SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                     Quarterly Report under Section 13 or 15(d)
      X              of the Securities Exchange Act of 1934 for
                     the quarterly period ended September 30, 1998

                                       Or

                     Transition   Report  under  Section  13  or  15(d)  of  the
                     Securities  Exchange Act of 1934 for the transition  period
                     from _________ to
 

                       Commission File Number 33-32341-D

                        WORLDPORT COMMUNICATIONS, INC.
          (Name of Small Business Issuer as Specified in its Charter)

                                                          
               Delaware                             84-1127336
    (State or other jurisdiction of          (IRS Employer ID Number)
     incorporation of organization)

       1825 Barrett Lakes Center,
      Suite 100, Kennesaw, Georgia                        30144
(Address of principal executive offices)               (Zip Code)


                                 (770) 792-8735
                         Registrant's telephone number


      Check  whether  the issuer (1) filed all  reports  required to be filed by
      Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
      12 months (or for such shorter  period that the registrant was required to
      file such reports),  and (2) has been subject to such filing  requirements
      for the past 90 days.

                                YES [ X ] NO [ ]




      As of November 6, 1998, the  Registrant  had  18,083,152  shares of Common
      Stock par value $0.0001 outstanding.


                   Transitional Small Business Disclosure Format
                                  (Check one):

                                Yes [ ] No [ X ]





                  WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                                TABLE OF CONTENTS


               Page

PART I - FINANCIAL INFORMATION

    Item 1. Financial Statements
      

            Condensed Consolidated Balance Sheets as of
            September 30, 1998 and December 31, 1997 . . . . . . . . . . . .   3

            Condensed Consolidated Statements of Operations
            For the Three and Nine Months Ended September 30,
            1998 and 1997  . . . . . . . . . . . . . . . . . . . . . . . . .   4

            Condensed Consolidated Statements of Cash Flows
            for the Nine Months Ended September 30, 1998 and 1997 . . . . .    5

            Notes to Condensed Consolidated Financial Statements . . . . . .   6

    Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of Operations   . . . . . . . .   10


PART II - OTHER INFORMATION

    Item 1. Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . .  17

    Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . .   17

    Item 3. Defaults Upon Senior Securities  . . . . . . . . . . . . . . . .  17

    Item 4. Submission of Matters to a Vote of Security Holders  . . . . . .  18

    Item 5. Other Information  . . . . . . . . . . . . . . . . . . . . . . .  18

    Item 6. Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . .   18


SIGNATURE                                                                     19



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS EXCEPT SHARE DATA)

<CAPTION>

                                     ASSETS
                                     ------

                                                       September 30,   December 31,
                                                           1998            1997
                                                       -------------   -----------
                                                        (Unaudited)
<S>                                                    <C>                  <C>    
CURRENT ASSETS:
     Cash and cash equivalents                               $   2,416    $     179
     Accounts receivable, net of allowance for
       doubtful accounts of $726 and $15, respectively           7,842          369
     Prepaid expenses and other current assets                   9,513           67
                                                             ---------    ---------
              Total current assets                              19,771          615

PROPERTY AND EQUIPMENT, net                                     77,685        5,032

OTHER ASSETS:
     Intangibles, net                                           71,654        6,292
     Other assets, net                                          10,194        1,258
                                                             ---------    ---------
              TOTAL ASSETS                                   $ 179,304    $  13,197
                                                             =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                        $  26,245    $   1,391
     Accrued expenses                                           12,794        1,292
     Short-term note payable                                       539          500
     Interim loan facility                                     107,679         --
     Current portion of notes payable - related parties            175          540
     Current portion of obligations under capital leases         1,627          937
     Other current liabilities                                     613           98
                                                             ---------    ---------
              Total current liabilities                        149,672        4,758

NOTES PAYABLE - RELATED PARTIES, net of current portion           --          1,191

OBLIGATIONS UNDER CAPITAL LEASES, net of current portion        17,482        3,006

OTHER LONG-TERM LIABILITIES                                      1,016           87

STOCKHOLDERS' EQUITY
     Undesignated preferred stock, $0.0001 par value,
       6,250,000 shares authorized,  no shares issued
        and outstanding                                           --           --
     Series A preferred stock, $0.0001 par value,
        750,000 shares authorized, 493,889 shares
        issued and outstanding in
        1998 and 1997, respectively                               --           --
     Series B preferred stock, $0.0001 par value,
        3,000,000 shares authorized, 2,962,687 and no
         shares issued and outstanding in
         1998 and 1997, respectively                              --           --
     Common stock, $0.0001 par value, 65,000,000
         shares authorized, 18,026,485 and 16,033,333
         shares issued and outstanding, in 1998 and
         1997, respectively                                          2            2
   Warrants                                                     20,056         --
     Additional paid-in capital                                 35,021        7,953
     Amounts due from stockholders                              (1,921)        --
     Cumulative translation adjustment                          (4,934)        --
   Unamortized compensation expense                               (324)        --
     Accumulated deficit                                       (36,766)      (3,800)
                                                             ---------    ---------
              Total stockholders' equity                        11,134        4,155
                                                             ---------    ---------

              TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $ 179,304    $  13,197
                                                             =========    =========


                 The accompanying notes are an integral part of
                    these consolidated financial statements.



</TABLE>


<TABLE>

                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)

<CAPTION>


                                       Three Months Ended       Nine Months Ended
                                         September  30,           September 30,
                                         1998        1997        1998        1997
                                         ----        ----        ----        ----

<S>                                    <C>         <C>         <C>         <C>     
REVENUES                               $ 11,746    $  1,506    $ 14,410    $  1,695

COST OF SERVICES
                                          8,473       1,347      10,980       1,541
                                       --------    --------    --------    --------

     Gross margin                         3,273         159       3,430         154

OPERATING EXPENSES:
     Selling, general and
        administrative expenses          14,097       1,062      20,349       1,715
     Depreciation and amortization
                                          4,281         283       5,778         313
                                       --------    --------    --------    --------

     Operating loss                     (15,105)     (1,186)    (22,697)     (1,874)

OTHER INCOME (EXPENSE):
     Interest expense, net
                                         (9,360)        (56)    (10,202)         (6)
                                       --------    --------    --------    --------


NET LOSS                               $(24,465)   $ (1,242)   $(32,899)   $ (1,880)
                                       ========    ========    ========    ======== 

BASIC AND DILUTED NET LOSS PER SHARE   $  (1.38)   $  (0.08)   $  (1.95)   $  (0.15)
                                       ========    ========    ========    ========

WEIGHTED AVERAGE
     SHARES OUTSTANDING
                                         17,702      15,988      16,841      12,305
                                       ========    ========    ========    ========



                 The accompanying notes are an integral part of
                    these consolidated financial statements.


