<PAGE>

================================================================================

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

                                   FORM 10 - Q

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

                  For the quarterly period ended June 30, 1999

                                       or

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

          For the transition period from ____________to ______________

                       Commission File Number - 000-23269

                         METROMEDIA FIBER NETWORK, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                       11-3168327
          --------                                       ----------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                   c/o Metromedia Fiber Network Services, Inc.
                           One North Lexington Avenue
                             White Plains, NY 10601
                             ----------------------
               (Address of principal executive office) (Zip code)

                                 (914) 421-6700
                                 --------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 1(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )

The number of shares outstanding of the registrant's common stock as of August
10, 1999 was:

                     Class                  Number of Shares
                     -----                  ----------------
                       A                       156,293,412
                       B                        33,769,272

================================================================================
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                          QUARTERLY REPORT ON FORM 10-Q
            FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 1999


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

    ITEM NO.      DESCRIPTION                                                                                PAGE

                         PART I - FINANCIAL INFORMATION
<S>               <C>                                                                                       <C>
    Item 1.       Financial Statements

                  Consolidated Statements of Operations for the Three- and Six-Month
                  Periods Ended June 30, 1999 and 1998 .....................................................  1

                  Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998 ....................  2

                  Consolidated Statements of Cash Flows for the Six-Month Periods Ended
                  June 30, 1999 and 1998 ...................................................................  3

                  Notes to Consolidated Financial Statements ...............................................  4

    Item 2.       Management's Discussion and Analysis of Financial Condition and Results
                  of Operations ............................................................................  12

    Item 3.       Quantitative and Qualitative Disclosures About Market Risk ...............................  17


                           PART II - OTHER INFORMATION

    Item 1.       Legal Proceedings ........................................................................  17

    Item 2.       Changes in Securities and Use of Proceeds ................................................  19

    Item 3.       Defaults Upon Senior Securities ..........................................................  19

    Item 4.       Submission of Matters to a Vote of Security Holders ......................................  19

    Item 5.       Other Information ........................................................................  20

    Item 6.       Exhibits and Reports on Form 8-K .........................................................  20
</TABLE>


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

                 METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (IN 000'S, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED               SIX MONTHS ENDED
                                                                        JUNE 30,                       JUNE 30,
                                                               -------------------------       -------------------------
                                                                  1999            1998            1999            1998
                                                               ---------       ---------       ---------       ---------
<S>                                                              <C>           <C>             <C>             <C>
Revenue ........................................                 $20,294       $   7,407       $  38,673       $   9,133

Expenses:
 Cost of sales .................................                   6,561           3,319          14,819           4,553
 Selling, general and administrative ...........                   7,713           3,183          13,786           5,914
 Consulting and employment incentives ..........                    --               103            --               195
 Settlement agreement ..........................                    --              --              --             3,400
 Depreciation and amortization .................                   3,863             230           5,058             440
                                                               ---------       ---------       ---------       ---------
Income (loss) from operations ..................                   2,157             572           5,010          (5,369)
Other income (expenses):
 Interest income ...............................                   6,075           1,875          13,512           3,576
 Interest expense ..............................                 (14,503)             (6)        (30,407)            (12)
 Loss from joint venture .......................                    (193)           (251)           (393)           (251)
                                                               ---------       ---------       ---------       ---------
Net income (loss) ..............................               $  (6,464)      $   2,190       $ (12,278)      $  (2,056)
                                                               =========       =========       =========       =========

Net income (loss) per share, basic .............               $   (0.03)      $    0.01       $   (0.06)      $   (0.01)
                                                               =========       =========       =========       =========

Net income (loss) per share, diluted ...........                   N/A         $    0.01           N/A             N/A
                                                               =========       =========       =========       =========

Weighted average number of shares
 outstanding, basic ............................                 189,667         186,516         189,098         185,616
                                                               =========       =========       =========       =========

Weighted average number of shares
 outstanding, diluted ..........................                   N/A           217,216          N/A             N/A
                                                               =========       =========       =========       =========
</TABLE>

                             See accompanying notes

                                       1
<PAGE>

                 METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                        (IN 000'S, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                JUNE 30,        DECEMBER 31,
                                                                  1999             1998
                                                               -----------       ---------
                                                               (UNAUDITED)
<S>                                                            <C>               <C>
                          ASSETS
Current assets:
  Cash and cash equivalents .............................      $   341,897       $ 569,319
  Marketable securities .................................           19,716            --
  Pledged securities, current portion ...................           63,142          61,384
  Accounts receivable ...................................           86,258          30,910
  Prepaid expenses and other current assets .............            2,761           2,210
                                                               -----------       ---------
    Total current assets ................................          513,774         663,823
Fiber optic transmission network and
  related equipment, net ................................          417,803         244,276
Property and equipment, net .............................            3,909           2,716
Pledged securities ......................................             --            30,512
Restricted cash .........................................           51,920            --
Investment in/advances to joint venture .................            6,763           4,156
Other assets ............................................           40,525          28,934
                                                               -----------       ---------
    Total assets ........................................      $ 1,034,694       $ 974,417
                                                               ===========       =========

           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ......................................      $     7,276       $   6,106
  Accrued liabilities ...................................          134,736          96,512
  Deferred revenue, current portion .....................            8,106           8,100
  Capital lease obligations, current portion ............               55              55
                                                               -----------       ---------
      Total current liabilities .........................          150,173         110,773

Senior notes payable ....................................          650,000         650,000
Capital lease obligations ...............................           23,202          22,675
Deferred revenue ........................................           68,530          33,455

Commitments and contingencies (see notes)
Stockholders' equity:
  Preferred stock, $.01 par value; 20,000,000 shares
    authorized; none issued and outstanding .............             --              --
  Class A common stock, $.01 par value; 2,404,031,240
    shares authorized; 156,293,412 and 155,210,220 shares
    issued and outstanding, respectively ................            1,563           1,552
  Class B common stock, $.01 par value; 522,254,782
    shares authorized; 33,769,272 shares
    issued and outstanding ..............................              338             338
   Additional paid-in capital ...........................          200,370         197,861
   Accumulated deficit ..................................          (54,515)        (42,237)
   Cumulative comprehensive loss ........................           (4,967)           --
                                                               -----------       ---------
       Total stockholders' equity .......................          142,789         157,514
                                                               -----------       ---------
       Total liabilities and stockholders' equity .......      $ 1,034,694       $ 974,417
                                                               ===========       =========
</TABLE>

                             See accompanying notes

                                       2
<PAGE>

                 Metromedia Fiber Network, Inc. & Subsidiaries
               Consolidated Statements of Cash Flows (Unaudited)
                                   (in 000's)

