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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

    For the fiscal year ended December 31, 2000

                                      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: 0-23253

                               ----------------

                              ITC/\DELTACOM, INC.
            (Exact name of registrant as specified in its charter)

               Delaware                              58-2301135
    (State or other jurisdiction of               (I.R.S. Employer
    incorporation or organization)               Identification No.)

              1791 O.G. Skinner Drive, West Point, Georgia 31833
                   (Address of principal executive offices)

                                (706) 385-8000
              Registrant's telephone number, including area code

                               ----------------

          Securities registered pursuant to Section 12(b) of the Act:

                                Not Applicable

          Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.01 per share
                               (Title of Class)

                               ----------------

   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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

   The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant at March 28, 2001, based upon the last reported
sale price of the registrant's common stock on the Nasdaq National Market on
that date, was $267,000,000.

   The number of shares of the registrant's common stock outstanding on March
28, 2001 was 62,202,505.

                      DOCUMENTS INCORPORATED BY REFERENCE

   Certain information in the proxy statement for the 2001 annual meeting of
stockholders of the registrant is incorporated by reference into Part III
hereof.

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                               TABLE OF CONTENTS

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                                    PART I

 Item 1.  Business......................................................    1

 Item 2.  Properties....................................................   23

 Item 3.  Legal Proceedings.............................................   24

 Item 4.  Submission of Matters to a Vote of Security Holders...........   24

                                    PART II

 Item 5.  Market for Registrant's Common Equity and Related Stockholder
           Matters......................................................   24

 Item 6.  Selected Financial Data.......................................   25

 Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations....................................   27

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk....   41

 Item 8.  Financial Statements and Supplementary Data...................   41

 Item 9.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure.....................................   41

                                   PART III

 Item 10. Directors and Executive Officers of the Registrant............   41

 Item 11. Executive Compensation........................................   42

 Item 12. Security Ownership of Certain Beneficial Owners and
           Management...................................................   42

 Item 13. Certain Relationships and Related Transactions................   42

                                    PART IV

 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
           8-K..........................................................   42

 Index to Consolidated Financial Statements.............................. F-1
</TABLE>

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   This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. When used in this report, the words "anticipate,"
"believe," "estimate," "expect," "intend" and "plan" as they relate to
ITC/\DeltaCom, Inc. or our management are intended to identify these forward-
looking statements. All statements by ITC/\DeltaCom, Inc. regarding our expected
future financial position and operating results, our business strategy, our
financing plans, forecasted trends relating to the markets in which we operate
and similar matters are forward-looking statements. We cannot assure you that
our expectations expressed or implied in these forward-looking statements will
turn out to be correct. Our actual results could be materially different from
our expectations as a result of, among other factors, the factors discussed
under the caption "Business--Risk Factors." We undertake no obligation to
update or revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.

   Some of the information contained in this report concerning the markets and
industry in which we operate is derived from publicly available information and
from industry sources. Although we believe that this publicly available
information and the information provided by these industry sources are
reliable, we have not independently verified the accuracy of any of this
information.

   Unless we indicate otherwise, references in this report to "we," "us," "our"
and "ITC/\DeltaCom" mean ITC/\DeltaCom, Inc. and its subsidiaries and
predecessors. Unless we indicate otherwise, we have rounded dollar amounts over
$1 million to one decimal place and dollar amounts less than $1 million to the
nearest thousand.

                                       ii
<PAGE>

                                     PART I

Item 1. Business.

Overview

   We provide integrated voice and data telecommunications services to mid-
sized and major regional businesses in the southern United States and are a
leading regional provider of wholesale long-haul services to other
telecommunications companies. In connection with these businesses, we own,
operate and manage an extensive fiber optic network in the southern United
States. We had revenues of approximately $363.6 million in 2000, which
represented a 49% increase over our revenues of $244.8 million in 1999.

   We operate our business in three segments: retail services, broadband
transport services and e/\deltacom. Through our retail services operations, we
provide local telephone services, long distance telephone services, data
services, Internet services, customer premise equipment sale, installation and
maintenance services and related telecommunications services to customers in 37
markets in the southern United States. Through our broadband transport services
operations, we sell wholesale long-haul telecommunications transmission
capacity to, and direct and transport telecommunications traffic for, other
telecommunications companies using our fiber optic network. Through our
e/\deltacom operations, which we inaugurated in March 2000, we provide customers
with colocation services, managed services and professional services primarily
through e/\deltacom's data center in Suwanee, Georgia. As part of these
services, e/\deltacom provides Web server hosting services integral to the
operation of important business applications over the Internet and a wide range
of optional configurations and services that include:

  . cabinet, caged and suite space;

  . metered power;

  . network management;

  . firewall management;

  . disaster recovery; and

  . circuits that connect customer premises to our network.

   To accelerate e/\deltacom's positioning in the market place, in May 2000 we
acquired Bay Data Consultants, Inc., a provider of technical solutions
specializing in applications solutions, project management, e-commerce,
security, enterprise solutions, network integration services, wide area network
and carrier relations, storage management, managed services and systems
management. We believe the addition of Bay Data Consultants has provided us
with expertise, staffing and customer relationships that will facilitate our
penetration of e/\deltacom's target market. That market consists primarily of e-
businesses, application service providers and enterprise customers seeking
advanced infrastructure for their important business applications and related
services that are provided by experienced technology professionals.

   During 2000, our operational achievements included the following:

  . we obtained a $160 million syndicated senior secured credit facility from
    Morgan Stanley Senior Funding, Inc., Bank of America, N.A. and other
    lenders;

  . we reached a settlement with BellSouth Telecommunications, Inc. over
    BellSouth's obligation to pay us reciprocal compensation for local calls
    placed by customers of BellSouth and terminated to our customers;

  . we obtained a $40 million capital lease facility from NTFC Capital
    Corporation;

  . we launched a suite of product solutions based on the Internet protocol,
    including Internet protocol bandwidth, virtual private networks based on
    the Internet protocol, Internet security solutions, such as managed
    firewalls and intrusion detection services, and remote dial access;

                                       1
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  . we opened the initial portion of e/\deltacom's data center and began
    offering a suite of colocation, hosting, managed and professional
    services from the center;

  . we completed the installation of 51 access nodes, which facilitate the
    efficient delivery of customer traffic from the edges of our fiber optic
    network onto our network's core, raising our total number of operational,
    colocated access nodes to 176;

  . we installed Nortel DMS-500 switches, which are network components that
    connect customers to, and transmit voice and data communications over,
    our network, in West Palm Beach, Florida, Nashville, Tennessee and
    Houston, Texas, increasing our total number of voice switches in
    operation to 13;

  . we installed 33 Unisphere SMX-2100 switches, which also connect customers
    to, and transmit voice and data communications over, our network,
    increasing our total number of Unisphere SMX-2100 switches to 37;

  . we added Nortel CVX 1800 access switches, which are designed with
    universal port capabilities, to each of our 12 DMS-500 switch sites to
    facilitate our Internet protocol-based virtual private network service
    offering;

  . we opened branch offices in Augusta, Georgia and in Chattanooga,
    Knoxville and Nashville, Tennessee, increasing our market coverage to 37
    branch offices operating in 37 markets; and

  . we completed the addition of approximately 1,390 route miles of fiber
    optic cable that we own to our network, establishing routes in Tennessee
    and Texas and raising our total route miles to approximately 9,640.

   We are incorporated in Delaware. Our principal executive offices are located
at 1791 O.G. Skinner Drive, West Point, Georgia 31833, and our telephone number
at that address is (706) 385-8000.

Services and Facilities

   Services. We currently provide three basic services:

  . integrated voice and data telecommunications services on a retail basis,
    which we refer to as our "retail services";

  . wholesale long-haul telecommunications transmission services to other
    telecommunications companies, which we refer to as our "broadband
    transport services"; and

  . colocation services, managed services and professional services through
    our e/\deltacom division.

   Retail Services. Our retail services involve the provision of voice and data
telecommunications services to end users and resellers. These retail services
include:

  . local telephone services;

  . long distance telephone services;

  . toll calling, calling card and operator services;

  . asynchronous transfer mode, frame relay and high-capacity broadband
    private line services;

  . primary rate interface connectivity and colocation services to Internet
    service providers;

  . enhanced services, including conference calling, fax broadcasting and
    pre-paid calling cards;

  . consulting, integration, operation and proactive management of data
    networks;

  . in-depth network performance analysis and implementation and design
    services for data network deployment;

  . Internet and Web page hosting services; and

  . customer premise equipment sales, installation and maintenance.

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   We intend to provide additional types of retail services and expand the
markets in which we offer customers our comprehensive bundle of value-added
telecommunications services generally over our network. Our customer-focused
software and network architecture permits us to present our customers with one
fully-integrated monthly billing statement for the entire package of retail
services they purchase from us.

   Local Telephone Services. We currently provide local telephone services by
using our network and facilities and by reselling the services of the former
monopoly local telephone companies, which we refer to as the "incumbent
carriers." Since our initial offering of local service in 1997, we have
steadily increased the percentage of services we provide over our network and
facilities compared to the services we provide by reselling the services of the
incumbent carriers. We offer local telephone services in all 37 markets in
which we currently provide retail services.

   In connection with offering local telephone services, we have entered into
interconnection agreements with BellSouth, SBC Communications Inc., Sprint
Corporation and Verizon Communications Inc. to resell the local telephone
services of these incumbent carriers and interconnect our network with the
networks of these incumbent carriers for the purpose of gaining immediate
access to their unbundled network elements. These interconnection agreements
currently allow us to provide local service on a resale basis or by purchasing
the unbundled network elements required to provide local service over our
network and facilities. These agreements allow us to enter new markets with
minimal capital expenditures and to offer local service to our current customer
base. The terms of the interconnection agreements, including interim pricing
terms agreed to by us and these incumbent carriers, have been approved by state
regulatory authorities, although they remain subject to review and modification
by such authorities. We believe, but cannot assure you, that these
interconnection agreements provide a foundation for us to provide local service
on a reasonable commercial basis. Factors that may adversely affect our ability
to provide local service on a reasonable commercial basis include unsettled
legal and regulatory issues, legal and regulatory developments and existing
operational issues with the incumbent carriers that are not resolved by the
interconnection agreements.

   BellSouth is the incumbent carrier in a majority of the markets in which we
offer local services. Our interconnection agreement with BellSouth, which we
entered into in March 1997 and that governed our ability to gain access to
BellSouth's unbundled network elements in all states where BellSouth is the
incumbent carrier, expired on July 1, 1999. We have entered into new
interconnection agreements with BellSouth for Florida and North Carolina and
have opted into an additional interconnection agreement between WorldCom, Inc.
and BellSouth for Mississippi. Although the Mississippi agreement has expired,
we will continue to operate under it until a new interconnection agreement is
completed for Mississippi. We are currently in the process of finalizing new
interconnection agreements in Alabama, Georgia, South Carolina and Tennessee
and expect to finalize interconnection agreements with BellSouth for Kentucky,
Louisiana and Mississippi thereafter. We expect that the terms and conditions
of these agreements will be similar to those that we obtained in our Florida
and North Carolina agreements. We will continue to operate under the expired
1997 interconnection agreement in all states where BellSouth is the incumbent
carrier, except Florida, Mississippi and North Carolina, until new
interconnection agreements are completed for those remaining states.

   Our strategy is to offer facilities-based local service in a majority of our
markets by colocating our equipment with that of the incumbent carriers with
which we have interconnection agreements. We began colocating our equipment in
some of BellSouth's central office locations during the first quarter of 1998.
As of December 31, 2000, we had completed physical colocation of 176 access
nodes and were offering our "Unity" service in all of the 37 markets in which
we provided our retail services. The Unity service, which we market primarily
to mid-sized and major regional businesses, connects our customer's location to
one of our switches using a direct T-1 digital connection and provides the
customer with local and long distance calling capacity on any of the T-1's 24
available channels.

   In June 2000, we signed an agreement with BellSouth to offer a UNE-P, or
unbundled network element- platform, service in all of the BellSouth markets.
To provide the UNE-P service, we purchase all of the required facilities of
BellSouth at advantageous prices. This allows us to convert existing resale
customers to facilities-based customers and facilitates higher gross margins.
Because of BellSouth operational delays, we did

                                       3
<PAGE>

not begin to offer this service to our customers until the fourth quarter of
2000. Through February 2001, we had converted over 20,000 resale customers to
our UNE-P service and we expect to continue to convert resale customers to this
service during 2001. We expect that this conversion will have a favorable
impact on our gross margins.

   Long Distance Telephone Services. We offer a wide range of retail long
distance telephone services, including traditional switched and dedicated long
distance, toll calling, international, calling card and operator services.

   Data Services. We provide a variety of data services to our customers,
including point-to-point, asynchronous transfer mode, frame relay and Internet
protocol-based virtual private networking services. Our network equipment
enables customers to use a single network connection to communicate with
multiple connection sites throughout our fiber optic network. We will continue
to seek, through strategic business relationships with other providers, to
interconnect our fiber optic network with the fiber optic networks of those
other providers.

   In the fourth quarter of 1999, we began offering our Integrated-T service,
which allows our customers to use a single digital T-1 transmission line for
both voice and data services, including frame relay, Internet access and
private line services. The Integrated-T service enables our customers to take
advantage of advanced features and lower costs offered by digital access and
offers the convenience of one service provider for voice and data services.
This product enables us to take advantage of our existing voice services and
network infrastructure by selling additional services, such as data services,
over the same transmission line.

   In February 2001, we announced three new services intended to enhance our
current data offerings to mid-sized businesses and to take advantage of our
existing network infrastructure. These products include virtual private
networking services based on the Internet protocol, Internet security services,
including managed firewall services and our Intrusion Detection Service, and
network managed services. Our virtual private network offering provides our
customers with a dedicated line or secure dial-up access between multiple sites
allowing the same level of security, performance and availability as a private
network. The managed firewall service and our Intrusion Detection Service
provide our customers security for Internet connections and reduce our
customer's capital expenditures and personnel costs necessary to achieve this
level of security. Our network management services allow our customers to
outsource all of their frame relay network management to us. We intend to
provide those customers with complementary services that will range from
reactive monitoring to proactive vendor management.

   Internet Access and Web Development. We provide dedicated Internet access,
electronic mail and Web hosting services. We expect that mid-sized and larger
businesses will require faster Internet access and larger bandwidth in the
future, and we intend to offer products that will meet that demand.

   Local Telecommunications Services for Internet Service Providers. We provide
local wholesale telecommunications services to Internet service providers.
These services include primary rate interface connectivity between our network
and the network of the Internet service provider and equipment colocation
services that permit the Internet service provider to colocate its modems,
routers or network servers with our switching facilities.

   Customer Premise Equipment. We sell, install and perform on-site maintenance
of equipment, such as telephones, office switchboard systems and, to a lesser
extent, private branch exchanges, for customers in the following markets:

  . Anniston, Birmingham, Dothan, Florence, Huntsville, Mobile and
    Montgomery, Alabama;

  . Atlanta, Columbus and Macon, Georgia;

  . Jacksonville, Ocala and Pensacola, Florida;

  . Baton Rouge, Louisiana;

                                       4
<PAGE>

  . Biloxi, Greenwood, Hattiesburg, Jackson and Tupelo, Mississippi;

  . Charlotte and Greensboro, North Carolina; and

  . Charleston, Columbia and Greenville, South Carolina.

   We intend to offer these customer premise equipment sales, installation and
maintenance services in additional markets in the future, with the goals of
augmenting and supporting our sale of local and long distance services and
enhancing customer retention.

   Broadband Transport Services. Our broadband transport services customers
include telecommunications carriers and non-facilities based carriers that have
switches but do not own transmission facilities, such as fiber optic cables.
These customers use our broadband transport services to transport their
customers' traffic between local access and transport areas, which are
geographic areas composed of contiguous local exchanges. Calls transmitted over
a long-haul circuit for a customer are generally routed by the customer through
a switch to a receiving terminal in our network. We transmit the signals over a
long-haul circuit to the terminal where the signals are to exit our network.
Our customer then routes the signals through another switch and to the call
recipient through a local carrier. We offer our broadband transport services in
varying degrees of speed and size. Some of our services are used by our
customers for very high capacity inter-city connectivity and specialized high-
speed data networking. We connect our network to our customer's facilities
either by local carrier or by a direct connection. We typically bill our
broadband transport services customers a fixed monthly rate depending on the
capacity and length of the circuit, regardless of the amount that the circuit
is actually used by the customer.

   e/\deltacom. As a result of the growing demand for a variety of data
services, we established e/\deltacom in 2000. e/\deltacom provides colocation
services, managed services and professional services, primarily through its
data center near Atlanta, Georgia.

   Colocation Services. Our colocation services allow businesses to have a Web
presence without incurring significant capital expenditures, increasing traffic
on their corporate network or burdening their information technology staff. We
offer Web server hosting, security, software updates, monitoring and hardware
solutions. Our colocation services include Internet connectivity with varying
speeds of bandwidth, primary and secondary domain name services support, timely
reporting of system performance and continuous monitoring by our network
operations staff.

   Managed Services. The four basic managed services we offer encompass
enhanced monitoring, managed security services, storage management services and
hardware management services. Our enhanced monitoring services consist of
extended monitoring to include not only port level monitoring, but also server
monitoring and detailed reporting. Our managed security services involve
firewall deployment, virtual private networks, vulnerability assessments,
content and virus scanning and authentication systems. e/\deltacom's storage
management services include the assessment and implementation of storage
solutions, which offer customers multiple technology and hardware choices. Our
hardware management services offer the customer e/\deltacom's ability to provide
hardware maintenance for servers from numerous vendors.

   Professional services. Our professional services provide our customers with
a single source for the design and implementation of an e-business solution
from the needs assessment phase to the design, implementation and support
phases. These professional services include project management and methodology,
consulting, system design, implementation and deployment services, and
maintenance and support services.

   Facilities. As of December 31, 2000, we owned or managed approximately 9,640
route miles of a fiber optic network which covered portions of ten states in
the southern United States. As of the same date, our network extended to
approximately 120 points of presence, which are the locations along our network
where we are able to deliver telecommunications traffic to, and receive
telecommunications traffic from, other carriers for further transmission or
ultimate delivery to an end-user. These points of presence are located in most
major

                                       5
<PAGE>

population centers in the areas covered by our fiber optic network and in a
significant number of smaller cities where our only competitor is the incumbent
carrier.

   As of December 31, 2000, we owned approximately 5,940 route miles of our
fiber optic network, which we have built or acquired since 1992. In addition,
we have strategic relationships principally with three public utilities, Duke
Power Company, Florida Power & Light Company and Entergy Technology Company,
pursuant to which we market, sell and manage capacity on approximately 3,700
route miles of network owned and operated by these three utilities. In
addition, we are able to purchase network capacity to some cities not covered
by our owned and managed network in North Carolina and South Carolina under a
buy-sell agreement with CFN FiberNet, LLC, which manages fiber optic facilities
in those two states and in one additional state. This agreement enables the
parties to buy and sell capacity on each other's networks at pre-established
prices, which are generally more favorable than the prices for such capacity
available in the open market. Under this agreement, neither party is
responsible for network maintenance charges relating to the other party's
network.

   We expect to add approximately 300 to 400 owned and operated route miles to
our fiber network by the end of 2001 through a combination of construction and
long-term dark fiber leases. In addition, as part of our network construction
strategy, we intend to continue to evaluate the potential expansion of our
network through a combination of new construction, long-term dark fiber leases
and fiber swap transactions, depending on the extent of capital required over
the economic life of the fiber assets we will deploy. Our decision to expand
our fiber optic network will be based on various factors, including the number
of our customers in a market, the anticipated operating cost savings associated
with such construction, and any strategic relationships with owners of existing
infrastructure, including utilities and cable operators. We believe that we
will be able to achieve capital efficiencies in constructing and expanding our
fiber optic network through strategic relationships with public utility
companies. We also believe that our fiber optic network, in combination with
our personalized approach to customer service, will create an attractive
customer-focused platform for the provision of local, long distance and
enhanced telecommunications services.

   We have implemented electronic redundancy, which enables traffic to be
rerouted to another fiber in the same fiber sheath in the event of a partial
fiber cut or electronic failure, throughout our network. At December 31, 2000,
over 60% of our network traffic was also protected by geographical diverse
routing, a network design also called a "self healing ring," which enables
traffic to be rerouted in the event of a total cable cut to an entirely
different fiber optic cable, assuming capacity is available.

   We purchase much of our network equipment, including switches, optical
transport products and access nodes, from Nortel Networks Inc. Under the
purchase agreement we entered into in November 2000, we have committed to
purchase up to $250 million of products and services from Nortel Networks
through December 31, 2002.

   A key component of our network is our switches, which are the primary
electronic components that connect customers to our network and transmit voice
and data communications over our network. Our primary switching facilities for
voice and data communications consist of a Nortel DMS-250 switch in Arab,
Alabama and Nortel DMS-500 switches in the following locations:

  . Anniston, Birmingham and Montgomery, Alabama;

  . Jacksonville, Ocala and West Palm Beach, Florida;

  . Atlanta, Georgia;

  . Gulfport, Mississippi;

  . Greensboro, North Carolina;

  . Columbia, South Carolina;

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  . Nashville, Tennessee; and

  . Houston, Texas.

The Nortel DMS-500 switches are capable of handling both local and long
distance voice and data traffic, while the Nortel DMS-250 switch is capable of
handling long distance voice and data traffic only.

   We expect to continue to evaluate our network and assess the need for
additional switching capacity. We also have colocated 176 Nortel access nodes
in various markets in the southern United States. These access nodes enable us
to perform remote local and long distance switching in additional markets where
we do not have switches by using our Nortel DMS-500 switches as hosts to the
access nodes we locate in remote markets. The Nortel access nodes are connected
to our Nortel DMS-500 switching platform using our fiber optic network wherever
possible. This networking design, together with our interconnection agreements
with incumbent carriers, such as BellSouth, will enable us to be a facilities-
based provider of local and long distance telephone services in all of the
markets that we intend to enter.

   We are a member of the Associated Communications Companies of America, a
ten-member trade association that negotiates with carriers for wholesale
telecommunications services for its members. The collective buying power of its
members enables the association to negotiate as if it were one of the larger
long distance providers in the United States.

   In November 2000, we opened and commenced operations at an initial portion
of e/\deltacom's data center in Suwanee, Georgia. The data center, which will
serve as e/\deltacom's headquarters, is a centralized facility that provides
advanced Web server hosting, server colocation and other services. Our
e/\deltacom management team is managing the implementation and integration of
e/\deltacom's services from this facility, the initial opening of which included
approximately 45% of the planned data center space. The remainder of the
facility is expected to be completed in 2001. The data center floor space
contains open racks, enclosed cabinets, caged areas and suites or fully
enclosed vaults. The center is connected through multiple and diverse
connections to our fiber optic network. Site access is controlled by security
officers, video surveillance and enhanced security procedures, and the center
is protected by advanced fire protection devices. Temperature, humidity and
dust are carefully maintained to promote uninterrupted server operation. The
data center also has redundant power supply systems to provide a constant
source of power in the event of a component failure.

Sales and Marketing

   Retail Services. We focus our retail sales efforts on mid-sized and major
regional businesses in the southern United States. We market our retail
services through a sales force composed of direct sales personnel, technical
consultants and technicians. We believe that high-quality employee training is
a prerequisite for superior customer service and, as a result, require each
member of our retail sales force to complete our intensive training program.
Our marketing strategy is built upon the belief that customers prefer to hold
one company accountable for all of their telecommunications services. Each
branch office provides technical assistance for its voice, data, Internet and
customer premise equipment as required. Our customers are assured that they
will have a single point of contact, 24 hours a day, seven days a week, to
support all of the services they receive from us.

   Our sales personnel make direct calls to prospective and existing business
customers, conduct analyses of business customers' usage histories and service
needs, and demonstrate how our service package will improve a customer's
communications capabilities and costs. Sales personnel locate potential
business customers by several methods, including customer referrals, market
research, telemarketing, and networking alliances, such as endorsement
agreements with trade associations and local chambers of commerce. Our sales
personnel work closely with our network engineers and information systems
consultants to design new service products and applications. Our branch offices
also are primarily responsible for coordinating service and customer premise
equipment installation activities. Technicians survey customers' premises to
assess power and space requirements, and coordinate delivery, installation and
testing of equipment.

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   Our retail services contracts generally provide for payment in arrears based
on minutes of use for long distance services and in advance for local telephone
and data services. The agreements also generally provide that the customer may
terminate the affected service without penalty in the event of substantial and
prolonged outages arising from causes within our control and for other
specified causes. Generally, the agreements provide that the customer must
utilize at least a minimum amount, measured by dollars or minutes of use, of
switched long distance services per month for the term of the agreement.

   We also market our retail services through public relations, advertisements,
event sponsorships, trade journals, direct mail and trade forums. Because we
seek to distinguish our retail services largely based on the convenience of our
integrated bundle of these services and the benefits of our comprehensive and
individualized customer support, we continue to believe that advertising and
public relations will play a significant role in our retail services marketing
strategy.

   Broadband Transport Services. We provide long-haul voice and data
transmission services through long-haul circuit contracts with other long
distance carriers, including AT&T Corp., WorldCom, Sprint, Qwest Communications
International Inc., Cable & Wireless plc, Frontier Corporation and Broadwing,
Inc. As of December 31, 2000, we had remaining future long-term contract
commitments for broadband transpoprt services totaling approximately $95.3
million. These contracts expire on various dates through 2008 and are expected
to generate approximately $88.2 million in revenues for us through 2005. We
also provide our long-haul transmission services to customers after contract
expiration on a month-to-month basis. Our long-haul contracts provide for fixed
monthly payments, which are generally made in advance. Although sales volumes
from particular customers vary from year to year, we have historically enjoyed
high customer retention and circuit renewal rates.

   e/\deltacom.  Our newest division, e/\deltacom, provides colocation services,
managed services and professional services from our data center in Suwanee,
Georgia to business customers primarily located in the Atlanta, Georgia area.
We believe that e/\deltacom's technology solutions complement our retail service
offerings, increase our bundle of integrated telecommunications services and
advance our strategy of being a single source for all of our customers'
communications needs. As part of this strategy, e/\deltacom's sales personnel
make direct calls to prospective and existing business customers, work closely
with our engineering staff to design specific solutions for each customer and
seek to market e/\deltacom's services along with our bundle of retail service
offerings.

   e/\deltacom markets its brand and services through advertising and public
relations campaigns, event sponsorships, trade journals, and trade forums. As
e/\deltacom continues to build its brand in the marketplace, we expect that
advertising and public relations will continue as a focus in our marketing
strategy for e/\deltacom.

Competition

   The telecommunications industry is highly competitive. We compete primarily
on the basis of price, availability, transmission quality, reliability,
customer service and variety of product offerings. Our ability to compete
effectively depends on our ability to maintain high-quality services at prices
generally equal to or below those charged by our competitors. In particular,
price competition in the retail services and broadband transport services
markets generally has been intense and is expected to increase. Our competitors
include, among others, AT&T, Sprint and WorldCom for long distance telephone
services and BellSouth for local telephone services. These companies, among
others, have substantially greater financial, personnel, technical, marketing
and other resources, larger numbers of established customers and more prominent
name recognition than ITC/\DeltaCom. These companies also operate more extensive
transmission networks than we do. In addition, companies such as Broadwing,
Qwest and Williams Communications Group, Inc. have constructed or are
constructing nationwide fiber optic systems, including routes through portions
of the southern United States in which we operate our fiber optic network. We
also increasingly face competition in the long distance market from local
carriers, resellers, cable companies and satellite carriers, and will likely
compete with electric utilities. We also may increasingly face competition from
businesses offering long distance data and voice services over the Internet.
These businesses could enjoy a significant cost advantage because, at this
time, they generally do not pay carrier access charges or universal service
fees.

                                       8
<PAGE>

   Our principal competitor for local services is the incumbent carrier in the
particular market, including BellSouth in a large majority of our market areas.
The incumbent carriers enjoy substantial competitive advantages arising from
their historical monopoly position in the local telephone market, including
their pre-existing customer relationship with all or virtually all end-users.
Further, we are highly dependent on the competing incumbent carrier for local
network facilities and wholesale services required in order for us to assemble
our own local retail services. We also face competition from local carriers
other than the incumbent carrier, which we refer to as "competitive carriers,"
some of which have already established local operations in some of our current
and target markets. In addition, incumbent carriers are expected to compete in
each other's markets in some cases. Wireless telecommunications providers may
develop into effective substitutes for wireline local telephone service, which
would further increase competition.

   Local and long distance marketing is converging, as other carriers offer
integrated retail services. For example, many competitive local carriers also
offer long distance service to their customers and large long distance
carriers, such as AT&T, Sprint and WorldCom, have begun to offer local services
in some markets. We also compete with numerous direct marketers, telemarketers
and equipment vendors and installers with respect to portions of our business.

   Regional Bell operating companies, such as BellSouth, are allowed to provide
outside their home regions "interLATA" long distance services, which are long
distance services that originate and terminate in different local access and
transport areas, as well as interLATA mobile services within their regions.
Under the Telecommunications Act of 1996, the regional Bell operating companies
will be allowed to provide interLATA long distance services within their
regions after meeting requirements intended to foster opportunities for local
telephone competition. These companies already have extensive fiber optic
cable, switching and other network facilities in their respective regions that
they can use to provide long distance services. BellSouth and other regional
Bell operating companies are taking significant steps toward obtaining approval
to provide in-region long distance service. The FCC has approved applications
of Verizon Communications to provide in-region long distance service in New
York and of SBC Communications to provide in-region long distance service in
Texas, Kansas and Oklahoma. Verizon Communications has an additional
application pending in Massachusetts and BellSouth may file for approval to
enter the long distance market in Florida and Georgia by the end of 2001. If
the FCC permits BellSouth to provide long distance service in those or other
states before meeting our local interconnection needs, BellSouth would be able
to duplicate our integrated local and long distance services and could have a
significant competitive advantage in marketing those services to its existing
local customers.

   A continuing trend toward consolidation, mergers, acquisitions and strategic
alliances in the telecommunications industry could also increase the level of
competition faced by our broadband transport customers or us. For example,
WorldCom acquired MCI Communications Corporation in September 1998, AT&T
acquired Tele-Communications, Inc. in March 1999, SBC Communications acquired
Ameritech Corporation in October 1999, GTE Corporation and Bell Atlantic
Corporation merged to form Verizon Communications in June 2000, Qwest acquired
US WEST, Inc. in June 2000 and Time Warner, Inc. merged into America Online,
Inc. to form AOL Time Warner Inc. in January 2001. Also, in January 2000, AT&T
and British Telecommunications plc entered into a joint venture, Concert, to
combine the international assets and operations of each company, including
their existing international networks. In addition, SBC Communications and
Williams Communications, a long distance services provider, entered into a
strategic alliance pursuant to which the two companies have agreed to supply
services to each other. The telecommunications market is very dynamic, and we
believe additional competitive changes are likely in the future.

Regulation

   Overview. Our services are subject to federal, state and local regulation.
Through our wholly-owned subsidiaries, we hold numerous federal and state
regulatory authorizations. The FCC exercises jurisdiction over
telecommunications common carriers to the extent they provide, originate or
terminate interstate or international communications. The FCC also establishes
rules and has other authority over some issues related

                                       9
<PAGE>

to local telephone competition. State regulatory commissions retain
jurisdiction over telecommunications carriers to the extent they provide,
originate or terminate intrastate communications. Local governments may require
us to obtain licenses, permits or franchises in order to use the public rights-
of-way necessary to install and operate our networks.

   Federal Regulation. We are categorized as a non-dominant carrier by the FCC
and, as a result, are subject to relatively limited regulation of our
interstate and international services. Some general policies and rules of the
FCC apply to us and we are subject to some FCC reporting requirements, but the
FCC does not review our billing rates. We possess all operating authority
required by the FCC to conduct our long distance business as it is currently
conducted. As a non-dominant carrier, we may install and operate additional
facilities for the transmission of domestic interstate communications without
prior FCC authorization, except to the extent that radio licenses are required.

   The FCC has required non-dominant long distance companies, including us, to
detariff our interstate long distance domestic and international services
during 2001. Tariffs set forth the terms, conditions and prices for services
and must be updated or amended when rates are adjusted or new products are
added. Tariffs currently govern our relationship with most of our long distance
customers. The detariffing process requires us to enter into individual
contracts with each of our customers and to notify all of our customers of the
change. This may increase our costs of doing business. For example, instead of
filing a new rate with the FCC in an existing tariff, we may be required to
notify all of our customers of all changes to their rates and service terms. In
addition, our large business customers may use the detariffing process as an
opportunity to attempt to renegotiate existing contracts with us.

