ITC DELTACOM INC
S-3, 1999-08-06
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>

    As filed with the Securities and Exchange Commission on August 6, 1999
                                                  Registration No.  333-________

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

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                 _____________

                                   FORM S-3
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                                 _____________
                              ITC/\DeltaCom, Inc.
            (Exact name of registrant as specified in its charter)

<TABLE>
<S>                               <C>                           <C>
            Delaware                         4813                     58-2301135
(State or other jurisdiction of   (Primary Standard Industrial    (I.R.S.  Employer
 incorporation or organization)   Classification Code Number)   Identification Number)
</TABLE>

                            1791 O.G. Skinner Drive
                           West Point, Georgia 31833
                                (706) 385-8000
              (Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)
                                 _____________
                Andrew M. Walker                             Copies to:
             Chief Executive Officer
               ITC/\DeltaCom, Inc.                     Nancy J. Kellner, Esq.
             1791 O.G. Skinner Drive                   HOGAN & HARTSON L.L.P.
            West Point, Georgia 31833                555 Thirteenth Street, N.W.
                  (706) 385-8000                       Washington, D.C. 20004
(Name, address, including zip code, and telephone          (202) 637-5600
 number, including area code, of agent for service)

       Approximate date of commencement of proposed sale to the public:
  As soon as practicable after this Registration Statement becomes effective.
                                 _____________

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

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

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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.  [_]

                         -----------------------------
                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===============================================================================================================================
                                                  Calculation of Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
                                                                              Proposed          Proposed
                                                           Amount to be    Maximum Price   Maximum Aggregate      Amount of
Title of Each Class of Securities to be Registered          Registered      per Security   Offering Price (1)  Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>             <C>                 <C>
 4 1/2% Convertible Subordinated Notes due 2006........      $100,000,000            100%       $100,000,000            $27,800
- -------------------------------------------------------------------------------------------------------------------------------
 Common Stock, par value $.01 per share (2)............  3,749,531 shares          -----          ----------           --------
===============================================================================================================================
</TABLE>

(1)  Equals the aggregate principal amount of the securities being registered.

(2)  Such number represents the number of shares of common stock that are
     currently issuable upon conversion of the notes. Pursuant to Rule 416 under
     the Securities Act, the registrant is also registering such indeterminate
     number of shares of common stock as may be issued from time to time upon
     conversion of the notes as a result of the antidilution protection or other
     adjustment provisions of the notes. Pursuant to Rule 457(i), no
     registration fee is required for these shares.

     The registrant hereby undertakes to amend this Registration Statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the SEC, acting pursuant to said Section
8(a), may determine.
<PAGE>

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

      Subject to Completion, Preliminary Prospectus dated August 6, 1999

PROSPECTUS
                                 $100,000,000
                                 ITC/\DeltaCom
                4 1/2% Convertible Subordinated Notes Due 2006

   Holders of our 4 1/2% Convertible Subordinated Notes due 2006 may offer the
notes and the shares of our common stock into which the notes are convertible
for sale at various times at market prices prevailing at the time of sale or at
privately-negotiated prices. The selling holders may sell the notes or the
common stock to or through underwriters, broker-dealers and agents, who may
receive compensation in the form of discounts, concessions or commissions.

 .  Interest on the notes is payable in arrears on May 15 and November 15 of each
   year, beginning on November 15, 1999.

 .  The notes will mature on May 15, 2006, unless earlier converted or redeemed.

 .  The notes are unsecured and rank below our existing and future indebtedness.

 .  Holders of the notes may convert any portion of a note, in multiples of
   $1,000, into our common stock, at a conversion price of $26.67 per share,
   subject to adjustment in specified circumstances.

 .  Our common stock is quoted on the Nasdaq National Market under the symbol
   "ITCD." On August 5, 1999, the reported last sale price of the common stock
   on the Nasdaq National Market was $22 5/8 per share.

 .  We may redeem any portion of the notes at any time prior to May 17, 2002, at
   a redemption price equal to $1,000 per note to be redeemed plus accrued and
   unpaid interest, if any, to the date of redemption, or we may make the notes
   nonconvertible after 30 days' notice at any time before May 17, 2002 under
   specified circumstances. If we redeem the notes or make the notes
   nonconvertible, we will make an additional "make-whole" payment equal to
   $212.60 per $1,000 note, minus the amount of any interest we actually paid on
   the note prior to the notice date with respect to the redeemed notes or, if
   we make notes nonconvertible, all notes, including notes converted after the
   notice date.

 .  We do not intend to apply to list the notes on any securities exchange or for
   quotation through any automated quotation system. The notes are eligible for
   trading in the Private Offerings, Resale and Trading through Automated
   Linkages, or "Portal," market of the National Association of Securities
   Dealers, Inc. The notes are not expected to remain eligible for trading on
   the Portal system and a trading market may not develop for the notes.

 .  We will not receive any proceeds from the sale by the selling holders of the
   notes or the common stock into which the notes are convertible. We will pay
   all expenses, excluding selling commissions and fees and stock transfer
   taxes, of the registration and sale of the notes and the common stock.

 .  Our headquarters are located at 1791 O.G. Skinner Drive, West Point, Georgia
   31833 and our telephone number at this address is (706) 385-8000.

   Investing in the notes or the common stock into which the notes are
convertible involves a high degree of risk. See "Risk Factors" beginning on page
1.
                         -----------------------------

   Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities offered by this
prospectus or determined if this prospectus is truthful or complete. It is
illegal for any person to tell you otherwise.

                         -----------------------------
               , 1999


<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Risk Factors.......................................................................................    1
Cautionary Note Regarding Forward-Looking Statements...............................................   19
Where You Can Find More Information................................................................   19
About ITC/\DeltaCom................................................................................   21
ERISA Matters......................................................................................   22
Ratio of Earnings to Fixed Charges.................................................................   22
Use of Proceeds....................................................................................   22
Description of the Notes...........................................................................   23
Description of Capital Stock.......................................................................   37
Important United States Federal Tax Consequences...................................................   41
Selling Holders....................................................................................   47
Plan of Distribution...............................................................................   49
Legal Matters......................................................................................   51
Experts............................................................................................   51
</TABLE>

                             _____________________

     The indenture relating to the notes requires ITC/\DeltaCom to distribute to
the holders of the notes annual reports containing our financial statements
audited by our independent auditors and quarterly reports containing unaudited
condensed financial statements for the first three quarters of each fiscal year.
As used in this prospectus, "ITC/\DeltaCom," "we," "our," "ours" and "us" refer
to ITC/\DeltaCom, Inc. and its subsidiaries, except where the context otherwise
requires.
                             _____________________

     If it is against the law in any state to make an offer to sell the
securities, or to solicit an offer from someone to buy the securities, then this
prospectus does not apply to any person in that state, and no offer or
solicitation is made by this prospectus to any such person.

     You should rely only on the information contained or incorporated by
reference in this prospectus. ITC/\DeltaCom has not authorized anyone to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. You should assume that the
information appearing in this prospectus is accurate only as of the date on the
front cover.
<PAGE>

                                 RISK FACTORS

  ITC/\DeltaCom is a full service provider of integrated voice and data
telecommunications services on a retail basis to mid-sized and major regional
businesses in the southern United States.  We refer to this business segment as
our Retail Services segment. We are also a leading regional provider of
wholesale long-haul services to other telecommunications companies. We call this
business segment our Carriers' Carrier Services segment. In connection with
these businesses, we own, operate and manage an extensive fiber optic network in
the southern United States. A more detailed description of our business may be
found under the caption "About ITC/\DeltaCom" and in our Annual Report on Form
10-K for the year ended December 31, 1998, filed with the SEC on March 25, 1999.
See "Where You Can Find More Information" for instructions on how to obtain a
copy of our Annual Report and other important documents that we have filed with
the SEC.

  In addition to the other information contained and incorporated by reference
in this prospectus, you should carefully consider the following risk factors
relating to ITC/\DeltaCom, the notes and the common stock before purchasing the
notes or the common stock offered by this prospectus.

We expect to continue to have operating losses and negative cash flow after
capital expenditures, which may result in our failure to meet our working
capital and debt service requirements, including our obligations under the
notes.

  As we have implemented our business strategy to expand our telecommunications
service offerings, expand our fiber optic network and enter new markets, we have
experienced operating losses and negative cash flow after capital expenditures.
We expect this will continue during the next several years as we continue to
expand our business and make substantial capital expenditures.  In addition, we
cannot assure you that we will achieve or sustain profitability or positive net
cash flow at any time after that period.  If we cannot achieve or sustain
operating profitability and positive net cash flow, we may not be able to obtain
the funds necessary to continue our operations or to repay amounts due on our
outstanding indebtedness, including the notes.

We may not have, or be able to obtain, the significant amounts of capital that
we need to expand our network, operations and services as currently planned.

  We need significant capital to expand our network, operations and services
according to our business plans.  Our current business plans require us to
continue to make significant capital expenditures in connection with the
accelerated expansion of our fiber optic network and Retail Services segment.
During 1998, we made capital expenditures of approximately $148 million and we
currently estimate that our capital expenditures will total approximately $250
to $300 million through the year 2000.  In addition, we may make substantial
capital expenditures after 2000, which expenditures may be even more significant
than those in previous periods.  If we do not have access to the capital that we
require or if our estimates are inaccurate, we will need to change our business
plans. This could have a material adverse effect on our business, financial
condition and results of operations, and on our ability to repay the notes.

  Our planned capital expenditures primarily will be for:

  .  continued development and construction of our fiber optic network,
     including transmission equipment;

  .  continued addition of facilities-based local telephone service to our
     bundle of integrated telecommunications services, including acquisition and
     installation of switches and related equipment;

                                       1
<PAGE>

  .  the addition of switching capacity, electrical equipment and additional
     collocation space in connection with the expansion of our provision of
     local telecommunications services to ISPs;

  .  market expansion; and

  .  infrastructure enhancements, principally for information systems.

  Although we cannot assure you that our capital resources will permit us to
fund the planned expansion of our network, operations and services, we expect to
have sufficient funds to enable us to expand our business as currently planned.
We believe that these funds will be provided by:

  .  cash on hand;

  .  cash flow from operations;

  .  borrowings expected to be available under our $50.0 million revolving
     credit facility; and

  .  the proceeds from our May 1999 sale of the notes and our May 1999 common
     stock offering.

  Our estimates of our future capital needs may not be accurate, which would
require us to seek additional financing.

  If our estimates of our capital needs are not accurate for any reason, we may
need to seek additional funds from, for example, public or private sales of
equity or debt securities:

  .  to fund capital expenditures;

  .  for working capital;

  .  to fund new business activities related to our current and planned
     businesses; and

  .  to acquire, or enter into joint ventures and strategic alliances with,
     other businesses.

We cannot assure you that we will be able to obtain these funds on favorable
terms or at all.  Our inability to obtain such funds, if necessary, could have a
material adverse effect on our business, financial condition and results of
operations.

  Our estimate of future capital requirements is a "forward-looking statement"
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. The actual amount and timing of our future
capital requirements may differ substantially from our estimate due to factors
such as:

  .  regulatory, technological, or competitive developments;

  .  unforeseen delays;

  .  cost overruns;

  .  changes in demand for our services; and

  .  new market developments and opportunities.

                                       2
<PAGE>

We have significant debt and we may be unable to service that debt.

  We have significant debt. Set forth below are some of our recent historical
results on a consolidated basis, adjusted to reflect our May 1999 issuance of
the notes as if it had occurred on January 1, 1999.


           At June 30, 1999                    Six months ended June 30, 1999
  ------------------------------------       ----------------------------------

Indebtedness of $517.5 million               Earnings insufficient to cover
                                             fixed charges by $27.5 million
Stockholders' equity of $213.3 million       EBITDA, as adjusted, less capital
                                             expenditures and interest expense
                                             of negative $71.8 million

  EBITDA, as adjusted, represents earnings before extraordinary item, other
income (expense), net interest, income taxes, depreciation and amortization. We
have included EBITDA, as adjusted, data because it is a measure of performance
commonly used in the industry. EBITDA, as adjusted, is not a measure of
financial performance under generally accepted accounting principles and should
not be considered an alternative to net income as a measure of performance or to
cash flows as a measure of liquidity.

  We cannot assure you that we will be able to improve our earnings before fixed
charges or that we will be able to meet our debt service obligations, including
our obligations to repay the notes.  We will be in default under the terms of
our debt obligations if:

  .  we are unable to generate sufficient cash flow or otherwise obtain funds
     necessary to make required payments or

  .  we otherwise fail to comply with the various covenants in our debt
     obligations.

A default would permit the holders of the indebtedness to accelerate its
maturity. This, in turn, could cause defaults under our other indebtedness and
would have a material adverse effect on our business, financial condition and
results of operations, and on our ability to repay the notes.

  Even if we are able to meet our debt service obligations, the amount of debt
we have could adversely affect us in a number of ways, including by:

  .  limiting our ability to obtain any necessary financing in the future for
     working capital, capital expenditures, debt service requirements or other
     purposes;

  .  limiting our flexibility in planning for, or reacting to, changes in our
     business;

  .  placing us at a competitive disadvantage relative to our competitors who
     have lower levels of debt;

  .  making us more vulnerable to a downturn in our business or the economy
     generally; and

  .  requiring us to use a substantial portion of our cash flow from operations
     to pay principal and interest on our debt, instead of contributing those
     funds to other purposes, such as working capital and capital expenditures.

                                       3
<PAGE>

To be able to meet our debt service requirements we must successfully implement
our business strategy. Therefore, we will need to:

  .  expand our network;

  .  obtain and retain a significant number of customers; and

  .  experience significant and sustained growth in our cash flow.

  We cannot assure you that we will successfully implement our business strategy
or that we will be able to generate sufficient cash flow from operating
activities to meet our debt service obligations and working capital
requirements. Our ability to meet our obligations will be dependent upon our
future performance, which will be subject to prevailing economic conditions and
to financial, business and other factors.

  If the implementation of our business strategy is delayed or unsuccessful, or
if we do not generate sufficient cash flow to meet our debt service and working
capital requirements, we may need to seek additional financing. If we are unable
to obtain such financing on terms that are acceptable to us, we could be forced
to dispose of assets to make up for any shortfall in the payments due on our
indebtedness under circumstances that might not be favorable to realizing the
highest price for those assets. A substantial portion of our assets consist of
intangible assets, the value of which will depend upon a variety of factors,
including without limitation, the success of our business. As a result, we
cannot assure you that our assets could be sold quickly enough, or for amounts
sufficient, to meet our obligations, including our obligations under the notes.

Our current indebtedness contains restrictive covenants that place limits on our
business activities.

  We are subject to restrictions under:

  .  the indenture pursuant to which our 9 3/4% Senior Notes were issued;

  .  the indenture pursuant to which our 8 7/8% Senior Notes were issued;

  .  the indenture pursuant to which our 11% Senior Notes were issued; and

  .  our $50.0 million revolving credit facility.

These restrictions affect and, in certain cases, significantly limit or
prohibit, among other things, our ability and the ability of our subsidiaries
to:

  .  incur additional indebtedness;

  .  create liens;

  .  make investments;

  .  issue stock; and

  .  sell assets.

  Our Senior Note indentures restrict our ability to incur indebtedness, other
than indebtedness to finance the acquisition of equipment, inventory or network
assets and other specified indebtedness,

                                       4
<PAGE>

by requiring compliance with specified leverage ratios. In addition, if and when
we borrow funds under our credit facility, our credit facility will require us
to maintain specified financial ratios. We cannot assure you that we will be
able to maintain the required ratios following such borrowing. In addition,
these restrictive covenants may adversely affect our ability to finance our
future operations or capital needs, or to engage in other business activities
that may be in our interest. See "--We have significant debt and we may be
unable to service that debt."

We may not be able to manage our growth successfully.

  The expansion and development of our business will depend upon, among other
things, our ability to:

  .  successfully implement our sales and marketing strategy;

  .  evaluate markets;

  .  design fiber routes;

  .  secure financing;

  .  install facilities;

  .  acquire rights of way;

  .  obtain any required government authorizations;

  .  interconnect to, and collocate with, facilities owned by incumbent local
     exchange carriers; and

  .  obtain appropriately priced unbundled network elements and wholesale
     services from the incumbent local exchange carriers.

These all must be accomplished in a timely manner, at reasonable cost and on
satisfactory terms and conditions. Our rapid growth, particularly in the
provision of Retail Services, has placed, and the growth we anticipate in our
other services may in the future also place, a significant strain on our
administrative, operational and financial resources. Our ability to continue to
manage our growth successfully will require us to:

  .  enhance our operational, management, financial and information systems and
     controls; and

  .  hire and retain qualified sales, marketing, administrative, operating and
     technical personnel.

We cannot assure you that we will be able to do so. In addition, as we increase
our service offerings and expand our targeted markets, there will be additional
demands on customer support, sales and marketing, administrative resources and
network infrastructure. These demands will be intensified if we continue to
accelerate our expansion plans. Our inability to manage our growth effectively
could have a material adverse effect on our business, results of operations and
financial condition, and on our ability to repay the notes.

                                       5
<PAGE>

Development and expansion of our business, including through acquisitions, is
subject to regulatory and market risks.

  The successful implementation of our business strategy to provide an
integrated bundle of telecommunications services and expand our operations will
be subject to a variety of risks, including:

  .  competition and pricing;

  .  the availability of capital on favorable terms;

  .  regulatory uncertainties;

  .  operating and technical problems;

  .  the need to establish and maintain interconnection and collocation
     arrangements with incumbent local exchange carriers in our target markets;
     and

  .  the potential difficulties of offering local exchange services.

In addition, the expansion of our business may involve acquisitions of other
telecommunications businesses and assets that, if made, could divert our
resources and management time and could require integration with our existing
operations. We cannot assure you that any acquisitions could be successfully
integrated into our operations or that any acquired business will perform as
expected. Our failure to implement our expansion and growth strategy
successfully would have a material adverse effect on our business, results of
operations and financial condition, and on our ability to repay the notes.

Our business is subject to significant competitive pressures.

  Our industry is highly competitive and the level of competition, particularly
with respect to pricing, is increasing. For example, prices for long distance
services and for data transmission services have declined substantially in
recent years. These prices are expected to continue to decline, which will
adversely affect our gross margins as a percentage of revenues. In addition,
many of our existing and potential competitors have financial, technical and
other resources and customer bases and name recognition far greater than our
own. We cannot assure you that we will be able to achieve or maintain adequate
market share or revenues, or compete effectively in any of our markets.

  .  We face intense competition from incumbent local exchange carriers,
especially BellSouth

  Local telephone and intraLATA long distance services substantially similar to
  those that we offer are also offered by the incumbent local exchange carriers
  serving the markets that we serve or plan to serve. BellSouth is the incumbent
  local exchange carrier and a particularly strong competitor in most of these
  markets. BellSouth and other incumbent local exchange carriers already have
  relationships with every customer. These carriers may be able to subsidize
  services of the type we offer from service revenues not subject to effective
  competition, which could result in even more intense price competition. In
  addition, successful implementation of our business plan for provision of
  local telephone services is dependent on our ability to obtain the local loop
  and other services and facilities from BellSouth. We expect that competition
  from BellSouth in the provision of local telephone services will continue to
  be intense. By impeding, hindering or delaying provision of services and
  facilities to us, BellSouth could inhibit or prevent us from providing local
  telephone service to our customers, which would place us at a substantial
  competitive disadvantage.

