SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(Mark One)

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

For the quarterly period ended MARCH 31, 1998

                                       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 333-8807

                          GST TELECOMMUNICATIONS, INC.
--------------------------------------------------------------------------------
             (Exact name of Registrant as Specified in its Charter)

          CANADA                                        NOT APPLICABLE
-----------------------------------             --------------------------------
(State or Other Jurisdiction                       (IRS Employer Identification
 of Incorporation or Organization)                                Number)


        4001 MAIN STREET, VANCOUVER, WA                   98663
-----------------------------------------               ----------
(Address of Principal Executive Offices)                (Zip Code)

Registrant's Telephone Number, Including Area Code: (360) 906-7100
                                                    --------------

N/A
--------------------------------------------------------------------------------
(Former  Name,  Former  Address and Former  Fiscal Year,  if Changed  Since Last
Report)

                  Indicate by check mark  whether the  Registrant  (1) has filed
all  reports  required  to be filed  by  Section  13 or 15(d) of the  Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter  period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes /X/  No / /

                  Indicate  the  number  of  shares  outstanding  of each of the
issuer's classes of common stock, as of the latest  practicable  date: At May 8,
1998, there were outstanding 35,938,584 Common Shares, without par value, of the
Registrant.

<PAGE>
                          GST TELECOMMUNICATIONS, INC.


                                      INDEX

                                                                         Page(s)
                                                                         -------

                          PART I: FINANCIAL INFORMATION


ITEM 1.        FINANCIAL STATEMENTS:

               Consolidated Condensed Balance Sheet - March 31,               3
               1998 (unaudited) and December 31, 1997

               Consolidated Condensed Statements of Operations                4
               - Three Months Ended March 31, 1998 and 1997
               (unaudited)

               Consolidated Condensed Statements of Cash Flows                5
               - Three Months Ended March 31, 1998 and 1997
               (unaudited)

               Notes to Consolidated Condensed Financial                    6-7
               Statements (unaudited)


ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL           8-12
               CONDITION AND RESULTS OF OPERATIONS


ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
               Not Required

                           PART II: OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS                                             13

ITEM 2.        CHANGES IN SECURITIES                                         13

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS        13-14

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K                              14


SIGNATURES                                                                   15

                                      -2-
<PAGE>
                          GST TELECOMMUNICATIONS, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                MARCH 31, 1998 (UNAUDITED) AND DECEMBER 31, 1997
                                 (IN THOUSANDS)
                                                     March 31,   December 31,
                                                         1998        1997 (1)
                                                     ---------   ------------
ASSETS
  Current assets:
    Cash and cash equivalents                      $ 239,904    $ 199,053
    Restricted cash and investments                   32,184       31,731
    Accounts receivable, net                          17,568       27,324
    Investments                                          373        7,619
    Inventories                                          788        3,412
    Prepaid expenses and other current assets         12,076       13,127
                                                   ---------    ---------

         Total current assets                        302,893      282,266
                                                   ---------    ---------

 Restricted investments                              103,013      112,719

 Property, plant and equipment                       472,290      433,680
   less accumulated depreciation                     (31,630)     (26,785)
                                                   ---------    ---------
                                                     440,660      406,895

 Other assets                                        123,283      117,908
   less accumulated amortization                     (21,728)     (21,614)
                                                   ---------    ---------
                                                     101,555       96,294
                                                   ---------    ---------
                                                   $ 948,121    $ 898,174
                                                   =========    =========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
 Current liabilities:
    Accounts payable                               $  16,752    $  14,798
    Accrued liabilities                               42,693       30,869
    Current portion of capital lease obligations       4,128        6,286
    Current portion of long term debt                  5,053        4,579
    Other current liabilities                            304          993
                                                   ---------    ---------

         Total current liabilities                    68,930       57,525
                                                   ---------    ---------

    Other liabilities                                  6,732        3,551
    Capital lease obligation, less current portion    17,264       13,994
    Long term debt, less current portion             770,422      763,292

    Minority interest in subsidiaries                   --         12,732

    Preference shares                                 54,635       54,635

    Shareholders' equity (deficit):
       Common shares                                 239,612      221,105
       Commitment to issue shares                        302          604
       Deficit                                      (209,776)    (229,264)
                                                   ---------    ---------

            Total shareholders' equity (deficit)      30,138       (7,555)
                                                   ---------    ---------

                                                   $ 948,121    $ 898,174
                                                   =========    =========

(1)      The information in this column was derived from the Company's audited
         financial statements as of December 31, 1997.

