<Page>

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

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

                                    FORM 10-Q
             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       For the period ended June 30, 2001

                                       or

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

          For the transition period from ____________to ______________

                       Commission File Number - 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.
                               360 Hamilton 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 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X)  No ( )

The number of shares outstanding of the registrant's common stock as of August
6, 2001 was:

<Table>
<Caption>

                 Class         Number of Shares
                 -----         ----------------
<S>                             <C>
                   A            545,460,429
                   B             67,538,544
</Table>

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

<Page>

                  METROMEDIA FIBER NETWORK, INC. & SUBSIDIARIES
                          QUARTERLY REPORT ON FORM 10-Q
                 FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2001

                                TABLE OF CONTENTS



ITEM NO.    DESCRIPTION                                                  PAGE

                         PART I - FINANCIAL INFORMATION

  Item 1.   Financial Statements

            Consolidated Statements of Operations for the
            Three and Six Month Periods Ended June 30,
            2001 and 2000                                                  1

            Consolidated Balance Sheets as of June 30, 2001
            and December 31, 2000                                          2

            Consolidated Statements of Cash Flows for the
            Six Month Periods Ended June 30, 2001 and 2000                 3

            Notes to Consolidated Financial Statements                     4

  Item 2.   Management's Discussion and Analysis of
            Financial Condition and Results of Operations                 11

  Item 3.   Quantitative and Qualitative Disclosures
            about Market Risk                                             15

                           PART II - OTHER INFORMATION

  Item 1.   Legal Proceedings                                             17

  Item 2.   Changes in Securities and Use of Proceeds                     18

  Item 3.   Defaults Upon Senior Securities                               18

  Item 4.   Submission of Matters to a Vote of Security Holders           18

  Item 5.   Other Information                                             18

  Item 6.   Exhibits and Reports on Form 8-K                              18


<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,
                                                                          ------------------------      ------------------------
                                                                            2001            2000           2001           2000
                                                                          ---------      ---------      ---------      ---------
<S>                                                                       <C>            <C>            <C>            <C>
         Revenue                                                          $  91,652      $  43,315      $ 168,628      $  75,236

         Expenses:
          Cost of sales (excluding non-cash compensation
              in 2001 of $4,760 and $8,105, respectively)                    76,942         47,148        142,094         82,724
          Selling, general and administrative, (excluding
             non-cash compensation in 2001 of $12,892 and
             $22,556, respectively)                                          59,738         27,968        121,919         55,628
          Non-cash compensation                                              17,652             --         30,661             --
          Depreciation and amortization                                      91,842         40,045        163,275         72,534
                                                                          ---------      ---------      ---------      ---------
         Loss from operations                                              (154,522)       (71,846)      (289,321)      (135,650)
         Other income (expenses):
          Other income and expense                                          (12,131)        36,831         15,630         61,888
          Interest expense                                                  (38,275)       (55,689)       (79,416)      (100,869)
          Loss from joint ventures                                             (275)        (1,308)          (429)        (2,541)
                                                                          ---------      ---------      ---------      ---------
         Net loss                                                         $(205,203)     $ (92,012)     $(353,536)     $(177,172)
                                                                          =========      =========      =========      =========

         Net loss per share, basic                                        $   (0.34)     $   (0.17)     $   (0.60)     $   (0.33)
                                                                          =========      =========      =========      =========

         Net loss per share, diluted                                         N/A            N/A            N/A            N/A
                                                                          =========      =========      =========      =========

         Weighted average number of shares
          outstanding, basic                                                608,138        547,708        590,472        537,789
                                                                          =========      =========      =========      =========

         Weighted average number of shares
          outstanding, diluted                                               N/A            N/A            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,
                                                                         2001             2000
                                                                      -----------      -----------
                                                                      (UNAUDITED)
<S>                                                                   <C>              <C>
                              ASSETS

Current assets:
    Cash and cash equivalents                                         $    78,258      $ 1,148,888
    Marketable securities                                                      --          192,349
    Restricted cash, current                                                9,579               --
    Accounts receivable                                                   151,039          111,157
    Prepaid expenses and other current assets                              45,185           52,993
                                                                      -----------      -----------
            Total current assets                                          284,061        1,505,387

Fiber optic transmission network and related equipment, net             3,720,342        2,958,096
Property and equipment, net                                                87,733           43,875
Restricted cash                                                            11,851           61,204
Investment in/advances to joint ventures                                   10,117           10,270
Other assets                                                               99,059           94,749
Intangibles, net                                                        2,582,075        1,578,750
                                                                      -----------      -----------
            Total assets                                              $ 6,795,238      $ 6,252,331
                                                                      ===========      ===========

               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                  $   310,489      $   302,300
    Accrued expenses                                                      387,773          551,507
    Deferred revenue, current portion                                      45,056           43,664
    Capital lease obligations and notes payable, current portion            3,147            8,981
                                                                      -----------      -----------
            Total current liabilities                                     746,465          906,452
Senior notes payable                                                    1,612,260        1,635,400
Convertible subordinated notes payable                                    975,281          975,281
Capital lease obligations and notes payable                                26,920           31,036
Deferred revenue                                                          456,964          439,988
Other long term liabilities                                                24,087           18,949

Commitments and contingencies (see notes)

