<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-Q

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                      FOR THE QUARTER ENDED JUNE 30, 2000
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER 000-22581

                            ------------------------

                         STAR TELECOMMUNICATIONS, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
               DELAWARE                                     77-0362681
       (State of incorporation)                (I.R.S. Employer Identification No.)

        223 EAST DE LA GUERRA,                                93101
       SANTA BARBARA, CALIFORNIA                            (Zip Code)
    (Address of principal executive
               offices)
</TABLE>

                                 (805) 899-1962

              (Registrant's telephone number, including area code)

                                      NONE
   (Former name, former address and former fiscal year, if changed since last
                                    report)

                            ------------------------

    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 of August 1, 2000, the number of shares of the registrant's Common Stock
outstanding was 58,656,802 shares.

--------------------------------------------------------------------------------
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<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                      --------
<S>                     <C>                                                           <C>
PART I--FINANCIAL INFORMATION:

Item 1:                 Financial Statements

                        Condensed Consolidated Balance Sheets As Of December 31,
                        1999 And June 30, 2000 (unaudited)..........................         3

                        Condensed Consolidated Statements Of Operations For The
                        Three And Six Month Periods Ended June 30, 1999 And 2000
                        (unaudited).................................................         4

                        Condensed Consolidated Statements Of Cash Flows For The Six
                        Month Periods Ended June 30, 1999 And 2000 (unaudited)......         5

                        Notes To Condensed Consolidated Financial Statements........         6

Item 2:                 Management's Discussion And Analysis Of Financial Condition
                        And Results Of Operations...................................        12

Item 3:                 Quantitative And Qualitative Disclosures About Market
                        Risks.......................................................        19

PART II--OTHER INFORMATION..........................................................        19
</TABLE>

                                       2
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT FOR SHARE DATA)

<TABLE>
<CAPTION>
                                                              DECEMBER 31,     JUNE 30,
                                                                  1999           2000
                                                              -------------   -----------
                                                                              (UNAUDITED)
<S>                                                           <C>             <C>
Current Assets:
  Cash and cash equivalents.................................    $ 25,561        $ 16,844
  Short-term investments....................................       1,482           1,756
  Accounts and notes receivable, net........................     167,403         161,169
  Receivable from related parties...........................       1,390             942
  Other current assets......................................      39,250          45,610
                                                                --------        --------
    Total current assets....................................     235,086         226,321
                                                                --------        --------
Long-Term Assets:
  Property and equipment, net...............................     363,089         304,314
  Intangible assets, net....................................     200,582         193,316
  Other.....................................................       8,997           5,838
                                                                --------        --------
    Total assets............................................    $807,754        $729,789
                                                                ========        ========
Current Liabilities:
  Revolving lines of credit.................................    $ 43,540        $ 23,884
  Current portion of long-term obligations..................      18,528           7,159
  Current portion of note payable due carrier...............      --              57,666
  Accounts payable..........................................     159,920         126,292
  Accrued network costs.....................................     147,672         102,495
  Related party payable.....................................       1,133           1,359
  Other accrued expenses....................................      25,840          22,048
  Deferred revenue..........................................      36,374          37,280
                                                                --------        --------
    Total current liabilities...............................     433,007         378,183
                                                                --------        --------
Long-Term Liabilities:
  Long-term obligations, net of current portion.............      49,324          59,403
  Other long-term liabilities...............................      47,369          33,634
                                                                --------        --------
    Total long-term liabilities.............................      96,693          93,037
                                                                --------        --------
Stockholders' Equity:
  Common stock $.001 par value:
    Authorized--100,000,000 shares..........................          58              58
  Additional paid-in capital................................     365,845         365,930
  Deferred compensation.....................................      (2,160)         (1,810)
  Note receivable from stockholder..........................      (3,714)         (3,856)
  Accumulated other comprehensive loss......................      (6,022)         (8,017)
  Accumulated deficit.......................................     (75,953)        (93,736)
                                                                --------        --------
    Total stockholders' equity..............................     278,054         258,569
                                                                --------        --------
    Total liabilities and stockholders' equity..............    $807,754        $729,789
                                                                ========        ========
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       3
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED     SIX MONTHS ENDED
                                                           JUNE 30,              JUNE 30,
                                                      -------------------   -------------------
                                                        1999       2000       1999       2000
                                                      --------   --------   --------   --------
                                                          (UNAUDITED)           (UNAUDITED)
<S>                                                   <C>        <C>        <C>        <C>
Revenue.............................................  $272,269   $242,295   $500,478   $497,400
Operating expenses:
  Cost of services..................................   248,589    207,817    441,503    433,657
  Selling, general and administrative expenses......    45,588     27,852     77,053     61,181
  Depreciation and amortization.....................    10,910     13,078     19,640     26,128
  Merger expense....................................       430      --         1,872      --
                                                      --------   --------   --------   --------
                                                       305,517    248,747    540,068    520,966
                                                      --------   --------   --------   --------
  Loss from operations..............................   (33,248)    (6,452)   (39,590)   (23,566)
                                                      --------   --------   --------   --------
Other income (expense):
  Interest income...................................       946         76      1,675        265
  Interest expense..................................    (2,319)    (4,818)    (3,532)    (7,742)
  Other.............................................        98     (3,142)    (1,923)     7,554
                                                      --------   --------   --------   --------
                                                        (1,275)    (7,884)    (3,780)        77
                                                      --------   --------   --------   --------
  Loss before benefit for income taxes..............   (34,523)   (14,336)   (43,370)   (23,489)
Benefit for income taxes............................    (6,591)    (3,077)    (7,886)    (5,706)
                                                      --------   --------   --------   --------
Net loss............................................  $(27,932)  $(11,259)  $(35,484)  $(17,783)
                                                      ========   ========   ========   ========
Basic and diluted loss per share....................  $  (0.48)  $  (0.19)  $  (0.64)  $  (0.30)
                                                      ========   ========   ========   ========
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       4
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                                    JUNE 30,
                                                              ---------------------
                                                                1999        2000
                                                              ---------   ---------
                                                                   (UNAUDITED)
<S>                                                           <C>         <C>
Cash Flows From Operating Activities:
  Net loss..................................................  $ (35,484)  $ (17,783)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Depreciation and amortization...........................     19,640      26,129
    Gain on investment......................................         --     (11,259)
    Loss on disposal of equipment...........................         --       1,508
    Provision for doubtful accounts.........................      9,999      12,413
    Deferred income taxes...................................     (1,427)     (1,276)
    Deferred compensation...................................         --         (95)
    Change in assets and liabilities net of effects from
      purchase of PT-1:
      Accounts and notes receivable, net....................    (57,001)    (26,423)
      Receivable from related parties.......................       (473)        306
      Prepaid expenses......................................     (4,451)     (3,450)
      Other assets..........................................      3,359       1,417
      Accounts payable......................................     18,703      68,340
      Related party payable.................................     (1,749)        226
      Accrued network cost..................................     54,233     (37,766)
      Other accrued expenses................................     17,834         688
      Deferred revenue......................................     (3,113)        914
      Other liabilities.....................................     (6,705)     (2,532)
                                                              ---------   ---------
        Net cash provided by operating activities...........     13,365      11,357
                                                              ---------   ---------
Cash Flows From Investing Activities:
  Capital expenditures......................................    (51,932)     (4,219)
  Short-term investments....................................        444        (345)
  Net of cash acquired in purchase of PT-1..................     (4,435)         --
  Payment to former shareholder of PT-1.....................     (2,000)         --
  Sale of investments.......................................         --      13,467
  Other long term assets....................................     (5,408)       (577)
                                                              ---------   ---------
        Net cash (used) provided by investing activities....    (63,331)      8,326
                                                              ---------   ---------
Cash Flows From Financing Activities:
  Borrowings under line of credit...........................    147,487     191,561
  Repayments under lines of credit..........................   (127,611)   (211,217)
  Borrowings under long-term debt and capital lease
    obligations.............................................        700          --
  Payments under long-term debt and capital lease
    obligations.............................................     (9,251)     (9,157)
  Stock options exercised...................................        583          85
  Other financing activities................................        (48)         --
                                                              ---------   ---------
        Net cash provided (used) by financing activities....     11,860     (28,728)
                                                              ---------   ---------
Effects Of Foreign Currency Translation.....................        175         328
Decrease in cash and cash equivalents.......................    (37,931)     (8,717)
Cash and cash equivalents, beginning of period..............     47,297      25,561
                                                              ---------   ---------
Cash and cash equivalents, end of period....................  $   9,366   $  16,844
                                                              =========   =========
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       5
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  (UNAUDITED)

