VERSATEL TELECOM INTERNATIONAL N V, F-3, 2000-01-28

VERSATEL TELECOM INTERNATIONAL N V
F-3, 2000-01-28
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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As filed with the Securities and Exchange Commission on January 28, 2000
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VersaTel Telecom International N.V.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
The Netherlands 4813 None
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
Paalbergweg 36
1105 BV Amsterdam-Zuidoost
The Netherlands
(31-20) 430 4300
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
------------------------
CT Corporation System
1633 Broadway
New York, NY 10019
(212) 664-1666
(Address, including zip code, and telephone
number, including area code, of agent for service)
------------------------
with copies to
John D. Morrison
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
(212) 848-4000

Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.

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

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, as amended (the "Securities Act"), 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. o

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. o

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. o

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE

Title of each class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price per Unit (1) Aggregate Offering Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ordinary Shares par value
NLG 0.05 per share.... 4,478,698 shares $ 38.13 $ 170,772,755 $ 45,084
- ------------------------------------------------------------------------------------------------------------------------------------
Warrants to purchase 333,060 warrants
Ordinary Shares (2) ...
====================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act, based on the average of
the high and low sale prices on the Nasdaq National Market on January 25,
2000 of $ 38.13 per share.

(2) Warrants to purchase up to 4,441,022 ordinary shares are held by the
Selling Shareholders. The shares issuable upon exercise of the warrants
registered hereunder are included in the ordinary shares registered
hereunder.

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

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

<PAGE>

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE
SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JANUARY 28, 2000

PROSPECTUS

VersaTel Telecom International N.V.

4,478,698 Ordinary Shares
333,060 Warrants to Purchase Ordinary Shares

All ordinary shares (which we refer to as the Shares), par value NLG
0.05, of VersaTel Telecom International N.V. and warrants to purchase ordinary
shares of VersaTel offered hereby are being offered by shareholders and
warrantholders of VersaTel (collectively referred to as the Selling
Shareholders). We will not receive any proceeds from the sale of the Shares and
the Warrants. The Shares may be offered in the form of ordinary shares or
American Depositary Shares (ADSs).

We have been advised by the Selling Shareholders that they may sell all
or a portion of the Shares from time to time on the Amsterdam Stock Exchange or
the Nasdaq National Market. The Selling Shareholders may also make private sales
of Shares or Warrants to purchasers directly. Alternatively, the Selling
Shareholders may from time to time offer the securities through underwriters,
brokers, dealers or agents, who may receive compensation in the form of
underwriting discounts, commissions or concessions.

Our ordinary shares are listed on the Amsterdam Stock Exchange and our
ADSs are listed on the Nasdaq Stock Market's National Market, each under the
symbol "VRSA." On January 25, 2000, the last reported sale price of our ADSs,
each representing one ordinary share, on the Nasdaq National Market was $38.00.
The warrants are not listed on any exchange.

Investing in the securities involves risks. See "Risk Factors"
beginning on page 7 of this prospectus.

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

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

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

The date of this prospectus is ___________, 2000

<PAGE>

Table of Contents

About This Prospectus..........................................................4
Where You Can Find More Information............................................4
Summary........................................................................6
Risk Factors...................................................................7
Disclosure Regarding Forward-Looking Statements...............................21
Use of Proceeds...............................................................22
Price Range of Ordinary Shares................................................22
Dividend Policy...............................................................22
Selected Financial Data for VersaTel..........................................24
About VersaTel................................................................26
Management....................................................................54
Principal Shareholders........................................................60
Selling Shareholders..........................................................61
Description of Material Indebtedness..........................................72
Description of Capital Stock..................................................74
Description of American Depositary Receipts...................................78
Description of Warrants.......................................................86
Tax Considerations............................................................90
U.S. Federal Income Tax Consequences..........................................97
Plan of Distribution.........................................................102
Legal Matters................................................................103
Experts......................................................................103
Glossary.....................................................................A-1

We publish our financial statements in Dutch guilders. In this
prospectus, references to "U.S. dollars" or "$" are references to the currency
of the United States, references to "Dutch guilders" or "NLG" are references to
the currency of The Netherlands, references to "Belgian francs" or "BEF" are
references to the currency of Belgium and references to "Deutsche Marks" or
"DEM" are references to the currency of Germany. The exchange rate of the
Luxembourg franc to the U.S. dollar is the same as that of the Belgian franc to
the U.S. dollar. Solely for the convenience of the reader, this prospectus
contains translations of certain Dutch guilder amounts into U.S. dollars at
specified rates. These translations should not be construed as representations
that the Dutch guilder amounts actually represent such U.S. dollar amounts or
could be converted into U.S. dollars at the rate indicated or at any other rate.
Both The Netherlands and Belgium have adopted the euro as of January 1, 1999. On
January 25, 2000, the Noon Buying Rate was $1.00 per euro 1.00. To obtain a
current formulation of the value of Dutch guilders, Belgian francs or Deutsche
marks in U.S. dollars, investors are required first to convert such currencies
into euro at the fixed conversion rates of NLG 2.20371 per Euro 1.00, BEF
40.3399 per Euro 1.00 and DEM 1.95583 per Euro 1.00 established in
connection with the implementation of the third stage of European Monetary
Union, and converting the resulting euro amounts into U.S. dollars at the Noon
Buying Rate for euro. Unless otherwise indicated, the translations of Dutch
guilders into U.S. dollars have been made at NLG 2.07 per $1.00, based on the
noon buying rate in the City of New York for cable transfers in euro as
certified for customs purposes by the Federal Reserve Bank of New York ("Noon
Buying Rate") on September 30, 1999. On January 25, 2000, the exchange rate of
Dutch guilders to U.S. dollars (based on the Noon Buying Rate for euro) was NLG
2.19 per $1.00. We have published our historical financial statements in Dutch
guilders. We expect to begin preparing our

<PAGE>

financial statements in euros commencing with the financial statements for the
fiscal year 2000, but not to restate our historical financial statements in
euros. Our financial statements for 2000 will contain a column converting euro
amounts to Dutch guilders for comparison purposes. We expect to keep our
accounting records in euros starting in 2000. We expect that our share capital
will be re-denominated in euros in 2000.

Service of Process and
Enforceability of Civil Liabilities

We are incorporated under the laws of The Netherlands and substantially
all of our assets are located outside the United States. In addition, most of
our management board, supervisory board and executive officers are not residents
of the United States. As a result, it may not be possible for investors to
effect service of process within the United States upon such persons or to
enforce against such persons or VersaTel judgments of U.S. courts based upon
civil liabilities under the U.S. federal securities laws. The United States and
The Netherlands do not have a treaty providing for the reciprocal recognition
and enforcement of judgments, so U.S. judgments are not directly enforceable in
The Netherlands. However, a final judgment for the payment of money obtained in
a U.S. court, which is not subject to appeal or any other means of contestation
and is enforceable in the United States, would in principle be upheld by a
Netherlands court of competent jurisdiction when asked to render a judgment in
accordance with such final judgment by a U.S. court, without substantive
re-examination or re-litigation on the merits of the subject matter thereof;
provided that such judgment has been rendered by a court of competent
jurisdiction, in accordance with rules of proper procedure, that it has not been
rendered in proceedings of a penal or revenue nature, that its content and
possible enforcement are not contrary to public policy or public order of The
Netherlands, and that such judgment does not concern the recognition of punitive
damages which have no bearing on the amount of damages incurred. Notwithstanding
the foregoing, there can be no assurance that U.S. investors will be able to
enforce against VersaTel, or executive officers or members of the management or
supervisory boards, or certain experts named herein who are residents of The
Netherlands or other countries outside the United States, any judgments in civil
and commercial matters, including judgments under the federal securities laws.
VersaTel has been advised by its Netherlands counsel, Stibbe Simont Monahan
Duhot, that there is doubt as to whether a Netherlands court would impose civil
liability on VersaTel, or on its executive officers or the members of the
management or supervisory boards, in an original action based solely upon the
federal securities laws of the United States brought in a court of competent
jurisdiction in The Netherlands against VersaTel or such members.

<PAGE>

About This Prospectus

This prospectus is part of a registration statement on Form F-3 that we
filed with the Securities and Exchange Commission, the SEC, using a "shelf"
registration process. Under this process, the Selling Shareholders may, from
time to time, sell any combination of the offered securities described in this
prospectus in one or more offerings up to 4,478,698 ordinary shares and up to
333,060 warrants. This prospectus does not contain all of the information
included in the registration statement and the exhibits thereto. Statements
included in this prospectus as to the contents of any contract or other document
that is filed as an exhibit to the registration statement are not necessarily
complete and you should refer to that agreement or document for a complete
description of these matters. You should read both this prospectus and any
prospectus supplement together with the additional information described below
under the heading "Where You Can Find More Information."

Where You Can Find More Information

We file periodic reports and other information with the SEC through its
Electronic Data Gathering, Analysis and Retrieval (or EDGAR) system. Such
periodic reports and other information will be available for inspection and
copying at the public reference facilities, regional offices and Web site of the
SEC referred to above under the heading "About this Prospectus." Pursuant to the
indentures governing the notes and the warrant agreements governing the warrants
that we issued in three high yield offerings in 1998 and 1999, we have agreed to
file with the SEC all annual financial statements and other financial
information that are required to be contained in a filing with the SEC on Form
20-F. Furthermore, we have agreed to file with the SEC all quarterly financial
statements and other financial information that would be required to be
contained in a filing with the SEC on Form 10-Q, if we were required to file
such form. Such quarterly information will be filed with the SEC within 45 days
following the end of each fiscal quarter, and such annual information will be
filed within 90 days following the end of each fiscal year of VersaTel.

You may read and copy all or any portion of the documents that we file
with the SEC at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the SEC located at Seven
World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can request
copies of these documents, upon payment of a duplication fee, by writing to the
SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the SEC's public reference rooms. Also, the SEC maintains a World
Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the SEC.

The SEC allows us to "incorporate by reference" the information that we
file with it. This means that we can disclose important information to you by
referring you to those documents that are considered part of this prospectus.
Our subsequent filings of similar documents with the SEC will automatically
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 by VersaTel (1) after
the date of the filing of this registration statement and prior to its
effectiveness and (2) until the offering of securities has been completed.

The following documents have been filed with the SEC pursuant to the
Securities Exchange Act of 1934 and are hereby incorporated by reference:

<PAGE>

o VersaTel's Annual Report on Form 20-F for the fiscal year ended
December 31, 1998, filed on March 30, 1999,

o VersaTel's Reports on Form 6-K, filed on June 21, 1999, June 25,
1999, December 7, 1999 and December 22, 1999, which
include a description and the financial statements of Svianed and
VEW Telnet,

o VersaTel's Reports on Form 8-A, filed on July 20, 1999 and July
22, 1999, respectively, which include descriptions of our ordinary
shares and the ADSs, and

o VersaTel's Quarterly Report on Form 6-K for the fiscal quarter
ended September 30, 1999, filed on November 15, 1999.

You may obtain a copy of these filings at no cost by writing us. Any
requests should be directed to Leo van der Veen, Finance Manager, VersaTel
Telecom International N.V., Paalbergweg 36, 1105 BV Amsterdam-Zuidoost, The
Netherlands.

You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. This prospectus is an
offer to sell or to buy only the securities referred to in this prospectus, and
only under circumstances and in jurisdictions where it is lawful to do so. The
information contained in this prospectus or any prospectus supplement is current
only as of the date on the front page of those documents. Also, you should not
assume that there has been no change in the affairs of VersaTel since the date
of this prospectus or any applicable prospectus supplement.

<PAGE>

Summary

VersaTel is a rapidly growing, competitive network operator focused
primarily on the Benelux and the Northwest Rhine region of Germany. Our
objective is to become the leading fully integrated provider of local access,
facilities-based broadband services, including voice, data and Internet services
to our customers in this region. We are building a fully integrated broadband
network to provide end-to-end connectivity to our customers. Our network has
been designed to pass through all the major population and business centers in
the Benelux and to connect city centers, business parks and buildings along its
route. Our network design consists of three fully integrated elements:

o Benelux network--multiple, integrated fiber optic rings connecting
all major population and business centers in the Benelux,

o local access infrastructure--high bandwidth fiber optic and radio
connectivity to customers along our Benelux network route
including city centers, business parks and buildings, and

o international network--fiber optic rings initially connecting
London, Dusseldorf, Frankfurt, Paris and the Benelux network.

In May 1998, we issued and sold units consisting of $225,000,000 13
1/4% Senior Notes due 2008 and warrants to purchase 3,000,000 (as adjusted for a
two-for-one stock split) ordinary shares (referred to as the First High Yield
Offering). In December 1998, we issued and sold units consisting of $150,000,000
13 1/4% Senior Notes due 2008 and warrants to purchase 2,000,100 (as adjusted
for a two-for-one stock split) ordinary shares (referred to as the Second High
Yield Offering). The notes issued in the First High Yield Offering and the
Second High Offering have subsequently been registered under the U.S. Securities
Act of 1933.

In July 1999, we completed an initial public offering of our ordinary
shares (referred to as the Initial Public Offering). Concurrently with the
Initial Public Offering, we issued and sold $180,000,000 117/8% Senior Dollar
Notes due 2009 and Euro 120,000,000 117/8% Senior Euro Notes due 2009
(referred to as the Third High Yield Offering). As part of the Initial Public
Offering, holders of an aggregate of 38,800 warrants issued in the First High
Yield Offering and the Second High Yield Offering exercised their warrants on a
cashless basis for an aggregate of 457,492 ordinary shares, which ordinary
shares were sold in the Initial Public Offering. The remaining 336,200
outstanding warrants issued in the First High Yield Offering and the Second High
Yield Offering became exercisable on the closing date of the Initial Public
Offering, and this prospectus covers the offer and sale of such warrants and the
ordinary shares obtainable upon exercise of such warrants. As of December 31,
1999, 3,140 of these warrants have been exercised on a cashless basis for a
total of 37,676 ordinary shares. If all the remaining 333,060 outstanding
warrants will be exercised upon payment in full of the exercise price, such
exercise will result in the issuance by VersaTel of an additional 4,441,022
ordinary shares.

In December 1999, we acquired VEW Telnet, a competitive network
operator in the Northwest Rhine region of Germany from VEW Energie, a power
company in the Westphalia-Lippe region of Germany. In addition, we issued and
sold 15,000,000 of our ordinary shares and Euro 300,000,000 4% Senior
Convertible Notes due 2004 in a private placement to institutional investors.

<PAGE>

Risk Factors

You should carefully consider the risks described below before making
an investment decision. Additional risks and uncertainties not presently known
to us or that we currently consider not material may also impair our business
operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our ordinary shares could decline,
and you may lose all or part of your investment.

Our history of substantial net losses may continue indefinitely and make it
difficult to fund our operations.

For the nine months ended September 30, 1999 we had a loss from
operating activities of NLG 130.7 million and negative EBITDA of NLG 100.6
million and for the nine months ended September 30, 1998 we had a loss from
operating activities of NLG 30.2 million and negative EBITDA of NLG 25.2
million. For the year ended December 31, 1998, we had a loss from operating
activities of NLG 46.5 million and negative EBITDA of NLG 40.0 million. For the
year ended December 31, 1997, we had a loss from operating activities of NLG
19.3 million and negative EBITDA of NLG 16.0 million. For the year ended
December 31, 1996 we had a loss from operating activities of NLG 4.5 million and
negative EBITDA of NLG 4.0 million. In addition, we had an accumulated deficit
of NLG 92.3 million and NLG 25.2 million as of December 31, 1998 and December
31, 1997, respectively, and an accumulated deficit of NLG 360.1 million and NLG
65.6 million as of September 30, 1999 and September 30, 1998, respectively. We
expect to continue to incur significant further operating losses for the
foreseeable future as we incur additional costs in the build out of our network,
the expansion of our marketing and sales force and the introduction of new
communications services and products, including our DSL service. In addition,
the acquisitions of Svianed and VEW Telnet will cause us to incur additional
operating losses. Although we have experienced revenue growth since we commenced
operations in 1995, there can be no assurance our revenues will continue to
grow. You should also be aware that the prices of voice, data and Internet
communications services have fallen significantly in Europe in recent years, and
as competition increases, we expect that prices will continue to decline. As the
cost of providing services decreases, we expect these price reductions to be at
least partially offset, but you should be aware that we cannot be certain that
we will achieve or, if achieved, be able to maintain operating profits in the
future.

Our substantial indebtedness may hinder our growth and put us at a competitive
disadvantage.

We have substantial indebtedness. In May 1998, we issued and sold
$225,000,000 13 1/4% Senior Notes due 2008 as part of the First High Yield
Offering. In December 1998, we issued and sold $150,000,000 13 1/4% Senior Notes
due 2008 as part of the Second High Yield Offering. In July 1999, we issued and
sold $180,000,000 117/8% Senior Dollar Notes due 2009 and Euro 120,000,000
11 7/8% Senior Euro Notes due 2009 in the Third High Yield Offering, which was
used in part to refinance interim loans (also referred to as the Interim Loans)
used for the purpose of financing in part our acquisition of Svianed. In
December 1999, we issued and sold Euro 300,000,000 4% Senior Convertible
Notes due 2004 (also referred to as the Convertible Notes). As of September 30,
1999, after giving effect to the issuance of the Convertible Notes as if it had
occurred on such date, but excluding any indebtedness of VEW Telnet, VersaTel's
total consolidated indebtedness was approximately $674.2 million. Subject to
limits imposed by our indebtedness, we may continue to incur substantial
additional indebtedness because the indentures governing the notes issued in the
First High Yield Offering (also referred to as the First Notes), the notes
issued in the Second High Yield Offering (also referred to as the Second Notes)
and the notes issued in the Third High Yield Offering (also referred to as the
Third Notes) and the terms of the Convertible Notes do not limit the amount of

<PAGE>

indebtedness that we may incur to finance the cost of the development of our
network. The First Notes, the Second Notes and the Third Notes are also together
referred to as the High Yield Notes and together with the Convertible Notes are
referred to as the Notes.

Covenants in our debt agreements restrict our ability to borrow and invest,
which could impair our ability to expand or finance our future operations.

The indentures governing the High Yield Notes contain a number of
covenants that impose significant operating and financial restrictions on us and
our subsidiaries. These restrictions significantly limit, and in some cases
prohibit, among other things, our and certain of our subsidiaries' ability to
incur more indebtedness, create liens on assets, enter into business
combinations or engage in certain activities with our subsidiaries. These
covenants will also likely prohibit us from paying dividends or making other
distributions in respect of the ordinary shares for the foreseeable future. A
failure to comply with these restrictions would constitute a default under the
indentures governing the High Yield Notes, and as a consequence the Notes could
become immediately due and payable, which would seriously adversely affect our
business and our shareholders' equity.

Our high level of indebtedness and the limits imposed by our
indebtedness could have the following effects, among others:

o we may have difficulty in paying the interest on our outstanding
debt and any newly incurred debt,

o we may have difficulty finding sources of financing for working
capital, our capital expenditure requirements and the interest
payments on our outstanding debt,

o we will be unable to use a significant portion of our cash flow in
our business and we may be unable to react to industry or economic
changes, because of the portion of cash flow directed to paying
interest and principal on our debt, and

o we may be unable to react as quickly to changes in our business as
our competitors who have less debt and financial restrictions,
which may put us at a disadvantage and make us more vulnerable to
adverse changes in economic conditions.

Despite current levels of indebtedness, we may still be able to incur
substantially more indebtedness, which could intensify the risks described
above.

The indentures governing the High Yield Notes and the terms of the
Convertible Notes do not limit the amount of indebtedness that may be incurred
to finance the cost of development of our network, and permit us to incur a
significant amount of additional indebtedness in the future. In addition, our
failure to comply with the covenants and restrictions contained in the
agreements governing any additional borrowings could trigger defaults under such
agreements. If we incur additional indebtedness, the related risks that we now
face could intensify. We anticipate that we will incur additional indebtedness
in the future.

<PAGE>

Possible inability to meet our debt service obligations may result in our
outstanding indebtedness becoming due and payable.

The consolidated net interest expense of VersaTel for the year ended
December 31, 1998, and for the nine months ended September 30, 1999, after
giving effect to the Third High Yield Offering, the incurrence and repayment of
the Interim Loans and the issuance of the Convertible Notes as if each had
occurred on January 1, 1998 and January 1, 1999, respectively, would have been
approximately $79.9 million and $83.3 million, respectively, using the
applicable exchange rates in effect on January 1, 1999. The EBITDA of VersaTel
for the year ended December 31, 1998, and for the nine months ended September
30, 1999, after giving effect to the acquisition of Svianed, the incurrence and
repayment of the Interim Loans, the Third High Yield Offering and the issuance
of the Convertible Notes as if each had occurred on January 1, 1998 and January
1, 1999, respectively, would have been approximately $11.7 million and $52.7
million, respectively. Unlike the holders of the First Notes and the Second
Notes, the holders of the Third Notes and the Convertible Notes will not have
the benefit of any securities placed in escrow to fund any interest payments on
the Third Notes and the Convertible Notes, respectively. Accordingly, we will
have to increase substantially our net cash flow in order to meet our debt
service obligations. In addition, after May 15, 2001, we will no longer be able
to rely on cash that has been set aside in escrow to meet our debt service
obligations on the First Notes and the Second Notes. There is no certainty that
we will be able to generate sufficient cash flow from operating activities to
pay interest and principal on the Notes or any other outstanding debt. Our
ability to improve our operating performance and financial results will depend
not only on our ability to successfully implement our business plan, but also
upon economic, financial, competitive, regulatory and other factors beyond our
control, including fluctuations in exchange rates and general economic
conditions in the Benelux. If we are unable to meet the repayment obligations,
we may have to refinance our indebtedness, including the Notes, sell our assets
or obtain new financing. We cannot assure you that any such refinancing would be
possible or that any such sales of assets or additional financing could be
achieved. If we cannot refinance or otherwise satisfy our debt obligations we
will be in default under such obligations, which could in turn result in the
Notes and other indebtedness becoming immediately due and payable. Any default
under the Notes would have a material adverse effect on our shareholders'
equity.

We will need to obtain additional capital to expand our network which may not be
available on acceptable terms.

We will require significant amounts of capital to further develop and
expand our network, our sales and marketing efforts and our product and service
offerings, including our DSL service. We expect that the capital raised from
Initial Public Offering, the offering of 15,000,000 ordinary shares completed in
December 1999 (also referred to as the New Equity Offering, and together with
the Initial Public Offering referred to as the Equity Offerings), the High Yield
Offerings and the Convertible Notes Offering, together with other available
financing and cash flow from operations, will be sufficient to fund our current
capital requirements and anticipated losses for at least the next 12 to 18
months. However, we continually re-evaluate our business objectives and are
considering further acquisitions, expansions of our services and acceleration of
parts of our current plans and we may raise additional capital during the next
12 months. In the past, we have raised more capital more quickly than we had
originally anticipated for similar reasons. We have raised substantially more
capital with these offerings than we had originally anticipated and we have
substantial discretion with respect to the use of the proceeds. Although we
believe that this additional capital will enable us to accelerate our expansion
plans, we can provide no assurance that we will utilize these additional
proceeds rapidly, and pending such utilization, we will invest the proceed in
cash, government securities, or short term, investment grade interest bearing
investments permitted under the terms of the indentures

<PAGE>

governing the High Yield Notes, so as to avoid becoming an investment company
under the U.S. Investment Company Act of 1940.

If these sources are not sufficient or if our plans or assumptions
change or prove to be incorrect, we may have to delay or abandon some of our
development and expansion plans or we may have to seek additional financing
earlier than anticipated. We may not be able to obtain additional financing or
we may not be able to obtain it on a timely basis or on terms favorable to us.
Our current debt obligations also restrict our ability to raise additional
financing and our subsequent use of any such additional financing. In addition,
any such additional financing is likely to be subject to additional financial
restrictions. A failure to acquire additional capital on acceptable terms may
seriously and adversely affect our business.

We may encounter delays in implementing elements of our business strategy, which
could adversely affect our growth.

Our future success depends upon our ability to build and maintain our
own telecommunications network and to develop successfully our existing and new
products and services, including our DSL service. Our success will depend
specifically on our ability to obtain and maintain, among other things, the
following:

o experienced and qualified management and staff,

o additional switch, MDF and co-location sites,

o interconnection with PTTs' and other carriers' networks,

o the necessary licenses, including for radio frequencies,

o additional transmission facilities, and

o the necessary easements and rights-of-way from property owners,
competitors and various levels of government.

We are not certain that our current cost estimates are correct or that
we will meet our current development schedule relating to construction of the
network. In 1998, we experienced a delay in obtaining rights-of-way on
approximately 60 kilometers of public property due to the uncertainty expressed
by some local governments as to the implications of the new telecommunications
act, which was recently adopted by The Netherlands parliament. Although
ultimately we did obtain these rights-of-way, these delays prevented us from
completing part of our network within the time originally anticipated. We and
certain other carriers are currently experiencing difficulties in obtaining a
right-of-way necessary to extend construction into Brussels. In addition, we
experienced additional delays in the planned construction of the network due to
weather-related flooding. More recently, we have experienced more delays and
difficulties than we had previously anticipated in connecting customer premises
to completed segments of our local access networks, forcing us to lease
expensive transmission capacity from third parties in the interim. Also, the
successful implementation of our construction and expansion strategy will be
subject to a variety of other risks, including operating and technical problems,
regulatory uncertainties, delays in the full implementation of the European
Commission directives regarding telecommunications liberalization, competition,
the availability of capital and the risk of damage to software and hardware
resulting from adverse weather conditions, fire, power loss, natural disasters
and other causes. Any significant increase in costs or any

<PAGE>

further delay in the schedule could have a substantial negative effect on our
financial condition. Even if our network is successfully developed, we may not
be able to operate it efficiently.

We have entered into agreements for the design and construction of key
components of our network. However, we have not entered into definitive
agreements relating to the development and construction of significant other
portions of our network and we cannot guarantee that we will enter into these
agreements or that any future construction will be completed efficiently. Even
when we do have such agreements, we cannot be certain that the development and
construction will proceed as planned and we have been unsatisfied with some of
such arrangements in the past. Further, our network depends on technology and
products we obtain from vendors that also supply our competitors. Such vendors
might stop supplying us and we might not be able to find suitable replacements.

In addition, our DSL service is still in the trial phase and has not
been commercially introduced. We cannot assure you that our DSL service will
become commercially viable or that we will be able to further develop a portion
of our access network. See "--The successful launch of our commercial DSL
business will require us to make significant capital investments and may pose
significant technical and operational challenges."

The development of our network is based on projections of the growth in
traffic volumes and routing preferences and the most cost-effective means of
constructing our network. If these projections are incorrect, it could have a
material adverse effect on our business.

Any inability to manage our rapid growth could adversely affect our business.

Our growth strategy has placed and will continue to place a significant
strain on our management resources. In particular, the acquisition and
integration of VEW Telnet, Svianed, SpeedPort, VuurWerk and ITinera will require
a significant amount of management time and resources. Our ability to manage
this growth will require us to substantially enhance our management, financial
and information systems and to effectively develop and train our employee base.
Our billing system had been identified by our auditors as a potential weakness
in our system of internal controls and is being replaced by an advanced system
designed by Saville Systems. In this respect, management has, among other
things, revised its financial collection of data and call billing procedures. In
addition, we have also introduced a customer care system designed by Clarify. We
have experienced delays in implementing both the Saville and Clarify Systems,
and full implementation of both systems will take longer than originally
anticipated.

Managing our growth will become even more challenging as we increase
our target markets and our product and service offerings. The inability to
achieve or effectively manage our growth could materially and adversely affect
our business. In addition, we will need to transfer the data collection, billing
and customer care functions of our recently acquired businesses onto these
systems which may present additional implementation difficulties.

Our margins have decreased recently because of our need to lease transmission
capacity to support our increasing customer base.

We have aggressively pursued new customers and as a result have
expanded our customer base faster than we have been able to roll out our
network. While we believe that in the long run this will result in higher levels
of revenue and profitability, in the short run this situation has forced us to
lease expensive

<PAGE>

transmission capacity from third parties. As a consequence, our margins have
deteriorated in recent quarters, and we expect that they will continue to
decrease until we complete our network rollout and can migrate these customers
to our own network.

We may have difficulty integrating our acquired businesses.

We have brought senior managers of many of our acquired businesses into
our management team and we are relying on these individuals to assist us in
integrating these acquired businesses into our business strategy. There can be
no guarantee that we will be able to attract and retain managers from any newly
acquired businesses or be successful in integrating any new managers and
businesses from our recent acquisitions or that we will be able to operate and
integrate our network management platforms. In connection with the acquisition
of VEW Telnet we will begin operations in Germany, a country in which we have no
prior operating experience which may result in unexpected delays and costs in
the integration of VEW Telnet. In addition, in the case of our recent
acquisition of VEW Telnet we will need to devote certain of our senior managers
to running the business acquired and integrating it into our operations.

We expect to realize operating synergies as a result of our recent
acquisitions. However, there is no assurance that we will be able achieve the
benefits that our management expects to realize or that the expected benefits
will be realized within the time frame we contemplate.

The successful launch of our commercial DSL business will require us to make
significant capital investments and may pose significant technical and
operational challenges.

The expansion of our DSL business beyond its current trial phases will
require a significant capital investment. Because our DSL business is relatively
new we have limited operating and financial data upon which to evaluate this
business. Our DSL business is in a development stage and is operating in a new
and rapidly evolving market. Some of the risks we face in establishing a
successful DSL business include:

o the timing and willingness of the former monopoly
telecommunications services providers in the European Union,
commonly known as PTTs, to provide us with central office space
and the prices, terms and conditions on which they make the space
available to us. Central office space is an important factor in
our DSL strategy because we must secure physical space from these
entities for our equipment in order to provide our services in our
targeted markets;

o our ability to identify, access and initiate service in our target
regions;

o our ability to secure the unbundled DSL-capable lines or telephone
wires that connect each end-user to our equipment located in the
central offices of the PTTs;

o PTTs have in the past imposed significant obstacles on our ability
to efficiently install our services, and we expect that they will
continue to do so, particularly as our DSL services will be a
source of significant competition for their lucrative E1 business.
In particular, these PTTs must cooperate with us for (a) the
provision and maintenance of transmission facilities, and (b) the
use of their technology and capabilities to meet certain
telecommunication needs of our customers and to maintain our
service standards; and

<PAGE>

o certain tests indicate that some types of DSL technology may cause
interference with and be interfered with by other signals present
in PPTs' copper plant, usually with lines in close proximity. Such
interference concerns have been, and we expect may in the future
continue to be, used by the PTTs as a reason to delay the
development of our services.

The DSL business is expected to be extremely competitive. COLT Telecom,
for example, recently announced its intention to significantly expand its DSL
business efforts throughout Europe.

We must establish and enhance our Zon brand in order to compete effectively in
the free internet service market.

We believe that in order to develop Zon into a viable business, we must
continue to invest significant marketing and other resources in order to
establish, maintain and enhance the Zon brand. We have been operating our free
Internet service under the Zon name since September 1999 and have applied for
trade mark registration of the Zon name and logo. Sun Microsystems has contested
our use of the Zon name and we are currently in discussion with them on this
matter. We can give no assurance that we will reach a satisfactory agreement
with Sun Microsystems enabling us to continue to use the Zon name, nor that our
applications will be successful or that the Zon name and logo will not be
successfully attacked by third parties alleging prior rights or that the trade
mark is otherwise valid. In order to attract and retain users and to promote and
maintain our brand or future brands we may need substantially to increase our
marketing and development expenditures. Our business could be adversely affected
if our efforts are unproductive or if we cannot increase our brand awareness.

One customer represents a significant portion of our revenues.

As a result of our acquisition of Svianed in June 1999, 35.8% of our
revenues for the year ended December 31, 1998, on a combined pro forma basis
with Svianed, would have come from the Gak group of companies. The Gak group is
under contract to use our data services until May 2001. There can be no
assurance that we will be able to retain the Gak group as a customer after May
2001 or that our revenues from the Gak group would not thereafter be
significantly curtailed. We cannot assure you that any such lost revenues could
be replaced. A loss of the revenues derived from the Gak group, without
significant replacement revenue from other sources, could have an adverse effect
on our business.

We may have difficulties in upgrading and protecting our network, which could
adversely affect our growth.

The success of our network will also depend on our continued ability to
provide high-quality telecommunications services through upgrading our systems
and our ability to protect our network from external damage. As we grow, the
timing and implementation of these upgrades will become more important. We
cannot guarantee that the quality and availability of our services will not be
disrupted because of our inability to make timely or error-free upgrades to our
network. Also, our network may be subject to external damage, in particular from
construction work, but also from events, such as floods and other accidents,
that can disrupt service. In fact, the construction of our Benelux network was
delayed due to significant rain and flooding of our ducts in The Netherlands
during the last three months of 1998. We have established design and management
techniques to address any disruptions that may occur; however, any prolonged
difficulty in accessing our network may threaten our relationship with our
customers and have an adverse impact on our business.

<PAGE>

In connection with our recent acquisition of VEW Telnet, we entered
into a maintenance agreement with VEW Energie in respect of the network leased
by VEW Telnet and, as a result, we will be dependent on VEW Energie to maintain
and protect the network leased by VEW Telnet.

Our limited history and experience could place us at a disadvantage to
established competitors and may not be a reliable basis for evaluating our
prospects.