Stockholders' equity:
    Class A common stock, $.01 par value; 2,404,031,240
      shares authorized; 542,157,196 and 484,518,343
      shares issued and outstanding, respectively                           5,422            4,845
    Class B common stock, $.01 par value; 522,254,782
      shares authorized; 67,538,544 shares issued and outstanding             676              676
    Additional paid-in capital                                          4,177,925        2,814,480
    Unearned stock-based compensation                                    (259,660)              --
    Accumulated deficit                                                  (917,952)        (564,416)
    Cumulative comprehensive loss                                         (53,150)         (10,360)
                                                                      -----------      -----------
            Total stockholders' equity                                  2,953,261        2,245,225
                                                                      -----------      -----------
            Total liabilities and stockholders' equity                $ 6,795,238      $ 6,252,331
                                                                      ===========      ===========
</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,
                                                              ----------------------------
                                                                 2001             2000
                                                              -----------      -----------
<S>                                                           <C>              <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss                                                      $  (353,536)     $  (177,172)
Adjustments to reconcile net loss to net cash
    provided by operating activities:
         Depreciation                                              78,006           31,531
         Amortization                                              85,269           41,003
         Foreign currency gain                                    (23,040)              --
         Amortization of deferred financing costs                   2,839            2,838
         Stocks, options and warrants issued for services             440               --
         Non-cash compensation                                     30,661               --
         Loss from joint ventures                                     429            2,541
         Loss on writedown of investments                          24,340               --
CHANGE IN OPERATING ASSETS AND LIABILITIES:
         Accounts receivable                                      (34,650)          (4,855)
         Accounts payable and accrued expenses                    (28,686)          14,477
         Deferred revenue                                          18,368           46,726
         Other                                                     (6,910)          (1,097)
                                                              -----------      -----------
       Net cash used in operating activities                     (206,470)         (44,008)
                                                              -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales and purchases of marketable securities                      192,349         (147,231)
Capital expenditures on fiber optic transmission
    network and related equipment                                (971,696)        (726,632)
Investment in/advances to joint ventures                           (2,533)          (5,266)
Capital expenditures on property and equipment                    (35,223)         (24,226)
Business acquisitions (net of cash acquired)                      (34,882)          (2,315)
                                                              -----------      -----------
    Net cash used in investing activities                        (851,985)        (905,670)
                                                              -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock                             10,422          751,337
Purchases and sales of pledged securities, net                         --           31,960
Restricted cash secured by letter of credit                        38,992           20,011
Repayment of notes payable and capital lease obligations          (17,849)          (3,405)
Proceeds from issuance of notes payable                                --          975,281
                                                              -----------      -----------
   Net cash provided by financing activities                       31,565        1,775,184
                                                              -----------      -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                           (43,740)          (5,887)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           (1,070,630)         819,619
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD                   1,148,888        1,262,391
                                                              -----------      -----------
CASH AND CASH EQUIVALENTS-END OF PERIOD                       $    78,258      $ 2,082,010
                                                              ===========      ===========
Supplemental information:
    Interest paid                                             $   111,171      $    90,361
                                                              ===========      ===========
    Income taxes paid                                         $        --      $        --
                                                              ===========      ===========
    Accrued capital expenditures                              $   516,187      $   156,010
                                                              ===========      ===========
</Table>

In connection with the acquisition of all of the common stock of SiteSmith in
February 2001, the Company issued shares of Class A common stock, options and
warrants with a total value of $1,019,162, net of a deferred compensation charge
of $331,158.

In connection with the acquisitions in 2000 of MIBH and of 100% of the shares
owned by the joint venture partners of AboveNet UK Ltd., shares of class A
common stock were issued with a total value of $49,280 and $10,000,
respectively.

                             SEE ACCOMPANYING NOTES


                                        3
<Page>


1. BASIS OF PRESENTATION, DESCRIPTION OF THE BUSINESS AND SIGNIFICANT ACCOUNTING
   POLICIES

BASIS OF PRESENTATION

      The consolidated financial statements include the accounts of Metromedia
Fiber Network, Inc. and its wholly owned subsidiaries, (collectively, "MFN" or
the "Company"). All significant inter-company balances and transactions have
been eliminated in consolidation. Investments in joint ventures which are not
majority owned, or which the Company does not control but over which it
exercises significant influence, are accounted for using the equity method.
Certain reclassifications have been made to the consolidated financial
statements for prior periods to conform to the current presentation.

      The interim unaudited consolidated financial statements in this Report
have been prepared in accordance with the rules and regulations of the United
States Securities and Exchange Commission's Regulation S-X and consequently do
not include all disclosures required under accounting principles generally
accepted in the United States. 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,
2000, contained in 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.

DESCRIPTION OF BUSINESS

      The Company provides fiber optic infrastructure, high-bandwidth internet
connectivity and managed internet infrastructure services for its communications
intensive customers. 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. Through its acquisition of AboveNet
Communications, Inc. ("AboveNet"), the Company also provides "one-hop"
connectivity that enables mission critical internet applications to thrive, as
well as high-bandwidth infrastructure, including managed co-location services.
PAIX.net, Inc. ("PAIX"), serves as a packet switching center for ISPs and also
offers secure, fault-tolerant co-location services to ISPs. SiteSmith, Inc.
("SiteSmith") provides a comprehensive internet infrastructure management
solution that includes design and architecture, hardware and software,
installation, co-location and network connectivity and ongoing management.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

MANAGEMENT ESTIMATES

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results may differ from those estimates.

FIBER OPTIC TRANSMISSION NETWORK AND RELATED EQUIPMENT

      The fiber optic transmission network and related equipment are stated at
cost. Costs incurred in connection with the installation and expansion of the
network are capitalized. Depreciation is computed using the straight-line method
through the life of either the franchise agreement or right of way for the
related network. For data centers, depreciation is computed using the
straight-line method through the shorter of the life of the lease or ten years.


                                       4
<Page>

1. BASIS OF PRESENTATION, DESCRIPTION OF THE BUSINESS AND SIGNIFICANT ACCOUNTING
   POLICIES (CONTINUED)

RECOGNITION OF REVENUE

      The Company recognizes substantially all 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. Revenue on managed services, bandwidth and space
requirement charges is recognized in the period in which the services are
provided.

      The Company has adopted Staff Accounting Bulletin ("SAB") No. 101 as
amended. The adoption of SAB No. 101, as amended, has not and is not expected to
have a material impact on the Company's results of operations.

DEFERRED REVENUE

      Deferred revenue represents prepayments received from customers for future
use of the Company's fiber optic network and co-location facilities as well as
prepayment for installation services, which have not yet been provided. Lease
payments are structured as either prepayments or monthly recurring charges.
Prepayments are accounted for as deferred revenues and recognized over the term
of the respective customer lease agreement.

COMPREHENSIVE LOSS

      Statements of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income (Loss)" establishes rules for the reporting of
comprehensive income and its components. Comprehensive income (loss) consists of
net income (loss), unrealized loss on an investment and foreign currency
translation adjustments. The comprehensive loss for the three and six months
ended June 30, 2001 was approximately $218.2 million and $396.3 million
respectively, compared to a loss of approximately $93.1 million and $183.1
million respectively, for the three and six months ended June 30, 2000.

