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

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 1999

                                       OR

            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                        (Commission File Number 1-11965)
                            ICG COMMUNICATIONS, INC.
                        (Commission File Number 1-11052)
                            ICG HOLDINGS (CANADA) CO.
                        (Commission File Number 33-96540)
                               ICG HOLDINGS, INC.
           (Exact names of registrants as specified in their charters)


------------------------------------------- ------------------------------------
Delaware                                    84-1342022
Nova Scotia                                 Not Applicable
Colorado                                    84-1158866
(State or other jurisdiction of
 incorporation or organization)             (I.R.S. Employer Identification No.)
------------------------------------------- ------------------------------------
161 Inverness Drive West                    Not applicable
Englewood, Colorado 80112

161 Inverness Drive West                    c/o ICG Communications, Inc.
Englewood, Colorado 80112                   161 Inverness Drive West
                                            Englewood, Colorado 80112

161 Inverness Drive West                    Not applicable
Englewood, Colorado 80112
(Address of principal executive offices)    (Address of U.S. agent for service)
------------------------------------------- ------------------------------------
Registrants' telephone numbers, including area codes: (888) 424-1144 or (303)
414-5000

         Indicate  by check  mark  whether  the  registrants  (1) have 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
registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days.   Yes |X|   No

         The number of registrants' outstanding common shares as of November 11,
1999  were  47,556,435,  31,931,558  and  1,918,  respectively.  ICG  Canadian
Acquisition,  Inc., a wholly owned subsidiary of ICG Communications,  Inc., owns
all of the issued and outstanding common shares of ICG Holdings (Canada) Co. ICG
Holdings  (Canada)  Co.  owns all of the  issued and  outstanding  shares of ICG
Holdings, Inc.
<PAGE>

                                TABLE OF CONTENTS




PART I    .....................................................................3
  ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ......................3
             Consolidated Balance Sheets as of December 31, 1998 and
               September 30, 1999 (unaudited)..................................3
             Consolidated Statements of Operations (unaudited) for the
               Three Months and Nine Months Ended September 30, 1998 and 1999..5
             Consolidated Statement of Stockholders' Deficit (unaudited)
               for the Nine Months Ended September 30, 1999 ...................7
             Consolidated Statements of Cash Flows (unaudited) for the
               Nine Months Ended September 30, 1998 and 1999 ..................8
             Notes to Consolidated Financial Statements, December 31, 1998
               and September 30, 1999(unaudited)..............................10
  ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS .......................................27
  ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ......45

PART II   ....................................................................47
  ITEM 1.    LEGAL PROCEEDINGS ...............................................47
  ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS .......................47
  ITEM 3.    DEFAULTS UPON SENIOR SECURITIES .................................47
  ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS ...........47
  ITEM 5.    OTHER INFORMATION ...............................................47
  ITEM 6.    EXHIBITS AND REPORT ON FORM 8-K .................................47
             Exhibits ........................................................47
             Report on Form 8-K ..............................................48



                                       2
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets
              December 31, 1998 and September 30, 1999 (unaudited)


<TABLE>
<CAPTION>
                                                                               December 31,             September 30,
                                                                                   1998                     1999
                                                                            --------------------     --------------------
    Assets                                                                                 (in thousands)

    <S>                                                                     <C>                          <C>
    Current assets:
       Cash and cash equivalents                                            $       210,307                149,176
       Short-term investments available for sale                                     52,000                 21,483
       Receivables:
          Trade, net of allowance of $14,351 and $68,545 at December 31,
            1998 and September 30, 1999, respectively (note 6)                      113,030                140,013
          Other                                                                         529                    922
                                                                            --------------------     --------------------
                                                                                    113,559                140,935

       Inventory                                                                          -                     70
       Prepaid expenses and deposits                                                 11,530                 11,621
       Net current assets of discontinued operations (note 3)                            66                 15,775
                                                                            --------------------     --------------------

          Total current assets                                                      387,462                339,060
                                                                            --------------------     --------------------

    Property and equipment                                                        1,064,112              1,456,096
       Less accumulated depreciation                                               (156,054)              (252,667)
                                                                            --------------------     --------------------
          Net property and equipment                                                908,058              1,203,429
                                                                            --------------------     --------------------

    Restricted cash                                                                  16,912                 11,814
    Investments in debt securities available for sale and restricted
      and exchangeable preferred stock (note 4)                                           -                 28,489
    Other assets, net of accumulated amortization:
       Goodwill                                                                     110,513                101,976
       Deferred financing costs                                                      35,958                 37,196
       Transmission and other licenses                                                5,646                    604
       Other                                                                         22,324                 15,544
                                                                            --------------------     --------------------
                                                                                    174,441                155,320
                                                                            --------------------     --------------------

    Net non-current assets of discontinued operations (note 3)                      102,774                 49,338
                                                                            --------------------     --------------------

          Total assets (note 7)                                              $    1,589,647              1,787,450
                                                                            ====================     ====================
                                                                                                              (Continued)

</TABLE>


                                       3
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

               Consolidated Balance Sheets (unaudited), Continued

<TABLE>
<CAPTION>

                                                                            December 31,          September 30,
                                                                                1998                   1999
                                                                         -------------------    -------------------
Liabilities and Stockholders' Deficit                                                 (in thousands)

<S>                                                                      <C>                       <C>
Current liabilities:
   Accounts payable                                                      $        30,424               24,677
   Accrued liabilities                                                            51,565               83,644
   Deferred revenue (note 6)                                                       5,647               33,652
   Deferred gain on sale (note 3)                                                      -                8,624
   Current portion of capital lease obligations (note 6)                           4,846                7,956
   Current portion of long-term debt (note 5)                                         46                   46
                                                                         -------------------    -------------------
         Total current liabilities                                                92,528              158,599
                                                                         -------------------    -------------------

Capital lease obligations, less current portion (note 6)                          62,946               62,057
Long-term debt, net of discount, less current portion (note 5)                 1,598,998            1,855,484
Other long-term liabilities                                                            -                  862
                                                                         -------------------    -------------------

   Total liabilities                                                           1,754,472            2,077,002
                                                                         -------------------    -------------------

Redeemable preferred stock of subsidiary ($384.3 million liquidation
   value at September 30, 1999) (note 5)                                         338,310              377,065

Company-obligated  mandatorily  redeemable  preferred  securities
   of subsidiary limited  liability company which holds solely
   Company preferred stock ($133.4 million liquidation value at
   September 30, 1999)                                                           128,042              128,331

Stockholders' deficit:
   Common stock, $0.01 par value, 100,000,000 shares authorized;
      46,360,185 and 47,514,260 shares issued and outstanding at
      December 31, 1998 and September 30, 1999, respectively                         464                  475
   Additional paid-in capital                                                    577,940              595,516
   Accumulated deficit                                                        (1,209,462)          (1,390,939)
   Accumulated other comprehensive loss                                             (119)                   -
                                                                         -------------------    -------------------
      Total stockholders' deficit                                               (631,177)            (794,948)
                                                                         -------------------    -------------------
Commitments and contingencies (notes 5 and 6)

      Total liabilities and stockholders' deficit                        $     1,589,647            1,787,450
                                                                         ===================    ===================
</TABLE>

          See accompanying notes to consolidated financial statements.




                                       4
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                Consolidated Statements of Operations (unaudited)
         Three Months and Nine Months Ended September 30, 1998 and 1999


<TABLE>
<CAPTION>
                                                                    Three months ended               Nine months ended
                                                                       September 30,                   September 30,
                                                              -------------------------------  -------------------------------
                                                                   1998            1999             1998            1999
                                                              ---------------  --------------  ---------------  --------------
                                                                            (in thousands, except per share data)

<S>                                                           <C>                 <C>            <C>              <C>
Revenue (note 7)                                              $    82,567          115,166        205,269          337,151

Operating costs and expenses:
   Operating costs                                                 48,145           66,284        137,113          179,391
   Selling, general and administrative expenses                    39,485           94,558        112,699          180,341
   Depreciation and amortization (note 7)                          22,715           45,079         54,310          126,137
   Provision for impairment of long-lived assets                        -                -              -           29,300
   Other, net                                                           -              626            498               91
                                                              ---------------  --------------  ---------------  --------------
      Total operating costs and expenses                          110,345          206,547        304,620          515,260
                                                              ---------------  --------------  ---------------  --------------

      Operating loss                                              (27,778)         (91,381)       (99,351)        (178,109)

Other (expense) income:
   Interest expense (note 7)                                      (45,958)         (52,891)      (121,862)        (151,637)
   Interest income                                                  8,190            3,772         22,175           11,669
   Other expense, net, including realized and unrealized
     gains and losses on marketable trading securities               (350)            (333)          (962)          (2,676)
                                                              ---------------  --------------  ---------------  --------------
                                                                  (38,118)         (49,452)      (100,649)        (142,644)
                                                              ---------------  --------------  ---------------  --------------

Loss from continuing operations before income taxes,
   preferred dividends and extraordinary gain                     (65,896)        (140,833)      (200,000)        (320,753)
Income tax expense                                                    (45)               -            (45)               -
Accretion and preferred dividends on preferred securities of
   subsidiaries                                                   (13,987)         (15,694)       (40,774)         (45,739)
                                                              ---------------  --------------  ---------------  --------------

Loss from continuing operations before extraordinary gain         (79,928)        (156,527)      (240,819)        (366,492)

Discontinued operations (note 3):
   Net (loss) income from discontinued operations                 (15,535)             748        (57,235)             (55)
   Loss on disposal of discontinued operations, including
     provision  of $0.2  million,  $0.2  million and $0.3
     million for the three months ended  September 30, 1998,
     the nine months ended  September 30, 1998 and the nine
     months ended September 30, 1999, respectively, for
     operating losses during phase out period                      (1,201)               -         (1,201)          (7,959)
                                                              ---------------  --------------  ---------------  --------------
                                                                  (16,736)             748        (58,436)          (8,014)
                                                              ---------------  --------------  ---------------  --------------
Extraordinary gain on sales of operations of NETCOM, net of
   income taxes of $6.4 million (note 3)                                -                -              -          193,029
                                                              ---------------  --------------  ---------------  --------------

     Net loss                                                 $   (96,664)        (155,779)      (299,255)        (181,477)
                                                              ===============  ==============  ===============  ==============

Other comprehensive income - foreign currency translation
   adjustment                                                        (118)               -           (194)               -
                                                              ---------------  --------------  ---------------  --------------

     Comprehensive loss                                       $   (96,782)        (155,779)      (299,449)        (181,477)
                                                              ===============  ==============  ===============  ==============
                                                                                                                   (Continued)
</TABLE>




                                       5
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

          Consolidated Statements of Operations (unaudited), Continued

<TABLE>
<CAPTION>

                                                                        Three months ended             Nine months ended
                                                                          September 30,                  September 30,
                                                              -------------------------------  -------------------------------
                                                                   1998            1999             1998            1999
                                                              ---------------  --------------  ---------------  --------------
                                                                           (in thousands, except per share data)

Net loss per share - basic and diluted:
<S>                                                           <C>                   <C>             <C>              <C>
   Loss from continuing operations                            $    (1.75)           (3.31)          (5.36)           (7.81)
   Net (loss) income from discontinued operations                  (0.37)            0.02           (1.30)           (0.17)
   Extraordinary gain on sales of operations of NETCOM                  -            -                  -             4.11
                                                              ---------------  --------------  ---------------  --------------
     Net loss per share - basic and diluted                   $    (2.12)           (3.29)          (6.66)           (3.87)
                                                              ===============  ==============  ===============  ==============

Weighted average number of shares outstanding - basic and
    diluted                                                        45,588           47,320         44,922           46,948
                                                              ===============  ==============  ===============  ==============
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       6
<PAGE>




                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

           Consolidated Statement of Stockholders' Deficit (unaudited)
                      Nine Months Ended September 30, 1999






<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                      Common stock       Additional                        other           Total
                                                -----------------------   paid-in      Accumulated     comprehensive   stockholders'
                                                  Shares      Amount      capital        deficit           loss           deficit
                                                ----------- ----------- ------------- --------------- --------------- --------------
                                                                                      (in thousands)

<S>                                                <C>      <C>            <C>           <C>                 <C>         <C>
Balances at January 1, 1999                        46,360   $    464       577,940       (1,209,462)         (119)       (631,177)
   Shares issued for cash in connection with the
     exercise of options and warrants                 798          8        10,753                -             -          10,761
   Shares issued for cash in connection with the
     employee stock purchase plan                     157          1         2,687                -             -           2,688
   Shares issued as contribution to 401(k) plan       199          2         4,136                -             -           4,138
   Reversal of cumulative foreign currency
     translation adjustment (note 3)                    -          -             -                -           119             119
   Net loss                                             -          -             -         (181,477)            -        (181,477)
                                                =========== =========== ============= =============== =============== ==============
Balances at September 30, 1999                     47,514   $     475      595,516       (1,390,939)            -        (794,948)
                                                =========== =========== ============= =============== =============== ==============
</TABLE>

          See accompanying notes to consolidated financial statements.




                                       7
<PAGE>




                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows (unaudited)
                  Nine Months Ended September 30, 1998 and 1999
<TABLE>
<CAPTION>

                                                                                            Nine months ended September 30,
                                                                                           -----------------------------------
                                                                                               1998                 1999
                                                                                           --------------      ---------------
                                                                                                     (in thousands)

<S>                                                                                         <C>                   <C>
Cash flows from operating activities:
   Net loss                                                                                 $   (299,255)         (181,477)
   Loss from discontinued operations                                                              58,436             8,014
   Extraordinary gain on sales of discontinued operations                                              -          (193,029)
   Adjustments to reconcile net loss to net cash used by operating activities:
       Recognition of deferred gain                                                                   -            (17,376)
       Accretion and preferred dividends on preferred securities of subsidiaries                 40,774             45,739
       Depreciation and amortization                                                             54,310            126,137
       Provision for impairment of long-lived assets                                                  -             29,300
       Deferred compensation                                                                          -                862
       Net loss (gain) on disposal of long-lived assets                                             498               (771)
       Provision for uncollectible accounts                                                       7,945             56,193
       Interest expense deferred and included in long-term debt                                 117,068            143,663
       Interest expense deferred and included in capital lease obligations                        4,208              3,968
       Amortization of deferred advertising costs included in selling, general
         and administrative expenses                                                                469                  -
       Amortization of deferred financing costs included in interest expense                      3,307              3,541
       Interest expense capitalized on assets under construction                                 (7,218)            (8,954)
       Contribution to 401(k) plan through issuance of common stock                               2,593              4,138
       Change in operating assets and liabilities, excluding the effects of
         dispositions and non-cash transactions:
            Receivables                                                                         (46,343)           (87,556)
            Inventory                                                                                 -                136
            Prepaid expenses and deposits                                                           271              3,011
            Deferred advertising costs                                                           (1,795)                 -
            Accounts payable and accrued liabilities                                             18,382             (9,643)
            Deferred revenue                                                                      1,422             29,197
                                                                                           --------------      ---------------
               Net cash used by operating activities                                            (44,928)           (44,907)
                                                                                           --------------      ---------------
Cash flows from investing activities:
  Increase in long-term notes receivable from affiliates and others                              (4,877)                 -
  Acquisition of property, equipment and other assets                                          (253,488)          (368,134)
  Payments for construction of corporate headquarters                                            (4,944)                 -
  Payments for business acquisitions, net of cash acquired                                      (14,307)                 -
  Proceeds from sales of operations of NETCOM, net of cash included in sale                           -            252,881
  Proceeds from disposition of property, equipment and other assets                                 148              4,302
  Proceeds from sale of corporate headquarters, net of selling and other costs                   30,283                  -
  Proceeds from sales of short-term investments available for sale                               71,281             30,517
  Proceeds from sale of marketable trading securities, net of realized gain                           -             30,000
  Decrease in restricted cash                                                                     5,760              5,098
  Purchase of investments                                                                             -            (28,489)
  Purchase of minority interest in subsidiaries                                                  (9,000)            (6,039)
                                                                                           --------------      ---------------
       Net cash used by investing activities                                                   (179,144)           (79,864)
                                                                                           --------------      ---------------
                                                                                                                  (Continued)
</TABLE>



                                       8
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

          Consolidated Statements of Cash Flows (unaudited), Continued

<TABLE>
<CAPTION>

                                                                                            Nine months ended September 30,
                                                                                          -------------------------------------
                                                                                                 1998                  1999
                                                                                          -------------------   ---------------
                                                                                                     (in thousands)

<S>                                                                                         <C>                       <C>
Cash flows from financing activities:
  Proceeds from issuance of common stock:
      Sale by subsidiary                                                                    $        3,385                  -
      Exercise of options and warrants                                                              12,693             10,761
      Employee stock purchase plan                                                                   2,136              2,688
  Proceeds from issuance of long-term debt                                                         550,574             80,000
  Deferred long-term debt issuance costs                                                           (17,496)            (4,777)
Principal payments on capital lease obligations                                                    (11,559)           (12,720)
Principal payments on long-term debt                                                                (6,850)              (255)
Payments of preferred dividends                                                                     (6,695)            (6,695)
                                                                                          -------------------   ---------------
  Net cash provided by financing activities                                                        526,188             69,002
                                                                                          -------------------   ---------------

  Net increase (decrease) in cash and cash equivalents                                             302,116            (55,769)
  Net cash provided (used) by discontinued operations                                                8,298             (5,362)
Cash and cash equivalents, beginning of period                                                     120,574            210,307
                                                                                          ===================   ===============
Cash and cash equivalents, end of period                                                   $       430,988            149,176
                                                                                          ===================   ===============

Supplemental disclosure of cash flows information of continuing operations:
   Cash paid for interest                                                                 $          4,497              9,419
                                                                                          ===================   ================
   Cash paid for income taxes                                                             $             45              1,140
                                                                                          ===================   ================

Supplemental  schedule  of  non-cash  investing  and  financing   activities  of
   continuing operations:
      Common stock issued in connection with business combinations                        $         15,532                  -
                                                                                          ===================   ================
      Acquisition of corporate headquarters assets through the issuance of long-
        term debt and conversion of security deposit                                      $              -             33,077
                                                                                          ===================   ================
      Assets acquired under capital leases                                                $              -              6,190
                                                                                          ===================   ================
</TABLE>

          See accompanying notes to consolidated financial statements.




                                       9
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
              December 31, 1998 and September 30, 1999 (unaudited)


(1)      Organization and Basis of Presentation

         ICG  Communications,   Inc.,  a  Delaware   corporation   ("ICG"),  was
         incorporated on April 11, 1996 and is the  publicly-traded  U.S. parent
         company  of ICG  Funding,  LLC,  a  special  purpose  Delaware  limited
         liability  company ("ICG Funding"),  ICG Holdings  (Canada) Co., a Nova
         Scotia unlimited liability company  ("Holdings-Canada"),  ICG Holdings,
         Inc., a Colorado corporation  ("Holdings"),  and ICG Services,  Inc., a
         Delaware corporation ("ICG Services"), and their subsidiaries.  ICG and
         its subsidiaries are collectively referred to as the "Company."

         The  Company's   principal  business  activity  is   telecommunications
         services,  including  Telecom Services and, until the completion of the
         sales of such operations, Satellite Services. Telecom Services consists
         primarily  of  the  Company's   competitive   local  exchange   carrier
         operations  which  provide  local,  long  distance and data services to
         business  end  users,  Internet  service  providers  ("ISPs")  and long
         distance  carriers and resellers.  Additionally,  in February 1999, the
         Company began marketing  Internet access and enhanced  network services
         to ISPs and  other  telecommunications  providers.  Satellite  Services
         consists of satellite voice,  data and video services provided to major
         cruise ship lines, the U.S. Navy, the offshore oil and gas industry and
         integrated  communications  providers.  Through  October 22, 1999,  the
         Company also provided  Network  Services which consisted of information
         technology  services  and  selected  networking  products,  focusing on
         network design, installation,  maintenance and support for a variety of
         end users,  including Fortune 1000 firms and other large businesses and
         telecommunications companies.

         On January 21, 1998, the Company completed a merger with NETCOM On-Line
         Communication Services,  Inc. ("NETCOM").  At the effective time of the
         merger,  each outstanding share of NETCOM common stock, $.01 par value,
         was  automatically  converted into shares of ICG common stock, $.01 par
         value ("ICG Common  Stock"),  at an exchange  ratio of 0.8628 shares of
         ICG  Common  Stock  per  NETCOM  common  share.   The  Company   issued
         approximately  10.2 million  shares of ICG Common  Stock in  connection
         with the merger,  valued at approximately $284.9 million on the date of
         the merger. The business  combination was accounted for as a pooling of
         interests. On February 17 and March 16, 1999, the Company completed the
         sales of the  operations of NETCOM (see note 3) and,  accordingly,  the
         Company's  consolidated  financial  statements  prior to March 16, 1999
         reflect the  operations  and net assets of NETCOM as  discontinued.  In
         conjunction with the sales, the legal name of the NETCOM subsidiary was
         changed to ICG NetAhead, Inc. ("NetAhead") (see note 3).

         On July 15, 1999,  the  Company's  board of directors  adopted a formal
         plan to dispose of the Company's  investments  in Network  Services and
         Satellite  Services  (see  note  3)  and,  accordingly,  the  Company's
         consolidated financial statements reflect the operations and net assets
         of Network  Services and  Satellite  Services as  discontinued  for all
         periods presented.