(1) GENERAL

    The financial statements included herein are unaudited and have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and Securities Exchange Commission ("SEC") regulations.
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. In
management's opinion, the financial statements reflect all adjustments (of a
normal and recurring nature) which are necessary to present fairly the financial
position, results of operations, stockholders' equity and cash flows for the
interim periods. These financial statements should be read in conjunction with
the audited financial statements for the year ended December 31, 1999, as set
forth in our Annual Report on Form 10-K. Certain prior year balances have been
reclassified to conform to the current year presentation. The results for the
three and six months ended June 30, 2000, are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000.

(2) BUSINESS AND PURPOSE

    We are a multinational telecommunications services company focused primarily
on the international long distance market. We offer low-cost switched voice
services on a wholesale basis primarily to U.S. based long distance carriers. We
provide international long distance services through a flexible network
comprised of foreign termination relationships, international gateway switches,
leased and owned transmission facilities and resale arrangements with other long
distance providers.

    We operate several wholly-owned foreign subsidiaries to further expand our
international network. We have made substantial investments to install switch
facilities in four of our subsidiaries, STAR Europe Limited ("SEL") which is
located in London, England, STAR Telecommunications Deutschland Holding, GmbH
and affiliates ("GmbH") which is located in Frankfurt, Germany, STAR
Telecommunications Switzerland which is located in Geneva, Switzerland, and STAR
Telecommunications Austria GmbH, which is located in Vienna, Austria. We use
these switching facilities to decrease international traffic termination costs
and to initiate outbound calls from these local markets.

    We provide domestic commercial long distance services throughout the United
States through our subsidiaries, CEO Telecommunications, Inc. ("CEO"), CEO
California Telecommunications, Inc. ("CEO CA"), and
AS Telecommunications, Inc. ("ALLSTAR Telecom").

    Prepaid calling cards and dial around service are provided through our
subsidiary, PT-1 Communications, Inc. ("PT-1").

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION AND DEFERRED REVENUE

    In 1999 we began selling excess broadband fiber optic capacity that we
obtained under 20 year Indefeasible Rights of Use ("IRU") agreements, which were
accounted for as capital leases under SFAS No. 13. The IRU agreements
specifically provided for the pass through by us of capacity to third parties.
Revenues from broadband sales are recorded upon customer acceptance and the
fulfillment of all of our obligations under the original IRU agreement and all
of our obligations under the sales contract. This together with the fact that
the buyers fully paid for the capacity upon acceptance has resulted in us
achieving completion of the earnings process associated with the capacity
transferred. We had no IRU sales and realized no profit during the three and
six months ended June 30, 2000 and

                                       6
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1999. The accounting for the sale of broadband is evolving and may require us to
account for future broadband sales in a manner similar to operating leases over
the life of the related agreements, generally 20 years.

(4) NET LOSS PER COMMON SHARE

    The following schedule summarizes the information used to compute basic and
diluted net loss per common share for the three and six month periods ended
June 30, 1999 and 2000. No common share equivalents will be considered in the
computation of diluted earnings per share for 1999 and 2000, as the effect would
be anti-dilutive (in thousands):

<TABLE>
<CAPTION>
                                                                 THREE MONTHS
                                                                     ENDED              SIX MONTHS
                                                                   JUNE 30,           ENDED JUNE 30,
                                                              -------------------   -------------------
                                                                1999       2000       1999       2000
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Weighted average number of common shares used to compute
  basic and diluted loss per share..........................   58,419     58,601     55,541     58,609
                                                               ======     ======     ======     ======
</TABLE>

    For the three and six month periods ended June 30, 1999 and 2000, stock
options to purchase 3,795,000 and 3,317,000 shares, respectively, of common
stock were outstanding, but were excluded from the computation of diluted
earnings per share, as such options were anti-dilutive.

(5) COMPREHENSIVE INCOME (LOSS)

    On January 1, 1998, we adopted SFAS No. 130, "Reporting Comprehensive
Income." For year end financial statements, SFAS No. 130 requires us to display
comprehensive income (which is the total of net income and all other non-owner
changes in equity) with the same prominence as other consolidated financial
statements. For the year end financial statements, we display the components of
other comprehensive loss in the consolidated statements of stockholders' equity.
During the three month periods ended June 30, 1999 and 2000, comprehensive loss
consisting of foreign currency translation adjustments of $2,251,000 and
$371,000, respectively, resulted in total comprehensive loss of $30,183,000 and
$11,630,000, respectively. During the six month periods ended June 30, 1999 and
2000, comprehensive loss consisting of foreign currency translation adjustments
of $4,373,000 and $1,995,000, respectively, resulted in a total comprehensive
loss of $39,857,000 and $19,778,000, respectively.

(6) SIGNIFICANT EVENTS

    On January 18, 2000, we were notified that our capacity on the China-US
Undersea Cable System would be reclaimed, unless we made a payment of
approximately $47.2 million by February 1, 2000. The $47.2 million represents
the total amount of liabilities owed to the China-US Undersea Cable System as of
December 31, 1999. We allowed reclamation of the capacity to take place. As a
result, we removed the capitalized cost of $48.7 million, which is included in
operating equipment at December 31, 1999, and the related accounts payable
balance of $47.2 million in the first quarter of 2000. The remaining balance of
the capitalized cost of $1.5 million was expensed and included in other income
for the six months ended June 30, 2000.