SEGMENT INFORMATION

      The Company discloses information regarding segments in accordance with
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 131 establishes standards for reporting of financial
information about operating segments in annual financial statements and requires
reporting selected information about operating segments in interim financial
reports. The disclosure of segment information is not required as the Company
operates in only one business segment.

      As of and for the three and six months ended June 30, 2001 and 2000, in
excess of 90% of the Company's assets were located in the United States and the
Company derived substantially all of its revenue from businesses located in the
United States.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

      In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and
No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), effective for
fiscal years beginning after December 15, 2001. Under the new rules, goodwill
and intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests in accordance with the
Statements. Other intangible assets will continue to be amortized over their
useful lives.

      The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. The Company
is currently evaluating its intangible assets in relation to the provisions
of SFAS 142 to determine the impact the adoption of SFAS 142 will have on its
results of operations and financial position. However, the Company believes
that application of the non-amortization provision of SFAS 142 will
significantly reduce its amortization expense from amounts currently
recorded. During 2002, the Company will perform the first of the required
impairment tests of goodwill and other intangible assets, and has not yet
determined what the effect of these tests will be on the earnings and
financial position of the Company.


                                       5
<Page>

2. FIBER OPTIC TRANSMISSION NETWORK AND RELATED EQUIPMENT

      Fiber optic transmission network and related equipment consist of the
following (in 000's):

<Table>
<Caption>

                                         JUNE 30,        DECEMBER 31,
                                           2001              2000
                                        -----------      -----------
<S>                                     <C>              <C>
Fiber optic network                     $ 1,467,753      $ 1,062,982
Data Centers                                878,605          337,146
Telecommunication equipment & other         267,002          206,051
Construction in progress                  1,287,197        1,464,190
                                        -----------      -----------
    Total Network                         3,900,557        3,070,369
Less: accumulated depreciation             (180,215)        (112,273)
                                        -----------      -----------
                                        $ 3,720,342      $ 2,958,096
                                        ===========      ===========
</Table>

      Construction in progress includes amounts incurred in the Company's
expansion of its network and data centers. 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. During the six months ended June 30,
2001 and 2000, $36.9 million and $7.8 million of interest expense was
capitalized, respectively. The Company's commitment to purchase materials and
contracts for the construction of fiber optic network systems was approximately
$416.0 million as of June 30, 2001.

3. INVESTMENT IN/ADVANCES TO JOINT VENTURES

      The Company records its investments in other companies and joint ventures
which are less than majority-owned, or which the Company does not control, but
in which it exercises significant influence, under the equity method of
accounting.

      The Company's unconsolidated investments in joint ventures, at cost, net
of adjustments for its equity in earnings or losses, were as follows (in 000's):

<Table>
<Caption>

                                JUNE 30,      DECEMBER 31,     OWNERSHIP
                                  2001            2000             %
                                --------      -----------     -----------
<S>                             <C>             <C>                   <C>
         AboveNet France        $    248        $    248              50%
         AboveNet Japan               --           2,285              (1)
         AboveNet Taiwan           3,508           1,579              56%
         ION                       6,353           6,150              50%
         Other                         8               8              --
                                --------        --------
                                $ 10,117        $ 10,270
                                ========        ========
</Table>

----------
(1) In February 2001, the Company purchased an additional 50% interest in
    AboveNet Japan, increasing its ownership to 90%, and now consolidates
    AboveNet Japan.



                                       6
<Page>

4. ACQUISITIONS

      All acquisitions have been accounted for under the purchase method. The
results of operations of the acquired businesses are included in the
consolidated financial statements from the dates of acquisition.

      On February 8, 2001, the Company acquired all the outstanding common stock
of SiteSmith for a total purchase price, paid in Company class A common stock,
of approximately $1.0 billion. The holders of SiteSmith common stock, stock
options and warrants received, in exchange for those securities, 1.3404 shares
of the Company's class A common stock, stock options and warrants, respectively.
The excess of purchase price over the fair value of the net assets acquired was
approximately $1.0 billion and has been recorded as goodwill, which is being
amortized over ten years.

      In addition, in connection with the issuance of unvested stock options and
restricted shares of class A common stock, the Company recorded approximately
$331.2 million of deferred compensation expense, which is being amortized over
the remaining vesting periods of three to four years. As part of the Company's
integration plan, employees which were deemed to be redundant as a result of
the merger were terminated in May 2001. An adjustment was made to increase
goodwill by approximately $42.0 million for the amount of deferred
compensation expense related to those employees.

      In February 2001, the Company purchased an additional 50% interest in its
40% owned joint venture in Japan, AboveNet Japan, for approximately $7.5
million.

      The following unaudited pro forma financial information presents the
combined results of operations of the Company and the SiteSmith acquisition as
if the acquisition had occurred as of the beginning of 2000, after giving effect
to certain adjustments, including amortization of goodwill. The pro forma
financial information does not necessarily reflect the results of operations
that would have occurred had the entities constituted a single entity during
such periods. The amounts are presented in thousands, except per share
amounts. Pro forma results of operations for the AboveNet Japan acquisition
noted above have not been presented because the effects were not significant.

                                       7
<Page>

4. ACQUISITIONS (CONTINUED)

<Table>
<Caption>

                                                      JUNE 30,
                                         ----------------------------------
                                            2001                    2000
                                         ----------              ----------
<S>                                      <C>                     <C>
      Revenue                            $ 171,542               $  82,360
      Net Loss                            (455,227)               (301,060)
      Loss per share, basic                  (0.71)                  (0.51)
</Table>

5. RELATED PARTY TRANSACTIONS

      The Company is a 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 2001 and 2000 annual management fee under the agreement is $1.0 million,
payable monthly. The Company is also obligated to reimburse Metromedia Company
for all its out-of-pocket costs and expenses incurred and advances paid by
Metromedia Company in connection with the management agreement.

      At June 30, 2001, the Company has notes receivable from two officers for
approximately $980,000 and $2.1 million, respectively.

6. DEBT

      On March 6, 2000, the Company issued $975.3 million of 6.15% convertible
subordinated notes due March 15, 2010, to Verizon Communications ("Verizon").
The notes are convertible into shares of class A common stock at a conversion
price of $17.00 per share. Interest on the notes is payable semi-annually in
arrears on March 15 and September 15, commencing on September 15, 2000. Upon the
occurrence of a change of control, each holder of convertible subordinated notes
will have the right to require the Company to purchase all or any part of that
holder's convertible subordinated notes at a price equal to 100% of the
outstanding principal amount. The payment of all amounts due on the convertible
subordinated notes is subordinated to the prior payment of the senior notes.