</TABLE>


<TABLE>


                 WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN THOUSANDS)
<CAPTION>

                                                                 Nine Months Ended
                                                                   September 30,
                                                                 -----------------
                                                                 1998        1997
                                                                 ----        ----
<S>                                                               <C>          <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                          $ (32,899)   $  (1,880)
Adjustments to reconcile net loss to net cash
     used in operating activities -
          Depreciation and amortization                               5,778          313
     Amortization of warrants                                         3,882          -
          Compensation charge                                         1,419          -
          Increase in accounts receivable                            (2,194)         -
          Increase in prepaid expenses and other assets              (1,485)        (185)
          Increase in accounts payable and accrued
               Expenses and other liabilities
                                                                     12,985           62
                                                                  ---------    ---------

                    Net cash used in operating activities           (12,514)      (1,690)

CASH FLOWS FROM INVESTING ACTIVITIES:
          Cash paid in connection with acquisitions, net of        (113,891)      (1,215)
cash acquired
          Issuance of notes receivable                                  -           (100)
     Collection of notes receivable                                     -          1,283
     Deposits paid in conjunction with new business alliances        (1,238)         -
          Capital expenditures                                       (7,614)         (92)
                                                                  ---------    ---------

                    Net cash used in investing activities          (122,743)        (124)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from Interim Loan facility                            120,000          -
     Proceeds from issuance of notes payable - related parties          -            225

     Principal payments on note payable - related party                (365)         -
          Principal payments on short-term debt                         -           (262)
          Payments on obligations under capital leases                 (722)         (34)
          Proceeds from issuance of preferred stock                  12,777          368
          Proceeds from issuance of common stock, net of
            offering expenses                                           900           12
                                                                  ---------    ---------

                    Net cash provided by financing activities       132,590          309

Effect of exchange rate changes on cash
                                                                      4,904          -

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  2,237       (1,505)

CASH AND CASH EQUIVALENTS, beginning of the period                      179        1,553
                                                                  ---------    ---------


CASH AND CASH EQUIVALENTS, end of the period                      $   2,416     $     48
                                                                  =========    =========

CASH PAID DURING THE PERIOD FOR INTEREST                          $     491     $     47
                                                                  =========    =========
CASH PAID DURING THE PERIOD FOR INCOME TAXES                      $     -       $    -
                                                                  =========    =========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:

     Conversion of note payable for 1,680,000 shares of           $     -       $    420
                                                                  =========    =========
     Issuance of short-term debt to related party in              $     -       $    175
                                                                  =========    =========
     connection with acquisition                                        - 
                                                                  =========    =========
     Conversion of notes payable - related parties and
     accrued interest for 230,627 shares of Series B
     preferred stock                                              $   1,236     $    -
                                                                  =========    =========
     Issuance of 250,000 shares of Series B preferred
     stock for notes receivable                                   $   1,017     $    - 
                                                                  =========    =========
     Stock issued for ICX and IIC acquisitions                    $   8,326     $    -
                                                                  =========    =========
     Assets acquired under capital lease                          $   4,320     $    -
                                                                  =========    =========

                 The accompanying notes are an integral part of
                    these consolidated financial statements.


</TABLE>



               WORLDPORT COMMUNICATIONS, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)


(1)   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Organization and Basis of Presentation

      WorldPort  Communications,  Inc. and  subsidiaries  (the  "Company")  is a
      rapidly growing facilities-based multinational  telecommunications carrier
      focused on  providing  a broad range of  international  telecommunications
      services to carriers,  distributors  and  resellers,  large  multinational
      corporations  and  Internet  service  providers  ("ISPs")  worldwide.  The
      Company positions itself as a next generation carrier's carrier, utilizing
      advanced   technologies  on  unified  global  switching  and  transmission
      platforms  to  provide  least-cost  interconnectivity  and high  bandwidth
      capacity for voice,  data,  video,  Internet and other  telecommunications
      services.  The Company's  initial  geographical  focus is on  high-traffic
      routes within and between Europe, Latin America and Asia-Pacific.

      The accompanying  condensed  consolidated  financial  statements have been
      prepared  by  the  Company   without  audit  pursuant  to  the  rules  and
      regulations of the Securities and Exchange Commission. Certain information
      and  footnote   disclosures  normally  included  in  financial  statements
      prepared in accordance with generally accepted accounting  principles have
      been  condensed or omitted in this Form 10-QSB  pursuant to such rules and
      regulations;  however, management believes that the disclosures herein are
      adequate to make the information  presented not misleading.  The financial
      statements  and notes thereto  included in this Form 10-QSB should be read
      in conjunction with the financial statements and notes thereto included in
      the Company's Annual Report on Form 10-KSB for the year ended December 31,
      1997.

      In the opinion of the Company's  management,  the  accompanying  condensed
      consolidated  financial  statements  contain all adjustments  necessary to
      present fairly the Company's  financial position as of September 30, 1998,
      and the  results  of  operations  for the  three  and  nine  months  ended
      September  30,  1998 and 1997 and cash  flows  for the nine  months  ended
      September 30, 1998 and 1997.  The results of operations  for the three and
      nine months ended September 30, 1998 are not necessarily indicative of the
      operating results for the full year.

      Financial Condition

      The Company is subject to various risks in  connection  with the operation
      of its business  including,  among other  things,  (i) changes in external
      competitive  market  factors,  (ii)  termination of certain  operating and
      interconnection agreements or inability to enter into additional operating
      or  interconnection  agreements,  (iii)  inability to satisfy  anticipated
      working   capital  or  other  cash   requirements,   (iv)  changes  in  or
      developments  under  domestic  or  foreign  laws,  regulations,  licensing
      requirements  or   telecommunications   standards,   (v)  changes  in  the
      availability  of  transmission  facilities,  (vi) changes in the Company's
      business  strategy  or  an  inability  to  execute  its  strategy  due  to
      unanticipated  changes  in  the  market  for  the  Company's  products  or
      services,  (vii) various  competitive factors that may prevent the Company
      from competing successfully in the marketplace,  (viii) the Company's lack
      of liquidity  and its ability to raise  additional  capital,  (ix) loss of
      services  of key  executive  officers  and (x)  loss of a  customer  which
      provides significant  revenues to the Company.  During 1997, the Company's
      first year of operations as an international  telecommunications  services
      provider,  the Company incurred losses of approximately $3.5 million.  For
      the nine months ended  September 30, 1998, the Company  incurred losses of
      approximately  $32.9  million and  expects to continue to incur  operating
      losses in the near  future.  The  Company  has an  accumulated  deficit of
      approximately  $36.8 million as of September 30, 1998 as well as a working
      capital deficit of approximately $129.9 million.  Funding of the Company's
      working capital deficit, current and future operating losses and expansion
      of the  Company's  global  network  will  require  substantial  continuing
      capital  investment.   The  Company's  strategy  is  to  fund  these  cash
      requirements  through debt facilities and additional equity financing (see
      Recent Developments,  Fourth Quarter Financing). There can be no assurance
      that sufficient  debt or equity  financing will be available in the future
      or  that  it  will  be  available  on  terms  acceptable  to the  Company,
      especially in light of current  financial  market  conditions.  Failure to
      obtain   sufficient   capital  could   materially   affect  the  Company's
      operations, financial condition and acquisition and operating strategies.

