UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
     EXCHANGE ACT OF 1934

For the quarterly period ended  June 30, 1997

                        Commission file number 333-25749

                            RSL COMMUNICATIONS, LTD.
                            ------------------------
           (Exact name of the registrant as specified in its charter)

          Bermuda                                  N/A
          -------                                  ---
(State or other jurisdiction                (I.R.S. Employer
of incorporation or organization)           identification No.)

                                 Clarendon House
                                  Church Street
                             Hamilton HM CX Bermuda
                             ----------------------
                    (Address of principal executive offices)

                                 (441) 295-2832
                                 --------------
                         (Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 at July 31, 1997, approximately 9,243,866 of the preferred shares, par value
$0.01 per share, 665,340 of the Class A common stock, par value $0.01 per share,
4,807,711 of the Class B common stock, par value $0.01 per share and none of the
Class C common stock, par value $0.01 per share, of the registrant were
outstanding.

<PAGE>

                            RSL COMMUNICATIONS, LTD.

                                Table of Contents

                                                                            Page
                                                                            ----

Background...................................................................1


PART I - FINANCIAL INFORMATION

    Item 1.  Financial Statements............................................2

    Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations.......................................7

PART II - OTHER INFORMATION

    Item 1.  Legal Proceedings..............................................12

    Item 2.  Change in Securities...........................................12

    Item 6.  Exhibits and Reports on Form 8-K...............................12

Signatures..................................................................13

Exhibit Index...............................................................14

<PAGE>

1.    Background

      On October 3, 1996, RSL Communications, Ltd. ("RSL") and RSL
Communications PLC (the "Note Issuer") completed the private offering (the
"Private Offering") of 300,000 units, each unit consisting of one 12 1/4% Senior
Note due 2006 of the Note Issuer (the "Original Notes") and one warrant to
purchase 1.815 Class A common shares of RSL, for an aggregate purchase price of
$300,000,000.

      In connection with the Private Offering, RSL and the Note Issuer entered
into a Notes Registration Rights Agreement with the placement agents in the
Private Offering, pursuant to which RSL and the Note Issuer agreed, among other
things, to exchange the Original Notes for registered Notes (the "Exchange
Notes" and, together with the Original Notes, the "Notes"), with substantially
identical terms, on or prior to June 1, 1997. On April 24, 1997, a joint
Registration Statement on Form S-4 of RSL and the Note Issuer (the "Registration
Statement"), pursuant to which the Note Issuer offered to exchange the Exchange
Notes for the Original Notes (the "Exchange Offer") was declared effective by
the Securities and Exchange Commission (the "Commission"). The Exchange Offer
was consummated on May 22, 1997. As a result of the effectiveness of the
Registration Statement, RSL and the Note Issuer are required to comply with the
periodic reporting requirements under Sections 13 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). This report has been
filed with the Commission by RSL pursuant to Rule 13a-13 promulgated under the
Exchange Act. The indenture governing the Notes (the "Indenture") requires that
this Report be delivered to the holders of the Notes.

      The Note Issuer is a 100% wholly owned subsidiary of RSL. The Note Issuer,
through its subsidiaries, operates the Company's United States and European
operations. The Notes are fully and unconditionally guaranteed by RSL.

      RSL and its direct and indirect subsidiaries, including, without
limitation, the Note Issuer, are referred to in this Report collectively as the
"Company." In this Report, references to "dollars" and "$" are to United States
dollars.

Forward-Looking Statements

      Certain matters discussed in this Report under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operation -
Liquidity and Capital Resources" contain certain forward-looking statements
which involve risks and uncertainties (including changing market conditions,
competitive and regulatory matters (such as timing and extent of deregulation of
telecommunications market, the size and financial resources of competitors,
etc.), general economic conditions in the markets in which the Company operates,
etc.) and, accordingly, there can be no assurance with regard to such
statements.


                                       1
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements.


