AMENDMENT NO. 5



            This  Amendment  No. 5 entered  into as of  August  31,  1998  (this
      "Amendment") by and among GALAXY TELECOM,  L.P., ("GTLP"),  GALAXY TELECOM
      CAPITAL CORP.  ("Capital Corp.";  and together with GTLP, the "Borrower"),
      the  financial  institutions  party  to  the  Amended  and  Restated  Loan
      Agreement  referred  to below (the  "Lenders"),  and FLEET  NATIONAL  BANK
      ("Fleet"),  a national banking association organized under the laws of the
      United  States of America,  as agent for itself and the other Lenders (the
      "Agent").  Capitalized  terms  used but not  otherwise  expressly  defined
      herein shall have the meanings  assigned thereto in the Loan Agreement (as
      such term is defined below).

      PRELIMINARY STATEMENTS:

            WHEREAS, the Borrower,  the Lenders, and the Agent have entered into
      an Amended and Restated Loan Agreement  dated as of September 28, 1995, as
      amended by Amendment  No. 1 dated as of October  21,1996,  Amendment No. 2
      dated as of March 28, 1997,  Amendment No. 3 dated as of November 14, 1997
      and  Amendment  No. 4 dated as of March 27,  1998 (as  amended,  the "Loan
      Agreement"). Capitalized terms used herein and not otherwise defined shall
      have the meanings specified in the Loan Agreement;

            WHEREAS, the Borrower has requested that the Lenders amend certain
      provisions of the Loan Agreement;

            NOW,  THEREFORE,  in  consideration  of the mutual  covenants herein
      contained and good and valuable consideration, the receipt and adequacy of
      which are hereby acknowledged, the parties hereto hereby agree as follows:

      1. New Lender. Simultaneously herewith, The First National Bank of Chicago
      (the  "New  Lender")  and  Fleet  shall  each  enter  into a  Substitution
      Agreement  with ING  pursuant  to the  terms of  Section  9.11 of the Loan
      Agreement.  Following the execution of such  Substitution  Agreement,  ING
      shall no longer be a Lender and shall have no  Commitment  and no Pro Rata
      Share.

            2.    [Intentionally omitted]

      3.  Amendment.  The parties hereto agree that the Loan Agreement is hereby
      amended as follows:

            (a) Total Indebtedness and Senior Indebtedness  Coverage.  Effective
      as of the date  hereof,  Section  5.1.10 of the Loan  Agreement  is hereby
      amended by replacing the required  ratios for the period from July 1, 1998
      through  the  periods  set forth  below with the  ratios  set forth  below
      opposite such period:

                                          Total             Senior
                                          Indebtedness            Indebtedness
                                          Ratio             Ratio

July 1, 1998 through                      7.00:1.00                 2.40:1.00
September 30, 1998

October 1, 1998 through                   7.00:1.00                 2.25:1.00
December 31, 1998

January 1, 1999 through                   6.75:1.00                 2.00:1.00
March 31, 1999

April 1, 1999 through                     6.50:1.00                 2.00:1.00
June 30, 1999

July 1, 1999 through                      6.00:1.00                 2.00:1.00
December 31, 1999

January 1, 2000 and thereafter            5.75:1.00                 2.00:1.00

            (b) Total  Indebtedness  per  Subscriber.  Effective  as of the date
      hereof,  clause  (B) of  Section  5.1.11 of the Loan  Agreement  is hereby
      amended to read as follows:

                        "(B) $1,100:1.00 for the period from September 30, 1998
      through June 30, 1999,"

            (c) Interest  Coverage.  Effective  as of the date  hereof,  Section
      5.1.12 of the Loan  Agreement  is hereby  amended by  deleting  the period
      "October 1, 1998 through  December  31,  1998" and the period  "January 1,
      1999  through  December  31,  1999" and the ratios for such periods and by
      substituting the following in place thereof:

                  October 1, 1998 through                   1.25:1.00
                  December 31, 1998

                  January 1, 1999 through                   1.25:1.00
                  June 30, 1999

                  July 1, 1999 through                      1.60:1.00
                  December 31, 1999