   The FCC's role with respect to local telephone competition arises
principally from the Telecommunications Act of 1996. The Telecommunications Act
pre-empts state and local laws to the extent that they prevent competitive
entry into the provision of any telecommunications service. Subject to this
limitation, however, the state and local governments retain telecommunications
regulatory authority. The Telecommunications Act imposes a variety of new
duties on local carriers, including competitive carriers such as ITC/\DeltaCom,
in order to promote competition in local telephone services. These duties
include requirements to:

  . complete calls originated by customers of competing carriers on a
    reciprocal basis;

  . permit the resale of services;

  . permit users to retain their telephone numbers when changing carriers;
    and

  . provide competing carriers access to poles, ducts, conduits and rights-
    of-way at regulated prices.

   Incumbent carriers are also subject to additional duties. These duties
include obligations of the incumbent carriers to:

  . interconnect their networks with networks or facilities of competitors;

  . offer colocation of competitors' equipment at their premises;

  . make available elements of their networks, including network facilities,
    features and capabilities, on non-discriminatory, cost-based terms; and

  . offer wholesale versions of their retail services for resale at
    discounted rates.

   Collectively, these requirements recognize that local telephone service
competition is dependent upon cost-based and non-discriminatory interconnection
with and use of incumbent carrier networks and facilities. Failure to achieve
such arrangements could have a material adverse impact on our ability to
provide competitive local telephone services. Under the Telecommunications Act,
incumbent carriers are required to negotiate in good faith with carriers
requesting any or all of the foregoing arrangements. In addition, in August
1996, the FCC released the "interconnection decision" implementing the
interconnection portions of the Telecommunications

                                       10
<PAGE>

Act. The FCC subsequently adopted further specific rules to implement these
requirements. The interconnection decision has been the subject of significant
legal dispute. In January 1999, the U.S. Supreme Court rejected most of the
challenges to the interconnection decision and affirmed the authority of the
FCC to establish rules governing interconnection. The Supreme Court required
the FCC to revise its method for determining which network elements incumbent
carriers must provide to competitive carriers. The FCC's actions in response to
the decision of the Supreme Court resulted in changes to the number and type of
network elements available to competitive carriers. Additional disputes
regarding the interconnection decision and other related FCC actions are
pending, and we believe additional disputes are likely. Currently, the FCC is
considering changes to the rule on compensation for services provided by one
carrier to another and on the provision of unbundled network elements by
incumbent carriers. Any changes to these rules could have a significant impact
on the industry and on ITC/\DeltaCom.

   We cannot assure you that the FCC's rules, together with rules adopted by
state public utility commissions, will be implemented in a manner that will
permit local telephone competition to develop to a substantial extent and
without significant delays. For example, many new carriers, including
ITC/\DeltaCom, have experienced problems with respect to the operations support
systems used by new carriers to order and receive network elements and
wholesale services from the incumbent carriers. These systems are necessary for
new carriers like us to provide local service to customers on a timely and
competitive basis. The FCC has created a task force to examine problems that
have slowed the development of local telephone competition, but has not taken
any enforcement actions. In September 1999, the FCC adopted revised rules
defining the circumstances under which incumbent carriers must make network
elements available to competitors. In a number of ways, these rules are more
favorable to competitors than prior rules, but the FCC's pricing methodology
for network elements included in these rules remains subject to judicial
challenge. In other ways, however, these rules are less favorable to
competitors than the prior rules. The revised rules restrict in some respects
the availability of some network elements and limit in some respects the
services that competitors can provide over those elements. Any restriction on
the availability of network elements could have a material adverse effect on
us.

   Among other interconnection agreements, we entered into an interconnection
agreement with BellSouth in 1997 that enabled us to provide in all nine
BellSouth states local service on either a resale basis or by purchasing all
unbundled network elements required to provide local service on a facilities
basis, without using facilities we own. We agreed with BellSouth on interim
pricing terms for such resale and purchase of unbundled network elements, and
the public utilities commissions for those nine BellSouth states approved the
terms of the interconnection agreement. The initial term of the interconnection
agreement expired in 1999, but, according to the agreement, we are entitled to
continue to operate under the agreement and obtain such unbundled network
elements from BellSouth until we reach agreement with BellSouth on new terms
and conditions for the various BellSouth states. Since the expiration of the
initial agreement, we have become a party to three new interconnection
agreements with BellSouth. These interconnection agreements enable us to
provide in Florida, North Carolina and Mississippi local service on either a
resale basis or by purchasing all unbundled network elements required to
provide local service on a facilities basis, without using facilities we own.
In addition, the rates, terms and conditions of the expired 1997
interconnection agreement remain in effect while we negotiate new
interconnection agreements with BellSouth for the six BellSouth states that
remain subject to the terms and conditions of the expired 1997 interconnection
agreement. The expired 1997 interconnection agreement did not resolve, and the
other BellSouth interconnection agreements to which we are a party do not
resolve, all operational issues, including those relating to the colocation of
our equipment with that of BellSouth. Strengthened equipment colocation
requirements were adopted by the FCC in 1999, but portions of the FCC decision
were recently sent back to the FCC for reconsideration by the reviewing court.
As a result, a number of colocation issues are still undecided. We expect, but
cannot assure you, that each new BellSouth interconnection agreement we become
a party to will provide a foundation for us to provide local service in the
nine BellSouth states on a reasonable commercial basis.

   The Telecommunications Act also eliminates previous prohibitions on the
provision of interLATA long distance services by the regional Bell operating
companies and GTE Corporation, which is now part of Verizon

                                       11
<PAGE>

Communications. The regional Bell operating companies are permitted to provide
interLATA long distance service outside those states in which they provide
local service, or "out-of-region long distance service," upon receipt of any
necessary state and federal regulatory approvals that are otherwise applicable
to the provision of intrastate and interstate long distance service. Under the
Telecommunications Act, the regional Bell operating companies will be allowed
to provide long distance service within the regions in which they also provide
local service, or "in-region long distance service," on a state-by-state basis
upon specific approval of the FCC and satisfaction of other conditions,
including a checklist of interconnection requirements intended to open local
telephone markets to competition.

   In the future, an important element of providing competitive local services
may be the ability to offer customers high-speed broadband local connections.
The FCC has considered a proposal that would allow regional Bell operating
companies to offer these and other services through separate affiliates, in
which case their network elements for providing these services would not need
to be made available to us or other competitors. However, a Washington, D.C.
court vacated an FCC decision that in part permitted a similar structure in
connection with the merger of SBC Communications and Ameritech. AT&T has
entered arrangements with cable companies for the exclusive use of their local
networks for broadband telecommunications, and several cable companies are
offering broadband Internet access over their network facilities. If we are
unable to meet future demands of our customers for broadband local access on a
timely basis at competitive rates, we may be at a significant competitive
disadvantage.

   The FCC also regulates the interstate access rates charged by incumbent
carriers for the origination and termination of interstate long distance
traffic. These access rates make up a significant portion of the cost of
providing long distance service. The FCC is in the process of implementing
access policy changes that over time are expected to reduce access rates and
the cost of providing long distance service, especially to business customers.
In 2000, the FCC adopted a plan to lower access charges. However, further FCC
action in this area is necessary, and a current proposal to reduce access
charges levied by rural carriers is pending. The full impact of the FCC's
decisions will not be known until those decisions are implemented over the next
several years. More generally, the FCC has indicated that it may consider
whether to streamline or restructure the manner in which all payments are made
by carriers to other carriers, including access charges and the payments paid
by carriers to each other for the transport of local calls, commonly known as
reciprocal compensation. Any decision in this area could have a material
adverse effect on our revenues from other carriers.

   The FCC has granted incumbent carriers some flexibility in pricing their
interstate special and switched access services. Under this pricing scheme,
local carriers may establish pricing zones based on access traffic density and
charge different prices for access provided in each zone. The FCC recently
granted incumbent carriers additional pricing flexibility as local competition
develops in their markets. We cannot assure you that such pricing flexibility
will not place us at a competitive disadvantage, either as a purchaser of
access for our long distance operations or as a vendor of access to other
carriers or end-user customers.

   In a related proceeding, the FCC has adopted changes to the methodology by
which access has been used in part to subsidize universal telephone service and
other public policy goals. Telecommunications providers like us now pay a fee
calculated as a percentage of revenues to support these goals. Some states are
also implementing universal service funds. The effects of these decisions are
uncertain and subject to change.

   In addition, the FCC continues to consider related questions regarding the
applicability of access charges and universal service fees to Internet service
providers. Currently, Internet service providers are not subject to these
expenses, and the U.S. Court of Appeals for the Eighth Circuit has upheld the
FCC's decision not to impose such fees. However, the incumbent carriers and
other parties argue that this exemption unfairly benefits Internet service
providers, particularly when they provide data, voice or other services in
direct competition with conventional telecommunications services. We are not in
a position to determine how these issues regarding access charges and universal
service fees will be resolved or whether such resolution will be harmful to our
competitive position or our results of operations.

                                       12
<PAGE>

   The FCC also imposes prior approval requirements on transfers of control and
assignments of radio licenses and operating authorizations. The FCC has the
authority generally to condition, modify, cancel, terminate or revoke licenses
and operating authority for failure to comply with federal laws and the rules,
regulations and policies of the FCC. Fines or other penalties also may be
imposed for such violations. We cannot assure you that the FCC or third parties
will not raise issues with regard to our compliance with applicable laws and
regulations.

   As a general matter, we cannot provide assurance regarding how quickly or
how adequately we will be able to take advantage of the opportunities created
by the Telecommunications Act. We could be materially adversely affected if a
court decision reversing some of the FCC's rules or problems in the related
arbitration and negotiation process increase our costs of using incumbent
carrier network elements or services, or if such actions otherwise delay or
impede the development of local telephone competition.

   State Regulation. We are subject to various state laws and regulations. Most
state public utility commissions require providers such as ITC/\DeltaCom to
obtain authority from the commission before initiating service in that state.
In most states, including Alabama, Georgia and Florida, we also are required to
file tariffs or price lists setting forth the terms, conditions and prices for
services that are classified as intrastate and to update or amend our tariffs
when we adjust our rates or add new products. We also are subject to various
reporting and record-keeping requirements. In addition, some states are
ordering the detariffing of services, which may increase our costs of doing
business and provide our customers an opportunity to renegotiate existing
contracts with us.

   Many states also require prior approval for transfers of control of
certified carriers, corporate reorganizations, acquisitions of
telecommunications operations, assignment of carrier assets, carrier stock
offerings and incurrence by carriers of significant debt obligations.
Certificates of authority can generally be conditioned, modified, canceled,
terminated or revoked by state regulatory authorities for failure to comply
with state law or the rules, regulations and policies of state regulatory
authorities. Fines or other penalties also may be imposed for such violations.
We cannot assure you that public utility commissions or third parties will not
raise issues with regard to our compliance with applicable laws or regulations.

   We have authority to offer intrastate long distance services in all 50 U.S.
states and the District of Columbia. We have obtained authority to provide long
distance service in states outside of our current and target markets to enhance
our ability to attract business customers with offices, or whose employees
travel, outside of our markets.

   We provide local services in our region by reselling the retail local
services of the incumbent carrier in a given territory and, in some established
markets, using incumbent network elements and our own local switching
facilities. We possess authority to provide local telephone services in
Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North
Carolina, South Carolina, Tennessee and Texas.

   Many issues remain open regarding how new local telephone carriers will be
regulated at the state level. For example, although the Telecommunications Act
preempts the ability of states to forbid local service competition, the
Telecommunications Act preserves the ability of states to impose reasonable
terms and conditions of service and other regulatory requirements. These
statutes and related issues arising from the Telecommunications Act will be
refined through rules and policy decisions made by public utility commissions
as they address local service competition issues.

   We also will be affected by state public utility commission decisions
related to the incumbent carriers despite recent U.S. Supreme Court decisions
upholding the FCC's rule-making power under the Telecommunications Act. For
example, public utility commissions have responsibility under the
Telecommunications Act to oversee relationships between incumbent carriers and
their new competitors with respect to such competitors' use of the incumbent
carriers' network elements and wholesale local services.

                                       13
<PAGE>

Public utility commissions arbitrate interconnection agreements between the
incumbent carriers and competitive carriers such as us when necessary.
Important issues regarding the scope of the authority of public utility
commissions in this area and the extent to which the commissions will adopt
policies that promote local telephone service competition remain unresolved. We
believe it is too early to evaluate how these matters will be resolved or their
impact on our ability to pursue our business plan.

   States also regulate the intrastate carrier access services of the incumbent
carriers. We are required to pay access charges to the incumbent carriers when
they originate or terminate our intrastate long distance traffic. We could be
materially adversely affected by high access charges, particularly to the
extent that the incumbent carriers do not incur the same level of costs with
respect to their own intrastate long distance services. States also will be
developing intrastate universal service charges parallel to the interstate
charges created by the FCC. For example, incumbent carriers such as BellSouth
advocate the formation of state-level funds that would be supported by
potentially large payments by businesses such as ITC/\DeltaCom based on their
total intrastate revenues. Another issue is the use by some incumbent carriers,
with the approval of the relevant public utility commissions, of extended local
area calling that converts otherwise competitive intrastate toll service to
local service. States also are or will be addressing various intraLATA dialing
parity issues that may affect competition. Our business could be materially
adversely affected by these or other developments.

   We also will be affected by how states regulate the retail prices of the
incumbent carriers with which we compete. We believe that, as the degree of
intrastate competition increases, the states will offer the incumbent carriers
increasing pricing flexibility. This flexibility may present the incumbent
carriers with an opportunity to subsidize services that compete with our
services with revenues generated from non-competitive services, thereby
allowing incumbent carriers to offer competitive services at prices lower than
most or all of their competitors. In addition, BellSouth has obtained authority
to create affiliates that would operate on a much less regulated basis and,
therefore, could provide significant competition whether or not the traditional
BellSouth local business receives more pricing flexibility. Kentucky has placed
limitations on such affiliates, while Tennessee has refused such affiliate
applications of BellSouth. We cannot predict the extent to which these
developments may affect our business.

   Local Government Authorizations and Related Rights-of-Way. We are required
to obtain street use and construction permits and licenses or franchises to
install and expand our fiber optic network using municipal rights-of-way. In
some municipalities where we have installed or anticipate constructing
networks, we will be required to pay license or franchise fees based on a
percentage of gross revenues or a per linear foot basis. We cannot assure you
that, following the expiration of existing franchises, fees will remain at
their current levels. In many markets, the incumbent carriers do not pay these
franchise fees or they pay fees that are substantially less than those required
to be paid by us, although the Telecommunications Act requires that, in the
future, such fees be applied in a competitively neutral manner. To the extent
that competitors do not pay the same level of fees as we do, we could be at a
competitive disadvantage. Termination of the existing franchise or license
agreements before their expiration dates, or a failure to renew the franchise
or license agreements, and a requirement that we remove the corresponding
portion of our facilities or abandon the corresponding portion of our network
could have a material adverse effect on us. In addition, we would be adversely
affected if we are unable to obtain additional authorizations for new network
construction on reasonable terms. Further, unresolved issues exist regarding
the ability of new local service providers to gain access to commercial office
buildings to serve tenants.

Employees

   As of December 31, 2000, we had more than 2,400 full-time employees, none of
whom was represented by a union or covered by a collective bargaining
agreement. We believe that our relationship with our employees is good. In
connection with the construction and maintenance of our fiber optic network and
the conduct of our other business operations, we use third-party contractors,
some of whose employees may be represented by unions or covered by collective
bargaining agreements.

                                       14
<PAGE>

Executive Officers

   The following presents information about our executive officers.

<TABLE>
<CAPTION>
   Name                     Age Positions with Company
   ----                     --- ----------------------
   <S>                      <C> <C>
   Andrew M. Walker........  59 Vice Chairman, Chief Executive Officer, President and Director
   Douglas A. Shumate......  35 Senior Vice President-Chief Financial Officer
   Steven D. Moses.........  51 Senior Vice President-Network Services
   J. Thomas Mullis........  57 Senior Vice President-Legal and Regulatory, General Counsel
                                 and Secretary
   Roger F. Woodward.......  48 Senior Vice President-Sales and Account Services
   J. Stephen Johnson......  41 Senior Vice President-General Manager, e/\deltacom
   Thomas P. Schroeder.....  53 Senior Vice President-Large Account Sales
   Sara L. Plunkett........  51 Vice President-Finance
</TABLE>

   Andrew M. Walker has served as our Chief Executive Officer since March 1997,
our President since April 2000 and as our Vice Chairman of the Board of
Directors since April 1998. He served as President and Chief Executive Officer
of the managing partner of each of Interstate FiberNet and Gulf States
FiberNet, predecessors to Interstate FiberNet, Inc., a wholly-owned subsidiary
of ITC/\DeltaCom, from November 1994 until March 1997. Mr. Walker has served as
a director of KNOLOGY Holdings, Inc., a broadband telecommunications services
company, since July 1996 and as Chief Executive Officer and President of
KNOLOGY Holdings from July 1996 to February 1997.

   Douglas A. Shumate has served as our Senior Vice President-Chief Financial
Officer since March 1997. He served as Chief Financial Officer of the Managing
Partners of each of Interstate FiberNet and Gulf States FiberNet from January
1995 until March 1997. From May 1991 to January 1995, he served as Vice
President- Finance and Chief Financial Officer of Interstate Telephone Company,
a local telephone service provider and wholly-owned subsidiary of ITC Holding.
From December 1986 through April 1991, Mr. Shumate was employed as a C.P.A. at
Arthur Andersen LLP.

   Steven D. Moses has served as our Senior Vice President-Network Services
since March 1997. He served as Vice President of Interstate FiberNet from
January 1992 until April 1995 and Chief Operating Officer of Interstate
FiberNet from April 1995 until March 1997. From May 1991 to January 1992, Mr.
Moses was Director-Special Projects of Interstate Telephone and Valley
Telephone Company, a local telephone service provider and a wholly owned-
subsidiary of ITC Holding.

   J. Thomas Mullis has served as our Senior Vice President-Legal and
Regulatory, General Counsel and Secretary since March 1997. Mr. Mullis served
as General Counsel and Secretary of DeltaCom, Inc., the predecessor of
ITC/\DeltaCom Communications, Inc. that was a provider of long distance
telecommunications services, from May 1985 to March 1997 and as Executive Vice
President of DeltaCom from January 1994 to November 1996. From November 1996 to
March 1997, he also served as Senior Vice President of DeltaCom. From January
1990 to December 1993, Mr. Mullis was President, General Counsel and Secretary
of Southern Interexchange Services, Inc., a switched services carrier, and
Southern Interexchange Facilities, Inc., a private line carriers' carrier.

   Roger F. Woodward has served as our Senior Vice President-Sales and Account
Services since July 2000. He also served as our Senior Vice President-Sales,
Marketing and Customer Support from March 1997 to July 2000. Mr. Woodward was
Senior Vice President-Sales of DeltaCom, Inc. from October 1996 until March
1997. From March 1990 until July 1996, Mr. Woodward served in a variety of
positions, including Regional Sales Director and Vice President-Sales, with
Allnet Communications, Inc., which was acquired by Frontier Communications
Corporation in August 1995.

   J. Stephen Johnson has served as our Senior Vice President-General Manager,
e/\deltacom, since May 2000. Mr. Johnson founded and served as President and
Sales Manager for Bay Data Consultants, LLC., a

                                       15
<PAGE>

provider of technical solutions, from November 1997 until Bay Data Consultants
was acquired by ITC/\DeltaCom in May 2000. From May 1994 to November 1997, he
served as Vice President-Sales of UDC/G.E. Network Services, Inc.

   Thomas P. Schroeder has served as our Senior Vice President-Large Account
Sales since April 2000. He served as Senior Vice President-Carrier Sales of
ITC/\DeltaCom from April 1999 until April 2000 and as Vice President-Carrier
Sales of ITC/\DeltaCom from March 1997 until April 1999. From June 1995 until
March 1997, Mr. Schroeder served as Vice President-Sales and Marketing of
Interstate FiberNet and, from April 1994 to June 1995, as the Director of Sales
and Marketing of Interstate FiberNet.

   Sara L. Plunkett has served as our Vice President-Finance since March 1997.
She also served as our Treasurer from March 1997 through March 2000. Ms.
Plunkett was Vice President-Finance of DeltaCom, Inc. from October 1996 until
March 1997. From May 1989 through October 1996, she served as Chief Financial
Officer of DeltaCom.

Risk Factors

   Our business is subject to a number of risks, including the following:

We expect to continue to have operating losses and negative cash flow after
capital expenditures, which may result in our failure to meet our working
capital and debt service requirements.

   As we have implemented our business strategy to increase our
telecommunications service offerings, expand our fiber optic network and enter
new markets, we have experienced operating losses and negative cash flow after
capital expenditures. We expect operating losses and such negative cash flow
will continue at least through 2002 as we continue to expand our business and
make substantial capital expenditures. We cannot assure you that we will
achieve or sustain operating profitability or positive net cash flow at any
time after 2002. If we cannot achieve or sustain operating profitability and
positive net cash flow, we may not be able to obtain the funds necessary to
continue our operations or to repay amounts due on our outstanding
indebtedness.

We may not have, or be able to obtain, the significant amounts of capital that
we need to expand our network, operations and services as currently planned.

   We need significant capital to expand our network, operations and services
according to our business plans. Our current business plans require us to
continue to make significant capital expenditures primarily in connection with
the expansion of our business. During 2000, we made capital expenditures of
approximately $309.8 million. We currently estimate that our capital
expenditures will total approximately $190 million to $205 million in 2001, and
we expect to make substantial capital expenditures after 2001. These estimates
may turn out to be inaccurate or otherwise may change as a result of factors
such as the following:

  . adverse regulatory, technological, or competitive developments;

  . unforeseen delays;

  . cost overruns;

  . changes in demand for our services; or

  . new market developments or opportunities.

In such an event, we may need to change our business plans. Such a change or
our inability to obtain the capital necessary to expand our network, operations
and services could have a material adverse effect on our business, financial
condition and results of operations.

We have significant debt and may be unable to service that debt.

   We have significant debt. As of December 31, 2000, we had indebtedness of
$713.9 million and stockholders' equity of $181.1 million. For the year ended
December 31, 2000, as adjusted to reflect $160.0

                                       16
<PAGE>

million of indebtedness we incurred under our senior secured credit facility in
April 2000, as if that issuance had occurred on January 1, 2000, our earnings
were insufficient to cover our fixed charges by $73.9 million and EBITDA, as
adjusted, less capital expenditures and interest expense, was negative $311.6
million. EBITDA, as adjusted, represents earnings before extraordinary item,
preacquisition loss, equity in losses of unconsolidated subsidiaries, net
interest, other income and other expenses, income taxes, and depreciation and
amortization. EBITDA, as adjusted, is not a measure of financial performance
under accounting principles generally accepted in the United States and should
not be considered an alternative to net income as a measure of performance or
to cash flow as a measure of liquidity.

   To meet our debt service requirements we must successfully implement our
business strategy. Therefore, we will need to:

  . expand our network;

  . obtain and retain a significant number of customers; and

  . experience significant and sustained growth in our cash flow.

   We cannot assure you that we will successfully implement our business
strategy or that we will be able to generate sufficient cash flow from
operating activities to meet our debt service obligations and working capital
requirements. Our ability to meet our obligations will be dependent upon our
future performance, which will be subject to prevailing economic conditions and
to financial, business and other factors.

Agreements governing our current indebtedness contain restrictive covenants
that place limits on our business activities.

   We are subject to restrictions under the indentures pursuant to which we
issued our publicly traded senior notes, under our $160 million senior secured
credit facility and under our $40 million capital lease facility. These
restrictions affect and, in some cases, significantly limit or prohibit, among
other things, our ability and the ability of our subsidiaries to incur
additional indebtedness, create liens, make investments, issue stock and sell
assets. Our senior note indentures restrict our ability to incur indebtedness,
other than indebtedness to finance the acquisition of equipment, inventory or
network assets and other specified indebtedness, by requiring compliance with
specified leverage ratios. Our senior secured credit facility and our capital
lease facility also contain restrictions on our ability to incur indebtedness.

   The amount of debt we have could adversely affect us in a number of ways,
including by:

  . limiting our ability to obtain any necessary financing in the future for
    working capital, capital expenditures, debt service requirements or other
    purposes;

  . limiting our flexibility in planning for, or reacting to, changes in our
    business;

  . placing us at a competitive disadvantage relative to our competitors who
    have less debt;

  . making us more vulnerable to a downturn in our business or the economy
    generally; and

  . requiring us to use a substantial portion of our cash flow from
    operations to pay principal and interest on our debt, rather than for
    working capital and capital expenditures.

We may not be able to manage our growth successfully.

   The expansion and development of our business will depend upon, among other
things, our ability to:

  . secure financing;

  . successfully implement our sales and marketing strategy;

  . evaluate markets;

  . design fiber routes;

                                       17
<PAGE>

  . install facilities;

  . acquire rights-of-way;

  . obtain any required government authorizations;

  . interconnect to, and colocate with, facilities owned by incumbent
    carriers; and

  . obtain appropriately priced unbundled network elements and wholesale
    services from incumbent carriers.

   Our inability to manage our growth effectively could have a material adverse
effect on our business, results of operations and financial condition. We must
accomplish the foregoing tasks in a timely manner, at reasonable cost and on
satisfactory terms and conditions. Our growth has placed, and our anticipated
future growth may also place, a significant strain on our administrative,
operational and financial resources. Our ability to manage our growth
successfully will require us to enhance our operational, management, financial
and information systems and controls, and to hire and retain qualified sales,
marketing, administrative, operating and technical personnel. We cannot assure
you that we will be able to do so. In addition, as we increase our service
offerings and expand our targeted markets, there will be additional demands on
customer support, sales and marketing, administrative resources and network
infrastructure.

Development and expansion of our business, including through acquisitions, is
subject to regulatory and market risks.

   The successful implementation of our business strategy to provide an
integrated bundle of telecommunications services and expand our operations will
be subject to a variety of risks, including the following:

  . competition and pricing;

  . the availability of capital on favorable terms;

  . regulatory uncertainties;

  . operating and technical problems;

  . the need to establish and maintain interconnection and colocation
    arrangements with incumbent carriers in our target markets; and

  . the potential difficulties of offering local telephone services.

   In addition, the expansion of our business may involve acquisitions of other
telecommunications businesses and assets that, if made, could divert our
resources and management time and could require integration with our existing
operations. We cannot assure you that any acquisitions could be successfully
integrated into our operations or that any acquired business will perform as
expected. Our failure to implement our expansion and growth strategy
successfully would have a material adverse effect on our business, results of
operations and financial condition.

Our business is subject to significant competitive pressures.

   Our industry is highly competitive, and the level of competition,
particularly with respect to pricing, is increasing. For example, prices for
long distance services and for data transmission services have declined
substantially in recent years. These prices may continue to decline, which will
adversely affect our gross margins as a percentage of revenues. In addition, if
the FCC authorizes BellSouth to provide in-region long distance services in one
or more of our markets, we anticipate that local and long distance pricing in
these markets will become even more competitive. Many of our existing and
potential competitors also have financial, technical and other resources and
customer bases and name recognition far greater than our own. We cannot assure
you that we will be able to achieve or maintain adequate market share or
revenues or compete effectively in any of our markets. For additional
information on the competitive environment in which we operate and on how
regulatory developments may increase competition, see "Competition" and
"Regulation" above.

                                       18
<PAGE>

We face significant challenges in offering local telephone services, including
the need to make significant investments and compete with established
providers.

   We will have to continue to make significant operating and capital
investments and to address numerous operating complexities to implement our
local telephone services strategy. Because of these and possible other unknown
factors, we cannot assure you that we will be successful in implementing our
local services strategy. Our inability to implement this strategy could have a
material adverse affect on our business, results of operations and financial
condition. To implement our local services strategy, we are required to:

  . develop new products, services and systems;

  . develop new marketing initiatives;

  . train our sales force in connection with selling these services; and

  . implement the necessary billing and collecting systems for these
    services.

   We expect to continue to face significant pricing and product competition
from the regional Bell operating companies, whose core business is providing
local dial tone service and who are currently the dominant providers of
services in their markets. We also will face significant competitive product
and pricing pressures from other incumbent carriers and from other companies
like us that attempt to compete in the local services market.

The long distance transmission industry is subject to pricing pressures and
risks of industry over-capacity.

   The long distance transmission industry generally has experienced over-
capacity and declining prices. These trends have exerted downward pressure on
the prices we charge for our broadband transport services, and we anticipate
that prices for these services will continue to decline over the next several
years. Dramatic and substantial price reductions in the long distance industry
could force us to reduce our prices significantly, which could have a material
adverse effect on our business, financial condition and results of operations.

   We expect these price declines will occur because:

  . some long distance carriers are expanding their capacity generally;

  . other existing long distance carriers and potential new carriers are
    constructing new fiber optic and other long distance transmission
    networks in the southern United States, and BellSouth is likely to
    receive authority to use its excess capacity to market long distance
    service to customers in its primary markets;

  . expansion and new construction of transmission networks is likely to
    create substantial excess capacity relative to demand in the short- or
    medium-term, and companies building these networks are likely to install
    fiber optic cable that provides substantially more transmission capacity
    than will be needed because the cost of fiber is a relatively small
    portion of the overall cost of constructing new lines;

  . recent technological advances may also greatly expand the capacity of
    existing and new fiber optic cable; and

  . the marginal cost of carrying an additional call over existing fiber
    optic cable is extremely low.

   An increase in the capacity of our competitors could adversely affect our
business, even if we are also able to increase our capacity. If industry
capacity expands so much that available capacity exceeds overall demand along
any of our routes, severe additional pricing pressure could develop.

The local and long distance industries are subject to significant government
regulation, and the regulations may change.

   We are required to obtain authorizations from the FCC and state public
utility commissions to offer some of our telecommunications services. We are
also required to file tariffs for many of our services and to comply with local
license or permit requirements relating to installation and operation of our
network. Any of the following could have a material adverse effect on our
business, results of operations and financial condition:

                                       19
<PAGE>

  . failure to maintain proper federal and state tariffs;

  . failure to maintain proper state certifications;

  . failure to comply with federal, state or local laws and regulations;

  . failure to obtain and maintain required licenses and permits;

  . burdensome license or permit requirements to operate in public rights-of-
    way; and

  . burdensome or adverse regulatory requirements or developments.

   Although the local telephone services market was opened to competition
through the passage of the Telecommunications Act in 1996, the FCC and the
states are still implementing many of the rules and policies necessary for
local telephone competition and addressing other related consumer issues. As a
result, we believe that we may see increased state regulation of competitive
carriers.

We depend on access service from incumbent carriers to provide long distance
and interexchange private services, and we could be adversely affected if we do
not benefit from reduced access charges at least as much as our competitors.

   We depend on incumbent carriers to provide access service for the
origination and termination of our toll long distance traffic and interexchange
private lines.We could be adversely affected if we do not experience access
cost reductions proportionally equivalent to those of our competitors.
Historically, charges for access service have made up a significant percentage
of the overall cost of providing long distance service. In 1998, the FCC
implemented changes to its interstate access rules that, among other things,
have reduced per-minute access charges and substituted new per-line flat rate
monthly charges. The FCC also approved reductions in overall access rates, and
established new rules to recover subsidies to support universal service and
other public policies. Additional access charge adjustments were implemented in
July 2000, and others are expected in the future. The impact of these changes
on our competitors or us is not yet clear. New Internet-based competitors
generally are exempt from these charges, which could give them a significant
cost advantage in this area.

If we are unable to interconnect with BellSouth and other incumbent carriers on
acceptable terms, our ability to offer local telephone services will be
adversely affected.

   Incumbent carriers meet their obligations under the Telecommunications Act
through the use of interconnection agreements negotiated under regulatory
supervision with competitive carriers like ITC/\DeltaCom. We cannot assure you
that we will be able to enter into or renew interconnection agreements that
permit us to offer local services at rates that are profitable or competitive.
These agreements have been the subject of ongoing disputes and key issues
remain open. Our ability to negotiate interconnection agreements on a timely
basis and on favorable terms is critical to our ability to provide local
services on a competitive and profitable basis. Any successful effort by the
incumbent carriers to deny or substantially limit our access to their network
elements or wholesale services would have a material adverse effect on our
ability to provide local telephone services.

   Our March 1997 interconnection agreement with BellSouth, which expired on
July 1, 1999, was our most significant interconnection agreement and enabled us
to provide local telephone services in all nine states in which BellSouth
operates. The agreement provides that the parties will continue to exchange
traffic according to the terms and conditions of the agreement until new terms,
conditions and prices are ordered by a state public utility commission or
negotiated by the parties. The new terms, conditions and prices would then be
effective retroactive to July 1, 1999. We have negotiated new interconnection
agreements with BellSouth for services in Florida and North Carolina and have
opted into an existing interconnection agreement between BellSouth and another
carrier for services in Mississippi. We continue to negotiate new
interconnection agreements with BellSouth for the remaining six BellSouth
states. We cannot assure you that we will be able to enter into new
interconnection agreements with BellSouth for these remaining states on
favorable terms, if at

                                       20
<PAGE>

all. If we are unable to enter into favorable interconnection agreements in our
current or target markets, our business, results of operations and financial
condition may be materially adversely affected.

