ICG COMMUNICATIONS INC
424B3, 1997-11-03
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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                                            Filed pursuant to Rule 424(b)(3)
                                            Registration No. 333-38823



                            687,221 SHARES
                       ICG COMMUNICATIONS, INC.
                             COMMON STOCK

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


     This Prospectus relates to the resale by the holders named herein
(see "Selling Stockholders") of 687,221 shares of the common stock
("Common Stock") of ICG Communications, Inc. (the "Company").

     The Common Stock to be resold hereby will be offered into the
existing trading market for the Common Stock. The Common Stock is
quoted on the Nasdaq National Market under the symbol "ICGX". On
October 23, 1997, the last reported sale price for the Common Stock on
the Nasdaq National Market was $22.25 per share.

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

 SEE "RISK FACTORS" BEGINNING ON PAGE 8 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.

           The date of this Prospectus is October 31, 1997

<PAGE>



     NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE
HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED OR INCORPORATED BY REFERENCE 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 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, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITIES 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 HEREUNDER SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT
THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF.

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


                           TABLE OF CONTENTS


AVAILABLE INFORMATION............................................    2
INFORMATION INCORPORATED BY REFERENCE............................    2
PROSPECTUS SUMMARY...............................................    3
RISK FACTORS.....................................................    8
USE OF PROCEEDS..................................................   17
DESCRIPTION OF CAPITAL STOCK.....................................   17
SELLING STOCKHOLDERS.............................................   20
PLAN OF DISTRIBUTION.............................................   21
LEGAL MATTERS....................................................   21
EXPERTS..........................................................   21






<PAGE>

                         AVAILABLE INFORMATION

     The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance with the Exchange Act files periodic reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and
other information filed by the Company with the Commission can be
inspected and copied (at prescribed rates) at the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Regional Offices of the Commission
located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New
York, New York 10048. Such material may also be accessed
electronically by means of the Commission's home page on the Internet
at http://www.sec.gov. In addition, reports, proxy statements and
other information concerning the Company can be inspected and copied
at the offices of the Nasdaq National Market at 1735 K Street, N.W.,
Washington, D.C. 20006.

     The Company has filed with the Commission a registration
statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities offered hereby. This Prospectus, which is
part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and the exhibits
and schedules thereto, certain items of which are omitted in
accordance with the rules and regulations of the Commission. For
further information with respect to the Company and the securities
offered hereby, reference is hereby made to the Registration Statement
and such exhibits and schedules. The Registration Statement, including
the exhibits and schedules thereto, may be inspected at, and copies
thereof may be obtained at prescribed rates from, the public reference
facilities of the Commission set forth above.

                 INFORMATION INCORPORATED BY REFERENCE

     The following documents have been filed by the Company with the
Commission and are hereby incorporated by reference and made a part of
this Prospectus:

     1.   Annual Report on Form 10-K for the fiscal year ended
          September 30, 1996 (File No. 1-11965). 

     2.   Transition Report on Form 10-K/A for the transition period from
          October 1, 1996 to December 31, 1996 (File No. 1-11965).

     3.   Quarterly Report on Form 10-Q for the fiscal quarter ended
          March 31, 1997 (File No. 1-11965).

     4.   Quarterly Report on Form 10-Q for the fiscal quarter ended
          June 30, 1997 (File No. 1-11965).

     5.   Current Report on Form 8-K dated February 20, 1997 (File No.
          1-11965).

     6.   Current Report on Form 8-K dated February 24, 1997 (File No.
          1-11965).

     7.   Current Report on Form 8-K dated September 18, 1997 (File
          No. 1-11965).

     8.   Current Report on Form 8-K dated September 29, 1997 (File
          No. 1-11965).

     9.   Current Report on Form 8-K dated October 21, 1997 (File No.
          1-11965).

     10.  The description of the Company's Common Stock set forth in
          the Company's Registration Statement on Form 8-A filed
          pursuant to Section 12 of the Exchange Act and any amendment
          or report filed for the purpose of updating such
          description.

     All documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act, after the date of this Prospectus and prior to the
termination of the offering of the shares made hereby, shall be deemed
to be incorporated by reference into the Registration Statement of
which this Prospectus is a part and to be a part hereof from the date
of such filing. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this Prospectus shall be
deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes
such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of
this Prospectus.

     The Company hereby undertakes to provide without charge to each
person to whom this Prospectus is delivered, upon oral or written
request of such person, a copy of any and all information that has
been incorporated by reference into this Prospectus (not including
exhibits to the information unless such exhibits are specifically
incorporated by reference into such information). Requests for
information should be addressed to: ICG Communications, Inc., 9605
East Maroon Circle, P.O. Box 6742, Englewood, Colorado 80155-6742,
Attention: Investor Relations (telephone number (800) 408-4253).


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<PAGE>

                           PROSPECTUS SUMMARY

     The following summary is qualified in its entirety by the more
detailed information and consolidated financial statements, and notes
thereto, appearing in the documents incorporated by reference herein.
Unless the context otherwise requires, the term "Company" or "ICG"
means the combined business operations of ICG and its subsidiaries,
including ICG Holdings (Canada), Inc. ("Holdings-Canada") and ICG
Holdings, Inc. ("Holdings"). Certain statements contained in this
Prospectus with respect to the Company's plans and strategy for its
business and related financing are forward-looking statements (as such
term is defined in the Private Securities Litigation Reform Act). Such
statements are subject to risks and uncertainties and, as a result,
actual results may differ materially from those expressed in or
implied by such forward-looking statements. For a discussion of
important risks of an investment in the Common Stock, including
factors that could cause actual results to differ materially from
results referred to in the forward-looking statements, see "Risk
Factors." Investors should carefully consider the information set
forth under the caption "Risk Factors," including the risks relating
to historical and anticipated operating losses and negative cash
flows.

                              THE COMPANY

     The Company is one of the largest independent providers of
competitive local telephone services in the United States, based on
estimates of the industry's 1996 revenue. Competitive local exchange
carriers ("CLECs") seek to provide an alternative to the incumbent
local exchange carriers ("ILECs") for a full range of
telecommunications services in the increasingly deregulated
telecommunications industry. As a CLEC, the Company operates networks
in four regional clusters covering major metropolitan statistical
areas in California, Colorado, the Ohio Valley and the Southeast. The
Company also provides a wide range of network systems integration
services and maritime and international satellite transmission
services. As a leading participant in the rapidly growing competitive
local telecommunications industry, the Company has experienced
significant growth, with total revenue increasing from $59.1 million
for fiscal 1994 to $237.9 million for the 12-month period ended June
30, 1997.

     The Federal Telecommunications Act of 1996 (the
"Telecommunications Act") and state pro-competitive regulatory
initiatives have substantially changed the telecommunications
regulatory environment in the United States. Due to these regulatory
changes, the Company is now permitted to offer all interstate and
intrastate telephone services, including competitive local dial tone.
The Company is marketing and selling local dial tone services in major
metropolitan areas in the following regions: California, which began
service in late January 1997, followed by Ohio in February 1997,
Colorado in March 1997 and the Southeast in May 1997. During the six
months ended June 30, 1997, the Company sold approximately 60,300
local access lines, of which approximately 20,100 were in service at
that date. As a complement to its local exchange services, the Company
has begun marketing bundled offerings which include long distance,
enhanced telecommunications services and data services. The Company
has 18 operating high capacity digital voice switches and 15 data
communications switches, and plans to install additional switches as
demand warrants. To facilitate the expansion of its services, the
Company has entered into agreements with Lucent Technologies, Inc.,
Northern Telecom Inc. and Cascade Communications, Inc. ("Cascade") to
purchase a full range of switching systems, fiber optic cable, network
electronics software and services. The Company has entered into a
merger agreement with NETCOM On-line Communications Services Inc. to
acquire all of the Internet Service Provider and, accordingly, broaden
the Company's product and service offerings. See "-- Recent
Developments."

     In developing its telecommunications service offerings, the
Company continues to invest significant resources to expand its
network. This expansion is being undertaken through a combination of
constructing owned facilities, entering into long-term agreements with
other telecommunications carriers, establishing strategic alliances
with utility companies and potentially through acquisitions. For
example, the Company recently announced an agreement with a subsidiary
of The Southern Company ("Southern") that will permit the Company to
construct a 100-mile fiber optic network in the Atlanta metropolitan
area. In addition, the Company is expanding its geographic focus to
include Texas (and may also expand to Arkansas, Louisiana and
Oklahoma) through its strategic alliance with Central and South West
Corporation ("CSW") that will develop and market telecommunications
services, including local service, in these markets. In June 1997, the
Company entered into an indefeasible right of use ("IRU") agreement
with Qwest Communications Corporation ("Qwest") for approximately
1,800 miles of fiber optic network and additional broadband capacity
in California, Colorado, Ohio and the Southeast. The new capacity will
connect major markets in California and the Company expects this new

                             3

<PAGE>


capacity will be used for the transmission of local, long distance and
data communications services in the Company's markets. See "-- Recent
Developments."