      During June 1998 the Company  obtained  $120 million in interim  financing
      (the "Interim Loan") for purposes of completing the acquisition of EnerTel
      N.V.  ("EnerTel").  During 1998,  the Company raised  approximately  $13.5
      million  and $1  million  in  connection  with  the  sale of its  Series B
      convertible  preferred stock and common stock,  respectively  (see Note 5)
      and  converted  approximately  $1.2  million  in notes  payable to related
      parties into its Series B convertible  preferred  stock. In June 1998, the
      Company  increased  its existing  lease  financing  facility with Forsythe
      MacArthur to provide up to $30 million in infrastructure  financing and in
      September  1998 entered into a $30 million lease  financing  facility with
      Comdisco,   Inc.,   subject  to  the  Company  meeting  certain  financial
      conditions.  The Company has  restructured its $500,000 debt obligation to
      Value Partners, Ltd (see Item 3. Defaults Upon Senior Securities).

      Consolidation

      The accompanying consolidated financial statements include the accounts of
      the  Company  and  its  wholly   owned   subsidiaries.   All   significant
      intercompany accounts and transactions have been eliminated.

(2)   LOSS PER SHARE

      The Company  adopted SFAS No. 128,  "Earnings Per Share" in 1997.  For all
      periods  presented,  basic and diluted  earnings per share are the same as
      any dilutive securities had an antidilutive effect on earnings per share.

(3)   ACQUISITIONS

      In April 1998,  the Company  acquired  the  telecommunications  assets and
      operations of InterContinental Exchange, Inc. ("ICX"), a licensed provider
      of  international  telecommunications  services  headquartered  in the San
      Francisco Bay area, in exchange for 400,000 shares of the Company's common
      stock.

      In June  1998,  the  Company  acquired  EnerTel.,  which  holds a national
      infrastructure  license and operates a  telecommunications  network in The
      Netherlands for consideration of 186 million Dutch guilders (approximately
      $92  million)  and  the  repayment  of  certain  EnerTel  indebtedness  of
      approximately  $17  million.   Beginning  in  1996,   EnerTel  deployed  a
      nationwide  backbone  fiber optic network  utilizing  fiber optic capacity
      leased  from its  consortium  members  in order to  provide  domestic  and
      international long distance services to business and residential customers
      in The  Netherlands.  EnerTel operates a network backbone of approximately
      19,000 fiber kilometers.  Additionally,  EnerTel has  interconnection  and
      service agreements with KPN Telecom,  Deutsche Telecom, Belgacom S.A., and
      Cable & Wireless,  plc,  that  provide  EnerTel  with  direct  termination
      services in The  Netherlands,  Germany,  Belgium,  and the United Kingdom,
      respectively. On September 11, 1998, the Company sold a portion of the Bel
      1600  division of Enertel,  which  provided  indirect  access  services to
      residential subscribers,  for approximately $2.8 million (the net carrying
      value of the  assets) as part of a strategic  repositioning  of Enertel to
      serve  carriers,  ISPs and other high  volume  customers.  This amount was
      reflected  as a reduction in  goodwill.  On October 21, 1998,  the Company
      sold a 15%  interest  in EnerTel  to former  shareholders  of EnerTel  for
      approximately $15 million, which is expected to clear escrow in the fourth
      quarter of 1998, subject to receipt of any required regulatory  approvals.
      The new minority  shareholders  in EnerTel are three major  regional Dutch
      utility and telecommunications services companies.

      In  July  1998,  the  Company   acquired  the  assets  and  operations  of
      International InterConnect, Inc. ("IIC"), a provider of international long
      distance  and  private  line  services  primarily  to Latin  America.  The
      purchase  consideration  was 916,520 shares of the Company's  common stock
      (of which 38,500 are held in escrow) and $750,000,  of which  $500,000 has
      been paid to date.

      Each   acquisition   was  accounted  for  under  the  purchase  method  of
      accounting.  The purchase  price was  allocated to the  underlying  assets
      purchased and  liabilities  assumed based on their  estimated  fair market
      values at acquisition date.

      The following table summarizes the net assets purchased in connection with
      the  acquisitions  and the  amount  attributable  to cost in excess of net
      assets acquired (in thousands):

                                             IIC         EnerTel        ICX
                                             ---         -------        ---
     Working capital                    $    729      $   (541)     $    (58)
     Property, plant, and equipment          244        61,975           169
     Other assets                            251           930            28
     Non-current liabilities                (192)      (11,696)          (39)
     Customer base                         7,389             0           472
     Goodwill                                  0        66,117             0

      The preliminary  estimate of net assets acquired  represents  management's
      best estimate  based on currently  available  information;  however,  such
      estimate may be revised up to one year from the acquisition date. Customer
      bases and goodwill are amortized over 5 and 20 years, respectively.

      In May 1998,  the Company  entered  into a  definitive  agreement  for the
      acquisition  of all of the issued  and  outstanding  capital  stock of All
      America Cables & Radio  ("AACR"),  for  consideration  of $31.5 million in
      cash,   300,000   shares  of  common  stock  and  the  repayment  of  AACR
      indebtedness of  approximately  $12 million.  AACR provides  international
      long distance, data, leased line, microwave, satellite, telex and wireless
      services in the Dominican Republic.  Additionally, AACR holds a license to
      provide  PCS  services.  While,  as a result  of  damage  caused to AACR's
      network facilities by Hurricane Georges,  the parties allowed the terms of
      the original agreement to expire, the parties are negotiating  appropriate
      purchase price and other terms and conditions of the transaction.

      In  July  1998,   the  Company   entered  into  a   definitive   agreement
      (subsequently  modified  in  November  1998)  for the  acquisition  of the
      outstanding  capital  stock  of  Campuslink  Communication  Systems,  Inc.
      ("Campuslink")  for  consideration  of  (i)  $15  million  in  cash,  (ii)
      2,000,000  shares  of  the  Company's  common  stock  and  (iii)  warrants
      exercisable for 1,000,000  shares of the Company's  common stock at $4 per
      share.  Campuslink  provides  design,  installation,   and  management  of
      integrated telecommunications systems to colleges, universities, and other
      institutional  campuses.  The  Company  intends  to close the  acquisition
      subsequent to the closing of the Fourth Quarter Financing.

(4)   COMMITMENTS AND CONTINGENCIES

      Employment Agreements

      On September 29, 1998, the Company  amended its promissory  notes with two
      executives  who  acquired  250,000  shares of Series B preferred  stock at
      $5.36 per share  which was deemed to be the fair value of the stock at the
      date of  acquisition.  The  promissory  notes (which are for the aggregate
      amount of  $1,017,500  and are secured by pledges of the stock  purchased)
      will mature  August 1, 2000.  As amended,  all payments of  principal  and
      interest, which accrues at an annual rate of 9%, will be due at maturity.