    On February 11, 2000, we entered into a definitive agreement to merge with
and into World Access, Inc. ("World Access"). On June 7, 2000, we amended the
terms of the agreement with World

                                       7
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

(6) SIGNIFICANT EVENTS (CONTINUED)
Access. Under the terms of the amended agreement, each share of our common stock
will be converted into 0.386595 shares of World Access common stock. World
Access may, at its election, pay up to 40% of the merger consideration in cash.

    The merger is subject to, among other things, certain regulatory approvals,
the approval of the shareholders of World Access and STAR, and the divestiture
of our prepaid calling card and dial around business. World Access is not
obligated to complete the merger unless we sell the assets of PT-1 for net cash
proceeds of at least $150 million. However, under the merger agreement this
condition will be satisfied if we sell the assets of PT-1 to Counsel
Communications LLC ("Counsel") for net cash proceeds of at least $120 million
under the terms of our agreement with Counsel. Any net proceeds in excess of
$150 million that we receive would be added to the merger consideration. The
merger will be accounted for as a purchase transaction. The transaction is
expected to close by the end of the third quarter of 2000.

    On June 6, 2000, we entered into an agreement to sell the assets of PT-1 to
Counsel for cash proceeds of $150 million less certain liabilities. The proceeds
are subject to a purchase price adjustment based on an audit of PT-1 after the
sale is closed. Upon obtaining shareholder approval of this transaction, we will
record a loss of approximately $90 million on this sale at closing. The
agreement can be terminated by PT-1 or Counsel on August 31, 2000, however, we
are in discussions with Counsel to extend the termination date. We believe that
we will be able to extend the termination date of the agreement to October 15,
2000.

    In connection with the acquisition of PT-1 on February 4, 1999, PT-1 and
STAR placed 500,000 shares of STAR common stock into escrow for issuance to
certain PT-1 distributors for no consideration. After further negotiations, we
entered into a distribution agreement with NY Phone Card Distributors LLC
("Distribution Co."), a partnership of distributors, on March 1, 2000. The
distribution agreement provided for a total of 400,000 shares of our common
stock to be issued to Distribution Co. as folows: (i) 228,750 shares at the date
of execution, (ii) 31,250 shares at the end of May, 2000, provided that the
agreement was still in effect, and (iii) 140,000 shares contingently issuable
based on certain minimum purchase requirements.

    Under the agreement, we converted our accounts receivable balances totaling
$1.3 million as of March 1, 2000 into interest free notes receivable due
beginning June 1, 2000 in monthly installments for a period of 10 months. In
addition, the rebate of $1.1 million owed to Distribution Co. pursuant to the
distribution agreement for the March, 2000 through May, 2000 time period was
offset against the notes receivable in the second quarter of 2000.

    On February 14, 2000 and March 1, 2000, identical class action complaints
were filed against us and directors Christopher E. Edgecomb, Mary A. Casey, Mark
Gershein, Gordon Hutchins, Jr., John R. Snedegar, Arunas A. Chesonis and Samer
Tawfik. The complaints were consolidated and alleged causes of action for breach
of fiduciary duty arising from approval of our merger with World Access on the
grounds that the consideration to be received in the merger with World Access
was unfair, unconscionable and grossly inadequate. On May 31, 2000, the Superior
Court of the State of California of the County of Santa Barbara granted our
demurrer on the grounds that the consolidated complaint was legally deficient,
effectively dismissing the lawsuits. On July 14, 2000, the plaintiff filed a
notice of appeal from that judgment.

                                       8
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

(6) SIGNIFICANT EVENTS (CONTINUED)
    On March 11, 1999, a proceeding was commenced by PT-1 by notice of petition
following the election by a PT-1 stockholder to dissent from STAR's merger with
PT-1 and following a demand for payment of the fair value of approximately
2,731,330 shares of PT-1 held by the stockholder. The proceeding was commenced
in the Supreme Court of the State of New York. The PT-1 stockholder is seeking
damages in accordance with his appraisal rights under New York law. On July 26,
2000, the Supreme Court of the State of New York of the County of Queens issued
a temporary restraining order in favor of the stockholder which prevents PT-1
from distributing to STAR any of the proceeds from the sale of PT-1 to Counsel
unless PT-1 has first set aside a reserve in the amount of $25,000,000 in cash
to satisfy the stockholder's claim. Under New York law, the PT-1 stockholder has
the right to receive, in cash, the fair market value of his PT-1 shares as of
the time of our acquisition of PT-1. We believe that the PT-1 stockholder's
claim for any amount above his pro rata share of the consideration paid by us
for PT-1 is without merit and we will seek to minimize his recovery.

    On April 12, 2000, we signed a note agreement, which converted
$56.0 million of trade payables we owed to MCI WorldCom Network Services, Inc.
("WorldCom") into a note payable. The note is secured by substantially all of
our assets, bears interest at 16% per annum and is payable at the earlier of
(i) termination of the merger agreement with World Access, (ii) the close of the
World Access merger or (iii) October 31, 2000.

    On June 30, 2000, we entered into a standby term loan note agreement with
WorldCom in an amount which is the lesser of $30.0 million or the aggregate
principal sum of any advances made under the note. Under the note we received
advances on July 1, 2000 and August 1, 2000 each in the amount of
$10.0 million. Currently, we are not entitled to receive any further advances
under the note. The note will mature on the earlier to occur of (i) termination
of the merger agreement with World Access, (ii) the close of the World Access
merger or (iii) October 31, 2000.

    We owe, along with certain of our subsidiaries, approximately $35 million to
Nortel Networks, Inc. ("Nortel"). We intend to enter into a promissory note with
Nortel to provide for repayment of this obligation although the terms of such
note have not been established.

    On April 18, 2000, Samer Tawfik resigned as a director of STAR. On June 7,
2000, Kelly Enos resigned as the Chief Financial Officer of STAR.

    On May 5, 2000, GmbH entered into an agreement to sell the stock of its
wholly owned subsidiary, Katel, a Germany based telecommunications company for
$1. GmbH recognized a loss of approximately $1.0 million related to this
transaction.

    On June 26, 2000, GmbH entered into an agreement to sell its interest in
Mainova Telecommunications GmbH, a Germany based start up telecommunications
company. Per the terms of the agreement, a sum of approximately $1.7 million was
paid for GmbH's interest in Mainova. This transaction will result in a gain of
approximately $1.2 million. In addition, a loan previously made to Mainova of
approximately $0.5 million was required to be paid in full. GmbH's shares in
Mainova were turned over to the purchaser and the total proceeds, including the
loan repayment of approximately $2.2 million were received on July 11, 2000. Per
the agreement, the effective date of this transaction is September 30, 2000, and
includes certain conditions that must be met in order for the agreement to
become effective. As such, the effects of the transaction have not been recorded
as of June 30, 2000.

                                       9
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

(7) STATEMENTS OF CASH FLOWS

    During the six-month periods ended June 30, 1999 and 2000, cash paid for
interest was approximately $3,349,000 and $5,206,000, respectively. For the same
periods, cash paid for income taxes amounted to approximately $1,806,000 and
$746,000, respectively.