     See accompanying notes to consolidated condensed financial statements.

                                      -3-
<PAGE>
                          GST TELECOMMUNICATIONS, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             Three Months
                                                                           Ended March 31,
                                                                    --------------------------------

                                                                         1998              1997
                                                                    --------------    --------------
Revenue:
<S>                                                                 <C>                <C>         
   Telecommunication services                                       $     29,180       $     19,619
   Telecommunication products                                                864              5,073
                                                                    ------------       ------------
                                                                          30,044             24,692
                                                                    ------------       ------------
Operating costs and expenses:
   Network expenses                                                       21,128             16,929
   Facilities administration and maintenance                               3,955              3,120
   Cost of product revenues                                                  689              1,863
   Selling, general and administrative                                    20,410             15,391
   Research and development                                                 --                  616
   Depreciation and amortization                                           8,669              4,481
                                                                    ------------       ------------
                                                                          54,851             42,400
                                                                    ------------       ------------

 Loss from operations                                                    (24,807)           (17,708)
                                                                    ------------       ------------

Other expenses (income):
   Interest income                                                        (4,935)              (538)
   Interest expense                                                       21,275              5,384
   Other                                                                 (60,635)            (6,928)
                                                                    ------------       ------------
                                                                         (44,295)            (2,082)
                                                                    ------------       ------------

Income (loss) before income taxes
   and minority interest                                                  19,488            (15,626)
                                                                    ------------       ------------

   Income taxes                                                             --                 (118)
   Minority interest in income of subsidiary                                --                  (40)
                                                                    ------------       ------------
                                                                            --                 (158)

Net income (loss)                                                   $     19,488       $    (15,784)
                                                                    ============       ============

Net income (loss) per share:
    Basic                                                           $       0.56       $      (0.68)
                                                                    ============       ============
    Diluted                                                         $       0.46       $      (0.68)
                                                                    ============       ============

Weighted average shares outstanding:
    Basic                                                             35,035,130         23,158,334
                                                                    ============       ============
    Diluted                                                           44,714,589         23,158,334
                                                                    ============       ============
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                      -4-
<PAGE>
                          GST TELECOMMUNICATIONS, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                         Three Months
                                                                        Ended March 31,
                                                                      -----------------

                                                                      1998        1997
                                                                      ----        ----
<S>                                                               <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                                 $  19,488    $ (15,784)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
  Minority interest in income of subsidiary                            --             40
  Loss on investments in affiliates                                     593          562
  Accretion of interest                                               6,601        4,535
  Depreciation and amortization                                       9,990        4,831
  Stock compensation                                                    943          286
  Gain on sale of fixed assets                                         (221)        --
  Gain on sale of subsidiary shares                                 (61,292)      (7,424)
Changes in non-cash operating working capital:
  Receivables                                                        (2,788)         677
  Inventory                                                            (190)        (182)
  Prepaid  expenses and other                                         1,828       (1,238)
  Accounts payable and accrued liabilities                           12,387       (3,019)
  Other liabilities                                                   4,491         (208)
                                                                  ---------    ---------

Net cash used in operating activities                                (8,170)     (16,924)

CASH FLOWS FROM INVESTING ACTIVITIES
 Acquisition of subsidiaries, net of cash acquired                  (12,418)        --
 Proceeds from sale of subsidiary shares, net                        85,074       27,365
 Cash disposed of in sale of subsidiary                              (5,252)        --
 Purchase of marketable securities                                     --         (2,000)
 Change in investments restricted for fixed asset purchases           8,011         --
 Purchase of fixed assets                                           (39,214)     (57,189)
 Purchase of other assets                                              (116)        (972)
 Proceeds from the sale of fixed assets                                 772         --
                                                                  ---------    ---------