We were founded in October 1995 and, as a result, we have limited
experience as an operating company and have generated only limited revenues. We
entered the Belgian market in the third quarter of 1998 and intend to enter the
Luxembourg market in 2000. In both of these markets, we have limited or no
operating experience and services had previously been provided primarily by the
national PTTs. Through our acquisition of VEW Telnet, we will enter the German
market in which we also have no prior operating experience. Through our
acquisitions of CS Net in November 1998, SpeedPort and VuurWerk in May 1999, and
Svianed and ITinera in June 1999, and our launch of Zon in August 1999, we have
entered several markets for Internet-based services which represent new and
rapidly developing markets for us. Accordingly, our prospects must be considered
in light of the risks, expenses and delays inherent in establishing operations
in markets with long established competitors and other more recent entrants to
the market and our historical results may not be a reliable basis for evaluating
our prospects.

If we do not adapt to the rapid changes in the telecommunications industry, we
could lose customers or market share.

The European telecommunications industry is changing rapidly due to,
among other factors, liberalization, privatization of PTTs, technological
improvements, expansion of telecommunications infrastructure and the
globalization of the world's economies and trade. Such changes may happen at any
time and can significantly affect our operations. There can be no assurance that
one or more of these factors will not occur as we expect or will not have
unforeseen effects which could have a material adverse effect on us. There can
also be no assurance, even if these factors turn out as anticipated, that our
strategy will be successful in this rapidly evolving market.

The telecommunications industry is in a period of rapid technological
evolution, marked by the introduction of new products and services, and
increased availability of transmission capacity, as well as the increasing
utilization of Internet-based technologies for voice and data transmission. Our
success will depend substantially on our ability to predict which of the many
possible current and future networks, products and services will be important to
finance, establish and maintain. In particular, as we further expand and develop
our network, we will become increasingly exposed to the risks associated with
the relative effectiveness of our technology and equipment. The cost of
implementation of emerging and future technologies, such as technologies
relating to our DSL service, could be significant, and there can be no
assurances that we will select appropriate technology and equipment or that we
will obtain appropriate new technology on a timely basis or on satisfactory
terms. The failure to obtain effective technology and equipment may adversely
affect our ability to offer competitive products and services and the viability
of our operations and could have a material adverse effect on our business.

<PAGE>

Loss of key personnel in a competitive employment environment could affect our
growth and future success.

Our success depends on the continued employment of Gary Mesch, our
managing director, Greg Mesch, our vice president corporate development, Raj
Raithatha, our vice president finance and chief financial officer, Larry
Hendrickson, our vice president technology and chief technology officer, Marc
van der Heijden, our vice president legal and regulatory affairs. We have not
yet identified or hired a complete management team to support our acquisition of
VEW Telnet and certain of our senior managers will need to devote substantial
time to running the acquired business and integrating it into our operations. We
will also need to hire increasing numbers of qualified technical, sales and
marketing, and support personnel to successfully implement our expansion plans.
You should also be aware that we do not have any "key person" insurance. There
is intense competition for qualified personnel in our industry in Europe and the
limited availability of qualified individuals could become an issue of
increasing concern in the future. Our financial condition depends upon qualified
personnel implementing a successful business plan. The loss of any of the
individuals listed above or our inability to identify, attract and retain other
necessary qualified personnel could adversely affect our business.

We are dependent on our competitors to provide our customers with access to our
network.

We do not own most of the telecommunications transmission
infrastructure that we presently use. We use extensively the telecommunications
transmission infrastructure of other carriers in the Benelux and Germany and we
depend on interconnection agreements with these carriers to connect our
customers to our own network. Most of these carriers are our competitors.
Svianed in particular currently depends heavily upon leased lines procured from
KPN Telecom. Interconnection rates fluctuate and may be increased as a result of
cost increases on the side of the dominant providers. For example, the Dutch
regulator OPTA has recently approved a proposal for interim rates for the
1999-2000 period for interconnection which are higher than those applied to the
previous year. Definitive rates will only be known at the end of 2000.

Our profitability significantly depends on our ability to achieve
access, on a timely basis and at attractive rates, to the facilities of our
competitors, who may try to limit such access. In particular, the expansion of
our DSL business beyond the current trial phase depends upon access to
co-location facilities and existing copper infrastructure controlled by the
PTTs.

Our dependence on third parties to provide our customers with access to
our network makes us susceptible to price fluctuations, service disruptions and
cancellations that are outside of our control. These occurrences historically
have resulted in the loss of some customers and could result in customer losses
in the future. For example, in October 1998, we experienced two temporary
disruptions as a result of a malfunction in the software of KPN Telecom, which
led to customers temporarily having to switch off our network. We believe that
we lost a limited number of customers due to those service disruptions. Such
disruptions may occur from time to time in the future.

Svianed's network is comprised of leased lines from KPN Telecom and
Internet uplinks from UUNet. Svianed's profitability depends on its ability to
continue to have access to the facilities of KPN Telecom and UUNet.

<PAGE>

We expect to encounter increasing competition from dominant market participants
and new entrants.

The European telecommunications industry is a very competitive market
that is subject to both the continued dominance of PTTs and the arrival of new
entrants.

PTTs have significant competitive advantages over non-PTT market
participants which include:

o cost advantages as a result of economies of scale,

o greater financial resources, market presence and network coverage,

o greater brand name recognition, customer loyalty and goodwill,

o control over domestic transmission lines and control over the
access to these lines by other participants, and

o close ties to national regulatory authorities that may be
reluctant to adopt policies that would adversely affect their
competitive position.

Our policy in this competitive environment has been to price our
products and services at a discount to the PTTs, and to offer high-quality
customer service, products and services. However, the prices of long distance
calls in most of our markets have decreased substantially and our larger
competitors have been able to use their greater financial resources to create
severe price competition. We believe that prices will continue to decrease for
the foreseeable future and that PTTs and other providers will continue to
improve their product offerings, which will increase these competitive
pressures.

Our competition in the Benelux and Germany also comes from newer market
entrants including MCI WorldCom, Telfort, GTS/Esprit Telecom, COLT Telecom and
other more recent Internet-based competitors. Further, we believe that, as a
result of the introduction of the euro, there will be a greater transparency in
prices in our market which may lead to further price competition. Sustained
price competition could have a material adverse effect on our business.

Exchange rate fluctuations may adversely affect our business.

A significant portion of our indebtedness is denominated in U.S.
dollars. However, our revenues have been and will continue to be denominated in
Dutch guilders, Belgian francs, Deutsche Marks and, increasingly, in euros.
Therefore, our ability to pay the interest and principal due on the Notes will
be affected by changes in the exchange rates between the U.S. dollar and the
euro.

We denominate our financial reports in Dutch guilders while we maintain
significant U.S. dollar denominated assets and liabilities, so our reported
results of operations may be significantly affected by exchange rate movements.
Furthermore, we will become subject to greater foreign exchange fluctuations if
we expand our operations outside the Benelux and Germany and begin to receive
revenues denominated in currencies other than from countries that have adopted
the euro as their currency.

<PAGE>

Any inability to identify future acquisition opportunities and to pursue such
opportunities may hinder our growth.

As part of our business strategy, we intend to pursue selective
acquisitions and strategic relationships. This strategy presents risks inherent
in assessing the value, strengths and weaknesses of acquisition and investment
opportunities, and in integrating and managing newly acquired operations and
improving their operating efficiency. In addition, such acquisitions and
investments could divert our resources and consume significant management time.
We cannot assure that any desired strategic alliance, acquisition or investment
can be made in a timely manner or on terms and conditions acceptable to us. We
cannot assure that we will be successful in identifying attractive acquisition
candidates, completing and financing additional acquisitions on favorable terms,
or integrating the acquired businesses or assets into our existing operations.
Our ability to make acquisitions may depend on the availability of additional
debt financing on acceptable terms and will be subject to compliance with the
covenants contained in our debt instruments, including the indentures governing
the High Yield Notes.

We may encounter delays, operational problems and increased cost if we are
unable to acquire key equipment from our major suppliers.

We are dependent on third party suppliers of hardware and software
components, including Nortel, Cisco, Hewlett Packard, Microsoft and Netscape.
Although we attempt to maintain a number of vendors for each product, a failure
by a supplier to deliver quality products to us on a timely basis or our
inability to develop alternate sources if and as required could result in delays
which could have a material adverse effect on us.

Our recourse against suppliers who fail to deliver products to us on a
timely basis is restricted by contractual liability limitations in supply
agreements and purchase orders and, in many cases, by practical considerations
relating to our desire to maintain good relationships with suppliers. Moreover,
we cannot be sure that we will be able to obtain such products on the scale we
require at an affordable cost or at all. Neither can we be certain that our
suppliers will not enter into exclusive arrangements with our competitors or
stop selling their products or components to us at commercially reasonable
prices or at all. Any failure of our sole or limited-source suppliers to provide
products or components that comply with our standards could have a material
adverse effect on us.

We are controlled by a few principal shareholders.

You should be aware that five shareholders own approximately 45.8% of
our outstanding ordinary shares. Together, these shareholders can exercise
significant influence over our operations, business strategy and matters
requiring approval by our shareholders, including the approval of mergers or
other business combinations.

Obstacles associated with the effective implementation of the liberalization in
the European telecommunications markets may adversely affect our business.

The telecommunications industry is subject to a significant degree of
regulation. The national governments of the EU Member States were required to
pass legislation to liberalize the telecommunications markets within their
countries to implement European Commission directives. Although most of the EU
Member States have now implemented the required legislation, they have done so
on an inconsistent, and

<PAGE>

sometimes unclear, basis. In addition, the legislation and/or its implementation
has, in certain circumstances, imposed significant obstacles on the ability of
carriers to proceed with the necessary licensing process. Such barriers include
requirements that carriers make significant capital commitments to build
infrastructure, complete extensive application documentation and pay significant
license fees. Implementation has also been slow in certain EU Member States as a
result of such EU Member State's failure to dedicate the resources necessary to
have a functioning regulatory body in place. Although we have obtained the
necessary licenses, authorizations and registrations to operate our business in
the jurisdictions in which we currently operate, we will have to obtain
additional licenses and authorizations if we expand our product and service
offerings and expand our business to other countries. We are not certain that we
will be able to obtain such licenses and authorizations on a timely basis. The
above factors and other potential obstacles associated with the effective
implementation of liberalization could have a material adverse effect on our
operations by preventing us from expanding our operations either as quickly or
as currently intended, as well as a material adverse effect on our business,
financial condition and results of operations.

There are currently few laws and regulations that specifically regulate
communications on the Internet. European and U.S. government authorities and
agencies are considering laws and regulations that address issues such as user
privacy, infringement pricing, on-line content regulation, intellectual property
ownership and taxation of on-line products and services. The EU has adopted two
directives that impose restrictions on the collection and use of personal data,
guaranteeing citizens of EU Member States the right of access to their data, the
right to know where the data originated and the right to recourse in the event
of unlawful processing. However, to the best of our knowledge, no European court
has ever held a telecommunications services provider liable for content
transmitted over its network, although we can give no assurances that no laws or
regulations will be adopted that will impose such liability, or that any future
court rulings will not impose such liability. Any future regulation of the
Internet that imposes restrictions on the way we conduct our business could
seriously adversely affect our business.

A change of control may cause a default under the Notes.

Pursuant to the terms of the Notes, each note holder can require us to
redeem its notes in the event a change of control of VersaTel occurs. However,
our existing contractual obligations or an inability to obtain adequate
resources may prevent us from consummating any offering to repurchase the Notes.
Our failure to complete an offer to repurchase the Notes would be an event of
default under the Notes and would, therefore, seriously adversely affect our
business.

We may be considered a Passive Foreign Investment Company.

For the year 1998, we were a "passive foreign investment company" (a
"PFIC") for U.S. federal income tax purposes. Although we have not finalized our
1999 year-end financial statements, we do not believe that we were a PFIC for
1999 and, based on our projections, we do not expect to be a PFIC for any
subsequent year. However, because our projections may prove to be inaccurate
and, in particular, because we have substantial passive assets in the form of
cash from previous offerings of notes and equity, and because the value of our
goodwill may fluctuate significantly, we can provide no assurance regarding our
PFIC status for 1999 and subsequent years. U.S. Holders that own Shares, ADSs or
Warrants at any time during a taxable year for which we are a PFIC will be
subject to a complex set of rules under the Internal Revenue Code and,
generally, could in effect be subject to additional tax upon certain
distributions by us or upon a sale or other disposition of such Shares,

<PAGE>

ADSs or Warrants. We urge investors to consult their own tax advisors regarding
the application of the PFIC rules to their particular circumstances.

Shares eligible for public sale after this offering could adversely affect our
stock price.

As of December 31, 1999, there are 79,224,986 outstanding ordinary
shares, including ordinary shares represented by our ADSs. Of these shares,
24,437,500 shares have been registered under the Securities Act and are freely
tradeable. The remaining 54,787,486 shares have not been registered under the
Securities Act and may only be resold in compliance with the registration
requirements under the Securities Act or in transactions not subject to, or
pursuant to an exemption from, such act. In addition, five of our shareholders
holding an aggregate of 36,314,782 shares have agreed, subject to certain
limited exceptions, with the Amsterdam Stock Exchange that they will not sell or
dispose of an aggregate of 29,291,108 of those shares until July 23, 2002.

In addition, as of the date of this prospectus, there were outstanding
options to purchase 5,291,500 depositary receipts issued for ordinary shares
(348,000 of which are not dilutive in that the shares underlying such options
are currently outstanding and will be provided to us by the holders thereof). An
additional 591,500 ordinary shares have been reserved for issuance under our
1999 Stock Option Plan and an additional 3,000,000 ordinary shares have been
reserved for issuance under our 2000 Stock Option Plan. All of our stock option
plans provide that the option holder is not entitled to retain any depositary
receipts received by it as a result of the exercise of its option, nor is the
option holder entitled to exchange any depositary receipts for ordinary shares.
Upon exercise of its option by the option holder, the option holder is required
to offer the depositary receipts received by it to us or to another party
designated by us at the fair market value of the underlying shares.

We also have earn-out obligations to former shareholders of SpeedPort
and ITinera covering an aggregate of 130,000 ordinary shares. Upon issuance, any
such shares could only be resold in compliance with the registration
requirements of the Securities Act or in transactions not subject to, or
pursuant to an exemption from, such act.

We cannot predict if future sales of our ordinary shares, or the
availability of our ordinary shares for sale, will materially adversely affect
the market price for our ordinary shares or our ability to raise additional
capital by offering equity securities.

The price of our ordinary shares may be volatile.

Recently, stock markets in the United States and Europe have
experienced significant price and volume fluctuations and the market prices of
securities of telecommunications services providers and technology companies,
particularly Internet-related companies, have been highly volatile. Investors
may loose all or part of their investment. In the past, following periods of
volatility in the market price of a company's securities, securities class
action litigation in the United States has often been instituted against such a
company. The institution of such litigation against us could result in
substantial costs and a diversion of our management's attention and resources,
which could materially adversely affect our business, results of operations and
financial condition.

We do not intend to list the warrants on any stock exchange.

<PAGE>

The warrants have not been listed on any stock exchange and we do not
intend to list the warrants on any stock exchange in the future. Although the
warrants are eligible for trading in the PORTAL market of the Nasdaq Stock
Market, Inc. by "qualified institutional buyers" ("QIBs"), as defined in Rule
144A under the U.S. Securities Act of 1933, the absence of a listing on a stock
exchange may cause the warrants to trade at a price lower than the price for the
underlying ordinary shares that are traded on the Amsterdam Stock Exchange and
the Nasdaq National Market.

We have antitakeover provisions that could delay or prevent a change in control,
even if it would benefit shareholders.

Our articles of association provide for the possible issuance of
preference shares A, preference shares B and one priority share. Such shares may
be issued pursuant to a resolution of the general meeting of shareholders.
However, our management board has obtained from the shareholders at a general
meeting, the authority to issue preference shares and the priority share subject
only to the prior approval of the supervisory board. The issuance of preference
shares or the priority share may deter or prevent a takeover attempt, including
an attempt that might result in a premium over the market price for our Shares
or ADSs:

o Preference shares A and preference shares B. Upon obtaining
authority from the general meeting of shareholders to issue
preference shares, our management board is expected to grant a
call option on preference shares, which in the case of preference
shares B will not exceed 100% of all our other outstanding shares,
to an independent foundation (stichting) to be established under
Netherlands law. In the event of a threatened hostile take-over
bid, the foundation may exercise this option. The issuance of such
preference shares could therefore inhibit a change of control.

o Priority share. Upon obtaining authority from the general meeting
of shareholders to issue the priority share, our management board
is expected to grant a call option on the priority share to an
independent foundation (stichting) to be established under
Netherlands law. In the event of a threatened hostile take-over
bid, the foundation may exercise this option. The priority share
carries special voting rights. The issuance of this priority share
could therefore inhibit a change of control.

We do not expect to pay dividends for the foreseeable future.

We have never declared or paid any cash dividends on our ordinary
shares. We currently intend to retain any future earnings to finance operations,
expand our network, repay outstanding obligations and finance future
acquisitions. Therefore, we do not expect to pay any dividends in the
foreseeable future. In addition, the indentures governing the High Yield Notes
severely limit, and for the foreseeable future effectively prohibit, our ability
to pay cash dividends on our capital stock.

<PAGE>

Disclosure Regarding Forward-Looking Statements

This prospectus includes forward-looking statements. Such statements
can be identified by the use of terminology such as "believes," "expects,"
"may," "will," "should," "anticipate," "estimate," "continue" or other similar
words. We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to risks, uncertainties, and assumptions about us,
including, among other things:

o our anticipated expansion plans for our network and growth
strategies,

o our ability to integrate recently acquired companies,

o our expectation of the impact of this expansion on our revenue
potential, cost basis and margins,

o our expectation of the competitiveness of our services,

o our intention to introduce new products and services,

o anticipated trends and conditions in our industry, including
regulatory reform and the liberalization of telecommunications
services across Europe, and

o our ability to compete, both nationally and internationally.

In light of these risks, uncertainties, and assumptions, the
forward-looking events discussed in this prospectus might not occur. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Given these considerations, readers are cautioned not to place undue reliance on
such forward-looking statements.

<PAGE>

Use of Proceeds

All Shares and Warrants offered hereby are being offered by the Selling
Shareholders. We will not receive any of the proceeds from the sale of the
Shares or the Warrants.

The Shares offered hereby include up to 4,441,020 ordinary shares
issuable upon the exercise of the Warrants currently held by the Selling
Shareholders. As of the date of this prospectus, each Warrant entitles the
holder thereof to purchase 13.334 shares at an exercise price of NLG 2.55 per
share. The warrant agreements governing the Warrants provide that the Warrants
may also be exercised on a cashless basis by reducing the number of ordinary
shares obtainable upon the exercise of the Warrants. We may receive up to NLG
11.3 million ($5.5 million) upon the exercise of the Warrants if all Warrants
registered hereunder are exercised and if none of the Selling Shareholders
elects to exercise any of the Warrants on a cashless basis. We intend to use any
proceeds we may receive upon exercise of the Warrants for general corporate
purposes.

Price Range of Ordinary Shares

Our ADSs and ordinary shares have been traded on the Nasdaq National
Market and the Amsterdam Stock Exchange, respectively, under the symbol "VRSA"
since July 23, 1999, the date of our initial public offering. The following
table sets forth, for the periods indicated, the high and low closing bid prices
per ADS as reported on the Nasdaq National Market.

High Low
---- ---

July 1999 (from July 23)...................... 15.38 13.63
August 1999................................... 13.94 10.81
September 1999................................ 13.38 10.63
October 1999.................................. 13.50 10.88
November 1999................................. 27.50 14.00
December 1999................................. 37.50 27.88
January 2000 (through January 25)............. 38.50 30.50

The closing bid price for the American Depositary Shares as reported on
the Nasdaq National Market on January 25, 2000 was $38.00. The closing bid
price for our ordinary shares as reported on the Amsterdam Stock Exchange on
January 25, 2000 was Euro 38.00.

Dividend Policy

We have never declared or paid any dividends on our ordinary shares and
we do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain future earnings to finance operations, expand our
network, repay outstanding obligations and finance future acquisitions. Any
future determination to pay cash dividends will be at the discretion of the
shareholders, to be determined, at a general meeting of shareholders. Our
ability to declare or pay cash dividends, if any, will be dependent upon the
ability of our subsidiaries to declare and pay dividends or otherwise transfer
funds to VersaTel, because VersaTel conducts its operations entirely through
subsidiaries. The indentures governing the Notes provide that, in general, we
may not declare of pay any dividend or make any other cash distribution to our

<PAGE>

shareholders, unless we have generated sufficient cash flows from prior years.
These indentures limit and, for the foreseeable future, effectively prohibit,
our ability to declare or pay cash dividends.

<PAGE>

Selected Financial Data for VersaTel

The following selected financial data of VersaTel as of and for the
years ended December 31, 1996, 1997 and 1998 have been prepared in accordance
with U.S. GAAP and have been derived from the historical financial statements of
VersaTel, which have been audited by Arthur Andersen, independent public
accountants. The selected financial data for VersaTel as of and for the nine
month periods ended September 30, 1998 and 1999 are unaudited, but in the
opinion of the management contain all adjustments, consisting only of normal
recurring accruals, which are necessary for a fair presentation of results for
interim periods. The selected financial data should be read in conjunction with
the financial statements of VersaTel and the related notes thereto included in
VersaTel's Annual Report on Form 20-F for the year ended December 31, 1998, and
VersaTel's Quarterly Report on Form 6-K for the nine months ended September 30,
1999, that are incorporated by reference into this prospectus.

<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
----------------------------------------- ------------------------------------
1996 1997 1998 1998 1999(1)
---- ---- -------------------- ---- -----------------------
NLG NLG NLG $(2) NLG NLG $ (2)
(in thousands, except share and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue................................. 6,428 18,896 39,561 19,112 25,880 78,134 37,746
Operating expenses:
Cost of revenue, excluding
depreciation and amortization..... 4,954 17,405 31,821 15,373 21,120 59,690 28,836
Selling, general and administrative..... 5,485 17,527 47,733 23,059 30,002 119,025 57,500
Depreciation and amortization........... 453 3,237 6,473 3,127 4,914 30,127 14,554
------ ------- ------- ------- ------- -------- --------
Total operating expenses................ 10,892 38,169 86,027 41,559 56,036 208,842 100,890
------ ------- ------- ------- ------- -------- --------
Loss from operations.................... (4,464) (19,273) (46,466) (22,447) (30,156) (130,708) (63,144)
Interest expense (income), net.......... 269 534 25,810 12,469 14,962 86,061 41,575
Currency loss (gain).................... - 53 (5,146) (2,486) 4,747 44,036 21,274
Other expense, net...................... - - - - - 4,033 1,948
------ ------- ------- ------- ------- -------- --------
Loss before income taxes................ (4,733) (19,860) (67,130) (32,430) (40,371) (264,838) (127,941)
Provision for income taxes.............. - - 7 3 - 2,893 1,398
------ ------- ------- ------- ------- -------- --------
Net loss................................ (4,733) (19,860) (67,137) (32,433) (40,371) (267,731) (129,339)
====== ======= ======= ======= ======= ======== ========
Net loss per share
(basic and diluted)(3).............. (0.47) (1.10) (2.06) (.99) (1.32) (5.91) (2.85)
Weighted average number of
shares outstanding(3)............... 10,008 18,084 32,622 32,622 30,495 45,332 45,332
</TABLE>

<TABLE>
<CAPTION>
Year Ended December 31, As of September 30,
----------------------------------------- ------------------------------------
1996 1997 1998 1998 1999(1)
---- ---- -------------------- ---- -----------------------
NLG NLG NLG $(2) NLG NLG $ (2)
<S> <C> <C> <C> <C> <C> <C> C>
Balance Sheet Data:

Cash and restricted cash................. 4,443 1,495 583,570 281,918 395,166 949,192 458,547
Working capital (excluding cash
and restricted cash)................. (2,704) (24,774) (46,851) (22,633) (36,515) (129,918) (62,762)

Capitalized finance cost................. - - 28,750 13,889 19,333 46,388 22,410
Property, plant and equipment, net....... 2,340 13,619 38,608 18,651 23,161 203,965 203,965
Construction in progress................. - - 46,019 22,231 10,407 129,402 62,513
Goodwill................................. - - 4,556 2,201 1,478 379,263 183,219
Total assets............................. 8,160 19,331 723,397 349,467 459,880 1,779,022 859,431
Total long-term obligations
(including current portion).......... 4,185 8,931 688,796 332,752 423,022 1,392,229 672,575
Total shareholders' equity (deficit)..... 146 (18,214) (34,073) (16,460) (9,510) 182,129 87,985
</TABLE>

24
<PAGE>

Cash Flow Data:
Net cash provided by (used in)
operating activities................ (1,718) 5,765 (37,322) (18,030) (24,104) (86,718) (41,893)
Net cash used in investing activities....... (2,569) (14,516) (82,036) (39,631) (25,672) (647,834) (312,963)
Net cash provided by financing activities.... 8,571 5,807 490,026 236,728 288,079 1,125,916 543,921
</TABLE>

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

(1) The historical unaudited interim financial statements of VersaTel for the
nine months ended September 30, 1999 include all of the assets and
operations of Svianed, which were consolidated with VersaTel following
VersaTel's acquisition of Svianed on June 11, 1999.
(2) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on September 30, 1999
of NLG 2.07 per $1.00.
(3) As adjusted to give effect to a 2-for-1 stock split on April 13, 1999.
Includes 180,000 shares approved for issuance by the general meeting of
shareholders in connection with the acquisition of CS Net and ITinera.
(4) Excluding the one-time non cash charge related to a revaluation of employee
stock options, the selling, general and administrative expenses as a
percentage of revenue for the nine months ended September 30, 1999 would
have been 116.9%.
(5) EBITDA consists of earnings (loss) before interest expense, income taxes,
depreciation, amortization and foreign exchange gain (loss). EBITDA is
included because management believes it is a useful indicator of a
company's ability to incur and service debt. EBITDA should not be
considered as a substitute for operating earnings, net income, cash flow or
other statements of operations or cash flow data computed in accordance
with U.S. GAAP or as a measure of a company's results of operations or
liquidity. Funds depicted by this measure may not be available for
management's discretionary use (due to covenant restrictions, debt service
payments, the expansion of our network, and other commitments). Because all
companies do not calculate EBITDA identically, the presentation of EBITDA
contained herein may not be comparable to other similarly entitled measures
of other companies.

<PAGE>

About VersaTel

Overview

VersaTel is a rapidly growing, competitive network operator focused
primarily on the Benelux and the Northwest Rhine region of Germany. Our
objective is to become the leading fully integrated provider of local access,
facilities-based broadband services, including voice, data and Internet
services, to customers in our target region. We currently provide high-quality,
competitively priced telecommunications, data and Internet services in The
Netherlands and Belgium to four targeted market segments:

o business services--small- and medium-sized businesses located
throughout our target market,

o local access services--high bandwidth users within the Benelux
which are near and directly connected to our network,

o data services--high bandwidth data customers with multiple sites
throughout our target market, and

o carrier services--telecommunications, data and Internet service
providers.

With over 9,700 business customers for voice services (and, including
data and Internet customers, more than 20,000 customers), 275,000 subscribers to
Zon's free Internet service, and over 540 employees, we are a leading
alternative to KPN Telecom and Belgacom, the former monopoly telecommunications
carriers in The Netherlands and Belgium, respectively. Our revenues were NLG39.6
million for the year ended December 31, 1998. Pro forma for the acquisition of
Svianed (described below), our revenues would have been NLG96.2 million for the
year ended December 31, 1998 and NLG105.3 million for the nine months ended
September 30, 1999. Our revenues for the three months ended September 30, 1999
were NLG39.0 million.

We are building a fully integrated broadband network in the Benelux to
provide end-to-end connectivity to our customers. Our network has been designed
to pass through all the major population and business centers in the Benelux and
to connect city centers, business parks and buildings along its route. Our
network design consists of three fully integrated elements:

o Benelux network--multiple, integrated fiber optic rings connecting
all major population and business centers in the Benelux,

o local access infrastructure--high bandwidth fiber optic and radio
connectivity to customers along our Benelux network route
including city centers, business parks and buildings, and

o international network--fiber optic rings initially connecting
London, Dusseldorf, Frankfurt, Paris and the Benelux network.

On September 28, 1999, we announced the completion of our STM-64 (SDH)
fiber optic Randstad Ring. The Randstad Ring spans approximately 440 km and
connects the cities of Amsterdam, Utrecht, Den Bosch, Breda, Rotterdam, Den Haag
and Haarlem. This ring completes the Randstad portion of the fiber

<PAGE>

optic ring that has been operational since July 1999 and replaces a portion of
the leased circuit that completed the initial Amsterdam-Antwerp ring. An
additional 40 km of the Benelux network is operational connecting the Randstad
ring to Antwerp. As of November 30, 1999, approximately 1,500 kilometers of
fiber-ready duct had been constructed and approximately 1,175 kilometers of
fiber had been installed. As of September 30, 1999, our construction passed 23
city centers, 18 business parks and 13,059 buildings along the route of our
network. We currently have both a Nortel Networks DMS 100 digital circuit switch
and a Cisco Systems data switch in each of Amsterdam, Rotterdam and Antwerp. We
expect to have an additional Nortel DMS switch and an additional Cisco Systems
data switch installed in Brussels, in 2000. The Nortel DMS switches enable us to
deliver voice and ISDN telecommunications services and the Cisco data switches
allow us to support multiple data communications protocols including ATM, IP
(Internet Protocol), IPX (Novell), Frame Relay and others.

During the past year, we have substantially expanded our product
offering from our initial offering of long distance voice services. We currently
offer a full portfolio of voice, data and Internet services to our business
customers and a broad range of connectivity, termination, co-location and
hosting services to other telecommunications, data and Internet service
providers. Through our acquisition of VEW Telnet we believe that we will be able
to provide customers in the Northwest Rhine region of Germany with the same
broadband services and high bandwidth connections.

Recent Developments

Acquisition of VEW Telnet

On December 13, 1999 we acquired of VEW Telnet, a competitive network
operator in the Northwest Rhine region of Germany, from VEW Energie, a power
company in the Westphalia-Lippe region of Germany. VEW Telnet complements
VersaTel's strategy by providing voice, data and Internet to approximately 3,800
business customers through its existing 1,400 km fiber optic network which is
leased from VEW Energie pursuant to a 30-year Indefeasible Right of Use. We
intend to connect VEW Telnet's network directly to our Benelux network and
provide substantially the same product offering in Germany as we do in the
Benelux. VEW Telnet's network consists of an STM 16 ring with over 160 SDH
nodes/points-of-presence and seven points of interconnection with Deutsche
Telekom. Also, we have secured the right to jointly build with VEW Energie by
utilizing its power network rights-of-way, giving VersaTel the ability to build
additional fiber network and customer connections. VEW Telnet's revenues on a
German GAAP basis were DEM 17.8 million for the financial year ended December
31, 1998 and are DEM 28.3 million for the nine months ended September 30, 1999.

VersaTel intends to expand VEW Telnet's access to Deutsche Telekom's
MDF locations in the region by extending VEW Telnet's existing Network to
additional Deutsche Telekom MDF locations. We believe approximately 80% of the
market is connected to 325 MDF locations in this region. VersaTel plans to
leverage Deutsche Telekom's existing copper infrastructure to deploy DSL access,
as well as build local access fiber connections, to provide a full package of
high bandwidth, local access services to German customers.

VersaTel intends to maintain a strong relationship with VEW Energie and
has entered into a 12- month telecommunications services contract with them with
an additional five year "right of last offer" provision. The acquisition
agreement provides that VersaTel will have the exclusive right to use VEW
Energie's existing and future telecom infrastructure. In addition, the
acquisition agreement provides that

<PAGE>

VEW Energie and VersaTel will assess the possibilities of cross-selling and
product bundling and VersaTel will be allowed to market its services to VEW
Energie's power customers. VEW Telnet is also a member of RegioNet, a
cooperation between six adjacent regional carriers to reduce termination costs
and realize interconnection synergies in Germany.

DSL Trials

During the three months ended September 30, 1999, VersaTel conducted a
trial of ADSL services with 25 customers connected to KPN Telecom's Rotterdam
MDF location. VersaTel has established a team of dedicated employees to conduct
the DSL trials and prepare for commercial service that we expected to commence
in the first quarter of 2000.

During the trial, VersaTel linked its network to KPN Telecom's
Rotterdam MDF location with a direct connection and was able to provide
high-speed Internet service as well as voice over ADSL service.

VersaTel was the only alternative carrier to participate in the first
phase of the ADSL trials and is currently the only alternative carrier to begin
DSL testing with KPN Telecom in all of the additional 14 MDF locations that have
been scheduled for the second phase of the trial. We believe that these 15
trials locations located primarily in Amsterdam, Rotterdam and Utrecht,
represent approximately 10% of the addressable business market in The
Netherlands.

