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================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File No. 0-29-092 PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED (Exact name of registrant as specified in its charter) Delaware 54-1708481 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1700 Old Meadow Road, Suite 300, McLean, VA 22102 (Address of principal executive offices) (Zip Code) (703) 902-2800 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding as of Class April 30, 2000 ----- --------------- Common Stock $.01 par value 40,044,287 ================================================================================

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED INDEX TO FORM 10-Q Page No. -------- Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Consolidated Statements of Operations.......................1 Consolidated Balance Sheets.................................2 Consolidated Statements of Cash Flows.......................3 Consolidated Statements of Comprehensive Loss...............4 Notes to Consolidated Financial Statements..................5 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS......................9 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................................16 Part II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS..........................................17 Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS..................17 Item 3. DEFAULTS UPON SENIOR SECURITIES............................17 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........17 Item 5. OTHER INFORMATION..........................................17 Item 6. EXHIBITS AND REPORTS ON FORM 8-K...........................17 SIGNATURE....................................................................19 EXHIBIT INDEX................................................................20

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, ---------------------------- 2000 1999 ----------- ------------ NET REVENUE $ 287,953 $ 131,228 COST OF REVENUE 207,435 104,596 ----------- ------------ GROSS MARGIN 80,518 26,632 ----------- ------------ OPERATING EXPENSES Selling, general and administrative 79,267 29,296 Depreciation and amortization 22,170 8,976 ----------- ------------ Total operating expenses 101,437 38,272 ----------- ------------ LOSS FROM OPERATIONS (20,919) (11,640) INTEREST EXPENSE (29,942) (16,770) INTEREST AND OTHER INCOME 7,609 3,255 ----------- ------------ LOSS BEFORE INCOME TAXES (43,252) (25,155) INCOME TAXES - - ----------- ------------ NET LOSS $ (43,252) $ (25,155) =========== ============ BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (1.14) $ (0.89) =========== ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 37,824 28,317 =========== ============ Other Data: EBITDA $ 1,251 $ (2,664) =========== ============ See notes to consolidated financial statements. 1

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) March 31, December 31, 2000 1999 (unaudited) ---------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 683,148 $ 471,542 Restricted investments 12,964 25,932 Marketable securities 30,407 - Accounts receivable (net of allowance for doubtful accounts of $37,621 and $36,453) 189,332 165,384 Prepaid expenses and other current assets 71,577 56,994 ---------- ---------- Total current assets 987,428 719,852 PROPERTY AND EQUIPMENT - Net 325,316 285,390 INTANGIBLES - Net 535,992 402,030 OTHER ASSETS 58,677 44,101 ---------- ---------- TOTAL ASSETS $1,907,413 $1,451,373 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 209,224 $ 169,527 Accrued expenses and other current liabilities 139,438 123,453 Accrued interest 32,781 32,420 Current portion of long-term obligations 17,271 16,438 ---------- ---------- Total current liabilities 398,714 341,838 LONG-TERM OBLIGATIONS 1,247,458 913,506 OTHER LIABILITIES 9,257 4,543 ---------- ---------- Total liabilities 1,655,429 1,259,887 =========== =========== COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value - authorized 2,455,000 shares; none issued and outstanding - - Common stock, $.01 par value - authorized 80,000,000 shares; issued and outstanding, 40,022,149, and 37,101,464 shares 400 371 Additional paid-in capital 515,757 417,060 Accumulated deficit (267,641) (224,389) Accumulated other comprehensive income/(loss) 3,468 (1,556) ---------- ---------- Total stockholders' equity 251,984 191,486 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,907,413 $ 1,451,373 =========== =========== See notes to consolidated financial statements. 2

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended March 31, ------------------------------- 2000 1999 ------------ ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (43,252) $ (25,155) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation, amortization and accretion 22,261 9,067 Sales allowance 4,381 2,833 Stock issuance - 401(k) Plan 75 62 Minority interest share of loss (248) - Changes in assets and liabilities: (Increase) decrease in accounts receivable (23,099) (12,342) (Increase) decrease in prepaid expenses and other current assets (12,387) (7,118) (Increase) decrease in other assets (4,620) (2,272) Increase (decrease) in accounts payable 23,848 5,512 Increase (decrease) in accrued expenses, other current liabilities and other liabilities (3,073) (2,179) Increase (decrease) in accrued interest payable 