      (d) Restoration of Revolver.  Effective as of the date hereof, the defined
      term "Conversion  Date" set forth in the Loan Agreement is amended to mean
      "June 30, 1999". Notwithstanding anything to the contrary set forth in the
      Loan Agreement,  upon the  consummation of any System Asset Sale after the
      date  hereof,  the Borrower  shall apply the net proceeds  received by the
      Borrower therefrom to repay the Revolving Loans. Thereafter,  the Borrower
      shall not be permitted,  without the prior  written  consent of all of the
      Lenders, to borrow Revolving Loans if the aggregate  outstanding principal
      balance of the Revolving  Loans  following such borrowing would exceed the
      lesser  of (i)  $55,900,000  less the  aggregate  principal  amount of net
      proceeds  applied  to repay  Revolving  Loans  pursuant  to the  foregoing
      sentence,  or (ii) an amount such that the Borrower would,  following such
      borrowing,  not be in compliance with the financial covenants set forth in
      Sections 5.1.10 through 5.1.15 of the Loan Agreement  calculated pro forma
      as though  such  borrowing  and all other  borrowings  during  the  fiscal
      quarter in which such  borrowing is made had been  outstanding on the last
      day of the immediately  preceding  fiscal quarter (it being understood and
      agreed that, with respect to a borrowing occurring during a fiscal quarter
      in which the Borrower has  consummated  a System Asset Sale,  the Borrower
      shall, not less than two days prior to such borrowing, submit to the Agent
      a  certificate  in  the  form  of  Exhibit  5.3.5  to the  Loan  Agreement
      calculating  the  financial  covenants  set forth  thereon as though  such
      System Asset Sale and all other System Asset Sales made during such fiscal
      quarter  had  occurred  as of the first day of the  immediately  preceding
      fiscal  quarter  without  the  Operating  Cash  Flow  related  to the sold
      System(s)  and as  though  the  borrowing  in  question  and all  previous
      borrowings  occurring  during such fiscal quarter had been  outstanding on
      the last day of the immediately  preceding  fiscal quarter,  as though the
      average  interest  rate  applicable  to the Loans for the period  from the
      first day of such  fiscal  quarter  through the date such  certificate  is
      submitted and as though the interest rate(s) applicable to the Loans as of
      the date such  certificate  is submitted  continue to be applicable to the
      Loans and such  borrowings  for the remainder of the fiscal period covered
      by the pro forma  calculation).  The provisions of this subsection (d) may
      not be waived or amended  without the prior written  consent of all of the
      Lenders.

      (e) Principal Amortization.  Notwithstanding  anything to the contrary set
      forth in Section  2.1.2(b) of the Loan  Agreement,  no  principal  payment
      shall be required to be made under that Section  until  September 30, 1999
      on which date the  Borrower  shall be  required to make the full amount of
      the 6% payment  required for 1998,  the 4% payment  required for March 31,
      1999,  the 4%  payment  required  for  June 30,  1999  and the 4%  payment
      required  for  September  30,  1999  (for a  total  payment  to be made on
      September 30, 1999 in an amount equal to 18% of the outstanding  principal
      balance of the Revolving  Loans on the Conversion  Date).  On December 31,
      1999,  the Borrower  shall be required to make payment of the remaining 4%
      payment due under the Loan  Agreement  on such date and,  thereafter,  the
      amortization  of the Loans  shall  continue  in  accordance  with  Section
      2.1.2(b) of the Loan Agreement.

      (f) Commitment  Reduction.  The defined term  "Revolving  Commitment"  set
      forth  in  the  Loan   Agreement   is  amended  by  deleting   the  phrase
      "$63,000,000"  therefrom and by substituting  the phrase  "$55,900,000" in
      place thereof.

      (g) System  Asset Sales and  Permitted  Acquisitions.  The Lenders  hereby
      consent to the System Asset Sales  described on Exhibit A hereto  provided
      that such System Asset Sales occur prior to the  Conversion  Date and that
      the proceeds thereof are applied to reduce the Revolving Loans as provided
      for in Section  2.1.7.2(a) of the Loan Agreement and further provided that
      the Agent, in its discretion,  approves in writing  (following its receipt
      of  a  reasonably  detailed   description   thereof)  the  specific  terms
      (including, without limitation, price) of each such System Asset Sale. The
      Lenders  further  hereby  agree  that  the  proposed  System  acquisitions
      described  on Exhibit A hereto  shall  constitute  Permitted  Acquisitions
      under the Loan Agreement  provided that the terms of Section  5.2.12.1 are
      complied with.