                                       6
<PAGE>

   .  Other competitors and technologies in our industries may further increase
competition

   Providers of long distance services and Carriers' Carrier Services.   We
   -------------------------------------------------------------------
   compete with long distance carriers in the provision of interLATA long
   distance services and Carriers' Carrier Services. The interLATA long distance
   market consists of three major competitors, AT&T, MCI WorldCom and Sprint.
   Other companies operate or are building networks in the southern United
   States and other geographic areas. Our other competitors in the long distance
   services and Carriers' Carrier Services markets include or are likely to
   include Regional Bell Operating Companies, or RBOCs, providing out-of-region
   and, with the future removal of regulatory barriers, in-region long distance
   services, other competitive local exchange carriers, microwave and satellite
   carriers, and private networks owned by large end-users. We also compete with
   direct marketers, equipment vendors and installers, and telecommunications
   management companies with respect to certain portions of our business.

   Wireless providers.   In the future, providers of wireless services may offer
   -------------------
   products that increasingly become a substitute for, rather than only a
   supplement to, a customer's wireline communications services. Competition
   with providers of wireless telecommunications services may be intense. Many
   of our potential wireless competitors have substantially greater financial,
   technical, marketing, sales, manufacturing and distribution resources than
   our own. In recent years, the FCC has made additional spectrum available
   through public auction for use in wireless communications, including
   broadband local loops.

   New transmission technologies.   We also may increasingly face competition
   ------------------------------
   from companies offering long distance data and voice services over the
   Internet. Such companies could enjoy a significant cost advantage because at
   present they do not pay carrier access charges or universal service fees.
   Other competitors are also deploying new transmission technologies in their
   networks to upgrade capacity and reduce costs. For example, in June 1998,
   Sprint announced its intention to offer voice, data and video services over
   its nationwide ATM network, which Sprint anticipates will significantly
   reduce its cost to provide such services. Sprint plans to bill its customers
   based upon the amount of traffic carried, without regard to the time required
   to send the traffic or the traffic's destination. Other advanced networks are
   being deployed by other carriers.

   Competitive local exchange carriers.   We will face competition in the
   ------------------------------------
   markets in which we operate from one or more competitive local exchange
   carriers operating fiber optic networks, in some cases in conjunction with
   the local cable television operator. AT&T, MCI WorldCom, Sprint and others
   have begun to offer local telecommunications services, either directly or in
   conjunction with other competitive local exchange carriers in certain
   locations, and are expected to expand that activity as opportunities created
   by the federal Telecommunications Act of 1996 develop. BellSouth has
   announced plans to provide local service in areas of its region where it is
   not the incumbent local exchange carrier and to establish its own less
   regulated "competitive local exchange carrier" subsidiaries.  In connection
   with those plans, BellSouth has proceeded to file tariffs with some state
   regulatory authorities.

   . Business combinations and strategic alliances may increase competition

     A continuing trend toward business combinations and strategic alliances in
   the telecommunications industry may further increase competition. For
   example, the national long distance carrier WorldCom has merged with MCI. MCI
   WorldCom also acquired competitive local exchange carriers, including MFS
   Communications Company, Inc. and Brooks Fiber Properties, Inc., and related
   businesses such as SkyTel, Inc., AT&T has acquired another competitive local
   exchange carrier, Teleport Communications Group Inc., as well as Tele-
   Communications, Inc., a major cable television operator, and has announced
   plans to provide

                                       7
<PAGE>

  services in conjunction with Time Warner Inc. AT&T has also announced plans to
  enter into a joint venture with British Telecommunications plc to combine the
  international assets and operations of each company, including their existing
  international networks. SBC Communications and Ameritech propose to merge
  which, if approved, would mean that the seven original RBOCs have been reduced
  to four. Other proposed or completed acquisitions include:

     .    Qwest Communication's acquisition of LCI International, Inc. in June
          1998 which created the nation's fourth-largest long distance carrier

     .    Bell Atlantic's proposed acquisition of GTE announced in July 1998

     .    SBC's strategic alliance with Williams Communications

     .    BellSouth's recent equity investment in and marketing agreement with
          Qwest

     .    AT&T's recently announced bid to acquire Media One

     .    Global Crossing Ltd.'s proposed merger with Frontier Corp.

     .    Qwest's proposed merger with U.S. West Inc.

  These types of strategic alliances and business combinations could put us at a
  significant competitive disadvantage.

  .  Recent legislation and regulation may also increase competition

  Long distance services.   The Telecommunications Act of 1996 creates the
  -----------------------
  foundation for increased competition in the long distance market from the
  incumbent local exchange carriers. Such competition could affect the
  successful implementation of our business plans. For example, certain
  provisions of the Telecommunications Act eliminate previous prohibitions on
  the provision of both retail and carriers' carrier interLATA long distance
  services by the RBOCs, subject to compliance by such companies with
  requirements set forth in the Telecommunications Act and implemented by the
  FCC. The FCC has rejected RBOC applications to provide interLATA services,
  including applications from BellSouth covering the states of South Carolina
  and Louisiana. However, the FCC, various states and other parties are actively
  considering actions that could expedite approval of interLATA service.
  BellSouth is actively pursuing favorable state-level approval in Georgia with
  the goal of obtaining FCC approval by the end of 1999 to provide interLATA
  service in that state.  BellSouth also is at various stages of the approval
  process in other states in its region, and it is possible that interLATA entry
  could be approved in one or more of those states next year. In addition,
  legislation is pending in Congress that, if enacted, would relax the interLATA
  restriction in some respects. We could be adversely affected if the RBOCs, and
  particularly BellSouth, are allowed to provide wireline interLATA long
  distance services within their own regions before local competition is
  established.

  Broadband local services.   The FCC has proposed new rules that would give the
  -------------------------
  major incumbent local exchange carriers more freedom if they offer broadband
  local services through separate subsidiaries. Specifically, incumbent local
  exchange carriers would be allowed to offer advanced data services through
  such subsidiaries without dominant carrier regulation and without the
  obligation to make network facilities and services of that affiliate available
  to competitors. The FCC is expected to take action on this matter during 1999.
  We are evaluating how such actions would impact our ability to compete with
  BellSouth and other incumbent local exchange carriers. In a related
  development, cable operators are beginning to offer customers

                                       8
<PAGE>

  broadband access to the Internet, and AT&T has made arrangements to acquire
  the use of such cable network for telecommunications services on an exclusive
  basis. We could be adversely affected if in the future we are not able to
  offer broadband services to certain customers due to limitations on our
  ability to reach such customers over broadband local network facilities.

  Additional flexibility for incumbent local exchange carriers.   The FCC is
  -------------------------------------------------------------
  considering proposed new policies and rules that would grant the incumbent
  local exchange carriers additional flexibility in the pricing of interstate
  access services, and states are considering or are expected to consider
  incumbent local exchange carrier requests for similar regulatory relief with
  respect to intrastate services. Such flexibility is likely to come first for
  services offered in the business market. Any pricing flexibility or other
  significant deregulation of the incumbent local exchange carriers could have a
  material adverse effect on our business. If the incumbent local exchange
  carriers are permitted to engage in increased volume and discount pricing
  practices prior to full competition in local services, or if the incumbent
  local exchange carriers seek to delay implementation of interconnection by
  competitors to their networks or charge excessive interconnection fees, our
  results of operations and financial condition could be adversely affected.

  Access charges; universal service.   We also could be adversely affected by
  ----------------------------------
  FCC or state regulatory decisions affecting access charges and universal
  service. Such decisions could increase our costs of providing service or limit
  our ability to recover those costs from rates charged to customers. The effect
  on us would be particularly adverse to the extent that we bear a
  disproportionate share of these costs compared to our competitors. These
  matters are the subject of ongoing regulation, and important issues regarding
  the future of access and universal service charges remain to be resolved.

We face significant challenges in offering local telephone services, including
the need to make significant investments and compete with established providers.

  We will have to continue to make significant operating and capital
investments, and address numerous operating complexities, to implement our local
telephone services strategy.  Because of these and possible other unknown
factors, we cannot assure you that we will be successful in implementing our
local services strategy.  Our inability to implement this strategy could have a
material adverse affect on our business, results of operations and financial
condition, and on our ability to repay the notes.  To implement our local
services strategy, we are required to:

  .  develop new products, services and systems;

  .  develop new marketing initiatives;

  .  train our sales force in connection with selling these services; and

  .  implement the necessary billing and collecting systems for these services.

  In addition, we expect to continue to face significant pricing and product
competition from the RBOCs, whose core business is providing local dial tone
service and who are currently the dominant providers of services in their
markets. We also will face significant competitive product and pricing pressures
from other incumbent local exchange carriers and from other companies like us
which attempt to compete in the local services market.

  We also expect that the addition of local services to our bundle of
telecommunications services will continue to have a negative impact on our gross
margin as a percentage of revenues. This is because the gross margin on the
resale of local services through incumbent local exchange carrier

                                       9
<PAGE>

facilities is lower than the gross margin on our other lines of business. Gross
margin means gross revenues less cost of services.

The long distance transmission industry is subject to pricing pressures and
risks of industry over-capacity.

  Since shortly after the AT&T divestiture in 1984, the long distance
transmission industry generally has experienced over-capacity and declining
prices. These trends have exerted downward pressure affecting our Carriers'
Carrier Services and we anticipate that prices for our Carriers' Carrier
Services will continue to decline over the next several years. Dramatic and
substantial price reductions in the long distance industry could force us to
reduce our prices significantly, which could have a material adverse effect on
our business, financial condition and results of operations, and on our ability
to repay the notes.

  We expect these price declines will occur because:

  .  some long distance carriers are expanding their capacity generally;

  .  other existing long distance carriers and potential new carriers are
     constructing new fiber optic and other long distance transmission networks
     in the southern United States, and BellSouth is likely to receive authority
     to use its excess capacity to market in-region interLATA services;

  .  expansion and new construction of transmission networks is likely to create
     substantial excess capacity relative to demand in the short or medium term.
     Persons building such lines are likely to install fiber optic cable that
     provides substantially more transmission capacity than will be needed
     because the cost of the fiber cable itself is a relatively small portion of
     the overall cost of constructing new lines;

  .  recent technological advances may also greatly expand the capacity of
     existing and new fiber optic cable; and

  .  the marginal cost of carrying an additional call over existing fiber optic
     cable is extremely low.

  An increase in the capacity of our competitors could adversely affect our
business, even if we are also able to increase our capacity. If industry
capacity expands so much that available capacity exceeds overall demand along
any of our routes, severe additional pricing pressure could develop.  This also
could have a material adverse effect on our business, financial condition and
results of operations, and on our ability to repay the notes.  See "--Our
business is subject to significant competitive pressures" for more information
on the competitive pressures in our industry.

The local and long distance industries are subject to significant government
regulation, and the regulations may change.

  We are required to obtain authorizations from the FCC and state public utility
commissions to offer some of our telecommunications services. We are also
required to file tariffs for many of our services and to comply with local
license or permit requirements relating to installation and operation of our
network. Any of the following could have a material adverse effect on our
business, results of operations and financial condition, and on our ability to
repay the notes:

  .  failure to maintain proper federal and state tariffs;

                                       10
<PAGE>

  .  failure to maintain proper state certifications;

  .  failure to comply with federal, state or local laws and regulations;

  .  failure to obtain and maintain required licenses and permits;

  .  burdensome license or permit requirements to operate in public rights-of-
     way; and

  .  burdensome or adverse regulatory requirements or developments.

  In addition, we recently entered the newly-created competitive local
telecommunications services industry. The local telephone services market was
opened to competition through the passage of the Telecommunications Act. Because
the FCC and the states are still implementing many of the rules and policies
necessary for local telephone competition, and addressing other related issues,
it is uncertain how successful the Telecommunications Act will be in creating
local competition. There is little practical experience under the decisions that
have been made to date. If we are required to change or delay our offering of
local services as a result of changes in regulatory requirements, we may
experience adverse effects on our business, results of operations and financial
condition, and on our ability to repay the notes.

We depend on access service from incumbent local exchange carriers to provide
long distance and interexchange private line services, and we could be adversely
affected if we do not benefit from reduced access charges at least as much as
our competitors.

  We depend on incumbent local exchange carriers to provide access service for
the origination and termination of our toll long distance traffic and
interexchange private lines. Historically, charges for such access service have
made up a significant percentage of the overall cost of providing long distance
service. In 1998, the FCC implemented changes to its interstate access rules
that, among other things, have reduced per-minute access charges and substituted
new per-line flat rate monthly charges. The FCC also approved reductions in
overall access rates, and established new rules to recover subsidies to support
universal service and other public policies. Additional access charge
adjustments will be implemented in the future. The impact of these changes on us
or our competitors is not yet clear. We could be adversely affected if we do not
experience access cost reductions proportionally equivalent to those of our
competitors. New Internet-based competitors continue to be exempt from these
charges, which could give them a significant cost advantage in this area.

If we are unable to interconnect with BellSouth and incumbent local exchange
carriers on acceptable terms, our ability to offer local telephone services will
be adversely affected.

  In August 1996, the FCC adopted rules and policies (1) implementing the local
competition provisions of the Telecommunications Act and (2) imposing
obligations on the incumbent local exchange carriers, including the RBOCs, to
enter into interconnection agreements with new competitive entrants like
ITC/\DeltaCom. We depend on our interconnection agreements with incumbent local
exchange carriers such as BellSouth, GTE, SBC and Sprint to:

  .  provide local telephone service through access to local loops, termination
     service and, in some markets, central office switches of such carriers;

  .  resell local telephone services that we obtain from the incumbent local
     exchange carriers on a wholesale basis; and

                                       11
<PAGE>

  .  obtain operational support to ensure timely delivery to us of network
     elements and wholesale services from the incumbent local exchange carriers.

  In January 1999, the U.S. Supreme Court upheld the FCC's authority to adopt
and implement these rules, but many aspects of such implementation remain to be
determined. For example, the FCC is currently reconsidering its rules regarding
the obligation of the incumbent exchange carriers to make available particular
network elements to competitors. Any restriction on the availability of network
elements could have a materially adverse effect on us.

  Incumbent local exchange carriers meet their obligations under the
Telecommunications Act through the use of interconnection agreements negotiated
with competitive local exchange carriers under regulatory supervision. Such
agreements have been the subject of ongoing disputes, and key issues remain
open. Our ability to successfully negotiate interconnection agreements on a
timely basis and on favorable terms is critical to our ability to provide local
services on a competitive and profitable basis. We cannot assure you that we
will be able to enter into or renew interconnection agreements that permit us to
offer local services at rates that are both profitable and competitive. Any
successful effort by the incumbent local exchange carriers to deny or
substantially limit our access to their network elements or wholesale services
would have a material adverse effect on our ability to provide local telephone
services. This would have a material adverse effect on our business, results of
operations, and financial condition, and on our ability to repay the notes.

  Our interconnection agreement with BellSouth is our most significant
interconnection agreement, enabling us to provide local services in all nine
markets in which BellSouth operates. That agreement currently allows us to
provide local service on a resale basis or by purchasing all unbundled network
elements required to provide local service on a facilities basis, without having
to buy or build our own facilities. The terms of that interconnection agreement,
including interim pricing terms to which we and BellSouth have agreed, have been
approved by state regulatory authorities in all states in which BellSouth
operates. These interim pricing terms remain subject to review and modification
by such authorities. In addition, the BellSouth interconnection agreement does
not resolve all operational issues. We and BellSouth are continuing to negotiate
to resolve those issues.

  The BellSouth interconnection agreement expired on July 1, 1999. We are in
negotiations with BellSouth to renew the terms of the interconnection agreement.
In addition, we have filed for arbitration of certain unresolved issues with the
relevant state regulatory authorities in all BellSouth states except for
Kentucky.  The agreement provides that the parties will continue to exchange
traffic under the current agreement after July 1, 1999 until such time as
renewal terms, conditions and prices are ordered by a state commission or
negotiated by the parties. The new terms, conditions and prices would then be
effective retroactive to July 1, 1999. We cannot assure you that we will be able
to renew the interconnection agreement with BellSouth on favorable terms, or at
all.

  Under the Telecommunications Act, the RBOCs will not be permitted to provide
in-region interLATA long distance services until there is adequate competition
in the local services industry. This provides some incentive to the RBOCs to
provide access to their facilities to competitive new entrants such as
ITC/\DeltaCom. We cannot assure you, however, that once BellSouth or other RBOCs
are permitted to offer long distance service, they will continue to be willing
to enter into interconnection agreements with us that will enable us to provide
local services on competitive and profitable terms.

                                       12
<PAGE>

We are dependent upon rights of way and other third party agreements to expand
and maintain our fiber optic network.

  To construct and maintain our fiber optic network, we have obtained easements,
rights of way, franchises and licenses from various private parties, including
actual and potential competitors and local governments. We cannot assure you
that we will continue to have access to existing rights of way and franchises
after the expiration of our current agreements, or that we will obtain
additional rights necessary to extend our network on reasonable terms. In
addition, third parties may challenge our use of rights of way obtained by
others. If a franchise, license or lease agreement were terminated and we were
forced to remove or abandon a significant portion of our network, such
termination could have a material adverse effect on our business, results of
operations, and financial condition. Similarly, our business plans could be
adversely affected if our network expansion is hindered through delays or
denials of rights of way, easements or related licenses on competitive terms.

Our inability to maintain our network infrastructure, portions of which we do
not own, could adversely affect our business, results of operations and
financial condition, and on our ability to repay the notes.

  Network agreements may be terminated.   We have effectively extended our
  -------------------------------------
network with minimal capital expenditures by entering into marketing and
management agreements with three public utility companies to sell long-haul
private line services on the fiber optic networks owned by these companies.
Under these agreements, which have remaining terms ranging from three to six
years, we generally earn a commission based upon a percentage of the gross
revenues generated by the sale of capacity on the utility's networks. We also
have an agreement to buy and sell capacity with Carolinas Fibernet, which
manages fiber optic facilities in North Carolina and South Carolina.
Cancellation or non-renewal of any of these agreements could materially
adversely affect our business, results of operations and financial condition,
and on our ability to repay the notes.

  Some of our agreements are non-exclusive.   In addition, two of our three
  -----------------------------------------
agreements with the public utility companies are nonexclusive, and we may
encounter competition for capacity on the utilities' networks from other service
providers that enter into comparable arrangements with the utilities. Any
reduction in the amount of capacity that is made available to us could adversely
affect us. To the extent that we are unable to establish similar arrangements in
new markets, we may be required to make additional capital expenditures to
extend our fiber optic network.

  We may experience network equipment failures or cable cuts.   Our business
  -----------------------------------------------------------
also could be materially adversely affected by a cable cut or equipment failure
in our fiber optic network. A substantial portion of our owned and managed fiber
optic network is not protected by electronic redundancy in the event of a total
cable cut. Electronic redundancy enables us to reroute traffic to another fiber
in the same fiber sheath in the event of a partial fiber cut or electronics
failure.

We are dependent on some large customers for a significant percentage of our
revenues and we cannot assure you that we will be able to retain those
customers.

  The table below sets forth, for the years ended December 31, 1997 and 1998 and
for the six months ended June 30, 1999, the percentage of our consolidated
revenues accounted for by our two largest Carriers' Carrier customers and our
five largest Retail Services customers.

                                       13
<PAGE>

<TABLE>
<CAPTION>
                                 Year Ended                     Year Ended                   Six Months Ended
                                 ----------                     ----------                   ----------------
                             December 31, 1997               December 31, 1998                 June 30, 1999
                             -----------------               -----------------                 -------------
<S>                        <C>                             <C>                             <C>
Two largest
Carriers' Carrier          Approximately 12.5% of          Approximately 13.1% of          Approximately 11.4%
customers........          consolidated revenues           consolidated revenues           consolidated revenues

Five largest
Retail Services            Approximately 10.0% of          Approximately 8.5% of           Approximately 12.2% of
customers........          consolidated revenues           consolidated revenues           consolidated revenues
</TABLE>

  We cannot assure you that we will be able to retain our customers. The loss
of, or a significant decrease of business from, any of our largest customers
would have a material adverse effect on our business, results of operations and
financial condition, and on our ability to repay the notes.

