<PAGE>

                       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, 1999
                               --------------

                                       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 1-12866
                                                -------

                          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) 356-7100
                                                    --------------

                                       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 12, 1999, 
there were outstanding 37,390,815 Common Shares, without par value, of the 
Registrant.

<PAGE>

                         GST TELECOMMUNICATIONS, INC.

                                    INDEX

<TABLE>
<CAPTION>
                                                                         PAGE(S)
                                                                         -------
<S>       <C>                                                            <C>
                         PART I: FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS:

          Consolidated Condensed Balance Sheets - March 31,
          1999 and December 31, 1998                                          2

          Consolidated Condensed Statements of Operations
          - Three Months Ended March 31, 1999 and
          1998                                                                3

          Consolidated Condensed Statements of Cash Flows
          - Three Months Ended March 31, 1999 and 1998                        4

          Notes to Consolidated Condensed Financial
          Statements                                                        5-6

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS                              7-12

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK         13


                         PART II: OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS                                               14-16

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                16

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                   16

SIGNATURES                                                                   17

</TABLE>


                                      -1-
<PAGE>

                          GST Telecommunications, Inc.
                       Consolidated Condensed Balance Sheets
                                (In thousands)

<TABLE>
<CAPTION>

ASSETS                                                         MARCH 31, 1999         DECEMBER 31, 1998
                                                             ------------------       -----------------
<S>                                                          <C>
Current assets:
  Cash and cash equivalents                                  $          50,035       $         86,070
  Restricted investments                                                34,681                 34,107
  Accounts receivable, net                                              39,037                 32,935
  Investments                                                           16,246                 16,246
  Inventory, net                                                         1,554                  1,485
  Prepaid and other current assets                                      19,506                 11,454
                                                             ------------------      -----------------

         Total current assets                                          161,059                182,297
                                                             ------------------      -----------------

Restricted investments                                                 185,571                247,257

Property and equipment                                                 754,806                678,374
  less accumulated depreciation                                        (74,266)               (62,522)
                                                             ------------------      -----------------
                                                                       680,540                615,852

Other assets                                                           145,803                145,906
  less accumulated amortization                                        (45,583)               (40,029)
                                                             ------------------      -----------------

                                                                       100,220                105,877
                                                             ------------------      -----------------

         Total assets                                        $       1,127,390       $      1,151,283
                                                             ------------------      -----------------
                                                             ------------------      -----------------

LIABILITIES AND SHAREHOLDERS' DEFICIT 
Current liabilities:
  Accounts payable                                           $          22,839       $         26,411
  Accrued expenses                                                      42,347                 37,445
  Deferred revenue                                                       7,864                  6,030
  Current portion of capital lease obligations                           5,271                  5,649
  Current portion of long-term debt                                     13,225                 13,417
                                                             ------------------      -----------------

         Total current liabilities                                      91,546                 88,952
                                                             ------------------      -----------------

Other liabilities                                                       26,566                 21,377
Capital lease obligations, less current portion                         18,934                 19,741
Long-term debt, less current portion                                 1,109,280              1,092,959

Redeemable preference shares                                            61,741                 61,741

Shareholders' deficit:
  Common shares                                                        240,289                234,267
  Accumulated deficit                                                 (437,166)              (383,954)
  Accumulated other comprehensive income                                16,200                 16,200
                                                             ------------------      -----------------

                                                                      (180,677)              (133,487)
                                                             ------------------      -----------------

         Total liabilities and shareholders' deficit         $       1,127,390       $      1,151,283
                                                             ------------------      -----------------
                                                             ------------------      -----------------
</TABLE>

     See notes to consolidated condensed financial statements.


                                      -2-
<PAGE>

                           GST Telecommunications, Inc.
                    Consolidated Condensed Statements of Operations
                  (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                      THREE MONTHS
                                                                     ENDED MARCH 31,
                                                          --------------------------------------
                                                                1999                 1998
                                                          -----------------     ----------------
<S>                                                       <C>                   <C>
Revenues:
     Telecommunications services                          $         48,724      $        29,180
     Construction, facility sales and other                          5,876                  ---
     Product                                                         1,082                  864
                                                          ----------------      ---------------

         Total revenues                                             55,682               30,044
                                                          ----------------      ---------------

Operating costs and expenses:
     Network expenses                                               31,699               21,128
     Facilities administration and maintenance                       5,135                3,955
     Cost of construction revenues                                   2,514                  ---
     Cost of product revenues                                          695                  689
     Selling, general and administrative                            27,275               20,410
     Depreciation and amortization                                  16,978                8,669
                                                          ----------------      ---------------

         Total operating costs and expenses                         84,296               54,851
                                                          ----------------      ---------------

