AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 2000.

REGISTRATION NO. 333-44058
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

AMENDMENT NO. 1 TO FORM S-1 ON

FORM S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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

CARRIER1 INTERNATIONAL S.A.
(Exact name of Registrant as specified in its charter)

LUXEMBOURG 4813 98-0199626
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)

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

ROUTE D'ARLON 3
L-8009 STRASSEN, LUXEMBOURG
(011) (41-1) 297-2600

(Address, including ZIP code, and telephone number,
including area code, of Registrant's principal executive offices)

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

KEES VAN OPHEM, ESQ.
VICE PRESIDENT, PURCHASE AND GENERAL COUNSEL
CARRIER1 INTERNATIONAL GMBH
MILITARSTRASSE 36
CH-8004 ZURICH, SWITZERLAND
(011) (41-1) 297-2600

(Name, address, including ZIP code, and telephone number,
including area code, of Registrant's agent for service)

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

COPY TO:

PAUL D. BRUSILOFF, ESQ.
DEBEVOISE & PLIMPTON
TOWER 42 INTERNATIONAL FINANCIAL CENTER
OLD BROAD STREET
LONDON EC2N 1HQ
(4420) 7786-9000

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Approximate date of commencement of proposed sale to the public: From time
to time or at one time after the effective date of this registration statement
as determined by the registrants.

If the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/

If this Form is filed to register additional securities of an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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SUBJECT TO COMPLETION, DATED OCTOBER 20, 2000.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT, OF WHICH THIS
PROSPECTUS IS PART, 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 STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.

PROSPECTUS

CARRIER1 INTERNATIONAL S.A.

1,685,813 SHARES
IN THE FORM OF SHARES OR AMERICAN DEPOSITARY SHARES

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

This prospectus relates to the registration of the offer and sale of up to
1,685,813 common shares of Carrier1 International S.A., par value $2.00 per
share, that are issuable upon exercise of warrants held by the selling
shareholders named in this prospectus. The shares may be offered for sale in the
form of common shares or American Depositary Shares (ADSs).

The offering price for the shares that may be sold by the selling
shareholders may be the market price for our common shares prevailing at the
time of the sale, a price related to the prevailing market price, a negotiated
price or such other price as the selling shareholders determine from time to
time.

We will not receive any proceeds from the sales of the shares by the selling
shareholders. We will receive up to $2,096,874 upon the exercise of the dollar
warrants and up to $1,274,752 upon exercise of the euro warrants by the selling
shareholders, based on an exercise price of $2.00 per share.

Our common shares are traded on the Neuer Markt segment of the Frankfurt
Stock Exchange under the symbol "CJN". On October 18, 2000, the last reported
sale price of our common shares was E25.40. ADSs, each representing 0.2 of our
common shares, are traded on the Nasdaq National Market under the symbol "CONE".
On October 18, 2000, the last reported sale price of our ADSs was $4.1875.

The offering by the selling shareholders is not being underwritten.

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INVESTING IN THE SHARES OR ADSS INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 6.

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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.

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THE DATE OF THIS PROSPECTUS IS OCTOBER 20, 2000.

TABLE OF CONTENTS

PAGE
--------

SUMMARY..................................................... 2
RISK FACTORS................................................ 6
USE OF PROCEEDS............................................. 17
SELECTED CONSOLIDATED FINANCIAL DATA........................ 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 20
SELLING SHAREHOLDERS........................................ 34
DESCRIPTION OF SHARE CAPITAL................................ 37
DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS................. 42
TAXATION.................................................... 49
PLAN OF DISTRIBUTION........................................ 54
LEGAL MATTERS............................................... 55
EXPERTS..................................................... 55
WHERE YOU CAN FIND MORE INFORMATION......................... 55

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When we refer to "Carrier1 International," we are referring to the holding
company Carrier1 International S.A., the issuer of the shares and ADSs. When we
refer to ourselves generally or to "Carrier1," we are referring to Carrier1
International and its subsidiaries and their predecessors, except where the
context otherwise requires.

You should rely only on the information contained in this prospectus. We
have not authorized anyone to give you any information or to make any
representations about the transactions we discuss in this prospectus other than
those contained in this prospectus. This prospectus is not an offer to sell or a
solicitation of an offer to buy securities anywhere or to anyone where or to
whom an offer or sale of securities is not permitted under applicable law. The
delivery of this prospectus or the securities offered by this prospectus does
not, under any circumstances, mean that there has not been a change in our
affairs since the date of this prospectus. It also does not mean that the
information in this prospectus is correct after this date.
------------------------

CERTAIN REGULATORY ISSUES

For investors outside the United States: No action has been or will be taken
in any jurisdiction by us or any selling shareholder that would permit a public
offering of the shares or ADSs or possession or distribution of this prospectus
in any jurisdiction where action for that purpose is required, other than in the
United States. Persons into whose possession this prospectus comes are required
by us and any selling shareholder to inform themselves about, and to observe any
restrictions as to, the offering of the shares and ADSs and the distribution of
this prospectus.

The distribution of this document, and the offering of the shares and ADSs
in the United Kingdom is restricted. This document has not been drawn up in
accordance with the United Kingdom's Public Offers of Securities Regulations
1995 and a copy has not been delivered to the Registrar of Companies in England
and Wales for registration. Accordingly, the shares and ADSs may not be offered
or sold in the United Kingdom other than to persons whose ordinary activities
involve them in the acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances that do not constitute an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995.

Neither this prospectus, nor any other document issued in connection with
the offering of the shares and ADSs, may be issued or passed on to any person in
the United Kingdom unless that person is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1996 (as amended) or is a person to whom such document may otherwise be lawfully
issued or passed on. This prospectus is only directed at such persons in the UK
and it would be imprudent for persons of any other kind to respond to it.

The securities may not be offered, sold, transferred or delivered in or from
the Netherlands as part of their initial distribution or at any time thereafter,
directly or indirectly, other than to individuals or legal entities who or which
trade or invest in securities in the conduct of a business or profession, which
includes, but is not limited to, banks, brokers, dealers, insurance companies,
pension funds, other institutional investors and commercial enterprises which
regularly, as an ancillary activity, invest in securities.

This prospectus is being distributed on the basis that each person in the
Netherlands to whom this prospectus is issued is reasonably believed to be a
person falling within the exemption described in the foregoing paragraph.
Accordingly, by accepting delivery of this prospectus the recipient warrants and
acknowledges that it is a person falling within any such exemption.

The offering of the shares and ADSs in the Republic of Italy has not been
registered with the COMMISSIONE NAZIONALE PER LE SOCIETA E LA BORSA ("CONSOB")
pursuant to Italian securities legislation. The distribution of this prospectus
in the Republic of Italy is restricted to persons who qualify as professional
investors under applicable Italian securities regulation.

PRESENTATION OF FINANCIAL INFORMATION

We report our financial statements in U.S. dollars and prepare our financial
statements in accordance with accounting principles generally accepted in the
United States. We have adopted a fiscal year end of December 31.

In this prospectus, except where otherwise indicated, references to:

1) "$" or "U.S. dollars" are to the lawful currency of the United States,

2) "E" or "euro" are to the single currency at the start of the third stage
of European economic and monetary union on January 1, 1999, pursuant to
the treaty establishing the European Economic Community, as amended by
the treaty on European Union, signed at Maastricht on February 7, 1992,
and

3) "DM" or "Deutsche Mark" are to the lawful currency of Germany.

SUMMARY

THIS IS ONLY A SUMMARY. IT HIGHLIGHTS BASIC INFORMATION ABOUT CARRIER1. IT
DOES NOT CONTAIN ALL OF THE INFORMATION IMPORTANT TO YOU. YOU SHOULD READ THE
MORE DETAILED INFORMATION, INCLUDING THE SECTION ENTITLED "RISK FACTORS" AND OUR
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES, APPEARING ELSEWHERE AND
INCORPORATED BY REFERENCE IN THIS PROSPECTUS.

CARRIER1

We are a rapidly expanding European facilities-based provider of voice,
Internet and bandwidth and related telecommunications services. We offer these
services primarily to other telecommunications service providers. In
March 1998, our experienced management team and Providence Equity Partners
formed Carrier1 to capitalize on the significant opportunities emerging for
facilities-based carriers in Europe's rapidly liberalizing telecommunications
markets. By September 1998, we had deployed our initial network and commenced
selling services. By June 30, 2000, we had 352 contracts with voice customers
and 154 contracts with Internet and bandwidth customers.

We are developing an extensive city-to-city European fiber optic network
accessing and linking key population centers. In select European cities, we are
also developing:

- intra-city networks, and

- data centers for housing and managing equipment.

We expect these intra-city networks to give us faster, lower cost access to
customers, with better quality control. We also expect to bundle and cross-sell
our intra-city network and data center capabilities with our other services.

As of June 30, 2000, we offered voice, Internet and bandwidth and related
services in over 20 cities and 12 countries.

We intend to continue rapidly expanding our network in a cost-effective
manner by building, buying or swapping network assets.

In addition, we and several other parties have formed Digiplex, a joint
venture to build data centers in which we can house and manage mission-critical
data and networking equipment both for ourselves and for our customers.

In furtherance of our business strategy, we regularly explore possible
strategic partnerships, acquisitions, business combinations and other similar
transactions.

* * *

Carrier1 International is a holding company and renders its services
indirectly through subsidiaries primarily located in various Western European
countries. Its registered office is located at L-8009, Strassen, Route d'Arlon
3, Luxembourg. Executive offices of Carrier1 International GmbH, its principal
management services subsidiary, are located at Militarstrasse 36, CH-8004
Zurich, Switzerland. Its phone number is 011-41-1-297-2600.

SUMMARY OF THE OFFERING BY SELLING SHAREHOLDERS

Unless otherwise indicated, the information throughout this prospectus
assumes that all outstanding euro warrants and dollar warrants are exercised and
the shares sold.

Shares offered by selling
shareholders............................ Up to 1,685,813 shares, in the form of shares or, in the
United States, ADSs

Shares to be outstanding after exercise of
all euro warrants and dollar warrants... 43,406,991 shares, not including the exercise of any
outstanding options or other warrants. As of June 30,
2000 we had outstanding options which, if fully
exercised, would allow the holders to purchase an
aggregate of 2,612,718 shares.

The ADSs.................................. For shares sold in the form of ADSs, each ADS represents
0.2 shares.

Dividend policy........................... We have never declared or paid dividends, and we do not
expect to do so in the foreseeable future.

Use of proceeds........................... We will not receive any of the proceeds from the sale of
the shares by the selling shareholders.

Neuer Markt symbol........................ "CJN" for the shares.

Nasdaq National Market symbol............. "CONE" for the ADSs.

RISK FACTORS

See "Risk Factors," immediately following this Summary, for a discussion of
risk factors relating to us, our business and an investment in the shares and
ADSs.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table sets forth our summary consolidated financial data as of
and for the period from February 20, 1998, our inception, to December 31, 1998,
as of and for the year ended December 31, 1999, as of and for the six months
ended June 30, 1999 (unaudited), and as of and for the six months ended
June 30, 2000 (unaudited). The summary consolidated financial data as of and for
the period from our inception to December 31, 1998, and as of and for the year
ended December 31, 1999, were derived from our consolidated financial statements
which were audited by Deloitte & Touche Experta AG, independent auditors. The
data set forth below is not necessarily indicative of the results of future
operations and should be read in conjunction with our consolidated financial
statements and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Amounts are presented in thousands of U.S. dollars, except share data.

SIX MONTHS SIX MONTHS YEAR ENDED INCEPTION TO
ENDED ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, 2000 JUNE 30, 1999 1999 1998
------------- ------------- ------------ ------------
(UNAUDITED) (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenues............................................... $ 108,798 $ 32,487 $ 97,117 $ 2,792
Cost of services (exclusive of amounts shown separately
below)............................................... 113,003 39,361 113,809 11,669
Selling, general and administrative expenses........... 16,803 6,465 18,369 8,977
Depreciation and amortization.......................... 13,379 3,634 13,849 1,409
----------- ----------- ----------- ----------
Loss from operations................................... (34,387) (16,973) (48,910) (19,263)
Other income (expense):
Interest income...................................... 9,090 3,078 5,859 92
Interest expense..................................... (19,625) (12,605) (29,475) (11)
Other expense, net................................... (6) (413) (555) --
Currency exchange loss, net.......................... (15,825) (7,149) (15,418) (53)
----------- ----------- ----------- ----------
Loss before income tax benefit......................... (60,753) (34,062) (88,499) (19,235)
Income tax benefit, net of valuation allowance(1)...... -- -- -- --
----------- ----------- ----------- ----------
Net loss............................................... $ (60,753) $ (34,062) $ (88,499) $ (19,235)
=========== =========== =========== ==========
Weighted average number of shares outstanding(2)....... 39,047,000 27,618,000 29,752,000 7,367,000
Net loss per share (basic)............................. $ (1.56) $ (1.23) $ (2.97) $ (2.61)
Net loss per share (diluted)(3)........................ (1.56) (1.23) (2.97) (2.61)
OTHER FINANCIAL DATA:
EBITDA(4).............................................. $ (21,008) $ (13,339) $ (35,061) $ (17,854)
Capital expenditures(5)................................ 76,183 55,239 195,376 37,168
Net cash used in operating activities.................. (22,927) (52,410) (78,359) (14,441)
Net cash used in investing activities.................. (92,291) (186,952) (253,247) (19,866)
Net cash provided by financing activities.............. 590,199 280,429 353,450 37,770
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 508,814 $ 48,105 $ 28,504 $ 4,184
Restricted cash........................................ 21,202 2,815 5,512 1,518
Restricted investments(6).............................. 47,246 135,486 90,177 --
Total assets........................................... 1,008,039 325,289 437,655 51,434
Total long-term debt................................... 241,333 253,979 337,756 --
Shareholders' equity (deficit)......................... 585,672 12,946 (34,509) 19,189

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

(1) Due to our limited operating history, we were unable to conclude that
realization of our deferred tax assets in the near future was more likely
than not. Accordingly, a valuation allowance was recorded to offset the full
amount of such assets. See notes to our consolidated financial statements.

(2) See notes to our consolidated financial statements.

(3) Potential dilutive securities have been excluded from the computation for
the period from our inception to December 31, 1998 for the year ended
December 31, 1999 and for the six month periods ended June 30, 1999 and
2000, as their effect is antidilutive. See notes to our consolidated
financial statements.

(4) EBITDA stands for earnings before interest, taxes, depreciation,
amortization, foreign currency exchange gains or losses and other income
(expense).
EBITDA is used by management and certain investors as an indicator of a
company's ability to service debt and to satisfy its capital requirements.
However, EBITDA is not a measure of financial performance under generally
accepted accounting principles and should not be considered as an
alternative to cash flows from operating, investing or financing activities
as a measure of liquidity or an alternative to net income as indications of
our operating performance or any other measure of performance derived under
generally accepted accounting principles. EBITDA as presented may not be
comparable to other similarly titled measures of other companies or to
similarly titled measures as calculated under our debt agreements.

(5) Consists of purchases of property and equipment, and an investment in a
joint venture.

(6) Reflects:

(a) the remaining portion of the net proceeds of our 13 1/4% senior notes
which was used to purchase government securities to secure and fund the
first five scheduled interest payments on the notes, and

(b) certain amounts used to collateralize letters of credit relating to the
construction of the German network.

See notes to our consolidated financial statements.

RISK FACTORS

YOU SHOULD CONSIDER CAREFULLY THE RISKS DESCRIBED BELOW AND OTHER
INFORMATION IN THIS PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION.

IF ANY OF THE FOLLOWING EVENTS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL
CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY AFFECTED, AND
THE TRADING PRICE OF OUR SHARES AND ADSS COULD DECLINE. IN THAT EVENT, YOU MAY
LOSE ALL OR PART OF YOUR INVESTMENT.

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO EVALUATE OUR
PERFORMANCE.

We formed our business in March 1998, and we commenced commercial operations
on September 1, 1998. Accordingly, you have limited historical operating and
financial information on which to base your evaluation of our performance.

WE EXPECT TO EXPERIENCE NET LOSSES AND NEGATIVE CASH FLOW.

Our continued business development and network deployment will require that
we incur substantial capital expenditures. To date, we have experienced net
losses and, generally, negative cash flow from operating activities. We expect
to incur net losses and negative cash flow from operating activities through at
least 2002. Whether or when we will generate positive cash flow from operating
activities will depend on a number of financial, competitive, regulatory,
technical and other factors, many of which are beyond our control. We cannot
assure you that we will achieve profitability or positive cash flow.

IF WE ARE UNABLE TO IMPROVE AND ADAPT OUR OPERATIONS AND SYSTEMS AS WE GROW, WE
COULD LOSE CUSTOMERS AND REVENUES.

We expect our business to continue to grow rapidly, which may significantly
strain our customer support, sales and marketing, accounting and administrative
resources, network operation and management and billing systems. Such a strain
on our operational and administrative capabilities could adversely affect the
quality of our services and our ability to collect revenues. To manage our
growth effectively, we will have to further enhance the efficiency of our
operational support and other back office systems and procedures, and of our
financial systems and controls. We will also have to expand and train our
employee base to handle the increased volume and complexities of our business.
We cannot assure you that we will maintain adequate internal operating,
administrative and financial systems, procedures and controls, or obtain, train
and adequately manage sufficient personnel to keep pace with our growth.

In addition, if we fail to project traffic volume and routing preferences
correctly, or to determine the optimal means of expanding the network, we could
lose customers, make inefficient use of the network, and have higher costs and
lower profit margins.

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY.

At least initially, our revenues are dependent upon a relatively small
number of significant customers and contracts. The loss or addition of one or
more of these customers or contracts could cause significant fluctuations in our
financial performance. In addition, the significant expenses resulting from the
expansion of our network and services are likely to lead to operating results
that vary significantly from quarter to quarter.

OUR ABILITY TO GENERATE CASH TO SERVICE OUR SUBSTANTIAL CAPITAL NEEDS DEPENDS ON
MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL.

We will require significant capital to fund our capital expenditures and
working capital needs, as well as our debt service requirements and cash flow
deficits.

We expect to incur significant capital expenditures in connection with the
expansion of our network. The actual amounts and timing of our future capital
requirements may vary significantly from our estimates. The demand for our
services, regulatory developments and the competitive environment of the
telecommunications industry could cause our capital needs to exceed our current
expectations. In that case, we may need to seek additional capital sooner than
we expect, and such additional financing may not be available on acceptable
terms or at all. Moreover, our substantial existing indebtedness and any
additional indebtedness we may incur may adversely affect our ability to raise
additional funds. A lack of financing may require us to delay or abandon plans
for deploying parts of our network, which in turn could increase our costs and
hinder our ability to swap or sell transmission capacity to other
telecommunications entities.

OUR INDEBTEDNESS AND OUR ABILITY TO INCUR MORE INDEBTEDNESS COULD PREVENT US
FROM FULFILLING OUR OBLIGATIONS UNDER OUR EXISTING DEBT OBLIGATIONS.

The following table shows certain important credit statistics at June 30,
2000.

Total long-term debt........................................ $241,333
Shareholders' equity........................................ 585,672
Total long-term debt as a percentage of total
capitalization............................................ 29%

Our debt instruments limit, but do not prohibit, us from incurring more
indebtedness. Moreover, our debt instruments permit us to incur an unlimited
amount of indebtedness to finance the acquisition of equipment, inventory and
network assets.

If we cannot generate sufficient cash flow from operations to meet our debt
service requirements, we may be required to refinance our indebtedness. Our
ability to obtain such financing will depend on our financial condition at the
time, the restrictions in the agreements governing our indebtedness and other
factors, including general market and economic conditions. If such refinancing
were not possible, we could be forced to dispose of assets at unfavorable
prices. In addition, we could default on our debt obligations.

OUR DEBT AGREEMENTS IMPOSE OPERATING AND FINANCIAL RESTRICTIONS, WHICH MAY
PREVENT US FROM CAPITALIZING ON BUSINESS OPPORTUNITIES.

Our existing debt agreements impose significant operating and financial
restrictions on us. The terms of any other financings we may obtain may do so as
well. These restrictions may substantially limit or prohibit us from taking
various actions, including incurring additional debt, making investments, paying
dividends to our shareholders, creating liens, selling assets, engaging in
mergers, consolidations or other business combinations, repurchasing or
redeeming our shares, or otherwise capitalizing on business opportunities.
Failure to comply with the covenants and restrictions in our indentures or other
financing agreements could trigger defaults under such agreements even if we are
able to pay our debt.

In addition, the indentures governing our 13 1/4% senior notes provide that
upon a "change of control," each note holder will have the right to require us
to purchase all or a portion of the holder's notes at a purchase price of 101%
of the principal amount, together with accrued and unpaid interest, if any, to
the redemption date. We may be unable to incur the additional indebtedness or
otherwise obtain the additional funds necessary to satisfy that obligation,
which could have a material adverse effect on us. This provision could also
delay, deter or prevent a change of control transaction.

IF WE ARE UNABLE TO EXTEND OUR NETWORK IN THE MANNER WE HAVE PLANNED, OUR
OPERATING REVENUES OR GROSS MARGINS COULD BE ADVERSELY AFFECTED.

Our success will depend on our ability to continue to deploy our network on
a timely basis. A number of factors could hinder the deployment of our network.
These factors include cost overruns, the unavailability of additional capital,
strikes, shortages, delays in obtaining governmental or other third-party

approvals, other construction delays, natural disasters and other casualties,
delays in the deployment or delivery of network capacity of others that we have
arranged to acquire, and other events that we cannot foresee. We have
experienced some construction delays in connection with the planned completion
of our Amsterdam network, and some cost overruns and construction delays in
connection with the completion of portions of our German network.

Delays in the continued deployment of our network could:

- limit the geographic scope of our services,

- prevent us from providing services on a cost-effective basis,

- reduce the number of customers we can attract and the volume of traffic we
carry,

- force us to rely more heavily on refiling or reselling for terminating our
voice traffic, increasing termination costs and making our quality control
more difficult, and

- affect our ability to obtain lower cost capacity on other networks by
swapping excess capacity or cause us to incur penalties for untimely
delivery of promised capacity or could result in renegotiation (as has
occurred on one occasion) or termination of our swaps.

Any one of these results could prevent us from increasing our operating
revenues or could adversely impact gross margins.

EUROPEAN USE OF THE INTERNET, ELECTRONIC COMMERCE AND THE DEMAND FOR BANDWIDTH
INTENSIVE APPLICATIONS MAY NOT INCREASE AS SUBSTANTIALLY AS WE EXPECT, WHICH
WOULD LIMIT DEMAND FOR OUR SERVICES AND LIMIT OUR ABILITY TO INCREASE OUR
REVENUES.

