<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549
                                        
                                  FORM 10-K/A
                                        
      [X]  ANNUAL REPORT PURSUANT TO SECTION  13 OR 15 (D) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 1996
                                       or

     [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
          EXCHANGE ACT OF 1934
                     For the transition period from     to

                        Commission file number 0-20913
 
                      TELEPORT COMMUNICATIONS GROUP INC.
            (Exact Name of Registrant as Specified In Its Charter)
 
          DELAWARE                                                 13-3173139
(STATE OR OTHER JURISDICTION OF                                (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)
 
437 RIDGE ROAD, EXECUTIVE BUILDING 3, DAYTON, NJ                     08810
   (Address of Principal Executive Offices)                        (Zip Code)

                                (732) 392-2000
             (Registrant's Telephone Number, Including Area Code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                        
                                                  Name of Each Exchange
     Title of Each Class                           on Which Registered
     -------------------                          ---------------------
            NONE                                           NONE

          Securities registered pursuant to Section 12(g) of the Act:

                              CLASS A COMMON STOCK
                                (TITLE OF CLASS)

        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
          ---              ---

        Indicate by check mark if disclosure of delinquent filers pursuant to
      Item 405 of Regulation S-K is not contained herein, and will not be
      contained, to the best of Registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form
      10-K or any amendment to this Form 10-K.

        Based on the closing sales price on March 20, 1997 the aggregate market
      value of the voting stock held by non-affiliates of the Registrant was
      approximately $800,113,800.

        At March 20, 1997, 37,576,689 shares of the Registrant's Class A Common
      Stock and 127,274,632 shares of Registrant's Class B Common Stock were
      outstanding.

        Portions of the Registrant's definitive Proxy Statement to be filed with
      the Securities and Exchange Commission in connection with its 1997 Annual
      Meeting are incorporated by reference into Part III of this Report on Form
      10-K.

        Certain Exhibits filed with the Registrant's Registration Statement on
      Form S-1 (File Nos. 333-3850 and 333-3984, as amended), are incorporated
      by reference as Exhibits to this Report on Form 10-K in Part III, Item 14.
<PAGE>
 
                                    PART IV

Item 14.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a) (1) Financial Statements

             The following financial statements and related notes of the Company
             contained on pages F-1 through F-26 of the Company's Annual Report
             on Form 10-K for the fiscal year ended December 31, 1996, are
             incorporated by reference.

<TABLE> 
<CAPTION> 
 <S>                                                                                                <C> 
                                                                                                    Page
Independent Auditors' Report........................................................................ F-1
Balance Sheets at December 31, 1996 and 1995........................................................ F-2
Statements of Operations for the Years Ended December 31, 1996, 1995 and 1994....................... F-4
Statements of Changes in Stockholders' Equity and Partners' Capital (Deficit)
  for the Years Ended December 31, 1996, 1995 and 1994.............................................. F-5
Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994....................... F-6
Notes to Financial Statements....................................................................... F-7
</TABLE> 
The following financial statements and related notes are attached hereto
following the signature page.
 
     Financial Information as required by Form 11-K with respect to the Teleport
     Communications Group Inc. Employee Stock Purchase Plan (1996) for the plan
     year ended June 27, 1997.
 
     Independent Auditors' Report
     Statement of Net Assets Available for Benefits As Of June 27, 1997
     Statement of Changes in Net Assets for the Year Ended June 27, 1997
     Notes to Financial Statements
 
 (a) (3) Exhibits
 
Exhibit No.
-----------
<TABLE> 
<CAPTION> 
<S>     <C> 
*2.1    Reorganization Agreement dated as of April 18, 1996
*3.6    Amended and Restated Certificates of Incorporation of TCG, as revised
*3.7    Amended and Restated By-laws of TCG, as revised
*4.2    Amended and Restated Stockholders' Agreement (incorporated by reference to
        Exhibit E of Exhibit 2.1 hereof)
*4.3    Indenture between TCG and United States Trust Company of New York, as Trustee,
        relating to the 11 1/8% Senior Discount Notes due 2007 of TCG
*4.4    Indenture of TCG and United States Trust Company of New York, as Trustee,
        relating to 9 7/8% Senior Notes due 2006 of TCG
*10.1   New York Franchise Agreement dated May 2, 1994, as amended
*10.2   Participation Agreement, dated May 15, 1984
*10.3   Agreement of Lease, dated May 15, 1984, as amended
*10.4   Keepwell Agreement, dated June 7, 1984, as amended
*10.5   Agreement of Lease with Teleport Associates, dated November 10, 1987
*10.6   Agreement of Sublease between Merrill Lynch/WFC/L, Inc. and TC Systems, Inc.
        dated January 30, 1990
*10.7   Loan Agreement, dated May 5, 1993
*10.8   Amendment No. 1 to Loan Agreement, dated March 1, 1994
*10.9   Amendment No. 2 to Loan Agreement, dated October 23, 1994
*10.10  Amendment No. 3 to Loan Agreement, dated February 15, 1995
*10.11  Loan Agreement, dated May 22, 1995 and related documents
*10.12  Amendment No. 1 to Loan Agreement, dated May 31, 1996
*10.13  Teleport Communications Group Inc. 1992 Unit Appreciation Plan
*10.14  Teleport Communications Group Inc. 1993 Unit Appreciation Plan

