<PAGE>

                                                                    Exhibit 4.2

January 24, 2000

Name
Address
Address
Address

To:  All holders of Convertible Notes of
     American TeleSource International, Inc. ("ATSI" or "the Company")
     Issued March 17, 1997

Re:  Update to letter dated December 30, 1999

Dear NAME:

     I am writing in reference to the letter previously sent to you dated
December 30, 1999 in which ATSI offered you the opportunity to convert your
Convertible Note into common stock of ATSI.  Based upon several discussions held
with Convertible Note holders this past week, the Company has decided to amend
its offer to convert.  As such, the offers in this letter replace any offering
in the December 30, 1999 letter.

     The majority of the comments I received centered around the time period
to be used to calculate the conversion price, and the fact that the stock to be
received upon conversion was to contain a legend and could not be traded except
pursuant to Rule 144 or other available exemptions.

     As of the date of this letter, the Company is still offering the
Convertible Note holders the following:

     a)    The right to convert any outstanding $0.27 warrants to purchase the
           common Stock of ATSI against the outstanding principal and interest
           owed to you by ATSI; and

     b)    The right to convert any and all remaining outstanding principal and
           interest

           Owed to you, after exercising your rights under a) above, into common
           stock of ATSI.

     The following terms have been changed or amended from the original
offering:

     -     The price at which your balance would be converted under b) above
           will equal a 20% discount to the average closing price during the
           entire month of January 2000; and

<PAGE>

     -     The Company agrees to file registration statements to register your
           shares issued as a result of converting under b) above in the
           following manner: 33% of the issued shares on or before April 30,
           2000; 33% of the issued shares on or before July 31, 2000; and 34% of
           the issued shares on or before October 31, 2000.

     -     The option to exercise your rights under a) and b) above must be
           received by the Company by January 24, 2000.

     As was mentioned in the earlier letter, the shares to be issued upon
exercising your rights in a) above have already been registered.  Registration
of shares under b) above will eliminate any restrictions and allow the shares to
be traded in the open market.

     The transactions will still take place effective January 31, 2000. A form
has been attached for you to indicate your decision to exercise, or not
exercise, your rights per this letter. The form should be faxed to me at (210)
547-1029 or delivered to me at the Company's corporate address by January 24,
2000. If you have already responded based upon the initial offer and would like
to change your response, please use the attached form to do so. A lack of
response by any individual will be considered to be a choice NOT to exercise the
rights being offered in this letter. The Convertible Note holders wishing to
exercise their rights will be sent a subscription agreement subsequent to
January 24, 2000.

     The Company encourages you to exercise your rights per this letter.  Funds
will need to be raised externally in order to pay Convertible Note holders who
do not exercise their rights.  I also encourage you to call me at (210) 547-1029
in order to discuss the proposed transaction, as well as the Company's progress
to date.

Sincerely,
AMERICAN TELESOURCE INTERNATIONAL, INC.



H. Douglas Saathoff
Chief Financial Officer