Due to the high population density in The Netherlands and the close
geographic dispersion of KPN Telecom's MDF locations, we believe that customer
line distances and the business customer to residential customer ratio in KPN
Telecom's MDF locations will allow us to offer high-quality, retail DSL services
to business customers. We intend to access additional KPN Telecom MDF locations
by utilizing high-speed, direct connections to our network in order to leverage
KPN Telecom's existing copper infrastructure. We also intend to provide ADSL
services to residential customers through other telecommunications, data and
Internet service providers on a wholesale basis. We have applied to gain access
to 200 of KPN Telecom's MDF locations that are within five km of our network
which we believe would allow us to address approximately 40% of the business
market in The Netherlands with DSL services.

Zon

On August 31, 1999, we launched Zon, a new free Internet service
provider, along with our marketing and distribution partners Radio 538, a
leading commercial radio station in The Netherlands among 15-35 year olds, and
Free Record Shop, a leading music retail chain in The Netherlands. VersaTel
currently owns 90% of the issued and outstanding share capital of Zon and Radio
538 and Free Record Shop own 10%, collectively, with an option to acquire an
additional 10% based on certain performance incentives. Free Record Shop and
Radio 538 will provide marketing and distribution support for Zon's products.

As of December 31, 1999, Zon provided Internet service to more than
275,000 subscribers. For the month ended October 31, 1999, Zon customers
generated over 44 million terminating minutes for VersaTel as well as
approximately 6.6 million page views for Zon's web site. In a recent marketing
survey regarding the brand-awareness of free Internet service providers in The
Netherlands, Zon scored highest with 23% brand-awareness, followed by Freeler
with 18% and Het Net with 8%.

<PAGE>

Zon's portal site is designed as an easily accessible, user-friendly
site for its customers that will allow subscribers the ability to customize the
information they access. The company therefore uses a high-quality and high
bandwidth network infrastructure provided by VersaTel.

Zon focuses primarily on individual Internet users in The Netherlands.
Zon offers subscribers Internet access and e-mail without registration or
subscription fees and subscribers only pay local dial-in telephone costs.
Current and new Internet users can subscribe to Zon by accessing the Zon web
site through a free subscription CD-ROM that is available at the 165 stores
operated by Free Record Shop in The Netherlands or by calling a toll-free (0800)
number operated by Zon.

Svianed and Other Recent Acquisitions

On June 11, 1999, we acquired Svianed, the third largest provider of
data services in The Netherlands. Svianed complements VersaTel's strategy by
providing data services to approximately 50 customers, primarily in the
financial services and banking industry, including the principal social
insurance organization and the largest financial institution in The Netherlands.
These customers are served on a network which connects to over 600 buildings and
utilizes over 700 leased lines covering approximately 6,000 kilometers. The
Svianed network has 50 regional points of presence and transports traffic at
speeds of up to 150 Mbps. Prior to VersaTel's acquisition of Svianed, Svianed
was owned by Gak Holdings B.V., a government-controlled organization partially
responsible for the implementation of social security laws within The
Netherlands. Svianed had revenues of NLG56.7 million and EBITDA of NLG17.9
million for the year ended December 31, 1998.

Through our acquisition of Svianed we will be able to significantly
accelerate the deployment of our broadband data services product offering by
combining our market presence with Svianed's data and network management
expertise. We intend to directly connect Svianed's customers to, and transition
Svianed's traffic onto, our network in order to reduce our reliance on leased
lines. We believe this will significantly enhance the quality of our service
offering to Svianed's customers and reduce our costs. In addition to Svianed, we
have recently extended our product and service offerings and expanded our
customer base through the following strategic acquisitions:

o VuurWerk--a leading provider of web hosting, co-location, access
and e-commerce services in The Netherlands and Belgium. VuurWerk
is one of the largest providers of web hosting services in The
Netherlands, with more than 10,000 domain name registrations and
approximately 6,000 customers.

o SpeedPort--a provider of Internet co-location and connectivity
solutions for high bandwidth and mission critical Internet and
e-commerce applications. SpeedPort will use VersaTel's
international fiber connectivity to build its IP-based network to
serve its customers.

o CS Net--enables Internet-based trade communities to conduct
business-to-business transactions in specific industries. It
currently provides these services to six trade communities with
10,000 end users.

o ITinera--a Belgium-based Internet service provider with over 950
business customers.

<PAGE>

Over time, we intend to market most products and services of these
companies under the VersaTel brand. SpeedPort, however, will continue to market
its interest solutions under its current brands.

The Benelux Market Opportunity

VersaTel was founded in 1995, initially, to capitalize on the
opportunities created by the liberalization of the telecommunications market in
the Benelux. We believe that the Benelux provides an excellent opportunity for
competitive communications service providers for several reasons, including:

o High Population Density. With approximately 26.2 million people in
a relatively small geographical area, the Benelux market is
characterized by one of the world's highest population densities,
approximately 351 persons per square kilometer, compared to
approximately 107 persons per square kilometer in western Europe
as a whole.

o High Growth Potential. Data and telecommunications revenues as a
percentage of gross domestic product ("GDP") of 5.3% in 1997 were
still relatively low compared to 6.3% in the United Kingdom and
7.0% in the United States, each with a more developed
communications market.

o Rapidly Expanding Data and Internet Markets. The market for data
and Internet services is growing rapidly in the Benelux. According
to International Data Corporation, the estimated annual growth of
the market for Internet access services will be 30.4% and 45.2% in
The Netherlands and Belgium, respectively, from 1997 to 2001.

o High Intensity of Communications Traffic. The Benelux is a major
transportation and trade gateway which generates a relatively high
level of communications traffic. According to EITO (the European
Information Technology Observatory), the total Benelux
telecommunication services market amounted to $14.2 billion in
1997. If ranked as a single country, the Benelux would have been
the fifth largest telecommunications market in western Europe
behind Germany, France, the United Kingdom and Italy.

o Traditionally Underserved Market. At present, the Benelux
communications market is dominated by the former monopoly
carriers, KPN Telecom, Belgacom and P&T Luxembourg in The
Netherlands, Belgium and Luxembourg, respectively. We believe
these carriers have not traditionally focused on providing high
quality customer service to our targeted customers.

o Demand for End-to-End, Broadband Services. We believe that
business customers will increasingly demand high bandwidth
end-to-end communications services, as they rapidly adopt
Internet-based applications as essential business and
communications tools, such as electronic commerce.

VersaTel currently operates in The Netherlands and in Belgium and, with
the acquisition of VEW Telnet in Germany. We plan to extend our operations to
Luxembourg in the future. The following table provides a brief overview of the
Benelux market:

<PAGE>

Population(1)....................................................26.2 million
Population Density(2)............................................351 persons/km2
Per capita GDP in 1997(1)........................................$24,033
Total telecom expenditures in 1997(3)............................$14.2 billion
Telecom expenditures as % of GDP in 1997(3)......................2.6%
Benelux telecom expenditures as % of
western Europe's telecom expenditures in 1997(3)..........8.2%
Number of Internet devices in 1997(4)............................1,831,000
Expected annual growth Internet devices 1997-2001(4).............35.9%
Total Internet access revenues in 1997(4)........................$24.1 million
Expected annual growth Internet access revenues 1997-2001(4)....34.7%

- ---------------
(1) Source: The Economist Intelligence Unit and Quest Economics Database
(2) Source: International Telecommunications Union, 1998
(3) Source: The European Information Technology Observatory (EITO), 1997
(4) Source: International Data Corporation, 1998

Business Strategy

Our objective is to become the leading local access, facilities-based
operator for broadband voice, data and Internet services in the Benelux and the
Northwest Rhine region of Germany. The principal elements of our strategy are:

o Deploy Our Broadband Network. We are deploying our fully
integrated broadband network to allow us to provide voice, data
and Internet services, as well as to support all major protocols.
We believe that our high capacity network will allow us to grow
our customer base rapidly, increase our margins and expand our
service offerings. We have designed our network to pass the major
points of interconnection of other service providers and to
connect to major Internet exchanges. We intend to be one of the
highest quality ISPs in the Benelux and the Northwest Rhine region
of Germany. In addition, we have started constructing our local
access infrastructure in areas where we have completed the Benelux
network. Also, we are deploying the latest network technologies,
such as IP over DWDM (dense wave division multiplexing), and
intend to add services to this platform as it proves reliable. We
intend to continue to actively participate in the development of
new network technologies in order to maximize the capacity of our
network and to expand our service offerings.

o Focus on Targeted Customer Segments with Specialized Teams. We
have identified four groups--broadband local access customers,
small- and medium-sized businesses, broadband data services
customers and other telecommunications, data and Internet service
providers--as our targeted customer segments. We have tailored our
sales force, customer care and billing system to meet the specific
needs of each of our target customer segments. We plan to continue
to leverage our network, team approach and operations to deliver
services to meet our targeted customers' needs.

<PAGE>

o Provide Innovative Products and Services. We seek to continue to
be market leaders in providing our customers with advanced
products and services and plan to provide customized solutions to
fit local market needs. We intend to leverage our high bandwidth
Network to offer integrated services to our customers. By
providing broadband services to our customers we will be able to
meet their demand for a single source provider, competitive
prices, high quality of service and guaranteed access to
bandwidth. By directly connecting our customers to our network and
by providing multiple services, we believe customers will be less
likely to switch to other service providers and that these
customers will provide relatively higher revenues and margins.
Through our acquisition of Svianed we will be able to
significantly accelerate the deployment of our broadband data
services product offerings by combining our market presence with
Svianed's data and network management expertise.

o Expand Carrier Services. We plan to generate substantial revenue
and additional traffic on our network through sales to
telecommunications, data and Internet service providers lacking
network infrastructure. Our fully integrated broadband network,
high quality systems and peering arrangements are intended to
allow us to offer a broad portfolio of carrier services, high
bandwidth connectivity, co-location, call termination and hosting.
In addition, we are able to provide our carrier service customers
with support systems, such as customer care and billing solutions.
This approach enables us to use our high capacity network to
obtain revenues and margins from market segments, such as
residential customers, that we do not currently target.

o Focus on Superior Customer Service. VersaTel strives to maintain a
competitive advantage over competitors in its target markets by
providing superior customer service in terms of responsiveness,
accuracy and quality. We believe that the Benelux market has been
particularly underserved by the PTTs and that providing a high
level of customer service is a key element to establishing
customer loyalty and attracting new customers. We were the first
provider in the market of detailed monthly billing statements and
monthly call management reports which identify savings to
customers and enable them to manage their telecommunications
expenditures more effectively. We have invested in a leading
operational support system software and hardware to insure that
our back-office systems enable us to maintain a competitive
advantage in the market.

o Pursue Selective Acquisitions and Strategic Relationships. We plan
to continue to acquire or enter into partnerships with other
competitive telecommunications, data and Internet service
providers in order to accelerate the growth of our customer base,
our network and our service portfolio. As part of our strategy,
our acquisition of Svianed will accelerate our time to market with
our data services product offering, enhance our sales force and
expand our market presence in the Benelux. Through our
acquisitions of CS Net in November 1998, SpeedPort and VuurWerk in
May 1999 and Svianed and ITinera in June 1999, and the recent
establishment of Zon, we have significantly expanded our Internet
services product offerings and expertise. In addition to the
acquisition of VEW Telnet, we are actively pursuing additional
strategic relationships with alternative carriers in France and
the United Kingdom in order to establish interconnection
agreements, to partner in infrastructure projects and to expand
our geographic reach.

<PAGE>

The VersaTel Network

We are building a high bandwidth network designed to provide flexible,
broadband local access to business customers with connectivity to all major
business and population centers in the Benelux and to key international
destinations (the "VersaTel Network" or the "Network"). Our Network will have
the ability to carry voice, data and Internet traffic and will support all major
protocols, including Frame Relay, ATM and IP. We connect with the major Internet
exchanges in Amsterdam, Brussels, London, Paris, Dusseldorf and Frankfurt and
through our acquisition of SpeedPort we will be increasing the number and
quality of peering arrangements with leading carriers of IP traffic to enhance
our presence in the rapidly expanding European Internet services market.

Network Design Principles

Our Network is designed to be scaleable, flexible, reliable and
efficient:

o Scaleability. We are constructing our Network to offer very high
capacity in all Network components, including ducts, fibers, DWDM,
SDH and operating support system platforms. We are placing eight
ducts, each capable of carrying over 300 fibers, on most routes.
We believe this will be enough to provide excess capacity for
future growth and will allow us to trade and sell a portion of our
excess capacity to other operators. We have installed DWDM
equipment on our initial fibers, which allows us to transmit
multiple frequencies of light on the same fiber strand. As a
result, the capacity of a single fiber can be increased by 16
times. Our SDH equipment will be capable of transmitting at the
rate of 10 Gbps (STM-64), with the ability to make 20 Gbps
available, if necessary. Our design will enable us to deliver high
bandwidth to our customers while providing substantial potential
for future expansion.

o Flexibility. We believe our Network design will enable us to
respond to changes in service offerings, Network standards and
protocols. We currently have a Nortel DMS 100 digital circuit
switch and a Cisco data switch in each of Amsterdam, Rotterdam and
Antwerp. We expect to have an additional Nortel DMS switch and an
additional Cisco data switch installed in Brussels in 2000. The
Nortel DMS switches enable us to deliver voice and ISDN
telecommunications services and the Cisco data switches allow us
to support multiple data communications protocols including IP,
IPX (Novell), ATM, Frame Relay and others.

o Reliability. The Network provides redundancy at multiple levels by
using a self-healing, shared protection ring structure to provide
dual direction routing capability in the event of cable damage or
equipment failure. SDH equipment automates most of the functions
of routing and connecting service bandwidth and reroutes these
functions in the event of failure. Our data and voice/ISDN
networks also have alternate routing capability to assure high
availability of the services they deliver. We have selected very
reliable equipment from world class vendors, such as Nortel and
Cisco.

o Efficiency. We believe we are constructing our Network in the most
efficient manner by routing the Network to target all the major
business parks and city centers in the Benelux and by installing
high capacity Network elements which will provide us with excess
capacity to allow for future growth. Also, this efficiency is
maintained in our Network operations by our

<PAGE>

use of the highest quality components and equipment and by
ensuring we continue to properly manage our Network.

Network Elements

The VersaTel Network will consist of the following integrated elements:

o Benelux Network. We are constructing a high capacity, broadband
network that will offer local access connectivity to thousands of
business customers with flexible bandwidth fiber facilities. The
Benelux network will extend to all major commercial and population
centers in the Benelux, including most interconnection points with
PTTs, other telecommunications network operators and major
Internet exchanges. We have designed the Network route to pass
through as many businesses as possible by going through business
communities and past major bandwidth users. Approximately 90,000
businesses are located within one kilometer of the network and
approximately 270,000 businesses are located within five
kilometers of the route. Physical access points will be provided
near each group of potential customers, at average intervals of
1.5 kilometers. While these features have increased the initial
cost of our network and the time to construct it, we expect that
the total cost of connecting to buildings will be lower and the
time required for connections will be reduced. A small portion of
our network is being constructed jointly with other carriers and
some rural sections are being completed by purchases of dark fiber
and pending the completion of construction, through leased lines.
On September 28, 1999, we announced the completion of our STM-64
(SDH) fiber optic Randstad Ring. The Randstad Ring spans
approximately 440 km and connects the cities of Amsterdam,
Utrecht, Den Bosch, Breda, Rotterdam, Den Haag and Haarlem. This
ring completes the Randstad portion of the fiber optic ring that
has been operational since July 1999 and replaces a portion of the
leased circuit that completed the initial Amsterdam-Antwerp ring.
An additional 40 km of the Benelux network is operational
connecting the Randstad ring to Antwerp. As of November 30, 1999,
approximately 1,500 kilometers of fiber-ready duct had been
constructed and approximately 1,175 kilometers of fiber had been
installed. By the end of 1999, we intend to have in service four
self-healing rings consisting of 1,200 kilometers. By the middle
of 2000, the Benelux network is expected to consist of
approximately 2,200 kilometers of fiber optic rings.

o Local Access Infrastructure. We are extending the Benelux network
into city centers, business parks and buildings with fiber optic
rings and radio systems to directly connect to customers. We
started constructing fiber optic infrastructure in business parks
in January 1999. We connected our first customers shortly after
the initial ring of the Benelux network became operational. We
have completed construction of five business park rings and one
city ring representing over 60 kilometers of operational local
access fiber. We plan to construct over 300 kilometers of local
access infrastructure in 1999. Also, we began testing point-to-
multipoint radio systems technology at two sites in The
Netherlands in the third quarter of 1998 and we plan to begin
testing in Belgium in the first half of 2000. In addition, we are
considering using unbundled local loop access to reach customers
when it becomes available.

o International Network. We are establishing an international
network that will extend the Benelux network to several major
interconnection and Internet exchange points in Western Europe.
Initially, these points will be London, which we connected in
March 1999, Frankfurt,

<PAGE>

which we connected in May 1999, Paris, which we connected in
November 1999, and Dusseldorf, which we expect to connect by the
end of the first quarter of 2000. The international network will
consist of one or more fiber pairs in fully redundant ring
structures. We are also considering acquiring fiber optic capacity
to the United States to improve our Network's Internet
connectivity for SpeedPort's utilization. Most of the
international network will consist of fiber or SDH capacity
obtained from other operators, but we plan to own and operate the
transmission equipment.

As of September 30, 1999, our network passed the following city centers
and business parks in The Netherlands and Belgium:

<TABLE>
<CAPTION>
City Centers Business Parks
- ------------------------------------------ -----------------------------------------------------------------
<S> <C> <C> <C>
o Alkmaar o Hilversum o Amsterdam--Bullewijk o Rotterdam--Brainpark
o Amersfoort o Hoofddorp o Amsterdam--Sloterdijk o Rotterdam--Capelle
o Amsterdam o Kortrijk o Breda--Emer o Rotterdam-- Parkhaven
o Antwerp o Leiden o Brussels--Keiberg o Rotterdam--Spaanse Polder
o Breda o Mechelen o Den Bosch--De Herven o Schiphol--Forward
o Brussels o St-Niklaas o Den Bosch--De Hurk o Utrecht--Lage Weide
o Delft o Roosendaal o Eindhoven--Ekkersrijt
o Den Bosch o Rotterdam o Etten-Leur--Vossenberg
o Eindhoven o Utrecht o Haarlem--Waarderpolder
o Gent o Venlo o The Hague--Plaspoelpolder
o Haarlem o Zaandam o Nieuwegein--Plettenberg
o The Hague o Rotterdam--Alexanderpolder
</TABLE>

Service Platforms

Our Network incorporates service platforms to deliver each of the major
service categories we offer or plan to offer. An SDH transmission platform
provides highly reliable transmission capacity for our other services and for
capacity leased to other operators, service providers and customers. A digital
circuit switching platform delivers voice and ISDN services. A data
communications platform based on ATM supports all major data protocols with high
quality service. An Internet services platform will support the Internet
services we provide to end-users and our offering of outsourced services to ISPs
and content providers. In parallel, we are implementing an additional new
platform of IP equipment connected directly to DWDM/fiber which is intended to
support all types of services. By integrating the functions of SDH, ATM and
circuit switching, this platform should provide a lower cost and a more flexible
design than traditional equipment. We plan to carry services, including voice,
data and Internet services, on this platform as the quality of service
management becomes proven.

<PAGE>

Data Centers

We intend to establish large scale data centers in Amsterdam, Antwerp,
Rotterdam and Brussels. We are designing these data centers to house our
transmission, IP routing and switching facilities. At these data centers, we
also expect to offer hosting, co-location and interconnection services to
high-volume customers, such as ISPs, in a secure, controlled site with direct
access to our Network. Through the acquisition of SpeedPort, we have acquired a
data center with 150 square meters of raised floor space for equipment housing
and fiber connectivity to both the SARA and NIKHEF parts of the Amsterdam
Internet Exchange. We are presently constructing a new Amsterdam data center
which will provide 1,000 square meters of raised floor space for equipment
housing and will also have direct fiber connectivity to both parts of the
Amsterdam Internet Exchange. In addition, SpeedPort will be constructing
Internet co-location facilities in London, Paris and Frankfurt.

Peering and Transit Arrangements

Our peering arrangements allow us to exchange traffic with these ISPs
without these ISPs, or us, having to pay transit costs. We will establish
peering arrangements with ISPs when equal traffic volumes are expected to be
exchanged. We currently have peering arrangements with 54 ISPs, including
Belgacom, Euronet, PSINet Europe, Demon Internet, @Home Benelux, World Online,
A2000 and other major ISPs in the Internet market in western Europe. We expect
to enter into additional peering arrangements with network-based ISPs in order
to support SpeedPort and our other Internet services. In addition, we expect to
sell approximately 60 transit connections to ISPs and content providers.

Network Management

We monitor our Network 24 hours a day and seven days a week at our
Network operations center. Our Network operations center is able to identify
Network interruptions as soon as they occur and allows us to reroute traffic to
ensure termination. Our Network operations center has an uninterrupted power
supply and redundant communications access and computer processors. We own and
control our own points of presence in the Benelux which allows us immediate
access for rapid restoration when necessary. We have provided for a back-up
Network operations center in the event our primary Network operations center is
forced off-line.

Network Implementation

VersaTel has entered into a framework agreement with Nortel to supply
most initial transmission equipment, including SDH, radio, voice/ISDN switching
and the SDH network management system. This agreement includes vendor financing
for all Nortel products and services. A similar agreement with Cisco is
providing the data communications platform and Cisco's support services. We have
agreements with four leading construction companies in The Netherlands for
Network construction. Although Meijsen Ondergrondse Infrastructuren B.V. had
originally been contracted to oversee the construction of our Network, we have
now allocated construction responsibility to three additional contractors. We
have added another construction contractor in Belgium as well. These
construction companies are responsible for obtaining rights of way, civil
engineering, physical construction and testing of our Network. We have retained
experienced agents in both The Netherlands and Belgium to assist the
construction companies in obtaining rights-of-way.

<PAGE>

Svianed's Network

Svianed has an extensive network in The Netherlands comprised of leased
lines, regionally dispersed points of presence, data and Internet switches and
routers which serve 50 customers and over 100,000 end-users. The Svianed Network
has 50 regional points of presence, over 700 leased lines covering 6,000
kilometers, 83 ATM and Frame Relay switches and approximately 750 Cisco routers.
The Svianed Network directly connects to over 600 customer buildings at speeds
of up to 150 Mbps. During the third quarter of 1999, we connected Svianed's
network to the VersaTel Network.

Products and Services

VersaTel currently offers a wide range of business and carrier products
and services and continually evaluates potential product and service offerings,
including competitors' offerings, in order to retain and expand its customer
base and to increase revenue per customer.

Business Products and Services Offerings

We currently offer the following products and services to business
customers:

Long Distance Telephony. VersaTel offers international and national
long distance telephony services to over 9,000 business and residential
customers in The Netherlands and over 1,000 business customers in Belgium. Our
telephony service is offered through our "1611" carrier select code and dial-
around and least-cost routing software installed in our customer PBXs.

ISDN Services. We offer ISDN primary rate services to our customers in
the Benelux. This service primarily targets the business market with digital
PBX's and high volumes of outgoing and incoming traffic. Currently, ISDN is the
fastest growing service for business telephony in the western European market.

LAN to LAN Interconnect Services. We offer high speed LAN (local area
network) to LAN interconnect services for multi-site business customers. This
service targets business customers that need to interconnect their multiple LANs
to share centralized computer data and applications efficiently. We provide
end-to-end management of the wide area network, including the routers, at
customers' premises.

Dedicated Internet Connectivity. We also offer dedicated high speed
Internet access services to business customers. This service provides high
bandwidth access to the Internet, e-mail facilities, news feed from news groups
and web space for hosting web-sites.

Remote Access Services. We offer efficient remote access services to
business customers enabling employees to access the corporate LAN from home.
These home offices will have secured access to the corporate network, data and
applications. This service will also be applied to tele-banking and
tele-shopping applications.

IP-based Electronic Transaction Services. CS Net provides
Internet-based business-to-business transaction services to vertical trade
communities that act as comprehensive sources of information, interaction and
electronic commerce for their users.

<PAGE>

Dial-in Internet Access Services. We currently offer dial-in Internet
access services for the small- and medium-sized businesses and package it with
our long distance telephony service.

Web Hosting Services. VuurWerk provides web hosting services targeting
the business market. This service consists of an integrated package of a domain
name, e-mail accounts, web space for hosting corporate web-sites and on-line
web-site statistics.

Toll-free (0800) Services. We offer both 'on-net' and 'off-net'
toll-free (0800) services to our business customers. This service is positioned
to serve both our target market of small- and medium-sized businesses as well as
internal and external call centers.

We also expect to introduce the following retail products and services
to business customers within the next 12 months:

o virtual private network,

o dial-in LAN interconnect services,

o data VPN, Intranet/Extranet and Voice Over IP services,

o carrier pre-select (equal access) telephony, and

o Internet and telecommunications services over MDF access and DSL
technology.

Carrier Products and Services

We currently offer the following products and services:

Call Termination Services. We offer switched services to other
telecommunications service providers, including international and national call
termination services in the Benelux. As we complete our international network,
we will be able to offer call termination services in Germany, France and the
United Kingdom.

Co-location and Facilities Management. We provide co-location services
for carriers wishing to extend and expand their networks by housing their own
computing and telecommunications equipment inside our secured premises within
the Benelux and selected international locations.

Network Capacity Facilities. We sell and trade rights-of-way, ducts,
dark fiber, wave length and high bandwidth SDH capacity to other carriers.

Virtual Point-of-Presence Dial-In Services. We offer virtual
point-of-presence services for telecommunications, data and Internet service
providers in order to allow cost-efficient dial-in capability and effective
remote access capabilities for their customers.

Internet Transit Services. We offer Internet transit services to
telecommunications and Internet service providers seeking transit services
between major Internet exchanges.

<PAGE>

Leased Circuit Services. We offer resilient E1, E3, T3 and STM-1 leased
lines to other carriers and services providers within the Benelux. We provide
high quality and managed 'point-to-point' or 'point-to- multipoint' circuits via
our fiber and SDH network.

ISP Hosting Services. We have recently launched Zon, a new ISP offering
free Internet access to customers in The Netherlands. With 275,000 new
subscribers in less than five months Zon is one of the largest ISP's in The
Netherlands. We host Zon at our co-location, network and Internet platform.

We expect to introduce the following carrier products and services in
the future:

o Carrier (pre-)select hosting services for resellers,
o Application hosting services, and
o Voice Over IP gateway and clearing house services.

Svianed's Products and Services

Many of Svianed's products and services are complementary to VersaTel's
products and services and any duplication will be rationalized over the next 18
months. Svianed provides the following products and services to its business
customers:

LAN to LAN Interconnect. Connecting LANs at geographically dispersed
locations both within and outside The Netherlands.

LAN and WAN Management. Svianed supplies and manages all active
components of a customer's LAN including ethernet switches.

Remote Dial-In. Regional dial-in connections to customers to their own
business networks for remote access.

Telephony Services. Svianed offers traditional voice communications,
particularly telephone exchanges, and network facilities, including management.

Internet Access. Svianed provides access to the Internet, including
mail, web hosting and news services, in addition to security services,
integration of speech and data communications and computer telephony
integration.

Co-location. Svianed offers customers the opportunity to co-locate
their network equipment at Svianed points of presence.

Sales and Marketing

VersaTel seeks to capitalize on its position as a competitive
communications services provider that offers comprehensive customer service and
competitively priced communications services in the Benelux with a focus on
small- and medium-sized businesses. We believe that we have created a prominent
brandname in our target market that we expect to successfully apply throughout
the Benelux. Over time we intend to market the products and services of our
acquired businesses under a common VersaTel brandname.

<PAGE>

We market our products and services through several marketing channels,
including database marketing, targeted telemarketing, brand and promotional
advertising, direct mail and our direct sales force.

Our sales force is composed of direct sales personnel, telemarketers
and independent sales agents. At September 30, 1999, our marketing was conducted
by 80 direct sales personnel in The Netherlands and 30 in Belgium. In the
future, we expect to further expand our direct sales force and open an
additional sales office in Brussels. Our sales personnel make direct calls to
prospective and existing business customers, analyze business customers' usage
and service needs, and demonstrate how VersaTel's service package will improve a
customer's communications capabilities and costs. Each member of our sales force
is required to complete our intensive training program. In addition, we have a
telemarketing group that screens prospective customers and verifies call
volumes.

We have also established a sales agent program under which sales agents
receive commissions, but are not employed by us. Agents are provided with an
advertising and sales promotion budget based on the volume of their sales. At
September 30, 1999 we had approximately 100 such sales agents in The Netherlands
and approximately 50 in Belgium. We intend to continue to increase the size of
this program. Sales agents primarily sell our business services offerings.

Our sales force is organized in the following four groups to target the
primary customer segments with a focused product portfolio that matches the
needs of these customer segments:

Business Services. Our business services sales force targets our core
target market of small- and medium-sized businesses throughout The Netherlands
and Belgium. The customers targeted by this group currently access the Network
indirectly by manually dialing, using an auto-dialer, or through pre- programmed
PBX's, our "1611" carrier select code. As a result of OPTA's recent ruling, we
will be able to reach these customers through carrier pre-select (equal access)
and unbundled local loop access. The services offered to these customers also
include ISDN, Internet and LAN to LAN interconnection services.

Local Access Services. Our local access services sales force targets
potential customers along the Benelux network with a high bandwidth service
package consisting of voice, data and Internet products. Unlike most other
competitive alternative communications services providers who focus primarily on
the main international cities, we will be able to offer high bandwidth services
to our customers at any point along the Benelux network. The customers targeted
by this team will access the Network directly through leased lines or, upon its
deployment, through our own local access infrastructure.

Data Services. Through our acquisition of Svianed, our data services
sales force targets potential customers with multiple locations throughout the
Benelux with high bandwidth requirements. These potential customers include
medium- to large-sized organizations that are located more than five kilometers
from the Network or do not seek a direct connection to the Network.

Carrier Services. Our carrier services sales force markets our product
portfolio to other telecommunications and Internet services providers, including
switchless resellers, in the Benelux and the countries reached by our
international network. Our focus is on developing a broad range of services that
address the specific needs of carrier customers targeting the Benelux.

<PAGE>

Customers

We market our services on a retail basis to business customers and on a
wholesale basis to other carriers and service providers.

Small- and Medium-sized Businesses. Our target customers are small- and
medium-sized businesses (businesses with fewer than 500 employees). However,
with the acquisition of Svianed, we are now able to offer high bandwidth data
services to large-sized customers. We focus particularly on those business and
industry segments which have historically generated significant volumes of
national and international traffic, such as financial services, information
technology services, transportation and import and export. We believe that the
small- and medium-sized business segment has been underserved by the PTTs and
the major alternative service providers. Traditionally, the PTTs and the other
major carriers have focused on offering their lowest rates and best services
primarily to larger, higher-volume business customers. Through our acquisition
of CS Net, we are able to offer business-to-business transaction services to
vertical trade communities.

Carrier Customers. Our carrier customers are global and regional
network operators, Internet service providers and switchless resellers serving
specific market segments in the Benelux. We focus primarily on high capacity and
high volume customers. We believe that new entrants to the telecommunications
services market that provide voice, data or Internet services in the Benelux
region will require quality carrier services and high bandwidth services to
develop their market position.

Residential Customers. Our initial focus with respect to residential
customers had been to market our services to employees of our business customers
and to residential customers in certain niche markets characterized by
high-volume calling patterns. Recently, we have refocused our efforts and we now
intend to target the residential market by offering carrier hosting services to
switchless resellers who target the residential market. We believe that this
approach is a more cost-effective way of reaching the residential market
segment.

Svianed's Customers

Svianed currently has approximately 50 customers, the largest of which
is the Gak Group, who composed approximately 60.8% of Svianed's 1998 revenue. In
addition to the Gak Group, Svianed's other major clients include: ING Groep
(financial services), Achmea Groep (financial services and insurance), Belgacom
(telecommunications), Kluwer (publishing), Assurantie Data Network (insurance)
and Sociale Zekerheid (insurance). Additionally, Svianed provides dial-in
services and LAN/WAN management to a large Netherlands-based pension fund, as
well as one of the largest insurance companies in The Netherlands.

Customer Service

Our goal is to maintain an advantage over our competitors in our target
markets by providing superior customer service. We believe that providing a high
level of customer service is a key element to establishing customer loyalty and
attracting new customers. We have dedicated customer service representatives who
initiate contact with our customers on a routine basis to ensure customer
satisfaction and market new products. Customer service representatives are
available 24 hours a day, 365 days a year. In addition, we provide detailed
monthly billing statements and monthly call management reports which identify
savings to customers and enable them to manage their telecommunications
expenditures more effectively.

<PAGE>

We also believe that technology plays an important role in customer
satisfaction. Advanced technological equipment is crucial to enabling the
provision of a high quality of service to our customers. It is our policy to
reduce technical risks as much as possible by buying proven products from world
leaders in the applicable technology. We have installed sophisticated
status-monitoring and diagnostic equipment at our Network operations center and
plan to install similar units on our SDH equipment. This equipment allows us to
identify and remedy network problems before they are detected by customers. By
providing superior customer service and through the effective use of technology,
we expect to maintain a competitive advantage in our target markets.

We use the Internet and Internet technology in our communications with
our customers. The information technology industry is demonstrating that
providing customer access to their own information records, through
Internet-based technologies, can result in increased customer satisfaction and
loyalty while reducing costs. We intend to begin to provide this type of
Internet-based system for sales, service ordering, customer inquiries, fault
management and billing with usage information in the near future.

