EXHIBIT 10.40


                           LOAN AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                                   RAM MUKUNDA

                                  ("BORROWER")

                                       AND

                   STARTEC GLOBAL COMMUNICATIONS CORPORATION

                                   ("LENDER")




                                 8 OCTOBER 1998


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                           LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of October 8,
1998 by and between Ram Mukunda ("Borrower"),  and Startec Global Communications
Corporation, a Maryland corporation ("Lender").

                                    RECITALS

     A.  Whereas,  Borrower  desires to borrow  funds from  Lender and Lender is
willing to establish such  arrangements  for and make loans to Borrower,  on the
terms and conditions set forth below.

     B. Whereas,  the parties desire to define the terms and conditions of their
relationship and to reduce their agreements to writing.

     NOW, THEREFORE, in consideration of the promises and covenants contained in
this Agreement,  and for other good and valuable consideration,  the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

     As used in this  Agreement,  the  following  terms shall have the following
meanings:

     SECTION   1.1. AGREEMENT.   "Agreement"   means   this  Loan  and  Security
Agreement, as it may be amended or supplemented from time to time.

     SECTION  1.2. APPLICABLE INTEREST RATE. "Applicable Interest Rate" means an
interest rate of 7.87% per annum.

     SECTION  1.3. BORROWED  MONEY.  "Borrowed  Money"  means  any obligation to
repay money, any indebtedness evidenced by this Loan and Security Agreement.

     SECTION  1.4. BORROWER.  "Borrower"  has  the  meaning  set  forth  in  the
Preamble.

     SECTION  1.5. BUSINESS DAY. "Business Day" means any day on which financial
institutions  are  open  for  business  in  the  State  of  Maryland,  excluding
Saturdays and Sundays.

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     SECTION  1.6. CLOSING  DATE.  "Closing" and "Closing Date" mean the date on
which this Agreement is executed by and between the Borrower and the Lender.

     SECTION 1.7. LENDER. "Lender" has the meaning set forth in the Preamble.

     SECTION 1.8. LOAN. "Loan" has the meaning set forth in Section 2.1(a).

     SECTION 1.9.  LOAN  DOCUMENTS.  "Loan  Documents"  means and includes  this
Agreement the final, executed Escrow Agreement and each and every other document
now or  hereafter  delivered  in  connection  therewith,  as any of them  may be
amended, modified, or supplemented from time to time.

     SECTION   1.10. PERSON.   "Person"   means   an   individual,  partnership,
corporation,  trust,  joint  venture,  joint  stock  company,  limited liability
company,  association,  unincorporated  organization, Governmental Authority, or
any other entity.

     SECTION 1.11. TERM. "Term" has the meaning set forth in Section 2.3.


                                   ARTICLE II

                                      LOAN

     SECTION 2.1. TERMS.

          (a)  Borrower  and Lender agree that the  aggregate  principal  amount
loaned  by  Lender to  Borrower  hereunder  (the  "Loan")  will be Four  Hundred
Thousand Dollars ($400,000.00).

          (b) Borrower hereby agrees to repay Lender the principal amount of the
Loan pursuant to the terms and  conditions  set forth herein.  Borrower  further
agrees to pay the Lender interest on the Loan from the date hereof until repaid,
at a rate per  annum in  arrears  (on the  basis of the  actual  number  of days
elapsed over a year of 360 days) equal to the Applicable Interest Rate.

     SECTION 2.2.  PAYMENTS.  Principal payable on account of this Loan shall be
due and  payable by  Borrower  to Lender  immediately  upon the  earliest of (i)
December 31, 1999; or (ii) the termination of this Agreement pursuant to Section
2.3(b)  hereof.  Interest  shall be due and  payable at the time that  principal
amounts are fully paid.  Pursuant to Section 2.3(b),  the Loan may be prepaid in
whole or in part at any time or from time to time without premium or penalty.

     SECTION 2.3. TERM.


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          (a) This  Agreement  shall be in effect  from the  Closing  Date until
December 31, 1999 ("the Term"),  unless terminated as provided in subsection (b)
of this  Section,  and  this  Agreement  may be  renewed  for  one-year  periods
thereafter upon the mutual written agreement of the parties.