Our business plan assumes that European use of the Internet, electronic
commerce and other bandwidth intensive applications will increase substantially
in the next few years, in a manner similar to the increased use in the United
States market in the past few years. If the use of bandwidth intensive
applications in Europe does not increase as anticipated, demand for some of our
services, including our Internet and bandwidth services, will be lower than we
currently anticipate and our ability to generate revenues will be adversely
affected. We cannot assure you that demand for our services will grow in
accordance with our expectations. Reduced demand for our services will have a
negative effect on our business.

WE HAVE NO CONTROL OVER THIRD PARTIES ON WHOM WE RELY FOR THE OPERATION OR
MAINTENANCE OF PORTIONS OF OUR NETWORK, AND IF THEY OR THEIR FACILITIES DO NOT
PERFORM OR FUNCTION ADEQUATELY, OUR NETWORK MAY BE IMPAIRED.

Our success is dependent on the technical operation of our network and on
the management of traffic volumes and route selections over the network. We
depend on parties from whom we have leased or acquired a right to use
transmission capacity to provide or maintain certain of the network's circuits.
Shortfalls in maintenance or other failure to perform by any of these parties
could lead to transmission failure or additional costs. Our network is also
subject to other risks outside our control, such as the risk of damage from
fire, power loss, natural disasters and general transmission failures caused by
these or other factors.

WE DEPEND ON OUR HIGHLY TRAINED EXECUTIVE OFFICERS AND EMPLOYEES. ANY DIFFICULTY
IN RETAINING OUR CURRENT EMPLOYEES OR IN HIRING NEW EMPLOYEES WOULD ADVERSELY
AFFECT OUR ABILITY TO OPERATE OUR BUSINESS.

Our operations are managed by a small number of key executive officers,
including our Chief Executive Officer, Stig Johansson. In addition, our business
functions are managed by a relatively small number of key employees. The loss of
any of these individuals could have a material adverse effect on us.

Our success depends on our ability to continue to attract, recruit and retain
sufficient qualified personnel as we grow. Competition for qualified personnel
in Europe is intense, and there is generally a limited number of persons with
the requisite experience in the sectors in which we operate. We cannot assure
you that we will be able to retain senior management, integrate new managers or
recruit qualified personnel in the future.

A FAILURE TO ENTER INTO OR MAINTAIN ADEQUATE INTERCONNECTION AND PEERING
ARRANGEMENTS COULD CAUSE US TO INCUR HIGHER TERMINATION COSTS THAN COMPETITORS
WHO HAVE SUCH ARRANGEMENTS.

One of the most cost-effective ways for an international operator to achieve
voice termination and access in a country in which it has a point of presence is
to negotiate an interconnection agreement with the national incumbent telephone
operator. Failure to maintain adequate interconnection arrangements would cause
us to incur higher voice termination and access costs, which could have a
material adverse effect on our ability to compete with carriers that have a more
effective system of interconnection agreements for the countries in which they
operate.

A substantial portion of our revenue from our voice products is based on
mobile traffic. We have arrangements in place for termination of mobile traffic.
However, direct operating agreements with mobile operators tend to be expensive
and refiling of mobile traffic generally does not meet our quality targets.
Although we currently have a number of direct agreements with mobile operators
and quality refilers in place, we cannot guarantee that we can maintain these
agreements or enter into similar agreements of adequate price levels, or at all,
to support the expansion of our mobile traffic.

Our ability to maintain arrangements for the free exchange of data with
European and United States ISPs that have traffic volumes roughly equivalent to
ours will also affect our costs. To the extent we do not maintain these peering
arrangements, we are required to pay a transit fee in order to exchange Internet
traffic. Our inability to maintain sufficient peering arrangements would keep
our Internet termination costs high and could limit our ability to compete
effectively with other European Internet backbone providers that have lower
transit costs than we do.

IF WE LOST ONE OR MORE OF OUR GOVERNMENT LICENSES OR BECAME SUBJECT TO MORE
ONEROUS GOVERNMENT REGULATIONS, WE COULD BE ADVERSELY AFFECTED.

We are subject to varying degrees of regulation in each of the jurisdictions
in which we provide services. Local laws and regulations, and their
interpretation, differ significantly among those jurisdictions. Future
regulatory, judicial and legislative changes may have a material adverse effect
on the operation of our business.

National regulatory frameworks that are fully consistent with the policies
and requirements of the European Commission and the World Trade Organization
have only recently been, or are still being, put in place in many European Union
member states. These nations are still providing for and adapting to a
liberalized telecommunications market. As a result, in these markets, we and
other new entrants may encounter more protracted and difficult procedures to
obtain licenses and negotiate interconnection agreements.

Our operations are dependent on licenses that we acquire from governmental
authorities in each jurisdiction in which we operate. These licenses generally
contain clauses pursuant to which we may be fined or our license may be revoked
in certain circumstances. Such revocation may be on short notice, at times as
short as 30 days' written notice to us. The revocation of any of our licenses
may cause us to lose favorable interconnection rates or, in some cases, force us
to stop operating in the relevant country.

THE ADOPTION OR MODIFICATION OF LAWS OR REGULATIONS RELATING TO THE INTERNET
COULD ADVERSELY AFFECT OUR BUSINESS.

The adoption or modification of laws or regulations relating to the Internet
could adversely affect our business. The European Union has recently enacted its
own privacy regulations. The law of the Internet, however, remains largely
unsettled, even in areas where there has been some legislative action. It may
take years to determine whether and how existing laws, such as those governing
intellectual property, privacy, libel and taxation, apply to the Internet. In
addition, the growth and development of the market for online commerce may
prompt calls for more stringent consumer protection laws that may impose
additional burdens on companies conducting business online.

THE TELECOMMUNICATIONS INDUSTRY IS HIGHLY COMPETITIVE AND WE MAY BE UNABLE TO
COMPETE SUCCESSFULLY.

The European telecommunications market is highly competitive, and
liberalization is rendering it increasingly more so. The opening of the market
to new service providers, combined with technological advances, has resulted in
significant reductions in retail and wholesale prices for voice services. We
expect prices to continue to decline. Decreasing prices are also narrowing gross
profit margins on long distance voice traffic. Our ability to compete
successfully in this environment will significantly depend on our ability to
generate high traffic volumes from our customers while keeping our costs of
services low and to effectively bundle and cross-sell the services we offer to
our customers. We cannot assure you that we will be able to do so.

We expect price decreases in the European Internet market over the next few
years as competition increases. We cannot assure you that Internet service
prices will not decline more quickly than our Internet transmission or
termination costs, which could have a material adverse effect on our gross
profit margins.

As a result of the construction of European fiber optic networks by our
competitors, the price of wholesale bandwidth capacity is declining rapidly. The
decline in market prices has lowered the price at which we are able to sell our
voice and Internet and bandwidth products, including dark fiber, that is, fiber
that has been laid but not "lit" with transmission electronics. We also expect
technological advances that greatly increase the capacity of fiber optic cable
to exacerbate downward price pressure.

Other competitive factors include the following:

- Certain voice customers may redirect their traffic to another carrier on
the basis of even small differences in price.

- Carriers that have a more developed network than ours may lower prices so
as to increase volume and maximize utilization rates.

OUR COMPETITORS MAY HAVE MORE EXPERIENCE, SUPERIOR OPERATIONAL ECONOMIES OR
GREATER RESOURCES, PLACING US AT A COST AND PRICE DISADVANTAGE.

We compete with a number of incumbent telephone operators, who generally
control access to local networks and have significant operational economies,
including large national networks and existing operating agreements with other
incumbents. Moreover, national regulatory authorities have, in some instances,
shown reluctance to adopt policies that would result in increased competition
for the local incumbent. In addition, incumbents may be more likely to provide
transmission capacity on favorable terms and direct excess traffic to their
related carriers than to us.

In Internet transport services, our main competitors have an established
customer base and either a significant infrastructure or strong connectivity to
the United States through various peering arrangements. We believe that, if the
quality of the service is consistently high, Internet transport and data center
customers will typically renew their contracts because it is costly and
technically burdensome to switch providers, which could impede our ability to
attract new customers.

Although we believe that there has been and is currently strong demand for
data centers in the European market, there are numerous new entrants with which
we compete in specific markets. Many of our competitors have been established
providers of data center services in Europe for longer than we have. There can
be no assurance that new entrants like us will be able to effectively compete.

We also compete with companies that are building European networks to the
extent these companies offer services to our target customers. Some of these
companies have more experience operating a network than our company does. We may
not be able to deploy a European network as quickly or run it as efficiently as
some or all of these competitors, which could impair our ability to compete with
them.

Many of our competitors have greater financial resources and would be in a
better position than we would be to withstand the adverse effect on gross profit
margins caused by price decreases, particularly those competitors that own more
infrastructure and thus may enjoy a lower cost base than we do. Unless and until
we are able to reduce our cost base, we may not be able to compete on the basis
of price if market prices are reduced below a certain level. Inability to price
services competitively may in turn cause us to lose customers.

WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT COST-EFFECTIVE TRANSMISSION CAPACITY,
WHICH COULD DELAY OUR ABILITY TO PENETRATE CERTAIN MARKETS OR CARRY A HIGHER
VOLUME OF TRAFFIC IN MARKETS IN WHICH WE ALREADY OPERATE.

We lease or have purchased rights to use transmission capacity from others,
and we have swapped capacity on our own German network for transmission capacity
on other carriers' networks. We therefore currently depend on other parties for
much of our transmission capacity. We cannot assure you that we will always be
able to obtain capacity where and when we need it at an acceptable price or at
all. Any failure to obtain such capacity could delay our ability to penetrate
certain markets or to carry a higher volume of traffic in the markets in which
we already operate. Furthermore, to the extent some of our capacity suppliers
begin to compete with us, those suppliers may no longer be willing to provide us
with capacity.

Until our owned network is fully operational, we will need to continue to
lease capacity. We will therefore, in the short term, continue to have
transmission costs that are higher than our target cost levels and higher than
the costs of our competitors who own transmission infrastructure. We cannot
assure you that the cost of obtaining capacity will decrease. In addition, if
our owned network is not completed on a timely basis, we will need to rely on
leased lines to a greater extent than currently anticipated. If we cannot
purchase additional capacity at our target costs for additional needs we may
have in the future, we may have to seek to meet those needs by building
additional capacity, for which we would need to incur additional capital
expenditures. It is also possible that additional capacity would not be
available for purchase at the time that we need it.

IF ESTIMATES WE HAVE MADE ARE NOT CORRECT, WE MAY HAVE TOO MUCH OR TOO LITTLE
CAPACITY.

We rely on other carriers to provide certain voice termination services.
Negotiation of refile or resale agreements with such carriers involves making
estimates of the future calling patterns and traffic levels of our customers.
Underestimation of traffic levels or failure to estimate calling patterns
correctly could lead to:

- a shortage of capacity, requiring us to either lease more capacity or
reroute calls to other carriers at a higher termination cost,

- higher termination costs, as we may have to use additional, higher priced,
refilers or resellers, and

- a possibly lower quality of service, as we may not be carrying the traffic
over our own network.

Our leased capacity costs are fixed monthly payments based on the capacity
made available to us. If our traffic volumes decrease, or do not grow as
expected, the resulting idle capacity will increase our per unit costs.

WE MAY HAVE DIFFICULTY ENHANCING OUR SOPHISTICATED BILLING, CUSTOMER AND
INFORMATION SYSTEMS. ANY SUCH DIFFICULTIES COULD DELAY OR DISRUPT OUR ABILITY TO
SERVICE OR BILL OUR CUSTOMERS.

Sophisticated information systems are vital to our growth and our ability
to:

- manage and monitor traffic along our network,

- track service provisioning, traffic faults and repairs,

- effect best choice routing,

- achieve operating efficiencies,

- monitor costs,

- bill and receive payments from customers, and

- reduce credit exposure.

The billing and information systems we have acquired will require
enhancements and ongoing investments, particularly as traffic volume increases.
We may encounter difficulties in enhancing our systems or integrating new
technology into our systems in a timely and cost-effective manner. Such
difficulties could have a material adverse effect on our ability to operate
efficiently and to provide adequate customer service.

RAPID CHANGE IN OUR INDUSTRY COULD REQUIRE US TO EXPEND SUBSTANTIAL COSTS TO
IMPLEMENT NEW TECHNOLOGIES. WE COULD LOSE CUSTOMERS IF OUR COMPETITORS IMPLEMENT
NEW TECHNOLOGIES BEFORE WE DO.

The European telecommunications industry is changing rapidly due to, among
other things:

- market liberalization,

- significant technological advancements,

- introductions of new products and services utilizing new technologies,

- increased availability of transmission capacity,

- expansion of telecommunications infrastructure, and

- increased use of the Internet for voice and data transmission.

If the growth we anticipate in the demand for telecommunications services
were not to occur or we were precluded from servicing this demand, we might not
be able to generate sufficient revenues in the next few years to fund our
working capital requirements.

To compete effectively, we must anticipate and adapt to rapid technological
changes and offer, on a timely basis, competitively priced services that meet
evolving industry standards and customer preferences. We may choose new
technologies that prove to be inadequate or incompatible with technologies of
our customers, providers of transmission capacity or other carriers. As new
technologies develop, we may be forced to implement such new technologies at
substantial cost to remain competitive. In addition, competitors may implement
new technologies before we do, allowing such competitors to provide lower priced
or enhanced services and superior quality compared to those we provide. Such a
development could have a material adverse effect on our ability to compete,
particularly because we seek to distinguish ourselves on the basis of the
quality of our services.

CUSTOMERS THAT ARE PRICE SENSITIVE MAY DIVERT THEIR TRAFFIC TO ANOTHER CARRIER
BASED ON SMALL PRICE CHANGES, RESULTING IN FLUCTUATIONS OR LOSS IN OUR REVENUE.

Voice customers often maintain relationships with a number of
telecommunications providers, and our contracts with our voice customers
generally do not impose on customers minimum usage requirements. Furthermore,
basic voice services are not highly differentiated. As a result, most customers
are price sensitive and certain customers may divert their traffic to another
carrier based solely on small price changes. These diversions can result in
large and abrupt fluctuations in revenues. Similarly, while we seek to provide a
higher quality of service than our competitors, there is somewhat limited scope
for differentiation. There can be no assurance that small variations between our
prices and those of other carriers will not cause our customers to divert their
traffic or choose other carriers.

Our contracts with our voice customers require us to carry their voice
traffic at a contractually fixed price per minute that can only be changed upon
seven or thirty days' notice. Similarly, we have contracted with some Internet
customers to carry their Internet traffic at a fixed monthly rate that can only
be changed upon six or twelve months' notice. If we were forced to carry voice
or Internet traffic over a higher-cost route due to capacity and quality
constraints, our gross profit margins would be reduced.

WE RELY ON A SMALL NUMBER OF SIGNIFICANT CUSTOMERS, AND THE LOSS OF ANY SINGLE
CUSTOMER COULD THEREFORE HAVE A MATERIAL ADVERSE EFFECT ON OUR REVENUES.

We currently depend on a small number of significant customers for our
revenues. In the six-month period ended June 30, 2000, for example, one customer
accounted for approximately 8% of our revenue. The loss of any single customer
could therefore have a material adverse effect on us. In addition, certain
customers may be unprofitable or only marginally profitable, resulting in a
higher risk of delinquency or nonpayment. Recently, the Internet services
industry has experienced increased merger and consolidation activity among ISPs
and Internet backbone providers. The consolidation of ISPs may reduce the
customer base for our Internet services.

WE WILL ENGAGE IN JOINT VENTURES, WHICH ARE ACCOMPANIED BY INHERENT RISKS.

We constructed the German network with Viatel and Metromedia. We are
investing in data center facilities through a joint venture. We may enter into
future joint ventures with other companies. All joint ventures are accompanied
by risks. These risks include:

- the lack of complete control over the relevant project,

- diversion of our resources and management time,

- inconsistent economic, business or legal interests or objectives among
joint venture partners,

- the possibility that a joint venture partner will default in connection
with a capital contribution or other obligation, thereby forcing us to
fulfill such obligation, and

- difficulty maintaining uniform standards, controls, procedures and
policies.

THE COSTS AND DIFFICULTIES OF ACQUIRING AND INTEGRATING BUSINESSES OR ENGAGING
IN OTHER STRATEGIC TRANSACTIONS COULD IMPEDE OUR FUTURE GROWTH AND ADVERSELY
AFFECT OUR COMPETITIVENESS.

We intend to evaluate, and may enter into, acquisition or other strategic
transactions in order to expand our business or enhance our product portfolio.
We may acquire interests in businesses in countries in which we do not currently
operate. Any such acquisitions or other strategic transactions may expose us to
the following risks:

- the difficulty of identifying appropriate strategic transaction candidates
in the countries in which we do business or intend to do business,

- the difficulty of assimilating the operations and personnel of the
acquired entities,

- the potential disruption to our ongoing business caused by senior
management's focus on the strategic transactions,

- our failure to successfully incorporate licensed or acquired technology
into our network and product offerings,

- the failure to maintain uniform standards, controls, procedures and
policies, and

- the impairment of relationships with employees and customers as a result
of changes in management and ownership.

We cannot assure you that we would be successful in overcoming these risks,
and our failure to overcome these risks could have a negative effect on our
business. Additionally, in connection with an acquisition, we will generally
record goodwill that must be amortized and which would reduce our earnings per
share.

In addition, in connection with the listing of our common shares on the
Neuer Markt segment of the Frankfurt Stock Exchange, we were required to agree
to comply with the German take-over code. Our compliance with the German
take-over code could have the effect of delaying or preventing a tender offer or
takeover. If we intend to merge with or acquire a publicly-traded German stock
corporation, we must comply with notice, disclosure and other regulatory
requirements.

WE ARE CONTROLLED BY PARTIES WHOSE INTERESTS MAY NOT BE ALIGNED WITH OTHER
HOLDERS OF OUR SECURITIES.

Funds managed by Providence Equity Partners Inc. alone, and funds managed by
Providence and funds managed by Primus Venture Partners Inc. together,
indirectly control us. Such ownership may present conflicts of interest between
the Providence or Primus funds and us. They may pursue or cause us to pursue
transactions that could enhance their controlling interest, or permit them to
realize upon their investment, in a manner that is not in the interests of
minority shareholders.

Providence and Primus, or their affiliates, currently have significant
investments in other telecommunications companies, and may in the future invest
in other entities engaged in the telecommunications business, some of which may
compete with us. Providence and Primus are under no obligation to bring us any
investment or business opportunities of which they are aware, even if
opportunities are within our objectives. Conflicts may also arise in the
negotiation or enforcement of arrangements we may enter into with entities in
which Providence or Primus, or their affiliates, have an interest.

THE INTERNATIONAL SCOPE OF OUR OPERATIONS MAY ADVERSELY AFFECT OUR BUSINESS.

We may face certain risks because we conduct an international business
including:

- regulatory restrictions or prohibitions on the provision of our services,

- tariffs and other trade barriers,

- longer payment cycles,

- problems in collecting accounts receivable,

- political risks, and

- potentially adverse tax consequences of operating in multiple
jurisdictions.

In addition, an adverse change in laws or administrative practices in
countries within which we operate could have a material adverse effect on us.

We are exposed to fluctuations in foreign currencies, as our revenues,
costs, assets and liabilities are denominated in multiple local currencies. Our
payment obligations on our debt are denominated in U.S. dollars and euros, but
our revenues are denominated in other currencies as well. Any appreciation in
the value of the U.S. dollar or the euro relative to such other currencies could
decrease our revenues, increase our debt and interest payments and, therefore,
materially adversely affect our operating margins. Fluctuations in foreign
currencies may also make period to period comparisons of our results of
operations difficult.

CONVERSION TO THE EURO MAY RESULT IN INCREASED COSTS AND POSSIBLE ACCOUNTING,
BILLING AND LOGISTICAL DIFFICULTIES IN OPERATING OUR BUSINESS.

From January 1, 1999, until January 1, 2002, the euro will exist in
electronic form only and the participating countries' individual currencies will
persist in tangible form as legal tender. During the transition period, everyone
must manage transactions in both the euro and the participating countries'
respective individual currencies. While we believe that our systems have not
been and will not be adversely impacted by the introduction of the euro, there
can be no assurance that we will not incur increased operational costs or have
to modify or upgrade our information systems in order to respond to possible
accounting, billing and other logistical problems resulting from the conversion
to the euro. In addition, there can be no assurance that our third-party
suppliers and customers will be able to successfully implement the necessary
protocols.

WE MAY BE ADVERSELY AFFECTED BY YEAR 2000 ISSUES.

Computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000, which could result in
miscalculations or a major system failure. We cannot assure you that all our
systems will continue to function adequately although as of June 30, 2000, we
have not experienced any significant problems or failures and we do not expect
to experience any in the future. A failure of our computer systems or other
systems could have a material adverse effect on us. Any failure of the computer
systems of our vendors, suppliers or customers could materially and adversely
affect our ability to operate our network and retain customers and could impose
significant costs on us.

ENFORCING JUDGMENTS AGAINST US MAY REQUIRE COMPLIANCE WITH NON-U.S. LAW.

Most assets of Carrier1 International and its subsidiaries are located
outside the United States. You will need to comply with foreign laws to enforce
judgments obtained in a U.S. court against our assets, including to foreclose
upon such assets. In addition, it may not be possible for you to effect service
of process within the United States upon us, or to enforce against us U.S. court
judgments predicated upon U.S. federal securities laws.

VOLATILITY IN THE PRICE OF OUR COMMON SHARES COULD RESULT IN A LOWER TRADING
PRICE THAN YOUR PURCHASE PRICE.

The market price of our common shares and ADSs has fluctuated since our
shares and ADSs began to trade publicly in March, 2000. The market price of the
shares and ADSs may continue to fluctuate significantly in response to a number
of factors, some of which are beyond our control, including:

- quarterly variations in our operating results,

- changes in financial estimates by securities analysts,

- changes in market valuations of telecommunications companies,

- announcements by us, or our competitors, of significant contracts,
acquisitions, strategic partnerships, joint ventures, business
combinations, or capital commitments,

- loss of a major customer,

- additions or departures of key personnel, and

- sales of shares or ADSs.

THE POSSIBLE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT OUR
SHAREHOLDERS.

Historically, the market prices for securities of emerging companies in the
telecommunications industry have been highly volatile. In addition, the stock
market has experienced volatility that has affected the market prices of equity
securities of many companies and that often has been unrelated to the operating
performance of those companies. These broad market fluctuations may adversely
affect the market price of our shares or ADSs. Furthermore, following periods of
volatility in the market price of a company's securities, shareholders of the
company have often instituted securities class action litigation against the
company. Any similar litigation against us could result in substantial costs and
a diversion of management's attention and resources, which could adversely
affect the conduct of our business.