      At December 31, 2000, AboveNet had $13.2 million outstanding under its
credit facility (the "Credit Facility"), with no additional borrowings
available. In February 2001, the Company paid the balance outstanding under the
credit facility.

      The Company entered into a commitment letter with Citicorp USA, Inc.
and Salomon Smith Barney on January 8, 2001, which provides for senior credit
facilities in the aggregate amount of $350.0 million upon the execution and
delivery of definitive documentation. The commitment letter provides for a
revolving credit facility of up to $150.0 million and a term loan facility of
up to $200.0 million. The initial expiration date of the commitment letter
was May 15, 2001. On May 15, 2001 the commitment letter was extended until
June 30, 2001. On June 29, 2001 the commitment letter was extended until July
31, 2001 and the commitment letter was amended to provide that Citicorp was
committed to provide $62.5 million, subject to the receipt of commitments
from other lenders in the amount of $287.5 million. On July 31, 2001 the
commitment letter was extended until August 15, 2001 and the commitment
letter was amended to provide that Citicorp's $62.5 million commitment was
also subject to the receipt of $200.0 million of vendor financing. The
Company has received commitments from affiliates aggregating $180.0 million.
The Company will not be consummating any financings on or before the August
15, 2001 expiration of the Citicorp commitment letter. The Company continues
in negotiations with Citicorp and is also in negotiations with other
financing sources. There are no assurances that the Company will obtain the
financing that it is seeking. In the event that the Company cannot obtain
financing, it will need to restructure its indebtedness or file for
protection under the federal bankruptcy laws.

                                       8
<Page>

7. VERIZON INVESTMENT

      On March 6, 2000, the Company closed a securities purchase agreement with
Verizon, under which Verizon purchased approximately 51.1 million newly issued
shares of MFN class A common stock at a purchase price of $14.00 per share and a
convertible subordinated note of approximately $975.3 million, which is
convertible into shares of MFN class A common stock at a conversion price of
$17.00 per share (see Note 6). Assuming conversion of the convertible
subordinated notes, this investment represents approximately 18.0% of the
Company's outstanding shares.

8. FIBERNET TELECOM GROUP INVESTMENT

      Prior to the second quarter of 2001, the Company considered the decline
in the market value of its investment in FiberNet Telecom Group, Inc.
("FiberNet") to be temporary, due to the volatility and overall weakness in
telecommunication securities. However, during the second quarter of 2001, the
Company no longer deemed this decline to be temporary and recorded a loss of
$24.3 million in connection therewith.

9. CONTINGENCIES

      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)
(the Contardi Litigation). 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 shares of the Company's
common stock which the Company cannot currently ascertain but believes 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 the Company cannot currently ascertain but believes 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 moved for summary judgment on the complaint. On or about June 5, 2000,
the court denied the summary judgment motion. On or about July 20, 2000, the
court entered a stipulation and order dismissing this action without prejudice
on the grounds that the court lacks subject matter jurisdiction. On or about
December 28, 2000, Contardi refiled the action in the Southern District of New
York, captioned Contardi v. Sahagen et al. 00 CIV 9811 (JGK), alleging claims
against the Company for breach of contract, breach of the implied covenant of
good faith and fair dealing, conversion and unjust enrichment. Contardi seeks,
among other things, 1,814,400 shares of the Company's stock or damages "in the
amount of the highest value of said MFN/NFN shares to which plaintiff was and is
entitled, from the date of defendants' breach to time of trial, together with
interest therein."

      The Company intends to vigorously defend the Contardi Litigation because
the Company believes that it acted appropriately in connection with the matters
at issue. However, the Company can make no assurances that it will not determine
that the advantages of entering into a settlement outweigh the risk and expense
of protracted litigation or that ultimately it will not be successful in
defending against these allegations.

      In January 2000, Herman Goldsmith and Arnold S. Schickler commenced an
action against the Company, F. Garofalo Electric Co., Inc. and Stephen A.
Garofalo in the Supreme Court of the State of New York, County of New York (No.
600163/00) (the "Goldsmith Litigation"). The complaint alleges a cause of action
for breach of contract in connection with an alleged "finders agreement" entered
into in 1993 between Messrs. Goldsmith and Schickler, on the one hand, and F.
Garofalo Electric Co., Inc. and Stephen A. Garofalo, on the other. Plaintiffs
seek damages of $860.6 million, plus interest from September 7, 1999, in
addition to their costs, expenses and reasonable attorneys' fees. On March 28,
2001, the court dismissed the action for failure to state a cause of action.
The plaintiffs may appeal the dismissal.

      As of March 31, 2001 the Company was preparing a response to a Rule Nisi
(show cause) action issued by the Georgia Public Service Commission ("GPSC") as
a result of certain of its subcontractors causing damage to underground utility
facilities. In May 2001, the Company and the GPSC entered into an agreement
settling the matter.


                                       9
<Page>

9. CONTINGENCIES (CONTINUED)

      The Company is a respondent in a proceeding and before the CA Public
Utilities Commission ("CPUC"). The issue before the CPUC is whether the
Company improperly engaged in certain construction actions under the
authority of our initial Certificate of Public Convenience and Necessity
("CPCN"). The Company believes that it did not act improperly and is
vigorously asserting its defenses. The possible ramifications stemming from
the proceeding includes fines, sanctions and actions taken against the
Company's CPCN.

      In June 2001, the Company commenced an action in New York State Court
against one of its fiber customers, Storage Networks, Inc. ("Storage"), for
anticipatory breach of its fiber lease contract with the Company. In July 2001,
Storage filed an action against the Company in Massachusetts State Court
claiming, among other things, breach of contract, negligent misrepresentation
and fraudulent inducement. The Storage complaint seeks to relieve Storage from
its obligation under the fiber lease contract to lease additional fiber from MFN
and claims damages. The complaint does not seek to relieve Storage from its
obligation to continue to lease from MFN fiber it had previously ordered and
accepted.

      The Company believes that it has acted appropriately in connection with
the Storage fiber lease contract and plans to vigorously prosecute its claim
in New York State Court and defend against the Storage action in
Massachusetts. However, the Company can make no assurances 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.