Net cash used in investing activities                                36,857      (32,796)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from long term debt                                         --         15,916
  Principal payments on long term debt and capital leases            (2,473)      (2,287)
  Deferred financing costs                                           (1,519)      (1,475)
  Change in investments restricted to finance interest payments       1,242         --
  Issuance of common shares, net                                     14,914       11,276
  Issuance of preferred shares                                         --         50,000
                                                                  ---------    ---------

Net cash provided by financing activities                            12,164       73,430
                                                                  ---------    ---------

Net increase (decrease) in cash and cash equivalents                 40,851       23,710
Cash and cash equivalents at beginning of period                    199,053       13,363
                                                                  ---------    ---------

Cash and cash equivalents at end of period                        $ 239,904    $  37,073
                                                                  =========    =========
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                      -5-
<PAGE>
                          GST TELECOMMUNICATIONS, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                       (IN THOUSANDS EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION

         The accompanying  financial statements have been prepared in conformity
with generally accepted accounting principles.  However,  certain information or
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with generally accepted accounting principles have been condensed, or
omitted,  pursuant to the rules and  regulations  of the Securities and Exchange
Commission. In the opinion of management, the statements include all adjustments
necessary (which are of a normal and recurring nature) for the fair presentation
of the results of the interim periods  presented.  The results of operations for
the  periods  presented  are not  necessarily  indicative  of the  results to be
expected for the full fiscal year or for  subsequent  periods.  These  financial
statements should be read in conjunction with the Company's audited consolidated
financial  statements  for the three months ended December 31, 1997, as included
in the Company's  Transition  Report on Form 10-K for the three month transition
period ended December 31, 1997.

2.       NET INCOME (LOSS) PER SHARE

         For the three months ended March 31, 1998, diluted net income per share
excludes  $901 of interest  expense  related to  convertible  notes.  Net income
(loss) per share is computed  using the  weighted  average  number of common and
dilutive common equivalent  shares assumed to be outstanding  during the period.
For the three months  ended March 31,  1998,  diluted  weighted  average  shares
outstanding includes the following components:

                  Weighted average shares outstanding, basic          35,035,130
                  Options to purchase common shares                    1,115,494
                  Warrants to purchase common shares                     175,559
                  Debt convertible into common shares                  3,455,327
                  Preference shares convertible into common shares     4,933,079
                                                                      ---------
                  Weighted average shares outstanding, diluted        44,714,589
                                                                      ==========

         For the three  months ended March 31,  1997,  common stock  equivalents
were  antidilutive  and were not  included in diluted  weighted  average  shares
outstanding.

3.     SHAREHOLDERS' EQUITY

         Shares issued and outstanding are as follows:

                                         March 31, 1998        December 31, 1997
                                         --------------        -----------------

     Common shares, no par value          35,863,008                 34,564,898

     Unlimited number of
     common shares authorized

                                      -6-

<PAGE>
4.  SUPPLEMENTAL CASH FLOW INFORMATION

                                                              Three Months
                                                             Ended March 31,
                                                          --------------------
                                                           1998           1997
                                                           ----           ----
     Cash Transactions:
       Cash paid for interest                             4,194          1,605
       Cash paid for income taxes                             -            105

     Non-Cash Transactions:
       Recorded in business combinations:
            Assets                                       17,378              -
            Liabilities                                   2,612              -
            Common shares                                 2,348              -

        Disposition of subsidiary:
            Assets                                       35,480              -
            Liabilities                                   4,218              -
            Minority interest                            12,732              -

        Assets acquired through capital leases            3,289              -

        Amounts in accounts payable and accrued
        liabilities for the purchase of fixed assets
        at period end                                    20,027         15,305

5.       DISPOSAL OF SUBSIDIARY

In February 1998,  the Company  completed the sale of its remaining 63% interest
in NACT Telecommunications, Inc. for net proceeds of approximately $85.0 million
and recorded a gain of approximately $61.3 million on such sale.

