EXHIBIT 10.21

                                BTI TELECOM CORP.

                             SHAREHOLDERS AGREEMENT


         THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made as of the 28th
day of December 1999, by and among BTI Telecom Corp., a North Carolina
corporation (the "Company"), Peter T. Loftin ("Loftin") and Welsh, Carson,
Anderson & Stowe VIII, L.P., a Delaware limited partnership, WCAS Information
Partners, L.P., a Delaware limited partnership, and BTI Investors LLC, a
Delaware limited liability company (collectively, the "Investor," and
collectively with Loftin, the "Shareholders").

         WHEREAS, the Investor is acquiring 200,000 shares of Series A Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"), of the Company
and warrants (collectively, the "Warrant") to purchase up to an aggregate of
4,500,000 shares of Common Stock, no par value per share, of the Company (the
"Warrant Stock"), pursuant to the terms of a Series A Preferred Stock Purchase
Agreement dated as of December 10, 1999 among the Company and the Investor (the
"Purchase Agreement"); and

         WHEREAS, it is a condition to the obligations of the Investor under the
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute this Agreement and to be bound by the
provisions hereof;

         NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
shareholders, the Company and the Shareholders hereby agree with each other as
follows.

         1. Definition of Shares. As used in this Agreement, "Shares" shall mean
and include any equity security or any security convertible or exchangeable into
an equity security of the Company now owned or hereafter acquired by any
Shareholders. Other terms used as defined terms herein and not otherwise defined
shall have the meanings set forth in the Purchase Agreement or its Related
Agreements (as such term is defined in the Purchase Agreement).

         2. Restrictions on Transfers. No Shareholder shall sell, pledge,
encumber, assign, transfer or dispose of all or any of his or its Shares except
in compliance with the terms of this Agreement. Notwithstanding anything to the
contrary contained in this Agreement, any Shareholder may transfer without the
necessity of prior approval all or any of his or its Shares (a) by way of gift
to his spouse or to any of his lineal descendants or ancestors, (b) to any trust
for the sole benefit of any one or more of such Shareholder, his spouse or his
lineal descendants or ancestors; or (c) in a sale, assignment, transfer or other
disposition by the Investor to an affiliate or by a Shareholder that is a
partnership or limited liability company to a partner or member of such
partnership or limited liability company or retired partner or member who
retires after the date hereof, or to the estate of any such partner or member or
in


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a transfer by any partner or member in accordance with (a) or (b) hereof;
provided, however, that, except as otherwise provided below, it shall be
condition to any such transfer enumerated in items (a) through (c) above that
any such transferee shall agree in writing with the Company and the
Shareholders, as a condition to such transfer, to be bound by all of the
provisions of this Agreement in the same manner and to the same extent as the
transferor. Notwithstanding anything herein to the contrary, the proviso
contained in the immediately preceding sentence shall not be applied to any
transfer by Investor of its Shares to any partner of Investor pursuant to a
distribution in respect of the partnership interests in Investor in connection
with which Investor determines not to require such partners to have agreed in
writing to be bound by the terms of this Agreement or to be entitled to the
benefit hereof. In addition to the transfers described in the previous sentence,
Loftin shall be entitled to cause the Company to redeem $65,000,000 of Common
Stock at the per share price of $8.55 pursuant to the Stock Repurchase Agreement
attached as Exhibit G to the Purchase Agreement. If Loftin transfers any Shares
pursuant to Section 4(d) subsequent to a Qualified Public Offering, the
transferees in any such transfer shall not be bound by or entitled to the
benefits of the terms of this Agreement.

                  Notwithstanding anything herein to the contrary, each transfer
of Shares must be made in compliance with the 1933 Act and any applicable state
and foreign securities laws. Any attempt to transfer any Shares not in
compliance with this Agreement shall be null and void and neither the Company
nor any transfer agent shall give any effect in the Company's transfer records
to such transfer. No Shareholder shall enter into any agreement or arrangement
of any kind with any person or entity with respect to its Shares inconsistent
with the provisions of this Agreement, including, but not limited to, agreements
or arrangements with respect to the acquisition, disposition or voting of its or
his Shares.