363 1,419 ------------ ------------- Net cash used in operating activities (35,751) (30,173) ------------ ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (42,237) (16,391) Sale (purchase) of restricted investments 12,967 12,612 Purchase of marketable securities (15,000) - Cash used for business acquisitions, net of cash acquired (25,990) (7,825) ------------ ------------- Net cash used in investing activities (70,260) (11,604) ------------ ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on capital leases and other (1,187) (18,961) long-term obligations Proceeds from sale of common stock and exercise of stock options 1,595 203 Proceeds from issuance of long-term obligations 324,735 200,000 Deferred financing costs (10,000) (7,500) ------------ ------------- Net cash provided by financing activities 315,143 173,742 ------------ ------------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 2,474 369 ------------ ------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 211,606 132,334 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 471,542 136,196 ------------ ------------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 683,148 $ 268,530 ============ ============= See notes to consolidated financial statements. 3

PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited) Three Months Ended March 31, ----------------------------- 2000 1999 ----------- ------------ NET LOSS $ (43,252) $ (25,155) OTHER COMPREHENSIVE INCOME/(LOSS) - Foreign currency translation adjustment (10,378) 1,284 Unrealized gain on marketable securities 15,402 - ----------- ------------ COMPREHENSIVE LOSS $ (38,228) $ (23,871) =========== ============ See notes to consolidated financial statements. 4

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements of Primus Telecommunications Group, Incorporated (the "Company" or "Primus") have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Securities and Exchange Commission ("SEC") regulations. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (of a normal and recurring nature) which are necessary to present fairly the financial position, results of operations, cash flows and comprehensive loss for the interim periods. The results for the three months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. The financial statements should be read in conjunction with the Company's audited consolidated financial statements included in the Company's most recently filed Form 10-K. (2) Summary of Significant Accounting Policies ------------------------------------------ Principles of Consolidation --The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and all other subsidiaries over which the Company exerts control. All material intercompany profits, transactions, and balances have been eliminated in consolidation. There are minority shareholders representing outside ownership of 49% of the common stock of Matrix Internet, S.A. ("Matrix"), 49% of Cards & Parts Telecom GmbH ("Cards & Parts"), 49% of CS Communications Systems GmbH and CS Network GmbH ("Citrus") and 62% of Bekkoame Internet, Inc. ("Bekko"), all of which the Company has a controlling interest. All other investments in affiliates are carried at cost. Marketable Securities --Marketable securities are classified as available-for-sale and are recorded at current market value. Net unrealized gains and losses on marketable securities are excluded from earnings and are reported as other comprehensive income/(loss) until realized. (3) Acquisitions ------------ In March 2000, the Company acquired 38% and control of Bekkoame Internet, Inc. ("Bekko"), a Japanese facilities-based Internet Service Provider ("ISP") for $10.9 million in cash. In March 2000, the Company acquired Eco Software, Inc. ("Shore.Net"), a U.S. based, business-focused ISP for $44.5 million, comprised of $23.5 million in cash and 477,886 shares of the Company's common stock. In February 2000, the Company acquired 51% of each of CS Communications Systems GmbH and CS Network GmbH ("Citrus"), a reseller of voice traffic and seller of telecommunications equipment and accessories for $1.0 million, comprised of $0.9 million in cash and 2,092 shares of the Company's common stock. In February 2000, the Company acquired over 96% of the common stock of LCR Telecom Group, Plc ("LCR Telecom"), and subsequently the Company acquired the remaining shares for a total of 100%, in exchange for 2,216,632 shares of the Company's common stock valued at $73.4 million. The purchase price is subject to adjustment and may be increased to a total of 2,277,092 shares. LCR Telecom operates principally in European markets and is an international telecommunications company providing least cost routing, international callback and other value added services, primarily to small- and medium-sized enterprises. 5