      Interim Loan Facility

      To finance  the  EnerTel  acquisition,  the  Company  entered  into a $120
      million Interim Loan Facility with a consortium of lenders  effective June
      23, 1998, the terms of which also included the issuance of warrants. As of
      September  30, 1998 Interim Loan holders,  in  aggregate,  are eligible to
      receive  warrants  exercisable  for 2,358,625  shares of common stock at a
      price per share of $0.01.  Under the terms of the  facility,  the  Interim
      Loan  holders  are  eligible  to receive  warrants  representing  up to an
      aggregate  of 11% of the  fully  diluted  common  stock in the  event  the
      Interim Loan is not repaid by December 23, 1998.  The fair market value of
      the  warrants  currently   outstanding   (approximately  $20  million)  is
      reflected as a reduction in the principal amount of the notes. This amount
      is being amortized to interest expense over the life of the loan (1 year).
      The  Interim  Loan,  which  matures  on June 23,  1999,  includes  certain
      negative  and   affirmative   covenants  and  is  secured  by  a  lien  on
      substantially  all of  the  assets  of  the  Company  and  certain  of its
      subsidiaries and a pledge of the capital stock of certain of the Company's
      subsidiaries.  As of  November  10, 1998 the  Company  had  increased  its
      borrowings under the Interim Loan facility by approximately $4.5 million.

      During the third quarter of 1998, the Company  contemplated an offering of
      Units  consisting of Senior Notes and attached  Warrants,  the proceeds of
      which would have been used, in part,  to repay the Interim Loan  Facility.
      Due to unfavorable changes in world financial markets beginning in August,
      1998, the Company has restructured  its proposed  financing to include (i)
      equity, (ii) conversion of certain short-term  obligations  (including the
      Interim Loan Facility) into long-term  obligations,  and (iii)  additional
      leasing  facilities,  to be  completed  during  the fourth  Quarter,  1998
      ("Fourth  Quarter  Financing").  The Company  seeks to convert the Interim
      Loan Facility into a long-term  obligation.  As part of the Fourth Quarter
      Financing,  the Company is pursuing  additional equity. Cash proceeds will
      be  utilized  to  pay  the  cash  portion  of the  aforementioned  pending
      acquisitions  as  well  as  meet  a  portion  of the  capital  expenditure
      requirements  associated with the Company's  network build-out and working
      capital needs. However,  there can be no assurance that these transactions
      will be  consummated  by the  Company.  See  Management's  Discussion  and
      Analysis - Liquidity and Capital Resources for further discussion.

(5)   STOCKHOLDERS' EQUITY

      During 1998, the Company has raised  approximately $13.5 million, of which
      approximately  $12.8  million was received as of September  30, 1998, in a
      private  placement  offering of its par value $0.0001 Series B convertible
      preferred  stock at $5.36 per share.  The Series B  convertible  preferred
      stock is convertible into shares of the Company's common stock at any time
      at the option of the holder at a rate of 4 shares of common stock for each
      share of preferred stock. Holders of Series B convertible  preferred stock
      have voting rights equal to 40 votes per share on all matters submitted to
      a vote of the stockholders of the Company.



ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

NOTE ON "FORWARD-LOOKING" STATEMENTS

      The  information  set forth in  Management's  Discussion  and  Analysis of
      Financial  Condition and Results of Operations  ("MD&A")  contains certain
      "forward-looking  statements"  within the  meaning  of Section  27A of the
      Securities  Act of 1933, as amended,  Section 21E of the Securities Act of
      1934,  as amended,  and the Private  Securities  Litigation  Reform Act of
      1995,  including,  among  others (i)  expected  changes  in the  Company's
      revenues and  profitability  (ii) prospective  business  opportunities and
      (iii) the  Company's  strategy for  expanding  and financing its business.
      Forward-looking   statements   are   statements   other  than   historical
      information  or  statements  of current  condition.  Some  forward-looking
      statements  may  be  identified  by  use  of  terms  such  as  "believes",
      "anticipates",  "intends" or "expects".  These forward-looking  statements
      relate  to  the  plans,   objectives   and   expectations   of   WorldPort
      Communications,   Inc.  and   subsidiaries   (the  "Company")  for  future
      operations.  Although  the Company  believes  that its  expectations  with
      respect  to the  forward-looking  statements  are  based  upon  reasonable
      assumptions  within  the  bounds  of its  knowledge  of its  business  and
      operations, in light of the risks and uncertainties inherent in all future
      projections,  the inclusion of  forward-looking  statements in this report
      should not be  regarded  as a  representation  by the Company or any other
      person that the objectives or plans of the Company will be achieved.

      The Company's  revenues and results of operations could differ  materially
      from those  projected  in the  forward-looking  statements  as a result of
      numerous  factors,  including,  but not  limited  to, the  following:  (i)
      changes in  external  competitive  market  factors,  (ii)  termination  of
      certain operating or interconnection agreements or inability to enter into
      additional  operating or  interconnection  agreements,  (iii) inability to
      satisfy  anticipated  working  capital  or other cash  requirements,  (iv)
      changes in or  developments  under domestic or foreign laws,  regulations,
      licensing requirements or telecommunications standards, (v) changes in the
      availability  of  transmission  facilities,  (vi) changes in the Company's
      business  strategy  or  an  inability  to  execute  its  strategy  due  to
      unanticipated  changes  in  the  market  for  the  Company's  products  or
      services,  (vii) various  competitive factors that may prevent the Company
      from competing successfully in the marketplace,  (viii) the Company's lack
      of liquidity  and its ability to raise  additional  capital,  (ix) loss of
      services  of key  executive  officers  and (x)  loss of a  customer  which
      provides  significant revenues to the Company. In light of these risks and
      uncertainties,  there can be no assurance that actual results, performance
      or achievements of the Company will not differ  materially from any future
      results,   performance  or  achievements  expressed  or  implied  by  such
      forward-looking  statements.  The  foregoing  review of important  factors
      should  not  be  construed  as  exhaustive.   The  Company  undertakes  no
      obligation to release  publicly the results of any future revisions it may
      make to  forward-looking  statements  to reflect  events or  circumstances
      after the date  hereof  or to  reflect  the  occurrence  of  unanticipated
      events.

      The following  discussion should be read in conjunction with the Condensed
      Consolidated  Financial Statements and Notes thereto included under Item 1
      of  this  Form  10-QSB.  In  addition,  reference  should  be  made to the
      Financial Statements and Notes thereto and related Management's Discussion
      and Analysis of Financial  Condition and Results of Operations included in
      the Company's Annual Report on Form 10-KSB for the year ended December 31,
      1997.

      OVERVIEW

      The   Company  is  a  rapidly   growing   facilities-based   multinational
      telecommunications   carrier   focused  on  providing  a  broad  range  of
      international  telecommunications  services to carriers,  distributors and
      resellers, large multinational corporations and Internet service providers
      ("ISPs")  worldwide.  The Company  positions  itself as a next  generation
      carrier's  carrier,  utilizing  advanced  technologies  on unified  global
      switching    and    transmission    platforms   to   provide    least-cost
      interconnectivity  and high  bandwidth  capacity for voice,  data,  video,
      Internet and other  telecommunications  services.  The  Company's  initial
      geographical  focus is on  high-traffic  routes within and between Europe,
      Latin  America and  Asia-Pacific.  The Company is  currently  deploying an
      advanced  high capacity  global  network  consisting  of (i)  indefeasible
      rights of use  ("IRUs") it has  committed  to  purchase on major  undersea
      fiber optic  cable  systems,  (ii)  international  gateway  switches to be
      deployed through its turn-key agreement with Nortel and (iii) IP switching
      and  intelligent  network  equipment  to be deployed  through its turn-key
      agreement with Lucent.  The Company's  global network will be complemented
      by relationships and operating, interconnection and terminating agreements
      with other carriers and strategic suppliers.

