<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                  FORM 10-Q/A

(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: 333-48371

                         FACILICOM INTERNATIONAL, INC.
            (Exact name of registrant as specified in its charter)

               DELAWARE                                     52-2065185
   (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                     Identification No.)


      1401 New York Avenue, NW
      9th Floor
      Washington, D.C.                                        20005
      (Address principal executive offices)                 (Zip Code)

      Registrant's Telephone Number, Including Area Code (202) 496-1100

      N/A
      Former Name, Former Address and Former Fiscal Year, if Changed Since Last
      Report.


Indicate by check mark whether 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 [ ]

As of August 25, 1999, there were 226,923 shares of common stock outstanding,
par value $.01 per share.
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

Item 1. Financial Statements.

                FACILICOM INTERNATIONAL, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
               (Dollars in thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                            March 31,       September 30,
                                                                                              1999             1998
                                                                                          ---------------  ---------------
ASSETS                                                                                     (As Restated,
                                                                                            See Note 5)
<S>                                                                                       <C>              <C>
CURRENT ASSETS:
     Cash and cash equivalents                                                              $  24,517       $  68,129
     Accounts receivable--net of allowance for doubtful accounts of $6,238 at
          March 31, 1999 and $4,620 at September 30, 1998...............................       76,087          59,915
     Marketable securities ($31,612 at March 31, 1999 and $31,394 at September 30,
          1998 restricted) .............................................................       31,612          70,092
     Prepaid expenses and other current assets..........................................        6,406           6,060
                                                                                          -----------      -----------
          Total current assets..........................................................      138,622         204,196
                                                                                            ---------       ---------
PROPERTY AND EQUIPMENT:
     Transmission and communications equipment..........................................      120,861          97,849
     Transmission and communications equipment--leased...................................      65,814          17,162
     Furniture, fixtures and other......................................................       18,329          11,154
                                                                                            ----------      ----------
                                                                                              205,004         126,165
     Less accumulated depreciation and amortization.....................................      (19,430)        (10,417)
                                                                                            ---------       ---------
          Net property and equipment                                                          185,574         115,748
                                                                                            ---------        --------
OTHER ASSETS:
     Intangible assets, net of accumulated amortization of $2,385 at March 31, 1999
          and $1,673 and September 30, 1998.............................................        5,229           5,630
     Debt issue costs, net of accumulated amortization of $1,266 at March 31, 1999
          and $744 and September 30, 1998...............................................        9,174           9,696
     Advances to affiliates.............................................................          549             490
     Marketable securities-restricted...................................................       29,143          43,124
                                                                                           ----------      ----------
           Total other assets...........................................................       44,095          58,940
                                                                                           ----------      ----------
TOTAL ASSETS...........................................................................      $368,291        $378,884
                                                                                             ========        ========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       2
<PAGE>

                FACILICOM INTERNATIONAL, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
               (Dollars in thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                           March 31,     September 30,
                                                                                             1999            1998
                                                                                        --------------  --------------
LIABILITIES AND CAPITAL ACCOUNTS                                                        (As Restated,
                                                                                         See Note 5)
<S>     <C>    <C>

CURRENT LIABILITIES:
     Accounts payable...................................................................    $  76,903        $  63,802
     Accounts payable--transmission equipment............................................      25,172           24,668
     Accounts payable--related party.....................................................         603              332
     Accrued interest...................................................................        6,917            7,109
     Other current obligations..........................................................       25,026           12,610
     Capital lease obligations due within one year......................................       13,265            3,407
     Long-term debt due within one year.................................................          394               394
                                                                                          ------------      ------------
          Total current liabilities.....................................................      148,280          112,322
                                                                                            ---------        ---------
OTHER LIABILITIES:
     Capital lease obligations..........................................................        3,840            4,791
     Long-term debt.....................................................................      300,150          300,346
                                                                                            ---------        ---------
          Total other liabilities.......................................................      303,990          305,137
                                                                                            ---------        ---------
COMMITMENTS AND CONTINGENCIES

CAPITAL ACCOUNTS:
     Common stock, $.01 par value--300,000 shares authorized; 225,741 issued and
          outstanding at March 31, 1999 and September 30, 1998..........................            2                2
     Additional paid-in capital.........................................................       36,534           36,534
     Stock-based compensation...........................................................        6,550            6,305
     Holding gain on marketable securities..............................................           --               24
     Foreign currency translation adjustments...........................................       (2,354)           3,450
     Accumulated deficit................................................................     (124,711)         (84,890)
                                                                                            ---------       ----------
          Total capital accounts........................................................      (83,979)         (38,575)
                                                                                           ----------       ----------
TOTAL LIABILITIES AND CAPITAL ACCOUNTS.................................................      $368,291         $378,884
                                                                                             ========         ========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                FACILICOM INTERNATIONAL, INC. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                                (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                      Three Months Ended             Six Months Ended
                                                          March 31,                     March 31,
                                                          ---------                     ---------
                                                      1999           1998           1999           1998
                                                      ----           ----           ----           ----
                                                 (As Restated,                  (As Restated,
                                                  See Note 5)                    See Note 5)
<S>                                              <C>             <C>            <C>             <C>
Revenues.....................................      $90,292        $ 35,146       $173,257        $ 70,954
Cost of revenues.............................       83,142          33,677        160,810          66,486
                                                  --------       ---------      ---------       ----------
Gross margin ................................        7,150           1,469         12,447           4,468
                                                  --------       ---------      ---------       ----------
Operating Expenses:
    Selling, general and administrative......       12,568           6,492         24,719          12,239
    Stock-based compensation expense.........           85           5,514            245           5,514
    Related party expense....................          642             254          1,202             469
    Depreciation and amortization............        6,140           1,853         10,437            2,854
                                                 ----------      ----------    ----------       -----------
         Total operating expenses............       19,435           14,113        36,603           21,076
                                                 ---------       ----------    ----------       ----------
Operating loss...............................      (12,285)        (12,644)       (24,156)        (16,608)
                                                 ---------       ---------     ----------       ---------
Other income (expense):
    Interest expense-related party...........           --              --             --            (180)
    Interest expense.........................       (8,733)         (5,894)       (16,907)         (6,249)
    Interest income..........................          966           2,505          2,762           2,505
    Foreign exchange (loss) gain.............           98              63         (1,290)           (394)
                                                    ------       ------------  ----------       ----------