         Loss from operations                                      (28,614)             (24,807)
                                                          ----------------      ---------------

Other expenses (income):
    Interest income                                                 (3,861)              (4,935)
    Interest expense, net of amounts capitalized                    28,260               21,275
    Gain on sale of subsidiary shares                                  ---              (61,266)
    Other                                                              199                  657
                                                          ----------------      ---------------

                                                                    24,598              (44,269)
                                                          ----------------      ---------------

         (Loss) income before income taxes                         (53,212)              19,462

Income tax expense                                                     ---                  ---
                                                          ----------------      ---------------

Net (loss) income                                         $        (53,212)     $        19,462
                                                          ----------------      ---------------
                                                          ----------------      ---------------

Net (loss) income per share:
         Basic                                            $          (1.46)     $          0.56
                                                          ----------------      ---------------
                                                          ----------------      ---------------
         Diluted                                          $          (1.46)     $          0.44
                                                          ----------------      ---------------
                                                          ----------------      ---------------

Weighted average shares outstanding:
         Basic                                                  36,461,055           35,035,130
                                                          ----------------      ---------------
                                                          ----------------      ---------------
         Diluted                                                36,461,055           44,714,589
                                                          ----------------      ---------------
                                                          ----------------      ---------------
</TABLE>

See notes to consolidated condensed financial statements.

                                      -3-
<PAGE>

                           GST Telecommunications, Inc.
                   Consolidated Condensed Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                         THREE MONTHS
                                                                        ENDED MARCH 31,
                                                              -----------------------------------
                                                                  1999                 1998
                                                              --------------      ---------------
<S>                                                           <C>                 <C>
Operations:
     Net (loss) income                                        $     (53,212)      $        19,462
     Adjustments to reconcile net loss to net cash
       used in operations:
         Depreciation and amortization                               18,398                 9,990
         Accretion and accrual of interest                           17,983                 9,782
         Non-cash stock compensation and other expense                  156                   943
         Loss (gain) on disposal of assets                              359                  (221)
         Equity in losses of investments and joint                      ---                   593
           venture
         Gain on sale of subsidiary shares                              ---               (61,266)
         Changes in non-cash operating working capital:
              Accounts receivable, net                               (6,102)               (2,788)
              Inventory                                                 (69)                 (190)
              Prepaid, other current and other assets,               (8,052)                1,828
                net
              Accounts payable and accrued liabilities                4,912                12,387
              Deferred revenue                                        1,834                 1,310
                                                              --------------      ----------------
                  Cash used in operations                           (23,793)               (8,170)
                                                              --------------      ----------------

Investments:
     Acquisition of subsidiaries, net of cash acquired                  ---               (12,418)
     Purchase of property and equipment                             (75,908)              (39,214)
     Proceeds from sale of property and equipment                       ---                   772
     Purchase of other assets                                          (139)                  (90)
     Change in investments restricted for the
       purchase of property and equipment                            61,897                 8,011
     Proceeds from the sale of subsidiary shares, net                   ---                85,048
     Cash disposed of in sale of subsidiary                             ---                (5,252)
                                                              --------------      ----------------
                  Cash (used in) provided by
                    investing activities                            (14,150)               36,857
                                                              --------------      ----------------

Financing:
     Proceeds from long-term debt                                       316                   ---
     Principal payments on long-term debt and capital                (2,715)               (2,473)
       leases
     Issuance of common shares, net of issuance costs                 5,092                14,914
     Deferred debt financing costs                                      ---                (1,519)
     Change in investments restricted to finance
       interest payments                                               (785)                1,242
                                                              --------------      ----------------
                  Cash provided by financing activities               1,908                12,164
                                                              --------------      ----------------
                  (Decrease) increase in cash and cash
                    equivalents                                     (36,035)               40,851

Cash and cash equivalents, beginning of period                       86,070               199,053
                                                              --------------      ----------------

Cash and cash equivalents, end of period                      $      50,035       $       239,904
                                                              --------------      ----------------
                                                              --------------      ----------------
</TABLE>

See notes to consolidated condensed financial statements.


                                      -4-
<PAGE>

                          GST TELECOMMUNICATIONS, INC.
               NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                       (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

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 fiscal year ended December 31, 1998 as included in the Company's annual 
report on Form 10-K.

2.       BASIC AND DILUTED NET LOSS PER SHARE

         For the three months ended March 31, 1999, common stock equivalents 
were antidilutive and were not included in diluted weighted average shares 
outstanding. If the Company had reported net income for the periods presented, 
the weighted average number of common equivalent shares used to determine 
diluted net loss per share would have increased by 13,628,341 for the three 
month period ended March 31, 1999.