      The Company primarily  operates through a number of acquired  subsidiaries
      that  operate  in  the  United  States,  Europe  and  Latin  America.  The
      acquisitions  completed  by the  Company  to date and  those  pending  are
      described below.

      Completed Acquisitions

      In February  1998,  the Company  commenced  operations in The  Netherlands
      through  the  acquisition  of all  of the  outstanding  capital  stock  of
      MathComp B.V.  ("MathComp").  The Company  changed the name of MathComp to
      WorldPort  Communications Europe, B.V. ("WorldPort Europe"). In connection
      with this  acquisition,  the Company  issued  150,000 shares of the common
      stock and paid  $250,000 in cash.  The former  shareholder  of MathComp is
      eligible to earn an additional 2,350,000 shares of common stock contingent
      upon  the   attainment  of  certain   future   revenue  and  gross  margin
      requirements during the first and second quarters of 1999.

      In April 1998,  the Company  acquired  the  telecommunications  assets and
      operations of ICX, a licensed provider of international telecommunications
      services  headquartered  in the San  Francisco  Bay area in  exchange  for
      400,000 shares of common stock.

      In June 1998,  the Company  acquired  ownership of EnerTel,  which holds a
      national infrastructure license and operates a telecommunications  network
      in The Netherlands,  for  consideration  consisting of  approximately  $92
      million and the payment of certain EnerTel  indebtedness of  approximately
      $17  million.  On October  21,  1998 the  Company  sold a 15%  interest in
      Enertel to former  shareholders of Enertel for  approximately $15 million,
      which is expected to clear escrow in the fourth  quarter of 1998,  subject
      to  receipt  of any  required  regulatory  approvals.  Beginning  in 1996,
      EnerTel deployed a nationwide backbone fiber optic network utilizing fiber
      capacity leased from its consortium  members in order to provide  domestic
      and  international  long  distance  services to business  and  residential
      customers  in the  Netherlands.  EnerTel  operates a network  backbone  of
      approximately   19,000  fiber   kilometers.   Additionally,   EnerTel  has
      interconnection and service agreements with KPN Telecom, Deutsche Telecom,
      Belgacom S.A., and Cable & Wireless, plc, that provide EnerTel with direct
      termination services in The Netherlands,  Germany, Belgium, and the United
      Kingdom, respectively.  During 1997, EnerTel's principal source of revenue
      was indirect  access  services  provided by its Bel 1600 division to small
      and medium size  business and  residential  subscribers.  On September 11,
      1998 the Company  sold the Bel 1600  division of Enertel,  which  provided
      indirect access services to residential customers,  for approximately $2.8
      million (its net carrying value) as part of a strategic  repositioning  of
      Enertel to serve  carriers,  ISPs and other  high  volume  customers.  The
      Company retains on a wholesale basis the traffic minutes  generated by the
      residential subscribers.  The disposition is expected to improve operating
      margins  as a  result  of a  reduction  in  related  sales  and  marketing
      expenses.  In 1997,  EnerTel also  generated  revenue  from long  distance
      telecommunications  services provided to business customers through direct
      network  connections  as well as from  leased  lines and  Internet  access
      services. During the first half of 1998, EnerTel expanded its leased lines
      and Internet access services while also introducing  international  leased
      lines and 800  services.  Principal  sources  of  expenses  are access and
      termination  charges  of  KPN  Telecom,   leased  line  charges,   network
      maintenance and general and administrative expenses. Additionally, EnerTel
      has incurred substantial marketing costs in an effort to develop its brand
      name recognition.

      In  July  1998,  the  Company   acquired  the  assets  and  operations  of
      International  InterConnect,  Inc. ("IIC"). The purchase consideration was
      916,520 shares of the Company's  common stock (of which 38,500 are held in
      escrow)  and  $750,000,  of  which  $500,000  has been  paid to date.  IIC
      specializes in providing international long distance services primarily to
      Latin  America.  IIC's  customer  base  consists  primarily of  resellers,
      multinational corporations, foreign embassies, and other businesses. IIC's
      gross margin is equal to the incremental difference between the per minute
      rate  charged to it by various  long  distance  carriers and the amount it
      charges its customers per minute,  depending upon a call's origination and
      destination  points.  IIC's other principal  expense is the commissions it
      pays its various distributors based on sales volumes.

      Pending Acquisitions

      In May 1998,  the Company  entered  into a  definitive  agreement  for the
      acquisition  of all of the issued  and  outstanding  capital  stock of All
      America Cables & Radio  ("AACR"),  for  consideration  of $31.5 million in
      cash,   300,000   shares  of  common  stock  and  the  repayment  of  AACR
      indebtedness of  approximately  $12 million.  AACR provides  international
      long distance, data, leased line, microwave, satellite, telex and wireless
      services in the Dominican Republic.  Additionally, AACR holds a license to
      provide  PCS  services.  While,  as a result  of  damage  caused to AACR's
      network facilities by Hurricane Georges,  the parties allowed the terms of
      the original agreement to expire, the parties are negotiating  appropriate
      purchase price and other terms and conditions of the transaction.

      In July 1998,  the Company  entered  into a definitive  agreement  for the
      acquisition  of all the capital stock of Campuslink for  consideration  of
      $15  million  in cash,  2,000,000  shares  of common  stock  and  warrants
      exercisable  for  1,000,000  shares  of  common  stock  at $4  per  share.
      Campuslink  provides  design,  installation,  and management of integrated
      telecommunications  systems to colleges,  universities and private student
      housing complexes. Campuslink typically funds certain infrastructure costs
      in   exchange   for   an   exclusive    service   agreement   to   provide
      telecommunications  services to its  customers.  The  Company's  customers
      include Texas Christian University,  the University of Kansas and The U.S.
      Military  Academy at West Point.  Campuslink  plans to expand its customer
      base  geographically  and  has  recently  reorganized  the  business  into
      regional marketing areas.  Campuslink generates revenues through resale of
      telephone,   video,   and  data  services  to  residents;   on-going  flat
      per-student  technology  fees  assessed  to the  college,  university,  or
      property  owner;   and  one-time  fees  associated  with  special  network
      integration  or  system  installation  projects.   Campuslink's  principal
      expenses  relate to rental of T-1  lines,  cost of  network  equipment  on
      installation  projects,  carrier  termination charges and personnel costs.
      This  acquisition  is expected to close in the fourth quarter of 1998. The
      Campuslink  acquisitions is subject to customary conditions to closing and
      there can be no assurance that it will be completed on schedule,  upon the
      agreed terms and conditions, or at all.