         Total other income (expense) .......       (7,669)         (3,326)       (15,435)         (4,318)
                                                  --------       ----------     ---------       ----------
Loss before income taxes.....................      (19,954)        (15,970)       (39,591)        (20,926)
Income tax benefit...........................        1,865           3,619          5,576           3,226
                                                 ----------      ----------    -----------      ----------
Net loss.....................................      (18,089)        (12,351)       (34,015)        (17,700)
Other comprehensive income:
    Foreign currency translation adjustment..       (5,826)            159         (5,804)            383
                                                 ----------      -----------   ------------     -----------
Total comprehensive loss.....................     $(23,915)       $(12,192)     $ (39,819)       $(17,317)
                                                  =========       =========     ==========       =========
</TABLE>

           See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                FACILICOM INTERNATIONAL, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Six Months Ended
                                                                                           March 31,
                                                                                           ---------
                                                                                       1999          1998
                                                                                       ----          ----
                                                                                  (As Restated,
                                                                                   See Note 5)
<S>                                                                                <C>             <C>
Cash flows from operating activities:
     Net loss...................................................................    $(34,015)      $ (17,700)
     Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization..............................................      10,437           2,854
     Non-cash stock-based compensation..........................................         245           5,514
     Non-cash income tax benefit................................................      (5,806)         (3,226)
     Amortization of bond discount..............................................      (1,288)           (386)
     Changes in operating assets and liabilities:
         Accounts receivable....................................................     (16,172)        (10,495)
         Prepaid expenses and other current assets..............................        (346)         (3,348)
         Accounts payable and other current liabilities.........................      25,325          14,169
         Accounts payable--related party.........................................        271            (279)
         Advance to affiliate...................................................        (195)           (668)
                                                                                  -----------      ---------
     Net cash used in operating activities......................................     (21,544)        (13,565)
                                                                                   ---------       ---------
Cash flows from investing activities:
     Purchase of investments in subsidiaries....................................          --            (588)
     Purchase of investments in available-for-sale securities...................      (7,407)        (51,617)
     Maturities of available-for-sale securities................................      13,378              --
     Sales of available-for-sale securities.....................................      32,798              --
     Purchase of investments in held-to-maturity securities.....................      (1,164)        (86,549)
     Maturities of investments in held-to-maturity securities...................      16,120              --
     Purchases of property and equipment........................................     (60,528)        (14,960)
     Other......................................................................        (365)            (64)
                                                                                  -----------      ---------
     Net cash used in investing activities......................................      (7,168)       (153,778)
                                                                                  ----------       ---------
Cash flows (used in) provided by financing activities:
     Excess capital contributions...............................................          --          13,750
     Proceeds from debt issuance................................................          --         300,000
     Payment of debt issuance costs.............................................          --          (9,896)
     Payments of long-term debt and capital leases..............................      (9,096)        (12,487)
                                                                                  ----------      -----------
     Net cash (used in) provided by financing activities........................      (9,096)        291,367
                                                                                  ----------      ----------
Effect of exchange rate changes on cash.......................................        (5,804)            383
                                                                                  ----------      ----------
(Decrease) increase in cash and cash equivalents..............................       (43,612)        124,407
Cash and cash equivalents, beginning of period................................        68,129           1,016
                                                                                   ---------      -----------
Cash and cash equivalents, end of period......................................      $ 24,517        $125,423
                                                                                    ========        ========
Supplemental cash flow information:
     Interest paid..............................................................    $ 17,099      $       998
                                                                                    ========      ===========
</TABLE>
                                                   (Footnotes on following page)

           See notes to condensed consolidated financial statements.

                                       5
<PAGE>

--------
NONCASH TRANSACTIONS:
(a)  For the six months ended March 31, 1998, the majority owner converted
     $6,250 of loans into capital and a $162 receivable was forgiven as part of
     the purchase of minority interest which reduced prepaid expenses and other
     current assets and increased goodwill.
(b)  FCI received property and equipment under capital leases and financing
     agreements, which increased property and equipment and long-term
     obligations $17,807 and $10,755 in the six months ended March 31, 1999 and
     1998, respectively. In addition, for the six months ended March 31, 1999
     and 1998, FCI received equipment, which increased property and equipment
     and accounts payable transmission equipment by $504 and $26,103,
     respectively.
(c)  FCI recognized a tax benefit of $5,806 and $3,226 for the six months ended
     March 31, 1999 and 1998, respectively. In accordance with the tax sharing
     agreement with Armstrong Holdings, Inc. ("AHI") entered into on December
     22, 1997, FCI recorded a dividend to AHI for the amount of the benefit to
     be realized by AHI.