    Non-cash investing and financing activities, which are excluded from the
consolidated statements of cash flows, are as follows (in thousands):

<TABLE>
<CAPTION>
                                                           SIX MONTHS ENDED
                                                               JUNE 30,
                                                         --------------------
                                                           1999        2000
                                                         ---------   --------
<S>                                                      <C>         <C>
Equipment purchased through capital leases.............  $     158   $    294
Assets acquired through a vendor financing
  arrangement..........................................      3,925      1,165
Disposition of cable systems...........................         --     47,200
Conversion of payables into short-term note............                57,666
Other non-cash transactions............................         --     16,203
Detail of acquisition:
  Fair value of assets acquired........................    303,743         --
  Liabilities assumed..................................   (144,563)        --
  Common stock issued..................................   (153,578)        --
  Notes payable issued.................................     (1,167)        --
                                                         ---------   --------
                                                         $   8,518   $123,844
                                                         =========   ========
</TABLE>

(8) SEGMENT INFORMATION

    At June 30, 2000, we have three separately managed business segments, North
American Wholesale, North American Commercial and European long distance
telecommunications.

<TABLE>
<CAPTION>
                                                       NORTH       NORTH
                                                     AMERICAN     AMERICAN
                                                     WHOLESALE   COMMERCIAL   EUROPEAN    TOTAL
                                                     ---------   ----------   --------   --------
<S>                                                  <C>         <C>          <C>        <C>
THREE MONTHS ENDED, JUNE 30, 1999 (in thousands)
Revenues from external customers...................  $121,104     $124,710    $ 26,455   $272,269
Revenues from other segments.......................    29,168        7,611      10,218     46,997
Interest income....................................       894           34          18        946
Interest expense...................................       973          298       1,048      2,319
Depreciation and amortization......................     4,009        4,430       2,471     10,910
Segment net income (loss) before provision
  (benefit) for income taxes.......................   (13,132)      (9,553)    (11,838)   (34,523)
Segment assets.....................................   206,475      320,862     145,489    672,826
</TABLE>

                                       10
<PAGE>
                 STAR TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                  (UNAUDITED)

(8) SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
                                                       NORTH       NORTH
                                                     AMERICAN     AMERICAN
                                                     WHOLESALE   COMMERCIAL   EUROPEAN    TOTAL
                                                     ---------   ----------   --------   --------
<S>                                                  <C>         <C>          <C>        <C>
THREE MONTHS ENDED, JUNE 30, 2000 (in thousands)
Revenues from external customers...................  $ 72,648     $133,376    $ 36,271   $242,295
Revenues from other segments.......................    95,095           --       3,642     98,737
Interest income....................................         5           71          --         76
Interest expense...................................     3,705          502         611      4,818
Depreciation and amortization......................     5,183        4,246       3,649     13,078
Segment net income (loss) before provision
  (benefit) for income taxes.......................    (8,591)       3,463      (9,208)   (14,336)
Segment assets.....................................   230,588      333,087     166,114    729,789
</TABLE>

<TABLE>
<CAPTION>
                                                       NORTH       NORTH
                                                     AMERICAN     AMERICAN
                                                     WHOLESALE   COMMERCIAL   EUROPEAN    TOTAL
                                                     ---------   ----------   --------   --------
<S>                                                  <C>         <C>          <C>        <C>
SIX MONTHS ENDED, JUNE 30, 1999 (in thousands)
Revenues from external customers...................  $248,806     $199,726    $ 51,946   $500,478
Revenues from other segments.......................    63,987        8,718      19,434     92,139
Interest income....................................     1,536          110          29      1,675
Interest expense...................................     1,452          716       1,364      3,532
Depreciation and amortization......................     7,604        7,433       4,603     19,640
Segment net income (loss) before provision
  (benefit) for income taxes.......................    (7,754)     (20,693)    (14,923)   (43,370)
Segment assets.....................................   206,475      320,862     145,489    672,826
</TABLE>

<TABLE>
<CAPTION>
                                                       NORTH       NORTH
                                                     AMERICAN     AMERICAN
                                                     WHOLESALE   COMMERCIAL   EUROPEAN    TOTAL
                                                     ---------   ----------   --------   --------
<S>                                                  <C>         <C>          <C>        <C>
SIX MONTHS ENDED, JUNE 30, 2000 (in thousands)
Revenues from external customers...................  $153,945     $268,526    $ 74,929   $497,400
Revenues from other segments.......................   198,980           --      10,265    209,245
Interest income....................................        11          133         121        265
Interest expense...................................     5,564          798       1,380      7,742
Depreciation and amortization......................    10,242        8,583       7,303     26,128
Segment net income (loss) before provision
  (benefit) for income taxes.......................   (14,129)         284      (9,644)   (23,489)
Segment assets.....................................   230,588      333,087     166,114    729,789
</TABLE>

(9) RECENTLY ISSUED ACCOUNTING STANDARDS

    In June 1998 and June 1999, the AICPA issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities," and SFAS No. 137, which delayed
the effective date of SFAS No. 133. We will adopt SFAS No. 133 in January 2001.
We are currently analyzing the statement to determine the impact, if any, on our
financial position or results of operations.

                                       11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    This Quarterly Report on Form 10-Q contains certain "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements are statements other than historical information or
statements of current condition. Some forward looking statements may be
identified by use of such terms as "believes", "anticipates", "intends", or
"expects". These forward-looking statements relate to the plans, objectives and
expectations of our future operations. In light of the risks and uncertainties
inherent in all such projected operation matters, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by us or any other person that our objectives or plans will be
achieved or that any of our operating expectations will be realized. Our
revenues and results of operations are difficult to forecast and could differ
materially from those projected in the forward-looking statements contained in
this report as a result of numerous factors including among others, the
following: (i) changes in customer rates per minute; (ii) foreign currency
fluctuations; (iii) termination of certain service agreements or inability to
enter into additional service agreements; (iv) inaccuracies in our forecast of
traffic growth; (v) changes in or developments under domestic or foreign laws,
regulations, licensing requirements or telecommunications standards;
(vi) foreign political or economic instability; (vii) changes in the
availability of transmission facilities; (viii) loss of the services of key
officers; (ix) loss of a customer which provides us with significant revenues;
(x) highly competitive market conditions in the industry; (xi) concentration of
credit risk; and (xii) availability of long term financing. The foregoing review
of the important factors should not be considered as exhaustive.

    The following table sets forth income statement data as a percentage of
revenues for the periods indicated.