6.      ADOPTION OF NEW ACCOUNTING STANDARD

The Company has adopted the  provisions  of Statement  of  Financial  Accounting
Standards ("SFAS") No. 130,  "Reporting  Comprehensive  Income." The adoption of
SFAS No. 130 did not  materially  impact the  presentation  of the  accompanying
financial statements, and as such, no additional disclosure is included.

7.       RECENT DEVELOPMENTS

In April 1998, the Company  acquired ICON  Communications  Corp., a switch-based
reseller of long distance and local services located in Seattle, Washington, for
approximately $23.8 million in cash.

In May 1998,  the  Company  completed  a  private  placement  of $500.0  million
principal  amount at maturity of 10.5% senior  secured  discount  notes due 2008
(the "1998  Notes").  The 1998 Notes will fully  accrete to face value on May 1,
2003. From and after May 1, 2003, the 1998 Notes will bear interest,  which will
be payable in cash,  at a rate of 10.5% per annum on each May 1 and  November 1,
commencing November 1, 2003. The net proceeds from the sale of the 1998 Notes of
approximately    $288.5   million   are   restricted   for   the   purchase   of
telecommunications equipment and network infrastructure.

                                      -7-

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

         The  following  management's   discussion  and  analysis  of  financial
condition and results of operations  contains  forward  looking  statements that
involve  risks and  uncertainties.  The  Company's  actual  results could differ
materially  from those  anticipated  in these  forward  looking  statements as a
result of certain factors discussed herein.

OVERVIEW

         GST Telecommunications,  Inc. (the "Company") provides a broad range of
integrated  telecommunications  products  and  services,  primarily  to business
customers  located in the western  continental  United  States and Hawaii.  As a
facilities-based  competitive  local  exchange  carrier  ("CLEC"),  the  Company
operates state-of-the-art,  digital telecommunications  networks that provide an
alternative  to incumbent  local exchange  carriers.  The Company's full line of
products,  which offer a "one-stop"  solution to  customers'  telecommunications
services requirements,  include local dial tone, long distance,  Internet,  data
transmission and private line services.

         The Company's  digital networks  currently serve 40 markets in Arizona,
California,  Hawaii, Idaho, New Mexico, Texas and Washington.  In addition,  the
Company has networks under construction  which, when completed,  will expand its
regional footprint to Oregon.  The Company also constructs,  markets and manages
longhaul fiber optic facilities in Arizona, California and Hawaii. The Company's
longhaul   fiber  optic   facilities   currently   extend  over  900  miles  and
approximately  1,700 route miles are under  construction  and expected to become
operational over the next 12 months.

         Management  believes  that  the  formation  of an  integrated  regional
network through the  interconnection of the Company's  individual  networks with
the longhaul fiber optic  facilities  will provide  significant  competitive and
economic  advantages.  In  addition  to  providing  the  Company  with a  larger
addressable market, the interconnection of its networks is expected to allow the
Company to a carry a portion of its  intra-regional  telecommunications  traffic
on-net,  thereby  improving  operational  margins by reducing  payments to other
carriers for use of their  facilities.  In addition,  increasing demand for high
bandwidth  capacity has created  opportunities  for the Company to sell or lease
capacity on its network to other communications carriers.

RESULTS OF OPERATIONS

         REVENUES.  Total  revenue  for the three  months  ended  March 31, 1998
increased  $5.3 million,  or 21.7%,  to $30.0 million from $24.7 million for the
three months ended March 31, 1997.  Telecommunications  services revenue for the
three months ended March 31, 1998  increased  $9.6 million,  or 48.7%,  to $29.2
million  from $19.6  million  for the three  months  ended March 31,  1997.  The
increase  in   telecommunications   services  revenue  resulted  primarily  from
increased  local service  revenue  generated by the Company's  networks and from
increased long distance  service  revenue.  To a lesser extent,  the increase in
telecommunications  services  revenue  resulted from the  acquisitions of Action
Telcom  Co.  ("Action  Telcom")  in May 1997 and the Guam  operations  of Sprint
Corporation  ("Sprint")  in October 1997.  Product  revenue for the three months
ended March 31, 1998 decreased $4.2 million,  or 83.0%, to $.9 million from $5.1
million for the three  months  ended  March 31,  1997.  The  decrease in product
revenues  resulted  from  the  sale  of  the  Company's  63%  interest  in  NACT
Telecommunications, Inc. ("NACT").