<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED
                                                                                  JUNE 30,
                                                                          -------------------------
                                                                             1999           1998
                                                                          ---------       ---------
<S>                                                                       <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ...........................................................      $ (12,278)      $  (2,056)
Adjustments to reconcile net loss to net cash
  provided by operating activities:
    Depreciation and amortization ..................................          5,057             440
    Amortization of deferred financing costs .......................          1,000            --
    Options issued for settlement agreement ........................           --             3,000
    Stocks, options and warrants issued for services ...............            395             195
    Loss from joint venture ........................................            393             251
CHANGE IN OPERATING ASSETS AND LIABILITIES:
    Accounts receivable ............................................        (48,985)         (6,676)
    Accounts payable and accrued liabilities........................         37,990           1,532
    Deferred revenue ...............................................         35,081          16,802
    Other ..........................................................          2,391            (149)
                                                                          ---------       ---------
    Net cash provided by operating activities ......................         21,044          13,339
                                                                          ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities ..................................        (19,716)           --
Capital expenditures on fiber optic transmission
  network and related equipment ....................................       (122,823)        (28,779)
Restricted cash secured by letter of credit ........................        (63,313)           --
Investment in / advances to joint venture ..........................         (3,000)         (2,745)
Capital expenditures on property and equiptment ....................         (1,676)           (770)
Business acquisition (net of cash acquired) ........................        (24,966)           --
                                                                          ---------       ---------
    Net cash used in investing activities ..........................       (235,494)        (32,294)
                                                                          ---------       ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock .............................          2,056             754
Payments of business acquisition's pre-acquisition's debt ..........        (15,028)           --
                                                                          ---------       ---------
    Net cash used in financing activities ..........................        (12,972)            754
                                                                          ---------       ---------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ...............       (227,422)        (18,201)
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD ......................        569,319         138,846
                                                                          ---------       ---------
CASH AND CASH EQUIVALENTS-END OF PERIOD ............................      $ 341,897       $ 120,645
                                                                          =========       =========
Supplemental information:
    Interest paid ..................................................      $  31,152       $      12
                                                                          =========       =========
    Income taxes paid ..............................................      $   2,736       $     473
                                                                          =========       =========
    Interest capitalized ...........................................      $   3,072       $       -
                                                                          =========       =========
Supplemental disclosure of significant non-cash investing activites:
    Capital lease obligations ......................................      $     527       $  19,401
                                                                          =========       =========
    Accrued capital expenditures ...................................      $  30,092       $  20,543
                                                                          =========       =========
</TABLE>

                             See accompanying notes

                                       3
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS OPERATIONS AND LINE OF BUSINESS

Metromedia Fiber Network, Inc. and its subsidiaries (collectively, the
"Company") is a facilities-based provider of technologically advanced,
high-bandwidth, fiber optic communications infrastructure to communications
carriers and corporate and government customers in the United States and Europe.
The Company focuses its operations on domestic, intra-city fiber optic networks
in clusters of the 15 largest cities throughout the United States based on
population. The Company leases or otherwise makes available for use its
broadband communications infrastructure to two main customer groups:
communications carriers and corporate/government customers located in selected
top 15 cities in the United States based on population. The Company currently
operates high-bandwidth fiber optic communications networks in the New York
metropolitan area, the greater Philadelphia area and parts of the Dallas
Metroplex, Washington D.C. and Chicago areas. The Company has also begun
engineering and constructing networks in Boston, Los Angeles, Seattle, Houston
and Atlanta. The Company expects that its domestic intra-city networks will
ultimately encompass approximately 810,000 fiber miles, covering approximately
1,896 route miles. Fiber miles means the number of strands of fiber contained in
a length of fiber optic cable multiplied by the length of cable in miles. Route
miles means the number of miles spanned by fiber optic cable calculated without
including physically overlapping segments of cable.

The Company has also built or obtained inter-city fiber optic capacity that
links certain of its intra-city networks. The Company built a 250 route-mile
network from New York to Washington D.C., which was put into operation at the
end of the first quarter of 1999. When complete, as currently planned, this
network will cover approximately 180,000 net fiber miles. The Company has also
obtained rights for fiber optic capacity with other facilities-providers,
obtained fiber optic capacity linking New York to Chicago, New York to Boston,
Chicago to Seattle and Seattle to Portland and plans to construct intra-city
networks in all of these metropolitan areas except Portland.

In addition, the Company has entered into a joint venture with a U.K.
telecommunications company to connect its New York network to London. The
Company has also formed a joint venture to construct a high-bandwidth fiber
optic network connecting 13 cities in Germany and obtained certain additional
fiber optic capacity in Western Europe. In addition, the Company plans to
engineer and construct networks in the European cities of London, Amsterdam,
Frankfurt, Stuttgart, and Cologne.

The Company has entered into letters of intent with a Canadian
telecommunications company, providing the Company with access to intra-city
fiber optic network facilities in Toronto, Canada.

The Company expects that the entire network when completed, as currently
planned, will ultimately consist of approximately 1.2 million fiber miles
covering approximately 9,250 route miles.

On June 22, 1999, the Company entered into an Agreement and Plan of Merger
("Merger Agreement") with AboveNet Communications, Inc. Pursuant to the Merger
Agreement, each share of AboveNet common stock will convert into the right to
receive 1.175 shares of the Company's class A common stock. Following
consummation of the merger, AboveNet will become a wholly-owned subsidiary of
the Company. AboveNet is a leading provider of facilities-based, managed
services for customer-owned Web servers and related equipment, known as
co-location, and high performance Internet connectivity solutions for
electronic commerce and other business critical Internet operations.

BASIS OF PRESENTATION
The interim unaudited consolidated financial statements in this Report have been
prepared in accordance with the United States Securities and Exchange
Commission's Regulation S-X and consequently do not include all disclosures
required under generally accepted accounting principles. The interim unaudited
consolidated financial statements should be read in conjunction with the audited
Consolidated Financial Statements of the Company and accompanying Notes for the
year ended December 31, 1998, contained in

                                       4
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the Company's Annual Report on Form 10-K. The Form 10-K includes information
with respect to the Company's significant accounting and financial reporting
policies and other pertinent information. The Company believes that all
adjustments of a normal recurring nature that are necessary for a fair
presentation of the results of the interim periods presented in this report have
been made. Certain balances have been reclassified to conform to the current
period presentation.

STOCK SPLITS
On August 28, 1998, December 22, 1998 and May 19, 1999, the Company completed
two-for-one stock splits of the Company's class A and class B common stock in
the form of 100 percent stock dividends to all stockholders of record as of
certain specified dates.

RECOGNITION OF REVENUE
The Company recognizes revenue on telecommunications services ratably over
the term of the applicable lease agreements with customers. Amounts billed in
advance of the service provided are recorded as deferred revenue. In
addition, the Company occasionally enters into sales of portions of its
network. For those sales occurring prior to completion of the portion of the
network, the Company recognizes revenue using the percentage of completion
method. Under the percentage of completion method, progress is generally
measured on performance milestones relating to the contract where such
milestones fairly reflect the progress toward contract completion. Network
construction costs include all direct material and labor costs and those
indirect costs related to contract performance. General and administrative
costs are charged to expense as incurred. If necessary, the estimated loss on
an uncompleted contract is expensed in the period in which it is identified.
Contract costs are estimated using allocations of the total cost of
constructing the specific phase of the network. Revisions to estimated
profits on contracts are recognized in the period that they become known. The
Company also provides installation services for its customers, and as these
services typically are completed within a short time period, the Company
records the revenues and related costs for these services under the completed
contract method.

FOREIGN CURRENCY TRANSLATION
For translation of the financial statements of its newly formed German
operations, the Company has determined that the local currency is the functional
currency. Assets and liabilities of foreign operations are translated at the
period-end exchange rates and income statement items are translated at average
exchange rates for the period. The resulting adjustments are made directly to
the Cumulative Translation Adjustment component of Stockholders' Equity. Foreign
currency transactions are recorded at the exchange rate prevailing on the
transaction date.

MARKETABLE SECURITIES
For purposes of the consolidated financial statements, the Company considers all
highly liquid investments with a maturity of greater than three months from the
financial statement date to be marketable securities.

COMPREHENSIVE INCOME (LOSS)
In 1998, the Company adopted Statement of Financial Accounting Standards No.
130, ("SFAS 130") Reporting Comprehensive Income (Loss). This statement
establishes rules for the reporting of comprehensive income and its components.
Comprehensive income (loss) consists of net income (loss) and foreign currency
translation adjustments. The comprehensive loss for the three and six months
ended June 30, 1999 was $8.5 million and $17.2 million, respectively, compared
with comprehensive income of $2.2 million and comprehensive loss of $2.1
million, respectively, for the comparable periods in 1998.