Billing and Information Systems

We are in the process of replacing our billing, customer care and sales
support system with advanced systems designed by Saville Systems and Clarify. We
do not expect any material disruption in our billing or information systems as a
result of the Year 2000. In addition, we have planned and budgeted replacements
and enhancements to our information systems to handle our growth in the size and
complexity of our business, our customer base and our product portfolio in areas
such as work flow, fixed asset management, sales support and service
provisioning.

VEW Telnet

VEW Telnet is a leading regional telecommunications operator in the
Westphalia-Lippe region of Germany, including the heavily industrial eastern
Ruhr District. VEW Telnet has approximately 3,800 business customers, 1,300
residential customers (excluding call-by-call activities) and 225 employees.
This region of Germany, which has a population of approximately nine million
inhabitants, represents approximately 10% of the population of Germany, and over
240,000 addressable business customers.

Network

The VEW Telnet network spans approximately 1,400 km and consists of
approximately 1,200 km of aerial cable and 200 km of underground cable,
primarily with 18 fiber strands. Approximately 160 SDH nodes/PoP locations are
in operation. The SDH backbone consists of an STM 16 (2.5 Gbit/s) ring with
seven STM 4 rings (622 Mbit/s) which are based on Siemens and Nokia technology.
Three Nokia switches are being used in Recklinghausen, Dortmund and Munster for
the transmission of voices services. Voice traffic is directed to the Deutsche
Telekom network via seven points of interconnection located in Hagen, Dortmund,
Wuppertal, Gelsenkirchen, Bielefeld, Meschede and Munster. Ascend Frame Relay
nodes are deployed in 11 locations and there are three dial-in nodes for
Internet traffic. Frame Relay, ATM and IP technology is supplied by Cascade. At
present VEW Telnet is co-located in 34 of Deutsche Telekom's MDF locations that
are used for providing DSL services. Together, these 36 MDF locations represent
approximately 12% of the addressable market in the Westphalia-Lippe region. VEW
Telnet has deployed Nokia and Siemens DSLAM equipment in the MDF locations. To
accelerate local access fiber connections, VersaTel has secured the right to
jointly build with VEW Energie, by utilizing VEW Energie's power

<PAGE>

network rights-of-way, giving VersaTel the ability to build additional fiber
network and customer connections.

Products and Services

Many of VEW Telnet's products and services are complementary to
VersaTel's products and services. VEW Telnet provides the following products and
services to its customers:

o Voice Services. VEW Telnet offers traditional voice communication,
customers are connected to the network of VEW Telnet using direct
ISDN connections over DSL or leased lines, and indirect
connections by using call-by-call and carrier pre-select services.
We expect that VEW Telnet's current call by call revenues will
decline in future periods.

o Internet Services. VEW Telnet provides access to the Internet,
including mail and news services. VEW Telnet recently launched a
free Internet service under the name Rout44 targeting the
residential market in the Northern Rhine-Westphalia region.

o Data Services. VEW Telnet offers Frame relay and ATM services with
various bandwidths targeting companies with more than 50 employees
and multiple office locations.

Customers

Currently, VEW Telnet has approximately 4,000 corporate customers and
1,300 private customers (excluding call-by-call activities). VEW Telnet's major
customers include Edelhoff A.G, a major waste disposal company in North Western
Germany, VEW Energie and Harpen A.G., all of which are related to VEW Telnet's
former ultimate parent, VEW AG. These customers represent approximately 9% of
the revenues generated by VEW Telnet as of September 30, 1999. All existing
contracts between VEW Telnet and VEW Energie will be extended at current terms
and conditions for a period of 12 months following the acquisition.

Stake Holdings

VEW Telnet has made investments in the following city carriers:

o TeleBeL Gesellschaft fur Telekommunikation Bergisches Land mbH,
Wuppertal
- Shares held by VEW Telnet: 25.1%
- Additional shareholders: Wuppertaler Stadtwerke AG,
Wuppertal GmbH, Engel GmbH & Co. KG, Stadtsparkasse
Wuppertal, Stadtsparkasse Solingen and Vermogensbetrieb
Stadt Solingen
- 750,000 inhabitants in license area

o DOKOM Gesellschaft fur Telekommunikation mbH, Dortmund
- Shares held by VEW Telnet: 10%
- Additional shareholders: Stadt Dortmund, Dortmunder
Stadtwerke AG, Dortmunder Energie-und Wasserversorgung
GmbH, Stadtsparkasse Dortmund and Westfalische
Ferngas-AG
- 600,000 inhabitants in license area

<PAGE>

o RuhrNET Gesellschaft fur Telekommunikation mbH, Schwerte
- Shares held by VEW Telnet: 24.8%
- Additional shareholders: Technopark Schwerte GmbH,
Stadtsparkasse Schwerte and Stadtwerke Schwerte GmbH
- 100,000 inhabitants in license area

In addition, VEW Telnet has an investment of 5% in BORnet GmbH,
Stadtlohn, another city carrier, and has certain cooperation agreements with
additional city carriers.

We expect that we will need to write down the carrying value of certain
of these investments following the acquisition.

Competition

Until recently, the telecommunications market in each EU Member State
has been dominated by its respective PTT. Since the implementation of a series
of European Commission directives beginning in 1990, the EU Member States have
started to liberalize their respective telecommunications markets, permitting
alternative telecommunications providers to enter the market. Liberalization has
coincided with technological innovation to create an increasingly competitive
market, characterized by still-dominant PTTs as well as an increasing number of
new market entrants. Competition in the European long distance
telecommunications industry is driven by numerous factors, including price,
customer service, type and quality of services and customer relationships.

In The Netherlands, Belgium, Luxembourg and Germany, we compete or will
compete primarily with the national PTTs. As the former monopoly providers of
telecommunications services in these countries, the PTTs have an established
market presence, fully built networks and financial and other resources that are
substantially greater than ours. In addition, the national PTTs own and operate
virtually all of the infrastructure which we must currently access to provide
our services. We estimate that in each of these countries the national PTT still
controls the vast majority of the telecommunications market.

In addition, various new providers of telecommunications services have
entered the market in each of these countries, targeting various segments of the
market in these countries. Companies such as Telfort, a company formed by
British Telecom and Nederlandse Spoorwegen N.V., The Netherlands railroad
company, as well as Global One Communications, MCI Worldcom, GTS/Esprit Telecom
and EnerTel, compete with KPN Telecom for contracts with large multinational
companies in The Netherlands. MCI Worldcom, British Telecom, AT&T, TeleNet,
France Telecom, COLT Telecom, Unisource, a subsidiary of KPN Telecom, and
GTS/Esprit Telecom compete with Belgacom for contracts with large multinational
companies in Belgium.

The following table sets forth some of our most important competitors
in the areas of voice, data, Internet and carrier services:

<PAGE>

Market The Netherlands Belgium Germany
- ------ --------------- ------- -------
Voice KPN Telecom Belgacom Deutsche Telekom
Telfort MCI Worldcom MCI Worldcom
MCI Worldcom GTS/Esprit Telecom COLT Telecom
GTS/Esprit Telecom Mannesmann
COLT Telecom

Data KPN Telecom Belgacom Deutsche Telekom
Global One MCI Worldcom MCI Worldcom
Telfort COLT Telecom
Mannesmann

Internet KPN Telecom Belgacom Deutsche Telekom
MCI Worldcom/UUNet TeleNet MCI Worldcom
Wirehub Mannesmann
EuroNet

Carrier Services KPN Telecom Belgacom Deutsche Telekom
MCI Worldcom MCI Worldcom MCI Worldcom
EnerTel/WorldPort GTS/Esprit Telecom Mannesmann
GTS/Esprit Telecom

Regulation

In Europe, the traditional system of monopoly PTTs has ensured the
development of broad access to telecommunications services; however, it has also
restricted the growth of high-quality and competitively priced voice and data
services. The liberalization in the European telecommunications market is
intended to address these market deficiencies by ending PTTs' monopolies,
allowing new telecommunications service providers to enter the market and
increasing the competition within the European telecommunications market. The
inefficiencies of the traditional monopoly system, combined with the EU
liberalization initiatives, have created the current market opportunity for
VersaTel's product and service offerings.

The current regulatory framework in the EU and in the countries in
which we provide our services or intend to provide our services is briefly
described below. There can be no assurance that future regulatory, judicial and
legislative changes will not have a material adverse effect on us, that national
or international regulators or third parties will not raise material issues with
regard to our compliance or noncompliance with applicable regulations or that
any changes in applicable laws or regulations will not have a material adverse
effect on us.

European Union

Starting in 1987, the EC Green Paper on Telecommunications charted the
course for the current changes in the EU telecommunications industry by
advancing principles such as separation of operators from regulators,
transparency of procedures and information, cost orientation of tariffs, access
to monopoly infrastructure networks and the liberalization of services. In 1990,
the EU Member States approved two directives that established these principles
in EU law: the Open Network Provision ("ONP") Framework Directive and the EC
Services Directive. These two directives set forth the basic rules for access to
the PTT

<PAGE>

public networks and the liberalization of the provision of all
telecommunications services within the EU except for voice telephony.

The ONP Framework Directive established the conditions under which
competitors and users could gain cost-oriented access to the PTTs' public
networks. The EC Services Directive abolished the existing monopolies on, and
permitted the competitive provision of, all telecommunications services with the
exception of voice telephony. The intended effect of the Services Directive was
to permit the competitive provision of all services, other than voice telephony,
including value-added services and voice services to closed user groups. As a
result, many new entrants entered the market, labeling their services as closed
user group services, while in fact providing voice telephony services.

In 1992, the EC approved the ONP Leased Line Directive, which required
the PTTs to lease lines to competitors and end-users, and to establish cost
accounting systems for those products by the end of 1993. The national
regulatory authorities were to use this cost information to set cost-oriented
tariffs for leased lines. The purpose of the ONP Leased Lines Directive is to
ensure that, in a competitive market, all users continue to have access to
leased lines from at least one operator, under harmonized conditions of access
and use.

In 1996, the EC issued the Full Competition Directive, which requires
EU Member States to permit alternative infrastructure providers, such as
existing networks of cable companies, railroads, electric and other utility
companies, to resell capacity on these networks for the provision of services
other than voice telephony from July 1996. This allows VersaTel to lease
transmission capacity from companies other than the PTTs. The Full Competition
Directive also established January 1, 1998 as the date by which the EU Member
States had to establish a legal framework which removes all remaining
restrictions on the provision of telecommunications services, including voice
telephony. Although Spain, Greece, Portugal, Ireland and Luxembourg were each
allowed to delay implementation for various periods, only Greece had not
implemented the Full Competition Directive as of January 1, 1999. Subject to the
foregoing, each EU Member State is obliged, under EU law, to enforce the terms
of the Full Competition Directive. Enforceability of the Full Competition
Directive may be challenged at the EU level or at the EU Member State level.

In addition to the Full Competition Directive, the EC issued the
Licensing Directive in April 1997 and the Interconnection Directive in June
1997. The Licensing Directive establishes a common framework for general
authorizations and individual licenses in the field of telecommunication
services. The Licensing Directive is intended to allow telecommunications
operators to benefit from an EU-wide market for telecommunications and establish
a common framework for national authorization regimes and seeks to facilitate
cross-border networks and services. The Interconnection Directive standardizes
regulatory frameworks to be implemented by EU Member States and their national
regulatory authorities, including the regulation of public telecommunications
networks and services. The Interconnection Directive governs the manner in which
alternative network operators and service providers are permitted to
interconnect with the PTTs' public networks. The Interconnection Directive
requires national regulators to ensure that interconnection agreements with
parties with significant market power provide for access at cost-oriented rates.

The Interconnection Directive has been amended to provide for carrier
selection (ensuring that end-users can select the long distance or international
carrier of their choice on a call-by-call basis) as of January 1, 1998, and
carrier pre-selection (ensuring that end-users can select the long distance or
international carrier

<PAGE>

of their choice prior to the time calls are made) and number portability (the
ability of end-users to keep their numbers when changing operators) by January
1, 2000. Carrier selection and carrier pre-selection are required to be made
available by carriers with significant market power. The Interconnection
Directive indicates that significant market power could be assumed if the
carrier's market share exceeds 25%, but Member States may adopt different
standards.

In December 1999 the European Commission published a draft policy
document to review the present regime for telecommunication regulations in the
European Union, which in general continues the present regime. After
consultations with the industry and other stakeholders, a political review is
likely to lead to a new set of directives which will take effect round the year
2003. Certain principal issues which are likely to be changed include
institutional structure and the reduction of the size of the regulatory
framework.

Despite these regulatory initiatives supporting the liberalization of
the telecommunications market, most EU Member States are still in the initial
stages of liberalizing their telecommunications markets and establishing
competitive regulatory structures to replace the monopolistic environment in
which the PTTs previously operated. For example, most EU Member States have only
recently established a national regulatory authority. In addition, the
implementation, interpretation and enforcement of these EC directives differ
significantly among the EU Member States. While some EU Member States have
embraced the liberalization process and achieved a high level of openness,
others have delayed the full implementation of the directives and maintain
several levels of restrictions on full competition.

There are currently few laws and regulations that specifically regulate
communications on the Internet. European and U.S. Government authorities and
agencies are considering laws and regulations that address issues such as user
privacy, pricing, on-line content regulation and taxation of on-line products
and services. In November 1995, the EC adopted a general directive regarding
certain privacy rights of citizens of EU Member States and in December 1997, the
EU adopted another directive designed to specifically address privacy rights in
the area of telecommunications services. These directives impose restrictions on
the collection and use of personal data, guaranteeing citizens of EU Member
States the right of access to their data, the right to know where the data
originated and the right to recourse in the event of unlawful processing.
Although, to the best of our knowledge, no European court has ever held a
telecommunications services provider liable for content transmitted over its
network, we can give no assurances that no laws or regulations will be adopted
that will impose such liability, or that any future court rulings will not
impose such liability. Any future regulation of the Internet could impose
restrictions on the way we conduct our business and could seriously affect our
business.

An overview of the regulatory framework in the individual markets where
we operate or intend to operate is described below. This discussion is intended
to provide a general outline, rather than a comprehensive discussion of the more
relevant regulations and current regulatory posture of these jurisdictions. We
require licenses, authorizations or registrations in all countries in which we
operate to provide our services. Licenses, authorizations and/or registrations
have been obtained in The Netherlands and Belgium and we have received an
International Facilities License in the United Kingdom. We intend to apply for
such licenses and registrations in Luxembourg and France in the near future.
Although we expect that these licenses and registrations will be granted, there
can be no assurance that we will be able to obtain such licenses, authorizations
or registrations or that our operations will not become subject to other
regulatory authorization or registration requirements in the countries in which
we operate or plan to operate.

<PAGE>

The Netherlands

The Telecommunications Act of 1998 provides the current regulatory
framework in The Netherlands. This new telecommunications act came into force on
December 15, 1998, and remedied the old legislative and regulatory patchwork
that had existed as a result of the implementation of a series of EC directives.
The new telecommunications act contains provisions that give registered
telecommunication services providers rights-of-way, subject to certain
conditions, thereby facilitating the construction of the VersaTel Network.

As part of the liberalization of The Netherlands telecommunications
market, the new independent supervisory authority, OPTA, was established by the
Ministry of Traffic and Waterways. OPTA started its activities on August 1,
1997. OPTA's main tasks include ensuring compliance with the telecommunications
laws and regulations in The Netherlands, granting licenses for
telecommunications activities and resolving disputes among market participants,
such as disputes regarding interconnection rates. The rulings of OPTA, to date,
have given us confidence that new providers of telecommunications services will
be granted fair and equal access to the market in The Netherlands.

The Telecommunications Act also requires providers of public
telecommunications services to comply with the specific privacy provisions
contained in the act, which are based on the privacy directive of December 1997.
In general, providers of public telecommunications services must ensure the
protection of personal data and privacy of subscribers and remove the processed
data on subscribers with respect to the actual use of the network. In The
Netherlands, ISPs are considered to be providers of public telecommunications
services referred to in the Telecommunications Act. As a result, ISPs are also
bound by the specific privacy provisions for providers of public
telecommunications services contained in the Telecommunications Act.

In August 1997, we obtained one of the first Netherlands registrations
to operate as a telecommunications service provider of public voice telephony
(other than KPN Telecom). In September 1997, we obtained an infrastructure
license with rights-of-way for the construction and operation of
telecommunications facilities in a limited geographic area. In December 1998, we
obtained the first authorizations under the new telecommunications act to
operate as a public telecommunications services provider and network operator.
We have received licenses which allow us to test point-to-multipoint radio
technology in The Netherlands. It is expected that The Netherlands Government
will conduct an auction on frequencies for this point-to-multipoint radio
technology (fixed-wireless access) by the first half of 2000. Since May 1999, we
have been able to offer our customers our own subscriber numbers, all of which
start with "750".

Since our founding in October 1995, we have adopted a proactive
regulatory strategy. In October 1996, we successfully challenged KPN Telecom's
use of our invoice records to offer our customers additional discounts. In a
warning letter to KPN Telecom, the Directorate for Competition (DG IV) of the EC
held this to be an abuse of power by KPN Telecom. Not only did the EC require
KPN Telecom to stop using information regarding the calling behavior of
customers for competitive activities, such as approaching our customers with
discounts and other special offers, it also questioned the legitimacy of KPN
Telecom's discount plans for business customers. The EC requires that such
discounts be based on actual cost savings and not on predatory pricing tactics.
OPTA, to whom the EC had delegated this matter, has recently ruled that these
discount plans indeed violate competition law principles and has required KPN
Telecom to change them.

<PAGE>

We were one of the first voice telephony competitors in The Netherlands
to interconnect with KPN Telecom and to implement a carrier select code in all
of KPN Telecom's telephone switches. The introduction of carrier pre-selection
in The Netherlands, which has been introduced on January 1, 2000, will allow
customers the option to pre-select a carrier other than KPN Telecom for all
their international and national long distance calls. We continue to seek to
obtain lower interconnection rates from KPN Telecom. In July 1998, OPTA ruled
that KPN Telecom's origination and termination charges had to be reduced by
approximately 55% and 30%, respectively. The terms and conditions of
interconnection have had and will continue to have a material effect on the
competitive position of VersaTel.

In December 1998, OPTA issued a ruling on KPN Telecom's end-user
tariffs, which were deemed contrary to the principles on cost orientation. As a
result, KPN Telecom lowered its end-user tariffs for its national long distance
services by approximately 10% in January 1999 and by approximately 20% in May
1999. It is expected that OPTA's ruling will have some negative effects on
competition in the market in The Netherlands.

In December 1998, VersaTel filed a complaint with OPTA asserting that
the limited access provided by KPN Telecom to the KPN Telecom network hampered
VersaTel's growth. Our customers often experienced busy signals when they tried
to dial into the VersaTel Network through our access code. Other Netherlands
telecommunications services providers voiced similar complaints. OPTA ruled that
KPN Telecom must allow us access to their entire interconnection network. In
addition, OPTA ruled that KPN Telecom would be responsible for the additional
costs associated with the implementation of such ruling. The ruling does not
affect KPN Telecom's access rates.

In March 1999, OPTA issued a ruling, requiring KPN Telecom to offer
unbundled access to local customer access lines at the MDF in KPN Telecom's
central exchange offices. Unbundled local access may enable us to offer a high
bandwidth package to those customers that are not directly connected to our
Network.

In September 1999, the mobile operators KPN Telecom and Libertel were
found to have significant market power which effectively means that other
companies such as VersaTel can request interconnection with the networks of
these operators.

The Netherlands government is expected to grant licences for the
utilization of point-to-multipoint systems for broad band fixed wireless access.
The procedure of assignment will be an auction of five blocks in the 2.6 Giga
Hertz band and two blocks in the 3.5 Giga Hertz band and 2.6 Giga Hertz band.
The auction is expected to take place in March 2000.

Belgium

Belgium started the liberalization of its telecommunications market in
1991 with an amendment to the Belgian public post and telecommunications act. It
provided the basis for the privatization of Belgacom, and allowed new entrants
to the telecommunications services market to provide all services, with the
exception of voice telephony, upon obtaining a license. At the same time a new
regulatory entity was introduced, the Belgium Institute for Post and
Telecommunications (Belgisch Instituut voor Post en Telecommunicatie), under the
Ministry of Economy and Telecommunications.

<PAGE>

A further amendment to this act was adopted by the Belgian Parliament
in December 1997, to implement the liberalization of voice telephony and
infrastructure. The amended act was published in the Belgian Official Journal on
January 19, 1998, but in order to implement the amended act certain
administrative regulations are required. To prevent any delays in providing
access to the market for new entrants, the Ministry of Economy and
Telecommunications issued a notice which opened the way for temporary licenses
for service providers and infrastructure operators.

On the basis of the amended telecommunications act, we applied for a
licence to construct and operate public telecommunications infrastructure and a
license to provide voice telephony nationwide. Both licenses were granted in
June 1998. For marketing purposes, we have reserved the same carrier select code
"1611" as we currently use in The Netherlands. In August, 1998, we obtained
interconnection with Belgacom for carrier selection and call termination
services in advance of concluding a definitive interconnect agreement in
November 1998.

In July 1998, various Royal Decrees were published to replace the
temporary regime with a definitive one. On that basis, we had to file new
applications for an infrastructure license and a license for voice services. On
November 9, 1998, we were the first alternative telecommunications services
provider to obtain a definitive license for the provision of voice services. On
December 21, 1998, we obtained a definitive infrastructure license in Belgium
and thereby obtained rights of way in all of Belgium and a special interconnect
tariff which is 15% below the tariff for voice service providers.

In October 1998, we were granted geographic number ranges for the main
cities in Belgium, including Brussels, Antwerp, Kortrijk and Gand, in which we
plan to start operations. In addition, we obtained number ranges for toll-free
(0800) phone services and premium rate services.

Pursuant to the new telecommunications act, Belgacom is required as of
January 1, 2000, to introduce number portability and carrier pre-selection
(equal access). A request by Belgacom to the Belgian regulatory entity, the
Belgisch Instituut voor Post en Telecommunicatie, to delay these introductions
by four to six months has been denied. However, we expect the implementation to
commence with minor delays.

The Belgisch Instituut voor Post en Telecommunicatie is also expected
to grant licenses for the utilization of point-to-multipoint systems for
broadband fixed wireless access. However, the procedure of assignment has not
been chosen by the Belgisch Instituut voor Post en Telecommunicatie. VersaTel
intends to file applications once such procedures are implemented.

In September 1999, Belgacom introduced a number of new discount schemes
which VersaTel deems to be anticompetitive. VersaTel filed a complaint at the
relevant court dealing with competition issues requesting the court to suspend
these discount schemes. A ruling on this complaint is expected in early of 2000.

Luxembourg

The Luxembourg telecommunications market has been liberalized since
July 1, 1998, six months after liberalization in most other EU Member States.
Until that date, P&T Telecom Luxembourg, a state-owned company, had a 100%
monopoly in the provision of basic voice telephony and telecommunications
infrastructure. A new regulatory entity, the Luxembourg Institute of
Telecommunications (Institut Luxembourgeois des Telecommunications), has been
installed to oversee the newly deregulated market.

<PAGE>

Under this new regulatory regime, competition is expected to develop along the
same lines as in the other Benelux countries.

In the second quarter of 1998, the Institut Luxembourgeois des
Telecommunications, in co-operation with the Ministry of Telecommunications,
published most of the secondary legislation and rulings with the intention to
provide a full liberalization of the telecommunications market. However, in the
third quarter of 1998, the EC initiated an infringement procedure against
Luxembourg asserting the insufficient implementation of the liberalization
directives and certain other directives. It primarily concerned the definition
of "universal service," the vocal telephony licensing procedure, the financing
of the Institut Luxembourgeois des Telecommunications and the adaptation of the
Luxembourg law in line with the EC Satellite Directive. In most instances, the
situation was assessed as resulting mainly from delays in the adoption of the
secondary legislation.

In January 1999, the Luxembourg government started a consultation
period which may lead to an assignment procedure for frequencies to operate
point-to-multipoint systems for broadband fixed wireless access.

Germany

The German Telecommunications Act of July 25, 1996, ended the legal
monopoly of Deutsche Telekom AG for the provision of voice telephony and of
public telecommunications networks, and immediately liberalized all
telecommunications activities, but postponed effective liberalization of voice
telephony until January 1, 1998. Since January 1, 1998 the German
telecommunications market has been completely open to competition and a new
regulatory authority, the Regulierungsbehorde fur Telekommunikation und Post
("RTP"), installed. The German Telecommunications Act has been complemented by
several Ordinances. The most significant Ordinances concern license fees, rate
regulation, interconnection, universal service, frequencies and customer
protection.

Under the German regulatory scheme, the RTP can grant licenses in four
license classes. A license is required for operation of transmission lines that
extend beyond the limits of a property and that are used to provide
telecommunications services for the general public. The licenses required for
the operation of transmission lines are divided into 3 infrastructure license
classes: mobile telecommunications (license class 1); satellite (license class
2); and telecommunications services for the general public (license class 3). In
addition to the infrastructure licenses, an additional license is required for
operation of voice telephony services on the basis of self-operated
telecommunications networks (license class 4). A class 4 license does not
include the right to operate transmission lines. Licensees that operate
transmission lines crossing the boundary of a property have the right to install
transmission lines on, in and above public roads, squares, bridges and public
waterways without payment; however, when installing transmission lines a
planning agreement must be obtained from the relevant authorities. The RTP
establishes license fees, and the level of fees imposed on licensees is the
subject of several complaints to the RTP and German courts. VEW Telnet has
obtained both a class 3 license and a class 4 license for the Westfalia-Lippe
region.

Fixed Network Market: The RTP approved, inter alia, the distance-based
interconnection rates which Deutsche Telekom can charge alternative network
operators to interconnect their network and route their traffic through the
network of Deutsche Telekom.

<PAGE>

The average interconnection rate was approved in 1997 by the Federal
Ministry for Postal and Telecommunications (now the RTP) at DEM 0.027 per
minute. The more points of interconnection (POI's) a carrier establishes and
connects with the network of Deutsche Telekom the shorter are the distances
Deutsche Telekom carries the traffic and the lower are the distance-based
interconnection rates such carrier has to pay to Deutsche Telekom. The current
standard draft interconnection agreement and the network concept of Deutsche
Telekom contain an obligation to establish 23 points of interconnection within
certain time frames. Such migration concept might lead to further investments of
VEW Telnet in the future. The delivery periods to receive E1 interconnection
connections from Deutsche Telekom are very long and might postpone the growth of
VEW Telnet's business in the future.

The RTP announced the establishment of a new interconnection regime
including new rates in the year 2000. It is expected that the RTP will extend
the current rate regime, which is set to expire on December 31, 1999, for an
interim period until the new regime has been announced and Deutsche Telekom has
received approval of the new interconnection rates. It is expected that the new
interconnection regime will contain element-based rates instead of
distance-based rates as well as several changes in the standard interconnection
agreements. The RTP announced that it might consider Deutsche Telekom not in all
segments of the market as market dominating carrier. These segments would fall
outside the scope of the rate regulation regime and Deutsche Telekom would no
longer be obliged to request prior approval of its rates from the RTP.

Internet/Data Services: A broad variety of local and nation-wide
internet access and content providers offer their services in the German market.
Internet access charges have decreased in the last months and alternative
carriers operate their own backbone networks but are still to a large extent
dependent on the interconnection rates to address the traffic to their
subscribers.

Local Loop: In the local loop (access to the subscriber lines) the
market position of Deutsche Telekom is two years after liberalization still
extremely strong and only a limited number of competitors are currently
operating. These alternative carriers focus mainly on business customers and are
active primarily in the metropolitan areas with a high density of inhabitants.
With the allocation of WLL (Wireless Local Loop) point-to-multi-point
frequencies to alternative carriers in the fall of 1999 the RTP expects that
competition in the local loop will increase in the near future. In addition,
Deutsche Telekom is in the process of selling its broadcasting cable network
which has been split for this purpose into nine regions. The broadcasting
network is considered after further investments by the new owners (availability
of a back channel) as the second alternative network in the local loop. These
networks will compete in the future with VEW Telnet's network.

Properties

Our principal executive offices are located at Paalbergweg 36,
Amsterdam-Zuidoost, The Netherlands. The lease agreement for this location will
expire in May 2003. Our Belgian offices are located at Noorderlaan 133 in
Antwerp. The lease agreement for this location will expire in May 2007. We
recently entered into a lease agreement for a new head office in Amsterdam. We
intend to move most of our employees to this new office space in April 2000. The
new lease agreement will expire on February 1, 2010.

VuurWerk's offices are located at Gedempte Oude Gracht 82-E, 2011 GV
Haarlem, The Netherlands. The lease agreement for this location will expire on
September 31, 2000.

<PAGE>

SpeedPort's offices are located at Kruislaan 400, 1098 SM Amsterdam,
The Netherlands. The lease agreement for this location expires November 1, 2000.

CSNet's offices are located at Brugweg 56, 2741 KZ Wadinxveen, The
Netherlands. The lease agreement for this location expires on November 1, 2000.

ITinera's offices are located at Dam 171, 8500 Kortrijk, Belgium. The
lease agreement for this location expires on August 31, 2006.

Svianed's offices are currently located at Jan Tooropstraat 109, 1040
HD Amsterdam, The Netherlands. The lease agreement for this location expires on
January 1, 2000. As of January 1, 2000 the operations of Svianed will be moved
to Paalbergweg 36.

Employees

As of September 30, 1999, VersaTel had 543 full-time employees and
approximately 150 full-time consultants. In addition, we employ approximately 50
temporary employees at any given time. None of our employees is represented by a
labor union or covered by a collective bargaining agreement, and we have never
experienced a work stoppage. We consider our employee relations to be good.

Intellectual Property

We have registered the trademark (woordmerk) "VersaTel" with the
Benelux trademark bureau (Benelux Merkenbureau). Applications for similar
registrations are pending in the other EU Member States. We have obtained rights
to the Internet domain name "www.versatel.com" and initiated formal registration
procedures with Internic, the European Union domain registration authority. Zon
recently applied for trademark registration of the "Zon" logo, although we can
provide no assurance that this application will be successful.

Legal Proceedings

We have filed complaints in the past with the European Commission, OPTA
and the Minister of Transport and Waterways of The Netherlands as part of its
regulatory strategy. We also make routine filings with the regulatory agencies
and governmental authorities in the countries in which we operate or intend to
operate.

VersaTel is from time to time involved in routine litigation in the
ordinary course of business. We believe that no currently pending litigation to
which VersaTel is a party will have a material adverse effect on our financial
position or results of operations.

<PAGE>

Management

The members of the supervisory board and the management board of
VersaTel and other significant employees of VersaTel and their respective ages
and positions are set forth below.

Management Board

R. Gary Mesch is the sole managing director (statutair directeur) of
VersaTel.

Supervisory Board

Name Age Position
- ---- --- --------
Leo W.A.M. van Doorne..............40 Chairman
Johan G. Wackwitz..................44 Member
James R. Meadows...................57 Member
Sander van Brummelen...............57 Member

Executive Officers

Name Age Position
- ---- --- --------
R. Gary Mesch......................46 Managing Director
W. Greg Mesch......................39 Vice President Corporate Development
Raj Raithatha......................37 Vice President Finance and Chief
Financial Officer
Larry Hendrickson..................56 Vice President Technology and Chief
Technology Officer
Marc A.J.M. van der Heijden........40 Vice President Legal and Regulatory
Affairs
Frits R. Kunnen....................64 Chief Operations Officer

Supervisory Board

Under Netherlands law and the articles of association of VersaTel, the
management of VersaTel is entrusted to the management board (Directie) under the
supervision of the supervisory board (Raad van Commissarissen). Under the laws
of The Netherlands, supervisory directors cannot at the same time be managing
directors of the same company. The primary responsibility of the supervisory
board is to supervise the policies pursued by the management board and the
general course of affairs of VersaTel and its business. In fulfilling their
duties, the members of the supervisory board are required to act in the best
interests of VersaTel and its business.

Pursuant to the articles of association, the supervisory board consists
of such number of members as may be determined by the general meeting of
shareholders. The members of the supervisory board are appointed by the general
meeting of shareholders. Resolutions of the supervisory board require the
approval of a majority of the members. The supervisory board meets each time
this is deemed necessary by one of its members. Every retiring supervisory
director may be reappointed, provided that such supervisory director has not
attained the age of 72. A member of the supervisory board must retire not later
than on the day of the general meeting of shareholders held in the fiscal year
in which such member reaches the age of 72.

<PAGE>

A member of the supervisory board may at any time be suspended or
removed by the general meeting of shareholders. The members of the supervisory
board may receive such compensation as may be determined by the general meeting
of shareholders.

Management Board

The management of VersaTel is entrusted to the management board under
the supervision of the supervisory board. The articles of association provide
that the management board may from time to time adopt written policies governing
its internal organization. Such written policies require the approval of the
supervisory board. In addition, the articles of association list certain actions
which require prior approval of the supervisory board. Such actions include,
among other things: (i) borrowing or lending money; (ii) participating directly
or indirectly in the capital of another company; (iii) making any investments;
and (iv) providing security in the name of VersaTel or its property.

The management board consists of such number of members as may be
determined by the general meeting of shareholders. In addition, the general
meeting of shareholders appoints the members of the management board.