<TABLE>
<CAPTION>
                                                                 THREE MONTHS           SIX MONTHS
                                                                ENDED JUNE 30,        ENDED JUNE 30,
                                                              -------------------   -------------------
                                                                1999       2000       1999       2000
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Revenues....................................................      100%       100%       100%       100%
Operating expenses:
  Cost of services..........................................     91.3       85.8       88.2       87.2
  Selling, general and administrative.......................     16.7       11.5       15.4       12.3
  Depreciation and amortization.............................      4.0        5.4        3.9        5.3
  Merger expense............................................      0.2         --        0.4         --
                                                               ------     ------     ------     ------
                                                                112.2      102.7      107.9      104.7
                                                               ------     ------     ------     ------
  Loss from operations......................................    (12.2)      (2.7)      (7.9)      (4.7)
                                                               ------     ------     ------     ------
Other income (expense):
  Interest income...........................................      0.3         --        0.3        0.1
  Interest expense..........................................     (0.9)      (2.0)      (0.7)      (1.6)
  Other.....................................................      0.1       (1.3)      (0.4)       1.5
                                                               ------     ------     ------     ------
                                                                 (0.5)      (3.3)      (0.8)      (0.0)
                                                               ------     ------     ------     ------
Loss before benefit for income taxes........................    (12.7)      (5.9)      (8.7)      (4.7)
Benefit for income taxes....................................     (2.4)      (1.3)      (1.6)      (1.1)
                                                               ------     ------     ------     ------
Net loss....................................................    (10.3)%     (4.6)%     (7.1)%     (3.6)%
                                                               ======     ======     ======     ======
</TABLE>

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000

    REVENUES:  Total revenues decreased 11.0% to $242.3 million in the second
quarter of 2000 from $272.3 million in the second quarter of 1999. The decrease
is a result of rate and volume decreases in

                                       12
<PAGE>
the North American wholesale operations as a result of continued pricing
pressures on competitive routes and our efforts to focus on higher margin
countries. This decrease was partially offset by increases in the North American
commercial dial around programs and our European operations due to increased
minutes of use.

    Revenues from North American wholesale customers decreased 40.0% to
$72.6 million in the current quarter from $121.1 million in the prior year's
second quarter. The decease in revenues is the result of a decline in the
average rate per minute and minutes of use in the current year's second quarter
as compared to the prior year's second quarter. The average North American
wholesale rate per minute of use declined 23.8% to $0.16 for the current quarter
as compared to $0.21 for the quarter ended June 30, 1999. The decrease in rates
reflects continued pricing pressures on competitive routes and an increase in
traffic in countries with lower average revenue rates per minute of use. Minutes
of use generated by North American wholesale customers decreased 24.7% to
440.8 million minutes in the second quarter of 2000, as compared to
585.5 million minutes in the comparable quarter of the prior year. We continue
to experience growth in the number of North American wholesale customers, which
increased to 241 at June 30, 2000, up from 223 customers at June 30, 1999.
However, the overall decline in the minutes of use in the second quarter of 2000
as compared to the second quarter of 1999 is the result of increased competition
in the wholesale market and our focus on higher margin countries.

    North American commercial revenues increased 6.9% to $133.4 million in the
second quarter of 2000 from $124.7 million in the second quarter of 1999. The
increase is due primarily to increases in minutes of use generated by the dial
around programs at PT-1. Minutes of use generated by North American commercial
customers increased 24.8% to 968.4 million minutes in the second quarter of
2000, as compared to 775.9 million minutes in the comparable quarter of 1999.
The average North American commercial rate per minute decreased 12.5% to $0.14
per minute in the second quarter of 2000 from $0.16 per minute in the second
quarter of 1999, primarily due to continued competition on competitive routes.

    The second quarter of 2000 also included revenues generated from the
European operations, which increased 37.1% to $36.3 million, as compared to
approximately $26.5 million in the second quarter of 1999. The increase is due
primarily to an increase in the minutes of use of 76.9% from 410.8 million in
the second quarter of 1999 to 726.5 million in the second quarter of 2000. The
growth in revenue is a primary result of the increase in wholesale customers
from June 30, 1999 to June 30, 2000 from approximately 105 to approximately 191.
Management believes that the prospects for growth in Europe remain strong as
STAR Telecommunications Deutschland GmbH is fully utilizing its interconnect
with Deutsche Telekom AG, as well as with other European PTTs. In addition,
management expects continued growth in European revenues due to continued
development of the Austrian and Swiss markets.

    COST OF SERVICES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION):  Total cost
of services (exclusive of depreciation and amortization) decreased 16.4% to
$207.8 million in the second quarter of 2000 from $248.6 million in the second
quarter of 1999 and decreased as a percentage of revenues for the same periods
to 85.8% from 91.3%.

    Cost of services (exclusive of depreciation and amortization) from North
American vendors decreased 19.6% to $176.9 million in the second quarter of 2000
from $219.9 million in the second quarter of 1999 and decreased as a percentage
of North American revenues to 85.9% from 89.5%, respectively. The decline in
cost of services (exclusive of depreciation and amortization) reflects the
decrease in minutes of use from the wholesale usage and an overall declining
average cost per minute. The average cost per minute declined as a result of
competitive pricing pressures, a larger proportion of our total usage deriving
from lower cost per minute countries, and as a result of an increasing
proportion of traffic routed on our proprietary network. Management believes
that the average cost per

                                       13
<PAGE>
minute will continue to decline as we expand our international network over
additional cost effective routes.

    The second quarter of 2000 also includes cost of services (exclusive of
depreciation and amortization) from the European operations, which increased
7.7% to $30.9 million, compared to $28.7 million in the second quarter of 1999
and decreased as a percentage of European revenues to 85.2% from 108.5%,
respectively. The increase in cost of services (exclusive of depreciation and
amortization) from the European operations was attributable to increased usage
and private line costs. The three months ended June 30, 1999 included a
$6.7 million cost accrual related to a retroactive rate increase imposed by a
European telecom carrier.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:  For the second quarter of
2000, total selling, general and administrative expenses, exclusive of merger
expenses, decreased 38.9% to $27.9 million from $45.6 million in the second
quarter of 1999 and decreased as a percentage of revenues to 11.5% from 16.7%
over the comparable 1999 period. This compares to total selling, general and
administrative expenses, exclusive of merger expenses for the first quarter of
2000 of $33.3 million, representing a decrease of $5.4 million or 16.4% from the
first quarter of 2000 to the second quarter of 2000. This significant
improvement represents our continued cost saving efforts, which began in the
latter half of 1999 throughout our North American operations.

    North American selling, general and administrative expenses decreased 45.3%
to $21.1 million in the second quarter of 2000 from $38.6 million in the second
quarter of 1999. For the second quarter of 2000, North American selling, general
and administrative expenses decreased as a percentage of North American revenues
to 10.2% from 15.7% in the second quarter of 1999. The decrease is primarily a
result of the elimination of redundant staff positions during the third quarter
of 1999 after the PT-1 and United Digital Network, Inc. ("UDN") mergers and our
ongoing commitment to reduce operating expenses, which has resulted in decreased
payroll, commission, advertising and promotion expenses during the second
quarter of 2000 as compared to the second quarter of 1999. Additionally, as a
result of the reduction in revenues in the second quarter of 2000 as compared to
the second quarter of 1999, there was a decrease in bad debt expense of
$3.0 million.