           See notes to condensed consolidated financial statements.

                                       6
<PAGE>

                FACILICOM INTERNATIONAL, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)





1.   BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial information set
forth therein, in accordance with generally accepted accounting principles for
interim financial reporting and Securities and Exchange Commission regulations.
The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for any future period. Certain
information and footnote disclosures normally contained in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto contained in FaciliCom International, Inc.'s (the "Company" or "FCI")
Form 10-K for the year ended September 30, 1998.

2.    IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general purpose financial statements and requires an enterprise
to report a total for comprehensive income in condensed financial statements of
interim periods. The Company adopted SFAS No. 130 in fiscal 1999 and has elected
to display the components of comprehensive income within the Condensed
Consolidated Statements of Operations and Comprehensive Loss.

3.    LONG-TERM DEBT

In May 1998, the Company entered into a Memorandum of Understanding with Qwest
Communications Corporation ("Qwest"). The agreement provides Qwest with
international direct dial termination service to various destinations and
provides the Company an Indefeasible Right of Use ("IRU") for domestic and
international fiber optic capacity. The IRU is for twenty-five years, for which
the Company has agreed to pay $24 million. Delivery of two of the capacity
segments occurred during the six months ended March 31, 1999. The delivery of
the remaining capacity is expected within the next three months. The Company has
recorded a liability of $17.8 million related to the two capacity segments that
were delivered during the six months ended March 31, 1999.

4.    LITIGATION

The Company is involved in various claims and possible actions arising in the
normal course of its business. Although the ultimate outcome of these claims
cannot be ascertained at this time, it is the opinion of the Company's
management, based on its knowledge of the facts and advice of counsel, that the
resolution of such claims and actions will not have a material adverse effect on
the Company's financial position or results of operations or cash flows.

                                       7
<PAGE>

                FACILICOM INTERNATIONAL, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


5.    RESTATEMENT

Subsequent to the issuance of the Company's consolidated financial statements
as of and for the three and six months ended March 31, 1999, the Company's
management determined that certain foreign currency transaction losses, on
intercompany balances of a long-term nature, should have been excluded from the
determination of net loss. As a result, the consolidated financial statements as
of and for the three and six months ended March 31, 1999, have been restated
from the amounts previously reported to reflect these foreign currency
transaction losses as a component of other comprehensive loss.

A summary of the significant effects of the restatement is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                    For the Three Months Ended          For the Six Months Ended
                                                 ------------------------------     ------------------------------
                                                 As Previously                      As Previously
                                                 Reported         As Restated       Reported         As Restated
                                                 -------------   --------------     -------------   --------------
                                                          (In millions, except share and per share amounts)
<S>                                              <C>              <C>               <C>              <C>
For the Three and Six Months Ended
March 31, 1999
Foreign exchange (loss) gain                     $  (2,993)       $      98         $   (4,381)      $  (1,290)
Loss before income taxes                           (23,045)         (19,954)           (42,682)        (39,591)
Net loss                                           (21,180)         (18,089)           (37,106)        (34,015)
Other comprehensive loss                            (2,735)          (5,826)            (2,713)         (5,804)

At March 31, 1999
Foreign currency translation adjustments                                            $      737       $  (2,354)
Accumulated deficit                                                                   (127,802)       (124,711)
</TABLE>

                                       8
<PAGE>

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

This document contains various "forward-looking statements," as defined in the
Private Securities Litigation Reform Act of 1995, that are based on management's
beliefs as well as assumptions made by and information currently available to
management. Such statements are subject to various risks and uncertainties which
could cause actual results to vary materially from those contained in such
forward-looking statements. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those anticipated, estimated, expected or projected.
Certain of these risks and uncertainties are described in the Company's
Registration Statement on Form S-4 filed under the Securities Act of 1933, as
amended, and declared effective on June 2, 1998, including the section entitled
"Risk Factors".

Overview

     FCI is a rapidly growing multinational carrier focused on providing
international wholesale telecommunications services to other carriers worldwide.
As a facilities-based carrier, the Company seeks primarily to provide service
over its facilities and international transmission capacity owned or leased on a
fixed-cost basis ("on-net"). The Company believes that it is better able to
control the quality and the termination costs of on-net traffic and that
increasing the proportion of on-net traffic significantly improves the Company's
gross margins. For the six months ended March 31, 1999, 42.4% of the Company's
wholesale international traffic was terminated on-net and 57.6% was terminated
by other long distance carriers pursuant to resale and operating agreements
between the Company and such carriers ("off-net"). The Company plans to expand
its facilities to increase the percentage of on-net traffic.

     The Company provides its services over a carrier-grade international
network consisting of international gateway switches, transmission capacity
owned or leased on a fixed-cost basis and various multinational termination
agreements and resale arrangements with other long distance providers. FCI began
generating revenues in July 1995 through it's acquisition of FCI-Sweden,
formerly Nordiska Tele8 AB. Since that time the Company has installed or
acquired 16 additional international gateway switches in the United States (New
York, New Jersey, Los Angeles and Miami) and Europe (United Kingdom, The
Netherlands, Germany, Finland, Denmark, France, Norway, Switzerland, Italy,
Austria, Spain and Belgium).