         For the three months ended March 31, 1998, diluted net income per 
share excludes $901 of interest expense related to convertible notes. Net 
income 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:

<TABLE>
         <S>                                                  <C>
         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
                                                              ----------
                                                              ----------
</TABLE>


                                      -5-
<PAGE>

                        GST TELECOMMUNICATIONS, INC.
     NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

3.       SHAREHOLDERS' EQUITY

         Shares issued and outstanding are as follows:

<TABLE>
<CAPTION>
                                                            MARCH 31, 1999       DECEMBER 31, 1998
                                                           ----------------      -----------------
         <S>                                               <C>                   <C> 
         Common shares, no par value                           37,098,179            36,264,066
</TABLE>

4.       SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                     THREE MONTHS
                                                                    ENDED MARCH 31,
                                                             ------------------------------
                                                                 1999             1998
                                                             -------------    -------------
<S>                                                          <C>              <C>
Supplemental disclosure of cash flow information:
     Cash paid for interest                                  $      3,538     $      4,194
     Cash paid for income taxes                                       ---              ---

Supplemental schedule of non-cash investing and 
     financing activities:
         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
          Amounts in accounts payable and accrued
              liabilities for the purchase of fixed assets at
              end of period                                        22,363           20,027
          Assets acquired through capital leases                      543            3,289
          Non-cash conversion of debt to equity                       774              ---
</TABLE>

5.       ADOPTION OF NEW ACCOUNTING STANDARD

         The Company adopted Statement of Position 98-5, Reporting on the 
Costs of Start-Up Activities (SOP 98-5) on January 1, 1999. SOP 98-5 requires 
that costs incurred during start-up activities, including organization costs, 
be expensed as incurred and that previously capitalized costs related to such 
activities be expensed as cumulative effect of a change in accounting 
principle upon adoption. Adoption of SOP 98-5 did not have a material effect on 
results of operations for the three month period ended March 31, 1999.


                                      -6-
<PAGE>

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

         Certain information included in this Quarterly Report may be deemed 
to include forward-looking statements within the meaning of Section 27A of 
the Securities Act of 1933, as amended, and Section 21E of the Securities 
Exchange Act of 1934, as amended, that involve risk and uncertainty, such as 
information relating to expected capital expenditures and expected trends in 
operating losses and cash flows, as well as any statements preceded by, 
followed by, or that include the words "intends," "estimates," "believes," 
"expects," "anticipates," "should," "could," or similar expressions, and 
other statements contained herein regarding matters that are not historical 
facts. Although the Company believes that its expectations are based on 
reasonable assumptions, it can give no assurance that its expectations will 
be achieved. The important factors that could cause actual results to differ 
materially from those in the forward-looking statements herein (the 
"Cautionary Statements") include, without limitation, risks associated with 
the Company's operating losses, risks relating to the Company's development 
and expansion and possible inability to manage growth, risks relating to the 
Company's significant capital requirements, substantial indebtedness and 
possible inability to service its debt, risks relating to competition and 
regulatory developments, risks relating to implementing local and enhanced 
services, risks relating to its long distance business, as well as other 
risks referenced from time to time in the Company's filings with the 
Securities and Exchange Commission, including Amendment No. 3 to the 
Company's Form S-4 as filed on May 3, 1999 and the Company's Form 10-K for 
the fiscal year ended December 31, 1998. All subsequent written and oral 
forward-looking statements attributable to the Company or persons acting on 
its behalf are expressly qualified in their entirety by the Cautionary 
Statements. The Company does not undertake any obligation to release publicly 
any revisions to such forward-looking statements to reflect events or 
circumstances after the date hereof or to reflect the occurrence of 
unanticipated events.

OVERVIEW

         The Company, through its subsidiaries, provides a broad range of 
integrated telecommunications products and services, primarily to business 
customers located in California, Hawaii and other western continental states. 
As a facilities-based integrated communications provider ("ICP"), the Company 
operates state-of-the-art, digital telecommunications networks that represent 
an alternative to incumbent local exchange carriers ("ILECs"). The Company's 
full line of products, which offer a "one-stop" customer-focused solution to 
the telecommunications services requirements of its customers, include local 
dial tone, long distance, Internet, data transmission and private line 
services. With the turn-up of its Virtual Integrated Transport and Access 
("VITA") network in the fiscal year ended December 31, 1998 ("Fiscal 1998"), 
the Company became one of the first ICPs to develop and deploy a converged 
network. As of March 31, 1999, the VITA network was operational in 18 of the 
Company's markets, positioning the Company for deployment of advanced 
Internet Protocol ("IP") services in those markets.