2.  FIBER OPTIC TRANSMISSION NETWORK AND RELATED EQUIPMENT
Fiber optic transmission network and related equipment consist of the following
(in 000's):

                                       5
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                           JUNE 30,      DECEMBER 31,
                                            1999            1998
                                          ---------       ---------
Material-fiber optic cable .........      $  76,273       $  23,436
Engineering and layout costs .......          7,515           7,101
Fiber optic cable installation costs        101,714          16,639
Other ..............................         34,525           4,242
Construction in progress ...........        204,563         195,256
                                          ---------       ---------
                                            424,590         246,674
Less: accumulated depreciation .....         (6,787)         (2,398)
                                          ---------       ---------
                                            417,803         244,276
                                          =========       =========

Construction in progress includes amounts incurred in the Company's expansion of
its network. These amounts include fiber optic cable and other materials,
engineering and other layout costs, fiber optic cable installation costs and
other network assets held under capital leases. Construction in progress also
includes payments for rights of way for the underlying sections of the network
build.

3.  INVESTMENT IN/ADVANCES TO JOINT VENTURE
The Company has a joint venture agreement with Racal Telecommunications, Inc.
("Racal") that provides broad-based transatlantic communication services between
New York and London. During 1998, each party made capital contributions of $4.3
million. The Company and Racal may each be required to contribute additional
capital as needed for their respective 50% interests. The Company accounts for
its investment using the equity method. For the three and six months ended June
30, 1999, the Company recorded losses of $193,000 and $393,000, respectively,
from the joint venture based on its 50% interest in the joint venture compared
with $0 and $251,000, respectively, for the comparable periods in 1998.

4.  ACQUISITION OF COMMUNICATION SYSTEMS DEVELOPMENT, INC.
On March 11, 1999, the Company acquired all the outstanding common stock of
Communication Systems Development, Inc. ("CSD") for $25 million in cash. CSD has
its primary operations in Dallas, Texas and is engaged in the engineering and
construction of fiber optic networks. The acquisition has been accounted for by
the purchase method and, accordingly, the results of operations of CSD have been
included in the Company's consolidated financial statements from March 11, 1999.
The purchase price has been preliminarily allocated based on estimated fair
values as of the date of acquisition pending final determination of certain
tangible and intangible assets.

The following unaudited pro forma financial information presents the combined
results of operations of the Company and CSD as if the acquisition had occurred
as of the beginning of 1999 and 1998, after giving effect to certain
adjustments, including amortization of goodwill, additional depreciation expense
and related income tax effects. The pro forma financial information does not
necessarily reflect the results of operations that would have occurred had the
Company and CSD constituted a single entity during such periods.  The amounts
are presented in thousands, except per share amounts.

                                         SIX MONTHS ENDED JUNE 30,
                                            1999          1998
                                          --------       -------

               Revenue .............      $ 41,940       $ 9,985
                                          ========       =======
               Net Loss ............      $(12,263)      $(1,779)
                                          ========       =======
               Loss per share, basic      $  (0.06)      $ (0.01)
                                          ========       =======

                                       6
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.  GERMAN NETWORK BUILD

In February 1999, the Company entered into a joint venture with Viatel, Inc. and
Carrier 1 Holdings, Ltd. to jointly build a national fiber optic
telecommunications network in Germany. Upon completion of construction, the
joint venture will be dissolved and the Company will own its own separate German
broadband network. In connection with the terms of this agreement, the Company
made a deposit payment of $4.7 million during the third quarter of 1998. Upon
signing a definitive agreement, the Company provided irrevocable standby letters
of credit in the amount of approximately DM110 million (approximately $63
million) as security for the construction costs of the network, which, in
addition to the deposit payment made, covers the Company's portion of the
estimated construction costs of the network. As of June 30, 1999, the Company
had restricted cash of approximately $52 million to secure the remaining value
of the irrevocable standby letters of credit.

6.  PROPOSED ACQUISITION OF ABOVENET COMMUNICATIONS, INC.

On June 22, 1999, the Company entered into an Agreement and Plan of Merger
("Merger Agreement") with AboveNet Communications, Inc. ("AboveNet"). Pursuant
to the Merger Agreement, each share of AboveNet common stock will convert into
the right to receive 1.175 shares of the Company's class A common stock.
Following consummation of the merger, AboveNet will become a wholly-owned
subsidiary of the Company. In connection with the execution of the Merger
Agreement, the Company and AboveNet entered into an Option Agreement pursuant to
which the Company was granted an option to acquire up to 19.9% of AboveNet's
common stock at a price of $49.9375 per share. The transaction contemplated by
the Merger Agreement, which has been approved by the board of directors of each
company, is intended to be a tax-free reorganization.

Consummation of the transactions contemplated in the Merger Agreement is subject
to approval of the issuance of the shares of the Company's class A common stock
in the merger by the stockholders of the Company and approval of the merger by
the stockholders of AboveNet and other customary closing conditions.
Stockholders who control 15.7% of AboveNet's common stock have agreed to vote in
favor of the merger. All of the holders of the Company's class B common stock,
who control approximately 66% of the Company's voting power, have agreed to vote
in favor of the issuance of the shares of the Company's class A common stock in
the merger. The transactions will therefore be approved by holders of the
Company's common stock at the Company's special meeting without requiring the
vote of any additional Company stockholders. The Company and AboveNet mailed
definitive proxy statements to their respective shareholders on August 6, 1999
and have scheduled the special meetings at which the stockholders will vote to
approve the merger on September 8, 1999. The Company and AboveNet expect that
the merger will be consummated immediately following the stockholder meetings.

7.  RELATED PARTY TRANSACTIONS

The Company is party to a management agreement under which the Company's
controlling shareholder, Metromedia Company, provides consultation and advisory
services relating to legal matters, insurance, personnel and other corporate
policies, cash management, internal audit and finance, taxes, benefit plans and
other services as are reasonably requested. The management agreement terminates
on December 31 of each year, and is automatically renewed for successive
one-year terms unless either party terminates upon 60 days prior written notice.
The 1998 management fee under the agreement was $500,000 per year, payable
quarterly at a rate of $125,000. The 1999 management fee under the agreement is
$1,000,000 per year, payable quarterly at a rate of $250,000. The Company is
also obligated to reimburse Metromedia Company for all its out-of-pocket costs,
expenses incurred and advances paid by Metromedia Company in connection with the
management agreement.

                                       7
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.  SETTLEMENT AGREEMENT

In March 1998, the Company entered into a settlement agreement with Howard Katz,
Realprop Capital Corporation and Evelyn Katz, among others, which settled and
resulted in the dismissal of litigation for which the Company was a defendant in
KATZ, ET AL. V. NATIONAL FIBER NETWORK, INC., ET AL., No. 97 Civ. 2764 (JGK).

9.  NOTES PAYABLE

On November 25, 1998, the Company issued and sold $650.0 million of 10% Senior
Notes due November 15, 2008. The net proceeds of the 10% Senior Notes were
approximately $630.0 million, after deducting offering costs, which are included
in other long-term assets. Interest on the 10% Senior Notes is payable
semi-annually in arrears on May 15 and November 15 of each year, commencing May
15, 1999. Approximately $91.5 million of the net proceeds was utilized to
purchase certain pledged securities the proceeds of which, together with
interest earned on such securities, will be used to satisfy the Company's
semi-annual interest obligations through May 15, 2000. The 10% Senior Notes are
subject to redemption at the option of the Company, in whole or in part, at any
time on or after November 15, 2003, at specified redemption prices. In addition,
prior to November 15, 2001, the Company may use the net cash proceeds from
certain specified equity transactions to redeem up to 35% of the 10% Senior
Notes at specified redemption prices.