The general meeting of shareholders has the power to suspend or dismiss
members of the management board. The supervisory board also has the power to
suspend members of the management board. If a member of the management board is
temporarily prevented from acting, the remaining members of the management board
shall temporarily be responsible for the management of VersaTel. If all members
of the management board are prevented from acting, a person appointed by the
supervisory board (who may be a member of the supervisory board) will be
temporarily responsible for the management of VersaTel. The compensation and
other terms and conditions of employment of the members of the management board
are determined by the general meeting of shareholders.

Biographies

R. Gary Mesch has served as Managing Director of VersaTel individually
or through his position as President of Open Skies International Inc. ("Open
Skies") since October 1995. In 1991 he founded and became President of Open
Skies, a telecommunications consultancy with operations based in Amsterdam,
which provided consulting for early stage development of competitive European
telecommunications businesses. From 1991 to 1995 Open Skies advised such clients
as Unisource, PTT Telecom International, Inmarsat, NEC and Eurocontrol. In 1984
he founded and until 1990 he managed the commercial operations of NovaNet, a
Denver-based provider of satellite-based data communications networks. NovaNet
was acquired by ICG Communications in 1993. From 1981 to 1983 he served as
director of sales for Otrona Advanced Systems, a Colorado-based manufacturer of
high performance computer systems. From 1975 to 1981 he served as a senior
systems engineer with Westinghouse Electric. Mr. Gary Mesch holds a B.S. in
Electrical Engineering from the University of Colorado and an M.B.A. from Denver
University.

Leo W.A.M. van Doorne has served as Chairman of the Supervisory Board
of VersaTel since December 1995. Since 1996, Mr. van Doorne has been the
Managing Director of NeSBIC Groep B.V., a venture capital company and a
subsidiary of Fortis, an international group of more than 200 companies
operating in the fields of insurance, banking and investments. Worldwide, Fortis
has over 58,000 employees. From 1994 to 1996 he served as Managing Director of
NeSBIC Venture Management B.V. From 1990 to 1994 he was Regional Director of
Banque de Suez Nederland N.V. Mr. van Doorne serves as a member of

<PAGE>

the supervisory board of various other companies. Mr. van Doorne holds a degree
in law from the University of Utrecht.

Johan G. Wackwitz has served as a member of the Supervisory Board of
VersaTel since August 1998. Mr. Wackwitz is a member of the management board of
COBEPA S.A. and Paribas Deelnemingen N.V. From 1991 to 1993 he was employed by
Paribas in its capital markets division and responsible for the Benelux within
the investment banking group. From 1979 to 1991 he served at various management
positions at Bankers Trust Company. Mr. Wackwitz serves as a member of the
supervisory board of various other companies. Mr. Wackwitz holds a degree in
economics from the Rijks Universiteit Groningen and an M.B.A. from Columbia
University.

James R. Meadows has served as a member of the Supervisory Board of
VersaTel since August 1998. Mr. Meadows is Senior Vice President and co-founder
of PrimeTEC International, Inc., a U.S.-based international telecommunications
services provider, since 1997. From 1989 to 1997 he served as Director of
Government Affairs at Capital Network System, Inc. (CNSI), a telecommunications
services provider. Mr. Meadows is a member of the Board of Directors of Lone
Star 2000, a public policy foundation, and of Comptel. Mr. Meadows holds a
degree in history from the University of Texas at Austin.

Sander van Brummelen has served as a member of the Supervisory Board of
VersaTel since July, 1999. Mr. Van Brummelen is a Managing Director of Gak
Holding since 1996. From 1992 to 1996 he served as a principal director of Gak
and from 1982 to 1992 he served as IT director of Gak. From 1979 to 1982 he
served in managing positions at KPN Telecom. Mr. van Brummelen serves as a
member of the supervisory board of various other companies. Mr. van Brummelen
holds a degree in technical engineering from the University of Delft.

W. Greg Mesch has served as Vice President Corporate Development since
October 1999. He has served as Chief Operations Officer of VersaTel from April
1998 to October 1999. From VersaTel's inception in 1995 until August 1998, he
served as a member of the Supervisory Board of VersaTel nominated by Telecom
Founders and has performed operations consulting roles for VersaTel. From 1993
to 1997, Mr. Mesch was the Chief Operations Officer of Esat Telecom plc, a
public company listed on NASDAQ. From 1986 to 1992, he served as Chief Executive
Officer of Nova Net, a Denver-based provider of satellite-based data
communications networks, which he founded with his brother Mr. Gary Mesch. Mr.
Mesch has been a Director of In-Touch Associates Ltd., a U.K.-based
telecommunications consulting firm, since 1997 and is an Advisory Board Member
to NeSBIC Converging Technologies Fund. Mr. Mesch has an M.B.A. from Denver
University.

Raj Raithatha has served as Vice President Finance and Chief Financial
Officer of VersaTel since April 1998. From 1994 to April 1998 he has served as
Chief Financial Officer and Director of Business Development of ACC Corp.'s
European Operations. From 1992 to 1994 he served as Finance Director of Bay
Trading Company. From 1989 to 1992, he served as divisional finance director at
Securiguard Group plc and from 1987 to 1989 he was financial controller at
Harrison Willis. From 1983 to 1987 he was employed by KPMG Peat Marwick. Mr.
Raithatha holds a degree in economics and mathematics from the University of
Cardiff, Wales.

<PAGE>

Larry Hendrickson has served as Vice President Technology and Chief
Technology Officer of VersaTel since April 1998. From 1994 to 1998 he was senior
consultant and partner of DDV Telecommunications Strategies, a Benelux-based
telecommunications consulting company, and from 1993 to 1994 he was an
independent telecommunications consultant. From 1986 to 1993 he served at
various management positions at Cincinnati Bell, including President of Europe
Group, President and Chief Executive Officer of LDN Communications (Cincinnati
Bell) and President of the Mobile Communications Division of Cincinnati Bell
Information Systems. From 1964 to 1986 he was employed by AT&T. Mr. Hendrickson
holds a B.S. in management from the Massachusetts Institute of Technology and
completed the Advanced Management Program at Harvard Business School.

Marc A.J.M. van der Heijden has served as Vice President Legal and
Regulatory Affairs of VersaTel since June 1998. Mr. van der Heijden served as
regulatory counsel to VersaTel on matters of telecommunications law and
regulatory policy since October 1995 as an independent consultant. As an
independent consultant on telecommunications law he has acted as advisor to the
EC, the governments of The Netherlands and the United Kingdom, and various
telephone companies, such as France Telecom and KPN Telecom, and financial
institutions, such as ABN AMRO and Nederlandse Investerings Bank. He worked as
an expert for KPMG Peat Marwick on bidding processes for mobile telephony and
sale of cable companies. Mr. Van der Heijden holds a degree in law.

Frits R. Kunnen has served as Chief Operations Officer since October
1999. He has served as Vice President and, Director Special Assignments from
October 1998 to October 1999. Mr. Kunnen has served in these capacities pursuant
to a consultancy agreement. In 1991, he founded Sharp Electronics Benelux
B.V., for which he served as President and Chief Executive Officer from 1991 to
1997. From 1990 to 1991 he served as Managing Director and Member of the Group
Council of the Samas Group N.V., where he was responsible for the Office
Equipment and Software divisions. From 1989 to 1990 he was Interim Manager of
the Defense and Control Systems Division and finally as Director of Far East
Operations of Philips N.V., where he was responsible for the divestment of this
division. From 1960 to 1989 he served as Group Product Manager, Regional
Manager and Director of the Components Division of Philips N.V. Mr. Kunnen holds
a degree in electronics from the University of Delft.

Executive Compensation

The total aggregate compensation for the supervisory board of VersaTel
for services in all capacities for 1998 was NLG 34,477. The total aggregate
compensation (including amounts paid pursuant to management and consulting
agreements) of all executive officers (including the managing director) of
VersaTel as a group for 1998 was NLG 2,449,209. The total aggregate compensation
for the management board of VersaTel for services in all capacities for 1998 was
NLG 326,483. In 1998, options covering 4,550,000 ordinary shares were granted to
our executive officers (including the managing director) and no options were
granted to members of the supervisory board.

During 1998, VersaTel did not accrue any amounts to provide pension,
retirement and similar benefits to the executive officers of VersaTel or to any
of the managing or supervisory directors of VersaTel.

Stock Option Plans

1997 Stock Option Plan

In December 1996, our shareholders approved the 1997 Stock Option Plan.
The 1997 Plan provides for the grant of options to certain key employees of
VersaTel to purchase depositary receipts representing an equal number of
ordinary shares of VersaTel. Under the 1997 Plan, no options have been granted
with

<PAGE>

an expiration date of more than five years after the granting of the option. The
option exercise price is determined in the particular grant of the option.

The option holder is not entitled to retain any depositary receipts
received by the option holder as a result of the exercise of its option. Upon
exercise of its option by the option holder, the option holder is required to
offer the depositary receipts received by it to VersaTel or to another party
designated by VersaTel at the applicable purchase price. Unless otherwise
specified in the particular grant of the option, the purchase price will be the
fair market value of the ordinary shares minus a penalty discount. The 1997 Plan
contains provisions in the event of a dispute regarding the fair market value of
the ordinary shares. The penalty discount, if any, is determined by the length
of employment of the particular option holder.

Pursuant to the Shareholders' Agreement, Telecom Founders, Cromwilld
and NeSBIC must make available the shares underlying the depositary receipts to
be issued under the 1997 Plan. As of the date of this prospectus, 398,000
options to purchase 398,000 depositary receipts had been granted under the 1997
Plan and VersaTel does not intend to grant any more options under the 1997 Plan.

1998 Stock Option Plan

In March 1998, our shareholders approved the 1998 Stock Option Plan.
The 1998 Plan allows VersaTel to grant options to employees to purchase
depositary receipts representing an equal number of ordinary shares of VersaTel.
The option period will commence at the date of the grant and will last five
years. The option exercise price shall be the economic value of the depositary
receipt at the date of the grant of the option. The 1998 Plan contains specific
provisions for the determination of the economic value of the depositary
receipts.

As of the date of this prospectus, 5,000,000 options to purchase
5,000,000 depositary receipts have been granted under the 1998 Plan and the
Company does not intend to grant any more options under the 1998 Plan. Of these
5,000,000 options, 1,940,000 options have been exercised for a total of
1,940,000 depositary receipts.

1999 Stock Option Plan

In January 1999, our shareholders approved the 1999 Stock Option Plan.
The 1999 Plan allows VersaTel to grant options to employees to purchase
depositary receipts representing an equal number of ordinary shares of VersaTel.
The option period will commence at the date of the grant and will last five
years. The option exercise price shall be determined by VersaTel.

<PAGE>

depositary receipts. The 1999 Plan contains specific provisions for the
determination of the economic value of the depositary receipts.

As of the date of this prospectus, 1,908,500 options to purchase
depositary receipts have been granted under the 1999 Plan. VersaTel expects to
grant an additional 591,500 options under the 1999 Plan.

2000 Stock Option Plan

In December 1999, our supervisory board approved the 2000 Stock Option
Plan. The 2000 Plan allows VersaTel to grant options to employees to purchase
ordinary shares of VersaTel. The option period will commence at the date of the
grant and will last five years. The option exercise price shall be determined by
VersaTel. We have reserved 3,000,000 ordinary shares for issuance under the 2000
Stock Option Plan.

As of the date of this prospectus, no options to purchase ordinary
shares have been granted under the 2000 Plan.

The depositary receipts issued under the 1997 Plan, the 1998 Plan and
the 1999 Plan will be administered by the Stichting Administratiekantoor
VersaTel. As of the date of this prospectus, there have been 4,550,000 options
granted to our executive officers. No options have been granted to any of our
supervisory board members.

<PAGE>

Principal Shareholders

As of December 31, 1999, 79,224,986 ordinary shares are issued and
outstanding. The following table sets forth information regarding the beneficial
ownership of the ordinary shares of VersaTel as of December 31, 1999, by each
beneficial owner of 5.0% or more of the ordinary shares and by the executive
officers and directors of VersaTel as a group.

<TABLE>
<CAPTION>
Number Percent of Shares
Name of Beneficial Owner of Shares Outstanding(1)
- ------------------------ --------- -----------------
<S> <C> <C>
NeSBIC Venture Fund C.V.(2)(3)..................................... 15,162,896 19.1%
Paribas Deelnemingen N.V........................................... 7,282,340 9.2
Cromwilld Limited.................................................. 5,853,036 7.4
Telecom Founders B.V.(2)(4)........................................ 5,663,568 7.1
---------- -----
Total........................................................ 33,961,840 42.8%
All directors and executive officers as a group(5)................. 7,603,568 9.6%
</TABLE>

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

(1) Percentages do not reflect the issuance of an aggregate of 130,000 shares
approved for issuance by our shareholders in connection with earn-out
obligations relating to the acquisitions of SpeedPort and ITinera. Does not
give effect to dilution from the exercise of warrants covering 4,441,022
ordinary shares issued in the First High Yield Offering and the Second High
Yield Offering that have not been exercised as of December 31, 1999 or to
options granted to employees covering 5,291,500 ordinary shares (348,000 of
which are non-dilutive in that the shares underlying such options are
currently outstanding and will be provided to us by the holders thereof)
(all as adjusted to give effect to the 2-for-1 stock split on April 13,
1999). See "Management--Stock Option Plans" and "Description of Warrants."
(2) Includes an aggregate 348,000 ordinary shares that may be forfeited by
Telecom Founders B.V. and NeSBIC Venture Fund C.V. pursuant to options
exercised under the 1997 option plan.
(3) Includes 1,274,510 ordinary shares held by NeSBIC Groep B.V., an affiliate
of NeSBIC Venture Fund C.V.
(4) Telecom Founders B.V., a Netherlands company, is a wholly owned subsidiary
of Relyt Holdings N.V., a Netherlands Antilles company owned by R. Gary
Mesch. The Company understands that Telecom Founders B.V. has issued
depositary receipts representing nearly half of its shareholding in
VersaTel to certain persons, including officers and directors of VersaTel.
(5) Reflects (i) the 5,663,568 shares held by Telecom Founders B.V., beneficial
ownership of which may be attributed to Mr. R. Gary Mesch and other
executive officers of VersaTel upon the exchange of their depositary
receipts in Telecom Founders, and (ii) 1,940,000 shares issued as a result
of options exercised by certain executive officers.

<PAGE>

Selling Shareholders

All Warrants offered hereby by the Selling Shareholders were originally
issued by VersaTel as part of the First High Yield Offering and the Second High
Yield Offering. All Shares offered hereby by the Selling Shareholders will be
issued to the Selling Shareholders upon the exercise by the Selling Shareholders
of the Warrants held by such Selling Shareholder. The following table sets forth
estimated information regarding the beneficial ownership of the Shares by the
Selling Shareholders and assumes that all Warrants currently owned by the
Selling Shareholders have been exercised by the Selling Shareholders upon
payment in full of the exercise price.

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Number Percent Shares Number Percent
of Shares of Shares Being of Shares of Shares
Name Owned Outstanding(1) Offered Outstanding Outstanding(1)
- ---- --------- -------------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
ACM Global Strategic Income Fund 36,668 * 36,668 0 *
1345 Avenue of the Americas
New York, NY 10105

AGI - Global High Yield 73,337 * 73,337 0 *
1345 Avenue of the Americas
New York, NY 10105

AIM Management 497,091 * 497,091 0 *
11 Greenway Plaza #100
Houston, TX 77046

Alliance High Yield Fund 66,670 * 66,670 0 *
1345 Ave. of the Americas - 38th Floor
New York, NY 10105

ACE American Insurance Company, c/o 3,800 * 3,800 0 *
Cigna Investments, Inc.
900 Cottage Grove Road, S-116
Hartford, CT 06152-2116

ACE Property and Casualty Insurance 5,100 * 5,100 0 *
Company, c/o
Cigna Investments, Inc
900 Cottage Grove Road, S-116
Hartford, CT 06152-2116

Banco Di Sardegna - EPTA High Yield 6,667 * 6,667 0 *
VIA Camperio 8
20123 Milano-Italy

BDS EPTA Europa 6,667 * 6,667 0 *
1345 Avenue of the Americas
38th Floor
New York, NY 10105

Cigna High Income Shares, c/o 87,337 * 87,337 0 *
Cigna Investments, Inc.
900 Cottage Grove Road, S-116
Hartford, CT 06152-2116

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Connecticut General Life Insurance 57,669 * 57,669 0 *
Company, c/o
Cigna Investments, Inc.
900 Cottage Grove Road, S-116
Hartford, CT 06152-2116

Pacific Employers Insurance Company, c/o 1,100 * 1,100 0 *
Cigna Investments, Inc.
900 Cottage Grove Road, S-116
Hartford, CT 06152-2116

Washington Suburban Sanitary Commission 5,000 * 5,000 0 *
Employees Retirement Plan c/o
Cigna Investments, Inc.
900 Cottage Grove Road, S-116
Hartford, CT 06152-2116

Endeavor High Yield Bond Fund, c/o 1,333 * 1,333 0 *
Massachusetts Financial Services (MFS)
500 Boylston Street
Boston, MA 02116

Jefferson Pilot Variable Fund High Yield, c/o 1,066 * 1,066 0 *
Massachusetts Financial Services (MFS)
500 Boylston Street
Boston, MA 02116

Members High Income Fund, c/o 666 * 666 0 *
Massachusetts Financial Services (MFS)
500 Boylston Street
Boston, MA 02116

MFS High Yield Opportunities Fund, c/o 2,666 * 2,666 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

MFS Funds-European High Yield Bond 333 * 333 0 *
Fund, c/o
MFS Investment Management
500 Boylston Street
Boston, MA 02116

MFS/Sun Life-High Yield Series, c/o 30,001 * 30,001 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

High Yield Variable Account, c/o 14,667 * 14,667 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

MFS Funds-U.S. High Yield Bond Fund, c/o 333 * 333 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

MFS Institutional High Yield Fund, c/o 533 * 533 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

MFS High Income Fund, c/o 145,673 * 145,673 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

MFS Meridian U.S. High Yield Fund, c/o 24,401 * 24,401 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

MFS VIT - MFS High Income Series, c/o 4,666 * 4,666 0 *
MFS Investment Management
500 Boylston Street
Boston, MA 02116

Fidelity Advisor Series II, c/o 94,138 * 94,138 0 *
Fidelity Advisor High Yield Fund
82 Devonshire Street - E20E
Boston, MA 02109

Fidelity Advisor Series II, c/o 4,533 * 4,533 0 *
Fidelity Advisor Strategic Income Fund
82 Devonshire Street - E20E
Boston, MA 02109

Fidelity Capital & Income Fund 37,676 * 37,676 0 *
82 Devonshire Street - E20E
Boston, MA 02109

Fidelity Management Trust Company 15,667 * 15,667 0 *
82 Devonshire Street - E20E
Boston, MA 02109

EQ Alliance High Yield Portfolio 133,340 * 133,340 0 *
1345 Ave. of the Americas - 38th Floor
New York, NY 10105

Janus Flexible Income Fund, c/o 36,001 * 36,001 0 *
Janus Capital Corporation
100 Fillmore St., Suite 300
Denver, CO 80206
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Idex Flexible Income Fund , c/o 1,000 * 1,000 0 *
Janus Capital Corporation
100 Fillmore St., Suite 300
Denver, CO 80206

Aspen Flexible Income Fund, c/o 3,000 * 3,000 0 *
Janus Capital Corporation
100 Fillmore St., Suite 300
Denver, CO 80206

Kemper High Income Trust 10,133 * 10,133 0 *
222 South Riverside Plaza
Chicago, Illinois 60606

Kemper Multi-Market Income Trust 4,666 * 4,666 0 *
222 South Riverside Plaza
Chicago, Illinois 60606

Kemper Variable Series - Kemper High Yield 19,067 * 19,067 0 *
Portfolio
222 South Riverside Plaza
Chicago, Illinois 60606

Kemper Strategic Income Fund 18,934 * 18,934 0 *
222 South Riverside Plaza
Chicago, Illinois 60606

Kemper High Yield Series - Kemper High 230,544 * 230,544 0 *
Yield Fund
222 South Riverside Plaza
Chicago, Illinois 60606

Kemper Income Trust-Kemper High Yield 3,333 * 3,333 0 *
Fund II
222 South Riverside Plaza
Chicago, Illinois 60606

Kemper High Yield Series-Kemper High 3,333 * 3,333 0 *
Yield Opportunity Fund
222 South Riverside Plaza
Chicago, Illinois 60606

LB Series Fund, Inc., High Yield Portfolio 56,002 * 56,002 0 *
625 Fourth Avenue South
Minneapolis, MN 55415

Lehman Brothers Inc. 353,350 * 353,350 0 *
3 World Financial Center
New York, NY 10285

Lutheran Brotherhood High Yield Fund 37,335 * 37,335 0 *
625 Fourth Avenue South
Minneapolis, MN 55415
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

The Mitsui Trust & Banking Co. Ltd. 66,670 * 66,670 0 *
Alliance High Yield Bond Open
2-1-1, Nihonbashi-Muromachi
Chuo-Ku
Tokyo, 103-0022

Morgan Stanley Dean Witter High Income 13,334 * 13,334 0 *
ADV Trust
Two World Trade Center, 71st Floor
New York, NY 10048

Morgan Stanley Dean Witter, 2,666 * 2,666 0 *
SEL DIM INV SER-Diversified Income
Two World Trade Center, 71st Floor
New York, NY 10048

Morgan Stanley Dean Witter Diversified 37,335 * 37,335 0 *
Income Trust
Two World Trade Center, 71st Floor
New York, NY 10048

Morgan Stanley Dean Witter High Income 20,001 * 20,001 0 *
Adv Trust II
Two World Trade Center, 71st Floor
New York, NY 10048

Morgan Stanley Dean Witter High Income 6,667 * 6,667 0 *
Adv Trust II
Two World Trade Center, 71st Floor
New York, NY 10048

Morgan Stanley Dean Witter, High Yield 486,691 * 486,691 0 *
Securities
Two World Trade Center, 71st Floor
New York, NY 10048

Morgan Stanley Dean Witter, 33,335 * 33,335 0 *
Var Inv Ser-High Yield
Two World Trade Center, 71st Floor
New York, NY 10048

Smith Barney Balanced Fund 22,067 * 22,067 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Smith Barney High Income Fund 145,940 * 145,940 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

The Nikko Trust and Banking Corporation 173,342 * 173,342 0 *
Alliance Global High Income Open Portfolio A
1-1, Marunouchi 3-Chome
Chiyoda-Ku, Tokyo, 100-0005
Japan

The Nikko Trust and Banking Corporation 32,001 * 32,001 0 *
Alliance Global High Income Open Portfolio B
1-1, Marunouchi 3-Chome
Chiyoda-Ku, Tokyo, 100-0005
Japan

Greenwich Street Series - Diversified 1,333 * 1,333 0 *
Strategic Income Portfolio
388 Greenwich Street, 23rd Floor
New York, NY 10013

Smith Barney Diversified Strategic Income 79,137 * 79,137 0 *
Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013

High Income Opportunity Fund 8,333 * 8,333 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Smith Barney High Income Portfolio 3,800 * 3,800 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Managed High Income Fund 34,668 * 34,668 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Prudential High Yield Total Return Fund, 13,334 * 13,334 0 *
Inc., c/o
The Prudential Investment Corporation
Two Gateway Center, Third Floor
Newark, NJ 07102

The Prudential Series Fund, Inc. High Yield 26,668 * 26,668 0 *
Bond Portfolio, c/o
The Prudential Investment Corporation
Two Gateway Center, Third Floor
Newark, NJ 07102

Prudential High Yield Fund, Inc., c/o 120,006 * 120,006 0 *
The Prudential Investment Corporation
Two Gateway Center, Third Floor
Newark, NJ 07102
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Agway Inc. Employees Retirement Trust 266 * 266 0 *
c/o The Putnam Advisory Company, Inc.
7 Shattuck Road, C-8-A
Andover, MA 01810

Abbott Laboratories Annuity Retirement Plan 1,866 * 1,866 0 *
c/o The Putnam Advisory Company, Inc.
7 Shattuck Road, C-8-A
Andover, MA 01810

Strategic Global Fund-High Yield Fixed 2,200 * 2,200 0 *
Income (Putnam) Fund
c/o The Putnam Advisory Company, Inc.
7 Shattuck Road, C-8-A
Andover, MA 01810

Ameritech Pension Trust 4,400 * 4,400 0 *
c/o The Putnam Advisory Company, Inc.
7 Shattuck Road, C-8-A
Andover, MA 01810

Southern Farm Bureau Annuity Insurance 2,800 * 2,800 0 *
Company
c/o The Putnam Advisory Company, Inc.
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam High Yield Managed Trust 13,067 * 13,067 0 *
c/o Putnam Fiduciary Trust Company
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam High Yield Fixed Income Fund, LLC 3,400 * 3,400 0 *
c/o Putnam Fiduciary Trust Company
7 Shattuck Road, C-8-A
Andover, MA 01810

Ameritech Non-Management Umbrella 33 * 33 0 *
Welfare Benefit Plan
c/o Putnam Fiduciary Trust Company
7 Shattuck Road, C-8-A
Andover, MA 01810

The George Putnam Fund of Boston 3,600 * 3,600 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Income Fund 5,866 * 5,866 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Putnam Equity Income Fund 200 * 200 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam High Yield Trust 129,606 * 129,606 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Balanced Retirement Fund 533 * 533 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Global Governmental Income Trust 12,667 * 12,667 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam High Yield Advantage Fund 135,673 * 135,673 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam High Income Convertible and Bond 1,733 * 1,733 0 *
Fund
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Variable Trust-Putnam VT High 33,201 * 33,201 0 *
Yield Fund
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Variable Trust-Putnam Global Asset 1,466 * 1,466 0 *
Allocation Fund
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Master Income Trust 6,533 * 6,533 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Premier Income Trust 16,267 * 16,267 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Putnam Master Intermediate Income Trust 9,733 * 9,733 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Diversified Income Trust 73,470 * 73,470 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Convertible Opportunities and 1,533 * 1,533 0 *
Income Trust
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Asset Allocation Funds-Growth 2,133 * 2,133 0 *
Portfolio
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Asset Allocation Funds-Balanced 5,466 * 5,466 0 *
Portfolio
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Asset Allocation Funds-Conservative 1,733 * 1,733 0 *
Portfolio
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Funds Trust-Putnam High Yield 30,134 * 30,134 0 *
Trust II
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Managed High Yield Trust 3,333 * 3,333 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Travelers Series Fund Inc.-Putnam 2,000 * 2,000 0 *
Diversified Income Portfolio
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

Putnam Strategic Income Fund 2,733 * 2,733 0 *
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Putnam Variable Trust-Putnam VT 8,667 * 8,667 0 *
Diversified Income Fund
c/o Putnam Investments
7 Shattuck Road, C-8-A
Andover, MA 01810

Smith Barney USA High Yield Fund 6,000 * 6,000 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Zenix Income Fund 3,533 * 3,533 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Global Horizon Diversified Strategic Income 1,000 * 1,000 0 *
Fund
388 Greenwich Street, 23rd Floor
New York, NY 10013

Nomura Global Investment Fund 1,333 * 1,333 0 *
388 Greenwich Street, 23rd Floor
New York, NY 10013

Saudi International Bank 16,667 * 16,667 0 *
One Knightsbridge
London SWIX 7X5

Target/United Funds, Inc. High Income 6,667 * 6,667 0 *
Portfolio, c/o
Waddell & Reed, Inc.
6300 Lamar Avenue, P.O. Box 29217
Shawnee Mission, KS 66201-9217

United High Income Fund, Inc., c/o 50,002 * 50,002 0 *
Waddell & Reed, Inc.
6300 Lamar Avenue, P.O. Box 29217
Shawnee Mission, KS 66201-9217

United High Income Fund II, Inc., c/o 20,001 * 20,001 0 *
Waddell & Reed, Inc.
6300 Lamar Avenue, P.O. Box 29217
Shawnee Mission, KS 66201-9217

Waddell & Reed Funds, Inc. High Income 3,333 * 3,333 0 *
Fund, c/o
Waddell & Reed, Inc.
6300 Lamar Avenue, P.O. Box 29217
Shawnee Mission, KS 66201-9217
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Before the Offering After the Offering
------------------- ------------------

All other warrantholders combined 390,887 * 390,887 0 *
</TABLE>

- ---------------
* Less than 1.0%.

(1) Based on shares outstanding as of December 31, 1999. All shares
issuable upon exercise of the currently outstanding warrants are deemed
outstanding for the purpose of computing the percentage ownership of
the person holding such warrants but are not deemed outstanding for
computing the percentage ownership of any other person.

<PAGE>

Description of Material Indebtedness

In 1999, VersaTel was able to secure the following additional debt
financing, in addition to the First Notes and the Second Notes issued by
VersaTel in 1998 as part of the First High Yield Offering and the Second High
Yield Offering, respectively.

The Third High Yield Offering

In the Third High Yield Offering in July 1999, VersaTel issued
$180,000,000 in aggregate principal amount of 11 7/8% Senior Dollar Notes due
2009 and Euro 120,000,000 in aggregate principal amount of 11 7/8% Senior
Euro Notes due 2009. The notes were sold to Lehman Brothers International
(Europe), ING Barings LLC and ING Barings Limited, as underwriters. Interest on
the Third Notes will be paid semi-annually on January 15 and July 15, beginning
January 15, 2000. Unlike the holders of the First Notes and the Second Notes,
the holders the Third Notes will not have the benefit of any securities placed
in escrow to fund any interest payments on the Third Notes. The Third Notes are
redeemable at the option of VersaTel, in whole or in part, at any time on or
after July 15, 2004, at 105.937% of their principal amount, plus accrued
interest, declining to 100% of their principal amount, plus accrued interest, on
or after July 15, 2007. In addition, at any time prior to July 15, 2002,
VersaTel may, at its option, redeem from time to time up to 35% of the aggregate
principal amount of either series of Third Notes at a redemption price equal to
111.875% of the aggregate principal amount thereof plus accrued and unpaid
interest and additional amounts, if any, to the date of redemption with the
proceeds of one or more public equity offerings by VersaTel, provided that at
least 65% of the aggregate original principal amount of such series remains
outstanding immediately after the occurrence of such redemption. The Third Notes
may also be redeemed at our option of VersaTel, in whole but not in part, at any
time at a redemption price equal to the aggregate principal amount thereof, and
all additional amounts, if any, then due and which will become due as a result
of the redemption or otherwise, in the event of changes affecting Netherlands
taxes or as a result of any change in the application of Netherlands tax laws or
regulations that require VersaTel to pay additional amounts that VersaTel
determines cannot be avoided by taking reasonable steps. The Third Notes rank
equal in right of payment to the First Notes, the Second Notes (except with
respect to the securities placed in escrow to fund interest payments on the
First Notes and Second Notes, respectively) and all other senior indebtedness of
VersaTel, including the Convertible Notes, and will be senior in right of
payment to any future subordinated indebtedness of VersaTel.

The indentures governing each series of Third Notes contain covenants
applicable to VersaTel and certain of its subsidiaries, including limitations
and requirements with respect to indebtedness, restricted payments, dividends
and other payments affecting restricted subsidiaries, the issuance and sale of
capital stock of restricted subsidiaries, transactions with stockholders and
affiliates, liens, asset sales, issuances of guarantees of indebtedness by
restricted subsidiaries, consolidations and mergers, and provision of financial
statements and reports. Each indenture also requires VersaTel to commence and
consummate an offer to purchase the Third Notes, for 101% of the aggregate
principal amount, upon certain events constituting or which may constitute a
change of control of VersaTel. Under certain circumstances, VersaTel will be
required by each indenture to offer to purchase the Third Notes with the
proceeds of the sale of certain assets. Each indenture also provides for events
of default which, if any of them occurs, would permit or require the principal
of, premium, if any, interest and any other monetary obligations on the Third
Notes to become or to be declared to be immediately due and payable. Holders of
Third Notes may under certain circumstances be entitled to receive additional
payments in respect of taxes and similar charges in respect

<PAGE>

of payments on the Third Notes. Each indenture governing the Third Notes is also
subject to, and governed by, the Trust Indenture Act.

The Convertible Notes Offering

In the Convertible Notes Offering in December 1999, VersaTel issued 4%
Convertible Senior Notes due 2004 in an aggregate principal amount of
Euro 300,000,000. The Convertible Notes were sold to Morgan Stanley & Co.
International Limited, Lehman Brothers International (Europe) and ING Bank N.V.
as the placement agents, who subsequently sold them to institutional investors
in reliance on exemptions under the Securities Act. The Convertible Notes will
mature on December 17, 2004 and be payable at a price of 126.6642% of the
initial principal amount. Interest on the Convertible Notes will be paid
annually in arrears on December 17, beginning December 17, 2000. In the event
any withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges of whatever nature is required by
law, no additional amounts will be payable to the holders of the Convertible
Notes. The Convertible Notes are direct, unsecured obligations of VersaTel and
will rank equal in right of payment with VersaTel's High Yield Notes and all
other unsubordinated and unsecured indebtedness of VersaTel, and the Convertible
Notes will be senior in right of payment to any future subordinated indebtedness
of VersaTel.