RESULTS OF OPERATIONS

         REVENUES.  Total revenue for the three month period ended March 31, 
1999 increased $25.7 million, or 85.3%, to $55.7 million from $30.0 million 
for the comparable three months ended March 31, 1998. Telecommunications 
services revenues for the three month period ended March 


                                      -7-
<PAGE>

31, 1999 increased $19.5 million, or 67.0%, to $48.7 million from $29.2 
million for the comparable three months ended March 31, 1998. The increase in 
telecommunications services revenues resulted primarily from strategic 
acquisitions, including the acquisition of ICON Communications Corp. in April 
1998, and from increased local service revenue generated by the Company's 
networks. To a lesser extent, the increase in telecommunications services 
revenues resulted from increased long distance, Internet, and data services. 
Construction, facility sales and other revenue was $5.9 million and $0 for 
the three month periods ended March 31, 1999 and 1998, respectively. The 
increase was attributable to revenue from the construction of network and 
fiber systems. Product revenue for the three month period ended March 31, 
1999 increased $0.2 million, or 25.2%, to $1.1 million from $0.9 million for 
the three month period ended March 31, 1998.

         OPERATING EXPENSES.  Total operating expenses for the three month 
period ended March 31, 1999 increased $29.4 million, or 53.7%, to $84.3 
million from $54.9 million for the three month period ended March 31, 1998. 
Network expenses, which include direct local and long distance circuit costs, 
increased $10.6 million, or 50.0%, to $31.7 million, or 65.1% of 
telecommunications services revenues for the three month period ended March 
31, 1999 compared to $21.1 million, or 72.4% for the comparable three month 
period ended March 31, 1998. The decrease in network expenses as a percentage 
of telecommunications services revenue resulted from the inclusion of 
strategic acquisitions and an increase in revenues for traffic carried on the 
Company's network. Facilities administration and maintenance expenses for the 
three month period ended March 31, 1999 increased $1.1 million, or 29.8%, to 
$5.1 million, or 10.5% of telecommunications services revenues compared to 
$4.0 million, or 13.6% for the comparable three month period ended March 31, 
1998. The decrease in these expenses as a percentage of telecommunications 
services revenues resulted from the inclusion of revenues from strategic 
acquisitions, substantially all of which are not generated on the Company's 
networks.

         Cost of construction revenue was $2.5 million and $0 for the three 
months periods ended March 31, 1999 and 1998, respectively. The increase was 
attributable to new construction of network and fiber systems.

         Cost of product revenues was $0.7 million in each of the three 
month periods ended March 31, 1999 and 1998. For the three month period ended 
March 31, 1999 cost of product revenues were 64.2% of product revenues, 
compared to 79.7% for the comparable three month period ended March 31, 1998.

         Selling, general and administrative expenses for the three month 
period ended March 31, 1999 increased $6.9 million, or 33.6%, to $27.3 
million from $20.4 million for the three month period ended March 31, 1998. 
The increase is due to the expansion of the Company's local and enhanced 
services operations, which resulted in additional marketing, management 
information and sales staff, and to selling, general and administrative 
expenses related to companies acquired in 1998. As a percentage of total 
revenue, selling, general and administrative expenses for the three months 
ended March 31, 1999 were 49.0%, compared to 67.9% for the three months ended 
March 31, 1998.

         Depreciation and amortization for the three month period ended March 
31, 1999 increased $8.3 million, or 95.8%, to $17.0 million from $8.7 million 
for the three months ended March 31, 1998. The increase is attributable to 
newly-constructed networks and related equipment being placed into service 
and to the amortization of intangible assets related to companies acquired in 
1998. 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 expense was 30.5% of total 
revenue for the three months ended March 31, 1999 compared to 28.9% for the 
comparable three month period ended March 31, 1998.

                                      -8-
<PAGE>

         OTHER EXPENSES/INCOME.  For the three month period ended March 31, 
1999, the Company recorded net other expense of $24.6 million, compared to 
net other income of $44.3 million for the comparable three month period ended 
March 31, 1998. For the three months ended March 31, 1998, net other income 
includes a $61.3 million gain resulting from the sale of the Company's 
majority interest in NACT (the "NACT Sale"). Excluding such gain, net other 
expense would have increased $7.6 million for the three month period ended 
March 31, 1999 as compared to the same period in the previous year. The 
increase in net other expense related primarily to increased interest expense 
resulting from the issuance in May, 1998 of $500.0 million principal amount 
at maturity of 10.5% senior secured discount notes (the "1998 Notes").

         NET INCOME/LOSS.  Net income (loss) for the three months ended March 
31, 1999 decreased $72.7 million, or 373.4%, to ($53.2) million from $19.5 
million for the three months ended March 31, 1998. Excluding the $61.3 
million gain on the NACT Sale, net loss would have been $41.8 million for the 
three months ended March 31, 1998. Excluding the gain on the NACT Sale, net 
loss would have increased $11.4 million for the three months ended March 31, 
1999 as compared to the three months ended March 31, 1998. Such increase in 
net loss resulted primarily from a $7.0 million increase in interest expense 
and a $29.4 million increase in operating expenses and was partially offset by 
a $25.7 million increase in revenues.