(2)      Significant Accounting Policies

         (a)   Basis of Presentation

               These financial statements should be read in conjunction with the
               Company's  Annual  Report on Form 10-K for the fiscal  year ended
               December 31, 1998, as certain  information  and note  disclosures
               normally included in financial  statements prepared in accordance
               with generally accepted accounting principles have been condensed
               or omitted  pursuant to the rules and  regulations  of the United
               States Securities and Exchange Commission.  The interim financial
               statements  reflect all adjustments  which are, in the opinion of
               management,  necessary  for  a  fair  presentation  of  financial
               position,  results of operations and cash flows as of and for the
               interim  periods  presented.  Such  adjustments  are of a  normal
               recurring nature.


                                       10
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(2)      Significant Accounting Policies (continued)

               Operating  results for the nine months ended  September  30, 1999
               are  not  necessarily  indicative  of  the  results  that  may be
               expected for the fiscal year ending December 31, 1999.

               All significant  intercompany accounts and transactions have been
               eliminated in consolidation.

         (b)   Net Loss Per Share

               Basic and  diluted net loss per share is  calculated  by dividing
               net loss by the weighted average number of shares of common stock
               outstanding.   Weighted  average  number  of  shares  outstanding
               represents ICG Common Stock outstanding for the nine months ended
               September   30,   1999  and   combined   ICG  Common   Stock  and
               Holdings-Canada  Class A common shares  outstanding  for the nine
               months ended September 30, 1998.  Potential  common stock,  which
               includes options, warrants and convertible subordinated notes and
               preferred securities,  are not included in the net loss per share
               calculation  as their  effect is  anti-dilutive.  The Company has
               presented  net loss per share from  discontinued  operations  and
               extraordinary  gain on  sales  of  operations  of  NETCOM  in the
               consolidated statement of operations for all periods presented.

         (c)   Reclassifications

               Certain 1998 amounts have been  reclassified  to conform with the
               1999 presentation.

 (3)     Discontinued Operations

         Net loss from discontinued operations consists of the following:
<TABLE>
<CAPTION>

                                                             Three months ended                 Nine months ended
                                                               September 30,                      September 30,
                                                       -------------------------------    -------------------------------
                                                           1998              1999             1998              1999
                                                       -------------     -------------    --------------    -------------
                                                                                (in thousands)

        <S>                                            <C>                       <C>          <C>                  <C>
        Network Services (a)                           $    (1,069)              748           (7,250)             (367)
        Satellite Services (b)                                 915                 -           (3,012)              312
        Zycom (c)                                           (1,449)                -           (4,647)                -
        NETCOM (d)                                         (13,932)                -          (42,326)                -
                                                       -------------     -------------    --------------    -------------
           Net (loss) income from
            discontinued operations                    $   (15,535)              748          (57,235)              (55)
                                                       =============     =============    ==============    =============
</TABLE>

         (a)   Network Services

               On July 15, 1999,  the  Company's  board of  directors  adopted a
               formal  plan  to  dispose  of the  Company's  investments  in its
               wholly-owned subsidiaries, ICG Fiber Optic Technologies, Inc. and
               Fiber Optic  Technologies of the Northwest,  Inc.  (collectively,
               "Network  Services").  On October 22, 1999, the Company completed
               the sale of all of the capital  stock of Network  Services to ACS
               Communications, Inc. for total proceeds of $24.0 million in cash.
               During the three months ended June 30, 1999, the Company  accrued
               approximately  $8.0 million for estimated  losses on the disposal
               of Network  Services,  including  approximately  $0.3 million for
               estimated  operating  losses of Network Services during the phase
               out  period.  Any  adjustments  to the  loss on the  disposal  of
               Network  Services will be included in the Company's  statement of
               operations for the three months ended December 31, 1999.


                                       11
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)      Discontinued Operations (continued)

               The  Company's  consolidated  financial  statements  reflect  the
               operations of Network  Services as  discontinued  for all periods
               presented.  The Company has included in its loss from  operations
               for the three  months and nine months  ended  September  30, 1999
               income from operations of Network Services of approximately  $0.8
               million for the period from July 15, 1999 to September  30, 1999.
               Included  in net  current  assets and net  non-current  assets of
               discontinued  operations  in the Company's  consolidated  balance
               sheets are the following accounts of Network Services:
<TABLE>
<CAPTION>

                                                                         December 31,       September 30,
                                                                             1998               1999
                                                                      ------------------- ------------------
                                                                                 (in thousands)

               <S>                                                  <C>                         <C>
               Cash and cash equivalents                            $           846                 -
               Receivables, net                                              21,237              24,933
               Inventory, prepaid expenses and deposits                       1,888               3,258
               Accounts payable, accrued liabilities and
                  other current liabilities                                  (5,752)            (15,371)
                                                                    ------------------- ------------------

                  Net current assets of Network Services            $        18,219              12,820
                                                                    =================== ==================

               Property and equipment, net                          $         3,686               2,324
               Goodwill, net                                                  9,865               8,980
               Other assets                                                      93                  72
               Capital lease obligations, less current portion                 (413)               (285)
                                                                    ------------------- ------------------

                  Net non-current assets of Network Services        $        13,231              11,091
                                                                    =================== ==================
</TABLE>

         (b)   Satellite Services

               On July 15, 1999,  the  Company's  board of  directors  adopted a
               formal  plan  to  dispose  of the  Company's  investments  in ICG
               Satellite Services, Inc. and Maritime Telecommunications Network,
               Inc. (collectively,  "Satellite Services"). The Company's plan of
               disposal  consists of a sale for cash proceeds of the business of
               Satellite Services.  On August 11, 1999, the Company entered into
               a  definitive  agreement  to sell  all of the  capital  stock  of
               Satellite  Services  to  a  third  party  for  cash  proceeds  of
               approximately  $100.0  million.  The Company  expects to record a
               gain on the  sale  of  Satellite  Services,  which  gain  will be
               included in the Company's  consolidated  financial  statements in
               the  period of  disposal.  The  Company  anticipates  the sale of
               Satellite Services will be completed prior to the end of 1999.

               The  Company's  consolidated  financial  statements  reflect  the
               operations of Satellite  Services as discontinued for all periods
               presented.  Since  the  Company  expects  to record a gain on the
               disposition of Satellite  Services,  the Company has deferred the
               net  operating  losses of Satellite  Services  from July 15, 1999
               through  September 30, 1999.  Included in net current  assets and
               net  non-current   assets  of  discontinued   operations  in  the
               Company's  consolidated balance sheets are the following accounts
               of Satellite Services:




                                       12
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)      Discontinued Operations (continued)

<TABLE>
<CAPTION>
                                                                       December 31,       September 30,
                                                                           1998               1999
                                                                    ------------------- ------------------
                                                                                (in thousands)

               <S>                                                  <C>                          <C>
               Cash and cash equivalents                            $             -                  47
               Receivables, net                                              10,342               6,553
               Inventory, prepaid expenses and deposits                       1,440               2,052
               Deferred losses of Satellite Services                              -                  79
               Accounts payable and accrued liabilities                      (6,664)             (5,047)
                                                                    ------------------- ------------------

                  Net current assets of Satellite Services          $         5,118               3,684
                                                                    =================== ==================

               Property and equipment, net                          $        22,390              26,154
               Goodwill, net                                                 10,125               8,887
               Other assets, net                                              2,785               3,206
                                                                    ------------------- ------------------

                  Net non-current assets of Satellite Services      $        35,300              38,247
                                                                    =================== ==================
</TABLE>

        (c)    Zycom

               The Company  owns a 70% interest in Zycom  Corporation  ("Zycom")
               which,  through  its  wholly  owned  subsidiary,   Zycom  Network
               Services, Inc. ("ZNSI"),  operated an 800/888/900 number services
               bureau and a switch  platform in the United  States and  supplied
               information  providers and commercial accounts with audiotext and
               customer  support  services.  In June 1998, Zycom was notified by
               its largest  customer of the  customer's  intent to transfer  its
               call traffic to another service bureau.  In order to minimize the
               obligation  that this loss in call traffic would  generate  under
               Zycom's volume discount agreements with AT&T Corp. ("AT&T"),  its
               call transport  provider,  ZNSI entered into an agreement on July
               1, 1998 with an unaffiliated entity, ICN Limited ("ICN"), whereby
               ZNSI assigned the traffic of its largest  audiotext  customer and
               its other 900-number customers to ICN, effective October 1, 1998.
               As part of this  agreement,  ICN assumed all minimum call traffic
               volume obligations to AT&T.

               The call traffic assigned to ICN represented approximately 86% of
               Zycom's revenue for the year ended December 31, 1998. The loss of
               this   significant   portion   of   Zycom's   business,   despite
               management's  best  efforts to secure  other  sources of revenue,
               raised  substantial  doubt as to Zycom's  ability to operate in a
               manner which would benefit Zycom's or the Company's shareholders.
               Accordingly,  on August  25,  1998,  Zycom's  board of  directors
               approved a plan to wind down and ultimately  discontinue  Zycom's
               operations.  On October 22, 1998, Zycom completed the transfer of
               all customer traffic to other providers.  On January 4, 1999, the
               Company completed the sale of the remainder of Zycom's long-lived
               operating  assets to an unrelated  third party for total proceeds
               of $0.2  million.  As Zycom's  assets were  recorded at estimated
               fair  market  value at  December  31,  1998,  no gain or loss was
               recorded on the sale during the nine months ended  September  30,
               1999.

               The  Company's  consolidated  financial  statements  reflect  the
               operations of Zycom as  discontinued  for all periods  presented.
               Zycom reported net losses from operations of  approximately  $1.2
               million for the period from August 25, 1998 to December  31, 1998
               and  reported  no income or losses from  operations  for the nine
               months ended  September 30, 1999. The Company has accrued for all
               expected  future net  losses of Zycom.  Included  in net  current
               liabilities and net non-current assets of discontinued operations


                                       13
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)      Discontinued Operations (continued)

               in the Company's  consolidated  balance  sheets are the following
               accounts of Zycom:
<TABLE>
<CAPTION>

                                                                             December 31,        September 30,
                                                                                 1998                1999
                                                                          -----------------    ----------------
                                                                                     (in thousands)

               <S>                                                        <C>                             <C>
               Cash and cash equivalents                                  $            47                    -
               Receivables, net                                                        90                    -
               Prepaid expenses and deposits                                           11                    1
               Accounts payable and accrued liabilities                            (1,092)                (730)
                                                                          -----------------    ----------------

                   Net current liabilities of Zycom                       $          (944)                (729)
                                                                          =================    ================
               Net non-current assets of Zycom - property and
                   equipment, net                                         $           220                    -
                                                                          =================    ================
</TABLE>

          (d)  NETCOM

               On February 17, 1999,  the Company sold certain of the  operating
               assets and liabilities of NETCOM to MindSpring Enterprises, Inc.,
               an ISP located in Atlanta, Georgia ("MindSpring"). Total proceeds
               from the sale were $245.0  million,  consisting of $215.0 million
               in cash and 376,116 shares of common stock of MindSpring,  valued
               at approximately $79.76 per share at the time of the transaction.
               Assets and liabilities sold to MindSpring  include those directly
               related to the domestic  operations of NETCOM's Internet dial-up,
               dedicated  access and Web site hosting  services.  In conjunction
               with  the  sale  to  MindSpring,  the  Company  entered  into  an
               agreement  to lease  to  MindSpring  for a  one-year  period  the
               capacity of certain  network  operating  assets formerly owned by
               NETCOM and retained by the Company.  MindSpring  is utilizing the
               Company's  network  capacity  to provide  Internet  access to the
               dial-up  services  customers  formerly owned by NETCOM.  Over the
               term of the one-year agreement, MindSpring is required to pay the
               Company a minimum  of $27.0  million  for the  Company's  network
               capacity,  although such minimum is subject to increase dependent
               upon network usage.  In addition,  the Company is receiving for a
               one-year  period 50% of the gross  revenue  earned by  MindSpring
               from the dedicated  access  customers  formerly  owned by NETCOM,
               estimated to be  approximately  $10.0 million for the term of the
               agreement.  The Company, through NetAhead, is currently utilizing
               the  retained  network  operating  assets  to  provide  wholesale
               capacity and other  enhanced  network  services to MindSpring and
               intends  to   provide   similar   services   to  other  ISPs  and
               telecommunications providers in the future. The carrying value of
               the  assets  retained  by the  Company  was  approximately  $21.7
               million,   including   approximately  $17.5  million  of  network
               equipment,  on  February  17,  1999.  The Company  also  retained
               approximately  $11.3 million of accrued  liabilities  and capital
               lease obligations.

               On March 16, 1999,  the Company sold all of the capital  stock of
               NETCOM's   international   operations   for  total   proceeds  of
               approximately  $41.1 million.  MetroNET  Communications  Corp., a
               Canadian  entity,  and  Providence  Equity  Partners,  located in
               Providence,  Rhode Island ("Providence"),  together purchased the
               80%  interest  in  NETCOM   Canada  Inc.   owned  by  NETCOM  for
               approximately  $28.9  million in cash.  Additionally,  Providence
               purchased  all of the  capital  stock of NETCOM  Internet  Access
               Services Limited,  NETCOM's operations in the United Kingdom, for
               approximately $12.2 million in cash.

               During the nine months  ended  September  30,  1999,  the Company
               recorded a combined gain on the sales of the operations of NETCOM
               of  approximately   $193.0  million,   net  of  income  taxes  of
               approximately


                                       14
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(3)      Discontinued Operations (continued)

               $6.4 million.  Offsetting the gain on the sales is  approximately
               $16.6  million  of net  losses  from  operations  of NETCOM  from
               November  3,  1998  (the  date on which  the  Company's  board of
               directors adopted the formal plan to dispose of the operations of
               NETCOM) through the dates of the sales.  Additionally,  since the
               Company expects to generate  operating costs in excess of revenue
               under its network  capacity  agreement  with  MindSpring  and the
               terms of the sale agreement were dependent upon and negotiated in
               conjunction with the terms of the network capacity agreement, the
               Company deferred approximately $26.0 million of the proceeds from
               the sale  agreement  to be  applied  on a  periodic  basis to the
               network capacity agreement.  The deferred proceeds are recognized
               in the Company's  statement of  operations as the Company  incurs
               cash  operating  losses  under the  network  capacity  agreement.
               Accordingly,  the  Company  does  not  expect  to  recognize  any
               revenue,  operating costs or selling,  general and administrative
               expenses from services provided to MindSpring for the term of the
               agreement.  Any  incremental  revenue or costs generated by other
               customers,  or by other  services  provided  to  MindSpring,  are
               recognized in the Company's  consolidated statement of operations
               as  incurred.  During  the three  months  and nine  months  ended
               September  30, 1999,  the Company  applied $6.9 million and $17.4
               million,  respectively, of deferred proceeds from the sale of the
               operating  assets  and  liabilities  of  NETCOM  to  the  network
               capacity  agreement with  MindSpring,  which entirely  offset the
               costs of the Company's operations under the agreement.  Since the
               operations  sold were  acquired by the  Company in a  transaction
               accounted for as a pooling of interests, the gain on the sales of
               the operations of NETCOM is classified as an  extraordinary  item
               in the Company's consolidated statement of operations.

(4)      Investments

         On August 11, 1999, the Company purchased  1,250,000 shares of Series C
         Preferred  Stock (the  "ThinkLink  Preferred  Stock") of  International
         ThinkLink  Corporation  ("ThinkLink"),   or  approximately  8%  of  the
         outstanding  shares, for $1.0 million in cash. The ThinkLink  Preferred
         Stock  accrues  dividends  at an annual rate of 8% and is  exchangeable
         into common  stock of ThinkLink at any time.  The  ThinkLink  Preferred
         Stock will automatically convert to common stock upon the completion of
         the initial  public  offering of the common  stock of ThinkLink or upon
         election  to convert by the  holders  of a  majority  of the  ThinkLink
         Preferred Stock. The conversion rate from the ThinkLink Preferred Stock
         to common stock of ThinkLink is initially  one-for-one;  however,  such
         conversion rate is subject to adjustment. The Company has accounted for
         its  investment  in  ThinkLink  under the cost  method  of  accounting.
         Dividends on the ThinkLink  Preferred  Stock will be included in income
         when paid. ThinkLink is an Internet and enhanced services provider.




                                       15
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(5)      Long-term Debt and Redeemable Preferred Stock of Subsidiary

         Long-term debt is summarized as follows:
<TABLE>
<CAPTION>

                                                                                 December 31,         September 30,
                                                                                     1998                  1999
                                                                              -------------------    -----------------
                                                                                          (in thousands)
           <S>                                                                <C>                        <C>
           Senior Facility with adjustable rate of interest due
             on scheduled maturity dates, secured by assets of ICG
             Equipment and NetAhead (a)                                       $              -              79,812
           9 7/8% Senior discount notes of ICG Services, net of discount               266,918             286,898
           10% Senior discount notes of ICG Services, net of discount                  327,699             352,586
           11 5/8% Senior discount notes of Holdings, net of discount                  122,528             133,329
           12 1/2% Senior discount notes of Holdings, net of discount                  414,864             454,287
           13 1/2% Senior discount notes of Holdings, net of discount                  465,886             514,459
           Mortgage loan payable with interest at 8 1/2%, due monthly
             into 2009, secured by building                                              1,084               1,017
           Mortgage loan payable with adjustable rate of interest (14.77%
             at September 30, 1999) due in full on January 31, 2013,
             secured by corporate headquarters                                               -              33,077
           Other                                                                            65                  65
                                                                              -------------------    -----------------
                                                                                     1,599,044           1,855,530
              Less current portion                                                         (46)                (46)
                                                                              ===================    =================
                                                                              $      1,598,998           1,855,484
                                                                              ===================    =================
</TABLE>

             (a)  Senior Facility

                  On August 12, 1999, ICG Equipment and NetAhead  entered into a
                  $200.0 million senior secured financing  facility (the "Senior
                  Facility")  consisting  of a $75.0 million term loan, a $100.0
                  million  term  loan  and a  $25.0  million  revolving  line of
                  credit.  The Senior Facility is guaranteed by ICG Services and
                  is secured by the assets of ICG Equipment and NetAhead.

                  As required under the terms of the loan, the Company  borrowed
                  on August 12, 1999 the  available  $75.0  million on the $75.0
                  million  term  loan.  The loan  bears  interest  at an  annual
                  interest  rate of LIBOR plus 3.5% or the base rate, as defined
                  in the credit  agreement,  plus 2.5%, at the Company's option.
                  At  September  30,  1999,  the $75.0  million  term loan bears
                  annual  interest  at LIBOR  plus  3.5%,  or  8.88%.  Quarterly
                  repayments  commenced September 30, 1999 and require quarterly
                  loan balance  reductions  of 0.25%  through June 30, 2005 with
                  the  remaining  outstanding  balance  to be repaid  during the
                  final three  quarters of the loan term. The $75.0 million term
                  loan matures on March 31, 2006.  At  September  30, 1999,  the
                  Company has $74.8 million  outstanding under the $75.0 million
                  term loan.

                  On August 12, 1999,  the Company  borrowed $5.0 million on the
                  $100.0  million  term loan.  The $100.0  million  term loan is
                  available for borrowing  through August 10, 2000 at an initial
                  annual interest rate of LIBOR plus 3.125% or the base rate, as
                  defined in the credit agreement, plus 2.125%, at the Company's
                  option.  At September 30, 1999,  the $100.0  million term loan
                  bears  annual  interest  at  LIBOR  plus  3.125%,   or  8.51%.
                  Quarterly  repayments  commence September 30, 2002 and require
                  aggregate  loan  balance  reductions  of 25% through  June 30,
                  2003, 35% through June 30, 2004 and 40% through June 30, 2005.
                  The $100.0 million term loan matures on June 30, 2005.



                                       16
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(5)      Long-term Debt and Redeemable Preferred Stock of Subsidiary (continued)

                  The  $25.0  million  revolving  line of  credit  is  available
                  through  the  maturity  date of June  30,  2005 at an  initial
                  annual interest rate of LIBOR plus 3.125% or the base rate, as
                  defined in the credit agreement, plus 2.125%, at the Company's
                  option.

                  The  Company  is  required  to  pay  commitment  fees  ranging
                  from 0.625% to 1.375% for  the  unused  portion  of  available
                  borrowings under the Senior Facility.

                  The terms of the Senior Facility  provide certain  limitations
                  on the use of proceeds,  additional  indebtedness,  dividends,
                  prepayment of the Senior Facility and other  indebtedness  and
                  certain  other  transactions.  Additionally,  the  Company  is
                  subject to certain financial covenants based on its results of
                  operations.  On September 30, 1999,  certain  defined terms in
                  the credit  agreement for the Senior  Facility were amended to
                  ensure that the Company  would remain in  compliance  with the
                  financial covenants of the Senior Facility.