      On or about August 8, 2001, Mary Jane Crescente filed an action against
the Company, Stephen A. Garofalo and Nicholas M. Tanzi in the United States
District Court for the Southern District of New York (No. 01 CV 7353). Ms.
Crescente alleges causes of action on behalf of herself and a class of the
Company's stockholders who purchased shares of the Company's stock between
January 8, 2001 and July 2, 2001, claiming that the defendants engaged in a
fraudulent scheme, a deceptive course of action and the dissemination of
false and misleading statements in respect of disclosure regarding the
commitment letter the Company received from Citicorp USA, Inc. and Salomon
Smith Barney, and are therefore liable to the plaintiff class under Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The
plaintiff also alleges that Messrs. Garofalo and Tanzi are liable under
Section 20(a) of the Securities Exchange Act. The Company intends to
vigorously defend the Crescente litigation because the Company believes that
disclosure regarding the Citicorp commitment letter was appropriate. However,
the Company can make no assurances 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.

      On or about August 9, 2001, Misubishi Electric Information Corporation
("MIND") filed a complaint against the Company in the Southern District of
New York, (No. 01 CV 7409), alleging that the Company interfered in MIND's
contractual relations with Pacific Gateway Exchange, Inc. ("PGE"). MIND
alleges that the Company's purchase of PGE's ownership position in the cable
consortia that own and operate TAT-14 and Japan-US interfered in MIND's
purchase of capacity from PGE. The suit claims damages of $15.0 million or
such amount as proven at trial plus punitive damages of $100.0 million. The
Company believes that it acted appropriately in connection with its purchase
of PGE's ownership position in the cable consortia and intends to vigorously
defend the litigation. However, the Company can make no assurances 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.

      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 will seriously harm its financial condition or results of
operations, although it can make no assurances in this regard.


                                       10
<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, 2000. 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 prospectus. 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; costs and other effects of legal 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.

GENERAL

      We provide dedicated fiber optic infrastructure, high-bandwidth internet
connectivity and managed internet infrastructure services for our communications
intensive customers. We are a facilities-based provider of end-to-end optical
solutions that offer virtually unlimited, unmetered bandwidth at a fixed cost to
our communications carrier, corporate and government customers in the United
States and Europe. Through AboveNet we provide internet infrastructure to our
customers. SiteSmith provides a comprehensive internet infrastructure
management solution that includes design and architecture, hardware and
software, installation, co-location and network connectivity and ongoing
management. The combined company

                                       11
<Page>

facilitates the growth of e-commerce and advanced internet and communications
applications by delivering secure, reliable and scaleable optical networks and
IP services to internet content and service providers, communications carriers
and enterprise users worldwide.

      As of June 30, 2001, we have 2,078 employees. Subsequent to June 30,
2001, we reduced our workforce to approximately 1,600 employees.

      We are expanding our presence to approximately 50 cities in the United
States and 17 international cities. To date, we have 29 cities operational, 32
cities currently under construction, and the balance in the engineering phase.

      Our existing intra-city networks consist of approximately 1,484,000 fiber
miles covering in excess of 2,900 route miles in the United States. Our
inter-city network consists of approximately 352,000 fiber miles primarily
covering the 255 route-mile network that we have built between New York City and
Washington, D.C. and our nationwide dark fiber network linking our intra-city
networks.

      We are constructing 16 intra-city networks throughout Europe. Our existing
intra-city international network consists of approximately 148,000 fiber miles
covering approximately 414 route miles. Our inter-city international network
consists of approximately 8,000 fiber miles on the Circe network, which connects
a number of European markets. Additionally, we have entered into an agreement
with Carrier 1 Holdings, Ltd. and Viatel, Inc., to jointly build a dark fiber
inter-city network between selected cities throughout Germany. Once completed,
our German inter-city network will consist of approximately 320,000 fiber miles
covering in excess of 1,450 route miles that will connect 14 of Germany's
largest cities such as Hamburg, Berlin, Munich, Frankfurt and Dusseldorf. Viatel
has recently filed for protection under Chapter 11 of the United States
Bankruptcy Code. We cannot yet estimate the effect of this filing on either our
joint build or on our results of operations and financial position. Separately,
we have also entered into a contract to acquire rights to dark fiber network
facilities in Toronto, Canada.

      On October 7, 1999, we entered into a securities purchase agreement with
Verizon, under which Verizon purchased approximately 51.1 million newly issued
shares of our class A common stock at a purchase price of $14.00 per share and a
convertible subordinated note of approximately $975.3 million, which is
convertible into shares of our class A common stock at a conversion price of
$17.00 per share. This transaction closed on March 6, 2000. Assuming the
conversion of the convertible subordinated note, this investment would represent
approximately 18.0% of our outstanding shares.

      On February 8, 2001, we completed a merger with SiteSmith pursuant to an
agreement and Plan of Merger, dated as of October 9, 2000. We acquired all of
the outstanding shares of SiteSmith for a total purchase price, paid in shares
of our class A common stock, of approximately $1.0 billion. The holders of
SiteSmith common stock, stock options and warrants received 1.3404 shares of our
class A common stock, stock options and warrants, respectively. The Company has
recorded the acquisition using the purchase method of accounting. SiteSmith is a
provider of comprehensive, internet infrastructure management services. Its
services are designed to maximize the performance, reliability and security of
large-scale, complex internet sites. SiteSmith designs and architects the
infrastructure for its customers' internet operations, installs the necessary
hardware and software, recommends and establishes network connectivity, and
performs ongoing monitoring and security services.

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE
MONTHS ENDED JUNE 30, 2000, AND SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX
MONTHS ENDED JUNE 30, 2000

REVENUES

      Revenues for the second quarter of 2001 were $91.7 million or 112% greater
than revenues of $43.3 million for the second quarter of 2000. Revenues for the
six months ended June 30, 2001 were $168.6 million, or 124% greater than
revenues of $75.2 million for the same period in 2000. The increases for the
three and six months ended June 30, 2001, compared with the three and six months
ended June 30, 2000 reflect higher revenues associated with commencement of
service to an increased total number of customers and the inclusion of
SiteSmith's revenue for the period from February 8, 2001 (acquisition date).
Internet infrastructure revenue rose 74% to $56.6 million for the second quarter
of 2001, compared with $32.6 million for the second quarter of 2000.