FUTURE SALES OF SUBSTANTIAL NUMBERS OF SHARES COULD ADVERSELY AFFECT THE MARKET
PRICE OF THE SHARES.

Of the 41,721,178 shares outstanding as of August 1, 2000, approximately
55.7% are held indirectly by funds managed by Providence and approximately 11.1%
are held indirectly by funds managed by Primus. Subject to some exceptions, the
investment vehicle for the Providence and Primus funds and each of our executive
officers and directors agreed not to sell any shares until August 23, 2000
without the prior written consent of Morgan Stanley & Co. International Limited
and Salomon Brothers International Limited or certain of their affiliates. After
that date, they may sell their shares as permitted by the securityholders'
agreement, U.S. securities laws and other applicable laws. In addition, as of
August 1, 2000, 2,612,718 shares were issuable upon the exercise of outstanding
options. We expect to grant additional options to employees in the future.

Future sales of a large block of our shares, or the perception that these
sales could occur, could cause a decrease in the market price of our shares or
ADSs.

OUR COMMITMENTS TO ISSUE ADDITIONAL COMMON SHARES MAY ADVERSELY AFFECT THE
MARKET PRICE OF OUR COMMON SHARES AND MAY IMPAIR OUR ABILITY TO RAISE CAPITAL.

We currently have outstanding commitments in the form of warrants and
options to issue a substantial number of new common shares. The shares subject
to these issuance commitments, to some degree, will be issued in transactions
registered with the Securities and Exchange Commission and thus will be freely
tradable. In other instances, these shares are subject to grants of registration
rights that, if and when exercised, would result in those shares becoming freely
tradable. We have also granted registration rights with respect to a number of
our outstanding common shares. The exercise of registration rights by persons
holding those shares would permit those persons to sell those shares without
regard to the limitations of Rule 144 under the Securities Act of 1933. An
increase in the number of common shares that will become available for sale in
the public market may adversely affect the market price of our common shares
and, as a result, could impair our ability to raise additional capital through
the sale of our equity securities.

EVENTS DESCRIBED BY OUR FORWARD-LOOKING STATEMENTS MAY NOT OCCUR.

This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events and on industry publications. We have not independently verified
the data derived from industry publications.

Our forward-looking statements are subject to risks, uncertainties and
assumptions including, among other things, those discussed above as well as
under "Management's Discussion and Analysis of Financial

Condition and Results of Operations." Examples of forward-looking statements
include all statements that are not historical in nature, including statements
regarding:

- operations and prospects,

- technical capabilities,

- funding needs and financing sources,

- network deployment plans,

- scheduled and future regulatory approvals,

- expected financial position,

- business and financial plans,

- markets, including the future growth in the European telecommunications
market,

- expected characteristics of competing systems, and

- expected actions of third parties such as equipment suppliers and joint
venture partners.

In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur. Additional risks, and
uncertainties and assumptions that we may currently deem immaterial or that are
not presently known to us could also cause the forward-looking events discussed
in this prospectus not to occur. We do not intend to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

THESE RISKS AND UNCERTAINTIES ARE NOT THE ONLY ONES FACING US.

Additional risks and uncertainties not presently known to us or that we may
currently deem immaterial may also impair our business operations.

USE OF PROCEEDS

We will not receive any proceeds from the offering of the shares by the
selling shareholders. We expect that the net proceeds to us from the exercise of
warrants by the selling shareholders, based on an exercise price of $2.00 per
share, will be approximately $3.37 million, assuming all warrants are exercised.
We intend to use the net proceeds of the exercise of the warrants for general
corporate purposes.

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected consolidated financial data as
of and for the period from our inception to December 31, 1998, as of and for the
year ended December 31, 1999, and as of and for the six months ended June 30,
1999 (unaudited), and as of and for the six months ended June 30, 2000
(unaudited). The selected consolidated financial data as of and for the period
from our inception to December 31, 1998, and as of and for the year ended
December 31, 1999, were derived from our consolidated financial statements which
were audited by Deloitte & Touche Experta AG, independent auditors. The
information set forth below is not necessarily indicative of the results of
future operations and should be read in conjunction with our consolidated
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

Amounts are presented in thousands of U.S. dollars, except share data.

SIX MONTHS SIX MONTHS YEAR ENDED INCEPTION TO
ENDED ENDED DECEMBER 31, DECEMBER 31,
JUNE 30, 2000 JUNE 30, 1999 1999 1998
-------------- -------------- ------------- -------------
(UNAUDITED) (UNAUDITED)

Weighted average number of shares outstanding(2)....... 39,047,000 27,618,000 29,752,000 7,367,000
Net loss per share (basic)............................. $ (1.56) $ (1.23) $ (2.97) $ (2.61)
Net loss per share (diluted)(3)........................ (1.56) (1.23) (2.97) (2.61)

OTHER FINANCIAL DATA:
EBITDA(4).............................................. $ (21,008) $ (13,339) $ (35,061) $ (17,854)
Capital expenditures(5)................................ 76,183 55,239 195,376 37,168
Net cash used in operating activities.................. (22,927) (52,410) (78,359) (14,441)
Net cash used in investing activities.................. (92,291) (186,952) (253,247) (19,866)
Net cash provided by financing activities.............. 590,199 280,429 353,450 37,770
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 508,814 $ 48,105 $ 28,504 $ 4,184
Restricted cash........................................ 21,202 2,815 5,512 1,518
Restricted investments(6).............................. 47,246 135,486 90,177 --
Total assets........................................... 1,008,039 325,289 437,655 51,434
Total long-term debt................................... 241,333 253,979 337,756 --
Shareholders' equity (deficit)......................... 585,672 12,946 (34,509) 19,189

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

(2) See notes to our consolidated financial statements.

(3) Potential dilutive securities have been excluded from the computation for
the period from our inception to December 31, 1998, for the year ended
December 31, 1999 and for the six month periods ended June 30, 1999 and
2000, as their effect is antidilutive. See notes to our consolidated
financial statements.

(4) EBITDA stands for earnings before interest, taxes, depreciation,
amortization, foreign currency exchange gains or losses and other income
(expense).

EBITDA is used by management and certain investors as an indicator of a
company's ability to service debt and to satisfy its capital requirements.
However, EBITDA is not a measure of financial performance under generally
accepted accounting principles and should not be considered as an
alternative to cash flows from operating, investing or financing activities
as a measure of liquidity or an alternative to net income as indications of
our operating performance or any other measure of performance derived under
generally accepted accounting principles. EBITDA as presented may not be
comparable to other similarly titled measures of other companies or to
similarly titled measures as calculated under our debt agreements.

(5) Consists of purchases of property and equipment and investment in joint
venture.

(6) Reflects:

(b) certain amounts used to collateralize letters of credit relating to the
construction of the German network.

See notes to our consolidated financial statements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR FINANCIAL CONDITION AND RESULTS
OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL
STATEMENTS AND RELATED NOTES. CERTAIN INFORMATION CONTAINED IN THE DISCUSSION
AND ANALYSIS OR SET FORTH ELSEWHERE IN THIS PROSPECTUS, INCLUDING INFORMATION
WITH RESPECT TO OUR PLANS AND STRATEGY FOR OUR BUSINESS AND RELATED FINANCING,
INCLUDES FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK AND UNCERTAINTIES, AS
DETAILED IN THE "RISK FACTORS" SECTION OF THIS PROSPECTUS AND IN OUR MOST RECENT
FORM 10-K AS OF DECEMBER 31, 1999. SEE "RISK FACTORS" FOR A DISCUSSION OF
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE
RESULTS DESCRIBED IN OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS CONTAINED IN
THIS PROSPECTUS.

OVERVIEW

We are developing an extensive city-to-city European fiber optic network
accessing and linking key population centers. In select European cities, we are
also developing intra-city networks and data centers for housing and managing
equipment. We expect these intra-city networks to give us faster, lower cost
access to customers, with better quality control. We also expect to bundle and
cross-sell our intra-city network and data center capabilities with our other
services. We intend to continue rapidly expanding our network in a
cost-effective manner by building, buying or swapping network assets.

To date, we have experienced net losses and, generally, negative cash flow
from operating activities. In the second quarter of 2000, we had positive cash
flow from operating activities of approximately $26.7 million. From our
inception to September 1998, our principal activities included developing our
business plans, obtaining governmental authorizations and licenses, acquiring
equipment and facilities, designing and implementing our voice and Internet
networks, hiring management and other key personnel, developing, acquiring and
integrating information and operational support systems and operational
procedures, negotiating interconnection agreements and negotiating and executing
customer service agreements. In September 1998, we commenced the roll-out of our
services. We expect to continue to generate net losses and negative cash flow
through at least 2002 as we expand our operations. Whether or when we will
generate positive cash flow from operating activities will depend on a number of
financial, competitive, regulatory, technical and other factors. See
"--Liquidity and Capital Resources."

Although our management is highly experienced in the wholesale
telecommunications business, our company itself has a limited operating history.
Prospective investors therefore have limited operating and financial information
about our company upon which to base an evaluation of our performance and an
investment in our securities.

Our consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States of America. We
have adopted a fiscal year end of December 31.

FACTORS AFFECTING FUTURE OPERATIONS

REVENUES

We expect to generate most of our revenues through the sale of voice and
Internet and bandwidth services to other telecommunications service providers.
We record revenues from the sale of voice and

Internet services at the time of customer usage. Revenue from bandwidth IRU
sales is recognized in accordance with the Financial Accounting Standards Board
(the "FASB") interpretation of accounting rules generally on a monthly basis
over contract life, typically over 15 to 20 years. For contracts that satisfy
sales-type lease accounting, revenues are recognized at the time of sale. Our
agreements with our voice customers are typically for an initial term of twelve
months and will be renewed automatically unless cancelled. They employ
usage-based pricing and do not provide for minimum volume commitments by the
customer. We generate a steady stream of voice traffic by providing high-quality
service and superior customer support. Our Internet and bandwidth services are
generally charged at a flat monthly rate, regardless of usage, based on the line
speed and level of performance made available to the customer. We also offer
usage-based Internet pricing for our Internet transport services, "Internet
Exchange Connect", "Euro Transit" and "Global Transit", only in combination with
Internet contracts that have a fee-based component that guarantees minimum
revenue, in order to encourage usage of our network services by our Internet
customers. Our agreements with our Internet transport customers are generally
for a minimum term of twelve months. Currently, our bandwidth services are
typically also for an initial term of twelve months, although we expect to be
able to offer more flexible pricing alternatives to bandwidth customers in the
future. We believe that, if the quality of the service is consistently high,
Internet transport customers will typically increase the amount of capacity they
purchase from us. We believe that they will also generally renew their contracts
because it is costly and technically burdensome to switch carriers.

Our services are priced competitively and we emphasize quality and customer
support. The rates charged to voice and Internet and bandwidth customers are
subject to change from time to time. Our revenue per billable minute for voice
traffic in the second quarter of 2000 increased compared with the second quarter
1999 as a result of a more favorable traffic and services mix. The revenue per
billable minute for voice traffic decreased in the second quarter of 2000
compared with the first quarter 2000. We generally expect to experience, and
have planned for, declining revenue per billable minute for voice traffic and
declining revenue per Mb for Internet traffic and bandwidth, in part as a result
of increasing competition.

As a result of the construction of European fiber optic networks by our
competitors, the price of bandwidth capacity is declining rapidly, which has
lowered the price at which we are able to sell our Internet and bandwidth
products, including dark fiber. We also expect technological advances that
greatly increase the capacity of fiber optic cable to exacerbate downward price
pressure. We anticipate, however, that the incremental costs of lighting dark
fiber with transmission equipment will remain significant and will therefore
serve as an economic restraint to increases in available managed bandwidth
capacity at low marginal costs. Furthermore, we believe that price decreases
will promote demand for high volumes and opportunities for volume related
revenue increases. The impact on our results of operations from price decreases
has been in prior quarters, and we believe it will continue to be, at least
partially offset by decreases in our cost of providing services, largely due to
our increased use of our own fiber and our consequent decreased termination
costs, and increases in our voice and Internet traffic volumes. In addition, we
believe that our ability to bundle and cross-sell network services allows us to
compete effectively and to protect our business, in part, against the impact of
these price decreases.

Our focus on providing services to other operators results in us having
substantially fewer customers than a carrier in the mass retail sector. As a
result, a shift in the traffic pattern of any one customer, especially in the
near term and on one of our high volume routes, could have a material impact,
positive or negative, on our revenues. For example, in the six months ended
June 30, 2000, one customer accounted for approximately 8% of our revenues, and
this customer may continue to account for a significant portion of revenues in
the near term. Furthermore, many wholesale customers of voice services tend to
be price sensitive and may switch suppliers for certain routes on the basis of
small price differentials. In contrast, Internet and bandwidth customers tend to
use fewer suppliers than voice customers, cannot switch suppliers as easily and,
we believe, are more sensitive to service quality than to price. We believe that
customers for data center services are more sensitive to the value added
services that we plan to provide

than to price. In addition, we believe that they are unlikely to move between
facilities due to their initial investments in tenant improvements and the high
costs and risks of network outage associated with moving to another facility.

As of June 30, 2000, we have entered into contracts to provide bandwidth and
capacity on our network with a total value to us of approximately $262 million
over contract life. Because we have not yet begun to deliver capacity under the
contracts and as most of these are operating leases, we will generally recognize
revenue on a monthly basis over contract life, typically over 15 to 20 years.

COST OF SERVICES, EXCLUSIVE OF ITEMS DISCUSSED SEPARATELY BELOW

Cost of services, exclusive of depreciation and amortization, which is
discussed separately below, are classified into the following general
categories: access costs, transmission costs, voice and Internet termination
costs and other costs of services.

ACCESS COSTS. We have minimal access costs as our customers are typically
responsible for the cost of accessing our network. We have begun to provide
services to switchless resellers. Switchless resellers do not have any
telecommunications infrastructure. Therefore, for services to switchless
resellers we will have access costs payable to the originating local provider,
usually the incumbent telephone operator. These costs are reflected in our
pricing and will vary based on calling volume and the distance between the
caller and our point of presence.

TRANSMISSION COSTS. Our transmission costs currently consist of leased
capacity, operation, administration and maintenance cost of owned fiber as well
as switch and router facilities costs. Leased capacity charges are fixed monthly
payments based on capacity provided and are typically higher than a "dark fiber
cost level," which is our target cost level and represents the lowest possible
per unit cost. Dark fiber cost level is the per unit cost of high-capacity fiber
that has been laid and readied for use but which has not been "lit" with
transmission electronics. Dark fiber cost levels can be achieved not only
through owned facilities, but also may be possible through other rights of use
such as multiple investment units, known as "MIUs," or indefeasible rights of
use, known as "IRUs."

As part of our strategy to lower our cost base over time, we will seek dark
fiber cost levels for our entire transmission platform, through building,
acquiring or swapping capacity. For example, our German network is operational,
and in commercial service. The Paris and Amsterdam intra-city networks will be
operational at the end of 2000. We have acquired intra-city capacity in London
to lower our access costs, and we have made capital-efficient arrangements to
swap capacity on the German network for capacity on other networks. We have
secured an extensive UK network as part of an agreement announced during the
second quarter with 360networks. In this agreement, we have agreed to purchase
approximately $85 million of infrastructure and bandwidth capacity from
360networks and 360networks in turn has agreed to purchase approximately
$155 million of infrastructure and bandwidth capacity from us. As a part of this
agreement, 360networks will provide us with trans-Atlantic and North American
capacity, as well as 12 strands of dark fiber on its diversely-routed 1,150
kilometer UK network between Liverpool and London, connecting Manchester,
Sheffield, Birmingham, Bristol, Nottingham and Cambridge. We will provide and
sell dark fiber on our German network and our Paris and Amsterdam city rings and
broadband capacity on our pan-European network. We further minimize our
transmission costs by optimizing the routing of our voice traffic and increasing
volumes on our fixed-cost leased and owned lines, thereby spreading the
allocation of fixed costs over a larger number of voice minutes or larger volume
of Internet traffic, as applicable. To the extent we overestimate anticipated
traffic volume, however, per unit costs will increase. As we continue to develop
our owned network and rely less on leased capacity, per unit voice transmission
costs are expected to decrease substantially, offset partially by an increase in
depreciation and amortization expense. We also expect to experience declining
transmission costs per billable minute or per Mb, as applicable, as a result of
increasing use of our owned network as opposed to leased network assets,

decreasing cost of leased transmission capacity, increasing availability of more
competitively priced IRUs and MIUs and increasing traffic volumes.

VOICE TERMINATION COSTS. Termination costs represent the costs we are
required to pay to other carriers from the point of exit from our network to the
final point of destination. Generally, most of the total costs associated with a
call, from receipt to completion, are termination-related costs. Voice
termination costs per unit are generally variable based on distance, quality,
geographical location of the termination point and the degree of competition in
the country in which the call is being terminated.

If a non-mobile call is terminated in a city in which we have a point of
presence and an interconnection agreement with the national incumbent telephone
operator, the call will be transferred to the public switched telephone network
for local termination. This is usually the least costly mode of terminating a
call. If a call is to a location in which we do not have a point of presence, or
have a point of presence but do not have an interconnection agreement giving us
access to the public switched telephone network, then the call must be
transferred to, and refiled with, another carrier that has access to the
relevant public network for local termination. We pay this carrier a refile fee
for terminating our traffic. Most refilers currently operate out of New York and
various European cities such as London, Frankfurt and Vienna, so that the
refiled traffic is rerouted to such cities and from there is carried to its
termination point. Refile agreements provide for fluctuating rates with rate
change notice periods typically of one or four weeks. We seek to reduce our
refile costs by utilizing least cost routing. For example, where we do not yet
have interconnection agreements, we implement "resale" agreements whereby a
local carrier that has an interconnection agreement with the incumbent telephone
operator "resells" or shares this interconnection right with us for a fee.
Termination through resale agreements is more expensive than through
interconnection agreements but significantly less expensive than through refile
agreements because the traffic does not need to be rerouted to another country.

In countries where we have not been directly authorized to provide services,
we will negotiate to obtain direct operating agreements with correspondent
telecommunications operators where such agreements will result in lower
termination costs than might be possible through refile arrangements. We believe
our refile and resale agreements are competitively priced. If our traffic
volumes are higher than expected, we may have to divert excess traffic onto
another carrier's network, which would also increase our termination costs. We
believe, however, that we have sufficient capacity and could, if necessary,
obtain more. In addition, our technologically advanced daily traffic monitoring
capabilities allow us to identify changes in volume and termination cost
patterns as they begin to develop, thereby permitting us to respond in a
cost-efficient manner.

We believe that our termination costs per unit should decrease as we extend
our network and increase transmission capacity. We also believe that continuing
liberalization in Europe will lead to decreases in termination costs as new
telecommunications service providers offer alternatives to the incumbent
telephone operators for local termination, and as European Union member states
implement and enforce regulations requiring incumbent telephone operators to
establish rates which are set on the basis of forward-looking, long run economic
costs that would be incurred by an efficient provider using advanced technology.
There can be no assurance, however, regarding the extent or timing of such
decreases in termination costs.

TERMINATION OF MOBILE TRAFFIC. A substantial portion of our revenue from
our voice products is based on mobile traffic. We have arrangements in place for
termination of mobile traffic. However, direct operating agreements with mobile
operators tend to be expensive and refiling of mobile traffic generally does not
meet our quality targets. Although we currently have a number of direct
agreements with mobile operators and quality refilers in place, we cannot
guarantee that we can maintain these agreements or enter into similar agreements
of adequate price levels, or at all, to support the expansion of our mobile
traffic.

INTERNET TERMINATION COSTS. Termination costs represent costs we are
required to pay to other Internet backbone providers from the point of exit of
our network. Internet termination is effected through peering and transit
arrangements. Peering arrangements provide for the exchange of Internet traffic
free-of-charge. We have entered into peering arrangements with ISPs in the
United States and Europe, including recent peering arrangements with several
European incumbent telephone operators. There can be no assurance that we will
be able to negotiate additional peering arrangements. Under transit
arrangements, we are required to pay a fee to exchange traffic. That fee is
largely fixed and is based on the minimum Mb amount charged to us by our transit
partners.

Recently, the Internet services industry has experienced merger and
consolidation activity. This activity is likely to increase the concentration of
market power of Internet backbone providers, and may adversely affect our
ability to obtain peering and cost-effective transit arrangements.

OTHER COSTS OF SERVICES. Other costs of planned services include the
expenses associated with providing value-added Internet services and data center
capabilities. These expenses will consist primarily of certain engineering
costs, personnel costs and lease expenses within our data center facilities.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Our strategy of selling mainly to operators allows us to maintain lower
selling, general and administrative expenses than companies providing services
to the mass retail market. Our selling, general and administrative expenses
consist primarily of personnel costs, information technology costs, office
costs, travel, commissions, billing, professional fees and advertising and
promotion expenses. We employ a direct sales force located in the major markets
in which we offer services. To attract and retain a highly qualified sales
force, we offer our sales personnel a compensation package emphasizing
performance-based commissions and equity options. We expect to incur significant
selling and marketing costs in advance of anticipated related revenue as we
continue to expand our operations and service offerings. Our selling, general
and administrative expenses are expected to decrease as a percentage of
revenues, however, once we have established our operations in targeted markets
and expanded our customer base.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense includes charges relating to
depreciation of property and equipment, which consist principally of equipment
(such as switches, multiplexers and routers), investments in indefeasible rights
of use and in multiple investment units, furniture and equipment. We depreciate
our network over periods ranging from 5 to 15 years and amortize our intangible
assets over a period of 5 years. We depreciate our investments in indefeasible
rights of use and in multiple investment units over their estimated useful lives
of not more than 20 years. We expect depreciation and amortization expense to
increase significantly as we expand our owned network, including the development
of the German network.

RESULTS OF OPERATIONS

Because we commercially introduced our services in September 1998, our
management believes that a comparison of results for the year ended
December 31, 1999 to the period from our inception to December 31, 1998 is not
meaningful.

CONSOLIDATED QUARTERLY FINANCIAL DATA

The following table sets forth our consolidated financial data as of and for
the three-month periods ended June 30 and March 31, 2000 and December 31,
September 30, June 30 and March 31, 1999. The consolidated financial data were
derived from our unaudited consolidated financial statements and include, in the
opinion of our management, all adjustments, consisting solely of normal
recurring adjustments, necessary to present fairly the data for such period. The
information set forth below is not necessarily indicative of the results of
future operations and should be read in conjunction with the rest of this
discussion and with our consolidated financial statements and related notes.