                                      -8-

<PAGE>
         OPERATING EXPENSES. Total operating expenses for the three months ended
March 31, 1998 increased  $12.5 million,  or 29.4%,  to $54.9 million from $42.4
million for the three  months  ended March 31,  1997.  Network  expenses,  which
include direct local and long distance circuit costs, increased $4.2 million, or
24.8%, to $21.1 million, or 72.4% of telecommunications services revenue for the
three  months  ended  March 31,  1998  compared  to $16.9  million,  or 86.3% of
telecommunications  services  revenue for the three months ended March 31, 1997.
The primary reason for the decrease in network  expenses as a percent of revenue
is the increase in revenues for traffic  carried on the  Company's  network as a
percent of total revenues.  Facilities  administration and maintenance  expenses
(consisting  primarily  of costs  related to  personnel  providing  maintenance,
monitoring and technical  assistance  for the Company's  networks) for the three
months ended March 31, 1998 increased $.9 million, or 26.8%, to $4.0 million, or
13.6% of telecommunications services revenue, compared to $3.1 million, or 15.9%
of  telecommunications  services  revenue,  for the three months ended March 31,
1997.

         Cost of product  revenues  for the three  months  ended  March 31, 1998
decreased  $1.2 million,  or 63%, to $.7 million from $1.9 million for the three
months  ended  March  31,  1997 as a result  of the sale of NACT.  For the three
months  ended March 31,  1998,  cost of product  revenues  consists of the costs
associated with product  revenue of Action Telcom.  The decrease in research and
development costs, from $.6 million for the three months ended March 31, 1997 to
$0 for the three  months  ended  March 31, 1998 also  resulted  from the sale of
NACT.

         Selling, general and administrative expenses for the three months ended
March 31, 1998 increased $5.0 million,  or 32.6%, to $20.4 million,  or 67.9% of
total  revenue,  from $15.4 million,  or 62.3% of total  revenue,  for the three
months  ended  March 31,  1997.  The  increase  is due to the  expansion  of the
Company's  CLEC  and  enhanced  services  operations,  the  acquisition  of four
companies between May 1997 and March 1998 and the hiring of a significant number
of  marketing,  management  information  and sales  personnel to  implement  the
Company's integrated services strategy. Such increases were offset by a decrease
of $1.2 million resulting from the disposition of NACT.

         Depreciation and amortization for the three months ended March 31, 1998
increased  $4.2  million,  or 93.5%,  to $8.7  million from $4.5 million for the
three  months  ended  March  31,  1997.   The  increase  was   attributable   to
newly-constructed  networks  becoming  operational  and to the  amortization  of
intangible  assets related to the Company's  acquisitions.  The Company  expects
that  depreciation  will  continue to increase  as it expands its  networks  and
longhaul fiber optic facilities and installs additional  switches.  Depreciation
and amortization was 28.9% of total revenue for the three months ended March 31,
1998 compared to 18.1% for the three months ended March 31, 1997.

         OTHER  INCOME/EXPENSE.  For the three months ended March 31, 1998,  net
other income  increased $42.4 million to $44.3 million from $1.9 million for the
three  months ended March 31,  1997.  The primary  reason for the increase was a
$61.3  million gain from the sale of the Company's  remaining  interest in NACT.
Such increase was partially offset by increased  interest expense resulting from
the issuance in May 1997 of $265.0  million of 13.25%  senior  secured notes due
2007 (the "Secured  Notes") and the issuance in November 1997 of $144.0  million
of 12.75% senior subordinated  accrual notes due 2007 (the "Accrual Notes"). For
the three months ended March 31, 1998,  minority interest and income tax expense
were $0 due to the disposition of NACT.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company has  incurred  significant  operating  and net losses as a
result of the  development

                                      -9-

<PAGE>
and  operation  of its  networks.  The  Company  expects  that such  losses will
continue as the Company  emphasizes the development,  construction and expansion
of its networks and builds its customer  base.  Cash  provided by the  Company's
operations  will  not be  sufficient  to fund  the  expansion  of its  networks,
longhaul fiber optic facilities and services.