In January 2000, the Company acquired Infinity Online Systems ("Infinity"), an ISP based in Ontario, Canada, for $2.3 million, comprised of $1.2 million in cash and 29,919 shares of the Company's common stock. The Company has accounted for all of these acquisitions using the purchase method of accounting and accordingly, the net assets and results of operations of the acquired companies have been included in the Company's financial statements since the acquisition dates. The purchase price, including direct costs, of the Company's acquisitions was allocated to assets acquired, including intangible assets and liabilities assumed, based on their respective fair values at the acquisition dates. The valuation of the Company's acquired assets and liabilities for the 2000 acquisitions are preliminary, and as a result, the allocation of the acquisition costs among tangible and intangible assets may change. (4) Marketable Securities --------------------- In connection with a strategic business arrangement with Pilot Network Services ("Pilot"), in January 2000, the Company made a $15.0 million strategic investment in Pilot pursuant to which the Company purchased 919,540 shares, or 6.3%, of Pilot's common stock at a price of $16.3125 per share, and received a warrant to purchase an additional 200,000 shares at $25.00 per share. At March 31, 2000, the unrealized gain on this investment was $15.4 million. (5) Goodwill and Other Intangible Assets ------------------------------------ Goodwill and other intangible assets consist of the following (in thousands): March 31, December 31, 2000 1999 (unaudited) --------------- ---------------- Goodwill $ 469,402 $ 340,272 Customer lists 108,206 95,192 Other 2,988 1,914 --------------- ---------------- Subtotal 580,596 437,378 Less: Accumulated amortization (44,604) (35,348) --------------- -------------- Total goodwill and other intangible assets, net $ 535,992 $ 402,030 =============== ================ Amortization expense for Goodwill and Other Intangible Assets for the three months ended March 31, 2000 was $9.2 million. (6) Long-Term Obligations --------------------- Long-term obligations consist of the following (in thousands): March 31, December 31, 2000 1999 (unaudited) ---------------- ----------------- Obligations under capital leases $ 20,754 $ 21,072 Senior notes 1,168,898 868,807 Equipment financing 37,049 29,406 Other long-term obligations 38,028 10,659 ---------------- ----------------- Subtotal 1,264,729 929,944 Less: Current portion of long-term obligations (17,271) (16,438) ---------------- ----------------- Total $ 1,247,458 $ 913,506 ================ ================= In February 2000, the Company completed the sale of $250 million in aggregate principal amount of 5 3/4% convertible subordinated debentures due 2007 ("February 2000 Debentures") with semi- 6

annual interest payments. On March 13, 2000, the Company announced that the initial purchasers of the February 2000 Debentures had exercised their $50 million over-allotment option granted pursuant to a purchase agreement dated February 17, 2000. The debentures are convertible into approximately 6,025,170 shares of the Company's common stock based on a conversion price of $49.7913 per share. During the year ended December 31, 1999, NTFC Capital Corporation and Ericsson Financing Plc provided to the Company $30.0 million and $34.3 million, respectively, in financing to fund the purchase of network equipment, secured by the equipment purchased. At March 31, 2000, the entire $30.0 million was utilized through NTFC Capital Corporation and $2.3 million was utilized through Ericsson Financing Plc. Borrowings under these credit facilities accrue interest at rates ranging from 10.93% to LIBOR plus 5.8% and are payable over a 5-year term. At December 31, 1999, approximately $24.4 million was utilized through NTFC Capital Corporation. In March 2000, the Company entered into a strategic business alliance agreement with Hewlett-Packard Company pursuant to which Hewlett-Packard will provide products and services to enable the Company to develop data centers in Europe, Australia, Japan and Brazil. Hewlett-Packard also agreed to purchase up to $50 million in convertible debt. Such debt will bear interest at a rate of 9.25% per annum and is convertible into the Company's common stock at a price of $60 per share. The Company has the right under certain circumstances to require Hewlett-Packard to convert the debt to equity. As of March 2000, Hewlett-Packard invested $25 million and these debentures are included in other long-term obligations. Until converted, the debt will be secured by equipment purchased from Hewlett-Packard with the proceeds of the investment. (7) Operating Segment and Related Information ----------------------------------------- The Company has three reportable operating segments based on management's organization of the enterprise into geographic areas - North America, Asia- Pacific and Europe. The Company evaluates the performance of its segments and allocates resources to them based upon net revenue and income/(loss) from operations. Operations and assets of the North America segment include shared corporate functions and assets, which the Company does not allocate to its other geographic segments for management reporting purposes. Summary information with respect to the Company's segments is as follows (in thousands): Three Months Ended March 31, (unaudited) ---------------------------------------------- 2000 1999 --------------------- --------------------- Net Revenue North America $ 127,624 $ 62,186 Asia-Pacific 74,884 44,410 Europe 85,445 24,632 --------------------- --------------------- Total $ 287,953 $ 131,228 ===================== ===================== Income/(Loss) from Operations North America $ (12,423) $ (8,289) Asia-Pacific (4,194) (2,860) Europe (4,302) (491) --------------------- --------------------- Total $ (20,919) $ (11,640) ===================== ===================== March 31, December 31, (unaudited) ----------------------------------------------- 2000 1999 --------------------- --------------------- Assets North America $ 1,368,731 $1,069,716 Asia-Pacific 192,681 182,748 Europe 346,001 198,909 --------------------- --------------------- Total $ 1,907,413 $1,451,373 ===================== ===================== 7