The indenture pursuant to which the 10% Senior Notes are issued contains certain
covenants that, among other matters, limit the ability of the Company and its
subsidiaries to incur additional indebtedness, issue stock in subsidiaries, pay
dividends or make other distributions, repurchase equity interests or
subordinated indebtedness, engage in sale and leaseback transactions, create
liens, enter into transactions with affiliates, sell assets, and enter into
mergers and consolidations.

In the event of a change in control of the Company as defined in the indentures,
holders of the 10% Senior Notes will have the right to require the Company to
purchase their Notes, in whole or in part, at a price equal to 101% of the
stated principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of purchase. The 10% Senior Notes are senior unsecured
obligations of the Company, and are subordinated to all current and future
indebtedness of the Company's subsidiaries, including trade payables.

The Company made an interest payment on May 15, 1999. As a result, the value of
pledged securities to satisfy the Company's semi-annual interest obligation
through May 15, 1999 was reduced to approximately $63 million.

10.  EQUITY TRANSACTIONS

AUTHORIZED CAPITAL

On May 18, 1999, the stockholders of the Company approved an amendment to its
Certificate of Incorporation to increase the authorized number of shares of its
capital stock to 2,946,286,022 shares consisting of (a) 2,404,031,240 shares of
class A common stock, (b) 522,254,782 shares of class B common stock, and (c)
20,000,000 shares of preferred stock.

STOCK SPLITS

As discussed in Note 1, on August 28, 1998, December 22, 1998 and May 19, 1999
the Company completed two-for-one stock splits of the Company's class A and
class B common stock in the form of 100 percent stock dividends to all
stockholders of record as of certain specified dates. The accompanying financial
statements give retroactive effect to the stock dividends.

                                       8
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 1999, adjusted for the effect of the stock dividends, the Company
had 156,293,412 class A common shares outstanding and 33,769,272 class B common
shares outstanding.

STOCK WARRANTS

(a)      On December 13, 1996, the Company issued and sold to a private
         investor, for an aggregate cash consideration of $2,025,000, (i)
         1,200,000 shares of 10% cumulative convertible preferred stock (the
         "Series A preferred stock") bearing dividends at a rate of $.17 per
         share per annum, (ii) warrants to purchase 912,600 shares of class A
         common stock at an exercise price of $.62 per share and (iii) a
         contingent stock subscription warrant to purchase a number of shares of
         class A common stock (such number to be determined based on certain
         future events) at an exercise price of $0.01 per share. In connection
         with the investment in the Company by Metromedia Company, the private
         investor allowed the Series A preferred stock and the contingent
         warrants to be redeemed at an aggregate redemption price of $2,115,000
         (which includes accrued but unpaid dividends on the Series A preferred
         stock) and the number of shares underlying the private investor's
         warrants to be increased from 912,600 to 1,825,200. In January 1998,
         the private investor made a cashless exercise of all its warrants and
         the number of its shares issuable upon exercise was reduced by the
         number of shares at the closing on the day of exercise having a value
         equal to the aggregate exercise price. Accordingly, the Company issued
         the private investor 1,382,120 shares of class A common stock for all
         its warrants.

(b)      In April 1995, the Company entered into a loan agreement with a
         customer for $500,000 bearing interest at 11% per annum. In July 1997,
         the note was repaid in full. In connection with this loan, the Company
         issued the customer a warrant entitling the holder to purchase a total
         of 5,353,336 shares of the Company's common stock. In February 1997,
         this warrant was exchanged for a new warrant to purchase 3,650,400
         shares of the Company's common stock at $.60 per share. In February
         1999, in accordance with an anti-dilution provision in the warrant, the
         Company increased the warrant to include the right to purchase an
         additional 331,882 shares of the Company's class A common stock at $.56
         per share and repriced the existing warrant to the same $.56 per share.
         As of March 31, 1999, none of the warrants have been exercised. The
         warrant expires on February 13, 2000.

11.  CONTINGENCIES

(a)      On or about October 20, 1997, Vento & Company of New York, LLC
         commenced an action against the Company, Stephen A. Garofalo, Peter
         Silverman, the law firm of Silverman, Collura, Chernis & Balzano, P.C.,
         Peter Sahagen, Sahagen Consulting Group of Florida, Robert Kramer,
         Birdie Capital Corp., Lawrence Black, Sterling Capital LLC, Penrush
         Limited, Needham Capital Group, Arthur Asch, Michael Asch and Ronald
         Kuzon in the United States District Court for the Southern District of
         New York, No. 97 CIV 7751(JGK). On or about May 29, 1998, Vento &
         Company filed an amended complaint. In its complaint, as amended, Vento
         & Company alleges four causes of action in connection with its sale of
         900,000 shares, not adjusted for subsequent stock splits, of the
         Company's class A common stock to Mr. Sahagen and some of the
         defendants on January 13, 1997. The four causes of action include:

                  (i)      violation of Section 10(b) of the Securities Exchange
                           Act of 1934 and Rule 10b-5 promulgated under such
                           Act;

                  (ii)     fraud and fraudulent concealment;

                  (iii)    breach of fiduciary duty; and

                  (iv)     negligent misrepresentation and omission.

         On the first and second causes of action, Vento & Company is seeking,
         among other things, rescission of the Vento & Company sale, or
         alternatively, damages in an amount which the Company cannot currently
         ascertain but believe to be in excess of $36 million, together with
         interest. On the third and

                                       9
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         fourth causes of action, Vento & Company is seeking damages in an
         amount, which the Company cannot currently ascertain but believe to be
         in excess of $36 million, together with interest. Vento & Company is
         also seeking punitive damages in the amount of $50 million, reasonable
         legal fees and the cost of this action. All the defendants, including
         Metromedia Fiber Network and Stephen A. Garofalo, have moved to dismiss
         Vento & Company's amended complaint. On or about March 17, 1999 the
         defendant's motions to dismiss were denied in part and granted in part.
         The Company filed an answer to the amended complaint and raised
         affirmative defenses.

         On or about July 1, 1999, Vento & Company filed a second amended
         complaint. In its complaint, as amended, Vento & Company alleges seven
         causes of action in connection with its sale of 900,000 shares, not
         adjusted for subsequent stock splits, of the Company's class A common
         stock to Mr. Sahagen and some of the defendants on January 13, 1997,
         including (i) violation of Section 10(b) of the Securities Exchange Act
         of 1934 and Rule 10b-5 promulgated under such Act; (ii) fraud and
         fraudulent concealment; (iii) breach of fiduciary duty (but not against
         the Company); (iv) negligent misrepresentation and omission; and (v)
         breach of contract.

         Vento & Company is seeking, among other things, recission of the Vento
         & Company sale, or alternatively, damages in an amount not currently
         ascertainable but believed to be in excess of $460 million, together
         with interest thereon. Vento & Company is also seeking punitive damages
         in an amount not yet determined, reasonable legal fees and the costs of
         this action.

         The Company has filed an answer to the second amended complaint and
         has raised affirmative defenses. All the defendants, including the
         Company and its Chairman, served motions for summary judgment to
         dismiss the action.

(b)      On or about June 12, 1998, Claudio E. Contardi commenced an action
         against Peter Sahagen, Sahagen Consulting Group of Florida and the
         Company in the United States District Court for the Southern District
         of New York, No. 98 CIV 4140(JGK). Mr. Contardi alleges a cause of
         action for, among other things, breach of a finder's fee agreement
         entered into between Mr. Sahagen and Mr. Contardi on or about November
         14, 1996 and breach of an implied covenant of good faith and fair
         dealing contained in the finder's fee agreement. Mr. Contardi is
         seeking, among other things, a number of our shares of class A common
         stock which we cannot currently ascertain but believe to be
         approximately 112,500 shares (calculated as of the date on which the
         complaint was filed without taking into account subsequent stock
         splits) or damages in an amount which we cannot currently ascertain but
         believe to be approximately $4.9 million (calculated as of the date on
         which the complaint was filed) and all costs and expenses incurred by
         him in this action. The Company has filed an answer to the complaint
         and has raised affirmative defenses.