          (b) Borrower may terminate this  Agreement at any time,  provided that
as of the effective date of such  termination,  Borrower shall pay to Lender the
full amount of any outstanding principal and interest then due and owning on the
Loan.

     SECTION 2.4. SECURITY.

     Borrower  and Lender  agree that this Loan shall be secured  by, and Lender
shall have legal recourse to, all of the Borrower's personal estate,  including,
but not  limited  to all  now-owned  and  hereafter  acquired  real or  personal
property, deposit accounts, money, insurance proceeds,  securities and rights to
payment of every kind and  description,  and all of Borrower's  contract rights,
and all of Borrower's  rights,  remedies,  interest,  security and liens, in any
real or personal property.  Lender's right of recourse to the security described
herein  shall  be  secondary  to any  pre-existing  security  interests  in such
property held by any other Persons.

     SECTION 2.5. ESTABLISHMENT OF ESCROW SECURITY.

     As additional  security for payments  hereunder the Borrower shall place in
escrow certain  securities of Startec  Global  Communications  Corporation  (the
"Stock") owned by Borrower,  valued at an amount equal to five hundred  thousand
dollars  ($500,000) as determined by a Fair Market  Valuation as of the date the
Escrow  Agreement is executed by and among the parties.  For the purpose of this
paragraph,  a Fair  Market  Valuation  on any  given  day  shall be equal to the
closing price  reported for the Stock on the National  Association of Securities
Dealers Automated Quotation System (NASDAQ) two days earlier.

     The Stock shall be placed in a  segregated  account to be held by an escrow
agent for the purpose of securing  payment of the Loan.  Following the execution
and delivery of this Agreement, the parties shall enter into an Escrow Agreement
with an appropriate institution (the "Escrow Agent"),  substantially in the form
of the Escrow Agreement  attached hereto as Exhibit A.  Simultaneously  with the
execution and delivery of the Escrow  Agreement,  the Borrower shall deliver the
Stock to the Escrow Agent.

     SECTION 2.6.  ENTITLEMENT  TO ESCROW  SECURITY.  In the event that Borrower
fails to satisfy his obligations  hereunder in accordance with the payment terms
of  Section  2.2 and fails to make  interest  and  principal  payments  required
hereunder by December 31, 1999, Lender shall, in addition to all other legal and
equitable remedies,  have recourse to the Stock but only in amounts equal to the
principal  and interest  amounts  remaining  due and unpaid.  Within thirty days
following  the last day of the Term,  Lender shall  provide  Borrower and Escrow
Agent with notice  ("Notice to Recover")



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of its  intention  to recover  amounts due and  outstanding  out of the escrowed
Stock. If Borrower fails to satisfy his obligations  under Section 2.2 within 15
days of his receipt of Notice to  Recover,  the Escrow  Agent shall  release and
provide to Lender  escrowed Stock equal to the amount due and  outstanding  from
Borrower  to  Lender.  The value of the Stock at the time that  Lender  shall be
entitled to recourse  thereto (i.e.,  in the event borrower fails to satisfy his
obligations hereunder),  shall be determined by a Fair Market Valuation. For the
purpose of this  paragraph,  a Fair Market  Valuation  on any given day shall be
equal to the closing price reported for the Stock on the National Association of
Securities Dealers Automated Quotation System (NASDAQ) two days earlier.

     SECTION 2.7. RELEASE OF ESCROW SECURITIES TO BORROWER.  Upon the earlier of
(1) notice jointly  provided to the Escrow Agent that the interest and principal
amounts due  hereunder  have been paid;  or (2)  February  28,  2000,  all Stock
remaining in escrow shall be released and returned to Borrower.


                                   ARTICLE III

                                  MISCELLANEOUS

     SECTION 3.1. ENTIRE AGREEMENT;  AMENDMENTS.  This Agreement constitutes the
full and entire  understanding  and  agreement  among the parties with regard to
their  subject  matter and  supersedes  all prior  written  or oral  agreements,
understandings,  representations  and warranties made with respect  thereto.  No
amendment,  supplement or  modification  of this Agreement nor any waiver of any
provision  thereof shall be made except in writing executed by the party against
whom enforcement is sought.