         The  Company's  net cash  provided by (used in) operating and investing
activities  was $28.7  million and $(49.7)  million for the three  months  ended
March 31, 1998 and 1997,  respectively.  During the three months ended March 31,
1998,  the Company  completed the sale of its remaining 63% interest in NACT for
net proceeds of  approximately  $85.0  million.  Net cash  provided by financing
activities  from borrowings and equity  issuances to fund capital  expenditures,
acquisitions  and  operating  losses was $12.2 million and $73.4 million for the
three months ended March 31, 1998 and 1997, respectively.

         Capital expenditures for the three months ended March 31, 1998 and 1997
were $41.8  million  and $62.5  million,  respectively.  The  Company  estimates
capital  expenditures  for fiscal  1998 and fiscal  1999 of  approximately  $325
million and $400 million,  respectively.  The majority of these  expenditures is
expected to be made for the  construction  of network and  longhaul  fiber optic
facilities and the purchase of switches and related  equipment to facilitate the
offering of the Company's services.  Continued  significant capital expenditures
are expected to be made thereafter. In addition, the Company expects to continue
to incur operating  losses while it expands its business and builds its customer
base.  Actual capital  expenditures and operating losses will depend on numerous
factors, including the extent of future expansion, acquisition opportunities and
other  factors  beyond the Company's  control,  including  economic  conditions,
competition, regulatory developments and the availability of capital.

         In addition to the Company's capital  expenditures,  in March 1998, the
Company  acquired KLP, Inc. (d/b/a Call America),  a  Phoenix-based  reseller of
long distance,  for approximately $3.8 million in cash and the business of Whole
Earth  Networks,  LLC, a San  Francisco-based  Internet  service  provider,  for
approximately $9.0 million in cash and the assumption of certain liabilities. In
April 1998,  the Company  acquired ICON  Communications  Corp.,  a  switch-based
reseller  of  long   distance  and  local  service   located  in  Seattle,   for
approximately $23.8 million in cash.

         In November 1997, the Company  completed a public offering of 6,440,000
common shares at $12 per share and $144.0 million of Accrual Notes.  Semi-annual
cash interest payments on the 1997 Accrual Notes will not begin until May 2003.

         In May  1998,  the  Company  completed  a private  placement  of $500.0
million  principal amount at maturity of 10.5% senior secured discount notes due
2008 (the "1998 Notes").  The 1998 Notes will fully accrete to face value on May
1, 2003.  From and after May 1, 2003, the 1998 Notes will bear  interest,  which
will be payable in cash, at a rate of 10.5% per annum on each May 1 and November
1, commencing November 1, 2003. The net proceeds from the sale of the 1998 Notes
of   approximately   $288.5   million  are   restricted   for  the  purchase  of
telecommunications  equipment and network infrastructure.  The indenture related
to the 1998 Notes, and the indentures  associated with previously  issued notes,
include  restrictive  covenants  which,  among  other  items,  limit or restrict
additional   indebtedness  incurred  by  the  Company,   investment  in  certain
subsidiaries, the sale of assets and the payment of dividends.

         At March 31,  1998,  the Company had  approximately  $796.9  million of
indebtedness  outstanding and $54.6 million of mandatorily redeemable preference
shares. In addition, as of March 31, 1998, the Company had $30.5 of availability
under a credit  facility  with Tomen  America Inc.  (the "Tomen