              Redeemable preferred stock of subsidiary is summarized as follows:
<TABLE>
<CAPTION>

                                                                               December 31,             September 30,
                                                                                   1998                      1999
                                                                           ----------------------     -------------------
                                                                                          (in thousands)
              <S>                                                          <C>                                <C>
              14% Exchangeable preferred stock of Holdings,
                mandatorily redeemable in 2008                             $        124,867                   139,077
              14 1/4% Exchangeable preferred stock of Holdings,
                mandatorily redeemable in 2007                                      213,443                   237,988
                                                                           ======================     ===================
                                                                           $        338,310                   377,065
                                                                           ======================     ===================
</TABLE>

(6)      Commitments and Contingencies

         (a)   Network Construction

               In June 1999, the Company signed a minimum  10-year  agreement to
               lease  certain  portions of its fiber optic  network to Qwest for
               $32.0 million,  which was received in full by the Company in June
               1999. The Company has accounted for the agreement as a sales-type
               lease  and is  recognizing  revenue  and  operating  cost  in its
               consolidated  financial  statements  as the network  build-out is
               completed and is available for use by Qwest. For the three months
               ended  September 30, 1999, the Company  included $5.1 million and
               $1.1 million in revenue and operating costs, respectively, in its
               consolidated  financial statements,  including revenue attributed
               to maintenance services which is recognized ratably over the term
               of the  agreement.  The Company  expects  the network  facilities
               included in the  agreement to be primarily  completed  during the
               remainder of 1999 and the first half of 2000. Approximately $26.9
               million of the total  proceeds  received  from  Qwest  remains in
               deferred revenue in the Company's  consolidated  balance sheet at
               September 30, 1999.

               In June 1997, the Company entered into an  indefeasible  right of
               use  ("IRU")  agreement  with  Qwest  Communications  Corporation
               ("Qwest")  for  approximately  1,800 miles of fiber optic network
               and additional broadband capacity in California,  Colorado,  Ohio
               and  the  Southeast.  Network  construction  is  ongoing  and  is
               expected to be completed in 2000. The Company is responsible  for
               payment  on the  construction  as  segments  of the  network  are
               completed and  has  incurred  approximately $24.9  million  as of
               September  30, 1999,  with  remaining  costs  anticipated  to  be
               approximately $10.1 million.



                                       17
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)      Commitments and Contingencies (continued)

               In March 1996, the Company and Southern California Edison Company
               ("SCE") entered into a 25-year  agreement under which the Company
               will  license  1,258  miles of  fiber  optic  cable  in  Southern
               California,  and can install up to 500 additional  miles of fiber
               optic cable. This network,  which will be maintained and operated
               primarily by the Company,  stretches from Los Angeles to southern
               Orange County. Under the terms of this agreement, SCE is entitled
               to receive an annual fee for ten years,  certain fixed  quarterly
               payments,  a quarterly  payment  equal to a percentage of certain
               network  revenue,   and  certain  other  installation  and  fiber
               connection fees. The aggregate fixed payments remaining under the
               agreement totaled  approximately  $126.1 million at September 30,
               1999.  The agreement has been accounted for as a capital lease in
               the accompanying consolidated balance sheets.

          (b)  Network Capacity and Line Purchase Commitments

               In November 1998, the Company entered into two service agreements
               with WorldCom Network Services,  Inc.  ("WorldCom").  Both of the
               agreements have three-year  terms and were effective in September
               1998. Under the Telecom Services Agreement, WorldCom provides, at
               designated rates, switched  telecommunications services and other
               related services to the Company,  including termination services,
               toll-free  origination,  switched  access,  dedicated  access and
               travel  card  services.   Under  the  Carrier  Digital   Services
               Agreement,  WorldCom  provides the Company,  at designated rates,
               with  the  installation   and  operation  of  dedicated   digital
               telecommunications interexchange services, local access and other
               related  services,  which the Company believes  expedites service
               availability to its customers.  Both agreements  require that the
               Company provide  WorldCom with certain  minimum monthly  revenue,
               which if not met,  would  require  payment by the Company for the
               difference  between the minimum commitment and the actual monthly
               revenue.  Additionally,   both  agreements  limit  the  Company's
               ability to utilize vendors other  than   WorldCom   for   certain
               telecommunications  services  specified  in the  agreements.  The
               Company's  policy is to accrue and include in operating costs the
               effect of any  shortfall  in minimum  revenue  commitments  under
               these  agreements in the period in which the shortfall  occurred.
               The  Company  has  successfully   achieved  all  minimum  revenue
               commitments to WorldCom under these agreements  through September
               30, 1999.

               In  March  1999,  the  Company  entered  into an  agreement  with
               NorthPoint,   which   designates   NorthPoint  as  the  Company's
               preferred  digital  subscriber line ("DSL") provider through June
               1, 2001. Under the agreement, the Company is required to purchase
               49,000 digital subscriber lines before June 1, 2001 at designated
               intervals.  In  return,  the  Company  receives  substantial  DSL
               service  price   discounts   and  enhanced   market  access  from
               NorthPoint.   Price  discounts  are  determined   pursuant  to  a
               graduated  schedule  based on the  number of  digital  subscriber
               lines purchased by the Company,  with maximum discounts  achieved
               by purchasing  75,000 digital  subscriber lines over the two-year
               term. The Company's  policy is to accrue and include in operating
               costs the effect of any shortfall in DSL installations  under its
               agreement  with  NorthPoint  in the period in which the shortfall
               occurred. The 49,000 digital subscriber line purchase requirement
               and the price  discounts  are  adjustable  based on  NorthPoint's
               compliance with a commitment schedule of DSL service availability
               for various U.S. locations.  Additionally,  the Company agreed to
               sell its existing DSL equipment to NorthPoint  for total proceeds
               of approximately $2.7 million.

         (c)   Other Commitments

               The  Company  has  entered   into  various   equipment   purchase
               agreements with certain of its vendors.  Under these  agreements,
               if the  Company  does not meet a  minimum  purchase  level in any
               given  year,  the  vendor  may  discontinue   certain  discounts,
               allowances and incentives otherwise provided to the Company. In


                                       18
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)      Commitments and Contingencies (continued)

               addition,  the agreements may be terminated by either the Company
               or the vendor upon prior written notice.

               Additionally, the Company has entered into certain commitments to
               purchase  capital  assets  with an  aggregate  purchase  price of
               approximately $87.8 million at September 30, 1999.

         (d)   Transport and Termination Charges

               The Company has recorded revenue of  approximately  $4.9 million,
               $58.3 million and $95.4 million for fiscal 1997,  fiscal 1998 and
               the nine months  ended  September  30,  1999,  respectively,  for
               reciprocal compensation relating to the transport and termination
               of local  traffic to ISPs from  customers  of ILECs  pursuant  to
               various  interconnection  agreements.  Some of the ILECs have not
               paid most of the bills they have  received  from the  Company and
               have  disputed  substantially  all of these  charges based on the
               belief  that such  calls are not local  traffic as defined by the
               various  agreements  and not subject to payment of transport  and
               termination  charges  under  state and  federal  laws and  public
               policies.  As a result,  the  Company  expects  receivables  from
               transport and termination charges will continue to increase until
               these disputes have been resolved.

               The  resolution  of these  disputes  will be based on  rulings by
               state   public   utility   commissions   and/or  by  the  Federal
               Communications  Commission  ("FCC").  To date,  there  have  been
               favorable final rulings from 31 state public utility  commissions
               that  ISP  traffic  is  subject  to  the  payment  of  reciprocal
               compensation under current  interconnection  agreements.  Many of
               these state commission decisions have been appealed by the ILECs.
               To date,  nine federal  court  decisions,  including  two federal
               circuit court of appeals  decisions and one state court decision,
               have been issued  upholding state commission  decisions  ordering
               the  payment  of  reciprocal  compensation  for ISP  traffic.  On
               February  25,  1999,  the FCC  issued a decision  that  ISP-bound
               traffic  is  largely  jurisdictionally  interstate  traffic.  The
               decision  relies on the  long-standing  federal  policy  that ISP
               traffic,  although  jurisdictionally  interstate,  is  treated as
               though it is local  traffic for pricing  purposes.  The  decision
               also emphasizes that because there currently are no federal rules
               governing   intercarrier   compensation  for  ISP  traffic,   the
               determination as to whether such traffic is subject to reciprocal
               compensation  under the terms of  interconnection  agreements  is
               properly  made by the state  commissions  and that  carriers  are
               bound by their  interconnection  agreements and state  commission
               decisions  regarding the payment of reciprocal  compensation  for
               ISP  traffic.  The  FCC has  initiated  a  rulemaking  proceeding
               regarding   the  adoption  of   prospective   federal  rules  for
               intercarrier  compensation  for ISP  traffic.  In its  notice  of
               rulemaking,  the FCC expresses its preference  that  compensation
               rates for this traffic continue to be set by negotiations between
               carriers,  with disputes  resolved by  arbitrations  conducted by
               state commissions,  pursuant to the Telecommunications Act. Since
               the issuance of the FCC's decision on February 25, 1999, 18 state
               utility  commissions,  including four states in which the Company
               provides  competitive  local exchange carrier ("CLEC")  services,
               have either  ruled or  reaffirmed  that ISP traffic is subject to
               reciprocal compensation under current interconnection agreements,
               and two  state  commissions  have  declined  to apply  reciprocal
               compensation  for  ISP  traffic  under  current   interconnection
               agreements.

               On May 5, 1999, the Public Utilities  Commission of Ohio ("PUCO")
               issued a decision  affirming  its August 1998  decision  that ISP
               traffic is subject to reciprocal compensation under the Company's
               currentinterconnection   agreement  with  Ameritech   Corporation
               ("Ameritech").  The PUCO also  denied  Ameritech's  request for a
               stay of its obligation to remit payment to the Company. After the
               PUCO issued the May 5, 1999 ruling,  the Company  received  $58.0
               million   for   amounts   owed  by   Ameritech   for   reciprocal
               compensation. Ameritech has filed for judicial review of the PUCO
               decision. The Company




                                       19
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)      Commitments and Contingencies (continued)

               cannot  predict  the  final  outcome  on the  merits of the court
               appeal.  Additionally,  through September 30, 1999,  Southwestern
               Bell  Telephone  Company  ("SWBT")  has  remitted  payment to the
               Company of $2.2 million for reciprocal  compensation  owed to the
               Company for traffic  from SWBT  customers in Texas to ISPs served
               by the Company.  On June 21,  1999,  the Alabama  Public  Service
               Commission  ("PSC") issued a decision that BellSouth  Corporation
               ("BellSouth")   is  required   to  pay  the  Company   reciprocal
               compensation  for  ISP  traffic  pursuant  to  the  terms  of the
               Company's current interconnection  agreement.  The PSC's June 21,
               1999  decision  modified its March 1999  decision  that had found
               that reciprocal  compensation is owed for Internet  traffic under
               certain  CLEC   interconnection   agreements   at  issue  in  the
               proceeding.  The June 21, 1999 PSC decision held that the Company
               should be treated the same as the other  CLECs that  participated
               in the  proceeding  and for  which  the  Alabama  PSC  previously
               ordered the payment of  reciprocal  compensation.  BellSouth  has
               filed for judicial  review of both the March 4, 1999 and June 21,
               1999 PSC  decisions.  On August 18,  1999,  the  reviewing  court
               entered an order  dismissing  BellSouth's  appeal of the March 4,
               1999 order and upholding the Alabama PSC's ruling that reciprocal
               compensation is to be paid for ISP traffic under the terms of the
               interconnection  agreements  at issue.  Further  proceedings  are
               pending  these  appeals.  The Company has received  payments from
               BellSouth for  reciprocal  compensation  of $1.0 million  through
               September  30, 1999.  On July 26,  1999,  the  California  Public
               Utilities  Commission  ("CPUC")  issued a  decision  affirming  a
               previous  decision  in October  1998,  that held that  reciprocal
               compensation  must be paid by  Pacific  Bell  and GTE  California
               ("GTE")  for  the  termination  of ISP  traffic  by  CLECs  under
               existing  interconnection  agreements.  Both Pacific Bell and GTE
               have appealed the CPUC's  decisions in federal  district court in
               California.  On June 24, 1999,  the CPUC adopted a decision in an
               arbitration   proceeding   between   Pacific  Bell  and  Pac-West
               Telecomm,  Inc., a CLEC ("Pac-West"),  which held that reciprocal
               compensation  is payable to Pac-West for ISP-bound  calls under a
               new two-year  interconnection  agreement between Pacific Bell and
               Pac-West,  which  agreement  became  effective  on June 29, 1999.
               Pacific Bell has filed an appeal of this arbitration  decision in
               federal district court. On October 27, 1999, the Company received
               $6.7  million  from  Pacific  Bell  in  reciprocal   compensation
               payments,  and Pacific  Bell also  deposited  $8.9  million  into
               escrow,  which Pacific Bell has  calculated is the amount owed to
               the Company for  reciprocal  compensation  on ISP-bound  traffic.
               Also, on October 27, 1999, the Company  received payment from GTE
               of $8.9 million, the full amount billed by the Company to GTE for
               reciprocal  compensation  in  California.   The  Colorado  Public
               Utilities  Commission  approved a decision  on July 28, 1999 that
               orders  US  WEST  Communications,  Inc.  ("US  WEST")  to pay the
               Company reciprocal  compensation for calls from US WEST customers
               to ISPs  served by the  Company.  The  decision  resolves  in the
               Company's favor a complaint that was filed by the Company in June
               1998.

               On  September  16,  1999,  the CPUC  rendered a decision  against
               MFS/Worldcom,  a CLEC ("MFS"),  in an arbitration between Pacific
               Bell and MFS.  The CPUC ruled that MFS should not be permitted to
               charge reciprocal compensation rates for the tandem switching and
               common  transport rate  elements.  Although the CPUC's ruling did
               not involve the Company,  the Company  made a decision  effective
               for the three months ended  September 30, 1999 and  thereafter to
               suspend  the revenue  recognition  for the tandem  switching  and
               common   transport   rate  elements  for  services   provided  in
               California  and in all other states  where the Company  operates.
               Additionally,  the Company  recorded a provision of $45.2 million
               during the three  months  ended  September  30, 1999 for accounts
               receivable  related  to  these  elements  recognized  in  periods
               through  June  30,  1999,  which  the  Company  believes  may  be
               uncollectible.  The  Company  will  continue  to bill for  future
               tandem  switching  and common  transport  rate  elements and will
               pursue  collection  of  its  accounts  receivable,   despite  any
               provision.  MFS has filed a petition for rehearing with the CPUC,
               asking  the  CPUC to  reverse  its  decision  on the  tandem  and
               transport  rate  elements.  The  Company  has  supported  the MFS
               petition for rehearing.



                                       20
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)      Commitments and Contingencies (continued)

               The  Company has also  recorded  revenue of  approximately  $19.1
               million  and $11.8  million  for fiscal  1998 and the nine months
               ended  September  30,  1999,   respectively,   related  to  other
               transport and termination  charges to the ILECs,  pursuant to the
               Company's  interconnection  agreements with these ILECs. Included
               in the  Company's  trade  receivables  at  December  31, 1998 and
               September  30,  1999  are  $72.8   million  and  $73.5   million,
               respectively,   for  all   receivables   related  to   reciprocal
               compensation  and other  transport and termination  charges.  The
               receivables  balance at September 30, 1999 is net of an allowance
               of $54.8  million for disputed  amounts and tandem  switching and
               common transport rate elements.

               As  the  Company's  interconnection   agreements  expire  or  are
               extended,  rates for transport and termination  charges are being
               and  will  continue  to be  renegotiated.  Some of the  Company's
               agreements  are already  being  affected.  Although the Company's
               interconnection agreement with BellSouth has expired, the Company
               has received written notification from BellSouth that the Company
               may  continue   operating   under  the  expired   interconnection
               agreement,  until such agreement is renegotiated or arbitrated by
               the relevant  state  commissions.  On May 27,  1999,  the Company
               filed petitions with the state  commissions of Alabama,  Georgia,
               North Carolina,  Kentucky,  Tennessee and Florida for arbitration
               with  BellSouth.  On November 1, 1999, the Alabama PSC approved a
               final  decision  in the  Company's  arbitration  proceeding  with
               BellSouth   that,   among   other   issues,   orders   reciprocal
               compensation  to be paid  for  ISP-bound  traffic  under  the new
               interconnection agreement to be executed between the parties. The
               Alabama  PSC  established  a  rate  to  be  paid  for  reciprocal
               compensation  for all traffic,  including  ISP traffic.  The rate
               established by the Alabama PSC includes  compensation for the end
               office  switching,  tandem  switching and common  transport  rate
               elements,  at per-minute rates that are based on rates previously
               established   by  the  Alabama  PSC  in  a  proceeding  on  rates
               applicable to unbundled  network  elements  ("UNEs")  provided by
               BellSouth.  On November  4, 1999,  the North  Carolina  Utilities
               Commission  ("NCUC") issued a Recommended  Arbitration Order (the
               "Recommended  Decision"),  that among other  issues  requires the
               payment  of  reciprocal  compensation  for ISP  traffic  in a new
               interconnection agreement and establishes reciprocal compensation
               rates  equal to the UNE rates  adopted by the NCUC for end office
               switching,   tandem   switching,   common  transport  and  common
               transport facilities  termination.  The Recommended Decision also
               finds that the Company is entitled to be paid the tandem rate for
               traffic through the Company's  Charlotte,  North Carolina switch.
               After a comment  period,  the full NCUC will vote on  whether  to
               adopt the Recommended Decision as its final decision. The Alabama
               final decision provides that the Alabama PSC will require and the
               Recommended Decision provides that the NCUC may require a true-up
               of the reciprocal compensation rates based on a future FCC ruling
               in  the  FCC's  pending  rulemaking   proceeding  on  prospective
               compensation  and/or future PUC rulings  adopted  pursuant to any
               FCC decision.  The  arbitration  proceedings  with  BellSouth are
               ongoing  in  the  remainder  of  the  states.  Additionally,  the
               Company's  interconnection  agreement with Ameritech recently was
               extended  from June 15, 1999 to February 15, 2000.  The Company's
               extension  of  its   interconnection   agreement  with  Ameritech
               includes reduced rates for transport and termination  charges. On
               September 27, 1999, the Company filed an  arbitration  proceeding
               petition  with the  PUCO  for  arbitration  with  Ameritech.  The
               Company expects that its ongoing  negotiations  and  arbitrations
               with  BellSouth  also will  affect  the rates for  transport  and
               termination  charges  included  in its  existing  interconnection
               agreement with BellSouth,  as has already occurred in Alabama and
               is  proposed  in  North   Carolina.   The   Company's   remaining
               interconnection  agreements  expire  in 1999  and  2000,  and the
               Company has commenced  renegotiations  with the ILECs.  While the
               Company  intends  to pursue  the  collection  of all  receivables
               related to transport and termination  charges as of September 30,
               1999  and  believes  that  future   revenue  from  transport  and
               termination   charges  recognized  under  the  Company's  current
               interconnection  agreements  will be  realized,  there  can be no
               assurance that future regulatory and



                                       21
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(6)      Commitments and Contingencies (continued)

               judicial  rulings  will  be  favorable  to the  Company,  or that
               different  pricing plans for transport  and  termination  charges
               between   carriers   will   be   adopted   when   the   Company's
               interconnection  agreements are renegotiated or arbitrated, or as
               a  result  of  the   FCC's   rulemaking   proceeding   on  future
               compensation   methods.   In  fact,  the  Company  believes  that
               different  pricing  plans will be  considered  and  adopted,  and
               although the Company  expects that  revenue  from  transport  and
               termination charges likely will decrease as a percentage of total
               revenue from local  services in periods  after the  expiration of
               current   interconnection   agreements,   the   Company's   local
               termination services still will be required by the ILECs and must
               be provided  under the  Telecommunications  Act,  and likely will
               result in  increasing  volume in minutes due to the growth of the
               Internet and related  services  markets.  The Company  expects to
               negotiate reasonable  compensation and collection terms for local
               termination  services,  although  there is no assurance that such
               compensation will remain consistent with current levels.

         (e)   Litigation

              On  April  4,  1997,   certain   shareholders  of  Zycom  filed  a
              shareholder   derivative  suit  and  class  action  complaint  for
              unspecified damages,  purportedly on behalf of all of the minority
              shareholders  of Zycom,  in the District  Court of Harris  County,
              Texas (Case No. 97-17777)  against the Company,  Zycom and certain
              of their subsidiaries. This complaint alleges that the Company and
              certain of its  subsidiaries  breached  certain duties owed to the
              plaintiffs.  The plaintiffs were denied class certification by the
              trial court and the Court of Appeals  affirmed  the trial  court's
              decision. Trial has been tentatively scheduled for early 2000. The
              Company  is  vigorously  defending  the  claims.  While  it is not
              possible  to predict the  outcome of this  litigation,  management
              believes these proceedings will not have a material adverse effect
              on the  Company's  financial  condition,  results of operations or
              cash flows.

              The  Company  is a party to  certain  other  litigation  which has
              arisen in the  ordinary  course of  business.  In the  opinion  of
              management, the ultimate resolution of these matters will not have
              a material  adverse effect on the Company's  financial  condition,
              results of operations or cash flows.

(7)      Business Segments

         The Company conducts  transactions with external  customers through the
         operations of its Telecom Services business unit. Shared administrative
         services  are  provided  to Telecom  Services  by  Corporate  Services.
         Corporate  Services  consists  of  the  operating   activities  of  ICG
         Communications, Inc., ICG Funding, LLC, ICG Canadian Acquisition, Inc.,
         ICG Holdings (Canada) Co., ICG Holdings,  Inc., ICG Services, Inc., ICG
         Corporate Headquarters,  L.L.C. and ICG 161, L.P., which primarily hold
         securities  and other  nonoperating  assets and provide  certain legal,
         accounting  and finance,  personnel  and other  administrative  support
         services to the business units.