TELECOM SERVICES

     The Company operates local exchange networks in the following
markets within its four regional clusters: California (Sacramento, San
Diego and portions of the Los Angeles and San Francisco metropolitan
areas); Colorado (Denver, Colorado Springs and Boulder); the Ohio
Valley (Akron, Cleveland, Columbus, Dayton and Louisville) and the
Southeast (Birmingham, Charlotte and Nashville). The Company plans to
build a network in Atlanta in conjunction with Southern. Through its
strategic alliance with CSW, service is expected to be offered in
Austin, Corpus Christi, Dallas, Houston and San Antonio, Texas. See
"-Recent Developments." The Company will continue to expand its
network through construction, leased facilities, strategic joint
ventures and potentially through acquisitions. The Company's operating
networks have grown from 780 fiber route miles at the end of fiscal
1994 to 2,898 fiber route miles as of June 30, 1997. Telecom Services
revenue has increased from $14.9 million for fiscal 1994 to $146.5
million for the 12-month period ended June 30, 1997.

   Strategy

     The Company's objective is to become the dominant alternative to
the ILEC in the markets it serves. In furtherance of this objective,
the Company has developed strategies to aggressively market its broad
range of telecommunications services to business end users and to
leverage its extensive network footprint and its expertise in the
provision of switched telecommunications services. The key elements of
this strategy are:

     Expand Service Offerings. The Company's focus is to provide a
wide range of local, long distance and data communications services to
business end users and wholesale customers within the Company's
service areas, with an emphasis on local exchange services. The
Company believes that customers are increasingly demanding a broad,
full service approach to providing telecommunications services. By
offering a wide array of services bundled into customized packages,
management believes the Company will be better able to capture
business from telecommunications-intensive commercial accounts. To
this end, the Company is complementing its core competitive local
exchange services with local, toll and long distance services tailored
to the needs of its customers and expects to also provide tailored
data services.

     Market Services to End Users. Management believes an end user
strategy can accelerate its penetration of the local services market
and better leverage the Company's network investment. In support of
this strategy, the Company has substantially increased its direct
sales and marketing staff. The Company's sales force has grown from 81
and 143 people at September 30, 1996 and December 31, 1996,
respectively, to approximately 350 people (including sales management,
technical sales support and administrative support) at August 31,
1997.

     Concentrate Markets in Regional Clusters. The Company believes
that by focusing on regional clusters it will be able to more
effectively service its customers' needs and efficiently market,
operate and control its networks. As a result, the Company has
concentrated its networks in regional clusters serving major
metropolitan areas in California, Colorado, the Ohio Valley and the
Southeast. The Company also intends to expand its network footprint to
include Texas (and may also expand to Arkansas, Louisiana and
Oklahoma) through a strategic alliance with CSW and to include Atlanta
through a strategic alliance with Southern. See "-- Recent
Developments."

     Network Connectivity. Significant amounts of telecommunications
traffic are carried within the Company's regional clusters. Management
believes that integrating these clusters through the connection of
individual networks will provide significant benefits, including cost
advantages. These cost advantages would result from the Company's
ability to carry regional traffic on-net, thereby improving operating
margins by reducing payments to other carriers for the use of their
facilities. Accordingly, the Company is in the process of connecting
networks within each of its California, Colorado and Ohio Valley
clusters with inter-city fiber optic cable.

     Expand Alliances with Utilities. The Company has established and
is actively pursuing strategic alliances with utility companies to
take advantage of their existing fiber optic infrastructures and
customer relationships. This approach affords the Company the
opportunity to license or lease fiber optic facilities on a long-term
basis, which is more timely and cost effective than constructing
facilities. In addition, utilities possess conduit and other
facilities that enable the Company to more easily install additional
fiber to extend existing networks in a given market. Finally,
management expects these strategic alliances to combine the Company's

                             4

<PAGE>

  
expertise in providing high quality telecommunications services with
the utility's name recognition and customer relationships in marketing
telecommunications products and services to the utility's customer
base.

NETWORK SERVICES

     Through the Company's wholly owned subsidiary, ICG Fiber Optic
Technologies, Inc. ("FOTI"), the Company supplies information
technology services and selected networking products, focusing on
network design, installation, maintenance and support for a variety of
end users, including Fortune 1000 firms and other large businesses and
telecommunications companies. Revenue from Network Services operations
was $65.4 million for the 12-month period ended June 30, 1997.

SATELLITE SERVICES

     The Company's Satellite Services operations provide satellite
voice and data services to major cruise lines, commercial shipping
vessels, yachts, the U.S. Navy and offshore oil platforms. The Company
also owns a teleport facility which provides international voice and
data transmission services. Revenue for Satellite Services operations
was $26.1 million for the 12-month period ended June 30, 1997. The
Company is considering the disposition of its Satellite Services
operations to better focus its efforts on its core Telecom Services
unit, although it has not formally approved or adopted a plan for such
disposition.

RECENT DEVELOPMENTS

     Network Expansion. The Company continues to expand its network
footprint through several strategic initiatives with utility companies
and other telecommunications carriers. The Company recently announced
an agreement with a subsidiary of Southern that will permit the
Company to construct a 100-mile fiber optic network in the Atlanta
metropolitan area. In June 1997, the Company entered into an IRU
agreement with Qwest for approximately 1,800 miles of fiber optic
network and additional broadband capacity in California, Colorado,
Ohio and the Southeast. The new capacity will connect major markets in
California that the Company expects will be used for the transmission
of local, long distance and data communications services in the
Company's markets.

     CSW Strategic Alliance. In January 1997, the Company announced a
strategic alliance with CSW which is expected to develop and market
telecommunications services in Austin, Corpus Christi, Dallas, Houston
and San Antonio, Texas. The venture entity, a limited partnership
named CSW/ICG ChoiceCom, L.P. ("ChoiceCom"), is based in Austin,
Texas. CSW holds 100% of the interest in ChoiceCom and the Company has
an option to purchase a 50% interest at any time prior to July 1,
2003. Subsequent to July 1, 1999, if the Company has not exercised its
purchase option, CSW will have the right to sell either 51% or 100% of
the partnership interest in ChoiceCom to the Company. CSW and the
Company each have two representatives on the Management Committee of
the general partner of ChoiceCom. ChoiceCom may eventually offer local
exchange, data communications, long haul and other services in other
cities in Arkansas, Louisiana, Oklahoma and Texas.

     Cascade Agreement. In April 1997, the Company entered into an
agreement with Cascade for the purchase of high-speed frame relay and
asynchronous transfer mode ("ATM") switching products that will enable
the Company to provide high-speed data connectivity to its customers.
In addition, the Company has obtained turnkey services from Cascade
for product planning and deployment of the product, including program
management, network design, onsite operations support and training.

     Acquisition of Communication Buying Group. On October 17, 1997,
the Company purchased approximately 91% of the outstanding capital stock
of Communications Buying Group, Inc. ("CBG"), an Ohio based local
exchange and Centrex reseller (the "CBG Acquisition").  The remaining
9% will be purchased on or before March 24, 1998, pursuant to the terms
of the Stock Purchase Agreement governing the CBG Acquisition.  The total
consideration paid and to be paid is approximately $47.4 million plus the
assumption of certain liabilities. Separately, on October 17, 1997, the
Company exercised its option to sell approximately $16.0 million of Common
Stock to certain shareholders of CBG.

     CBG currently serves customers in Cleveland, Columbus and Akron,
Ohio as well as in surrounding areas.  CBG currently has approximately 
30,000 Centrex lines in service and over 23,000 business lines in service, 
principally pursuant to various resale and other agreements with Ameritech
Corp. ("Ameritech"), the ILEC in the markets it serves. CBG focuses its 
sales and marketing efforts on small to medium-sized businesses and provides

                             5

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a one-stop solution for the local and long distance needs of its customers.
For the calendar year 1996, CBG's revenue was approximately $21.4 million 
and EBITDA losses were approximately $(1.0) million.

     The Company believes that the business strategy of CBG is closely
aligned with that of the Company and that it can successfully leverage
the services offered by CBG to enhance the Company's offering of
similar services in its existing Ohio markets, including all those
currently served by CBG. The acquisition of CBG will double the
Company's current sales presence in Ohio to approximately 60 people.
In addition, the Company believes that its ability to migrate, over
time, a portion of CBG's existing customer base to its fiber optic
facilities offers significant cost savings. The Company believes that
the transaction will significantly further its goal of becoming the
dominant alternative to the ILEC in Ohio.

