those things at any time either before or
         after the expiration of this Agreement.

                 (e)      For purposes of this Agreement, the term
         "Confidential Information" means information (i) disclosed to or known
         by Employee as a consequence of or through Employee's employment by
         the Company, (ii) not generally known outside the Company, and (iii)
         that relates to the Company.

                 (f)      Because the remedy at law for any breach of the
         provisions of this Section 3.1 would be inadequate, Employee hereby
         consents to the granting of an injunction or other equitable relief
         enjoining any breach of these provisions by any court having
         jurisdiction without the necessity of proving actual monetary loss.
         In addition to such injunctive relief, the Company may pursue at law
         any remedies available to it.

                 (g)      This Section 3.1 will continue in full force and
         effect after the expiration of this Agreement.

         3.2     COMPETITION.

                 (a)      Employee expressly covenants and agrees that for the
         period during which Employee is receiving compensation under Article
         II of this Agreement, Employee will not, without the prior written
         consent of the Board of Directors of the Company, either acting alone
         or in conjunction with others, directly or indirectly:

                          (i)      Engage in any competition with the Company;

                          (ii)     Solicit business of any type engaged in by
                 Company (or any subsidiary or affiliate of Company) from any
                 person or business which is an account, customer, or client of
                 Company (or any subsidiary or affiliate of Company), except in
                 connection with Employee's employment hereunder;

                          (iii) Induce or attempt to influence any such
                 account, customer, or client to curtail or cancel his or its
                 business with Company (or any subsidiary or affiliate of
                 Company).  This Subparagraph (iii) shall not apply to the
                 Employee's enforcement of normal credit and collection
                 policies for the benefit




                                     - 4 -
<PAGE>   5
                 of the Company; or

                          (iv) Induce or attempt to influence any employee to
                 terminate his or her employment with the Company (or any
                 subsidiary or affiliate of Company).

                 (b)      Because the remedy at law for any breach of the
         provisions of this Section 3.2 would be inadequate, Employee hereby
         consents to the granting of an injunction or other equitable relief
         enjoining any breach of these provisions by any court having
         jurisdiction without the necessity of proving actual monetary loss.
         In addition to such injunctive relief, the Company may pursue at law
         any remedies available to it.

                 (c)      The provisions of this Section 3.2 will apply for
         three (3) years from the Commencement Date, regardless of the prior
         termination of this Agreement, but it will not apply if Employee's
         employment is terminated for a reason other than his voluntary
         resignation.


                                   Article IV
                             Miscellaneous Matters


         4.1     NO ASSIGNMENT.  Except as required by law, Employee may not
assign or alienate (voluntarily or involuntarily) any right to receive payments
under this Agreement.

         4.2     GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without reference
to the conflict of laws provisions thereof.

         4.3     CAPTIONS.  The captions of this Agreement are included solely
for convenience of reference and shall have no force or effect.

         4.4     AMENDMENTS.  This Agreement may not be amended, modified, or
waived in any manner other than by a written agreement executed by the parties
hereto.  The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision of this Agreement, or of any subsequent breach by the other
party of any provision of this Agreement.

         4.5     NOTICES.  All notices and other communications hereunder shall
be sufficient if in writing and either hand-delivered or mailed by registered
or certified mail, return receipt requested, with postage prepaid, to the
parties at the following addresses (or to such other address or addresses as
either party shall have designated in writing to the other party hereto):





                                     - 5 -

<PAGE>   6


                 If to the Company:
                 ----------------- 

                 IXC Communications, Inc.
                 5000 Plaza on the Lake, Suite 200
                 Austin, Texas 78746
                 Attn:  Ralph J. Swett, President

                 If to Employee:
                 -------------- 

                 David Thomas   
                 5105 Standing Oaks
                 Austin, TX 78746                 

         4.6     SEVERABILITY.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

         4.7     ENTIRE AGREEMENT AND MODIFICATION.  This Agreement constitutes
the full and complete understanding and agreement of the parties and supersedes
all prior understandings and agreements between the parties.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year indicated above.

                                      IXC Communications, Inc.


                                      By:  /s/ RALPH J. SWETT 
                                           ------------------------------------
                                           Ralph J. Swett

                                      Its: President
                                           ------------------------------------


                                      David Thomas,
                                      an individual

                                      /s/ DAVID THOMAS
                                      -----------------------------------------






                                     - 6 -

<PAGE>   1
               EXHIBIT 11.1 -- COMPUTATION OF PER-SHARE EARNINGS

                            IXC COMMUNICATIONS, INC.
                COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
           FOR THE THREE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
           AND THE THREE MONTH PERIODS ENDED MARCH 31, 1995 and 1996
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,               THREE MONTHS ENDED MARCH 31,
                                                       ----------------------------------          ----------------------------
                                                         1993          1994        1995               1995              1996
                                                       ----------------------------------           ---------------------------
<S>                                                     <C>           <C>        <C>                 <C>              <C>
EARNINGS

  Adjusted net income (loss)                            $(23,317)     $7,315     $(4,965)            $1,267           $(11,699)

  Less: Dividends applicable to preferred stock           (1,567)     (1,752)     (1,843)              (479)              (433)
                                                        ---------------------------------            --------------------------

  Net income (loss) applicable to common stockholders    (24,884)      5,563      (6,808)               788            (12,132)
                                                        
  Extraordinary (gain) loss                               (8,495)     (2,298)      1,747                 --                 --
                                                        ---------------------------------            --------------------------