  For both Carriers' Carrier Services and Retail Services, our customers
generally have concurrent arrangements with more than one service provider. This
enables our customers to reduce their use of our services and switch to other
providers without incurring significant expense. Our agreements with our
customers generally provide that the customer may terminate service without an
"early discontinuance charge" in the event of specified types of outages in
service and for other defined causes. As of December 31, 1998, our Carriers'
Carrier business had remaining future long-term contract commitments totaling
approximately $139.7 million. Some of those contractual commitments provide
that, if the customer is offered lower pricing with respect to any circuit by
another carrier, the customer's commitment to us will be reduced to the extent
we do not match the price for such circuit and the customer purchases such
circuit from the other carrier.

We are dependent on sophisticated billing, customer service and information
systems.

  We depend on sophisticated information and processing systems to grow, monitor
costs, bill customers, provision customer orders and achieve operating
efficiencies. As we increase our provision of dial tone and switched local
access services, the need for enhanced billing and information systems will also
increase. Our inability to identify adequately all of our information and
processing needs, or to upgrade systems as necessary, could have a material
adverse effect on our ability to reach our objectives, on our financial
condition and on our results of operations, and on our ability to repay the
notes.

Failure to obtain Year 2000 compliance may have adverse effects on us.

  The Year 2000 issue is the result of computer programs using two digits,
rather than four, to define the applicable year. Because of this programming
convention, software, hardware or firmware may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures,
miscalculations or errors causing disruptions of operations or other business
problems, including, among others, an inability to process transactions, send
invoices, or engage in similar normal business activities. Our Year 2000
readiness program is described below. However, we cannot know the actual effects
of the Year 2000 issue on our business and operations until the Year 2000. If we
and/or our major vendors, third party network service providers, and other
material service providers and customers fail to adequately address our
respective Year 2000 issues in a timely manner, this could have a material
adverse effect on our business, results of operations, and financial condition,
and on our ability to repay the notes.

                                       14
<PAGE>

  We have undertaken a comprehensive program to address the Year 2000 issue with
respect to the following:

  .  our information technology and operating systems, including our network
     switching, customer service, call detail and billing systems;

  .  our non-information technology systems, such as buildings, plant, equipment
     and other infrastructure systems that may contain embedded microcontroller
     technology;

  .  the systems of our major vendors, third party network service providers and
     other material service providers, insofar as they relate to our business;
     and

  .  our major Carriers' Carrier and Retail Services customers.

  Our Year 2000 program involves:

  .  a wide-ranging assessment of the Year 2000 problems that may affect us;

  .  the development of remedies to address the problems discovered in the
     assessment phase;

  .  testing and implementation of the remedies; and

  .  the preparation of contingency plans to deal with worst case scenarios.

  As part of the assessment phase of this program, we have identified
substantially all of the major components of the systems described above. To
determine the extent to which those systems are vulnerable to the Year 2000
issue, we:

  .  evaluated our internally developed software applications; and

  .  made inquiries of substantially all of our significant hardware, software
     and other equipment vendors, third party network service providers, other
     material service providers and material customers requesting detailed,
     written information related to Year 2000 compliance.

  To date, we have received and analyzed responses from a substantial majority
of our major vendors and service providers and from our significant Carriers'
Carrier and Retail Services customers. We are investigating, and intend to
closely monitor, the Year 2000 readiness of the three public utilities that own
and operate approximately 3,700 miles of our approximately 8,100-mile fiber
optic network. All of those utilities have indicated that they are Year 2000
compliant. In addition, we continue to follow up with respect to those entities
that have not yet responded to our Year 2000 inquiries.

  Based upon results of our assessment efforts, we began conducting remediation
and testing of at-risk systems identified by the assessment.  During the first
quarter of 1999, we completed the remediation and testing of internally
developed code and the systems that operate and are operated by such software,
and we placed the remediated systems and software into production.  After we
completed the testing of remediated systems, we arranged to conduct laboratory-
simulated integrated systems testing.  During the second quarter of 1999, we
completed the laboratory-simulated testing process.  We continue to develop
contingency plans to handle our most reasonably likely worst case Year 2000
scenarios, which have not yet been identified fully.  We expect to complete the
preparation of our contingency plans by the end of the third quarter of 1999.
These

                                       15
<PAGE>

contingency plans will continue to be refined and updated through the end of
1999, based upon, among other factors, responses from third party inquiries.

  Through June 30, 1999, we incurred approximately $1.7 million in costs for our
Year 2000 program. We currently estimate that, in the remainder of 1999, we will
incur additional expenses which are not expected to exceed approximately
$450,000 to complete our Year 2000 compliance work. These costs, which may vary
from the estimates, have been, and will continue to be, expensed as incurred.


We are subject to risks associated with rapid changes in technology.

  The telecommunications industry is subject to rapid and significant changes in
technology. In addition, we may be required to select in advance one emerging
technology over another, but it will be impossible to predict with any
certainty, at the time we are required to make our investment, which technology
will prove to be the most economic, efficient or capable of attracting customer
usage. Unexpected developments, or our failure to adapt to them, could have a
material adverse effect on our business, results of operations and financial
condition, and on our ability to repay the notes.

Our success depends on our ability to attract and retain key personnel.

  Our business is currently managed by a small number of key management and
operating personnel. We do not have any employment agreements with, nor do we
maintain "key man" insurance on, these employees. The loss of the services of
key personnel, or the inability to attract, recruit and retain sufficient or
additional qualified personnel, could have a material adverse effect on our
business, results of operations and financial condition, and on our ability to
repay the notes.

Our operating results could vary significantly from period to period.

  Our revenues and operating results could vary significantly from period to
period for many reasons, including:

  .  significant expenses associated with the construction and expansion of our
     network and services;

  .  competition and regulatory developments;

  .  changes in market growth rates for our products and services;

  .  availability or announcement of alternative technologies; and

  .  general economic conditions.

  These factors and any resulting fluctuations in our operating results will
make period to period comparisons of our financial condition less meaningful and
could have a material adverse effect on our business, results of operations and
financial condition, and on our ability to repay the notes.

We have several large stockholders who may influence our affairs.

  As of June 30, 1999, Campbell B. Lanier, III beneficially owned approximately
12% of ITC/\DeltaCom's outstanding common stock. To the extent that Mr. Lanier
exercises his voting and investment rights in concert with other stockholders,
Mr. Lanier and such other stockholders may be

                                       16
<PAGE>

able to exercise control over our business by virtue of their voting power with
respect to the election of directors and other actions requiring stockholder
approval.

We do not pay dividends on our capital stock.

  We have never declared or paid any cash dividends on our capital stock and we
do not anticipate paying cash dividends in the foreseeable future. Additionally,
our Senior Note indentures and our revolving credit facility restrict our
ability to pay dividends.

Several provisions in our certificate of incorporation and bylaws could have
effects that conflict with the interests of our stockholders.

  Our certificate of incorporation and bylaws and the General Corporation Law of
the State of Delaware contain provisions that could make it more difficult for a
third party to acquire control of us, even if such change in control would be
beneficial to our stockholders. In particular, the classification of our board
of directors may delay or impede the removal of incumbent directors and
therefore could have the effect of delaying a change in control. In addition,
our certificate of incorporation authorizes the board of directors to issue
shares of our preferred stock, in one or more series, without further
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the board of directors may determine. Any such
issuances of preferred stock could make it more difficult for a third party to
acquire control of us.

The market price of our common stock has fluctuated significantly, and could
fluctuate significantly in the future, as a result of our operating performance
and conditions in our industry.

  The market price of our common stock has fluctuated over a wide range since it
began trading publicly after our initial public offering in October 1997.  The
market price may continue to fluctuate in the future.

  The market price of our common stock could be subject to significant
fluctuations in response to various factors and events, including, among other
things,

  .  the depth and liquidity of the trading market for our common stock;

  .  quarterly variations in actual or anticipated operating results and growth
     rates;

  .  changes in estimates by analysts;

  .  market conditions in the industry;

  .  announcements by competitors;

  .  regulatory actions; and

  .  general economic conditions.

  In addition, the stock market in recent years has experienced significant
price and volume fluctuations that have often been unrelated to the operating
performance of companies. These fluctuations have particularly affected the
market prices of the stocks of telecommunications companies.

                                       17
<PAGE>

  Any of these events would likely result in a material adverse effect on the
market price of our common stock.

The notes rank below our existing and future senior indebtedness and we may be
unable to repay our obligations under the notes.

  The notes are unsecured and subordinated in right of payment to all of our,
and our subsidiaries', existing and future "senior indebtedness," as that term
is defined in the indenture under which the notes were issued. Senior
indebtedness includes all borrowings under our secured credit facility, and the
11% Senior Notes, the 8 7/8% Senior Notes and the 9 3/4% Senior Notes. Because
the notes are subordinate to our senior indebtedness, (1) in the event of our
bankruptcy, liquidation, or reorganization, (2) upon the acceleration of the
notes due to an event of default and (3) in certain other events, we will make
payments on the notes only after we have satisfied all of our senior debt
obligations. Therefore, we may not have sufficient assets remaining to pay
amounts on any or all of the notes. In addition, the notes are effectively
subordinated to all liabilities, including trade payables, of our subsidiaries.
Consequently, our right to receive assets of our subsidiaries upon their
liquidation or reorganization, and the rights of the holders of the notes to
share in those assets, would be subordinate to the claims of the subsidiaries'
creditors.

  The notes are the exclusive obligations of ITC/\DeltaCom. The notes indenture
does not limit our ability, or the ability of our subsidiaries, to incur senior
indebtedness, other debt and other liabilities. We may have difficulty paying
our obligations under the notes if we or our subsidiaries incur additional debt
or liabilities. As of June 30, 1999, ITC/\DeltaCom had approximately $417.5
million of indebtedness outstanding on a consolidated basis, excluding the
notes.  Substantially all of this indebtedness would be considered senior
indebtedness under the indenture.

  Our Senior Note indentures permit us and our subsidiaries to incur an
unlimited amount of debt to finance the acquisition of equipment, inventory and
network assets and to secure such debt. Our Senior Note indentures permit us and
our subsidiaries to incur additional debt--up to $100 million under the 11%
Senior Note indenture, and up to $150 million under the 8 7/8% Senior Note
indenture and the 9 3/4% Senior Note indenture, which may be increased to $250
million under conditions specified in the Senior Note indentures. Under our
credit facility, we have available borrowings of $50.0 million, subject to
compliance with the credit agreement. Our credit facility is secured by
substantially all of the assets of our subsidiaries.

  We expect that from time to time we will incur additional debt, including
senior indebtedness, and that we and our subsidiaries may, from time to time,
incur other additional indebtedness and liabilities. See "Description of the
Notes --- Subordination of Notes."

We may be unable to pay the redemption price for the notes.

  Upon a "fundamental change," as that term is defined in the notes indenture,
each holder of notes will have the right to require ITC/\DeltaCom to redeem all
or a portion of such holder's notes. If a fundamental change were to occur, we
cannot assure you that ITC/\DeltaCom would have sufficient funds to pay the
redemption price for all notes tendered by the holders thereof. Under the
current terms of our credit facility, we would be prohibited from redeeming the
notes in the event of a fundamental change. In addition, the Senior Notes and
other indebtedness that we may incur from time to time may prohibit us from
redeeming the notes. If a fundamental change occurs at a time when we are
prohibited from purchasing or redeeming notes, we could seek the consent of our
lenders to the purchase of notes or could attempt to refinance the borrowings
that contain such prohibition. If we do not obtain such a consent to repay such
borrowings, we would remain prohibited from purchasing or redeeming notes. In
such case, our failure to redeem tendered notes would constitute an event of
default under the notes indenture, which might constitute a default under the
terms of other indebtedness that we may enter into from time to time. In such
circumstances, the

                                       18
<PAGE>

subordination provisions in the notes indenture would likely restrict payments
to the holders of the notes. The term "fundamental change" is limited to certain
specified transactions and may not include other events that might adversely
affect our financial condition, nor would the requirement that we offer to
repurchase the notes upon occurrence of a fundamental change necessarily afford
holders of the notes protection in the event we undertake a transaction,
reorganization, merger or similar transaction in which we incur substantial
additional debt. See "Description of the Notes -- Redemption at Your Option."

There is no public market for the notes.

  The initial purchasers of the notes, though they have advised us that they
intend to make a market in the notes, are not obligated to do so and may
discontinue market-making at any time without notice. Their market-making
activity will be subject to the limits imposed by the securities laws. We cannot
guarantee that the market for the notes will be maintained. The trading price of
the notes may decline if there ceases to be an active trading market for them.
We do not intend to apply for listing of the notes on any securities exchange.
Accordingly, we cannot assure as to the development or liquidity of any trading
market for the notes.

             CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

  This prospectus and the information incorporated by reference in it include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We intend the forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements in these sections. All statements regarding our expected financial
position and operating results, our business strategy and our financing plans
are forward-looking statements. These statements can sometimes be identified by
our use of forward-looking words such as "may," "will," "anticipate,"
"estimate," "expect," or "intend." We cannot promise you that our expectations
in such forward-looking statements will turn out to be correct. Our actual
results could be materially different from and worse than our expectations.
Important factors that could cause our actual results to be materially different
from our expectations include those discussed in this prospectus under the
caption "Risk Factors" beginning on page 1.


                      WHERE YOU CAN FIND MORE INFORMATION

  We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy materials that we have filed
with the SEC, including the registration statement, at the following SEC public
reference rooms:

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

Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.

  Our common stock is quoted on The Nasdaq National Market under the symbol
"ITCD," and our SEC filings can also be read at the following Nasdaq address:

                               Nasdaq Operations
                              1735 K Street, N.W.
                            Washington, D.C. 20006

                                       19
<PAGE>

Our SEC filings are also available to the public on the SEC's Web Site at
http://www.sec.gov.

  The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
including any filings after the date of initial filing and prior to the
effectiveness of the registration statement of which this prospectus is a part,
until we have sold all of the securities to which this prospectus relates or the
offering is otherwise terminated.

     .    Our Annual Report on Form 10-K for our fiscal year ended December 31,
          1998, filed with the SEC on March 25, 1999, as amended by our Form 10-
          K/A, filed with the SEC on April 30, 1999.

     .    Our Quarterly Report on Form 10-Q for our quarterly period ended March
          31, 1999, filed with the SEC on May 17, 1999.

     .    Our Current Reports on Form 8-K, filed with the SEC on April 30, 1999
          and May 6, 1999.

     .    The Description of our common stock included in a registration
          statement on Form 8-A, filed with the SEC on October 22, 1997,
          including any amendments or reports filed for the purpose of updating
          that description.

  You may request a copy of these filings, at no cost, by writing to us at the
following address or telephoning us at (706) 385-8000 between the hours of 9:00
a.m. and 4:00 p.m., West Point, Georgia local time:


                              ITC/\DeltaCom, Inc.
                         Attention: Investor Relations
                            1791 O.G. Skinner Drive
                           West Point, Georgia 31833

                                       20
<PAGE>

                              ABOUT ITC/\DELTACOM


  We are a full service provider of  integrated voice and data
telecommunications services on a retail basis to mid-sized and major regional
businesses in the southern United States.  We are also a leading regional
provider of wholesale long-haul services to other telecommunications companies.
In connection with these businesses, we own, operate and manage an extensive
fiber optic network in the southern United States.

Our Retail Services Segment

  We are a full service provider of integrated retail telecommunications
services to mid-sized and major regional businesses in a bundled package
tailored to the business customer's specific needs.  These Retail Services
include:

               .    local exchange telephone services;
               .    long distance services;
               .    calling card and operator services;
               .    Asynchronous Transfer Mode, or ATM, frame relay, high
                    capacity broadband private line services;
               .    Internet, Intranet, web page hosting and development
                    services;
               .    primary rate interface connectivity and collocation services
                    to Internet service providers;
               .    customer premise equiptment sales, installation and repair;
                    and
               .    enhanced services, including conference calling, fax
                    broadcasting and pre-paid calling cards.

  In connection with offering local exchange services, we have entered into
interconnection agreements with the following incumbent local exchange carriers:

               .    BellSouth Telecommunications, Inc., for all of its markets;
               .    GTE Corporation, for its Alabama market;
               .    Sprint Corporation, for its Florida markets; and
               .    SBC Communications, for its Arkansas markets.

  The interconnection agreements allow us to resell the local exchange services
of  the incumbent carrier and to interconnect our network with their networks.
This allows us to offer local exchange services to our current customer base and
to enter new markets with minimal capital expenditures.  We intend to complete
interconnection agreements with GTE, SBC and Sprint for certain other markets
that we serve or intend to serve.

Our Carriers' Carrier Services Segment

  We also provide wholesale long-haul services, which we call our "Carriers'
Carrier Services," to other telecommunications carriers.  This means we sell
capacity on our network to, and switch and transport telecommunications traffic
for, such carriers. Our Carriers' Carrier customers include, among others, AT&T
Corp., MCI WorldCom, Inc., Qwest Communications International, Inc., Sprint
Corporation, Cable & Wireless Communications, Inc., Allnet Communications
Services, Inc. d/b/a Frontier Communications Services and IXC Communications,
Inc.

Our Principal Executive Offices, Telephone Number And Internet Address

  Our headquarters are located at 1791 O.G. Skinner Drive, West Point, Georgia
31833, our telephone number at this address is (706) 385-8000 and our Internet
site is located at

                                       21
<PAGE>

http://www.itcdeltacom.com. Information contained on our Web site is not, and
should not be deemed to be, a part of this prospectus.

                                 ERISA MATTERS

  ITC/\DeltaCom and its subsidiaries may each be considered a "party in
interest," within the meaning of the Employee Retirement Income Security Act, or
a "disqualified person," within the meaning of Section 4975 of the Internal
Revenue Code, with respect to many employee benefit plans that are subject to
ERISA. The purchase of offered securities by an ERISA plan, including an
individual retirement plan, that is subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of the Internal
Revenue Code and with respect to which ITC/\DeltaCom or any of its affiliates is
a service provider, or otherwise is a party in interest or a disqualified
person, may constitute or result in a prohibited transaction under ERISA or the
Internal Revenue Code, unless such offered securities are acquired pursuant to
and in accordance with an applicable federal statutory exemption, or
administrative exemption issued on a class-wide basis by the United States
Department of Labor. Any pension or other employee benefit plan proposing to
acquire any offered securities should consult with its counsel.


                      RATIO OF EARNINGS TO FIXED CHARGES

  The following table sets forth ITC/\DeltaCom's ratio of earnings to fixed
charges on a historical basis for the periods indicated.  The ratio of earnings
to fixed charges is computed by dividing income from continuing operations
before income taxes and fixed charges by total fixed charges.  Earnings consist
of income before income tax expense (benefit), preacquisition earnings (loss)
and extraordinary loss, plus fixed charges.  Fixed charges represent interest
expense (including capitalized interest), the amortization of debt issuance
costs, and the portion of rental expense under operating leases representing
interest (estimated to be one-third of such expense).


<TABLE>
<CAPTION>
                                                                                                         Six Months Ended
                                                                                                         ----------------
                                                             Fiscal Year                                     June 30,
                                  -----------------------------------------------------------------          --------
                                      1994         1995         1996         1997          1998                1999
                                      ----         ----         ----         ----          ----                ----
                                                              (in thousands, except ratio data)
<S>                               <C>              <C>          <C>         <C>           <C>            <C>
Ratio of earnings to fixed
charges                              2.65              --           --           --            --                  --

Deficiency of earnings to fixed
charges                               N/A           $ 807       $5,143      $13,664       $32,360             $25,854(a)
</TABLE>

___________________

(a)  For the six months ended June 30, 1999, as adjusted to reflect our May 1999
     issuance of the notes as if it had occured on January 1, 1999, earnings
     would have been insufficient to cover fixed charges by 27.5 million.