                            RSL COMMUNICATIONS, LTD.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


                                                         As of          As of
                                                       June 30,     December 31,
                                                         1997           1996
                                                         -----          ----
                                                      (unaudited)

Assets

Cash and Cash Equivalents                                 $81,203       $104,068
Accounts Receivable, Net                                   45,789         26,479
Marketable Securities - Available for Sale                 50,797         67,828
Prepaid Expenses and Other Current Assets                  12,288          3,969
Marketable Securities - Held to Maturity                   84,728        104,370
Property and Equipment                                     47,999         35,851
Less: Accumulated Depreciation                            (6,833)        (3,513)
Goodwill and Other Intangibles, Net                        87,545         87,605
Deposits and Other Assets                                   1,026          1,312
                                                      ------------  ------------

     Total Assets                                        $404,542       $427,969
                                                      ============  ============



Liabilities and Shareholders' Equity (Deficiency)

Accounts Payable and Other Liabilities                    $85,639        $70,441
Short-term Debt                                             8,310          6,974
Long-term Debt                                             21,788         18,425
Senior Notes, 12 1/4% Due 2006, Net                       296,300        296,000
Other Liabilities - Noncurrent                              6,942         15,286
Shareholders' Equity (Deficiency)                        (14,437)         20,843
                                                      ------------  ------------

     Total Liabilities and Shareholders' Equity          $404,542       $427,969
                                                      ============  ============

            See notes to condensed consolidated financial statements


                                       2
<PAGE>

                            RSL COMMUNICATIONS, LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (in thousands, except for loss per share)

<TABLE>
<CAPTION>
                                                                    Three Months Ended            Six Months Ended

                                                                    June 30,   June 30,         June 30,    June 30,
                                                                    --------   --------         --------    --------
                                                                      1997       1996             1997        1996
                                                                      ----       ----             ----        ----

<S>                                                                 <C>        <C>              <C>         <C>     
REVENUES .........................................................  $ 67,194   $ 23,900         $ 109,361   $ 39,764
COST OF SERVICES .................................................    59,663     20,973            96,631     35,657
                                                                    --------   --------         ---------   --------  
GROSS PROFIT .....................................................     7,531      2,927            12,730      4,107
SELLING, GENERAL AND ADMINISTRATIVE 
  EXPENSES .......................................................    20,458      8,798            34,271     13,656
DEPRECIATION AND AMORTIZATION ....................................     4,414      1,303             8,676      2,175
                                                                    --------   --------         ---------   --------  
LOSS FROM OPERATIONS .............................................   (17,341)    (7,174)          (30,217)   (11,724)
INTEREST INCOME ..................................................     3,432         22             7,224         80
INTEREST EXPENSE .................................................    (9,430)      (337)          (18,861)      (635)
OTHER INCOME-NET .................................................     6,871         --             6,616         --
MINORITY INTEREST ................................................      (110)        --              (229)        --
INCOME TAXES .....................................................      (181)        --              (439)        --
                                                                    --------   --------         ---------   --------  
NET LOSS .........................................................  $(16,759)  $ (7,489)        $ (35,906)  $(12,279)
                                                                    ========   ========         =========   ========

LOSS PER SHARE OF CLASS B COMMON STOCK ...........................    $(3.49)    $(2.56)           $(7.47)    $(4.19)
WEIGHTED AVERAGE NUMBER OF SHARES OF CLASS B COMMON STOCK
   OUTSTANDING ...................................................     4,808      2,928             4,808      2,928
</TABLE>

            See notes to condensed consolidated financial statements.