LIQUIDITY AND CAPITAL RESOURCES

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

         At March 31, 1999, the Company had approximately $1,146.7 million of 
indebtedness outstanding. Although the Company's liquidity was substantially 
improved as a result of proceeds 


                                      -9-
<PAGE>

received from the sale of $312.4 million principal amount at maturity of 
13.875% senior discount notes and $37.9 million principal amount at maturity 
of 13.875% convertible senior subordinated discount notes in December 1995 
(collectively the "1995 Notes"), the sale of $265.0 million of 13.25% senior 
secured notes in May 1997 (the "Secured Notes"), the sale of $144.0 million 
of 12.75% senior subordinated accrual notes in November 1997 (the "Accrual 
Notes") and the sale of the "1998 Notes", the Company has significant debt 
service obligations. The Company will be required to make principal and 
interest payments of approximately $61.3 million (of which $35.1 million will 
be made from funds securing the Secured Notes), $66.8 million (of which $17.6 
million will be made from funds securing the Secured Notes), $113.1 million, 
$111.5 million and $155.0 million in the remainder of 1999 and in 2000, 2001, 
2002, and 2003, 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 
scheduled 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, 1999, the Company had cash, cash equivalents, and 
investments, including restricted investments, of approximately $286.5 
million. The Company believes that such amounts will be sufficient to fund 
the Company's operations through the end of Fiscal 1999. Divestitures and 
other management actions may prolong capital availability into the fiscal 
year 2000 and beyond. 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, the Company incurs significant unexpected expenses, 
or the Company's 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 GST 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 facility will be available to the Company in 
the future or that if such facility were available, that it would be 
available on terms and conditions acceptable to the Company.

         The Company's net cash (used in) provided by operating and investing 
activities was ($37.9) million and $28.7 million for the three months ended 
March 31, 1999 and 1998, respectively. Net cash provided by financing 
activities from borrowings and equity issuances to 


                                      -10-
<PAGE>

fund capital expenditures, acquisitions and operating losses was $1.9 million 
and $12.2 million for the three months ended March 31, 1999 and 1998, 
respectively.

         Capital expenditures for the three months ended March 31, 1999 and 
1998 were $77.1 million and $41.8 million, respectively. The Company 
estimates capital expenditures of $172.9 million and $150 million in the 
remainder of 1999 and in Fiscal 2000, 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.

        The Company, GST USAS, GST Network Funding, Inc. and GST Equipment 
Funding, Inc. are parties to certain indentures and have issued or guaranteed 
notes governed by those indentures. In November 1998, the Company notified 
United States Trust Company of New York, as trustee under the indentures, 
that certain actions by the Company and its subsidiaries may not have been in 
compliance with the technical requirements of certain restrictive covenants 
contained in the indentures. In particular, the Company disclosed that a 
series of transactions involving Global may have resulted in technical 
non-compliances with the indentures. The Company is currently conducting a 
review of the relevant transactions and intends to vigorously pursue any 
necessary action to cure the potential non-compliances. The Company has 
initiated litigation against Global and others in an effort to cure any 
technical covenant violations that may have resulted from the transactions 
involving Global. See Item 1, "Legal Proceedings."

        In February 1999, the trustee informed the note holders of the 
potential violations. Pursuant to the definitions contained within the 
indentures of each of the notes described above, no default has been declared 
and no event of default has occurred. The Company has not classified the 
related debt obligations as current in its consolidated financial statements 
because management believes it is probable that, in the event that the 
holders declared a default, the Company would be able to take corrective 
actions to cure any objectively determinable violations within the prescribed 
grace period.

       While the Company believes that any non-compliances can be cured, the 
Company cannot offer any assurance that the litigation will be successful or 
that any other potential cures will be effected in a timely manner or be 
sufficient. In the event that the Company has violated its indentures and 
does not cure the violations, the holders of the notes issued under the 
indentures could demand repayment of the notes, discontinue disbursements of 
cash proceeds of the most recent notes and assert other remedies against the 
Company. If any of these events occurred, the Company would not have 
sufficient liquid assets to repay the notes.

YEAR 2000 PROGRAM

         The Company is currently verifying system readiness for the 
processing of date-sensitive information by its information technology ("IT") 
systems (applications, hardware, system software and interfaces) and its 
network operations. The review of IT systems and network operations is 
centrally managed through a year 2000 Program Management Office (PMO).

         THE COMPANY'S STATE OF READINESS.  In general, the Company's year 
2000 project is divided into three phases: (1) inventory and assessment 
("Phase One"), (2) strategy and contingency planning ("Phase Two"), and (3) 
conversion and remediation ("Phase Three").