         Direct and certain  indirect  costs  incurred by Corporate  Services on
         behalf of Telecom  Services are allocated to Telecom  Services based on
         the  nature  of the  underlying  costs.  Transactions  between  Telecom
         Services and  Corporate  Services for services  performed in the normal
         course of  business  are  recorded  at amounts  which are  intended  to
         approximate fair value.

         Set forth below are revenue,  EBITDA (before  nonrecurring  and noncash
         charges), which represents the measure of operating performance used by
         management   to   evaluate   operating   results,    depreciation   and
         amortization,  interest  expense,  capital  expenditures  of continuing
         operations and total assets for Telecom




                                       22
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(7)      Business Segments (continued)

         Services and Corporate Services.  As described in note 3, the operating
         results of the Company  reflect  the  operations  of Network  Services,
         Satellite  Services,  Zycom and NETCOM as discontinued  for all periods
         presented.
<TABLE>
<CAPTION>

                                                                   Three months ended               Nine months ended
                                                                      September 30,                   September 30,
                                                              ------------------------------  ------------------------------
                                                                  1998            1999            1998            1999
                                                              --------------  --------------  -------------- ---------------
                                                                                     (in thousands)
<S>                                                           <C>                  <C>             <C>             <C>
Revenue:
   Telecom Services                                           $     82,567         115,166         205,269         337,151
   Corporate Services                                                    -               -               -               -
                                                              --------------  --------------  -------------- ---------------
       Total revenue                                          $     82,567         115,166         205,269         337,151
                                                              ==============  ==============  ============== ===============

EBITDA (before nonrecurring and noncash charges) (a):
   Telecom Services                                           $        339         (38,888)        (28,881)         (6,266)
   Corporate Services                                               (5,402)         (6,788)        (15,662)        (16,315)
                                                               --------------  --------------  -------------- ---------------
       Total EBITDA (before nonrecurring and noncash
          charges)                                            $     (5,063)        (45,676)        (44,543)        (22,581)
                                                              ==============  ==============  ============== ===============

Depreciation and amortization (b):
   Telecom Services                                           $     21,540          44,103          50,493         123,242
   Corporate Services                                                1,175             976           3,817           2,895
                                                              ==============  ==============  ============== ===============
       Total depreciation and amortization                    $     22,715          45,079          54,310         126,137
                                                              ==============  ==============  ============== ===============

Interest expense (b):
   Telecom Services                                           $        724               -           1,632               -
   Corporate Services                                               45,234          52,891         120,230         151,637
                                                              ==============  ==============  ==============  ==============
       Total interest expense                                 $     45,958          52,891         121,862         151,637
                                                              ==============  ==============  ==============  ==============

Capital expenditures of continuing operations (c):
   Telecom Services                                           $    108,047         138,387         252,818         374,311
   Corporate Services                                               (4,603)              -             670              13
                                                              ==============  ==============  ==============  ==============
       Total capital expenditures of continuing operations    $    103,444         138,387         253,488         374,324
                                                              ==============  ==============  ==============  ==============

</TABLE>

<TABLE>
<CAPTION>
                                                                               December 31,           September 30,
                                                                                   1998                   1999
                                                                           ---------------------   --------------------
                                                                                         (in thousands)
          <S>                                                              <C>                           <C>
          Total assets:
             Telecom Services (d)                                          $     1,135,937               1,453,778
             Corporate Services (d)                                                371,157                 321,499
             Eliminations                                                          (20,287)                (52,940)
             Net assets of discontinued operations                                 102,840                  65,113
                                                                           =====================   ====================
                Total assets                                               $     1,589,647               1,787,450
                                                                           =====================   ====================
</TABLE>




                                       23
<PAGE>





                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(7)      Business Segments (continued)

         (a)   EBITDA (before nonrecurring and noncash charges) consists of loss
               from  continuing   operations  before  interest,   income  taxes,
               depreciation  and  amortization,   provision  for  impairment  of
               long-lived  assets and other,  net operating  costs and expenses,
               including  deferred  compensation and net loss (gain) on disposal
               of  long-lived  assets,  other  expense,  net and  accretion  and
               preferred dividends on preferred  securities of subsidiaries,  or
               simply,  revenue less  operating  costs and selling,  general and
               administrative expenses.  EBITDA (before nonrecurring and noncash
               charges)  is  presented  as the  Company's  measure of  operating
               performance  because  it  is  a  measure  commonly  used  in  the
               telecommunications  industry.  EBITDA  (before  nonrecurring  and
               noncash  charges) is presented to enhance an understanding of the
               Company's operating results and is not intended to represent cash
               flows from  operating  activities  or results  of  operations  in
               accordance with generally accepted accounting  principles for the
               periods  indicated.   EBITDA  (before  nonrecurring  and  noncash
               charges) is not a measurement under generally accepted accounting
               principles  and  is not  necessarily  comparable  with  similarly
               titled measures of other companies.

          (b)  Although not included in EBITDA (before  nonrecurring and noncash
               charges),  which represents the measure of operating  performance
               used by management to evaluate operating results, the Company has
               supplementally   provided   depreciation   and  amortization  and
               interest  expense for Telecom  Services and  Corporate  Services.
               Interest   expense  excludes  amounts  charged  for  interest  on
               outstanding cash advances and expense allocations between Telecom
               Services and Corporate Services.

          (c)  Capital expenditures include assets acquired under capital leases
               and excludes payments for construction of the Company's corporate
               headquarters and corporate  headquarters  assets acquired through
               the issuance of long-term debt.

          (d)  Total assets of Telecom Services and Corporate  Services excludes
               investments  in  consolidated  subsidiaries  which  eliminate  in
               consolidation.

(8)      Summarized Financial Information of ICG Holdings, Inc.

         The 11 5/8% Senior Discount Notes due 2007 (the "11 5/8% Notes") issued
         by  Holdings  during  1997 are  guaranteed  by ICG.  The 12 1/2% Senior
         Discount  Notes due 2006 (the "12 1/2%  Notes")  and the 13 1/2% Senior
         Discount Notes due 2005 (the "13 1/2% Notes") issued by Holdings during
         1996 and 1995, respectively, are guaranteed by ICG and Holdings-Canada.

         The separate  complete  financial  statements of Holdings have not been
         included  herein  because  such  disclosure  is  not  considered  to be
         material to the holders of the 11 5/8% Notes, the 12 1/2% Notes and the
         13 1/2% Notes.  However,  summarized combined financial information for
         Holdings and its subsidiaries is as follows:



                                       24
<PAGE>


                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(8)      Summarized Financial Information of ICG Holdings, Inc. (continued)

                Summarized Consolidated Balance Sheet Information
<TABLE>
<CAPTION>

                                                                          December 31,            September 30,
                                                                              1998                     1999
                                                                      --------------------    ---------------------
                                                                                    (in thousands)

         <S>                                                       <C>                          <C>
         Current assets                                            $        241,667                255,949
         Net current assets of discontinued operations                       22,392                 15,775
         Property and equipment, net                                        610,671                565,716
         Other non-current assets, net                                      147,283                131,569
         Net non-current assets of discontinued operations                   48,751                 49,338
         Current liabilities                                                 69,204                118,490
         Capital lease obligations, less current portion                     62,946                 55,821
         Long-term debt, less current portion                             1,004,316              1,103,046
         Due to parent                                                      191,889                254,434
         Due to ICG Services                                                137,762                145,736
         Redeemable preferred stock                                         338,311                377,065
         Stockholder's deficit                                             (733,664)            (1,036,245)
</TABLE>

                Summarized Consolidated Statement of Operations Information



<TABLE>
<CAPTION>
                                                       Three months ended             Nine months ended
                                                          September 30,                 September  30,
                                                 ------------------------------ ------------------------------
                                                     1998            1999           1998            1999
                                                 -------------- --------------- --------------  --------------
                                                                        (in thousands)

        <S>                                      <C>                 <C>             <C>             <C>
        Total revenue                            $      81,439        112,190         205,269         336,949
        Total operating costs and expenses             106,509        156,556         299,039         476,170
        Operating loss                                 (25,070)       (44,366)        (93,770)       (139,221)
        Loss from continuing operations                (56,972)      (125,816)       (181,770)       (294,567)
        Net loss                                       (37,642)       (97,619)       (197,880)       (302,581)
</TABLE>



                                       25
<PAGE>



                    ICG COMMUNICATIONS, INC. AND SUBSIDIARIES

              Notes to Consolidated Financial Statements, Continued


(9)      Condensed Financial Information of ICG Holdings (Canada) Co.

         Condensed financial information for Holdings-Canada only is as follows:

                       Condensed Balance Sheet Information
<TABLE>
<CAPTION>

                                                              December 31,           September 30,
                                                                  1998                   1999
                                                           -------------------     ------------------
                                                                          (in thousands)

         <S>                                             <C>                          <C>
         Current assets                                  $            162                    140
         Advances to subsidiaries                                 191,889                254,434
         Non-current assets, net                                    2,414                    603
         Current liabilities                                           73                     73
         Long-term debt, less current portion                          65                     65
         Due to parent                                            182,101                244,623
         Share of losses of subsidiaries                          733,664              1,036,245
         Shareholders' deficit                                   (721,438)            (1,025,829)
</TABLE>

                  Condensed Statement of Operations Information
<TABLE>
<CAPTION>

                                                            Three months ended                 Nine months ended
                                                               September 30,                     September 30,
                                                       ------------------------------  ------------------------------
                                                           1998            1999            1998            1999
                                                       --------------  --------------  --------------  --------------
                                                                              (in thousands)

         <S>                                           <C>                  <C>            <C>             <C>
         Total revenue                                 $          -               -               -               -
         Total operating costs and expenses                      48             604             129           1,810
         Operating loss                                         (48)           (604)           (129)         (1,810)
         Losses of subsidiaries                             (37,642)         97,619        (197,880)       (302,581)
         Net loss attributable to common shareholders       (37,690)        (98,223)       (198,009)       (304,391)
</TABLE>

(10)     Condensed  Financial Information of ICG  Communications,  Inc.  (Parent
         company)

         The primary  assets of ICG are its  investments  in ICG  Services,  ICG
         Funding and Holdings-Canada,  including advances to those subsidiaries.
         Certain corporate  expenses of the parent company are included in ICG's
         statement of operations  and were  approximately  $1.0 million and $1.4
         million  for the  three  months  ended  September  30,  1998 and  1999,
         respectively,  and $2.0  million  and $2.3  million for the nine months
         ended September 30, 1998 and 1999, respectively.  ICG has no operations
         other than those of ICG Services,  ICG Funding and  Holdings-Canada and
         their subsidiaries.



                                       26
<PAGE>



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

         The following  discussion includes certain  forward-looking  statements
which  are  affected  by  important  factors  including,  but  not  limited  to,
dependence on increased  traffic on the  Company's  facilities,  the  successful
implementation   of  the   Company's   strategy  of   offering   an   integrated
telecommunications  package of local, long distance, data and enhanced telephony
and  network   services,   continued   development  of  the  Company's   network
infrastructure and actions of competitors and regulatory  authorities that could
cause actual results to differ materially from the  forward-looking  statements.
The results of operations  for the three months and nine months ended  September
30, 1998 and 1999 represent the consolidated  operating  results of the Company.
See the unaudited condensed consolidated financial statements of the Company for
the nine  months  ended  September  30,  1999  included  elsewhere  herein.  The
Company's  consolidated  financial  statements reflect the operations of Network
Services,  Satellite Services,  Zycom and NETCOM as discontinued for all periods
presented. The Company changed its fiscal year end to December 31 from September
30, effective January 1, 1997. All dollar amounts are in U.S. dollars.

Company Overview

         ICG Communications Inc. ("ICG" or the "Company") is one of the nation's
leading competitive  integrated  communications  providers ("ICPs") based on the
industry's  1998 revenue.  ICPs seek to provide an  alternative to the incumbent
local   exchange   carriers   ("ILECs"),   long  distance   carriers  and  other
communications service providers for a full range of communications  services in
the increasingly deregulated  telecommunications industry. The Company's Telecom
Services  primarily  include its  competitive  local exchange  carrier  ("CLEC")
operations,  in which the Company  operates fiber networks in regional  clusters
covering major  metropolitan  statistical areas in California,  Colorado,  Ohio,
Texas and the  Southeast,  offering  local,  long  distance,  data and  enhanced
telephony  services to business  end users and ISPs.  Additionally,  in February
1999, the Company began providing wholesale network services over its nationwide
data  network.  Until  the  completion  of the  sales  of such  operations,  the
Company's  Satellite  Services  consists  of  satellite  voice,  data and  video
services provided to major cruise lines, the U.S. Navy, the offshore oil and gas
industry and ICPs.  Through October 22, 1999, the Company also provided  Network
Services,  which  consisted  of  information  technology  services  and selected
networking products, focusing on network design,  installation,  maintenance and
support.  As a leading  participant  in the rapidly  growing  competitive  local
telecommunications  industry,  the Company has experienced  significant  growth,
with total revenue increasing from  approximately  $72.7 million for fiscal 1996
to  approximately  $435.2  million for the 12-month  period ended  September 30,
1999.  The  Company's  rapid  growth is the result of the initial  installation,
acquisition  and  subsequent  expansion  of its  fiber  optic  networks  and the
expansion of its communications service offerings.

         The  Federal  Telecommunications  Act of 1996 (the  "Telecommunications
Act")  and  pro-competitive  state  regulatory  initiatives  have  substantially
changed the  telecommunications  regulatory  environment  in the United  States.
Under  the  Telecommunications  Act,  the  Company  is  permitted  to offer  all
interstate and intrastate telephone services,  including  competitive local dial
tone.  In early 1997,  the Company  began  marketing and selling local dial tone
services  in major  metropolitan  areas in  California,  Colorado,  Ohio and the
Southeast  and, in December 1998,  began  offering  services in Texas through an
acquired  business.  During  fiscal 1997,  fiscal 1998 and the nine months ended
September 30, 1999,  the Company sold 178,470,  206,458 and 321,525 local access
lines,  respectively,  net of  cancellations of which 584,827 were in service at
September 30, 1999.  In addition,  the Company's  regional  fiber  networks have
grown from 2,143  regional  fiber route miles at the end of fiscal 1996 to 4,449
regional  fiber route miles at September 30, 1999.  The Company had 29 operating
high capacity digital circuit  switches and 16 operational  data  communications
switches at September  30,  1999,  and plans to install  additional  switches as
demand  warrants.  Additionally,  the Company had 23 asynchronous  transfer mode
("ATM")  switches  installed  at September  30,  1999,  which are expected to be
operational  in the near term.  As a complement to its local  exchange  services
offered to business end users,  the Company markets  bundled  service  offerings
provided over its regional fiber network which include long  distance,  enhanced
telecommunications  services and data services.  Additionally,  the Company owns
and operates a nationwide data network with 227 points of presence ("POPs") over
which the  Company  recently  began  providing  wholesale  Internet  access  and
enhanced network services to MindSpring  Enterprises,  Inc., an Internet service
provider ("ISP") located in Atlanta,  Georgia  ("MindSpring")  and certain other
ISPs and telecommunications  providers, and intends to offer similar services to
more ISPs and telecommunications providers in the future.

                                       27
<PAGE>

         To better  focus its efforts on its core Telecom  Services  operations,
the Company made further  progress  toward the disposal of certain  assets which
management believes do not complement its overall business strategy. On July 15,
1999, the Company's  board of directors  adopted a formal plan to dispose of the
operations  of  the  Company's  wholly-owned   subsidiaries,   ICG  Fiber  Optic
Technologies,   Inc.  and  Fiber  Optic  Technologies  of  the  Northwest,  Inc.
(collectively, "Network Services") and ICG Satellite Services, Inc. and Maritime
Telecommunications Network, Inc. (collectively,  "Satellite Services"),  through
the sale of such businesses for cash proceeds.  On October 22, 1999, the Company
completed  the  sale of all of the  capital  stock  of  Network  Services  to an
unrelated  third party for total proceeds of $24.0 million.  On August 11, 1999,
the Company entered into a definitive agreement to sell all of the capital stock
of Satellite Services to a third party for cash proceeds of approximately $100.0
million.  The  Company  anticipates  the sale of  Satellite  Services,  which is
dependent upon the receipt of certain  regulatory  approvals,  will be completed
prior to the end of 1999. Due primarily to the loss of a major  customer,  which
generated a significant  obligation  under a volume discount  agreement with its
call transport provider,  the board of directors of Zycom Corporation  ("Zycom")
approved  a plan on  August  25,  1998 to wind down and  ultimately  discontinue
Zycom's  operations.  On October 22, 1998,  Zycom  completed the transfer of all
customer  traffic  to other  providers  and on  January  4,  1999,  the  Company
completed the sale of the remainder of Zycom's long-lived operating assets to an
unrelated  third party.  On February  17, 1999,  the Company sold certain of the
operating assets and liabilities of NETCOM On-Line Communication  Services, Inc.
("NETCOM") to MindSpring for total proceeds of $245.0 million,  and on March 16,
1999,  the  Company  sold all of the  capital  stock of  NETCOM's  international
operations in Canada and the United Kingdom to other unrelated third parties for
total  proceeds of  approximately  $41.1  million.  During the nine months ended
September  30, 1999,  the Company  recorded a combined  gain on the sales of the
operations of NETCOM of  approximately  $193.0  million,  net of income taxes of
approximately  $6.4 million.  Offsetting the gain on the sales is  approximately
$16.6 million of net losses from operations of NETCOM from November 3, 1998 (the
date on which the  Company's  board of  directors  adopted  the  formal  plan to
dispose of the operations of NETCOM)  through the dates of the sales.  Since the
operations sold were acquired by the Company in a transaction accounted for as a
pooling  of  interests,  the gain on the  sales of the  operations  of NETCOM is
classified as an extraordinary item in the Company's  consolidated  statement of
operations.  For  fiscal  1996,  1997  and  1998,  Network  Services,  Satellite
Services,  Zycom and NETCOM combined reported revenue of $216.8 million,  $284.7
million and $275.9 million, respectively, and EBITDA losses (before nonrecurring
and noncash  charges) of $(36.0)  million,  $(13.4) million and $(16.7) million,
respectively.  The  Company's  consolidated  financial  statements  reflect  the
operations  of  Network  Services,  Satellite  Services,  Zycom  and  NETCOM  as
discontinued  for all  periods  presented.  The  Company  will from time to time
evaluate  all of its assets as to their core need and,  based on such  analysis,
may sell or  otherwise  dispose of assets  which do not  complement  its overall
business strategy.

         In  conjunction  with the sale to  MindSpring,  the  legal  name of the
NETCOM subsidiary was changed to ICG NetAhead,  Inc. ("NetAhead").  NetAhead has
retained the domestic  Internet  backbone  assets formerly owned by NETCOM which
include 227 POPs serving more than 700 cities nationwide.  NetAhead is utilizing
the retained network operating assets to provide  wholesale  Internet access and
enhanced  network  services to MindSpring and other ISPs and  telecommunications
providers.  On February 17, 1999, the Company entered into an agreement to lease
to MindSpring for a one-year  period the capacity of certain  network  operating
assets  formerly  owned by NETCOM and  retained by the  Company.  MindSpring  is
utilizing  the  Company's  network  capacity to provide  Internet  access to the
dial-up  services  customers  formerly  owned  by  NETCOM.  Over the term of the
one-year agreement, MindSpring is required to pay the Company a minimum of $27.0
million,  although  such minimum is subject to increase  dependent  upon network
usage.  In addition,  the Company is receiving for a one-year  period 50% of the
gross revenue earned by MindSpring from the dedicated access customers  formerly
owned by NETCOM, estimated to be approximately $10.0 million for the term of the
agreement.  Although the Company expects to generate cash operating losses under
this  agreement,  any such losses will be offset by the periodic  recognition of
approximately $26.0 million of the proceeds from the sale of certain of NETCOM's
domestic  operating  assets and  liabilities  to  MindSpring,  which the Company
deferred on  February  17,  1999.  Accordingly,  the Company  does not expect to
recognize any revenue,  operating costs or selling,  general and  administrative
expenses from services provided to MindSpring for the term of the agreement. Any
incremental revenue or costs generated by other customers,  or by other services
provided to MindSpring,  are recognized in the Company's  consolidated statement
of operations as incurred.