(8) Commitments and Contingencies ----------------------------- In December 1999, the Company agreed to purchase approximately $23.2 million of fiber capacity from Qwest Communications which will provide the Company with an ATM+IP based nationwide broadband backbone of nearly 11,000 route miles of fiber optic cable in the U.S. as well as private Internet peering at select sites in the U.S. and overseas. In March 2000, the Company agreed to purchase an additional $22.2 million of fiber capacity and other services. On December 9, 1999, Empresa Hondurena de Telecommunicaciones, S.A., based in Honduras, filed suit in Florida State Court in Broward County against TresCom and one of TresCom's wholly-owned subsidiaries, St. Thomas and San Juan Telephone Company, alleging that such entities failed to pay amounts due to plaintiff pursuant to contracts for the exchange of telecommunications traffic during the period from December 1996 through September 1998. The Company acquired TresCom in June 1998 and TresCom is currently the Company's subsidiary. Plaintiff is seeking approximately $14 million in damages, plus legal fees and costs. The Company filed an answer on January 25, 2000 and discovery has commenced. Because it is only in the early stages of discovery, the Company's ultimate legal and financial liability with respect to such legal proceeding cannot be estimated with any certainty at this time. The Company intends to defend the case vigorously. The Company is subject to certain other claims and legal proceedings that arise in the ordinary course of its business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be decided unfavorably to the Company. Management believes that any liability that may ultimately result from the resolution of these matters will not have material adverse effect on the financial condition or results of operations or cash flows of the Company. (9) Subsequent Events ------------------ None. 8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Primus is a facilities-based global total service provider offering bundled international and domestic Internet data and voice services to business and residential retail customers and other carriers located in the United States, Canada, Brazil, the United Kingdom, continental Europe, Australia and Japan. The Company seeks to capitalize on the increasing demand for high-quality international communications services, which is being driven by the globalization of the world's economies, the worldwide trend toward telecommunications deregulation and the growth of global data and Internet traffic. Primus provides services over its network, which consists of (i) 19 carrier-grade switches, including 15 international gateway switches in the United States, Australia, Canada, France, Germany, Japan, Puerto Rico and the United Kingdom and four domestic switches in Australia; (ii) more than 150 points of presence ("POPs") and Internet access nodes in additional markets within our principal service regions; (iii) both owned and leased transmission capacity on undersea and land-based fiber optic cable systems; and (iv) an international satellite earth station located in London, together with the capacity the Company leased on an Intelsat satellite. Utilizing this network, along with resale arrangements and foreign carrier agreements, the Company provides quality service to approximately 2.1 million customers. Net revenue is earned based on the number of minutes billable and is recorded upon completion of a call, adjusted for sales allowance. The Company generally prices its services at a savings compared to the major carriers operating in its principal service regions. The Company's net revenue is derived from carrying a mix of business, residential and carrier long distance traffic, data and Internet traffic in Australia, Canada, and Germany, and in Australia, also from the provision of both local and cellular services. The Company expects to market its services to customers with significant international long distance usage, including small- and medium-sized businesses, multinational corporations, ethnic residential customers and other telecommunications carriers and resellers. Cost of revenue is comprised primarily of costs incurred from other domestic and foreign telecommunications carriers to originate, transport and terminate calls. The majority of the Company's cost of revenue is variable, based upon the number of minutes of use, with transmission and termination costs being the Company's most significant expense. As the Company increases the portion of traffic transmitted over its leased or owned facilities, cost of revenue increasingly will be comprised of fixed costs. Although the Company's functional currency is the United States dollar, a significant portion of the Company's net revenue is derived from its sales and operations outside the United States. In the future, the Company expects to continue to derive a significant portion of its net revenue and incur a significant portion of its operating costs from outside of the United States; therefore, changes in foreign currency exchange rates may have a significant effect on the Company's results of operations. The Company historically has not engaged in hedging transactions and does not currently contemplate engaging in hedging transactions to mitigate foreign exchange risks. Other Operating Data The following information for the three months ended March 31, 2000 and 1999 (in thousands) is provided for informational purposes and should be read in conjunction with the unaudited Consolidated Financial Statements and Notes thereto contained elsewhere herein and the Consolidated Financial Statements presented with the Company's most recently filed Form 10-K. 9