         3. Notice of Proposed Transfers. Loftin and the holder of each
certificate representing Registrable Securities (as defined in Section 1.1 of
the Investor Rights Agreement, dated as of the date hereof, by and among the
Company and the Investor) agrees to comply in all respects with the provisions
of this Section. Prior to any proposed sale, assignment, transfer or pledge of
any Registrable Securities, or of any of Loftin's Common Stock, unless (i) the
transfer is made to a person or entity described in the second sentence of
Section 2 hereof or the transfer is made to the Company, (ii) a registration
statement under the 1933 Act will cover the proposed transfer, (iii) such sale
is made pursuant to Rule 144, the holder thereof shall give written notice to
the Company of the holder's intention to effect such transfer, sale, assignment
or pledge. Each such notice shall describe the manner and circumstances of the
proposed transfer, sale, assignment or pledge in sufficient detail, and if
requested by the Company, shall be accompanied at such holder's expense by a
written opinion of legal counsel who shall, and whose legal opinion shall, be
reasonably satisfactory to the Company addressed to the Company, to the effect
that the proposed transfer of the Registrable Securities or Loftin's Common
Stock may be effected without registration under the 1933 Act. Each certificate
evidencing the Registrable Securities or Loftin's Common Stock transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144
or a public offering, the appropriate restrictive legends set forth in Section
10 below, except that such certificate shall not bear such restrictive legend if
in the opinion of counsel for such holder and


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the Company such legend is not required in order to establish compliance with
any provisions of the 1933 Act.

         4. Prohibited Transfers. Notwithstanding anything herein to the
contrary:

                  (a) The Investor shall not, prior to the date which is two (2)
years after the date hereof, sell, pledge, encumber, assign, transfer or dispose
of all or any of its Shares except in the event of (i) a liquidation,
dissolution or winding up of the Company, either voluntary or involuntary, (ii)
a transfer permitted pursuant to the second sentence of Section 2 or (iii) the
sale, transfer or other disposition of all the stock or all or substantially all
the assets of the Company to, or a merger or consolidation or other similar
business combination with or into, an entity that is not controlled, directly or
indirectly, by the shareholders of the Company. For purposes of the preceding
sentence, "control" shall mean ownership of more than fifty percent of the
voting power of an entity.


                  (b) Reserved.

                  (c) The Investor shall not sell, assign or otherwise transfer
any of its Series A Preferred Stock to a Competitor or any person or entity that
owns greater than twenty-five percent (25%) of the outstanding shares
(calculated on a fully-diluted basis) of a Competitor and that actually
designates at least that number of members of the Board of Directors of such
Competitor that is proportional to its equity interest in such Competitor. For
purposes of the preceding sentence, a person or entity shall be deemed a
"Competitor" if it is engaged in providing integrated communications services to
small and medium sized businesses and, at the time of the proposed sale,
assignment or transfer, directly competes with the Company in the Company's
markets.

                  (d) Neither Peter Loftin nor his transferees described in the
second sentence of Section 2, shall sell, pledge, encumber, assign, transfer or
otherwise dispose of more than five percent (5%) of the Common Stock of the
Company owned by them as of the date hereof in any twelve (12) month period,
except for a transfer of shares described in the second or fourth sentences of
Section 2; provided, that, no such transfer by Loftin to the Company shall be
permitted pursuant to this Section 4(d) without the written consent of the
Investor.

                  (e) The restrictions placed on the Investor in subsections (a)
- (c) of this Section 4 shall not apply to transfers from the Investor to its
limited partners or affiliates.