         Additionally,  the  Company  intends to provide  network  capacity  and
enhanced  data  services  to ISPs and  other  telecommunications  providers,  as
required.  In December  1998, the Company  announced  plans to offer several new
network  services to its business and ISP customers by utilizing its  nationwide
data network and service capabilities to carry out-of-region traffic and enhance

                                       28
<PAGE>

data services provided. One of the services currently being offered is modemless
remote access service ("RAS"). RAS, also known as managed modem service,  allows
the  Company  to  provide  modem  access  at its own  switch  location,  thereby
eliminating the need for ISPs to deploy modems physically at each of their POPs.
The benefits to ISPs,  including  reduced capital  expenditures and the shift of
network  management  responsibility  from the ISPs to the  Company,  allows  the
Company to act as an  aggregator  of ISP traffic.  In offering  RAS, the Company
provides  radius  routing and proxy  services at the modem bank connected to the
Company's local switch, which services are the authentication services necessary
to validate and  accurately  route incoming call traffic to the ISP. The Company
also provides  transport  services to deliver all Internet  protocol ("IP") data
packets  either  directly  to the  ISP,  if the  ISP  is not  collocated  at the
Company's  local  switch,  or  directly  to the  Internet,  bypassing  the  ISP.
Additionally,  through its network  operations  center, the Company monitors the
usage of each port and is  responsible  for the  administration  of all  network
repair and maintenance. The Company is currently offering Internet RAS services,
or expanded  originating  services,  to MindSpring and will begin providing such
services  offerings  to other ISPs and  telecommunications  provides in the near
term. In June 1999,  the Company  entered into a five-year  agreement with Qwest
Communications  Corporation  ("Qwest"),  whereby  Qwest has  agreed to  purchase
100,000 RAS ports from the Company.  The Company has installed 60,000 of Qwest's
RAS ports as of September 30, 1999,  with the  remaining  40,000 RAS ports to be
installed prior to June 29, 2000. In August 1999, the Company signed a long-term
contract with a large national ISP to provide 100,000 RAS ports to the ISP for a
minimum five-year term. As of September 30, 1999, the Company had 100,000 of the
RAS ports installed,  including  83,000 ports previously  providing local access
services which were upgraded to accommodate  RAS. In September 1999, the Company
signed a three-year  agreement  with NetZero,  Inc., a leading  provider of free
Internet access ("NetZero"), to deliver Internet RAS. Throughout the term of the
agreement, the Company will install up to 100,000 RAS ports for NetZero. Service
delivery is expected to begin in early 2000. Additionally, the Company signed an
agreement  in October 1999 with  Microsoft  Network,  L.L.C.  ("MSN") to provide
Internet  RAS to MSN for a three-year  period.  Under this  agreement,  MSN will
purchase  the use of a minimum of  150,000  RAS ports.  The  Company  expects to
install  approximately  100,000  of these RAS  ports by April  30,  2000 and the
remaining  50,000 by October  2000. In August 1998,  the Company began  offering
enhanced telephony services via IP technology. The Company currently offers this
service in 230 major cities in the United States,  which cities account for more
than 90% of the  commercial  long distance  market.  The Company  carries the IP
traffic over its  nationwide  data network and terminates a large portion of the
traffic via its own POPs.  The Company  also began  offering  integrated  access
service  ("IAS")  which  allows voice and data traffic to be carried on the same
circuit.  Through equipment  installed by the Company at the customers' premises
and in the Company's central offices,  IAS provides expanded bandwidth for small
to medium-sized  business  customers as an alternative to purchasing  additional
circuits.  Data traffic,  including Internet traffic, from IAS service offerings
is carried over the  Company's  nationwide  network.  Additionally,  the Company
intends to provide other enhanced network services as demand warrants.  In April
1999,  the Company  announced  its intention to expand its RAS and other network
service  offerings  to the major U.S.  markets of Boston,  New York,  Washington
D.C., Miami,  Chicago and Seattle. The Company expects such service offerings to
be available by the end of 1999.

         The Company will  continue to expand its network and service  offerings
through  construction,  leased facilities,  strategic  alliances and mergers and
acquisitions.  For example,  on December 31, 1998,  the Company  purchased  from
Central and South West Corporation ("CSW") 100% of the partnership  interests in
ICG ChoiceCom, L.P. ("ChoiceCom"),  a strategic alliance with CSW formed for the
purpose of  developing  and  marketing  telecommunications  services  in certain
cities in Texas.  ChoiceCom  is based in Austin,  Texas and  currently  provides
local exchange and long distance  services in Austin,  Corpus  Christi,  Dallas,
Houston and San Antonio,  Texas.  For fiscal 1997 and 1998,  ChoiceCom  reported
revenue of $0.3  million  and $5.8  million,  respectively,  and  EBITDA  losses
(before nonrecurring and noncash charges) of $(5.5) million and $(13.6) million,
respectively.   Additionally,  on  the  acquisition  date,  ChoiceCom  had  five
operating  high  capacity  digital  circuit  switches and two  operational  data
communications switches and had 19,569 access lines in service, including 15,282
access lines  previously sold by ICG on behalf of ChoiceCom.  In March 1999, the
Company entered into an agreement with NorthPoint  Communications,  Inc., a data
CLEC  based  in  San  Francisco,  California  ("NorthPoint"),  which  designates
NorthPoint as the Company's  preferred digital  subscriber line ("DSL") provider
through June 1, 2001. A significant portion of the Company's DSL traffic will be
routed by  NorthPoint  to the  Company's  ATM  switches and  transported  by the
Company either to the ISP, via a point to point connection or via IP technology,
or directly to the Internet, as required.  The Company is required to purchase a
minimum of 49,000 digital  subscriber  lines from NorthPoint  during the term of
the agreement.  Additionally, the Company entered into two long-term fiber optic
capacity  agreements  with Qwest in June 1999.  Under the first  agreement,  the
Company is leasing more than 7,600 miles of fiber optic  capacity from Qwest for
a maximum term of 20 years, as determined by the Company.  The Company  believes
that the  additional  capacity will increase the speed and national  presence of


                                       29
<PAGE>


the Company's fiber optic network.  Under the second  agreement,  the Company is
leasing  certain  portions  of its fiber  optic  network  to Qwest for a 10-year
minimum term for total proceeds of $32.0 million.

         In conjunction with the increase in its service offerings,  the Company
has and will continue to need to spend significant amounts on sales,  marketing,
customer  service,  engineering and support personnel prior to the generation of
corresponding  revenue.  EBITDA losses,  EBITDA (before nonrecurring and noncash
charges)   losses  and  operating  and  net  losses  have  generally   increased
immediately  preceding and during periods of relatively rapid network  expansion
and development of new services.  Since the quarter ended June 30, 1996,  EBITDA
losses  (before  nonrecurring  and  noncash  charges)  have  improved  for  each
consecutive  quarter,  through and including the quarter ended June 30, 1999 for
which the Company  reported  positive  EBITDA (before  nonrecurring  and noncash
charges) of $15.2 million.  Due to the Company's decision to suspend the revenue
recognition for certain elements of transport and termination  services provided
to ILECs and a  nonrecurring  provision  for certain of the  Company's  accounts
receivable (see "Liquidity - Transport and Termination Charges"),  the Company's
EBITDA for the quarter ended September 30, 1999 was $(45.7) million. However, as
the Company  continues to provide a greater  volume of higher  margin  services,
principally  RAS and local  exchange  services,  carries more traffic on its own
facilities  rather than ILEC  facilities  and obtains the right to use unbundled
ILEC facilities,  while experiencing  decelerating increases in personnel any or
all of which may occur,  the Company  anticipates  that EBITDA  performance will
continue to improve in the near term.

Results of Operations

         The following  table provides a breakdown of revenue,  operating  costs
and  selling,  general and  administrative  expenses  for Telecom  Services  and
Corporate  Services  and certain  other  financial  data for the Company for the
periods  indicated.  The table also shows certain revenue,  expenses,  operating
loss,  EBITDA  and  EBITDA  (before  nonrecurring  and  noncash  charges)  as  a
percentage of the Company's total revenue.
<TABLE>
<CAPTION>

                                            Three months ended September 30,                  Nine months ended September 30,
                                     ------------------------------------------------ ----------------------------------------------
                                              1998                    1999                     1998                    1999
                                     ----------------------- ------------------------ ------------------------ ---------------------
                                          $           %           $            %           $            %           $           %
                                     ------------- --------- ------------- ---------- ------------- ---------- ------------ --------
                                                                               (unaudited)
                                                                              (in thousands)
<S>                                     <C>          <C>        <C>          <C>         <C>          <C>        <C>          <C>
Statement of Operations Data:
Revenue                                   82,567     100         115,166     100          205,269     100         337,151     100
Operating costs                           48,145      58          66,284      58          137,113      67         179,391      53
Selling, general and administrative:
    Telecom services                      33,741                  87,192                   96,695                 163,448
    Corporate services (1)                 5,744                   7,366                   16,004                  16,893
                                     ------------- --------- ------------- ---------- ------------- ---------- ---------------------
       Total selling, general and
         administrative                   39,485      48          94,558      82          112,699      55         180,341      54
Depreciation and amortization             22,715      28          45,079      39           54,310      26         126,137      37
Provision for impairment of
   long-lived assets                           -       -               -       -                -       -          29,300       9
Other, net                                     -       -             626       -              498       -              91       -
                                     ------------- --------- ------------- ---------- ------------- ---------- ---------------------
    Operating loss                       (27,778)    (34)        (91,381)    (79)         (99,351)    (48)       (178,109)    (53)

Other Data:
Net cash used by operating               (14,075)                (22,911)                 (44,928)                (44,907)
   activities
Net cash used by investing              (148,579)               (130,758)                (179,144)                (79,864)
   activities
Net cash (used) provided by
   financing activities                   (7,353)                 73,848                  526,188                  69,002
EBITDA (2)                                (5,063)     (6)        (46,302)    (40)         (45,041)    (22)        (51,972)    (15)
EBITDA (before nonrecurring and
   noncash charges) (2)                   (5,063)     (6)        (45,676)    (40)         (44,543)    (22)        (22,581)     (7)
Capital expenditures of continuing
   operations (3)                        103,444                 138,387                  253,488                 374,324
Capital expenditures of discontinued
   operations (3)                          8,685                   4,970                   26,762                  11,129
                                                                                                                         (Continued)
</TABLE>


                                       30
<PAGE>


<TABLE>
<CAPTION>

                                            September 30,      December 31,       March 31,          June 30,         September 30,
                                                1998              1998              1999               1999                1999
                                           ---------------   ---------------     -------------    --------------     --------------
                                                                                (unaudited)
<S>                                              <C>                <C>               <C>               <C>               <C>
Statistical Data (4):
Full time employees                                3,251              3,415             2,665             2,753             3,054
Telecom services:
   Access lines in service (5)                   290,983            354,482           418,610           494,405           584,827
   Buildings connected:
     On-net                                          684                777               789               874               939
     Hybrid (6)                                    4,217              4,620             5,337             5,915             6,476
                                           ---------------     --------------    -------------     --------------    --------------
       Total buildings connected                   4,901              5,397             6,126             6,789             7,415
   Operational switches:
     Circuit                                          21                 29                29                29                29
     Data                                             15                 16                17                16                16
                                           ---------------     --------------    -------------     --------------    --------------
       Total operational switches                     36                 45                46                45                45
   Regional fiber route miles:
     Operational                                   3,995              4,255             4,351             4,406             4,449
     Under construction                                -                  -                 -                 -               523
   Regional fiber strand miles (8):
     Operational                                 127,756            134,152           155,788           164,416           167,067
     Under construction                                -                  -                 -                 -            19,224
   Collocations with ILECs                            47                 59               111               126               139
Satellite services:
   C-Band installations (9)                           69                 76                78                81                85
</TABLE>

(1)     Corporate   Services  consists  of  the  operating   activities  of  ICG
        Communications,  Inc., ICG Funding, LLC, ICG Canadian Acquisition, Inc.,
        ICG Holdings (Canada) Co., ICG Holdings,  Inc., ICG Services,  Inc., ICG
        Corporate  Headquarters,  L.L.C. and ICG 161, L.P., which primarily hold
        securities  and other  nonoperating  assets and provide  certain  legal,
        accounting  and  finance,  personnel  and other  administrative  support
        services to the business units.

(2)     EBITDA  consists of loss from  continuing  operations  before  interest,
        income taxes,  depreciation  and  amortization,  other expense,  net and
        accretion   and   preferred   dividends  on  preferred   securities   of
        subsidiaries,   or  simply,   operating  loss  plus   depreciation   and
        amortization.   EBITDA  (before   nonrecurring   and  noncash   charges)
        represents  EBITDA before certain  nonrecurring and noncash charges such
        as the provision for  impairment  of  long-lived  assets and other,  net
        operating costs and expenses,  including  deferred  compensation and net
        loss (gain) on disposal of long-lived assets.  EBITDA and EBITDA (before
        nonrecurring and noncash charges) are provided because they are measures
        commonly  used in the  telecommunications  industry.  EBITDA  and EBITDA
        (before  nonrecurring  and noncash  charges) are presented to enhance an
        understanding of the Company's operating results and are not intended to
        represent cash flows from operating  activities or results of operations
        in accordance with generally accepted accounting principles ("GAAP") for
        the  periods  indicated.  EBITDA and  EBITDA  (before  nonrecurring  and
        noncash charges) are not measurements under GAAP and are not necessarily
        comparable with similarly titled measures of other  companies.  Net cash
        flows from operating,  investing and financing  activities as determined
        using GAAP are also presented in Other Data.

(3)     Capital  expenditures  include assets  acquired under capital leases and
        excludes   payments  for   construction   of  the  Company's   corporate
        headquarters  and corporate  headquarters  assets  acquired  through the
        issuance  of  long-term  debt.  Capital   expenditures  of  discontinued
        operations  includes  the  capital  expenditures  of  Network  Services,
        Satellite Services, Zycom and NETCOM combined for all periods presented.

(4)     Amounts presented are for three-month periods ended, or as of the end of
        the period presented.

(5)     Access lines in service at September  30, 1999  includes  508,292  lines
        which are  provisioned  through the  Company's  switch and 76,535  lines
        which are provisioned  through resale and other  agreements with various
        local exchange  carriers.  Resale lines typically generate lower margins
        and are used primarily to obtain  customers.  Although the Company plans
        to migrate lines from resale to higher margin on-switch lines,  there is
        no assurance that it will be successful in executing this strategy.

(6)     Hybrid   buildings  connected   represent  buildings  connected  to  the
        Company's network via another carrier's facilities.


                                       31
<PAGE>


(7)     Regional  fiber  route  miles  refers to the number of miles of regional
        fiber optic cable, including leased fiber. As of September 30, 1999, the
        Company had 4,449 regional fiber route miles, of which 48 regional fiber
        route miles were leased under  operating  leases.  Regional  fiber route
        miles under  construction  represents fiber under  construction which is
        expected to be operational within six months.

(8)     Regional fiber strand miles refers to the number of regional fiber route
        miles,   including  leased  fiber,  along  a   telecommunications   path
        multiplied  by the  number  of fiber  strands  along  that  path.  As of
        September 30, 1999, the Company had 167,067 regional fiber strand miles,
        of which 856 regional  fiber  strand  miles were leased under  operating
        leases.  Regional fiber strand miles under construction represents fiber
        under  construction  which is  expected  to be  operational  within  six
        months.

(9)     The Company's C-Band  installations are provided by Satellite  Services.
        C-Band  installations  service  cruise  ships,  U.S.  Navy  vessels  and
        offshore  oil  platform   installations.   The  Company's   consolidated
        financial  statements  reflect the  operations of Satellite  Services as
        discontinued for all periods presented.



Three  Months Ended September 30, 1999 Compared  to Three Months Ended September
30, 1998

         Revenue.  Revenue,  which  consists  solely  of  revenue  from  Telecom
Services,  increased  $32.6  million,  or 39%,  from $82.6 million for the three
months  ended  September  30, 1998 to $115.2  million for the three months ended
September 30, 1999. Local services revenue increased from $46.2 million,  or 56%
of revenue,  for the three months ended September 30, 1998 to $69.5 million,  or
60% of revenue,  for the three months ended September 30, 1999, primarily due to
an increase in local access lines from 290,983 lines in service at September 30,
1998 to 584,827  lines in service at  September  30, 1999.  In  addition,  local
access revenue includes revenue of approximately $17.8 million and $24.4 million
for the three  months  ended  September  30,  1998 and 1999,  respectively,  for
reciprocal  compensation  relating to the  transport  and  termination  of local
traffic to ISPs from  customers  of ILECs  pursuant  to various  interconnection
agreements.  These agreements are subject to renegotiation over the next several
months.  While  management  believes that these  agreements  will be replaced by
agreements  offering the Company some form of compensation for ISP traffic,  the
renegotiated  agreements may reflect rates for reciprocal compensation which are
lower than the rates under the current contracts. See "Liquidity - Transport and
Termination  Charges." Special access revenue  increased from $20.2 million,  or
24% of revenue,  for the three months ended September 30, 1998 to $29.3 million,
or 25% of revenue,  for the three months ended September 30, 1999, primarily due
to $5.1 million of revenue  recognized  during the three months ended  September
30, 1999 under the Company's fiber optic lease agreement with Qwest. The Company
expects to record a minimum of approximately $14.2 million in additional revenue
under this  agreement  during the  remainder of 1999 and the first half of 2000.
Switched access  (terminating  long distance) revenue increased to $11.8 million
for the three months ended September 30, 1999, compared to $11.6 million for the
three months ended  September  30,  1998.  The Company has raised  prices on its
wholesale  switched  services product in order to improve margins.  Revenue from
long  distance  services  was  $4.6  million  for both the  three  months  ended
September 30, 1998 and 1999. The Company's  long distance  revenue for the three
months  ended  September  30, 1999 was  impacted by planned  attrition of resale
access lines which had high long distance  service  penetration  rates.  Revenue
from data services did not generate a material  portion of total revenue  during
either period.

         Operating costs.  Operating  costs,  which consists solely of operating
costs from Telecom Services, increased $18.2 million, or 38%, from $48.1 million
for the three months  ended  September  30, 1998 to $66.3  million for the three
months ended  September 30, 1999. For both periods,  operating costs were 58% of
revenue.  Operating  costs  consist of  payments to ILECs for the use of network
facilities to support special and switched access  services,  network  operating
costs,  right of way fees and other costs.  The  increase in operating  costs in
absolute  dollars is attributable to the increase in volume of local and special
access  services  and the  increase in network  operating  costs  which  include
engineering and operations  personnel dedicated to the development and launch of
local  exchange  services.  Operating  costs as a percentage  of revenue for the
three months ended September 30, 1999 was impacted by the Company's  decision to
suspend the revenue  recognition  related to certain  elements of transport  and
termination   services  provided  to  ILECs.  See  "Liquidity  -  Transport  and
Termination  Charges."  The  Company  expects  the ratio of  operating  costs to
revenue will improve as the Company  provides a greater  volume of higher margin
services,  principally RAS and local exchange services,  carries more traffic on
its own facilities  rather than the ILEC facilities and obtains the right to use
unbundled ILEC  facilities on  satisfactory  terms,  any or all of which may not
occur.


                                       32
<PAGE>


         Selling,  general and administrative  expenses.  Total selling, general
and  administrative  ("SG&A")  expenses  increased $55.1 million,  or 139%, from
$39.5 million for the three months ended September 30, 1998 to $94.6 million for
the three months ended  September 30, 1999.  Total SG&A expenses  increased as a
percentage of revenue from 48% for the three months ended  September 30, 1998 to
82% for the three  months  ended  September  30,  1999.  Telecom  Services  SG&A
expenses increased from $33.7 million,  or 41% of revenue,  for the three months
ended  September  30, 1998 to $87.2  million,  or 76% of revenue,  for the three
months  ended  September  30, 1999.  The  increase in absolute  dollars and as a
percentage  of  revenue  is  principally  due to a  provision  of $45.2  million
recorded  during  the  three  months  ended  September  30,  1999  for  accounts
receivable  related to certain  elements of transport and  termination  services
provided to ILECs recorded in periods prior to June 30, 1999,  which the Company
believes  may be  uncollectible.  See  "Liquidity  - Transport  and  Termination
Charges."  From time to time,  the Company  will  experience  increases  in SG&A
expenses as the Company  prepares  for  offerings of newly  developed  services.
Corporate Services SG&A expenses  increased $1.6 million,  from $5.8 million for
the three months ended  September  30, 1998 to $7.4 million for the three months
ended  September  30,  1999,  primarily  due to an  increase  in the  number  of
employees necessary to support the Company's expanding operations.

         Depreciation and amortization.  Depreciation and amortization increased
$22.4 million,  or 98%, for the three months ended September 30, 1999,  compared
to the three  months  ended  September  30,  1998,  primarily  due to  increased
investment in depreciable  assets resulting from the continued  expansion of the
Company's networks and services,  in addition to increased  amortization arising
from  goodwill  recorded in  conjunction  with a significant  purchase  business
combination   completed  on  December  31,  1998.   The  Company   expects  that
depreciation and amortization will continue to increase as the Company continues
to invest in the expansion and upgrade of its regional fiber and nationwide data
networks.

         Other, net. Other, net operating costs and expenses of $0.6 million for
the  three  months  ended  September  30,  1999  primarily   includes   deferred
compensation   expense  of  $0.4  million  related  to  the  Company's  deferred
compensation  arrangement  with  its  chief  executive  officer.  Other  amounts
included in other,  net operating  costs and expenses for the three months ended
September  30, 1999  include  net gains and losses on disposal of  miscellaneous
long-lived assets.

         Interest expense.  Interest expense increased $6.9 million,  from $46.0
million for the three months ended  September  30, 1998 to $52.9 million for the
three months ended  September 30, 1999,  which includes $49.5 million of noncash
interest.  The  Company's  interest  expense  increased,  and will  continue  to
increase,  because the principal amount of its indebtedness  increases until the
Company's  fixed  rate  senior  indebtedness  begins  to pay  interest  in cash,
beginning in 2001. Additionally,  interest expense increased due to the increase
in  long-term  debt  associated  with the  Company's  purchase of the  corporate
headquarters,  effective  January  1,  1999  and the  senior  secured  financing
facility (the "Senior Facility") completed in August 1999.

         Interest  income.  Interest  income  decreased $4.4 million,  from $8.2
million for the three  months ended  September  30, 1998 to $3.8 million for the
three  months ended  September  30, 1999.  The decrease is  attributable  to the
decrease in cash,  cash  equivalents  and short-term  investments as the Company
funds  operating  losses and  continues  to invest  available  cash  balances in
telecommunications equipment and other assets.

