<PAGE>   1
                                                                     EXHIBIT 4.2


                           SECURITYHOLDERS' AGREEMENT


         THIS SECURITYHOLDERS' AGREEMENT is made as of April 5, 1999, by and
among MGC Communications, Inc., a Nevada corporation (the "Company"), the
Institutional Investors (as defined herein), and each of the securityholders
from time to time a party hereto (the "Securityholders") (as amended from time
to time, this "Agreement"). Capitalized terms used but not otherwise defined
herein shall have the meaning given to such terms in the Purchase Agreement
referred to below.

         The execution and delivery of this Agreement is a condition to the
Institutional Investors' purchase of the Purchased Securities pursuant to that
certain Securities Purchase Agreement dated the date hereof among the Company
and the Institutional Investors (as amended from time to time, the "Purchase
Agreement").

         NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:

         Section 1.        Certain Definitions.

         "Board" means the Company's Board of Directors.

         "Institutional Investors" means those persons holding Purchased
Securities.

     "Investor Designees" means those member(s) of the Board or Sub Board that
have been designated by the Required Investor Approval.

     "Purchase Agreement" has the meaning given such term in the recitals.

     "Required Board Approval" means the majority vote or written consent of a
majority of the directors of the Board or the Sub Board, as applicable,
including the approval of the Investor Designee, or, if there is more than one
Investor Designee, that Investor Designee that has been designated in writing by
the Required Investor Approval as the person whose approval is necessary for
purposes of this definition.

     "Required Investor Approval" means, at any time, the affirmative vote of
the holders of more than fifty percent (50%) of the outstanding Purchased
Securities held by the Institutional Investors at such time.

     "Subject Securities" has the meaning given to such term in Section 2
hereof.
<PAGE>   2
     Section 2.       Board Composition.

                  (a) From and after the date hereof, and until the provisions
of this Section 2 cease to be effective, each Securityholder and Institutional
Investor shall vote all of its Common Stock and other voting securities of the
Company over which such holder has voting control ("Subject Securities") and
shall take all other necessary or desirable actions within its control (in its
capacity as a securityholder or stockholder and, subject to any fiduciary
obligation owed by such Securityholder or Institutional Investor to the Company,
in its capacity as a director, member of a board committee or officer of the
Company or otherwise, and including, without limitation, attendance at meetings
in person or by proxy for purposes of obtaining a quorum and execution of
written consents in lieu of meetings), and the Company shall take all necessary
or desirable actions within its control (including, without limitation, calling
special Board and stockholder meetings), so that the following shall occur:

                  (i) one representative designated by the Required Investor
                  Approval (who shall initially be Paul Salem) shall be elected
                  to the Board for a three-year term, and reelected for
                  subsequent terms so long as this Agreement is in effect;

                  (ii) subject to the limitation contained in Section
                  2(a)(viii), if the authorized number of directors on the Board
                  has been increased to eight (8), then commencing on the date
                  which is six (6) months after the effective date of such
                  expansion of the Board, one additional representative
                  designated by the Required Investor Approval and reasonably
                  acceptable to the Company shall be elected to the Board;

                  (iii) subject to the limitations contained in Section
                  2(a)(viii), if the authorized number of directors on the Board
                  has been increased (A) to nine (9) prior to the election of
                  the additional Investor Designee pursuant to Section 2(a)(ii)
                  above, or (B) to ten (10) or higher at any time after the
                  election of the additional Investor Designee pursuant to
                  Section 2(a)(ii) above, there shall be elected to the Board
                  such number of additional Investor Designees (who must be
                  reasonably acceptable to the Company), if any, as are
                  necessary to result in the percentage representation by
                  Investor Designees on the Board equaling at least the
                  Institutional Investors' percentage ownership of outstanding
                  Common Stock of the Company arising out of their ownership of
                  (x) shares of Series B Preferred (assuming the conversion of
                  all outstanding shares of Series B Preferred) and (y) shares
                  of Common Stock that have been issued on conversion of shares
                  of Series B Preferred; provided, in no event shall the number
                  of Investor Designees to the Board be less than one (1);