                                USE OF PROCEEDS

     The selling holders will receive all of the net proceeds from the sale of
their notes and the common stock into which the notes are convertible.
Accordingly, ITC/\DeltaCom will not receive any proceeds from the sale by the
selling holders of the notes and the common stock into which the notes are
convertible.

                                       22
<PAGE>

                           DESCRIPTION OF THE NOTES

  We issued the notes under an indenture dated as of May 12, 1999 between
ITC/\DeltaCom, Inc. and U.S. Trust Company of Texas, N.A., as trustee.  The
notes are covered by a registration rights agreement dated as of May 12, 1999
between ITC/\DeltaCom, Inc. and the placement agents listed in that agreement.
You may request a copy of the indenture and the registration rights agreement
from the trustee.

  We have summarized portions of the indenture and the registration rights
agreement below.  We urge you to read the indenture and the registration rights
agreement because they define your rights as a holder of the notes. In this
section, "ITC/\DeltaCom," "our," "we" and "us" each refers only to
ITC/\DeltaCom, Inc. and not to any of its subsidiaries.


General

  We issued $100,000,000 aggregate principal amount of notes. The notes are
unsecured general obligations of ITC/\DeltaCom subordinate in right of payment
to certain other obligations of ITC/\DeltaCom and convertible into common stock
as described below. The notes are issued only in denominations of $1,000 and
multiples of $1,000 and will mature on May 15, 2006, unless earlier converted or
redeemed by ITC/\DeltaCom or redeemed at the option of the holder upon a
"Fundamental Change," as defined below.

  The indenture does not contain any financial covenants or restrict us from
paying dividends, incurring indebtedness, including "Senior Indebtedness" as
defined below under "--Subordination of Notes," or issuing or repurchasing our
other securities. The indenture also does not contain covenants or other
provisions to protect holders of the notes in the event of a highly leveraged
transaction or a change in control, except to the extent described under "--
Redemption at Option of the Holder."

  The notes bear interest at the annual rate of 41/2% from May 12, 1999 or from
the most recent date to which interest has been paid. We will pay interest in
arrears on May 15 and November 15 of each year, commencing on November 15, 1999,
to holders of record at the close of business on the preceding May 1 and
November 1, except:

  .  that the interest payable upon redemption, unless the date of redemption is
     an interest payment date, will be payable to the person to whom principal
     is payable; and

  .  as set forth in the next succeeding sentence.

In the case of any note, or portion of any note, which is converted into common
stock of ITC/\DeltaCom during the period from, but excluding, a record date for
any interest payment date to, but excluding, the interest payment date, then
either:

  .  if the note, or portion of the note, has been called for redemption on a
     redemption date which occurs during that period, or is to be redeemed in
     connection with a Fundamental Change on a Repurchase Date, as defined
     below, which occurs during such period, ITC/\DeltaCom shall not be required
     to pay interest on such interest payment date in respect of any, or any
     portion of, that note; or

                                       23
<PAGE>

  .  if otherwise, any note, or portion of any note, submitted for conversion
     during that period is accompanied by funds equal to the interest payable on
     such interest payment date on the principal amount so converted.

See "--Conversion of Notes." Interest may, at our option, be paid either:

  .  by check mailed to the address of the person entitled to receive it as it
     appears in the note register, provided that a holder of notes with an
     aggregate principal amount in excess of $10.0 million shall, at the written
     election of the holder, be paid by wire transfer in immediately available
     funds, or

  .  by transfer to an account maintained by such person located in the United
     States; provided, however, that payment to DTC will be made by wire
     transfer of immediately available funds to the account of DTC or its
     nominee. DTC means The Depository Trust Company, New York, New York.

Interest will be computed on the basis of a 360-day year comprised of twelve 30-
day months.


Form, Denomination and Registration

  We issued the notes in fully registered form, without coupons, in
denominations of $1,000 principal amount and multiples of $1,000.

  Global Note, Book-Entry Form.   Notes that were sold to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act
("QIBs"), were represented by global notes, which were deposited with, or on
behalf of, DTC and registered in the name of Cede & Co. as DTC's nominee. Except
as described below, the global note may be transferred, in whole or in part,
only to another nominee of DTC or to a successor of DTC or its nominee.

  You may hold your interests in the global note directly through DTC if you are
a participant in DTC, or indirectly through organizations which are participants
in DTC (the "Participants"). Transfers between Participants will be effected in
the ordinary way according to DTC rules and will be settled in same day funds.
The laws of some states require that specified persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in the global note to those persons may be limited.

  If you are not a Participant, you may beneficially own interests in the global
note held by DTC only through Participants, or selected banks, brokers, dealers,
trust companies and other parties that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants"). So long as Cede & Co., as the nominee of DTC, is the registered
owner of the global note, Cede & Co. for all purposes will be considered the
sole holder of the global note. Except as provided below, owners of beneficial
interests in the global note will not be entitled to have certificates
registered in their names, will not receive physical delivery of certificates in
definitive registered form, and will not be considered the holders of the global
note.

  We will pay interest on and the redemption price of the global note to Cede &
Co. by wire transfer of immediately available funds on each interest payment
date or the redemption or repurchase date, as the case may be. Neither
ITC/\DeltaCom, the trustee nor any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

                                       24
<PAGE>

  We have been informed by DTC that, with respect to any payment of interest on,
or the redemption price of, the global note, DTC's practice is to credit
Participants' accounts on the payment date with payments in amounts
proportionate to their respective beneficial interests in the principal amount
represented by the global note as shown on the records of DTC, unless DTC has
reason to believe that it will not receive payment on such payment date.
Payments by Participants to owners of beneficial interests in the principal
amount represented by the global note held through such Participants will be the
responsibility of such Participants, as is now the case with securities held for
the accounts of customers registered in "street name."

  Because you cannot hold a physical certificate representing your interest in
the global note and because DTC can only act on behalf of Participants, your
ability to pledge your interest to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of your interest, may be
affected by the absence of a physical certificate representing your interest in
the global note.

  Neither ITC/\DeltaCom, the trustee nor any registrar, paying agent or
conversion agent under the indenture will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised ITC/\DeltaCom that it will take any action permitted
to be taken by a holder of notes, including, without limitation, the
presentation of notes for exchange as described below, only at the direction of
one or more Participants to whose account with DTC interests in the global note
are credited, and only in respect of the principal amount of the notes
represented by the global note as to which such Participant or Participants has
or have given such direction.

  DTC has advised us that it is a limited purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC was created to hold securities for its
Participants and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and may include other organizations
such as the placement agents. Some of these Participants or their
representatives, together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with, a
Participant, either directly or indirectly.

  Although DTC has agreed to the procedures described above in order to
facilitate transfers of interests in the global note among Participants, DTC is
under no obligation to perform or continue to perform those procedures, and the
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed
within 90 days, we will cause notes to be issued in definitive registered form
in exchange for the global note.

Certificated Notes.   Certificated notes may be issued in exchange for notes
represented by the global note if no successor depositary is appointed by
ITC/\DeltaCom as set forth above under "--Global Note, Book-Entry Form."

Conversion of Notes

  You may convert your notes into common stock at any time after August 10,
1999, which is 90 days after May 12, 1999, the date of original issuance of the
notes, through the close of business on May 15, 2006, the final maturity date of
the notes, subject to prior redemption and our ability to make the notes
nonconvertible under certain circumstances as described under "Provisional
Redemption or Nonconversion Election by ITC/\DeltaCom." You may convert any
notes or portions

                                       25
<PAGE>

thereof in denominations of $1,000 or multiples of $1,000 at the conversion
price set forth on the cover page of this prospectus, subject to adjustment as
described below. Except as described below, no payment or other adjustment will
be made on conversion of any notes for interest accrued or for dividends on any
common stock issued upon conversion. If any notes not called for redemption are
converted between a record date and the next interest payment date, the notes
must be accompanied by funds equal to the interest payable on the next interest
payment date on the principal amount so converted. We are not required to issue
fractional shares of common stock upon conversion of notes and, instead, may pay
a cash adjustment based upon the market price of common stock on the last
business day prior to the date of conversion. In the case of notes called for
redemption, conversion rights will expire at the close of business on the
business day preceding the day fixed for redemption unless we default in the
payment of the redemption price. You may convert a note which you have elected
to be redeemed upon a Fundamental Change only if you withdraw your election to
redeem according to the terms of the indenture.

  The initial conversion price of $26.67 per share of common stock is subject to
adjustment upon specified events, including:

  (1) the issuance of common stock as a dividend or distribution on the common
      stock;

  (2) specified subdivisions and combinations of the common stock;

  (3) the issuance to all holders of common stock of rights or warrants to
      purchase common stock entitling them to purchase or subscribe for common
      stock at less than the Current Market Price (as defined);

  (4) the distribution to all holders of shares of common stock of capital stock
      (other than common stock) or evidences of indebtedness of ITC/\DeltaCom or
      of assets, including securities, but excluding those rights, warrants,
      dividends and distributions referred to above or paid in cash;

  (5) distributions consisting of cash, excluding any quarterly cash dividend on
      the common stock to the extent that the aggregate cash dividend per share
      of common stock in any quarter does not exceed the greater of:

      (x) the amount per share of common stock of the next preceding quarterly
          cash dividend on the common stock to the extent that such proceeding
          quarterly dividend did not require any adjustment of the conversion
          price pursuant to this clause (5), as adjusted to reflect subdivisions
          or combinations of the common stock, and

      (y) 3.75% of the average of the last reported sales price of the common
          stock during the ten trading days immediately prior to the date of
          declaration of such dividend,

      and excluding any dividend or distribution in connection with the
      liquidation, dissolution or winding up of ITC/\DeltaCom. If an adjustment
      is required to be made as set forth in this clause (5) as a result of a
      distribution that is a quarterly dividend, such adjustment would be based
      upon the amount by which such distribution exceeds the amount of the
      quarterly cash dividend permitted to be excluded pursuant to this clause
      (5). If an adjustment is required to be made as set forth in this clause
      (5) as a result of the distribution that is not a quarterly divided, such
      adjustment would be based upon the full amount of the distribution;

  (6) payment in respect of a tender offer or exchange offer by ITC/\DeltaCom or
      any subsidiary of ITC/\DeltaCom for all or any portion of the common stock
      to the extent that the cash and value of any other consideration included
      in such payment per share of common stock exceeds the Current Market Price
      per share of common stock on the trading day next

                                       26
<PAGE>

      succeeding the last date on which tenders or exchanges may be made
      pursuant to such tender or exchange offer; and

  (7) payment in respect of a tender offer or exchange offer by a person other
      than ITC/\DeltaCom or any subsidiary of ITC/\DeltaCom in which, as of the
      closing date of the offer, the board of directors is not recommending
      rejection of the offer. The adjustment referred to in this clause (7) will
      only be made if the tender offer or exchange offer is for an amount that
      increases the offeror's ownership of common stock to more than 25% of the
      total shares of common stock outstanding, and if the cash and value of any
      other consideration included in such payment per share of common stock
      exceeds the Current Market Price per share of common stock on the business
      day next succeeding the last date on which tenders or exchanges may be
      made pursuant to such tender or exchange offer. The adjustment referred to
      in this clause (7) will generally not be made, however, if, as of the
      closing of the offer, the offering documents with respect to such offer
      disclose a plan or an intention to cause ITC/\DeltaCom to consolidate or
      merge or sell all or substantially all of our assets.

  In the case of:

  .  any reclassification of the common stock or

  .  a consolidation, merger or combination involving ITC/\DeltaCom or a sale or
     conveyance to another person of all or substantially all of the property or
     assets of ITC/\DeltaCom, in each case, as a result of which holders of
     common stock shall be entitled to receive stock, other securities, other
     property or assets, including cash, with respect to or in exchange for the
     common stock,

the holders of the notes then outstanding will generally be entitled after the
reclassification, consolidation, merger, combination, sale or conveyance to
convert the notes into the kind and amount of shares of stock, other securities
or other property or assets, including cash, which they would have owned or been
entitled to receive upon the reclassification, consolidation, merger,
combination, sale or conveyance had the notes been converted into common stock
immediately prior to the reclassification, consolidation, merger, combination,
sale or conveyance assuming that a holder of notes would not have exercised any
rights of election as to the stock, other securities or other property or
assets, including cash, receivable in connection with such transaction.

  If we make a taxable distribution to holders of common stock or in some other
circumstances requiring an adjustment to the conversion price, the holders of
notes may, in specified circumstances, be deemed to have received a distribution
subject to United States income tax as a dividend; in other circumstances, the
absence of such an adjustment may result in a taxable dividend to the holders of
common stock. See "Important United States Federal Income Tax Consequences"
below for more information concerning some possible tax consequences of
investing in the notes.

  We may from time to time and to the extent permitted by law, reduce the
conversion price by any amount for any period of at least 20 days, in which case
we shall give at least 15 days' notice of such reduction, if the board of
directors of ITC/\DeltaCom has made a determination that the reduction would be
in our best interests, which determination shall be conclusive. We may, at our
option, make reductions in the conversion price, in addition to those described
above, as the board of directors deems advisable to avoid or diminish any income
tax to holders of common stock resulting from any dividend or distribution of
stock, or rights to acquire stock, or from any event treated as such for income
tax purposes. For more information concerning some possible tax implications of
investing in the notes, see "Important United States Federal Income Tax
Consequences."

                                       27
<PAGE>

  No adjustment in the conversion price will be required unless it would require
a change of at least 1% in the conversion price then in effect; provided that
any adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment. Except as stated
above, the conversion price will not be adjusted for the issuance of common
stock or any securities convertible into or exchangeable for common stock or
carrying the right to purchase any of the foregoing.


Provisional Redemption or Nonconversion Election by ITC/\DeltaCom

  ITC/\DeltaCom may redeem the notes, in whole or in part, at any time prior to
May 17, 2002, at a redemption price equal to $1,000 per note to be redeemed plus
accrued and unpaid interest, if any, to the date of redemption (the "Provisional
Redemption Date"), or ITC/\DeltaCom may make the notes nonconvertible (the
"Nonconversion Election") after 30 days' notice at any time before May 17, 2002,
if:

  1. the closing price of the common stock shall have exceeded 150% of the
     conversion price then in effect for at least 20 trading days in any
     consecutive 30-trading day period ending on the trading day prior to the
     date of mailing of the notice of provisional redemption or Nonconversion
     Election (the "Notice Date," which such date shall be no more than 60 nor
     less than 30 days prior to the Provisional Redemption Date or the date the
     Nonconversion Election will take effect) and

  2. the shelf registration statement covering resales of the notes and the
     common stock issuable upon conversion of the notes is effective and
     available for use and is expected to remain effective and available for use
     for the 30 days following the Notice Date.

  Upon any Provisional Redemption or Nonconversion Election, ITC/\DeltaCom will
make an additional payment in cash (the "Make-Whole Payment") with respect to
the notes called for redemption (or all notes in the case of a Nonconversion
Election) to holders on the Notice Date in an amount equal to $212.60 per $1,000
note, less the amount of any interest actually paid on such note prior to the
Notice Date. ITC/\DeltaCom will be obligated to make the Make-Whole Payment on
all notes called for Provisional Redemption (or all notes in the case of a
Nonconversion Election), including any notes converted after the Notice Date and
prior to the Provisional Redemption Date or the date the Nonconversion Election
takes effect.

Optional Redemption by ITC/\DeltaCom

  The notes are not entitled to any sinking fund. At any time on or after May
17, 2002, ITC/\DeltaCom may redeem the notes on at least 30 days' notice as a
whole or, from time to time, in part at the following prices, expressed as a
percentage of the principal amount, together with accrued interest to, but
excluding, the date fixed for redemption:

  1. if redeemed during the period beginning May 17, 2002 and ending May 14,
     2003 at a redemption price of 102.571%; and

  2. if redeemed during the 12-month period beginning May 15:

<TABLE>
<CAPTION>
                                                                    Redemption
                                                                    ----------
          Year                                                         Price
          ----                                                         -----
          <S>                                                       <C>
          2003.....................................................   101.929%
          2004.....................................................   101.286
          2005.....................................................   100.643
</TABLE>

                                       28
<PAGE>

and 100% at May 15, 2006; provided that if the redemption date is after an
interest payment record date and on or before an interest payment date, then the
interest payable on the redemption date shall be payable to the holder of record
of the notes on the relevant record date.

  If less than all of the outstanding notes are to be redeemed, the trustee
shall select the notes to be redeemed in principal amounts of $1,000 or
multiples of $1,000 by lot, or by another method the trustee considers fair and
appropriate. If a portion of a holder's notes is selected for partial redemption
and such holder converts a portion of such notes, such converted portion shall
be deemed to be of the portion selected for redemption.

  We may not give notice of any redemption of notes if a default in payment of
interest on the notes has occurred and is continuing.


Redemption at Your Option

  If a Fundamental Change (as defined below) occurs at any time prior to
maturity of the notes, each holder of notes shall have the right, at the
holder's option, to require ITC/\DeltaCom to redeem any or all of that holder's
notes on the date (the "Repurchase Date") that is 30 days after the date of our
notice of such Fundamental Change. The notes will be redeemable in multiples of
$1,000 principal amount.

  We shall redeem the notes at a price equal to 100% of the principal amount to
be redeemed plus accrued interest to, but excluding, the Repurchase Date;
provided that, if the Repurchase Date is after an interest record date and on or
before an interest payment date, then the interest payable on the Repurchase
Date shall be paid to the holder of record of the notes on the relevant record
date.

  We will mail to all holders of record of the notes a notice of the occurrence
of a Fundamental Change and of the redemption right arising as a result of the
Fundamental Change on or before the 30th day after the occurrence of the
Fundamental Change. We are also required to deliver to the trustee a copy of
such notice. To exercise the redemption right, a holder of notes must deliver,
on or before the 30th day after the date of our notice of a Fundamental Change
(the "Fundamental Change Expiration Time"), written notice of the holder's
exercise of such right, together with the notes to be redeemed, duly endorsed
for transfer, to us or an agent designated by us for such purpose. Payment for
notes surrendered for redemption, and not withdrawn, prior to the Fundamental
Change Expiration Time will be made promptly following the Repurchase Date.

  The term "Fundamental Change" means the occurrence of any transaction or event
in connection with which all or substantially all of the common stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive, consideration (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock listed, (or, upon consummation of or immediately following such
transaction or event which will be listed), on a United States national
securities exchange or approved for quotation on the Nasdaq National Market or
any similar United States system of automated dissemination of quotations of
securities prices.

  We will comply with the provisions of Rule 13e-4 and any other tender offer
rules under the Exchange Act to the extent then applicable in connection with
the redemption rights of the holders of notes in the event of a Fundamental
Change.

  The redemption rights of the holders of notes could discourage a potential
acquiror of ITC/\DeltaCom. The Fundamental Change redemption feature, however,
is not the result of management's knowledge of any specific effort to obtain
control of ITC/\DeltaCom by means of a

                                       29
<PAGE>

merger, tender offer, solicitation or otherwise, or part of a plan of management
to adopt a series of anti-takeover provisions. The term "Fundamental Change" is
limited to specified transactions and may not include other events that might
adversely affect our financial condition, nor would the requirement that we
offer to repurchase the notes upon a Fundamental Change necessarily afford the
holder of the notes protection in the event of a highly leveraged transaction,
reorganization, merger or similar transaction involving ITC/\DeltaCom.