      STRATEGIC SUPPLIER AGREEMENTS

      In July 1998 the Company entered into a memorandum of  understanding  with
      Lucent Technologies, Inc. with respect to the development of the Company's
      IP  backbone   using  IP   Switches  to  be  deployed  at  the   Company's
      international points of presence ("POPs") in the United States and Europe.
      These packet-switched, IP protocol network elements will be co-located, in
      most cases, with the Company's DMS-GSP switching  equipment to be deployed
      pursuant to the Company's turn-key  agreement with Northern Telecom,  Inc.
      ("Nortel").   Under  that   agreement,   Nortel   will   provide  for  the
      construction,  turn-key  installation,  in-country  technical  support and
      maintenance of a minimum of 10 DMS-GSP Switches to be installed in various
      locations  worldwide.  In July 1998,  the  Company  entered  into a Master
      Global Telecom  Facilities  Management  Agreement with EQUANT  providing a
      framework for EQUANT's  provision of  co-location  services for certain of
      the Company's  switches and other  network  equipment as well as technical
      support and  maintenance  for these  switches  and  equipment  and for the
      Company's proposed service control points in the United States and Europe.

      The Company has  entered  into  agreements  with Global  Crossing  for the
      purchase of 7 STM-1s of capacity on the AC-1 cable systems and STM-1 level
      capacity on additional  undersea cable systems under development by Global
      Crossing.

      RECENT DEVELOPMENTS

      In addition to the events  described above,  material  developments in the
      Company's business since June 30, 1998 include the following:

      o  Fourth Quarter Financing:  The Company is pursuing additional equity
         for acquisitions, network development and working capital.

      o  On October 21,  1998,  the company  sold a 15%  interest in EnerTel to
         former shareholders of EnerTel for approximately $15 million,  which is
         expected  to clear  escrow in the fourth  quarter  of 1998,  subject to
         receipt of any required regulatory approvals.

      o  Frontier  Agreement:  In  October,  1998 the Company  entered  into an
         agreement with Frontier  Corporation  whereby Frontier will provide the
         Company  with fiber  optic  capacity  in the United  States that may be
         utilized to physically  interconnect  WorldPort's switching and network
         facilities throughout the U.S.

      o  Additional  Leasing  Facilities:  In  September,  1998  the  Company
         entered  into a $30  million  Global  Master  Rental  Agreement  with
         Comdisco, Inc.  to be utilized for equipment purchases.

      RESULTS OF OPERATIONS

      During the three and nine months ended  September  30,  1998,  the Company
      incurred losses of $25,161,000 and $33,956,000,  respectively, compared to
      losses of  $1,242,000  and  $1,880,000  during  the same  periods in 1997.
      Included in the losses  incurred  during the three and nine  months  ended
      September  30,  1998  are the  operating  results  of  EnerTel  since  its
      acquisition by the Company,  including  amortization of the purchase price
      premium  and  recording  of  financing  costs  related  to  the  Company's
      acquisition of EnerTel, the operating results of WorldPort Europe and TNC,
      as well as general  expenses related to the Company's  worldwide  business
      development and financing  activities.  The operating  results for ICX and
      IIC did not have a material  impact on the losses  incurred by the Company
      in 1998. To address and remedy historical operating losses and to increase
      the  competitiveness,  revenues and gross  margins,  the Company has taken
      various steps to improve each subsidiary's  operating efficiency,  network
      capability  and  carrier  cost  structure.   The  Company  believes  these
      cost-reduction  and  revenue-enhancing  initiatives  will have a  positive
      impact on the Company's future operating results. However, as its business
      remains in the early growth stage,  the Company  anticipates  that it will
      continue  to incur  operating  losses and cash flow  deficiencies  for the
      foreseeable future.

      Prior to its  acquisition  of the assets and ongoing  operations of TNC in
      June 1997,  the  Company  was a  development  stage  company  that had not
      generated revenues other than interest income since inception.

      Revenues

      Revenues  for the three and nine  months  ended  September  30,  1998 were
      $11,746,000  and  $14,410,000,  respectively,  compared to $1,506,000  and
      $1,695,000  for the three and nine months ended  September  30, 1997.  The
      increase in revenues  is  primarily  attributed  to the  inclusion  of the
      results of operations of EnerTel  subsequent  to its  acquisition  in June
      1998.  EnerTel's  revenues were  $8,003,000  during the three months ended
      September 30, 1998. Also  contributing to the increase over the prior year
      are the  inclusion of TNC acquired in June 1997,  and ICX and IIC acquired
      in April and July 1998, respectively.  The acquisition of WorldPort Europe
      did not have an impact on revenues as  WorldPort  Europe is in the process
      of completing the installation and testing of its network.


      Gross Margin

      Gross  margin for the three and nine months ended  September  30, 1998 was
      $3,273,000 and $3,430,000, respectively, compared to $159,000 and $154,000
      for the three and nine months ended  September  30, 1997.  The increase in
      gross  margin was largely  attributed  to the  inclusion of the results of
      operations of EnerTel which  contributed gross margin of $2,150,000 during
      the three months ended September 30, 1998.

      Selling, General and Administrative Expenses

      Selling, general and administrative expenses increased to $14,097,000 from
      $1,062,000  and to  $20,349,000  from  $1,715,000  for the  three and nine
      months ended September 30, 1998 and 1997,  respectively.  The increase was
      due primarily to (i)  inclusion of the  operating  results of EnerTel (ii)
      increased  business  development  and  acquisition  activity,   (iii)  the
      relocation  of the  Company's  corporate  offices from  Houston,  Texas to
      Atlanta, Georgia, (iv) the expansion of the Company's executive management
      team, (v) certain  non-recurring  compensation charges associated with the
      granting of restricted stock and certain options to certain members of the
      Company's  management team and (vi) the inclusion of the selling,  general
      and administrative expenses associated with the operations of TNC, ICX and
      IIC.

      Depreciation and Amortization

      Depreciation and amortization  expense for the three and nine months ended
      September 30, 1998 was $4,281,000 and $ 5,778,000, respectively,  compared
      to $283,000 and $313,000 for the three and nine months ended September 30,
      1997.  The increase was  primarily due to (i)  depreciation  of the assets
      acquired in connection with the acquisition of EnerTel,  (ii) amortization
      of goodwill and other  intangible  assets  associated  with the  Company's
      acquisitions  (iii)  depreciation  of  additional  switching  and  network
      equipment acquired during 1998.

      Interest Expense

      Net  interest  expense for the three and nine months ended  September  30,
      1998  was  $9,360,000  and  $10,202,000,  respectively,  compared  to  net
      interest expense of $56,000 and $6,000 for the three and nine months ended
      September  30, 1997,  respectively.  The  increase in interest  expense is
      primarily due to (i) financing costs resulting from the interim loan, (ii)
      amortization of debt issuance costs related to the Interim Loan, and (iii)
      the acquisition of switching equipment subject to capital lease.

      LIQUIDITY AND CAPITAL RESOURCES

      The  Company  is  an  emerging  international  telecommunications  service
      provider  executing  a global  business  plan  that  requires  substantial
      capital.  The  Company  currently  has a working  capital  deficit and has
      operated at a loss since its  inception.  Funding of the  working  capital
      deficit,  current and future operating losses and expansion of the Company
      will require substantial continuing capital investment.