   Under the Telecommunications Act, the regional Bell operating companies will
not be permitted to provide in-region long distance service to customers in
their primary markets until there is adequate competition in the local services
industry. This provides some incentive to these carriers to provide access to
their facilities to competitive new entrants such as ITC/\DeltaCom. We cannot
assure you, however, that once BellSouth or other regional Bell operating
companies are permitted to offer in-region long distance service, they will
continue to be willing to enter into interconnection agreements with us that
will enable us to provide local services on competitive and profitable terms.

We are dependent upon rights-of-way and other third-party agreements to expand
and maintain our fiber optic network.

   To construct and maintain our fiber optic network, we have obtained
easements, rights-of-way, franchises and licenses from various private parties,
including actual and potential competitors and local governments. We cannot
assure you that we will continue to have access to existing rights-of-way and
franchises after the expiration of our current agreements, or that we will
obtain additional rights necessary to extend our network on reasonable terms.
In addition, third parties have challenged and may challenge in the future our
use of rights-of-way obtained by others. If a franchise, license or lease
agreement were terminated and we were forced to remove or abandon a significant
portion of our network, such termination could have a material adverse effect
on our business, results of operations, and financial condition. Similarly, our
business plans could be adversely affected if our network expansion is hindered
through delays or denials of rights-of-way, easements or related licenses on
competitive terms. For information on legal proceedings related to some of our
rights-of-way, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Overview."

Our inability to maintain our network infrastructure, portions of which we do
not own, could adversely affect our business, results of operations and
financial condition.

   Cancellation or non-renewal of any of our significant network agreements
could materially adversely affect our business, results of operations and
financial condition. We have effectively extended our network with minimal
capital expenditures by entering into marketing and management agreements with
three public utility companies to sell long-haul private line services on the
fiber optic networks owned by these companies. Under these agreements, which
have remaining terms ranging from one to four years, we generally earn a
commission based upon a percentage of the gross revenues generated by the sale
of capacity on the utility's networks. We also purchase network capacity to
some cities in North Carolina and South Carolina not covered by the owned and
operated portion of our network under a buy-sell agreement with CFN FiberNet,
which manages fiber optic facilities in those two states and in one additional
state. Our agreement with CFN FiberNet expires in February 2004.

   Two of our three agreements with the public utility companies are
nonexclusive. We may encounter competition for capacity on the utilities'
networks from other service providers that enter into comparable arrangements
with the utilities. Any reduction in the amount of capacity that is made
available to us could adversely affect us. To the extent that we are unable to
establish similar arrangements in new markets, we may be required to make
additional capital expenditures to extend our fiber optic network.

   Our business also could be materially adversely affected by a cable cut or
equipment failure along our fiber optic network. A portion of our fiber optic
network is not protected by electronic redundancy or geographical diverse
routing. Our lack of these protections would not enable us to reroute traffic
to another fiber in the same fiber sheath in the event of a partial fiber cut
or electronics failure or to an entirely different fiber optic route, assuming
capacity is available, in the event of a total cable cut.

                                       21
<PAGE>

We depend on a few large customers for a significant percentage of our revenues
and cannot assure you that we will be able to retain those customers.

   The table below sets forth, for 2000 and 1999, the approximate percentages
of our consolidated revenues generated by our five largest retail services
customers and our two largest broadband transport services customers:

<TABLE>
<CAPTION>
                                              Year Ended        Year Ended
                                           December 31, 2000 December 31, 1999
                                           ----------------- -----------------
<S>                                        <C>               <C>
Five largest retail services customers....        7.5%             11.3%
Two largest broadband transport services
 customers................................       11.5%             10.6%
</TABLE>

   We cannot assure you that we will be able to retain our customers. The loss
of, or a significant decrease of business from, any of our largest customers
would have a material adverse effect on our business, results of operations and
financial condition.

   For both retail services and broadband transport services, our customers
generally have concurrent arrangements with more than one service provider.
This enables our customers to reduce their use of our services and switch to
other providers without incurring significant expense. Our agreements with our
customers generally provide that the customer may terminate service without an
early discontinuance charge in the event of specified types of outages in
service and for other defined causes. As of December 31, 2000, our broadband
transport services business had remaining future long-term contract commitments
totaling approximately $95.3 million. Some of those contractual commitments
provide that, if the customer is offered lower pricing with respect to any
circuit by another carrier, the customer's commitment to us will be reduced to
the extent we do not match the price for such circuit and the customer
purchases such circuit from the other carrier.

We depend on sophisticated billing, customer service and information systems.

   We depend on sophisticated information and processing systems to grow,
monitor costs, bill customers, provision customer orders and achieve operating
efficiencies. As we increase our provision of dial tone and switched local
access services, the need for enhanced billing and information systems will
also increase. Our inability to identify adequately all of our information and
processing needs, or to upgrade systems as necessary, could have a material
adverse effect on our ability to reach our objectives and on our financial
condition and results of operations.

We are subject to risks associated with rapid changes in technology.

   The telecommunications industry is subject to rapid and significant changes
in technology. We may be required to select one emerging technology over
another, but it will be impossible to predict with any certainty, at the time
we are required to make our investment, which technology will prove to be the
most economic, efficient or capable of attracting customer usage. Unexpected
developments, or our failure to adapt to them, could have a material adverse
effect on our business, results of operations and financial condition.

Our success depends on our ability to attract and retain key personnel.

   Our business is currently managed by a small number of key management and
operating personnel, including our executive officers. We do not have
employment agreements with, nor do we maintain "key man" insurance on, these
employees. The loss of the services of key personnel, or the inability to
attract, recruit and retain sufficient or additional qualified personnel, could
have a material adverse effect on our business, results of operations and
financial condition.

                                       22
<PAGE>

Our operating results could vary significantly from period to period.

   Our revenues and operating results could vary significantly from period to
period for many reasons, including:

  . significant expenses associated with the construction and expansion of
    our network and services;

  . competition and regulatory developments;

  . changes in market growth rates for our products and services;

  . availability or announcement of alternative technologies; and

  . general economic conditions.

   These factors and any resulting fluctuations in our operating results will
make period-to-period comparisons of our financial condition less meaningful
and could have a material adverse effect on our business, results of operations
and financial condition.

Item 2. Properties.

   We have completed construction on approximately 45% of the total planned
floor space of approximately 376,000 square feet for e/\deltacom's data center
in Suwanee, Georgia. The remaining construction on the data center is expected
to be completed during 2001.

   We completed construction of our new corporate headquarters in West Point,
Georgia in April 1999.

   We own switch sites in Anniston, Birmingham and Montgomery, Alabama and
Nashville, Tennessee and lease space for a network operations center and a
switch site in Arab, Alabama. We also lease space for our switch sites in the
following locations:

  . Jacksonville, Ocala and West Palm Beach, Florida;

  . Atlanta, Georgia;

  . Gulfport, Mississippi;

  . Greensboro, North Carolina;

  . Columbia, South Carolina; and

  . Houston, Texas.

The leases for these switch sites expire on various dates from 2002 to 2014.

   We have constructed a multi-service facility in Anniston, Alabama to
function as a centralized switching control center for our network and an
operator services center. In addition, we lease space to operate a customer
network operations center in Atlanta, Georgia.

   We operate branch offices in the following locations:

  . Anniston, Birmingham, Dothan, Florence, Huntsville, Mobile and
    Montgomery, Alabama;

  . Daytona, Ft. Lauderdale, Jacksonville, Ocala, Orlando, Pensacola,
    Tallahassee and Tampa, Florida;

  . Albany, Atlanta (two offices), Augusta, Columbus and Macon, Georgia;

  . New Orleans and Baton Rouge, Louisiana;

  . Biloxi, Greenwood, Hattiesburg, Jackson and Tupelo, Mississippi;

  . Charlotte, Greensboro and Raleigh, North Carolina;


                                       23
<PAGE>

  . Charleston, Columbia and Greenville, South Carolina; and

  . Chattanooga, Knoxville and Nashville, Tennessee.

The leases for these branch offices expire on various dates from 2001 through
2005. We also lease office space for various administrative functions,
including accounting, legal, sales and human resources in Huntsville, Alabama,
and own an administrative office in Arab, Alabama.

   As part of our fiber optic network and switched service system, we own or
lease rights-of-way, land, office space and towers throughout the southern
United States.

   We own land and microwave transmission towers at various locations in
Alabama.

   We expect to lease or purchase additional office space and switching and
other network facilities in connection with the planned expansion of our
network.

Item 3. Legal Proceedings.

   We are a party to legal proceedings in the ordinary course of our business,
including disputes with contractors or vendors, which we believe are not
material to our business. We also are a party to regulatory proceedings
affecting the relevant segments of the communications industry generally. For a
description of legal proceedings involving rights-of-way upon which portions of
our network are dependent, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."

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

   There were no matters submitted to our security holders in the fourth
quarter of 2000.

                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

   Our common stock is traded on the Nasdaq National Market under the symbol
"ITCD." The following table sets forth for the last two years the high and low
sales prices per share of the common stock as reported by the Nasdaq National
Market:

<TABLE>
<CAPTION>
   1999                                                           High     Low
   ----                                                          ------- -------
   <S>                                                           <C>     <C>
   First Quarter................................................ $22.000 $12.500
   Second Quarter...............................................  40.750  19.750
   Third Quarter................................................  32.500  22.063
   Fourth Quarter...............................................  31.500  22.500

<CAPTION>
   2000                                                           High     Low
   ----                                                          ------- -------
   <S>                                                           <C>     <C>
   First Quarter................................................ $43.500 $24.750
   Second Quarter...............................................  35.625  16.312
   Third Quarter................................................  23.250   8.375
   Fourth Quarter...............................................  12.500   4.375
</TABLE>

   On March 28, 2001, there were approximately 835 holders of record of our
common stock.

   We have never declared or paid any cash dividends on our capital stock and
do not anticipate paying cash dividends on our common stock in the foreseeable
future. It is the current policy of our Board of Directors to retain earnings
to finance the expansion of our operations. Future declaration and payment of
dividends, if any, will be determined in light of the then-current conditions,
including our earnings, operations, capital

                                       24
<PAGE>

requirements, financial condition, restrictions in financing agreements and
other factors deemed relevant by the Board of Directors. The indentures under
which we have issued our publicly traded senior notes, the agreement for our
$160 million senior secured credit facility and the agreement for our $40
million capital lease facility contain restrictions on our ability to pay cash
dividends. We must satisfy debt incurrence and other financial tests to pay
cash dividends under these agreements.

Item 6. Selected Financial Data.

   The following table sets forth selected financial and operating data for
ITC/\DeltaCom. The selected historical statement of operations data for each of
the years ended December 31, 2000, 1999, 1998, 1997 and 1996 and the selected
historical balance sheet data for the years then ended have been derived from
the consolidated financial statements that have been audited by Arthur
Andersen LLP, independent public accountants.

<TABLE>
<CAPTION>
                                         Year Ended December 31,
                          ----------------------------------------------------------
                             2000        1999        1998     1997(a)(b)   1996(c)
                          ----------  ----------  ----------  ----------  ----------
<S>                       <C>         <C>         <C>         <C>         <C>
Income Statement Data:
Operating revenues......  $  363,648  $  244,844  $  171,838  $  114,590  $   66,518
                          ----------  ----------  ----------  ----------  ----------
Expenses:
 Cost of services.......     155,000     118,721      82,979      54,550      38,756
 Selling, operations and
  administration........     151,050      96,854      64,901      38,255      18,876
 Depreciation and
  amortization..........      86,519      53,810      30,887      18,332       6,438
                          ----------  ----------  ----------  ----------  ----------
 Total expenses.........     392,569     269,385     178,767     111,137      64,070
                          ----------  ----------  ----------  ----------  ----------
Operating (loss)
 income.................     (28,921)    (24,541)     (6,929)      3,453       2,448
Equity in losses of
 unconsolidated
 subsidiaries...........           0           0           0           0      (1,590)
Interest expense........     (55,482)    (45,293)    (31,930)    (21,367)     (6,173)
Interest and other
 income (expense), net..      14,337      14,949       6,499       4,251         172
                          ----------  ----------  ----------  ----------  ----------
Loss before income
 taxes, preacquisition
 loss and extraordinary
 item...................     (70,066)    (54,885)    (32,360)    (13,663)     (5,143)
Income tax (benefit)
 expense................        (512)         94      (6,454)     (3,324)     (1,233)
Preacquisition loss.....           0           0           0          74           0
Extraordinary item (net
 of tax)................      (1,321)          0      (8,436)       (508)          0
                          ----------  ----------  ----------  ----------  ----------
 Net loss...............  $  (70,875) $  (54,979) $  (34,342) $  (10,773) $   (3,910)
                          ==========  ==========  ==========  ==========  ==========
Basic and diluted net
 loss per common
 share:(d)(e)
 Before extraordinary
  loss..................  $    (1.14) $    (0.98) $    (0.51) $    (0.26) $    (0.10)
 Extraordinary loss.....       (0.02)       0.00       (0.16)      (0.01)       0.00
                          ----------  ----------  ----------  ----------  ----------
 Net loss...............  $    (1.16) $    (0.98) $    (0.67) $    (0.27) $    (0.10)
                          ==========  ==========  ==========  ==========  ==========
Basic weighted average
 common shares
 outstanding(d)(e)......  60,928,387  56,370,269  50,972,361  40,249,816  38,107,350
Diluted weighted average
 common shares
 outstanding(d)(e)......  60,928,387  56,370,269  50,972,361  40,249,816  38,203,852

Balance Sheet Data:
Working capital.........  $   85,094  $  244,913  $  190,118  $  116,446  $    3,415
Total assets............   1,048,526     807,598     587,517     386,104     113,208
Long-term debt, advances
 from ITC Holding and
 capital lease
 obligations, including
 current portions.......     713,869     516,907     417,934     203,889      75,443
Stockholders' equity....     181,053     218,162     118,200     148,266      19,257

Other Financial Data:
Capital expenditures....     309,831     165,540     147,842      43,874       6,173
Cash flows provided by
 (used in) operating
 activities.............      45,931      (5,334)      9,512       6,302       8,189
Cash flows used in
 investing activities...     305,208     149,995     118,166      93,854      72,694
Cash flows provided by
 financing activities...     151,986     219,593     198,447     180,625      65,150
EBITDA, as adjusted(f)..      57,598      29,269      23,958      21,785       8,886
Ratio of earnings to
 fixed charges(g).......         --          --          --          --          --
</TABLE>
--------
(a) On March 27, 1997, ITC/\DeltaCom purchased fiber and fiber-related assets,
    including a significant customer contract for network services in Georgia,
    from SCANA Corporation. The results of operations for these assets are
    included in ITC/\DeltaCom's consolidated statements of operations beginning
    March 27, 1997.

                                      25
<PAGE>

(b) On March 27, 1997, ITC/\DeltaCom purchased the remaining 64% partnership
    interest in Gulf States FiberNet that it did not already own from SCANA.
    Gulf States FiberNet's revenues and expenses have been included in the
    consolidated statement of operations data effective January 1, 1997, with
    the preacquisition loss attributable to the previous owner deducted to
    determine the consolidated net loss for the year ended December 31, 1997.
(c) On January 29, 1996, our predecessor purchased DeltaCom, Inc., which
    subsequently was renamed ITC/\DeltaCom Communications, Inc. and became one
    of our subsidiaries as part of a 1997 reorganization of ITC Holding
    Company, Inc. and its affiliated entities. That company's results of
    operations are included in the historical statement of operations data
    since the date of acquisition.
(d) On September 4, 1998, ITC/\DeltaCom effected a two-for-one stock split of
    its common stock in the form of a stock dividend. All references to number
    of shares, except shares authorized, and to per share information in the
    consolidated financial statements have been adjusted to reflect the stock
    split on a retroactive basis.
(e) Pursuant to SEC Staff Accounting Bulletin 98, for periods prior to the
    completion of the initial public offering of our common stock, basic net
    loss per share is computed using the weighted average number of shares of
    common stock outstanding during the period. Diluted net loss per share is
    computed using the weighted average number of shares of common stock
    outstanding during the period and nominal issuances of common stock and
    common stock equivalents, regardless of whether they are anti-dilutive.
(f) EBITDA, as adjusted, represents earnings before extraordinary item,
    preacquisition loss, equity in losses of unconsolidated subsidiaries, net
    interest, other income and other expenses, income taxes, and depreciation
    and amortization. EBITDA, as adjusted, is provided because it is a measure
    commonly used in the industry. EBITDA, as adjusted, is not a measurement of
    financial performance under accounting principles generally accepted in the
    United States and should not be considered an alternative to net income as
    a measure of performance or to cash flow as a measure of liquidity. EBITDA,
    as adjusted, is not necessarily comparable with similarly titled measures
    for other companies.
(g) Earnings consist of income before income taxes, plus fixed charges. Fixed
    charges consist of interest charges and amortization of debt issuance costs
    and the portion of rent expense under operating leases representing
    interest, estimated to be one-third of such expense. Earnings were
    insufficient to cover fixed charges for the years ended December 31, 2000,
    1999, 1998, 1997 and 1996 by $70.1 million, $54.9 million, $32.4 million,
    $13.7 million and $5.1 million, respectively.

                                       26
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

   We have included data with respect to EBITDA, as adjusted, in the following
analysis because it is a measure commonly used in our industry. EBITDA, as
adjusted, represents earnings before extraordinary item, preacquisition loss,
equity in losses of unconsolidated subsidiaries, net interest, other income and
other expenses, income taxes, and depreciation and amortization. EBITDA, as
adjusted, is not a measure of financial performance under accounting principles
generally accepted in the United States and should not be considered an
alternative to net income as a measure of performance or to cash flow as a
measure of liquidity. EBITDA, as adjusted, is not necessarily comparable with
similarly titled measures for other companies.

Overview

   We provide integrated voice and data telecommunications services on a retail
basis to mid-size and major regional businesses in the southern United States.
We also are a leading regional provider of wholesale long-haul services, which
we refer to as our "broadband transport services," to other telecommunications
companies. In connection with these businesses, we own, operate and manage an
extensive fiber optic network in the southern United States.

   We provide our retail services individually or in a bundled package tailored
to the business customer's specific needs. At December 31, 2000, we provided
our retail services to approximately 13,700 business customers in 37
metropolitan areas and had sold approximately 303,700 access lines, of which
approximately 226,650 had been installed. Our retail services business
generated revenues of $269.9 million in 2000, $172.0 million in 1999 and $119.9
million in 1998.

   Our broadband transport services include the provision of long-haul
telecommunications transmission capacity on our network to other
telecommunications carriers and the switching and transportation of
telecommunications traffic for these carriers. During 2000, we extended our
fiber network approximately 1,390 route miles to approximately 9,640 route
miles. We own the network fiber and related electronics for approximately 5,940
of our total network route miles and we manage and market under our own name
the network fiber and related electronics for the remaining 3,700 route miles
under long-term agreements with the owners of those networks. Our broadband
transport services business generated revenues of $83.3 million in 2000, $72.9
million in 1999 and $51.9 million in 1998.

   In March 2000, we inaugurated a new line of business, which we refer to as
e/\deltacom. e/\deltacom provides colocation services, managed services and
professional services integral to operating important business applications
over the Internet. e/\deltacom also provides a wide range of optional
configurations and services. e/\deltacom, which began generating revenues in May
2000, had revenues of $10.4 million in 2000.

   Operating Revenues. Retail services and broadband transport services
currently account for the vast majority of our operating revenues.

   Retail Services. We currently provide local service by using our network and
facilities and by reselling the services of incumbent carriers. Since our
initial offering of local service in 1997, we have steadily increased the
percentage of services we provide over our own network and facilities compared
to the services we provide by reselling the services of the incumbent carriers.
We expect that this trend, which reduces our costs of providing these services,
will continue during 2001. At December 31, 2000, approximately 78% of the lines
we had in service were provided over our own network and facilities compared to
approximately 57% at December 31, 1999. At December 31, 2000, we offered local
telephone services in all of the 37 markets in which we provided our retail
services.

   We expect that, as we increase our provision of local service on a
facilities basis rather than on a resale basis, we will reduce the access costs
we incur when we sell our end-user customers long distance services and realize
increased revenues from the originating and terminating switched access
services we provide to other

                                       27
<PAGE>

carriers that originate or terminate calls for our local end-user customers.
Some incumbent carriers, including BellSouth, have taken the position that,
when a carrier provides local service by obtaining all necessary elements from
the incumbent carrier in a combined form, the incumbent carrier retains the
right to receive the access revenues generated by customers served through the
use of those elements. Important issues related to this form of interconnection
remain open, including issues related to when a competitor can obtain network
elements used for, among other things, access purposes, and legal challenges
related to these issues are likely.

   We have derived, and expect we will continue to derive, an increasing
percentage of our revenue from local services, primarily local services
provided under our interconnection agreements with the incumbent carriers. We
expect that gross margin as a percentage of revenues associated with our
facilities-based local retail services will be slightly higher than the gross
margin as a percentage of revenues associated with our long distance retail
services. We cannot assure you that we will be able to enter into additional
interconnection agreements on terms acceptable to us or at all, or that the
incumbent carriers will provide the operational support required for us to
provide local services to end-users.

   During 2000, we reached a settlement with BellSouth of our long-standing
dispute over BellSouth's payment of reciprocal compensation to us for local
calls placed by customers of BellSouth and terminated to our customers,
including calls terminated to our Internet service provider customers. The
settlement agreement provides for the settlement of all amounts claimed by us
to be due for reciprocal compensation before the date of the agreement at rates
consistent with or in excess of amounts previously recognized by us as revenue.
The agreement also establishes rates for all reciprocal compensation traffic on
our network for the portion of 2000 that remained after the date of the
settlement agreement, for 2001 and for 2002. The terms of the settlement
agreement are not subject to modification by changes in law or subsequent FCC,
court or state commission decisions.

   The settlement agreement provided for a cash payment of approximately $53
million, which BellSouth made in October 2000. This payment represents payment
for reciprocal compensation amounts billed to BellSouth before the date of the
settlement agreement and for estimated reciprocal compensation billings after
the date of the settlement agreement through December 31, 2001. The portion of
the payment related to 2001 is subject to reconciliation procedures beginning
in July 2001 to determine whether the expected reciprocal compensation traffic
amounts upon which the prepayment is computed have been realized. The
settlement agreement also provides for the prepayment by BellSouth of $24
million to us in December 2001 related to expected reciprocal compensation
traffic levels in 2002. This additional amount also will be subject to
reconciliation procedures based upon the actual amount of reciprocal
compensation traffic during 2002. In addition, we have agreed to limit our
reciprocal compensation received from BellSouth to $27.5 million in 2001 and
$29.5 million in 2002.

   Effective May 2000, we entered into an agency agreement with an equipment
and hardware provider to market and sell equipment and hardware to our
customers. We recognize commission revenues resulting from this agreement equal
to any gross margin we retain after payment to the supplier. These non-
recurring revenues are combined for financial reporting purposes with revenues
from sales of customer premise equipment, other equipment and software.

   Although we expect that a significant portion of our revenue growth will
come from our retail services business, we do not expect our retail services to
obtain a significant share of the market for telecommunications services in the
southern United States. The customer contracts for our retail services
generally provide for payment in arrears based on minutes of use for switched
services and payment in advance for local exchange and private line services.
The contracts generally provide that the customer may terminate the affected
services without penalty in the event of specified outages in service and for
other defined causes. The contracts also typically provide that the customer
must use at least a minimum dollar amount of switched long distance services
per month for the term of the contract. During the past several years, market
prices for many telecommunications services segments have been declining. To
maintain and develop our customer base in response to these and other
competitive pressures, we have modified some of our retail contracts to extend

                                       28
<PAGE>

lower rates over longer terms to selected customers. We may decide in the
future to modify other retail customer contracts in a similar manner to
emphasize lower pricing and longer commitment periods.

   Broadband Transport Services. We derive commission revenues from the
marketing, sale and management of capacity on the portions of our network that
are owned by utilities but managed and marketed by us. Negligible incremental
costs are associated with these commissions, because we use the same marketing
and sales force in servicing the utility-owned portions of the network as we do
for the portions owned by us. Our commission revenues from these arrangements
amounted to approximately $10.2 million for 2000, $8.4 million for 1999 and
$3.8 million for 1998.

   We provide wholesale long-haul telecommunications transmission services to
our broadband transport customers on a "take or pay" long-term basis, on an
individual circuit basis, or on a month-to-month basis after the initial term
of the "take or pay" or individual circuit contract has expired. As of December
31, 2000, we had remaining future long-term contract commitments totaling
approximately $95.3 million. These contracts expire on various dates through
2008 and are expected to generate approximately $88.2 million in revenues for
us through 2005.

   Proceedings Affecting Rights-of-Way. A portion of our network runs through
fiber optic cables owned by the Mississippi Power Company over its rights-of-
way located in Jasper County, Mississippi. A proceeding involving Mississippi
Power and several landowners who have granted Mississippi Power rights-of-way
in Jasper County resulted in a January 1999 order of the Mississippi Supreme
Court holding that Mississippi Power could not use its rights-of-way at issue
for any purpose other than in connection with providing electricity to
customers of Mississippi Power. We were not a party to the proceeding until
after the January 1999 order. The Circuit Court of the First Judicial District
Court of Jasper County, Mississippi directed us on June 15, 2000 to cease using
that portion of our fiber optic network located on Mississippi Power's rights-
of-way in Jasper County. At our request, the Mississippi Supreme Court stayed
the application of the District Court's order pending the Mississippi Supreme
Court's decision on our appeal.

   We have rerouted substantially all of the circuits on the affected portion
of our network so that, if the court's order is enforced, we expect to be able
to continue to provide services to our customers along the affected route
without material disruption. The affected portion of our network, however,
would not be protected by geographically diverse routing, which enables traffic
to be rerouted in the event of electronic failures or total or partial cable
cuts along the route. In the event of an electronics failure or cable cut,
these protections would significantly reduce the duration of any outages in the
affected area. We are continuing our search to purchase rights-of-way in an
attempt to minimize the potential loss of route diversity for the portion of
our network that would be affected by the court's order, if it is enforced. As
of the date of this report, we cannot determine whether we will be able to
secure these protections at reasonable costs, within a reasonable period of
time or at all.

   We utilize the rights-of-way of Gulf Power Company in Florida for a portion
of our network. In the fourth quarter of 2000, Gulf Power was sued by two
landowners who claim to represent a class of all landowners over whose property
Gulf Power has facilities that are used by third parties. The landowners have
alleged that Gulf Power does not have the authority to permit us or other
carriers to transmit telecommunications services over the rights-of-way. We are
not a party to this litigation, but we would be adversely affected if, as a
result of this litigation, Gulf Power were required to cease allowing us to use
the rights-of-way for a portion of our network.

   Operating Expenses. Our principal operating expenses consist of cost of
services, selling, operations and administration expenses, and depreciation and
amortization.

   Cost of Services. Cost of services related to our retail services consists
primarily of access charges and local facility charges paid to incumbent and
other carriers, as well as wholesale carrier origination, termination and
interexchange facility charges paid to other carriers.

                                       29
<PAGE>

   Cost of services related to our broadband transport services are
substantially all fixed costs attributable to:

  .  the leasing of dark fiber under long-term operating leases;

  .  the leasing of capacity outside our owned or managed network, which we
     refer to as "off-net capacity," to meet customer requirements for
     network capacity generally in areas where we plan to extend our network;
     and

  .  network costs associated with the provision of signaling system 7
     services, which allow us to monitor the status of lines and circuits on
     the network, alert us to events occurring on the network, and transmit
     routing and destination signals over the network.

   Cost of services for e/\deltacom currently consist of third-party contract
personnel, direct labor costs and manufacturers' service contracts. As
e/\deltacom continues to increase its Web hosting and server colocation
revenues, we expect that the primary cost of services for this segment will
consist of utility costs to support the data center, direct labor costs and
access charges paid to carriers for access to their networkis.

   Selling, Operations and Administration Expenses. Selling, operations and
administration expenses consist of expenses of selling and marketing, field
personnel engaged in direct network maintenance and monitoring, customer
service and corporate administration.

   Depreciation and Amortization. Depreciation and amortization include
depreciation of our telecommunications network and equipment and amortization
of goodwill and other intangible assets related to acquisitions, primarily the
acquisition of DeltaCom, Inc. in 1996, our acquisition of AvData Systems, Inc.
in 1999 and our acquisition of Bay Data Consultants, Inc. in 2000.

   As we expand into new geographic markets, add new branch offices and
facilities, and enlarge our current service offerings, we expect cost of
services, selling, operations and administration expenses and depreciation and
amortization to increase. Accordingly, we expect to continue to incur
operating losses at least through the end of 2002. Although we anticipate that
we will generate positive cash flow from operations, we expect that cash flows
will be more than offset by capital expenditures at least through the end of
2002 as we continue to implement our business plan. As we continue to use
unbundled network elements of the incumbent carriers to provide services over
our network and facilities instead of reselling services over the networks of
the incumbent carriers, we expect gross margin on local service to continue to
improve. We expect that this improvement will result from reduced access
charges and from efficiencies realized through increased reliance on the owned
portion of our network. Competitive market pressures to reduce prices for our
retail services, however, could offset these expected margin improvements.

Other Information About Our Business

   The following table shows for 2000, 1999 and 1998 the percentages of total
operating revenues generated by our categories of services:

<TABLE>
<CAPTION>
                                                                2000 1999 1998
                                                                ---- ---- ----
   <S>                                                          <C>  <C>  <C>
   Local/data/Internet......................................... 42%  26%  15%
   Long distance............................................... 24%  36%  48%
   Broadband transport......................................... 24%  30%  30%
   Customer premise equipment, other equipment and software-
    nonrecurring revenue.......................................  7%   5%   4%
   Other.......................................................  3%   3%   3%
</TABLE>

   The foregoing percentages do not reflect the effect of a one-time net
benefit of $14.3 million that we recorded in 2000 pursuant to a settlement
agreement with BellSouth related to reciprocal interconnection charges.

                                      30
<PAGE>

   The following table presents, as of the dates indicated, additional
information about our operations and business. The data presented, except
market, colocation and switch data, are rounded to the nearest whole number.

<TABLE>
<CAPTION>
                         December 31, September 30, June 30,  March 31, December 31,
                             2000         2000        2000      2000        1999
                         ------------ ------------- --------  --------- ------------
<S>                      <C>          <C>           <C>       <C>       <C>
Cumulative markets......        37            35         34         33         33
Business customers
 served-retail
 services*..............    13,700        13,460     13,330     13,000     12,375
Route miles.............     9,640         8,970      8,530      8,320      8,250
Colocations.............       176           142        125        125        125
Voice switches..........        13            13         11         10         10
ATM switches............        10            10         10         10         10
Frame relay switches....        17            17         17         17         17
Unisphere SMX-2100
 switches...............        37            23          9          8          4
Passport switches.......        36            36          0          0          0
Number of employees.....     2,445         2,250      2,075      1,750      1,640
Lines sold cumulative...   303,700       249,800    223,000    148,000    128,200
Lines installed
 cumulative.............   226,650       176,650    148,350    119,300    101,500
Lines installed/lines
 sold percentage........        75%           71%        67%        81%        79%
</TABLE>
--------
*  Reflects the combination of multiple accounts of some customers into a
   single customer account.

Results of Operations

   The following tables present, for the periods indicated, selected statements
of operations data in dollars and as a percentage of revenues for our retail
services, broadband transport services and e/\deltacom segments. The dollar
amounts are shown in thousands.