      (h) Excess Cash Flow Recapture Deferral.  Notwithstanding  anything to the
      contrary  contained  in  Section  2.1.7.2(b)  of the Loan  Agreement,  the
      Borrower shall not be required to make any principal  payment with respect
      to its Excess Cash Flow for the 1998 fiscal year.

      (i) Capital  Expenditures.  Notwithstanding  anything to the  contrary set
      forth in  Section  5.2.17 of the Loan  Agreement,  the  Borrower  shall be
      permitted to make Capital  Expenditures  during its 1998 fiscal year in an
      amount not to exceed $14,000,000 of which not more than $10,000,000 may be
      used with  respect to the  existing  cable  television  operations  of the
      Borrower and not more than  $4,000,000 may be used in connection  with the
      installation  of  fiber  optic  cable  in  Nebraska.  In  addition  to the
      foregoing,  and  notwithstanding  anything  to the  contrary  set forth in
      Section  5.2.17  of the Loan  Agreement,  up to  $250,000  of the  Capital
      Expenditures  otherwise  permitted to be made by the  Borrower  during its
      1999 fiscal year may be used in connection with the  installation of fiber
      optic  cable  in  Nebraska.   Notwithstanding  anything  to  the  contrary
      contained in the Loan Agreement,  no unexpended  portion of the amounts of
      Capital  Expenditures  permitted to be made pursuant to the foregoing in a
      fiscal year may be carried forward to the succeeding fiscal year.

      (j) Events of Default.  Notwithstanding anything to the contrary set forth
      in the Loan Agreement it shall constitute an immediate Event of Default if
      the Borrower,  GTLP,  GTI, LLC or Capital Corp. or any Subsidiary  thereof
      shall,  without the prior  written  consent of all of the Lenders,  become
      liable for Indebtedness for Borrowed Money which the Borrower would not be
      permitted  to have  outstanding  under  the  terms of  Section  5.2.8.  In
      addition to the foregoing,  the Lenders and the Agent agree that no one of
      them will  consent  to a waiver of,  amendment  to or  departure  from the
      provisions  of  Section  6.1.14 of the Loan  Agreement  unless  all of the
      Lenders consent in writing to such a waiver, amendment or departure.

      (k)  Adjustment of Pro Rata Shares.  Effective as of the date hereof,  the
      Loan  Agreement is hereby  amended by deleting  Exhibit 1.8 thereto and by
      substituting  in place  thereof a new Exhibit 1.8 in the form of Exhibit B
      hereto. Simultaneously herewith, the Borrower shall issue to Fleet and the
      New  Lender new  Revolving  Notes to reflect  the  changes to Exhibit  1.8
      effected by the foregoing.

      (l)  Operating  Cash  Flow.   Notwithstanding  anything  to  the  contrary
      contained  in the Loan  Agreement,  from and  after  the date  hereof,  in
      calculating  Operating  Cash Flow for any fiscal  period of the  Borrower,
      there  shall be  excluded  from such  Operating  Cash  Flow all  operating
      results  attributable to any System which the Borrower has sold during the
      fiscal period in question.

      (m) Waiver of  Indebtedness.  The Borrower has advised the Lenders and the
      Agent that it has incurred Indebtedness for the purchase of vehicles which
      Indebtedness  is  owed  to  First  National  Bank  of the  Mid-South.  The
      outstanding   principal   balance  of  such   Indebtedness   is  presently
      approximately   $3,000,000.   The  Agent  and  the  Lenders  hereby  waive
      compliance by the Borrower with the  provisions of Section  5.2.8.5 of the
      Loan  Agreement  with  respect  to such  Indebtedness  provided  that  the
      outstanding  principal  balance  thereof at no time after the date  hereof
      shall  exceed  $3,000,000  which  amount shall be reduced by the amount of
      each principal payment hereafter made on such Indebtedness.