         The Company intends to vigorously defend both these actions because the
         Company believes that it acted appropriately in connection with the
         matters at issue in these two cases. However, the Company cannot assure
         you that it will not determine that the advantages of entering into a
         settlement outweigh the risk and expense of protracted litigation or
         that ultimately the Company will be successful in defending against
         these allegations. If the Company is unsuccessful in defending against
         these allegations, an award of the magnitude being sought in the Vento
         & Company litigation would have a material adverse effect on our
         financial condition and results of operations.

(c)      On June 29, 1999, an alleged stockholder of AboveNet filed a lawsuit,
         captioned KAUFMAN V. TUAN, et al, Del. Ch. C.A. No. 17259NC, in the
         Court of Chancery of the State of Delaware in and for the New Castle
         County. The plaintiff, who purports to represent a class of all
         AboveNet stockholders, challenges the terms of the proposed merger
         between the Company and AboveNet. The complaint names, as defendants,
         AboveNet, the directors of AboveNet, and the Company (as an aider and
         abettor). The complaint alleges generally that AboveNet's directors
         breached their fiduciary duty to stockholders of AboveNet, and seeks an
         injunction against the merger, or, in the alternative, rescission

                                       10
<PAGE>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         and the recovery of unspecified damages, fees and expenses. AboveNet,
         the Company and the individual defendants believe the lawsuit is
         without merit and intend to defend themselves vigorously. AboveNet and
         the individual director defendants' responses were filed on July 22,
         1999. In connection with these responses, a motion to dismiss the
         complaint in its entirety and a motion to stay discovery pending the
         outcome of the motion to dismiss were filed by the AboveNet and the
         individual directors of AboveNet on July 22, 1999. Similar motions to
         dismiss the complaint and stay discovery were filed by the Company on
         July 26, 1999.

         Four other complaints, which are virtually identical to the complaint
         in KAUFMAN V. TUAN, have also been filed in the Delaware Court of the
         Chancery. None of these four complaints have been served. The four
         actions are captioned BROSIOUS V. TUAN, et al, Del. Ch. C.A. No.
         17271NC, CHONG V. TUAN, et al, Del. Ch. C.A. No. 17281NC, EHLERT V.
         TUAN, et al, Del. Ch. C.A. No. 17284NC, HORN V. TUAN, et al, Del. Ch.
         C.A. No. 17300NC.

In addition, the Company is subject to various claims and proceedings in the
ordinary course of business. Based on information currently available, the
Company believes that none of such current claims, or proceedings, individually,
or in the aggregate, including the Vento & Company litigation and the Contardi
litigation, will have a material adverse effect on our financial condition or
results of operations, although the Company can make no assurances in this
regard.









                                       11
<PAGE>

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


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Any statements in this Quarterly Report on Form 10-Q about our expectations,
beliefs, plans, objectives, assumptions or future events or performance are not
historical facts and are forward-looking statements. These statements are often,
but not always, made through the use of words or phrases such as "will," "will
likely result," "expect," "will continue," "anticipate," "estimate," "intend,"
"plan," "projection," "would," "should" and "outlook." Accordingly, these
statements involve estimates, assumptions and uncertainties which could cause
actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout this Report and our Annual Report on Form 10-K for
the year ended December 31, 1998. The following cautionary statements identify
important factors that could cause our actual results to differ materially from
those projected in the forward-looking statements made in this Form 10-Q. Among
the key factors that have a direct bearing on our results of operations are:

         o        general economic and business conditions; the existence or
                  absence of adverse publicity; changes in, or failure to comply
                  with, government regulations; changes in marketing and
                  technology; changes in political, social and economic
                  conditions;

         o        increased competition in the telecommunications industry;
                  industry capacity; general risks of the telecommunications
                  industries;

         o        success of acquisitions and operating initiatives; changes in
                  business strategy or development plans; management of growth;

         o        availability, terms and deployment of capital;

         o        construction schedules;

         o        costs and other effects of legal, judicial and administrative
                  proceedings;

         o        dependence on senior management; business abilities and
                  judgment of personnel; availability of qualified personnel;
                  labor and employee benefit costs;

         o        development risks; risks relating to the availability of
                  financing; and

         o        other factors referenced in this Report and the Form 10-K.

Because the risk factors referred to above could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us, you should not place undue reliance on any such
forward-looking statements. Further, any forward-looking statement speaks only
as of the date on which it is made and we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which will arise. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.

BACKGROUND

We are a facilities-based provider of technologically advanced, high-bandwidth,
fiber optic communications infrastructure to communications carriers and
corporate and government customers in the United States and Europe. We focus our
operations on domestic, intra-city fiber optic networks in clusters of the 15
largest cities throughout the United States based on population. We on lease or
otherwise make available for use our broadband communications infrastructure to
two main customer groups: communications carriers and corporate/government
customers located in selected top 15 cities in

                                       12
<PAGE>

the United States based on population. We currently operate high-bandwidth fiber
optic communications networks in the New York metropolitan area, the greater
Philadelphia area and parts of the Dallas Metroplex, Washington D.C. and Chicago
areas. We have also begun engineering and constructing networks in Boston, Los
Angeles, Seattle, Houston and Atlanta. We expect that our domestic intra-city
networks will ultimately encompass approximately 810,000 fiber miles, covering
approximately 1,896 route miles. Fiber miles means the number of strands of
fiber contained in a length of fiber optic cable multiplied by the length of
cable in miles. Route miles means the number of miles spanned by fiber optic
cable calculated without including physically overlapping segments of cable.

We have also built or obtained inter-city fiber optic capacity that links
certain of our intra-city networks. We built a 250 route-mile network from New
York to Washington D.C., which was put into operation at the end of the first
quarter of 1999. When complete, as currently planned, this network will cover
approximately 180,000 net fiber miles. We have also obtained rights for fiber
optic capacity with other facilities-providers, obtained fiber optic capacity
linking New York to Chicago, New York to Boston, Chicago to Seattle and Seattle
to Portland and plan to construct intra-city networks in all of these
metropolitan areas except Portland.

In addition, we have entered into a joint venture with a U.K. telecommunications
company to connect our New York network to London. We have also formed a joint
venture to construct a high-bandwidth fiber optic network connecting 13 cities
in Germany and obtained certain additional fiber optic capacity in Western
Europe. In addition, we plan to engineer and construct networks in the European
cities of London, Amsterdam, Frankfurt, Stuttgart, and Cologne.

We have entered into letters of intent with a Canadian telecommunications
company, providing us with access to intra-city fiber optic network facilities
in Toronto, Canada.

The Company expects that the entire network when completed, as currently
planned, will ultimately consist of approximately 1.2 million fiber miles
covering approximately 9,250 route miles.

On June 22, 1999, we entered into an Agreement and Plan of Merger ("Merger
Agreement") with AboveNet Communications, Inc. Pursuant to the Merger
Agreement, each share of AboveNet common stock will convert into the right to
receive 1.175 shares of our class A common stock. Following consummation of
the merger, AboveNet will become our wholly-owned subsidiary. AboveNet is a
leading provider of facilities-based, managed services for customer-owned Web
servers and related equipment, known as co-location, and high performance
Internet connectivity solutions for electronic commerce and other business
critical Internet operations.

STOCK SPLITS

On August 28, 1998, December 22, 1998, and May 19, 1999, we completed
two-for-one stock splits of our class A and class B common stock in the form of
100 percent stock dividends to all stockholders of record as of certain
specified dates.