     SECTION  3.2.  NOTICES.  Any  notice  or other  communication  required  or
permitted  hereunder  shall be in writing and  personally  delivered,  mailed by
registered or certified  mail (return  receipt  requested and postage  prepaid),
sent by telecopier  (with a confirming  copy sent by regular  mail),  or sent by
prepaid  overnight  courier service,  and addressed to the relevant party at its
address set forth below,  or at such other address as such party may, by written
notice, designate as its address for purposes of notice hereunder:

        (a) If to Lender, at:

            Startec Global Communications Corporation
            10411 Motor City Drive
            Bethesda, MD 20817
            Attention: Subhash Pai, Vice President and Controller
            Telephone: (301) 365-8969

        (b) If to Borrower, at:

            Mr. Ram Mukunda
            8906 Durham Drive


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            Potomac, MD 20854
            (301) 469-8906

If mailed, notice shall be deemed to be given five (5) days after being sent, if
sent by personal delivery or telecopier, notice shall be deemed to be given when
delivered, and if sent by prepaid courier, notice shall be deemed to be given on
the next Business Day following deposit with the courier.

     SECTION  3.3.  SEVERABILITY.  If any term,  covenant or  condition  of this
Agreement,  or the application of such term,  covenant or condition to any party
or  circumstance  shall be found by a court of competent  jurisdiction to be, to
any extent,  invalid or  unenforceable,  the remainder of this Agreement and the
application  of such term,  covenant,  or condition to parties or  circumstances
other than those as to which it is held invalid or  unenforceable,  shall not be
affected  thereby,  and each  term,  covenant  or  condition  shall be valid and
enforced to the fullest  extent  permitted by law. Upon  determination  that any
such term,  covenant or  condition  is invalid,  illegal or  unenforceable,  the
parties hereto shall amend this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner.

     SECTION  3.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts,  each  of  which  shall  be  deemed  an original, but all of which
together shall constitute but one instrument.

     SECTION 3.5.  INTERPRETATION.  No provision of this  Agreement or any other
Loan Document shall be  interpreted or construed  against any party because that
party or its legal  representative  drafted  that  provision.  The titles of the
paragraphs of this  Agreement are for  convenience of reference only and are not
to be  considered  in  construing  this  Agreement.  Any  pronoun  used  in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and  neuter  gender  as the case  may be.  The  words  "herein,"  "hereof,"  and
"hereunder"  shall be deemed to refer to this  entire  Agreement,  except as the
context otherwise requires.

     SECTION 3.6. THIRD PARTIES.  No rights are intended to be created hereunder
for the benefit of any third party donee, creditor, or incidental beneficiary of
Borrower. Nothing contained in this Agreement shall be construed as a delegation
to Lender of Borrower's  duty of  performance,  including,  without  limitation,
Borrower's  duties  under any account or contract in which Lender has a security
interest.

     SECTION  3.7. CONSTRUCTION. The validity and construction of this Agreement
and  all  matters  pertaining  hereto shall be determined in accordance with the
laws of the State of Maryland.

     IN WITNESS  WHEREOF,  the parties have caused this Agreement to be executed
as of the date first written above.


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                                            LENDER:

ATTEST:                                     STARTEC GLOBAL COMMUNICATIONS,
                                            CORPORATION
By: /s/ Subhash Pai                         a Maryland corporation
   ---------------------------------        
Name: Subhash Pai                           By: /s/ Prabhav Maniyar
Title: Vice President and Controller           -------------------------------
                                            Name:  Prabhav Maniyar
                                            Title: Senior  Vice  President  and 
                                                   C.F.O.

                                            BORROWER:


ATTEST:                                     RAM MUKUNDA

By:/s/ Subhash Pai                          By: /s/ Ram Mukunda
   ---------------------------------           --------------------------------
Name: Subhash Pai                              Ram Mukunda
Title: Vice President and Controller

                                            


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