PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 19, 1998)
[GRAPHIC OMITTED]
$200,000,000 AGGREGATE PRINCIPAL
AMOUNT OF 5% CONVERTIBLE
SUBORDINATED NOTES DUE 2004
7,852,375 SHARES
OF COMMON STOCK
This Prospectus Supplement and the accompanying Prospectus relate to the
offer and sale from time to time by the holders named herein and therein or by
their transferees, pledgees, donees, or successors (collectively, the "Selling
Holders") of up to $200,000,000 aggregate principal amount of 5% Convertible
Subordinated Notes due 2004 (the "Notes") of Tel-Save Holdings, Inc. (the
"Company") and up to 7,852,375 shares of common stock, par value $.01 per share,
of the Company (the "Common Stock"), issuable upon the conversion of the Notes
in full (the "Shares" and, together with the Notes, the "Securities"). The
Company will receive no part of the proceeds of the sales made under this
Prospectus Supplement or the accompanying Prospectus. On August 24, 1998, the
last reported sale price for the Common Stock on the Nasdaq National Market was
$13 1/4.
----------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
"RISK FACTORS" BEGINNING ON PAGE 3 OF THE ACCOMPANYING PROSPECTUS.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI-
TIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus Supplement
is August 27, 1998.
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The information in this Prospectus Supplement is qualified in its entirety
by the more detailed information and consolidated financial statements and notes
thereto appearing or incorporated by reference in the accompanying Prospectus.
Prior to making an investment decision with respect to the Securities offered by
this Prospectus Supplement and the accompanying Prospectus, prospective
investors should consider carefully the information contained and incorporated
by reference in this Prospectus Supplement and the accompanying Prospectus.
Capitalized terms used herein and not defined have the meaning assigned to
them in the accompanying Prospectus.
SELLING HOLDERS
The following table supplements the table appearing on pages 34 and 35 of
the accompanying Prospectus and sets forth information with respect to Selling
Holders not identified in the accompanying Prospectus. The name of each Selling
Holder identified below is accompanied by the amount of Notes beneficially owned
by such Selling Holder that may be offered pursuant to this Prospectus
Supplement and the accompanying Prospectus. Such information was obtained from
the Selling Holders between July 11, 1998 and the date hereof unless otherwise
noted. The Shares into which the Notes are convertible are also offered pursuant
to this Prospectus Supplement and the accompanying Prospectus, and the formula
for conversion is set forth in the accompanying Prospectus under "DESCRIPTION OF
THE NOTES -- Conversion." To the Company's knowledge, except as noted below,
none of the Selling Holders identified below has, or within the past three years
has had, any position, office or other material relationship with the Company or
any of its predecessors or affiliates. Because the Selling Holders may offer all
or some portion of the Notes or Shares issuable upon conversion thereof pursuant
to this Prospectus Supplement and the accompanying Prospectus, no estimate can
be given as to the amount of the Notes or Shares issuable upon conversion
thereof that will be held by the Selling Holders upon termination of any such
sales. In addition, the Selling Holders identified below may have sold,
transferred or otherwise disposed of all or a portion of their Notes, since the
date on which they provided the information regarding the Notes, in transactions
exempt from the registration requirements of the Securities Act.