                                       12
<Page>

Optical infrastructure revenues increased to $35.0 million, up 224% from the
second quarter of 2000.

COST OF SALES

      Cost of sales was $76.9 million in the second quarter of 2001, a 63%
increase over cost of sales of $47.1 million for the second quarter of 2000.
Cost of sales for the six months ended June 30, 2001 was $142.1 million, or
72% greater than cost of sales of $82.7 million for the same period in 2000.
The increase for the three and six months ended June 30, 2001, compared with
the three and six months ended June 30, 2000, is primarily due to costs
associated with an increased amount of customers and the costs associated
with the operation of our networks and the inclusion of SiteSmith's cost of
sales since the acquisition date. Cost of sales as percentages of revenue for
the second quarters of 2001 and 2000 was 84% and 109%, respectively, and 84%
and 110% for the six months ended June 30, 2001 and 2000, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses increased to $59.7 million
for the second quarter of 2001, from $28.0 million during the second quarter
of 2000, an increase of $31.7 million or 113%. Selling, general and
administrative expenses, for the six month period ended June 30, 2001 versus
the six month period ended June 30, 2000 increased 119% to $121.9 million
from $55.6 million. The increase in selling, general and administrative
expenses in the three and six month periods ended June 30, 2001 as compared
to the same periods in 2000 resulted primarily from the increased headcount
and other overhead to support our network expansion as well as the inclusion
of SiteSmith's results since the acquisition date. As a percentage of
revenue, selling, general and administrative expenses were 65% and 72% for
the three and six month periods ended June 30, 2001 compared to 65% and 74%
for the comparable periods in 2000.

NON-CASH COMPENSATION

      Non-cash compensation increased by $17.7 million and $30.7 million, or
100% for the three and six months ended June 30, 2001 compared to the same
periods in the prior year. Non-cash compensation is primarily attributable to
the issuance of unvested stock options and restricted shares of stock in
connection with the acquisition of SiteSmith.

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA)

      EBITDA consists of earnings (losses) before income taxes plus all net
interest expense, other income (expense), depreciation and amortization expense
and losses from joint ventures. Although EBITDA is not a measure of financial
performance under generally accepted accounting principles, it is a widely used
financial measure of the potential capacity of a company to incur and service
debt. We also believe that such calculation provides relevant and useful
information for evaluating performance. However, EBITDA should not be considered
as an alternative to measures of operating performance as determined by
generally accepted accounting principles. As it is not calculated identically by
all companies, our reported EBITDA may not be comparable to similarly titled
measures used by other companies. In addition, there may be significant factors
or trends that EBITDA fails to capture.

      For the three and six months ended June 30, 2001, we recognized EBITDA
losses of $62.7 million and $126.0 million, respectively, compared with EBITDA
losses for the three and six months ended June 30, 2000 of $31.8 million and
$63.1 million, respectively. The increased EBITDA losses are primarily due to
the recording of non-cash compensation charges in connection with the SiteSmith
acquisition, higher fixed costs related to the operation of the network and
increased overhead to support our network expansion.

DEPRECIATION AND AMORTIZATION

      Depreciation and amortization expense was $91.8 million and $163.3 million
for the three and six months ended June 30, 2001, respectively, versus $40.0
million and $72.5 million for the three and six months ended June 30, 2000,
respectively. This


                                       13
<Page>

represents increases of $51.8 million and $90.8 million for the three and six
months ended June 30, 2001 as compared to the same periods in 2000. The increase
in depreciation and amortization expense resulted primarily from amortization of
the goodwill relating to the acquisition of SiteSmith and increased investment
in our completed fiber optic network and additional property and equipment
acquired.

LOSS FROM OPERATIONS

      For the three and six months ended June 30, 2001 we recognized losses from
operations of $154.5 million and $289.3 million, respectively. This represents
an increased loss of $82.7 million for the three months ended June 30, 2001 from
the $71.8 million loss from operations reported for the three months ended June
30, 2000, and an increased loss of $153.6 million for the six months ended June
30, 2001 from the $135.7 million loss from operations reported for the six
months ended June 30, 2000. The increased loss from operations was attributable
to the acquisition of SiteSmith and the related goodwill amortization and
increased overhead and fixed costs to support our network expansion.

OTHER INCOME AND EXPENSE

      Other income and expense was a net expense of $12.1 million for the
three months ended June 30, 2001, as compared to a net income of $36.8
million for the three months ended June 30, 2000. For the six months ended
June 30, 2001, other income and expense was a net income amount of $15.6
million compared to a net income of $61.9 million for the six months ended
June 30, 2000. The decreases in other income are primarily due to smaller
cash balances generating less interest income, as well as a $24.3 million
write down of our investment in FiberNet Telecom Group in the second quarter
of 2001. These decreases were partially offset by a foreign currency gain of
approximately $23.0 million for the six months ended June 30, 2001.

INTEREST EXPENSE

      Interest expense decreased in the three and six months ended June 30, 2001
to $38.3 million and $79.4 million, respectively, versus $55.7 million and
$100.9 million, for the three and six months ended June 30, 2000, respectively.
The decreased interest expense is due to the effect of the favorable exchange
rate between the dollar and the Eurodollar on the expense due on our Eurodollar
denominated debt, and an increase in capitalized interest.

NET LOSS

      We had net losses of $205.2 million and $353.5 million, respectively for
the three and six months ended June 30, 2001, versus net losses of $92.0 million
and $177.2 million, respectively for the comparable periods of 2000. For the
three and six months ended June 30, 2001, basic net loss per share was $0.34 and
$0.60, respectively, versus basic net loss per share of $0.17 and $0.33,
respectively for the three and six months ended June 30, 2000.

LIQUIDITY AND CAPITAL RESOURCES

      Our initial public offering, on October 28, 1997, of 145,728,000 shares of
class A common stock generated net proceeds of $133.9 million, after deducting
the underwriter's commission and expenses relating to such initial public
offering. In addition, on November 25, 1998, we issued and sold 10% Senior Notes
due 2008, which generated net proceeds of $630.0 million. Also, on October 25,
1999, we issued and sold 10% Senior Notes due 2009 which generated net proceeds
of $974.2 million. On October 7, 1999, we entered into a securities purchase
agreement with Verizon, under which Verizon purchased shares of our class A
common stock and a convertible subordinated note. The agreement closed on March
6, 2000 and generated net proceeds of approximately $1.7 billion.

