AMENDMENT NO. 3

      This  Amendment  No.  3  entered  into  as  of  November  14,  1997  (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 Stated 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, and Amendment No. 2 dated as of
March 28, 1997 (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.  Amendment.  The parties hereto agree that the Loan Agreement is
         hereby amended as follows;

       (a) Effective as of the date hereof, section 5.1.10 of the Loan Agreement
         is hereby amended by deleting the ratio  "6.50:1.00"  specified for the
         period  April 1, 1997  through  December  31,  1997,  and  substituting
         therefor the ratio "7.00:1.00."

       (b)  Effective  as of date  hereof,  clause (A) of Section  5.1.11 of the
            Loan Agreement is hereby amended to read as follows:

            "(A) $1,050:1.00 during the fiscal year ending December 31, 1997,"

       (c) Effective as of the date hereof, Section 5.1.12 of the Loan Agreement
      is hereby amended by deleting the table contained therein and substituting
      therefor the following:

            Period                                Ratio
            ------                                -----

July 1, 1997 through                             1.25:1.00
December 31, 1997

January 1, 1998 through                          1.45:1.00
December 31, 1998

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

January 1, 2000 and thereafter                   1.90:1.00


       (d)  Effective as of the date hereof,  the table in Section 5.2.17 of the
            Loan   Agreement   is  hereby   amended  by   deleting   the  figure
            "$13,500,000"  for the fiscal  year  ending  December  31,  1997 and
            substituting therefor the figure "$16,500,000."
<PAGE>

       2.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 the Amendment
           executed by the Borrowers and the Lenders, and counterparts of the
           Consent appended hereto executed by the Guarantors;

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

       3.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 the  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 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.

       4.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 pate to
         this Amendment by telecopier shall be effective as delivery of manually
         executed counterpart of the 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:    Executive Vice President
                                          and Chief Financial Officer

                              GALAXY TELECOM CAPITAL CORP.

                              By:  \s\ J. Keith Davidson
                                    -----------------------
                                 Name:  J. Keith Davidson
                                  Title:  Executive Vice President
                                          and Chief Financial Officer
<PAGE>

                              LENDERS:

                              FLEET NATIONAL BANK, as Agent and
                              as a Lender

                              By: /s/ Jeffrey J. McLaughlin
                                   -----------------------
                                  Name:  Jeffrey J. McLaughlin
                                  Title: Senior Vice President

                              INTERNATIONALE NEDERLANDEN
                              (U.S.) CAPITAL CORPORATION

                              By: /s/ William James
                                   -----------------------
                                  Name:  William James
                                  Title:  Vice President

                              STATE STREET BANK AND TRUST COMPANY

                              By: /s/ Diane Rooney
                                  -----------------------
                                 Name: Diane Rooney
                                  Title:  Vice President

                              UNION BANK

                              By:  /s/ Bryan G. Petermann
                                   -----------------------
                                  Name:  Bryan G. Petermann
                                             Title: Vice President

<PAGE>

                                     CONSENT
                           Dated as of November , 1997

      Each of GALAXY TELECOM,  INC., 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. 2 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.  2,  each
reference in such Guaranty to the Loan  Agreement  shall mean and be a reference
to the Loan  Agreement  as  amended  by  Amendment  No.  2, and (ii) each of the
general Partner Security  Documents and the Investments  Security  Documents and
all of the  collateral  described  therein do,  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:  Executive Vice President
                                          and Chief Financial Officer

                              GALAXY TELECOM INVESTMENTS, L.L.C..

                              By:  /s/ J. Keith Davidson
                                   -----------------------
                                  Name:  J. Keith Davidson
                                  Title:  Executive Vice President
                                          and Chief Financial Officer