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                  (iv) the governing body of each of the Company's Subsidiaries
                  (each a "Sub Board") shall have at least one Investor
                  Designee;

                  (v) any committees of the Board or a Sub Board (to the extent
                  not yet created) shall be created only upon Required Board
                  Approval and each committee shall have at least one Investor
                  Designee;

                  (vi) the removal from the Board or a Sub Board or any
                  committee thereof without cause of any Investor Designee shall
                  be conditional on the Required Investor Approval;

                  (vii) in the event that any Investor Designee ceases to serve
                  as a member of the Board or a Sub Board or any committee
                  thereof during his term of office, the resulting vacancy on
                  the Board or the Sub Board, and on each committee thereof,
                  shall be filled by an Investor Designee;

                  (viii) notwithstanding the provisions of Section 2(a)(ii) or
                  (iii), an Investor Designee shall not be added to the Board if
                  the number of Investor Designees on the Board resulting from
                  such addition would exceed the whole number obtained by
                  multiplying the Institutional Investors' percentage ownership
                  of outstanding Common Stock of the Company arising out of
                  their ownership of (x) shares of Series B Preferred (assuming
                  the conversion of all outstanding Series B Preferred) and (y)
                  shares of Common Stock that have been issued on conversion of
                  shares of Series B Preferred by the total number of directors
                  on the Board which would result from the addition of such
                  Investor Designee (it being understood that for purposes of
                  determining the whole number, any decimal beginning with 0-4
                  shall be rounded down to the nearest whole number and any
                  decimal beginning with 5-9 shall be rounded up to the nearest
                  whole number); and

                  (ix) in no event shall the number of directors on the Board be
                  less than five (5).

                  (b) The Company shall pay the reasonable out-of-pocket
expenses incurred by each director in connection with attending (i) the meetings
of the Board, any Sub Board and any committee thereof and (ii) any other
meetings at the request of any Company or any of its Subsidiaries. So long as
any Investor Designee serves on the Board or a Sub Board and for six years
thereafter, the Company shall maintain directors and officers indemnity
insurance coverage as currently in place or as otherwise approved by the
Required Investor Approval, and the constituent documents of the Company and
each of its Subsidiaries, as appropriate, shall provide for indemnification and
exculpation of directors to the fullest extent permitted under applicable


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law.

                  (c) If any party or parties fail(s) (but is otherwise
entitled) to designate a representative to fill a directorship pursuant to the
terms of this Section 2, the election of an individual to such directorship
shall be accomplished in accordance with the Company's or the applicable
Subsidiary's constituent documents and applicable law; provided that the parties
shall take all necessary actions to remove such individual if the party or
parties which failed (and are otherwise entitled) to designate such director so
directs.

     Section 3. Approval of Transaction. In the event a meeting of the Company's
stockholders is required under the General Corporation Law of the State of
Nevada or otherwise, including under the regulations of the Nasdaq Stock Market
(the "Nasdaq Rules"), for the approval of any aspect of the transactions
contemplated by the Purchase Agreement, including the issuance of the Purchased
Securities (the "Stockholder Approval"), (i) the Company shall promptly take all
action necessary to convene a meeting of its stockholders in accordance with the
Nevada General Corporation Law and the Company's Articles of Incorporation and
By-laws, and shall provide to its stockholders all proxy materials required by
the Nasdaq Rules and the regulations under the Securities Exchange Act of 1934,
as amended, in order to obtain the Stockholder Approval and (ii) each
Securityholder shall promptly take all necessary or desirable action within such
Securityholder's control (including, without limitation, attendance at
stockholders' meetings in person or by proxy for the purposes of obtaining a
quorum and the execution of written consents in lieu of meetings) to ensure that
all voting securities of the Company (including the Common Stock) over which
such Securityholder has control shall be voted in favor of the Stockholder
Approval.

     Section 4. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or any of the Institutional Investors unless such
modification, amendment or waiver is approved in writing by the Company and the
Required Investor Approval. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.