         The Company completed its Phase One assessment for IT systems in 
October 1998. Phase One for network operations was completed in March 1999. 
The Company has focused its independent testing activities principally on 
those systems whose failure would pose the greatest risk to the Company. The 
Company may not independently test all of its equipment and will rely upon 
vendor representations, if received by the Company, where tests are not 
conducted. There can be no assurance of the accuracy or completeness of such 
representations. The Company is continuing to contact all of its significant 
suppliers and large customers to determine the extent to which the Company's 
interface systems are vulnerable to those third parties' failure to remediate 
their own year 2000 issues.

         With respect to IT systems, the Company completed Phase Two, wherein 
remedial actions were planned and a contingency plan was formulated, in 
December 1998. The Company expects to complete Phase Three for IT systems, 
wherein remedial actions will be implemented and tested, in third quarter 
1999. The Company has completed strategy planning and anticipates conclusion 
of remaining Phase Two and Phase Three activities for network operations in 
third quarter 1999.

         COSTS.  The total amount expended on the project through March 31, 
1999 was approximately $1.7 million. The total cost of the year 2000 project 
is estimated to be $3.3 million, including $.3 million in internal staffing 
costs, $1.8 million in external staffing costs and $1.2 million in hardware 
and software upgrade costs. This cost may be reduced if software and hardware 
are replaced with compliant systems as a result of other currently scheduled 
capital projects. The Company does not expect remediation costs to have a 
material adverse effect on its 


                                      -11-
<PAGE>

financial position, results of operation or cash flows. 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.

         RISKS.  The failure to correct a material year 2000 problem could 
result in an interruption in, or a failure of, certain normal business 
activities or operations. Such failures could materially and adversely affect 
the Company's results of operations, liquidity and financial condition. Due 
to the general uncertainty inherent in the year 2000 problem, resulting in 
part from the uncertainty of the year 2000 readiness of third-party suppliers 
and customers, the Company is unable to determine at this time whether the 
consequences of year 2000 failures will have a material impact on the 
Company's results of operations, liquidity or financial condition. The year 
2000 project is expected to significantly reduce the Company's level of 
uncertainty about the year 2000 problem. The Company believes that, with the 
implementation of new business systems and completion of the project as 
scheduled, the possibility of significant interruptions of normal operations 
should be reduced.

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the FASB issued SFAS No. 133, "Accounting for 
Derivative Instruments and Hedging Activities." SFAS No. 133 standardizes the 
accounting for derivative instruments, including certain derivative 
instruments embedded in other contracts. Under SFAS No. 133, entities are now 
required to carry all derivative instruments in the balance sheet at fair 
value. The accounting for changes in fair value (i.e., gains and losses) of a 
derivative instrument depends on whether it has been designated and qualifies 
as part of a hedging relationship and, if so, on the reason for holding it. 
The Company must adopt SFAS No. 133 by January 1, 2000. The Company has not 
determined the impact that SFAS No. 133 will have on its financial statements 
and believes that such determination will not be meaningful until closer to 
the date of initial adoption.


                                      -12-

<PAGE>

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

INTEREST RATE MARKET RISK - The Company has fixed income investments 
consisting of cash equivalents, short-term investments in U.S. government 
debt instruments, certificates of deposit and commercial paper.

Interest income earned on the Company's short-term investment portfolio is 
affected by changes in the general level of U.S. interest rates. The Company 
believes that it is not exposed to significant changes in fair value because 
such investments are classified as available-for-sale and held-to-maturity 
and are recorded at amortized cost. The fair value of each investment 
approximates its amortized cost, and long-term securities have maturities of 
less than two years.

The following table provides information about the Company's risk exposure 
associated with changing interest rates. Currently, the Company does not use 
derivative financial instruments to manage its interest rate risk.

<TABLE>
<CAPTION>

                                                                           EXPECTED MATURITY
                                                                       (in thousands of dollars)
                                        ------------------------------------------------------------------------------------------
                                                                                                                          Market
                                                                                                                         Value at
                                                                                                                         March 31,
                                          1999      2000      2001      2002      2003      Thereafter       Total        1999 (1)
                                         ------    ------    ------    ------    ------     ----------     ---------     ---------
<S>                                      <C>       <C>       <C>       <C>       <C>        <C>            <C>           <C>
Long-term Debt:
  Fixed rate                            $ 1,290                                            $1,259,304(2)  $1,260,594(2)  $1,128,217
    Average interest rate                   8.5%                                                12.28%
  Variable rate                         $11,952   $17,041   $20,216   $20,898   $21,132    $   13,486     $  104,725
    Average interest rate (LIBOR plus)     3.37%     3.26%     3.29%     3.34%     3.34%         3.06%

Capital Leases:
  Fixed rate                            $ 6,476   $ 5,227   $ 2,279   $ 1,974   $ 1,981    $    7,434     $   25,371
    Average interest rate                 12.36%    12.36%    12.36%    12.36%    12.36%        12.36%

Redeemable Preferred Stock:
  Fixed rate                                                                               $  112,000     $  112,000
    Average interest rate                                                                       11.88%
</TABLE>

(1)  Based on quoted market prices at March 31, 1999.