                                       3
<PAGE>

                            RSL COMMUNICATIONS, LTD.
                 CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
                                   (UNAUDITED)

                                                  Six Months Ended June 30,
                                                  -------------------------
                                                         (in thousands)

                                                       1997        1996
                                                       ----        ----

Net loss .........................................  $ (35,906)  $(12,279)
Depreciation and amortization ....................      8,676      2,175
Working capital change and other .................    (16,588)     1,927
                                                    ---------   --------
     Net cash used in operations .................    (43,818)    (8,177)
                                                    ---------   --------

Acquisitions of subsidiaries .....................     (8,093)   (10,616)
Purchase of property and equipment ...............     (7,250)    (4,792)
Proceeds from marketable securities ..............     17,031         --
Proceeds from restricted securities ..............     22,665         --
                                                    ---------   --------
     Net cash provided by (used in) investing ....     24,353    (15,408)
                                                    ---------   --------

Proceeds from notes payable ......................         --     24,461
Payment of notes payable .........................     (1,800)        --
Other ............................................       (820)      (153)
                                                    ---------   --------
     Net cash (used in) provided by financing ....     (2,620)    24,308
                                                    ---------   --------

(Decrease)/increase in cash and cash 
equivalents ......................................    (22,085)       723
Effects of foreign currency on cash and cash
  equivalents ....................................       (780)        --
Cash and cash equivalents at beginning of period .    104,068      5,163
                                                    ---------   --------

Cash and cash equivalents at end of period .......  $  81,203   $  5,886
                                                    =========   ========

SUPPLEMENTAL DISCLOSURE OF CASH 
FLOWS INFORMATION:
Cash paid for interest ...........................  $  23,089   $    634
                                                    =========   ========

            See notes to condensed consolidated financial statements


                                       4
<PAGE>

                            RSL COMMUNICATIONS, LTD.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 1997
                                   (UNAUDITED)

1.  BASIS OF PRESENTATION

The unaudited Condensed Consolidated Financial Statements included herein have
been prepared by RSL Communications, Ltd. ("RSL") and RSL Communications PLC
("RSL PLC" and, together with RSL and their direct and indirect subsidiaries,
the "Company"), 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 pursuant to such rules and
regulations; however, in the opinion of management of the Company, the Condensed
Consolidated Financial Statements include all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial information
for such periods. The data contained in these financial statements are unaudited
and should be read in conjunction with the Company's audited consolidated
financial statements and the notes thereto and other data included in the joint
Registration Statement of RSL and RSL PLC on Form S-4 filed with the Securities
and Exchange Commission on April 24, 1997 (Registration No. 333-25749).

2.  EFFECTS OF RECENT ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per
Share." SFAS No. 128 becomes effective for financial statements issued for
periods ending after December 15, 1997. Management believes that the adoption of
SFAS No. 128 will not significantly effect the Company's reporting.

3.    OTHER INCOME-NET

The accompanying Condensed Consolidated Statements of Operations for the three
months and six months ended June 30, 1997 include the effect of a reversal of
approximately $7.0 million from the Company's "other liabilities-noncurrent" in
the accompanying Condensed Consolidated Balance Sheets to "other income", as a
result of the Company's renegotiations of, and successful amendments to, certain
transmission capacity contracts.

4.  SUMMARIZED FINANCIAL INFORMATION

The following presents summarized financial information of RSL PLC as of
December 31, 1996. RSL PLC is a 100% wholly owned subsidiary of the Company
incorporated on July 26, 1996. RSL PLC had no independent operations other than
serving solely as a foreign holding company for the Company's U.S. and European
operations. The Notes issued by RSL PLC are fully and unconditionally guaranteed
by RSL. RSL has not presented separate financial statements and other
disclosures concerning RSL PLC because management has determined that such
information is not material to holders of the Notes. RSL's financial statements
are, except for RSL's capitalization, Australian operations, corporate overhead
expenses and available credit facilities, identical to the financial statements
of RSL PLC.


                                       5
<PAGE>

                                                    As of            As of
                                                 December 31,       June 30,
                                                   1996              1997
                                              ($ in thousands)  ($ in thousands)
                                              ----------------------------------
Current Assets .............................       $201,738         $183,058
Non-current Assets .........................       $225,121         $209,347
Current Liabilities ........................       $ 76,229         $ 87,815
Non-current Liabilities ....................       $376,914         $362,336