            4. The Lenders hereby waive the  requirement  contained in Amendment
      No. 4 to the Loan Agreement that the Borrower pay a fee in an amount equal
      to $25,000 to each  Lender.  In  consideration  of the  foregoing  and the
      Lenders entering into this Amendment, the Borrower hereby agrees to pay to
      the Agent on the date  hereof for the pro rata  account of each  Lender an
      amendment fee in an amount equal to $279,500.

            5. This Amendment is subject to the provisions of Section 9.5 of the
      Loan  Agreement,  and shall become  effective,  as of the date first above
      written, upon the satisfaction of the following conditions precedent:

      (a) receipt by the Agent of counterparts of this Amendment executed by the
      Borrowers and the Lenders, and counterparts of the Consent appended hereto
      executed by the  Guarantors  and payment to the Agent of the amendment fee
      referred to above;

      (b) such other items or  documents as may be requested by the Agent or the
      Lenders.

            6. This  Amendment  shall be governed by and construed in accordance
      with the laws of the Commonwealth of Massachusetts.  All parts of the Loan
      Agreement not affected by this Amendment are hereby  ratified and affirmed
      in all  respects,  provided  that if any  provision of the Loan  Agreement
      shall conflict or be inconsistent  with this Amendment,  the terms of this
      Amendment  shall  supersede  and prevail.  Upon and after the date of this
      Amendment all references to the Loan Agreement in that document, or in any
      Financing  Document,  shall  mean the Loan  Agreement  as  amended by this
      Amendment.  Except as expressly provided in this Amendment,  the execution
      and  delivery  of this  Amendment  does not and will not amend,  modify or
      supplement any provision of, or constitute a consent to or a waiver of any
      noncompliance  with the provisions of the Loan  Agreement,  and, except as
      specifically  provided in this Amendment,  the Loan Agreement shall remain
      in full force and effect.

            7. The Borrower  hereby  represents  and warrants to the Lenders and
      the Agent that the  representations  and warranties set forth in Section 4
      of the Loan Agreement are true and correct in all material  respects as of
      the date hereof.  The  Borrower  hereby  agrees to indemnify  and hold the
      Lenders, the New Lender and the Agent harmless from and against any claim,
      cost, damage (including without limitation consequential damages), expense
      (including  without limitation  reasonable  attorneys' fees and expenses),
      loss,  liability,  or judgment now or hereafter arising as a result of any
      claim against the Borrower,  the Lenders,  the New Lender and/or the Agent
      arising  out of the  transactions  contemplated  by  this  Amendment.  The
      provisions  of this  Section  shall  continue in effect and shall  survive
      (among other events) any  termination of this  Agreement,  foreclosure,  a
      deed in lieu  transaction,  payment and satisfaction of the Note and other
      obligations of the Borrower  hereunder,  and release of any collateral for
      the Loans.

            8. This Amendment may be executed in one or more counterparts,  each
      of which when so executed and delivered  shall be deemed to be an original
      and all of which  taken  together  shall  constitute  but one and the same
      agreement. Delivery of an executed counterpart of a signature page to this
      Amendment  by  telecopier  shall be  effective  as  delivery of a manually
      executed counterpart of this Amendment.

            IN WITNESS WHEREOF,  the parties hereto have executed this Amendment
      as of the day and year first above written, under seal.

                                    BORROWERS:

                              GALAXY TELECOM, L.P.

                                  By: Galaxy Telecom, Inc., its general partner

                                    By: /s/ J. Keith Davidson
                                        ----------------------------------
                                          Name:  J. Keith Davidson
                                          Title: EVP & CFO

                                    GALAXY TELECOM CAPITAL CORP.