  If a Fundamental Change were to occur, we cannot assure you that ITC/\DeltaCom
will have sufficient funds to pay the redemption price for all the notes
tendered by the holders. The terms of our credit facility would, and the terms
of our Senior Notes and other senior debt may, prohibit the payment of the
redemption price. In the event a Fundamental Change occurs at a time when we are
prohibited from purchasing or redeeming the notes, we could seek the consent of
our then-existing lenders to the purchase of the notes or could attempt to
refinance the borrowings that contain such prohibition. If we do not obtain such
a consent or repay such borrowings, we would remain prohibited from purchasing
or redeeming the notes. In such case, our failure to redeem tendered notes would
constitute an Event of Default under the indenture, and may constitute a default
under the terms of other indebtedness that we may enter into from time to time.
In such circumstances, the subordination provisions in the indenture would
likely restrict payments to holders of notes.


Subordination of Notes

  The Indebtedness evidenced by the notes is subordinated to the extent provided
in the indenture to the prior payment in full of all Senior Indebtedness of
ITC/\DeltaCom. The notes also would be effectively subordinated to all
indebtedness and other liabilities, including trade payables and lease
obligations, if any, of our subsidiaries.

  Upon any distribution of assets of ITC/\DeltaCom upon any dissolution, winding
up, liquidation or reorganization, the holders of Senior Indebtedness will be
entitled to receive payment in full, in cash or other payment satisfactory to
the holders of Senior Indebtedness, before the holders of the notes will be
entitled to receive any payment of the principal of, or premium, if any, and
interest, including Liquidated Damages (as defined), if any, on the notes. In
the event of any acceleration of the notes because of an Event of Default (as
defined), the holders of any Senior Indebtedness then outstanding would be
entitled to payment in full in cash or other payment satisfactory to the holders
of Senior Indebtedness of all obligations in respect of such Senior Indebtedness
before the holders of the notes are entitled to receive any payment or
distribution in respect thereof. The indenture will require that we or the
trustee promptly notify holders of Designated Senior Indebtedness if payment of
the notes is accelerated because of an Event of Default.

  We also may not make any payment upon or in respect of the notes, including
upon redemption at the option of the holder of any note or at our option, if:

  .  a default in the payment of the principal, premium, if any, interest, rent
     or other payment obligations in respect of Designated Senior Indebtedness
     (as defined) occurs and is continuing (a "Payment Default") or

  .  any other default occurs and is continuing with respect to Designated
     Senior Indebtedness that permits a holder of the Designated Senior
     Indebtedness as to which such default relates to accelerate its maturity
     and the trustee receives a written notice of such default (a "Payment
     Blockage Notice") from us or other person permitted to give such notice
     under the indenture (a "Non-Payment Default").

                                       30
<PAGE>

  Payments on the notes may and shall be resumed:

  a. in case of a Payment Default, upon the date on which such default is cured
     or waived or ceases to exist and,

  b. in case of a Non-Payment Default, the earlier of the date on which such
     Non-Payment Default is cured or waived or ceases to exist or 179 days after
     the date on which the applicable Payment Blockage Notice is received by the
     trustee if the maturity of such Designated Senior Indebtedness has not been
     accelerated and no Payment Default with respect to any Designated Senior
     Indebtedness has occurred which has not been cured or waived (in which case
     clause (a) shall instead be applicable).

No new period of payment blockage may be commenced pursuant to a Payment
Blockage Notice unless and until:

  .  365 days have elapsed since the initial effectiveness of the immediately
     prior Payment Blockage Notice and

  .  all scheduled payments of principal, premium, if any, and interest
     (including Liquidated Damages, if any) on the notes that have come due have
     been paid in full in cash.

No Non-Payment Default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the trustee shall be, or shall be made, the basis
for a subsequent Payment Blockage Notice, unless such Non-Payment Default is
based upon facts or events arising after the date of delivery of such Payment
Blockage Notice.

  Notwithstanding the foregoing, if the trustee or any holder of the notes
receives any payment or distribution of assets of ITC/\DeltaCom of any kind in
contravention of any of the subordination provisions of the indenture, whether
in cash, property or securities, including, without limitation, by way of set-
off or otherwise, in respect of the notes before all Senior Indebtedness is paid
in full, then such payment or distribution will be held by the recipient in
trust for the benefit of holders of Senior Indebtedness or their representatives
to the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment or distribution,
or provision therefor, to or for the benefit of the holders of Senior
Indebtedness.

  By reason of the subordination provisions described above, in the event of our
bankruptcy, dissolution or reorganization, holders of Senior Indebtedness may
receive, more, ratably, and holders of the notes may receive less, ratably, than
the other creditors of ITC/\DeltaCom. Such subordination will not prevent the
occurrence of any Event of Default under the indenture.

  The term "Senior Indebtedness" means the principal of, premium, if any,
interest, including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post petition
interest is allowable as a claim in any such proceeding, and rent payable on or
in connection with, and all fees, costs, expenses and other amounts accrued or
due on or in connection with, Indebtedness (as defined) of ITC/\DeltaCom,
whether outstanding on the date of the indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by us, including all
deferrals, renewals, extensions or refundings of, or amendments, modifications
or supplements in the foregoing, unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the notes or expressly provides that such Indebtedness is
pari passu with or junior to the notes. Notwithstanding the foregoing, the term
Senior Indebtedness shall not include any Indebtedness of ITC/\DeltaCom to any
of its subsidiaries, a majority of the voting stock of which is owned, directly
or indirectly, by ITC/\DeltaCom.

                                       31
<PAGE>

  The term "Indebtedness" means, with respect to any Person (as defined) and
without duplication:

  (a) all indebtedness, obligations and other liabilities, contingent or
      otherwise, of such Person for borrowed money, including obligations in
      respect of overdrafts, foreign exchange contracts, currency exchange
      agreements, interest rate protection agreements, and any loans or advances
      from banks, whether or not evidenced by notes or similar instruments, and
      all commitment, standby and other fees due and payable to financial
      institutions with respect to credit facilities available to such Person,
      or evidenced by bonds, debentures, notes or similar instruments, whether
      or not the recourse of the lender is to the whole of the assets of such
      Person or to only a portion thereof, and all obligations of such Person
      issued or assumed as the deferred purchase price of property or services,
      other than any account payable or other accrued current liability or
      obligation incurred in the ordinary course of business in connection with
      the obtaining of materials or services;

  (b) all reimbursement obligations and other liabilities, contingent or
      otherwise, of such Person with respect to letters of credit, bank
      guarantees or bankers' acceptances;

  (c) all obligations and liabilities, contingent or otherwise, in respect of
      leases of real or personal property or other assets of such Person
      required, in conformity with generally accepted accounting principles, to
      be accounted for as capitalized lease obligations on the balance sheet of
      such Person and all obligations and other liabilities, contingent or
      otherwise, under any lease or related document, including a purchase
      agreement, in connection with the lease of real property which provides
      that such Person is contractually obligated to purchase or cause a third
      party to purchase the leased property and thereby guarantee a minimum
      residual value of the leased property to the lessor and the obligations of
      such Person under such lease or related documents to purchase or to cause
      a third party to purchase such leased property;

  (d) all obligations of such Person, contingent or otherwise, with respect to
      an interest rate or other swap, cap or collar agreement or other similar
      instrument or agreement or foreign currency hedge, exchange, purchase or
      similar instrument or agreement;

  (e) all direct or indirect guaranties or similar agreements by such Person in
      respect of, and obligations or liabilities, contingent or otherwise, of
      such Person to purchase or otherwise acquire or otherwise assure a
      creditor against loss in respect of, indebtedness, obligations or
      liabilities of another Person of the kind described in clauses (a) through
      (d);

  (f) any indebtedness or other obligations described in clauses (a) through (e)
      secured by any mortgage, pledge, lien or other encumbrance existing on
      property which is owned or held by such Person, regardless of whether the
      indebtedness or other obligation secured thereby shall have been assumed
      by such Person; and

  (g) any and all deferrals, renewals, extensions and refundings of, or
      amendments, modifications or supplements to, any indebtedness, obligation
      or liability of the kind described in clauses (a) through (f).

  The term "Designated Senior Indebtedness" means the credit facility, the 11%
Senior Notes, the 9 3/4% Senior Notes, the 8 7/8% Senior Notes and any Senior
Indebtedness in which the instrument creating or evidencing the same or the
assumption or guarantee thereof (or related agreements or documents in which
ITC/\DeltaCom is a party) expressly provides that such Senior Indebtedness shall
be "Designated Senior Indebtedness" for purposes of the indenture; provided that
such

                                       32
<PAGE>

instrument, agreement or other document may place limitations and conditions on
the right of such Senior Indebtedness to exercise the rights of Designated
Senior Indebtedness.

  As of June 30, 1999, excluding the notes, we had approximately $414.9 million
of indebtedness outstanding on an unconsolidated basis which would have
constituted Senior Indebtedness, and our subsidiaries had approximately $58.9
million of liabilities, including $2.6 million of indebtedness, all of which
would have been effectively senior to the notes. The indenture will not limit
the amount of additional indebtedness, including Senior Indebtedness, which we
can create, incur, assume or guarantee, nor will the indenture limit the amount
of indebtedness or other liabilities that any subsidiary can create, incur,
assume or guarantee.

  We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by it in connection with its duties relating to the notes. The trustee's claims
for such payment will generally be senior to those of the holders of the notes
in respect of all funds collected or held by the trustee.


Events of Default; Notice and Waiver

  An Event of Default is defined in the indenture as being:

  .  default in payment of the principal of or premium, if any (upon redemption
     or otherwise), on the notes, whether or not such payment is permitted to be
     made under the subordination provisions described above;

  .  default for 30 days in payment of any installment of interest, including
     Liquidated Damages, if any, on the notes, whether or not such payment is
     permitted to be made under the subordination provisions described above;

  .  default by ITC/\DeltaCom for 60 days after notice in the observance or
     performance of any other covenants in the notes or the indenture; or

  .  certain events involving bankruptcy, insolvency or reorganization of
     ITC/\DeltaCom or any of its Significant Subsidiaries.

The indenture provides that the trustee may withhold notice to the holders of
the notes of any default, except of principal or premium, if any, or interest
(including Liquidated Damages, if any) with respect to the notes, if the trustee
considers it in the interest of the holders of the notes to do so.

  The indenture provides that if an Event of Default shall have occurred and be
continuing, the trustee or the holders of not less than 25% in principal amount
of the notes then outstanding may declare the principal of, premium, if any, and
accrued interest (including Liquidated Damages, if any) on the notes to be due
and payable immediately. In the case of certain events of bankruptcy or
insolvency of ITC/\DeltaCom, the principal of, premium, if any, and accrued
interest (including Liquidated Damages, if any) on the notes shall automatically
become and be immediately due and payable. However, if ITC/\DeltaCom shall cure
all defaults, except the nonpayment of principal of, premium, if any, and
interest (including Liquidated Damages, if any) on any of the notes which shall
have become due by acceleration, and certain other conditions are met, with
certain exceptions, such declaration may be canceled and past defaults may be
waived by the holders of a majority of the principal amount of the notes then
outstanding.

  The indenture provides that any payment of principal, premium, if any, or
interest (including Liquidated Damages, if any) that is not made when due,
whether or not such payment is permitted

                                       33
<PAGE>

to be made under the subordination provisions described above, will accrue
interest, to the extent legally permissible, at the annual rate set forth on the
cover page hereof from the date on which such payment was required under the
terms of the indenture until the date of payment.

  The holders of a majority in principal amount of the notes then outstanding
shall have the right to direct in writing the time, method and place of
conducting any proceedings for any remedy available to the trustee, subject to
certain limitations specified in the indenture.

  The indenture provides that no holder of the notes may pursue any remedy under
the indenture, except for a default in the payment of principal, premium, if
any, or interest (including Liquidated Damages, if any) on the notes, unless
such holder shall have previously given to the trustee written notice of a
continuing Event of Default, and the holders of at least 25% in principal amount
of the outstanding notes shall have made a written request, and offered
reasonable indemnity, to the trustee to pursue the remedy, and the trustee shall
not have received from the holders of a majority in principal amount of the
outstanding notes a direction inconsistent with such request and shall have
failed to comply with such request within 60 days after receipt of such request.


Modification of the Indenture

  The indenture contains provisions permitting ITC/\DeltaCom and the trustee,
with the consent of the holders of a majority in principal amount of the notes
at the time outstanding, to modify the indenture or any supplemental indenture
or the rights of the holders of the notes, except that no such modification
shall:

  .  extend the fixed maturity of any note;

  .  reduce the rate or extend the time for payment of interest on the notes;

  .  reduce the principal amount of the notes or premium, if any, of the notes;

  .  reduce any amount payable upon redemption thereof;

  .  change the obligation of ITC/\DeltaCom to redeem any note upon the
     happening of any Fundamental Change in a manner adverse to the holders of
     the notes;

  .  impair the right of a holder to institute suit for the payment thereof;

  .  change the currency in which the notes are payable;

  .  impair the right to convert the notes into common stock subject to the
     terms set forth in the indenture; or

  .  modify the provisions of the indenture with respect to the subordination of
     the notes in a manner adverse to the holders of the notes in any material
     respect;

without the consent of each holder of a note so affected; or reduce the
percentage of notes whose holders are required to consent to any such
modification of the indenture or any such supplemental indenture, without the
consent of the holders of all of the notes then outstanding. The indenture also
provides for certain modifications of its terms without the consent of the
holders of the notes.

                                       34
<PAGE>

Registration Rights of the Noteholders

  Under a registration rights agreement with the placement agents, we are
required at our expense, for the benefit of the holders, to keep the shelf
registration statement of which this prospectus is a part effective until the
earlier of:

  1. the sale pursuant to the shelf registration statement of all the securities
     registered thereunder; or

  2. the expiration of the holding period applicable to such securities held by
     persons that are not affiliates of ITC/\DeltaCom under Rule 144(k) under
     the Securities Act, or any successor provision, subject to permitted
     exceptions.

We will be permitted to suspend the use of the prospectus that is a part of the
shelf registration statement under circumstances relating to pending corporate
developments, public filings with the SEC and similar events for a period not to
exceed 60 days in any three-month period or not to exceed an aggregate of 90
days in any 12-month period. We must pay predetermined liquidated damages
("Liquidated Damages"):

  1. in respect of the notes, at a rate per annum equal to .5% of the principal
     amount of the notes and

  2. in respect of any shares of common stock issued upon conversion of the
     notes, at a rate per annum equal to .5% of the then applicable conversion
     price,

to holders of restricted notes and holders of restricted common stock issued
upon conversion of the notes if the prospectus is unavailable for periods in
excess of those permitted above.

  A holder who sells notes or common stock issued upon conversion of the notes
pursuant to the shelf registration statement generally will be required to be
named as a selling stockholder in the related prospectus, deliver a prospectus
to purchasers and be bound by certain provisions of the registration rights
agreement that are applicable to such holder, including certain indemnification
provisions. We will pay all expenses of the shelf registration statement,
provide to each registered holder copies of the prospectus and take certain
other actions as are required to permit, subject to the foregoing, unrestricted
resale of the notes and the common stock issued upon conversion of the notes.

  You may request a copy of the registration rights agreement from
ITC/\DeltaCom, the placement agents or the trustee.


Information Concerning the Trustee

  We have appointed U.S. Trust Company of Texas, N.A., as trustee under the
indenture and paying agent, conversion agent, registrar and custodian with
regard to the notes. United States Trust Company of New York, an affiliate of
the trustee, acts as trustee for the other outstanding notes issued by
ITC/\DeltaCom, including our 11% Senior Notes, 8 7/8% Senior Notes and 9 3/4%
Senior Notes.

Rating of the Notes

  Standard & Poor's Ratings Services has assigned a rating of CCC+ to the notes
and Moody's Investors Service has assigned a rating of B3 to the notes.  The
market price of the notes and the

                                       35
<PAGE>

common stock could be materially adversely affected if rating agencies assign
the notes a rating lower than that expected by investors.


Notices

  Notices concerning any optional redemption, Provisional Redemption,
Nonconversion Election or Fundamental Change shall be given by publication in a
leading daily newspaper of general circulation in New York City and in London
and by mail sent to each holder. Publication of notices is expected to be made
in The Wall Street Journal (Eastern Edition) and the Financial Times.

                                       36
<PAGE>

                         DESCRIPTION OF CAPITAL STOCK

  The following description sets forth the general terms of ITC/\DeltaCom's
capital stock. This description does not purport to be complete and is subject
to and qualified in its entirety by reference to our certificate of
incorporation and our bylaws and the applicable provisions of the Delaware
General Corporation Law.  For information on how to obtain copies of
ITC/\DeltaCom's certificate of incorporation and bylaws, see "Where You Can Find
More Information."


Authorized and Outstanding Capital Stock

  Our certificate of incorporation provides that we have authority to issue
90,000,000 shares of our common stock, par value $.01 per share. At June 30,
1999, there were 58,117,236 shares of our common stock issued and outstanding.

  Our certificate of incorporation authorizes our board of directors from time
to time and without further stockholder action to provide for the issuance of up
to 5,000,000 shares of preferred stock in one or more series, of which 1,750,000
shares have been designated as Series A Convertible Preferred Stock, and to fix
the relative rights and preferences of the shares, including voting powers,
dividend rights, liquidation preferences, redemption rights and conversion
privileges. As of the date of this prospectus, our board of directors has not
provided for the issuance of any series of preferred stock other than the Series
A Preferred Stock, and there are no agreements or understandings for the
issuance of any other series of preferred stock. See "--Series A Preferred
Stock." At June 30, 1999, there were 1,480,771 shares of our Series A Preferred
Stock issued and outstanding.

  Because of its broad discretion with respect to the creation and issuance of
preferred stock without stockholder approval, our board of directors could
adversely affect the voting power of the holders of our common stock and, by
issuing shares of preferred stock with certain voting, conversion and/or
redemption rights, could discourage any attempt to obtain control of
ITC/\DeltaCom.


Common Stock

  Voting Rights. Each holder of shares of our common stock is entitled to attend
all special and annual meetings of our stockholders. In addition, each holder is
entitled, together with the holders of all other classes of stock entitled to
attend the special and annual meetings of our stockholders, to cast one vote for
each outstanding share of common stock held upon any matter or thing, including,
without limitation, the election of one or more directors, properly considered
and acted upon by the stockholders.

  Liquidation Rights. The holders of our common stock and the holders of any
class or series of stock entitled to participate with the holders of our common
stock as to the distribution of assets in the event of any dissolution,
liquidation, or winding up of ITC/\DeltaCom, whether voluntary or involuntary,
will become entitled to participate in the distribution of any assets of
ITC/\DeltaCom remaining after ITC/\DeltaCom has paid, or provided for the
payment of, all of its debts and liabilities and after ITC/\DeltaCom has paid,
or set aside for payment, to the holders of any class of stock having preference
over the common stock in the event of dissolution, liquidation or winding up,
the full preferential amounts, if any, to which they are entitled.

  Dividends.  Dividends may be paid on the common stock and on any class or
series of stock entitled to participate with the common stock as to dividends on
an equal per-share basis, but only when and as declared by our board of
directors. ITC/\DeltaCom has never paid cash dividends, and

                                       37
<PAGE>

the terms of the Senior Note indentures and our revolving credit facility
restrict the payment of dividends in the future.

  No holder of our common stock has any preemptive right to subscribe for any of
our securities, nor does any holder of our common stock have conversion rights.
The rights, privileges, preferences and priorities of holders of our common
stock are subject to, and may be adversely affected by, the rights of the
holders of our Series A Preferred Stock and shares of any series of preferred
stock which we may designate and issue in the future. See "--Series A Preferred
Stock."