Amounts are presented in thousands of U.S. dollars.

THREE MONTHS ENDED
--------------------------------------------------------------------------------------
JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2000 2000 1999 1999 1999 1999
----------- ----------- ------------- -------------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenue................................. $ 57,531 $ 51,267 $ 37,319 $ 27,311 $ 20,194 $ 12,293
Cost of services (exclusive of amounts
shown separately below)............... 58,467 54,536 41,905 32,543 22,346 17,015
Selling, general and administrative
expenses.............................. 9,165 7,638 7,688 4,216 3,147 3,318
Depreciation and amortization........... 7,228 6,151 6,032 4,183 2,298 1,336
-------- -------- -------- -------- -------- --------
Loss from operations.................... (17,329) (17,058) (18,306) (13,631) (7,597) (9,376)
Other income (expense):
Interest income......................... 6,406 2,684 772 2,009 2,099 979
Interest expense........................ (5,712) (13,913) (8,152) (8,718) (8,400) (4,205)
Other income (expense).................. (3) (3) (117) (25) (413) --
Currency exchange gain (loss), net...... 3,862 (19,687) (10,200) 1,931 (4,721) (2,428)
-------- -------- -------- -------- -------- --------
Loss before income tax benefit.......... (12,776) (47,977) (36,003) (18,434) (19,032) (15,030)
Income tax benefit, net of valuation
allowance............................. -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net loss................................ $(12,776) $(47,977) $(36,003) $(18,434) $(19,032) $(15,030)
======== ======== ======== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA.................................. $(10,101) $(10,907) $(12,274) $ (9,448) $ (5,299) $ (8,040)
Net cash used in operating activities... 26,729 (49,656) (18,790) (20,121) (20,932) (18,910)
Net cash used in investing activities... (73,357) (18,934) (53,992) (13,311) (31,893) (152,722)
Net cash provided by (used in) financing
activities............................ 31,520 558,679 86,638 (2,153) (4,996) 274,141

FINANCIAL POSITION

Current assets at June 30, 2000 were approximately $675.5 million,
representing an increase of approximately 294% over current assets at
December 31, 1999 of approximately $171.3 million, and a decrease of
approximately 6% over current assets at March 31 of approximately
$720.2 million. The increase from December 31, 1999, is primarily related to the
receipt of the net proceeds of our initial public offering of common stock in
February 2000. In addition, total accounts and unbilled receivables increased
from approximately $45.0 million at December 31, 1999 and approximately
$63.3 million at March 31, 2000, to approximately $66.4 million at June 30, 2000
as a result of increased revenues.

Property and equipment increased approximately 30% from approximately
$213.7 million at December 31, 1999 to approximately $277.4 million at June 30,
2000 mainly due to the investments in the construction of the German network.

Investment in joint ventures increased approximately 495% from approximately
$4.7 million at December 31, 1999 to approximately $27.9 million at June 30,
2000 as a result of our investment in the Digiplex joint venture (formerly
Hubco).

Restricted investments held in escrow (both current and long-term) decreased
from December 31, 1999 and March 31, 2000 to June 30, 2000 as a result of our
funding of scheduled interest payments on our senior notes and additions to our
German network.

Other accrued liabilities increased approximately 40% from approximately
$17.0 million at December 31, 1999 to approximately $23.8 million at June 30,
2000 mainly as a result of an increase in the value-added tax payable.

Deferred revenue (both current and long-term) increased approximately 530%
from approximately $5.0 million at December 31, 1999 and approximately 163% from
approximately $12.1 million at March 31, 2000 to approximately $31.6 million at
June 30, 2000 as a result of new bandwidth and infrastructure sales agreements.

Total long-term debt was approximately $241.3 million at June 30, 2000,
representing a decrease of approximately 29% from long-term debt at
December 31, 1999 of approximately $337.8 million and a decrease of
approximately 10% from long-term debt at March 31, 2000 of approximately
$268.2 million. The decrease is related to the repayment of our credit facility
with Nortel Networks of approximately $77.2 million and the reclassification of
our $26.1 million credit facility with Siemens to short-term debt at June 30,
2000 since this facility was repaid in July 2000.

Shareholders' equity (deficit) rose from a deficit of approximately
$34.5 million at December 31, 1999 to an equity balance of approximately
$605.2 million at March 31, 2000, then declined to an equity balance of
approximately $585.7 million at June 30, 2000 mainly as a result of our initial
public offering and the net losses incurred in the first quarter and second
quarter of 2000.

THREE MONTHS ENDED JUNE 30, 2000 AS COMPARED TO THREE MONTHS ENDED JUNE 30,
1999 AND THREE MONTHS ENDED MARCH 31, 2000

Revenues for the three months ended June 30, 2000 were approximately
$57.5 million, representing an increase of approximately 12% over revenues for
the three months ended March 31, 2000 of approximately $51.3 million and
approximately 185% over revenues for the three months ended June 30, 1999 of
approximately $20.2 million. Revenues primarily related to voice services, which
contributed approximately $47.9 million or 83% of total revenue in the second
quarter of 2000. Voice revenue grew 0.5% compared to the three months ended
March 31, 2000 and 203% over the three months ended June 30, 1999. Voice traffic
volume during the three months ended June 30, 2000 was approximately
343 million minutes compared with approximately 309 million and 122 million
minutes during the three months ended March 31, 2000 and June 30, 1999,
respectively. Average revenue per minute was approximately 14 cents, which
represented a decrease of approximately 10% compared to the three months ended
March 31, 2000 due primarily to changes in traffic mix and, to a lesser extent,
price reductions. Average revenue per minute increased by approximately 8%
compared to the second quarter of 1999, which primarily reflects changes in
traffic mix. The majority of voice traffic in the second quarter of 2000 both
originated and terminated in Europe where prices are generally lower, but where
we have implemented interconnection agreements and therefore generally do not
need to terminate traffic via more costly refile or resale arrangements.
Internet and bandwidth services revenue was approximately $9.6 million during
the three months ended June 30, 2000, representing an increase of 170% over the
three months ended March 31, 2000 and 120% over the three months ended June 30,
1999, primarily due to increases in our customer base. During the second quarter
of 2000, we recognized revenue of approximately $4.7 million from one bandwidth
IRU contract that qualified as a sales-type lease.

Cost of services (exclusive of items shown separately) for the three months
ended June 30, 2000 were approximately $58.5 million compared with approximately
$54.5 million and $22.3 million for the three months ended March 31, 2000 and
June 30, 1999, respectively. Such costs increased primarily as a result of costs
directly associated with our increased voice traffic. These costs consisted
primarily of operation of the network, leases for transmission capacity,
operation, administration and maintenance cost of owned fiber as well as
termination expenses including refiling.

Expressed as a percentage of revenues, cost of services (exclusive of items
shown separately) was 102% during the three months ended June 30, 2000 compared
with 106% and 111% for the three months ended March 31, 2000 and June 30, 1999,
respectively. These decreases are primarily the result of higher volumes carried
on our existing network.

Depreciation and amortization for the three months ended June 30, 2000 was
approximately $7.2 million compared with approximately $6.2 million and
$2.3 million for the three months ended March 31, 2000 and June 30, 1999,
respectively. These costs increased over the three months ended June 30, 1999
due to higher investments for network equipment, indefeasible rights of use, and
other furniture and equipment.

Selling, general and administrative expenses were approximately
$9.2 million during the three months ended June 30, 2000 compared with
approximately $7.6 million and $3.1 million for the three months ended
March 31, 2000 and June 30, 1999, respectively. Such costs consisted primarily
of personnel costs, information technology costs, office costs, professional
fees and expenses. These costs increased over the three months ended June 30,
1999 primarily as a result of increased headcount, information technology costs,
promotional costs, office costs and provisions for bad debts.

Net interest income for the three-month period ended June 30, 2000 was
approximately $0.7 million. Interest income of approximately $6.4 million
consisted of interest earned on deposits of escrowed proceeds of our senior
notes and unused net proceeds of our initial public offering. Interest expense
of approximately $5.7 million mainly consisted of interest accrued on the senior
notes, less capitalized interest of approximately $2.7 million.

The strengthening of the Euro to the U.S. dollar in the second quarter of
2000 resulted in a currency exchange gain of $3.9 million, compared with losses
of $19.7 million and $4.7 million during the quarters ended March 31, 2000 and
June 30, 1999, respectively.

Our management evaluates the relative performance of our voice and Internet
and bandwidth ("data") operations based on their respective fixed cost
contributions. Fixed cost contribution is defined as segment revenues less
direct variable costs incurred by the segment. Certain direct costs, such as
network and transmission costs, are shared by both the voice and data operations
and are not allocated by management to the segment.

Fixed cost contribution for voice services for the three-month period ended
June 30, 2000 was $4.8 million, representing $47.9 million in voice revenue less
$43.1 million, or approximately 13 cents per minute, in voice termination costs.
Fixed cost contribution for data services for the same period was $7.5 million
representing $9.6 million in data revenue less $2.1 million in data direct cost.

SIX MONTHS ENDED JUNE 30, 2000 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

Revenues for the six months ended June 30, 2000 were approximately
$108.8 million, representing an increase of approximately 235% over revenues for
the six months ended June 30, 1999 of approximately $32.5 million. Revenues
primarily related to voice services, which contributed approximately
$95.6 million or 88% of total revenue in the first half of 2000. Voice revenue
grew 245% over the six months ended June 30, 1999. Voice traffic volume during
the six months ended June 30, 2000 was approximately 652 million minutes
compared with approximately 184 million minutes during the six months ended
June 30, 1999. Average revenue per minute was approximately 14.6 cents, which
represented a decrease of

approximately 3% compared to the six months ended June 30, 1999, due primarily
to changes in traffic mix and, to a lesser extent, price reductions. The
majority of voice traffic in the first half of 2000 both originated and
terminated in Europe where prices are generally lower, but where we have
implemented interconnection agreements and therefore generally do not need to
terminate traffic via more costly refile or resale arrangements. Internet and
bandwidth services revenue was approximately $13.2 million during the six months
ended June 30, 2000, representing an increase of 178% over the six months ended
June 30, 1999, primarily due to increases in our customer base.

Cost of services (exclusive of items shown separately) for the six months
ended June 30, 2000 were approximately $113.0 million compared with
approximately $39.4 million for the six months ended June 30, 1999. Such costs
increased primarily as a result of costs directly associated with our increased
voice traffic. These costs consisted primarily of operation of the network,
leases for transmission capacity, operation, administration and maintenance cost
of owned fiber as well as termination expenses including refiling.

Expressed as a percentage of revenues, cost of services (exclusive of items
shown separately) was approximately 104% during the six months ended June 30,
2000 compared with approximately 121% for the six months ended June 30, 1999.
These decreases are primarily the result of higher volumes carried on our
existing network.

Depreciation and amortization for the six months ended June 30, 2000 was
approximately $13.4 million compared with approximately $3.6 million for the six
months ended June 30, 1999. These costs increased compared to the six months
ended June 30, 1999 due to higher investments for network equipment,
indefeasible rights of use, and other furniture and equipment.

Selling, general and administrative expenses were approximately
$16.8 million during the six months ended June 30, 2000 compared with
approximately $6.5 million for the six months ended June 30, 1999. Such costs
consisted primarily of personnel costs, information technology costs, office
costs, professional fees and expenses. These costs increased over the six months
ended June 30, 1999 primarily as a result of increased headcount, information
technology costs, promotional costs, office costs and provisions for bad debts.

Net interest expense for the six-month period ended June 30, 2000 was
approximately $10.5 million. It consisted during this period of approximately
$18 million of interest accrued on our senior notes, less capitalized interest
of approximately $4.1 million and interest income.

The over-all weakening of the Euro to the U.S. dollar in the first half of
2000 resulted in a currency exchange loss of $15.8 million, compared with a loss
of $7.1 million during the six-month period ended June 30, 1999.

Fixed cost contribution for voice services for the six-month period ended
June 30, 2000 was $9.5 million, representing $95.6 million in voice revenue less
$86.1 million, or approximately 13 cents per minute, in voice termination costs.
Fixed cost contribution for data services for the same period was $10.9 million
representing $13.2 million in data revenue less $2.3 million in data direct
cost.

YEAR ENDED DECEMBER 31, 1999

Revenues for the year ended December 31, 1999 were approximately
$97.1 million, primarily relating to voice services, which contributed
$87.6 million or 90% to the total revenue generated during that period. Voice
traffic volume of 606 million minutes was billed to our customers. Average
revenue per minute for the period was 14.5 cents. Revenue of $9.5 million for
the same period was generated by Internet and bandwidth services, including
revenue of $3.2 million associated with a second quarter bandwidth IRU contract
that was recorded as a sales-type lease.

Cost of services (exclusive of items shown separately) consists primarily of
operation of the network, leases for transmission capacity, and termination
expenses including refiling. These costs for the year

ended December 31, 1999 were approximately $113.8 million, including
$1.9 million of cost of services associated with the second quarter bandwidth
IRU contract.

Selling, general and administrative expenses were approximately
$18.4 million for the year ended December 31, 1999 and consisted primarily of
personnel costs, information technology costs, office costs, professional fees
and expenses.

Depreciation and amortization for the year ended December 31, 1999 was
approximately $13.8 million and consisted primarily of depreciation costs for
network equipment, indefeasible rights of use, and other furniture and
equipment.

Net interest expense for the year ended December 31, 1999 was approximately
$23.6 million. It consisted during this period of approximately $29.5 million of
interest on the 13 1/4% senior notes, other short term and long term debt, less
interest income of approximately $5.9 million. Interest income consists of
interest earned from investing the remaining proceeds of the investments by our
equity sponsors, employees and directors and the issuance of the 13 1/4% senior
notes and related warrants.

The weakening of the euro to the U.S. dollar in the year ended December 31,
1999 resulted in a currency exchange loss of approximately $15.4 million.

Fixed cost contribution for voice services for the year ended December 31,
1999 was $12.6 million, representing $87.6 million in voice revenue less
$75.0 million, or 12.4 cents per minute, in voice termination costs. Fixed cost
contribution for Internet and bandwidth services for the same period was
$7.6 million, representing approximately $9.5 million in Internet and bandwidth
services revenue less approximately $1.9 million of cost of services for the
bandwidth IRU contract.

PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1998

We commercially introduced our services in September 1998. Revenues for the
period from our inception to December 31, 1998 were approximately $2.8 million,
primarily relating to voice services, which contributed 98% to the total revenue
achieved in 1998. Voice traffic volume from the start of operations in
September 1998 until the end of 1998 amounted to 10 million minutes. Revenue of
$0.1 million for the same period was generated by Internet services.

Cost of services (exclusive of amounts shown separately) consists primarily
of operation of the network, leases for transmission capacity, and termination
expenses including refiling. These costs for the period from our inception to
December 31, 1998 were approximately $11.7 million.

Selling, general and administrative expenses were approximately
$9.0 million for the period from our inception to December 31, 1998 and
consisted primarily of start-up expenses, personnel costs, information
technology costs, office costs, professional fees and promotion expenses.

Depreciation and amortization for the period from our inception to
December 31, 1998 was approximately $1.4 million and consisted primarily of
depreciation costs for network equipment, indefeasible rights of use, and other
furniture and equipment.

Interest income during the period from our inception to December 31, 1998
consisted of interest earned from investing the proceeds of the issuance of
equity. Interest income totaled approximately $92,000 for the period from our
inception to December 31, 1998. No material interest expense was incurred during
the same period. No material currency exchange loss was incurred during the same
period.

Fixed cost contribution for voice services for the period from our inception
to December 31, 1998 was $0.1 million, representing $2.7 million in voice
revenue less $2.6 million in voice termination costs, reflecting the fact that
during the early stages of our operations we had relatively few interconnection
agreements with incumbent telephone operators so that traffic had to be
terminated at higher cost through

refiling. Fixed cost contribution for Internet and bandwidth services for the
same period was equivalent to Internet and bandwidth services revenue, or
$0.1 million.

LIQUIDITY AND CAPITAL RESOURCES

We broadly define liquidity as our ability to generate sufficient cash flow
from operating activities to meet our obligations and commitments. In addition,
liquidity includes the ability to obtain appropriate debt and equity financing
and to convert into cash those assets that are no longer required to meet
existing strategic and financial objectives. Therefore, liquidity cannot be
considered separately from capital resources that consist of current or
potentially available funds for use in achieving long-range business objectives
and meeting debt service commitments.

From our inception through December 31, 1998, we financed our operations
through equity contributions. During the year ended December 31, 1999, we
financed our operations through additional equity contributions and with the
proceeds of the issuance of our 13 1/4% senior notes and related warrants,
vendor financing and an interim credit facility. The further development of our
business and deployment of our network will require significant capital to fund
capital expenditures, working capital, cash flow deficits and debt service. Our
principal capital expenditure requirements include the expansion of our network,
including construction of the German and intra-city networks, the acquisition of
multiplexers, routers and transmission equipment and the construction of data
center facilities through an investment in the Digiplex (formerly named Hubco)
joint venture. Additional funding will also be required for office space, switch
site build-out and corporate overhead and personnel.

Between our inception and December 31, 1998, we had incurred capital
expenditures of approximately $37.2 million, and during the year ended
December 31, 1999 we incurred capital expenditures of approximately
$195.4 million, including amounts related to the German network in both periods.
Capital expenditures in 1998 and 1999 were principally for investments in fiber
infrastructure and transmission equipment. We estimate that we will incur
capital expenditures of approximately $362 million from January 2000 through the
end of 2001 ($242 million for 2000 and $120 million for 2001), including
approximately $23 million for our investment in the Digiplex joint venture. We
expect capital expenditures in 2000 and 2001 will be principally for investments
in fiber infrastructure and transmission equipment. We completed the
construction of the German network and portions of it became operational in
July 2000, with full operation expected in the second half of 2000. We plan to
purchase additional multiplexers and routers for our network. We plan to
complete the Amsterdam and Paris intra-city network by the end of 2000.

As of December 31, 1998 funds managed by our equity sponsors had invested a
total of approximately $37.8 million to fund start-up operations. By
February 19, 1999, such funds had completed their aggregate investment totaling
$60 million in equity contributions. On February 19, 1999, we issued 13 1/4%
senior notes, with warrants, for net proceeds of approximately $242 million,
after deducting discounts and commissions and expenses. Approximately
$79.0 million of the net proceeds were originally used to secure the first five
interest payments on the notes. In addition, as of December 31, 1999, employees
and directors had directly or indirectly invested approximately $6.7 million in
our shares.

On March 1, 2000, we completed our initial public offering of 8,625,000
shares of common stock (including the underwriters' overallotment of 1,125,000
shares) at a price of E87 per share (approximately $87.42 per share). We
received proceeds of approximately $682 million, net of underwriting discounts
and commissions, listing fees, and offering-related expenses.

In addition to the net proceeds of our initial public offering, other
potential sources of capital, if available on acceptable terms or at all, may
include possible sales of dark fiber on the German or intra-city networks (such
as Amsterdam) or additional private or public financings, such as an offering of
debt or equity in the capital markets, an accounts receivable or bank facility
or equipment financings. We believe, based on our current business plan, that
these sources, or a combination of them, will be sufficient to fund

the expansion of our business as planned, and to fund operations until we
achieve positive cash flow. We expect to continue to generate net losses and
negative cash flow through at least 2002 as we expand our operations. Whether or
when we will generate positive cash flow will depend on a number of financial,
competitive, regulatory, technical and other factors. For example, our net
losses and negative cash flow from operating activities are likely to continue
beyond that time if:

- we decide to build extensions to our network because we cannot otherwise
reduce our transmission costs,

- we do not establish a customer base that generates sufficient revenue,

- we do not reduce our termination costs by negotiating competitive
interconnection rates and peering arrangements as we expand our network,

- prices decline faster than we have anticipated,

- we do not attract and retain qualified personnel,

- we do not obtain necessary governmental approvals and operator licenses,
or

- we are unable to obtain any additional financing as may be required.

Our ability to achieve these objectives is subject to financial,
competitive, regulatory, technical and other factors, many of which are beyond
our control. There can be no assurance that we will achieve profitability or
positive cash flow.

The actual amount and timing of our future capital requirements may differ
materially from our estimates as a result of, among other things, the demand for
our services and regulatory, technological and competitive developments. There
can be no assurance that sources of additional financing will be available on
acceptable terms or at all.

As of June 30, 2000, we had total current assets of $675.5 million, of which
$32.0 million was escrowed for interest payments on the 13 1/4% senior notes and
$2.5 million of which was allocated to the construction cost of the German
network. Net unrestricted cash as of the same date was $508.8 million. In the
first half of 2000, we allocated approximately $19.3 million in additional funds
for the construction cost of the German network and provided a letter of credit
to secure payment of that amount. The balance of that letter of credit was
$14.9 million as of June 30, 2000. An additional amount for cost of construction
is currently in dispute, and the construction company and development company
are in mediation. Although we expect the disputed amount will not be payable in
full, our total share of that amount, if ultimately paid in full, would be
approximately $12.0 million.

After June 30, 2000, we have made alternative arrangements for network
assets that we had arranged to acquire from an affiliate of Iaxis Ltd. In the
third quarter, Iaxis Ltd. went into administration, which provides temporary
protection from creditors, and which necessitated these alternative
arrangements. We estimate the maximum total cost of such alternative
arrangements would be less than $3.0 million plus the amount of any asset
write-downs that might result from a failure of the Iaxis affiliate to deliver
network assets.

EBITDA, which we define as earnings before interest, taxes, depreciation,
amortization, foreign currency exchange gains or losses and other income
(expense), decreased from negative $12.3 million in the fourth quarter of 1999
to negative $10.9 million in the first quarter of 2000 and decreased to negative
$10.1 million in the second quarter of 2000. EBITDA is used by management and
certain investors as an indicator of a company's ability to service debt and to
satisfy capital requirements. However, EBITDA is not a measure of financial
performance under generally accepted accounting principles and should not be
considered as an alternative to cash flows from operating, investing or
financing activities as a measure of liquidity or an alternative to net income
as an indication of our operating performance or any other measure of
performance derived under generally accepted accounting principles. EBITDA as
used in this

report may not be comparable to other similarly titled measures of other
companies or to similarly titled measures as calculated under our debt
agreements.

Our significant debt and vendor financing activity to date has consisted of
the following:

- On February 19, 1999, we issued $160 million and E85 million of 13 1/4%
senior notes, with a scheduled maturity of February 15, 2009, with
detachable warrants.