All share and per share amounts presented herein give retroactive effect to the
stock dividends. As of June 30, 1999, adjusted for the effect of the stock
dividends, we had 156,293,412 class A common shares outstanding and 33,769,272
class B common shares outstanding.

RESULTS OF OPERATIONS

REVENUES

Revenues for the second quarter of 1999 were $20.3 million or 174% greater than
revenues of $7.4 million for the second quarter of 1998. Revenues for the six
months ending June 30, 1999 were $38.7 million or 325% greater than revenues of
$9.1 million for the same period in 1998. The increase for the three and six
months ended June 30, 1999, compared with the three and six months ended June
30, 1998, reflected higher revenues associated with commencement of service to
an increased total number of

                                       13
<PAGE>

customers, as well as revenue recognized related to capital leases to portions
of our network and sales of portions of our network through joint-build
agreements.

COST OF SALES

Cost of sales was $6.6 million in the second quarter of 1999, a 100% increase
over cost of sales of $3.3 million for the second quarter of 1998. Cost of sales
increased, for the six months ended June 30, 1999 compared with the same period
in 1998, due to costs associated with the commencement of service to customers,
higher fixed costs associated with the operation of our network in service and
the allocated costs of the network related to revenue recognized for sales-type
leases to portions of our network. Cost of sales as percentages of revenue for
the second quarter of 1999 and 1998 were 32% and 45%, respectively, declining as
a result of the significant increase in the number of customers and revenues
associated with those customers, coupled with a slower growth in costs
associated with these revenues.

Cost of sales was $14.8 million in the six months ending June 30, 1999, a 222%
increase over cost of sales of $4.6 million for the first six months of 1998.
Cost of sales increased for the six months ended June 30, 1999 compared with the
same period in 1998 due to costs associated with the commencement of service to
customers, as well as higher fixed costs associated with the build-out of our
network. Costs of sales as percentages of revenue for the first six months of
1999 and 1998 were 38% and 51% respectively, declining as a result of the
significant increase in the number of customers and revenues associated with
those customers, coupled with a slower growth in costs associated with these
revenues.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased to $7.7 million during
the second quarter of 1999, from $3.2 million during the second quarter of 1998,
an increase of $4.5 million, or 141%. Selling, general and administrative
expenses increased to $13.8 million during the six months of 1999 from $5.9
million during the six months of 1998, an increase of $7.9 million, or 134%. The
increase in selling, general and administrative expenses, for the three and
six-month periods ended June 30, 1999 versus the three and six-month periods
ended June 30, 1998, resulted primarily from increased overhead to accommodate
our network expansion. As a percentage of revenue, selling, general and
administrative expenses decreased to 38% of revenue for the three months ended
June 30, 1999, from 43% for the comparable period in 1998. As a percentage of
revenue, selling, general and administrative expenses decreased to 36% of
revenue for the six months ended June 30, 1999, from 65% for the comparable
period in 1998.

SETTLEMENT AGREEMENT

We recorded $3.4 million for a settlement agreement in the three months ended
March 31, 1998. The amount represented the expense associated with the issuance
of stock options and payment of cash related to a settlement agreement.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense was $3.9 million for the three months
ended June 30, 1999 versus $0.2 million during the three months ended June 30,
1998, an increase of $3.7 million. Depreciation and amortization of $5.1 million
was recorded during the six months ended June 30, 1999 versus $0.4 million
during the six months ended June 30, 1998, an increase of $4.7 million. The
increase in depreciation and amortization expense resulted from increased
investment in our completed fiber optic network and additional property and
equipment acquired.

INCOME (LOSS) FROM OPERATIONS

For the three months ended June 30, 1999, we attained income from operations of
$2.2 million, a $1.6 million, or a 267%, improvement over the $0.6 million
income from operations reported for the three months ended June 30, 1998. For
the six months ended June 30, 1999, income from operations was $5.0 million, a
$10.4 million improvement over the $5.4 million loss for the comparable period
in 1998. The

                                       14
<PAGE>

improvement in income from operations was attributable to the increase in
revenue as well as a reduction, as a percentage of sales, in cost of goods sold,
selling, general and administrative expenses and depreciation. In addition, the
1998 amount included the settlement agreement, mentioned above.

INTEREST INCOME

Interest income was $6.1 million during the three months ended June 30, 1999
compared with $1.9 million during the comparable 1998 period, an increase of
$4.2 million, or 221%. Interest income was $13.5 million during the six months
ended June 30, 1999 compared with $3.6 million during the comparable 1998
period, an increase of $9.9 million or 275%. Interest income increased in the
period as a result of the investment of our excess cash received as proceeds
from the issuance and sale of our 10% senior notes in November 1998.

INTEREST EXPENSE (NET)

Interest expense increased in the three months ended June 30, 1999 to $14.5
million versus $6,000 for the three months ended June 30, 1998. Interest
expense increased for the six months ended June 30, 1999 to $30.4 million
compared with $12,000 during the same period of 1998. The increase in interest
expense reflects the cost of additional debt acquired related to the issuance
and sale of 10% senior notes in November 1998.

LOSS FROM JOINT VENTURE

For the three months ended June 30, 1999, we recorded a $0.2 million loss
from the joint venture based on our 50% interest in the joint venture. For
the six months ended June 30, 1999 we recorded a $0.4 million loss from the
joint venture compared with a $0.3 million loss for the six months ended June
30, 1998.

NET LOSS

We had a net loss of $6.5 million for the three months ended June 30, 1999,
versus a net income of $2.2 million for the comparable period of 1998. For the
three months ended June 30, 1999, the basic net loss per share was $0.03 versus
a basic and fully dilutive net income per share of $0.01 for the three months
ended June 30, 1998.

We had net loss of $12.3 million for the six months ended June 30, 1999, versus
a net loss of $2.1 million for the comparable period of 1998. For the six months
ended June 30, 1999 and 1998, the basic net loss per share, after the stock
split, was $0.06 and $0.01, respectively. The net losses were primarily
attributable to the increase in net interest expense related to the issuance and
sale of our 10% senior notes in November 1998.

LIQUIDITY AND CAPITAL RESOURCES

On November 3, 1997, our initial public offering of 72,864,000 shares of class A
common stock generated net proceeds of $133.9 million, after deducting the
underwriters' commission and expenses relating to such initial public offering.
In addition, on November 25, 1998, we issued and sold 10% senior notes which
generated net proceeds of $630.0 million, after deducting the underwriters'
commission and related expenses.

For the six months ended June 30, 1999, our operating activities generated
$21.0 million of cash, compared with $13.3 million during the comparable period
in 1998. For the six months ended June 30, 1999, we used $235.5 million of cash
for investing activities compared with $32.3 million for the same period in
1998. This increase was due primarily to investments in the expansion of our
networks and related construction in progress, the restriction of cash as
security for letters of credit in connection with our German network build, and
the acquisition of Communication Systems Development, Inc. For 1999, we made net
payments of $13.0 million of cash from financing activities, compared to $0.8
million of net proceeds from the issuance of common stock in 1998, which was
primarily attributable to the payment of Communication Systems Development,
Inc.'s pre-acquisition debt.

                                       15
<PAGE>

We anticipate that we will continue to incur net operating losses as we expand
and complete our existing networks, construct additional networks and market our
services to an expanding customer base. We anticipate spending approximately
$300 million for the year ending December 31, 1999 and approximately $200
million for the year ending December 31, 2000 on the build-out of our fiber
optic networks in 17 cities in the United States and Europe. We believe that the
net proceeds from the issuance and sale of $650.0 million of 10% Senior Notes in
November 1998, other cash on hand, certain vendor financing and cash generated
in 1999 and 2000 (including advance customer payments), will be sufficient to
fund the planned build-out of our fiber optic networks and our other working
capital needs through the year ended December 31, 2000. The indenture for the
notes permits us to incur additional indebtedness to finance the construction of
our networks. As a result, we may also consider from time to time private or
public sales of additional equity or debt securities, entering into senior
credit facilities and other financings, depending upon market conditions, in
order to finance the continued build-out of our network. We cannot assure you
that we will be able to successfully consummate any such financing on acceptable
terms or at all.