At any time on or after January 26, 2000 up to and including December
3, 2004, unless previously redeemed or repurchased, the Convertible Notes will
be convertible into ordinary shares of VersaTel, initially at a conversion rate
of 23.0415 ordinary shares per Euro 1,000 initial principal amount (and
not their Accreted Principal Amount) (representing a conversion price of
Euro 43.40 per ordinary share), subject to adjustment upon the occurrence
of certain events. The terms and conditions of the Convertible Notes also
requires VersaTel to commence and consummate an offer to purchase the
Convertible Notes at the Accreted Principal Amount together with accrued and
unpaid interest to, but excluding, the redemption date, upon events constituting
or which may constitute a change of control of VersaTel.

The Convertible Notes are redeemable at the option of VersaTel, in
whole or in part, at any time on or after December 24, 2002, at their Accreted
Principal Amount plus accrued interest to but excluding the date of redemption,
provided that the official closing price of the ordinary shares as derived from
the Official Price List of the AEX on each of 30 consecutive AEX trading days
ending no more than five AEX trading days prior to the date on which notice of
redemption is given to the holders of the Convertible Notes shall have been at
least 130 percent of the Effective Conversion Price in effect on each of such
AEX trading days, where "Effective Conversion Price" is equal to the Accreted
Principal Amount together with accrued interest divided by the conversion rate
in effect at that time. The "Accreted Principal Amount," with respect to each
Euro 1,000 principal amount of Convertible Notes, shall be determined so
that, together with accrued interest from the immediately preceding interest
payment date or, if none, the date of issuance of the Convertible Notes, and
after taking into account any interest paid in respect of such Convertible Notes
in preceding periods, it represents for the holder thereof a gross yield to
maturity identical to that applicable in the case of redemption at maturity,
being 8.50% per annum. As a result, the Accreted Principal Amount of the
Convertible Notes will be 104.5% on December 17, 2000 and will increase over
time to 126.6642% at December 17, 2004.

<PAGE>

Description of Capital Stock

VersaTel was incorporated under the law of The Netherlands on October
10, 1995, as a private company with limited liability, referred to as besloten
vennootschap met beperkte aansprakelijkheid or a B.V. VersaTel converted its
legal structure from a B.V. to a public company with limited liability, referred
to as naamloze vennootschap or an N.V., on October 15, 1998. VersaTel has its
corporate seat in Amsterdam, The Netherlands. VersaTel is registered under
number 33272606 at the Commercial Register in Amsterdam, The Netherlands.

The following is a summary of the material provisions of our articles
of association and of relevant provisions of Netherlands law. Our articles of
association have been filed with the SEC. See "Where You Can Find More
Information" on page 4 of this prospectus for information on how to obtain a
copy of the articles of association.

Share Capital

The authorized share capital of VersaTel was increased on December 22,
1999 to NLG 15.5 million, consisting of 145 million ordinary shares with a par
value of NLG 0.05 each, 20 million preference shares A with a par value of NLG
0.05 each, 145 million preference shares B with a par value of NLG 0.05 each and
one priority share with a par value of NLG 0.05. The authorized capital of
VersaTel may further be increased by a shareholders' resolution and subsequent
amendment of the articles of association. The issued capital must at all times
at least equal 20.0% of the authorized capital.

Ordinary Shares

Holders of ordinary shares are entitled to one vote per share. There
are no cumulative voting rights. Holders of ordinary shares have pre-emptive
rights with respect to an issue of ordinary shares in proportion to the total
par value of their individual shareholdings. Each ordinary share is entitled to
participate equally in dividends and in the distribution of funds in the event
of liquidation or dissolution of VersaTel and, in each case, following
distributions on preference shares A, preference shares B and the priority
share, if issued.

Ordinary shares may be issued pursuant to a resolution passed at a
general meeting of shareholders or the shareholders, at a general meeting, may
delegate this power to another corporate body. The ordinary shares may, at the
option of the shareholder, be in registered form or bearer form. The ordinary
shares shall, however, be made out to bearer unless the shareholder indicates in
writing to VersaTel that it wishes to receive an ordinary share in registered
form. Only ordinary shares in bearer form are eligible for trading on the AEX.

Ordinary Bearer Shares. Ordinary shares in bearer form are represented
by a single global share certificate which may not be exchanged for single or
other multiple physical securities, and which VersaTel has lodged with NECIGEF
for safe-keeping on behalf of the parties entitled to the underlying ordinary
shares. The ordinary shares may only be transferred through the book-entry
system maintained by NECIGEF and in accordance with the articles of association
of VersaTel.

Ordinary Registered Shares. Holders of ordinary shares in registered
form are entered in the register of shareholders, which is updated regularly. No
share certificates are issued, however each shareholder may

<PAGE>

request VersaTel to issue an extract from the shareholders' register with
respect to its right to one or more registered shares. VersaTel is required to
do this free of charge. A holder of an ordinary share in registered form may at
all times have such shares made out to bearer as further described in the
articles of association.

As of December 31, 1999, 79,224,986 ordinary shares are issued and
outstanding.

Preference Shares A

Holders of preference shares A will be entitled to one vote per share.
There are no cumulative voting rights. Preference shares A have no pre-emptive
rights. Preference shares A are entitled to an annual dividend, to be set by the
corporate body authorized to issue the preference shares A.

Preference shares A may be issued pursuant to a resolution passed at a
general meeting of shareholders or the shareholders, at a general meeting, may
delegate this power to another corporate body. The preference shares A will be
in registered form and share certificates will not be issued.

As of December 31, 1999, no preference shares A are issued or
outstanding.

Preference Shares B

Holders of preference shares B will be entitled to one vote per share.
There are no cumulative voting rights. Preference shares B have no pre-emptive
rights. Preference shares B are entitled to a cumulative annual dividend
calculated on the basis of a fixed interest rate, as may be issued by the
European Central Bank from time to time, on the paid up portion of the nominal
value of the preference shares B, to the extent of the distributable profits,
prior to any dividend distribution on any of our other shares being made.

Preference shares B may be issued pursuant to a resolution passed at a
general meeting of shareholders or the shareholders, at a general meeting, may
delegate this power to another corporate body. Notwithstanding such delegation,
an issue of preference shares B that would exceed 100% of the number of our
other outstanding shares will require the approval of our shareholders at a
general meeting. The preference shares B will be in registered form and share
certificates will not be issued.

As of December 31, 1999, no preference shares B are issued or
outstanding.

Priority Share

The holder of the priority share will be entitled to one vote. There
are no cumulative voting rights. However, the priority share will have certain
special voting rights as described below. The priority share has no pre-emptive
rights. The priority share is entitled to a nominal annual dividend of 20% of
its nominal value, to the extent of distributable profits.

The priority share may be issued pursuant to a resolution passed at a
general meeting of shareholders or the shareholders, at a general meeting, may
delegate this power to another corporate body. The priority share will be in
registered form and share certificates will not be issued.

As of December 31, 1999, the priority share is not issued or
outstanding.

<PAGE>

On December 17, 1999 and for a period of two years, the shareholders
approved that the board of management, under prior approval of the supervisory
board, will be entitled to issue ordinary shares, preference shares A and B as
well as the priority share to a maximum, as defined in article 4 of paragraph 1
of the articles of association, as well as to restrict or exclude the
pre-emptive rights of shareholders.

Dividends

The profits of VersaTel are at the disposal of the shareholders at a
general meeting. Dividends shall be paid after the adoption of the annual
accounts of VersaTel. We may only pay dividends up to the distributable part of
our equity. Under Netherlands law, the sum of the called and paid-up capital and
certain statutory reserves is not distributable. Subject to the same limitation,
the general meeting of shareholders may resolve to pay dividends out of a
reserve not required by Netherlands law. Each ordinary share is entitled to
participate equally in dividends and in the distribution of funds in the event
of liquidation or dissolution of VersaTel. Preference shares A are entitled to
an annual dividend, to be set by the corporate body authorized to issue such
preference shares A. Preference shares B will be paid a cumulative annual
dividend calculated on the basis of a fixed interest rate on the paid up portion
of their nominal value, to the extent of distributable profits. The priority
share will be entitled to a nominal annual dividend of 20% of the nominal value,
to the extent of distributable profits.

Annual Accounts

Within five months after the end of our financial year, the board of
managing directors is required to prepare the annual accounts. This period may
be extended by the general meeting of shareholders for a period of six months on
the basis of special circumstances. The annual accounts accompanied by an annual
report must be submitted to the board of supervisory directors for signing and
must thereafter be adopted by the general meeting of shareholders. The annual
accounts and the annual report will be available to the shareholders and holders
of depositary receipts of shares at the office of VersaTel as from the date of
its preparation by the board of managing directors. See "Where You Can Find More
Information."

Anti-Takeover Provisions

The issuance of preference shares and priority shares may have an
anti-takeover effect and delay, defer or prevent a tender offer or takeover
attempt that a shareholder might consider to be in that shareholder's best
interests, including attempts that might result in a premium over the market
price to be paid for the ordinary shares.

Preference Shares. Our management board has obtained from the
shareholders at a general meeting, the authority to issue preference shares
subject only to the prior approval of the supervisory board. Upon obtaining such
authority, our management board is expected to grant a call option on the
preference shares not exceeding 100% of all our other outstanding shares to an
independent foundation (stichting) to be established under Netherlands law. In
the event of a threatened hostile takeover bid, the foundation may exercise this
option. The foundation will be entrusted with the obligation to take into
consideration our best interests and to prevent influences that may threaten our
continuity, independence or identity. The minimum amount required to be paid on
the preference shares upon issuance is 25% of the nominal amount issued.

Notwithstanding any delegation by the shareholders at a general meeting
of the power to authorize the issuance of any preference shares, a proposed
issuance of preference shares B that would exceed 100%

<PAGE>

of the number of our other outstanding shares will require the approval of our
shareholders at a general meeting. In all instances where preference shares are
issued without direct shareholder approval, the management board must explain
the reason for the issuance within four weeks at a general meeting of
shareholders. Within two years after the first issuance of preference shares, a
general meeting of shareholders must be held to vote on whether the preference
shares should be repurchased or canceled.

Priority share. Our management board has obtained from the shareholders
at a general meeting, the authority to issue a priority share subject only to
the prior approval of the supervisory board. Upon obtaining such authority, our
management board is expected to grant a call option on the priority share to an
independent foundation (stichting), to be established under Netherlands law. In
the event of a threatened hostile takeover bid, the foundation may exercise this
option. The priority share can only be transferred with the approval of the
management board and the supervisory board. The priority share carries the
following special voting rights:

o the right to nominate members for appointment to the
management board and supervisory board, which nominations may
only be set aside by a resolution of the general meeting of
shareholders adopted by two-thirds of the votes cast
representing more than one-half of the issued nominal capital,
and

o the exclusive right to propose amendments to our articles of
association, our merger or de-merger transactions or our
dissolution.

Transfer Agent and Registrar

The transfer agent and registrar for the ADRs is The Bank of New York.

<PAGE>

Description of American Depositary Receipts

American Depositary Receipts

The Bank of New York will issue the American Depositary Receipts, or
ADRs. Each ADR will represent an ownership interest in a number of American
Depositary Shares, each of which represents one ordinary share which VersaTel
will deposit with a custodian in The Netherlands. Each ADR will also represent
securities, cash or other property deposited with The Bank of New York but not
distributed to ADR holders. The Bank of New York's Corporate Trust Office is
located at 101 Barclay Street, New York, New York 10286, and its principal
executive office is located at One Wall Street, New York, NY 10286.

You may hold ADRs either directly or indirectly through your broker or
other financial institution. If you hold ADRs directly, you are an ADR holder.
This description assumes you hold your ADRs directly. If you hold the ADRs
indirectly, you must rely on the procedures of your broker or other financial
institution to assert the rights of ADR holders described in this section. You
should consult with your broker or financial institution to find out what those
procedures are.

Because The Bank of New York will be the legal owner of the ordinary
shares, ADR holders must rely on it to exercise the rights of a shareholder of
VersaTel. The obligations of The Bank of New York are set out in a deposit
agreement among VersaTel, The Bank of New York and you, as an ADR holder. The
deposit agreement and the ADRs are governed by New York law.

Share Dividends And Other Distributions

The Bank of New York has agreed to pay to you the cash dividends or
other distributions it or the custodian receives on ordinary shares or other
deposited securities, after deducting its fees and expenses. You will receive
these distributions in proportion to the number of ordinary shares your ADRs
represent.

Cash. The Bank of New York will convert any cash dividend or other cash
distribution VersaTel pays on the ordinary shares into U.S. dollars. If it is
not possible for The Bank of New York to convert such foreign currency in whole
or in part into U.S. dollars, or if any approval or license of any government is
needed and cannot be obtained, The Bank of New York may distribute the foreign
currency to, or in its discretion may hold the foreign currency uninvested and
without liability for interest for the accounts of, ADR holders entitled to
receive the same.

Before making a distribution, The Bank of New York will deduct any
withholding taxes that must be paid under Netherlands law. See "Tax
Considerations--Netherlands Tax Considerations." It will distribute only whole
U.S. dollars and cents and will round fractional cents to the nearest whole
cent.

Shares. The Bank of New York may, with the consent of VersaTel, and
must upon VersaTel's request, distribute new ADRs representing any shares
VersaTel may distribute as a dividend or free distribution. The Bank of New York
will only distribute whole ADRs. It will sell shares which would require it to
issue a fractional ADR and distribute the net proceeds in the same way as it
does with dividends or distributions of cash. If The Bank of New York does not
distribute additional ADRs, each ADR will also represent the additional
deposited shares.

<PAGE>

Rights to receive additional shares. If VersaTel offers holders of its
ordinary shares any rights to subscribe for additional ordinary shares or any
other rights, The Bank of New York may make these rights available to you.
VersaTel must first instruct The Bank of New York to do so and furnish it with
satisfactory evidence that it is legal to do so. If VersaTel does not furnish
this evidence and/or give these instructions, or if The Bank of New York
determines in its reasonable discretion that it is not lawful and feasible to
make such rights available to all or certain owners, The Bank of New York may
sell the rights and allocate the net proceeds to Owner's accounts. The Bank of
New York may allow rights that are not distributed or sold to lapse. In that
case, you will receive no value for them.

If The Bank of New York makes rights available to you, upon instruction
from you it will exercise the rights and purchase the shares on your behalf. The
Bank of New York will then deposit the shares and issue ADRs to you. It will
only exercise rights if you pay it the exercise price and any other charges the
rights require you to pay.

U.S. securities laws may restrict the sale, deposit, cancellation, and
transfer of the ADRs issued after exercise of rights. For example, you may not
be able to trade the ADRs freely in the United States. In this case, The Bank of
New York may issue the ADRs under a separate restricted deposit agreement which
will contain the same provisions as the agreement, except for changes needed to
put the restrictions in place.

Other Distributions. The Bank of New York will send to you anything
else VersaTel distributes on deposited securities by any means it thinks is
legal, fair and practical. If it cannot make the distribution in that way, The
Bank of New York has a choice. It may decide to sell what VersaTel distributed
and distribute the net proceeds, in the same way as it does with cash. Or, it
may decide to hold what VersaTel distributed, in which case ADRs will also
represent the newly distributed property.

The Bank of New York is not responsible if it decides that it is
unlawful or impractical to make a distribution available to any ADR holders.
VersaTel has no obligation to register ADRs, shares, rights or other securities
under the Securities Act. VersaTel also has no obligation to take any other
action to permit the distribution of ADRs, shares, rights or anything else to
ADR holders. This means that you may not receive the distributions VersaTel
makes on its shares or any value for them if it is illegal or impractical for
VersaTel to make them available to you.

Deposit, Withdrawal and Cancellation

The Bank of New York will issue ADRs if you or your broker deposit
shares or evidence of rights to receive shares with the custodian. Upon payment
of its fees and expenses and of any taxes or charges, such as stamp taxes or
stock transfer taxes or fees, The Bank of New York will register the appropriate
number of ADRs in the names you request and will deliver the ADRs at its
Corporate Trust Office to the persons you request.

You may turn in your ADRs at the Corporate Trust Office of The Bank of
New York's office. Upon payment of its fees and expenses and of any taxes or
charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New
York will deliver the deposited securities underlying the ADRs at the office of
the custodian, except that The Bank of New York may deliver at its Corporate
Trust Office any dividends or distributions with respect to the deposited
securities represented by the ADRs, or any proceeds from the sale of any
dividends, distributions or rights, which may be held by The Bank of New York.
Or, at your request, risk and expense, The Bank of New York will deliver the
deposited securities at its Corporate Trust Office.

<PAGE>

Voting Rights

You may instruct The Bank of New York to vote the shares underlying
your ADRs but only if VersaTel asks The Bank of New York to ask for your
instructions. Otherwise, you will not be able to exercise your right to vote
unless you withdraw the ordinary shares underlying the ADRs. However, you may
not know about a meeting at which you may be entitled to vote enough in advance
to withdraw the shares.

If VersaTel asks for your instructions, The Bank of New York will
notify you of the upcoming vote and arrange to deliver voting materials to you.
The materials will (1) describe the matters to be voted on and (2) explain how
you, on a certain date, may instruct The Bank of New York to vote the shares or
other deposited securities underlying your ADRs as you direct. For instructions
to be valid, The Bank of New York must receive them on or before the date
specified. The Bank of New York will try, as far as practical, subject to
Netherlands law and the provisions of VersaTel's articles of association, to
vote or to have its agents vote the shares or other deposited securities as you
instruct. The Bank of New York will only vote or attempt to vote as you
instruct. However, if The Bank of New York does not receive your voting
instructions on or before the date specified, it will give a proxy to vote your
shares to a person designated by VersaTel.

VersaTel cannot assure you that you will receive the voting materials
in time to ensure that you can instruct The Bank of New York to vote your
shares. In addition, The Bank of New York and its agents are not responsible for
failing to carry out voting instructions or for the manner of carrying out
voting instructions. This means that you may not be able to exercise your right
to vote and there may be nothing you can do if your shares are not voted as you
requested.

The Bank of New York shall fix a record date whenever:

o any cash dividend or distribution shall become payable,

o any distribution other than cash shall be made,

o rights shall be issued with respect to the deposited securities,

o The Bank of New York, for any reason, causes a change in the
number of ordinary shares that are represented by each ADS, or

o The Bank of New York receives notice of any meeting of holders of
ordinary shares or other deposited securities.

The purpose of fixing a record date is to determine which ADR holders
are:

o entitled to receive such dividend, distribution or rights,

o entitled to receive the net proceeds from the sale of such
dividend, distribution or rights, and

o entitled to give instructions for the exercise of voting rights
at any such meeting.

<PAGE>

Fees and Expenses
<TABLE>
<S> <C>
If: You must pay:

o An ADR is issued to you, including $5.00 (or less) per 100 ADSs (or portion
as a result of a distribution of shares thereof)
or rights or other property

o Your ADR is cancelled, including $5.00 (or less) per 100 ADSs (or portion
if the deposit agreement terminates thereof)

o You receive any cash payment $0.02 (or less) per ADS

o There is a transfer and registration of Registration or transfer fees
shares on the share register of VersaTel's
registrar or foreign registrar from your
name to the name of The Bank of New
York or its agent when you deposit or
withdraw shares

o The Bank of New York converts NLG Expenses of The Bank of New York
to U.S. dollars

o The Bank of New York sends a cable, Expenses of The Bank of New York
telex or facsimile transmission (if
expressly provided in the deposit
agreement)

o The Bank of New York or the custodian Your proportionate share of those
pays taxes and other governmental taxes or charges
charges on any ADR or underlying share,
such as stock transfer taxes, stamp
duty or withholding taxes.

</TABLE>

Payment of Taxes

The Bank of New York may deduct the amount of any taxes owed from any
payments to you. It may also sell deposited securities, by public or private
sale, to pay any taxes owed. You will remain liable if the proceeds of the sale
are not enough to pay the taxes. If The Bank of New York sells deposited
securities, it will, if appropriate, reduce the number of ADRs to reflect the
sale and pay to you any proceeds, or send to you any property, remaining after
it has paid the taxes.

Reclassifications, Recapitalizations and Mergers
<TABLE>
<S> <C>
If VersaTel: Then:

o Changes the nominal or par value of its shares The cash, shares or other securities
received by The Bank of New York will
become deposited securities.
</TABLE>

<PAGE>

o Reclassifies, splits up or consolidates any Each ADR will automatically
of the deposited securities represent its equal share of the new
deposited securities.

o Recapitalizes, reorganizes, merges, liquidates, The Bank of New York may with
sells all or substantially all of its assets, VersaTel's approval and will if
or takes any similar action VersaTel asks it to, execute and
deliver additional ADRs or ask you
to surrender your outstanding ADRs in
exchange for new ADRs, identifying
the new deposited securities.
</TABLE>

Amendment and Termination

Versatel may agree with The Bank of New York to amend the deposit
agreement and the ADRs without your consent for any reason. If the amendment
adds or increases fees or charges, except for taxes and other governmental
charges or certain expenses of The Bank of New York, or prejudices an important
right of ADR holders, it will only become effective 30 days after The Bank of
New York notifies you of the amendment. At the time an amendment becomes
effective, you are considered, by continuing to hold your ADR, to agree to the
amendment and to be bound by the ADRs and the agreement as amended.

The Bank of New York will terminate the agreement if VersaTel asks it
to do so. The Bank of New York may also terminate the agreement if The Bank of
New York has told VersaTel that it would like to resign and VersaTel has not
appointed a new depositary bank within 90 days. In both cases, The Bank of New
York must notify you at least 90 days before termination.

After termination, The Bank of New York and its agents will be required
to do only the following under the agreement: (1) collect dividends and
distributions on the deposited securities, (2) deliver shares and other
deposited securities upon cancellation of ADRs, and shall sell rights as
provided in the agreement. One year after termination, The Bank of New York may
sell any remaining deposited securities by public or private sale. After that,
The Bank of New York will hold the money it received on the sale, as well as any
other cash it is holding under the agreement for the pro rata benefit of the ADR
holders that have not surrendered their ADRs. It will not invest the money and
has no liability for interest. The Bank of New York's only obligations will be
to account for the money and other cash and with respect to indemnification.
After termination our only obligations will be with respect to indemnification
and to pay certain amounts to The Bank of New York.

The Bank of New York upon the written request or with the written
approval of VersaTel, may appoint one or more co-transfer agents for the purpose
of effecting transfers, combinations and split-ups of ADRs at designated
transfer offices on behalf of The Bank of New York. A co-transfer agent may
require evidence of your authority and compliance with applicable laws and other
requirements will be entitled to protection and indemnity to the same extent as
The Bank of New York.

<PAGE>

Limitations on Obligations and Liability to ADR Holders

The deposit agreement expressly limits VersaTel's obligations and the
obligations of The Bank of New York. It also limits VersaTel's liability and the
liability of The Bank of New York. VersaTel and The Bank of New York:

o are only obligated to take the actions specifically set forth in
the agreement without negligence or bad faith;

o are not liable if either is prevented or delayed by law or the
articles of association of VersaTel, or circumstances beyond
their control from performing their obligations under the
agreement;

o are not liable if either exercises, or fails to exercise,
discretion permitted under the agreement;

o have no obligation to become involved in a lawsuit or other
proceeding related to the ADRs or the agreement on your behalf or
on behalf of any other party; and

o may rely upon any advice of or information from legal counsel,
accountants, any person depositing Shares, any ADR holder or any
other person whom they believe in good faith is competent to give
them that advice or information.

In the agreement, VersaTel and The Bank of New York agree to indemnify
each other under specified circumstances.

Requirements for Depositary Actions

Before The Bank of New York will issue or register transfer of an ADR,
make a distribution on an ADR, or permit withdrawal of shares, The Bank of New
York may require:

o payment to stock transfer or other taxes or other governmental
charges and transfer or registration fees charged by third
parties for the transfer of any shares or other deposited
securities, as well as the fees and expenses of The Bank of New
York;

o production of satisfactory proof of the identity of the person
presenting shares for deposit or ADRs upon withdrawal and
genuineness of any signature or other information it deems
necessary; and

o compliance with laws or regulations relating to ADRs or to the
withdrawal of deposited securities and any such reasonable
regulations it may establish, from time to time, consistent with
the agreement, including presentation of transfer documents.

The Bank of New York may refuse to deliver, transfer, or register
transfers of ADRs generally when the transfer books of The Bank of New York, or
VersaTel are closed or at any time if The Bank of New York or VersaTel thinks it
advisable to do so.

<PAGE>

You have the right to cancel your ADRs and withdraw the underlying
shares at any time except:

o when temporary delays arise because: (1) The Bank of New York or
VersaTel has closed its transfer books; (2) the transfer of
shares is blocked to permit voting at a shareholders' meeting; or
(3) Versatel is paying a dividend on the shares;

o when you owe money to pay fees, taxes and similar charges; or

o when it is necessary to prohibit withdrawals in order to comply
with any laws or governmental regulations that apply to ADRs or
to the withdrawal of shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of
the deposit agreement.

Pre-Release of ADRs

In certain circumstances described below, subject to the provisions of
the deposit agreement, The Bank of New York may issue ADRs before deposit of the
underlying shares. This is called a pre-release of the ADR. The Bank of New York
may also deliver shares upon the receipt and cancellation of pre-released ADRs
(even if the ADRs are cancelled before the pre-release transaction has been
closed out). A pre-release is closed out as soon as the underlying shares are
delivered to The Bank of New York. The Bank of New York may receive ADRs instead
of shares to close out a pre-release. The Bank of New York may pre-release ADRs
only under the following conditions:

(1) before or at the time of the pre-release, the person to whom the
pre-release is being made must represent to The Bank of New York
in writing that it or its customer, as the case may be:

(a) owns the Shares or ADRs to be remitted,

(b) will assign all beneficial rights, title and interest
in the ADRs or shares to The Bank of New York and for
the benefit of the holders, and

(c) will not take any action with respect to the ADRs or
Shares that is inconsistent with the assignment of
beneficial ownership (including, without the consent of
The Bank of New York, disposing of the ADRs or Shares)
other than in satisfaction of the pre-release;

(2) the pre-release must be fully collateralized with cash or other
collateral that The Bank of New York considers appropriate; and

(3) The Bank of New York must be able to close out the pre-release on
not more than five business days' notice.

In addition, The Bank of New York will limit the number of ADRs that
may be outstanding at any time as a result of pre-release, although The Bank of
New York may disregard the limit from time to time, if it thinks it is
appropriate to do so.

<PAGE>

Reports and Other Communications

The Bank of New York will make available for your inspection at its
Corporate Trust Office any reports and communications, including any proxy
soliciting material, it receives from VersaTel, if those reports and
communications are both (a) received by The Bank of New York as the holder of
the deposited securities and (b) made generally available by VersaTel to the
holders of the deposited securities. The Bank of New York will also, upon
written request, send you copies of those reports it receives from VersaTel.
VersaTel will provide those reports and communications, including any proxy
soliciting material, in English.

Inspection of Transfer Books

The Bank of New York will keep books for the registration and transfer
of ADRs, which will be open for your inspection at all reasonable times. You
will only have the right to inspect those books if the inspection is for the
purpose of communicating with other owners of ADRs in connection with the
business of VersaTel or a matter related to the agreement or the ADRs.

<PAGE>

Description of Warrants

The warrants that are being offered were issued by VersaTel on May 27,
1998 and December 3, 1998, respectively. The Warrants have been issued pursuant
to two warrant agreements (the "Warrant Agreements") between the Company and
United States Trust Company of New York, as Warrant Agent, dated May 27, 1998,
and December 3, 1998, respectively. There are no material differences between
the two Warrant Agreements. On May 27, 1998, VersaTel issued and sold
225,000,000 units consisting of $225,000,000 in principal amount of 13 1/4%
senior notes due 2008 and 225,000 warrants to purchase an aggregate 3,000,000
ordinary shares (as adjusted for a two-for-one stock split which was effected on
April 13, 1999) in the First High Yield Offering. The units were sold to Lehman
Brothers, Inc., as initial purchaser, who subsequently sold them to certain
institutional investors in reliance on Rule 144A and Regulation S under the
Securities Act. The notes and the warrants were separated in August 1998. On
December 3, 1998, VersaTel issued and sold 150,000 issued units consisting of
$150,000,000 in principal amount of 13 1/4% senior notes due 2008 and 150,000
warrants to purchase an aggregate of 2,000,100 ordinary shares (as adjusted for
a two-for-one stock split which was effected on April 13, 1999) in the Second
High Yield Offering. The units were sold to Lehman Brothers, Inc., Lehman
Brothers International (Europe) and Paribas Corporation, as initial purchasers,
who subsequently sold them to certain institutional investors in reliance on
Rule 144A and Regulation S under the Securities Act. The notes and the warrants
were separated in January 1999. In connection with the Equity Offering, holders
of an aggregate of 38,800 warrants exercised such warrants on a cashless basis
for an aggregate of 457,492 ordinary shares, which were sold in the Equity
Offering. As of December 31, 1999, 3,140 of the remaining outstanding warrants
have been exercised on a cashless basis for a total of 37,676 ordinary shares.
If all the remaining 333,060 outstanding warrants will be exercised upon payment
in full of the exercise price, such exercise will result in the issuance by
VersaTel of an additional 4,441,022 ordinary shares. Set forth below is a
summary of the relevant provisions of the Warrant Agreements.

General

As of the date of this prospectus, each Warrant, when exercised, will
entitle the holder thereof to receive 13.334 fully paid and non-assessable
ordinary shares of VersaTel at an exercise price of NLG 2.55 per share. The
exercise price and the number of ordinary shares issuable upon exercise of a
Warrant are both subject to adjustment in the circumstances described below
under --Adjustments. Such Ordinary Shares, when issued and paid for in
accordance with the applicable Warrant Agreement, will be duly and validly
issued, fully paid and nonassessable, free of preemptive rights and free from
all liens, charges and security interests.

Exercise

The Warrants became exercisable on the closing date of the Initial
Public Offering. Unless earlier exercised, the Warrants will expire on May 15,
2008. VersaTel will give notice of expiration not less than 90 nor more than 120
days prior to such expiration date to the registered holders of the then
outstanding Warrants. If VersaTel fails to give such notice, the Warrants will
nevertheless expire and become void on the expiration date.

In order to exercise all or any of the Warrants, the holder thereof is
required to surrender to the Warrant Agent the related registered certificate
issued by VersaTel representing the Warrants with the accompanying form of
election to purchase properly completed and executed, and to pay in full the
exercise

<PAGE>

price for each ordinary share or other securities issuable upon exercise of such
Warrants. The exercise price may be paid (i) in cash or by certified or official
bank check or by wire transfer to an account designated by VersaTel for such
purpose or (ii) without the payment of cash, by reducing the number of ordinary
shares that would be obtainable upon the exercise of a Warrant and payment of
the exercise price in cash so as to yield a number of ordinary shares upon the
exercise of such Warrant equal to the product of (a) the number of ordinary
shares for which such Warrant is exercisable as of the date of exercise (if the
exercise price were being paid in cash) and (b) the Cashless Exercise Ratio. The
"Cashless Exercise Ratio" shall equal a fraction, the numerator of which is the
excess of the Current Market Value per ordinary share on the date the Warrants
are exercised over the exercise price per share as of the exercise date and the
denominator of which is the Current Market Value per ordinary share on the
exercise date. The "Current Market Value" per ordinary share is defined to mean
the average of the last reported sale price of the security for each business
day during the period commencing 15 business days before such date and ending on
the date one day prior to such date. Upon surrender of a warrant certificate
representing more than one Warrant in connection with the holder's option to
elect a cashless exercise, the number of ordinary shares deliverable upon a
cashless exercise shall be equal to the number of ordinary shares issuable upon
the exercise of Warrants that the holder specifies are to be exercised pursuant
to a cashless exercise multiplied by the Cashless Exercise Ratio. All provisions
of the warrant agreements shall be applicable with respect to a surrender of a
warrant certificate pursuant to a cashless exercise for less than the full
number of Warrants represented thereby. Upon surrender of the warrant
certificate and payment of the exercise price, VersaTel will issue ordinary
shares for each warrant evidenced by such warrant certificate, subject to
adjustment as described herein. If less than all of the Warrants evidenced by a
warrant certificate are to be exercised, a new warrant certificate will be
issued for the remaining number of Warrants. No fractional ordinary shares will
be issued upon exercise of the Warrants.

The holders of unexercised Warrants are not entitled, by virtue of
being such holders, to receive dividends, to vote, to consent, to exercise any
preemptive rights or to receive notice as stockholders of VersaTel in respect of
any stockholders meeting for the election of directors of VersaTel or any other
purpose or to exercise any other rights whatsoever as stockholders of VersaTel.

No service charge will be made for registration of transfer or exchange
upon surrender of any warrant certificate at the office of the Warrant Agent
maintained for that purpose. VersaTel may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration or transfer or exchange of warrant certificates.

In the event a bankruptcy or reorganization is commenced by or against
VersaTel, a bankruptcy court may hold that unexercised Warrants are executory
contracts which may be subject to rejection by VersaTel or a court-appointed
receiver with approval of the bankruptcy court. As a result, holders of the
Warrants may not, even if sufficient funds are available, be entitled to receive
any consideration or may receive an amount less than they would be entitled to
receive if they had exercised their Warrants prior to the commencement of any
such bankruptcy or reorganization.