  Net income (loss) applicable to common
    stockholders before extraordinary items             $(33,379)     $3,265     $(5,061)             $  788          $(12,132)
                                                        =================================             =========================

PRIMARY

  Weighted average number of shares outstanding           23,332      24,310      24,335              24,335            24,335

  Add: Effect for periods prior to the initial
    public offering (IPO), of common stock
    options issued within one year of the IPO                833         833         833                 833               833

  Add: Dilutive effect of outstanding stock 
    options                                                   --           9         120                 236                --

  Less: Assumed repurchase of shares under 
    the treasury stock method                               (139)       (141)       (160)               (178)              (139)  
                                                        ---------------------------------            --------------------------

  Number of shares used to compute earnings (loss)
    applicable to common stockholders                      24,026      25,011     25,128              25,226             25,029
                                                        ================================             ==========================

FULLY DILUTED

  Weighted average number of shares outstanding            23,332      24,310     24,335              24,335             24,335

  Add: Effect for periods prior to the initial
    public offering (IPO), of common stock
    options issued within one year of the IPO                833         833         833                 833               833

  Add: Dilutive effect of outstanding stock 
    options                                                   --           9         120                 236                --

  Less: Assumed repurchase of shares under 
    the treasury stock method                               (139)       (141)       (160)               (178)              (139)  
                                                        ---------------------------------            --------------------------

  Number of shares used to compute earnings (loss)
    applicable to common stockholders                     24,026      25,011      25,128              25,226             25,029
                                                        =================================            ==========================

PRIMARY INCOME (LOSS) PER COMMON SHARE

  Before extraordinary item                               $(1.39)      $0.13      $(0.20)              $0.03            $(0.48)

  Extraordinary gain (loss)                                 0.35        0.09       (0.07)                 --                --
                                                        ---------------------------------            --------------------------

  Net income (loss)                                       $(1.04)      $0.22      $(0.27)              $0.03            $(0.48)
                                                        =================================            ==========================


FULLY DILUTED INCOME (LOSS) PER COMMON SHARE

  Before extraordinary item                               $(1.39)      $0.13      $(0.20)              $0.03            $(0.48)

  Extraordinary gain (loss)                                 0.35        0.09       (0.07)                 --                --
                                                        ---------------------------------            --------------------------

  Net income (loss)                                       $(1.04)      $0.22      $(0.27)              $0.03            $(0.48)
                                                        =================================            ==========================

</TABLE>

<PAGE>   1
 
                                                                    EXHIBIT 23.2
 
                        CONSENT OF INDEPENDENT AUDITORS
 
   
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated March 1, 1996, except for Note 18, as to which the date
is June 12, 1996, in the Registration Statement (Form S-1 No. 333-4061) and
related Prospectus of IXC Communications, Inc.
    
 
                                          Ernst & Young LLP
 
Austin, Texas
   
June 12, 1996
    

<PAGE>   1
                                                                   EXHIBIT 24.2


                               POWER OF ATTORNEY
                               -----------------


         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
IXC Communications, Inc. (the "Company"), hereby constitutes and appoints Ralph
J. Swett and John J. Willingham, and each of them with full power to act
without the other, his true and lawful attorneys-in-fact and agents of the
undersigned, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities (unless revoked in
writing) to sign the Company's Amendment No. 1 to Registration Statement on
Form S-1 and any or all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting to such attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in connection therewith,
as fully to all intents and purposes as he might and could do in person hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.


Dated:  June 5, 1996.


                                           /s/ PHILLIP L. WILLIAMS
                                        -----------------------------------
                                               Phillip L. Williams


<PAGE>   2
                               POWER OF ATTORNEY
                               -----------------


         KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a director of
IXC Communications, Inc. (the "Company"), hereby constitutes and appoints Ralph
J. Swett and John J. Willingham, and each of them with full power to act
without the other, his true and lawful attorneys-in-fact and agents of the
undersigned, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities (unless revoked in
writing) to sign the Company's Amendment No. 1 to Registration Statement on
Form S-1 and any or all amendments thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting to such attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in connection therewith,
as fully to all intents and purposes as he might and could do in person hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.


Dated:  June 5, 1996.


                                                 /s/ JOE C. CULP
                                           ---------------------------------
                                                     Joe C. Culp

<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited March 31, 1996 consolidated balance sheets and income statements and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
       
<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               MAR-31-1996
<CASH>                                           5,492
<SECURITIES>                                         0
<RECEIVABLES>                                    7,430
<ALLOWANCES>                                    (1,490)
<INVENTORY>                                          0
<CURRENT-ASSETS>                                14,983
<PP&E>                                         172,858
<DEPRECIATION>                                 (50,696)
<TOTAL-ASSETS>                                 346,467
<CURRENT-LIABILITIES>                           42,453
<BONDS>                                        300,905
                                0
                                         13
<COMMON>                                           243
<OTHER-SE>                                      (5,097)
<TOTAL-LIABILITY-AND-EQUITY>                   346,467
<SALES>                                              0
<TOTAL-REVENUES>                                26,250
<CGS>                                                0
<TOTAL-COSTS>                                   15,600
<OTHER-EXPENSES>                                16,427
<LOSS-PROVISION>                                    12
<INTEREST-EXPENSE>                               9,870
<INCOME-PRETAX>                                 12,969
<INCOME-TAX>                                    (1,363)
<INCOME-CONTINUING>                                  0
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   (11,699)
<EPS-PRIMARY>                                    (0.48)
<EPS-DILUTED>                                        0
        

</TABLE>


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