    Selling, general and administrative expenses related to the European
operations decreased 2.9% to $6.8 million in the second quarter of 2000, from
approximately $7.0 million in the second quarter of 1999. The decrease is
primarily a result of substantial decreases in personnel related costs such as
payroll, due to our cost savings effort in our European subsidiaries. These
decreases in personnel related costs from second quarter 1999 to second quarter
2000 were offset by an increase in bad debt of approximately $1.0 million due to
the substantial increase in revenue during the same period.

    DEPRECIATION AND AMORTIZATION:  Depreciation and amortization expense
increased 19.9% to $13.1 million for the second quarter of 2000 from
$10.9 million for the second quarter of 1999, and increased as a percentage of
revenues to 5.4% from 4.0% over the comparable period in the prior year. The
increase is due primarily to significant asset additions in Europe during 1999
and as a result of our investment in domestic broadband capacity during 1999.
Depreciation and amortization expense attributable to North American assets
amounted to $9.4 million in the second quarter of 2000. European operations
realized total depreciation and amortization expense of $3.7 million in the
second quarter of 2000. We expect depreciation and amortization expense to
continue to increase as a percentage of revenues as we continue to expand our
global telecommunications network.

    LOSS FROM OPERATIONS:  In the second quarter of 2000, loss from operations
was $6.5 million compared to loss from operations of $33.2 million in the second
quarter of 1999. Operating margin in the second quarter 2000 was a negative 2.7%
as compared to a negative 12.2% in the second quarter of 1999. The increase in
operating margin from the second quarter of 1999 to the second quarter of 2000

                                       14
<PAGE>
is a result of our efforts to market higher margin countries in 2000, as well as
reduced North American and European selling, general and administrative expenses
in 2000.

    OTHER INCOME (EXPENSE):  We reported other expense, net, of approximately
$7.9 million in the second quarter of 2000, as compared to other expense, net,
of approximately $1.3 million for the second quarter of 1999. This is primarily
due to interest expense of $4.8 million on our lines of credit and capital lease
obligations for switches and a loss of approximately $1.5 million on the
disposal and related costs of a subsidiary of our European operations in the
second quarter of 2000 and $0.9 million of foreign currency translation losses.

    BENEFIT FOR INCOME TAXES:  We recorded a tax benefit of $3.1 million in the
second quarter of 2000 due to operating losses compared to a tax benefit of
$6.6 million in the second quarter of 1999.

SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE, 30, 2000

    REVENUES:  Total revenues decreased 0.6% to $497.4 million in the first
six months of 2000 from $500.5 million in the first six months of 1999. The
slight decrease is primarily a result of rate and volume decreases in the North
American wholesale operations from continued pricing pressures on competitive
routes and our efforts to focus on higher margin countries. This decrease was
partially offset by increases in the North American commercial dial around
programs and European operations due to increased minutes of use.

    Revenues from North American wholesale customers decreased 38.1% to
$153.9 million in the six months ended June 30, 2000 from $248.8 million in the
six months ended June 30, 1999. The decrease in revenues is the result of a
decline in the average rate per minute and minutes of use in the six months
ended June 30, 2000 compared to the six months ended June 30, 1999. The average
North American wholesale rate per minute of use declined 26.1% to $0.17 for the
current six-month period ended June 30, 2000 as compared to $0.23 for the
six-month period ended June 30, 1999. The decrease in rates reflects continued
pricing pressures on competitive routes and an increase in traffic in countries
with lower average revenue rates per minute of use. Minutes of use generated by
North American wholesale customers decreased 16.2% to 921.9 million minutes in
the first six months of 2000, as compared to 1.1 billion minutes in the first
six months of 1999. We continue to experience growth in the number of North
American wholesale customers, which increased to 241 at June 30, 2000, up from
223 at June 30, 1999. However, the overall decline in the minutes of use in the
six months ended June 30, 2000 as compared to the six months ended June 30, 1999
is the result of increased competition in the wholesale market and our focus on
higher margin countries.

    North American commercial revenues increased 34.4% to $268.5 million in the
first six months of 2000 from $199.7 million in the first six months of 1999.
During the first quarter of 1999, we consummated the acquisition of PT-1, which
diversified our revenue base with both prepaid calling cards and dial around
programs. The increase in commercial revenues from the six months ended
June 30, 1999 to the six months ended June 30, 2000 is primarily the result of
increases in minutes of use generated by the dial around programs. Minutes of
use generated by North American commercial customers increased 66.7% to
2.0 billion minutes in the first six months of 2000, as compared to 1.2 billion
minutes of use in the comparable six month period of 1999. The average North
American commercial rate per minute decreased 12.5% to $0.14 per minute in the
first six months of 2000 from $0.16 per minute in the first six months of 1999,
primarily due to continued competition on competitive routes.

    The first six months of 2000 also included revenues generated from our
European operations, which increased 44.2% to $75.0 million, as compared to
approximately $52.0 million in the first six months of 1999. The increase is due
primarily to an increase in the minutes of use of 119.2% from 775.4 million in
the first six months of 1999 to 1.7 billion in the first six months of 2000. The
growth in revenue is a result of the increase in wholesale customers from
June 30, 1999 to June 30, 2000 from

                                       15
<PAGE>
approximately 105 to approximately 191. Management believes that the prospects
for growth in Europe remain strong as STAR Telecommunications Deutschland GmbH
is fully utilizing its interconnect with Deutsche Telekom AG, as well as with
other European PTTs. In addition, management expects continued growth in
European revenues due to continued development of the Austrian and Swiss
markets.

    COST OF SERVICES (EXCLUSIVE OF DEPRECIATION AND AMORTIZATION):  Total cost
of services (exclusive of depreciation and amortization) decreased 1.8% to
$433.7 million in the first six months of 2000 from $441.5 million in the first
six months of 1999 and decreased as a percentage of revenues for the same
periods to 87.2% from 88.2%.

    Cost of services (exclusive of depreciation and amortization) from North
American vendors decreased 7.1% to $366.3 million in the first six months of
2000 from $394.5 million in the first six months of 1999 and decreased as a
percentage of North American revenues to 86.7% from 88.0%, respectively. The
decline in cost of services (exclusive of depreciation and amortization)
reflects the overall declining average cost per minute and decreases in minutes
of use from the wholesale usage partially offset by the increase in minutes of
use from the commercial usage generated by the dial around programs during the
first six months of 2000. The average cost per minute declined as a result of
competitive pricing pressures, a larger proportion of our total usage from lower
cost per minute countries, as well as an increasing proportion of traffic routed
on our proprietary network. Management believes that the average cost per minute
will continue to decline as we expand our international network over additional
cost effective routes.