         5. Election of Directors. At each annual meeting of the shareholders of
the Company, and at each special meeting of the shareholders of the Company
called for the purpose of electing directors of the Company, and at any time at
which shareholders of the Company shall have the right to, or shall, vote
(whether by written consent or otherwise) for directors of the Company, then,
and in each event, the Shareholders shall vote all Shares owned by them for the
election of a Board of Directors consisting of not more than ten directors,
designated as follows:


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                  (a) so long as Investor and its transferees described in the
second sentence of Section 2 beneficially own at least 11,700,000 (as adjusted
for stock splits, combinations, stock dividends, recapitalizations and the like)
shares of Common Stock (calculated after giving effect to the conversion of the
Series A Preferred Stock and, commencing at such time as the Warrant becomes
exercisable, the exercise or exchange of the Warrant ("Fully-Diluted Basis"))
(A) two directors shall be designated by Investor, (B) one observer (who shall
be entitled to attend each meeting of the Board of Directors but shall not be
entitled to vote or otherwise exercise any right or authority granted to the
members of the Board of Directors) shall be designated by Investor, and (C) the
remaining directors shall be designated by the holders of a majority of the
outstanding shares of Common Stock;

                  (b) so long as Investor and its transferees described in the
second sentence of Section 2 beneficially own at least 6,000,000, (as adjusted
for stock splits, combinations, stock dividends, recapitalizations and the
like), but less than 11,700,000, (as adjusted for stock splits, combinations,
stock dividends, recapitalizations and the like), shares of Common Stock
(calculated on a Fully-Diluted Basis) (A) one director shall be designated by
the Investor, (B) one observer (who shall be entitled to attend each meeting of
the Board of Directors but shall not be entitled to vote, or otherwise exercise
any right or authority granted to the members of the Board of Directors) shall
be designated by the Investor, and (C) the remaining directors shall be
designated by the holders of a majority of the outstanding shares of Common
Stock; and

                  (c) so long as Investor and its transferees described in the
second sentence of Section 2 beneficially own in the aggregate less than
6,000,000, (as adjusted for stock splits, combinations, stock dividends,
recapitalizations and the like), shares of Common Stock (calculated on a
Fully-Diluted Basis) all directors shall be designated in the manner set forth
in the Company's bylaws.

         No party hereto shall vote to remove any member of the Board of
Directors designated in accordance with the aforesaid procedure unless the
persons or groups so designating such director specified above so vote, and if
such persons or groups so vote then the non-designating party or parties shall
likewise so vote. Any vacancy on the Board of Directors created by the
resignation, removal, incapacity or death of any person nominated by the party
which originally nominated such person under this Section 5 shall be filled by
another person designated in a manner so as to preserve the constituency of the
Board of Directors as provided above. The Company shall use its best efforts to
implement the provisions of this Section 5 and shall take such actions as may be
necessary in furtherance of the foregoing.

         6. Committees and Subsidiary Boards. The Board of Directors of each
subsidiary of the Company at all times shall reflect the proportional
representation of the Board of Directors of the Company described in Section 5.
The Company shall vote its shares of stock of each subsidiary, and each
Shareholder shall take all other actions necessary, to ensure that the
composition of the Board of Directors of such subsidiary is as set forth above.
For so long as the Investor is entitled to designate any directors pursuant to
Section 5, the Investor shall


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have the right to designate at least one member of each committee of the Board
of Directors of the Company and the Board of Directors of each of its
subsidiaries.

         7. Restriction on Corporate Action. In addition to any action which is
required by law or the Company's Amended and Restated Articles of Incorporation:

                  (a) prior to a Qualified Public Offering (as defined in the
Company's Amended and Restated Articles of Incorporation), the written approval
of the holders of a majority of the outstanding shares of Series A Preferred
Stock shall be required in order for the Company to, or permit any of its
subsidiaries to:

                           (i) sell, transfer or otherwise dispose of assets of
         the Company, or any of its subsidiaries, purchase the equity or assets
         of another entity, or enter into a joint venture in a transaction in
         which the Fair Market Value of the consideration for such assets is
         greater than $25,000,000;

                           (ii) make any material change in any year to the
         annual operating and capital expenditure plan for the Company or any of
         its subsidiaries presented to the Board of Directors or the board of
         directors of any of the Company's subsidiaries for such year;

                           (iii) make any material change to the Company's 1997
         Stock Option Plan or adopt or make any material change to a new stock
         option plan, stock purchase plan or other equity or equity-based
         incentive compensation plan or arrangement; and

                           (iv) hire a new chief executive officer or chief
operating officer.