- On February 18, 1999 we entered into an agreement to purchase fiber optic
cable for the German network, initially for $20.3 million plus value-added
tax. As of December 31, 1999, we had borrowed approximately $15.7 million
under this agreement. We borrowed an additional amount of approximately
$10.4 million under this agreement since December 31, 1999. We decided in
June 2000 to repay this financing and did so on July 5, 2000.

- In June 1999, we entered into a financing facility with Nortel
Networks Inc., an equipment supplier. As of December 31, 1999, we had
borrowed substantially the full amount of the $75 million available under
the facility. The debt outstanding under this facility bore interest at a
LIBOR-based floating interest rate, and the weighted average on
outstanding amounts was 11.04% as of December 31, 1999. The debt was
repaid from the proceeds of our initial public offering.

- In December 1999, we entered into an interim credit agreement with Morgan
Stanley Senior Funding, Inc. and Citibank N.A. As of December 31, 1999, we
had borrowed E10 million of the $200.0 million (or the euro equivalent)
available under the facility. This debt bore interest at a LIBOR-based
floating interest rate equal to 6.72% as of December 31, 1999. The debt
outstanding under this facility (E40 million at the time of our initial
public offering), was repaid from the proceeds of our initial public
offering, and the facility terminated.

FOREIGN CURRENCY

Our reporting currency is the U.S. dollar, and interest and principal
payments on the 13 1/4% senior notes are in U.S. dollars and euros and a
significant portion of our costs and investments are denominated in dollars.
However, the majority of our revenues and operating costs are derived from sales
and operations outside the United States and are incurred in a number of
different currencies. Accordingly, fluctuations in currency exchange rates may
have a significant effect on our results of operations and balance sheet data.
The euro has eliminated exchange rate fluctuations among the 11 participating
European Union member states. Adoption of the euro has therefore reduced the
degree of intra-Western European currency fluctuations to which we are subject.
We will, however, continue to incur revenues and operating costs in non-Euro
denominated currencies, such as pounds sterling. Although we do not currently
engage in exchange rate hedging strategies, we may attempt to limit foreign
exchange exposure by purchasing forward foreign exchange contracts or engaging
in other similar hedging strategies. We have outstanding one contract to
purchase Deutsche Marks in exchange for dollars from time to time in amounts
anticipated to satisfy our Deutsche Mark-denominated obligations under our
German network arrangements. Any reversion from the euro currency system to a
system of individual country floating currencies could subject us to increased
currency exchange risk.

INFLATION

We do not believe that inflation will have a material effect on our results
of operations.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities. The adoption of this
standard is effective

for the first quarter of our fiscal year ending December 31, 2001. Management
has not yet completed its analysis of this new accounting standard and,
therefore, has not determined whether this standard will have a material effect
on our financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The following discussion summarizes the financial instruments and derivative
instruments held by us at June 30, 2000 that are sensitive to changes in
interest rates and foreign exchange rates. In the normal course of business, we
also face risks that are either nonfinancial or nonquantifiable. Such risks
principally include country risk, credit risk, and legal risk, and are not
reviewed in this discussion.

INTEREST RATE RISK MANAGEMENT. Within the past year, the sensitivity of our
cash flows, earnings, and financial condition to changes in market interest
rates declined significantly, upon our repayment (from the proceeds of our
initial public offering) of the E40 million, the $75 million and the
$26 million that were outstanding under floating rate facilities.

Because most of our outstanding debt at June 30, 2000 is fixed-rate debt, a
change in market interest rates is not likely to have a material effect on our
earnings, cash flows or financial condition. As of June 30, 2000, we did not
have a position in futures, forwards, swaps, options or other similar financial
instruments to manage the risk arising from these interest rate exposures.

FOREIGN EXCHANGE RISK MANAGEMENT. We have foreign exchange currency
exposures related to purchasing services and equipment and selling our services
in currencies other than the US dollar, our reporting currency. Because the
majority of our revenues and operating costs are derived from sales and
operations outside the United States and are incurred in a number of different
currencies, changes in foreign currency exchange rates may have a significant
effect on our results of operations and balance sheet data. The most significant
of our foreign currency exposures relate to our purchasing and selling
activities in the Western European countries such as Germany, Switzerland and
the United Kingdom, where our principal operations exist.

In addition, the E85 million of our 13 1/4% senior notes payable denominated
in euros exposes us to foreign exchange rate risk.

SELLING SHAREHOLDERS

The following table sets forth the name of each selling shareholder and the
number of shares (a) beneficially owned by such selling shareholder and
(b) which such selling shareholders may offer from time to time. We may from
time to time include additional selling shareholders in supplements to this
prospectus.

SHARES BENEFICIALLY OWNED NUMBER OF
PRIOR TO THE OFFERING SHARES TO BE
-------------------------- SOLD IN THE
SELLING SHAREHOLDER NUMBER(1) PERCENTAGE(2) OFFERING(1)
- ------------------- ---------- ------------- ------------

Appaloosa Arbitrage Fund Ltd................................ 21,025 *
Banca Popolare Di Verona--Banco S. Geminiano e S.
Prospero.................................................. 21,372 *
Banca Populare di Bergamo--Credito Varesino................. 489 *
Banco Popolare Commercio e Industria........................ 5,523 *
Banque de Gestion Edmond de Rothschild--Monaco.............. 5,946 *
Banque Du Gothard Monaco "La Belle Epoque".................. 2,072 *
Bear Stearns International Ltd.............................. 6,240 *
BSI SA...................................................... 10,965 *
Caja de Ahorros y Monte de Piedad de Avila.................. 1,844 *
The Chuo Mitsui Trust and Banking Co., Ltd Re: Alliance High
Yield Bond Open........................................... 23,485 *
Cisalpina Gestioni SPA--Societa' di Gestione del Risparmio--
Cisalpino Bilanciato Fund................................. 46,642(3) *
City of NY Teacher's Retirement System...................... 6,710 *
CSAM Australia US High Yield Fund........................... 1,677 *
CSAM Invest Trust US High Yield............................. 1,677 *
CSAM Strategic Global Income Fd Inc......................... 2,013 *
CSAM-GPF-CSAM High Yield Fund............................... 1,677 *
Deutsche Bank AG (London)................................... 14,173 *
Deutsche Bank Securities.................................... 180,349 *
Eaton Vance CDO, Limited.................................... 20,130 *
Eaton Vance High Income Fund................................ 109,878 *
Eaton Vance Income Fund of Boston........................... 27,679 *
General Retirement System of the City of Detroit............ 1,677 *
ING Bank N.V., London Branch................................ 89,158 *
Investec Guinness Flight.................................... 21,798(4) *
JP Morgan Securities Inc.................................... 36,905 *
Mediosim S.P.A.............................................. 2,494 *
Mercury Asset Management.................................... 36,512 *
Moore Global Investments, Ltd............................... 81,863 *
Morgan Stanley and Co. International........................ 164,958 *
Morgan Stanley Dean Witter and Co........................... 85,574 *
Oxford Strategic Income Fund................................ 3,355 *
Panorama Lifespan Diversified Income/VA..................... 335 *
Perkin Elmer Corp. Employee Pension and Savings Plan........ 1,342 *
Putnam Advisory Company, Inc.(5)............................ 4,680 *
Putnam Fiduciary Trust Company, Inc.(6)..................... 5,180 *
Putnam Investment Management, Inc.(7)....................... 210,524 *
Remington Investment Strategies, L.P........................ 19,768 *
Robert Fleming & Co. Ltd.................................... 15,072 *
Satellite Fund I, L.P....................................... 720 *
Satellite Fund II, L.P...................................... 28,881 *

Satellite Fund III L.P...................................... 17,691 *
Satellite Overseas Fund, Ltd................................ 51,190 *
SBC Master Pension Trust.................................... 3,355 *
SEI Global--High Yield Fixed Income......................... 671 *
SEI Institional Managed Trust............................... 6,710 *
Stichting Shell Pensioenfonds............................... 54,216(8) *
Texaco Inc.................................................. 1,677 *
UBKAM Global High Yield Fund................................ 8,448 *
UBS AG...................................................... 226 *
Warburg Pincus High Yield Fund.............................. 3,355 *
Other selling shareholders as a group (50 persons)(9)....... 9,353 *

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

* Less than 1%.

(1) Unless otherwise noted, comprises the number of shares for which the
warrants held by such selling shareholder are exercisable.

(2) Assuming the exercise of all warrants, based on 41,721,178 shares
outstanding as of August 1, 2000.

(3) Includes 16,000 shares beneficially owned by selling shareholder, which
shares are not being offered for resale pursuant to prospectus.

(4) Includes 12,574 shares beneficially owned by selling shareholder, which
shares are not being offered for resale pursuant to this prospectus.

(5) Shares are being sold severally, and not jointly or jointly and severally,
by the following funds or private investment accounts: Agway Inc.
Employees' Retirement Trust (496); Abbott Laboratories Annuity Retirement
Plan (939); Strategic Global Fund-High Yield Fixed Income (Putnam) Fund
(1,066); Northrop Grumman Corporation (1,623); and Ameritech Pension Trust
(556).

(6) Shares are being sold by the following fund or private investment account:
Putnam High Yield Managed Trust (5,180). Putnam Fiduciary Trust Company
provides investment advisory services to each entity identified above, and
to other investment companies and to certain other funds which may hold
securities issued by Carrier1 International.

(7) Shares are being sold severally, and not jointly or jointly and severally,
by the following funds or private investment accounts: Putnam High Yield
Trust (54,352); Putnam Global Governmental Income Trust (3,932); Putnam
High Yield Advantage Fund (46,991); Putnam High Income Convertible and Bond
Fund (751); Putnam Variable Trust-Putnam VT High Yield Fund (16,782);
Putnam Variable Trust-Putnam VT Global Asset Allocation Fund (637); Putnam
Master Income Trust (2,744); Putnam Premier Income Trust (8,367); Putnam
Master Intermediate Income Trust (2,395); Putnam Diversified Income Trust
(37,657); Putnam Convertible Opportunities and Income Trust (382); Putnam
Asset Allocation Funds-Growth Portfolio (3,120); Putnam Asset Allocation
Funds-Conservative Portfolio (1,093); Putnam Funds Trust-Putnam High Yield
Trust II (22,975); Putnam Managed High Yield Trust (1,509); Lincoln
National Global Asset Allocation Fund, Inc. (369); Putnam Strategic Income
Fund (1,684); and Putnam Variable Trust-Putnam VT Diversified Income Fund
(4,784). Putnam Investment Management, Inc. provides investment advisory
services to each entity identified above, and to other investment companies
and to certain other funds which may hold securities issued by Carrier1
International.

(8) Includes 9,000 shares beneficially owned by selling shareholders, which
shares are not being offered for resale pursuant to this prospectus.

(9) None of these shareholders owns more than 1% of the outstanding shares
immediately prior to the offering.

Because the selling shareholders may, under the terms of the offering, offer
all or some portion of the shares for which the warrants they presently hold are
exercisable, no estimate can be given as to the number of common shares that
will be held by the selling shareholders upon termination of any such sales. See
"Plan of Distribution."

This prospectus also covers the possible resale of the shares by certain
other currently unknown persons who may become owners of such shares as a result
of their acquisition of warrants. Each such transferee of a selling shareholder
is hereby deemed to be a selling shareholder for purposes of making resales of
shares using this prospectus. To the extent required by applicable law,
information about any such transferees shall be set forth in an appropriate
supplement to this prospectus.

On February 12, 1999, we and the warrant agents under the agreements
relating to the euro warrants and the dollar warrants entered into a
registration rights agreement. That agreement requires that we make this
prospectus available to the selling shareholders, subject to the exceptions
described below, until the earliest of:

- the time when all of the shares have been sold under this prospectus; and

- February 19, 2009.

This time period is referred to as the effectiveness period.

We may require the selling shareholders to suspend the sales of the shares
offered by this prospectus upon the occurrence of any event that makes any
statement in this prospectus or the related registration statement untrue in any
material respect or that requires the changing of statements in these documents
in order to make statements in those documents not misleading.

We will be permitted to suspend the use of this prospectus for:

(a) up to two 30-consecutive-day periods (except during the 30 days
immediately prior to the expiration of the warrants) if our board of directors
determines in good faith that there is a valid purpose for the suspension and
provides notice of such determination to the holders at their addresses
appearing in the register of warrants maintained by the warrant agent; and

(b) five additional, non-consecutive three-day periods (except during the
30 days immediately prior to the expiration of the warrants) if our board of
directors determines in good faith that we cannot provide adequate disclosure
during such period due to circumstances beyond our control.

Notice of such suspension shall be given in writing, in the case of
clause (a) above, promptly to each applicable holder and, in the case of
clause (b) above, promptly to the warrant agent and the warrant agent shall give
such notice promptly to each holder.

We will pay the expenses of registering the shares being sold pursuant to
this prospectus.

DESCRIPTION OF SHARE CAPITAL

SET FORTH BELOW IS A SUMMARY OF CERTAIN INFORMATION CONCERNING CARRIER1
INTERNATIONAL'S SHARE CAPITAL AND CERTAIN MATERIAL PROVISIONS OF CARRIER1
INTERNATIONAL'S ARTICLES OF INCORPORATION AND LUXEMBOURG LAW ON COMMERCIAL
COMPANIES IN EFFECT AS OF THE DATE OF THIS PROSPECTUS. THIS SUMMARY CONTAINS
INFORMATION THAT WE CONSIDER TO BE MATERIAL REGARDING THE SHARE CAPITAL OF
CARRIER1 INTERNATIONAL, BUT IT DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO CARRIER1 INTERNATIONAL'S ARTICLES OF
INCORPORATION AND THE LUXEMBOURG LAW ON COMMERCIAL COMPANIES.

As of August 1, 2000, Carrier1 International had outstanding 41,721,178
shares with a par value of $2.00, all of which had been paid in full,
representing a subscribed capital amount of $83,442,356.

The total authorized capital of Carrier1 International, including the
outstanding subscribed capital, is set at $200,000,000, consisting of a total of
100,000,000 shares, par value $2.00. Pursuant to Carrier1 International's
articles of incorporation, the board of directors has been authorized to issue
further shares so as to bring the total capital of Carrier1 International up to
the total authorized capital in whole or in part from time to time. The
authorization lapses five years after the publication in the Luxembourg official
gazette of the amendment to the Articles of Incorporation pursuant to which the
authorized capital was increased, which occurred at the extraordinary
shareholders' meeting on June 13, 2000, and may be renewed by shareholder vote
at an extraordinary meeting. Carrier1 International intends to issue additional
shares, including issuances from authorized capital from time to time to Carrier
One, LLC or its designees and directors and employees of the Carrier1 group as
provided in its 1999 and 2000 share option plans and its securities purchase
agreement. Assuming the exercise of all outstanding warrants, the issued share
capital of Carrier1 International would consist of 43,406,991 shares (not
including additional shares issuable upon exercise of options held by our
directors and employees).

MEETINGS OF SHAREHOLDERS

Meetings of shareholders may be either ordinary or extraordinary. At
ordinary meetings, which do not currently require a quorum, shareholders can
decide on most matters, but they cannot decide matters that entail a
modification of the articles. Only at extraordinary meetings, for which more
stringent quorum and majority conditions apply, can shareholders modify the
articles. Among other things, a merger, liquidation or transformation of
Carrier1 International into another form of company, increases (unless decided
by the board of directors within the limits of the authorized capital) or
decreases of share capital or issuance of a new class of shares would all
require modification of the articles. A quorum of 50% and a vote of two-thirds
of the shares present or represented are required to amend the articles. If the
quorum is not achieved, however, then a second meeting may be called, at which
no quorum is required.

Carrier1 International must hold a general meeting every year at the place
and date indicated in the articles. This annual general shareholders' meeting is
an ordinary meeting. Annual general shareholders' meetings usually have on their
agenda the approval of the annual accounts and related issues, such as approval
of the management report prepared by the board and of the report of the
statutory auditor, and the use of profits shown on the balance sheet, including
the distribution of dividends.

Ordinary and extraordinary shareholders' meetings may be called by the board
or by the statutory auditor. The board and the statutory auditor must convene a
meeting if requested in writing by shareholders representing at least 20% of the
subscribed capital of Carrier1 International.

VOTING AND QUORUM REQUIREMENTS

Matters brought before ordinary shareholders' meetings do not require a
quorum but must receive a majority of the votes cast to pass. Extraordinary
meetings, which are required to amend the articles, require a quorum of at least
half of the outstanding shares and may only act with a vote of two-thirds of the
shares present. If the quorum condition is not fulfilled, however, a second
meeting with the same agenda

may be called, for which the same two-thirds majority condition applies but for
which no quorum is required.

A "change of nationality," for purposes of Luxembourg law, of Carrier1
International would require approval by all the shareholders. Such a "change of
nationality" would typically consist of a permanent transfer of its registered
office outside of Luxembourg, but would not include a merger with a
non-Luxembourg company in which the non-Luxembourg company survives. An increase
of any obligations of shareholders set forth in the articles would also require
approval of all shareholders affected.

DIRECTORS

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF DIRECTORS. Under Luxembourg
law, civil liability of directors both to the company and to third parties is
generally considered to be a matter of public policy. It is possible that
Luxembourg courts would declare void an explicit or even implicit contractual
limitation on directors' liability to Carrier1 International. Carrier1
International, however, can validly agree to indemnify the directors against the
consequences of liability actions brought by third parties (including
shareholders if such shareholders have personally suffered a damage which is
independent of and distinct from the damage caused to Carrier1 International).
The articles contain such an agreement.

APPOINTMENT AND REMOVAL OF DIRECTORS. The articles provide that directors
are elected by the shareholders at a general meeting for a maximum term of six
years (except in case of a vacancy where the board may provisionally appoint a
director to fill such a vacancy until the next general meeting). Directors may
be re-elected indefinitely for further terms of up to six years. Under the
articles, a minimum of three directors is required but there is no maximum
unless so resolved by the shareholders at a general meeting.

There are no restrictions in the articles or under Luxembourg law as to
nationality, residence or professional qualifications for directors. There is no
age limit nor are directors required to retire by rotation. Directors may be
removed, at any time with or without cause, at any ordinary shareholders'
meeting.

POWERS OF THE BOARD. The board has wide powers to perform all acts
necessary or desirable for accomplishing Carrier1 International's aims. The
board may delegate daily management to one or more directors, officers,
executives, employees or other persons, provided that any delegation to a member
of the board has been previously authorized by the shareholders at a general
meeting.

OFFICERS

Under Luxembourg law, an employee of Carrier1 International can only be
liable to Carrier1 International for damages brought about by his or her willful
acts or gross negligence. Any arrangement providing for the indemnification of
officers against claims of Carrier1 International would be contrary to public
policy. Employees are liable to third parties under general tort law and may
enter into arrangements with Carrier1 International providing for
indemnification against third party claims.

An indemnification arrangement can never cover a willful act or gross
negligence.

DIVIDENDS

Dividends may only be paid out of the distributable profits and unrestricted
reserves of Carrier1 International as shown in Carrier1 International's audited
accounts for the most recently completed financial year, which would consist of
the profit (if any) for such year and retained earnings from prior years after
deduction for losses carried over from prior years and reserves required by law
or the articles. The Luxembourg law on companies requires Carrier1 International
to set up a reserve equal to 10% of the subscribed capital by allocating yearly
at least 5% of its profits to the reserve account until it reaches the 10%
threshold. Since Carrier1 International has not had profits through
December 31, 1999, it has not allocated any amount to the reserve account to
date.

Under Luxembourg law, Carrier1 International's board of directors may pay
interim dividends because the articles of incorporation contain a specific
provision to that effect. However, formal and substantive requirements have to
be met in order for Carrier1 International to pay interim dividends. These
include a requirement that Carrier1 International prepare financial statements
showing that funds are available for distribution. The amount of such
distribution may not exceed the profits earned by Carrier1 International since
the end of the last financial year for which the annual accounts have been
approved by the general shareholders' meeting plus retained earnings and
withdrawals from unrestricted reserves and minus carried-forward losses and
amounts to be mandatorily paid to a reserve account. No interim dividends may be
paid out during the first six months of the company's accounting year nor before
the approval of the annual accounts of the previous accounting year by a general
shareholders' meeting.

Carrier1 International's statutory auditor must verify whether the
conditions for the payment of interim dividends are fulfilled.

If an interim dividend exceeds the dividend set by the shareholders at the
annual ordinary shareholders' meeting, the excess is deemed an advance payment
of the next dividend.

Dividends may be paid in U.S. dollars or in shares or otherwise as the board
may determine in accordance with Luxembourg law. Payment of any dividends will
be made to holders of shares at their addresses in the register maintained by or
on behalf of Carrier1 International. Carrier1 International has never declared
or paid any dividends and does not expect to do so in the foreseeable future.
See "Dividend Policy."

Nonresidents of Luxembourg who hold shares or ADSs may be subject to
Luxembourg statutory withholding tax in respect of any cash dividends paid. See
"Taxation--Certain Luxembourg Tax Considerations."

CAPITAL INCREASES; PREEMPTIVE RIGHTS

The subscribed capital and the authorized capital of Carrier1 International
may be increased or reduced by the shareholders at a shareholders' meeting under
the same quorum and majority requirements applicable to an amendment of the
articles. The board may issue shares (up to the amount authorized by the
articles) without shareholder approval, and, if so decided by the board,
shareholders will have no pre-emptive rights in connection with such issuance.
Holders of shares outstanding prior to this offering will have no pre-emptive
rights in connection with this offering.

In the event that preemptive rights are not disallowed by the board, all
shareholders will be notified of the period during which preemptive rights may
be exercised, as determined by the board. Under Luxembourg law, this period must
be at least 30 days. Preemptive rights are transferable and may be sold, prior
to exercise.

LIQUIDATION RIGHTS

The shareholders of Carrier1 International may dissolve Carrier1
International under the conditions prescribed for modification of the articles.
If such dissolution were to occur, Carrier1 International would then be
liquidated, and after payment of its debts or consignment of the sums necessary
to pay such debts, the shareholders would be entitled to the remaining assets of
Carrier1 International, in proportion to their holdings.

FORM AND TRANSFER OF SHARES

As a general matter under Luxembourg law, shares may be issued in registered
or bearer form, at the option of the shareholder. As a result of an amendment to
the articles approved by shareholders at the extraordinary meeting held on
June 13, 2000, shares must be issued in registered form, unless the board of
directors determines otherwise.