                                              From Date of
                                              Incorporation
                                                (July 26, 
                                                1996) to
                                              December 31,      Six Months ended
                                                  1996           June 30, 1997
                                            ($ in thousands)    ($ in thousands)
                                           -------------------------------------
Net Revenue................................      $ 63,090           $102,175
Gross Profit...............................       $ 8,890           $ 12,160
Net Loss...................................     $( 21,627)          $(31,237)


                                       6
<PAGE>

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

Overview

      The Company is a rapidly growing multinational telecommunications company
which provides a broad array of international and domestic telephone services,
including long distance calling to over 200 countries, calling card, private
line and value-added services. The Company focuses on providing international
long distance voice service to small and medium-sized businesses in strategic
markets. The Company currently has operations in the United States, the United
Kingdom, France, Germany, Sweden, Finland, the Netherlands, Denmark and
Australia. The Company is expanding its operations and network into additional
strategic markets which account for a significant portion of the remaining
international traffic.

Results Of Operations

      The Company has significant revenues, costs, assets and liabilities that
are, for the most part, denominated in local currencies. Therefore, results of
operations, as stated in local currencies, and the Company's business practices
and plans with respect to a particular country, are not significantly affected
by exchange rate fluctuations. However, such results of operations as reported
in U.S. dollars may be significantly affected by fluctuations in the value of
the local currencies in which the Company transacts business in relation to the
U.S. dollar. Results of operations of the Company's subsidiaries are translated
into U.S. dollars on the basis of average exchange rates throughout the period.
Assets and liabilities are translated into U.S. dollars on the basis of rates of
exchange as of the balance sheet dates. The Company has monitored in the past,
and will continue to closely monitor, its currency exposure.

Results Of Operations For The Three Months Ended June 30, 1997 Compared To The
Three Months Ended June 30, 1996

      Revenues. Revenues increased to $67.2 million for the three months ended
June 30, 1997 compared to $23.9 million for the three months ended June 30,
1996, an increase of 181%. This increase is due primarily to an increase in the
Company's U.S. revenues from $20.2 million for the three months ended June 30,
1996 to $43.3 million for the same period this year and the Company's European
revenues, which increased from $3.8 million for the three months ended June 30,
1996 to $16.7 million for the same period this year. The Company generated
revenues in the United States, in seven European countries and in Australia
during the second quarter of 1997. The increase in U.S. and European revenues
was primarily due to both increased traffic volume from existing customers and
significant increases in the Company's U.S. commercial customer base. Revenues
from the Company's Australian operations commenced with the acquisition of an
Australian customer base in May 1997.

      Cost of Services. Cost of services increased to $59.7 million for the
three months ended June 30, 1997 from $21.0 million for the three months ended
June 30, 1996, an increase of 184%. This increase is primarily due to increased
traffic and increased rates paid to the Company's carrier vendors. As a
percentage of revenues, cost of services increased to 88.8% for the three months
ended June 30, 1997 from 87.8% for the three months ended June 30, 1996. The
increase in cost of services as a percentage of revenues is primarily
attributable to the Company's U.S. operations' costs of services which represent
66.0% of the Company's total cost of services. The Company's U.S. operations
generated a gross margin of 9.2% in the second quarter of 1997 compared to the
Company's European operations which produced an 18.0% gross


                                       7
<PAGE>

margin for the same period. The Company is currently seeking to purchase
additional capacity on routes on which it has experienced, or anticipates
experiencing, overflow traffic, in order to reduce costs. In addition, the
Company's prices to customers utilizing these routes are often adjusted to take
into account an increased expectation of overflow traffic.

      Gross Margins. The Company's consolidated gross margins decreased to 11.2%
for the three months ended June 30, 1997 from 12.3% for the three months ended
June 30, 1996 primarily due to significant price reductions in the markets of
France and Germany. Gross margins in the United States decreased to 9.2% for the
second quarter of 1997 from 11.0% for the second quarter of 1996, while gross
margins in the Company's European operations decreased to 18.0% for the second
quarter of 1997 from 19.1% for the second quarter of 1996.