      Cash used in operating activities was $206.5 million for the six months
ended June 30, 2001, compared with $44.0 million used in operations for the
comparable period in 2000. For the six months ended June 30, 2001 we used $852.0
million of cash for investing activities as compared to $905.7 million for the
comparable period in 2000. For the six months ended June 30, 2001, financing
activities provided $31.6 million compared to the $1.8 billion cash provided
during the comparable period in 2000.


                                       14
<Page>

      We anticipate that we will continue to incur net operating losses as we
expand and complete our existing networks, construct additional network, market
our services to an expanding customer base and incur operating expenses related
to the business of SiteSmith. We anticipate spending approximately $3.4 billion
through the year ending December 31, 2001 on the expansion of our fiber optic
networks and internet service exchanges to 50 cities in the United States and in
17 international cities. Of this amount, we have incurred approximately $3.1
billion on the expansion through June 30, 2001.

      As part of our acquisition of AboveNet, we recorded approximately $1.6
billion in goodwill and other intangible assets, which we are amortizing over
periods up to twenty years. The excess of the cost of the SiteSmith
acquisition over the fair value of net tangible assets acquired is
approximately $1.0 billion and has been allocated to goodwill, which is being
amortized over ten years. Accordingly, we expect to report further net
operating losses for the foreseeable future.

      The indentures governing our debt obligations permit us to incur
additional indebtedness to finance the engineering, construction,
installation, acquisition, lease, development or improvement of
telecommunications assets. See Part II, Item 3 Default on Senior Securities.
As a result, we may also consider from time to time private or public sales
of additional equity or debt securities, and entering into other credit
facilities and financings, depending upon market conditions, in order to
finance the continued build-out of our network.

      In an effort to conserve cash, pending consummation of the financing
that we are seeking, we have delayed paying some of our creditors. Some of
our creditors have filed liens against the property of the Company and
instituted legal proceedings against the Company. In other cases creditors
have threatened to file liens on assets of the Company, institute legal
proceedings against the Company and file involuntary bankruptcy petitions
against the Company.

      We filed a universal shelf registration statement on Form S-3 which was
declared effective in October 1999. Under that registration statement,
approximately $490.0 million aggregate principal amount of securities remain
eligible to be sold in primary offerings and approximately 9.1 million shares of
class A common stock remain eligible to be resold in secondary offerings. We may
issue and sell shares of our class A common stock or our debt or other
securities, or facilitate the sale of shares of our class A common stock by some
of our existing stockholders. In addition, on February 13, 2001, we filed a
universal shelf registration statement on Form S-3 to register the primary
offering of up to approximately $1.0 billion of debt and equity securities.

      We entered into a commitment letter with Citicorp USA, Inc. and Salomon
Smith Barney on January 8, 2001, which provides for senior credit facilities
in the aggregate amount of $350.0 million upon the execution and delivery of
definitive documentation. The commitment letter provides for a revolving
credit facility of up to $150.0 million and a term loan facility of up to
$200.0 million. The initial expiration date of the commitment letter was May
15, 2001. On May 15, 2001 the commitment letter was extended until June 30,
2001. On June 29, 2001 the commitment letter was extended until July 31, 2001
and the commitment letter was amended to provide that Citicorp was committed
to provide $62.5 million, subject to the receipt of commitments from other
lenders in the amount of $287.5 million. On July 31, 2001 the commitment
letter was extended until August 15, 2001 and the commitment letter was
amended to provide that Citicorp's $62.5 million commitment was also subject
to the receipt of $200.0 million of vendor financing. We have received
commitments from affiliates aggregating $180.0 million. We will not be
consummating any financings on or before the August 15, 2001 expiration of
the Citicorp commitment letter. We continue in negotiations with Citicorp and
we are also in negotiations with other financing sources. There are no
assurances that we will obtain the financing that we are seeking. In the
event that we cannot obtain financing, we will need to restructure our
indebtedness or file for protection under the federal bankruptcy laws.

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 and currency movements on our outstanding debt, we are subject to other
types of risk such as the


                                       15

<Page>

collectibility of our accounts receivables. Our principal long term obligations
are our $650 million 10% senior notes due 2008 and $962.3 million 10% senior
notes due 2009, and the convertible subordinated note of approximately $975.3
million issued to Verizon Communications in March 2000. The fair value of the
long-term debt at June 30, 2001 was $1.5 billion. 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 obligations by approximately $133.7 million and a
decrease in the fair value of our long term obligation by approximately $125.2
million, respectively.

      We are also subject to market risk associated with foreign currency
exchange rates. We plan to continue the expansion of our foreign operations and
$212.3 million of our 10% senior notes are denominated in Euros. We have not
utilized financial instruments to minimize our exposure to foreign currency
fluctuations. We will continue to analyze risk management strategies to minimize
foreign currency exchange risk in the future. A 10% decrease and a 10% increase
in the currency rates related to our Euro dollar based 10% senior notes due 2009
would result in a decrease in the fair value of our long term obligations by
$13.6 million and an increase in the fair value of our long term obligation by
$13.6 million, respectively.

      We had approximately $99.7 million in cash and cash equivalents at June
30, 2001 (approximately $21.4 million was restricted cash). To the extent our
cash and cash equivalents exceed our short-term funding requirements, we may
invest our excess cash and cash equivalents in longer-term high-quality
financial instruments. Such investments when made will be subject to changes
in interest rates.

                                       16
<Page>

                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      On or about June 12, 1998, Claudio E. Contardi commenced an action against
Peter Sahagen, Sahagen Consulting Group of Florida and us in the United States
District Court for the Southern District of New York (No. 98 CIV 4140) (the
Contardi Litigation). 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 shares of our 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 believes 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 moved for summary judgment on
the complaint. On or about June 5, 2000, the court denied the summary judgment
motion. On or about July 20, 2000, the court entered a stipulation and order
dismissing this action without prejudice on the grounds that the court lacks
subject matter jurisdiction. On or about December 28, 2000, Contardi refiled the
action in the Southern District of New York, captioned Contardi v. Sahagen et
al. 00 CIV 9811 (JGK), alleging claims against the Company for breach of
contract, breach of the implied covenant of good faith and fair dealing,
conversion and unjust enrichment. Contardi seeks, among other things, 1,814,400
shares of our stock or damages "in the amount of the highest value of said
MFN/NFN shares to which plaintiff was and is entitled, from the date of
defendants' breach to time of trial, together with interest therein."