     Merger Agreement with NETCOM On-Line Communications Services,
Inc. On October 12, 1997, the Company entered into an Agreement and
Plan of Merger (the "Merger Agreement") with NETCOM On-Line
Communications Services, Inc. ("NETCOM"). NETCOM is a provider of
Internet connectivity and Web-hosting services, as well as a suite of
software applications to primarily professional, small and
medium-sized businesses. Currently, NETCOM provides service to
approximately 550,000 customers throughout the United States,
including the provision of Internet and Web services to over 9,000
small and medium sized businesses. The closing of the merger with 
NETCOM (the "Merger") is expected to take place in the first quarter 
of 1998, pending certain approvals including the approval of the 
stockholders of both ICG and NETCOM and subject to other customary 
closing conditions.  It is anticipated that the Merger will qualify 
as a pooling-of-interests transaction for accounting and financial 
reporting purposes.

     The Merger is structured as a tax-free reorganization pursuant to
which NETCOM stockholders will receive an exchange ratio of 0.8628
shares of Common Stock for each share of NETCOM Common Stock, $.01 par
value, issued and outstanding, subject to adjustment. The exchange
rate mechanism allows NETCOM shareholders to share in an increase in
the Company's stock price prior to the closing, as well as to protect
them in the event of a decline in the stock price during such period.
Specifically, the Merger Agreement provides that if the closing price
of a share of Common Stock at the time of merger (based on the average
of the volume weighted average price for the ten consecutive trading
days ending two trading days prior to the closing (the "Closing
Price")) drops below $22.125 per share but not less than $19.00 per
share, the exchange ratio will be adjusted to equal the fraction
obtained by dividing 19.0625 by the Closing Price, and if the Closing
Price of the Common Stock drops below $19.00 per share, the exchange
ratio will be fixed at 1.0078 shares of Common Stock for each share of
NETCOM Common Stock.

     The Company believes that the Merger will create a full-service
business communications company providing a single source for a
complete range of voice, data, Internet, Web-hosting and other
communications services over an extensive fiber optic network.
Currently, approximately one-half of NETCOM's customers are located in
the Company's existing network territory. It is anticipated that the
Merger will enable the combined entity to better utilize ICG's fiber
and frame relay networks.

     Financing. In March 1997, the Company raised net proceeds of
$192.4 million from the sale of 11 5/8% Senior Discount Notes due 2007
(the "11 5/8% Notes") of Holdings and 14% Exchangeable Preferred Stock
Mandatorily Redeemable 2008 (the "14% Preferred Stock") of Holdings.
Cash interest on the 11 5/8% Notes accrues at 11 5/8% per annum
beginning March 15, 2002 and is payable quarterly, commencing
September 15, 2002. The 14% Preferred Stock accrues dividends
quarterly at an annual rate of 14% per annum. Dividends are payable
quarterly in cash or, on or prior to March 15, 2002, at the sole
option of Holdings, in additional shares of 14% Preferred Stock. The
Company believes that its liquidity was improved because the 11 5/8%
Notes and the 14% Preferred Stock do not require the payment of cash
interest or cash dividends prior to 2002. The 11 5/8% Notes and the
14% Preferred Stock have been registered under the Securities Act.

     In October 1997, the Company's new wholly-owned subsidiary, 
ICG Funding, LLC, a Delaware limited liability company ("ICG Funding"), 
completed a private placement of $132.25 million of Exchangeable 
Limited Liability Company Preferred Securities ("Preferred Securities"). 
The Preferred Securities are mandatorily redeemable November 15, 2009 
at the liquidation preference of $50.00, plus accrued and unpaid dividends.
Dividends on the Preferred Securities will be cumulative at the rate of 
6.75% per annum and will be paid in cash through November 15, 2000 and, 
thereafter, will be paid in cash and/or shares of Common Stock. The 
Preferred Securities are exchangeable, at the option of the holder, 
into Common Stock at an exchange price of $24.025 per share. ICG Funding 
may, at its option, redeem the Preferred Securities at any time on or 

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after November 18, 2000. Prior to that time, ICG Funding may redeem the 
Preferred Securities if the current market value of Common Stock equals 
or exceeds the exchange price, for at least 20 days of any consecutive
30-day trading period, by 170 percent prior to November 16, 1998; 160
percent from November 16, 1998 through November 15, 1999; and 150
percent from November 16, 1999 through November 15, 2000. The Company
is obligated to register under the Securities Act the Preferred
Securities and the Common Stock issuable upon exchange of the
Preferred Securities.

                             RISK FACTORS

     SEE "RISK FACTORS," IMMEDIATELY FOLLOWING THIS SUMMARY, FOR A
DISCUSSION OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONJUNCTION
WITH AN INVESTMENT IN THE COMMON STOCK, INCLUDING RISKS RELATED TO
HISTORICAL AND ANTICIPATED OPERATING LOSSES, NEGATIVE CASH FLOW AND
SUBSTANTIAL INDEBTEDNESS.


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<PAGE>

                             RISK FACTORS

     An investment in the Common Stock offered hereby involves a high
degree of risk. The following risk factors, together with the other
information set forth in this Prospectus and appearing in the
documents incorporated by reference herein, should be considered when
evaluating an investment in the Company. This Prospectus includes
certain forward-looking statements. The discussion set forth below
contains cautionary statements identifying important factors
including, but not limited to, dependence on increased traffic on the
Company's facilities, the successful implementation of the Company's
strategy of offering an integrated telecommunications package of
local, long distance, data communications and value added services,
continued development of the Company's network infrastructure and
actions of competitors and regulatory authorities, that could cause
actual results to differ materially from the forward-looking
statements.

HISTORICAL AND  ANTICIPATED  FUTURE  OPERATING  LOSSES,  NET LOSSES
AND NEGATIVE CASH FLOW

     The Company has incurred and expects to continue to incur
significant operating and net losses. For the 12 months ended June 30,
1997, the Company had revenue of approximately $237.9 million, an
operating loss of approximately $146.5 million, negative EBITDA of
approximately $93.9 million, cash used by operating activities of
approximately $55.9 million, interest expense of approximately $101.3
million and a net loss of approximately $252.0 million. In conjunction
with the increase in its service offering, the Company will need to
spend significant amounts on sales, marketing, customer service,
engineering and corporate personnel prior to the generation of
appreciable revenue. The Company expects to continue to generate
significant negative cash flow from operating activities while it
emphasizes development, construction and expansion of its Telecom
Services business and until the Company establishes a sufficient
revenue generating customer base. As the Company's customer base
grows, the Company anticipates that operating margins and cash flow
will improve as incremental revenue will exceed incremental operating
expenses. This is dependent upon the successful implementation of the
Company's local dial tone, local toll, data communications and long
distance service strategies, continued development of the Company's
network infrastructure, increased traffic on the Company's facilities,
any or all of which may not occur, and upon actions of competitors and
regulatory authorities. The Company had an accumulated deficit and
stockholders' deficit of approximately $513.0 million and $208.6
million, respectively, at June 30, 1997. There can be no assurance
that the Company will achieve or sustain profitability or positive
cash flows in the future or at any time have sufficient resources to
meet its obligations. The price of the Common Stock will be adversely
affected if the Company does not make substantial progress toward
achieving profitability.

RISKS RELATED TO LOCAL SERVICES AND SWITCHED SERVICES STRATEGIES

     The Company is a recent entrant in the competitive local
telecommunications services industry. The local telecommunications
services market has only recently opened to competition due to the
passage of the Telecommunications Act, state and federal regulatory
rulings designed to implement the Telecommunications Act, and
negotiations with ILECs under the terms of the Telecommunications Act
and state rulings. The Company is initiating the provision of long
distance and data communications services. The Company believes that
offering a full-service portfolio of local, long distance and data
products is the best method for gaining market share among business
customers and reducing customer churn. However, the Company has only
recently begun to offer long distance services and has not yet
generated any revenue from data services, despite its offering of
these services since the first quarter of 1997. The Company is making
significant operating and capital investments and will have to address
numerous operating complexities associated primarily with providing
local services. The Company will be required to develop new
provisioning and technical support systems and will need to develop
new marketing initiatives and hire and train a new sales force
responsible for selling its services. The Company will also need to
supplement the necessary billing and collection systems for local
services and integrate these systems with those of its long distance
and other services, including data services. There can be no assurance
that the Company can design and install, and coordinate with ILECs
regarding, necessary provisioning, billing and customer management
systems in a timely manner to permit the Company to provision local
exchange, local toll, long distance or data services as planned.