      Selling, General and Administrative Expense. Selling, general and
administrative ("SG&A") expense for the three months ended June 30, 1997
increased by $11.7 million, or 133%, to $20.5 million from $8.8 million for the
three months ended June 30, 1996. This increase is primarily attributable to the
reasons previously provided for revenues and cost of services above. As a
percent of U.S. revenues, the Company's U.S. SG&A expense decreased to 12.1% for
three months ended June 30, 1997 from 23.0% in the comparable period last year.
The Company's European operations generated $12.6 million or 61.8% of the
Company's consolidated SG&A, although such operations accounted for 24.8% of the
Company's total revenues due to a greater proportion of start-up costs in
Europe. SG&A expense as a percentage of revenues will continue to increase as a
result of start-up costs attributable to new local operations.

      Depreciation and Amortization Expense. Depreciation and amortization
expense increased 238% to $4.4 million for the three months ended June 30, 1997
from $1.3 million for the three months ended June 30, 1996. This increase is
primarily attributable to the increased amortization of goodwill recorded as a
result of acquisitions. Depreciation and amortization expense is expected to
increase in the future as the Company acquires additional businesses and assets.

      Interest Income. Interest income increased to $3.4 million for the three
months ended June 30, 1997 from $22,000 for the three months ended June 30,
1996, primarily as a result of interest earned on the remaining net proceeds of
the Private Offering.

      Interest Expense. Interest expense increased to $9.4 million for the three
months ended June 30, 1997 from $337,000 for the three months ended June 30,
1996, primarily as a result of interest related to the Notes.

      Net Loss. Net loss increased to $16.8 million for the three months ended
June 30, 1997, as compared to net loss of $7.5 million for the three months
ended June 30, 1996 due to the factors described above.

Results Of Operations For The Six Months Ended June 30, 1997 Compared To The Six
Months Ended June 30, 1996

      Revenues. Revenues increased to $109.4 million for the six months ended
June 30, 1997 compared to $39.8 million for the six months ended June 30, 1996,
an increase of 175%. This increase is due primarily to an increase in the
Company's U.S. revenues from $35.4 million for the six months ended June 30,
1996 to $69.9 million for the same period this year and the Company's European
revenues, which increased from $4.4 million for the six months ended June 30,
1996 to $32.3 million for the same period this year. The Company generated
revenues in the United States, in seven European countries and in Australia
during the


                                       8
<PAGE>

second quarter of 1997. The Company had revenue producing operations in only
the United States and five European countries in the first half of 1996. The
increase in U.S. revenues was primarily due to both increased traffic volume
from existing customers and significant increases in the Company's U.S.
commercial customer base. Revenues from the Company's European operations
increased as a result of the generation of revenues by its start-up operations
in the United Kingdom, Sweden and Finland and the operations it acquired in
Germany, France and the Netherlands.

      Cost of Services. Cost of services increased to $96.6 million for the six
months ended June 30, 1997 from $35.7 million for the six months ended June 30,
1996, an increase of 171%. This increase is primarily due to increased traffic
and increased rates paid to the Company's carrier vendors. As a percentage of
revenues, cost of services decreased to 88.4% for the six months ended June 30,
1997 from 89.7% for the six months ended June 30, 1996. The decrease in cost of
services as a percentage of revenues is primarily attributable to the Company's
growing European revenues which represented 29.5% of the Company's total
revenues for the six months ended June 30, 1997 as compared to 10.9% of the
Company's total revenues for the same period in 1996, the Company's European
operations having generated greater gross margins (18.7% for the six months
ended June 30, 1997) than the Company's U.S. operations (8.8% for the six months
ended June 30, 1997) and, to a lesser extent, to a decrease in overflow traffic.
The Company is currently seeking to purchase additional capacity on routes on
which it has experienced, or anticipates experiencing, overflow traffic, in
order to reduce costs. In addition, the Company's prices to customers utilizing
these routes are often adjusted to take into account an increased expectation of
overflow traffic.