     Section 5. Representations and Warranties of the Securityholders. Each
Securityholder represents and warrants to each Institutional Investor (as to
itself but not as to any other party) upon becoming a party hereto as follows:

              (a) Authorization; No Breach. The execution, delivery and
performance by such Securityholder of this Agreement has been duly authorized by
or on behalf of such Securityholder. This Agreement constitutes a valid and
binding obligation of such Securityholder, enforceable in accordance with its
terms. The execution and delivery by such


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Securityholder of this Agreement, and the fulfillment of and compliance with the
terms hereof by such Securityholder, do not and will not (a) conflict with or
result in a breach of the terms, conditions or provisions of, (b) result in a
violation of, or (c) require any consent that has not been obtained or made of,
from, with or to, any Person pursuant to, the constituent documents of such
Securityholder, or any material agreement, instrument or other documents, or any
applicable material requirement of law to which such Securityholder or any
Affiliate is bound or to which any of such Persons or its assets is subject.

              (b) Record Owner; Proxy. Such Securityholder (i) is the record
owner of the number of Subject Securities set forth opposite its name on
Schedule A attached to this Agreement and (ii) is not a party to any proxy,
voting trust or other agreement which is inconsistent with, conflicts with or
violates any provision of this Agreement. No Securityholder shall grant any
proxy or become party to any voting trust or other agreement which is
inconsistent with, conflicts with or violates any provision of this Agreement.

     Section 6. Representations and Warranties of the Company. The Company
represents and warrants to each Institutional Investor as follows:

              (a) Authorization; No Breach. The execution, delivery and
performance of this Agreement has been duly authorized by or on behalf of the
Company. This Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms. The execution and delivery by
the Company of this Agreement, and the fulfillment of and compliance with the
terms hereof by the Company, does not and will not (a) conflict with or result
in a breach of the terms, conditions or provisions of, (b) result in a violation
of, or, (c) require any consent that has not been obtained or made of, from,
with or to, any Person pursuant to, the constituent documents of the Company or
any or its Subsidiaries, or any agreement, instrument or other document, or any
applicable material requirement of law to which the Company or any of its
Subsidiaries or any of its Affiliates is bound or to which any of such Persons
or its assets is subject.

     Section 7. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had not been contained herein.

     Section 8. Successors and Assigns. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and the Institutional


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Investors and their respective successors and assigns; provided, that the
Company may not assign any of its obligations under this Agreement without the
Required Investor Approval. This Agreement shall be binding upon the
Securityholders and Institutional Investors so long as they hold Subject
Securities.

     Section 9. Counterparts; Fax Signatures. This Agreement may be executed in
multiple counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement. Signatures sent by
telecopy shall be deemed to constitute original signatures.

     Section 10. Remedies. Each party to this Agreement shall be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of the Agreement and that the Company or any Institutional Investor
may in its sole discretion apply to any court of law or equity or competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.

     Section 11. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) or sent by telecopy to the Company at the address set forth below and
to any other recipient at the address indicated on the Schedule attached hereto
or at such address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party. Notices shall
be deemed to have been given hereunder when delivered personally, when delivery
is confirmed by telecopy, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service.

                           MGC Communications, Inc.
                           3301 North Buffalo Drive
                           Las Vegas, Nevada  89129
                           Attention:  Maurice J. Gallagher, Jr.
                           Facsimile:  (702) 310-5715
                           Telephone:  (702) 310-1000

     Section 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Rhode Island, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Rhode Island or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
Rhode Island; provided that the General Corporation Law of the State of Nevada
shall govern all issues concerning the voting of the Subject Securities.

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     Section 13. Descriptive Headings; Interpretation. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Reference to any agreement, document or
instrument means such agreement, document or instrument as amended or otherwise
modified from time to time in accordance with the terms thereof and, if
applicable, hereof. The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
specified herein, the term "or" has the inclusive meaning represented by the
term "and/or" and the term "including" is not limiting. All references as to
"Sections", "Subsections", "Articles", "Schedules" and "Exhibits" shall be to
Section, Subsections, Articles, Schedules and Exhibits, respectively, of this
Agreement unless otherwise specifically provided.

     Section 14. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.

     Section 15. No Third Party Beneficiaries. This Agreement is not intended to
confer any rights or remedies upon any Person other than the parties hereto and
their successors and permitted assigns.