                                      -10-

<PAGE>
Facility")  and  $108.1  million of  availability  under a loan  agreement  with
Siemens Telecom Networks (the "Siemens Loan Agreement").  Although the Company's
liquidity was  substantially  improved as a result of proceeds received from the
sale of senior and  convertible  notes in December 1995 (the "1995 Notes"),  the
Secured  Notes,  the  Accrual  Notes and the 1998 Notes,  the Company  will have
significant  debt  service  obligations.  The  Company  will be required to make
principal and interest  payments of approximately  $52.5 million (of which $35.1
million will be made from funds securing the Secured  Notes),  $63.3 million (of
which $35.1 million will be made from funds securing the Secured  Notes),  $66.1
million (of which $17.6  million  will be made from funds  securing  the Secured
Notes),  $115.9 million and $114.2 million in the remainder of 1998 and in 1999,
2000, 2001 and 2002,  respectively.  In addition,  the Company  anticipates that
cash flow from  operations  will be  insufficient to pay interest in cash on the
1995 Notes when such  interest  becomes  payable in June 2001 and on the Secured
Notes  starting in November  2000 once the amount  pledged to fund the first six
interest  payments on the Secured Notes is paid and to repay the 1995 Notes, the
Secured  Notes and the Accrual Notes in full and that such notes will need to be
refinanced.  The  ability of the  Company to effect  such  refinancings  will be
dependent upon the future  performance of the Company,  which will be subject to
prevailing  economic  conditions  and to  financial,  business and other factors
beyond the control of the Company.  There can be no  assurance  that the Company
will be able to improve its  operating  results or that the Company will be able
to meet its debt service obligations.

         At March  31,  1998,  the  Company  had  cash,  cash  equivalents,  and
investments,  including  restricted cash and investments of approximately $375.5
million.  The  Company  believes  that the  amounts  on hand  together  with the
proceeds from the sale of the 1998 Notes and borrowings expected to be available
under the Tomen Facility and the Siemens Loan Agreement, will provide sufficient
funds for the Company to expand its  business as  presently  planned and to fund
its operating expenses through September 2000.  Thereafter,  the Company expects
to require additional financing.  The extent of additional financing will depend
on, among other things,  the rate of the Company's  expansion and the success of
the Company's  businesses.  In the event that the Company's plans or assumptions
change  or  prove  to be  inaccurate,  or  its  cash  resources,  together  with
borrowings under the current financing  arrangements prove to be insufficient to
fund  the  Company's  growth  and  operations,  or if  the  Company  consummates
additional acquisitions,  the Company may be required to seek additional sources
of capital (or seek additional capital sooner than currently  anticipated).  The
Company may also seek to raise additional capital to take advantage of favorable
conditions in the capital  markets.  There can be no assurance  that  additional
financing  will be  available  to the Company or, if  available,  that it can be
concluded on terms acceptable to the Company or within the limitations contained
within the Company's  financing  arrangements.  Failure to obtain such financing
could  result  in the  delay  or  abandonment  of some  or all of the  Company's
development or expansion  plans and could have a material  adverse effect on the
Company's business.  Such failure could also limit the ability of the Company to
make  principal  and  interest  payments on its  outstanding  indebtedness.  The
Company has no material  working capital or other credit facility under which it
may borrow for working capital and other general corporate  purposes.  There can
be no  assurance  that such a facility  will be  available to the Company in the
future or that if such a facility were available,  that it would be available on
terms and conditions acceptable to the Company.

YEAR 2000 PROGRAM

         Many  computer  systems will  experience  difficulty  processing  dates
beyond  the year  1999  and will  need to be  modified  prior to the year  2000.
Failure  to  make  such  modifications   could  result  in

                                      -11-

<PAGE>

system failures or miscalculations causing disruptions of operations,  including
among other things an inability to process transactions, send invoices or engage
in normal  business  activities.  The Company's core internal  systems that have
been recently  implemented are year 2000 compliant.  The remaining core internal
systems  are  scheduled  to be  replaced  by the second  quarter of 1999 and are
expected  to be  year  2000  compliant  when  installed.  The  Company  is  also
completing a preliminary  assessment of year 2000 issues not related to its core
systems, including issues surrounding systems that interface with those operated
by  unrelated  parties.  Based on its initial  evaluation,  the Company does not
believe that the cost of remedial actions will have a material adverse effect on
the Company's  results of operations  and financial  condition.  There can be no
assurance,  however,  that  there  will not be a delay  in, or  increased  costs
associated with, the  implementation of changes as the program  progresses,  and
failure to implement such changes could have an adverse effect on future results
of operations.