                                    By: /s/ J. Keith Davidson
                                        ----------------------------------
                                          Name:  J. Keith Davidson
                                          Title: EVP & CFO


                                    LENDERS:

                                  FLEET NATIONAL BANK, as Agent and as a Lender


                                    By:  /s/  Jeffrey J. McLaughlin
                                        ----------------------------------
                                          Name: Jeffrey J. McLaughlin
                                   Title: EVP



                                    STATE STREET BANK AND TRUST COMPANY


                               By: Diane I. Nooney
                                        ----------------------------------
                                          Name: Diane I. Nooney
                                          Title:  Vice-President


                                    UNION BANK


                             By: /s/ Christine Bell
                                        ----------------------------------
                                          Name: Christine Bell
                                          Title:  Vice-President


                                    THE FIRST NATIONAL BANK OF CHICAGO


                                    By:  /s/ Richard P. Howard
                                        ----------------------------------
                                          Name: Richard P. Howard
                                          Title: Vice-President

                                  EXHIBIT A

            Permitted System Sales and Permitted System Purchases


 
A.    Permitted System Sales 
 
 
   Disposition                Number of Subs           Closing Date

   Blackstone (S.W. GA)            2,280               September, 1998

   Blackstone (SC)                 2,821               October, 1998

   Leesville (LA)                  5,422               November, 1998

   Charter (SC)                    2,349               December, 1998

   Comcast (AL/FL/GA)              5,826               April, 1999

   New Path                        9,408               July, 1999
 _______________________    ________________________ __________________________
   TOTAL                           28,106







B.    Permitted System Purchases

      Purchase of Nebraska system with approximately 560 subscribers was
approved in the last
      amendment.

                                    EXHIBIT B

                                     EXHIBIT 1.8

                                   PRO RATA SHARES

Lender                                                Pro Rata Share

Fleet National Bank                                   37.2947428

State Street Bank and Trust Company                   22.4080848

Union Bank                                            22.4080848

The First National Bank of Chicago                    17.8890877

                                   Schedule A


      Name of New Lender, address for notices
      and instructions for wire transfers                       Pro Rata Share


            The First National Bank of Chicago                          17.89%

                                     CONSENT

      Dated as of August 31, 1998

            Each of  GALAXY  TELECOM , INC.,  as  Guarantor  under an  Unlimited
      Guaranty dated as of December 23, 1994 (as amended,  the "General  Partner
      Guaranty"), as Grantor under a Security Agreement dated as of December 23,
      1994, and as Assignor under a Collateral Assignment of Contracts,  Leases,
      Licenses,  Easements,  Permits and Franchises,  a Collateral Assignment of
      Easements, and a Collateral Assignment and Pledge of Partnership Interest,
      each dated as of December 23, 1994 (as amended, collectively, the "General
      Partner Security Documents") , and GALAXY TELECOM INVESTMENTS,  L.L.C., as
      Guarantor  under an Unlimited  Guaranty  dated as of December 23, 1994 (as
      amended,  the  "Investments  Guaranty"),   as  Grantor  under  a  Security
      Agreement  dated  as of  December  23,  1994,  and  as  Assignor  under  a
      Collateral  Assignment  and  Pledge of  Partnership  Interest  dated as of
      December 23, 1994 (as amended,  collectively,  the  "Investments  Security
      Documents"),  hereby consents to the foregoing Amendment No. 5 to the Loan
      Agreement,  and hereby  confirms  and agrees that (i) the General  Partner
      Guaranty and the  Investments  Guaranty,  and each of the General  Partner
      Security  Documents and the Investments  Security  Documents is, and shall
      continue  to be, in full  force and  effect  and is  hereby  ratified  and
      confirmed in all respects  except that, upon the  effectiveness  of and on
      and after the date of Amendment No. 5, each  reference in such Guaranty to
      the Loan Agreement  shall mean and be a reference to the Loan Agreement as
      amended by Amendment No. 5, and (ii) each of the General Partner  Security
      Documents and the Investments Security Documents and all of the collateral
      described  therein do, and shall continue to, secure the payment of all of
      the Obligations (as defined therein).


                              GALAXY TELECOM, INC.


                                    By: /s/ J. Keith Davidson
                                        ----------------------------------
                                          Name:  J. Keith Davidson
                                          Title: EVP & CFO


                                    GALAXY TELECOM INVESTMENTS, L.L.C.

                                    By: /s/ J. Keith Davidson
                                        ----------------------------------
                                          Name:  J. Keith Davidson
                                          Title: EVP & CFO