     The Company's strategy is to invest in network facilities as it expands its
customer base, allowing it to enhance service quality and increase gross margins
on particular routes. However, this approach also causes the Company's gross
margins to fluctuate with changes in network utilization due to the Company's
fixed-cost investment in its network.

     Currently, the Company's revenues are generated through the sale of
international long distance services on a wholesale basis to telecommunications
carriers and through the sale of domestic and international long distance
services on a retail basis in Sweden, Denmark, Norway and Finland. The Company
records revenues from the sale of telecommunications services at the time of
customer usage. The Company earns revenues based on the number of minutes it
bills to and collects from its customers. The Company's agreements with its
wholesale customers are short-term in duration and are subject to significant
traffic variability. The rates charged to customers are subject to change from
time to time, generally requiring seven days' notice to the customer.

     The Company believes its services are competitively priced in each country
in which the Company offers its services. Prices for wholesale and retail
telecommunications services in many of the Company's markets have declined in
recent years as a result of deregulation and increased competition. The Company
believes that worldwide deregulation and increased competition are likely to
continue to reduce the Company's wholesale and retail revenues per billed minute
of use. The Company believes, however, that any decrease in wholesale and retail
revenues per minute will be at least partially offset by an increase in billed
minutes by the Company's wholesale and retail customers, and by a decreased cost
per billed minute.

     The Company has made since its inception, and expects to continue to make,
investments to expand its network. Increased capital expenditures in the future
can be expected to affect the Company's operating results due to increased
depreciation charges and interest expense in connection with borrowings to fund
such expenditures.

                                       9
<PAGE>

Results of Operations

     Subsequent to the issuance of the Company's consolidated financial
statements as of and for the three and six months ended March 31, 1999, the
Company's management determined that certain foreign currency transaction
losses, on intercompany balances of a long-term nature, should have been
excluded from the determination of net loss. As a result, the consolidated
financial statements as of and for the three and six months ended March 31,
1999, have been restated from the amounts previously reported to reflect these
transaction losses as a component of other comprehensive loss. The effects of
the restatement have been presented in Note 5 of the Notes to the Condensed
Consolidated Financial Statements (unaudited) and have been reflected herein.

     The following table sets forth, for the periods indicated, certain
unaudited financial data and related percentage of revenues (in thousands):

<TABLE>
<CAPTION>
                                           Three Months Ended March 31,               Six Months Ended March 31,
                                         --------------------------------           ------------------------------
                                             1999                1998                  1999                 1998
                                      ------------------- -------------------- --------------------- --------------------
                                          $         %          $         %          $         %          $         %
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
<S>                                    <C>        <C>       <C>       <C>       <C>        <C>       <C>        <C>
Revenues..........................     $ 90,292   100.0%    $ 35,146   100.0%    $173,257   100.0%    $ 70,954   100.0%
Cost of revenues..................       83,142    92.1       33,677    95.8      160,810    92.8       66,486    93.7
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Gross margin......................        7,150      7.9       1,469     4.2       12,447      7.2       4,468     6.3
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Operating Expenses:
    Selling, general and
       administrative (including
       related party).............       13,210    14.6        6,746    19.2       25,921    15.0       12,708    17.9
    Stock-based compensation
       expense....................           85     0.1        5,514    15.7          245     0.1        5,514     7.8
    Depreciation and amortization.        6,140     6.8        1,853     5.3       10,437      6.0       2,854     4.0
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
         Total operating expenses.       19,435    21.5       14,113    40.2       36,603    21.1       21,076    29.7
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Operating loss....................      (12,285)  (13.6)     (12,644)  (36.0)     (24,156)  (13.9)     (16,608)  (23.4)
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Other income (expense):
    Interest expense (including
       related party) ............       (8,733)   (9.7)      (5,894)  (16.7)     (16,907)   (9.8)      (6,429)   (9.0)
    Interest income...............          966     1.1        2,505     7.1        2,762     1.6        2,505     3.5
    Foreign exchange (loss) gain..           98     0.1           63     0.2       (1,290)    (0.7)       (394)   (0.6)
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
         Total other income
           (expense) .............       (7,669)   (8.5)      (3,326)   (9.4)     (15,435)   (8.9)      (4,318)   (6.1)
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Loss before income taxes..........      (19,954)  (22.1)     (15,970)  (45.4)     (39,591)  (22.9)     (20,926)  (29.5)
Income tax benefit................        1,865     2.0        3,619    10.3        5,576      3.2       3,226      4.6
                                      ---------- --------- ---------- --------- ---------- --------- ---------- ---------
Net loss..........................     $(18,089)  (20.0)%   $(12,351)  (35.1)%   $(34,015)  (19.6)%   $(17,700)  (24.9)%
                                      ========== ========= ========== ========= ========== ========= ========== =========
</TABLE>

For the Three Months Ended March 31, 1999 as Compared to the Three Months Ended
March 31, 1998