Some Important Charter and Statutory Provisions

  Our certificate of incorporation provides for the division of our board of
directors into three classes of directors, each serving staggered, three-year
terms. The certificate further provides that any alteration, amendment or repeal
of certain sections of the certificate relating to the election and
classification of the board of directors, indemnification and the vote
requirements for such amendments to the certificate requires the approval of the
holders of at least two-thirds of the shares entitled to vote thereon. These
provisions may have the effect of deterring hostile takeovers or delaying
changes in control or management of ITC/\DeltaCom.

  ITC/\DeltaCom is subject to the provisions of Section 203 of the Delaware
General Corporation Law. In general, the statute prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless:

  .  prior to that date, the board of directors approved either the business
     combination or the transaction that resulted in the stockholder becoming an
     interested stockholder;

  .  upon consummation of the transaction that resulted in that person becoming
     an interested stockholder, the interested stockholder owned at least 85% of
     the voting stock of the corporation outstanding at the time the transaction
     commenced, excluding, for purposes of determining the number of shares
     outstanding, shares owned by certain directors or certain employee stock
     plans; or

  .  on or after the date the stockholder became an interested stockholder, the
     business combination is approved by the board of directors and authorized
     by the affirmative vote, and not by the written consent, of at least two-
     thirds of the outstanding voting stock, excluding the stock owned by the
     interested stockholder.

A "business combination" includes a merger, asset sale, or other transaction
resulting in a financial benefit to the interested stockholder. An "interested
stockholder" is a person who, other than the corporation and any direct or
indirect majority-owned subsidiary of the corporation, together with affiliates
and associates, owns or, as an affiliate or associate, within three years prior,
did own, 15% or more of the corporation's outstanding voting stock.

  The certificate of incorporation empowers our board of directors to redeem any
of ITC/\DeltaCom's outstanding capital stock, at a price determined by the
board, which price shall be at least equal to the lesser of:

  .  the fair market value as determined in accordance with the certificate of
     incorporation; or

  .  in the case of a "Disqualified Holder," the lesser of fair market value or
     such holder's purchase price (if the stock was purchased within one year of
     such redemption) to the extent

                                       38
<PAGE>

     necessary to prevent the loss or secure the reinstatement of any license,
     operating authority or franchise from any governmental agency.

A "Disqualified Holder" is any holder of shares of stock of ITC/\DeltaCom whose
holding of that stock may result in the loss of, or the failure to secure the
reinstatement of, any license or franchise from any governmental agency held by
ITC/\DeltaCom or any of its subsidiaries to conduct any portion of the business
of ITC/\DeltaCom or any of its subsidiaries. Under the Telecommunications Act of
1996, non-U.S. citizens or their representatives, foreign governments or their
representatives, or corporations organized under the laws of a foreign country
may not own, in the aggregate, more than 20% of a common carrier licensee or
more than 25% of the parent of a common carrier licensee if the FCC determines
that the public interest would be served by prohibiting such ownership. To
implement the United States' World Trade Organization ("WTO") market access
commitments, the FCC adopted an "open entry" policy that presumptively favors
entry for carriers from WTO Member nations, although the Commission reserves the
right to condition or deny licenses to protect competition.  Similarly, the FCC
may also condition an investment by a foreign telecommunications carrier of
greater than 25 percent in a U.S. international carrier.

Transfer Agent and Registrar

  The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.


Listing

  Our common stock is quoted on the Nasdaq National Market under the symbol
"ITCD."


Series A Preferred Stock

  Conversion rights. Holders of Series A Preferred Stock have the right, at any
time after March 14, 2002, to convert each share of Series A Preferred Stock
into one share of our common stock, subject to adjustment for stock splits,
stock dividends, recapitalizations and other specified events.

  Liquidation rights. In the event of any dissolution, liquidation or winding up
of ITC/\DeltaCom, whether voluntary or involuntary, holders of Series A
Preferred Stock will be entitled to receive a distribution of $7.40 per share,
plus any dividends declared and unpaid, prior to any payment or distribution of
assets to holders of our common stock. Holders of our common stock will then be
entitled to any equivalent distribution of $7.40 per share, plus any dividends
declared and unpaid, prior to any payment or distribution of assets to holders
of our common stock. Holders of Series A Preferred Stock and our common stock
will be entitled to share ratably in the distribution of any remaining assets of
ITC/\DeltaCom, with holders of Series A Preferred Stock entitled to receive an
amount equal to the distribution made in respect of the number of shares of
common stock into which the Series A Preferred Stock is then convertible.

  Dividend rights. The holders of Series A Preferred Stock are entitled to
receive, when, as and if declared by our board of directors out of funds legally
available therefor, dividends in an amount per share of Series A Preferred Stock
equal to the dividends payable on the number of shares of common stock into
which one share of Series A Preferred Stock is then convertible. So long as any
shares of Series A Preferred Stock are outstanding, no dividends may be declared
or paid on the common stock or on any class or series of capital stock ranking
on a parity with the Series A Preferred Stock as to dividends, unless dividends
are also paid on the Series A Preferred Stock in an amount per share equal to
the dividends payable on the number of shares of ITC/\DeltaCom common stock into
which one share of Series A Preferred Stock is convertible.

                                       39
<PAGE>

  No redemption rights. The Series A Preferred Stock is not subject to mandatory
or optional redemption.

  Voting rights. Except as set forth in the following sentence, holders of
Series A Preferred have no voting rights. The affirmative vote of holders of at
least two-thirds of the shares of Series A Preferred Stock outstanding is
necessary for:

  .  the authorization or issuance of any class of stock ranking prior to the
     Series A Preferred Stock as to dividends or the distribution of assets upon
     dissolution, liquidation or winding up of ITC/\DeltaCom;

  .  an increase in the authorized or issued amount of Series A Preferred Stock;
     or

  .  the amendment, alteration or repeal, whether by merger, consolidation or
     otherwise, of any provision of the certificate of incorporation that would
     affect any right, preference or voting power of the Series A Preferred
     Stock.

                                       40
<PAGE>

            IMPORTANT UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

  The following is a summary of the material United States federal income tax
consequences relating to the purchase, ownership, and disposition of the notes
and of common stock into which notes may be converted. For purposes of this
summary, the Internal Revenue Service is referred to as the "IRS."

  This summary:

  .  does not purport to be a complete analysis of all the potential tax
     consequences that may be material to an investor based on his or her
     particular tax situation;

  .  is based on (1) the provisions of the Internal Revenue Code of 1986, as
     amended, which is referred to in this summary as the "Code," (2) the
     applicable Treasury Regulations promulgated or proposed under the Code,
     which are referred to in this summary as the "Treasury Regulations," and
     (3) judicial authority and current administrative rulings and practice, all
     of which are subject to change, possibly on a retroactive basis;

  .  deals only with the beneficial owner, or "holder," of a note that will hold
     notes and common stock into which notes may be converted as "capital
     assets" (within the meaning of Section 1221 of the Code);

  .  does not address tax consequences applicable to holders that may be subject
     to special tax rules, such as banks, tax-exempt organizations, pension
     funds, insurance companies, dealers in securities or foreign currencies,
     persons that will hold notes as a position in a hedging transaction,
     "straddle" or "conversion transaction" for tax purposes, or persons that
     have a "functional currency" other than the U.S. dollar; and

  .  does not address the tax consequences to persons other than U.S. holders.


  ITC/\DeltaCom has not sought any ruling from the IRS with respect to the
statements made and the conclusions reached in the following summary, and we
cannot assure you that the IRS will agree with those statements and conclusions.
In addition, the IRS is not precluded from successfully adopting a contrary
position. This summary does not consider the effect of any applicable foreign,
state, local or other tax laws.

  Investors considering the purchase of notes should consult their own tax
advisors with respect to the application of the United States federal income and
estate tax laws to their particular situations as well as any tax consequences
arising under the laws of any state, local or foreign taxing jurisdiction or
under any applicable tax treaty.

  As used herein, the term "U.S. holder" means a beneficial owner of a note or
of common stock that is, for United States federal income tax purposes,

  .  a citizen or resident, as defined in Section 7701(b) of the Code, of the
     United States,

  .  a corporation, partnership or other entity created or organized under the
     laws of the United States or political subdivision thereof,

  .  an estate the income of which is subject to federal income taxation
     regardless of its source, or

                                       41
<PAGE>

  .  in general, a trust subject to the primary supervision of a United States
     court and the control of one or more United States persons.

Payment of Interest

  Interest on a note generally will be includable in the income of a holder as
ordinary income at the time the interest is received or accrued according to the
holder's method of accounting for United States federal income tax purposes.
ITC/\DeltaCom is obligated to pay Liquidated Damages to holders of the notes in
circumstances described under "Description of the Notes--Registration Rights of
the Noteholders." According to Treasury Regulations, the possibility of an
additional payment on the notes will not affect the amount of interest income
recognized by a holder (or the timing of such recognition) if the likelihood of
the additional payment, as of the date the debt obligations are issued, is
remote. ITC/\DeltaCom believes that the likelihood of the payment of Liquidated
Damages is remote and does not intend to treat this possibility as affecting the
yield to maturity of any note. Notwithstanding the above, if Liquidated Damages
are paid, the payments will be treated as interest income when received.
Although not free from doubt, ITC/\DeltaCom intends to take the position that
the likelihood of payment of the Make-Whole Payment is remote under the Treasury
Regulations, and likewise does not intend to treat the possibility of such
payment as affecting the yield to maturity of any note. Notwithstanding the
above, if a Make-Whole Payment is made in connection with a Nonconversion
Election, the payment should be treated as income to the holder. Similarly,
ITC/\DeltaCom intends to take the position that the likelihood of a redemption
or a repurchase upon a "Fundamental Change" is remote under the Treasury
Regulations, and likewise does not intend to treat the possibility of such a
redemption or repurchase as affecting the yield to maturity of any note.

  Treasury Regulations relating to original issue discount provide special rules
for the treatment of "contingent payment debt instruments" (the "contingent debt
regulations"). In general, the holder of a contingent payment debt instrument,
including a holder using the cash method of accounting, must accrue interest on
the debt instrument as original issue discount over its term based upon a
projected payment schedule (subject to subsequent adjustments) determined by the
issuer and any gain or (subject to certain limitations) loss recognized by the
holder on the sale of the debt instrument will be ordinary rather than capital.
Since a contingency that is remote will not cause a debt instrument to be
considered a contingent payment debt instrument, ITC/\DeltaCom intends to take
the position that the contingent debt regulations do not apply to the notes.

Market Discount

  If a holder purchases a note at a price that is lower than the principal
amount of the note, the holder may be affected by the "market discount"
provisions of the Code.  The market discount on any note will generally equal:

  .  the principal amount of the note; minus

  .  the price at which the holder purchased the note.

Subject to a de minimis exception, the market discount provisions generally
require the holder to treat as ordinary income any gain recognized on a
subsequent disposition or redemption of the note to the extent of the "accrued
market discount" at the time of the subsequent disposition.  If any note with
accrued market discount is converted into common stock, the amount of such
accrued market discount generally will be taxable as ordinary income upon
disposition of the common stock.  Market discount on the note will be treated as
accruing on a straight line basis over the term of such note, unless the holder
elects to accrue market discount using a constant interest method.  In addition,
if a holder of a note with market discount incurs or maintains indebtedness to
purchase or carry the

                                       42
<PAGE>

note, any interest deduction attributable to such indebtedness may be disallowed
until the note matures or is disposed of in a taxable transaction.

  A holder may elect to include market discount in income for United States
federal income tax purposes as it accrues, using either a ratable or constant
interest method.  If a holder makes this election, the rule described above
requiring the deferral of deductions for interest expense will not apply.  If
made, the election will apply to all market discount obligations that the holder
acquires on or after the first day of the first taxable year to which the
election applies, and the election may not be revoked without the consent of the
IRS.

Amortizable Premium

  If a holder purchases a note at a premium over its stated principal amount,
plus accrued interest, the holder generally may elect to amortize such premium
("amortizable bond premium") from the purchase date to the note's maturity date
under a constant yield method. Amortizable bond premium, however, will not
include any premium attributable to a note's conversion feature. The premium
attributable to the conversion feature equals:

  .  the purchase price of the note; minus

  .  what the note's fair market value would be if there were no conversion
     feature.

Also, because the notes may be redeemed at the option of ITC/\DeltaCom at a
price in excess of their principal amount, a holder may be required to amortize
any bond premium based on the earlier call date and the call price payable at
that time.  Amortizable bond premium is treated as an offset to interest income
on the note and not as a separate deduction, and the holder's tax basis in the
note will be reduced by the allowable bond premium amortization.

  An election by a holder to amortize bond premium will apply to all debt
obligations owned by the holder on the first day of the first taxable year to
which the election relates and to all debt obligations acquired by the holder
after that day.  The election may not be revoked without the consent of the IRS.

Sale, Exchange or Redemption of the Notes

  Except as described below under "Conversion of the Notes," upon the sale,
exchange or redemption of a note, a holder generally will recognize capital gain
or loss equal to the difference between:

  .  the amount of cash proceeds and the fair market value of any property
     received on the sale, exchange or redemption, except to the extent the
     amount is attributable to accrued interest not previously included in
     income which is taxable as ordinary income, and

  .  the holder's adjusted tax basis in the note.

  A holder's adjusted tax basis in a note generally will equal the cost of the
note to the holder, less any principal payments on the note previously received
by the holder. The capital gain or loss will be long-term if the holder's
holding period is more than one year and will be short-term if the holding
period is equal to or less than one year. In the case of certain noncorporate
taxpayers, including individuals, long-term capital gains are taxed at a maximum
rate of 20% and short-term capital gains are taxed at a maximum rate of 39.6%.
Corporate taxpayers are subject to a maximum regular tax rate of 35% on all
capital gains and ordinary income.

                                       43
<PAGE>

Constructive Dividends on Notes

  Under certain circumstances, adjustments to the conversion ratio of the notes
pursuant to the antidilution provision or otherwise may result in taxable
dividends to holders of notes under Section 305 of the Code.

  For example, if at any time:

  .  ITC/\DeltaCom makes a distribution of cash or property to its stockholders
     or purchases common stock and such distribution or purchase would be
     taxable to such stockholders as a dividend for United States federal income
     tax purposes (e.g., distributions of evidences of indebtedness or assets of
     ITC/\DeltaCom, but generally not stock dividends or rights to subscribe for
     common stock) and, pursuant to the anti-dilution provisions, the conversion
     rate of the notes is increased, or

  .  the conversion rate of the notes is increased at the discretion of
     ITC/\DeltaCom,

such increase in conversion rate may be deemed to be the payment of a taxable
dividend, to the extent of ITC/\DeltaCom's current or accumulated earnings and
profits, to holders of notes, pursuant to Section 305 of the Code. Such holders
of notes could therefore have taxable income as a result of an event pursuant to
which they received no cash or property. While ITC/\DeltaCom believes it
presently does not have any current or accumulated earnings and profits, the
actual amount of earnings and profits at any time will depend upon the actions
and financial performance of ITC/\DeltaCom.


Conversion of the Notes

  A holder generally will not recognize any income, gain or loss upon conversion
of a note into common stock, except to the extent the common stock is considered
attributable to accrued interest not previously included in income, which is
taxable as ordinary income, or with respect to cash received in lieu of a
fractional share of common stock. The holder's tax basis in the common stock
received on conversion of a note will be the same as the holder's adjusted tax
basis in the note at the time of conversion, reduced by any basis allocable to a
fractional share interest, and the holding period for the common stock received
on conversion will generally include the holding period of the note converted.
However, a holder's tax basis in shares of common stock considered attributable
to accrued interest as described above generally will equal the amount of such
accrued interest included in income, and the holding period for such shares will
begin as of the date of conversion of the notes.

  Cash received in lieu of a fractional share of common stock upon conversion
will be treated as a payment in exchange for the fractional share of common
stock. Accordingly, the receipt of cash in lieu of a fractional share of common
stock generally will result in capital gain or loss, measured by the difference
between the cash received for the fractional share and the holder's adjusted tax
basis in the fractional share.

  If upon conversion following a Provisional Redemption or Nonconversion
Election a holder receives additional consideration in the form of a Make-Whole
Payment, such additional consideration may be taxable to such holder as
additional gain or as ordinary income, or if ITC/\DeltaCom has no current or
accumulated earnings and profits, perhaps as a return of capital.

                                       44
<PAGE>

Dividends on Common Stock

  Generally, distributions will be treated as a dividend, subject to tax as
ordinary income, so long as and to the extent that ITC/\DeltaCom has current or
accumulated earnings and profits, then as a tax-free return of capital to the
extent of the holder's tax basis in the common stock and thereafter as gain from
the sale or exchange of such stock. The portion of any distribution treated as a
non-taxable return of capital will reduce the holder's tax basis on the common
stock.

  In general, a distribution on common stock that qualifies as a dividend
because ITC/\DeltaCom has earnings and profits to a corporate holder may qualify
for the 70% dividends received deduction if the holder owns less than 20% of the
voting power and value of ITC/\DeltaCom's stock, other than any non-voting, non-
convertible, non-participating preferred stock and certain other requirements
are satisfied. A corporate holder that owns 20% or more of the voting power and
value of ITC/\DeltaCom's stock, other than any non-voting, non-convertible, non-
participating preferred stock, generally may qualify for an 80% dividends
received deduction.

Sale of Common Stock

  Upon the sale or exchange of common stock, a holder generally will recognize
capital gain or loss equal to the difference between:

  .  the amount of cash and the fair market value of any property received upon
     the sale or exchange and

  .  such United States holder's adjusted tax basis in the common stock.

Such capital gain or loss will be long-term if the holder's holding period is
more than one year and will be short-term if the holding period is equal to or
less than one year. In the case of certain noncorporate taxpayers, including
individuals, long-term capital gains are taxed at a maximum rate of 20% and
short-term capital gains are taxed at a maximum rate of 39.6%. A holder's basis
and holding period in common stock received upon conversion of a note are
determined as discussed above under "Conversion of the Notes." Corporate
taxpayers are subject to a maximum regular tax rate of 35% on all capital gains
and ordinary income. The deductibility of capital losses is subject to certain
limitations.


Information Reporting and Backup Withholding Tax

  In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a note, payments of dividends on
common stock, payments of the proceeds of the sale of a note and payments of the
proceeds of the sale of common stock to certain holders, unless an exception
applies. Further, the payer will be required to withhold backup withholding tax
at the rate of 31% if:

  (a) the payee fails to furnish a taxpayer identification number, or "TIN," to
      the payer or establish an exemption from backup withholding,

  (b) the IRS notifies the payer that the TIN furnished by the payee is
      incorrect,

  (c) there has been a notified payee under-reporting with respect to interest,
      dividends or original issue discount described in Section 3406(c) of the
      Code or

  (d) there has been a failure of the payee to certify under the penalty of
      perjury that the payee is not subject to backup withholding under the
      Code.

                                       45
<PAGE>

Some holders, including corporations, will be exempt from such backup
withholding. Any amounts withheld under the backup withholding rules from a
payment to a holder will be allowed as a credit against the holder's United
States federal income tax and may entitle the holder to a refund, provided that
the required information is furnished to the IRS.

  Treasury regulations that are generally effective with respect to payments
made after December 31, 2000 modify the currently effective information
reporting and backup withholding procedures and requirements, and provide
presumptions regarding the status of holders when payments to the holders cannot
be reliably associated with appropriate documentation provided to the payer.
With respect to payments made after December 31, 2000, these "Final Withholding
Regulations" will require holders to provide certifications, if applicable, that
conform to the requirements of the Final Withholding Regulations. Because the
application of the Final Withholding Regulations will vary depending on the
holder's particular circumstances, holders are urged to consult their tax
advisors regarding the application of the Final Withholding Regulations.