</TABLE> 

                                       2
<PAGE>
 
<TABLE> 
<CAPTION> 
<S>     <C> 
*10.15   Teleport Communications Group Inc. 1993 Stock Option Plan, as amended
*10.16   Teleport Communications Group Inc. Employee Stock Purchase Plan
*10.17   Deferred Compensation Plan of Teleport Communications Group Inc.
*10.18   Make-Up Plan of Teleport Communications Group Inc. for the Retirement Savings Plan
*10.19   Teleport Communications Group Inc. 1996 Equity Incentive Plan
*10.20   Robert Annunizata Employment Agreement, dated December 18, 1992, as amended
*10.21   John A. Scarpati Employment Agreement, dated July 12, 1994, as amended
*10.22   Robert C. Atkinson Employment Agreement, dated July 12, 1994, as amended
*10.23   Stuart A. Mencher Employment Agreement, dated July 12, 1994, as amended
*10.24   Alf T. Hansen Employment Agreement, dated July 12, 1994, as amended
*10.25   Partnership Agreement of TCG Detroit, dated as of November 1, 1993
*10.26   Amended and Restated Partnership Agreement of TCG Los Angeles, dated as of March 1, 1994
*10.27   Partnership Agreement of TCG Pittsburgh, dated as of March 1, 1994
*10.28   Partnership Agreement of TCG San Diego, dated as of June 1, 1994
*10.29   Partnership Agreement of TCG San Francisco, dated as of January 1, 1994, as amended
*10.30   Partnership Agreement of TCG Seattle dated as of January 1, 1994, as amended
*10.31   Agreement among Teleport Communications Group Inc. and Comcast Corporation, dated as of
         April 18, 1996
*10.32   First Amendment to the Teleport Communications Group Inc. 1993 Stock Option Plan
*10.33   Second Amendment to the Teleport Communications Group Inc. 1993 Stock Option Plan
*10.34   Letter of Intent between Viacom Telecom, Inc. and Teleport Communications Group Inc., dated as
         of May 30, 1996.
*10.35   Letter of Intent between Viacom Telecom, Inc. and Teleport Communications Group Inc., dated as
         of May 30, 1996.
*10.36   First Amendment to the Teleport Communications Group Inc. 1996 Equity Incentive Plan
*10.37   Stockholders' Agreement of Comcast CAP of Philadelphia, Inc. dated as of June 30, 1993
**11.00  Computation of Loss Per Common Share
**12.00  Computation of Ratio of Earnings to Fixed Charges
**21.00  Subsidiaries of the Registrant
**23.1  Consent of Deloitte & Touche LLP
  23.2  Consent of Deloitte & Touche LLP
  23.3  Consent of Deloitte & Touche LLP
**27.00 Financial Data Schedule
</TABLE> 

*    Incorporated by reference to the corresponding exhibit of TCGI's
     Registration Statements on Form S-1 (File Nos. 333-3850 and  333-3984)
**   Previously filed with the Company's Annual Report on Form 10-K

                              REPORTS ON FORM 8-K

  The following reports on Form 8-K were filed during the Company's quarter
ended December 31, 1996:

  A report on Form 8-K, dated October 23, 1996, was filed reporting Registrant's
agreement to acquire Eastern TeleLogic Corporation in a two-step transaction.

  A report on Form 8-K, dated October 31, 1996 was filed reporting Registrant's
financial results for the fiscal quarter ended September 30, 1996.

                                       3
<PAGE>
 
                                   SIGNATURE

  Pursuant to the requirements of  Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                  Teleport Communications Group Inc.
                                  (Registrant)

                            By:  /s/  Maria Terranova Evans    Date: 10/27/97
                                 --------------------------          --------
                                      Maria Terranova Evans
                
                                     Teleport Communications Group Inc.
                                     Vice President and Controller
                                     (Principal Accounting Officer)

                                       4
<PAGE>
 
                              Financial Statements
 
                                                         Page Number
                                                        In This Report
 
Independent Auditors' Report                                  F-28
 
Statement of Net Assets Available for Benefits As Of
  June 27, 1997                                               F-29
 
Statement of Changes in Net Assets for the Year
  Ended June 27, 1997                                         F-30
 
Notes to Financial Statements                                 F-31
 

                                      F-27
<PAGE>
 
Independent Auditors' Report

Sponsor and Participants
Teleport Communications Group Inc.
Employee Stock Purchase Plan (1996)

We have audited the accompanying statement of net assets available for benefits
of the Teleport Communications Group Inc. Employee Stock Purchase Plan (1996)
(the "Plan") as of June 27, 1997 and the related statement of changes in net
assets available for benefits for the year ended June 27, 1997.  These financial
statements are the responsibility of the Plan's management.  Our responsibility
is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at June
27, 1997 and the changes in net assets available for benefits for the year ended
June 27, 1997 in conformity with generally accepted accounting principles.