         Other expense,  net. Other expense, net decreased from $0.4 million for
the three months ended  September  30, 1998 to $0.3 million for the three months
ended  September 30, 1999.  Other  expense,  net recorded  during both the three
months  ended  September  30, 1998 and 1999  primarily  consists  of  litigation
settlement costs.

         Accretion   and   preferred   dividends  on  preferred   securities  of
subsidiaries.  Accretion  and  preferred  dividends on preferred  securities  of
subsidiaries  increased  $1.7  million,  from $14.0 million for the three months
ended  September 30, 1998 to $15.7 million for the three months ended  September
30, 1999. The increase is due primarily to the periodic  payment of dividends on
the 14%  Exchangeable  Preferred  Stock  Mandatorily  Redeemable  2008 (the "14%
Preferred  Stock")  and the 14 1/4%  Exchangeable  Preferred  Stock  Mandatorily
Redeemable  2009 (the "14 1/4%  Preferred  Stock") in  additional  shares of 14%
Preferred Stock and 14 1/4% Preferred Stock.  Accretion and preferred  dividends
on preferred  securities of subsidiaries  recorded during the three months ended
September 30, 1999 consists of the  accretion of issuance  costs ($0.3  million)
and the accrual of the preferred securities dividends ($15.4 million) associated
with the 6 3/4% Exchangeable  Limited  Liability  Company  Preferred  Securities
Mandatorily  Redeemable  2009  (the  "6  3/4%  Preferred  Securities"),  the 14%


                                       33
<PAGE>


Preferred Stock and the 14 1/4% Preferred Stock.

         Loss  from  continuing  operations.  Loss  from  continuing  operations
increased  $76.6 million,  or 96%, from $79.9 million for the three months ended
September  30, 1998 to $156.5  million for the three months ended  September 30,
1999 due to the increases in operating  costs,  SG&A expenses,  depreciation and
amortization and interest  expense,  offset by an increase in revenue,  as noted
above.

         Net (loss) income from discontinued operations.  Net (loss) income from
discontinued  operations  fluctuated  from a net loss of $16.7  million  for the
three  months  ended  September  30, 1998 to net income of $0.7  million for the
three months ended September 30, 1999. Net loss from discontinued operations for
the three months ended September 30, 1998 consists of the combined net losses of
Network  Services,  Satellite  Services,  Zycom  and  NETCOM.  Net  income  from
discontinued  operations for the three months ended  September 30, 1999 consists
of net income of Network Services. Since the Company expects to report a gain on
the disposition of Satellite Services,  the Company deferred the net losses from
operations  of  Satellite  Services  from  July 15,  1999 (the date on which the
Company's  board  of  directors  adopted  the  formal  plan  to  dispose  of the
operations  of Satellite  Services)  through  September  30, 1999,  to be offset
against the gain on the sale of Satellite Services in the period of disposition.
Accordingly,  the  Company  reported  no loss from  discontinued  operations  of
Satellite  Services  for the  three  months  ended  September  30,  1999.  Zycom
terminated  its normal  operations  on October  22, 1998 and,  accordingly,  the
Company  reported no loss from  discontinued  operations  of Zycom for the three
months ended  September 30, 1999.  The Company sold the  operations of NETCOM in
February and March 1999.  Net loss from  discontinued  operations  for the three
months ended  September 30, 1998  includes an estimated  loss on the disposal of
Zycom of $1.2 million.

Nine  Months Ended  September 30, 1999 Compared  to Nine  Months Ended September
30, 1998

         Revenue.  Revenue,  which  consists  solely  of  revenue  from  Telecom
Services,  increased  $131.9  million,  or 64%, from $205.3 million for the nine
months  ended  September  30, 1998 to $337.2  million for the nine months  ended
September 30, 1999. Local services revenue increased from $98.7 million,  or 48%
of revenue,  for the nine months ended September 30, 1998 to $213.6 million,  or
63% of revenue, for the nine months ended September 30, 1999. In addition, local
access revenue includes revenue of approximately $32.9 million and $95.4 million
for the nine  months  ended  September  30,  1998 and  1999,  respectively,  for
reciprocal  compensation  relating to the  transport  and  termination  of local
traffic to ISPs from  customers  of ILECs  pursuant  to various  interconnection
agreements.  Special  access revenue  increased  from $53.9  million,  or 26% of
revenue,  for the nine months ended September 30, 1998 to $75.3 million,  or 22%
of revenue,  for the nine months  ended  September  30,  1999.  Switched  access
(terminating  long  distance)  revenue  decreased to $33.4  million for the nine
months ended  September 30, 1999,  compared to $37.2 million for the nine months
ended  September  30,  1998.  The  Company  has raised  prices on its  wholesale
switched  services  product  in order to  improve  margins.  Revenue  from  long
distance services decreased to $14.9 million for the nine months ended September
30,  1999,  compared to $15.5  million for the nine months ended  September  30,
1998.  The decrease in long distance  revenue is primarily  attributable  to the
Company's  planned attrition of resale access lines which had high long distance
service  penetration  rates.  Revenue  from data  services  did not  generate  a
material portion of total revenue during either period.

         Operating costs.  Operating  costs,  which consists solely of operating
costs from  Telecom  Services,  increased  $42.3  million,  or 31%,  from $137.1
million for the nine months ended  September 30, 1998 to $179.4  million for the
nine months ended September 30, 1999. Additionally, operating costs decreased as
a percentage of revenue from 67% for the nine months ended September 30, 1998 to
53% for the nine months  ended  September  30,  1999.  The increase in operating
costs in absolute dollars is attributable to the increase in volume of local and
special  access  services  and the  increase  in network  operating  costs which
include  engineering and operations  personnel  dedicated to the development and
launch  of  local  exchange  services.  The  decrease  in  operating  costs as a
percentage  of revenue is due  primarily  to a greater  volume of higher  margin
services, principally local exchange services.

         Selling,  general  and  administrative  expenses.  Total SG&A  expenses
increased  $67.6 million,  or 60%, from $112.7 million for the nine months ended
September  30, 1998 to $180.3  million for the nine months ended  September  30,
1999. Total SG&A expenses  decreased as a percentage of revenue from 55% for the
nine months ended  September 30, 1998 to 54% for the nine months ended September
30, 1999. Telecom Services SG&A expenses increased from $96.7 million, or 47% of
revenue,  for the nine months ended September 30, 1998 to $163.4 million, or 48%


                                       34
<PAGE>


of revenue,  for the nine months  ended  September  30,  1999.  The  increase in
absolute  dollars  and  as a  percentage  of  revenue  is  principally  due to a
provision of $45.2 million  recorded during the three months ended September 30,
1999 for  accounts  receivable  related to certain  elements  of  transport  and
termination  services  provided to ILECs  recorded in periods  prior to June 30,
1999, which the Company believes may be uncollectible.  Corporate  Services SG&A
expenses  increased  $0.9 million,  from $16.0 million for the nine months ended
September  30, 1998 to $16.9  million for the nine months  ended  September  30,
1999,  primarily  due to an increase  in the number of  employees  necessary  to
support  the  Company's  expanding  operations,  offset  by a  decrease  in SG&A
expenses due to the Company's  purchase of the corporate  headquarters which was
leased under an operating lease during 1998.

         Depreciation and amortization.  Depreciation and amortization increased
$71.8 million,  or 132%, for the nine months ended September 30, 1999,  compared
to the  nine  months  ended  September  30,  1998,  primarily  due to  increased
investment in depreciable  assets resulting from the continued  expansion of the
Company's networks and services,  in addition to increased  amortization arising
from  goodwill  recorded in  conjunction  with a significant  purchase  business
combination completed on December 31, 1998.

         Provision  for  impairment of  long-lived  assets.  For the nine months
ended September 30, 1999, provision for impairment of long-lived assets of $29.3
million  relates to the  impairment  of  software  and other  capitalized  costs
associated with Telecom  Services'  in-process  billing and provisioning  system
development  projects.  The  provision for  impairment of long-lived  assets was
based on  management's  decision to select new vendors for these systems,  which
vendors  are  expected  to provide the  Company  with  billing and  provisioning
solutions   with  improved   functionality   and  earlier   delivery   dates  at
significantly  lower costs.  The Company's  in-process  billing and provisioning
systems were either not  operational  or were serving  minimal  customers at the
time management  determined the carrying value of the underlying  assets was not
recoverable.

         Other,  net.  Other,  net operating  costs and expenses  decreased $0.4
million from $0.5 million for the nine months ended  September  30, 1998 to $0.1
million for the nine months ended September 30, 1999. Other, net operating costs
and  expenses  for the nine months  ended  September  30,  1998  consists of the
write-off  of  certain   installation  costs  of  disconnected   special  access
customers.  Other,  net  operating  costs and expenses for the nine months ended
September  30, 1999  consists of deferred  compensation  expense of $0.8 million
related  to the  Company's  deferred  compensation  arrangement  with its  chief
executive officer, offset by a net gain on disposal of miscellaneous  long-lived
assets.

         Interest expense. Interest expense increased $29.7 million, from $121.9
million for the nine months ended  September 30, 1998 to $151.6  million for the
nine months ended  September 30, 1999,  which includes $142.2 million of noncash
interest.  The  Company's  interest  expense  increased,  and will  continue  to
increase,  because the principal amount of its indebtedness  increases until the
Company's  fixed  rate  senior  indebtedness  begins  to pay  interest  in cash,
beginning in 2001. Additionally,  interest expense increased due to the increase
in  long-term  debt  associated  with the  Company's  purchase of the  corporate
headquarters,  effective  January 1, 1998 and the Senior  Facility  completed in
August 1999.

         Interest income.  Interest income  decreased $10.5 million,  from $22.2
million for the nine months ended  September  30, 1998 to $11.7  million for the
nine months ended  September  30,  1999.  The  decrease is  attributable  to the
decrease in cash,  cash  equivalents  and short-term  investments as the Company
funds  operating  losses and  continues  to invest  available  cash  balances in
telecommunications equipment and other assets.

         Other expense,  net. Other expense, net increased from $1.0 million for
the nine months  ended  September  30, 1998 to $2.7  million for the nine months
ended  September 30, 1999. For the nine months ended  September 30, 1998,  other
expense, net consists of litigation  settlement costs. For the nine months ended
September 30, 1999, other expense,  net includes  litigation  settlement  costs,
offset by the gain of $0.4 million on the common stock of  MindSpring  which the
Company  received  as  partial  consideration  for  the  sale  of  the  domestic
operations  of NETCOM.  The Company sold its  investment  in MindSpring in April
1999.

         Accretion   and   preferred   dividends  on  preferred   securities  of
subsidiaries.  Accretion  and  preferred  dividends on preferred  securities  of
subsidiaries  increased  $4.9  million,  from $40.8  million for the nine months
ended  September 30, 1998 to $45.7  million for the nine months ended  September
30, 1999. The increase is due primarily to the periodic  payment of dividends on


                                       35
<PAGE>


the 14% Preferred Stock and the 14 1/4% Preferred Stock in additional  shares of
14%  Preferred  Stock  and 14 1/4%  Preferred  Stock.  Accretion  and  preferred
dividends on  preferred  securities  of  subsidiaries  recorded  during the nine
months ended  September  30, 1999  consists of the  accretion of issuance  costs
($0.9  million) and the accrual of the  preferred  securities  dividends  ($44.8
million)  associated  with the 6 3/4%  Preferred  Securities,  the 14% Preferred
Stock and the 14 1/4% Preferred Stock.

         Loss  from  continuing  operations.  Loss  from  continuing  operations
increased $125.7 million,  or 52%, from $240.8 million for the nine months ended
September  30, 1998 to $366.5  million for the nine months ended  September  30,
1999 due to the increases in operating  costs,  SG&A expenses,  depreciation and
amortization,  provision  for  impairment  of  long-lived  assets  and  interest
expense, offset by an increase in revenue, as noted above.

         Net (loss) income from discontinued operations.  Net (loss) income from
discontinued operations decreased $50.4 million or 86%, from a $58.4 million net
loss for the nine months  ended  September  30, 1998 to an $8.0 million net loss
for the nine  months  ended  September  30,  1999.  Net loss  from  discontinued
operations for the nine months ended September 30, 1998 consists of the combined
net losses of Network Services,  Satellite Services,  Zycom and NETCOM. Net loss
from  discontinued  operations  for the nine  months  ended  September  30, 1999
consists  of the  combined  net  losses of  Network  Services  and net income of
Satellite  Services.  Since  the  Company  expects  to  report  a  gain  on  the
disposition  of  Satellite  Services,  the Company  deferred the net losses from
operations  of  Satellite  Services  from  July 15,  1999 (the date on which the
Company's  board  of  directors  adopted  the  formal  plan  to  dispose  of the
operations  of Satellite  Services)  through  September  30, 1999,  to be offset
against the gain on the sale of Satellite Services in the period of disposition.
Accordingly,  the  Company  reported  no loss from  discontinued  operations  of
Satellite  Services  for the  three  months  ended  September  30,  1999.  Zycom
terminated  its normal  operations  on October  22, 1998 and,  accordingly,  the
Company  reported  no loss from  discontinued  operations  of Zycom for the nine
months ended September 30, 1999.  Since the Company expected to report a gain on
the disposition of NETCOM,  the Company  deferred the net losses from operations
of NETCOM  from  November  3, 1998  (the  date on which the  Company's  board of
directors  adopted  the  formal  plan to dispose  of the  operations  of NETCOM)
through the dates of the sales and,  accordingly,  the Company  reported no loss
from  discontinued  operations  of NETCOM prior to or subsequent to the dates of
the  sales  for the  nine  months  ended  September  30,  1999.  Net  loss  from
discontinued operations for the nine months ended September 30, 1998 includes an
estimated  loss  on the  disposal  of  Zycom  of $1.2  million.  Net  loss  from
discontinued operations for the nine months ended September 30, 1999 includes an
estimated loss on the disposal of Network Services of $8.0 million.

         Extraordinary  gain on sales  of  operations  of  NETCOM.  The  Company
reported an  extraordinary  gain on the sales of the operations of NETCOM during
the nine months ended September 30, 1999 of $193.0 million,  net of income taxes
of $6.4 million. Offsetting the gain on the sales is approximately $16.6 million
of net losses of operations of NETCOM from November 3, 1998 through the dates of
the sales and $26.0 million of deferred  sales proceeds from the sale of certain
of the domestic  operating  assets and liabilities of NETCOM to MindSpring.  The
deferred  proceeds  are  recognized  on a  periodic  basis  over the term of the
Company's network capacity agreement with MindSpring.

Liquidity and Capital Resources

         The Company's  growth has been funded  through a combination of equity,
debt and lease  financing.  As of September  30,  1999,  the Company had current
assets of $339.1 million, including $170.7 million of cash, cash equivalents and
short-term investments available for sale, which exceeded current liabilities of
$158.6 million, providing working capital of $180.5 million. The Company invests
excess  funds   primarily  in  short-term,   interest-bearing   investment-grade
securities  until  such  funds  are used to fund  the  capital  investments  and
operating needs of the Company's  business.  The Company's short term investment
objectives are safety, liquidity and yield, in that order.

Net Cash Used By Operating Activities

         The Company's operating activities used $44.9 million and $44.9 million
for the nine months ended  September 30, 1998 and 1999,  respectively.  Net cash
used  by  operating  activities  is  primarily  due to  losses  from  continuing
operations and increases in receivables,  which are partially  offset by changes
in other working capital items and noncash  expenses,  such as depreciation  and
amortization, deferred interest expense and accretion and preferred dividends on
subsidiary preferred securities.


                                       36
<PAGE>



         The Company does not anticipate  that cash provided by operations  will
be sufficient to fund  operating  activities,  the future  expansion of existing
networks or the  construction  and acquisition of new networks in the near term.
As the Company provides a greater volume of higher margin services,  principally
RAS and local  exchange  services,  carries more  traffic on its own  facilities
rather  than  ILEC  facilities  and  obtains  the  right to use  unbundled  ILEC
facilities,  while  experiencing  decelerating  increases in personnel and other
SG&A expenses supporting its operations,  any or all of which may not occur, the
Company  anticipates that net cash used by operating  activities will improve in
the future.

Net Cash Used By Investing Activities

         Investing  activities used $179.1 million and $79.9 million in the nine
months  ended  September  30,  1998 and  1999,  respectively.  Net cash  used by
investing  activities  for the nine months ended  September  30, 1998  primarily
includes  cash  expended for the  acquisition  of property,  equipment and other
assets  of  $253.5  million,  offset  by  proceeds  from the  sale of  corporate
headquarters  of  $30.3  million  and  proceeds  from  the  sale  of  short-term
investments  available for sale of $71.3 million. Net cash provided by investing
activities  for the nine months ended  September 30, 1999 includes cash expended
for the  acquisition of property,  equipment and other assets of $368.1 million,
offset by proceeds from the sales of the  operations of NETCOM of $252.9 million
and proceeds  from the sales of  short-term  investments  available for sale and
marketable trading securities of $60.5 million. The Company will continue to use
cash in 1999 and subsequent  periods for the  construction of new networks,  the
expansion of existing networks and, potentially,  for acquisitions.  The Company
acquired  assets under  capital  leases of $6.2  million  during the nine months
ended September 30, 1999.

Net Cash Provided By Financing Activities

         Financing  activities  provided $526.2 million and $69.0 million in the
nine months ended September 30, 1998 and 1999,  respectively.  Net cash provided
by financing  activities  for these  periods  include the net proceeds  from the
private  placement of the 10% Senior  Discount  Notes due 2008 (the "10% Notes")
and 9 7/8% Senior  Discount  Notes due 2008 (the "9 7/8% Notes") in February and
April 1998,  respectively,  and the Senior  Facility  completed  in August 1999.
Historically, the funds to finance the Company's business acquisitions,  capital
expenditures,  working  capital  requirements  and  operating  losses  have been
obtained through public and private  offerings of ICG and ICG Holdings  (Canada)
Co.   ("Holdings-Canada")   common  shares,   convertible   subordinated  notes,
convertible  preferred shares of  Holdings-Canada,  capital lease financings and
various working capital sources, including credit facilities, in addition to the
private  placement of the securities  previously  mentioned and other securities
offerings.  Net cash provided by financing  activities for the nine months ended
September  30, 1998 and 1999 also include  proceeds  from the issuance of common
stock in conjunction with the exercise of options and warrants and the Company's
employee stock purchase plan, offset by principal payments on long-term debt and
capital  leases and payments of preferred  dividends on preferred  securities of
subsidiaries.

         On August 12, 1999,  ICG Equipment  and NetAhead  entered into a $200.0
million  Senior  Facility  consisting  of a $75.0  million  term loan,  a $100.0
million  term loan and a $25.0  million  revolving  line of credit.  As required
under  the terms of the loan,  the  Company  borrowed  on  August  12,  1999 the
available  $75.0 million on the $75.0 million term loan. The loan bears interest
at an annual  interest  rate of LIBOR plus 3.5% or the base rate,  as defined in
the credit agreement, plus 2.5%, at the Company's option. At September 30, 1999,
the $75.0 million term loan bears annual  interest at LIBOR plus 3.5%, or 8.88%.
Quarterly  repayments  commenced  September 30, 1999 and require  quarterly loan
balance reductions of 0.25% through June 30, 2005 with the remaining outstanding
balance to be repaid during the final three quarters of the loan term. The $75.0
million term loan matures on March 31, 2006. At September 30, 1999,  the Company
had $74.8 million  outstanding  under the $75.0 million term loan. On August 12,
1999,  the Company  borrowed $5.0 million on the $100.0  million term loan.  The
$100.0  million term loan is available for borrowing  through August 10, 2000 at
an  initial  annual  interest  rate of LIBOR plus  3.125% or the base  rate,  as
defined in the credit  agreement,  plus  2.125%,  at the  Company's  option.  At
September 30, 1999, the $100.0 million term loan bears annual  interest at LIBOR
plus 3.125%,  or 8.51%.  Quarterly  repayments  commence  September 30, 2002 and
require  aggregate  loan balance  reductions  of 25% through June 30, 2003,  35%
through  June 30, 2004 and 40% through June 30,  2005.  The $100.0  million term
loan matures on June 30, 2005.  The $25.0  million  revolving  line of credit is
available  through  the  maturity  date of June 30,  2005 at an  initial  annual
interest  rate of LIBOR plus  3.125% or the base rate,  as defined in the credit
agreement,  plus 2.125%, at the Company's option. The Company is required to pay


                                       37
<PAGE>


commitment  fees  ranging  from  0.625%  to 1.375%  for the  unused  portion  of
available borrowings under the Senior Facility.