     Revenues increased by $55.1 million to $90.3 million for the three months
ended March 31, 1999, from $35.1 million for the three months ended March 31,
1998. The growth in revenues resulted primarily from an increase in billed
customer minutes of use resulting from an increase in wholesale customers in the
U.S. and Europe and an increase in retail customers in Sweden, Denmark, Norway
and Finland, as well as usage increases from existing wholesale customers.
Offsetting the growth in revenues during this period was a decrease in the price
per billed minute to $0.191 for the three months ended March 31, 1999, from
$0.217 for the three months ended March 31, 1998, as a result of increased
on-net traffic and competition. For the three months ended March 31, 1999, U.S.
revenues totaled $39.9 million or 44.2% of the Company's consolidated revenues
and European revenues totaled $50.4 million, or 55.8% of consolidated revenues.
Billed minutes of use increased by 312.1 million, to 474.0 million minutes of
use for the three months ended March 31, 1999, from 161.9 million minutes of use
for the three months ended March 31, 1998.

     Wholesale customers increased by 83 or 85.6%, to 180 wholesale customers at
March 31, 1999 from 97 wholesale customers at March 31, 1998. As of March 31,
1999 there were approximately 49,000 retail customers in Sweden, Denmark,
Finland and Norway.

     Cost of revenues increased by $49.5 million to $83.1 million for the three
months ended March 31, 1999, from $33.7 million for the three months ended March
31, 1998. As a percentage of revenues, cost of revenues decreased

                                       10
<PAGE>

to 92.1% for the three months ended March 31, 1999, from 95.8% for the three
months ended March 31, 1998, primarily as a result of increased minutes of use
on the Company's network, improved efficiencies of network fiber facilities due
to higher traffic volumes and reductions in rates charged by the Company's
carrier suppliers. Cost of revenues as a percentage of revenues is expected to
decrease as a result of improved efficiencies of network fiber facilities due to
higher traffic volumes as well as from an anticipated increase in the percentage
of on-net traffic.

     Gross margin increased by $5.7 million to $7.2 million for the three months
ended March 31, 1999, from $1.5 million for the three months ended March 31,
1998. As a percentage of revenues, gross margin increased to 7.9% for the three
months ended March 31, 1999, from 4.2% for the three months ended March 31,
1998.

     Selling, general and administrative expenses increased by $1.0 million to
$13.3 million for the three months ended March 31, 1999, from $12.3 million for
the three months ended March 31, 1998, primarily as a result of the Company's
increased sales, an increase in customer service, billing, collections and
accounting staff required to support revenues growth. As a percentage of
revenues, selling, general and administrative expenses decreased to 14.7% for
the three months ended March 31, 1999, from 34.9% for the three months ended
March 31, 1998. Bad debt expense was $1.6 million, or 1.7% of revenues for the
three months ended March 31, 1999 compared with $568,000, or 1.6% of revenues
for the three months ended March 31, 1998. Although selling, general and
administrative expenses are expected to increase on an absolute basis in order
to support expansion of the Company's operations, the Company expects that
selling, general and administrative expenses as a percentage of revenues will
continue to decrease over time.

     Depreciation and amortization increased by $4.3 million to $6.1 million for
the three months ended March 31, 1999, from $1.9 million for the three months
ended March 31, 1998, primarily due to increased capital expenditures incurred
in connection with the deployment and expansion of the Company's network.

     Interest expense increased by $2.8 million to $8.7 million for the three
months ended March 31, 1999, from $5.9 million for the three months ended March
31, 1998, primarily due to interest obligations on the Company's Senior Notes in
the aggregate principal amount of $300 million, which were issued on January 28,
1998.

     Interest income decreased by $1.5 million to $966,000 for the three months
ended March 31, 1999, from $2.5 million for the three months ended March 31,
1998 and related principally to interest on proceeds from the Senior Notes
offering, which were invested in marketable securities.

     Foreign exchange gain increased by $35,000 to $98,000 for the three months
ended March 31, 1999, from $63,000 for the three months ended March 31,
1998.

     Income tax benefit of $1.9 million and $3.6 million was recorded for the
three months ended March 31, 1999 and 1998, respectively, related principally to
the estimated tax benefits of $1.9 million and $4.0 million, respectively,
utilized by Armstrong Holdings, Inc. ("AHI"). The Company had a tax charge of
$393,000 for the three months ended March 31, 1998, resulting from a change in
the Company's tax status as a result of the reorganization.

For the Six Months Ended March 31, 1999 as Compared to the Six Months Ended
March 31, 1998

     Revenues increased by $102.3 million to $173.3 million for the six months
ended March 31, 1999, from $71.0 million for the six months ended March 31,
1998. The growth in revenues resulted primarily from an increase in billed
customer minutes of use resulting from an increase in wholesale customers in the
U.S. and Europe and an increase in retail customers in Sweden, Denmark, Norway
and Finland, as well as usage increases from existing wholesale customers.
Offsetting the growth in revenues during this period was a decrease in the price
per billed minute to $0.201 for the six months ended March 31, 1999, from $0.243
for the six months ended March 31, 1998, as a result of increased on-net traffic
and competition. For the six months ended March 31, 1999, U.S. revenues totaled
$75.9 million or 43.8% of the Company's consolidated revenues and European
revenues totaled $97.3 million, or 56.2% of consolidated revenues. Billed
minutes of use increased by 567.7 million, to 860.3 million minutes of use for
the six months ended March 31, 1999, from 292.6 million minutes of use for the
six months ended March 31, 1998.