/s/ Deloitte & Touche LLP
    ---------------------
    Deloitte & Touche LLP

    New York, New York
    October 27, 1997

                                      F-28
<PAGE>
 
                       TELEPORT COMMUNICATIONS GROUP INC.
                      EMPLOYEE STOCK PURCHASE PLAN (1996)


                 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
                              AS OF JUNE 27, 1997


Asset:
Receivable from plan sponsor               $7,951,730
                                            
Liability:
Distribution due to plan participants       7,951,730
                                            ---------
Net Assets Available for Benefits:         $       --
                                            =========

                       See Notes to Financial Statements.

                                      F-29
<PAGE>
 
                       TELEPORT COMMUNICATIONS GROUP INC.
                      EMPLOYEE STOCK PURCHASE PLAN (1996)


           Statement Of Changes In Net Assets Available For Benefits
                           Year Ended June 27, 1997


Additions to net assets attributed to:

Employee contributions                              $  7,951,730

Deductions from net assets attributed to:

Withdrawals from plan                                         --
Distribution due to active plan participants           7,951,730
                                                    ------------
Change In Net Assets                                          

Net Assets:                                                   --

Beginning of period                                           --
                                                    ------------
End of period                                       $         --
                                                    ============


                      See Notes to Financial Statements.

                                      F-30
<PAGE>
 
                      TELEPORT COMMUNICATIONS GROUP INC.
                      EMPLOYEE STOCK PURCHASE PLAN (1996)

                         Notes To Financial Statements
                                 June 27, 1997


1.  Description of Plan

    The Teleport Communications Group Inc. Employee Stock Purchase Plan (1996)
    (the "Plan") is a self-funded contributory stock purchase plan which
    provides employees the option to purchase stock at a discounted price.

    General - The Plan was adopted by Teleport Communications Group Inc. (the
    "Plan Sponsor" or the "Company") during 1996 to allow eligible employees to
    purchase Plan Sponsor stock (up to 745,000 shares in the aggregate) at a
    discounted price. Each eligible employee was given an option to purchase a
    number of shares of Class A Common Stock equal to up to 10% of such
    employee's compensation plus bonus paid for the calendar year preceding the
    year the option is awarded, divided by the purchase price per share under
    the option. No employee can receive more than $25,000 worth of shares in any
    calendar year, valued as of the date of grant. Eligible employees are
    employees who were scheduled to work at least 20 hours per week or at least
    five (5) months in any calendar year as of June 27, 1996. The purchase price
    for one share of Class A Common Stock was 15% below the initial offering
    price of $16 or $13.60. Employees subscribed to a certain number of shares
    on June 27, 1996 and elected to pay for the shares through payroll
    deductions, through a lump sum payment upon exercise of option on June 27,
    1997 or through a non-cash transaction on June 27, 1997 where they would
    receive the difference between the market price at that time less the
    exercise price of $13.60.

    Contributions - Contributions to the Plan are made by the participants based
    on the amount of participant elections. Contributions to the Plan are
    commingled with the general assets of the Plan Sponsor.

    Administrative Expenses - All administrative expenses of the Plan were paid
    by the Company during the fiscal year ended June 27, 1997.

    Vesting and Termination - At all times, each Plan participant has a fully
    vested, nonforfeitable right to all cash amounts withheld from his or her
    paychecks.

2.  Summary Of Significant Accounting Policies

    The receivable from the Plan Sponsor represents accumulated payroll
    deductions less amounts disbursed for withdrawals. These payroll deductions
    are included with the general funds of the Plan Sponsor.

3.  Income Taxes

    It is intended that the right to purchase shares of Class A Common Stock
    under the Plan shall constitute an option granted by the Plan Sponsor
    pursuant to an "employee stock purchase plan" within the meaning of Section
    423 of the Internal Revenue Code, and that such shares, for tax purposes,
    shall be treated in accordance with the provisions thereof.

    An employee is not considered to have income for federal income tax purposes
    from the granting of a right to purchase shares. Amounts deducted from an
    employee's pay do not reduce the amount of his or her income for tax
    purposes.

                                      F-31