                                       46
<PAGE>

                                SELLING HOLDERS

     The notes were originally issued by ITC/\DeltaCom and sold by the initial
purchasers in a transaction exempt from the registration requirements of the
Securities Act to persons reasonably believed by such initial purchasers to be
qualified institutional buyers.  Selling holders, which term includes their
transferees, pledgees or donees or their successors, may from time to time offer
and sell pursuant to this prospectus any or all of the notes and common stock
into which the notes are convertible.

     The following table sets forth the name of each selling holder, any
material relationship of such holder with ITC/\DeltaCom and the following
information as of August 5, 1999:

 .  the amount of notes owned by each selling holder;

 .  the maximum amount of notes which may be offered for the account of such
   selling holder under this prospectus;

 .  the amount of common stock owned by each selling holder; and

 .  the maximum amount of common stock which may be offered for the account of
   such selling holder under this prospectus.

     This information with respect to each selling holder is based upon
information provided by or on behalf of such selling holder.  The selling
holders may offer all, some or none of the notes or common stock into which the
notes are convertible.  Because the selling holders may offer all or some
portion of the notes or the common stock, we cannot estimate the amount of notes
or common stock that will be held by the selling holders upon termination of
sales pursuant to this prospectus.  In addition, the selling holders identified
below may have sold, transferred or otherwise disposed of all or a portion of
their notes since the date on which they provided the information regarding
their notes in transactions exempt from the registration requirements of the
Securities Act.

<TABLE>
<CAPTION>
                                      Principal
                                      Amount of
                                        Notes              Principal
                                     Beneficially          Amount of              Common Stock
                                     Owned Prior             Notes                Owned Prior                Common
                                       to the              Offered                  to the                Stock Offered
      Name                            Offering              Hereby                Offering(1)               Hereby(2)
      ----                            --------              ------                -----------               ---------
<S>                                  <C>                 <C>                      <C>                     <C>
Bear Stearns & Co.                   $  1,375,000        $  1,375,000                 51,556                   51,556
White River
 Securities LLC                      $  1,375,000        $  1,375,000                 51,556                   51,556
Warburg Dillon
 Read LLC                            $    500,000        $    500,000                 18,747                   18,747
TCW Group, Inc.                      $  5,750,000        $  5,750,000                215,598                  215,598

Any other holder of notes
or future transferee from
any such holder(3)(4).......         $ 91,000,000        $ 91,000,000              3,412,074(5)             3,412,074
              Total.........         $100,000,000        $100,000,000              3,749,531                3,749,531
</TABLE>

                                       47
<PAGE>

(1)  Comprises the shares of common stock owned by each selling holder prior to
the offering, including the shares of common stock into which the notes held by
the selling holder are convertible at the initial conversion rate of $26.67 per
share, excluding fractional shares. Fractional shares will not be issued upon
conversion of the notes; rather, cash will be paid in lieu of fractional shares,
if any. The conversion price and the number of shares of common stock issuable
upon conversion of the notes are subject to adjustment under specified
circumstances, which are described in more detail under "Description of Notes --
Conversion of Notes." Accordingly, the number of shares of common stock issuable
upon conversion of the notes may increase or decrease from time to time.

(2)  Assumes conversion into common stock of the full amount of notes held by
the selling holder at the initial conversion rate of $26.67 per share and the
offering of those shares by the selling holder pursuant to this prospectus. The
conversion price and the number of shares of common stock issuable upon
conversion of the notes are subject to adjustment under specified circumstances
which are described in more detail under "Description of Notes -- Conversion of
Notes." Accordingly, the number of shares of common stock issuable upon
conversion of the notes may increase or decrease from time to time. Fractional
shares will not be issued upon conversion of the notes; rather, cash will be
paid in lieu of fractional shares, if any. The selling holders may offer and
sell pursuant to the prospectus, their notes, the shares of common stock into
which the notes are convertible, or both.

(4)  Information concerning other selling holders of notes will be set forth in
prospectus supplements from time to time, as required. No holder may offer notes
pursuant to this prospectus until such holder is included as a selling holder in
a supplement to this prospectus in accordance with the registration rights
agreement.

(5)  Assumes that any other holders of notes or any future transferee from any
such holder does not beneficially own any common stock other than common stock
into which the notes are convertible at the conversion price of $26.67 per
share.

___________________

     Other than as noted above, none of the selling holders has had any material
relationship with us or our affiliates within the past three years.  The selling
holders purchased all of the notes from us in a private transaction on May 12,
1999.  All of the notes were "restricted securities" under the Securities Act
prior to this registration.

     We agreed with the selling holders to file the registration statement to
register the resale of the notes and shares of common stock into which the notes
are convertible.  We agreed to prepare and file all necessary amendments and
supplements to the registration statement to keep it effective until the earlier
of (1) May 12, 2001 and (2) the date on which the notes and the common stock
into which the notes are convertible no longer qualify as "registrable
securities" under the Registration Rights Agreement.

     Information concerning the selling holders may change from time to time and
any such changed information will be set forth in supplements to this prospectus
if and when necessary.  In addition, the per share conversion price, and
therefore the number of shares of common stock issuable upon conversion of the
notes, is subject to adjustment under certain circumstances.  Accordingly, the
aggregate principal amount of notes and the number of shares of common stock
into which the notes are convertible may increase or decrease.  ITC/\DeltaCom
will pay the expenses of registering the notes and common stock being offered by
this prospectus.

                                       48
<PAGE>

                             PLAN OF DISTRIBUTION

     The selling holders and their successors, which term includes their
transferees, pledgees or donees or their successors, may sell the notes and the
common stock into which the notes are convertible directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the selling holders or
the purchasers, which discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.

     The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at prices related to such prevailing market prices, at varying
prices determined at the time of sale, or at negotiated prices.  Such sales may
be effected in transactions, which may involve crosses or block transactions:

     .    on any national securities exchange or quotation service on which the
          notes or the common stock may be listed or quoted at the time of sale,

     .    in the over-the-counter market,

     .    in transactions otherwise than on such exchanges or services or in the
          over-the-counter market,

     .    through the writing of options, whether such options are listed on an
          options exchange or otherwise, or

     .    through the settlement of short sales.

In connection with the sale of the notes and the common stock into which the
notes are convertible or otherwise, the selling holders may enter into hedging
transactions with broker-dealers or other financial institutions which may in
turn engage in short sales of the notes or the common stock into with the notes
are convertible and deliver these securities to close out such short positions,
or loan or pledge the notes or the common stock into which the notes are
convertible to broker-dealers that in turn may sell these securities.

     The aggregate proceeds to the selling holders from the sale of the notes or
common stock into which the notes are convertible offered by them hereby will be
the purchase price of such notes or common stock less discounts and commissions,
if any.  Each of the selling holders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any
proposed purchase of notes or common stock to be made directly or through
agents.  We will not receive any of the proceeds from this offering.

     Our outstanding common stock is listed for trading on the Nasdaq National
Market.  We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.

     In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
such jurisdictions only through registered or licensed brokers or dealers.  In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.

                                       49
<PAGE>

     The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act.  Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under the
Securities Act.  Selling holders who are "underwriters" within the meaning of
Section 2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act.  The selling holders have acknowledged that
they understand their obligations to comply with the provisions of the Exchange
Act and the rules thereunder relating to stock manipulation, particularly
Regulation M, and have agreed that they will not engage in any transaction in
violation of such provisions.

     In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus.  A selling holder
may not sell any notes or common stock described herein and may not transfer,
devise or gift such securities by other means not described in this prospectus.

     To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.

          We entered into a registration rights agreement for the benefit of
holders of the notes to register their notes and common stock under applicable
federal and state securities laws under particular circumstances and at
specified times.  The Registration Rights Agreement provides for cross-
indemnification of the selling holders and ITC/\DeltaCom and their respective
directors, officers and controlling persons against certain liabilities in
connection with the offer and sale of the notes and the common stock, including
liabilities under the Securities Act.  We will pay all of our expenses and
substantially all of the expenses incurred by the selling holders incident to
the offering and sale of the notes and the common stock, provided that each
selling holder will be responsible for payment of commissions, concessions and
discounts of underwriters, broker-dealers or agents.

                                       50
<PAGE>

                                 LEGAL MATTERS

  The validity of the notes and the common stock will be passed upon for
ITC/\DeltaCom by its special counsel, Hogan & Hartson L.L.P., Washington, D.C.
Hogan & Hartson L.L.P. also provides legal services to affiliated companies of
ITC/\DeltaCom and Campbell B. Lanier, III. Anthony S. Harrington, a partner of
the firm, beneficially owns approximately 118,00 shares of the common stock.

                                    EXPERTS

  The consolidated balance sheets of ITC/\DeltaCom, Inc. and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1998 and the related schedule incorporated by
reference in this Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto and are incorporated by reference herein in reliance upon the authority
of said firm as experts in giving said reports.

                                       51
<PAGE>

                                 $100,000,000


                                 ITC/\DeltaCom


                4 1/2% Convertible Subordinated Notes Due 2006






                                  Prospectus

                            Dated            , 1999
<PAGE>

                                    PART II

                    INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.   Other Expenses of Issuance and Distribution

     The following table sets forth the various expenses in connection with the
registration of the notes and common stock offered hereby. ITC/\DeltaCom will
bear all of these expenses, including those of the selling securityholders
(other than any underwriting discounts or commissions or any agent commissions).
All amounts are estimated except for the Securities and Exchange Commission
registration fee and Nasdaq National Market Listing fee:

SEC Registration Fee.........................   $ 27,800
Nasdaq National Market Listing Fee...........     17,500
Printing and Duplicating Expenses............     20,000
Legal Fees and Expenses......................     60,000
Accounting Fees and Expenses.................      7,500
Miscellaneous................................     25,200
                                                --------
  Total......................................   $158,000
                                                --------

Item 15.    Indemnification of Directors and Officers

     Under Section 145 of the Delaware General Corporation Law ("DGCL"), a
corporation may indemnify its directors, officers, employees and agents and its
former directors, officers, employees and agents and those who serve, at the
corporation's request, in such capacities with another enterprise, against
expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have had
no reasonable cause to believe his or her conduct was unlawful. In addition, the
DGCL does not permit indemnification in an action or suit by or in the right of
the corporation, where such person has been adjudged liable to the corporation,
unless, and only to the extent that, a court determines that such person fairly
and reasonably is entitled to indemnity for costs the court deems proper in
light of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.

     ITC/\DeltaCom's Restated Certificate of Incorporation contains provisions
that provide that no director of ITC/\DeltaCom shall be liable for breach of
fiduciary duty as a director except for (1) any breach of the directors' duty of
loyalty to ITC/\DeltaCom or its stockholders; (2) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of the law;
(3) liability under Section 174 of the DGCL; or (4) any transaction from which
the director derived an improper personal benefit. Under the Amended and
Restated Bylaws of ITC/\DeltaCom, ITC/\DeltaCom is required to advance expenses
incurred by an officer or director in defending any such action if the director
or officer undertakes to repay such amount if it is determined that the director
or officer is not entitled to indemnification. In addition, ITC/\DeltaCom has
entered into indemnity agreements with each of its directors pursuant to which
ITC/\DeltaCom has agreed to indemnify the directors as permitted by the DGCL.
ITC/\DeltaCom has obtained directors and officers liability insurance against
certain liabilities, including liabilities under the Securities Act.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933, may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing

                                     II-1
<PAGE>

provisions, ITC/\DeltaCom has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.

Item 16.   Exhibits

     3.1    Restated Certificate of Incorporation of ITC/\DeltaCom, Inc. Filed
            as Exhibit 3.1 to ITC/\DeltaCom's Registration Statement on Form S-4
            (File No. 333-71735) and incorporated herein by reference.

     3.2    Amended and Restated Bylaws. Filed as Exhibit 3.2 to ITC/\DeltaCom's
            Registration Statement on Form S-1 (File No. 36683) and incorporated
            herein by reference.

     4.1    Registration Rights Agreement, dated as of May 12, 1999, by and
            among ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated,
            Credit Suisse First Boston Corporation, First Union Capital Markets
            Corp. and Nationsbanc Montgomery Securities LLC. Filed as Exhibit
            4.1 to ITC/\DeltaCom's Quarterly Report on Form 10-Q for the
            quarterly period ended March 31, 1999 (File No. 0-23252) and
            incorporated herein by reference.

     4.2    Indenture, dated as of May 12, 1999, between ITC/\DeltaCom, Inc. and
            U.S. Trust Company of Texas, N.A., as Trustee. Filed as Exhibit 4.2
            to ITC/\DeltaCom's Quarterly Report on Form 10-Q for the quarterly
            period ended March 31, 1999 (File No. 0-23252) and incorporated
            herein by reference.

     4.3    Form of 4 1/2% Convertible Subordinated Note due 2006. Contained in
            the Indenture filed as Exhibit 4.2 to ITC/\DeltaCom's Quarterly
            Report on Form 10-Q for the quarterly period ended March 31, 1999
            (File No. 0-23252) and incorporated herein by reference.

     4.4    Form of Common Stock Certificate of the Company. Filed as Exhibit
            4.1 to ITC/\DeltaCom's Registration Statement on Form S-1 (File No.
            333-36683) and incorporated herein by reference.

  *  5.1    Opinion of Hogan & Hartson L.L.P. regarding the legality of the
            notes and the common stock into which the notes are convertible.

  +  12.1   Statement Regarding Computation of Ratios.

  *  23.1   Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5.1).

  +  23.2   Consent of Arthur Andersen LLP, independent public accountants.

  +  24.1   Power of Attorney (included on signature page).

  +  25.1   Form T-1 Statement of Eligibility of U.S. Trust Company of Texas,
            N.A., to act as trustee under the indenture.

____________________

+    Filed herewith.
*    To be filed by amendment.

                                     II-2
<PAGE>

Item 17.   Undertakings

     (a)  The undersigned Registrant hereby undertakes:

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

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

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

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

     Provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii) above shall
     not apply if the information required to be included in a post-effective
     amendment by those paragraphs is contained in the periodic reports filed
     with or furnished to the Commission by the Registrant pursuant to Section
     13 or Section 15(d) of the Securities Exchange Act of 1934 that are
     incorporated by reference in this registration statement.

          (2)  That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the Offered Securities
     offered herein, and the offering of such Offered Securities at that time
     shall be deemed to be the initial bona fide offering thereof.

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

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

     (c)  Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to existing provisions or arrangements
whereby the Registrant may indemnify a director, officer or controlling person
of the Registrant against liabilities arising under the Securities Act of 1933,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 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

                                     II-3
<PAGE>

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 of 1933 and will be
governed by the final adjudication of such issue.


                                     II-4
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Point, State of Georgia, on this 6th day of
August, 1999.


                                   ITC/\DELTACOM, INC.


                                   By: /s/ Douglas A. Shumate
                                      ----------------------------
                                        Douglas A. Shumate
                                      Senior Vice President and
                                       Chief Financial Officer

                               POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Campbell B. Lanier, III, Andrew M. Walker and
Douglas A. Shumate, jointly and severally, each in his own capacity, his true
and lawful attorneys-in-fact, with full power of substitution, for him and his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents with full power and authority to do so and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signature                              Title                                 Date
       ----------                              -----                                 ----
<S>                                 <C>                                         <C>
/s/ Campbell B. Lanier, III              Chairman, Director                     August 6, 1999
- ---------------------------------
    Campbell B. Lanier, III


/s/ Andrew M. Walker                 Chief Executive Officer, Vice              August 6, 1999
- ---------------------------------
    Andrew M. Walker                     Chairman and Director
                                     (Principal executive officer)


/s/ Douglas A. Shumate              Senior Vice President and Chief             August 6, 1999
- ---------------------------------
    Douglas A. Shumate                Financial Officer (Principal
                                    financial officer and principal
                                         accounting officer)


/s/ Donald W. Burton                           Director                         August 6, 1999
- ---------------------------------
    Donald W. Burton


/s/ Malcom C. Davenport                        Director                         August 6, 1999
- ---------------------------------
    Malcolm C. Davenport, V


/s/ Robert A. Dolson                           Director                         August 6, 1999
- ---------------------------------
    Robert A. Dolson


/s/ O. Gene Gabbard                            Director                         August 6, 1999
- ---------------------------------
    O. Gene Gabbard


/s/ William T. Parr                            Director                         August 6, 1999
- ---------------------------------
    William T. Parr


/s/ William H. Scott, III                      Director                         August 6, 1999
- ---------------------------------
    William H. Scott, III


/s/ William B. Timmerman                       Director                         August 6, 1999
- ---------------------------------
    William B. Timmerman
</TABLE>
<PAGE>

                               INDEX TO EXHIBITS

     3.1   Restated Certificate of Incorporation of ITC/\DeltaCom, Inc. Filed as
           Exhibit 3.1 to ITC/\DeltaCom's Registration Statement on Form S-4
           (File No. 333-71735) and incorporated herein by reference.

     3.2   Amended and Restated Bylaws. Filed as Exhibit 3.2 to ITC/\DeltaCom's
           Registration Statement on Form S-1 (File No. 36683) and incorporated
           herein by reference.

     4.1   Registration Rights Agreement, dated as of May 12, 1999, by and among
           ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated, Credit
           Suisse First Boston Corporation, First Union Capital Markets Corp.
           and Nationsbanc Montgomery Securities LLC. Filed as Exhibit 4.1 to
           ITC/\DeltaCom's Quarterly Report on Form 10-Q for the quarterly
           period ended March 31, 1999 (File No. 0-23252) and incorporated
           herein by reference.

     4.2   Indenture, dated as of May 12, 1999, between ITC/\DeltaCom, Inc. and
           U.S. Trust Company of Texas, N.A., as Trustee. Filed as Exhibit 4.2
           to ITC/\DeltaCom's Quarterly Report on Form 10-Q for the quarterly
           period ended March 31, 1999 (File No. 0-23252) and incorporated
           herein by reference.

     4.3   Form of 4 1/2% Convertible Subordinated Note due 2006. Contained in
           the Indenture filed as Exhibit 4.2 to ITC/\DeltaCom's Quarterly
           Report on Form 10-Q for the quarterly period ended March 31, 1999
           (File No. 0-23252) and incorporated herein by reference.

     4.4   Form of Common Stock Certificate of the Company. Filed as Exhibit 4.1
           to ITC/\DeltaCom's Registration Statement on Form S-1 (File No. 333-
           36683) and incorporated herein by reference.

  *  5.1   Opinion of Hogan & Hartson L.L.P. regarding the legality of the notes
           and the common stock into which the notes are convertible.

  +  12.1  Statement Regarding Computation of Ratios.

  *  23.1  Consent of Hogan & Hartson L.L.P. (included as part of Exhibit 5.1).

  +  23.2  Consent of Arthur Andersen LLP, independent public accountants.

  +  24.1  Power of Attorney (included on signature page).

  +  25.1  Form T-1 Statement of Eligibility of U.S. Trust Company of Texas,
           N.A., to act as trustee under the indenture.

____________________

+    Filed herewith.
*    To be filed by amendment.