<TABLE>
<CAPTION>
                                             Retail Services
                                         Year Ended December 31,
                                  -------------------------------------------
                                    2000     %     1999     %     1998     %
                                  --------  ---  --------  ---  --------  ---
<S>                               <C>       <C>  <C>       <C>  <C>       <C>
Operating revenues............... $269,947  100% $171,991  100% $119,936  100%
Cost of services.................  138,850   51   107,950   63    75,337   63
                                  --------       --------       --------
Gross margin.....................  131,097   49    64,041   37    44,599   37
                                  --------       --------       --------
Selling, operations and
 administration..................  101,743   38    72,703   42    50,490   42
Depreciation and amortization....   45,164   17    24,871   14    11,669   10
                                  --------       --------       --------
Total operating expenses.........  146,907   55    97,574   56    62,159   52
                                  --------       --------       --------
Operating loss................... $(15,810)  (6) $(33,533) (19) $(17,560) (15)
                                  ========       ========       ========
EBITDA, as adjusted.............. $ 29,354   11  $ (8,662)  (5) $ (5,891)  (5)
                                  ========       ========       ========
</TABLE>

                                       31
<PAGE>

<TABLE>
<CAPTION>
                                         Broadband Transport Services
                                            Year Ended December 31,
                                     ----------------------------------------
                                       2000     %     1999    %    1998    %
                                     --------  ----  ------- ---  ------- ---
<S>                                  <C>       <C>   <C>     <C>  <C>     <C>
Operating revenues.................. $ 83,336   100% $72,853 100% $51,902 100%
Cost of services....................    9,387    11   10,771  15    7,642  15
                                     --------        -------      -------
Gross margin........................   73,949    89   62,082  85   44,260  85
                                     --------        -------      -------
Selling, operations and
 administration.....................   32,986    40   24,151  33   14,411  28
Depreciation and amortization.......   37,930    45   28,857  40   19,136  37
                                     --------        -------      -------
Total operating expenses............   70,916    85   53,008  73   33,547  65
                                     --------        -------      -------
Operating income.................... $  3,033     4  $ 9,074  12  $10,713  20
                                     ========        =======      =======
EBITDA, as adjusted................. $ 40,963    49  $37,931  52  $29,849  57
                                     ========        =======      =======

<CAPTION>
                                                  e/\deltacom
                                            Year Ended December 31,
                                     ----------------------------------------
                                       2000     %     1999    %    1998    %
                                     --------  ----  ------- ---  ------- ---
<S>                                  <C>       <C>   <C>     <C>  <C>     <C>
Operating revenues.................. $ 10,365   100%     --           --
Cost of services....................    6,763    65      --           --
                                     --------        -------      -------
Gross margin........................    3,602    35      --           --
                                     --------        -------      -------
Selling, operations and
 administration.....................   16,321   158      --           --
Depreciation and amortization.......    3,343    32      --           --
                                     --------        -------      -------
Total operating expenses............   19,664   190      --           --
                                     --------        -------      -------
Operating loss...................... $(16,062) (155)     --           --
                                     ========        =======      =======
EBITDA, as adjusted................. $(12,719) (123)     --           --
                                     ========        =======      =======
</TABLE>

Year Ended December 31, 2000 Compared with Year Ended December 31, 1999

   Operating Revenues. Total operating revenues increased $118.8 million, or
48.5%, from $244.8 million for the year ended December 31, 1999 to $363.6
million for the year ended December 31, 2000.

   Revenues from our retail services increased $97.9 million, or 56.9%, from
$172.0 million for 1999 to $269.9 million for 2000. The increase in our retail
services revenues was primarily attributable to the following factors:

  . increased revenues generated by our local, data and Internet products,
    which, excluding the effects of one-time net benefits from prior-period
    amounts of interconnection agreement settlements with BellSouth,
    accounted for 42% of total operating revenues, compared to 26% in 1999;

  . receipt of a one-time net benefit of approximately $14.3 million for 2000
    related to the prior-period amounts of the interconnection agreement
    settlements with BellSouth and $1.8 million related to an interconnection
    agreement settlement with Sprint;

  . continued growth in access lines installed, which increased by
    approximately 125,150 lines from December 31, 1999 to December 31, 2000;

  . continued success selling multiple services to our new customers and
    additional services to our existing customer base, which we believe
    supports our bundled approach to offering our products;

  . continued stability in the rate of revenue loss from former customers
    from period to period; and

  . continued increase in the number of customers served, from 12,375 at
    December 31, 1999 to 13,700 at December 31, 2000.

                                       32
<PAGE>

   The increase in our revenues from retail services during 2000 was partially
offset by a continued decrease in the rate per minute of use we charge for the
services we price per minute of use, including reductions in the rate per
minute of use we charge some of our large customers for these services, and by
an increase in revenues from dedicated long distance services, which have a
lower minute of use rate than switch services. The effect of the rate decrease
per minute of use we charged our customers was partially offset by similar
decreases in our cost of services. Although providing our customers with
dedicated services generates lower revenue per minute of use, we expect that
this approach will provide us with a greater opportunity to sell additional
value-added, higher margin services, including data services, in the future.
We expect continued growth in 2001 in our retail services revenues as we
continue to penetrate our existing markets and as our older markets mature.

   Revenues from our broadband transport services increased $10.4 million, or
14.3%, from $72.9 million for 1999 to $83.3 million for 2000. The increase in
these revenues was primarily attributable to an increasing demand for
bandwidth, which is reflected in the growth of our customer base for this
segment, and the expansion of our network. We expect continued growth in 2001
in our broadband transport services revenues as a result of the continued
demand for bandwidth, the expansion of our network and our continued efforts
to provide customers with a bundled package of our retail services and
e/\deltacom service offerings.

   Revenues from our e/\deltacom segment for 2000 totaled $10.4 million and
were primarily related to professional services, including the sale of
maintenance contracts and services. We expect this segment to experience
revenue growth as we continue to sign customers to colocation and Web server
hosting contracts and integrate additional offerings through the e/\deltacom
data center.

   No single customer of our retail services, broadband transport services or
e/\deltacom services represented over 10% of our total operating revenues for
2000.

   Cost of Services. Total cost of services increased $36.3 million from
$118.7 million for 1999 to $155.0 million for 2000.

   Cost of services for our retail services increased $30.9 million from
$107.9 million for 1999 to $138.8 million for 2000. Cost of services as a
percentage of revenues from our retail services decreased to 51% for 2000 from
63% for 1999. The decrease in our cost of services as a percentage of revenues
for 2000 was primarily attributable to the following factors:

  . a continued increase in sales of facilities-based services as a
    percentage of our total sales;

  . a continued increase in the sales of higher gross margin services,
    particularly sales of our data services;

  . the continued migration of resale services to the portion of our network
    and facilities we own and operate; and

  . continued reductions in access costs, primarily access costs we incur for
    the services we price per minute of use.

   Cost of services for our broadband transport services decreased $1.4
million from $10.8 million for 1999 to $9.4 million for 2000. Cost of services
as a percentage of revenues from our broadband transport services decreased to
11% for 2000 from 15% for 1999. These decreases were primarily attributable to
the continued migration of traffic to the portion of our network and
facilities we own and operate, which reduced off-network costs, and to a
reduction in rates charged for off-network usage.

   Cost of services attributable to our e/\deltacom segment was $6.8 million,
or 65% of revenues, for 2000.

   Selling, Operations and Administration Expenses. Total selling, operations
and administration expenses increased $54.2 million from $96.9 million, or 40%
of revenue, for 1999 to $151.1 million, or 42% of revenue, for 2000.

   Selling, operations and administration expenses attributable to our retail
services increased $29.0 million from $72.7 million, or 42% of revenue, for
1999 to $101.7 million, or 38% of revenue, for 2000. This increase

                                      33
<PAGE>

was primarily attributable to costs associated with an increase in the number
of our employees, our continued geographic expansion and the further expansion
of our service offerings.

   Selling, operations and administration expenses attributable to our
broadband transport services increased $8.8 million from $24.2 million, or 33%
of revenue, for 1999 to $33.0 million, or 40% of revenue, for 2000. This
increase resulted primarily from costs incurred in adding personnel to support
the geographic expansion of our network, in developing the infrastructure
required to support our Internet protocol-based network backbone, and in
supporting our information systems and research and development activity.

   Selling, operations and administration expenses attributable to our
e/\deltacom segment was $16.3 million, or 158% of revenue, for 2000.

   Depreciation and Amortization. Total depreciation and amortization increased
$32.7 million from $53.8 million for 1999 to $86.5 million for 2000. Our retail
services accounted for $20.3 million of the increase, which was primarily
related to a full year of depreciation on new central office equipment and
telecommunications equipment added to our network during 1999 and to
depreciation on new central office equipment and other telecommunications
equipment added to our network during 2000. Our broadband transport services
accounted for $9.1 million of the increase, which was primarily attributable to
a full year of depreciation on fiber and telecommunications equipment installed
in 1999 and to depreciation on fiber and telecommunications equipment installed
in 2000. Our e/\deltacom segment accounted for $3.3 million of the increase in
depreciation and amortization expense for 2000. We expect depreciation and
amortization to increase in 2001 as we add electronic equipment to our network,
complete e/\deltacom's data center and realize a full year of depreciation on
switches and network facilities purchased in 2000.

   Interest Expense. Total interest expense increased $10.2 million from $45.3
million for 1999 to $55.5 million for 2000. The increase in interest expense in
2000 was primarily attributable to higher average outstanding debt balances as
a result of our issuance in May 1999 of $100 million principal amount of
convertible subordinated notes and our incurrence in April 2000 of $160 million
of borrowings under our senior secured credit facility.

   Interest Income. Total interest income from the temporary investment of
available cash balances increased $600,000 from $14.2 million for 1999 to $14.8
million for 2000.

   Other Income (Expense). In connection with the mark-to-market of an interest
rate swap, we recognized expense of approximately $426,000 for 2000 and income
of approximately $754,000 for 1999.

   Extraordinary Item. We incurred an extraordinary loss of $1.3 million during
2000 as a result of the write-off of debt-issuance costs related to the early
termination of our $50 million revolving credit facility. We did not borrow any
amounts under this credit facility.

   EBITDA, as adjusted. Total EBITDA, as adjusted, increased $28.3 million from
$29.3 million for 1999 to $57.6 million for 2000. EBITDA, as adjusted, net of
prior-period amounts for our interconnection agreement settlements with
BellSouth, was $43.3 million for 2000.

   EBITDA, as adjusted, attributable to our retail services for 2000 was $29.4
million, which represented an increase of $38.1 million from EDITDA, as
adjusted, of $(8.7) million for 1999. Net of prior-period amounts for our
interconnection agreement settlements with BellSouth, EBITDA, as adjusted,
attributable to retail services was $15.1 million for 2000. The increase in
EBITDA, as adjusted, for our retail services was primarily attributable to the
following factors:

   . continued revenue growth resulting from additional service offerings and
     geographic expansion;

   . continued growth in sales of higher gross margin services, especially our
     data services;

   . maturation of older markets;

                                       34
<PAGE>

   . the continued migration of customers from our resale services to services
     we provide over the portion of our network we own and operate;

   . increased cost efficiencies; and

   . reductions in our off-network access costs.

   EBITDA, as adjusted, attributable to our broadband transport services
increased $3.1 million to $41.0 million for 2000 from $37.9 million for 1999.
The effects of this increase, which was primarily attributable to the
increasing demand for bandwidth, were partially offset by the competitive
pricing of our broadband transport services.

   EBITDA, as adjusted, attributable to our e/\deltacom segment was $(12.7)
million for 2000.

Year Ended December 31, 1999 Compared with Year Ended December 31, 1998

   Operating Revenues. Total operating revenues increased $73.0 million, or
42.5%, from $171.8 million for 1998 to $244.8 million for 1999.


   Revenues from our retail services increased $52.1 million, or 43.5%, from
$119.9 million for 1998 to $172.0 million for 1999. The increase in our retail
services revenues was primarily attributable to the following factors:

  . continued geographic expansion, including the opening of 11 branch sales
    offices;

  . the maturation of existing sales offices;

  . a continued increase in the number of business customers, from
    approximately 10,500 as of December 31, 1998 to approximately 12,375 as
    of December 31, 1999;

  . an increase in the diversity of our services, including an increase in
    revenues from our local services, telecommunications services for
    Internet service providers and data-related services;

  . the inclusion of revenues from the operations of AvData and SciTel since
    our acquisition of AvData in July 1999 and SciTel in August 1999;

  . continued growth in local lines in service, from approximately 32,200 as
    of December 31, 1998 to approximately 101,500 as of December 31, 1999;

  . continued growth in long distance minutes of use, the effect of which was
    partially offset by a decrease in long distance rates; and

  . continued stability in the rate of revenue loss from lost customers from
    period to period.

   Revenues from our broadband transport services increased $21.0 million, or
40.5%, from $51.9 million for 1998 to $72.9 million for 1999. The increase in
revenue from our broadband transport services was primarily attributable to the
following factors:

  . an increase in our customer base resulting from the continued increasing
    demand for bandwidth, the effect of which was partially offset by pricing
    pressures on some of our network routes;

  . expansion of our fiber optic network, from approximately 7,800 route
    miles as of December 31, 1998 to approximately 8,250 route miles as of
    December 31, 1999; and

  . continued growth in commissions derived from the managed, monitored and
    marketed portion of our network.

   No single customer of our retail services or broadband transport services
represented over 10% of our total revenues for 1999.

                                       35
<PAGE>

   Cost of Services. Total cost of services increased $35.7 million from $83.0
million for 1998 to $118.7 million for 1999.

   Cost of services for our retail services increased $32.6 million from $75.3
million for 1998 to $107.9 million for 1999. Cost of services as a percentage
of revenues from our retail services remained constant at 63% from 1998 to
1999. The increase in cost of services in absolute dollars for our retail
services was primarily attributable to an increase in our network and other
usage-based provider costs associated with our product and customer growth.

   Cost of services for our broadband transport services increased $3.1 million
from $7.7 million for 1998 to $10.8 million for 1999. Cost of services as a
percentage of revenues from our broadband transport services remained constant
at 15% from 1998 to 1999. The increase in absolute dollars was primarily
attributable to an increase in our network costs resulting from the expansion
of our fiber network.

   Selling, Operations and Administration Expenses. Total selling, operations
and administration expenses increased $32.0 million from $64.9 million, or 38%
of revenue, for 1998 to $96.9 million, or 40% of revenue, for 1999.


   Selling, operations and administration expenses attributable to our retail
services increased $22.2 million from $50.5 million, or 42% of revenue, for
1998 to $72.7 million, or 42% of revenue, for 1999. The increase in selling,
operations and administration expenses in absolute dollars for our retail
services was primarily attributable to the following factors:

  . an increase in the number of employees, primarily employees dedicated to
    sales, customer support and provisioning;

  . our continued geographic expansion, which included the opening of 11
    branch sales offices; and

  . the expansion of our product lines, especially local and data services.

   Selling, operations and administration expenses attributable to our
broadband transport services increased $9.8 million from $14.4 million, or 28%
of revenue, for 1998 to $24.2 million, or 33% of revenue, for 1999. The
increase in selling, operations, and administration expenses for our broadband
transport services primarily reflected higher costs attributable to additions
of personnel resulting from the geographic expansion of our network, the
development of infrastructure required to support the Internet protocol-based
portion of our network backbone and an increase in information systems,
research and development, marketing and accounting activities.

   Depreciation and Amortization. Total depreciation and amortization increased
$22.9 million from $30.9 million for 1998 to $53.8 million for 1999. Our retail
services accounted for $13.2 million of the increase, which was primarily
related to installation of new central office equipment and other
telecommunications equipment. Our broadband transport services accounted for
$9.7 million of the increase, which was primarily attributable to network
expansion.

   Interest Expense. Total interest expense increased $13.4 million from $31.9
million for 1998 to $45.3 million for 1999. The increase in interest expense in
1999 was primarily attributable to payment of a full year's interest on our 8
7/8% Senior Notes due 2008 issued in March 1998, which we refer to as the
"March 1998 Notes," our 9 3/4% Senior Notes due 2008 issued in November 1998,
which we refer to as the "November 1998 Notes," and our 4 1/2% Convertible
Subordinated Notes due 2006 issued in May 1999, which we refer to as the "1999
Convertible Subordinated Notes."

   Interest Income. Total interest income increased $4.4 million from $9.8
million for 1998 to $14.2 million for 1999 as a result of the temporary
investment of available cash balances.

                                       36
<PAGE>

   Other Income (Expense). In connection with the mark-to-market of an interest
rate swap, we recognized income of approximately $754,000 in 1999 and expense
of approximately $3.3 million in 1998.

   EBITDA, as adjusted. Total EBITDA, as adjusted, increased $5.3 million from
$24.0 million for 1998 to $29.3 million for 1999.

   EBITDA, as adjusted, attributable to our retail services for 1999 was $(8.7)
million, a decrease of $2.8 million, compared to $(5.9) million for 1998.
EBITDA, as adjusted, attributable to our retail services remained constant at
(5)% of revenues for 1998 and 1999. The decrease in EBITDA, as adjusted, in
absolute dollars for our retail services was primarily attributable to
increases in:

  . network costs associated with increased customer usage;

  . costs associated with the expansion of new sales offices; and

  . costs of employing additional personnel to support growth.

   EBITDA, as adjusted, attributable to our broadband transport services
increased $8.0 million to $37.9 million for 1999 from $29.9 million for 1998.
The increase in EBITDA, as adjusted, for our broadband transport segment was
primarily attributable to the increased demand for bandwidth, the effect of
which was partially offset by rate adjustments for customers to current market
rates and the cost of additional support personnel.

Liquidity and Capital Resources

   We generated (used) net cash from operating activities of $45.9 million in
2000, $(5.3) million in 1999 and $9.5 million in 1998. Changes in working
capital were $27.3 million in 2000, $(6.4) million in 1999 and $6.7 million in
1998.

  . The change in 2000 was primarily attributable to an increase in accounts
    payable, accrued interest, unearned revenue and accrued compensation and
    other accrued liabilities, the effect of which was partially offset by an
    increase in accounts receivable.

  . The change in 1999 was primarily attributable to an increase in accounts
    receivable and other current assets, the effect of which was partially
    offset by an increase in accounts payable, unearned revenue and accrued
    compensation and other accrued liabilities.

  . The change in 1998 was primarily attributable to an increase in accounts
    payable, interest and other accruals and unearned revenue, the effect of
    which was partially offset by increases in accounts receivable.

   Cash used for investing activities was $305.2 million in 2000, $150.0
million in 1999 and $118.2 million in 1998. The cash used in these years was
primarily applied to fund capital expenditures.

   We made capital expenditures of $309.8 million in 2000, $165.5 million in
1999 and $147.8 million in 1998.

  . Of the $309.8 million of capital expenditures in 2000, $131.1 million
    related to our retail services segment, $121.6 million related to our
    broadband transport services segment and $57.1 million related to our
    e/\deltacom segment.

  . Of the $165.5 million of capital expenditures in 1999, $98.7 million
    related to our retail services segment and $66.8 million related to our
    broadband transport services segment.

  . Of the $147.8 million of capital expenditures in 1998, $80.4 million
    related to our retail services segment and $67.4 million related to our
    broadband transport services segment.

                                       37
<PAGE>

   Cash provided by financing activities was $152.0 million in 2000, $219.6
million in 1999 and $198.4 million in 1998.

  . Net cash provided by financing activities in 2000 consisted primarily of
    net proceeds of $157.4 million from our $160 million senior secured
    credit facility, of which $7.0 million was restricted for capital
    expenditures at December 31, 2000, and $3.1 million from the exercise of
    options to purchase common stock, reduced by $1.5 million from the net
    repayment of other long-term debt and capital lease obligations.

  . Net cash provided by financing activities in 1999 consisted primarily of
    net proceeds of $97.0 million from the sale of the 1999 Convertible
    Subordinated Notes, $120.9 million from the sale of common stock in a
    public offering and $2.7 million from the exercise of options to purchase
    common stock, reduced by $1.1 million from the net repayment of other
    long-term debt and capital lease obligations.

  . Net cash provided by financing activities in 1998 consisted primarily of
    net proceeds of $155.2 million from the sale of the March 1998 Notes,
    $121.4 million from the sale of the November 1998 Notes and $1.3 million
    from the exercise of options to purchase common stock, reduced by $70
    million paid in partial redemption of our 11% Senior Notes due 2007,
    which we refer to as the "1997 Notes," a $7.7 million premium paid in
    connection with such partial redemption and $1.6 million from the net
    repayment of other long-term debt and capital lease obligations.

   On April 5, 2000, we entered into two senior secured credit facilities,
which we refer to collectively as the "senior secured credit facility,"
totaling $160 million with Morgan Stanley Senior Funding, Inc., Bank of
America, N.A. and other lenders. The senior secured credit facility includes a
$100 million Tranche 1 Term Loan B facility to be used to finance working
capital, capital expenditures and other general corporate purposes and a $60
million Tranche 2 Term Loan B facility to be used to finance the purchase of
equipment. All amounts available under Tranche 1 and Tranche 2 were drawn by us
at the closing of the senior secured credit facility. Tranche 1 is secured by
all of our assets, except for the equipment purchased with proceeds from
Tranche 2. The senior secured credit facility is senior to the $415 million
principal amount of our outstanding senior notes and $100 million principal
amount of the outstanding 1999 Convertible Subordinated Notes. Interest per
annum, as defined in the credit agreement governing the senior secured credit
facility, is payable on the senior secured credit facility at our option at
1.875% plus the Base Rate or 2.875% plus the Eurodollar Rate. The Base Rate at
December 31, 2000 was 9.5% and the Eurodollar Rate at December 31, 2000 was
6.82%. The combined terms of repayment for the Tranche 1 and Tranche 2 advances
are $400,000 quarterly from June 2000 through September 2006, $37.4 million in
December 2006, $37.4 million in March 2007, $37.4 million in June 2007 and
$37.4 million on the termination date as defined by the credit agreement. The
termination date may be accelerated and any remaining balance on the advances
will become immediately due in the event the 1999 Convertible Subordinated
Notes are not converted or refinanced in full on terms and conditions
reasonably satisfactory to the lenders on or prior to April 15, 2006, in which
event all outstanding balances will be due on April 15, 2006, or the 1997 Notes
are not refinanced in full on terms and conditions reasonably satisfactory to
the lenders on or prior to April 15, 2007, in which event all outstanding
balances will be due on April 15, 2007.

   The senior secured credit facility is subject to customary affirmative and
negative covenants, including restrictions on our ability to incur additional
indebtedness, pay cash dividends and make distributions. We intend to continue
to use the net proceeds from the senior secured credit facility to finance
working capital and other general corporate purposes and to purchase
telecommunications equipment.

   In connection with the completion of the senior secured credit facility, we
terminated our $50 million credit facility with Bank of America, N.A, as
administrative lender, and other lenders. In connection with the termination of
the $50 million credit facility, we wrote off $1.3 million of unamortized debt
issuance costs, which is reflected in the accompanying consolidated statements
of operations as an extraordinary loss on early termination of credit facility.
No amounts were borrowed under the $50 million credit facility.

   In August 2000, we amended an agreement with a significant provider of
rights-of-way to replace future variable payments with specified future fixed
payments annually through 2020 and to modify some rights under

                                       38
<PAGE>

the agreement. The present value of the future payments has been recorded in
the accompanying consolidated balance sheets as a capital lease obligation in
the amount of approximately $10.0 million. This amount does not include a one-
time charge payable by us if there is a change in control, as defined in the
amended agreement. Upon expiration in 2020, this agreement is renewable for up
to two ten-year terms.

   In October 2000, we executed a $10 million operating lease with one of our
primary infrastructure providers.

   In December 2000, we obtained a $40 million capital lease facility with NTFC
Capital Corporation. This facility will be used to finance equipment for
expansion of our network. The initial funding of the facility, which occurred
in December 2000, was for approximately $28.5 million. Each funding under the
facility has a five-year term commencing on the funding date.

   At December 31, 2000, we had entered into agreements with vendors to
purchase approximately $67.4 million of equipment and services during 2001 and,
for the year ended December 31, 2000, had made capital expenditures of $309.8
million. We currently estimate that our aggregate capital requirements through
2001 will total approximately $190 million to $205 million, including our $67.4
million in commitments as of December 31, 2000. We expect to make substantial
capital expenditures thereafter. We expect that capital expenditures in 2001
will be primarily for the following purposes:

  . continued development and construction of our telecommunications network,
    including transmission equipment;

  . continued addition of switching capacity, electrical equipment and
    additional colocation space in connection with the expansion of our local
    telecommunications services for Internet service providers;

  . infrastructure enhancements, principally for information systems; and

  . the purchase of assets for our e/\deltacom division.

The actual amount and timing of our capital requirements may differ materially
from the foregoing estimates as a result of economic, regulatory, technological
and competitive developments, including market developments and new
opportunities, or in the event we decide to acquire other businesses or enter
into joint ventures or strategic alliances, in our industry.

   In February 2001, we announced that we had secured a commitment for $150
million in equity financing in a definitive agreement with ITC Holding Company,
Inc. The agreement provides for the issuance and sale of up to $150 million of
our newly authorized Series B cumulative convertible preferred stock in
multiple series and related common stock purchase warrants. Actual funding
under the agreement will occur in multiple closings, with the initial closing
of $30 million expected to be completed by the end of the second quarter of
2001. We will have the option, but will not be obligated, to sell up to an
additional $120 million of Series B preferred stock and related warrants during
a one-year period following the initial closing in increments not to exceed $30
million. Closings under the agreement are subject to approval by our
stockholders, waivers under or amendments to our senior credit agreements, the
1997 Notes, the March 1998 Notes and the November 1998 Notes, regulatory
approvals and other customary closing conditions. In addition, funding after
the initial closing is subject to approval by the stockholders of Powertel of
the acquisition of Powertel by Voicestream Wireless Corporation and/or Deutsche
Telecom AG, which approval was obtained in March 2001.

   The Series B preferred stock will have a stated purchase price of $1,000 per
share and will accrue an 8% annual dividend payable quarterly in shares of
Series B preferred stock or cash, at our option. The Series B preferred stock
will be redeemable at our option beginning five years after the issue date and
will be subject to mandatory redemption after ten years. The Series B preferred
stock will be convertible into common stock at any time at a conversion price
equal to an average price per share of common stock over a specified pricing

                                       39
<PAGE>

period, plus a 15% premium, but not to exceed $8.74. We will also issue
warrants at the closing of each funding having an aggregate exercise price that
is equal to 30% of the aggregate purchase price of the Series B preferred stock
issued at such closing. The warrant exercise price will equal the conversion
price of the Series B preferred stock with which such warrants are issued.

   As of December 31, 2000, we had $141.1 million of cash and cash equivalents,
excluding $7.0 million in cash restricted for capital expenditures. We estimate
that our existing sources of funds, excluding a $24 million prepayment of
reciprocal compensation we expect to receive in December 2001 pursuant to our
interconnection agreement settlement with BellSouth, are sufficient to enable
us to make both committed and uncommitted planned capital expenditures and
otherwise expand our business as currently planned through the middle of the
third quarter of 2001. We believe that these sources of funds and cash flows
expected to be generated from operations, together with net proceeds that we
would obtain if we issued and sold all $150 million of Series B preferred stock
and warrants pursuant to the equity financing announced in February 2001, will
provide sufficient funds to enable us to expand our business as currently
planned through the end of 2002. We believe that, beginning with the year
ending December 31, 2003, our cash flow from operations will be sufficient to
fund our capital expenditures and debt service requirements. Our ability to
acquire funds in such equity financing is subject to the conditions described
above. In the event that our plans or assumptions change or prove to be
inaccurate, the foregoing sources of funds may prove to be insufficient to fund
our currently planned growth and operations. In addition, if we successfully
complete any acquisitions of other businesses, we may be required to seek
additional capital sooner than currently anticipated. Additional sources may
include equity and debt financing and other financing agreements, such as
vendor financing. We cannot assure you that we will be able to generate
sufficient cash flow from operations or that additional financing arrangements
will be available or, if available, that they can be concluded on terms
acceptable to us. Any inability by us to generate or obtain sufficient funds
would result in delay or abandonment of some or all of our development and
expansion plans, which could have a material adverse effect on our operations.

   Our level of indebtedness and debt service obligations are significant as a
result of our issuance of the senior notes and the 1999 Convertible
Subordinated Notes and our borrowings of $160 million under our senior secured
credit facility and commitments of up to $40 million under our capital lease
facility. The successful implementation of our strategy, including expanding
our network, obtaining and retaining a significant number of customers and
increasing our cash flow significantly and in a sustained manner are necessary
for us to be able to meet our debt service requirements. We cannot assure you
that we will successfully implement our strategy or that we will be able to
generate sufficient cash flow from operating activities to improve our earnings
before fixed charges or to meet our debt service obligations and working
capital requirements. Our ability to meet our obligations will be dependent
upon our future performance, which will be subject to prevailing economic
conditions and to financial, business and other factors.

Effects of New Accounting Standards

   In December 1999, the SEC issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements." SAB No. 101 requires that revenues and
costs of revenues derived from services rendered at the beginning of a contract
or business relationship be deferred and recognized over the life of the
related contract or relationship. We adopted the guidelines in SAB No. 101
during 2000. Our adoption of these guidelines did not have a material effect on
our consolidated financial statements.

   Statement of Financial Accounting Standard No. 133, "Accounting for
Derivative Instruments and for Hedging Activities," establishes accounting and
reporting standards requiring that every derivative instrument, including
certain derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement and
requires that a company formally document, designate and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 133 was
originally effective for fiscal years beginning

                                       40
<PAGE>

after June 15, 1999. SFAS No. 133 may not be applied retroactively. SFAS No.
133 must be applied to derivative instruments and certain derivative
instruments embedded in hybrid contracts that were issued, acquired or
substantively modified after December 31, 1997. In June 1999, the Financial
Accounting Standards Board, or "FASB," issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities- Deferral of the Effective Date
of FASB Statement No. 133," and in June 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivatives and Certain Hedging Activities-an Amendment
to FASB No. 133." SFAS No. 137 amends SFAS No. 133 to be effective for all
fiscal years beginning after June 15, 2000 or January 1, 2001 for companies
with calendar-year fiscal years. We adopted SFAS Nos. 133, 137 and 138 for the
fiscal year beginning January 1, 2001, with no material effect on our
consolidated financial statements.

Inflation

   Inflation did not have a significant impact on our consolidated operations
in any of the three years ended December 31, 2000.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

   We are exposed to minimal market risks. We manage the sensitivity of our
results of operations to these risks by maintaining an investment portfolio
consisting primarily of short-term, interest-bearing securities and by entering
into long-term debt obligations with appropriate pricing and terms. We do not
hold or issue derivative, derivative commodity or other financial instruments
for trading purposes. We do not have any material foreign currency exposure.

   Our major market risk exposure is to changing interest rates we incur on
borrowings we use to fund the expansion of our business, including $159.2
million of borrowings outstanding under our senior secured credit facility as
of December 31, 2000. Interest is payable on our senior secured credit facility
at our option at either 1.875% plus the Base Rate, which was 9.5% at December
31, 2000, or 2.875% plus the Eurodollar Rate, which was 6.82% at December 31,
2000. The interest rates that we are able to obtain on our debt financing
depend on then-current market conditions. We are also exposed to fair value
risk related to our fixed-rate, long-term debt. As of December 31, 2000, our
fixed-rate, long-term debt and capital lease obligations totaled $554.7
million.

   Our policy is to manage interest rates through a combination of fixed-rate
and variable rate debt and through the use of interest rate swap contracts to
manage our exposure to fluctuations in interest rates on our variable-rate
debt. At December 31, 2000, $159.2 million of our long-term debt consisted of
variable-rate instruments that accrue interest at floating rates. A change of
one percentage point in the interest rate applicable to our $159.2 million of
variable-rate debt at December 31, 2000 would result in a fluctuation of
approximately $1.6 million in our annual interest expense.

Item 8. Financial Statements and Supplementary Data.

   The consolidated financial statements of ITC/\DeltaCom listed in Item 14 are
filed as part of this report and appear on pages F-2 through F-26.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

   None.
                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

   For information about our executive officers, see "Business--Executive
Officers." Other information responsive to this Item is incorporated herein by
reference to ITC/\DeltaCom's definitive proxy statement for the 2001 annual
meeting of stockholders.

                                       41
<PAGE>

Item 11. Executive Compensation.

   Information responsive to this Item is incorporated herein by reference to
ITC/\DeltaCom's definitive proxy statement for the 2001 annual meeting of
stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

   Information responsive to this Item is incorporated herein by reference to
ITC/\DeltaCom's definitive proxy statement for the 2001 annual meeting of
stockholders.

Item 13. Certain Relationships and Related Transactions.

   Information responsive to this Item is incorporated herein by reference to
ITC/\DeltaCom's definitive proxy statement for the 2001 annual meeting of
stockholders.

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

   (a)(1) The following consolidated financial statements of the Company appear
on pages F-2 through F-26 of this report and are incorporated by reference in
Part II, Item 8:

     Report of Independent Public Accountants.

     Consolidated Balance Sheets--December 31, 2000 and 1999.

     Consolidated Statements of Operations for the Years Ended December 31,
  2000, 1999 and 1998.

     Consolidated Statements of Stockholders' Equity for the Years Ended
     December 31, 2000, 1999 and 1998.

     Consolidated Statements of Cash Flows for the Years Ended December 31,
  2000, 1999 and 1998.

     Notes to Consolidated Financial Statements.

   (a)(2) The following financial statement schedule is filed as part of this
report and is attached hereto as pages S-1 and S-2:

     Report of Independent Public Accountants as to Schedule.

     Schedule II--Valuation and Qualification Accounts.

   All other schedules for which provision is made in the applicable accounting
regulations of the SEC either have been included in the consolidated financial
statements of ITC/\DeltaCom or the notes thereto, are not required under the
related instructions or are inapplicable, and therefore have been omitted.

(a)(3) The following exhibits are either filed with this Form 10-K or are
incorporated herein by reference. Our Securities Exchange Act file number is 0-
23253.

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
   3.1   Restated Certificate of Incorporation of ITC/\DeltaCom, Inc. Filed as
         Exhibit 3.1 to Quarterly Report on Form 10-Q for the quarter ended
         June 30, 2000 and incorporated herein by reference.