      Gross Margins. The Company's consolidated gross margins increased to 11.6%
for the six months ended June 30, 1997 from 10.3% for the six months ended June
30, 1996. Gross margins in the United States were comparable for the six months
ended June 30, 1997 and 1996, while gross margins in the Company's European
operations increased to 18.7% for the six months ended June 30, 1997 from 17.0%
for the six months ended June 30, 1996.

      Selling, General and Administrative Expense. Selling, general and
administrative ("SG&A") expense for the six months ended June 30, 1997 increased
by $20.6 million, or 150%, to $34.3 million from $13.7 million for the six
months ended June 30, 1996. This increase is primarily attributable to the
reasons previously provided for revenues and cost of services above. As a
percent of U.S. revenues, the Company's U.S. SG&A expense decreased to 14.5% for
six months ended June 30, 1997 from 22.3% in the comparable period last year.
The Company's European operations generated $20.1 million or 58.6% of the
Company's consolidated SG&A, although such operations accounted for 29.5% of the
Company's total revenues due to a greater proportion of start-up costs in
Europe. SG&A expense as a percentage of revenues will continue to increase as a
result of start-up costs attributable to new local operations.

      Depreciation and Amortization Expense. Depreciation and amortization
expense increased 295% to $8.7 million for the six months ended June 30, 1997
from $2.2 million for the six months ended June 30, 1996, an increase of $6.5
million. This increase is primarily attributable to the increased amortization
of goodwill recorded as a result of acquisitions. Depreciation and amortization
expense is expected to increase in the future as the Company acquires additional
businesses and assets.

      Interest Income. Interest income increased to $7.2 million for the six
months ended June 30, 1997 from $80,000 for the six months ended June 30, 1996,
primarily as a result of interest earned on the remaining net proceeds of the
Private Offering.

      Interest Expense. Interest expense increased to $18.9 million for the six
months ended June 30, 1997 


                                       9
<PAGE>

from $635,000 for the six months ended June 30, 1996, an increase of
approximately $18.2 million, as a result of interest related to the Notes.

      Net Loss. Net loss increased to $35.9 million for the six months ended
June 30, 1997, as compared to a net loss of $12.3 million for the six months
ended June 30, 1996 due to the factors described above.

Liquidity and Capital Resources

      The Company has incurred significant operating and net losses, due in
large part to the start-up and development of the Company's local operations and
the development of the Company's European network infrastructure. The Company
expects that such losses will continue as the Company implements its growth
strategy. Historically, the Company has funded its operating losses and capital
expenditures through capital contributions, borrowings and a portion of the net
proceeds of the Private Offering.

      Cash used in operating activities for the six months ended June 30, 1997
totaled $43.8 million compared with $8.2 million for the same period in 1996.
Capital expenditures for the six months ended June 30, 1997 were $7.3 million
compared with $4.8 million for the comparable period in 1996. Funds expended for
acquisitions were $8.1 million during the six months ended June 30, 1997
compared with $10.6 million for the six months ended June 30, 1996.

      In connection with the issuance of the Notes, the Company was required to
purchase marketable securities, which are held by the trustee under the
Indenture, in order to secure the payment of the first six scheduled interest
payments on the Notes. The market value of such restricted marketable securities
was approximately $84.7 million at June 30, 1997. On May 15, 1997, the Company
made its first required semi-annual interest payment in the amount of
approximately $22.7 million. The funds required for the interest payment were
released from the restricted securities portfolio.

      One of the Company's primary equipment vendors has provided to the Company
$50.0 million in vendor financing to fund the purchase of additional switching
and related telecommunications capital equipment. At June 30, 1997,
approximately $30.2 million was available under this facility. Borrowings from
this equipment vendor accrue interest at a rate of LIBOR plus either 5.25% or
4.5% depending on the equipment purchased.

      The Company is currently contractually committed to the purchase of three
international gateway and two domestic switches. This commitment amounts to
approximately $8.0 million, all of which is being currently financed under the
Company's vendor financing facility.

      The Company's 1997-1998 planned network facilities expansion is comprised
primarily of both international gateway and domestic switches and is projected
to require approximately $15 million of the currently available $19.8 million
under the Company's vendor financing facility.