     The Company expects to face significant competition from ILECs,
whose core business is providing local dial tone service. The ILECs,
who currently are the dominant providers of services in their markets,
are expected to mount a significant competitive response to new
entrants in their market, such as the Company. The Company expects to

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face significant competitive product and pricing pressures from the
ILECs in these markets, as well as from other CLECs.

     The Company began generating switched services revenue in the
fourth quarter of fiscal 1994, and substantially all of the Company's
current switched revenue is from wholesale customers. The Company is
experiencing negative operating margins from the provision of
wholesale switched services because it relies on ILEC networks to
terminate and originate customers' switched traffic. The Company
expects overall operating margins from switched services to improve as
local dial tone, local toll, long distance and data communications
services become a relatively larger portion of its business mix and
the Company deemphasizes its wholesale switched services.

CERTAIN FINANCIAL AND OPERATING RESTRICTIONS

     The terms governing certain of Holdings' senior indebtedness and
preferred stock impose significant operating and financial
restrictions on the Company. Such restrictions affect, and in certain
cases significantly limit or prohibit, among other things, the ability
of the Company to incur additional indebtedness, create liens on its
assets, pay dividends, sell assets, engage in mergers or acquisitions
or make investments. Failure to comply with such covenants would
result in a default thereunder, in which case the lenders will be able
to accelerate the maturity of the applicable indebtedness. Moreover,
the instruments governing the Company's material indebtedness contain
cross-default provisions which provide that a default under other
indebtedness will be considered a default under the indebtedness in
question. In the event that a cross-default were triggered, the
maturity of substantially all of the Company's approximately $916.9
million of indebtedness at June 30, 1997 would be accelerated and
become immediately due and payable. As a result, the Company would not
be able to satisfy all of its debt obligations, which would have a
substantial material adverse effect on the price of the Common Stock
and the Company's ability to continue as a going concern. There can be
no assurance that the Company will be able to comply with such
covenants in the future or that such compliance would not cause the
Company to forego opportunities that might otherwise be beneficial to
the Company.

SUBSTANTIAL INDEBTEDNESS

     As of June 30, 1997, the Company had, on a consolidated basis,
aggregate indebtedness, including capitalized lease obligations, of
approximately $916.9 million. With respect to indebtedness currently
outstanding, the Company has interest payment obligations of
approximately $113.3 million in 2001, $158.0 million in 2002 and
$168.1 million in 2003. In addition, with respect to preferred stock
currently outstanding, the Company has cash dividend obligations of
approximately $28.0 million through 2000, $21.5 million in 2001, 
$57.0 million in 2002 and $70.9 million in 2003. Accordingly, the 
Company may have to refinance a substantial amount of indebtedness 
and obtain substantial additional funds prior to March 2001, when 
Holdings is required to commence cash interest payments under its 
senior indebtedness. The Company's ability to obtain additional 
sources of cash will depend on, among other things, its financial 
condition at the time, the restrictions in the instruments governing 
its indebtedness and other factors, including market conditions, 
beyond the control of the Company. Additional sources of cash may 
include public and private equity and debt financings by ICG, Holdings 
and their subsidiaries, sales of non-strategic assets, capitalized 
leases and other financing arrangements. There can be no assurance 
that the Company will be able to refinance such indebtedness, including 
such capitalized leases, or obtain such additional funds, and if the 
Company is unable to effect such refinancings or obtain additional 
funds, the Company's ability to make principal and interest payments 
on its indebtedness, its ability to continue as a going concern and 
the price of the Common Stock will be substantially materially adversely 
affected.

RISKS  RELATED  TO RAPID  EXPANSION  OF  BUSINESS;  INTEGRATION  OF
ACQUIRED BUSINESSES

     The continued rapid expansion and development of the Company's
business will depend on, among other things, the Company's ability to
successfully implement its sales and marketing strategy, evaluate
markets, lease fiber, design and build fiber backbone routes, secure
financing, install facilities, acquire rights of way and building
access, obtain any required government authorizations, implement
interconnection to, and collocation with, facilities owned by ILECs
and obtain appropriately priced unbundled network elements from the
ILECs, all in a timely manner, at reasonable costs and on satisfactory
terms and conditions. In addition, such expansion may involve
acquisitions which, if made, could divert the resources and management
time of the Company and require integration with the Company's
existing networks and service offering. The Company's ability to
effectively manage its rapid expansion will require it to continue to
implement and improve its operating, financial and accounting systems
and to expand, train and manage its employee base. The failure to

                             9

<PAGE>


effectively manage its planned expansion could have a material adverse
effect on the Company's business, growth, financial condition, results
of operations and the price of the Common Stock.

     The Company has experienced rapid growth. The Company intends to
continue to grow through further expansion of its existing operations,
through acquisitions including the CBG Acquisition and the NETCOM
Merger, and through the establishment of new operations. The Company 
constantly evaluates acquisition opportunities. The Company's
ability to manage its anticipated future growth will depend on its
ability to evaluate new markets and investment vehicles, monitor
operations, control costs, maintain effective quality controls, and
significantly expand the Company's internal management, technical and
accounting systems. The Company's rapid growth has placed, and its
planned future growth with continue to place, a significant strain on
the Company's financial, management and operational resources,
including the identification of acquisition targets and the
negotiation of acquisition agreements. In addition, acquisitions and
the establishment of new operations will entail considerable expenses
in advance of anticipated revenues and may cause fluctuations in the
Company's operating results.

     In addition, the Company's acquired and new businesses will need
to be integrated with its existing operations. For acquired
businesses, including CBG, this may entail, among other things,
integration of switching, transmission, technical, sales, marketing,
billing, accounting, quality control, management, personnel, payroll,
regulatory compliance and other systems and operating hardware and
software, some or all of which may be incompatible. The failure to
effectively integrate acquired businesses could have a material
adverse effect on the Company's business, growth, financial condition
and results of operations and the price of the Common Stock.

COMPETITION

     The Company operates in an increasingly competitive environment
dominated by ILECs such as the Regional Bell Operating Companies
("RBOCs") and GTE Corporation ("GTE"). The Company's current
competitors include RBOCs, GTE, other independent ILECs, other CLECs,
network systems integration service providers, microwave and satellite
service providers, teleport operators, wireless telecommunications
providers and private networks of large end users. Potential
competitors include cable television companies, utilities, ILECs
outside their current local service areas and the local access
operations of long distance carriers. Consolidation of
telecommunications companies, including mergers between certain of the
RBOCs, and the formation of strategic alliances within the
telecommunications industry, as well as the development of new
technologies, could give rise to increased competition. One of the
primary purposes of the Telecommunications Act is to promote
competition, particularly in the local telephone market. Since the
enactment of the Telecommunications Act, several telecommunications
companies have indicated their intention to aggressively expand their
ability to address many segments of the telecommunications industry,
including segments in which the Company participates and expects to
participate. For example, AT&T Corp., MCI Communications Corp., Time
Warner Communications, Inc., Texas Utilities Company and other large
companies are entering the local markets as competitors of the
Company. This may result in more participants than can ultimately be
successful in a given market.

     As a recent entrant in the telecom services industry, the
Company, like other CLECs, has not achieved a significant market
share. The ILECs have long-standing relationships with their
customers, have the potential to subsidize services with revenue from
a variety of businesses and have benefited from certain state and
federal regulations that, until recently, favored the incumbent
operator over potential competitors. The Telecommunications Act, other
recent state legislative actions, and current federal and state
regulatory initiatives provide increased business opportunities for
the Company by removing or substantially reducing barriers to local
exchange competition. However, these new competitive opportunities are
accompanied by potential new competitive opportunities for the ILECs,
as the Telecommunications Act provides the conditions for the removal
of previous restrictions on the provision of long distance services by
the RBOCs. It is also expected that increased local competition will
result in increased pricing flexibility for, and relaxation of
regulatory oversight of, the ILECs. If the ILECs are permitted to
engage in increased volume and discount pricing practices or charge
CLECs increased fees for interconnection to their networks, or if the
ILECs seek to delay implementation of interconnection to their
networks, the Company's results of operations and financial condition
could be adversely affected. In addition, the Company has experienced
declining access unit prices and increasing price competition for
access services which to date have been more than offset by increasing
network usage. The Company expects to continue to experience declining
prices for the foreseeable future. There can be no assurance that the
Company will be able to achieve or maintain adequate market share or
revenue, or compete effectively in any of its markets. Any of the
foregoing factors could have a material adverse effect on the Company
and the price of the Common Stock.

                             10

<PAGE>


     In addition, the long distance and data transmission businesses
are extremely competitive and prices have declined substantially in
recent years and are expected to continue to decline.