   3.2   Amended and Restated Bylaws of ITC/\DeltaCom, Inc. Filed herewith.

   4.1   Form of Common Stock Certificate of ITC/\DeltaCom, Inc. Filed as
         Exhibit 4.1 to Registration Statement on Form S-1, as amended (File
         No. 333-36683) ("Form S-1"), and incorporated herein by reference.

  10.1   Capacity Agreement dated as of February 1, 1997 between Interstate
         FiberNet, Inc. and EntergyTechnology Company. Filed as Exhibit 10.1 to
         Registration Statement on Form S-4, as amended (File No. 333-31361)
         (the "1997 Form S-4"), and incorporated herein by reference.

  10.2   License Agreement dated February 1, 1997 between Interstate FiberNet,
         Inc. and Metropolitan Atlanta Rapid Transit Authority. Filed as
         Exhibit 10.2 to 1997 Form S-4 and incorporated herein by reference.
</TABLE>

                                       42
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.3.1  Master Capacity Lease dated July 22, 1996 between Interstate FiberNet,
         Inc. and InterCel PCS Services, Inc. Filed as Exhibit 10.8 to 1997
         Form S-4 and incorporated herein by reference.

 10.3.2  First Amendment to Master Capacity Lease dated as of August 22, 1996
         between Interstate FiberNet, Inc. and InterCel PCS Services, Inc.
         Filed as Exhibit 10.9 to 1997 Form S-4 and incorporated herein by
         reference.
 10.4    Assignment and Assumption Agreement dated as of March 27, 1997 between
         Gulf States FiberNet and Gulf States Transmission Systems, Inc. Filed
         as Exhibit 10.13 to 1997 Form S-4 and incorporated herein by
         reference.
 10.5    Term Agreement dated as of August 11, 1994 between Gulf States
         FiberNet and Illinois Central Railroad Company. Filed as Exhibit 10.14
         to 1997 Form S-4 and incorporated herein by reference.

 10.6.1  Revised and Restated Fiber Optic Facilities and Services Agreement
         dated as of June 9, 1995 among Southern Development and Investment
         Group, Inc., on behalf of itself and as agent for Alabama Power
         Company, Georgia Power Company, Gulf Power Company, Mississippi Power
         Company, Savannah Electric and Power Company, Southern Electric
         Generating Company and Southern Company Services, Inc. and MPX
         Systems, Inc., which was assigned in part by MPX Systems, Inc. to Gulf
         States FiberNet pursuant to an Assignment dated as of July 25, 1995.
         Filed as Exhibit 10.15 to 1997 Form S-4 and incorporated herein by
         reference.

 10.6.2  Release, Waiver, and Assumption Agreement, dated as of December 31,
         1997, between Southern Development Investment Group, Inc., on behalf
         of itself and as agent for Alabama Power Company, Georgia Power
         Company, Gulf Power Company, Mississippi Power Company, Savannah
         Electric and Power Company, Southern Electric Generating Company and
         Southern Company Services, Inc. and Interstate FiberNet, Inc. and Gulf
         States Transmission Systems, Inc. Filed as Exhibit 10.15.1 to 1997
         Form 10-K and incorporated herein by reference.

 10.6.3  Amendment to the Revised and Restated Fiber Optic Facilities and
         Services Agreement, dated as of January 1, 1998, by and among Southern
         Company Energy Solutions, Inc. (f/k/a Southern Development Group,
         Inc.), on behalf of itself and as agent for Alabama Power Company,
         Georgia Power Company, Gulf Power Company, Mississippi Power Company,
         Savannah Electric and Power Company, Southern Electric Generating
         Company and Southern Company Services, Inc. and Interstate FiberNet,
         Inc. Filed as Exhibit 10.15.2 to Quarterly Report on Form 10-Q for the
         quarter ended September 30, 1998 (the "September 1998 Form 10-Q") and
         incorporated herein by reference.

 10.6.4  First Amendment to Revised and Restated Fiber Optic Facilities and
         Services Agreement dated as of July 24, 1995 between Southern
         Development and Investment Group, Inc. on behalf of itself and as
         agent for others and MPX Systems, Inc. Filed as Exhibit 10.16 to 1997
         Form S-4 and incorporated herein by reference.

 10.6.5  Partial Assignment and Assumption of Revised and Restated Fiber Optic
         Facilities and Services Agreement dated July 25, 1995 between MPX
         Systems, Inc. and Gulf States FiberNet. Filed as Exhibit 10.17 to 1997
         Form S-4 and incorporated herein by reference.

 +10.6.6 Amendment to Revised and Restated Fiber Optic Facilities and Services
         Agreement, dated July 15, 1997, by and among Southern Development and
         Investment Group, Inc., on behalf of itself and its agent for Alabama
         Power Company, Georgia Power Company, Gulf Power Company, Mississippi
         Power Company, Savannah Electric and Power Company, Southern Electric
         Generating Company and Southern Company Services, Inc. (collectively
         "SES"), ITC Transmission Systems, Inc. (as managing partner of
         Interstate Fibernet) and Gulf States Transmission Systems, Inc. Filed
         as Exhibit 10.17.1 to 1997 Form S-4 and incorporated herein by
         reference.
</TABLE>


                                       43
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.6.7  Consent for Assignment of Interest dated February 20, 1997 among SCANA
         Communications, Inc., Gulf States FiberNet, Gulf States Transmission
         Systems, Inc. and Southern Development and Investment Groups, Inc.
         Filed as Exhibit 10.18 to 1997 Form S-4 and incorporated herein by
         reference.

 10.6.8  Second Partial Assignment and Assumption of Revised and Restated Fiber
         Optic Facilities and Services Agreement dated March 27, 1997 between
         SCANA Communications, Inc. and ITC Holding Company, Inc. Filed as
         Exhibit 10.19 to 1997 Form S-4 and incorporated herein by reference.

 +10.6.9 Amendment, effective as of August 1, 2000, between Southern Telecom,
         Inc., on behalf of itself and as agent for the other parties specified
         therein, and Interstate FiberNet, Inc. to the Revised and Restated
         Fiber Optics Facilities and Services Agreement made as of June 9,
         1995. Filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the
         quarter ended September 30, 2000 and incorporated herein by reference.

 10.7.1  Fiber System Lease Agreement dated January 30, 1996 between CSW
         Communications, Inc. and Gulf States FiberNet. Filed as Exhibit 10.20
         to 1997 Form S-4 and incorporated herein by reference.

 10.7.2  Consent for Acquisition and Assignment dated January 13, 1997 between
         CSW Communications, Inc. and Gulf States FiberNet. Filed as Exhibit
         10.21 to 1997 Form S-4 and incorporated herein by reference.

 10.8.1  Agreement for the Provision of Fiber Optic Services and Facilities
         dated April 21, 1986 between SouthernNet, Inc. and MPX Systems, Inc.
         Filed as Exhibit 10.22 to 1997 Form S-4 and incorporated herein by
         reference.

 10.8.2  First Amendment to Agreement for the Provision of Fiber Optic Services
         and Facilities dated May 8, 1992 between MPX Systems, Inc. and MCI
         Telecommunications Corporation. Filed as Exhibit 10.23 to 1997 Form S-
         4 and incorporated herein by reference.

 10.8.3  Second Amendment to Agreement for the Provision of Fiber Optic
         Services and Facilities dated January 30, 1996 between MPX Systems,
         Inc. and MCI Telecommunications Corporation. Filed as Exhibit 10.24 to
         1997 Form S-4 and incorporated herein by reference.

 10.9    Network Operating Agreement dated March 25, 1996 among Gulf States
         FiberNet, TriNet, Inc., Hart Communications, Inc. and SCANA
         Communications, Inc. (f/k/a MPX Systems, Inc.). Filed as Exhibit 10.25
         to 1997 Form S-4 and incorporated herein by reference.

 10.10.1 Agreement for the Provision of Fiber Optic Facilities and Services
         dated March 29, 1990 between Alabama Power Company and Southern
         Interexchange Facilities, Inc. Filed as Exhibit 10.26 to 1997 Form S-4
         and incorporated herein by reference.

 10.10.2 Amendment to the Agreement for Provision of Fiber Optic Facilities and
         Services dated March 29, 1990 between Alabama Power Company and
         Southern Interexchange Facilities, Inc. Filed as Exhibit 10.27 to 1997
         Form S-4 and incorporated herein by reference.

 10.10.3 First Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated March 22, 1991 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.28 to 1997 Form S-4 and incorporated herein by reference.

 10.10.4 Second Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated December 1, 1991 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.29 to 1997 Form S-4 and incorporated herein by reference.
</TABLE>


                                       44
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.10.5 Third Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated September 23, 1992 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.30 to 1997 Form S-4 and incorporated herein by reference.

 10.10.6 Fourth Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated January 1, 1994 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.31 to 1997 Form S-4 and incorporated herein by reference.

 10.11.1 Agreement dated March 6, 1990 between Tennessee Valley Authority and
         Consolidated Communications Corporation (predecessor to DeltaCom,
         Inc.). Filed as Exhibit 10.32 to 1997 Form S-4 and incorporated herein
         by reference.

 10.11.2 Supplement Agreement; Leased Fiber Pathways, dated as of September 26,
         1997, by and between Tennessee Valley Authority and DeltaCom, Inc.
         Filed as Exhibit 10.32.1 to 1997 Form 10-K and incorporated herein by
         reference.

 10.12.1 Interconnection Agreement signed March 12, 1997 between DeltaCom, Inc.
         and BellSouth Telecommunications, Inc. Filed as Exhibit 10.33 to 1997
         Form S-4 and incorporated herein by reference.

 10.12.2 Amendment to Interconnection Agreement relating to BellSouth loops
         dated March 12, 1997 between DeltaCom, Inc. and BellSouth
         Telecommunications, Inc. Filed as Exhibit 10.34 to 1997 Form S-4 and
         incorporated herein by reference.

 10.12.3 Amendment to Interconnection Agreement relating to resale of BellSouth
         services dated March 12, 1997 between DeltaCom, Inc. and BellSouth
         Telecommunications, Inc. Filed as Exhibit to 1997 Form S-4 and
         incorporated herein by reference.

 10.12.4 Third Amendment to Interconnection Agreement, dated March 12, 1997, by
         and between DeltaCom, Inc. and BellSouth Telecommunications, Inc.
         Filed as Exhibit 10.35.1 to 1997 Form S-4 and incorporated herein by
         reference.

 10.12.5 Fourth Amendment to Interconnection Agreement, dated August 22, 1997,
         by and between DeltaCom, Inc. and BellSouth Telecommunications, Inc.
         Filed as Exhibit 10.35.2 to 1997 Form S-4 and incorporated herein by
         reference.

 10.12.6 Amendment to Interconnection Agreement, dated October 3, 1997, by and
         between DeltaCom, Inc. and BellSouth Telecommunications, Inc. Filed as
         Exhibit 10.35.3 to Form S-1 and incorporated herein by reference.

 10.12.7 Fifth Amendment to Interconnection Agreement, dated July 22, 1998, by
         and between DeltaCom, Inc., and BellSouth Telecommunications, Inc.
         Filed as Exhibit 10.35.4 to September 1998 Form 10-Q, filed with the
         Commission on November 16, 1998 and incorporated herein by reference.

 10.13   Master Equipment Lease Agreement dated October 30, 1995 between AT&T
         Systems Leasing Co. and DeltaCom, Inc. Filed as Exhibit 10.36 to 1997
         Form S-4 and incorporated herein by reference.

 10.14   Agreement for Use of Optical Fiber System, Microwave Radio Tower Site
         and Associated Facilities dated January 2, 1996 between DeltaCom, Inc.
         and SCI Systems, Inc. Filed as Exhibit 10.39 to 1997 Form S-4 and
         incorporated herein by reference.

 10.15   Collocate Agreement dated January 7, 1991 between Williams
         Telecommunications Services, Inc., and Southern Interexchange
         Facilities, Inc. (including consent for change of control). Filed as
         Exhibit 10.40 to 1997 Form S-4 and incorporated herein by reference.

 10.16   Agreement dated January 14, 1997 between DeltaCom, Inc. and SCANA
         Communications, Inc., for switch location in Columbia, South Carolina.
         Filed as Exhibit 10.41 to 1997 Form S-4 and incorporated herein by
         reference.
</TABLE>


                                       45
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
  Number  Exhibit Description
 -------  -------------------

 <C>      <S>
 10.17    Lease Agreement dated January 1, 1996 between Brindlee Mountain
          Telephone Company and DeltaCom, Inc. for, among other purposes,
          switch location in Arab, Alabama. Filed as Exhibit 10.42 to 1997 Form
          S-4 and incorporated herein by reference.

 ++10.18  Network Products Purchase Agreement No. ITC 2000NPPA between Nortel
          Networks Inc. and Interstate FiberNet, Inc. and its subsidiary
          ITC/\DeltaCom Communications, Inc., effective as of November 8, 2000.
          Filed herewith.

 +10.19   Fiber Optic Facilities Agreement, dated November 15, 1996, by and
          between Interstate FiberNet and Florida Power Corporation. Filed as
          Exhibit 10.45 to 1997 Form S-4 and incorporated herein by reference.

 +10.20.1 Fiber Optic Capacity Marketing and Operating Agreement, dated March
          21, 1996, by and between Interstate FiberNet and Florida Power &
          Light Company. Filed as Exhibit 10.46 to 1997 Form S-4 and
          incorporated herein by reference.

 +10.20.2 Addendum to Fiber Optic Capacity Marketing and Operating Agreement,
          dated July 10, 1997, by and between Interstate FiberNet and Florida
          Power & Light Company. Filed as Exhibit 10.47 to 1997 Form S-4 and
          incorporated herein by reference.

 +10.21   Master Service Agreement, dated May 6, 1996, by and between
          Interstate FiberNet and MCI Telecommunications Corporation. Filed as
          Exhibit 10.48 to 1997 Form S-4 and incorporated herein by reference.

 +10.22   Telecommunications System Maintenance Agreement, dated as of January
          26, 1995, by and between Interstate FiberNet and Sprint
          Communications Company L.P. Filed as Exhibit 10.49 to 1997 Form S-4
          and incorporated herein by reference.

 +10.23   Sprint Communications Company Facilities and Services Agreement,
          dated January 26, 1995, by and between Interstate FiberNet and Sprint
          Communications Company L.P. Filed as Exhibit 10.50 to 1997 Form S-4
          and incorporated herein by reference.

 +10.24   Fiber Optic Facility Lease Agreement, dated as of January 31, 1997,
          by and between Interstate FiberNet, Inc. and Southern Telecom 1, Inc.
          Filed as Exhibit 10.51 to 1997 Form S-4 and incorporated herein by
          reference.

 10.25    First Assignment and Assumption of Fiber Optic Facility Lease
          Agreement, dated February 1, 1997, by and between Interstate
          FiberNet, Inc. and Gulf States FiberNet. Filed as Exhibit 10.52 to
          1997 Form S-4 and incorporated herein by reference.

 +10.26.1 Telecommunications System Agreement, dated January 26, 1995, by and
          between Interstate FiberNet, Inc. and Sprint Communications Company
          L.P. Filed as Exhibit 10.53 to 1997 Form S-4 and incorporated herein
          by reference.

 10.26.2  Amendment to Telecommunications System Agreement, dated July 25,
          1995, by and between Gulf States FiberNet and Sprint Communications
          Company L.P. Filed as Exhibit 10.54 to 1997 Form S-4 and incorporated
          herein by reference.

 +10.26.3 Amendment No. 2 to Telecommunications System Agreement, dated August
          8, 1996, by and between Gulf States FiberNet and Sprint
          Communications Company L.P. Filed as Exhibit 10.55 to 1997 Form S-4
          and incorporated herein by reference.

 +10.26.4 Assignment of the Telecommunications System Agreement, dated July 25,
          1995, between Interstate FiberNet, Inc., Gulf States FiberNet and
          Sprint Communications Company L.P. Filed as Exhibit 10.56 to 1997
          Form S-4 and incorporated herein by reference.
</TABLE>


                                       46
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
  Number  Exhibit Description
 -------  -------------------
 <C>      <S>
 +10.26.5 Assignment of the Telecommunications System Agreement, dated February
          27, 1997, between Sprint Communications Company L.P., Gulf States
          FiberNet and Gulf States Transmission Systems, Inc. Filed as Exhibit
          10.57 to 1997 Form S-4 and incorporated herein by reference.

 10.27    Fixed Fee Agreement for Exchange of Use and Maintenance of Six (6)
          Fiber Optic Fibers with an Option of Two (2) Additional Fiber Optic
          Fibers, dated July 25, 1997, by and between Interstate FiberNet,
          Inc., Gulf States Transmission Systems, Inc. and ALLTEL Telephone
          Services Corporation. Filed as Exhibit 10.58 to 1997 Form S-4 and
          incorporated herein by reference.

 +10.28   Switched Reseller Services Agreement, dated January 25, 1994, by and
          between DeltaCom, Inc. and Allnet Communication Services, Inc. Filed
          as Exhibit 10.69 to 1997 Form S-4 and incorporated herein by
          reference.

 +10.29.1 WilTel, Inc. Carrier Digital Services Agreement, dated September 1,
          1995, by and between WorldCom Network Services, Inc. D/b/a WilTel,
          Associated Communications Companies of America (ACCA) and the
          individual members of ACCA referenced therein. Filed as Exhibit 10.70
          to 1997 Form S-4 and incorporated herein by reference.

 +10.29.2 Amendment to WilTel, Inc. Carrier Digital Services Agreement, dated
          April 1, 1996, by and between WorldCom Network Services, Inc. d/b/a/
          WilTel, Associated Communications Companies of America (ACCA) and the
          individual members of ACCA referenced therein. Filed as Exhibit 10.71
          to 1997 Form S-4 and incorporated herein by reference.

 +10.29.3 Amendment No. 2 to WilTel, Inc. Carrier Digital Services Agreement,
          dated June 1, 1996, by and between WorldCom Network Services, Inc.
          d/b/a/ WilTel, Associated Communications Companies of America (ACCA)
          and the individual members of ACCA referenced therein. Filed as
          Exhibit 10.72 to 1997 Form S-4 and incorporated herein by reference.

 +10.29.4 Amendment No. 3 to WilTel, Inc. Carrier Digital Services Agreement,
          dated May 1, 1997, by and between WorldCom Network Services, Inc.
          d/b/a/ WilTel, Associated Communications Companies of America (ACCA)
          and the individual members of ACCA referenced therein. Filed as
          Exhibit 10.73 to 1997 Form S-4 and incorporated herein by reference.

 +10.30   Marketing and Operating Agreement, dated as of October 6, 1994, by
          and between Interstate FiberNet, Inc. and DukeNet Communications,
          Inc. Filed as Exhibit 10.74 to 1997 Form S-4 and incorporated herein
          by reference.

 +10.31   Reseller Agreement, dated June 25, 1997, by and between DeltaCom,
          Inc. and Total Network Services, a division of Cable & Wireless, Inc.
          Filed as Exhibit 10.75 to 1997 Form S-4 and incorporated herein by
          reference.

 10.32    Sublease Agreement, dated as of January 1, 1995, by and between ITC
          Holding Company, Inc. and ITC Transmission Systems, Inc. Filed as
          Exhibit 10.76 to 1997 Form S-4 and incorporated herein by reference.

 10.33.1  Credit Agreement (the "Credit Agreement"), dated as of April 5, 2000,
          among ITC/\DeltaCom, Inc., Interstate FiberNet, Inc., the subsidiary
          guarantors listed on the signature pages thereto, the banks,
          financial institutions and other institutional lenders listed on the
          signature pages thereto as the Initial Lenders, Morgan Stanley Senior
          Funding, Inc. ("Morgan Stanley"), as administrative agent for the
          Lender Parties (as defined therein), Morgan Stanley & Co.
          Incorporated, as collateral agent, Bank of America Securities LLC and
          Morgan Stanley, as joint lead arrangers and joint book runners, and
          Bank of America, N.A., as syndication agent. Filed as Exhibit 10.1 to
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
          and incorporated herein by reference.
</TABLE>


                                       47
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
  Number  Exhibit Description
 -------  -------------------
 <C>      <S>
 10.33.2  Security Agreement, dated April 5, 2000, made by Interstate FiberNet,
          Inc., ITC/\DeltaCom, Inc., and the other Persons listed on the
          signature pages thereof and the Additional Grantors (as defined in
          Section 23(b) thereof) to Morgan Stanley & Co. Incorporated, as
          collateral agent for the Secured Parties (as defined in the Credit
          Agreement). Filed as Exhibit 10.2 to Quarterly Report on Form 10-Q
          for the quarter ended March 31, 2000 and incorporated herein by
          reference.

 10.34.1  Indenture, dated as of June 3, 1997, between ITC/\DeltaCom, Inc. and
          United States Trust Company of New York, as Trustee, relating to the
          11% Senior Notes due 2007 of ITC/\DeltaCom, Inc. Filed as Exhibit 4.1
          to 1997 Form S-4 and incorporated herein by reference.

 10.34.2  Supplemental Indenture, dated as of October 17, 1997, between
          ITC/\DeltaCom, Inc. and United States Trust Company of New York, as
          Trustee. Filed as Exhibit 82.2 to Form S-1 and incorporated herein by
          reference.

 10.34.3  Pledge and Security Agreement dated as of June 3, 1997 from
          ITC/\DeltaCom, Inc. as Pledgor to United States Trust Company of New
          York as Trustee. Filed as Exhibit 4.3 to 1997 Form S-4 and
          incorporated herein by reference.

 10.34.4  Form of Exchange Note (contained in Indenture filed as Exhibit
          10.34.1).

 10.35    Assignment and Contribution Agreement Pursuant to Pledge and Security
          Agreement dated as of July 25, 1997, by and among ITC/\DeltaCom, Inc.,
          Interstate FiberNet, Inc. and United States Trust Company of New
          York, as Trustee filed herewith. Filed as Exhibit 4.5 to 1997 Form S-
          4 and incorporated herein by reference.

 +10.36.1 MCI Carrier Agreement, effective September 1, 1997, by and between
          MCI Telecommunications Corporation and Associated Communications
          Companies of America (ACCA). Filed as Exhibit 10.87 to Form S-1 and
          incorporated herein by reference.

 +10.36.2 First Amendment to the MCI Carrier Agreement, dated as of November
          21, 1997, by and between MCI Telecommunications Corporation and
          Associated Communication Companies of America (ACCA). Filed as
          Exhibit 10.87.1 to 1997 Form 10-K and incorporated herein by
          reference.

 10.37.1  Amended and Restated ITC/\DeltaCom, Inc. 1997 Stock Option Plan. Filed
          as Exhibit 4.1 to Registration Statement on Form S-8 (File No. 333-
          49034) and incorporated herein by reference.

 10.37.2  Form of Stock Option Agreement under the Amended and Restated
          ITC/\DeltaCom, Inc. 1997 Stock Option Plan. Filed herewith.

 10.38.1  ITC/\DeltaCom, Inc. Director Stock Option Plan. Filed as Exhibit 10.89
          to Form S-1 and incorporated herein by reference.

 10.38.2  Form of Non-Qualified Stock Option Agreement under the ITC/\DeltaCom,
          Inc. Director Stock Option Plan. Filed herewith.

 10.39.1  ITC Holding Company, Inc. Amended and Restated Stock Option Plan.
          Filed as Exhibit 10.90 to Form S-1 and incorporated herein by
          reference.

 10.39.2  Amendment No. 1 to ITC Holding Company, Inc. Amended and Restated
          Stock Option Plan. Filed as Exhibit 10.2 to Quarterly Report on Form
          10-Q for the quarter ended June 30, 2000 and incorporated herein by
          reference.

 10.40.1  ITC Holding Company, Inc. Nonemployee Director Stock Option Plan.
          Filed as Exhibit 10.91 to Form S-1 and incorporated herein by
          reference.
</TABLE>


                                       48
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.40.2 Amendment No. 1 to ITC Holding Company, Inc. Nonemployee Director
         Stock Option Plan. Filed as Exhibit 10.3 to Quarterly Report on Form
         10-Q for the quarter ended June 30, 2000 and incorporated herein by
         reference.

 10.41   Description of ITC/\DeltaCom, Inc. Bonus Plan. Filed as Exhibit 10.92
         to Form S-1 and incorporated herein by reference.

 10.42   Form of Indemnity Agreement between ITC/\DeltaCom, Inc. and certain of
         its Directors and Officers. Filed as Exhibit 10.93 to Form S-1 and
         incorporated herein by reference.

 10.43.1 Sale and Purchase Agreement, dated as of March 11, 1997, by and
         between SCANA Corporation and ITC Holding Company, Inc. Filed as
         Exhibit 10.94 to Form S-1 and incorporated herein by reference.

 10.43.2 First Amendment to Sale and Purchase Agreement. Among SCANA
         Corporation, SCANA Communications, Inc., and ITC Holding Company,
         Inc., dated as of October 16, 1997, among SCANA Corporation, SCANA
         Communications, Inc., ITC Holding Company, Inc. and ITC/\DeltaCom, Inc.
         Filed as Exhibit 10.95 to Form S-1 and incorporated herein by
         reference.

 10.44.1 Indenture dated March 3, 1998 between ITC/\DeltaCom, Inc. and United
         States Trust Company of New York, as Trustee, relating to the 8 7/8%
         Senior Notes due 2008 of ITC/\DeltaCom, Inc. Filed as Exhibit 4.2 to
         1997 Form 10-K and incorporated herein by reference.

 10.44.2 Form of Global 8 7/8% Note due 2008 (contained in Indenture filed as
         Exhibit 10.44.1).

 10.45.1 Indenture dated as of November 5, 1998 between ITC/\DeltaCom, Inc. and
         United States Trust Company of New York, as Trustee, relating to the 9
         3/4% Senior Notes due 2008 of ITC/\DeltaCom, Inc. Filed as Exhibit 4.2
         to Registration Statement on Form S-4, as amended (File No. 333-71735)
         (the "February 1999 Form S-4"), and incorporated herein by reference.

 10.45.2 Form of Global 9 3/4% Note due 2008 (contained in Indenture filed as
         Exhibit 10.45.1).

 10.46.1 Registration Rights Agreement, dated as of May 12, 1999, by and among
         ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated, Credit
         Suisse First Boston Corporation, First Union Capital Markets Corp. and
         NationsBanc Montgomery Securities LLC. Filed as Exhibit 4.1 to the May
         1999 Form 10-Q and incorporated herein by reference.

 10.46.2 Indenture dated as of May 12, 1999, between ITC/\DeltaCom, Inc.
         ITC/\DeltaCom, Inc. and U.S. Trust, Company of Texas, N.A., a national
         banking corporation, as trustee. Filed as Exhibit 4.1 to the May 1999
         Form 10-Q and incorporated herein by reference.

 10.46.3 Form of Global Note relating to the 4 1/2% Convertible Subordinated
         Notes due 2006 (contained in Indenture filed as Exhibit 10.46.2).

 10.46.4 Form of Registered 4 1/2% Convertible Subordinated Note due 2006.
         Filed as Exhibit 4.5 to Registration Statement on Form S-3, as amended
         (File No. 333-84661), and incorporated herein by reference.

 10.47.1 Master Lease Agreement, dated as of December 29, 2000, between NTFC
         Capital Corporation, as Lessor, and ITC/\DeltaCom Communications, Inc.
         and Interstate FiberNet, Inc., as Lessees (the "Master Lease
         Agreement"). Filed herewith.

 10.47.2 Form of Equipment Schedule to the Master Lease Agreement. Filed
         herewith.

 10.47.3 Guaranty, dated as of December 29, 2000, between Interstate FiberNet,
         Inc. and NTFC Capital Corporation. Filed herewith.

 10.48   Interconnection Agreement, dated February 9, 2001, by and between
         BellSouth Telecommunications, Inc. and ITC/\DeltaCom Communications,
         Inc. d/b/a/ ITC/\DeltaCom. Filed herewith.
</TABLE>


                                       49
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.49.1 Interconnection Agreement, dated as of June 5, 2000, by and between
         BellSouth Telecommunications, Inc. and ITC/\DeltaCom Communications,
         Inc. d/b/a/ ITC/\DeltaCom. Filed herewith.

 10.49.2 First Amendment to the Interconnection Agreement by and between
         BellSouth Telecommunications, Inc. and ITC/\DeltaCom Communications,
         Inc., dated as of August 21, 2000, between ITC/\DeltaCom
         Communications, Inc. and BellSouth Telecommunications, Inc. Filed
         herewith.

 10.49.3 Amendment to the Interconnection Agreement by and between BellSouth
         Telecommunications, Inc. and ITC/\DeltaCom Communications, Inc., dated
         as of February 14, 2001, by and between ITC/\DeltaCom Communications,
         Inc. and BellSouth Telecommunications, Inc. Filed herewith.

 10.50   Agreement, effective as of July 1, 1999, by and between ITC/\DeltaCom
         Communications, Inc. and BellSouth Telecommunications, Inc. Filed
         herewith.

 10.51.1 Investment Agreement, dated as of February 27, 2001, between
         ITC/\DeltaCom, Inc. and ITC Holding Company, Inc. Filed as Exhibit 10-1
         to Current Report on Form 8-K (the "March 2001 Form 8-K"), filed with
         the SEC on March 23, 2001, and incorporated herein by reference.

 10.51.2 Form of Certificate of Designation of the Powers, Preferences and
         Relative, Participating, Optional and Other Special Rights of Series
         B-[ ] Cumulative Convertible Preferred Stock and Qualifications,
         Limitations and Restrictions Thereof. Filed as Exhibit 10.2 to the
         March 2001 Form 8-K and incorporated herein by reference.

 10.51.3 Form of Common Stock Purchase Warrant. Filed as Exhibit 10.3 to the
         March 2001 Form 8-K and incorporated herein by reference.

 10.51.4 Form of Registration Rights Agreement among ITC/\DeltaCom, Inc., ITC
         Holding Company, Inc. and the other Holders from time to time
         thereunder. Filed as Exhibit 10.4 to the March 2001 Form 8-K and
         incorporated herein by reference.

 12.1    Statement regarding Computation of Ratios. Filed herewith.

 21.1    Subsidiaries of ITC/\DeltaCom, Inc. Filed herewith.

 23.1    Consent of Arthur Andersen LLP. Filed herewith.
</TABLE>
--------
+  Confidential treatment has been granted for this exhibit. The copy filed as
   an exhibit omits the information subject to the confidential treatment
   request.
++ Certain confidential portions of this exhibit were omitted by means of
   redacting a portion of the text. This exhibit has been filed separately with
   the Secretary of the SEC without such text pursuant to our Application
   Requesting Confidential Treatment under Rule 24b-2 under the Securities
   Exchange Act.

(b) Reports on Form 8-K.

   ITC/\DeltaCom filed a Current Report of Form 8-K on October 3, 2000 reporting
that it had reached an interconnection agreement settlement with BellSouth.

                                       50
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                                        <C>
Report of Independent Public Accountants.................................. F-2

Consolidated Balance Sheets--December 31, 2000 and 1999................... F-3

Consolidated Statements of Operations for the Years Ended December 31,
 2000, 1999 and 1998...................................................... F-4

Consolidated Statements of Stockholders' Equity for the Years Ended
 December 31, 2000, 1999 and 1998......................................... F-5

Consolidated Statements of Cash Flows for the Years Ended December 31,
 2000, 1999 and 1998...................................................... F-6

Notes to Consolidated Financial Statements................................ F-7
</TABLE>

                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ITC/\DeltaCom, Inc.:

   We have audited the accompanying consolidated balance sheets of
ITC/\DELTACOM, INC. (a Delaware corporation) AND SUBSIDIARIES as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the financial statements (pages F-3 - F-26) referred to
above present fairly, in all material respects, the consolidated financial
position of ITC/\DeltaCom, Inc. and subsidiaries as of December 31, 2000 and
1999 and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.