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<CAPTION>
PRINCIPAL
PRINCIPAL AMOUNT OF
AMOUNT OF NOTES NOTES COVERED
BENEFICIALLY BY THIS
SELLING HOLDER NAME OWNED PROSPECTUS
- ----------------------------------------------------------------------- ----------------- --------------
<S> <C> <C>
Bank of America Convertible Securities Fund DTC #2130 Bank of
America Personal Trust ............................................... $ 170,000 $ 170,000
Commonwealth Life Insurance -- Company Stock
TRAC (TEAMSTERS I)(1)(4) ............................................. $ 567,000 $ 567,000
Deeprock & Co.(1)(4) .................................................. $ 433,000 $ 433,000
Donaldson, Lufkin & Jenrette Securities Corp. ......................... $3,800,000 $3,800,000
Glacier Water Services, Inc.(4) ....................................... $ 500,000 $ 500,000
MainStay Convertible Fund(1)(4) ....................................... $3,375,000 $3,375,000
MainStay VP Convertible Portfolio(4) .................................. $1,000,000 $1,000,000
New York Life Separate Account #7 ..................................... $1,800,000 $1,800,000
Pacific Horizon Capital Income Fund DTC #901 Bank of New York ......... $1,000,000 $1,000,000
Pacific Innovations Trust Capital Income Fund DTC #2616 PNC Bank,
National Association ................................................. $ 230,000 $ 230,000
Raytheon Company Master Pension Trust(4) .............................. $1,170,000 $1,170,000
SBC Warburg Dillon Reed Inc.(4) ....................................... $1,250,000 $1,250,000
Shepherd Investments International Ltd.(1)(4) ......................... $1,250,000 $1,250,000
Smith Barney Inc.(1)(3) ............................................... $4,204,000 $4,204,000
Societe Generale Securities Corp.(4) .................................. $4,400,000 $4,400,000
Stark International(1)(4) ............................................. $1,250,000 $1,250,000
</TABLE>
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(1) The Notes listed here are in addition to those listed in the Prospectus
dated May 19, 1998.
(2) Boston Partners Bond Fund, Mellon Trust, and Orange County Employee
Retirement System were mistakenly listed as Selling Holders in the
Prospectus dated May 19, 1998.
S-2
<PAGE>
(3) Smith Barney Inc. was an Initial Purchaser of the Notes. In December 1997,
Smith Barney Inc. merged with Salomon Brothers Inc., which has performed
advisory services for the Company and had credit relationships with the
Company.
(4) Information was provided by the Selling Holder between May 20, 1998 and
July 10, 1998.
The foregoing list of Selling Holders, and the list of Selling Holders
pages 34 and 35 of the accompanying Prospectus, may not include holders of
additional aggregate principal amount of Notes which have been registered for
future sale under the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus are parts. Additional Selling Holders will be
identified, together with the amount of Securities to be offered by such
holders, in one or more additional supplements to the accompanying Prospectus.
Any such supplement will be circulated with the accompanying Prospectus and will
be deemed to be a part thereof as of the date of such supplement. Only the
Selling Holders listed in the accompanying Prospectus or any supplement thereto,
including this Prospectus Supplement, (or the transferees, pledgees or donees of
such Selling Holders, or their successors) will be entitled to offer their
Securities by means of the accompanying Prospectus, as supplemented from time to
time.
S-3
<PAGE>
<TABLE>
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<S> <C>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS $200,000,000 AGGREGATE PRINCIPAL
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE AMOUNT OF 5% CONVERTIBLE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR SUBORDINATED NOTES DUE 2004
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR 7,852,375 SHARES
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN OF COMMON STOCK
AUTHORIZED BY THE COMPANY OR ANY OF ITS AGENTS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH
INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM, IT IS
UNLAWFUL TO MAKE SUCH SOLICITATION.
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TABLE OF CONTENTS [GRAPHIC OMITTED]
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PAGE --------------------------
---- PROSPECTUS SUPPLEMENT
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PROSPECTUS SUPPLEMENT --------------------------
Selling Holders .............................. S-2
PROSPECTUS
Available Information ........................ 2
Incorporation of Certain Documents by
Reference ................................. 3
Risk Factors ................................. 4
The Company .................................. 11
Description of Capital Stock ................. 11
Description of the Notes ..................... 11
Book-Entry System; Delivery and Form ......... 24
Certain U.S. Federal Income Tax Conse-
quences ................................... 29
Use of Proceeds .............................. 33
Selling Holders .............................. 33
Plan of Distribution ......................... 36
Legal Matters ................................ 36
Experts ...................................... 37 Dated August 27, 1998
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