(2)  Includes $242.3 million of unaccreted discount.

MARKET PRICE RISK - The Company's risk exposure associated with market price 
is limited to its long-term debt that is publicly traded. These bonds are 
recorded at book value, which could vary from current market prices.

FOREIGN CURRENCY MARKET RISK - Although the Company conducts some business in 
Canada, the international operations were not material to the Company's 
consolidated financial position. Accordingly, the Company was not subject to 
material foreign currency exchange rate risk from the effects that exchange 
rate movements of foreign currencies would have on the Company's future costs 
or on future cash flows it would receive.

                                     -13-

<PAGE>

                           PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

GST TELECOMMUNICATIONS, INC. AND GST TELECOM, INC. V. GLOBAL LIGHT 
TELECOMMUNICATIONS, INC., ET AL.

         On October 20, 1998, the Company and GST Telecom, Inc. ("GST 
Telecom") filed a Complaint in the Superior Court of California, County of 
Santa Clara, No. CV777408, against GST Global Telecommunications, Inc., now 
known as Global Light Telecommunications, Inc. ("Global") and six former 
officers and directors of the Company. The Complaint includes claims for 
fraud, negligent misrepresentation, unjust enrichment, and unfair competition 
primarily related to the alleged misappropriation of a Mexican business 
opportunity. The complaint seeks an accounting, a constructive trust, and 
restitution of the Company's interest in the opportunity and also seeks 
unspecified exemplary and punitive damages and reimbursement of attorneys' 
fees.

         In particular, the Complaint alleges that Global and the individual 
defendants misappropriated the Company's joint venture interest in Bestel, 
the owner of a 2,270 kilometer fiber optic telecommunications network in 
Mexico. The lawsuit alleges that the individual defendants caused the 
Company's 49% interest in Bestel to be transferred to Global, then a shell 
corporation in which the individuals, had secretly invested. No written 
agreement validated the transfer. The Company therefore seeks return of the 
asset and monetary compensation to remedy the loss arising from the wrongful 
transfer.

         On December 23, 1998, Defendants filed a motion to stay or dismiss 
the action on grounds of inconvenient forum, and four of the individual 
defendants filed a motion to dismiss the action for lack of personal 
jurisdiction. The Superior Court granted Defendants' motion to stay the 
proceedings on February 5, 1999, and the Company and GST Telecom filed a 
notice of appeal on February 9, 1999.

WARTA V. GST TELECOMMUNICATIONS, GST USA, INC., AND GST TELECOM AND 
COUNTERCLAIMS

         On January 25, 1999, John Warta filed a Complaint in the Superior 
Court of Washington, King County, No. 99-2-02287-4SEA, against the Company, 
GST USA, Inc. ("GST USA") and GST Telecom. The Complaint, which relates to the 
circumstances under which Mr. Warta ceased to serve as an officer and director 
of the Company, includes claims for breach of employment agreement, breach of 
the covenant of good faith and fair dealing, violation of wage statutes, and 
indemnity.

         On February 23, 1999, the Company answered by denying all liability 
and filed counterclaims against Mr. Warta, Global and five other former 
officers and directors for liability with respect to the matters leading to 
the termination of Mr. Warta's employment. In particular, the Company seeks 
recovery under Washington law for matters described in GST AND TELECOM V. 
GLOBAL, ET. AL, above, as well as for breaches committed with respect to the 
wrongful use of Company funds for the purchase of telecommunications licenses 
by Mr. Warta through companies he owns.

GST TELECOMMUNICATIONS, GST USA AND GST TELECOM V. IRWIN AND OLSHAN


                                      -14-
<PAGE>

         On December 16, 1998, the Company, GST USA and GST Telecom filed a 
Complaint in the United States District Court, Southern District of New York, 
No. 98 CIV. 8865, against Stephen Irwin and the law firm of Olshan Grundman 
Frome & Rosenzweig LLP ("Olshan"). The Complaint, which relates to Mr. Irwin 
and Olshan's representation of the Company, GST USA and GST Telecom in 
various matters, includes claims for professional negligence, breach of 
fiduciary duty, and breach of contract, and seeks compensatory damages and 
reimbursement of attorneys' fees.