<PAGE>


                                                                    Exhibit 12.1

                   Statement Regarding Computation of Ratios
         (In thousands, except ratio of earnings to fixed charges data)
<TABLE>
<CAPTION>

                                                                                            Six Months
                                                     Years Ended December 31,             Ended June 30,
                                          ----------------------------------------------  --------------
                                           1994    1995      1996      1997       1998         1999
                                          -----  -------  --------  ---------  ---------  --------------
<S>                                       <C>    <C>      <C>       <C>        <C>        <S>

Fixed charges:
  Interest expense on debt                $ 274  $  297   $ 6,173   $ 21,367   $ 32,828      $ 21,594
  Capitalized interest                       --      --        --         --        529           722
  Interest element of rent expense           21      25       424      2,053      2,440         1,526
  Fixed charges of unconsolidated
    subsidiary                               --     782     1,564         --         --            --
                                          -----  ------   -------   --------   --------      --------
                                          $ 295  $1,104   $ 8,161   $ 23,420   $ 35,797      $ 23,842
                                          =====  ======   =======   ========   ========      ========


Earnings:
  Consolidated net income (loss)          $ 137  $ (504)  $(3,910)  $(10,773)  $(34,342)     $(25,948)
  Extraordinary loss                         --      --        --        508      8,436            --
  Preacquisition earnings (losses)          236      --        --        (74)        --            --
  Provision (benefit) for income taxes      113    (303)   (1,233)    (3,324)    (6,454)           94
  Fixed charges                             295   1,104     8,161     23,420     35,797        23,842
                                          -----  ------   -------   --------   --------      --------
                                          $ 781  $  297   $ 3,018   $  9,757   $  3,437      $ (2,012)
                                          =====  ======   =======   ========   ========      ========

Ratio of Earnings to Fixed Charges         2.65      --        --         --         --              --
                                          =====  ======   =======   ========   ========        ========

Coverage Deficiency                         N/A  $  807   $ 5,143   $ 13,663   $ 32,360        $ 25,854

</TABLE>


                                      11





<PAGE>

                                                                    EXHIBIT 23.2
                                                                    ------------

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 12, 1999
included in ITC/\DeltaCom, Inc.'s Form 10-K for the year ended December 31, 1998
and to all references to our Firm included in this registration statement.


/s/ Arthur Andersen LLP

Atlanta, Georgia
August 4, 1999

<PAGE>

                                                                    Exhibit 25.1

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                _______________

                                    FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
                 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

             CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
                     TRUSTEE PURSUANT TO SECTION 305(b)(2)
                                _______________

                       U.S. TRUST COMPANY OF TEXAS, N.A.
              (Exact name of trustee as specified in its charter)

                                                  75-2353745
       (State of incorporation                 (I.R.S. employer
        if not a national bank)                 identification No.)

       2001 Ross Ave, Suite 2700                     75201
             Dallas, Texas                         (Zip Code)
         (Address of trustee's
      principal executive offices)

                               Compliance Officer
                       U.S. Trust Company of Texas, N.A.
                           2001 Ross Ave, Suite 2700
                              Dallas, Texas  75201
                                 (214) 754-1200
           (Name, address and telephone number of agent for service)

                                _______________
                               ITC DeltaCom, Inc.
              (Exact name of obligor as specified in its charter)

                 Delaware                         58-2301135
       (State or other jurisdiction of          (I.R.S. employer
       incorporation or organization)           identification No.)

             1791 O. G. Skinner Drive
                West Point, Georgia                   31833
       (Address of principal executive offices)     (Zip Code)
                                _______________
                 4 1/2% Convertible Subordinated Notes due 2006
                      (Title of the indenture securities)

<PAGE>

                                    GENERAL

1.  General Information.
    --------------------

    Furnish the following information as to the Trustee:

     (a)  Name and address of each examining or supervising authority to which
          it is subject.

                Federal Reserve Bank of Dallas (11th District), Dallas, Texas
                        (Board of Governors of the Federal Reserve System)
                Federal Deposit Insurance Corporation, Dallas, Texas
                The Office of the Comptroller of the Currency, Dallas, Texas

     (b)  Whether it is authorized to exercise corporate trust powers.

                The Trustee is authorized to exercise corporate trust powers.

2.   Affiliations with Obligor and Underwriters.
     -------------------------------------------

     If the obligor or any underwriter for the obligor is an affiliate of the
     Trustee, describe each such affiliation.

     None.

3.   Voting Securities of the Trustee.
     ---------------------------------

     Furnish the following information as to each class of voting securities of
     the Trustee:

                              As of July 20, 1999

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

               Col A.                             Col B.

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

          Title of Class                     Amount Outstanding

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

Capital Stock - par value $100 per share        5,000 shares

4.   Trusteeships under Other Indentures.
     ------------------------------------

     Not Applicable

5.   Interlocking Directorates and Similar Relationships with the Obligor or
     -----------------------------------------------------------------------
     Underwriters.
     -------------

     Not Applicable
<PAGE>

6.   Voting Securities of the Trustee Owned by the Obligor or its Officials.
     -----------------------------------------------------------------------

     Not Applicable

7.   Voting Securities of the Trustee Owned by Underwriters or their Officials.
     --------------------------------------------------------------------------

     Not Applicable

8.   Securities of the Obligor Owned or Held by the Trustee.
     -------------------------------------------------------

     Not Applicable

9.   Securities of Underwriters Owned or Held by the Trustee.
     --------------------------------------------------------

     Not Applicable

10.  Ownership or Holdings by the Trustee of Voting Securities of Certain
     --------------------------------------------------------------------
     Affiliates or Security Holders of the Obligor.
     ----------------------------------------------

     Not Applicable

11.  Ownership or Holdings by the Trustee of any Securities of a Person Owning
     -------------------------------------------------------------------------
     50 Percent or More of the Voting Securities of the Obligor.
     -----------------------------------------------------------

     Not Applicable

12.  Indebtedness of the Obligor to the Trustee.
     -------------------------------------------

     Not Applicable

13.  Defaults by the Obligor.
     ------------------------

     Not Applicable

14.  Affiliations with the Underwriters.
     -----------------------------------

     Not Applicable

15.  Foreign Trustee.
     ----------------

     Not Applicable

16.  List of Exhibits.
     -----------------

     T-1.1  -  A copy of the Articles of Association of U.S. Trust Company of
               Texas, N.A.; incorporated herein by reference to Exhibit T-1.1
               filed with Form T-1 Statement, Registration No. 22-21897.
<PAGE>

16.  (con't.)

     T-1.2  -  A copy of the certificate of authority of the Trustee to commence
               business; incorporated herein by reference to Exhibit T-1.2 filed
               with Form T-1 Statement, Registration No. 22-21897.

     T-1.3  -  A copy of the authorization of the Trustee to exercise corporate
               trust powers; incorporated herein by reference to Exhibit T-1.3
               filed with Form T-1 Statement, Registration No. 22-21897.

     T-1.4  -  A copy of the By-laws of the U.S. Trust Company of Texas, N.A.,
               as amended to date; incorporated herein by reference to Exhibit
               T-1.4 filed with Form T-1 Statement, Registration No. 22-21897.

     T-1.6  -  The consent of the Trustee required by Section 321(b) of the
               Trust Indenture Act of 1939.

     T-1.7  -  A copy of the latest report of condition of the Trustee published
               pursuant to law or the requirements of its supervising or
               examining authority.


                                       NOTE

As of  July 20, 1999, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp.  As of July 20, 1999,  U.S.
T.L.P.O. Corp. had 35 shares of Capital Stock outstanding, all of which are
owned by U.S. Trust Corporation.  U.S. Trust Corporation had outstanding
18,436,338 shares of $1 par value Common Stock as of July 20, 1999.

The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.

In as much as this Form T-1 is filed prior to the ascertainment by the Trustee
of all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information.  Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.

In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the Trustee
disclaims responsibility for the accuracy or completeness of such information.


                                _______________
<PAGE>

                                   SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, U.S
Trust Company of Texas, N.A., a national banking association organized under the
laws of the United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
21st day of July, 1999.

                                    U.S. Trust Company
                                    of Texas, N.A., Trustee



                                    By: /s/ Louis P. Young
                                       ----------------------------------
                                        Louis P. Young
                                        Authorized Officer
<PAGE>

                                                       Exhibit T-1.6



                               CONSENT OF TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of ITC DeltaCom, Inc. 4
1/2 Convertible Subordinated Notes due 2006, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefore.



                                    U.S. Trust Company of Texas, N.A.



                                    By: /s/ Louis P. Young
                                       ------------------------------------
                                        Louis P. Young
                                        Authorized Officer
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                        <C>
                                                                           Board of Governors of the Federal Reserve System
                                                                           OMB Number:  7100-0036
                                                                           Federal Deposit Insurance Corporation
                                                                           OMB Number:  3064-005
                                                                           Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council                         OMB Number:  1557-0081
                                                                           Expires March 31, 2001

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

                                                                           (1)
                                                                           Please Refer to Page I,
(LOGO)                                                                     Table of Contents, for
                                                                           the required disclosure
                                                                           of estimated burden.

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

CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK
WITH DOMESTIC OFFICES ONLY AND TOTAL ASSETS OF LESS
THAN $100 MILLION OR MORE BUT LESS THAN $300 MILLION -                     (19990331)
- -  FFIEC  033                                                              ---------
                                                                           (RCRI 9999)

REPORT AT THE CLOSE OF BUSINESS March 31, 1999                             This report form is to be filed by banks with domestic
                                                                           offices only.  Banks with branches and consolidated
This report is required by law:  12 U.S.C. Section (S)                     subsidiaries in U.S. territories and possessions, Edge
324 (State member banks); 12 U.S.C. Section (S) 1817                       or Agreement subsidiaries, foreign branches,
(State nonmember banks); and 12 U.S.C. Section (S) 161                     consolidated foreign subsidiaries, or International
(National banks).                                                          Banking Facilities must file FFIEC 031.

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

NOTE:  The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.

I,  Alfred B. Childs, Managing Director
  ------------------------------------------
        Name and Title of  Officer Authorized to Sign Report

of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with
the instructions issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and belief.

/s/         Alfred B. Childs
- ---------------------------------------------------
  Signature of Officer Authorized to Sign Report

April 21, 1999
- ---------------------------------------------------
 Date of Signature


The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.  NOTE:  these instructions may in
some cases differ from generally accepted accounting principles.

We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it
has been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate
Federal regulatory authority and is true and correct.

/s/     Stuart M. Pearman
- --------------------------------------------------
Director (Trustee)

/s/.    J. T. More, Jr.
- --------------------------------------------------
Director (Trustee)

/s/.    Arthur White
- -------------------------------------------------
Director (Trustee)

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

Submission of Reports

Each bank must prepare its Reports of Condition and Income either:
(a)   in electronic form and then file the computer data file
      directly with the banking agencies' collection agent, Electronic
      Data Systems Corporation (EDS), by modem or on computer diskette; or
(b)   in hard-copy (paper) form and arrange for another party to
      convert the paper report to electronic form. That party (if other
      than EDS) must transmit the bank's computer data file to EDS.

For electronic filing assistance, contact EDS Call Report Services,
2150 North Prospect Avenue, Milwaukee, WI  53202, telephone (800)
255-1571.

To fulfill the signature and attestation requirement for the Reports
of Condition and Income for this report date, attach this signature
page to the hard-copy record of the completed report that the bank
places in its files.

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

FDIC Certificate Number   33217                                             US Trust Company of Texas, National Association
                        ---------                                           ------------------------------------------------------
                      (RCRI 9050)                                           Legal Title of Bank (TEXT 9010)

                                                                            Dallas
                                                                            -------------------------------------------------------
                                                                            City (TEXT 9130)

                                                                            TX                                      75201
                                                                            -------------------------------------------------------
                                                                            State Abbrev. (TEXT 9200)        Zip Code. (TEXT 9220)



</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>

<TABLE>
<CAPTION>
<S>                                                       <C>                   <C>              <C>        <C>          <C>    <C>


U.S. Trust Company of Texas, N.A.                         Call Date:            3/31/1999        State #:   48-6797      FFIEC  033
2001 Ross Avenue, Suite 2700                              Vendor ID:                    D         Cert #:     33217      RC-1
Dallas, TX  75201                                         Transit #:             11101765



                                                                                                                     ---------------
                                                                                                                            9
                                                                                                                     ---------------

</TABLE>

CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR March 31, 1999

All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.

<TABLE>
<CAPTION>
Schedule RC - Balance Sheet
                                                                                                                             C200
                                                                                                       Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>      <C>        <C>      <C>        <C>
ASSETS
 1.     Cash and balances due from depository institutions:                                            RCON
                                                                                                                ----------
        a. Noninterest-bearing balances and currency and coin (1,2)______________  ______   _______    0081         1,297  1.a
                                                                                                                ----------
        b. Interest bearing balances (3)_________________________________________  ______   _______    0071           696  1.b
                                                                                                                ----------
 2.     Securities:
                                                                                                                ----------
        a. Held-to-maturity securities (from Schedule RC-B, column A)____________  ______   _______    1754             0  2.a
                                                                                                                ----------
        b. Available-for-sale securities (from Schedule RC-B, column D)__________  ______   _______    1773       131,683  2.b
                                                                                                                ----------
 3.     Federal funds sold (4) and securities purchased under agreements to                            1350         6,000  3
        resell:
                                                                                                                ----------
 4.     Loans and lease financing receivables:                                     RCON
                                                                                            --------
        a. Loans and leases, net of unearned income (from Schedule RC-C)________    2122     22,709                        4.a
                                                                                            --------
        b. LESS: Allowance for loan and lease losses____________________________    3123        260                        4.b
                                                                                            --------
        c. LESS: Allocated transfer risk reserve________________________________    3128          0                        4.c
                                                                                            --------
        d. Loans and leases, net of unearned income, allowance, and reserve                           RCON
                                                                                                       ----     ----------
             (item 4.a minus 4.b and 4.c)______________________________________    ______   _______    2125        22,249  4.d
                                                                                                                ----------
 5.     Trading assets____________________________________________________________ ______   _______    3545             0  5.
                                                                                                                ----------
 6.     Premises and fixed assets (including capitalized leases)__________________ ______   _______    2145           917  6.
                                                                                                                ----------
 7.     Other real estate owned (from Schedule RC-M)______________________________ ______   _______    2150             0  7.
                                                                                                                ----------
 8.     Investments in unconsolidated subsidiaries and associated companies
        (from Schedule RC-M)______________________________________________________ ______   _______    2130             0  8
                                                                                                                ----------
 9.     Customers' liability to this bank on acceptances outstanding______________ ______   _______    2155             0  9.
                                                                                                                ----------
10.     Intangible assets (from Schedule RC-M)____________________________________ ______   _______    2143         1,950  10.
                                                                                                                ----------
11.     Other assets (from Schedule RC-F)_________________________________________ ______   _______    2160         2,527  11.
                                                                                                                ----------
12.     Total assets (sum of items 1 through 11)__________________________________ ______   _______    2170       167,519  12.
                                                                                                                ----------
</TABLE>

(1)  Includes cash items in process of collection and unposted debits.
(2)  Included time certificates of deposit not held for trading.
<PAGE>

<TABLE>
<CAPTION>
<S>                                             <C>         <C>              <C>        <C>           <C>    <C>

U.S. Trust Company of Texas, N.A.               Call Date:  03/31/1999       State #:   48-6797       FFIEC  033
2001 Ross Avenue, Suite 2700                    Vendor ID:           D        Cert #:     33217       RC-2
Dallas, TX  75201                               Transit #:    11101765
                                                                                                             ---------------
                                                                                                                    10
                                                                                                             ---------------
</TABLE>

Schedule RC - Continued

<TABLE>
<CAPTION>
                                                                                                      Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>     <C>        <C>      <C>        <C>
LIABILITIES
13.     Deposits:
        a.  In domestic offices (sum of totals of                                                      RCON
                                                                                                                ----------
             columns A and C from Schedule RC-E)________________________________    RCON               2200       141,618  13.a
                                                                                    -----
                                                                                                                ----------

                                                                                            --------
             (1)  Noninterest-bearing                                               6631      8,794                        13.a.1
        ___________________________________________________
                                                                                            --------
             (2)  Interest-bearing                                                  6636    132,824                        13.a.2
        ---------------------------------------------------
                                                                                            --------
        b.    In foreign offices, Edge and Agreement subsidiaries, and IBFs
              (1) Noninterest-bearing____________________________________________
              (2) Interest-bearing_______________________________________________
                                                                                                                ----------
14.     Federal funds purchased(2) and securities sold under agreements to                             RCON             0  14
                                                                                                       ----
        repurchase:                                                                                    2800
                                                                                                                ----------
15.     a. Demand notes issued to the U.S. Treasury______________________________  ______   _______    2840             0  15.a
                                                                                                                ----------
        b. Trading liabilities___________________________________________________  ______   _______    3548             0  15.b
                                                                                                                ----------
16. Other borrowed money:
                                                                                                                ----------
        a. With a remaining maturity of one year or less_________________________  ______   _______    2332             0  16.a
                                                                                                                ----------
        b.  With a remaining maturity of more than one year through three years__  ______   _______    A547         2,000  16.b
                                                                                                                ----------
        c. With a remaining maturity of more than three years____________________  ______   _______    A548         1,000  16.c
                                                                                                                ----------
                                                                                                                ----------
17.     Not applicable

18.     Bank's liability on acceptances executed and outstanding_________________  ______   _______    2920             0  18.
                                                                                                                ----------
19.     Subordinated notes and debentures________________________________________  ______   _______    3200             0  19.
                                                                                                                ----------
20.     Other liabilities (from Schedule RC-G)___________________________________  ______   _______    2930         2,317  20.
                                                                                                                ----------
21.     Total liabilities (sum of items 13 through 20)___________________________  ______   _______    2948       146,935  21.
                                                                                                                ----------
22.     Not applicable

EQUITY CAPITAL
                                                                                                                ---------
                                                                                                       RCON        7,000   23.
23.     Perpetual preferred stock and related surplus____________________________  ______   ______     3838
                                                                                                                ---------
24.     Common stock_____________________________________________________________  ______   ______     3230          500   24.
                                                                                                                ---------
25.     Surplus (exclude all surplus related to preferred stock__________________  ______   ______     3839        8,384   25.
                                                                                                                ---------
26.     a. Undivided profits and capital reserves________________________________  ______   ______     3632        4,406   26.a
                                                                                                                ---------
        b.  Net unrealized holding gains (losses) on available-for-sale            ______   ______     8434          294   26.b
        securities_______________________________________________________________
                                                                                                                ---------
27.     Cumulative foreign currency translation adjustments______________________
                                                                                                                ---------
28.     Total equity capital (sum of items 23 through 27)________________________  ______   ______     3210       20,584   28.
                                                                                                                ---------
29.     Total liabilities and equity capital (sum of items 21 and 28)____________  ______   ______     2257      167,519   29.
                                                                                                                ---------
</TABLE>

Memorandum
<PAGE>

<TABLE>
     <S>                                                                                                          <C>
     To be reported only with the March Report of Condition.                                                      Number
                                                                                                                  ------
 </TABLE>
<TABLE>
<CAPTION>
<S>   <C>                         <C>                          <C>                           <C>      <C>         <C>
1.  Indicate in the box at the right the number of the statement below that
    best describes the most comprehensive level of auditing work performed for
    the bank by independent external auditors as of any date during 1998_____                         6724        1  M.1
                                                                                                                  ------
</TABLE>

<TABLE>
<S>                                                                    <C>
1 = Independent audit of the bank conducted in accordance              4 = Directors' examination of the bank performed by other
    with generally accepted auditing standards by certified                 external   auditors   (may  be   required   by  state
    public accounting firm which submits a report on the  bank              chartering authority)
2 = Independent audit of the bank's parent holding company             5 = Review of the bank's financial statements by external
    conducted in accordance with generally accepted auditing               auditors
    standards by a certified public accounting firm which              6 = Compilation of the bank's financial statements by
    submits a report on the consolidated holding company (but              external auditors
    not on the bank separately)                                        7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in accordance             work)
    with generally accepted auditing standards by a certified          8 = No external audit work
    public accounting firm (may be required by state chartering
    authority)


</TABLE>

(1)  Includes total demand deposits and noninterest-bearing time and savings
     deposits.
(2)  Includes limited-life preferred stock and related surplus.


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