     Finally, with respect to the NETCOM Merger, when completed, the
Company will experience substantial competition in providing Internet
services.

REGULATION

     The Company operates in an industry that is undergoing
substantial regulatory change as a result of the passage of the
Telecommunications Act. The Company's Telecom Services activities are
regulated by the FCC, state regulatory agencies, and municipalities.
The Company's Satellite Service activities are regulated by the FCC
and international regulatory bodies.

     The FCC regulates the Company's provision of interstate common
carrier services, including long distance and data services, and the
Company's provision of international services. The Company currently
files and maintains tariffs with the FCC. In addition, the FCC and
state regulatory bodies are charged with implementing the
Telecommunications Act, which has a substantial impact on the
development of the Company's local exchange business. The
Telecommunications Act is also subject to actions of the federal
courts, while state regulatory actions are subject to review and
actions of both state and federal courts. State regulatory agencies
regulate the Company's provision of local dial tone and other
intrastate common carrier services. In general, the Company is
required to obtain certification from the relevant state public
utilities commissions prior to the initiation of intrastate service
and is also required to file tariffs listing the rates, terms and
conditions of intrastate services provided. Several states also impose
operating restrictions on the CLEC industry, covering the ability to
raise and lower prices and restrictions on marketing and sales
activities. In addition, local authorities control the Company's
access to municipal rights of way. Any failure to maintain proper
federal and state tariffing or state certification, or noncompliance
with federal, state or local laws or regulations, could have a
material adverse effect on the Company.

     The Telecommunications Act generally requires ILECs to provide
interconnection, nondiscriminatory access to ILEC networks, unbundling
of ILEC networks and access to ILEC operational support systems and
network portability. The Telecommunications Act imposes a variety of
new duties on the ILECs in order to promote network competition in the
markets for local exchange and access services, including the duty to
negotiate in good faith with competitors requesting interconnection to
the ILEC networks. However, negotiations with each ILEC have sometimes
involved considerable delays and the resulting negotiated agreements
may not necessarily be obtained on terms and conditions that are
desirable to the Company. In such instances, the Company has
petitioned the proper state regulatory agency to arbitrate disputed
issues. In addition, following state review either party in the
negotiations can appeal to the federal courts. There can be no
assurance that the Company will be able to negotiate acceptable new
interconnection agreements with ILECs or that, if state regulatory
authorities impose terms and conditions on the parties in arbitration,
such terms will be acceptable to the Company.

     On August 8, 1996, the FCC adopted rules and policies
implementing the interconnection provisions of the Telecommunications
Act, which rules, in general, are favorable to new competitive
entrants. The FCC's rules were challenged in the federal courts of
appeals by GTE, the RBOCs, other large independent ILECs and state
regulatory commissions. On July 18, 1997, the U.S. Court of Appeals
for the Eighth Circuit (the "Eighth Circuit Court") issued a ruling
that vacated certain of the FCC's rules and upheld the FCC's rules on
other issues.

     In the July 18, 1997 decision, the Eighth Circuit Court ruled
that state commissions, not the FCC, have jurisdiction over the
pricing of interconnection, unbundled network elements and resale
services. The Eighth Circuit Court also ruled that the FCC's
interpretation of Section 252(i) of the Telecommunications Act, the
so-called "pick and choose" provision, was incorrect. The Eighth
Circuit Court held that the Telecommunications Act allows CLECs to
adopt whole interconnection agreements negotiated by other competitors
but not to "pick and choose" pieces of existing agreements.

     Because the Eighth Circuit Court held that CLECs cannot "pick and
choose" pieces of other interconnectors' negotiated interconnection
agreements, the Company may be subject to the risk that other CLECs
negotiate more favorable prices, terms or conditions with the ILECS.
The Company's only recourse under such circumstances may be to adopt
other interconnectors' agreements with an ILEC in whole, though these
agreements may include terms and conditions the Company finds
unacceptable. The Eighth Circuit Court upheld certain of the FCC's
rules regarding unbundled network elements. Moreover, the Eighth

                             11

<PAGE>


Circuit Court's decision does not alter most of the basic statutory
requirements of the Telecommunications Act, including the statutory
requirements that the ILECs conduct negotiations and enter into
interconnection agreements with competitive carriers.

     The FCC (and other parties) have announced their intention to
seek Supreme Court review of the Eighth Circuit Court's decision.
Additionally, separate petitions for rehearing were filed with the
Eighth Circuit Court by a group of interexchange carriers ("IXCs"),
two groups of ILECs and a group of CLECs. On October 14, 1997 the
Eighth Circuit Court granted the ILEC petitions for rehearing, and
denied the CLEC and IXC petitions. The Court's decision on rehearing
vacated an additional FCC rule that addressed the ability of new
entrants to purchase ILEC network elements at cost-based rates on a
bundled rather than an unbundled basis. Management believes the
Company could benefit from a reversal in whole, or in part, of the
Eighth Circuit Court's decisions.

     Although the Company believes that the Telecommunications Act and
other state and federal regulatory initiatives that favor increased
competition are advantageous to the Company, there can be no assurance
that changes in current or future state or federal regulations,
including changes that may result from further court review of the
FCC's interconnection rules, or increased competitive opportunities
resulting from such changes, will not have a material adverse effect
on the Company and on the price of the Common Stock.

     The Company must obtain and maintain certain FCC authorizations
for its satellite and wireless services. The Company currently
provides maritime communication services pursuant to an experimental
license and a grant of Special Temporary Authority ("STA"). The
Company's experimental license has been renewed by the FCC on several
occasions. In January 1997, the Company submitted an application for
the modification and renewal of the experimental license, which was
due to expire on February 1, 1997. Under the FCC's procedures, the
experimental license has remained valid pending FCC action on the
renewal and modification. On January 30, 1997, the Company was granted
the STA for which the Company filed for a six-month extension on July
25, 1997. The Company has received a verbal grant of the extension.
Although the Company expects that the FCC will issue a permanent
license, there can be no assurance the Company will be granted a
permanent license, that the experimental license currently being used
to provide maritime services will be renewed for a further term or
that any license granted by the FCC will not require substantial
payments by the Company.

     The FCC and relevant state public utilities commissions have the
authority to regulate interstate and intrastate telephone rates,
respectively, ownership of transmission facilities and the terms and
conditions under which certain of the Company's services are provided.
Federal and state regulations and regulatory trends have had, and in
the future are likely to have, both positive and negative effects on
the Company and its ability to compete. The recent trend in both
federal and state regulation of telecommunications service providers
has been in the direction of reduced regulation. In general, neither
the FCC nor the relevant state public utilities commission currently
regulate the Company's long distance rates or profit levels, although
either or both may do so in the future. There can be no assurance that
changes in current or future federal or state regulations or future
judicial changes would not have a material adverse effect on the
Company.

SIGNIFICANT CAPITAL REQUIREMENTS

     The Company's current plans for expansion of existing networks,
the development of new networks, the further development of the
Company's products and services and the continued funding of operating
losses may require additional cash from outside sources. The Company's
arrangements with utilities require it to make significant cash
payments and the development of the Company's networks requires
significant capital expenditures for transmission equipment, switching
and network build-out from the utilities' fiber backbone to end user
locations. The Company must also purchase a substantial amount of
equipment and other assets from vendors. The Company anticipates that
the expansion of existing networks, construction of new networks and
further development of the Company's products and services will
require capital expenditures of approximately $125.0 million during
the second half of 1997 and approximately $250.0 million in 1998, and
continued significant capital expenditures thereafter. Further, the
Company has significant personnel expenses related to increasing its
marketing efforts and offering new long distance and planned data
transmission services in anticipation of revenue growth. The Company
also plans to make strategic acquisitions from time to time. The
Company anticipates that its substantial cash requirements will
continue into the foreseeable future. Additional sources of cash may
include public and private equity and debt financings of ICG, Holdings
or their subsidiaries, sales of non-strategic assets, capitalized
leases and other financing arrangements. There can be no assurance
that additional financing will be available to the Company or, if
available, that it can be obtained on terms acceptable to the Company.
Failure to obtain such financing could result in the delay or
abandonment of some or all of the Company's acquisition, development

                             12

<PAGE>


and expansion plans and expenditures, which could have a material
adverse effect on its business prospects and the price of the Common
Stock.

DEPENDENCE ON KEY CUSTOMERS

     The Company's five largest customers accounted for approximately
28%, 30% and 27% of the Company's consolidated revenue in fiscal 1996,
the three months ended December 31, 1996 and the six months ended June
30, 1997, respectively. The loss of, or decrease of business from, one
or more of these customers could have a material adverse effect on the
business, financial condition and results of operations of the Company
and the price of the Common Stock. While the Company actively markets
its products and services, there can be no assurance that the Company
will be able to attract new customers or retain its existing
customers.