------------------------------------------------------------------------------ Three Months Ended March 31, 2000 (unaudited) ------------------------------------------------------------------------------ Net Minutes of Long Distance Use ----------------------------------------------------------- Revenue International Domestic Total --------------- ----------------- ----------------- ----------------- North America $ 127,624 418,368 561,954 980,322 Asia-Pacific 74,884 44,166 159,416 203,582 Europe 85,445 257,507 214,317 471,824 --------------- ----------------- ----------------- ----------------- Total $ 287,953 720,041 935,687 1,655,728 =============== ================= ================= ================= ------------------------------------------------------------------------------ Three Months Ended March 31, 1999 (unaudited) ------------------------------------------------------------------------------ Net Minutes of Long Distance Use ----------------------------------------------------------- Revenue International Domestic Total --------------- ----------------- ----------------- ----------------- North America $ 62,186 205,194 67,958 273,152 Asia-Pacific 44,410 35,113 85,054 120,167 Europe 24,632 97,133 21,516 118,649 --------------- ----------------- ----------------- ----------------- Total $ 131,228 337,440 174,528 511,968 =============== ================= ================= ================= Results of operations for the three months ended March 31, 2000 as compared to the three months ended March 31, 1999. Net revenue increased $156.8 million or 119% to $288.0 million for the three months ended March 31, 2000, from $131.2 million for the three months ended March 31, 1999. North America: Of the net revenue increase, $65.4 million was associated with North American operations, representing a growth rate of 105%. The growth reflects increased traffic volumes in business and ethnic residential retail operations and in carrier operations, and includes the operations of the Company's 1999 and 2000 acquisitions including Telegroup (since the June 1999 effective date of the acquisition), AT&T Canada (since the May 1999 customer base acquisition), the LTN and Wintel Companies (since the March 1999 acquisition), TelSN (since the June 1999 acquisition) and Matrix Internet S.A. (since the November 1999 acquisition). The total of these acquisitions contributed $53.0 million or 81% of the total North American increase. Asia-Pacific: The Company's Asia-Pacific net revenue increased $30.5 million or 69% from $44.4 million for the three months ended March 31, 1999 to $74.9 million for the three months ended March 31, 2000. Part of the net revenue increase in the Asia-Pacific region was from the provision of local access in Australia, which resulted from unbundling of the local loop for residential customers, as well as the continued growth in the Company's voice and data and Internet sales. Europe: European net revenue increased $60.9 million, growing 247% from $24.6 million for the three months ended March 31, 1999 to $85.5 million for the three months ended March 31, 2000. The European net revenue increase is primarily attributed to the addition of Telegroup, LCR Telecom and Cards & Parts (the September 1999 German acquisition). The total of these acquisitions contributed $32.3 million or 53.0% of the European increase. The additional net revenue growth resulted from increased retail business and residential traffic in Germany and the United Kingdom. Carrier Services also increased in the United Kingdom, Germany and France from the same period in 1999. Cost of revenue increased $102.8 million, from $104.6 million for the three months ended March 31, 1999 to $207.4 million, for the three months ended March 31, 2000. As a percentage of net revenue, the cost of revenue decreased by 770 basis points from 79.7% to 72.0% primarily due to the continuing expansion of the Company's global network, a greater mix of retail versus carrier traffic, 10