In addition to the above, the merger agreement with AboveNet will cause us to
record approximately $1.5 billion in goodwill and other intangible assets, to be
amortized over periods up to twenty years. Accordingly, we expect to continue
experiencing net operating losses and negative cash flows for the foreseeable
future.

YEAR 2000 SYSTEM MODIFICATIONS

We are currently working to evaluate and resolve the potential impact of the
Year 2000 on our processing of date-sensitive information and network systems.
The Year 2000 problem is the result of computer programs being written using two
digits (rather than four) to define the year 2000, which could result in
miscalculations or system failures resulting from recognition of a date using
"00" as the year 1900 rather than the year 2000.

We have delegated responsibility to a group of executives to coordinate the
identification, evaluation and implementation of changes to computer systems and
applications necessary to achieve our goal of a Year 2000 date conversion which
would minimize the effect on our customers and avoid disruption to business
operations. We are also focusing on hardware and software tools, programming and
outside forces that may affect our operations, including our vendors, banks and
utility companies. Our analysis of the Year 2000 threat is ongoing and will be
continuously updated throughout 1999 as necessary.

We have developed a questionnaire and project plan to be completed by our
systems and operating personnel to identify all business and computer
applications so that we can identify potential compliance problems. We have
initiated communications with our significant customers, suppliers, contractors
and major systems developers to determine their plans to remedy any Year 2000
issues that arise in their business with us. We have begun to compile a database
of information based upon these responses, which we expect to complete during
the third quarter of 1999. To the extent problems are identified, we will
implement corrective procedures where necessary, then test the applications for
Year 2000 compliance. We expect to complete this project prior to January 1,
2000.

Based on preliminary data, our estimate is that the Year 2000 effort will have a
nominal cost impact, although we can make no assurances as to the ultimate cost
of the Year 2000 effort or the total cost of information systems. Such costs
will be expensed as incurred, except to the extent such costs are incurred for
the purchase or lease of capital equipment. We expect to make some of the
necessary modifications through our ongoing investment in system upgrades. We
believe that our exposure to this issue, based on our internal systems, is
somewhat limited by the fact that substantially all of our existing systems have
been purchased or replaced since 1997.

As of June 30, 1999, we had incurred nominal consulting costs in respect of our
Year 2000 conversion effort. We have not deferred any other information systems
projects due to the Year 2000 efforts. We expect

                                       16
<PAGE>

that the source of funds for Year 2000 costs will be cash on hand. Accordingly,
we are devoting the necessary resources to resolve all significant Year 2000
issues.

If our customers, suppliers, contractors or major systems developers are unable
to resolve Year 2000 processing issues in a timely manner, a material adverse
effect on our results of operations and financial condition could result.

This Quarterly Report on Form 10-Q constitutes a Year 2000 Readiness Disclosure
Statement, and the statements in this Form 10-Q are subject to the Year 2000
Information and Readiness Disclosure Act. We hereby claim the protection of this
act for this Quarterly Report and all information contained herein.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, our financial position is routinely subjected
to a variety of risks. In addition to the market risk associated with interest
movements on our outstanding debt, we are subject to other types of risk such as
the collectibility of our accounts receivables and fluctuation of foreign
currency. Our principal long-term obligation is our $650 million 10% Senior
Notes. The fair value of the long-term debt at June 30, 1999 was approximately
$650 million. A 10% decrease and a 10% increase in the level of interest rates
would result in an increase in the fair value of our long term obligation by
$6.5 million and a decrease in the fair value of our long term obligation by
$6.5 million respectively.

We have also purchased a portfolio of U.S. government securities, which mature
at dates sufficient to provide for payment, in full, of interest on our $650
million 10% Senior Notes through May 15, 2000. The pledged securities are stated
at cost, adjusted for premium amortization and accrued interest. The fair value
of the pledged securities approximates its carrying value.

Additionally, we have restricted cash invested in German certificates of
deposits, which have been used to secure a DM110 million irrevocable standby
letter of credit for our German network build. The fair value of the restricted
cash approximates the carrying value of the remaining portion of the letter of
credit.

We have $342 million in cash and cash and equivalents at June 30, 1999. To the
extent our cash and cash equivalents exceed our short-term funding requirements
we may invest the excess cash and cash equivalents on longer-term high-quality
financial instruments. Such investments when made will be subject to changes in
interest rates.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

(a)      On or about October 20, 1997, Vento & Company of New York, LLC
         commenced an action against Metromedia Fiber Network, Inc., Stephen A.
         Garofalo, Peter Silverman, the law firm of Silverman, Collura, Chernis
         & Balzano, P.C., Peter Sahagen, Sahagen Consulting Group of Florida,
         Robert Kramer, Birdie Capital Corp., Lawrence Black, Sterling Capital
         LLC, Penrush Limited, Needham Capital Group, Arthur Asch, Michael Asch
         and Ronald Kuzon in the United States District Court for the Southern
         District of New York, No. 97 CIV 7751(JGK). On or about May 29, 1998,
         Vento & Company filed an amended complaint. In its complaint, as
         amended, Vento & Company alleges four causes of action in connection
         with its sale of 900,000 shares, not adjusted for subsequent stock
         splits, of our class A common stock to Mr. Sahagen and some of the
         defendants on January 13, 1997. The four causes of action include:

         (i)      violation of Section 10(b) of the Securities Exchange Act of
                  1934 and Rule 10b-5 promulgated under such Act;

         (ii)     fraud and fraudulent concealment;

         (iii)    breach of fiduciary duty; and

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<PAGE>

         (iv)     negligent misrepresentation and omission.

         On the first and second causes of action, Vento & Company is seeking,
         among other things, rescission of the Vento & Company sale, or
         alternatively, damages in an amount which we cannot currently ascertain
         but believe to be in excess of $36 million, together with interest. On
         the third and fourth causes of action, Vento & Company is seeking
         damages in an amount which we cannot currently ascertain but believe to
         be in excess of $36 million, together with interest. Vento & Company is
         also seeking punitive damages in the amount of $50 million, reasonable
         legal fees and the cost of this action. All the defendants, including
         Metromedia Fiber Network and Stephen A. Garofalo, have moved to dismiss
         Vento & Company's amended complaint. On or about March 17, 1999 the
         defendant's motion to dismiss were denied in part and granted in part.
         We filed an answer to the amended complaint and raised affirmative
         defenses.

         On or about July 1, 1999, Vento & Company filed a second amended
         complaint. In its complaint, as amended, Vento & Company alleges seven
         causes of action in connection with its sale of 900,000 shares, not
         adjusted for subsequent stock splits, of our class A common stock to
         Mr. Sahagen and some of the defendants on January 13, 1997, including
         (i) violation of Section 10(b) of the Securities Exchange Act of 1934
         and Rule 10b-5 promulgated under such Act; (ii) fraud and fraudulent
         concealment; (iii) breach of fiduciary duty (but not against
         Metromedia Fiber Network); (iv) negligent misrepresentation and
         omission; and (v) breach of contract.

         Vento & Company is seeking, among other things, recission of the Vento
         & Company sale, or alternatively, damages in an amount not currently
         ascertainable but believed to be in excess of $460 million, together
         with interest thereon. Vento & Company is also seeking punitive damages
         in an amount not yet determined, reasonable legal fees and the costs of
         this action.