RISKS OF ENTRY INTO LONG DISTANCE BUSINESS

     In order to offer its end user customers a complete package of
telecommunications services, the Company recently began offering long
distance services. Although the Company has extensive experience in
the telecommunications business, including an executive team with
sales, marketing and long distance management expertise, the Company
has limited experience providing long distance services. The long
distance business is extremely competitive and prices have declined
substantially in recent years and are expected to continue to decline.
The Company does not expect long distance services to generate a
material portion of its revenues over the near term.

     The Company relies on other carriers to provide transmission and
termination services for a majority of its long distance traffic and
will therefore be dependent on such carriers. The Company has entered
into agreements with long distance carriers to provide it with long
distance transmission services. Such agreements typically provide for
the resale of long distance services on a per minute basis (some with
minimum volume commitments). Where the Company anticipates higher
volumes of traffic, it may lease point-to-point circuits on a monthly
or longer term fixed cost basis. The negotiation of these agreements
involves estimates of future supply and demand for long distance
telecommunications transmission capacity. Should the Company fail to
meet its minimum volume commitments, if any, pursuant to these
agreements, it may be obligated to pay underutilization charges.
Likewise, the Company may underestimate its need for long distance
facilities and therefore be required to obtain the necessary
transmission capacity through more expensive means. There can be no
assurance that the Company will acquire long distance capacity on
favorable terms or that the Company can accurately predict long
distance prices and volumes so that it can generate positive gross
margins. The success of the Company's entry into the long distance
business will be dependent upon, among other things, the Company's
ability to select new equipment and software and integrate these into
its networks, hire and train qualified personnel, enhance its billing,
back-office and information systems to accommodate long distance
services and the acceptance of potential customers of the Company's
long distance service offerings. If the Company's long distance
transmission business fails to generate positive gross margins or if
the Company fails in any of the foregoing respects, such failure may
have a material adverse effect on the Company's business and on the
price of the Common Stock. In addition, a majority of the Company's
Telecom Services revenue is derived from long distance carrier
customers. The Company is subject to the risk that its entry into the
long distance business will adversely affect its relationship with its
long distance carrier customers.

RISKS OF ENTRY INTO DATA TRANSMISSION BUSINESS

     To complement its telecommunications services offerings the
Company began offering frame relay services in California, Colorado
and Ohio during the first quarter of 1997. These services are targeted
at the Company's existing customers and other businesses with
substantial data communications requirements. To date, the Company has
not generated any revenue from these services, despite having offered
these services since the first quarter of 1997. Based on this market
experience, the Company is reevaluating its previous product and
customer strategies, and expects to generate low or negative gross
margins and substantial start-up expenses as it develops and rolls out
its data services. The Company does not expect data transmission
services to generate a material portion of its revenue over the near
term.

     Although the Company has extensive experience in the
telecommunications business, the Company has no direct experience
providing data transmission services. Additionally, the data
transmission business is extremely competitive and prices have
declined substantially in recent years and are expected to continue to
decline. In providing these services, the Company will be dependent
upon vendors for assistance in the planning and deployment of its

                             13

<PAGE>


initial data product offerings, as well as ongoing training and
support. The success of the Company's entry into the data transmission
business will be dependent upon, among other things, the Company's
ability to select new equipment and software and integrate these into
its networks, hire and train qualified personnel, enhance its billing,
back-office and information systems to accommodate data transmission
services and customer acceptance of the Company's data services. No
assurance can be given that the Company will be successful with
respect to these matters. If the Company is not successful with
respect to these matters, there may be a material adverse effect on
the Company's business and on the price of the Common Stock.

DEPENDENCE ON BILLING, CUSTOMER SERVICE AND INFORMATION SYSTEMS

     Sophisticated information and processing systems are vital to the
Company's growth and its ability to monitor costs, bill customers,
provision customer orders and achieve operating efficiencies. Billing
and information systems for the Company's historical lines of business
have been produced largely in-house with partial reliance on third
party vendors. These systems have generally met the Company's needs
due in part to the Company's low volume of bills and orders. As the
Company commences providing local, long distance and data transmission
services, the need for sophisticated billing and information systems
is increasing significantly. The Company's current local billing
platform plans rely on products and services provided by third party
vendors. Additionally, the Company is developing automated systems and
customer service centers to provision orders. Information systems are
vital to the success of these centers, and the information systems for
these centers are largely being developed by third party vendors.

     San Francisco Consulting Group ("SFCG") has been engaged by the
Company to recommend a long-term customer care and billing solution,
to provide support in development of short to long-term information
systems planning and to facilitate and improve the provisioning
process. The services provided by SFCG focus primarily on further
development of the Company's abilities to ensure that back-office
processes and functions operate at maximum effectiveness. The failure
of (i) the Company's vendors to deliver proposed products and services
in a timely and effective manner, (ii) the Company to adequately
identify all of its information and processing needs, or (iii) the
Company to upgrade systems as necessary, could have a material adverse
impact on the ability of the Company to reach its objectives, and on
its financial condition and results of operations.

     While the Company believes that its software applications are
year 2000 compliant, there can be no assurance until the year 2000
occurs that all systems will then function adequately. Further, if the
software applications of local exchange carriers, long distance
carriers or others on whose services the Company depends are not year
2000 compliant, it could have a material adverse effect on the
Company's financial condition and results of operations and the value
of the Common Stock.

RISKS RELATED TO JOINT VENTURES AND STRATEGIC ALLIANCES

     The Company has formed a strategic alliance with CSW for the
purpose of providing services, through ChoiceCom, in Austin, Corpus
Christi, Dallas, Houston and San Antonio, Texas. Under the terms of
this arrangement, CSW holds a 100% interest in ChoiceCom and the
Company has an option to purchase a 50% interest. Under the terms of
certain of its indebtedness the Company is currently prohibited from
making any investment in ChoiceCom (other than a $15.0 million debt
investment that the Company intends to make) and from purchasing less
than a majority interest in any venture. Unless the terms of certain
of the Company's indebtedness are revised (which could entail
substantial costs), the Company may not be able to exploit
opportunities for joint ventures, which could have an adverse effect
on the Company and the price of the Common Stock.

     The Company has also formed strategic alliances with utility
companies to lease fiber optic facilities. The Company expects to
continue to enter into strategic alliances, joint ventures and other
similar arrangements in the future. The other parties to such existing
arrangements, and to arrangements in which the Company may
subsequently participate, may at any time have economic, business or
legal interests or goals that are inconsistent with those of the
strategic alliance, joint venture or similar arrangement or those of
the Company. In addition, a joint venture partner may be unable to
meet its economic or other obligations to the venture, which,
depending upon the nature of such obligations, could adversely affect
the Company and the price of the Common Stock.

                             14

<PAGE>


RAPID TECHNOLOGICAL CHANGE

     The telecommunications industry is subject to rapid and
significant changes in technology. The effect of technological
changes, including changes relating to emerging wireline and wireless
transmission technologies, on the business of the Company cannot be
predicted.

DEPENDENCE ON RIGHTS OF WAY AND OTHER THIRD PARTY AGREEMENTS

     The Company must obtain easements, rights of way, franchises and
licenses from various private parties, including actual and potential
competitors, and local governments in order to construct and maintain
fiber optic networks. There can be no assurance that the Company will
obtain rights of way and franchise agreements to expand its networks
or that these agreements will be on terms acceptable to the Company,
or that current or potential competitors will not obtain similar
rights of way and franchise agreements. Because certain of these
agreements are short-term or are terminable at will, there can be no
assurance that the Company will continue to have access to existing
rights of way and franchises after the expiration of such agreements.
An important element of the Company's strategy is to enter into
long-term agreements with utilities to take advantage of their
existing facilities and to license or lease their excess fiber
capacity. The Company has entered into contracts and is negotiating
agreements with other utilities. However, other CLECs are seeking to
enter into similar arrangements and have bid and are expected to
continue to bid against the Company for future licenses or leases.
Furthermore, utilities are required by state or local regulators to
retain the right to "reclaim" fiber licensed or leased to the Company
if such fiber is needed for the utility's core business. There can be
no assurance that the Company will be able to obtain additional
licenses or leases on satisfactory terms or that such arrangements
will not be subject to reclamation. If a franchise, license or lease
agreement was terminated and the Company was forced to remove or
abandon a significant portion of its network, such termination could
have a material adverse effect on the Company and on the price of the
Common Stock.