The shares sold by the selling shareholders will generally be in registered
global form, although in some instances, shares in registered form may be
delivered. Shares that are in registered global form will be delivered into the
custody of Clearstream Banking AG, Frankfurt am Main, or Clearstream, Frankfurt.
Clearstream, Frankfurt will eventually be registered in our share register as
the sole shareholder for the shares sold in this offering, although in some
instances, shares in registered form may be delivered. Beneficial interests in
the shares can be transferred in accordance with the rules and regulations of
Clearstream, Frankfurt. The shares are also expected to be accepted for
clearance through Clearstream, Frankfurt, Euroclear and Clearstream Banking,
societe anonyme, or Clearstream, Luxembourg. The shares may be credited at the
option of investors either to a German bank's Clearstream, Frankfurt account or
to the accounts of participants with Euroclear or Clearstream, Luxembourg.

In general, title to shares in bearer form passes by delivery of the
certificates evidencing the shares. Transfers of registered shares require
either (i) an inscription of the transfer in the share register of Carrier1
International signed by the transferor and the transferee or their respective
agents or (ii) a notification of the transfer by the transferor or the
transferee to Carrier1 International which in turn must record such transfer in
the share register maintained by it or on its behalf. Carrier1 International or
its registrar may also enter the transfer in the register on the basis of
correspondence or other documents that establish the existence of an agreement
between the transferor and the transferee.

It is generally held that contractual restrictions on the transfer of shares
are legal provided they do not render the shares inalienable for a prolonged
period of time. Currently, the articles provide that, if the board determines
that a proposed transfer of shares would violate a restriction on transfer
agreed to by the owner of such shares or its predecessor in interest and brought
to the attention of the board, the board may refuse to record such transfer in
the share register of Carrier1 International (with a provision that such refusal
will not result in a situation where a shareholder is forced to continue to hold
shares for an extended period of time).

DESCRIPTION OF THE WARRANTS

GENERAL

In connection with the issuance of the 13 1/4% senior dollar and euro notes,
Carrier1 International issued dollar warrants and euro warrants. The following
summary of certain provisions of the warrant agreements does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
provisions of the warrant agreements. Wherever particular defined terms of the
warrant agreements, not otherwise defined in this prospectus, are referred to,
those defined terms are incorporated by reference in this prospectus. A copy of
each warrant agreement and the registration rights agreement referred to below
is filed as an exhibit to the registration statement of which this prospectus is
a part.

Each dollar warrant is exercisable to purchase 6.71013 shares at the
exercise price per share equal to the greater of $2.00 and the minimum par value
required by Luxembourg law (currently 50 Luxembourg francs) (excluding a 1%
Luxembourg capital duty which is payable by Carrier1 International), subject to
adjustment. Each euro warrant is exercisable to purchase 7.53614 shares at the
same exercise price. The warrants may be exercised at any time beginning
February 19, 2000, and prior to the close of business on February 19, 2009,
unless redeemed. Warrants that are not exercised by this expiration date will
expire.

As at August 1, 2000, the aggregate number of the warrants outstanding was
240,823 and the aggregate number of shares for which the warrants may be
exercised was 1,685,813.

Upon the occurrence of a merger with a person in connection with which the
consideration to shareholders of Carrier1 International is not all cash and
where the shares (or other securities) issuable upon exercise of the warrants
are not registered under the Exchange Act, Carrier1 International or its
successor by merger will be required to offer (or cause an affiliate to offer)
to repurchase the warrants for cash in the manner specified in the warrant
agreements.

The shareholders of Carrier1 International may be required to reauthorize
and reserve the shares issuable upon exercise of all outstanding warrants. To
the extent such reauthorization or reservation is required by applicable law,
Carrier1 International has agreed (to the extent permitted by applicable law) to
take any and all actions required, and Carrier One, LLC has agreed (to the
extent permitted by applicable law) to vote any shares held by it, to
reauthorize and reserve the shares for issuance upon exercise of the warrants at
least 31 days prior to the date such reauthorization would be required under
Luxembourg law.

ANTI-DILUTION PROVISIONS

Each warrant agreement contains provisions adjusting the exercise price and
the number of shares or other securities issuable upon exercise of a warrant of
the relevant series under specified circumstances. Each warrant agreement also
contains other provisions that will provide alternative equivalent adjustments
or other protections in the event that the adjustment provisions would result in
a reduction of the exercise price to below either the par value of the
underlying shares or the minimum par value required by Luxembourg law. Each
warrant agreement prohibits Carrier1 International from increasing the par value
of the underlying shares to an amount greater than the exercise price, except to
the extent required by applicable law.

No adjustment in the number of shares purchasable upon exercise of the
warrants is required, however, for certain public offerings or private
placements, for certain grants, or exercises, of options or other rights to
purchase granted to or for the benefit of management investors, for certain
issuances of shares to or for the benefit of management investors, for grants,
or exercises of options, warrants or other rights to purchase pursuant to
agreements existing on the date the warrants were issued, for issuances of
shares pursuant to options, warrants or other agreements or rights to purchase
capital stock of Carrier1 International existing on the date the warrants were
issued and in other circumstances specified in the warrant agreements, or unless
such adjustment would require an increase or decrease of at least one percent in
the number of shares purchasable upon the exercise of a warrant or if certain
other limited exceptions are applicable.

OTHER PROVISIONS

The terms of the warrant agreements also permit the warrant holders to
participate in merger transactions and impose reporting obligations on Carrier1
International. In addition, the warrant holders have registration rights
pursuant to a registration rights agreement. Under the terms of the registration
rights agreement, the holders of the warrants have "piggy-back" registration
rights for the shares or other securities issuable upon exercise of the warrants
in connection with specified public offerings of shares or other securities
issuable upon exercise of the warrants conducted subsequent to this initial
public offering. Carrier1 International is required to use its best efforts to
cause to be declared effective, no later than six months after the closing date
of our initial public offering, a shelf registration statement with respect to
the issuance of or in certain cases, resales of the shares or other securities
issuable upon exercise of the warrants. This prospectus forms a part of that
shelf registration statement. Carrier1 International is required to use
reasonable efforts to maintain the effectiveness of that shelf registration
statement until the earlier of the date all warrants have been exercised and the
expiration date of the warrants. Carrier1 International has the ability to
suspend the availability of this registration statement for specified time
periods.

NO RIGHTS AS SHAREHOLDERS

The holders of unexercised warrants are not entitled to receive dividends or
other distributions, receive notice of any meeting of the shareholders, consent
to any action of the shareholders, receive notice of any other shareholder
proceedings, or to any other rights as shareholders of Carrier1 International.

DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS

Bankers Trust Company acts as the depositary for the American Depositary
Shares. The depositary's offices are located at 4 Albany Street, New York, New
York. American Depositary Shares are frequently referred to as ADSs and
represent ownership interests in shares that are on deposit with the depositary
or its custodian. ADSs are normally represented by certificates that are
commonly known as American Depositary Receipts, or ADRs.

We have appointed the depositary pursuant to a deposit agreement. A copy of
the deposit agreement was filed with the United States Securities and Exchange
Commission as an exhibit to a registration statement on Form F-6 (File
No. 333-11440). You may obtain a copy of the deposit agreement from the
Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549.

We are providing you with a summary description of the ADSs and your rights
as an owner of ADSs. This is only a summary and may not contain all of the
information important to you. For complete information, you should review the
deposit agreement in its entirety, as well as the form of ADR attached to the
deposit agreement.

Each ADS represents 0.2 of one share on deposit with the custodian. An ADS
will also represent any other property received by the depositary or the
custodian on behalf of the owner of the ADS but that has not been distributed to
the owners of ADSs because of legal restrictions or practical considerations.

If you become an owner of ADSs, you will become a party to the deposit
agreement and therefore will be bound by its terms and by the terms of the ADRs
that represent your ADSs. The deposit agreement and the ADR specify our rights
and obligations as well as your rights and obligations as an owner of ADSs and
those of the depositary. The deposit agreement is governed by New York law.

As an owner of ADSs, you may hold your ADSs either by means of an ADR
registered in your name or through a brokerage or safekeeping account. If you
decide to hold your ADSs through your brokerage or safekeeping account, you must
rely on the procedures of your broker or bank to assert your rights as an ADS
owner. Please consult with your broker or bank to determine what those
procedures are. This summary description assumes you have opted to own the ADSs
directly by means of an ADR registered in your name and, as such, we will refer
to you as the "holder."

DIVIDENDS AND DISTRIBUTIONS

As a holder, you generally have the right to receive the distributions we
make on the shares deposited with the custodian. Your receipt of these
distributions may be limited, however, by practical considerations and legal
limitations. Holders will receive distributions under the terms of the deposit
agreement in proportion to the number of ADSs held as of a specified record
date.

DISTRIBUTIONS OF CASH

If we make a cash distribution for the shares on deposit with the custodian,
we will notify the depositary. Upon receipt of such notice, if the distribution
is not in U.S. dollars, the depositary will arrange for the funds to be
converted into U.S. dollars and for the distribution of the U.S. dollars to the
holders.

The conversion into U.S. dollars will take place only if practicable and if
the U.S. dollars are transferable to the United States. The amounts distributed
to holders will be net of the fees, expenses, taxes and governmental charges
payable by holders under the terms of the deposit agreement. The depositary will
apply the same method for distributing the proceeds of the sale of any property
(such as undistributed rights) held by the custodian in respect of shares on
deposit.

DISTRIBUTIONS OF SHARES

Whenever we make a free distribution of shares for the shares on deposit
with the custodian, we will notify the depositary. Upon receipt of such notice,
the depositary will either distribute to holders new ADSs representing the
shares deposited or modify the ADS to shares ratio, in which case each ADS you
hold will represent rights and interests in the additional shares so deposited.
Only whole new ADSs will be distributed. Fractional entitlements will be sold
and the proceeds of such sale will be distributed as in the case of a cash
distribution.

The distribution of new ADSs or the modification of the ADS to share ratio
upon a distribution of shares will be made net of the fees, expenses, taxes and
governmental charges payable by holders under the terms of the deposit
agreement. In order to pay such taxes or governmental charges, the depositary
may sell all or a portion of the new shares so distributed.

No such distribution of new ADSs will be made if it would violate a law
(including the U.S. securities laws) or if it is not operationally practicable.
If the depositary does not distribute new ADSs as described above, it will use
its best efforts to sell the shares received and will distribute the proceeds of
the sale as in the case of a distribution of cash.

DISTRIBUTIONS OF RIGHTS

Whenever we intend to distribute rights to purchase additional shares, we
will give prior notice to the depositary and we will assist the depositary in
determining whether it is lawful and reasonably practicable to distribute rights
to purchase additional ADSs to holders.

The depositary will establish procedures to distribute rights to purchase
additional ADSs to holders and to enable such holders to exercise such rights if
it is lawful and reasonably practicable to make the rights available to holders
of ADSs, and if we provide all of the documentation contemplated in the deposit
agreement (such as opinions to address the lawfulness of the transaction). You
may have to pay fees, expenses, taxes and other governmental charges to
subscribe for the new ADSs upon the exercise of your rights. The depositary is
not obligated to establish procedures to facilitate the distribution and
exercise by holders of rights to purchase new shares directly rather than new
ADSs.

The depositary will not distribute the rights to you if:

- we do not request that the rights be distributed to you or we ask that the
rights not be distributed to you, or

- we fail to deliver satisfactory documents to the depositary, or

- it is not reasonably practicable to distribute the rights.

The depositary will attempt to sell the rights that are not exercised or not
distributed if such sale is lawful and reasonably practicable. The net proceeds
of such sale will be distributed to holders as in the case of a cash
distribution. If the depositary is unable to sell the rights, it will allow the
rights to lapse.

OTHER DISTRIBUTIONS

Whenever we intend to distribute property other than cash, shares or rights
to purchase additional shares, we will notify the depositary in advance and will
indicate whether we wish such distribution to be made to you. If so, we will
assist the depositary in determining whether such distribution to holders is
lawful and reasonably practicable.

If it is reasonably practicable to distribute such property to you and if we
provide all of the documentation contemplated in the deposit agreement, the
depositary will distribute the property to the holders in a manner it deems
practicable.

The distribution will be made net of fees, expenses, taxes and governmental
charges payable by holders under the terms of the deposit agreement. In order to
pay such taxes and governmental charges, the depositary may sell all or a
portion of the property received.

The depositary will not distribute the property to you and will sell the
property if:

- we do not request that the property be distributed to you or if we ask
that the property not be distributed to you, or

- we do not deliver satisfactory documents to the depositary, or

- the depositary determines that all or a portion of the distribution to you
is not reasonably practicable.

The net proceeds of such a sale will be distributed to holders as in the
case of a cash distribution.

CHANGES AFFECTING SHARES

The shares held on deposit for your ADSs may change from time to time. For
example, there may be a change in nominal or par value, a split-up,
cancellation, consolidation or classification of such shares or a
recapitalization, reorganization, merger, consolidation or sale of assets.

If any such change were to occur, your ADSs would, to the extent permitted
by law, represent the right to receive the property received or exchanged in
respect of the shares held on deposit. The depositary may in such circumstances
deliver new ADSs to you or call for the exchange of your existing ADSs for new
ADSs. If the depositary may not lawfully distribute such property to you, the
depositary may sell such property and distribute the net proceeds to you as in
the case of a cash distribution.

ISSUANCE OF ADSS UPON DEPOSIT OF SHARES

The depositary may issue ADSs on your behalf if you or your broker deposit
shares with the custodian. The depositary will deliver ADRs representing these
ADSs to the person you indicate only after you pay any applicable issuance fees
and any charges and taxes payable for the transfer of the shares to the
custodian.

The issuance of ADSs may be delayed until the depositary or the custodian
receives confirmation that all required approvals have been given and that the
shares have been duly transferred to the custodian. The depositary will only
issue ADSs in whole numbers and will not accept fractions of shares for deposit.

When you make a deposit of shares, you will be responsible for transferring
good and valid title to the depositary. As such, you will be deemed to represent
and warrant that:

- the shares are duly authorized, validly issued, fully paid, non-assessable
and legally obtained,

- all preemptive (and similar) rights, if any, with respect to such shares
have been validly waived or exercised,

- you are duly authorized to deposit the shares, and

- the shares presented for deposit are not, and the ADSs issuable upon such
deposit will not be, restricted securities (as defined in the deposit
agreement).

If any of the representations or warranties are incorrect in any way, we and
the depositary may, at your cost and expense, take any and all actions necessary
to correct the consequences of the misrepresentations.

WITHDRAWAL OF SHARES UPON CANCELLATION OF ADSS

As a holder, you will be entitled to present your ADSs to the depositary for
cancellation and then receive the whole number of underlying shares represented
by such ADSs at the custodian's offices. In order to withdraw the shares
represented by your ADSs, you will be required to pay to the depositary the fees
for cancellation of ADSs and any charges and taxes payable upon the transfer of
the shares being withdrawn. You assume the risk for delivery of all funds and
securities upon withdrawal. Once canceled, the ADSs will not have any rights
under the deposit agreement.

The withdrawal of the shares represented by your ADSs may be delayed until
the depositary receives satisfactory evidence of compliance with all applicable
laws and regulations. Please keep in mind that the depositary will only accept
ADSs for cancellation that represent a whole number of securities on deposit.

You will have the right to withdraw the shares represented by your ADSs at
any time except, among other things, for:

- temporary delays that may arise because (i) the transfer books for the
shares or ADSs are closed, or (ii) shares are immobilized on account of a
shareholders' meeting or a payment of dividends,

- obligations to pay fees, taxes and similar charges, and

- restrictions imposed because of laws or regulations applicable to ADSs or
the withdrawal of shares on deposit.

The deposit agreement may not be modified to impair your right to withdraw
the shares represented by your ADSs except to comply with mandatory provisions
of law.

VOTING RIGHTS

As a holder, you generally have the right under the deposit agreement to
instruct the depositary to exercise the voting rights for the whole shares
represented by your ADSs.

At our request, the depositary will mail to registered holders of ADSs any
notice of shareholders' meeting received from us together with information
explaining how to instruct the depositary to exercise the voting rights of the
shares represented by ADSs. To the extent you are not a registered holder of
ADSs, you will need to look to the financial institution with whom you hold your
ADSs for voting materials.

If the depositary receives timely voting instructions from a holder of ADSs,
it will endeavor to vote the shares represented by the holder's ADSs in
accordance with such voting instructions.

Please note that the ability of the depositary to carry out voting
instructions may be limited by practical and legal limitations and the terms of
the shares on deposit. We cannot assure you that you will receive voting
materials in time to enable you to return voting instructions to the depositary
in a timely manner. Shares for which no voting instructions have been received
will not be voted.

FEES AND CHARGES

As an ADS holder, you will be required to pay the following service fees to
the depositary:

SERVICE FEES
- ------- ---------------------------------------------

Issuance of ADSs............................. Up to $.05 per ADS issued

Cancellation of ADSs......................... Up to $.05 per ADS canceled

Exercise of rights to purchase additional
ADSs....................................... Up to $.05 per ADS issued

Distribution of cash upon sale of rights and
other entitlements......................... Up to $.02 per ADS held

As an ADS holder you will also be responsible to pay certain fees and
expenses incurred by the depositary and certain taxes and governmental charges
such as:

- fees for the transfer and registration of shares (upon deposit and
withdrawal of shares),

- expenses incurred for converting foreign currency into U.S. dollars,

- expenses for cable, telex and fax transmissions and for delivery of
shares, and

- taxes and duties upon the transfer of shares (when shares are deposited or
withdrawn from deposit).

We have agreed to pay certain other charges and expenses of the depositary.
Note that the fees and charges you may be required to pay may vary over time and
may be changed by us and by the depositary. You will receive prior notice of
such changes.

AMENDMENTS AND TERMINATION

We may agree with the depositary to modify the deposit agreement at any time
without your consent. We undertake to give holders 30 days' prior notice of any
modifications that would prejudice any of their substantial rights under the
deposit agreement (except in very limited circumstances enumerated in the
deposit agreement).

You will be bound by the modifications to the deposit agreement if you
continue to hold your ADSs for 30 days after notice of the modifications to the
deposit agreement are given to you. The deposit agreement cannot be amended to
prevent you from withdrawing the shares represented by your ADSs (except as
permitted by law).

We have the right to direct the depositary to terminate the deposit
agreement. Similarly, the depositary may in certain circumstances on its own
initiative terminate the deposit agreement. In either case, the depositary must
give notice to the holders at least 30 days before termination.

Upon termination, the following will occur under the deposit agreement:

- You will be able to request the cancellation of your ADSs and the
withdrawal of the shares represented by your ADSs and the delivery of all
other property held by the depositary in respect of those shares on the
same terms as prior to the termination. During such six months' period,
the depositary will continue to collect all distributions received on the
shares on deposit but will not distribute any such property to you until
you request the cancellation of your ADSs.

- After the expiration of such six months' period, the depositary may sell
the shares held on deposit. The depositary will hold the proceeds from
such sale and any other funds then held for the holders of ADSs in a
non-interest bearing account. At that point, the depositary will have no
further obligations to holders other than to account for the funds then
held for the holders of ADSs still outstanding.

BOOKS OF DEPOSITARY

The depositary will maintain ADS holder records at its depositary office.
You may inspect such records at such office during regular business hours but
solely for the purpose of communicating with other holders in the interest of
business matters relating to the ADSs and the deposit agreement.

The depositary will maintain in New York facilities to record and process
the issuance, cancellation, combination, split-up and transfer of ADRs.

LIMITATIONS ON OBLIGATIONS AND LIABILITIES

The deposit agreement limits our obligations and the depositary's
obligations to you. Please note the following:

- We and the depositary are obligated only to take the actions specifically
stated in the depositary agreement without negligence or bad faith.

- The depositary disclaims any liability for any failure to carry out voting
instructions, for any manner in which a vote is cast or for the effect of
any vote, provided it acts without negligence, in good faith and in
accordance with the terms of the deposit agreement.

- We and the depositary disclaim any liability if we are prevented, delayed
or forbidden from acting on account of any law or regulation, any
provision of our articles of incorporation, any provision of any
securities on deposit or by reason of any act of God or war or other
circumstances beyond our control.

- We and the depositary disclaim any liability by reason of any exercise of,
or failure to exercise, any discretion provided for the deposit agreement.

- We and the depositary further disclaim any liability for any action or
inaction in reliance on the advice or information received from legal
counsel, accountants, any person presenting shares for deposit, any holder
of ADSs or authorized representative of any holder, or any other person
believed by either of us in good faith to be competent to give such advice
or information.

- We and the depositary also disclaim liability for the inability by a
holder to benefit from any distribution, offering, right or other benefit
which is made available to holders of shares but is not, under the terms
of the deposit agreement, made available to you.

- We and the depositary may rely without any liability upon any written
notice, request or other document believed to be genuine and to have been
signed or presented by the proper parties.

PRE-RELEASE TRANSACTIONS

The depositary may, in certain circumstances, issue ADSs before receiving a
deposit of shares or release of shares before receiving ADSs. These transactions
are commonly referred to as pre-release transactions. The deposit agreement
limits the aggregate size of pre-release transactions and imposes a number of
conditions on such transactions (for example, the need to receive collateral,
the type of collateral required or the representations required from brokers).
The depositary may retain any compensation received from the pre-release
transactions.

TAXES

You will be responsible for the taxes and other governmental charges payable
on the ADSs and the shares represented by the ADSs. We, the depositary and the
custodian may deduct from any distribution the taxes and governmental charges
payable by holders and may sell any and all property on deposit to pay the taxes
and governmental charges payable by holders. You will be liable for any
deficiency if the sale proceeds do not cover the taxes that are due.

The depositary may refuse to issue ADSs, to deliver transfer, split and
combine ADRs or to release shares on deposit until all taxes and charges are
paid by the applicable holder. The depositary and the custodian may take
reasonable administrative actions to obtain tax refunds and reduced tax
withholding for any distributions on your behalf. However, you may be required
to provide to the depositary and to the custodian proof of taxpayer status and
residence and such other information as the depositary and the custodian may
require to fulfill legal obligations. You are required to indemnify us, the
depositary and the custodian for any claims with respect to taxes based on any
tax benefit obtained for you.

FOREIGN CURRENCY CONVERSION

The depositary will arrange for the conversion of all foreign currency
received into U.S. dollars if such conversion is practicable, and it will
distribute the U.S. dollars in accordance with the terms of the deposit
agreement. You may have to pay fees and expenses incurred in converting foreign
currency, such as fees and expenses incurred in complying with currency exchange
controls and other governmental requirements.

If the conversion of foreign currency is not practicable or lawful, or if
any required approvals are denied or not obtainable at a reasonable cost or
within a reasonable period, the depositary may take the following actions in its
discretion:

- convert the foreign currency to the extent practicable and lawful and
distribute the U.S. dollars to the holders for whom the conversion and
distribution is lawful and practicable.

- distribute the foreign currency to holders entitled to receive such
foreign currency.

- hold the foreign currency (uninvested without liability for interest) for
the holders entitled to receive such foreign currency.