                                       11
<PAGE>

     Wholesale customers increased by 83 or 85.6%, to 180 wholesale customers at
March 31, 1999 from 97 wholesale customers at March 31, 1998. As of March 31,
1999 there were approximately 49,000 retail customers in Sweden, Denmark,
Finland and Norway.

     Cost of revenues increased by $94.3 million to $160.8 million for the six
months ended March 31, 1999, from $66.5 million for the six months ended March
31, 1998. As a percentage of revenues, cost of revenues decreased to 92.8% for
the six months ended March 31, 1999, from 93.7% for the six months ended March
31, 1998, primarily as a result of increased minutes of use on the Company
network, improved efficiencies of network fiber facilities due to higher traffic
volumes and reductions in rates charged by the Company's carrier suppliers. Cost
of revenues as a percentage of revenues is expected to decrease as a result of
improved efficiencies of network fiber facilities due to higher traffic volumes
as well as from an anticipated increase in the percentage of on-net traffic.

     Gross margin increased by $8.0 million to $12.4 million for the six months
ended March 31, 1999, from $4.5 million for the six months ended March 31, 1998.
As a percentage of revenues, gross margin increased to 7.2% for the six months
ended March 31, 1999, from 6.3% for the six months ended March 31, 1998.

     Selling, general and administrative expenses increased by $7.9 million to
$26.2 million for the six months ended March 31, 1999, from $18.2 million for
the six months ended March 31, 1998, primarily as a result of the Company's
increased sales, an increase in customer service, billing, collections and
accounting staff required to support revenues growth. As a percentage of
revenues, selling, general and administrative expenses decreased to 15.1% for
the six months ended March 31, 1999, from 25.7% for the six months ended March
31, 1998. Bad debt expense was $2.8 million, or 1.6% of revenues for the six
months ended March 31, 1999 compared with $828,000, or 1.2% of revenues for the
six months ended March 31, 1998. Although selling, general and administrative
expenses are expected to increase on an absolute basis in order to support
expansion of the Company's operations, the Company expects that selling, general
and administrative expenses as a percentage of revenues will continue to
decrease over time.

     Depreciation and amortization increased by $7.6 million to $10.4 million
for the six months ended March 31, 1999, from $2.9 million for the six months
ended March 31, 1998, primarily due to increased capital expenditures incurred
in connection with the deployment and expansion of the Company's network.

     Interest expense increased by $10.5 million to $16.9 million for the six
months ended March 31, 1999, from $6.4 million for the six months ended March
31, 1998, primarily due to interest obligations on the Company's 10-1/2% Senior
Notes due 2008 ("Senior Notes") in the aggregate principal amount of $300
million, which were issued on January 28, 1998.

     Interest income increased by $257,000 to $2.8 million for the six months
ended March 31, 1999, from $2.5 million for the six months ended March 31, 1998
and related principally to interest on proceeds from the Senior Notes offering,
which were invested in marketable securities.

     Foreign exchange loss increased by $896,000 to $1.3 million for the six
months ended March 31, 1999, from $394,000 for the six months ended March 31,
1998.

     Income tax benefit of $5.6 million and $3.2 million was recorded for the
six months ended March 31, 1999 and 1998, respectively, related principally to
the estimated tax benefits of $5.8 million utilized by AHI. For the three months
ended March 31, 1999, the benefit was partially offset by approximately $230,000
for a tax charge in Finland. The Company had a tax charge of $393,000 for the
six months ended March 31, 1998, resulting from a change in the Company's tax
status as a result of the reorganization.

Liquidity and Capital Resources

     The Company has incurred significant operating losses and negative cash
flows as a result of the development and operation of its network, including the
acquisition and maintenance of switches and undersea fiber optic capacity. The
Company has financed its growth primarily through equity, a credit facility
provided by Armstrong International Telecommunications, Inc. ("AIT"), credit
facilities with two equipment vendors, capital lease financing and the proceeds
from the $300 million offering of Senior Notes.

                                       12
<PAGE>

     Net cash provided by (used in) operating activities was ($21.5) million for
the six months ended March 31, 1999 due principally to a net loss of $34.0
million offset in part by depreciation and amortization expense of $10.4
million.

     Net cash provided by (used in) investing activities was ($7.2) million for
the six months ended March 31, 1999. Net cash used in investing activities in
this period resulted from an increase in capital expenditures to expand the
Company's network offset in part by the sale of marketable securities.

     Net cash provided by (used in) financing activities was ($9.1) million for
the six months ended March 31, 1999. Net cash used in financing activities for
the six months ended March 31, 1999 resulted from payments on existing long-term
debt and capital leases.

     Non-cash financing activities for the six months ended March 31, 1999
resulted from the financing of undersea fiber circuits provided by Qwest
Communications Corporation ("Qwest").

     The Company's business strategy contemplates aggregate capital expenditures
of approximately $100 million during fiscal year 1999. Such capital expenditures
are expected to be used primarily for international gateway switches, points of
presence ("PoPs"), transmission equipment, undersea and international fiber
circuits (including Indefeasible Right of Use ("IRUs") and Minimum Assignable
Ownership Units ("MAOUs")) for new and existing routes and other support
systems. In May 1998, the Company entered into a Memorandum of Understanding
with Qwest. The agreement provides Qwest with international direct dial
termination service to various destinations and provides the Company an IRU for
domestic and international fiber optic capacity. The IRU is for twenty-five
years, for which the Company has agreed to pay $24 million within three years of
delivery of the fiber optic capacity. Delivery of two of the capacity segments
occurred during the six months ended March 31, 1999. The delivery of the
remaining fiber optic capacity is expected within the next three months.