Adjustments

The number of ordinary shares of VersaTel issuable upon the exercise of
the Warrants and the exercise price will be subject to adjustment in certain
circumstances, including:

(a) the payment by VersaTel of dividends and other distributions on its
ordinary shares;

<PAGE>

(b) subdivisions, combinations and certain reclassifications of the
ordinary shares of VersaTel;

(c) the issuance of rights, options or warrants entitling the holders
thereof to subscribe for additional ordinary shares, or of securities
convertible into or exercisable or exchangeable for additional ordinary shares
at an offering price (or with an initial conversion, exercise or exchange price
plus such offering price) which is less than the Current Market Value per
ordinary share;

(d) the distribution to all holders of ordinary shares of any assets of
VersaTel (including cash), debt securities of VersaTel or any rights or warrants
to purchase any securities (excluding those rights and warrants referred to in
clause (c) above and cash dividends and other cash distributions from current or
retained earnings);

(e) the issuance of ordinary shares for a consideration per share which
is less than the Current Market Value per ordinary share; and

(f) the purchase of ordinary shares pursuant to a tender or exchange
offer made by VersaTel or any subsidiary thereof at a price greater than the
Current Market Value of the ordinary shares at the time such tender or exchange
offer expires.

The events described in clauses (c) and (e) above are subject to some
exceptions described in the applicable Warrant Agreement, including, without
limitation, certain bona fide public offerings and private placements and
issuances of ordinary shares pursuant to employee stock incentive plans.

No adjustment in the exercise price will be required unless and until
such adjustment would result, either by itself or with other adjustments not
previously made, in an increase or decrease of at least 1% in the exercise price
or the number of ordinary shares issuable upon exercise of Warrants immediately
prior to the making of such adjustment; provided, however, that any adjustment
that is not made as a result of this paragraph will be carried forward and taken
into account in any subsequent adjustment.

In case of certain consolidations, mergers or demergers of VersaTel, or
the sale of all or substantially all of the assets of VersaTel to another
entity, each Warrant will thereafter be exercisable for the right to receive the
kind and amount of shares of stock or other securities or property to which such
holder would have been entitled as a result of such consolidation, merger,
demerger or sale had the Warrants been exercised immediately prior thereto.
However, if (a) VersaTel consolidates, merges, demerges or sells all or
substantially all of its assets to another entity and, in connection therewith,
the consideration payable to the holders of ordinary shares in exchange for
their shares is payable solely in cash or (b) there is a dissolution,
liquidation or winding-up of VersaTel, then the holders of the Warrants will be
entitled to receive distributions on an equal basis with the holders of ordinary
shares or other securities issuable upon exercise of the Warrants, as if the
Warrants had been exercised immediately prior to such event, less the exercise
price. Upon receipt of such payment, if any, the Warrants will expire and the
rights of holders thereof will cease. In the case of any such consolidation,
merger, demerger or sale of assets, the surviving or acquiring entity and, in
the event of any dissolution, liquidation or winding-up of VersaTel, VersaTel
must deposit promptly with the Warrant Agent the funds, if any, required to pay
the holders of the Warrants. After such funds and the surrendered warrant
certificates are received, the Warrant Agent is required to deliver a check in
such amount as is appropriate (or, in the case of consideration other than cash,
such other consideration as is appropriate) to such entities as it may be
directed in writing by the holders surrendering such Warrants.

<PAGE>

Amendment

Any amendment or supplement to the warrant agreements that has an
adverse effect on the interests of the holders of the Warrants will require the
written consent of the holders of a majority of the then outstanding Warrants
under the applicable Warrant Agreement (excluding any Warrants held by VersaTel
or any of its affiliates). Notwithstanding the foregoing, from time to time,
VersaTel and the Warrant Agent, without the consent of the holders of the
Warrants, may amend or supplement each Warrant Agreement for certain purposes,
including to cure any ambiguities, defects or inconsistencies or to make any
change that does not adversely affect the rights of any holder. The consent of
each holder of the Warrants affected will be required for any amendment pursuant
to which the exercise price would be increased or the number of ordinary shares
issuable upon exercise of the Warrants would be decreased (other than pursuant
to adjustments provided for in the applicable Warrant Agreement) or the exercise
period with respect to the Warrants would be shortened.

Shelf Registration

VersaTel is required under the warrant agreements to cause the Shelf
Registration Statement, of which this prospectus forms a part, to remain
effective until the earlier of (a) such time as all Warrants have been exercised
and (b) the expiration date of the Warrants. However, during any consecutive
365-day period, VersaTel shall be entitled to suspend the availability of this
Shelf Registration Statement for up to two 30-consecutive-day periods (except
for the 30-consecutive-day period immediately prior to the expiration date) if
the board of directors determines in the exercise of its reasonable judgment
that there is a valid business purpose for such suspension and provides notice
that such determination was made to the holders of the Warrants; provided,
however, that in no event shall VersaTel be required to disclose the business
purpose for such suspension if VersaTel determines in good faith that such
business purpose must remain confidential.

<PAGE>

Tax Considerations

Netherlands Tax Considerations

The following discussion, subject to the limitations set forth therein,
describes the material Netherlands tax consequences of the acquisition,
ownership and disposition of the Warrants, Shares or ADSs, and is the opinion of
Arthur Andersen, special Netherlands tax counsel (belastingadviseurs) to
VersaTel. This opinion represents Arthur Andersen's interpretation of existing
law. This opinion does not address the income taxes imposed by any political
subdivision of The Netherlands or any tax imposed by any other jurisdiction.
This opinion does not discuss all the tax consequences that may be relevant to
the holders in light of their particular circumstances or to holders that are
subject to special treatment under applicable law and is not intended to be
applicable in all respects to all categories of investors. Changes in VersaTel's
organizational structure or the manner in which VersaTel conducts its business
may invalidate this opinion. The laws upon which this opinion is based are
subject to change, sometimes with retroactive effect. Changes in the applicable
laws may invalidate this opinion and this opinion will not be updated to reflect
such subsequent changes. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS
REGARDING THE PARTICULAR TAX CONSEQUENCES OF THEIR ACQUIRING, OWNING AND
DISPOSING OF THE WARRANTS, SHARES OR ADSs.

Substantial Interest

A shareholder that owns, either via shares, warrants or options,
directly or indirectly, 5% or more of any class of shares, or 5% or more of the
total issued share capital of a company resident in The Netherlands (a
"Substantial Interest"), is subject to special rules. Profit participation
rights which give the holder rights to 5% or more of the annual profit or 5% or
more of the liquidation proceeds of the target company will also qualify as
substantial interest. A deemed substantial interest is present if (part of) a
substantial interest has been disposed of, or is deemed to have been disposed
of, on a non-recognition basis. With respect to individuals, attribution rules
exist in determining the presence of a Substantial Interest. Unless indicated
otherwise, the term "shareholder," as used herein, includes individuals and
entities as defined under Netherlands tax law holding ordinary shares, but does
not include any such person having a Substantial Interest in VersaTel.

Tax Consequences for Residents or Deemed Residents of The Netherlands

Dividend Withholding Tax

Dividends that VersaTel distributes are subject to withholding tax at a
rate of 25%, unless:

1. the participation exemption applies and the ordinary shares are
attributable to the business carried out in The Netherlands, or

2. dividends are distributed to a qualifying EU corporate
shareholder satisfying the conditions of the EU directive, or

3. the rate is reduced by treaty.

<PAGE>

Dividends may include:

o distributions of cash,

o distributions of property in kind,

o constructive dividends,

o hidden dividends,

o liquidation proceeds in excess of our recognized paid-in capital,

o proceeds from the redemption of shares in excess of our
recognized paid-in capital,

o stock dividends equal to their nominal value (unless distributed
out of our recognized paid-in share premium), and

o the repayment of paid-in capital not recognized as capital.

The term "recognized paid-in capital" or "share premium" relates to our
paid-in capital or share premium as recognized for Netherlands tax purposes.

Generally, a shareholder that resides, or is deemed to reside, in The
Netherlands will be allowed a credit against Netherlands income tax or
corporation tax for the tax withheld on dividends paid on ordinary shares. A
legal entity resident in The Netherlands that is not subject to Netherlands
corporate income tax may, under certain conditions, request a refund of the tax
withheld.

Dividends VersaTel pays to a corporate shareholder that qualifies for
the "participation exemption" (as defined in Article 13 of The Netherlands
Corporation Tax Act 1969 (the "Corporation Tax Act")) will not be subject to the
dividend withholding tax if the ordinary shares are attributable to the
shareholder's business carried out in The Netherlands. A resident corporate
shareholder will qualify for the participation exemption if, among other things,
the resident shareholder owns generally at least 5% of the nominal paid-up
capital.

Individual Income Tax and Corporation Income Tax

If the Shares or ADSs are held by an individual who resides, or is
deemed to reside, in The Netherlands, income derived from the Shares or ADSs is
subject to Netherlands income tax on a net income basis at graduated rates. An
individual generally is entitled to a dividend exemption of NLG 1,000 a year
(NLG 2,000 a year for married couples). Ordinary shares distributed to
individual shareholders from our share premium account (as recognized for
Netherlands tax purposes) are also exempt from Netherlands income tax. The
dividend exemption is not available to an individual shareholder if the ordinary
shares:

1. are attributable to a trade or business carried on by the
shareholder, or

2. form part of a Substantial Interest.

<PAGE>

Dividends accruing to individual shareholders that hold a Substantial
Interest are subject to income tax at a rate of 25% on a net basis.

Dividends received from Shares or ADSs or ordinary shares by an entity
that resides, or is deemed to reside, in The Netherlands will be subject to
Netherlands corporation tax on a net basis unless the company's shareholding
qualifies for the participation exemption. Dividends received from ordinary
shares by a pension fund as defined in the Corporation Tax Act are not subject
to Netherlands corporation tax.

Capital Gains Realized from the Sale or Exchange of Shares or ADSs

Capital gains derived from the sale, conversion or disposition of
Shares or ADSs by an individual shareholder who resides, or is deemed to reside,
in The Netherlands are not subject to Netherlands income tax, provided:

1. the Shares or ADSs were not acquired directly or indirectly by
VersaTel or a subsidiary of VersaTel,

2. the shareholder did not have a (deemed) Substantial Interest in
VersaTel's share capital at the time of the sale or exchange, and

3. the Shares or ADSs were not assets of a business.

Capital gains realized by an individual shareholder that is a resident
or a deemed resident of The Netherlands on the disposal of Shares or ADSs
forming part of a (deemed) Substantial Interest are subject to tax at a rate of
25%. Capital gains realized by an individual resident shareholder from the sale
or exchange of Shares or ADSs forming part of the assets of a shareholder's
business are subject to tax on a net income basis at the progressive income tax
rates.

If the Warrants are held by an entity that is a resident or a deemed
resident of The Netherlands, capital gains realized from the sale or exchange of
the Warrants are subject to corporation tax. In the case capital gains realized
from the sale or exchange of the ordinary shares are subject to corporation tax
unless the shareholding qualifies for the participation exemption. If the Shares
or ADSs are held by a qualifying pension fund, gains realized from the sale or
exchange of ordinary shares are exempt from Netherlands corporation tax.

Net Wealth Tax

An individual who resides, or is deemed to reside, in The Netherlands
generally will be subject to a net wealth tax at a rate of 0.7% on the fair
market value of the Warrants, Shares or ADSs.

Gift Tax and Inheritance Tax

Netherlands gift tax or inheritance tax will be due with respect to a
gift or inheritance of Warrants, Shares or ADSs from a person who resided, or
was deemed to have resided, in The Netherlands at the time of the gift or his or
her death. Netherlands tax will be due in the case of a gift of Warrants, Shares
or ADSs by an individual who at the time of the gift was neither resident nor
deemed to be resident in The Netherlands, if such individual dies within 180
days after the date of the gift, while being resident or deemed resident in The
Netherlands. A Dutch national is deemed to have been resident in The Netherlands
if he or

<PAGE>

she was a resident in The Netherlands at any time during the ten years preceding
the date of the gift or the date of his or her death. For gift tax purposes,
each person (regardless of nationality) is deemed to be a Netherlands resident
if he or she was a resident in The Netherlands at any time during the 12 months
preceding the date of the gift. The ten-year and 12-month residency rules may be
modified by treaty.

Liability for payment of the gift tax or inheritance tax rests with the
donee or heir, respectively. The rate at which these taxes are levied is
primarily dependent on the fair market value of the gift or inheritance and the
relationship between the donor and donee or the deceased and his or her heir(s).
Exemptions may apply under specific circumstances.

Tax Consequences for Non-Residents of The Netherlands

This subsection applies to U.S. Holders (as defined below).

Dividend Withholding Tax

Dividends VersaTel distributes are subject to withholding tax at a rate
of 25%, unless:

1. the participation exemption applies and the ordinary shares are
attributable to the business carried out in The Netherlands, or

2. dividends are distributed to a qualifying EU corporate
shareholder satisfying the conditions of the EU directive, or

3. the rate is reduced by treaty.

Dividends may include:

o distributions of cash,

o distributions of property in kind,

o constructive dividends,

o hidden dividends,

o liquidation proceeds in excess of our recognized paid-in capital,

o proceeds from the redemption of shares in excess of our
recognized paid-in capital,

o stock dividends equal to their nominal value (unless distributed
out of our recognized paid-in share premium), and

o the repayment of paid-in capital not recognized as capital.

The term "recognized paid-in capital" or "share premium" relates to our
paid-in capital or share premium as recognized for Netherlands tax purposes.

<PAGE>

A non-resident shareholder may benefit from a reduced dividend
withholding tax rate pursuant to an income tax treaty in effect between the
shareholder's country of residence and The Netherlands. Under most Netherlands
income tax treaties, the withholding tax rate is reduced to 15% or less,
provided that:

1. the recipient shareholder does not have a permanent establishment
in The Netherlands to which the ordinary shares are attributable,
and

2. the recipient shareholder is the beneficial owner of the
dividends.

Under the Income Tax Treaty of December 18, 1992 concluded between The
Netherlands and the United States (the "Treaty"), dividends we pay to a resident
of the United States generally will be subject to a dividend withholding tax
rate of 15%. The rate may be reduced to 5% if the beneficial owner is a United
States corporation that directly holds 10% or more of the voting power in our
Company. The Treaty exempts from withholding tax dividends received by exempt
pension trusts and exempt organizations, under conditions as defined in the
Treaty. Except in the case of exempt organizations, dividends paid may benefit
from the reduced dividend withholding tax rate (or exemption from dividend
withholding tax) by filing the proper forms in advance of the dividend payment.
Exempt organizations remain subject to the statutory withholding rate of 25% and
must file a return to claim a refund of the tax withheld.

A shareholder may not claim Treaty benefits unless:

1. the shareholder is a "resident" of the United States, as that
term is defined in the Treaty, and

2. Article 26 (the "treaty shopping rules") does not preclude the
shareholder's ability to claim Treaty benefits.

The withholding of tax on dividend distributions on Shares or ADSs to a
non-resident corporate shareholder carrying on a business through a Netherlands
permanent establishment is not required as long as:

1. The Netherlands participation exemption applies, and

2. the Shares or ADSs form a part of the permanent establishment's
business assets.

To qualify for the participation exemption, this entity should hold
generally at least 5% of our nominal paid-up capital and the Shares or ADSs must
form a part of the permanent establishment's business assets.

Individual Income Tax and Corporation Income Tax

A non-resident shareholder will not be subject to Netherlands income
tax on dividends received from VersaTel, provided such shareholder does not or
has not:

1. carried on a business in The Netherlands through a permanent
establishment or a permanent representative that includes in its
assets the Shares or ADSs,

<PAGE>

2. held a Substantial Interest in VersaTel's share capital or, in
the event the non-resident shareholder has held a Substantial
Interest in VersaTel, such interest was a business asset in the
hands of the shareholder,

3. shared directly (not through the beneficial ownership of shares
or similar securities) in the profits of an enterprise managed
and controlled in The Netherlands that owned or was deemed to
have owned the Shares and ADSs, and

4. carried out employment activities in The Netherlands or served as
a director or board member of any entity resident in The
Netherlands, or served as a civil servant of a Netherlands public
entity with which the holding of the Shares or ADSs was
connected.

Capital Gains Realized from the Sale or Exchange of Warrants, Shares or ADSs

A non-resident shareholder will not be subject to Netherlands income
tax on capital gains derived from the sale, conversion or disposition of
Warrants, Shares or ADSs, provided the non-resident shareholder does not have or
has not:

1. carried on a business in The Netherlands through a permanent
establishment or a permanent representative that included in its
assets the Warrants, Shares or ADSs,

3. shared directly (not through the beneficial ownership of shares
or similar securities) in the profits of an enterprise managed
and controlled in The Netherlands which owned or was deemed to
have owned Warrants, Shares or ADSs, and

4. carried out employment activities in The Netherlands, or served
as a director or board member of any entity resident in The
Netherlands, or served as a civil servant of a Netherlands public
entity, with which the holding of the Warrants, Shares or ADSs
was connected.

Capital gains derived from the sale, conversion or disposition of
Shares or ADSs by a non-resident corporate shareholder, carrying on a business
through a permanent establishment in The Netherlands, are not subject to
Netherlands corporation tax, provided:

1. The Netherlands participation exemption applies, and

2. the Shares or ADSs are attributable to the business carried out
in The Netherlands.

To qualify for the participation exemption, the shareholder must
generally hold at least 5% of our nominal paid-up capital and meet other
requirements.

Under most Netherlands tax treaties, the right to tax capital gains
realized by a non-resident shareholder from the sale or exchange of Shares or
ADSs is in many cases allocated to the shareholder's country of residence.

<PAGE>

Net Wealth Tax

A non-resident individual shareholder will not be subject to
Netherlands net wealth tax in respect of the Shares or ADSs provided the
non-resident shareholder does not or has not:

1. carried on a business in The Netherlands through a permanent
establishment or a permanent representative that included in its
assets the Shares or ADSs, and

2. shared directly (not through the beneficial ownership of shares
or similar securities) in the profits of an enterprise managed
and controlled in The Netherlands, which owned or was deemed to
have owned Shares or ADSs.

Gift Tax and Inheritance Tax

A gift or inheritance of Shares or ADSs from a non-resident shareholder
will not be subject to Netherlands gift tax or inheritance tax in the hands of
the donee or heir provided the non-resident shareholder was not:

1. a Dutch national who has been resident in The Netherlands at any
time during the 10 years preceding the date of gift or the date
of death or, in the event he or she was resident in The
Netherlands during such period, the non-resident shareholder was
not a Dutch national at the time of gift or death;

2. solely for the purpose of the gift tax, a resident of The
Netherlands at any time during the 12 months preceding the time
of the gift (however, in case of a gift by an individual who at
the time of the gift was neither resident nor deemed to be
resident in The Netherlands and such individual dies within 180
days after the date of the gift, while being resident or deemed
to be resident in The Netherlands, such tax will be due);

3. engaged in a business in The Netherlands through a permanent
establishment or a permanent representative which included in its
assets Shares or ADSs; and

4. shared directly (not through the beneficial ownership of shares
or similar securities) in the profits of an enterprise managed
and controlled in The Netherlands which owned or is deemed to
have owned Shares or ADSs.

Tax Reform 2001

In The Netherlands a major tax reform is pending which should become
effective as of January 1, 2001. It will in particular change the taxation in
relation to Shares held by individual holders resident or deemed resident of The
Netherlands which are not part of a so-called substantial interest. According to
the proposed legislation Netherlands individual resident holders or deemed
Netherlands resident holders of Shares will be taxed annually on a deemed income
of 4% of the average annual value of the Shares at a rate of 30%, regardless
whether any interest is received, capital gains are realized or capital losses
are suffered. On the other hand the net wealth tax will be abolished. Since this
legislation is still pending it may be subject to change.

<PAGE>

U.S. Federal Income Tax Consequences

The following discussion describes the material U.S. federal income tax
consequences that may be relevant to the purchase, ownership and disposition of
Shares, ADSs or Warrants to a prospective purchaser that is a U.S. Holder (as
defined below). This discussion is based on the Internal Revenue Code of 1986,
as amended (the "Code"), existing and proposed Treasury regulations
("Regulations"), administrative and judicial interpretations thereof, all as in
effect on the date hereof and all of which are subject to change, possibly with
retroactive effect, and differing interpretations. In addition, this discussion
deals only with Shares, ADSs and Warrants held by a U.S. Holder as capital
assets within the meaning of Section 1221 of the Code. This discussion does not
address all of the tax consequences that may be relevant to prospective
purchasers of Shares, ADSs or Warrants in light of their particular
circumstances or to persons subject to special tax rules, such as insurance
companies, financial institutions, dealers in securities or foreign currencies,
tax-exempt investors, persons holding Shares, ADSs or Warrants as a position in
a "straddle," conversion or other integrated transaction, persons owning,
directly, indirectly or constructively, 10% or more of the total combined voting
power of all classes of the Company's stock or persons whose functional currency
(as defined in Section 985 of the Code) is not the U.S. dollar. Prospective
purchasers of Shares, ADSs or Warrants should consult with their own tax
advisors regarding the application of the U.S. federal income tax laws to their
particular situations as well as to any additional tax consequences of
purchasing, holding or disposing of Shares, ADSs or Warrants, including the
applicability and effect of the tax laws of any state, local or foreign
jurisdiction.

As used in this section, the term "U.S. Holder" means a beneficial
owner of a Share, ADS or Warrant who or that is for U.S. federal income tax
purposes (i) a citizen or individual resident of the United States, (ii) a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its
source or (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust.

In general, for U.S. federal income tax purposes, U.S. Holders of
American depositary receipts evidencing ADSs will be treated as the owners of
the Shares represented by the ADSs.

Exercise of Warrants

Upon the exercise of a Warrant, a U.S. Holder will not recognize gain
or loss (except to the extent of cash, if any, received in lieu of the issuance
of fractional Shares) and will have an adjusted tax basis in the Shares acquired
pursuant to such exercise equal to such U.S. Holder's tax basis in the Warrant
plus the exercise price of the Warrant. The holding period for such Shares so
acquired will commence on the date after the date of exercise of the Warrant. If
any cash is received in lieu of fractional Shares, the U.S. Holder will
recognize gain or loss in an amount and of the same character that such U.S.
Holder would have recognized if such U.S. Holder had received such fractional
Shares and then immediately sold them for cash back to the Company.

Sale, Exchange or Other Disposition of Warrants

Subject to the discussion in "Passive Foreign Investment Company"
("PFIC") below, the sale, exchange or other disposition of a Warrant will
generally result in the recognition of capital gain or loss to the U.S. Holder
in an amount equal to the difference between the amount realized and such U.S.
Holder's tax basis in the Warrant. As a result of certain limitations under the
foreign tax credit provisions of the

<PAGE>

Code, a U.S. Holder may be unable to claim a foreign tax credit for Netherlands
withholding taxes, if any, imposed on the proceeds received upon a sale,
exchange or other disposition of Warrants.

Lapse

If a Warrant expires unexercised, a U.S. Holder will recognize a
capital loss equal to such U.S. Holder's tax basis in the Warrant. Such capital
loss may, subject to certain limitations, be used to offset capital gains, if
any, otherwise realized by a U.S. Holder.

Adjustments

Under Section 305 of the Code, adjustments to the exercise price or
conversion ratio of the Warrants which occur under certain circumstances, or the
failure to make such adjustments, may result in the receipt of taxable
constructive dividends by a U.S. Holder to the extent of the Company's current
or accumulated earnings and profits, regardless of whether there is a
distribution of cash or property, if such change has the effect of increasing
the holder's proportionate interest in the earnings and profits or assets of the
Company. In general, anti-dilution adjustments are not treated as resulting in
taxable constructive dividends.

Cash Distributions

Subject to the PFIC discussion below, to the extent that a distribution
on Shares or ADSs (other than liquidating distributions and certain distribution
in redemption of Shares or ADSs) is paid to a U.S. Holder out of the Company's
current or accumulated earnings and profits (as determined for U.S. federal
income tax purposes), such distribution will be includible in the U.S. Holder's
gross income as foreign source dividend income in an amount equal to the U.S.
dollar value of such distribution (without reduction for any applicable foreign
withholding tax). Therefore, in the event that any foreign tax is withheld from
a distribution on the Shares or ADSs, a U.S. Holder generally will be required
to report gross income in an amount greater than the cash received (although, as
discussed below, such U.S. Holder may be eligible to claim a deduction or a
foreign tax credit in respect of such foreign tax). To the extent that the
amount of any distribution on the Shares or ADSs exceeds the current and
accumulated earnings and profits of the Company (as determined for U.S. federal
income tax purposes), a U.S. Holder's pro rata share of such excess amount would
be treated first as a nontaxable return of capital that would be applied against
and would reduce the U.S. Holder's tax basis in its Shares or ADSs (but not
below zero), and then as gain from the sale or exchange of property.
Distributions in excess of the Company's current and accumulated earnings and
profits (as determined for U.S. federal income tax purposes) generally will not
give rise to foreign source income and a U.S. Holder may be unable to claim a
foreign tax credit in respect of any Netherlands or other foreign withholding
tax imposed on such distributions unless (subject to applicable limitations) the
U.S. Holder has other foreign source income in the appropriate category for
foreign tax credit purposes. The Company believes that it does not presently
have current or accumulated earnings and profits for U.S. federal income tax
purposes. However, the Company cannot predict whether it will have any such
earnings and profits for future taxable years.

Subject to certain conditions and limitations (including certain
minimum holding period requirements), the U.S. dollar value of the foreign
income taxes, if any, withheld from a distribution to a U.S. Holder on the
Shares or ADSs as calculated on the date of any such foreign withholding may be
claimed as a credit against the U.S. Holder's U.S. federal income tax liability.
Alternatively, a U.S. Holder may claim a deduction for such amount of foreign
income taxes withheld in a taxable year, but only if such U.S. Holder does not
elect to claim a foreign tax credit in respect of any foreign taxes paid by it
in the taxable year.

<PAGE>

However, with respect to any withholding tax that may be imposed by The
Netherlands, because Netherlands tax law may not require the Company to remit
the full amount of such withholding tax to The Netherlands taxing authorities,
U.S. Holders may be limited in their ability to deduct or credit such
Netherlands withholding tax for U.S. federal income tax purposes. Dividends on
Shares or ADSs generally will constitute "passive income" or, in the case of
certain U.S. Holders, "financial services income" for U.S. foreign tax credit
purposes. Special rules apply to certain individuals whose foreign source income
during the taxable year consists entirely of "qualified passive income" and
whose creditable foreign taxes paid or accrued during the taxable year do not
exceed $300 ($600 in the case of a joint return).

The rules relating to foreign tax credits are extremely complex and the
availability of a foreign tax credit depends on numerous factors. U.S. Holders
of Shares or ADSs should consult their own tax advisors concerning the
application of the U.S. foreign tax credit rules to their particular situations.

The U.S. dollar value of any distribution to a U.S. Holder on Shares or
ADSs that is paid in a foreign currency will be calculated by reference to the
exchange rate in effect at the time the distribution is received by the U.S.
Holder (or a nominee, custodian or other agent of the U.S. Holder). A U.S.
Holder generally should not recognize any foreign currency gain or loss if such
foreign currency is converted into U.S. dollars on the day received. If a U.S.
Holder does not convert such foreign currency into U.S. dollars on the date of
receipt, however, such Holder may recognize foreign currency gain or loss (which
generally will be taxable as ordinary income or loss) upon a subsequent sale or
other disposition of the foreign currency.

A corporate U.S. Holder will not be entitled to a dividends received
deduction with respect to distributions on Shares or ADSs by the Company.

Sale, Exchange or Other Disposition of Shares or ADSs

A U.S. Holder generally will recognize gain or loss upon a sale,
exchange or other disposition of Shares or ADSs in an amount equal to the
difference between the U.S. dollar value of the amount realized on the sale or
other disposition and the U.S. Holder's adjusted tax basis in the Shares or
ADSs. Subject to the PFIC discussion below, such gain or loss generally will be
capital gain or loss and, in the case of certain non-corporate U.S. Holders, may
be subject to U.S. federal income tax at a preferential rate where the U.S.
Holder's holding period exceeds one year. Any gain or loss recognized by a U.S.
Holder on a sale, exchange or other disposition of Shares or ADSs generally will
be treated as United States source gain or loss for foreign tax credit purposes.
As a result of certain limitations under the foreign tax credit provisions of
the Code, a U.S. Holder may be unable to claim a foreign tax credit for
Netherlands withholding taxes, if any, imposed on the proceeds received upon a
sale, exchange or other disposition of Shares or ADSs. A U.S. Holder's ability
to deduct capital losses in respect of Shares and ADSs is subject to
limitations.

Passive Foreign Investment Company

In general, a foreign corporation is a PFIC for any taxable year in
which (i) 75% or more of its gross income consists of passive income (such as
dividends, interest, rents and royalties) or (ii) 50% or more of the average
quarterly value of its assets consists of assets that produce, or are held for
the production of, passive income. The Company was a PFIC for its 1998 taxable
year. Although we have not yet finalized our 1999 year-end financial statements,
the Company does not believe that it was a PFIC for the 1999 taxable

<PAGE>

year. While, based on its projections, the Company does not expect to be a PFIC
for any subsequent taxable year, because those projections may prove to be
inaccurate and, in particular, because the Company has substantial passive
assets in the form of cash from previous offerings of notes and equity and
because the value of the Company's goodwill may fluctuate significantly, no
assurance can be provided regarding the Company's PFIC status for 1999 and
subsequent years. A determination as to a corporation's PFIC status is made
annually and thus is subject to change.

If the Company were a PFIC for any taxable year, a U.S. Holder that
held Shares or ADSs in that taxable year generally would be subject to special
rules with respect to certain distributions made by the Company on the Shares or
ADSs and with respect to gains from dispositions of Shares or ADSs, whether
occurring in that or future taxable years. In general, such a U.S. Holder would
be required to allocate such distributions or gains (as the case may be) ratably
over its holding period for such Shares or ADSs. That portion of any such
distributions or gains allocated to a prior taxable year (other than a year
prior to the first year in which the Company was a PFIC) would effectively be
taxed at the highest U.S. federal income tax rate in effect for such year with
respect to ordinary income and the U.S. Holder would be subject to an interest
charge on the resulting tax liability (determined as if such tax liability had
been due with respect to the particular taxable year). That portion, if any, of
such distributions or gains not so allocated to a prior taxable year of the U.S.
Holder in which the Company was a PFIC would be included in the U.S. Holder's
income for the taxable year of the particular distribution or disposition and
taxed as ordinary income. The foregoing rules with respect to distributions and
dispositions may be partly or entirely avoided if a U.S. Holder is eligible for
and timely makes either a valid "QEF election" (in which case the U.S. Holder
generally would be required to include in income on a current basis its pro rata
share of the ordinary income and net capital gains of the Company, whether or
not actually distributed) or a valid "mark-to-market" election (in which case,
subject to certain limitations, the U.S. Holder would essentially be required to
take into account the difference, if any, between the fair market value and the
adjusted tax basis of its Shares and ADSs, at the end of a taxable year, in
calculating its income for such year). Under proposed Regulations, for purposes
of the PFIC rules, Warrants would be considered Shares, but the exercise of
Warrants would not be considered as a disposition of Shares. Under temporary
Regulations, a QEF election made with respect to any Shares will not apply to
any Warrants. Prospective purchasers are urged to consult their own tax advisors
regarding the consequences of an investment in a PFIC.

Backup Withholding

"Backup" withholding and information reporting requirements may apply
to payments made within the United States of dividends on Shares or ADSs and to
certain payments of proceeds of a sale or redemption of a Share, ADS or Warrant
paid to a U.S. Holder. The Company, its agent, a broker, the Trustee or any
paying agent, as the case may be, may be required to withhold tax from any
payment that is subject to backup withholding at a rate of 31% of such payment
if the U.S. Holder fails to furnish the U.S. Holder's taxpayer identification
number, to certify that such U.S. Holder is not subject to backup withholding,
or to otherwise comply with the applicable requirements of the backup
withholding rules. Certain U.S. Holders (including, among others, corporations)
are not subject to the backup withholding and information reporting
requirements. Any amounts withheld under the backup withholding rules from a
payment to a U.S. Holder generally may be claimed as a credit against such U.S.
Holder's U.S. federal income tax liability, provided that the required
information is furnished to the U.S. Internal Revenue Service. Regulations,
generally effective for payments made after December 31, 2000, modify certain of
the certification requirements for backup withholding. It is possible that the
Company and other withholding

100

<PAGE>

agents may request a new withholding certificate from U.S. Holders in order to
qualify for continued exemption from backup withholding under Regulations when
they become effective.

101

<PAGE>

Plan of Distribution

VersaTel has been advised by the Selling Shareholders that they may
sell all or a portion of the Shares offered by such Selling Shareholder hereby
from time to time on the Amsterdam Stock Exchange or the Nasdaq National Market.
The Selling Shareholders may also make private sales of Shares or Warrants to
purchasers directly. Alternatively, the Selling Shareholders may from time to
time offer the securities through underwriters, brokers, dealers or agents, who
may receive compensation in the form of underwriting discounts, commissions or
concessions from the Selling Shareholders and/or the purchasers of the
securities for whom they act as agent. To the extent required, the number of
securities to be sold, the purchase price, the name of any such agent, broker,
dealer or underwriters and any applicable commissions with respect to a
particular offer will be set forth in an accompanying prospectus supplement. The
aggregate net proceeds to the Selling Shareholders from the sale of the
securities offered by the Selling Shareholders hereby will be the purchase price
of such securities, less any commissions, if any, and other expenses of issuance
and distribution not borne by VersaTel.