/s/ Arthur Andersen LLP

Atlanta, Georgia
February 6, 2001

                                      F-2
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                              December 31,
                                                           --------------------
                                                              2000       1999
                                                           ----------  --------
<S>                                                        <C>         <C>
                         ASSETS
CURRENT ASSETS:
 Cash and cash equivalents...............................  $  141,140  $248,431
 Restricted assets.......................................       6,982     6,741
 Accounts receivable:
 Customer, net of allowance for uncollectible accounts of
  $3,003 and $1,524 in 2000 and 1999, respectively.......      71,428    47,377
 Affiliates (Note 10)....................................       6,638     4,047
 Inventory...............................................       9,249     5,074
 Prepaid expenses........................................       5,359     6,011
                                                           ----------  --------
  Total current assets...................................     240,796   317,681
                                                           ----------  --------
PROPERTY, PLANT AND EQUIPMENT, net (Note 3)..............     680,021   382,867
                                                           ----------  --------

OTHER LONG-TERM ASSETS:
 Intangible assets, net (Note 4).........................     113,338    91,762
 Other assets............................................      14,371    15,288
                                                           ----------  --------
  Total other long-term assets...........................     127,709   107,050
                                                           ----------  --------
  Total assets...........................................  $1,048,526  $807,598
                                                           ==========  ========

          LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
 Accounts payable:
 Trade...................................................  $   40,813  $ 22,343
 Construction............................................      35,808     8,516
 Accrued interest........................................      12,620     8,281
 Accrued compensation....................................       7,026     4,444
 Unearned revenue (Note 8)...............................      44,339    14,625
 Other accrued liabilities...............................      12,998    13,808
 Current portion of long-term debt and capital lease
  obligations (Note 5)...................................       2,098       751
                                                           ----------  --------
  Total current liabilities..............................     155,702    72,768
                                                           ----------  --------
LONG-TERM LIABILITIES:
 Deferred income taxes (Note 6)..........................           0       512
 Long-term debt and capital lease obligations (Note 5)...     711,771   516,156
                                                           ----------  --------
  Total long-term liabilities............................     711,771   516,668
                                                           ----------  --------

COMMITMENTS AND CONTINGENCIES (Notes 5 and 8)
STOCKHOLDERS' EQUITY:
 Preferred stock, $.01 par value; $7.40 liquidation
  preference; 5,000,000 shares authorized; 1,480,771
  shares issued and outstanding in 2000 and 1999.........          15        15
 Common stock, $.01 par value; 200,000,000 and 90,000,000
  shares authorized in 2000 and 1999, respectively;
  61,639,672 and 59,556,775 shares issued and outstanding
  in 2000 and 1999, respectively.........................         616       595
 Additional paid-in capital..............................     355,627   321,882
 Accumulated deficit.....................................    (175,205) (104,330)
                                                           ----------  --------
  Total stockholders' equity.............................     181,053   218,162
                                                           ----------  --------
  Total liabilities and stockholders' equity.............  $1,048,526  $807,598
                                                           ==========  ========
</TABLE>

   The accompanying notes are an integral part of these consolidated balance
                                    sheets.

                                      F-3
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                 Year ended December 31,
                                             ----------------------------------
                                                2000        1999        1998
                                             ----------  ----------  ----------
<S>                                          <C>         <C>         <C>
OPERATING REVENUES.........................  $  363,648  $  244,844  $  171,838
COST OF SERVICES...........................     155,000     118,721      82,979
                                             ----------  ----------  ----------
GROSS MARGIN...............................     208,648     126,123      88,859
                                             ----------  ----------  ----------
OPERATING EXPENSES:
  Selling, operations, and administration..     151,050      96,854      64,901
  Depreciation and amortization............      86,519      53,810      30,887
                                             ----------  ----------  ----------
    Total operating expenses...............     237,569     150,664      95,788
                                             ----------  ----------  ----------
OPERATING LOSS.............................     (28,921)    (24,541)     (6,929)
                                             ----------  ----------  ----------
OTHER INCOME (EXPENSE):
  Interest expense.........................     (55,482)    (45,293)    (31,930)
  Interest income..........................      14,763      14,195       9,753
  Other (expense) income, net..............        (426)        754      (3,254)
                                             ----------  ----------  ----------
    Total other expense, net...............     (41,145)    (30,344)    (25,431)
                                             ----------  ----------  ----------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY
 ITEM......................................     (70,066)    (54,885)    (32,360)
INCOME TAX (BENEFIT) EXPENSE...............        (512)         94      (6,454)
                                             ----------  ----------  ----------
LOSS BEFORE EXTRAORDINARY ITEM.............     (69,554)    (54,979)    (25,906)
EXTRAORDINARY ITEM--DEBT RESTRUCTURING
 (LESS RELATED INCOME TAX BENEFIT OF $2,133
 in 1998)..................................      (1,321)          0      (8,436)
                                             ----------  ----------  ----------
NET LOSS...................................  $  (70,875) $  (54,979) $  (34,342)
                                             ==========  ==========  ==========
BASIC AND DILUTED NET LOSS PER COMMON
 SHARE:
  Before extraordinary loss................  $    (1.14) $    (0.98) $    (0.51)
  Extraordinary loss.......................       (0.02)       0.00       (0.16)
                                             ----------  ----------  ----------
  Net loss.................................  $    (1.16) $    (0.98) $    (0.67)
                                             ==========  ==========  ==========
  Basic and diluted weighted average common
   shares outstanding......................  60,928,387  56,370,269  50,972,361
                                             ==========  ==========  ==========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-4
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (In thousands, except share data)

<TABLE>
<CAPTION>
                          Preferred Stock    Common Stock     Additional                 Total
                          ---------------- ------------------  Paid-in   Accumulated Stockholders'
                           Shares   Amount   Shares    Amount  Capital     Deficit      Equity
                          --------- ------ ----------  ------ ---------- ----------- -------------
<S>                       <C>       <C>    <C>         <C>    <C>        <C>         <C>
BALANCE, December 31,
 1997...................  1,480,771  $15   49,635,112   $496   $162,764   $ (15,009)   $148,266
 Issuance of common
  stock for IT Group
  acquisition...........          0    0      177,106      2      2,791           0       2,793
 Retirement of common
  shares................          0    0      (45,908)     0       (401)          0        (401)
 Deferred compensation..          0    0            0      0        144           0         144
 Exercise of common
  stock options.........          0    0    1,573,528     15      1,725           0       1,740
 Net loss...............          0    0            0      0          0     (34,342)    (34,342)
                          ---------  ---   ----------   ----   --------   ---------    --------
BALANCE, December 31,
 1998...................  1,480,771   15   51,339,838    513    167,023     (49,351)    118,200
 Sale of common stock,
  net of offering
  expenses of $5.9
  million...............          0    0    6,037,500     60    120,869           0     120,929
 Issuance of common
  stock for AvData
  acquisition...........          0    0      983,511     10     29,180           0      29,190
 Issuance of common
  stock for SciTel
  acquisition...........          0    0       83,117      1      1,999           0       2,000
 Retirement of common
  shares................          0    0       (3,473)     0        (55)          0         (55)
 Deferred compensation..          0    0            0      0        145           0         145
 Exercise of common
  stock options.........          0    0    1,116,282     11      2,721           0       2,732
 Net loss...............          0    0            0      0          0     (54,979)    (54,979)
                          ---------  ---   ----------   ----   --------   ---------    --------
BALANCE, December 31,
 1999...................  1,480,771   15   59,556,775    595    321,882    (104,330)    218,162
 Issuance of common
  stock under AvData
  earn-out provisions
  (Note 11).............          0    0      123,757      1      4,282           0       4,283
 Issuance of common
  stock for Bay Data
  acquisition...........          0    0      837,942      8     26,209           0      26,217
 Deferred compensation..          0    0            0      0        145           0         145
 Exercise of common
  stock options.........          0    0    1,121,198     12      3,109           0       3,121
 Net loss...............          0    0            0      0          0     (70,875)    (70,875)
                          ---------  ---   ----------   ----   --------   ---------    --------
BALANCE, December 31,
 2000...................  1,480,771  $15   61,639,672   $616   $355,627   $(175,205)   $181,053
                          =========  ===   ==========   ====   ========   =========    ========
</TABLE>


 The accompanying notes are an integral part of these consolidated statements.

                                      F-5
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                   Year ended December 31,
                                                -------------------------------
                                                  2000       1999       1998
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss...................................... $ (70,875) $ (54,979) $ (34,342)
                                                ---------  ---------  ---------
 Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities
  (excluding the effects of acquisitions):
 Depreciation and amortization.................    86,519     53,810     30,887
 Amortization of bond issuance costs...........     2,221      2,112      1,622
 Deferred income taxes.........................      (512)        94     (5,883)
 Extraordinary loss on debt restructuring......     1,321          0     10,569
 Changes in current operating assets and
  liabilities:
  Accounts receivable, net.....................   (26,127)   (12,725)   (14,075)
  Other current assets.........................    (3,321)    (3,322)    (2,164)
  Accounts payable.............................    18,270      6,968      4,215
  Accrued interest.............................     4,339        232      6,182
  Unearned revenue.............................    29,287        985      6,678
  Accrued compensation and other accrued
   liabilities.................................     4,809      1,491      5,823
                                                ---------  ---------  ---------
  Total adjustments............................   116,806     49,645     43,854
                                                ---------  ---------  ---------
   Net cash provided by (used in) operating
    activities.................................    45,931     (5,334)     9,512
                                                ---------  ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures..........................  (337,123)  (166,823)  (148,304)
 Change in accounts payable-construction.......    27,292      1,283        462
 Change in restricted assets, net..............     6,741     13,294     30,461
 Payment for acquisitions, net of cash received
  (Note 11)....................................    (2,218)     2,881          0
 Other.........................................       100       (630)      (785)
                                                ---------  ---------  ---------
  Net cash used in investing activities........  (305,208)  (149,995)  (118,166)
                                                ---------  ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from $160 million senior secured
  credit facility, net of issuance costs.......   157,434          0          0
 Cash from $160 million senior secured credit
  facility, restricted for capital
  expenditures.................................    (6,982)         0          0
 Proceeds from issuance of 4 1/2% Convertible
  Subordinated Notes, net of issuance costs....         0     96,954          0
 Proceeds from issuance of senior notes, net of
  issuance costs...............................         0          0    276,567
 Repayment of 11% Senior Notes, including
  premium paid.................................         0          0    (77,700)
 Repayment of other long-term debt and capital
  lease obligations............................    (1,535)    (1,102)    (1,597)
 Proceeds from issuance of common stock, net of
  offering expenses............................         0    120,929          0
 Proceeds from exercise of common stock
  options......................................     3,121      2,732      1,339
 Retirement of common shares...................         0        (55)         0
 Other.........................................       (52)       135       (162)
                                                ---------  ---------  ---------
  Net cash provided by financing activities....   151,986    219,593    198,447
                                                ---------  ---------  ---------
(DECREASE) INCREASE IN CASH AND CASH
 EQUIVALENTS...................................  (107,291)    64,264     89,793
CASH AND CASH EQUIVALENTS AT BEGINNING OF
 YEAR..........................................   248,431    184,167     94,374
                                                ---------  ---------  ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR....... $ 141,140  $ 248,431  $ 184,167
                                                =========  =========  =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
 Cash paid for interest (net of amount
  capitalized)................................. $  53,264  $  43,973  $  25,477
                                                =========  =========  =========
 Cash paid (refunds received) for income taxes,
  net.......................................... $    (143) $  (3,949) $  (1,604)
                                                =========  =========  =========
NONCASH TRANSACTIONS:
 Capital lease obligations issued for various
  network equipment and property rights........ $  38,496  $       0  $       0
                                                =========  =========  =========
 Acquisitions:
 Note payable and capital lease obligation
  assumed...................................... $       0  $      63  $     974
                                                =========  =========  =========
 Issuance of common stock...................... $  30,500  $  31,190  $   2,793
                                                =========  =========  =========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-6
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

 Nature of Business

   ITC/\DeltaCom, Inc. (together with its wholly-owned subsidiaries,
"ITC/\DeltaCom" or the "Company") provides integrated voice and data
telecommunications services to mid-sized and major regional businesses in the
southern United States (referred to as "retail services") and is a leading
regional provider of wholesale long-haul services to other telecommunications
companies (referred to as "broadband transport services"). Retail services
includes local exchange services, long distance services, calling card and
operator services, asynchronous transfer mode, frame relay and high capacity
broadband private line services, as well as Internet and Web page hosting
services and customer premise equipment sale, installation and repair. In
connection with these services, the Company owns, operates and manages an
extensive fiber optic network, which extends throughout ten southern states.

   In March 2000, the Company inaugurated a new line of business which it
refers to as "e/\deltacom." e/\deltacom provides colocation and Web server
hosting services integral to operating important business applications over the
Internet. In addition, e/\deltacom provides a wide range of optional
configurations and services, including cabinet, caged and suite space, metered
power, network management, firewall management, disaster recovery and circuits
that connect customer premises to the Company's network.

   The Company has experienced operating losses as a result of efforts to build
its network infrastructure, hire personnel, develop its systems and expand into
new markets. Assuming it obtains sufficient financing, the Company expects to
continue to focus on increasing its customer base and expanding its network
operations. Accordingly, the Company expects that its cost of services and its
selling, operations and administration expenses will continue to increase and
that its capital expenditures, although expected to decrease, will be
significant. These factors would have a negative impact on the Company's short-
term operating results. In addition, the Company may change its pricing
policies to respond to a changing competitive environment. Interstate FiberNet,
Inc., a wholly-owned subsidiary of the Company, has obtained a $160 million
senior secured credit facility with Morgan Stanley Senior Funding, Inc., Bank
of America, N.A. and other lenders (Note 5), and the Company has also raised
funds from sales of senior notes, subordinated convertible notes and common
stock (Notes 5 and 7). In the opinion of management, absent modification to the
Company's planned capital growth, the Company's existing sources of funds will
be sufficient to meet the capital and operating needs of the Company through
the middle of the third quarter of 2001. Accordingly, the Company may be
required to raise additional funds through public or private financings (see
Note 14) or other arrangements, or it may be required to slow its rate of
expansion. There can be no assurance that growth in the Company's revenue or
customer base will continue or that the Company will be able to achieve or
sustain profitability or positive cash flow. The Company has the ability to
slow its rate of expansion if it is not able to raise additional funds.

 Basis of Presentation

   The accompanying consolidated financial statements are prepared on the
accrual basis of accounting. All material intercompany accounts and
transactions have been eliminated in consolidation.

2. Summary of Significant Accounting Policies

 Sources of Supplies

   The Company primarily uses two vendors for transmission equipment used in
its network. However, if these vendors were unable to meet the Company's needs,
management believes that the Company could obtain

                                      F-7
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

this equipment from other vendors on comparable terms and that its operating
results would not be materially adversely affected.

 Credit Risk and Significant Customers

   The Company's accounts receivable subject the Company to credit risk, as
collateral generally is not required. The Company limits its risk of loss by
billing some customers in advance for services and by terminating access on
delinquent accounts. The large number of customers mitigates the concentration
of credit risk. In 2000, 1999 and 1998, no customer represented more than 10%
of the Company's consolidated operating revenues.

 Regulation

   The Company is subject to certain regulations and requirements of the
Federal Communications Commission and various state public service commissions.

 Reclassifications

   Reclassifications have been made to amounts previously reported to conform
to the current year presentation.

 Accounting Estimates

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

 Cash and Cash Equivalents

   The Company considers all short-term highly liquid investments with an
original maturity date of three months or less to be cash equivalents.

 Inventory

   Inventory consists primarily of customer premise equipment held for resale
and is valued at the lower of cost or market, using the first-in, first-out
method.

                                      F-8
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Property, Plant and Equipment

   Property, plant and equipment are recorded at cost. Depreciation begins when
property, plant and equipment is placed in service. The cost of maintenance,
repairs and replacement of minor items of property, plant and equipment is
charged to selling, operations and administration expense. Depreciation of
property, plant and equipment is provided using the composite or straight-line
method over the following estimated useful lives:

<TABLE>
<CAPTION>
                                                                         Years
                                                                        --------
     <S>                                                                <C>
     Buildings and towers..............................................       40
     Furniture, fixtures and office equipment..........................  3 to 10
     Vehicles..........................................................        5
     Fiber optic network............................................... 15 to 20
     Transmission equipment and electronics............................  5 to 10
</TABLE>

   Applicable interest charges incurred during the construction of new
facilities are capitalized as elements of cost and are depreciated over the
assets' estimated useful lives. Interest capitalized during the years ended
December 31, 2000, 1999 and 1998 was $4.1 million, $1.1 million and $529,000,
respectively.

 Intangible Assets

   Intangible assets include the excess of the purchase price of acquisitions
over the fair value of identifiable net assets acquired as well as various
other acquired intangibles. Intangible assets are amortized over the following
estimated useful lives:

<TABLE>
<CAPTION>
                                                                         Years
                                                                        --------
     <S>                                                                <C>
     Goodwill.......................................................... 10 to 40
     Trademark.........................................................       40
     Customer base.....................................................  5 to 12
     Noncompete agreements.............................................   2 to 3
</TABLE>

 Restricted Assets

   Restricted assets include cash designated for capital expenditures and, at
December 31, 1999 and 1998, investments in U.S. government treasury notes that
are classified as held-to-maturity and are reported at amortized cost. The cash
designated for capital expenditures represents the portion of the proceeds from
the $160 million senior secured credit facility obtained in April 2000 (Note 5)
required by the lenders to be used for capital expenditures. The investments in
U.S. government treasury notes represent the portion of the proceeds from the
Company's senior notes offering in 1997 (Note 5) that were held by a trustee as
security for and to fund the first six interest payments on these notes. The
sixth interest payment on the notes was made during 2000.

 Other Long-Term Assets

   Other long-term assets primarily consist of debt issuance costs that are
amortized using the effective interest rate method over the lives of the
related debt.

                                      F-9
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Long-Lived Assets

   The Company reviews its long-lived assets, such as property, plant and
equipment and intangible assets, for impairment at each balance sheet date and
whenever events or changes in circumstances indicate that the carrying amount
of an asset should be assessed. Management evaluates the intangible assets
related to each acquisition individually to determine whether impairment has
occurred. If an impairment occurs, the amount of the impairment recognized is
determined by estimating the fair value of the assets and recording a provision
for loss if the carrying value is greater than the fair value. Management
believes its long-lived assets in the accompanying balance sheet are
appropriately valued.

 Unearned Revenue

   Unearned revenue includes the liability for advance billings to customers
for use of the Company's fiber-optic network, recurring monthly charges for
local and data services and estimated reciprocal compensation billings to
BellSouth for 2001 (Note 8).

 Unbilled Revenue

   ITC/\DeltaCom Communications, Inc., a wholly-owned subsidiary of the Company,
records revenue for long distance services provided, but not yet billed, to
customers. Approximately $8.0 million and $7.3 million of such revenue
representing unbilled long distance services is included in accounts
receivable, customer in the accompanying consolidated balance sheets at
December 31, 2000 and 1999, respectively.

 Income Taxes

   The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred taxes are determined based on the
difference between the financial and tax bases of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse.

 Revenue Recognition

   Revenues from telecommunications and related services are recognized as
services are provided and consist primarily of charges for use of
telecommunications services and for use of the Company's fiber-optic network.
Revenues from sales of customer premise equipment, other equipment and software
are recognized upon installation. This non-recurring revenue as a percentage of
total revenue was approximately 7% in 2000, 5% in 1999 and 4% in 1998.

 Fair Value of Financial Instruments

   The carrying values of the Company's financial instruments, including cash
and cash equivalents, accounts receivable and investments held-to-maturity,
approximate their fair values as of December 31, 2000 and 1999, except for the
outstanding notes (Note 5). Based on their quoted market prices, such notes
have fair values at December 31, 2000 and 1999 as follows (in thousands):

<TABLE>
<CAPTION>
                              2000         2000         1999         1999
Instrument                 Fair Value Carrying Value Fair Value Carrying Value
----------                 ---------- -------------- ---------- --------------
<S>                        <C>        <C>            <C>        <C>
11% Senior Notes due
 2007.....................  $101,400     $130,000     $137,150     $130,000
8 7/8% Senior Notes due
 2008.....................   115,200      160,000      153,200      160,000
9 3/4% Senior Notes due
 2008.....................    93,750      125,000      125,938      125,000
4 1/2% Convertible
 Subordinated Notes due
 2006.....................    44,125      100,000      119,230      100,000
                            --------     --------     --------     --------
                            $354,475     $515,000     $535,518     $515,000
                            ========     ========     ========     ========
</TABLE>

                                      F-10
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Advertising Costs

   The Company expenses all advertising costs as incurred.

3. Property, Plant and Equipment

   Balances of major classes of property, plant and equipment and the related
accumulated depreciation as of December 31, 2000 and 1999 are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                             2000       1999
                                                           ---------  ---------
   <S>                                                     <C>        <C>
   Land................................................... $   5,375  $     889
   Buildings and towers...................................    84,525     28,673
   Furniture, fixtures and office equipment...............    49,298     27,220
   Vehicles...............................................     6,194      4,097
   Fiber optic network....................................   129,684    104,527
   Transmission equipment and electronics.................   470,909    291,064
                                                           ---------  ---------
                                                             745,985    456,470
   Less accumulated depreciation..........................  (183,443)  (103,857)
                                                           ---------  ---------
   Net property, plant and equipment in service...........   562,542    352,613
   Assets under construction..............................   117,479     30,254
                                                           ---------  ---------
   Property, plant and equipment, net..................... $ 680,021  $ 382,867
                                                           =========  =========
</TABLE>

4. Intangible Assets

   Intangible assets and the related accumulated amortization as of December
31, 2000 and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                               2000      1999
                                                             --------  --------
   <S>                                                       <C>       <C>
   Goodwill................................................. $115,188  $ 87,403
   Customer base............................................   12,839    12,839
   Noncompete agreements....................................      727       727
   Trademark................................................       40        40
   Other....................................................      432       432
                                                             --------  --------
                                                              129,226   101,441
   Less accumulated amortization............................  (15,888)   (9,679)
                                                             --------  --------
   Intangible assets, net................................... $113,338  $ 91,762
                                                             ========  ========
</TABLE>

   See Note 11 for a discussion of intangible assets recorded in 2000 related
to the acquisition of Bay Data Consultants, Inc. ("Bay Data") and for a
discussion of intangible assets recorded in 1999 related to the acquisitions of
AvData Systems, Inc. ("AvData") and Scientific Telecommunications, Inc.
("SciTel").

                                      F-11
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5. Financing Obligations

 Long-Term Debt

   Long-term debt at December 31, 2000 and 1999 consist of the following (in
thousands):

<TABLE>
<CAPTION>
                                                                2000      1999
                                                              --------  --------
   <S>                                                        <C>       <C>
   11% Senior Notes due 2007................................  $130,000  $130,000
   8 7/8% Senior Notes due 2008, net of unamortized discount
    of $115 and $131 in 2000 and 1999, respectively.........   159,885   159,869
   9 3/4% Senior Notes due 2008.............................   125,000   125,000
   4 1/2% Convertible Subordinated Notes due 2006...........   100,000   100,000
   Senior Secured Credit Facility...........................   159,200         0
                                                              --------  --------
                                                               674,085   514,869
   Less current maturities..................................    (1,600)        0
                                                              --------  --------
   Long-term debt, net of current portion...................  $672,485  $514,869
                                                              ========  ========
</TABLE>

   Maturities of long-term debt at December 31, 2000 are as follows (in
thousands):

<TABLE>
   <S>                                                                  <C>
   2001................................................................ $  1,600
   2002................................................................    1,600
   2003................................................................    1,600
   2004................................................................    1,600
   2005................................................................    1,600
   Thereafter..........................................................  666,200
                                                                        --------
                                                                        $674,200
                                                                        ========
</TABLE>

 Lease Obligations

   The Company has entered into various operating and capital leases for
facilities and equipment used in its operations. Aggregate future minimum
rental commitments under noncancelable operating leases with original or
remaining terms in excess of one year and maturities of capital lease
obligations as of December 31, 2000 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                             Operating Capital
                                                              Leases   Leases
                                                             --------- -------
<S>                                                          <C>       <C>
2001........................................................  $12,925  $ 4,158
2002........................................................   11,770    7,587
2003........................................................   10,930   11,066
2004........................................................    8,532   11,065
2005........................................................    6,797   11,065
Thereafter..................................................   20,788   15,054
                                                              -------  -------
                                                              $71,742   59,995
                                                              =======
Less amounts representing interest..........................           (20,211)
                                                                       -------
Present value of net minimum lease payments.................            39,784
Less current portion........................................              (498)
                                                                       -------
Obligations under capital leases, net of current portion....           $39,286
                                                                       =======
</TABLE>

                                      F-12
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   Rental expense charged to operations for the years ended December 31, 2000,
1999, and 1998 was $13.0 million, $10.0 million, and $7.4 million,
respectively.

   At December 31, 2000, the Company's assets under capital lease had a net
book value of $42.0 million.

 Notes Offerings

   On June 3, 1997, the Company completed the issuance of $200 million
principal amount of 11% Senior Notes due 2007 (the "1997 Notes"). Interest on
the 1997 Notes is payable semiannually on June 1 and December 1. On March 3,
1998, the Company completed the issuance of $160 million principal amount of 8
7/8% Senior Notes due 2008 at a price of 99.9% (the "March 1998 Notes") for an
effective yield of 8.88%. Interest on the March 1998 Notes is payable
semiannually on March 1 and September 1. On November 5, 1998, the Company
completed the issuance of $125 million principal amount of 9 3/4% Senior Notes
due 2008 (the "November 1998 Notes"). Interest on the November 1998 Notes is
payable semiannually on May 15 and November 15. On May 12, 1999, the Company
completed the issuance of $100 million principal amount of 4 1/2% Convertible
Subordinated Notes due 2006 (the "1999 Notes"). Interest on the 1999 Notes is
payable semiannually on May 15 and November 15.

   A portion of the proceeds from the 1997 Notes was held by a trustee as
security for, and to fund, the first six interest payments on these notes. The
sixth payment was made during 2000.

   On April 2, 1998, the Company used proceeds from its initial public
offering of common stock to redeem $70 million principal amount of its 1997
Notes at a redemption price of 111% of the principal amount thereof, plus
accrued and unpaid interest. In conjunction with this redemption, the Company
recorded a pre-tax extraordinary loss of $10.6 million (approximately $8.4
million after tax), consisting of a $7.7 million redemption premium and a $2.9
million write-off of unamortized debt issuance costs.

   The 1997 Notes, the March 1998 Notes and the November 1998 Notes
(collectively, the "Senior Notes") are general, unsubordinated and unsecured
senior obligations of the Company. The Company's subsidiaries have no
obligation to pay amounts due on the Senior Notes and do not guarantee the
Senior Notes. Therefore, the Senior Notes are effectively subordinated to all
liabilities of the Company's subsidiaries, including trade payables. Any
rights of the Company and its creditors, including holders of the Senior
Notes, to participate in the assets of any subsidiary of the Company upon any
liquidation or reorganization of any such subsidiary will be subject to the
prior claims of that subsidiary's creditors. The Senior Notes are subject to
negative covenants that, among other things, restrict the ability of the
Company and its subsidiaries to incur additional indebtedness, pay dividends
or make distributions.

   The 1999 Notes are unsecured general obligations of the Company and are
convertible into common stock any time after August 10, 1999, at a conversion
price of $26.67 per share, subject to adjustment in specified events. The
Company may redeem the 1999 Notes or make the 1999 Notes nonconvertible under
specified circumstances before May 17, 2002.

 Senior Secured Credit Facility

   On April 5, 2000, the Company entered into two senior secured credit
facilities, which are referred to collectively as the "senior secured credit
facility," totaling $160 million with Morgan Stanley Senior Funding, Inc.,
Bank of America, N.A. and other lenders. The senior secured credit facility
includes a $100 million Tranche 1 Term Loan B facility, or "Tranche 1," to be
used to finance working capital, capital expenditures and other general
corporate purposes, and a $60 million Tranche 2 Term Loan B facility, or
"Tranche 2," to be used to finance the purchase of equipment. All amounts
available under Tranche 1 and Tranche 2 were drawn

                                     F-13
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

by the Company at the closing of the senior secured credit facility. Tranche 1
is secured by all of the Company's assets, except for the equipment purchased
with proceeds from Tranche 2. The senior secured credit facility is senior to
the $415 million principal amount of the Company's outstanding Senior Notes and
$100 million principal amount of the Company's outstanding 1999 Notes. Interest
per annum, as defined in the credit agreement, is payable on the senior secured
credit facility at the option of the Company at 1.875% plus the Base Rate or
2.875% plus the Eurodollar Rate. The Base Rate at December 31, 2000 was 9.5%
and the Eurodollar Rate at December 31, 2000 was 6.82%. The combined terms of
repayment for the Tranche 1 and Tranche 2 advances are $400,000 quarterly from
June 2000 through September 2006, $37.4 million in December 2006, $37.4 million
in March 2007, $37.4 million in June 2007 and $37.4 million on the termination
date as defined by the credit agreement. The termination date may be
accelerated and any remaining balance on the advances will become immediately
due in the event (i) the Company's 1999 Notes are not converted or refinanced
in full on terms and conditions reasonably satisfactory to the lenders on or
prior to April 15, 2006, in which event all outstanding balances will be due on
April 15, 2006, or (ii) the Company's 1997 Notes are not refinanced in full on
terms and conditions reasonably satisfactory to the lenders on or prior to
April 15, 2007, in which event all outstanding balances will be due on April
15, 2007.

   The senior secured credit facility is subject to affirmative and negative
covenants customarily found in similar secured financings, including
restrictions on the Company's ability to incur additional indebtedness, pay
dividends and make distributions.

   In connection with the completion of the senior secured credit facility, the
Company terminated its $50 million credit facility with Bank of America, N.A,
as administrative lender, and certain other lenders. In connection with the
termination of the $50 million credit facility, the Company expensed $1.3
million of unamortized debt issuance costs, which is reflected in the
accompanying consolidated statements of operations as an extraordinary loss on
early termination of credit facility. No amounts were borrowed under the $50
million credit facility.

 Bridge Facility

   Prior to 1997, the Company held a 36% ownership interest in, and was the
managing partner of, Gulf States FiberNet ("Gulf States"), a Georgia general
partnership. In connection with the acquisition of the remaining 64% interest
in Gulf States in March 1997, the Company refinanced Gulf States' outstanding
indebtedness of approximately $41.6 million with a bridge facility (the "Bridge
Facility"). The Bridge Facility, which bore interest at LIBOR plus 2.25%,
matured on July 25, 1997, the date the proceeds from the Company's offering of
the 1997 Notes were released. The Company did not retire a forward-starting
interest rate swap agreement (the "Swap"), which swapped the variable interest
rate with a fixed rate of 8.25%, held by Gulf States in connection with this
refinancing. At December 31, 2000, the Swap had a notional amount of
approximately $17.8 million. At December 31, 2000, the Company would have been
required to pay approximately $772,000 to terminate the Swap. The Company made
payments totaling approximately $404,000, $851,000 and $898,000 during 2000,
1999 and 1998, respectively, in connection with the Swap, which are included in
other (expense) income in the accompanying consolidated statements of
operations. The Swap expires in December 2002.

   Upon receipt of the proceeds from the March 1998 Notes, the Company ceased
accounting for the Swap as a hedge of an anticipated transaction and began
accounting for the Swap as a trading security. The Swap is marked to market at
each balance sheet date and the related (loss) gain is included in other
(expense) income. For the years ended December 31, 2000, 1999 and 1998, the
Company recorded other (expense) income in the accompanying consolidated
statements of income of approximately $(426,000), $754,000 and $(3.3) million,
respectively, related to the Swap.

                                      F-14
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Leases

   Effective on August 1, 2000, the Company amended an agreement with a
significant provider of rights-of-way to replace future variable payments with
specified future fixed payments annually through 2020 and to modify certain
rights under the contract. The present value of the future payments has been
recorded in the accompanying consolidated balance sheets as a capital lease
obligation in the amount of approximately $10.0 million. This amount does not
include a one-time charge payable by the Company if there is a change in
control, as defined in the amended agreement. Upon expiration in 2020, this
agreement is renewable for up to two ten-year terms.

   On December 29, 2000, the Company obtained a $40 million capital lease
facility with NTFC Capital Corporation. The facility will be used to finance
equipment for expansion of the Company's network. The initial funding of this
facility, which occurred on December 29, 2000, was for approximately $28.5
million. Each funding under the facility has a five-year term.

6. Income Taxes

   Details of the income tax (benefit) expense for the years ended December 31,
2000, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                     2000      1999     1998
                                                   --------  --------  -------
   <S>                                             <C>       <C>       <C>
   Current:
     Federal...................................... $      0  $      0  $(3,277)
     State........................................        0         0      573
                                                   --------  --------  -------
       Total current..............................        0         0   (2,704)
                                                   --------  --------  -------
   Deferred:
     Federal......................................  (24,335)  (20,125)  (6,871)
     State........................................   (2,352)   (2,273)  (1,194)
   Increase in valuation allowance:                  26,175    22,492    4,315
                                                   --------  --------  -------
       Total deferred.............................     (512)       94   (3,750)
                                                   --------  --------  -------
       Total (benefit) expense.................... $   (512) $     94  $(6,454)
                                                   ========  ========  =======
</TABLE>

                                      F-15
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The tax effects of temporary differences between the carrying amounts of
assets and liabilities in the consolidated financial statements and their
respective tax bases, which give rise to deferred tax assets and liabilities,
as of December 31, 2000 and 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              2000      1999
                                                            --------  --------
   <S>                                                      <C>       <C>
   Deferred tax assets:
     Net operating loss carryforwards...................... $ 91,346  $ 50,002
     Alternative minimum tax credit carryforward...........      350       350
     Interest rate swap....................................      710       608
     Other.................................................    2,100     1,461
                                                            --------  --------
                                                              94,506    52,421
                                                            --------  --------
   Deferred tax liabilities:
     Property..............................................  (36,782)  (21,420)
     Other.................................................     (362)     (326)
                                                            --------  --------
                                                             (37,144)  (21,746)
                                                            --------  --------
   Net deferred tax assets.................................   57,362    30,675
   Valuation allowance.....................................  (57,362)  (31,187)
                                                            --------  --------
   Net deferred tax liabilities............................ $      0  $   (512)
                                                            ========  ========
</TABLE>

   At December 31, 2000, the Company had federal and state net operating loss
carryforwards of approximately $241.3 million and $285.1 million, respectively.
The carryforwards expire primarily in the years 2018 through 2020. Because the
Company is unable to conclude that it is more likely than not that it will be
able to realize the benefit of its deferred tax assets, it has provided a 100%
valuation allowance against the net amount of such assets at December 31, 2000.
The Company realized the benefit of non-qualified stock compensation expense
for tax purposes in excess of stock compensation expense for book purposes of
approximately $9.0 million, $2.7 million and $2.1 million for the years ended
December 31, 2000, 1999 and 1998, respectively. These amounts have been
credited directly against additional paid-in capital, net of a full valuation
allowance.