      As of  September  30, 1998 and December 31, 1997 the Company had a working
      capital deficit of $129,901,000 and $4,143,000,  respectively. The working
      capital  deficit at September 30, 1998 is due to (i) the Interim Loan (ii)
      the  payment  of  certain  liabilities  assumed  in  conjunction  with the
      aforementioned acquisitions, the majority of which were trade payables and
      short-term debt obligations, (iii) the acquisition of additional switching
      and peripheral equipment, the majority of which is being financed pursuant
      to  a  lease,  and  (iv)  the  operating  losses  of  the  Company.  Trade
      receivables increased to $7,842,000 at September 30, 1998 from $369,000 at
      December 31, 1997 largely due to the acquisition of EnerTel.

      Operations  used  $12,514,000  during the nine months ended  September 30,
      1998 due primarily to the (i) operating  losses,  (ii) increased  business
      development and acquisition  activity,  (iii)  relocation of the Company's
      corporate offices and (iv) expansion of the Company's executive management
      team.

      Investing  activities  used  $122,743,000  during  the nine  months  ended
      September  30,  1998.  Investing  activities  during the nine months ended
      September 30, 1998 consisted primarily of cash paid in connection with the
      EnerTel acquisition and increased capital spending.

      Financing  activities  provided  $132,590,000 during the nine months ended
      September  30,  1998.  Financing  activities  during the nine months ended
      September  30,  1998  consisted  primarily  of  proceeds  from (i) interim
      financing for purposes of completing the acquisition of EnerTel,  (ii) the
      issuance of  approximately  2.5 million shares of the Series B convertible
      preferred  stock and 180,000  shares of common stock and (iii) payments on
      capital leases and notes payable.

      During 1998,  the Company  initiated a private  placement  offering of its
      Series B  convertible  preferred  stock at $5.36 per  share.  The Series B
      convertible  preferred  stock is convertible  into shares of the Company's
      common  stock at any time at the  option  of the  holder at a rate of four
      shares of common  stock for each  share of  preferred  stock.  Holders  of
      Series B convertible  preferred stock have voting rights equal to 40 votes
      per share on all matters  submitted to a vote of the  stockholders  of the
      Company. As of September 30, 1998, the Company has received  approximately
      $12.8  million  in  proceeds  from  the sale of the  Series B  convertible
      preferred  stock and converted  approximately  $1.2 million of outstanding
      debt into the Series B convertible preferred stock.

      On June 23, 1998, WorldPort International, Inc., a wholly-owned subsidiary
      of the Company ("WorldPort International") entered into a Credit Agreement
      for the Interim Loan with Bankers Trust Company,  an affiliate of BT Alex.
      Brown  and  several  additional  lenders,   pursuant  to  which  WorldPort
      International borrowed $120 million in order to finance the acquisition of
      EnerTel and for working  capital.  The Interim Loan was  guaranteed by the
      Company and certain of its  subsidiaries.  The Interim Loan bears interest
      at LIBOR (as defined in the credit agreement  related to the Interim Loan)
      plus 6% per annum  increasing  by 0.5% per annum at the end of each period
      of three  consecutive  months  after June 23,  1998;  provided,  that such
      interest  rate  shall not  exceed 16% per annum if paid in cash or 18% per
      annum if capitalized.  The Interim Loan also contained  provisions for the
      issuance of $0.01 warrants  representing  between 3.5% and (if the Interim
      Loan is not repaid by December 23, 1998) 11%, of the fully-diluted  common
      stock of the Company,  depending upon the date of repayment of the Interim
      Loan.  As of November  10,  1998,  Interim  Loan  holders are  eligible to
      receive 2,362,240 warrants to purchase common stock. The fair market value
      of these warrants  (approximately $20 million) is reflected as a reduction
      in the principal  amount of the notes.  This amount is being  amortized to
      interest  expense over the life of the loan  (1year).  At such time as the
      facility is repaid, the remaining  unamortized portion of the value of the
      warrants will be expensed.  The Interim Loan matures on June 23, 1999. The
      Interim Loan includes  certain  negative and affirmative  covenants and is
      secured  by a lien on  substantially  all the  assets of the  Company  and
      certain of its  subsidiaries  and a pledge of the capital stock of certain
      of the Company's subsidiaries.

      The  anticipated  net  proceeds  from the Fourth  Quarter  Financing,  the
      anticipated $15 million EnerTel  minority  investments  (proceeds of which
      will  be  available  to  the  Company  upon  regulatory  approval  in  The
      Netherlands),  and the expansion of the Company's  various equipment lease
      facilities  will be used  (i) to fund  the cash  portions  of the  pending
      acquisitions,  (ii) for capital  expenditures  relating to  development of
      network infrastructure and for (iii) general corporate purposes, including
      working  capital.  The Company  expects that funds it anticipates  raising
      during the fourth quarter will provide the Company with sufficient capital
      to fund its current business plan's anticipated  capital  expenditures and
      anticipated  losses.  The Company  anticipates  that it will need to raise
      additional  capital through equity or debt financing  transactions to take
      advantage of business expansion  opportunities.  There can be no assurance
      that the Company can complete such financing transactions, including those
      currently contemplated, on favorable terms, if at all.



YEAR 2000 ISSUE

      The efficient  operation of the Company's business is dependent in part on
      its computer software programs and operating  systems.  These programs and
      systems are used in network trafficking, call origination and termination,
      pricing,  sales,  billing  and  financial  reporting,  as well as  various
      administrative  functions.  Recognizing  the  importance  and  need for an
      integrated  information  systems  solution,  the Company has  developed an
      implementation plan for upgrading its systems architecture. This plan also
      addresses the functionality of its systems beyond December 31, 1999 ("Year
      2000 compliance") as the majority of the internal  information systems are
      being replaced with new systems that the systems vendor represents will be
      Year 2000  compliant,  the cost of which is not considered to be Year 2000
      related. The Company does not anticipate  additional material expenditures
      for Year  2000  compliance  issues.  This new  systems  implementation  is
      expected to be completed by September 30, 1999.  Management  believes that
      the remaining Company information  technology ("IT") systems and other non
      IT  systems  are  either  Year  2000  compliant  or will be  compliant  by
      September  30,  1999 after  applying  vendor  supplied  upgrades  to these
      systems.  The cost of the upgrades are not considered to be material.  The
      Company is in the process of obtaining  documentation  from its suppliers,
      customers,  financial  institutions  and  others as to the status of their
      Year  2000  compliance  programs  and  the  possibility  of any  interface
      difficulties relating to Year 2000 compliance that may affect the Company.
      To date, no significant concerns have been identified;  however, there can
      be no  assurance  that there will not be any Year  2000-related  operating
      problems or expenses that will arise with the Company's  computer  systems
      and  software  or in  connection  with the  Company's  interface  with the
      computer  systems and  software  of its  suppliers,  customers,  financial
      institutions and others.  Because such third-party systems or software may
      not be Year 2000  compliant,  the Company is in the process of  developing
      contingency plans to address Year 2000 failures of the entities with which
      the  Company   interfaces.   The  Company   could  be  required  to  incur
      unanticipated expenses to remedy any problems, which could have a material
      adverse  effect  on the  Company's  business,  results  of  operation  and
      financial conditions.