                                       10

<PAGE>

      The Company anticipates that it will enter 7 new markets over the next
two years. The costs to be incurred in the first year in order to capitalize
such operations are projected to range from $500,000 to $1.5 million per market,
exclusive of costs related to the acquisition of switching and network equipment
which is expected to be vendor financed, and any losses incurred.

      The Company's indebtedness was approximately $312.2 million at June 30,
1997, of which $305.9 million represents long-term debt and $6.3 million
represents short-term debt. 

      The Company has a $7.5 million revolving credit facility with a bank (the
"Revolving Credit Facility"). The Company also has a $35.0 million subordinated
shareholder standby facility (the "Shareholder Standby Facility") pursuant to
which the Company's Chairman has agreed to provide (or arrange for a bank to
provide) RSL with up to $35.0 million of subordinated debt. The Company was not
utilizing either of these facilities at June 30, 1997 and the full amount of
each of these facilities was available. The Company's Chairman has provided a
guarantee in connection with the Company's borrowings under the Revolving Credit
Facility.

      One of the Company's subsidiaries, Cyberlink, Inc., has a $5.0 million
line of credit to finance its accounts receivable, and an additional $2.0
million line of credit from the same lender to finance its capital expenditures.
Both lines of credit were available at June 30, 1997. The interest rate
applicable to such commitments is 2.25% and 2.5% over the lender's prime rate,
respectively.

      Management believes that the remaining net proceeds of the Notes, together
with available borrowings under the Revolving Credit Facility and the
Shareholder Standby Facility, vendor financing and short-term lines of credit
and overdraft facilities from local banks, are expected to fund the Company's
planned expansion of its existing operations and fund operating losses for 15 to
20 months. Management believes that no significant restrictions on future
earnings or liquidity exists and that the Company's existing level of
indebtedness will not have any adverse impact on its operating flexibility. The
Company continually monitors its level of indebtedness. However, the Company is
continuously reviewing and considering acquisition opportunities and is
considering equity financing opportunities. The Company intends to pursue
acquisitions which it believes will expand or enhance its current operations.
Accordingly, such acquisitions and investments, if consummated, may require a
material portion of the Company's financial resources and may accelerate the
need for raising additional capital in the future.

Seasonality

      The Company's European operations experience seasonality during July and
August, December and January, and, to a lesser extent, March, as these months
are traditional holiday months in most European countries and many European
businesses, which are the Company's principal European customers, are closed
during portions of these months.


                                       11
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings.

      The Company is, from time to time, a party to litigation that arises in
the normal course of its business operations. The Company is not presently a
party to any litigation that the Company believes could reasonably be expected
to have a material adverse effect on its business or results of operations.

Item 2.  Change in Securities.

      Pursuant to an agreement and plan of reorganization, between the Company,
the Note Issuer and Charles Piluso ("Piluso"), Piluso elected to exchange his
shares in International Telecommunications Group, Ltd. ("ITG"), a subsidiary of
the Company, for shares in the Company. Accordingly, the Company issued Piluso
665,340 of the Class A Common Stock (the "RSL Shares"), par value $0.01 per
Share, of the Company in exchange for 15,619 shares of common stock of ITG. The
RSL Shares were issued pursuant to a private placement exemption under Section
4(2) of the Securities Act of 1933, as amended, and the certificates evidencing
the RSL Shares have been legended as restricted securities.

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

         Exhibits:

                  27.1     Financial Data Schedule

         Reports on Form 8-K:

                  None.


                                       12
<PAGE>

                                   SIGNATURES

      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.


                                            RSL COMMUNICATIONS, LTD.




Date:  August 12, 1997                      By  /s/  Mark Hirschhorn
                                              ---------------------------
                                               Name:  Mark Hirschhorn
                                               Title: Global Controller
                                                      (Authorized Officer and
                                                      Chief Accounting Officer)


                                       13
<PAGE>

                                  Exhibit Index

27.1     Financial Data Schedule


                                       14