         As of September 30, 1999, the Company had an aggregate of approximately
$70.0 million of capital lease  obligations  and an aggregate  accreted value of
approximately  $1.8 billion was  outstanding  under the 13 1/2% Senior  Discount
Notes due 2005 (the "13 1/2 % Notes"),  the 12 1/2%  Senior  Discount  Notes due
2006 (the "12 1/2 % Notes"), the 11 5/8% Senior Discount Notes due 2007 (the "11
5/8 % Notes"),  the 10% Notes, the 9 7/8% Notes and the Senior Facility.  The 13
1/2% Notes require  payments of interest to be made in cash commencing March 15,
2001 and mature on September  15, 2005.  The 12 1/2% Notes  require  payments of
interest  to be made in cash  commencing  November  1, 2001 and mature on May 1,
2006.  The 11  5/8%  Notes  require  payments  of  interest  to be  made in cash
commencing  September  15,  2002 and  mature  on March 15,  2007.  The 10% Notes
require  payments of interest in cash  commencing  August 15, 2003 and mature on
February  15,  2008.  The 9 7/8% Notes  require  payments  of  interest  in cash
commencing  November  1, 2003 and  mature on May 1, 2008.  The 6 3/4%  Preferred
Securities require payments of dividends to be made in cash through November 15,
2000. In addition,  the 14% Preferred  Stock and 14 1/4% Preferred Stock require
payments of dividends to be made in cash  commencing June 15, 2002 and August 1,
2001,  respectively.  As of September 30, 1999, the Company had $34.2 million of
other indebtedness  outstanding.  With respect to fixed rate senior indebtedness
outstanding  on  September  30,  1999,  the  Company has cash  interest  payment
obligations of  approximately  $113.3  million in 2001,  $158.0 million in 2002,
$212.6  million in 2003 and $257.2  million in 2004.  With  respect to preferred
securities currently  outstanding,  the Company has cash dividend obligations of
approximately $2.2 million remaining in 1999 and $8.9 million in 2000, for which
the Company has restricted cash balances  available for such dividend  payments,
$10.7 million in 2001 and $35.4 million in 2002 and each year thereafter through
2007.  Accordingly,  the Company may have to refinance a  substantial  amount of
indebtedness  and obtain  substantial  additional funds prior to March 2001. The
Company's  ability to do so will depend on, among other  things,  its  financial
condition  at  the  time,   restrictions  in  the   instruments   governing  its
indebtedness, and other factors, including market conditions, beyond the control
of the  Company.  There can be no  assurance  that the  Company  will be able to
refinance  such  indebtedness,  including  such capital  leases,  or obtain such
additional  funds,  and if the Company is unable to effect such  refinancings or
obtain  additional  funds, the Company's  ability to make principal and interest
payments  on its  indebtedness  or make  payments of cash  dividends  on, or the
mandatory redemption of, its preferred securities, would be adversely affected.

Capital Expenditures

         The Company's capital expenditures of continuing  operations (including
assets acquired under capital leases and excluding  payments for construction of
the Company's corporate headquarters) were $253.5 million and $374.3 million for
the nine months ended  September  30, 1998 and 1999,  respectively.  The Company
anticipates  that  the  expansion  of  existing  networks,  construction  of new
networks  and further  development  of the  Company's  products  and services as
currently  planned will require  capital  expenditures of  approximately  $145.0
million during the remainder of 1999. In the event that the Company's efforts to
acquire new customers and deploy new services are more  successful than planned,
the Company may be required to expend capital resources earlier than expected to
accommodate  customer  demands.  To facilitate the expansion of its services and
networks,  the Company has  entered  into  equipment  purchase  agreements  with
various  vendors under which the Company has committed to purchase a substantial
amount of  equipment  and other  assets,  including  a full  range of  switching
systems,  fiber optic cable, network electronics,  software and services. If the
Company fails to meet the minimum  purchase  level in any given year, the vendor
may discontinue certain discounts,  allowances and incentives otherwise provided
to the Company.  Actual capital  expenditures  will depend on numerous  factors,
including  certain factors beyond the Company's  control.  These factors include
the  nature  of  future  expansion  and  acquisition   opportunities,   economic
conditions, competition, regulatory developments and the availability of equity,
debt and lease financing.

Other Cash Commitments and Capital Requirements

         The  Company's  operations  have  required and will continue to require
significant capital  expenditures for development,  construction,  expansion and
acquisition of  telecommunications  assets.  Significant  amounts of capital are
required to be invested  before  revenue is generated,  which results in initial
negative cash flows. In addition to the Company's planned capital  expenditures,
it has other cash  commitments  as described in the  footnotes to the  Company's
unaudited  consolidated financial statements for the nine months ended September
30, 1999 included elsewhere herein.



                                       38
<PAGE>


         In view of the  continuing  development  of the Company's  products and
services,  the expansion of existing networks and the construction,  leasing and
licensing of new networks,  the Company will require  additional amounts of cash
in the future from outside sources.  Management believes that the Company's cash
on hand and amounts  expected to be available  through  asset sales,  the Senior
Facility,  cash flows from  operations,  including the collection of receivables
from transport and termination  charges and capital leases and vendor  financing
arrangements will provide  sufficient funds necessary for the Company to operate
its  business as  currently  planned and to fund its  operations  through  2000.
Changes in the Company's  business plan may require  additional  sources of cash
which may be obtained  through  public and private  equity and debt  financings,
credit facilities and other financing arrangements. In the past, the Company has
been able to secure  sufficient  amounts of financing to meet its capital needs.
There can be no assurance  that  additional  financing  will be available to the
Company or, if  available,  that it can be obtained on terms  acceptable  to the
Company.

         The failure to obtain  sufficient  amounts of financing could result in
the  delay  or  abandonment  of some  or all of the  Company's  development  and
expansion  plans,  which could have a material  adverse  effect on the Company's
business.  In  addition,  the  inability  to fund  operating  deficits  with the
proceeds  of  financings  and sales of  non-strategic  assets  until the Company
establishes a sufficient  revenue-generating customer base could have a material
adverse effect on the Company's liquidity.

Transport and Termination Charges

         The Company has recorded revenue of approximately  $4.9 million,  $58.3
million and $95.4 million for fiscal 1997, fiscal 1998 and the nine months ended
September 30, 1999,  respectively,  for reciprocal  compensation relating to the
transport  and  termination  of local  traffic to ISPs from  customers  of ILECs
pursuant to various interconnection  agreements. Some of the ILECs have not paid
most of the  bills  they  have  received  from the  Company  and  have  disputed
substantially  all of these  charges based on the belief that such calls are not
local traffic as defined by the various agreements and not subject to payment of
transport  and  termination  charges  under  state and  federal  laws and public
policies.  As a result,  the Company  expects  receivables  from  transport  and
termination  charges will  continue to increase  until these  disputes have been
resolved.

         The  resolution  of these  disputes  will be based on  rulings by state
public  utility  commissions  and/or by the  Federal  Communications  Commission
("FCC").  To date,  there have been favorable final rulings from 31 state public
utility  commissions  that ISP traffic is subject to the  payment of  reciprocal
compensation  under  current  interconnection  agreements.  Many of these  state
commission  decisions  have been  appealed by the ILECs.  To date,  nine federal
court  decisions,  including two federal circuit court of appeals  decisions and
one state court decision,  have been issued upholding state commission decisions
ordering the payment of reciprocal compensation for ISP traffic. On February 25,
1999,   the  FCC  issued  a   decision   that   ISP-bound   traffic  is  largely
jurisdictionally  interstate  traffic.  The decision relies on the long-standing
federal  policy  that ISP  traffic,  although  jurisdictionally  interstate,  is
treated as though it is local  traffic for pricing  purposes.  The decision also
emphasizes   that  because  there  currently  are  no  federal  rules  governing
intercarrier  compensation for ISP traffic, the determination as to whether such
traffic is subject to reciprocal compensation under the terms of interconnection
agreements is properly made by the state commissions and that carriers are bound
by their interconnection agreements and state commission decisions regarding the
payment of  reciprocal  compensation  for ISP traffic.  The FCC has  initiated a
rulemaking  proceeding  regarding the adoption of prospective  federal rules for
intercarrier compensation for ISP traffic. In its notice of rulemaking,  the FCC
expresses its preference that compensation rates for this traffic continue to be
set by negotiations  between  carriers,  with disputes  resolved by arbitrations
conducted by state commissions,  pursuant to the  Telecommunications  Act. Since
the  issuance of the FCC's  decision  on February  25,  1999,  18 state  utility
commissions,  including four states in which the Company provides CLEC services,
have  either  ruled or  reaffirmed  that ISP  traffic is  subject to  reciprocal
compensation under current interconnection agreements, and two state commissions
have  declined to apply  reciprocal  compensation  for ISP traffic under current
interconnection agreements.

         On May 5, 1999, the Public Utilities Commission of Ohio ("PUCO") issued
a decision  affirming  its August 1998  decision  that ISP traffic is subject to
reciprocal  compensation under the Company's current  interconnection  agreement
with  Ameritech  Corporation  ("Ameritech").  The PUCO also  denied  Ameritech's
request for a stay of its obligation to remit payment to the Company.  After the
PUCO issued the May 5, 1999  ruling,  the  Company  received  $58.0  million for
amounts owed by Ameritech for reciprocal  compensation.  Ameritech has filed for


                                       39
<PAGE>


judicial  review of the PUCO  decision.  The  Company  cannot  predict the final
outcome on the merits of the court appeal.  Additionally,  through September 30,
1999,  Southwestern  Bell Telephone Company ("SWBT") has remitted payment to the
Company of $2.2  million  for  reciprocal  compensation  owed to the Company for
traffic from SWBT customers in Texas to ISPs served by the Company.  On June 21,
1999,  the Alabama  Public  Service  Commission  ("PSC")  issued a decision that
BellSouth  Corporation  ("BellSouth") is required to pay the Company  reciprocal
compensation  for ISP  traffic  pursuant to the terms of the  Company's  current
interconnection  agreement.  The PSC's June 21, 1999 decision modified its March
1999 decision that had found that  reciprocal  compensation is owed for Internet
traffic  under  certain  CLEC   interconnection   agreements  at  issue  in  the
proceeding.  The June 21,  1999 PSC  decision  held that the  Company  should be
treated the same as the other CLECs that  participated in the proceeding and for
which the Alabama PSC previously ordered the payment of reciprocal compensation.
BellSouth  has filed for judicial  review of both the March 4, 1999 and June 21,
1999 PSC  decisions.  On August 18, 1999,  the reviewing  court entered an order
dismissing  BellSouth's  appeal  of the March 4, 1999  order and  upholding  the
Alabama PSC's ruling that reciprocal  compensation is to be paid for ISP traffic
under the terms of the interconnection  agreements at issue. Further proceedings
are pending these appeals.  The Company has received payments from BellSouth for
reciprocal  compensation of $1.0 million through September 30, 1999. On July 26,
1999, the California  Public  Utilities  Commission  ("CPUC")  issued a decision
affirming a previous  decision,  issued October 1998,  that held that reciprocal
compensation  must be paid by Pacific  Bell and GTE  California  ("GTE") for the
termination of ISP traffic by CLECs under existing  interconnection  agreements.
Both Pacific Bell and GTE have appealed the CPUC's decisions in federal district
court in  California.  On June 24,  1999,  the CPUC  adopted  a  decision  in an
arbitration proceeding between Pacific Bell and Pac-West Telecomm,  Inc., a CLEC
("Pac-West"), which held that reciprocal compensation is payable to Pac-West for
ISP-bound calls under a new two-year  interconnection  agreement between Pacific
Bell and Pac-West,  which agreement became  effective on June 29, 1999.  Pacific
Bell has filed an appeal of this arbitration decision in federal district court.
On October 27,  1999,  the Company  received  $6.7  million from Pacific Bell in
reciprocal  compensation  payments, and Pacific Bell also deposited $8.9 million
into escrow, which Pacific Bell has calculated is the amount owed to the Company
for reciprocal compensation on ISP-bound traffic. Also, on October 27, 1999, the
Company received payment from GTE of $8.9 million, the full amount billed by the
Company to GTE for reciprocal  compensation  in California.  The Colorado Public
Utilities  Commission  approved a decision  on July 28, 1999 that orders US WEST
Communications,  Inc. ("US WEST") to pay the Company reciprocal compensation for
calls  from US WEST  customers  to ISPs  served  by the  Company.  The  decision
resolves in the  Company's  favor a  complaint  that was filed by the Company in
June 1998.

         On  September  16,  1999,   the  CPUC   rendered  a  decision   against
MFS/Worldcom,  a CLEC ("MFS"),  in an arbitration  between Pacific Bell and MFS.
The  CPUC  ruled  that  MFS  should  not  be  permitted  to  charge   reciprocal
compensation  rates for the tandem switching and common transport rate elements.
Although  the CPUC's  ruling did not involve  the  Company,  the Company  made a
decision  effective for the three months ended September 30, 1999 and thereafter
to suspend the revenue recognition for the tandem switching and common transport
rate elements for services  provided in California and in all other states where
the Company  operates.  Additionally,  the Company recorded a provision of $45.2
million during the three months ended September 30, 1999 for accounts receivable
related to these elements recognized in periods through June 30, 1999, which the
Company  believes may be  uncollectible.  The Company will  continue to bill for
future  tandem  switching  and common  transport  rate  elements and will pursue
collection of its accounts  receivable,  despite any provision.  MFS has filed a
petition for rehearing with the CPUC, asking the CPUC to reverse its decision on
the tandem and  transport  rate  elements.  The  Company has  supported  the MFS
petition for rehearing.

         The Company has also recorded  revenue of  approximately  $19.1 million
and $11.8 million for fiscal 1998 and the nine months ended  September 30, 1999,
respectively,  related to other transport and termination  charges to the ILECs,
pursuant to the Company's interconnection  agreements with these ILECs. Included
in the Company's  trade  receivables at December 31, 1998 and September 30, 1999
are $72.8 million and $73.5 million,  respectively,  for all receivables related
to reciprocal  compensation  and other  transport and termination  charges.  The
receivables  balance  at  September  30,  1999 is net of an  allowance  of $54.8
million for disputed  amounts and tandem  switching  and common  transport  rate
elements.

         As the  Company's  interconnection  agreements  expire or are extended,
rates for  transport and  termination  charges are being and will continue to be
renegotiated.  Some of the  Company's  agreements  are already  being  affected.
Although the Company's interconnection agreement with BellSouth has expired, the
Company has received  written  notification  from BellSouth that the Company may
continue  operating  under the  expired  interconnection  agreement,  until such


                                       40
<PAGE>


agreement is  renegotiated or arbitrated by the relevant state  commissions.  On
May 27, 1999, the Company filed petitions with the state commissions of Alabama,
Georgia,  North Carolina,  Kentucky,  Tennessee and Florida for arbitration with
BellSouth. On November 1, 1999, the Alabama PSC approved a final decision in the
Company's arbitration proceeding with BellSouth that, among other issues, orders
reciprocal  compensation  to  be  paid  for  ISP-bound  traffic  under  the  new
interconnection  agreement to be executed  between the parties.  The Alabama PSC
established  a rate to be paid  for  reciprocal  compensation  for all  traffic,
including  ISP  traffic.  The  rate  established  by the  Alabama  PSC  includes
compensation for the end office switching, tandem switching and common transport
rate  elements,   at  per-minute  rates  that  are  based  on  rates  previously
established by the Alabama PSC in a proceeding on rates  applicable to unbundled
network elements ("UNEs") provided by BellSouth.  On November 4, 1999, the North
Carolina Utilities  Commission  ("NCUC") issued a Recommended  Arbitration Order
(the  "Recommended  Decision"),  that among other issues requires the payment of
reciprocal  compensation for ISP traffic in a new interconnection  agreement and
establishes reciprocal  compensation rates equal to the UNE rates adopted by the
NCUC for end office  switching,  tandem  switching,  common transport and common
transport facilities  termination.  The Recommended Decision also finds that the
Company is entitled to be paid the tandem rate for traffic through the Company's
Charlotte,  North Carolina  switch.  After a comment period,  the full NCUC will
vote on whether to adopt the  Recommended  Decision as its final  decision.  The
Alabama  final  decision  provides  that the  Alabama  PSC will  require and the
Recommended  Decision  provides  that the  NCUC may  require  a  true-up  of the
reciprocal  compensation rates based on a future FCC ruling in the FCC's pending
rulemaking  proceeding  on  prospective  compensation  and/or future PUC rulings
adopted pursuant to any FCC decision. The arbitration proceedings with BellSouth
are  ongoing  in  the  remainder  of the  states.  Additionally,  the  Company's
interconnection  agreement  with  Ameritech  recently was extended from June 15,
1999 to February  15,  2000.  The  Company's  extension  of its  interconnection
agreement with Ameritech  includes  reduced rates for transport and  termination
charges.  On September  27, 1999,  the Company filed an  arbitration  proceeding
petition with the PUCO for arbitration with Ameritech.  The Company expects that
its ongoing  negotiations and  arbitrations  with BellSouth also will affect the
rates  for  transport  and   termination   charges   included  in  its  existing
interconnection agreement with BellSouth, as has already occurred in Alabama and
is  proposed  in  North  Carolina.   The  Company's  remaining   interconnection
agreements expire in 1999 and 2000, and the Company has commenced renegotiations
with the  ILECs.  While the  Company  intends to pursue  the  collection  of all
receivables  related to transport  and  termination  charges as of September 30,
1999 and believes that future  revenue from  transport and  termination  charges
recognized  under  the  Company's  current  interconnection  agreements  will be
realized,  there can be no assurance that future regulatory and judicial rulings
will be favorable to the Company,  or that different pricing plans for transport
and termination  charges between carriers will not be adopted when the Company's
interconnection agreements are renegotiated or arbitrated, or as a result of the
FCC's rulemaking proceeding on future compensation methods. In fact, the Company
believes  that  different  pricing  plans will be  considered  and adopted,  and
although the Company expects that revenue from transport and termination charges
likely will  decrease as a percentage  of total  revenue from local  services in
periods  after  the  expiration  of  current  interconnection   agreements,  the
Company's  local  termination  services  still will be required by the ILECs and
must be provided  under the  Telecommunications  Act,  and likely will result in
increasing  volume in minutes  due to the  growth of the  Internet  and  related
services markets. The Company expects to negotiate  reasonable  compensation and
collection terms for local termination services,  although there is no assurance
that such compensation will remain consistent with current levels. Additionally,
the Company  expects to supplement  its current  operations  with  revenue,  and
ultimately  EBITDA,  from new services  offerings  such as RAS and DSL services,
however,  the Company may or may not be successful in its efforts to deploy such
services profitably.

New Accounting Pronouncement

         In June 1999,  the Financial  Accounting  Standards  Board (the "FASB")
issued FASB  Interpretation No. 43, Real Estate Sales, an interpretation of FASB
Statement No. 66 ("FIN 43").  FIN 43  establishes  standards for  recognition of
profit on all real estate sales transactions without regard to the nature of the
seller's  business.  Specifically,  FIN 43 expands the concept of real estate to
include  "integral  equipment,"  which  is  defined  in FIN 43 as "any  physical
structure  or  equipment  attached to the real estate that cannot be removed and
used separately without incurring  significant  costs." The provisions of FIN 43
are  effective  for all  sales of real  estate  with  property  improvements  or
integral equipment entered into after June 30, 1999.

          The Company  believes FIN 43 effectively  precludes the application of
sales-type  lease  accounting  to the  portions of  telecommunications  capacity
agreements which represent leases of telecommunications  capacity involving real


                                       41
<PAGE>


estate or integral  equipment,  unless the Company  transfers  ownership  of the
underlying  assets to the lessee.  In the event that sales-type lease accounting
is not applicable to portions or all of a telecommunications capacity agreement,
the Company will apply  operating  lease  accounting  and recognize  revenue and
operating  costs  ratably over the term of the  agreement.  Since the  Company's
telecommunications  capacity  agreements  which were accounted for as sales-type
leases and excluded  ownership transfer terms for underlying assets deemed to be
integral  equipment  do not  represent a  significant  portion of the  Company's
historical  revenue or operating costs, the Company does not expect the adoption
of FIN 43 to have a  material  impact on the  Company's  financial  position  or
results of operations in the future.

Year 2000 Compliance

Importance

         Many computer  systems,  software  applications  and other  electronics
currently  in use  worldwide  are  programmed  to accept  only two digits in the
portion of the date field which  designates  the year.  The "Year 2000  problem"
arises because these systems and products cannot properly  distinguish between a
year that begins with "20" and the familiar  "19." If these systems and products
are not modified or replaced,  many will fail,  create erroneous  results and/or
may cause interfacing systems to fail.

         Year 2000 compliance issues are of particular importance to the Company
since its operations rely heavily upon computer systems,  software  applications
and other electronics  containing  date-sensitive  embedded technology.  Some of
these  technologies were internally  developed and others are standard purchased
systems which may or may not have been  customized for the Company's  particular
application.  The Company also relies heavily upon various vendors and suppliers
that are themselves very reliant on computer systems,  software applications and
other electronics containing  date-sensitive embedded technology.  These vendors
and suppliers include: (i) ILECs and other local and long distance carriers with
which the Company has  interconnection or resale agreements;  (ii) manufacturers
of the hardware and related  operating systems that the Company uses directly in
its operations;  (iii) providers that create custom software  applications  that
the  Company  uses  directly in its  operations;  and (iv)  providers  that sell
standard  or custom  equipment  or  software  which allow the Company to provide
administrative support to its operations.

Strategy

         The Company's  approach to addressing the potential impact of Year 2000
compliance issues was focused upon ensuring,  to the extent reasonably possible,
the  continued,  normal  operation  of  its  business  and  supporting  systems.
Accordingly,  the Company  developed a four-phase  plan which it applied to each
functional  category of the Company's  computer systems and components.  Each of
the Company's  computer  systems,  software  applications and other  electronics
containing  date-sensitive  embedded  technology was included  within one of the
following four functional categories:

     o        Networks and Products,  which consists of all  components  whether
              hardware,  software or embedded  technology  used  directly in the
              Company's  operations,  including components used by the Company's
              circuit and data switches and collocation  and  telecommunications
              products;

     o        IT Systems,  which consists of  all components used to support the
              Company's operations, including  provisioning and billing systems;

     o        Building and  Facilities,  which consists of all  components  with
              embedded technology used at the Company's  corporate  headquarters
              building and other leased facilities,  including security systems,
              elevators and internal use telephone systems;

     o        Office Equipment, which consists of all office equipment with date
              -sensitive embedded technology.