   Section 382 of the Internal Revenue Code of 1986, as amended, limits the
utilization of net operating loss carryforwards when there are changes in
ownership greater than 50%, as defined under the Internal Revenue Code. If such
a change occurs, the timing of the Company's utilization of its U.S. net
operating loss carryforwards could be affected.

   A reconciliation of the federal statutory income tax rate to the effective
income tax rate for the periods presented is as follows:

<TABLE>
<CAPTION>
                                                            2000   1999   1998
                                                            ----   ----   ----
   <S>                                                      <C>    <C>    <C>
   Federal statutory rate.................................. (34)%  (34)%  (34)%
   State income taxes, net of federal benefit..............  (3)    (4)    (2)
   Permanent differences...................................  (1)    (3)     3
   Increase in valuation allowance.........................  37     41     13
                                                            ---    ---    ---
   Effective income tax rate...............................  (1)%    0%   (20)%
                                                            ===    ===    ===
</TABLE>

                                      F-16
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. Equity Interests

 Preferred Stock

   The Company has 1,480,771 shares of Series A Convertible Preferred Stock
(the "Preferred Shares") outstanding. Holders of the Preferred Shares are
entitled to receive dividends, when and if declared by the Company's Board of
Directors, in the amount equal to the dividends payable on the number of shares
of common stock into which the Preferred Shares are convertible. The Preferred
Shares are convertible at the option of the holders thereof into shares of
common stock on any date after March 14, 2002. The Preferred Shares are not
subject to mandatory or optional redemption. Holders of the Preferred Shares
have no voting rights other than the right to approve an increase in the
authorized or issued amount of the Preferred Shares, the issuance of any class
of stock ranking senior to the Preferred Shares as to dividends or rights on
liquidation, or changes to the Company's certificate of incorporation adversely
affecting the Preferred Shares. The Preferred Shares rank senior to the
Company's common stock as to rights on liquidation. The Preferred Shares have a
liquidation preference of $7.40 per share, plus all declared and unpaid
dividends.

 Registration Statements

   The Company has filed shelf registration statements with the Securities and
Exchange Commission for the issuance from time to time of up to $300 million in
equity securities, including common stock, preferred stock, shares of preferred
stock represented by depositary shares, warrants exercisable for common stock,
preferred stock or depositary shares, subscription rights evidencing the right
to purchase any of these securities and stock purchase contracts to purchase
common stock or preferred stock and stock purchase units.

 Common Stock Offering

   In May 1999, the Company completed an underwritten public offering and sale
of 6,037,500 shares of its common stock to the public, yielding net proceeds to
the Company of approximately $120.9 million.

 Amendment to Certificate of Incorporation

   In May 2000, the Company amended its certificate of incorporation to
increase the number of its authorized shares of capital stock from 95,000,000
to 205,000,000 and the number of its authorized shares of common stock from
90,000,000 to 200,000,000.

 Employee Stock Option Plan

   All employees of the Company are eligible to receive stock options under the
ITC/\DeltaCom, Inc. 1997 Stock Option Plan, as amended (the "Stock Option
Plan"), which was adopted by the Company on March 24, 1997. In May 2000, the
Company's stockholders approved an increase in the number of shares of common
stock authorized for issuance under the Stock Option Plan from 7,815,000 to
9,815,000 shares (subject to antidilution adjustments in the event of a stock
split, recapitalization or similar transaction). The Stock Option Plan provides
for the grant of options that are intended to qualify as "incentive stock
options" under Section 422 of the Code to employees of the Company and its
subsidiaries, as well as the grant of non-qualifying options to any other
individual whose participation in the Stock Option Plan is determined to be in
the best interests of the Company. The exercise price per share of common stock
of incentive stock options granted under the Stock Option Plan may not be less
than 100% of the fair market value of the common stock on the date of grant of
the option (or 110% in the case of an incentive stock option granted to an
optionee beneficially owning more than 10% of the outstanding common stock).
The option exercise price for non-incentive stock options granted under the
Stock Option Plan may not be less than the par value of the common stock on the

                                      F-17
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

date of grant of the option. The maximum option term is 10 years (or five years
in the case of an incentive stock option granted to an optionee beneficially
owning more than 10% of the outstanding common stock). Options granted under
the Stock Option Plan generally become exercisable with respect to 50% of the
shares subject to the options on the second anniversary of the date of grant
and with respect to 25% of the shares subject to the options on each of the
third and fourth anniversaries of the date of grant.

   Options to purchase 96,502 shares of common stock at $2.25 per share were
granted on October 1, 1997. At December 31, 2000 and 1999, unamortized
compensation expense of $121,000 and $266,000, respectively, is recorded as an
offset to equity in the accompanying consolidated balance sheets related to
these option grants since, at the time of grant, the per share exercise price
of the options was below fair market value. Compensation expense is recognized
over the vesting period.

   On December 12, 2000, the Company offered to exchange for new options those
options outstanding under the Stock Option Plan which have an exercise price of
$18.00 or more and were held by option holders who had not received options
after September 30, 2000. The offer expired on January 12, 2001 and the Company
accepted for exchange options to purchase 2,084,983 shares of the common stock.
Subject to terms and conditions of the offer, the Company will issue new
options to purchase up to an aggregate of 2,084,983 shares of common stock in
exchange for such tendered options no earlier than six months and one day after
January 12, 2001. The per share exercise price of the new options will equal
the last reported sale price of the common stock on the Nasdaq National Market
on the grant date of the new options.

 Director Stock Option Plan

   On March 24, 1997, the Company adopted and its stockholders approved the
ITC/\DeltaCom, Inc. Director Stock Option Plan (the "Director Plan"). The
Director Plan provides for the "formula" grant of options that are not intended
to qualify as "incentive stock options" under Section 422 of the Code to
directors of the Company who are not officers or employees of the Company (each
an "Eligible Director"). The Director Plan authorizes the issuance of up to
481,500 shares of common stock pursuant to options granted under the Director
Plan (subject to antidilution adjustments in the event of a stock split,
recapitalization or similar transaction). The option exercise price for options
granted under the Director Plan will be at least 100% of the fair market value
of the shares of common stock on the date of grant of the option. Each Eligible
Director will be granted an option to purchase 32,100 shares of common stock
upon such person's initial election or appointment to serve as a director.
Options granted will become exercisable with respect to 50% of the shares
subject to the options on the second anniversary of the date of grant and with
respect to 25% of the shares subject to the options on each of the third and
fourth anniversaries of the date of grant. The options will expire ten years
and 30 days after the date of grant.

 Assumed ITC Holding Company Plans

   The Company assumed the ITC Holding Company, Inc. Amended and Restated Stock
Option Plan and the ITC Holding Company, Inc. NonEmployee Director Stock Option
Plan (the "Assumed Plans") in connection with the merger of ITC Holding
Company, Inc. ("ITC Holding") and the Company in October 1997 for purposes of
administering options under the Assumed Plans which were outstanding as of the
merger date. Options to purchase shares of ITC Holding common stock that were
outstanding under the Assumed Plans prior to the merger were converted in the
merger into options to purchase shares of the Company's common stock and the
common stock of another entity, subject in each case to adjustment of the
exercise prices and the number of shares based on the exchange ratio for the
merger. At December 31, 2000, options to purchase 3,547,703 shares of the
Company's common stock were outstanding under the Assumed Plans.

                                      F-18
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Statement of Financial Accounting Standards (SFAS) No. 123

   The Company accounts for its stock based compensation plans under Accounting
Principles Board Opinion No. 25, under which no compensation cost is recognized
for options granted with a per share exercise price equal to the fair market
value of the Company's common stock at the grant date. The Company has
computed, for pro forma disclosure purposes, the value of all options to
purchase shares of common stock granted to employees of the Company using the
Black-Scholes option pricing model and the following weighted average
assumptions:

<TABLE>
<CAPTION>
                                                  2000        1999       1998
                                               ----------- ----------- ---------
   <S>                                         <C>         <C>         <C>
   Risk-free interest rate....................       6.20%       5.79%     5.26%
   Expected dividend yield....................          0%          0%        0%
   Expected lives............................. Seven years Seven years Ten years
   Expected volatility........................     190.90%      79.17%    77.45%
</TABLE>

   The weighted average fair value of options granted under the Stock Option
Plan and the Director Plan in 2000, 1999 and 1998 was $23.16, $19.19 and $13.48
per share, respectively. The total fair value of options for common stock
granted to employees of the Company during 2000, 1999 and 1998 was computed as
approximately $81.9 million, $35.4 million and $16.2 million, respectively,
which would be amortized on a pro forma basis over the four-year vesting period
of the options. If the Company had accounted for these plans in accordance with
SFAS No. 123, Accounting for Stock Based Compensation, the Company's net loss
for the years ended December 31, 2000, 1999 and 1998 would have increased as
follows:

<TABLE>
<CAPTION>
Net loss (in thousands)                            2000       1999      1998
-----------------------                          ---------  --------  --------
<S>                                              <C>        <C>       <C>
As Reported..................................... $ (70,875) $(54,979) $(34,342)
Pro Forma....................................... $(100,871) $(69,301) $(41,159)

<CAPTION>
Basic and diluted net loss per share
------------------------------------
<S>                                              <C>        <C>       <C>
As Reported..................................... $   (1.16) $  (0.98) $  (0.67)
Pro Forma....................................... $   (1.66) $  (1.23) $  (0.81)
</TABLE>

   A summary of the status of the Stock Option Plan, the Director Plan and the
Assumed Plans as of and for the years ended December 31, 2000, 1999 and 1998 is
as follows:

<TABLE>
<CAPTION>
                                                                Weighted Average
                                                                 Exercise Price
                                                      Shares       Per Option
                                                    ----------  ----------------
<S>                                                 <C>         <C>
Outstanding at December 31, 1997................... 10,260,222        2.33
  Granted..........................................  1,282,954       16.46
  Exercised........................................ (1,573,528)       1.11
  Forfeited........................................   (427,994)       5.84
                                                    ----------
Outstanding at December 31, 1998...................  9,541,654        4.28
  Granted..........................................  2,014,750       25.42
  Exercised........................................ (1,116,282)       2.45
  Forfeited........................................   (565,109)      13.33
                                                    ----------
Outstanding at December 31, 1999...................  9,875,013        8.28
  Granted..........................................  3,884,516       23.79
  Exercised........................................ (1,121,190)       2.78
  Forfeited........................................ (1,028,021)      20.13
                                                    ----------
Outstanding at December 31, 2000................... 11,610,318       12.81
                                                    ==========
</TABLE>

                                      F-19
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The following table sets forth the exercise price range, number of shares,
weighted average exercise price, and remaining contractual lives by groups of
similar price and grant date:

<TABLE>
<CAPTION>
                      Outstanding  Weighted Average                   Exercisable
      Range of           as of        Remaining     Weighted Average     As of     Weighted Average
   Exercise Prices   Dec. 31, 2000 Contractual Life  Exercise Price  Dec. 31, 2000  Exercise Price
   ---------------   ------------- ---------------- ---------------- ------------- ----------------
   <S>               <C>           <C>              <C>              <C>           <C>
   $ 0.16 - $ 0.93       391,724         0.1             $ 0.54          391,724        $ 0.54
   $ 0.97 - $ 1.93       809,315         2.6               1.43          809,315          1.43
   $ 2.16 - $ 3.03     3,283,302         5.8               2.40        2,462,988          2.40
   $ 3.31 - $ 4.44     1,248,087         6.0               3.91          678,653          3.91
   $ 6.75 - $ 8.63       916,629         9.5               7.80           33,667          8.63
   $ 9.78 - $14.75       523,190         7.3              12.72          211,245         12.49
   $16.12 - $22.88     1,206,730         8.6              18.85          193,691         20.39
   $23.90 - $28.25       679,295         8.9              26.32           11,960         23.91
   $29.12 - $32.94     2,552,046         9.0              31.41                0          0.00
</TABLE>

   At December 31, 2000, options to purchase 4,793,243 shares of the Company's
common stock with a weighted average exercise price of $3.57 per share were
exercisable by employees of the Company. At December 31, 1999, options to
purchase 4,133,109 shares of the Company's common stock with a weighted average
exercise price of $2.25 per share were exercisable by employees of the Company.
At December 31, 1998, options to purchase 2,565,963 shares of the Company's
common stock with a weighted average exercise price of $1.69 per share were
exercisable by employees of the Company.

8. Commitments and Contingencies

 Purchase Commitments

   At December 31, 2000, the Company had entered into agreements with vendors
to purchase approximately $67.4 million of equipment during 2001 related to the
improvement and installation of switches, other network expansion efforts and
certain services.

 Legal Proceedings

   In the normal course of business, the Company is subject to various
litigation. In management's opinion and the opinion of counsel, there are no
legal proceedings pending against the Company that would have a material
adverse effect on the financial position, results of operations or liquidity of
the Company.

 Reciprocal Interconnection Charges

   In September 2000, the Company reached a settlement with BellSouth
Telecommunications, Inc. ("BellSouth") related to the Company's long-standing
dispute over BellSouth's payment of reciprocal compensation for local calls
placed by customers of BellSouth and terminated to customers of the Company,
including calls terminated to the Company's Internet service provider customers
(the "Settlement Agreement"). The Settlement Agreement provides for the
settlement of all amounts claimed by the Company to be due for past reciprocal
compensation at rates consistent with or in excess of amounts previously
recognized by the Company as operating revenue, as well as establishes rates
for all reciprocal compensation traffic on the Company's network for 2001 and
2002. The Company recognized a one-time net benefit of approximately $14.3
million for the year ended December 31, 2000 related to prior-period amounts of
reciprocal compensation.

                                      F-20
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


   The Settlement Agreement provided for a cash payment of approximately $53
million, which BellSouth made in October 2000. This payment represented payment
for reciprocal compensation amounts previously billed to BellSouth and for
estimated reciprocal compensation billings for the period from the date of the
Settlement Agreement through December 31, 2000 and for 2001. The portion of the
payment related to 2001 is subject to a true-up procedure beginning in July
2001 to determine whether the expected reciprocal compensation traffic amounts
upon which the prepayment is computed have been realized. The accompanying
consolidated balance sheets includes $24 million in unearned revenue related to
the prepayment for 2001.

   The Settlement Agreement also provides for the prepayment by BellSouth of an
additional amount to the Company in December 2001 related to expected
reciprocal compensation traffic levels in 2002. This additional amount also
will be subject to a true-up procedure based upon the actual amount of
reciprocal compensation traffic during 2002.

   The Company agreed to limit its reciprocal compensation to be received from
BellSouth to $27.5 million in 2001 and $29.5 million in 2002.

9. Employee Benefit Plans

   Employees of the Company participate in the Company's 401(k) defined
contribution plan. The Company offers matching of employee contributions at a
rate of 100% of up to the first 2% of employee contributions and 50% of up to
the next 4% of employee contributions. Total matching contributions made to the
Company's plan and charged to expense by the Company for the years ended
December 31, 2000, 1999 and 1998 were $1.8 million, $946,000 and $542,000,
respectively. No discretionary contributions were made in 2000, 1999 or 1998.

10. Related Party Transactions

   Certain affiliated entities provide the Company with various services and/or
receive services provided by the Company. These entities include Interstate
Telephone Company and Valley Telephone Company, which provide local and long-
distance telephone services; InterCall, Inc. ("InterCall"), which provides
conference calling services; InterServ Services Corporation, which provides
operator services for "800" customer service numbers and full-service marketing
research in the telecommunications industry and other industries; Powertel,
Inc., which provides cellular services; KNOLOGY Holdings, Inc., which provides
local exchange and long distance telephone services and cable television
services; and Earthlink, Inc. ("Earthlink"), which is a provider of Internet
access. In management's opinion, the Company's transactions with these
affiliated entities are generally representative of arm's-length transactions.

   For the years ended December 31, 2000, 1999 and 1998, the Company received
services from these affiliated entities in the amounts of $781,000, $877,000,
and $854,000, respectively, which are reflected in selling, operations, and
administration expenses in the accompanying consolidated statements of
operations. In addition, in 2000, 1999 and 1998, the Company received services
from these affiliated entities in the amount of $780,000, $610,000 and
$457,000, respectively, which are reflected in cost of services in the
accompanying consolidated statements of operations.

   The Company's broadband transport services segment provides operator and
directory assistance services and leased capacity on some of its fiber routes
to affiliated entities. The Company's retail services segment provides long-
distance and related services to ITC Holding's wholly-owned and majority-owned
subsidiaries and businesses in which ITC Holding is a significant stockholder.
The retail services segment also acts as an agent for InterCall and Earthlink
in contracting with major interexchange carriers to provide origination and

                                      F-21
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

termination services. Under these agreements, the retail services segment
contracts with the interexchange carrier and rebills the appropriate access
charges plus a margin to InterCall and Earthlink so that only the margin
impacts the Company's consolidated operating revenues. Total affiliated
revenues generated pursuant to these arrangements and included in the
accompanying consolidated statements of operations for the years ended December
31, 2000, 1999 and 1998 were $21.4 million, $15.7 million and $13.4 million,
respectively.

   The Company's retail services segment leases real properties from a former
stockholder and entities controlled by the former stockholder. Total rental
expense related to these leases was approximately $203,000, $176,000 and
$164,000 in 2000, 1999 and 1998, respectively. The retail services segment is
obligated to pay rentals to the former stockholder totaling approximately
$175,000 in 2001 and $169,000 annually from 2002 through April 2005 under
leases which are cancelable by either of the parties with 24 months' notice.

   In July 1999, the Company completed the acquisition, by merger, of AvData,
an affiliated entity (Note 11). Prior to the acquisition, some of the directors
and officers of the Company were stockholders of AvData.

11. Acquisitions

 Acquisition of PSP Marketing Group, Inc. d/b/a IT Group Communications

   On May 20, 1998, the Company completed its acquisition of certain assets and
liabilities of PSP Marketing Group, Inc. d/b/a IT Group Communications ("IT
Group"), a Jackson, Mississippi-based long distance carrier. The Company issued
177,106 shares of common stock valued at $2.8 million, assumed liabilities of
$1.2 million and paid $397,000 in cash to consummate the transaction.

   The purchase price of IT Group was allocated to the underlying assets
purchased and liabilities assumed based on their estimated fair values at the
date of acquisition. The following table summarizes the net assets purchased in
connection with this acquisition and the amount attributable to costs in excess
of net assets acquired (in thousands):

<TABLE>
     <S>                                                                 <C>
     Property, plant and equipment...................................... $  316
     Other assets.......................................................    325
     Working capital....................................................   (201)
     Noncurrent liabilities.............................................   (974)
     Intangible assets..................................................  3,724
                                                                         ------
     Purchase price..................................................... $3,190
                                                                         ======
</TABLE>

 Acquisition of AvData

   In July 1999, the Company completed its acquisition, by merger, of AvData, a
privately-owned data network management provider in Atlanta, Georgia. As the
merger consideration, the Company issued 983,511 shares of common stock
(including 171,898 shares which are being held in a two-year escrow account to
protect against specified contingencies) and options to purchase 39,915 shares
of common stock valued at $29.2 million in the aggregate. The Company issued an
additional 123,757 shares of common stock and options to purchase 6,163 shares
of common stock in March 2000 valued at $4.3 million in the aggregate, under
earn-out provisions based on specified performance objectives met as of
December 31, 1999.

   The purchase price of AvData was allocated to the underlying assets
purchased and liabilities assumed based on their estimated fair values at the
date of acquisition. The following table summarizes the net assets

                                      F-22
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

purchased in connection with this acquisition and the amount attributable to
costs in excess of net assets acquired (in thousands):

<TABLE>
     <S>                                                                <C>
     Property, plant and equipment..................................... $ 4,446
     Working capital...................................................    (148)
     Noncurrent liabilities............................................     (63)
     Intangible assets.................................................  29,240
                                                                        -------
     Purchase price.................................................... $33,475
                                                                        =======
</TABLE>

 Acquisition of SciTel

   In August 1999, the Company completed its acquisition of certain assets of
SciTel, a privately-owned telecommunications equipment provider headquartered
in Greenwood, Mississippi. The Company issued 83,117 shares of common stock
valued at $2.0 million and paid $300,000 in cash to consummate the transaction.
This acquisition expanded the Company's physical presence in Mississippi to
include the Hattiesburg, Tupelo and Greenwood markets.

   The purchase price of SciTel was allocated to the underlying assets
purchased and liabilities assumed based on their estimated fair values at the
date of acquisition. The following table summarizes the net assets purchased in
connection with this acquisition and the amount attributable to costs in excess
of net assets acquired (in thousands):

<TABLE>
     <S>                                                                 <C>
     Property, plant and equipment...................................... $  107
     Working capital....................................................    498
     Noncurrent liabilities.............................................      0
     Intangible assets..................................................  1,695
                                                                         ------
     Purchase price..................................................... $2,300
                                                                         ======
</TABLE>

 Acquisition of Bay Data

   In May 2000, the Company completed its acquisition, by merger, of Bay Data,
a privately-owned information systems solutions company headquartered in
Atlanta, Georgia. The Company paid cash of $2.0 million and issued 837,942
shares of common stock valued at $26.2 million to consummate the transaction.
Of such shares, 111,725 shares are being held in escrow for two years to
protect against specified contingencies.

   The purchase price of Bay Data was allocated to the underlying assets
purchased and liabilities assumed based on their estimated fair values at the
date of acquisition. The following table summarizes the net assets purchased in
connection with this acquisition and the amount attributable to costs in excess
of net assets acquired (in thousands):

<TABLE>
     <S>                                                                <C>
     Property, plant and equipment..................................... $ 1,807
     Working capital...................................................  (1,375)
     Noncurrent liabilities............................................       0
     Intangible assets.................................................  27,785
                                                                        -------
     Purchase price.................................................... $28,217
                                                                        =======
</TABLE>

                                      F-23
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


 Pro forma results

   The following pro forma information has been prepared assuming the
acquisitions of AvData and Bay Data occurred on January 1, 1999. Pro forma
results reflecting the 1999 acquisition of SciTel are not presented, as the
acquisition was not material. This information includes pro forma adjustments
related to the amortization of intangible assets resulting from the excess of
the purchase price over the fair value of the net assets acquired. The pro
forma information is presented for informational purposes only and may not be
indicative of the results of operations as they would have been if these
acquisitions had actually occurred on January 1, 1999, nor is the information
necessarily indicative of the results of operations which may occur in the
future.

<TABLE>
<CAPTION>
                                                            2000       1999
                                                          ---------  ---------
                                                            (in thousands,
                                                          except share data)
     <S>                                                  <C>        <C>
     Operating revenues.................................. $ 367,923  $ 265,997
     Net loss............................................   (72,004)   (61,058)
     Basic and diluted net loss per common share......... $   (1.18) $   (1.07)
</TABLE>

12. Segment Reporting

   As discussed in Note 1, the Company operates in three business segments:
broadband transport services, retail services and e/\deltacom. The Company also
has a corporate segment, which has no operations. The Company evaluates segment
performance based on operating revenue, gross margin, selling, operation and
administration expense and depreciation and amortization expense. The
accounting policies of the business segments are the same as those described in
the summary of significant accounting policies (Note 2). All intercompany
transactions between segments have been eliminated. Summarized financial data
by business segment for the years ended December 31, 2000, 1999 and 1998 are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                   2000
                           ----------------------------------------------------
                           Broadband
                           Transport  Retail
                           Services  Services e/\deltacom Corporate
                            Segment  Segment   Segment    Segment  Consolidated
                           --------- -------- ---------- --------- ------------
<S>                        <C>       <C>      <C>        <C>       <C>
Operating revenues.......  $ 83,336  $269,947  $ 10,365   $     0   $  363,648
Gross margin.............    73,949   131,097     3,602         0      208,648
Selling, operations and
 administration..........    32,986   101,743    16,321         0      151,050
Depreciation and
 amortization............    37,930    45,164     3,343        82       86,519
Interest expense.........                                               55,482
Other income, net........                                               14,337
                                                                    ----------
Loss before income taxes
 and extraordinary item..                                           $  (70,066)
                                                                    ==========
Identifiable assets......  $457,637  $453,381  $101,630   $35,878   $1,048,526
                           ========  ========  ========   =======   ==========
Capital expenditures,
 net.....................  $121,588  $131,120  $ 57,123   $     0   $  309,831
                           ========  ========  ========   =======   ==========
</TABLE>

                                      F-24
<PAGE>

                      ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


<TABLE>
<CAPTION>
                                                   1999
                           ----------------------------------------------------
                           Broadband
                           Transport  Retail
                           Services  Services e/\deltacom Corporate
                            Segment  Segment    Segment   Segment  Consolidated
                           --------- -------- ----------- --------- ------------
<S>                        <C>       <C>      <C>         <C>       <C>
Operating revenues.......  $ 72,853  $171,991    $ 0       $     0    $244,844
Gross margin.............    62,082    64,041      0             0     126,123
Selling, operations and
 administration..........    24,151    72,703      0             0      96,854
Depreciation and
 amortization............    28,857    24,871      0            82      53,810
Interest expense.........                                               45,293
Other income, net........                                               14,949
                                                                      --------
Loss before income
 taxes...................                                             $(54,885)
                                                                      ========
Identifiable assets......  $386,820  $334,368    $ 0       $86,410    $807,598
                           ========  ========    ===       =======    ========
Capital expenditures,
 net.....................  $ 66,806  $ 98,734    $ 0       $     0    $165,540
                           ========  ========    ===       =======    ========

<CAPTION>
                                                   1998
                           ----------------------------------------------------
                           Broadband
                           Transport  Retail
                           Services  Services e/\deltacom  Corporate
                            Segment  Segment    Segment    Segment  Consolidated
                           --------- -------- ----------- --------- ------------
<S>                        <C>       <C>      <C>         <C>       <C>
Operating revenues.......  $ 51,902  $119,936    $ 0       $     0    $171,838
Gross margin.............    44,260    44,599      0             0      88,859
Selling, operations and
 administration..........    14,411    50,490      0             0      64,901
Depreciation and
 amortization............    19,136    11,669      0            82      30,887
Interest expense.........                                               31,930
Other income, net........                                                6,499
                                                                      --------
Loss before income taxes
 and extraordinary item..                                             $(32,360)
                                                                      ========
Identifiable assets......  $192,820  $106,221    $ 0       $87,063    $386,104
                           ========  ========    ===       =======    ========
Capital expenditures,
 net.....................  $ 67,467  $ 80,375    $ 0       $     0    $147,842
                           ========  ========    ===       =======    ========
</TABLE>

                                      F-25
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13. Quarterly Financial Data (Unaudited)

   The following table has been prepared from the financial records of the
Company, without audit, and reflects all adjustments that are, in the opinion
of management, necessary for a fair presentation of the results of operations
for the interim periods presented (in thousands, except per share amounts). The
sum of the per share amounts do not equal the annual amounts because of the
changes in the weighted-average number of shares outstanding during the year.

<TABLE>
<CAPTION>
                                                3rd
2000                     1st Qtr   2nd Qtr(a)  Qtr(a)   4th Qtr(a)(b)  Total
----                     --------  ---------- --------  ------------- --------
<S>                      <C>       <C>        <C>       <C>           <C>
Revenues................ $ 75,707   $ 86,411  $102,875    $ 98,655    $363,648
Gross margin............   41,071     48,492    63,540      55,545     208,648
Net loss................  (15,847)   (18,358)  (10,731)    (25,939)    (70,875)
Basic and diluted net
 loss per share.........    (0.27)     (0.30)    (0.17)      (0.42)      (1.16)

<CAPTION>
1999                     1st Qtr    2nd Qtr   3rd Qtr      4th Qtr     Total
----                     --------  ---------- --------  ------------- --------
<S>                      <C>       <C>        <C>       <C>           <C>
Revenues................ $ 53,034   $ 57,376  $ 65,811    $ 68,623    $244,844
Gross margin............   26,273     29,117    34,269      36,464     126,123
Net loss................  (13,012)   (12,936)  (13,528)    (15,503)    (54,979)
Basic and diluted net
 loss per share.........    (0.25)     (0.23)    (0.23)      (0.26)      (0.98)
</TABLE>
--------
(a)   The Company recognized one time net benefits for interconnection
      agreement settlements of approximately $2.5 million, $11.8 million and
      $1.8 million during the 2nd, 3rd and 4th quarters of 2000, respectively.
(b)   The Company's weighted average outstanding shares for the fourth quarter
      of 2000 was 61,611,576.

14. Subsequent Event (Unaudited)

   In February 2001, the Company announced that it had secured a commitment for
$150 million in equity financing in a definitive agreement with ITC Holding
Company, Inc. The agreement provides for the issuance and sale of up to $150
million of its newly authorized Series B cumulative convertible preferred stock
in multiple series and related common stock purchase warrants. Actual funding
under the agreement will occur in multiple closings, with the initial closing
of $30 million expected to be completed by the end of the second quarter of
2001. The Company will have the option, but will not be obligated, to sell up
to an additional $120 million of Series B preferred stock and related warrants
during a one-year period following the initial closing in increments not to
exceed $30 million. Closings under the agreement are subject to approval by the
Company's stockholders, waivers under or amendments to the Company's senior
credit agreements and the Senior Notes, regulatory approvals and other
customary closing conditions. In addition, funding after the initial closing is
subject to approval by the stockholders of Powertel of the acquisition of
Powertel by Voicestream Wireless Corporation and/or Deutsche Telecom AG, which
approval was obtained in March 2001.

   The Series B preferred stock will have a stated purchase price of $1,000 per
share and will accrue an 8% annual dividend payable quarterly in shares of
Series B preferred stock or cash, at the Company's option. The Series B
preferred stock will be redeemable at the Company's option beginning five years
after the issue date and will be subject to mandatory redemption after ten
years. The Series B preferred stock will be convertible into common stock at
any time at a conversion price equal to an average price per share of common
stock over a specified pricing period, plus a 15% premium, but not to exceed
$8.74. The Company will also issue warrants at the closing of each funding
having an aggregate exercise price that is equal to 30% of the aggregate
purchase price of the Series B preferred stock issued at such closing. The
warrant exercise price will equal the conversion price of the Series B
preferred stock with which such warrants are issued.

                                      F-26
<PAGE>

            REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS AS TO SCHEDULE

   We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of ITC/\DELTACOM, INC.
and SUBSIDIARIES included in this Form 10-K and have issued our report thereon
dated February 6, 2001. Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The schedule listed
in the index is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Atlanta, Georgia
February 6, 2001

                                      S-1
<PAGE>

                     ITC/\DELTACOM, INC. AND SUBSIDIARIES

               SCHEDULE II--VALUATION AND QUALIFICATION ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000
                                 (In thousands)

<TABLE>
<CAPTION>
                                            Additions
                         Balance at -------------------------             Balance at
                         Beginning  Charged to   Charged to                 End of
Description:             of Period    Income   Other Accounts Deduction     Period
------------             ---------- ---------- -------------- ---------   ----------
<S>                      <C>        <C>        <C>            <C>         <C>
Provision for
 uncollectible accounts
  1998..................  $ 1,061    $   587       $    0      $  388(2)   $ 1,260
  1999..................    1,260        753          494(1)      983(2)     1,524
  2000..................    1,524      3,009            0       1,530(2)     3,003
Valuation allowance for
 deferred tax assets
  1998..................  $   390    $ 6,198       $2,107(3)   $    0      $ 8,695
  1999..................    8,695     19,803        2,689(3)        0       31,187
  2000..................   31,187     17,176        8,999(3)        0       57,362
</TABLE>
--------
(1) Represents a purchase reserve related to the acquisition of AvData.
(2) Represents the write-off of accounts considered to be uncollectible, less
    recoveries of amounts previously written off.
(3) Represents the increase in the valuation allowance related to stock option
    compensation deductible for income tax purposes, but not for financial
    accounting purposes, and charged to additional paid-in capital, net of a
    full valuation allowance.

                                      S-2
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) 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, as of the 2nd day
of April 2001.

                                          ITC/\DeltaCom, Inc.

                                                   /s/ Andrew M. Walker
                                          By: _________________________________
                                                     Andrew M. Walker
                                                  Chief Executive Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated and on the dates indicated.