                                      -12-

<PAGE>
                           PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Reference  is made to Item 3 "Legal  Proceedings"  of the  Registrant's
Transition Report on Form 10-K for the three months ended December 31, 1997, and
to the descriptions  therein of an action  commenced by US WEST  Communications,
Inc. ("US WEST")  against  members of the Arizona  Corporation  Commission  (the
"ACC"), the ACC, American  Communications Services Inc., Brooks Fiber Properties
Inc. and the Registrant in the United States District Court in Arizona. On March
31,  1998,  several  other  CLEC  defendants'  motions  to  dismiss  the US WEST
complaint  were  granted  in their  entirety.  Many of the counts in the US WEST
complaint  against the Registrant are identical to those  dismissed by the court
in the other CLEC defendants'  cases. The Registrant is negotiating with US WEST
to determine  how to give effect to this order of dismissal in the  Registrant's
related  case.  Should US WEST  prevail  in its suit,  it could  have an adverse
impact on the Registrant's operations in Arizona.

ITEM 2.  CHANGES IN SECURITIES

         On March 19, 1998, the Registrant  issued an aggregate of 19,568 Common
Shares to four individuals as an installment  payment in  consideration  for the
Registrant's   acquisition   in   September   1996   of   Tri-Star   Residential
Communications Corp.

         There were no underwriters involved in the foregoing issuance of equity
securities and such issuance was exempt from registration  under Section 4(2) of
the Securities Act of 1933, as amended,  as transactions  not involving a public
offering.

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

         The  Registrant  held its Annual  Meeting of  Shareholders  on March 4,
1998. The following matters were voted upon at such meeting:

               1. The election of John Warta,  Stephen Irwin,  Joseph A. Basile,
Thomas E.  Sawyer,  Peter E.  Legault,  Jack G.  Armstrong,  Joseph G. Fogg III,
Mitsuhiro  Naoe and A. Roy Megarry as directors of the Registrant to serve until
the next  annual  meeting  or  until  their  successors  are  duly  elected  and
appointed.

               2. The approval of an amendment  to the  Registrant's  1996 Stock
Option  Plan to  increase  the  number of Common  Shares  that may be subject to
options under such plan from 700,000 to 1,000,000.

               3. The approval of the Registrant's 1997 Stock Option Plan.

               4. The approval of the Registrant's Amended and Restated By-Laws.


                                      -13-

<PAGE>
               5. The approval of the issuance of Common Shares upon  conversion
of the  outstanding  Series A Preference  Shares  issued by the  Registrant in a
February 1997 private placement.

               6. The  appointment of KPMG Peat Marwick LLP as the  Registrant's
auditors until the next annual meeting.

               All  of  such  matters  were   approved  by  a  majority  of  the
Registrant's  shareholders  based upon a showing of hands at the annual  meeting
pursuant to the requirements of Canadian corporate law.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

           Exhibit 2      Agreement  and Plan of Merger dated April 14, 1998, by
                          and among GST  Telecommunications,  Inc.,  GST  Merger
                          Sub, Inc. and ICON Communications Corp.

           Exhibit 27     Financial Data Schedule

         (b)  Reports on Form 8-K

              On January 6, 1998, the  Registrant  reported on Form 8-K in "Item
5.  Other  Events,"  the  announcement  of an  agreement  for  the  sale  by the
Registrant of its interest in NACT Telecommunications, Inc. ("NACT").

              On February 27, 1998, the Registrant reported on Form 8-K in "Item
2.  Acquisition or Disposition of Assets," the  consummation  of the sale by the
Registrant  of  5,113,712  shares  of the  common  stock of  NACT,  representing
approximately 63% of the outstanding common stock of NACT.

                                      -14-

<PAGE>
                               S I G N A T U R E S


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





Date: May 13, 1998                GST TELECOMMUNICATIONS, INC.
                                  (Registrant)



                                  /s/ Daniel L. Trampush,
                                  ---------------------------------------------
                                  Daniel L. Trampush,
                                  (Senior Vice President and Chief
                                  Financial Officer)



                                      -15-