The Selling Shareholders and any brokers, dealers, agents or
underwriters that participate with the Selling Shareholders in the distribution
of securities may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event any discounts, concessions and commissions
received by such brokers, dealers, agents or underwriters and any profit on the
resale of the securities purchased by them may be deemed to be underwriting
discounts and commissions under the Securities Act.

If the securities are sold in an underwritten offering, the
underwriters and selling group members, if any, may engage in stabilizing
transactions in accordance with Rule 10b-6A under the Exchange Act. Rule 104
permits stabilizing to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. The underwriters may
over-allot shares of the offered securities in connection with an offering of
offered securities, thereby creating a short position in the underwriter's
account. Syndicate covering transactions involve purchases of the offered
securities in the open market aftrer the distribution has been completed in
order to cover syndicate short positions. Stabilizing and syndicate covering
transactions may cause the price of the offered securities to be higher than it
would otherwise be in the absence of such transactions. These transactions, if
commenced, may be discontinued at any time.

VersaTel has agreed to bear all expenses (other than any commissions or
discounts of underwriters, dealers or agents or brokers' fee and the fees and
expenses of their counsel) in connection with the registration of the securities
being offered by the Selling Shareholders hereby.

Any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus. There is no assurance that the Selling
Shareholders will sell any or all of the securities.

102

<PAGE>

Legal Matters

The validity of the securities offered hereby will be passed upon for
VersaTel by Shearman & Sterling, New York, New York. The validity of the
securities with respect to Netherlands corporate law will be passed upon for
VersaTel by Stibbe Simont Monahan Duhot, Amsterdam, The Netherlands.

Experts

The financial statements of VersaTel as of December 31, 1998 and 1997
and for the years then ended, incorporated by reference in this prospectus from
our Annual Report on Form 20-F filed with the Securities and Exchange Commission
on March 30, 1999 have been audited by Arthur Andersen, independent public
accountants, with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as expert in giving said reports.

The financial statements of Svianed B.V. as of December 31, 1998 and
1997 and for the years then ended, incorporated in this prospectus by reference
from our Report on Form 6-K filed with the Securities and Exchange Commission on
June 21, 1999 have been audited by KPMG Accountants N.V., and are incorporated
in reliance upon the authority of said firm as experts in accounting and
auditing.

The financial statements of VEW Telnet as of December 31, 1998 and 1997
and for the years then ended, incorporated in this prospectus by reference from
our Report on Form 6-K filed with the Securities and Exchange Commission on
December 7, 1999 have been audited by BDO Deutsche Warentruehand
Aktiengesellschaft Wirtschaftsprunfungsgesellschaft, independent public
accountants, and are incorporated in reliance upon the authority of said firm as
experts in preparing said reports.

103

<PAGE>

ANNEX A

Glossary

Access costs--The costs paid by long distance carriers to the local
telephone companies for accessing the local networks of the local telephone
companies to originate and terminate long distance calls.

ADM (add-drop multiplexer)--A multiplexer which controls cross connect
between individual circuits by software, permitting dynamic cross connect of
individual 64 kbps circuits within an El line.

ADSL (asymetrical digital subscriber line)--A member of the digital
subscriber line family of copper loop enhancing technologies (see "DSL"). ADSL
is asymmetric, meaning than it provides faster transmission rates downstream
than upstream.

ATM (asynchronous transfer mode)--An international standard for
high-speed broadband packet-switched networks, operating at digital transmission
speeds above 1.544 Mbps.

Bandwidth--The range of frequencies that can be passed through a
medium, such as glass fibers, without distortion. The greater the bandwidth, the
greater the information-carrying capacity of such medium. For fiber optic
transmission, electronic transmitting devices determine the bandwidth, not the
fibers themselves. Bandwidth is measured in Hertz (analog) or Bits Per Second
(digital).

Bits--The smallest unit of digital information utilized by electronic
information processing, storage or transmission systems.

Bps (Bits per second)--The basic measuring unit of speed in a digital
transmission system; the number of bits that a transmission facility can convey
between a sending location and a receiving location in one second.

Carrier--A company authorized by a regulatory agency to provide
communications services.

Carrier pre-selection--The ability of end users to select the long
distance or international operator of their choice prior to the time their calls
are first made.

Carrier selection--The ability of end users to select on a call-by-call
basis the long distance or international operator of their choice.

Circuit switching--A switching technique that establishes a dedicated
transmission path between originating and terminating points and holds that path
open for the duration of a call.

Co-location--When an end-user or competing local telecommunications
service provider locates telephone network equipment at the building that houses
switches belonging to another telephone carrier, the user or competing provider
is said to be "co-located" with the other telephone carrier. The advantage for
the co-locating party is that it can make a direct connection to local and long
distance facilities and substantially reduce access costs.

Closed User Group--A group of customers with some affiliation with one
another and which are treated for regulatory purposes as not being the public.

A-1

<PAGE>

Connectivity--The property of a network that allows dissimilar devices
to communicate with each other.

Dark fiber--Any installed fiber optic cable lacking a light
transmission or signal, as opposed to in-service or "lit" fiber.

Dial around--Use of carrier access numbers and/or carrier
identification codes to place a call through a carrier other than the one
presubscribed to the originating phone.

DSL (digital subscriber line)--A family of technologies that provides
high-bandwidth transmission over standard twisted copper wires (regular
telephone lines).

DWDM (dense wavelength division multiplexing)--A multiplexing technique
allowing multiple different signals to be carried simultaneously, with
transmission capacity as high as 160 Gbps, on a fiber by allocating resources
according to frequency on non-overlapping frequency bands.

E1--The European counterpart to the North American T-1 transmission
speed. The T-1 is a type of digital carrier transmitting voice or data at 1.544
Mbps. A T-1 carrier can handle up to 24 multiplexed 64 Kbps digital voice/data
channels. A T-1 carrier system can use metallic cable, microwave radio or
optical fiber as a transmission media.

E3--The European counterpart to the North American T-3 transmission
speed. The T-3 is a type of digital carrier transmitting voice or data at 34
Mbps (see also "E1").

Facilities--Transmission lines, switches and other physical components
used to provide telephone service.

Facilities-based--When a carrier owns or leases a network and
facilities to run that network, services offered on it are said to be
facilities-based.

Facilities-based carrier--A company that owns or leases its
international network facilities including undersea fiber optic cables and
switching facilities rather than reselling time provided by another
facilities-based carrier.

Fiber--A filament, usually of glass, through which light beams carrying
voice, data or video transmissions are guided.

Fiber optic--Technology based on thin filaments of glass or other
transparent materials used as the medium for transmitting coded light pulses
that represent data, image and sound. Fiber optic technology offers extremely
high transmission speeds. It is the medium of choice for the telecommunications
industry. Fiber is immune to electrical interferences and environmental factors
that affect copper wiring and satellite transmission. Fiber optic technology
involves sending laser light pulses across glass strands in order to transmit
digital information. A strand of fiber optic cable is as thick as a human hair
yet has more bandwidth capacity than a copper wire the width of a telephone
pole.

Fiber optic ring network--Where a network is configured in
bi-directional circular fashion. If a portion of the ring malfunctions, the
signal can be re-routed back the way it came, around the circle, to complete the
connection.

A-2

<PAGE>

Frame relay--A method of achieving high-speed, packet-switched data
transmissions within digital networks at transmission speeds between 56 Kbps and
1.544 Mbps.

Gbps (gigabits per second)--A measurement of speed for digital signal
transmission expressed in billions of bits per second.

Interconnect--Connection of a telecommunications device or service to
the PSTN.

Intranet--A corporate communications system that uses the global
Internet protocol for employee-to-employee communications and information
transactions. An intranet allows employees of a company to access company and
customer information not available to the public, receive company or customer
information and communicate with other employees.

IP (Internet protocol)--The standard that defines the information unit
being passed among the host computers and packet-switched networks that make up
the Internet. The Internet protocol provides the basis for packet delivery on
the Internet.

IPX--Novell NetWare connection protocol.

ISDN (integrated services digital network)--Switched network providing
end-to-end digital connectivity for simultaneous transmission of voice and/or
data over multiple multiplexed communications channels and employing
transmission and out-of-band signaling protocols that conform to internationally
defined standards.

Kbps (thousands of bits per second)--A measurement of speed for digital
signal transmission expressed in thousands of bits per second.

LAN (local area network)--A private data communications network linking
a variety of data devices, such as computer terminals, personal computer
terminals, personal computers and microcomputers, all housed in a defined
building, plant or geographic area.

Local loop--That portion of the local telephone network that connects
the customer's premises to the local exchange provider's central office or
switching center. This includes all the facilities starting from the customer
premises interface which connects to the inside wiring and equipment at the
customer premises to a terminating point within the switching wire center.

Mbps (millions of bits per second)--A measurement of speed for digital
signal transmission expressed in millions of bits per second.

MDF (main distribution frame)--patch panel for connecting customer
equipment.

Multiplexing--An electronic or optical process that combines a large
number of lower-speed transmission lines into one high-speed line by splitting
the total available bandwidth of the high-speed line into narrower bands, or by
allotting a common channel to several different transmitting devices, one at in
sequence. Multiplexing devices are widely used in networks to improve efficiency
by concentrating traffic.

NACD (network automatic call distribution)--provides call queuing and
distribution functions.

A-3

<PAGE>

Number Portability--The ability of end users to keep their number when
changing operators.

Operating Support Systems--A general term encompassing the electronic
and manual systems used to fill orders for retail and wholesale telephone
services.

PBX (private branch exchange)--A switching system within an office
building that allows calls from outside to be routed directly to the individual
instead of through a central number. A PBX also allows for calling within an
office by way of four-digit extensions.

Platform--A group of unbundled network elements assembled and sold
together as a package.

POP (points of presence)--A location containing switches or other
networking equipment through which users connect to a network.

Protocol--A formal set of rules and conventions governing the
formatting and relative timing of message exchange between 2 communicating
points in a computer system or data communications network.

PSTN (public switched telephone network)--A telephone network which is
accessible by the public through private lines, wireless systems and pay phones.

PTT (Postal, Telephone and Telegraph Company)--The dominant carrier or
carriers in each Member State of the EU, until recently, often, but not always,
government-owned or protected.

Redundancy--Incorporation of duplicate components into a system so that
a duplicate component immediately takes over if the primary components fails.

Remote Access--A PBX feature that allows a user at an outside location
to access certain PBX features, such as call answering and advance calling, by
telephone. The user dials a direct distance dialing number to connect to the PBX
and then dials authorization and instruction codes to get the PBX services.

Reseller--A carrier that does not operate its own transmission
facilities (although it may own its own switches or other equipment), but
obtains communications services from another carrier for resale to the public
for profit.

Router--A device for interconnecting local area networks that have
dissimilar operating protocols but which share a common network interconnection
protocol.

Routing--Process of selecting the correct circuit path for a message.

SDH (synchronous digital hierarchy)--SDH is a set of standards for
optical communications transmission systems that define optical rates and
formats, signal characteristics, performance, management and maintenance
information to be embedded within the signals and the multiplexing techniques to
be employed in optical communications transmission systems. SDH facilitates the
interoperability of dissimilar vendors' equipment and benefits customers by
minimizing the equipment necessary for telecommunications applications. SDH also
improves the reliability of the local loop connecting customers' premises to the
local exchange provider, historically one of the weakest links in the service
delivery.

A-4

<PAGE>

SONET (synchronous optical network standard)--An ultra-high-speed,
fiber optic transmission standard for large-scale, fiber-based digital
transmission networks that use equipment from many different manufacturers. It
is the first telecom industry agreement on standardized interfaces between fiber
optic transmission systems and is well on the way to becoming an international
standard.

STM-1 (synchronous transport module)--SDH notation for data transport,
used for transport and connection providing capacity of 155 Mbps.

Switch--A sophisticated computer that accepts instructions from a
caller in the form of a telephone number. Like an address on an envelope, the
numbers tell the switch where to route the call. The switch opens or closes
circuits or selects the paths or circuits to be used for transmission of
information. Switching is a process of interconnecting circuits to form a
transmission path between users. Switches allow telecommunications service
providers to connect calls directly to their destination, while providing
advanced features and recording connection information for future billing.

T1 or T3--see "E1" or "E3."

Telephony--A generic term describing voice telecommunications.

Traffic--A generic term that includes any and all calls, messages and
data sent and received by means of telecommunications.

WAN (wide area network)--a large-scale, high speed communications
network used primarily for interconnecting local area and metro area networks
located in different cities, states or countries.

xDSL--a digital subscriber line providing high speed customer
connection over copper pairs.

A-5

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table sets forth the estimated expenses in connection with
the distribution of the securities being registered, other than underwriting
discounts and commissions.

Securities and Exchange Commission registration fee............. $ 45,084
Legal fees and expenses......................................... 100,000
Accounting fees and expenses.................................... 10,000
Miscellaneous expenses.......................................... 5,000
--------
Total.................................................. $160,084
========

Item 15. Indemnification of Directors and Officers

Netherlands law does not prohibit indemnification of directors, employees
and agents of corporations. The Company has obtained liability insurance for its
directors, employees and agents. Under Netherlands law, the legal reasonableness
and fairness test means that such indemnity cannot be relied on where the
individual has been grossly negligent, fraudulent or dishonest.

Item 16. Exhibits

The following exhibits are filed as part of this Registration Statement:

Exhibit
Number Description
------- -----------

4.1(1) Deposit Agreement among the Company, The Bank of New York, as
Depositary, and each holder from time to time of American
Depositary Receipts representing ordinary shares of the
Company
4.2(1) Warrant Agreement, dated May 27, 1998, between the Company
and United States Trust Company of New York as Warrant Agent
4.3(1) Warrant Agreement, dated December 3, 1998, between the
Company and United States Trust Company of New York as
Warrant Agent
5.1 Opinion of Shearman & Sterling regarding the legality of the
securities being registered
5.2 Opinion of Stibbe Simont Monahan Duhot regarding the legality
of the securities being registered
8.1 Opinion of Shearman & Sterling regarding tax matters
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)
23.2 Consent of Stibbe Simont Monahan Duhot (included in Exhibit
5.2)
23.3 Consent of Arthur Andersen
23.4 Consent of KPMG Accountants N.V.

II-1

<PAGE>

23.5 Consent of BDO Deutsche Warentruehand Aktiengesellschaft
Wirtschaftsprunfungsgesellschaft
24.1 Powers of attorney (included in the signature page hereof)
- ---------------

(1) Previously filed as an exhibit to the Company's Registration Statement on
Form F-1 (File number 333-81333) initially filed with the Securities and
Exchange Commission on June 23, 1999 and incorporated herein by reference.

Item 17. Undertakings

The undersigned registrant hereby undertakes:

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

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

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

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

Provided, however, that paragraphs (i) and (ii) above do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the 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.

II-2

<PAGE>

(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by ss.210.3-19 of this chapter at the start of any delayed offering or
throughout a continuous offering. Financial statements and information otherwise
required by Section 10(a)(3) of the Act need not be furnished, provided that the
registrant includes in the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph (a)(4) and other
information necessary to ensure that all other information in the prospectus is
at least as current as the date of those financial statements. Not withstanding
the foregoing, with respect to registration statements on Form F-3 (ss.239.33 of
this chapter), a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act or
ss.210.3-19 of this chapter if such financial statements and information are
contained in 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 the Form F-3.

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

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, 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 that Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any such 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-3

<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 a Form F-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Amsterdam, State of The Netherlands, on the 28th
day of January, 2000.

VersaTel Telecom International N.V.

By: /s/ R. Gary Mesch
----------------------------------
R. Gary Mesch
Managing Director

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 28th day of January, 2000. Each person whose
signature appears below hereby authorizes R. Gary Mesch and Raj Raithatha and
each of them, with full power of substitution, to execute in the name and on
behalf of such person any amendment or any post-effective amendment to this
Registration Statement and to file the same, with any exhibits thereto and other
documents in connection therewith, making such changes in this Registration
Statement as the Registrant deems appropriate, and appoints each of R. Gary
Mesch and Raj Raithatha and each of them, with full power of substitution,
attorney-in-fact to sign any amendment and any post-effective amendment to this
Registration Statement and to file the same, with any exhibits thereto and other
documents in connection therewith.

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

/s/ R. Gary Mesch
--------------------------------------- Managing Director (principal
R. Gary Mesch executive officer)

/s/ Raj Raithatha
--------------------------------------- Chief Financial Officer
Raj Raithatha (principal financial and
accounting officer)

/s/ Leopold W.A.M. van Doorne
--------------------------------------- Supervisory Director
Leopold W.A.M. van Doorne

/s/ Hans Wackwitz
--------------------------------------- Supervisory Director
Hans Wackwitz

/s/ James Meadows
--------------------------------------- Supervisory Director
James Meadows

/s/ Sander van Brummelen
--------------------------------------- Supervisory Director
Sander van Brummelen

II-4

<PAGE>

AUTHORIZED REPRESENTATIVE

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the undersigned in the capacity
indicated on the 28th day of January, 2000.

Name Capacity
---- --------
/s/ Donald J. Puglisi
--------------------------------------- Managing Director of Puglisi &
Donald J. Puglisi Associates

II-5

<PAGE>

EXHIBIT INDEX

Exhibit
Number Description
------- -----------

4.1 (1) Deposit Agreement among the Company, The Bank of New York, as
Depositary, and each holder from time to time of American
Depositary Receipts representing ordinary shares of the
Company

4.2 (1) Warrant Agreement, dated May 27, 1998, between the Company
and United States Trust Company of New York, as Warrant Agent

4.3 (1) Warrant Agreement, dated December 3, 1998, between the
Company and United States Trust Company of New York, as
Warrant Agent

5.1 Opinion of Shearman & Sterling regarding the legality of the
securities being registered

5.2 Opinion of Stibbe Simont Monahan Duhot regarding the legality
of the securities being registered

8.1 Opinion of Shearman & Sterling regarding tax matters

23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)

23.2 Consent of Stibbe Simont Monahan Duhot (included in Exhibit
5.2)

23.3 Consent of Arthur Andersen

23.4 Consent of KPMG Accountants N.V.

23.5 Consent of BDO Deutsche Warentruehand Aktiengesellschaft
Wirtschaftsprunfungsgesellschaft

24.1 Powers of attorney (included in the signature page hereof)

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

II-6

Exhibit 5.1

[LETTERHEAD OF SHEARMAN & STERLING]

(212) 848-4000

January 28, 2000

VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam - Zuidoost
The Netherlands

Ladies and Gentlemen:

We have acted as United States counsel to VersaTel Telecom
International N.V., a Netherlands company (the "Company"), in connection with
the filing by the Company under the Securities Act of 1933, as amended (the
"Act") of a registration statement on Form F-3 (the "Registration Statement")
with the United States Securities and Exchange Commission (the "Commission").
Pursuant to the Registration Statement, 333,060 warrants (the "Warrants"),
issued by the Company pursuant to warrant agreements dated May 27, 1998 and
December 3, 1998, respectively, each between the Company and The United States
Trust Company of New York, as warrant agent (the "Warrant Agreements"), and
4,478,698 ordinary shares of the Company (the "Ordinary Shares") are to be
registered under the Act by the Registration Statement. The Ordinary Shares
registered hereunder will be issued upon the exercise of the Warrants pursuant
to the terms of the Warrant Agreements.

In our capacity as United States counsel to the Company, we have
examined the Registration Statement, the Warrant Agreements and originals or
copies certified or otherwise identified to our satisfaction of such documents
as we have deemed necessary or appropriate to enable us to render the opinions
expressed below.

Based upon the foregoing, it is our opinion that, assuming due
authorization, execution and delivery by the Company under the laws of The
Netherlands, the Warrants have been duly executed and delivered by the Company
and insofar as New York law is concerned the Warrants constitute valid and
binding obligations of the Company, entitled to the benefits of the applicable
Warrant Agreement and are enforceable against the Company in accordance with
their

<PAGE>

VersaTel Telecom International N.V. 2 January 28, 2000

terms; except as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium and other similar laws relating to our affecting
enforcement of creditors' rights generally and by possible judicial action
giving effect to foreign governmental actions or foreign laws affecting
creditors' rights and except as enforcement thereof is subject to general
principles of equity including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether such
enforcement may be sought in a proceeding in equity or law).

We are attorneys admitted to practice law in the State of New York and
we do not express herein any opinion as to any matters governed by or involving
conclusions under the laws of any other jurisdiction other than the federal law
of the United States of America. In rendering the opinion expressed herein, we
have, with your approval, relied without independent investigation as to all
matters governed by or involving conclusions under the law of the Netherlands
upon the opinion (including the qualifications, assumptions and limitations
expressed therein) of Stibbe Simont Monahan Duhot, Netherlands counsel for the
Company, of even date herewith, a copy of which is attached hereto.

This opinion may be delivered to Stibbe Simont Monahan Duhot which may
rely on this opinion to the same extent as if such opinion were addressed to it.

We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" contained in the prospectus which is included in the Registration
Statement.

Very truly yours,

/s/ Shearman & Sterling

Shearman & Sterling
JDM/MTH/LSN

Exhibit 5.2

[STIBBE SIMONT MONAHAN DUHOT]

A.F.J.A. Leijten, advocaat
Direct telephone: +31 20-546 0409
Direct fax: +31 20-546 0715
Direct e-mail: [email protected]

VersaTel Telecom International N.V.
P.O. Box 22697
1100 DD Amsterdam

January 28, 2000

Dear Sirs,

We are acting as special legal counsel in the Netherlands on matters of Dutch
law to VersaTel Telecom International N.V. (the "Company") in connection with
the filing by the Company under the Securities Act of 1933, as amended (the
"Act") of a registration statement on Form F-3 (the "Registration Statement")
with the United States Securities and Exchange Commission ("SEC"). Pursuant to
the Registration Statement, 333,060 warrants to purchase ordinary shares of the
Company (the "Warrants") issued by the Company pursuant to warrant agreements
dated May 27, 1998 and December 3, 1998, respectively, each between the Company
and the United States Trust Company of New York, as warrant agent (the "Warrant
Agreements"), and 4,478,698 ordinary shares of the Company (the "Ordinary
Shares") are to be registered under the Act by the Registration Statement. The
Ordinary Shares registered hereunder will be issued upon the exercise of the
Warrants pursuant to the terms of the Warrant Agreements.

In rendering this opinion we have examined and relied upon the following
documents:

(1) a draft of the Registration Statement as confidentially submitted with
the SEC on 10 January 2000;

(2) copies of the Warrant Agreements;

(3) the minutes of the extraordinary general meetings of shareholders of the
Company held on March 16, 1998, April 17, 1998, May 19, 1998 and December
3, 1998 and the minutes of the Company's Supervisory Board meetings held
on March 31, 1998, May

<PAGE>

20, 1998, November 27, 1998 and December 3, 1998 (hereinafter jointly:
the "Resolutions");

(4) an on-line excerpt dated 27 January 2000 of the registration of the
Company in the Trade Register of the Chamber of Commerce of Amsterdam,
The Netherlands (the "Excerpt");

(5) a copy of the articles of association (statuten) of the Company as fully
restated and amended on 22 December 1999 and being in force on the date
hereof;

(6) a copy of the Deed of Incorporation of the Company (the "Deed of
Incorporation"), executed on 10 October 1995, before Mr Albert Peter van
Lidth de Jeude, civil-law notary, officiating in Amsterdam, The
Netherlands; and

(7) a company certificate of even date hereof attached hereto as Annex 1 (the
"Company Certificate");

and such other documents and such treaties, laws, rules, regulations, and the
like, as we have deemed necessary as a basis for the opinions hereinafter
expressed.

We have assumed:

(i) the genuineness of all signatures;

(ii) the authenticity of all agreements, certificates, instruments, and other
documents submitted to us as originals;

(iii) the conformity to the originals of all documents submitted to us as
copies;

(iv) that the contents of the Excerpt and the Company Certificate are true and
complete as of the date hereof; and

(v) that the Resolutions have not been revoked or rescinded and are in full
force on the date hereof.

Based on the foregoing and subject to any factual matters or documents not
disclosed to us in the course of our investigation, and subject to the
qualifications and limitations stated hereafter, we are of the opinion that:

A. the Company has been duly incorporated and is validly existing as a
"naamloze vennootschap" (company with limited liability) under the laws
of The Netherlands;

-2-
<PAGE>

B. the Warrants have been duly authorized by the Company for issuance, and
constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms;

C. the Ordinary Shares, when issued in conformity with Netherlands law and
the articles of association of the Company then prevailing and in
accordance with the terms and conditions contained in the Warrant
Agreements upon exercise of the Warrants, will be duly authorized and
validly issued in accordance with the laws of The Netherlands and the
provisions of the articles of association of the Company;

D. the choice of New York law as the law governing the Warrant Agreements is
valid and binding under the laws of The Netherlands, except (i) to the
extent that any term of the Warrant Agreements or any provision of New
York law applicable to the Warrant Agreements is manifestly incompatible
with the public policy (ordre public) of The Netherlands, and except (ii)
that a Dutch court may give effect to mandatory rules of the laws of
another jurisdiction with which the situation has a close connection, if
and insofar as, under the laws of that other jurisdiction those rules
must be applied, whatever the chosen law. However, in our opinion, (i)
there is nothing in Dutch law which would render any term of the Warrant
Agreements manifestly incompatible with the public policy (ordre public)
of The Netherlands, and (ii) no such mandatory rules of Dutch law are
applicable to the Warrant Agreements, except that the courts of The
Netherlands will apply Netherlands law as mandatorily applicable to all
issues related to the Warrants, to the extent that such issues would
involve the corporate organisation of the Company, regardless the chosen
law applicable to the Warrant Agreements.

In rendering the opinions expressed herein, we have, with your approval, relied
without independent investigation as to all matters governed by or involving
conclusions under the federal law of the United States of America and the law of
the State of New York, upon the opinion (including the qualifications,
assumptions and limitations expressed therein) of Shearman & Sterling, United
States counsel to the Company, of even date herewith.

In addition to the other assumptions and qualifications contained herein, this
opinion letter is further subject to the following qualifications:

1. since there is no treaty between the United States and The Netherlands
providing for the reciprocal recognition and enforcement of judgments,
United States judgments are not enforceable in The Netherlands. However,
a final judgment for the payment of money obtained in a United States
court, which is not subject to appeal or any other means of contestation
and is enforceable in the United States, would in principle be upheld by
a Netherlands court of competent jurisdiction when asked to render a
judgment in accordance with such final judgment by a United States court,
without substantative re-examination or relitigation on the merits of the
subject matter thereof; provided that such judgment has been rendered by
a court of competent jurisdiction, in accordance with rules of proper
procedure, that it has not

-3-

<PAGE>

been rendered in proceedings of a penal or revenue nature and that its
content and possible enforcement are not contrary to public policy or
public order of The Netherlands;

2. the opinions expressed above are limited by any bankruptcy, suspension of
payment (surseance van betaling), moratorium, reorganisation,
liquidation, suretyship or similar laws affecting the enforceability of
contractual rights generally in any applicable jurisdiction.

We express no opinion on any law other than the law of The Netherlands as it
currently stands and has been interpreted in published case law of the courts of
The Netherlands as per the date hereof. We express no opinion on any laws of the
European Communities (insofar as not implemented in The Netherlands in statutes
or other regulations of general application).

This opinion is strictly limited to the matters stated herein and may not be
read as extending by implication to any matters not specifically referred to.
Nothing in this opinion should be taken as expressing an opinion in respect of
any representations or warranties, or other information, or any other document
examined in connection with this opinion except as expressly confirmed herein.

We hereby consent to the use of this opinion as Exhibit 5.2 to the Registration
Statement and to the use of our name under the caption "Legal Matters" contained
in the prospectus which is included in the Registration Statement.

Yours sincerely,

/s/ A.F.J.A. Leijten /s/ M.W. Josephus Jitta

A.F.J.A. Leijten M.W. Josephus Jitta

-4-
<PAGE>

COMPANY CERTIFICATE

The undersigned, Jan van Berne, Corporate Secretary of VersaTel Telecom
International N.V. (the "Company") and authorised to represent the Company,
hereby declares the following to Stibbe Simont Monahan Duhot in order for them
to rely on the contents hereof in the framework of the legal opinion to be
issued by them to us in relation to the Registration Statement on Form-3
relating to the proposed offering of up to 4,478,698 Ordinary Shares and up to
333,060 Warrants to purchase Ordinary Shares:

1. The Company has not proposed and the shareholders of the Company have not
resolved to dissolve the Company;
2. The Company is not involved in legal proceedings which are aimed at the
dissolution of the Company;
3. The Company has not applied for suspension of payment and has not been
declared bankrupt;
4. Since the shareholders resolution of 17 December 1999 to amend the
Company's articles of association, no resolution to amend the articles of
association of the Company has been taken;
5. Prior to the shareholders resolution of 17 December 1999 to amend the
Company's articles of association, no resolution to amend the articles of
association of the Company has been taken, which has not been carried out
up to this date;

Signed by J.A. van Berne on January 27, 2000

/s/ Jan van Berne

Exhibit 8.1

[LETTERHEAD OF SHEARMAN & STERLING]

January 28, 2000

VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam - Zuidoost
The Netherlands

Ladies and Gentlemen:

We have acted as special United States tax counsel to VersaTel Telecom
International N.V., a Netherlands company (the "Company"), in connection with
the filing by the Company under the Securities Act of 1933, as amended (the
"Act"), of a registration statement dated January 27, 2000 on Form F-3 (the
"Registration Statement") with the United States Securities and Exchange
Commission (the "Commission"), relating to the registration of 4,478,698
ordinary shares of the Company, par value NLG 0.05 per share (the "Shares"), in
the form of Shares or American Depositary Shares (the "ADSs") and 333,060
warrants to purchase Shares (the "Warrants"), as set forth in the prospectus
dated January 27, 2000 contained in the Registration Statement (the
"Prospectus").

On the basis of the foregoing and upon consideration of applicable
current law, we are of the opinion that, subject to the limitations stated
therein, the discussion under the caption "Tax Considerations --- U.S. Federal
Income Tax Considerations" in the Prospectus accurately describes the material
U.S. federal income tax consequences that may be relevant to the purchase,
ownership and disposition of Shares, ADSs or Warrants.

In rendering our opinion, we have examined (i) the Registration
Statement, (ii) the Prospectus, and (iii) such other documents and material as
we have considered necessary or appropriate for purposes of this opinion
(together, the "Documents"). This opinion is premised, among other things, on
the initial and continuing accuracy of the facts, representations, covenants and
other information set forth in the Documents and assumes that the transactions
contemplated by the Documents will be consummated in accordance with the terms
thereof.

<PAGE>

This opinion is based on presently applicable United States federal
income tax law and no assurance can be given that future legislative, judicial
or administrative developments will not adversely affect the conclusions
expressed herein. Moreover, in rendering this opinion, we undertake no
responsibility to advise you of any new developments in the application or
interpretation of United States federal income tax law and this opinion may not
be relied upon to the extent that there is any new development in such law as it
relates to the conclusions expressed herein.

We have not considered and do not express any opinion other than as
expressly set forth above with respect to United States federal income tax. Nor
have we addressed the tax consequences, if any, under the laws of any state,
locality or foreign jurisdiction.

We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the reference to us in the
Registration Statement. In giving such consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act, and the rules and regulations of the Commission promulgated thereunder.

Very truly yours,

/s/ Shearman & Sterling

Shearman & Sterling

DRM/KY

EXHIBIT 23.3

CONSENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of VersaTel Telecom International
N.V. on Form F-3 of our report dated February 16, 1999 included in VersaTel
Telecom International N.V.'s Annual Report on Form 20-F filed with the
Securities and Exchange Commission on March 30, 1999 and to all references to
our Firm included in VersaTel Telecom International N.V.'s prospectus, which is
part of such Registration Statement. It should be noted that we have not audited
any financial statements of VersaTel Telecom International N.V. subsequent to
December 31, 1998.

/s/ Arthur Andersen
---------------------------------
Arthur Andersen

Amsterdam, The Netherlands
January 28, 2000

EXHIBIT 23.4

CONSENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference of our report dated March 15,
1999 with respect to Svianed B.V., included in VersaTel Telecom International
N.V.'s Report on Form 6-K filed with the Securities and Exchange Commission on
June 21, 1999, in the Registration Statement on Form F-3 of VersaTel Telecom
International N.V. and to the reference to our firm under the heading "Experts"
in the prospectus.

/s/ KPMG Accountants N.V.
---------------------------------
KPMG Accountants N.V.

Amsterdam, The Netherlands
January 28, 2000

EXHIBIT 23.5

CONSENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference of our report dated February
19, 1999 with respect to VEW TELNET Gesellschaft fur Telekommunikation und
Netzdienste mbH, included in VersaTel Telecom International N.V.'s Report on
Form 6-K filed with the Securities and Exchange Commission on December 7, 1999,
in the Registration Statement on Form F-3 of VersaTel Telecom International N.V.
and to the reference to our firm under the heading "Experts" in the prospectus.

/s/ BDO Deutsche Warentruehand Aktiengesellschaft
Wirtschaftsprunfungsgesellschaft
-------------------------------------------------
BDO Deutsche Warentruehand Aktiengesellschaft
Wirtschaftsprunfungsgesellschaft

Dusseldorf, Germany
January 28, 2000