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
   /s/ Campbell B. Lanier, III         Chairman, Director            April 2, 2001
______________________________________
       Campbell B. Lanier, III

       /s/ Andrew M. Walker            Chief Executive Officer,      April 2, 2001
______________________________________  Vice Chairman and
           Andrew M. Walker             Director (Principal
                                        Executive Officer)

      /s/ Douglas A. Shumate           Senior Vice President and     April 2, 2001
______________________________________  Chief Financial Officer
          Douglas A. Shumate            (Principal Financial
                                        Officer and Principal
                                        Accounting Officer)

     /s/ James H. Black, Jr.           Senior Vice President and     April 2, 2001
______________________________________  Director
         James H. Black, Jr.

       /s/ Donald W. Burton            Director                      April 2, 2001
______________________________________
           Donald W. Burton

       /s/ Robert A. Dolson            Director                      April 2, 2001
______________________________________
           Robert A. Dolson

       /s/ O. Gene Gabbard             Director                      April 2, 2001
______________________________________
           O. Gene Gabbard

       /s/ James V. Martin             Director                      April 2, 2001
______________________________________
           James V. Martin
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
              Signature                          Title                   Date
              ---------                          -----                   ----

<S>                                    <C>                        <C>
       /s/ William T. Parr                      Director             April 2, 2001
______________________________________
           William T. Parr

    /s/ William H. Scott, III                   Director             April 2, 2001
______________________________________
        William H. Scott, III

     /s/ William B. Timmerman                   Director             April 2, 2001
______________________________________
         William B. Timmerman

      /s/ Larry F. Williams                     Director             April 2, 2001
______________________________________
          Larry F. Williams
</TABLE>
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
  3.1    Restated Certificate of Incorporation of ITC/\DeltaCom, Inc. Filed as
         Exhibit 3.1 to Quarterly Report on Form 10-Q for the quarter ended
         June 30, 2000 and incorporated herein by reference.

  3.2    Amended and Restated Bylaws of ITC/\DeltaCom, Inc. Filed herewith.

  4.1    Form of Common Stock Certificate of ITC/\DeltaCom, Inc. Filed as
         Exhibit 4.1 to Registration Statement on Form S-1, as amended (File
         No. 333-36683) ("Form S-1"), and incorporated herein by reference.

 10.1    Capacity Agreement dated as of February 1, 1997 between Interstate
         FiberNet, Inc. and EntergyTechnology Company. Filed as Exhibit 10.1 to
         Registration Statement on Form S-4, as amended (File No. 333-31361)
         (the "1997 Form S-4"), and incorporated herein by reference.

 10.2    License Agreement dated February 1, 1997 between Interstate FiberNet,
         Inc. and Metropolitan Atlanta Rapid Transit Authority. Filed as
         Exhibit 10.2 to 1997 Form S-4 and incorporated herein by reference.

 10.3.1  Master Capacity Lease dated July 22, 1996 between Interstate FiberNet,
         Inc. and InterCel PCS Services, Inc. Filed as Exhibit 10.8 to 1997
         Form S-4 and incorporated herein by reference.

 10.3.2  First Amendment to Master Capacity Lease dated as of August 22, 1996
         between Interstate FiberNet, Inc. and InterCel PCS Services, Inc.
         Filed as Exhibit 10.9 to 1997 Form S-4 and incorporated herein by
         reference.
 10.4    Assignment and Assumption Agreement dated as of March 27, 1997 between
         Gulf States FiberNet and Gulf States Transmission Systems, Inc. Filed
         as Exhibit 10.13 to 1997 Form S-4 and incorporated herein by
         reference.
 10.5    Term Agreement dated as of August 11, 1994 between Gulf States
         FiberNet and Illinois Central Railroad Company. Filed as Exhibit 10.14
         to 1997 Form S-4 and incorporated herein by reference.

 10.6.1  Revised and Restated Fiber Optic Facilities and Services Agreement
         dated as of June 9, 1995 among Southern Development and Investment
         Group, Inc., on behalf of itself and as agent for Alabama Power
         Company, Georgia Power Company, Gulf Power Company, Mississippi Power
         Company, Savannah Electric and Power Company, Southern Electric
         Generating Company and Southern Company Services, Inc. and MPX
         Systems, Inc., which was assigned in part by MPX Systems, Inc. to Gulf
         States FiberNet pursuant to an Assignment dated as of July 25, 1995.
         Filed as Exhibit 10.15 to 1997 Form S-4 and incorporated herein by
         reference.

 10.6.2  Release, Waiver, and Assumption Agreement, dated as of December 31,
         1997, between Southern Development Investment Group, Inc., on behalf
         of itself and as agent for Alabama Power Company, Georgia Power
         Company, Gulf Power Company, Mississippi Power Company, Savannah
         Electric and Power Company, Southern Electric Generating Company and
         Southern Company Services, Inc. and Interstate FiberNet, Inc. and Gulf
         States Transmission Systems, Inc. Filed as Exhibit 10.15.1 to 1997
         Form 10-K and incorporated herein by reference.
</TABLE>



                                      E-1
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.6.3  Amendment to the Revised and Restated Fiber Optic Facilities and
         Services Agreement, dated as of January 1, 1998, by and among Southern
         Company Energy Solutions, Inc. (f/k/a Southern Development Group,
         Inc.), on behalf of itself and as agent for Alabama Power Company,
         Georgia Power Company, Gulf Power Company, Mississippi Power Company,
         Savannah Electric and Power Company, Southern Electric Generating
         Company and Southern Company Services, Inc. and Interstate FiberNet,
         Inc. Filed as Exhibit 10.15.2 to Quarterly Report on Form 10-Q for the
         quarter ended September 30, 1998 (the "September 1998 Form 10-Q") and
         incorporated herein by reference.

 10.6.4  First Amendment to Revised and Restated Fiber Optic Facilities and
         Services Agreement dated as of July 24, 1995 between Southern
         Development and Investment Group, Inc. on behalf of itself and as
         agent for others and MPX Systems, Inc. Filed as Exhibit 10.16 to 1997
         Form S-4 and incorporated herein by reference.

 10.6.5  Partial Assignment and Assumption of Revised and Restated Fiber Optic
         Facilities and Services Agreement dated July 25, 1995 between MPX
         Systems, Inc. and Gulf States FiberNet. Filed as Exhibit 10.17 to 1997
         Form S-4 and incorporated herein by reference.

 +10.6.6 Amendment to Revised and Restated Fiber Optic Facilities and Services
         Agreement, dated July 15, 1997, by and among Southern Development and
         Investment Group, Inc., on behalf of itself and its agent for Alabama
         Power Company, Georgia Power Company, Gulf Power Company, Mississippi
         Power Company, Savannah Electric and Power Company, Southern Electric
         Generating Company and Southern Company Services, Inc. (collectively
         "SES"), ITC Transmission Systems, Inc. (as managing partner of
         Interstate Fibernet) and Gulf States Transmission Systems, Inc. Filed
         as Exhibit 10.17.1 to 1997 Form S-4 and incorporated herein by
         reference.

 10.6.7  Consent for Assignment of Interest dated February 20, 1997 among SCANA
         Communications, Inc., Gulf States FiberNet, Gulf States Transmission
         Systems, Inc. and Southern Development and Investment Groups, Inc.
         Filed as Exhibit 10.18 to 1997 Form S-4 and incorporated herein by
         reference.
 10.6.8  Second Partial Assignment and Assumption of Revised and Restated Fiber
         Optic Facilities and Services Agreement dated March 27, 1997 between
         SCANA Communications, Inc. and ITC Holding Company, Inc. Filed as
         Exhibit 10.19 to 1997 Form S-4 and incorporated herein by reference.

 +10.6.9 Amendment, effective as of August 1, 2000, between Southern Telecom,
         Inc., on behalf of itself and as agent for the other parties specified
         therein, and Interstate FiberNet, Inc. to the Revised and Restated
         Fiber Optics Facilities and Services Agreement made as of June 9,
         1995. Filed as Exhibit 10.1 to Quarterly Report on Form 10-Q for the
         quarter ended September 30, 2000 and incorporated herein by reference.

 10.7.1  Fiber System Lease Agreement dated January 30, 1996 between CSW
         Communications, Inc. and Gulf States FiberNet. Filed as Exhibit 10.20
         to 1997 Form S-4 and incorporated herein by reference.

 10.7.2  Consent for Acquisition and Assignment dated January 13, 1997 between
         CSW Communications, Inc. and Gulf States FiberNet. Filed as Exhibit
         10.21 to 1997 Form S-4 and incorporated herein by reference.

 10.8.1  Agreement for the Provision of Fiber Optic Services and Facilities
         dated April 21, 1986 between SouthernNet, Inc. and MPX Systems, Inc.
         Filed as Exhibit 10.22 to 1997 Form S-4 and incorporated herein by
         reference.
</TABLE>



                                      E-2
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.8.2  First Amendment to Agreement for the Provision of Fiber Optic Services
         and Facilities dated May 8, 1992 between MPX Systems, Inc. and MCI
         Telecommunications Corporation. Filed as Exhibit 10.23 to 1997 Form S-
         4 and incorporated herein by reference.

 10.8.3  Second Amendment to Agreement for the Provision of Fiber Optic
         Services and Facilities dated January 30, 1996 between MPX Systems,
         Inc. and MCI Telecommunications Corporation. Filed as Exhibit 10.24 to
         1997 Form S-4 and incorporated herein by reference.

 10.9    Network Operating Agreement dated March 25, 1996 among Gulf States
         FiberNet, TriNet, Inc., Hart Communications, Inc. and SCANA
         Communications, Inc. (f/k/a MPX Systems, Inc.). Filed as Exhibit 10.25
         to 1997 Form S-4 and incorporated herein by reference.

 10.10.1 Agreement for the Provision of Fiber Optic Facilities and Services
         dated March 29, 1990 between Alabama Power Company and Southern
         Interexchange Facilities, Inc. Filed as Exhibit 10.26 to 1997 Form S-4
         and incorporated herein by reference.

 10.10.2 Amendment to the Agreement for Provision of Fiber Optic Facilities and
         Services dated March 29, 1990 between Alabama Power Company and
         Southern Interexchange Facilities, Inc. Filed as Exhibit 10.27 to 1997
         Form S-4 and incorporated herein by reference.

 10.10.3 First Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated March 22, 1991 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.28 to 1997 Form S-4 and incorporated herein by reference.

 10.10.4 Second Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated December 1, 1991 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.29 to 1997 Form S-4 and incorporated herein by reference.

 10.10.5 Third Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated September 23, 1992 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.30 to 1997 Form S-4 and incorporated herein by reference.

 10.10.6 Fourth Amendment to the Agreement for the Provision of Fiber Optic
         Facilities and Services dated January 1, 1994 between Alabama Power
         Company and Southern Interexchange Facilities, Inc. Filed as Exhibit
         10.31 to 1997 Form S-4 and incorporated herein by reference.

 10.11.1 Agreement dated March 6, 1990 between Tennessee Valley Authority and
         Consolidated Communications Corporation (predecessor to DeltaCom,
         Inc.). Filed as Exhibit 10.32 to 1997 Form S-4 and incorporated herein
         by reference.

 10.11.2 Supplement Agreement; Leased Fiber Pathways, dated as of September 26,
         1997, by and between Tennessee Valley Authority and DeltaCom, Inc.
         Filed as Exhibit 10.32.1 to 1997 Form 10-K and incorporated herein by
         reference.

 10.12.1 Interconnection Agreement signed March 12, 1997 between DeltaCom, Inc.
         and BellSouth Telecommunications, Inc. Filed as Exhibit 10.33 to 1997
         Form S-4 and incorporated herein by reference.

 10.12.2 Amendment to Interconnection Agreement relating to BellSouth loops
         dated March 12, 1997 between DeltaCom, Inc. and BellSouth
         Telecommunications, Inc. Filed as Exhibit 10.34 to 1997 Form S-4 and
         incorporated herein by reference.

 10.12.3 Amendment to Interconnection Agreement relating to resale of BellSouth
         services dated March 12, 1997 between DeltaCom, Inc. and BellSouth
         Telecommunications, Inc. Filed as Exhibit to 1997 Form S-4 and
         incorporated herein by reference.

 10.12.4 Third Amendment to Interconnection Agreement, dated March 12, 1997, by
         and between DeltaCom, Inc. and BellSouth Telecommunications, Inc.
         Filed as Exhibit 10.35.1 to 1997 Form S-4 and incorporated herein by
         reference.
</TABLE>

                                      E-3
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
  Number  Exhibit Description
 -------  -------------------
 <C>      <S>
 10.12.5  Fourth Amendment to Interconnection Agreement, dated August 22, 1997,
          by and between DeltaCom, Inc. and BellSouth Telecommunications, Inc.
          Filed as Exhibit 10.35.2 to 1997 Form S-4 and incorporated herein by
          reference.

 10.12.6  Amendment to Interconnection Agreement, dated October 3, 1997, by and
          between DeltaCom, Inc. and BellSouth Telecommunications, Inc. Filed
          as Exhibit 10.35.3 to Form S-1 and incorporated herein by reference.

 10.12.7  Fifth Amendment to Interconnection Agreement, dated July 22, 1998, by
          and between DeltaCom, Inc., and BellSouth Telecommunications, Inc.
          Filed as Exhibit 10.35.4 to September 1998 Form 10-Q, filed with the
          Commission on November 16, 1998 and incorporated herein by reference.

 10.13    Master Equipment Lease Agreement dated October 30, 1995 between AT&T
          Systems Leasing Co. and DeltaCom, Inc. Filed as Exhibit 10.36 to 1997
          Form S-4 and incorporated herein by reference.

 10.14    Agreement for Use of Optical Fiber System, Microwave Radio Tower Site
          and Associated Facilities dated January 2, 1996 between DeltaCom,
          Inc. and SCI Systems, Inc. Filed as Exhibit 10.39 to 1997 Form S-4
          and incorporated herein by reference.

 10.15    Collocate Agreement dated January 7, 1991 between Williams
          Telecommunications Services, Inc., and Southern Interexchange
          Facilities, Inc. (including consent for change of control). Filed as
          Exhibit 10.40 to 1997 Form S-4 and incorporated herein by reference.

 10.16    Agreement dated January 14, 1997 between DeltaCom, Inc. and SCANA
          Communications, Inc., for switch location in Columbia, South
          Carolina. Filed as Exhibit 10.41 to 1997 Form S-4 and incorporated
          herein by reference.

 10.17    Lease Agreement dated January 1, 1996 between Brindlee Mountain
          Telephone Company and DeltaCom, Inc. for, among other purposes,
          switch location in Arab, Alabama. Filed as Exhibit 10.42 to 1997 Form
          S-4 and incorporated herein by reference.

 ++10.18  Network Products Purchase Agreement No. ITC 2000NPPA between Nortel
          Networks Inc. and Interstate FiberNet, Inc. and its subsidiary
          ITC/\DeltaCom Communications, Inc., effective as of November 8, 2000.
          Filed herewith.

 +10.19   Fiber Optic Facilities Agreement, dated November 15, 1996, by and
          between Interstate FiberNet and Florida Power Corporation. Filed as
          Exhibit 10.45 to 1997 Form S-4 and incorporated herein by reference.

 +10.20.1 Fiber Optic Capacity Marketing and Operating Agreement, dated March
          21, 1996, by and between Interstate FiberNet and Florida Power &
          Light Company. Filed as Exhibit 10.46 to 1997 Form S-4 and
          incorporated herein by reference.

 +10.20.2 Addendum to Fiber Optic Capacity Marketing and Operating Agreement,
          dated July 10, 1997, by and between Interstate FiberNet and Florida
          Power & Light Company. Filed as Exhibit 10.47 to 1997 Form S-4 and
          incorporated herein by reference.

 +10.21   Master Service Agreement, dated May 6, 1996, by and between
          Interstate FiberNet and MCI Telecommunications Corporation. Filed as
          Exhibit 10.48 to 1997 Form S-4 and incorporated herein by reference.

 +10.22   Telecommunications System Maintenance Agreement, dated as of January
          26, 1995, by and between Interstate FiberNet and Sprint
          Communications Company L.P. Filed as Exhibit 10.49 to 1997 Form S-4
          and incorporated herein by reference.

 +10.23   Sprint Communications Company Facilities and Services Agreement,
          dated January 26, 1995, by and between Interstate FiberNet and Sprint
          Communications Company L.P. Filed as Exhibit 10.50 to 1997 Form S-4
          and incorporated herein by reference.
</TABLE>

                                      E-4
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
  Number  Exhibit Description
 -------  -------------------
 <C>      <S>
 +10.24   Fiber Optic Facility Lease Agreement, dated as of January 31, 1997,
          by and between Interstate FiberNet, Inc. and Southern Telecom 1, Inc.
          Filed as Exhibit 10.51 to 1997 Form S-4 and incorporated herein by
          reference.

 10.25    First Assignment and Assumption of Fiber Optic Facility Lease
          Agreement, dated February 1, 1997, by and between Interstate
          FiberNet, Inc. and Gulf States FiberNet. Filed as Exhibit 10.52 to
          1997 Form S-4 and incorporated herein by reference.

 +10.26.1 Telecommunications System Agreement, dated January 26, 1995, by and
          between Interstate FiberNet, Inc. and Sprint Communications Company
          L.P. Filed as Exhibit 10.53 to 1997 Form S-4 and incorporated herein
          by reference.

 10.26.2  Amendment to Telecommunications System Agreement, dated July 25,
          1995, by and between Gulf States FiberNet and Sprint Communications
          Company L.P. Filed as Exhibit 10.54 to 1997 Form S-4 and incorporated
          herein by reference.

 +10.26.3 Amendment No. 2 to Telecommunications System Agreement, dated August
          8, 1996, by and between Gulf States FiberNet and Sprint
          Communications Company L.P. Filed as Exhibit 10.55 to 1997 Form S-4
          and incorporated herein by reference.

 +10.26.4 Assignment of the Telecommunications System Agreement, dated July 25,
          1995, between Interstate FiberNet, Inc., Gulf States FiberNet and
          Sprint Communications Company L.P. Filed as Exhibit 10.56 to 1997
          Form S-4 and incorporated herein by reference.

 +10.26.5 Assignment of the Telecommunications System Agreement, dated February
          27, 1997, between Sprint Communications Company L.P., Gulf States
          FiberNet and Gulf States Transmission Systems, Inc. Filed as Exhibit
          10.57 to 1997 Form S-4 and incorporated herein by reference.

 10.27    Fixed Fee Agreement for Exchange of Use and Maintenance of Six (6)
          Fiber Optic Fibers with an Option of Two (2) Additional Fiber Optic
          Fibers, dated July 25, 1997, by and between Interstate FiberNet,
          Inc., Gulf States Transmission Systems, Inc. and ALLTEL Telephone
          Services Corporation. Filed as Exhibit 10.58 to 1997 Form S-4 and
          incorporated herein by reference.

 +10.28   Switched Reseller Services Agreement, dated January 25, 1994, by and
          between DeltaCom, Inc. and Allnet Communication Services, Inc. Filed
          as Exhibit 10.69 to 1997 Form S-4 and incorporated herein by
          reference.

 +10.29.1 WilTel, Inc. Carrier Digital Services Agreement, dated September 1,
          1995, by and between WorldCom Network Services, Inc. D/b/a WilTel,
          Associated Communications Companies of America (ACCA) and the
          individual members of ACCA referenced therein. Filed as Exhibit 10.70
          to 1997 Form S-4 and incorporated herein by reference.

 +10.29.2 Amendment to WilTel, Inc. Carrier Digital Services Agreement, dated
          April 1, 1996, by and between WorldCom Network Services, Inc. d/b/a/
          WilTel, Associated Communications Companies of America (ACCA) and the
          individual members of ACCA referenced therein. Filed as Exhibit 10.71
          to 1997 Form S-4 and incorporated herein by reference.

 +10.29.3 Amendment No. 2 to WilTel, Inc. Carrier Digital Services Agreement,
          dated June 1, 1996, by and between WorldCom Network Services, Inc.
          d/b/a/ WilTel, Associated Communications Companies of America (ACCA)
          and the individual members of ACCA referenced therein. Filed as
          Exhibit 10.72 to 1997 Form S-4 and incorporated herein by reference.

 +10.29.4 Amendment No. 3 to WilTel, Inc. Carrier Digital Services Agreement,
          dated May 1, 1997, by and between WorldCom Network Services, Inc.
          d/b/a/ WilTel, Associated Communications Companies of America (ACCA)
          and the individual members of ACCA referenced therein. Filed as
          Exhibit 10.73 to 1997 Form S-4 and incorporated herein by reference.
</TABLE>


                                      E-5
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
  Number  Exhibit Description
 -------  -------------------

 <C>      <S>
 +10.30   Marketing and Operating Agreement, dated as of October 6, 1994, by
          and between Interstate FiberNet, Inc. and DukeNet Communications,
          Inc. Filed as Exhibit 10.74 to 1997 Form S-4 and incorporated herein
          by reference.

 +10.31   Reseller Agreement, dated June 25, 1997, by and between DeltaCom,
          Inc. and Total Network Services, a division of Cable & Wireless, Inc.
          Filed as Exhibit 10.75 to 1997 Form S-4 and incorporated herein by
          reference.

 10.32    Sublease Agreement, dated as of January 1, 1995, by and between ITC
          Holding Company, Inc. and ITC Transmission Systems, Inc. Filed as
          Exhibit 10.76 to 1997 Form S-4 and incorporated herein by reference.

 10.33.1  Credit Agreement (the "Credit Agreement"), dated as of April 5, 2000,
          among ITC/\DeltaCom, Inc., Interstate FiberNet, Inc., the subsidiary
          guarantors listed on the signature pages thereto, the banks,
          financial institutions and other institutional lenders listed on the
          signature pages thereto as the Initial Lenders, Morgan Stanley Senior
          Funding, Inc. ("Morgan Stanley"), as administrative agent for the
          Lender Parties (as defined therein), Morgan Stanley & Co.
          Incorporated, as collateral agent, Bank of America Securities LLC and
          Morgan Stanley, as joint lead arrangers and joint book runners, and
          Bank of America, N.A., as syndication agent. Filed as Exhibit 10.1 to
          Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
          and incorporated herein by reference.

 10.33.2  Security Agreement, dated April 5, 2000, made by Interstate FiberNet,
          Inc., ITC/\DeltaCom, Inc., and the other Persons listed on the
          signature pages thereof and the Additional Grantors (as defined in
          Section 23(b) thereof) to Morgan Stanley & Co. Incorporated, as
          collateral agent for the Secured Parties (as defined in the Credit
          Agreement). Filed as Exhibit 10.2 to Quarterly Report on Form 10-Q
          for the quarter ended March 31, 2000 and incorporated herein by
          reference.

 10.34.1  Indenture, dated as of June 3, 1997, between ITC/\DeltaCom, Inc. and
          United States Trust Company of New York, as Trustee, relating to the
          11% Senior Notes due 2007 of ITC/\DeltaCom, Inc. Filed as Exhibit 4.1
          to 1997 Form S-4 and incorporated herein by reference.

 10.34.2  Supplemental Indenture, dated as of October 17, 1997, between
          ITC/\DeltaCom, Inc. and United States Trust Company of New York, as
          Trustee. Filed as Exhibit 82.2 to Form S-1 and incorporated herein by
          reference.

 10.34.3  Pledge and Security Agreement dated as of June 3, 1997 from
          ITC/\DeltaCom, Inc. as Pledgor to United States Trust Company of New
          York as Trustee. Filed as Exhibit 4.3 to 1997 Form S-4 and
          incorporated herein by reference.

 10.34.4  Form of Exchange Note (contained in Indenture filed as Exhibit
          10.34.1).

 10.35    Assignment and Contribution Agreement Pursuant to Pledge and Security
          Agreement dated as of July 25, 1997, by and among ITC/\DeltaCom, Inc.,
          Interstate FiberNet, Inc. and United States Trust Company of New
          York, as Trustee filed herewith. Filed as Exhibit 4.5 to 1997 Form S-
          4 and incorporated herein by reference.

 +10.36.1 MCI Carrier Agreement, effective September 1, 1997, by and between
          MCI Telecommunications Corporation and Associated Communications
          Companies of America (ACCA). Filed as Exhibit 10.87 to Form S-1 and
          incorporated herein by reference.

 +10.36.2 First Amendment to the MCI Carrier Agreement, dated as of November
          21, 1997, by and between MCI Telecommunications Corporation and
          Associated Communication Companies of America (ACCA). Filed as
          Exhibit 10.87.1 to 1997 Form 10-K and incorporated herein by
          reference.
</TABLE>

                                      E-6
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------

 <C>     <S>
 10.37.1 Amended and Restated ITC/\DeltaCom, Inc. 1997 Stock Option Plan. Filed
         as Exhibit 4.1 to Registration Statement on Form S-8 (File No. 333-
         49034) and incorporated herein by reference.

 10.37.2 Form of Stock Option Agreement under the Amended and Restated
         ITC/\DeltaCom, Inc. 1997 Stock Option Plan. Filed herewith.

 10.38.1 ITC/\DeltaCom, Inc. 1997 Director Stock Option Plan. Filed as Exhibit
         10.89 to Form S-1 and incorporated herein by reference.

 10.38.2 Form of Non-Qualified Stock Option Agreement under the ITC/\DeltaCom,
         Inc. Director Stock Option Plan. Filed herewith.

 10.39.1 ITC Holding Company, Inc. Amended and Restated Stock Option Plan.
         Filed as Exhibit 10.90 to Form S-1 and incorporated herein by
         reference.

 10.39.2 Amendment No. 1 to ITC Holding Company, Inc. Amended and Restated
         Stock Option Plan. Filed as Exhibit 10.2 to Quarterly Report on Form
         10-Q for the quarter ended June 30, 2000 and incorporated herein by
         reference.

 10.40.1 ITC Holding Company, Inc. Nonemployee Director Stock Option Plan.
         Filed as Exhibit 10.91 to Form S-1 and incorporated herein by
         reference.

 10.40.2 Amendment No. 1 to ITC Holding Company, Inc. Nonemployee Director
         Stock Option Plan. Filed as Exhibit 10.3 to Quarterly Report on Form
         10-Q for the quarter ended June 30, 2000 and incorporated herein by
         reference.

 10.41   Description of ITC/\DeltaCom, Inc. Bonus Plan. Filed as Exhibit 10.92
         to Form S-1 and incorporated herein by reference.

 10.42   Form of Indemnity Agreement between ITC/\DeltaCom, Inc. and certain of
         its Directors and Officers. Filed as Exhibit 10.93 to Form S-1 and
         incorporated herein by reference.

 10.43.1 Sale and Purchase Agreement, dated as of March 11, 1997, by and
         between SCANA Corporation and ITC Holding Company, Inc. Filed as
         Exhibit 10.94 to Form S-1 and incorporated herein by reference.

 10.43.2 First Amendment to Sale and Purchase Agreement. Among SCANA
         Corporation, SCANA Communications, Inc., and ITC Holding Company,
         Inc., dated as of October 16, 1997, among SCANA Corporation, SCANA
         Communications, Inc., ITC Holding Company, Inc. and ITC/\DeltaCom, Inc.
         Filed as Exhibit 10.95 to Form S-1 and incorporated herein by
         reference.

 10.44.1 Indenture dated March 3, 1998 between ITC/\DeltaCom, Inc. and United
         States Trust Company of New York, as Trustee, relating to the 8 7/8%
         Senior Notes due 2008 of ITC/\DeltaCom, Inc. Filed as Exhibit 4.2 to
         1997 Form 10-K and incorporated herein by reference.

 10.44.2 Form of Global 8 7/8% Note due 2008 (contained in Indenture filed as
         Exhibit 10.44.1).

 10.45.1 Indenture dated as of November 5, 1998 between ITC/\DeltaCom, Inc. and
         United States Trust Company of New York, as Trustee, relating to the 9
         3/4% Senior Notes due 2008 of ITC/\DeltaCom, Inc. Filed as Exhibit 4.2
         to Registration Statement on Form S-4, as amended (File No. 333-71735)
         (the "February 1999 Form S-4"), and incorporated herein by reference.

 10.45.2 Form of Global 9 3/4% Note due 2008 (contained in Indenture filed as
         Exhibit 10.45.1).

 10.46.1 Registration Rights Agreement, dated as of May 12, 1999, by and among
         ITC/\DeltaCom, Inc. and Morgan Stanley & Co. Incorporated, Credit
         Suisse First Boston Corporation, First Union Capital Markets Corp. and
         NationsBanc Montgomery Securities LLC. Filed as Exhibit 4.1 to the May
         1999 Form 10-Q and incorporated herein by reference.

 10.46.2 Indenture dated as of May 12, 1999, between ITC/\DeltaCom, Inc.
         ITC/\DeltaCom, Inc. and U.S. Trust, Company of Texas, N.A., a national
         banking corporation, as trustee. Filed as Exhibit 4.1 to the May 1999
         Form 10-Q and incorporated herein by reference.

 10.46.3 Form of Global Note relating to the 4 1/2% Convertible Subordinated
         Notes due 2006 (contained in Indenture filed as Exhibit 10.46.2).
</TABLE>



                                      E-7
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number  Exhibit Description
 ------- -------------------
 <C>     <S>
 10.46.4 Form of Registered 4 1/2% Convertible Subordinated Note due 2006.
         Filed as Exhibit 4.5 to Registration Statement on Form S-3, as amended
         (File No. 333-84661), and incorporated herein by reference.

 10.47.1 Master Lease Agreement, dated as of December 29, 2000, between NTFC
         Capital Corporation, as Lessor, and ITC/\DeltaCom Communications, Inc.
         and Interstate FiberNet, Inc., as Lessees (the "Master Lease
         Agreement"). Filed herewith.

 10.47.2 Form of Equipment Schedule to the Master Lease Agreement. Filed
         herewith.

 10.47.3 Guaranty, dated as of December 29, 2000, between Interstate FiberNet,
         Inc. and NTFC Capital Corporation. Filed herewith.

 10.48   Interconnection Agreement, dated February 9, 2001, by and between
         BellSouth Telecommunications, Inc. and ITC/\DeltaCom Communications,
         Inc. d/b/a/ ITC/\DeltaCom. Filed herewith.

 10.49.1 Interconnection Agreement, dated as of June 5, 2000, by and between
         BellSouth Telecommunications, Inc. and ITC/\DeltaCom Communications,
         Inc. d/b/a/ ITC/\DeltaCom. Filed herewith.

 10.49.2 First Amendment to the Interconnection Agreement by and between
         BellSouth Telecommunications, Inc. and ITC/\DeltaCom Communications,
         Inc., dated as of August 21, 2000, between ITC/\DeltaCom
         Communications, Inc. and BellSouth Telecommunications, Inc. Filed
         herewith.

 10.49.3 Amendment to the Interconnection Agreement by and between BellSouth
         Telecommunications, Inc. and ITC/\DeltaCom Communications, Inc., dated
         as of February 14, 2001, by and between ITC/\DeltaCom Communications,
         Inc. and BellSouth Telecommunications, Inc. Filed herewith.

 10.50   Agreement, effective as of July 1, 1999, by and between ITC/\DeltaCom
         Communications, Inc. and BellSouth Telecommunications, Inc. Filed
         herewith.

 10.51.1 Investment Agreement, dated as of February 27, 2001, between
         ITC/\DeltaCom, Inc. and ITC Holding Company, Inc. Filed as Exhibit 10-1
         to Current Report on Form 8-K (the "March 2001 Form 8-K"), filed with
         the SEC on March 23, 2001, and incorporated herein by reference.

 10.51.2 Form of Certificate of Designation of the Powers, Preferences and
         Relative, Participating, Optional and Other Special Rights of Series
         B-[ ] Cumulative Convertible Preferred Stock and Qualifications,
         Limitations and Restrictions Thereof. Filed as Exhibit 10.2 to the
         March 2001 Form 8-K and incorporated herein by reference.
 10.51.3 Form of Common Stock Purchase Warrant. Filed as Exhibit 10.3 to the
         March 2001 Form 8-K and incorporated herein by reference.
 10.51.4 Form of Registration Rights Agreement among ITC/\DeltaCom, Inc., ITC
         Holding Company, Inc. and the other Holders from time to time
         thereunder. Filed as Exhibit 10.4 to the March 2001 Form 8-K and
         incorporated herein by reference.
 12.1    Statement regarding Computation of Ratios. Filed herewith.
 21.1    Subsidiaries of ITC/\DeltaCom, Inc. Filed herewith.
 23.1    Consent of Arthur Andersen LLP. Filed herewith.
</TABLE>
--------
+  Confidential treatment has been granted for this exhibit. The copy filed as
   an exhibit omits the information subject to the confidential treatment
   request.
++ Certain confidential portions of this exhibit were omitted by means of
   redacting a portion of the text. This exhibit has been filed separately with
   the Secretary of the SEC without such text pursuant to our Application
   Requesting Confidential Treatment under Rule 24b-2 under the Securities
   Exchange Act.

                                      E-8