the continuing migration of existing and newly generated customer traffic onto the Company's network and new higher margin product offerings such as data and Internet services. The increase in the cost of revenue is attributable to the increase in traffic volumes and associated net revenue growth, and the addition of expense from acquired operations including Telegroup, AT&T Canada, the LTN and Wintel Companies and LCR Telecom. Selling, general and administrative expenses increased $50.0 million to $79.3 million, or 27.5% of net revenue, for the three months ended March 31, 2000 from $29.3 million, or 22.3% of net revenue, for the three months ended March 31, 1999. The increase is attributable to the impact of increased advertising, marketing and sales expenses focused on retail revenue growth as well as the impact of the Company's retail acquisitions of Telegroup, AT&T Canada, the LTN and Wintel Companies, and LCR Telecom. Depreciation and amortization expense increased by $13.2 million to $22.2 million for the three months ended March 31, 2000 from $9.0 million for the three months ended March 31, 1999. The increase is associated with increased amortization expense related to intangible assets arising from the Company's acquisitions and with increased depreciation expense related to capital expenditures for fiber optic cable, switching and other network equipment being placed into service. Interest expense increased from $16.8 million for the three months ended March 31, 1999 to $29.9 million for the three months ended March 31, 2000. The increase is primarily attributable to the $300 million 5 3/4% Convertible Subordinated Debentures due 2007 ("February 2000 Debentures"), the $250 million 12 3/4% Senior Notes due 2009 ("October 1999 Senior Notes"), the $45.5 million 11 1/4% senior notes due 2009 ("Telegroup Notes"), and additional capital lease and equipment financing. Interest income increased to $7.6 million for the three months ended March 31, 2000 from $3.3 million for the three months ended March 31, 1999. The increase is a result of the net proceeds from the Company's debt and secondary equity offerings. Liquidity and Capital Resources The Company's liquidity requirements arise from cash used in operating activities, purchases of network equipment including switches, related transmission equipment and international and domestic fiber optic cable transmission capacity, satellite earth stations and satellite transmission capacity, interest and principal payments on outstanding indebtedness, and acquisitions of and strategic investments in businesses. The Company has financed its growth to date through public offerings and private placements of debt and equity securities, bank debt, equipment financing and capital lease financing. Net cash used in operating activities was $35.8 million for the three months ended March 31, 2000 as compared to net cash used in operating activities of $30.2 million for the three months ended March 31, 1999. The increase in operating cash used was comprised of an increase in the net loss and an increase in accounts receivable due to higher revenue in 2000, partially offset by an increase in accounts payable. Net cash used in investing activities was $70.3 million for the three months ended March 31, 2000 compared to net cash used in investing activities of $11.6 million for the three months ended March 31, 1999. Net cash used in investing activities during the three months ended March 31, 2000 includes $42.2 million of capital expenditures primarily for the expansion of the Company's global network as compared to $16.4 million during the three months ended March 31, 1999. Additionally, $26.0 million of cash was used during the three months ended March 31, 2000 to acquire Shore.Net, Infinity, Citrus and Bekko. Cash was also used to purchase $15.0 million of marketable securities of Pilot Network Services. Net cash provided by financing activities was $315.1 million for the three months ended March 31, 2000 as compared to net cash provided by financing activities of $173.7 million for the three months ended March 31, 1999. Cash provided by financing activities in the three months ended March 31, 2000 resulted primarily from $290.0 million of net proceeds from the sale of the February 2000 Debentures, as well as the $25.0 million Hewlett-Packard investment, partially offset $1.2 million of payments on capital leases. 11

The Company believes that the net proceeds from the 2000 Convertible Debt, together with its existing cash and available capital lease and equipment financing (subject to the limitations in the Indentures related to the Company's senior notes) will be sufficient to fund the Company's operating losses, debt service requirements, capital expenditures, possible acquisitions and other cash needs for its operations, including iPRIMUS.com, until at least June 30, 2001. The semi-annual interest payments due under the 1997 Senior Notes through August 1, 2000 have been pre-funded and will be paid from restricted investments. The Company is continually evaluating the expansion of its service offerings and plans to make further investments in and enhancements to its switches and distribution channels in order to expand its service offerings. In order to fund these additional cash requirements, the Company anticipates that it will be required to raise additional financing from public or private equity or debt sources. Additionally, if the Company's plans or assumptions change, including those with respect to the development of the network and the level of Primus's operations and operating cash flow, if its assumptions prove inaccurate, if it consummates additional investments or acquisitions, if it experiences unexpected costs or competitive pressures, or if existing cash and any other borrowings prove to be insufficient, the Company may be required to seek additional capital sooner than expected. Except as described herein, Primus presently has no binding commitment or binding agreement with respect to any material acquisition, joint venture or strategic investment. However, from time to time, the Company may be party to one or more non-binding letters of intent