                  (b) after a Qualified Public Offering, the Company shall not,
and shall not permit any of its subsidiaries to:

                           (i) unless approved by a majority of the members of
         the Board of Directors, sell, transfer or otherwise dispose of assets
         of the Company or any of its subsidiaries, purchase the equity or
         assets of another entity, or enter into a joint venture, in a
         transaction in which the Fair Market Value of the consideration for
         such assets is greater than $25,000,000;

                           (ii) unless approved by a majority of the members of
         the Board of Directors, make any material change in any year to the
         annual operating and capital expenditure plan for the Company or any of
         its subsidiaries presented to the Board of Directors or the board of
         directors of any of the Company's subsidiaries for such year;

                           (iii) unless approved by a majority of the members of
         the Board of Directors who are not also officers of the Company, make
         any material change to the Company's 1997 Stock Option Plan or adopt or
         make any material changes to a new


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         stock option plan, stock purchase plan or other equity or equity-based
         incentive compensation plan or arrangement;

                           (iv) unless approved by a majority of the members of
the Board of Directors who are not also officers of the Company, hire a new
chief executive officer or chief operating officer.

                  (c) Without the consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock, during the period that ends upon
the later of (i) the date which is three years after the date hereof or (ii) the
date which is 270 days after the consummation of a Qualified Public Offering
(such period, the "Private Sale Restricted Period") the Company shall not sell
any equity securities or securities convertible or exchangeable into an equity
security of the Company (an "Equity Security") to an entity (or group of related
entities) in a transaction other than a registered public offering whereby as a
result of such transaction the purchasing entity or entities beneficially owns a
number of Equity Securities in excess of the number of Shares beneficially owned
by the Shareholders (a "Qualifying Private Equity Sale"). During the two year
period starting the day after the end of the Private Sale Restricted Period, the
Company shall not consummate a Qualifying Private Equity Sale unless the
purchaser or purchasers in such transaction becomes a party to this Agreement.


         8. Term. This Agreement shall terminate upon the first date on which
Investor and its transferees described in the second sentence of Section 2
beneficially own less than 6,000,000, (as adjusted for stock splits,
combinations, stock dividends, recapitalizations and the like), shares of Common
Stock (calculated on a Fully-Diluted Basis); provided that Section 5 hereof
shall terminate, if earlier, on the date on which such Section is required to
terminate under applicable law. Within 30 days prior to the date such Section 5
would otherwise terminate as a result of the proviso to the previous sentence,
the parties shall extend the term of such Section 5 for the maximum period
permitted by applicable law.

         9. Specific Enforcement. Each party hereto expressly agrees that the
other parties hereto may be irreparably damaged if this Agreement is not
specifically enforced. Upon a breach or threatened breach of the terms or
covenants of this Agreement by any party hereto, the other parties hereto shall,
in addition to all other remedies, each be entitled to apply for a temporary or
permanent injunction, and/or a decree for specific performance, in accordance
with the provisions hereof.

         10. Legend. Each certificate evidencing any of the Shares now owned or
hereafter acquired by the Shareholders shall bear a legend substantially as
follows, in addition to any other legends required by law, and each Shareholder
shall surrender to the Company the certificate(s) representing the Shares for
purposes of placement of the following legends:

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  APPLICABLE STATE

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                  SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR
                  INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND
                  MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
                  TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR
                  SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
                  AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY
                  OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
                  SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
                  SECURITIES LAWS.

                  ANY SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION OF, OR THE
                  VOTING OF, THE SHARES REPRESENTED BY THIS CERTIFICATE IS
                  RESTRICTED BY, AND SUBJECT TO, THE TERMS AND PROVISIONS OF A
                  SHAREHOLDERS AGREEMENT, AS AMENDED FROM TIME TO TIME. A COPY
                  OF SAID AGREEMENT IS ON FILE WITH THE SECRETARY OF THE
                  CORPORATION.