     In addition, the Company has entered into an agreement that provides the
Company with an IRU for international fiber optic capacity for the Pacific Rim.
Delivery of the capacity under the agreement is expected prior to November 1999.
The IRU is for 15 years, for which the Company has agreed to pay $20.0 million
through September 30, 2002, of which $2.5 million has already been paid as a
deposit and an additional $2.5 million is expected to be paid within the next
nine months. The Company has also agreed to acquire additional capacity in
Europe for approximately $4.8 million. Deliveries and payment for the fiber
capacity under these agreements are expected by September 30, 1999.

     The Company continuously reviews opportunities to further its business
strategy through strategic alliances with, investments in, or acquisitions of
companies that are complementary to the Company's operations. The Company may
finance such alliances, investments or acquisitions with cash flow from
operations or through additional bank debt, vendor financing or one or more
public offerings or private placements of securities.

     The Company believes that the net proceeds from the offering of the Senior
Notes, vendor or bank financing and cash from operations will provide the
Company with sufficient capital to fund planned capital expenditures and
anticipated losses and to make interest payments on the Senior Notes for at
least the next twelve months. There can be no assurance, however, that the
Company will achieve or, if achieved, will sustain profitability or positive
cash flow from operating activities in the future.

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measuring those instruments at fair value,
with the potential effect on operations dependent upon certain conditions being
met. The statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. The Company has yet to determine any impact the
implementation of the standard will have on the Company's financial position or
results of operations.

                                       13
<PAGE>

Impact of the Year 2000 Issue

     The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define the applicable year, resulting in
date-sensitive software having the potential, among other things, to recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities, which could have
material adverse operational and financial consequences. Currently, the Company
believes that a disruption in the operation of its networks, billing system and
financial and accounting systems and/or an inability to access interconnections
with other telecommunications carriers, are the major risks associated with the
inability of systems and software to process Year 2000 data correctly. If the
systems of other companies on whose services the Company depends, including AHI,
or with whom the Company's systems interface are not Year 2000 compliant, there
could be a material adverse effect on the Company's business, financial position
and results of operations.

     State of Readiness

     FCI, in conjunction with AHI, formed a task team in February 1998. The task
team's program comprised three phases: (i) assessment of Year 2000 compliance of
FCI's equipment, software and systems, (ii) a detailed inventory of these items
and (iii) building and implementing a workplan and contingency plan, which
includes assessing the cost in dollars and the necessary manpower, upgrading or
replacing the item, and scheduling the date of compliance. As of June 30, 1999,
the Company had substantially completed all phases of the program with total
completion expected to be completed by September 30, 1999. Included in the task
team's assessment was a review of the Year 2000 compliance efforts of FCI's key
suppliers. Below is a more detailed breakdown of their efforts.

     Internal Issues

     Network elements--The Company's main concern is the switching equipment and
peripherals, and other vendor components that are time and date sensitive. The
Company has upgraded all of its networks with the compliant software, except for
one switch in Finland, which the Company plans to replace the switch with a new
Year 2000 complaint switch by October 31, 1999. In addition, the Company has
completed the software upgrade for its Passport equipment which allows the
Company to compress its traffic thereby allowing more traffic to be carried over
a single fiber optic cable. The Company's transmission equipment is currently
Year 2000 "Friendly", which means the manufacturer has represented that the
software releases will not experience any service-affecting issues upon rollover
into the new millennium. Although the Company expects that it will be able to
resolve Year 2000 problems with workarounds, there can be no assurance that such
workarounds will be successful.

     Billing System and Accounting System--The Company's billing system was
developed by AHI's programmers and operates on an IBM AS400. The Company
believes that the billing system and the IBM AS400 are Year 2000 compliant.
However, the production of accurate and timely customer invoices depends upon
the generation of accurate and timely underlying data by the Company's switches.
Though the switch manufacturer has represented that the Company's switches are
Year 2000 compliant, there can be no assurance that such billing problems will
not occur. The Company is in the process of converting its accounting system.
The manufacturer has represented that this system is Year 2000 compliant and its
implementation is expected to be completed by September 30, 1999.

     Information Systems--The Company's upgrade of its information systems is in
progress. The Company believes that all of the Company's hardware equipment,
including the equipment it relies upon at AHI, is Year 2000 compliant. All of
the Company's software products are Year 2000 compliant. Substantially all
software applications have been modified or upgraded for Year 2000 compliance.
Additionally, all the Company's workstations and laptops have been upgraded for
Year 2000 compliance.

     Third Party Issues

     Vendor Issues--In general, FCI's product vendors have made available either
Year 2000 compliant versions of their products or new compliant products as
replacements for discontinued offerings. In most cases, statements made by the
Company herein as to the degree of compliance of the products in question are
based on vendor-provided information, which remains subject to FCI's testing and
verification activities. Testing and verification are expected to be completed
by September 30, 1999. The Company is in the process of requesting information
from utilities and similar service providers.