         On February 12, 1999, Mr. Irwin filed his Answer to the Complaint. 
Olshan filed its Answer and Counterclaims to the Complaint on February 17, 
1999. Olshan counterclaimed against the Company, GST USA and GST Telecom for 
breach of contract, unjust enrichment, quantum meruit, and "account stated," 
based on invoices submitted to the Company of approximately $250,000. No 
trial date has been set.

GST TELECOMMUNICATIONS V. SANDER

         On February 9, 1999, the Company filed a Complaint in the Superior 
Court for the State of Washington, Clark County, No. 99-2-00573-6, against 
Clifford Sander, the former treasurer of the Company. The Complaint, which is 
based on Mr. Sander's alleged misconduct as an officer of GST, includes 
claims for fraud, breach of fiduciary duty, unjust enrichment, and unfair 
business practices, and seeks an accounting, imposition of a constructive 
trust, compensatory damages, costs of suit, attorneys' fees, and treble 
damages. In particular, the Complaint seeks relief based on Mr. Sander's 
misuse of insider information in the purchase of stock, wrongful 
disbursements to third parties, and involvement in a fraudulent release of 
stock from escrow to three former directors and/or officers of GST. By order 
of the Court, this lawsuit will be transferred to King County, Washington, 
Superior Court. Mr. Sander has not yet responded to the Complaint.

GLOBAL AND MEXTEL V. GST TELECOMMUNICATIONS AND GST TELECOM

         On January 27, 1999, Global and GST Mextel, Inc. ("Mextel") filed a 
Complaint in the Supreme Court of British Columbia, No. C990449, against the 
Company and GST Telecom. The Complaint, which arises from the same matters 
for which the Company and GST Telecom brought suit against Global et al. in 
the Superior Court of California, includes claims for declaratory and 
injunctive relief to confirm the ownership of the Mexican business 
opportunity by Global, and unspecified general and special damages. In 
particular, Global seeks a declaration from the court that it is entitled to 
retain the equity interest in Bestel, or at least a judicial determination of 
the amount Global owes the Company. The Company intends to vigorously dispute 
the allegations in the Complaint.

IRWIN ET AL. V. GST TELECOMMUNICATIONS ET AL.

         On January 28, 1999, Stephen Irwin, Robert Hanson, Peter Legault, 
Clifford Sander, and John Warta, all former GST officers or directors, filed 
a Complaint in the Supreme Court of British Columbia, No. C990488, against 
the Company, GST Telecom, and four of the Company's current directors. The 
Complaint, which arises from the same matters for which the Company and GST 
Telecom brought suit against Global et al. in the Superior Court of 
California, includes claims for oppression and declaratory relief, and seeks 
unspecified actual and punitive damages, cost, and attorneys' fees. In 
particular, the plaintiffs have asked the court to declare that the 
plaintiffs may retain the Global stock they purchased while fiduciaries of 
the Company and seek to have the Canadian 


                                      -15-
<PAGE>

court enjoin GST from pursuing its claims against them. The Company and its 
directors will vigorously dispute the allegations in the Complaint.

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

     The Company held its Annual Meeting of the Shareholders on April 15, 1999.

     The following matters were voted upon at such meeting:

     1.  To fix the number of directors to be elected at eight (8) and to 
         elect Joseph A. Basile, Jr., Stanley M.D. Beck, George B. Cobbe, 
         Robert A. Ferchat, Joseph G. Fogg, III, David W. Garrison, A. Roy 
         Megarry, and Mitsuhiro Naoe as directors to hold office until the 
         next Annual Meeting of the Shareholders or until their successors 
         are duly elected or appointed.

     2.  Approval of the Company's Amended and Restated 1996 Employee 
         Stock Purchase Plan, including the reservation of an additional 
         600,000 shares for issuance thereunder.

     3.  Approval of the Company's 1999 Stock Plan, including the reservation 
         of 2,000,000 shares for issuance thereunder.

     4.  Approval of the Company's Supplemental Employee Stock Purchase Plan, 
         including the reservation of 150,000 shares for issuance thereunder.

     5.  To appoint KPMG Peat Marwick LLP as auditors for the Company until the
         next Annual Meeting of the shareholders and to authorize the 
         directors to fix the remuneration to be paid to the auditors.

         All of such matters were approved by a majority of the Company's 
     shareholders based upon a showing of hands at the annual meeting 
     pursuant to the requirements of Canadian corporate law. Moreover, 
     matters 2, 3, and 4 above were approved by a majority of disinterested 
     shareholders.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

                   Exhibit 27       Financial Data Schedule

         (b)  Reports on Form 8-K

                   None.


                                      -16-
<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 17, 1999               GST TELECOMMUNICATIONS, INC.
                                              (Registrant)


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


                                      -17-