    The first six months of 2000 also includes cost of services (exclusive of
depreciation and amortization) from the European operations, which increased
43.4% to $67.4 million, compared to $47.0 million in the first six months of
1999 and decreased as a percentage of European revenues to 89.9% from 90.5%,
respectively. The increase in cost of services (exclusive of depreciation and
amortization) from the European operations was attributable to increased usage
and private line costs.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:  For the first six months of
2000, total selling, general and administrative expenses, exclusive of merger
expenses, decreased 20.6% to $61.2 million from $77.1 million in the first
six months of 1999 and decreased as a percentage of revenues to 12.3% from 15.4%
over the comparable 1999 period. This significant improvement is a result of our
continued cost saving efforts throughout our North American operations.

    North American selling, general and administrative expenses decreased 30.9%
to $44.3 million in the first six months of 2000 from $64.1 million in the first
six months of 1999. For the first six months of 2000, North American selling,
general and administrative expenses decreased as a percentage of North American
revenues to 10.5% from 14.3% in the first six months of 1999. The decrease is
primarily a result of the elimination of redundant staff positions during the
third quarter of 1999 after the PT-1 and UDN mergers, and our ongoing commitment
to reduce operating expenses, which has resulted in decreased payroll,
commission, advertising and promotion expenses during the first six months of
2000 as compared to the first six months of 1999.

    Selling, general and administrative expenses related to the European
operations increased 30.0% to $16.9 million in the first six months of 2000,
from approximately $13.0 million in the first six months of 1999. The increase
is primarily a result of increases in compensation, advertising and promotion
expenses during the first six months of 2000, as compared to the first
six months of 1999. This reflects our commitment during 1999 to expand our
commercial sales force and back office support personnel in Germany.

    DEPRECIATION AND AMORTIZATION:  Depreciation and amortization expense
increased 33.0% to $26.1 million for the first six months of 2000 from
$19.6 million for the first six months of 1999, and increased as a percentage of
revenues to 5.3% from 3.9% over the comparable period in the prior year.

                                       16
<PAGE>
The increase is due primarily to significant asset additions in Europe
throughout 1999 and as a result of our investment in domestic broadband capacity
during 1999. Depreciation and amortization expense attributable to North
American assets amounted to $18.8 million in the first six months of 2000.
European operations realized total depreciation and amortization expense of
$7.3 million in the first six months of 2000. We expect depreciation and
amortization expense to continue to increase as a percentage of revenues as we
continue to expand our global telecommunications network.

    LOSS FROM OPERATIONS:  In the first six months of 2000, loss from operations
was $23.6 million compared to loss from operations of $39.6 million in the first
six months of 1999. Operating margin in the first six months of 2000 was a
negative 4.7% as compared to a negative 7.9% in the first six months of 1999.
The increase in operating margin from the first six months of 1999 to the first
six months of 2000 is a result of our efforts to market higher margin countries
in 2000, as well as reduced North American selling, general and administrative
expenses in 2000.

    OTHER INCOME (EXPENSE):  We reported other income, net, of approximately
$0.1 million in the first six months of 2000, as compared to other expense, net,
of $3.8 million for the first six months of 1999. This is primarily due to a
gain of approximately $12.9 million on the sale of a foreign investment by our
German subsidiary in 2000. This income is offset by interest expense of
$7.7 million on our line of credit and capital lease obligations for switches,
foreign currency translation losses by our European operations of approximately
$2.0 million, a loss of approximately $1.5 million on the disposal of a
subsidiary of our European operations in the second quarter of 2000, and a
$1.5 million loss on the disposal of our cable systems in 2000.

    BENEFIT FOR INCOME TAXES:  We recorded a tax benefit of $5.7 million in the
first six months of 2000 due to operating losses compared to a tax benefit of
$7.9 million in the first six months of 1999.

LIQUIDITY AND CAPITAL RESOURCES

    We have incurred significant operating and net losses over the past eighteen
months. Several factors have contributed to this situation. We have expanded our
domestic network and made significant capital expenditures in our foreign
subsidiaries, and as a result our depreciation expense has increased
substantially over this period. Our earnings before interest, taxes and
depreciation ("EBITDA"), however, have improved over the last three quarters.
This has primarily been a result of reduced selling, general and administrative
expenses and improved gross margins in the second quarter of 2000. Additionally,
we continued to deploy new international direct circuits in an effort to
increase the number of on-net countries that historically have provided higher
wholesale margins.

    As of June 30, 2000, we had cash and cash equivalents of approximately
$16.8 million, short-term investments of $1.8 million, and a working capital
deficit of $151.9 million.

    Cash provided by operating activities for the six months ended June 30,
2000, totaled $11.4 million as compared with cash provided by operating
activities of $13.4 million for the same period in 1999 reflecting increases in
accounts payable offset by the use of cash to fund operating losses, increases
in accounts receivables, and decreases in accrued network cost.

    Cash provided by investing activities for the six months ended June 30,
2000, totaled $8.3 million primarily as a result of the sale of investments of
approximately $13.5 million. Cash received from the sale of investments was
offset by capital expenditures of $4.2 million. Capital expenditures for the
same period last year totaled $51.9 million as compared to capital expenditures
for the six months ended June 30, 2000, which related primarily to the continued
development of our network.

    Cash used by financing activities for the six months ended June 30, 2000,
totaled $28.7 million primarily reflecting additional borrowings under our line
of credit offset by repayments of the line of credit, long-term debt and capital
lease obligations. Our indebtedness at June 30, 2000 was

                                       17
<PAGE>
approximately $178.1 million, of which $89.4 million was long-term debt and
$88.7 million was short-term debt. Our debt is currently a combination of credit
facility borrowings and capital leases for operating equipment, and a short-term
note payable to a vendor.

    As of June 30, 2000, we had $23.9 million outstanding on our $75 million
receivables financing agreement, which bears interest at prime plus 2.0% and
expires on November 30, 2001. This facility allows us to borrow up to
$75 million based upon our eligible accounts receivable.

    On February 11, 2000, we entered into a merger agreement with World Access.
The agreement calls for World Access to infuse cash in the form of a bridge loan
of up to $35 million with $25 million for U.S. operations and $10 million for
GmbH. The financing agreement with World Access will provide for predetermined
initial advances with additional advances to be made solely in World Access's
discretion. To date, no such advance has been made despite our request. On
June 7, 2000, the merger agreement was amended to provide for a
dollar-for-dollar reduction in the amount of funds available to us. The funds
available to us will be reduced on a dollar-for-dollar basis for each dollar of
financing provided subsequent to June 7, 2000 to us or our subsidiaries by
WorldCom, up to an aggregate of $30 million.

    On June 30, 2000, we entered into a standby term loan note agreement with
WorldCom for an amount which is the lesser of $30.0 million or the aggregate
principal sum of any advances made under the note. Under the note we received
advances on July 1, 2000 and August 1, 2000 each in the amount of
$10.0 million. Currently, we are not entitled to receive any further advances
under the note. The note will mature on the earlier to occur of (i) termination
of the merger agreement with World Access, (ii) the close of the World Access
merger or (iii) October 31, 2000.