                                       14
<PAGE>

     Customer Issues--FCI's customers are interested in the progress of FCI's
Year 2000 efforts, and FCI anticipates increased demand for information,
including detailed testing data and company-specific responses. When requested
by customers, the Company provides Year 2000 compliance information. At this
time, the Company has not performed an analysis of its potential liability to
customers in the event of Year 2000 related problems.

     Interconnecting Carriers--FCI's network operations interconnect with
domestic and international networks of other carriers. If one of these
interconnecting carriers should fail or suffer adverse consequences due to a
Year 2000 problem, the Company's customers could experience impairment of
services. In addition, since many of these interconnecting carriers are also the
Company's customers, a Year 2000 problem by one of these customers could result
in a loss of revenues due to its inability to send traffic to the Company's
network. The Company is in the process of sending correspondence to its major
interconnecting carriers to determine the status of their Year 2000 compliance
review.

     Costs

     Although total costs to implement the plan cannot be precisely estimated,
the Company has not incurred costs to date in excess of those normally
associated with business planning and implementation. The Company anticipates
that future costs will not be material, in as much as the Company began to
acquire products after the Year 2000 issue was identified and manufacturers had
begun to remediate the problem. However, there can be no assurance that material
costs will not be incurred. The Company cannot estimate the future cost related
to the interoperability of third party products. These costs will be expensed as
incurred, unless new systems are purchased that should be capitalized in
accordance with generally accepted accounting principles.

     Risks

     The failure to correct a material Year 2000 problem could cause an
interruption or failure of certain of the Company's normal business functions or
operations, which could have a material adverse effect on the Company's
business, financial position and results of operations. Due to the uncertainty
inherent in other Year 2000 issues that are ultimately beyond the Company's
control, including, for example, the Year 2000 readiness of the Company's
suppliers, customers and interconnecting carriers, the Company is unable to
determine at this time the likelihood of a material impact on the Company's
business, financial position and results of operation, due to such Year 2000
issues. However, based upon risk assessment work conducted thus far, the Company
believes that the most reasonably likely worst case scenario of the failure by
the Company, its suppliers or other telecommunications carriers with which the
Company interconnects to resolve Year 2000 issues would be an inability by the
Company (i) to provide telecommunications services to the Company's customers,
(ii) to route and deliver telephone calls originating from or terminating with
other telecommunications carriers, and (iii) to timely and accurately bill its
customers. In addition to lost earnings, these failures could also result in
loss of customers due to service interruptions and billing errors, substantial
claims by customers and increased expenses associated with Year 2000 litigation,
stabilization of operations and executing mitigation and contingency plans.
While the Company believes that it is taking appropriate measures to mitigate
these risks, there can be no assurance that such measures will be successful.

     Contingency Plan

     At this time, the Company has prepared the conceptual framework for its
contingency plan. Completion of the plan is expected by September 30, 1999.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

     Although the Company's reporting currency is the U.S. dollar, the Company
expects to derive an increasing percentage of its revenues from international
operations. Accordingly, changes in currency exchange rates may have a
significant effect on the Company's results of operations. For example, the
accounting rate under operating agreements is often defined in monetary units
other than U.S. dollars, such as "special drawing rights" or "SDRs." To the
extent that the U.S. dollar declines relative to units such as SDRs, the dollar
equivalent accounting rate would

                                       15
<PAGE>

increase. In addition, as the Company expands into foreign markets, its exposure
to foreign currency rate fluctuations is expected to increase. Although the
Company does not currently engage in exchange rate hedging strategies, it may
choose to limit such exposure by purchasing forward foreign exchange contracts
or other similar hedging strategies. The Company's board of directors (the
"Board of Directors") periodically reviews and approves the overall interest
rate and foreign exchange risk management policy and transaction authority
limits. Specific hedging contracts, if any, will be subject to approval by
certain specified officers of FCI acting within the Board of Directors' overall
policies and limits. The Company intends to limit its hedging activities to the
extent of its foreign currency exposure. There can be no assurance that any
currency hedging strategy would be successful in avoiding currency exchange-
related losses.

                                       16
<PAGE>

                                    PART II
                               OTHER INFORMATION

Item 1.  Legal Proceedings.

         The Company makes routine filings and is a party to customary
         regulatory proceedings with the FCC relating to its operations. The
         Company is not a party to any lawsuit or proceeding which, in the
         opinion of management, is likely to have a material adverse effect on
         the Company's business, financial position and results of operations.

Item 2.  Changes in Securities and Use of Proceeds.

         Not applicable.

Item 3.  Defaults Upon Senior Securities.

         Not applicable.

Item 4.  Submissions of Matters to a Vote of Security Holders.

         Not applicable.

Item 5.  Other Information.

         Not applicable.

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

         A.    Exhibits

               Exhibit No.           Exhibits
               -----------

               27                    Financial Data Schedule

         B.    Reports on Form 8-K

               There were no reports on Form 8-K filed during the period.

                                       17
<PAGE>

                                  SIGNATURES

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

                                  FaciliCom International, Inc.


Dated:   May 17, 1999                 By: /s/
                                      ---------------------------------------
                                      Christopher S. King
                                      Vice President--Finance and
                                      Administration, Chief Financial
                                      Officer (Authorized Officer, Principal
                                      Financial Officer and Principal
                                      Accounting Officer)

                                       18