      We intend to vigorously defend the Contardi Litigation because we believe
that we acted appropriately in connection with the matters at issue. However, we
can make no assurances 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.

      In January 2000, Herman Goldsmith and Arnold S. Schickler commenced an
action against us, F. Garofalo Electric Co., Inc. and Stephen A. Garofalo in the
Supreme Court of the State of New York, County of New York (No. 600163/00) (the
"Goldsmith Litigation"). The complaint alleges a cause of action for breach of
contract in connection with an alleged "finders agreement" entered into in 1993
between Messrs. Goldsmith and Schickler, on the one hand, and F. Garofalo
Electric Co., Inc. and Stephen A. Garofalo, on the other. Plaintiffs seek
damages of $860.6 million, plus interest from September 7, 1999, in addition to
their costs, expenses and reasonable attorneys' fees. On March 28, 2001, the
court dismissed the action for failure to state a cause of action. The
plaintiffs may appeal the dismissal.

      As of March 31, 2001 we were preparing a response to a Rule Nisi (show
cause) action issued by the Georgia Public Service Commission ("GPSC") as a
result of certain of our subcontractors causing damage to underground utility
facilities. In May 2001, we entered into an agreement with the GPSC settling
the matter.

      We are a respondent in a proceeding and before the CA Public Utilities
Commission ("CPUC"). The issue before the CPUC is whether we improperly
engaged in certain construction actions under the authority of our initial
Certificate of Public Convenience and Necessity ("CPUC"). We believe that we
did not act improperly and are vigorously asserting our defenses. The
possible ramifications stemming from the proceeding includes fines, sanctions
and actions taken against our CPCN.

      In June 2001, we commenced an action in New York State Court against one
of our fiber customers, Storage Networks, Inc. ("Storage"), for anticipatory
breach of its fiber lease contract with us. In July 2001, Storage filed an
action against us in Massachusetts State Court claiming, among other things,
breach of contract, negligent misrepresentation and fraudulent inducement. The
Storage complaint seeks to relieve Storage from its obligation under the fiber
lease contract to lease additional fiber from us and claims damages. The
complaint does not seek to relieve Storage from its obligation to continue to
lease from us fiber it had previously ordered and accepted.

      We believe that we have acted appropriately in connection with the
Storage fiber lease contract and plan to vigorously prosecute our claim in
New York State Court and defend against the Storage action in Massachusetts.
However, we can make no assurances 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.

      On or about August 8, 2001, Mary Jane Crescente filed an action against
the Company, Stephen A. Garofalo and Nicholas M. Tanzi in the United States
District Court for the Southern District of New York (No. 01 CV 7353). Ms.
Crescente alleges causes of action on behalf of herself and a class of the
Company's stockholders who purchased shares of the Company's stock between
January 8, 2001 and July 2, 2001, claiming that the defendants engaged in a
fraudulent scheme, a deceptive course of action and the dissemination of
false and misleading statements in respect of disclosure regarding the
commitment letter the Company received from Citicorp USA, Inc. and Salomon
Smith Barney, and are therefore liable to the plaintiff class under Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The
plaintiff also alleges that Messrs. Garofalo and Tanzi are liable under
Section 20(a) of the Securities Exchange Act. We intends to vigorously defend
the Crescente litigation because it believes that disclosure regarding the
Citicorp commitment letter was appropriate. However, the Company can make no
assurances that it will not determine that the advantages of entering into a
settlement outweigh the risk and expense of protracted litigation or that
ultimately it will be successful in defending against these allegations.

      On or about August 9, 2001, Misubishi Electric Information Corporation
("MIND") filed a complaint against us in the Southern District of New York,
(No. 01 CV 7409), alleging that we interfered in MIND's contractual relations
with Pacific Gateway Exchange, Inc. ("PGE"). MIND alleges that our purchase
of PGE's ownership position in the cable consortia that own and operate
TAT-14 and Japan-US interfered in MIND's purchase of capacity from PGE. The
suit claims damages of $15.0 million or such amount as proven at trial plus
punitive damages of $100.0 million. We believe that we acted appropriately in
connection with our purchase of PGE's ownership position in the cable
consortia and intend to vigorously defend the litigation. However, we can
make no assurances 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.

      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 will seriously harm our financial condition or results of operations,
although we can make no assurances in this regard.


                                       17
<Page>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      As of June 30, 2001 and as of the date hereof, we are in default under
the indentures governing our 10% senior notes.

      Some of our vendor agreements provide for or purport to impose purchase
money liens on the property acquired under such agreements. We believe that
we have cured the defaults under our indentures arising from the vendor liens.

      In addition, some of our contractors have filed contractor's,
materialmen's and similar liens on our property which liens we believe are in
the approximate amount of $20.0 million. Such filed contractors,
materialmen's and similar liens exceeds the ceiling on such liens permitted
under the indentures and constitutes a default under the indentures. The
Company intends to cure the indenture default resulting from such liens.

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

We held our 2001 annual meeting of stockholders on May 11, 2001.

The Stockholders elected the following class A directors at the 2001 annual
meeting of stockholders by the indicated votes of the shares of our class A
common stock:

<Table>
<Caption>

                                CLASS OF
         NAME                   DIRECTOR            VOTES FOR           VOTES WITHHELD
----------------------------  --------------   --------------------  --------------------
<S>                           <C>                      <C>                    <C>
Stephen A. Garofalo           Class A                  444,835,316             1,157,121
Nicholas M. Tanzi             Class A                  428,357,653            17,634,784
</Table>

At the annual meeting, the stockholders voted to ratify the retention of Ernst &
Young LLP as independent auditors for the 2001 fiscal year, by a vote of
445,379,323 class A shares and all 67,538,544 class B shares (entitled to
675,385,440 votes) voting for the proposal; and 332,880 class A shares voting
against the proposal and 280,234 class A shares abstaining.

ITEM 5. OTHER INFORMATION

Not applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

None

b) Reports on Form 8-K

None



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<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
                                          Senior Vice President and Chief
                                          Financial Officer (Principal
                                          Financial and Accounting Officer and
                                          Duly Authorized Officer)

                                          August 14, 2001




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