         We have filed an answer to the second amended complaint and have raised
         affirmative defenses. All the defendants, including the Company and
         Stephen A. Garofalo, served motions for summary judgment to dismiss the
         action.

(b)      On or about June 12, 1998, Claudio E. Contardi commenced an action
         against Peter Sahagen, Sahagen Consulting Group of Florida and
         Metromedia Fiber Network in the United States District Court for the
         Southern District of New York, No. 98 CIV 4140(JGK). Mr. Contardi
         alleges a cause of action for, among other things, breach of a finder's
         fee agreement entered into between Mr. Sahagen and Mr. Contardi on or
         about November 14, 1996 and breach of an implied covenant of good faith
         and fair dealing contained in the finder's fee agreement. Mr. Contardi
         is seeking, among other things, a number of our shares which we cannot
         currently ascertain but believe to be approximately 112,500 shares
         (calculated as of the date on which the complaint was filed which does
         not take into account subsequent stock splits) or damages in an amount
         which we cannot currently ascertain but believe to be approximately
         $4.9 million (calculated as of the date on which the complaint was
         filed) and all costs and expenses incurred by him in this action. We
         have filed an answer to the complaint and have raised affirmative
         defenses.

We intend to vigorously defend both these actions because we believe that we
acted appropriately in connection with the matters at issue in these two cases.
However, we cannot assure you that we will not determine that the advantages of
entering into a settlement outweigh the risk and expense of protracted
litigation or that ultimately we will be successful in defending against these
allegations. If we are unsuccessful in defending against these allegations, an
award of the magnitude being sought in the Vento & Company litigation would have
a material adverse effect on our financial condition and results of operations.

(c)      On June 29, 1999 , an alleged stockholder of AboveNet filed a lawsuit,
         captioned KAUFMAN V. TUAN, et al, Del. Ch. C.A. No. 17259NC, in the
         Court of Chancery of the State of Delaware in and for the New Castle
         County. The plaintiff, who purports to represent a class of all
         AboveNet stockholders, challenges the terms of the proposed merger
         between the Company and AboveNet. The complaint

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<PAGE>

         names, as defendants, AboveNet, the directors of AboveNet, and the
         Company (as an aider and abettor). The complaint alleges generally that
         AboveNet's directors breached their fiduciary duty to stockholders of
         AboveNet, and seeks an injunction against the merger, or, in the
         alternative, rescission and the recovery of unspecified damages, fees
         and expenses. AboveNet, the Company and the individual defendants
         believe the lawsuit is without merit and intend to defend themselves
         vigorously. AboveNet and the individual director defendants' responses
         were filed on July 22, 1999. In connection with these responses, a
         motion to dismiss the complaint in its entirety and a motion to stay
         discovery pending the outcome of the motion to dismiss were filed by
         the AboveNet and the individual directors of AboveNet on July 22, 1999.
         Similar motions to dismiss the complaint and stay discovery were filed
         by the Company on July 26, 1999.

         Four other complaints, which are virtually identical to the complaint
         in KAUFMAN V. TUAN, have also been filed in the Delaware Court of the
         Chancery. None of these four complaints have been served. The four
         actions are captioned BROSIOUS V. TUAN, et al, Del. Ch. C.A. No.
         17271NC, CHONG V. TUAN, et al, Del. Ch. C.A. No. 17281NC, EHLERT V.
         TUAN, et al, Del. Ch. C.A. No. 17284NC, HORN V. TUAN, et al, Del. Ch.
         C.A. No. 17300NC.

In addition, we are subject to various claims and proceedings in the ordinary
course of business. Based on information currently available, we believe that
none of such current claims, or proceedings, individually, or in the aggregate,
including the Vento & Company litigation and the Contardi litigation, will have
a material adverse effect on our financial condition or results of operations,
although we can make no assurances in this regard.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable

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

We held our 1999 annual meeting of stockholders on May 18, 1999.

         -        We have adjusted the shares indicated below for the
                  two-for-one stock splits.

         -        The stockholders elected the following class A directors at
                  the 1999 annual meeting of stockholders by the indicated votes
                  of the shares of our class A common stock:

<TABLE>
<CAPTION>
                         NAME             CLASS OF DIRECTOR    VOTES FOR    VOTES WITHHELD
                         ----             -----------------    ---------    --------------
<S>                                           <C>             <C>              <C>
                  Stephen A. Garofalo         Class A         127,274,768      178,970
                  Howard M. Finkelstein       Class A         127,271,768      181,970
                  Vincent A. Galluccio        Class A         127,264,978      188,760
</TABLE>

         -        At the annual meeting, the stockholders voted to approve the
                  amendment of our Amended and Restated Certificate of
                  Incorporation increasing the number of authorized shares of
                  our common stock from 200,000,000 shares to 2,926,286,022
                  shares, consisting of (a) 2,404,031,241 shares of class A
                  common stock and (b) 522,254,782 shares of class B common
                  stock by a vote of 114,172,010 class A shares voting for, all
                  33,769,272 class B

                                       19
<PAGE>

                  shares (337,692,720 votes) voting for, 13,226,208 class A
                  shares voting against, 35,590 class A shares abstaining and
                  19,390 class A shares constituting broker non-votes.

         -        At the annual meeting, the stockholders voted to ratify the
                  retention of Ernst & Young LLP as independent auditors for the
                  1999 fiscal year, by a vote of 127,345,768 class A shares
                  voting for, all 33,769,272 class B shares (337,692,720 votes)
                  voting for, 59,604 class A shares voting against and 48,366
                  class A shares abstaining.

ITEM 5.  OTHER INFORMATION

Not applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a)       Exhibits

         Exhibit #
         ---------

         27       Financial Data Schedule for the period ended June 30, 1999.

b)       Reports on Form 8-K

On June 22, 1999, we entered into an Agreement and Plan of Merger ("Merger
Agreement") with AboveNet Communications, Inc. ("AboveNet"). Pursuant to the
Merger Agreement, each share of AboveNet common stock will convert into the
right to receive 1.175 shares of our class A common stock. Following
consummation of the merger, AboveNet will become our wholly-owned subsidiary.
In connection with the execution of the Merger Agreement, we entered into an
Option Agreement with AboveNet pursuant to which we were granted an option to
acquire up to 19.9% of AboveNet's common stock at a price of $49.9375 per
share. The transaction contemplated by the Merger Agreement, which has been
approved by the board of directors of each company, is intended to be a
tax-free reorganization.

Consummation of the transactions contemplated in the
Merger Agreement is subject to approval of the issuance of the shares of our
class A common stock in the merger by our stockholders, approval of the
merger by the stockholders of AboveNet and other customary closing
conditions. Stockholders who control 15.7% of AboveNet's common stock have
agreed to vote in favor of the merger. All of the holders of our class B
common stock, who control approximately 66% of our voting power, have agreed
to vote in favor of the issuance of the shares of our class A common stock in
the merger. The transactions will therefore be approved by holders of our
common stock at the Company's special meeting without requiring the vote of
any of our additional stockholders. We and AboveNet mailed definitive proxy
statements to our respective shareholders on August 6, 1999 and have
scheduled the special meetings at which the stockholders will vote to approve
the merger on September 8, 1999. We and AboveNet expect that the merger will
be consummated immediately following the stockholder meetings.

                                       20
<PAGE>

SIGNATURE

Pursuant to the requirements of the United States Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

                         METROMEDIA FIBER NETWORK, INC.
                         ------------------------------
                                 (Registrant)

                                 By: /s/ Gerard Benedetto
                                     -------------------------------------
                                     Gerard Benedetto
                                     Chief Financial Officer
                                     (Principal Financial and Accounting Officer
                                      and Duly Authorized Officer)

                                     August 12, 1999















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