TAXATION

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes certain U.S. federal income tax
consequences of the ownership and disposition of common shares or ADSs, which we
collectively refer to in this discussion as shares, to U.S. Holders (as defined
below). The discussion is based upon provisions of the U.S. Internal Revenue
Code of 1986, as amended, known as the Code, its legislative history, judicial
authority, current administrative rulings and practice, and existing and
proposed Treasury regulations, all as in effect and existing on the date of this
prospectus. Legislative, judicial or administrative changes or interpretations
may be forthcoming that could alter or modify the conclusions set forth below,
possibly on a retroactive basis. This discussion assumes that any share is or
will be held as a capital asset (as defined in Section 1221 of the Code) by the
holders of the share. Except as otherwise described in this prospectus, this
discussion applies only to a person who is an initial holder or other beneficial
owner of shares purchased pursuant to this offering and who is for U.S. federal
income tax purposes (i) a citizen or resident of the United States, (ii) a
corporation or partnership created or organized in or under the laws of the
United States, any State of the United States or the District of Columbia,
(iii) an estate that is not a foreign estate for U.S. federal income tax
purposes or (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more U.S.
persons has the authority to control all substantial decisions of such trust (a
"U.S. Holder"). Non-U.S. Holders are advised to consult their own tax advisors
regarding the tax considerations incident to the acquisition, ownership and
disposition of shares. In addition, this discussion does not purport to deal
with all aspects of U.S. federal income taxation that might be relevant to other
particular holders in light of their personal investment circumstances or
status, nor does it discuss the U.S. federal income tax consequences to certain
types of holders that may be subject to special rules under the U.S. federal
income tax laws, such as persons owning (or treated as owning) 10% or more of
the total combined voting power of Carrier1 International, financial
institutions, insurance companies, dealers in securities or foreign currency,
tax-exempt organizations, foreign corporations or nonresident alien individuals,
or persons that hold shares that are a hedge against, or that are hedged
against, currency risk or that are part of a straddle or conversion transaction,
or persons whose functional currency is not the U.S. dollar. Moreover, the
effect of any applicable state, local or foreign tax laws is not discussed.

THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. EACH PURCHASER IS
STRONGLY URGED TO CONSULT WITH ITS OWN TAX ADVISORS TO DETERMINE THE IMPACT OF
SUCH PURCHASER'S PERSONAL TAX SITUATION ON THE ANTICIPATED TAX CONSEQUENCES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, OF
THE ACQUISITION, OWNERSHIP AND DISPOSITION OF SHARES.

GENERAL

For purposes of the Code, holders of ADSs will be treated as the beneficial
owners of the common shares represented by those ADSs.

Carrier1 International has not paid any dividends on its shares and does not
intend to pay dividends in the foreseeable future. See "Dividend Policy".
However, if a U.S. Holder receives a dividend on shares generally it will be
required to include such distribution in gross income as a taxable dividend to
the extent such distribution is paid from the current or accumulated earnings
and profits of Carrier1 International as determined under U.S. federal income
tax principles. Distributions in excess of the earnings and profits of Carrier1
International generally will first be treated, for U.S. federal income tax
purposes, as a nontaxable return of capital to the extent of the U.S. Holder's
basis in the shares and then as gain from the sale or exchange of a capital
asset, provided that the shares constitute a capital asset in the hands of the
U.S. Holder. Dividends received on shares by U.S. corporate shareholders will
not be eligible for the corporate dividends received deduction.

A U.S. Holder will be entitled to claim a foreign tax credit with respect to
income received from Carrier1 International only for foreign taxes (such as
withholding taxes), if any, imposed on dividends paid to such U.S. Holder, and
not for taxes, if any, imposed on Carrier1 International or on any entity in
which Carrier1 International has made an investment. For so long as Carrier1
International is a "United States-owned foreign corporation," distributions with
respect to shares that are taxable as dividends generally will be treated as
foreign source passive income (or, for U.S. Holders that are "financial service
entities" as defined in the Treasury Regulations, financial service income) or
U.S. source income for U.S. foreign tax credit purposes, in proportion to the
earnings and profits of Carrier1 International in the year of such distribution
allocable to foreign and U.S. sources, respectively. For this purpose, Carrier1
International will be treated as a United States-owned foreign corporation so
long as stock representing 50% or more of the voting power or value of Carrier1
International is owned, directly, or indirectly, by "United States persons." The
rules relating to foreign tax credits are extremely complex, and U.S. Holders
should consult their own tax advisors with regard to the availability of a
foreign tax credit and the application of the foreign tax credit to their
particular situation.

With certain exceptions, gain or loss on the sale or exchange of shares will
be treated as U.S. source capital gain or loss (if such shares are held as a
capital asset). Such capital gain or loss will be long-term capital gain or loss
if the U.S. Holder has held the shares for more than one year at the time of the
sale or exchange.

Various provisions contained in the Code impose special taxes in certain
circumstances on U.S. or foreign corporations and their stockholders. The
following is a summary of certain provisions which could have an adverse impact
on Carrier1 International and the U.S. Holders.

PERSONAL HOLDING COMPANY

A corporation that is a personal holding company ("PHC") is subject to a
39.6% tax on its undistributed personal holding company income (generally, U.S.
taxable income with certain adjustments, reduced by distributions to
shareholders). A corporation which is neither a foreign personal holding company
nor a passive foreign investment company (each of which is discussed below)
generally is a PHC if (i) more than 50% of the stock of which measured by value
is owned, directly or indirectly (taking into account certain ownership
attribution rules), by five or fewer individuals (without regard to their
citizenship or residence) and (ii) which receives 60% or more of gross income,
as specifically adjusted, from certain passive sources. For purposes of this
gross income test, a foreign corporation generally only includes taxable income
derived from U.S. sources or income that is effectively connected with a U.S.
trade or business.

More than 50% of the outstanding shares of Carrier1 International, by value,
may be currently treated as owned (through attribution) by five or fewer
individuals, and Carrier1 International believes that the stockholder test may
be met on a going forward basis. Carrier1 International anticipates, however,
that neither it nor its foreign subsidiaries should be classified as a PHC. In
addition, since it is anticipated that Carrier1 International's U.S.
subsidiaries will derive most or all of their income from non-passive sources,
it further believes that none of such subsidiaries will satisfy the foregoing
income test and, thus, will not be classified as a PHC. While Carrier1
International currently believes that neither it nor any of its subsidiaries
would be classified as a PHC, it is possible that Carrier1 International or one
or more of its subsidiaries would meet the foregoing income test and would
qualify as a PHC for that year. Carrier1 International intends to manage its
affairs and the affairs of its subsidiaries so as to attempt to avoid or
minimize the imposition of the personal holding company tax, to the extent such
management of its affairs is consistent with its other business goals.

FOREIGN PERSONAL HOLDING COMPANY

In general, if Carrier1 International or any of its foreign corporate
subsidiaries were to be classified as a foreign personal holding company
("FPHC"), the undistributed foreign personal holding company income (generally,
taxable income with certain adjustments) of Carrier1 International or such
subsidiary would be imputed to all of the U.S. Holders who were deemed to hold
Carrier1 International's stock or the stock of such subsidiary on the last day
of its taxable year. Such income would be taxable to such persons as a dividend,
even if no cash dividend were actually paid. U.S. Holders who dispose of their
shares prior to such date generally would not be subject to tax under these
rules. If Carrier1 International were treated as an FPHC, U.S. Holders who
acquire shares from decedents would, in certain circumstances, be denied the
step-up of the income tax basis for such shares to fair market value at the date
of death which would otherwise have been available and instead would have a tax
basis equal to the lower of the fair market value or the decedent's basis.

A foreign corporation will be classified as an FPHC if (i) five or fewer
individuals, who are U.S. citizens or residents, directly or indirectly (taking
into account certain ownership attribution rules), own more than 50% of the
corporation's stock (measured either by voting power or value) (the "stockholder
test") and (ii) the corporation receives at least 60% of its gross income
(regardless of source), as specifically adjusted, from certain passive sources
(the "income test"). After a corporation becomes an FPHC, the income test
percentage for each subsequent taxable year is reduced to 50%.

Five or fewer individuals who are U.S. citizens or residents currently may
be treated as owning a beneficial interest of more than 50% of the voting power
of the outstanding shares of Carrier1 International and its foreign corporate
subsidiaries for purposes of the FPHC rules, and Carrier1 International believes
that the stockholder test may be met on a going forward basis. Carrier1
International believes, however, that neither Carrier1 International nor its
foreign corporate subsidiaries, should be classified as an FPHC because Carrier1
International and each of the subsidiaries should not satisfy the foregoing
income test.

While Carrier1 International currently believes that neither it nor any of
its foreign corporate subsidiaries would be classified as an FPHC, it is
possible that Carrier1 International or one or more of such subsidiaries would
meet the foregoing income test in a given taxable year and would qualify as an
FPHC for that year. If Carrier1 International concludes that it or any of its
foreign corporate subsidiaries would be classified as an FPHC for any profitable
taxable year, Carrier1 International intends to manage its affairs and the
affairs of the subsidiaries so as to attempt to avoid or minimize having income
imputed to the U.S. shareholders under these rules, to the extent such
management of its affairs is consistent with its other business goals.

PASSIVE FOREIGN INVESTMENT COMPANY

In general, a foreign corporation is a "passive foreign investment company"
("PFIC") if either (i) 75% or more of its gross income constitutes "passive
income," or (ii) 50% or more of the average value of its assets produce passive
income or are held for the production of passive income. Carrier1 International
intends to manage its affairs and the affairs of its subsidiaries so as to avoid
or minimize the chances that Carrier1 International will be classified as a PFIC
following this offering, to the extent consistent with its other business goals.

If, however, Carrier1 International becomes a PFIC for any taxable year,
U.S. Holders of shares (including certain indirect U.S. Holders) may be subject
to reporting requirements and special tax and interest charge upon a sale or
other disposition of such shares, or upon the receipt of certain distributions
from Carrier1 International, unless such U.S. Holder elected to be taxed
annually on its pro rata share of the ordinary earnings and net capital gain of
the PFIC or, under certain circumstances, on the difference between the fair
market value and the adjusted basis of such shares as described below.

The special tax is computed by assuming that the gain, if any, with respect
to the shares was earned in equal portions throughout the holder's period of
ownership. The portion allocable to the year of the disposition is taxed as
ordinary income. The portion allocable to each year prior to the year of the
disposition is taxed as ordinary income at the maximum marginal tax rate
applicable for each such period. The interest charge is imposed on the amount of
the special tax in each such prior year that is deemed to arise from the
allocation of the gain to such prior year and is charged at the applicable rates
imposed on underpayments of U.S. federal income tax for the period commencing on
the due date of the tax return for each prior period and ending on the due date
of the tax return for the year of the gain. These rules would also apply to the
receipt of an "excess distribution" with respect to shares. In general, a
shareholder of a PFIC is treated as having received an excess distribution to
the extent that the amount of the distribution is more than 125% of the average
annual distributions with respect to its shares during the three preceding
taxable years (or shorter period during which the taxpayer held the shares).

If Carrier1 International were a PFIC, U.S. Holders who acquire shares from
decedents could be denied the step-up of the income tax basis for such shares
which would otherwise have been available.

Under certain circumstances, a shareholder of a PFIC may elect to treat a
PFIC as a "qualified electing fund" (a "QEF"), in which case the electing
shareholder would generally not be subject to the special tax rules discussed
above. Instead, the electing shareholder would include in its income each year
its pro rata share of the PFIC's ordinary earnings and net capital gain, whether
or not distributed. If Carrier1 International determines that it is a PFIC,
Carrier1 International will provide the requisite information to a shareholder
upon reasonable request of such shareholder to enable such shareholder to make
the "QEF" election if the shareholder so desires.

As an alternative election, a mark-to-market election may be made by a U.S.
person who owns marketable stock in a PFIC at the close of such person's taxable
year. An electing U.S. Holder would, in general, include as ordinary income in
each taxable year an amount equal to the increase, if any, in value of its
shares for that year (measured at the close of the U.S. Holder's taxable year)
and would be allowed a deduction for any decrease in the value of its shares for
that year, but only to the extent of previously included mark-to-market income.
The mark-to-market election is made with respect to marketable stock in a PFIC
on a shareholder-by-shareholder basis and, once made, can only be revoked with
the consent of the IRS. Under applicable Treasury regulations, the term
"marketable stock" includes stock of a PFIC that is "regularly traded" on a
qualified exchange or other market. For these purposes, a class of stock is
regularly traded on a qualified exchange or other market for any calendar year
during which such class of stock is traded (other than in de minimis quantities)
on at least 15 days during each calendar quarter. It is expected that the shares
will be treated as marketable stock for these purposes, but no assurances can be
given.

PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS AS TO THE EFFECT
OF THE PFIC RULES (INCLUDING THE PROPOSED REGULATIONS) ON THE OWNERSHIP, SALE OR
OTHER DISPOSITION OF THE SHARES.

INFORMATION REPORTING AND BACKUP WITHHOLDING

In general, information reporting requirements will apply to payment of
dividends on shares and the proceeds of certain sales of shares in respect of
U.S. Holders other than certain exempt persons (such as corporations.) Further,
a 31% backup withholding tax will apply to such payment if the U.S. Holder fails
to report in full all dividend income and the IRS notifies the payor of such
under-reporting or fails to satisfy certain other reporting requirements.

Any amounts, withheld under the backup withholding rules will be allocated
as a credit against such U.S. Holder's U.S. federal income tax liability and may
entitle such U.S. Holder to a refund, provided the required information is
furnished to the IRS. Treasury Regulations, generally effective for payments
made after December 31, 2000, modify certain of the certification requirements
for backup withholding. It is

possible that Carrier1 International and other withholding agents may request a
new withholding exemption certification from holders in order to qualify for
continued exemption from backup withholding under Treasury Regulations when they
become effective.

CERTAIN LUXEMBOURG TAX CONSIDERATIONS

THE FOLLOWING DISCUSSION IS FOR GENERAL INFORMATION ONLY. EACH PURCHASER IS
STRONGLY URGED TO CONSULT WITH ITS OWN TAX CONSULTANTS TO DETERMINE POSSIBLE
LUXEMBOURG TAX CONSEQUENCES OF A PURCHASE OF SHARES.

The following summary outlines certain Luxembourg tax consequences to
persons who are nonresidents of Luxembourg and who do not have a permanent
establishment in Luxembourg ("Non-Resident Holders") with respect to the
ownership and disposition of shares. It does not examine tax consequences to
residents or to some extent, former residents.

COMMON STOCK

Non-Resident Holders of shares are not liable for Luxembourg tax on capital
gains on any such shares; PROVIDED, HOWEVER, that if they hold more than 25% of
the share capital of Carrier1 International, they are subject to tax on capital
gains on the disposal of shares held for not more than six months.

Dividends paid on shares to Non-Resident Holders are subject to a
withholding tax of 25%. Under certain circumstances, European Union Non-Resident
Holders may benefit from an exemption of withholding tax. Reductions of the
withholding rate may also be provided by tax treaties. In the case of the
current treaty between Luxembourg and the United States, the withholding tax is
reduced to 12.5% or less, and in the new proposed treaty the rate will be
reduced to 15%, PROVIDED that the holder is entitled to claim treaty benefits.

No inheritance tax is payable by a non-resident holder of shares except if
the deceased holder was a resident of Luxembourg at the time of death.

The issuance of shares will trigger the levy of a capital duty payable by
Carrier1 International of 1% of the subscription price.

PLAN OF DISTRIBUTION

The selling shareholders may sell their common shares that they purchase
upon exercise of their warrants, from time to time. The selling shareholders
will act independently of us in making decisions regarding the timing, manner
and size of each sale. The sale may be made on the Neuer Markt segment of the
Frankfurt Stock Exchange, the Nasdaq National Market or in the over-the-counter
market or otherwise, at prices and at terms then prevailing or at prices related
to the then current market price, or in negotiated transactions. The selling
shareholders may effect such transactions by selling the shares to or through
broker-dealers. The shares may be sold by one or more of, or a combination of,
the following:

- a block trade in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction,

- purchases by a broker-dealer as principal and resale by such broker-dealer
for its account under this prospectus,

- an exchange distribution in accordance with the rules of such exchange,

- ordinary brokerage transactions and transactions in which the broker
solicits purchasers, or

- in privately negotiated transactions.

To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in the resales. The selling shareholders may enter
into hedging transactions with broker-dealers in connection with distributions
of the shares or otherwise. In these transactions, broker-dealers may engage in
short sales of the shares in the course of hedging the positions they assume
with selling shareholders. The selling shareholders also may sell shares short
and redeliver the shares to close out such short positions. The selling
shareholders may enter into option or other transactions with broker-dealers
which require the delivery to the broker-dealer of the shares. The broker-dealer
may then resell or otherwise transfer such shares under this prospectus. The
selling shareholders also may lend or pledge the shares to a broker-dealer. The
broker-dealer may sell the share so lent, or upon a default the broker-dealer
may sell the pledged shares under this prospectus.

Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
selling shareholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933 (the "Securities Act") in connection
with sales of the shares. Accordingly, any such commission, discount or
concession received by them and any profit on the resale of the shares purchased
by them may be deemed to be underwriting discounts or commissions under the
Securities Act. Because selling shareholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the selling
shareholders will be subject to the prospectus delivery requirements of the
Securities Act. In addition, any securities covered by this prospectus which
qualify for sale under Rule 144 promulgated under the Securities Act may be sold
under Rule 144 rather than under this prospectus. We have not been advised by
any selling shareholders that they have entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities. There is no underwriter or coordinating broker
acting in connection with the proposed sale of shares by the selling
shareholders.

To comply with the securities laws of certain jurisdictions, the shares will
be sold only through registered or licensed brokers or dealers if required. In
addition, in certain jurisdictions the shares may not

be sold unless they have been registered or qualified for sale in the applicable
jurisdiction or an exemption from the registration or qualification requirement
is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common shares for a period of two
business days prior to the commencement of such distribution. In addition, each
selling shareholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common shares by the selling shareholders. We will make copies of
this prospectus available to the selling shareholders and have informed them of
the need to deliver copies of this prospectus to purchasers at or prior to the
time of any sale of the shares.

We will file a supplement to this prospectus, if required, to comply with
Rule 424(b) under the Securities Act upon being notified by a selling
shareholder that any material arrangements have been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:

- the name of each such selling shareholder and of the participating
broker-dealer(s),

- the number of shares involved,

- the price at which such shares were sold,

- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,

- that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, and

- other facts material to the transaction.

We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. We have agreed
to indemnify the selling shareholders against certain civil liabilities,
including certain liabilities under the Securities Act and the selling
shareholders have agreed to indemnify us against certain civil liabilities,
including certain liabilities under the Securities Act.

In addition, Victor A. Pelson, a member of our board, is a Senior Advisor to
Warburg Dillon Read (one of the underwriters of our February 2000 IPO).

LEGAL MATTERS

Bonn & Schmitt & Steichen, our special Luxembourg counsel, will pass upon
the validity of the shares.

EXPERTS

The consolidated financial statements and the related financial statement
schedule incorporated by reference from our Annual Report on form 10-K for the
year ended December 31, 1999 have been audited by Deloitte & Touche Experta AG,
independent auditors, as stated in their report, incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

AVAILABLE INFORMATION

We file reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy this information at the public
reference facilities maintained by the

Commission at the Commission's Public Reference Room, which is located at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.

You may also obtain information about us from the following regional offices
of the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, 13th Floor, New York, New York 10048. Please call
1-800-SEC-0330 for further information on the public reference rooms. Our
filings will also be available to the public from commercial document retrieval
services and at the web site maintained by the Commission at http://www.sec.gov.
Copies of the information we file with the Commission may also be read at the
offices of the National Association of Securities Dealers at 1735 K Street,
N.W., Washington, D.C. 20006. We are also subject to periodic reporting
requirements in the Netherlands. Accordingly, we file information with the
Securities Board of the Netherlands.

Statements in this prospectus concerning the contents of any contract,
agreement or other document are not necessarily complete. If we filed as an
exhibit to any of our public filings any of the contracts, agreements or other
documents referred to in this prospectus, you should read the exhibit for a more
complete understanding of the document or matter involved.

INCORPORATION OF DOCUMENTS BY REFERENCE

We have incorporated information into this prospectus by reference. This
means we have disclosed information to you by referring you to another document
we filed with the Commission. We will make those documents available to you
without charge upon your oral or written request. Requests for these documents
should be directed to Carrier 1 International GmbH, Militarstrasse 36, CH-8004
Zurich, Switzerland, Attention: Investor Relations, telephone:
011-41-1-297-2600.

The information in the following documents we filed with the Commission
(File No. 001-15693) is incorporated by reference in this prospectus:

- Annual Report on Form 10-K for the year ended December 31, 1999, filed
with the Commission on March 30, 2000;

- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000, filed
with the Commission on May 9, 2000; and

- Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, filed
with the Commission on August 8, 2000.

We are also incorporating by reference additional documents we may file
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the date of this prospectus and before the termination of the
offering. This additional information is a part of this prospectus from the date
of filing of those documents.

Any statements made in this prospectus or in a document incorporated or
deemed to be incorporated by reference in this prospectus will be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference in
this prospectus modifies or supersedes the statement. Any statement so modified
or superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.

The information relating to us contained in this prospectus should be read
together with the information in the documents incorporated or deemed to be
incorporated by reference. In addition, some of the information, including
financial information, contained in this prospectus or incorporated or deemed to
be incorporated in this prospectus by reference should be read in conjunction
with documents filed with the Commission by Carrier1 International S.A.

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the fees and expenses to be incurred by
Carrier1 International S.A. in connection with the issuance and distribution of
the shares, par value $2.00 per share, offered hereby.

AMOUNT
TO BE PAID
----------

Securities and Exchange Commission Registration Fee......... $ 18,430
Legal Fees and Expenses..................................... 150,000
Accounting Fees............................................. 60,000
Printing and Engraving Costs................................ 30,000
Transfer Agent and Registration Fees........................ 50,000
Miscellaneous Expenses...................................... 50,000
--------
Total..................................................... $358,430
========

ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Under Luxembourg law, civil liability of directors both to the company and
to third parties is generally considered to be a matter of public policy. It is
possible that Luxembourg courts would declare void an explicit or even implicit
contractual limitation on directors' liability to Carrier1 International S.A.
Carrier1 International S.A., however, can validly agree to indemnify the
directors against the consequences of liability actions brought by third parties
(including shareholders if such shareholders have personally suffered a damage
which is independent of and distinct from the damage caused to the company).