regarding material acquisitions which, if consummated, may be paid for with cash or through the issuance of a significant number of shares of the Company's common stock. Special Note Regarding Forward Looking Statements Statements in this Form 10-Q, including those concerning the Company's expectations of future sales, net revenue, gross profit, net income, network development, traffic development, capital expenditures, selling, general and administrative expenses, service introductions and cash requirements include certain forward-looking statements. As such, actual results may vary materially from such expectations. Factors, which could cause results to differ from expectations, include risks associated with: Limited Operating History; Entry into Developing Markets. The Company was founded in February 1994, began generating revenue in March 1995. The Company intends to enter additional markets or businesses, including establishing an Internet business, where Primus has limited or no operating experience. Accordingly, the Company cannot provide assurance that its future operations will generate operating or net income, and the Company's prospects must be considered in light of the risks, expenses, problems and delays inherent in establishing a new business in a rapidly changing industry. Limited Operating History; Entry into Internet and data business. Primus has recently begun targeting businesses and residential customers for Internet and data services through its subsidiary iPRIMUS.com and other recently acquired ISPs. The Company has been expanding and intends to continue to expand, its offering of data and Internet services worldwide. Primus anticipates offering a full-range of Internet protocol-based data and voice communications over the global broadband ATM+IP network which the Company is beginning to deploy over its existing network infrastructure. Primus has limited experience in the Internet business and cannot provide assurance that it will successfully establish or expand the business. Currently, the Company provides Internet services to business and residential customers in the United States, Australia, Canada, Brazil and Germany, and offers Internet transmission services in the Indian Ocean/Southeast Asia regions through its satellite earth station in London. The market for Internet connectivity and related services is extremely competitive. Primus's primary competitors include other ISPs that have a significant national or international presence. Many of these carriers have substantially greater resources, capital and operational experience than Primus does. The Company also expects it will experience increased competition from traditional telecommunications carriers that expand into the market for Internet services. In addition, Primus will require substantial additional capital to make investments in its Internet operations, and it may not be able to obtain that capital on favorable terms or at all. The amount of such capital expenditures may exceed the amount of capital expenditures spent on the voice portion of its business going forward. 12

Further, even if Primus is able to establish and expand its Internet business, the Company will face numerous risks that may adversely affect the operations of its Internet business. These risks include: competition in the market for Internet services; Primus's limited operating history as an ISP; Primus's reliance on third parties to provide maintenance and support services for the Company's ATM+IP network; Primus's reliance on third-party proprietary technology, including Pilot's HDI security protocol, to provide certain services to Primus's customers; the Company's ability to recruit and retain qualified technical, engineering and other personnel in a highly competitive market; Primus's ability to adapt and react to rapid changes in technology related to the Internet business; uncertainty relating to the continuation of the adoption of the Internet as a medium of commerce and communications; vulnerability to unauthorized access, computer viruses and other disruptive problems due to the accidental or intentional actions of others; adverse regulatory developments; the potential liability for information disseminated over Primus's network; and the Company's need to manage the growth of its Internet business, including the need to enter into agreements with other providers of infrastructure capacity and equipment and to acquire other ISPs and Internet-related businesses on acceptable terms. Finally, Primus expects to incur operating losses and negative cash flow from its Internet and data business as the Company expands, builds out and upgrades this part of the business. Any such losses and negative cash flow are expected to partially offset the expected positive cash flow generated by the voice business and effectively reduce the overall cash flow of Primus as a whole. Managing Rapid Growth. The Company's strategy of rapid growth has placed, and is expected to continue to place, a significant strain on the Company. In order to manage its growth effectively, the Company must continue to implement and improve its operational and financial systems and controls, purchase and utilize additional transmission facilities, and expand, train and manage its employees, all within a rapidly-changing regulatory environment. Inaccuracies in the Company's forecast of traffic could result in insufficient