KEY PERSONNEL

     The efforts of a small number of key management and operating
personnel will largely determine the Company's success. The success of
the Company also depends in part upon its ability to hire and retain
highly skilled and qualified operating, marketing, financial and
technical personnel. The competition for qualified personnel in the
telecommunications industry is intense and, accordingly, there can be
no assurance that the Company will be able to hire or retain necessary
personnel. The loss of certain key personnel could adversely affect
the Company and the price of the Common Stock.

NO DIVIDENDS

     The Company does not expect to generate net income in the near
future and, therefore, does not anticipate paying cash dividends. The
payment of any future dividends on the Common Stock is effectively
prohibited by the indentures for certain of Holdings' senior
indebtedness and the amended articles of incorporation of Holdings,
which prohibit Holdings from making any material payment to the
Company. See "Description of Capital Stock".

POSSIBLE STOCK PRICE VOLATILITY

     The price of the Common Stock has been, and is expected to
continue to be, highly volatile. Factors such as legislation or
regulation, variations in the Company's revenue, earnings and cash
flow, the difference between the Company's actual results and the
results expected by investors and analysts and announcements of new
service offerings, marketing plans or price reductions by the Company
or its competitors, technological innovations, mergers or strategic
alliances, may cause the price of Common Stock to fluctuate
substantially. In addition, the stock markets recently have
experienced significant price and volume fluctuations that have
affected growth companies such as telecommunications concerns. The
fluctuations in the market prices of the stocks of many companies have
not been directly related to the operating performance of those
companies. Such market fluctuations may materially adversely affect
the price of the Common Stock.

                             15

<PAGE>


SHARES ELIGIBLE FOR FUTURE SALE

     As of September 30, 1997, there were 32,413,010 shares of Common
Stock outstanding (excluding the 687,221 shares of Common Stock offered
hereby), all of which are transferable without restriction or further 
registration under the Securities Act, except for any shares of Common 
Stock held by affiliates of ICG, which will be subject to the resale 
limitations of Rule 144 promulgated under the Securities Act ("Rule 144"). 
In addition, ICG has reserved and registered under the Securities Act 
the following 9,219,802 shares of Common Stock for future issuance: 
(i) 1,981,914 shares of Common Stock issuable pursuant to Holdings-Canada
warrants; (ii) 3,373 shares of Common Stock issuable upon conversion of 
the remaining interest on the Company's 7% Convertible Subordinated 
Notes; (iii) 4,923,011 shares of Common Stock issuable pursuant to 
outstanding options, with exercise prices ranging from $2.92 to $25.00 
per share; (iv) 424,511 shares of Common Stock reserved for issuance 
under ICG's 401(k) Plan; (v) 250,000 shares of Common Stock reserved 
for issuance upon the exercise of Series A Warrants, with an exercise 
price of $7.94 per share; (vi) 250,000 Shares of Common Stock reserved 
for issuance upon the exercise of the Series B Warrants, with an exercise 
price of $8.73 per share; (vii) 949,911 shares of Common Stock reserved 
for issuance pursuant to ICG's 1996 Employee Stock Purchase Plan, 
(viii) 405,382 shares of Common Stock reserved for issuance under the 
1996 Stock Option Plan; and (ix) 31,700 shares of Common Stock which 
may be issued upon the exchange of an equal number of shares of Class A
Common Shares of Holdings-Canada. In addition, ICG Funding, a recently
formed subsidiary of the Company, may sell Common Stock to fund
certain dividend obligations. See "Recent Developments --Financing."
Further, upon the completion of the NETCOM Merger, approximately 10.1 
million shares of Common Stock, subject to adjustment and subject to the 
exercise of options for NETCOM common stock, will be issued to the holders 
of NETCOM common stock in exchange for their shares. Sales or the expectation
of sales of substantial numbers of Common Stock in the public market could
adversely affect the prevailing market prices for the Common Stock.

ANTI-TAKEOVER PROVISIONS

     Certain provisions of ICG's corporate charter and the corporate
charter and debt instruments of its subsidiaries may have the effect
of deterring transactions involving a change in control of ICG,
including transactions in which stockholders might receive a premium
for their shares. ICG's corporate charter provides that directors
serve staggered three-year terms and authorizes the issuance of up to
1,000,000 shares of preferred stock with such designations, rights and
preferences as may be determined from time to time by ICG's Board of
Directors. In addition, the corporate charter(s) of Holdings and
Holdings-Canada authorize the issuance of up to 1,000,000 and
30,000,000 shares of preferred stock, respectively, with such
designations, rights and preferences as may be determined by the Board
of Directors of Holdings and Holdings-Canada, respectively. The
staggered board provision increases the likelihood that, in the event
of a takeover of ICG, incumbent directors would retain their positions
and, consequently, may have the effect of discouraging, delaying or
preventing a change in control or management of ICG. The authorization
of preferred shares empowers the Board of Directors, without further
shareholder approval, to issue preferred shares with dividend,
liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of the Common
Stock. In the event of issuance, the preferred shares could be
utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change of control of ICG. In addition, the
Company is and will continue to be, subject to the anti-takeover
provisions of the Delaware General Corporation law, which could have
the effect of delaying or preventing a change of control of the
Company. Furthermore, upon a change of control, the holders of
substantially all of the Company's outstanding indebtedness are
entitled, at their option, to be repaid in cash and the holders of the
Holdings preferred stock may, at their option, require Holdings to
redeem their shares for cash. Such provisions may have the effect of
delaying or preventing changes in control or management of the
Company. All of these factors could materially adversely affect the
price of the Common Stock.

                             16

<PAGE>

                            USE OF PROCEEDS

     The Company will receive no proceeds from this offering.


                     DESCRIPTION OF CAPITAL STOCK

     The authorized capital stock of ICG consists of 100,000,000
shares of Common Stock, $.01 par value, of which 32,239,457 shares
have been issued and were outstanding at September 1, 1997, and
1,000,000 shares of preferred stock, $.01 par value, of which no
shares are issued or outstanding.

COMMON STOCK

     Voting Rights. Each share of Common Stock entitles the holder to
one vote. The holders of the shares of Common Stock are entitled to
vote as one class on all matters to be voted on by stockholders,
including the election of directors. The board of directors of ICG is
divided into three classes, with the classes as nearly equal in number
as possible. Directors serve three-year staggered terms, with the term
of one class expiring each year in rotation. The holders of Common
Stock do not have cumulative voting rights.

     Dividends. Each share of Common Stock is entitled to receive
dividends from funds legally available therefor if, as and when
declared by the Board of Directors. However, the debt and preferred
stock of ICG's subsidiaries effectively prohibits the payment of any
dividends. Further, as long as the Arrangement and Support Agreement
dated June 27, 1996 between ICG and Holdings-Canada ("Arrangement and
Support Agreement") is in effect, ICG will not distribute shares of
Common Stock to the holders of Common Stock by way of stock dividend
or other distribution (other than an issue of shares of Common Stock
to holders of shares of Common Stock who exercise an option to receive
dividends in shares of Common Stock in lieu of receiving cash
dividends), or issue or distribute rights, options or warrants
entitling holders of substantially all of the Common Stock to
subscribe for or purchase shares of Common Stock without the prior
approval of Holdings-Canada and the prior approval of holders of
Holdings-Canada Class A Common Shares unless the economic equivalent
on a per share basis of such rights, options, securities, shares or
other assets is issued or distributed simultaneously to holders of the
Holdings-Canada Class A Common Shares.

     Other. Stockholders of ICG have no preemptive or other rights to
subscribe for additional shares. All holders of Common Stock are
entitled to share equally on a share-for-share basis in any assets
available for distribution to stockholders on liquidation, dissolution
or winding up of ICG. No shares of the Common Stock are subject to
redemption or a sinking fund. All outstanding shares are, and all
shares offered by this Prospectus will be, when sold, validly issued,
fully paid and nonassessable. ICG may not subdivide, redivide, reduce,
combine, consolidate, reclassify or otherwise change the then
outstanding shares of Common Stock without the prior approval of
Holdings-Canada and the prior approval of holders of the
Holdings-Canada Class A Common Shares, unless the same or an
economically equivalent change shall simultaneously be made to, or in
the rights of the holders of, the Holdings-Canada Class A Common
Shares.

     Transfer Agent and Registrar. The Transfer Agent for the Common
Stock is American Stock Transfer and Trust Company.