Under Luxembourg law, an employee of Carrier1 International S.A. can only be
liable to Carrier1 International S.A. for damages brought about by his or her
willful acts or gross negligence. Any arrangement providing for the
indemnification of officers against claims of Carrier1 would be contrary to
public policy. Employees are liable to third parties under general tort law and
may enter into arrangements with Carrier1 International S.A. providing for
indemnification against third party claims.

Under Luxembourg law, an indemnification agreement can never cover a willful
act or gross negligence.

Carrier1's articles of incorporation provide for the indemnification of
officers and directors (the "Agreement"), having terms substantially similar to
the following:

The corporation shall indemnify any director, any member of any committee
designated by the board of directors and any fonde de pouvoir and his or her
heirs, executors and administrators, against expenses (including attorneys'
fees), judgments and fines in connection with any action, suit or proceeding or
appeal therefrom, to which he or she may be made a party by reason of his or her
being or having been a director or a member of any committee designated by the
board of directors or a fonde de pouvoir of the corporation, or, at the request
of the corporation, of any other corporation, partnership, joint venture, trust
or other enterprise in which the corporation holds a direct or indirect
ownership interest or of which the corporation is a direct or indirect creditor
and by which he or she is not entitled to be indemnified, provided that he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding had no reasonable cause to believe his or her
conduct was unlawful; and in the event of a settlement, such indemnification
shall be provided for all expenses incurred and amounts paid in connection with
such settlement unless the corporation is advised by its legal counsel that the
person to be indemnified did not meet the above-indicated standard of conduct;
except that in the case of an action or suit brought by the corporation against
such a director, committee member or fonde de pouvoir to procure a judgment in

II-1

favor of the corporation (1) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action or suit, and (2) notwithstanding any
other provisions hereof, no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Luxembourg
Courts or the courts in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such costs and expenses as the Luxembourg Court or such other
court may deem legal and proper.

The corporation may purchase and maintain insurance on behalf of any person
who is or was or has agreed to become a director, committee member or fonde de
pouvoir of the corporation, or is or was serving at the request of the
corporation in any equivalent position in any such other corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him or on his behalf in any such capacity,
or arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under the provisions of the
Agreement, provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire board of
directors. If the Agreement or any portion thereof shall be invalidated on any
ground by any court of competent jurisdiction, then the corporation shall
nevertheless indemnify each such director, committee member or fonde de pouvoir
and may indemnify each employee or agent of the corporation as to costs, charges
and expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the corporation, to the fullest extent permitted by any applicable
portion of the Agreement that shall not have been invalidated and to the fullest
extent permitted by applicable law.

Subject to the applicable provisions of Luxembourg law and in particular
Section 59 of the Luxembourg Law on Commercial Companies, no director, committee
member or fonde de pouvoir of the corporation shall be liable to the corporation
or its stockholders for his actions or omissions when performing his duties as a
director, committee member or fonde de pouvoir, provided that nothing contained
in the Agreement shall eliminate or limit the liability of a director, committee
member or fonde de pouvoir (i) for any breach of his duty of loyalty to the
corporation or its stockholder, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law, or
(iii) for any transaction from which the director derived an improper personal
benefit.

ITEM 16. EXHIBITS

(A) EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

3.1 Articles of Incorporation of Carrier1 International S.A.*

4.1 Indenture, dated as of February 19, 1999, between Carrier1
International S.A. and the Chase Manhattan Bank, as Trustee,
relating to Carrier1 International S.A.'s 13 1/4% Senior
Dollar Notes Due 2009 (filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-4 (No.
333-75195) (the "Registrant's Form S-4"))*

4.2 Form of 13 1/4% Senior Dollar Note (included in Exhibit 4.1
to this registration statement)

4.3 Indenture, dated as of February 19, 1999, between Carrier1
International S.A. and the Chase Manhattan Bank, as Trustee,
relating to Carrier1 International S.A.'s 13 1/4% Senior
Euro Notes Due 2009 (filed as Exhibit 4.3 to the
Registrant's Form S-4)*

4.4 Form of 13 1/4% Senior Euro Note (included in Exhibit 4.3 to
this registration statement)

II-2

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.5 Notes Registration Rights Agreement, dated February 12,
1999, among Carrier1 International S.A., Morgan Stanley &
Co. Incorporated, Salomon Smith Barney Inc., Warburg Dillon
Read LLC and Bear, Stearns & Co. Inc. (filed as Exhibit 4.5
to the Registrant's Form S-4)*

4.6 U.S. Dollar Collateral Pledge and Security Agreement, dated
as of February 19, 1999, among Carrier1 International S.A.,
The Chase Manhattan Bank, as Trustee and The Chase Manhattan
Bank, as securities intermediary (filed as Exhibit 4.6 to
the Registrant's Form S-4)*

4.7 Euro Collateral Pledge and Security Agreement, dated as of
February 19, 1999, among Carrier1 International S.A., The
Chase Manhattan Bank, as Trustee and The Chase Manhattan
Bank AG, as securities intermediary (filed as Exhibit 4.7 to
the Registrant's Form S-4)*

4.8 Loan Agreement, dated June 25, 1999, between Carrier1
International S.A. as Borrower, the Lenders and Financial
Institutions named therein, and Nortel Networks Inc. as
Agent (filed as Exhibit 4.8 to the Registrant's Form S-4)*

4.9 Credit Agreement, dated as of December 21, 1999, among
Carrier1 International S.A., certain of its subsidiaries as
Borrowers and certain of its subsidiaries as Guarantors, the
Lenders and Financial Institutions named therein, and Morgan
Stanley Senior Funding, Inc. and Citibank, N.A. as Lead
Arrangers and Morgan Stanley Senior Funding, Inc. as
Administrative Agent and Security Agent (filed as Exhibit
4.9 to the Registrant's Registration Statement on Form S-1
(No. 333-94541) (the "Registrant's Form S-1"))*

4.10 Form of Deposit Agreement between Bankers Trust Company and
Carrier1 International, including form of Depositary Receipt
(previously filed as exhibit (a) to Registrant's
Registration Statement on Form F-6 (No. 333-11440))*

5.1 Opinion of Bonn & Schmitt & Steichen*

10.1 Dollar Warrant Agreement, dated as of February 19, 1999,
between Carrier1 International S.A. and The Chase Manhattan
Bank, as Warrant Agent (filed as Exhibit 10.1 to the
Registrant's Form S-4)*

10.2 Euro Warrant Agreement, dated as of February 19, 1999,
between Carrier1 International S.A. and The Chase Manhattan
Bank, as Warrant Agent (filed as Exhibit 10.2 to the
Registrant's Form S-4)*

10.3 Warrants Registration Rights Agreement, dated as of February
12, 1999, between Carrier1 International S.A. and The Chase
Manhattan Bank, as Warrant Agent (filed as Exhibit 10.3 to
the Registrant's Form S-4)*

10.4 Carrier1 International S.A. 1999 Share Option Plan (filed as
Exhibit 10.4 to the Registrant's Form S-4)*

10.5 Master Option Agreement, dated as of December 30, 1998,
among Carrier1 International S.A., Carrier One LLC, Carrier1
International GmbH, Carrier1 B.V., Carrier1 France S.A.R.L.,
Carrier1 U.K. Limited and Carrier1 GmbH & Co. AG (filed as
Exhibit 10.5 to the Registrant's Form S-4)*

10.6 Form of Option Agreement (filed as Exhibit 10.6 to the
Registrant's Form S-4)*

10.7 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Stig Johansson (filed as Exhibit 10.7 to
the Registrant's Form S-4)*

10.8 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Eugene A. Rizzo (filed as Exhibit 10.8 to
the Registrant's Form S-4)*

II-3

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.9 Employment Agreement, dated as of March 26, 1998, between
Carrier One AG and Terje Nordahl (filed as Exhibit 10.9 to
the Registrant's Form S-4)*

10.10 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Joachim Bauer (filed as Exhibit 10.10 to
the Registrant's Form S-4)*

10.11 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Kees van Ophem (filed as Exhibit 10.11 to
the Registrant's Form S-4)*

10.12 Securities Purchase Agreement, dated as of March 1, 1999,
among Carrier1 International S.A., Carrier One LLC and the
employee investors named therein (filed as Exhibit 10.12 to
the Registrant's Form S-4)*

10.13 Registration Rights Agreement, dated as of March 1, 1999,
among Carrier1 International S.A., Carrier One LLC, Stig
Johansson, Joachim Bauer, Gene Rizzo, Kees van Ophem, Terje
Nordahl and the other parties named therein (filed as
Exhibit 10.13 to the Registrant's Form S-4)*

10.14 Securityholders' Agreement, dated as of March 1, 1999, among
Carrier1 International S.A. and the employee investors named
therein (filed as Exhibit 10.14 to the Registrant's
Form S-4)*

10.15 Development Agreement, dated as of February 19, 1999 by and
among ViCaMe Infrastructure Development GmbH, Viatel German
Asset GmbH, Carrier 1 Fiber Network GmbH & Co. oHG,
Metromedia Fiber Network GmbH, Viatel, Inc. and Metromedia
Fiber Network, Inc. (filed as Exhibit 10.15 to the
Registrant's Form S-4)* ++

10.16 Amendment No. 1 to Securityholders' Agreement and
Registration Rights Agreement, dated as of March 1, 1999
(filed as Exhibit 10.16 to the Registrant's Form S-4)*

10.17 Amendment No. 2 to Securityholders' Agreement and Securities
Purchase Agreement, dated as of March 1, 1999 (filed as
Exhibit 10.17 to the Registrant's Form S-4)*

10.18 Amendment No. 3 to Securityholders' Agreement and Securities
Purchase Agreement, dated as of March 1, 1999 (filed as
Exhibit 10.18 to the Registrant's Form S-4)*

10.19 Amendment No. 4 to Securityholders' Agreement and Securities
Purchase Agreement, dated as of March 1, 1999 (filed as
Exhibit 10.19 to the Registrant's Form S-4)*

10.20 Amended and Restated Shareholders Agreement, dated as of
January 13, 2000, among Carlyle Hubco International
Partners, L.P., iaxis B.V., Carrier1 International S.A.,
Providence Equity Hubco (Cayman) L.P., and Hubco S.A. (filed
as Exhibit 10.1 to the Registrant's periodic report filed on
Form 8-K /A dated January 4, 2000 (the "Registrant's
Form 8-K/A"))* ++

10.21 Strategic Anchor Tenant Agreement, dated November 23, 1999,
between Carrier1 International S.A. and Hubco S.A. (filed as
Exhibit 10.3 to the Registrant's
Form 8-K /A)* ++

10.22 Registration Rights Agreement, dated November 23, 1999, by
and among The Carlyle entities named therein, iaxis B.V.,
Carrier1 International S.A., Providence Equity Partners III
L.P., Providence Equity Operating Partners III L.P. and
Hubco S.A. (filed as Exhibit 10.2 to the Registrant's
periodic report filed on Form 8-K/A dated February 17, 2000
(the "Registrant's Revised Form 8-K/A"))*

10.23 Amendment No. 1 to Registration Rights Agreement, dated as
of January 13, 2000, by and among Hubco S.A. and the Persons
listed on the signature pages thereto (filed as Exhibit 10.4
to the Registrant's Revised Form 8-K/A)*

II-4

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.24 Amendment Agreement, dated as of August 23, 2000, by and
among Carrier1 International S.A., Carrier One LLC and the
persons listed in Schedule A thereto.

21.1 List of Subsidiaries of Carrier1 International S.A. (filed
as Exhibit 21.1 to the Registrant's Form S-1)*

23.1 Consent of Deloitte & Touche Experta AG

23.2 Consent of Bonn & Schmitt & Steichen*

24.1 Power of Attorney from Glenn M. Creamer*

24.2 Power of Attorney from Jonathan E. Dick*

24.3 Power of Attorney from Stig Johansson*

24.4 Power of Attorney from Mark A. Pelson*

24.5 Power of Attorney from Victor A. Pelson*

24.6 Power of Attorney from Thomas J. Wynne*

24.7 Power of Attorney from Joachim W. Bauer*

24.8 Certified Resolution as to Power of Attorney*

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

* Previously filed.

++ Previously filed under a request for confidential treatment.

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) (Section 230.424(b) of this
chapter) 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 1(i) and 1(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the undersigned registrant pursuant to Section 13 or
Section 15(a) of the Securities Exchange Act of 1934 that are incorporated
herein by reference.

II-5

(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 that time shall be deemed to be the initial
bona fide offering thereof.

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

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 this
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.

The undersigned registrant hereby further undertakes, 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 foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Zurich on
October 20, 2000.

CARRIER1 INTERNATIONAL, S.A.

By: *
-----------------------------------------
Name: Stig Johansson
Title: CHIEF EXECUTIVE OFFICER AND
PRESIDENT

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

SIGNATURE CAPACITY IN WHICH SIGNED DATE
--------- ------------------------ ----

* Director, Chief Executive Officer
------------------------------------ and President (Principal October 20, 2000
Stig Johansson Executive Officer)

* Chief Financial Officer (Principal
------------------------------------ Financial Officer and Principal October 20, 2000
Joachim W. Bauer Accounting Officer)

*
------------------------------------ Director October 20, 2000
Glenn M. Creamer

*
------------------------------------ Director October 20, 2000
Jonathan E. Dick

*
------------------------------------ Director October 20, 2000
Mark A. Pelson

*
------------------------------------ Director October 20, 2000
Victor A. Pelson

*
------------------------------------ Director October 20, 2000
Thomas J. Wynne

II-7

CARRIER 1, INC. Authorized Representative in the U.S.

By: * October 20, 2000
-------------------------------
Joachim W. Bauer
ITS SECRETARY

*By: /s/ KEES VAN OPHEM October 20, 2000
-------------------------------
BY POWER OF ATTORNEY

II-8

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

3.1 Articles of Incorporation of Carrier1 International S.A.*
4.1 Indenture, dated as of February 19, 1999, between Carrier1
International S.A. and the Chase Manhattan Bank, as Trustee,
relating to Carrier1 International S.A.'s 13 1/4% Senior
Dollar Notes Due 2009 (filed as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-4 (No.
333-75195) (the "Registrant's Form S-4"))*
4.2 Form of 13 1/4% Senior Dollar Note (included in Exhibit 4.1
to this registration statement)
4.3 Indenture, dated as of February 19, 1999, between Carrier1
International S.A. and the Chase Manhattan Bank, as Trustee,
relating to Carrier1 International S.A.'s 13 1/4% Senior
Euro Notes Due 2009 (filed as Exhibit 4.3 to the
Registrant's Form S-4)*
4.4 Form of 13 1/4% Senior Euro Note (included in Exhibit 4.3 to
this registration statement)
4.5 Notes Registration Rights Agreement, dated February 12,
1999, among Carrier1 International S.A., Morgan Stanley &
Co. Incorporated, Salomon Smith Barney Inc., Warburg Dillon
Read LLC and Bear, Stearns & Co. Inc. (filed as Exhibit 4.5
to the Registrant's Form S-4)*
4.6 U.S. Dollar Collateral Pledge and Security Agreement, dated
as of February 19, 1999, among Carrier1 International S.A.,
The Chase Manhattan Bank, as Trustee and The Chase Manhattan
Bank, as securities intermediary (filed as Exhibit 4.6 to
the Registrant's Form S-4)*
4.7 Euro Collateral Pledge and Security Agreement, dated as of
February 19, 1999, among Carrier1 International S.A., The
Chase Manhattan Bank, as Trustee and The Chase Manhattan
Bank AG, as securities intermediary (filed as Exhibit 4.7 to
the Registrant's Form S-4)*
4.8 Loan Agreement, dated June 25, 1999, between Carrier1
International S.A. as Borrower, the Lenders and Financial
Institutions named therein, and Nortel Networks Inc. as
Agent (filed as Exhibit 4.8 to the Registrant's Form S-4)*
4.9 Credit Agreement, dated as of December 21, 1999, among
Carrier1 International S.A., certain of its subsidiaries as
Borrowers and certain of its subsidiaries as Guarantors, the
Lenders and Financial Institutions named therein, and Morgan
Stanley Senior Funding, Inc. and Citibank, N.A. as Lead
Arrangers and Morgan Stanley Senior Funding, Inc. as
Administrative Agent and Security Agent (filed as Exhibit
4.9 to the Registrant's Registration Statement on Form S-1
(No. 333-94541) (the "Registrant's Form S-1"))*
4.10 Form of Deposit Agreement between Bankers Trust Company and
Carrier1 International, including form of Depositary Receipt
(previously filed as exhibit (a) to Registrant's
Registration Statement on Form F-6 (No. 333-11440))*
5.1 Opinion of Bonn & Schmitt & Steichen*
10.1 Dollar Warrant Agreement, dated as of February 19, 1999,
between Carrier1 International S.A. and The Chase Manhattan
Bank, as Warrant Agent (filed as Exhibit 10.1 to the
Registrant's Form S-4)*
10.2 Euro Warrant Agreement, dated as of February 19, 1999,
between Carrier1 International S.A. and The Chase Manhattan
Bank, as Warrant Agent (filed as Exhibit 10.2 to the
Registrant's Form S-4)*
10.3 Warrants Registration Rights Agreement, dated as of
February 12, 1999, between Carrier1 International S.A. and
The Chase Manhattan Bank, as Warrant Agent (filed as Exhibit
10.3 to the Registrant's Form S-4)*
10.4 Carrier1 International S.A. 1999 Share Option Plan (filed as
Exhibit 10.4 to the Registrant's Form S-4)*
10.5 Master Option Agreement, dated as of December 30, 1998,
among Carrier1 International S.A., Carrier One LLC, Carrier1
International GmbH, Carrier1 B.V., Carrier1 France S.A.R.L.,
Carrier1 U.K. Limited and Carrier1 GmbH & Co. AG (filed as
Exhibit 10.5 to the Registrant's Form S-4)*
10.6 Form of Option Agreement (filed as Exhibit 10.6 to the
Registrant's Form S-4)*

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.7 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Stig Johansson (filed as Exhibit 10.7 to
the Registrant's Form S-4)*
10.8 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Eugene A. Rizzo (filed as Exhibit 10.8 to
the Registrant's Form S-4)*
10.9 Employment Agreement, dated as of March 26, 1998, between
Carrier One AG and Terje Nordahl (filed as Exhibit 10.9 to
the Registrant's Form S-4)*
10.10 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Joachim Bauer (filed as Exhibit 10.10 to
the Registrant's Form S-4)*
10.11 Employment Agreement, dated as of March 4, 1998, between
Carrier One AG and Kees van Ophem (filed as Exhibit 10.11 to
the Registrant's Form S-4)*
10.12 Securities Purchase Agreement, dated as of March 1, 1999,
among Carrier1 International S.A., Carrier One LLC and the
employee investors named therein (filed as Exhibit 10.12 to
the Registrant's Form S-4)*
10.13 Registration Rights Agreement, dated as of March 1, 1999,
among Carrier1 International S.A., Carrier One LLC, Stig
Johansson, Joachim Bauer, Gene Rizzo, Kees van Ophem, Terje
Nordahl and the other parties named therein (filed as
Exhibit 10.13 to the Registrant's Form S-4)*
10.14 Securityholders' Agreement, dated as of March 1, 1999, among
Carrier1 International S.A. and the employee investors named
therein (filed as Exhibit 10.14 to the Registrant's
Form S-4)*
10.15 Development Agreement, dated as of February 19, 1999 by and
among ViCaMe Infrastructure Development GmbH, Viatel German
Asset GmbH, Carrier 1 Fiber Network GmbH & Co. oHG,
Metromedia Fiber Network GmbH, Viatel, Inc. and Metromedia
Fiber Network, Inc. (filed as Exhibit 10.15 to the
Registrant's Form S-4)* ++
10.16 Amendment No. 1 to Securityholders' Agreement and
Registration Rights Agreement, dated as of March 1, 1999
(filed as Exhibit 10.16 to the Registrant's Form S-4)*
10.17 Amendment No. 2 to Securityholders' Agreement and Securities
Purchase Agreement, dated as of March 1, 1999 (filed as
Exhibit 10.17 to the Registrant's Form S-4)*
10.18 Amendment No. 3 to Securityholders' Agreement and Securities
Purchase Agreement, dated as of March 1, 1999 (filed as
Exhibit 10.18 to the Registrant's Form S-4)*
10.19 Amendment No. 4 to Securityholders' Agreement and Securities
Purchase Agreement, dated as of March 1, 1999 (filed as
Exhibit 10.19 to the Registrant's Form S-4)*
10.20 Amended and Restated Shareholders Agreement, dated as of
January 13, 2000, among Carlyle Hubco International
Partners, L.P., iaxis B.V., Carrier1 International S.A.,
Providence Equity Hubco (Cayman) L.P., and Hubco S.A. (filed
as Exhibit 10.1 to the Registrant's periodic report filed on
Form 8-K /A dated January 4, 2000 (the "Registrant's
Form 8-K/A"))* ++
10.21 Strategic Anchor Tenant Agreement, dated November 23, 1999,
between Carrier1 International S.A. and Hubco S.A. (filed as
Exhibit 10.3 to the Registrant's Form 8-K/A)* ++
10.22 Registration Rights Agreement, dated November 23, 1999, by
and among The Carlyle entities named therein, iaxis B.V.,
Carrier1 International S.A., Providence Equity Partners III
L.P., Providence Equity Operating Partners III L.P. and
Hubco S.A. (filed as Exhibit 10.2 to the Registrant's
periodic report filed on Form 8-K/A dated February 17, 2000
(the "Registrant's Revised Form 8-K/A"))*
10.23 Amendment No. 1 to Registration Rights Agreement, dated as
of January 13, 2000, by and among Hubco S.A. and the Persons
listed on the signature pages thereto (filed as Exhibit 10.4
to the Registrant's Revised Form 8-K/A)*
10.24 Amendment Agreement, dated as of August 23, 2000, by and
among Carrier1 International S.A., Carrier One LLC and the
persons listed in Schedule A thereto.
21.1 List of Subsidiaries of Carrier1 International S.A. (filed
as Exhibit 21.1 to the Registrant's Form S-1)*
23.1 Consent of Deloitte & Touche Experta AG
23.2 Consent of Bonn & Schmitt & Steichen*

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

24.1 Power of Attorney from Glenn M. Creamer*
24.2 Power of Attorney from Jonathan E. Dick*
24.3 Power of Attorney from Stig Johansson*
24.4 Power of Attorney from Mark A. Pelson*
24.5 Power of Attorney from Victor A. Pelson*
24.6 Power of Attorney from Thomas J. Wynne*
24.7 Power of Attorney from Joachim W. Bauer*
24.8 Certified Resolution as to Power of Attorney*

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

* Previously filed.

++ Previously filed under a request for confidential treatment.