    On April 12, 2000, we signed a note agreement, which converted
$56.0 million of trade payables we owed WorldCom into a note payable. The note
is secured by substantially all of our assets, bears interest at a rate of 16.0%
per annum and is payable at the earlier of (i) termination of the merger
agreement with World Access, (ii) the close of the World Access merger or
(iii) October 31, 2000. Management believes that the World Access merger will
close as planned and the WorldCom notes will be satisfied at maturity.

    On June 7, 2000, we entered into an agreement to sell the assets of PT-1 to
Counsel for cash proceeds of $150 million less certain liabilities. The proceeds
are subject to a purchase price adjustment based on an audit of PT-1 after the
sale is closed. This transaction is subject to shareholder approval. Upon
obtaining shareholder approval of this transaction, we will record a loss of
approximately $90 million. The agreement can be terminated by PT-1 or Counsel on
August 31, 2000, however, we are in discussions with Counsel to extend the
termination date. We believe that we will be able to extend the termination date
of the agreement to October 15, 2000.

    We owe along with certain of our subsidiaries, approximately $35 million to
Nortel. We intend to enter into a promissory note with Nortel to provide for
repayment of this obligation although the terms of such note have not been
established.

    We believe that the termination date of the PT-1 sale agreement will be
extended and the merger with World Access will be completed as scheduled and
that the WorldCom note payable and standby term loan note will be satisfied at
maturity. We believe that our operating cash flow and the proceeds from the PT-1
sale will be adequate to meet our operating requirements for at least fiscal
2000. There can be no assurance that World Access will provide financing to us.
Nevertheless, as we continue to expand our network facilities as needed, our
liquidity needs may increase, perhaps significantly, which could require us to
seek additional financing, such as capital leases, or the expansion of our
borrowing capacity under current or new lines of credit.

                                       18
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

    FOREIGN CURRENCY RISK.  As a global enterprise, we face exposure to adverse
movements in foreign currency exchange rates. Our foreign currency exposures may
change over time as the level of activity in foreign markets grows and could
have a material adverse impact upon our financial results. No material changes
have occurred in the quarter that would impact our exposure to foreign currency
risk.

    INTEREST RATE RISK.  We have borrowings under our purchase of receivable
facility and long-term debt for capital equipment. Some of these agreements are
based on variable interest rates. At any time, a sharp rise in interest rates
could have a material adverse impact upon our cost of working capital and
interest expense. No material changes have occurred in the quarter that would
impact our exposure to interest rate risk.

    The following table presents the hypothetical impact on our financial
results for changes in interest rates for the variable rate obligations we held
at June 30, 2000. The modeling technique used measures the change in our results
arising from selected potential changes in interest rates. Market rate changes
reflect immediate hypothetical parallel shifts in the yield curve of plus or
minus 50 basis points ("BPS"), 100 BPS, and 150 BPS over a twelve month time
horizon.

                        INTEREST RATE EXPOSURE ANALYSIS
  INCREASE OR (DECREASE) IN ANNUAL INTEREST EXPENSE DUE TO CHANGES IN INTEREST
                                     RATES
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DESCRIPTION                                50 BPS    100 BPS    150 BPS    (50) BPS   (100) BPS    (150) BPS
-----------                               --------   --------   --------   --------   ----------   ----------
<S>                                       <C>        <C>        <C>        <C>        <C>          <C>
Line of Credit..........................    $119       $239       $358      $(119)       $(239)       $(358)
Long Term Debt..........................    $330       $659       $989      $(330)       $(659)       $(989)
</TABLE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    On February 14, 2000 and March 1, 2000, identical class action complaints
were filed against us and directors Christopher E. Edgecomb, Mary A. Casey, Mark
Gershein, Gordon Hutchins, Jr., John R. Snedegar, Arunas A. Chesonis and Samer
Tawfik. The complaints were consolidated and alleged causes of action for breach
of fiduciary duty arising from approval of our merger with World Access on the
grounds that the consideration to be received in the merger with World Access
was unfair, unconscionable and grossly inadequate. On May 31, 2000, the Superior
Court of the State of California of the County of Santa Barbara granted our
demurrer on the grounds that the consolidated complaint was legally deficient,
effectively dismissing the lawsuits. On July 14, 2000, plaintiff filed a notice
of appeal from that judgment.

    On March 11, 1999, a proceeding was commenced by PT-1 by notice of petition
following the election by a PT-1 stockholder to dissent from STAR's merger with
PT-1 and following a demand for payment of the fair value of approximately
2,731,330 shares of PT-1 held by the stockholder. The proceeding was commenced
in the Supreme Court of the State of New York. The PT-1 stockholder is seeking
damages in accordance with his appraisal rights under New York law. On July 26,
2000, the Supreme Court of the State of New York of the County of Queens issued
a temporary restraining order in favor of the stockholder which prevents PT-1
from distributing to STAR any of the proceeds from the sale of PT-1 to Counsel
unless PT-1 has first set aside a reserve in the amount of $25,000,000 in cash
to satisfy the stockholder's claim. Under New York law, the PT-1 stockholder has
the right to receive, in cash, the fair market value of his PT-1 shares as of
the time of our acquisition of PT-1. We believe that the PT-1 stockholder's
claim for any amount above his pro rata share of the consideration paid by us
for PT-1 is without merit and we will seek to minimize his recovery.

                                       19
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

    At June 30, 2000, we were in compliance with all covenants under the
receivables financing agreement with RFC.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<S>      <C>      <C>
(a)      EXHIBIT  DESCRIPTION
         -------  ------------------------------------------------------------
           10.80  Standby Term Loan Note, dated June 30, 2000, between STAR
                  and MCI WorldCom Network Services, Inc ("WorldCom").

           10.81  Amendment No. 1 to Workout Agreement, dated as of June 30,
                  2000, between STAR, WorldCom and certain of STAR's
                  subsidiaries.

           10.82  Amendment No. 1 to Standby Term Loan Note, dated as of
                  July 31, 2000, between STAR and WorldCom.

           10.83  Amendment No. 1 to Promissory Note, dated as of July 31,
                  2000, between STAR and WorldCom.

           10.84  Amendment No. 2 to Standby Term Loan Note, dated as of
                  August 15, 2000, between STAR and WorldCom.

           10.85  Amendment No. 2 to Promissory Note, dated as of August 15,
                  2000, between STAR and WorldCom.

            27.1  Financial Data Schedule.
</TABLE>

                                       20
<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.

<TABLE>
<S>                                          <C>  <C>
                                             STAR TELECOMMUNICATIONS, INC.

Dated: August 18, 2000                       By:          /s/ CHRISTOPHER E. EDGECOMB
                                                  ------------------------------------------
                                                            Christopher E. Edgecomb
                                                     CHIEF EXECUTIVE OFFICER AND DIRECTOR
                                                         (PRINCIPAL EXECUTIVE OFFICER)

                                             By:              /s/ JOHN J. PASINI
                                                  ------------------------------------------
                                                                John J. Pasini
                                                           VICE PRESIDENT OF FINANCE
                                                        (PRINCIPAL ACCOUNTING OFFICER)
</TABLE>

                                       21