NEW ACCOUNTING PRONOUNCEMENTS

      SFAS No. 130,  Reporting  Comprehensive  Income,  issued by the  Financial
      Accounting  Standards  Board,  establishes  standards  for  reporting  and
      display of comprehensive  income and its components  (revenues,  expenses,
      gains, and losses) in a full set of general-purpose  financial statements.
      SFAS No. 130 requires  that all items that are  required to be  recognized
      under  accounting  standards  as  components  of  comprehensive  income be
      reported  in a  financial  statement  that  is  displayed  with  the  same
      prominence as other  financial  statements.  The Company  adopted SFAS No.
      130,   effective   January  1,  1998,  with  no  material  impact  on  the
      consolidated financial statements.

      SFAS No. 131,  Disclosures  about  Segments of an  Enterprise  and Related
      Information,  establishes  standards  for the  way  that  public  business
      enterprises   report   information  about  operating  segments  in  annual
      financial  statements and requires that those enterprises  report selected
      information  about operating  segments in interim financial reports issued
      to  shareholders.  SFAS No. 131 also  establishes  standards  for  related
      disclosures  about products and services,  geographical  areas,  and major
      customers. The adoption of SFAS No. 131 is not expected to have a material
      impact on the consolidated financial statements.

      In June 1998, the FASB issued Statement of Financial  Accounting Standards
      No. 133,  Accounting for Derivative  Instruments  and Hedging  Activities,
      which is effective for fiscal years  beginning  after June 15, 1999.  SFAS
      No. 133  establishes  accounting  and reporting  standards for  derivative
      instruments and transactions  involving hedge accounting.  The Company has
      not yet determined the impact this statement will have on its consolidated
      financial statements.



                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

      From time to time,  the Company is involved in various  lawsuits or claims
      arising from the normal course of business.  In the opinion of management,
      none of these  lawsuits or claims will have a material  adverse  effect on
      the financial statements or results of operations of the Company.

      On April 17,  1998,  the Company  was served with a summons and  complaint
      from  MC  Liquidating   Corporation  f/k/a  MIDCOM  Communications,   Inc.
      ("MIDCOM").  Both the Company and Telenational  Communications,  Inc., its
      wholly-owned  subsidiary  are  named as  defendants,  as are  Telenational
      Communications,  Limited  Partnership,  the former owner of the TNC assets
      ("TCLP"),  and Edmund Blankenau, a principal of TCLP and a former director
      of the  Company.  In its  complaint,  filed on  April 8,  1998 in the U.S.
      Bankruptcy Court for the Eastern District of Michigan,  Southern Division,
      MIDCOM seeks payment of over $600,000 for services  allegedly  provided to
      TCLP and the  Company,  together  with other  damages,  attorney  fees and
      costs.  The Company  believes the claims are without  merit and intends to
      vigorously defend itself against them.

      On June 2, 1998 the Company  initiated an arbitration  proceeding  against
      John  W.  Dalton  ("Dalton"),  a  former  director,  President  and  Chief
      Executive  Officer of the  Company.  In that  proceeding,  the  Company is
      seeking  the  rescission  and  cancellation,   on  grounds  of  fraudulent
      inducement,  of 1.2 million shares of the Company's stock that were issued
      to Dalton in connection with the Company's acquisition of the Wade Wallace
      Company.  In the same  proceeding,  Dalton is asserting claims against the
      Company,  Maroon Bells  Capital  Partners,  Inc.  ("MBCP"),  Paul A. Moore
      (Chairman of the  Company's  Board of Directors  and the  Company's  Chief
      Executive Officer), Phillip S. Magiera (a director and the Chief Financial
      Officer and Secretary of the Company), Dan Wickersham (President and Chief
      Operating  Officer of the Company) and Theodore H.  Swindells (a principal
      of MBCP).  Dalton's employment as President and Chief Executive Officer of
      the Company was terminated effective April 6, 1998. Dalton alleges,  among
      other things that those  parties  engaged in breach of contract,  tortious
      interference   and  breach  of  fiduciary  duty  in  connection  with  the
      termination  of  Dalton's  employment  contract.   Dalton  had  previously
      asserted these claims in a lawsuit he filed in Texas state court. However,
      based on a motion filed by the Company,  that proceeding was abated by the
      Court pending the completion of the  arbitration  proceeding.  The Company
      plans to prosecute its claims against Dalton  vigorously and to vigorously
      defend itself against the claims asserted by Dalton.


ITEM 2.  CHANGES IN SECURITIES

      In connection with the acquisition of IIC in July 1998, the Company issued
      916,520  shares of its common stock to the former sole  shareholder of IIC
      (of which  38,500 will be held in escrow up to a period of one year).  The
      former IIC sole  shareholder  is an  "accredited  investor"  as defined in
      Regulation D promulgated  under the Securities Act and the issuance of the
      shares was exempt under Section 4(2) of the Securities Act.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

      The Company has restructured its debt obligation to Value Partners,  Ltd..
      According  to the revised  terms,  on October  26,1998 the Company made an
      installment  payment of principal  and accrued  interest of $212,356.  The
      remaining balance will be repaid by monthly principal payments of $100,000
      plus  interest  at  14%,  with  acceleration  when  the  Enertel  minority
      investment proceeds are received.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5.  OTHER INFORMATION

None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

EXHIBITS

          Exhibit No.                        Description

           10.1             Global Master Rental Agreement dated as of September
                            23, 1998 by and between Comdisco, Inc. and WorldPort
                            Communications, Inc.

           10.2             Third Amendment to Employment Agreement
                            between Phillip S. Magiera and the Company
                            dated September 29, 1998

           10.3             Promissory Note between Phillip S. Magiera
                            and the Company dated September 29, 1998

           10.4             Third   Amendment  to  Employment   Agreement
                            between  Paul A. Moore and the Company  dated
                            September 29, 1998

           10.5             Promissory  Note  between  Paul A.  Moore and
                            the Company dated September 29, 1998

           27.1             Financial Data Schedule

REPORTS ON FORM 8-K

The  Company  filed  the  following  Current  Reports  on Form 8-K in the  third
quarter:

1. A Current  Report on Form 8-K,  dated June 25, 1998,  was filed July 10, 1998
   and amended August 13, 1998. This Report described the Company's  acquisition
   of EnerTel.  The Report  included  (i) the audited  financial  statements  of
   EnerTel  for the  years  ended  December  31,  1996 and  1997  and  unaudited
   financial  statements  for EnerTel for the three  months ended March 31, 1998
   and (ii) the unaudited  consolidated  pro-forma  financial  statements of the
   Company for the year ended December 31, 1997 and the three months ended March
   31, 1998.

2. A Current  Report on Form 8-K,  dated August 3, 1998, was filed on August 13,
   1998.  This Report  described  the Company's  acquisition  of IIC. The Report
   included  (i) the  audited  financial  statements  of IIC for the years ended
   December 31, 1996 and 1997 and unaudited financial statements for IIC for the
   three  months  ended  March  31,  1998 and (ii)  the  unaudited  consolidated
   pro-forma financial statements of the Company for the year ended December 31,
   1997 and the three months ended March 31, 1998.


                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                    WORLDPORT COMMUNICATIONS, INC.




Date:  November 10, 1998              By:  /s/ Phillip S. Magiera
                                           ----------------------
                                          Phillip S. Magiera
                                          Chief Financial Officer and Secretary