Each Shareholder consents to the Company's making a notation on its records and
giving instructions to any transfer agent of the Series A Preferred Stock, the
Conversion Shares, the Common Stock, the Warrant, the Warrant Stock and any
securities issued with respect to any of the foregoing in order to implement the
restrictions on transfer established in this Agreement. Such legends shall be
removed by the Company from any certificate at such time as the Shares
represented by such certificate cease to be subject to the restrictions
described in such legends.

         11. Notices.  All notices and other communications between the
parties hereto shall be delivered in the manner set forth in the Investor
Rights Agreement.

         12. Entire Agreement. This Agreement, along with the Articles of
Incorporation, the Investor Rights Agreement, the Series A Purchase Agreement,
the Warrant, and the Redemption Agreement, constitutes the full and entire
understanding and agreement among the parties with regard to the subjects hereof
and thereof and supercedes all prior agreements and understanding between them
or any of them as to such subject matter.

         13. Amendment. Neither this Agreement nor any provision hereof may be
waived, modified, amended or terminated except by a written agreement signed by
the parties hereto. Each of the Shareholders represents that he or it is not a
party to any other agreement which would prevent him or it from performing his
or its obligations hereunder. No waiver of any breach or default hereunder shall
be considered valid unless in writing, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar nature.


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         14. Governing Law. This Agreement shall be deemed a contract made under
the laws of the State of North Carolina and together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State without regard to the conflicts of laws provisions
thereof.

         15. Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any party of any one or more of the provisions of
this Agreement, or any part thereof, whether arising by reason of the law of any
such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of the remainder of this Agreement with
respect to such party or the validity, legality or enforceability of this
Agreement with respect to any other party. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

         16. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto; provided, that (i) the Company may not assign its obligations
under this Agreement and (ii) the Investor may not assign its rights under
Sections 5, 6 or 7 to any person other than a person described in the second
sentence of Section 2.

         17. Recapitalization, etc. In the event that any capital stock or other
securities are issued in respect of, in exchange for, or in substitution of, any
Shares by reason of any reorganization, recapitalization, reclassification,
merger, consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders or combination
of the Shares or any other change in capital structure of the Company,
appropriate adjustments shall be made with respect to the relevant provisions of
this Agreement so as to fairly and equitably preserve, as far as practicable,
the original rights and obligations of the parties hereto under this Agreement.

         18. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with, or
grant rights superior to the rights granted to the Shareholders pursuant to,
this Agreement.

         19. Captions. Captions are for convenience only and are not deemed to
be part of this Agreement.

         20. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
Agreement or any exhibit hereto may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart
hereof.


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         21. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective successors and permitted assigns.







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         IN WITNESS WHEREOF, the parties have caused this Shareholders Agreement
to be duly executed as of the date first above written.


COMPANY:                        BTI TELECOM CORP.

                                By: /s/ Peter T. Loftin
                                    _______________________________
                                Name: Peter T. Loftin
                                Title: Chief Executive Officer


LOFTIN:                         /s/ Peter T. Loftin
                                ___________________________________
                                Peter T. Loftin


INVESTOR:                       WELSH, CARSON, ANDERSON
                                   & STOWE VIII, L.P.

                                By:  WCAS VIII Associates LLC,
                                         General Partner

                                By: /s/ Jonathan Rather
                                    _______________________________
                                Name: Jonathan M. Rather
                                Title: Member


                                WCAS INFORMATION PARTNERS, L.P.

                                By:  WCAS Info Partners,
                                         General Partner

                                By: /s/ Jonathan Rather
                                    _______________________________
                                Name: Jonathan M. Rather
                                Title: Attorney-in-fact


                                BTI INVESTORS LLC


                                By: /s/ Jonathan Rather
                                    _______________________________
                                Name: Jonathan M. Rather
                                Title: Authorized Person



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