     Section 16. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.

     Section 17. Termination. This Agreement shall terminate upon the earlier to
occur of (i) seven (7) years from the date hereof or (ii) the date upon which
(A) less than one-third (1/3) of the number of shares of Series B Preferred
initially issued remains outstanding and (B) the number of shares of Series B
Preferred outstanding represents less than five percent (5%) of the outstanding
Common Stock, assuming conversion of all outstanding shares of Series B
Preferred.

            [THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

                                   MGC COMMUNICATIONS, INC.


                                   By:
                                   Name:
                                   Title:


                                   PROVIDENCE EQUITY PARTNERS III L.P.
                                   By:  Providence Equity Partners III L.L.C.,
                                          its general partner


                                   By:
                                   Name:
                                   Title:


                                   J K & B CAPITAL III L.P.


                                   By:
                                   Name:
                                   Title:


                                   WIND POINT PARTNERS III, L.P.


                                   By:
                                   Name:
                                   Title:


                 [SIGNATURE PAGE TO SECURITYHOLDERS' AGREEMENT]

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<PAGE>   9
                                                              By:
                                                              Name:
                                                              Title:



                                                              By:
                                                              Name:
                                                              Title:



                                                              By:
                                                              Name:
                                                              Title:



                                                              By:
                                                              Name:
                                                              Title:



                                                              By:
                                                              Name:
                                                              Title:



                                                              By:
                                                              Name:
                                                              Title:



                                                              By:
                                                              Name:


                                     - 9 -
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                                                              Title:


                 [SIGNATURE PAGE TO SECURITYHOLDERS' AGREEMENT]

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                    SCHEDULE A TO SECURITYHOLDERS' AGREEMENT

<TABLE>
<CAPTION>
                                                                                              TOTAL NUMBER OF
                                                                                             SHARES OF COMMON
                STOCKHOLDER                         DETAIL                                      STOCK OWNED
-------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                                <C>
     Maurice Gallagher                  Direct ownership - 22,500                                3,190,546
                                        Various trusts (1) - 1,478,146

                                        Gallagher Family Investments,
                                        LP - 1,650,000

                                        Gallagher Corp. - 39,900



     Nield Montgomery                                                                              736,500



     Timothy Flynn                      Direct ownership - 790,500                                 892,500

                                        Flynn Family Investments, LP
                                        - 60,000

                                        Flynn Corp. - 42,000



     David Kronfeld                     JK&B Capital (2) - 968,143                               1,145,371

                                        Boston Capital Ventures III,
                                        L.P. - 171,428

                                        Direct ownership - 5,800



     Thomas Neustaetter                 Strategic Investment Partners                              694,512
                                        Limited - 342,856

                                        S-C Phoenix Holdings, LLC -
                                        214,285

                                        Winston Partners II LDC -
                                        85,714

                                        Winston Partners II LLC -
                                        42,857

                                        Direct Ownership - 8,800



     Wind Point Partners III                                                                       685,714
     (Jim TenBroek)



     Robert L./Carol A. Priddy                                                                     889,500



     Hayden & Ladonna Fleming                                                                      140,369
     Revocable Trust
</TABLE>

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<TABLE>
<CAPTION>
<S>                                                                                                 <C>
     Hayden Fleming IRA                                                                              4,000



     Ladonna Fleming IRA                                                                             6,500



     Circle F Ventures, LLC                                                                        664,400



     Mitch Allee                                                                                   470,500



     John Boersma                                                                                   64,000
</TABLE>

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<TABLE>
<CAPTION>
                                                                                              TOTAL NUMBER OF
                                                                                             SHARES OF COMMON
                STOCKHOLDER                         DETAIL                                      STOCK OWNED
-------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                      <C>
     Dave Clark                                                                                     13,620


                                                                TOTAL:                           9,598,032

                                                    TOTAL OUTSTANDING:                          17,205,614

                                                           PERCENTAGE:                              55.78%

     (1) Gallagher Stock Trust dated 4/2/94
         Gallagher Trust dated 10/20/92

     (2) JK&B Capital, L.P. JK&B Capital II, L.P.
</TABLE>
                                      A-2