PREFERRED STOCK

     General. ICG is authorized to issue 1,000,000 shares of preferred
stock, $.01 par value per share. On the date of this Prospectus, no
shares of preferred stock are outstanding. The Board of Directors of
ICG has authorized the issuance of up to 50,000 shares of a series of
exchangeable preferred stock (the "Exchangeable Preferred Stock") and
ICG has filed a Certificate of Designation with the Secretary of State
of Delaware as required by Delaware law reflecting the authorization
of such series of preferred stock. The Exchangeable Preferred Stock
will be issued by ICG and, when so issued and paid for by ICG Funding,
will be fully paid and non-assessable, and the holders thereof will
not have any subscription or preemptive rights related thereto. The
Exchangeable Preferred Stock will be issued without coupons, in
denominations of $10,000 liquidation preference and any integral
multiple thereof. Each share of Exchangeable Preferred Stock will have
a liquidation preference at maturity of $10,000.

     Ranking. The Exchangeable Preferred Stock will rank, with respect
to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of ICG, (i) senior to all classes of common

                             17

<PAGE>


stock of ICG and to each other class of capital stock or series of
preferred stock established after September 24, 1997 by ICG's Board of
Directors, the terms of which do not expressly provide that it ranks
senior to or on a parity with the Exchangeable Preferred Stock as to
dividend distributions and distributions upon the liquidation,
winding-up and dissolution of ICG (collectively referred to with the
common stock of ICG as "ICG Junior Securities"); (ii) on a parity with
any class of capital stock or series of preferred stock issued by ICG
established after September 24, 1997 by ICG's Board of Directors, the
terms of which expressly provide that such class or series will rank
on a parity with the Exchangeable Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of ICG (collectively referred to as "ICG Parity
Securities"); and (iii) junior to each class of capital stock or
series of preferred stock issued by ICG established after September
24, 1997 by ICG's Board of Directors, the terms of which expressly
provide that such class or series will rank senior to the Exchangeable
Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of ICG (collectively referred
to as "ICG Senior Securities"). The Exchangeable Preferred Stock will
be subject to the issuance of series of ICG Junior Securities, ICG
Parity Securities and ICG Senior Securities; provided that ICG may not
issue any new class of ICG Senior Securities without the approval of
the holders of at least a majority of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case
may be, separately as one class.

     Dividends. Dividends on the Exchangeable Preferred Stock will be
payable quarterly. Until November 15, 2000, the dividends will be
payable in additional shares of Exchangeable Preferred Stock. From
November 15, 2000, the dividends will be payable in shares of Common
Stock (or in cash or any combination of cash and Common Stock) such
that the number of shares of Common Stock (plus any cash) paid as
dividends will (i) enable ICG Funding to transfer such shares to the
holders of the Preferred Securities in payment of dividends on the
Preferred Securities or (ii) be sufficient, when sold in the open
market by ICG Funding, for ICG Funding to make its dividend payments
on the Preferred Securities on the relevant Dividend Payment Date,
which is February 15, May 15, August 15 and November 15 of each year
(each, a "Dividend Payment Date"). However, the indentures for ICG's
outstanding high yield notes ("the Indentures") effectively prohibit
the payment of cash dividends by ICG, and future agreements may
provide for restrictions on the payment of cash dividends.

     Voting Rights. The holders of shares of Exchangeable Preferred
Stock will have no voting rights, except as otherwise required by law
and except as set forth below. The Certificate of Designation
governing the Exchangeable Preferred Stock provides that ICG may not,
without the approval of the holders of a majority of the Exchangeable
Preferred Stock, amend the Certificate of Designation or the
Certificate of Incorporation of ICG so as to have a material adverse
effect on the specific rights, preferences, privileges or voting
rights of holders of shares of Exchangeable Preferred Stock, or cause
the dissolution, winding-up or termination of ICG Funding. ICG Funding
is expected to be the sole holder of the Exchangeable Preferred Stock.
ICG Funding will not grant such approval without the consent of the
holders of a majority of the shares of the Preferred Securities then
outstanding.

     Exchange of the Exchangeable Preferred Stock. The Exchangeable
Preferred Stock will be exchangeable into Common Stock at the option
of ICG Funding (upon request by a holder of the Preferred Securities)
at any time prior to the business day immediately preceding the date
of repayment of such Exchangeable Preferred Stock at an initial
exchange rate of 416.22 shares of Common Stock for each Exchangeable
Preferred Stock, subject to certain adjustments.

     Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of ICG, holders of Exchangeable
Preferred Stock will be entitled to be paid, out of the assets of ICG
available for distribution, $10,000 per share of Exchangeable
Preferred Stock, plus an amount in cash equal to accumulated and
unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding-up (including an amount equal to a prorated
dividend for the period from the last dividend payment date to the
date fixed for liquidation, dissolution or winding-up), before any
distribution is made on any ICG Junior Securities, including, without
limitation, Common Stock. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of ICG, the amounts payable
with respect to the Exchangeable Preferred Stock and all other ICG
Parity Securities are not paid in full, the holders of the
Exchangeable Preferred Stock and the ICG Parity Securities will share
equally and ratably in any distribution of assets of ICG with respect
to the Exchangeable Preferred Stock and ICG Parity Securities, in
proportion to the full liquidation preference and accumulated and
unpaid dividends to which each is entitled. After payment of the full
amount of the liquidation preferences and accumulated and unpaid
dividends to which they are entitled, the holders of shares of
Exchangeable Preferred Stock will not be entitled to any further
participation in any distribution of assets of ICG.

     Mandatory Redemption by ICG. The Exchangeable Preferred Stock
must be redeemed by ICG at a redemption price of 100% of the
liquidation preference of the Exchangeable Preferred Stock plus

                             18

<PAGE>


accrued and unpaid dividends, if any, two business days prior to
November 15, 2009, which is the Mandatory Redemption Date for the
Exchangeable Preferred Stock.




                             19

<PAGE>

                         SELLING STOCKHOLDERS

     The selling stockholders listed below ("Selling Stockholders")
are persons who purchased shares of Common Stock from the Company in
connection with the CBG Acquisition. The list indicates any position,
office or other material relationship with the Company that each
Selling Stockholder had within the past three years, the number of
shares of Common Stock owned by each Selling Stockholder prior to the
offering, the maximum number of shares to be offered by such Selling
Stockholder, and the amount of the class owned by each Selling
Stockholder after the completion of the offering (assuming each
Selling Stockholder sold the maximum number of shares of Common
Stock). The Selling Stockholders are not required, and may choose not,
to sell any of their Common Stock.

                              Common         Common        Common 
                              Stock          Stock         Stock
                              Prior to       To Be         After
Name                          Offering       Offered       Offering
- ------------------------------------------------------------------------
Primus Capital Fund III
  Limited Partnership         111,330       111,330           0
Robert B. Daly                 36,766        36,766           0
Steven Halper                 120,263       120,263           0
Fred Skurow                   195,858       195,858           0
Sally Hiudt                    28,176        28,176           0
Mark Krinsky                  170,775       170,775           0
Stephanie A. Skurow,
  Trustee u/a dated 
  12/20/94, known as 
  the Skurow Children's 
  Trust                        24,053      24,053             0




                             20
  
<PAGE>

                         PLAN OF DISTRIBUTION

     Certain of the Selling Stockholders have informed the Company
that they intend to sell the Common Stock that they currently hold
through agents, dealers or underwriters on the Nasdaq National Market
or in the over-the-counter market, or otherwise, on terms and
conditions and at prices determined at the time of sale by the Selling
Stockholders or as a result of private negotiations between buyer and
seller. Certain Selling Stockholders have informed the Company that
they may engage in listed option transactions with respect to the
Common Stock via the use of Flexible Options, E-Flex Options or
European Options traded on a stock exchange which will not expire
prior to April 17, 1998 and may, from and after April 17, 1998, transfer
the shares on exercise or assignment of such options pursuant to this
Prospectus.  Sales of the Common Stock may be made pursuant to this 
Prospectus or pursuant to Rule 144 adopted under the Securities Act. 
Any sales pursuant to this Prospectus by holders of Common Stock will 
require the delivery of a current Prospectus to the purchaser. No 
underwriting arrangements exist as of the date of this Prospectus for 
sales by any Selling Stockholders. Upon being advised of any underwriting 
arrangements, the Company will supplement this Prospectus to disclose 
such arrangements.


                             LEGAL MATTERS

     The legality of the shares of Common Stock offered hereby will be
passed upon for the Company by Reid & Priest LLP, New York, New York.


                                EXPERTS

     The consolidated financial statements and schedule of the Company 
as of September 30, 1995 and 1996, and December 31, 1996 and for each of
the years in the three-year period ended September 30, 1996, and the
three-month period ended December 31, 1996 have been incorporated by
reference herein and in the registration statement in reliance upon the
reports of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.  

     The reports of KPMG Peat Marwick LLP covering the September 30, 1996 
consolidated financial statements and schedule refer to a change in the
method of accounting for long-term telecom service contracts.




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