     For  each of the  categories  described  above,  the  Company  applied  the
following four-phase approach to identifying and addressing the potential impact
of Year 2000 compliance issues:



                                       42
<PAGE>


     o        Phase I - Assessment
              During this phase,  the Company's  technology  staff  performed an
              inventory of all components currently in use by the Company. Based
              upon  this  inventory,   the  Company's  business  executives  and
              technology  staff jointly  classified  each component as a "high,"
              "medium"  or "low"  priority  item,  determined  primarily  by the
              relative  importance  that  the  particular  component  has to the
              Company's  normal  business  operations,   the  number  of  people
              internally and  externally  which would be affected by any failure
              of such component and the  interdependence  of such component with
              other  components  used by the  Company  that may be of  higher or
              lower priority.

              Based upon such classifications, the Company's business executives
              and  information  technology  staff jointly set desired  levels of
              Year 2000  readiness  for each  component  inventoried,  using the
              following criteria, as defined by the Company:

              -   Capable,  meaning that such computer  system or component will
                  be capable of managing and  expressing  calendar years in four
                  digits;

              -   Compliant,  meaning  that the Company will be able to use such
                  component for the purpose for which the Company intended it by
                  adapting to its ability to manage and express  calendar  years
                  in only two digits;

              -   Certified,  meaning  that the  Company  has  received  testing
                  results to  demonstrate,  or the vendor or supplier is subject
                  to  contractual  terms  which  requires,  that such  component
                  requires  no Year 2000  modifications  to manage  and  express
                  calendar years in four digits; or

              -   Non-critical,  meaning that the Company  expects to be able to
                  continue to use such  component  unmodified or has  determined
                  that the estimated costs of modification  exceed the estimated
                  costs associated with its failure.

     o        Phase II - Remediation
              During  this  phase,   the  Company   developed   and  executed  a
              remediation  plan for each component based upon the priorities set
              in Phase I. Remediation included component upgrade, reprogramming,
              replacement, receipt of vendor and supplier certification or other
              actions which were deemed necessary or appropriate.

     o        Phase III - Testing
              During this phase,  the Company  performed  testing  sufficient to
              confirm  that the  component  met the  desired  state of Year 2000
              readiness.  This phase  consisted of: (i) testing the component in
              isolation,  or unit testing;  (ii) testing the  component  jointly
              with  other  components,  or system  testing;  and  (iii)  testing
              interdependent systems, or environment testing.

     o        Phase IV - Implementation
              During  the  last  phase,  the  Company  implemented  each  act of
              remediation  developed and tested for each  component,  as well as
              the  implementation  of  adequate  controls  to ensure that future
              upgrades  and  changes  to the  Company's  computer  systems,  for
              operational  reasons  other than Year 2000  compliance,  would not
              alter the Company's Year 2000 state of readiness.

          The  Company  has  completed  all of the  phases  within its Year 2000
compliance plan for each of its functional system categories.

Costs

         The Company  expenses all incremental  costs to the Company  associated
with Year 2000 compliance  issues as incurred.  Through September 30, 1999, such
costs incurred were approximately $2.0 million, consisting of approximately $0.6
million of replacement  hardware and software and approximately  $1.4 million of
consulting fees and other miscellaneous costs of Year 2000 compliance  reference
and planning  materials.  The Company has also incurred  certain internal costs,
including  salaries and benefits for employees  dedicating  various  portions of
their time to Year 2000 compliance  issues,  of which costs the Company believes
has not exceeded $0.5 million  through  September 30, 1999. The Company  expects


                                       43
<PAGE>


total incremental costs of Year 2000 compliance  efforts subsequent to September
30,  1999 to be  approximately  $0.6  million  for  consulting  fees  and  other
miscellaneous  costs.  All such costs  incurred  and expected to be incurred are
included in the Company's  fiscal 1999 budget.  Budgeted  expenses for Year 2000
compliance  costs  represent  approximately  4% of the Company's  total budgeted
expenses for information  technology for fiscal 1999. The Company intends to use
cash on hand for Year 2000 compliance costs, as necessary.

Risk, Contingency Planning and Reasonably Likely Worst Case Scenario

         While  the  Company  is  heavily  reliant  upon its  computer  systems,
software applications and other electronics containing  date-sensitive  embedded
technology as part of its business  operations,  such  components upon which the
Company primarily relies were developed with current state-of-the-art technology
and,  accordingly,  the Company's four-phase approach has demonstrated that many
of its  high-priority  systems did not  present  material  Year 2000  compliance
issues.  For  computer  systems,  software  applications  and other  electronics
containing  date-sensitive  embedded  technology  that  have  met the  Company's
desired  level  of Year  2000  readiness,  the  Company  is using  its  existing
contingency  plans to mitigate or  eliminate  problems it may  experience  if an
unanticipated system failure were to occur.

         The Company believes that a reasonably  likely worst case scenario of a
Year 2000  compliance  failure could include the temporary  failure of a minimal
number of operating  systems,  despite the Company's  execution and satisfactory
completion of its comprehensive Year 2000 compliance plan.  However,  under this
scenario,  the Company also believes that any such failed  systems or components
would be fully  recovered  within a short  period  subsequent  to  failure  and,
accordingly,  the Company does not expect to experience any  significant or long
term  operational  disruption  as a result  of the  failure  of any  systems  or
components directly within the Company's control.

         The Company  acknowledges  the possibility  that the Company may become
subject  to  potential  claims by  customers  if the  Company's  operations  are
interrupted  for an  extended  period of time.  However,  it is not  possible to
predict either the  probability of such  potential  litigation,  the amount that
could  be in  controversy  or upon  which  party a court  would  place  ultimate
responsibility for any such interruption.

         The Company views Year 2000  compliance as a process that is inherently
dynamic and will change in response to changing circumstances. While the Company
believes  that through  execution and  satisfactory  completion of its Year 2000
compliance strategy its computer systems,  software applications and electronics
are Year 2000  compliant,  there can be no assurance  until the Year 2000 occurs
that all  systems and all  interfacing  technology  when  running  jointly  will
function  adequately.   Additionally,   there  can  be  no  assurance  that  the
assumptions  made by the Company within its Year 2000  compliance  strategy will
prove to be correct, that the strategy will succeed or that the remedial actions
implemented will be adequate to avoid system or component failures. In addition,
disruptions with respect to the computer systems of vendors or customers,  which
systems  are  outside the control of the  Company,  could  impair the  Company's
ability to obtain  necessary  products  or  services  to sell to its  customers.
Disruptions of the Company's  computer  systems,  or the computer systems of the
Company's vendors or customers, as well as the cost of avoiding such disruption,
could have a material  adverse effect on the Company's  financial  condition and
results of operations.


                                       44
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The  Company's  financial  position  and cash  flows are  subject  to a
variety of risks in the normal course of business,  which  include  market risks
associated  with  movements  in interest  rates and equity  prices.  The Company
routinely  assesses  these  risks  and has  established  policies  and  business
practices to protect  against the adverse  effects of these and other  potential
exposures.  The  Company  does  not,  in the  normal  course  of  business,  use
derivative financial instruments for trading or speculative purposes.

Interest Rate Risk

         The  Company's  exposure  to market  risk  associated  with  changes in
interest  rates  relates  primarily to the Company's  investments  in marketable
securities and its senior indebtedness.

         The Company  invests  primarily  in high grade  short-term  investments
which consist of money market  instruments,  commercial  paper,  certificates of
deposit, government obligations and corporate bonds, all of which are considered
to be available for sale and generally have  maturities of one year or less. The
Company's short term investment  objectives are safety,  liquidity and yield, in
that order.  As of September  30,  1999,  the Company had  approximately  $170.7
million in cash, cash equivalents and short-term investments available for sale,
at a weighted  average  fixed  interest rate of 2.72% for the three months ended
September 30, 1999. A hypothetical  10%  fluctuation in market rates of interest
would cause a change in the fair value of the Company's investment in marketable
securities at September 30, 1999 of approximately $0.2 million and, accordingly,
would not cause a material impact on the Company's financial  position,  results
of operations or cash flows.

         At September 30, 1999, the Company's indebtedness included $1.7 billion
under the 13 1/2%  Notes,  12 1/2% Notes,  11 5/8%  Notes,  10% Notes and 9 7/8%
Notes and $505.4 million under the 14 1/4% Preferred  Stock, 14% Preferred Stock
and 6 3/4% Preferred Securities. These instruments contain fixed annual interest
and  dividend  rates,  respectively,  and,  accordingly,  any  change  in market
interest rates would have no impact on the Company's financial position, results
of operations or cash flows.  Future  increases in interest rates could increase
the cost of any new  borrowings  by the  Company.  The  Company  does not  hedge
against future changes in market rates of interest.

         On August 12,  1999,  the  Company  entered  into the Senior  Facility,
consisting of two term loans and a revolving  line of credit.  All components of
the Senior Facility bear variable annual rates of interest,  based on changes in
LIBOR,  the  Royal  Bank of  Canada  prime  rate  and the  federal  funds  rate.
Consequently,  additional  borrowings under the Senior Facility and increases in
LIBOR,  the Royal  Bank of Canada  prime  rate and the  federal  funds rate will
increase the  Company's  indebtedness  and may increase the  Company's  interest
expense in future periods. Additionally, under the terms of the Senior Facility,
the Company is required to hedge the interest rate risk on $100.0 million of the
Senior  Facility if LIBOR exceeds 9.0% for 15 consecutive  days. As of September
30, 1999, the Company had $79.8 million outstanding under the Senior Facility.

Equity Price Risk

         On February 17, 1999,  the Company  completed  the sale of the domestic
operations of NETCOM to  MindSpring,  in exchange for a combination  of cash and
376,116 shares of common stock of MindSpring, valued at approximately $79.76 per
share, or $30.0 million, at the time of the transaction. Through April 16, 1999,
the Company bore some risk of market price  fluctuations  in its  investment  in
MindSpring.  In order to  mitigate  the risk  associated  with a decrease in the
market value of the Company's investment in MindSpring, the Company entered into
a hedging contract. In April 1999, the Company sold its investment in MindSpring
for net proceeds of approximately $30.4 million.  The Company recorded a gain on
its investment in MindSpring of  approximately  $0.4 million in its statement of
operations for the nine months ended  September 30, 1999.  The hedging  contract
was terminated upon the sale of the common stock of MindSpring.

         On March 30,  1999,  the Company  purchased,  for  approximately  $10.0
million in cash,  454,545  shares of restricted  Series D-1  Preferred  Stock of
NorthPoint  which was converted  into 555,555  shares of Class B common stock of
NorthPoint  (the  "NorthPoint  Class B Shares") on May 5, 1999.  The  NorthPoint
Class B Shares have no voting rights and are ultimately  convertible on or after
March 23, 2000 on a  one-for-one  basis into a voting  class of common  stock of


                                       45
<PAGE>


NorthPoint.  Accordingly,  the  Company  will  be  subject  to  the  effects  of
fluctuations in the fair value of the common stock of NorthPoint until such time
when the Company is permitted to liquidate its investment in NorthPoint.

         On August 11, 1999, the Company purchased  1,250,000 shares of Series C
Preferred Stock (the "ThinkLink  Preferred  Stock") of  International  ThinkLink
Corporation  ("ThinkLink"),  or approximately 8% of the outstanding  shares, for
$1.0 million in cash. The ThinkLink  Preferred Stock is exchangeable into common
stock of ThinkLink at any time. The ThinkLink Preferred Stock will automatically
convert to common stock upon the  completion of the initial  public  offering of
the common stock of ThinkLink or upon such election to convert by the holders of
a majority  of the  ThinkLink  Preferred  Stock.  The  conversion  rate from the
ThinkLink Preferred Stock to common stock of ThinkLink is initially one-for-one;
however,  such  conversion  rate is subject to  adjustment.  The Company will be
subject to the effects of  fluctuations in the fair value of the common stock of
ThinkLink  until such time when the  Company may  liquidate  its  investment  in
ThinkLink.

         Although  changes  in the  fair  market  value of the  common  stock of
NorthPoint  and  ThinkLink  may affect the fair  market  value of the  Company's
investments  in NorthPoint and ThinkLink and cause  unrealized  gains or losses,
such gains or losses will not be realized until the securities are sold.


                                       46
<PAGE>



                                     PART II


ITEM 1.   LEGAL PROCEEDINGS

          See  Note 6 (e)  to the  Company's  unaudited  condensed  consolidated
          financial  statements  for the nine months  ended  September  30, 1999
          contained elsewhere in this Quarterly Report.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

          None.

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBITS AND REPORT ON FORM 8-K

      (A)  Exhibits.

            (10)  Material Contracts.

                  10.1:  Amendment  to the Stock  Option  Agreement  between  J.
                         Shelby  Bryan and  IntelCom  Group  Inc.  dated May 30,
                         1995,   dated  as  of  March  10,  1999,   between  ICG
                         Communications, Inc. and J. Shelby Bryan.

                  10.2:  Amendment  to the Stock  Option  Agreement  between  J.
                         Shelby Bryan and IntelCom Group Inc. dated November 13,
                         1995,   dated  as  of  March  10,  1999,   between  ICG
                         Communications, Inc. and J. Shelby Bryan.

                  10.3:  Promissory  Note,  dated as of August 6, 1999,  between
                         ICG Telecom Group, Inc. and John Kane.

                  10.4:  Amendment to Employment  Agreement,  dated as of August
                         22,  1999,  between ICG  Communications,  Inc. and John
                         Kane.

                  10.5:  Amendment to Employment  Agreement,  dated as of August
                         22,  1999,  between ICG  Communications,  Inc.  and Don
                         Teague.

                  10.6:  Amendment to Employment  Agreement,  dated as of August
                         22, 1999, between ICG Communications, Inc. and Harry R.
                         Herbst.

                  10.7:  Amendment  to   Employment   Agreement,   dated  as  of
                         September 14, 1999,  between ICG  Communications,  Inc.
                         and J. Shelby Bryan.

                  10.8:  Amendment  No. 1 to the Credit  Agreement,  dated as of
                         September 30, 1999,  among ICG Equipment,  Inc. and ICG
                         NetAhead,  Inc., as Borrowers,  ICG Services,  Inc., as
                         Parent, certain Initial Lender Parties thereto,  Morgan
                         Stanley Senior Funding,  Inc., as Sole  Book-Runner and
                         Lead  Arranger,  Royal  Bank of Canada,  as  Collateral
                         Agent  and as  Administrative  Agent  for  such  Lender





                                       47
<PAGE>


                         Parties,  and Bank of America,  N.A. and Barclays  Bank
                         Plc, as Co-Documentation Agents.

            (27)  Financial Data Schedule.

                  27.1:  Financial Data Schedule of ICG Communications, Inc. for
                         the Nine Months Ended September 30, 1999.

      (B)  Report on Form 8-K. The following report on Form 8-K was filed by the
           registrants during the three months ended September 30, 1999:

                  (i)    Current Report on Form 8-K dated September 22, 1999 for
                         events   of   September   21,   1999,   regarding   the
                         announcement  by  ICG   Communications,   Inc.  of  the
                         September   16,  1999   arbitration   decision  by  the
                         California  Public  Utilities  Commission  in a  matter
                         between Pacific Bell and MFS/WorldCom.



                                       48
<PAGE>



                                INDEX TO EXHIBITS
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


10.1:     Amendment  to the Stock Option  Agreement  between J. Shelby Bryan and
          IntelCom  Group Inc.  dated May 30, 1995,  dated as of March 10, 1999,
          between ICG Communications, Inc. and J. Shelby Bryan.

10.2:     Amendment  to the Stock Option  Agreement  between J. Shelby Bryan and
          IntelCom  Group Inc.  dated  November 13, 1995,  dated as of March 10,
          1999, between ICG Communications, Inc. and J. Shelby Bryan.

10.3:     Promissory  Note,  dated as of August 6,  1999,  between  ICG  Telecom
          Group, Inc. and John Kane.

10.4:     Amendment  to  Employment  Agreement,  dated as of  August  22,  1999,
          between ICG Communications, Inc. and John Kane.

10.5:     Amendment  to  Employment  Agreement,  dated as of  August  22,  1999,
          between ICG Communications, Inc. and Don Teague.

10.6:     Amendment  to  Employment  Agreement,  dated as of  August  22,  1999,
          between ICG Communications, Inc. and Harry R. Herbst.

10.7:     Amendment to  Employment  Agreement,  dated as of September  14, 1999,
          between ICG Communications, Inc. and J. Shelby Bryan.

10.8:     Amendment  No. 1 to the Credit  Agreement,  dated as of September  30,
          1999, among ICG Equipment,  Inc. and ICG NetAhead, Inc., as Borrowers,
          ICG Services, Inc., as Parent, certain Initial Lender Parties thereto,
          Morgan  Stanley Senior  Funding,  Inc., as Sole  Book-Runner  and Lead
          Arranger,   Royal  Bank  of  Canada,   as  Collateral   Agent  and  as
          Administrative  Agent for such  Lender  Parties,  and Bank of America,
          N.A. and Barclays Bank Plc, as Co-Documentation Agents.

27.1:     Financial  Data  Schedule  of ICG  Communications,  Inc.  for the Nine
          Months Ended September 30, 1999.


<PAGE>



                                  EXHIBIT 10.1

       Amendment to the Stock Option Agreement between J. Shelby Bryan and
       IntelCom Group Inc. dated May 30, 1995, dated as of March 10, 1999,
              between ICG Communications, Inc. and J. Shelby Bryan.

<PAGE>


                                  EXHIBIT 10.2

       Amendment to the Stock Option Agreement between J. Shelby Bryan and
       IntelCom Group Inc. dated November 13, 1995, dated as of March 10,
           1999, between ICG Communications, Inc. and J. Shelby Bryan.


<PAGE>



                                  EXHIBIT 10.3

        Promissory Note, dated as of August 6, 1999, between ICG Telecom
                           Group, Inc. and John Kane.



<PAGE>



                                  EXHIBIT 10.4

         Amendment to Employment Agreement, dated as of August 22, 1999,
                 between ICG Communications, Inc. and John Kane.

<PAGE>



                                  EXHIBIT 10.5

         Amendment to Employment Agreement, dated as of August 22, 1999,
                between ICG Communications, Inc. and Don Teague.


<PAGE>



                                  EXHIBIT 10.6

         Amendment to Employment Agreement, dated as of August 22, 1999,
              between ICG Communications, Inc. and Harry R. Herbst.



<PAGE>




                                  EXHIBIT 10.7

       Amendment to Employment Agreement, dated as of September 14, 1999,
              between ICG Communications, Inc. and J. Shelby Bryan.




<PAGE>


                                  EXHIBIT 10.8

       Amendment No. 1 to the Credit Agreement, dated as of September 30,
      1999, among ICG Equipment, Inc. and ICG NetAhead, Inc., as Borrowers,
     ICG Services, Inc., as Parent, certain Initial Lender Parties thereto,
        Morgan Stanley Senior Funding, Inc., as Sole Book-Runner and Lead
           Arranger, Royal Bank of Canada, as Collateral Agent and as
       Administrative Agent for such Lender Parties, and Bank of America,
             N.A. and Barclays Bank Plc, as Co-Documentation Agents.


<PAGE>


                                  EXHIBIT 27.1

        Financial Data Schedule of ICG Communications, Inc. for the Nine
                        Months Ended September 30, 1999.




<PAGE>




                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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, on November 12, 1999.



                                         ICG COMMUNICATIONS, INC.





Date:  November 12, 1999            By:  /s/ Harry R. Herbst
                                         ---------------------------------------
                                         Harry R. Herbst, Executive Vice
                                         President and Chief Financial Officer
                                         (Principal Financial Officer)






Date:  November 12, 1999            By:  /s/ John V. Colgan
                                         ---------------------------------------
                                         John V. Colgan, Senior Vice President
                                         of Finance and Controller (Principal
                                         Accounting Officer)




<PAGE>





                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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, on November 12, 1999.



                                         ICG HOLDINGS (CANADA) CO.





Date:  November 12, 1999            By:  /s/ Harry R. Herbst
                                         ---------------------------------------
                                         Harry R. Herbst, Executive Vice
                                         President and Chief Financial Officer
                                         (Principal Financial Officer)






Date:  November 12, 1999            By:  /s/ John V. Colgan
                                         ---------------------------------------
                                         John V. Colgan, Senior Vice President
                                         of Finance and Controller (Principal
                                         Accounting Officer)

<PAGE>





                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) 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, on November 12, 1999.



                                         ICG HOLDINGS, INC.





Date:  November 12, 1999            By:  /s/ Harry R. Herbst
                                         ---------------------------------------
                                         Harry R. Herbst, Executive Vice
                                         President and Chief Financial Officer
                                         (Principal Financial Officer)






Date:  November 12, 1999            By:  /s/ John V. Colgan
                                         ---------------------------------------
                                         John V. Colgan, Senior Vice President
                                         of Finance and Controller (Principal
                                         Accounting Officer)