or excessive transmission facilities and disproportionate fixed expenses. Substantial Indebtedness; Liquidity. The Company currently has substantial indebtedness and anticipates that it and its subsidiaries will incur additional indebtedness in the future. The level of the Company's indebtedness (i) could make it more difficult for it to make payments of interest on its outstanding debt; (ii) could limit the ability of the Company to obtain any necessary financing in the future for working capital, capital expenditures, debt service requirements or other purposes; (iii) requires that a substantial portion of the Company's cash flow from operations, if any, be dedicated to the payment of principal and interest on its indebtedness and other obligations and, accordingly, will not be available for use in its business; (iv) could limit its flexibility in planning for, or reacting to, changes in its business; (v) results in the Company being more highly leveraged than some of its competitors, which may place it at a competitive disadvantage; and (vi) will make it more vulnerable in the event of a downturn in its business. Historical and Future Operating Losses; Negative EBITDA; Net Losses. Since inception, Primus had cumulative negative cash flow from operating activities and cumulative negative EBITDA. In addition, Primus incurred net losses since inception and has an accumulated deficit of approximately $267.6 million as of March 31, 2000. The Company expects to continue to incur additional operating losses and negative cash flow as it expands its operations and continues to build-out and upgrade its network. There can be no assurance that the Company's revenue will grow or be sustained in future 13

periods or that it will be able to achieve or sustain profitability or positive cash flow from operations in any future period. Acquisition and Strategic Investment Risks. Acquisitions, a key element in the Company's growth strategy, involve operational risks, including the possibility that an acquisition does not ultimately provide the benefits originally anticipated by management, while the Company continues to incur operating expenses to provide the services formerly provided by the acquired company, and financial risks including the incurrence of indebtedness by the Company in order to affect the acquisition and the consequent need to service that indebtedness. Integration of Acquired Businesses. There can be no assurance that the Company will be successful in identifying attractive acquisition candidates, completing and financing additional acquisitions on favorable terms, or integrating the acquired business or assets into its own. There may be difficulty in integrating the service offerings, distribution channels and networks gained through acquisitions with the Company's own. Successful integration of operations and technologies requires the dedication of management and other personnel which may distract their attention from the day-to-day business, the development or acquisition of new technologies, and the pursuit of other business acquisition opportunities. Intense Competition. The long distance telecommunications industry is intensely competitive and is significantly influenced by the marketing and pricing decisions of the larger industry participants. Competition in all of the Company's markets is likely to increase and, as deregulatory influences are experienced in markets outside the United States, competition in non-United States markets is likely to become similar to the intense competition in the United States. Many of the Company's competitors are significantly larger and have substantially greater financial, technical and marketing resources and larger networks than the Company, a broader portfolio of service offerings, greater control over transmission lines, stronger name recognition and customer loyalty, as well as long-standing relationships with the Company's target customers. In addition, many of the Company's competitors enjoy economies of scale that result in a lower cost structure for transmission and related costs which could cause significant pricing pressures within the industry. Dependence on Transmission Facilities-Based Carriers. The Company's ability to maintain and expand its business is dependent upon whether the Company continues to maintain favorable relationships with the transmission facilities-based carriers to carry the Company's traffic. International Operations. In many international markets, the existing carrier will control access to the local networks, enjoy better brand recognition and brand and customer loyalty, and have significant operational economies, including a larger backbone network and correspondent agreements. Moreover, the existing carrier may take many months to allow competitors, including the Company, to interconnect to its switches within its territory. There can be no assurance that the Company will be able to obtain the permits and operating licenses required for it to operate, obtain access to local transmission facilities or to market services in international markets. In addition, operating in international markets generally involves additional risks, including: unexpected changes in regulatory requirements, tariffs, customs, duties and other trade barriers; difficulties in staffing and managing foreign operations; problems in collecting accounts receivable; political risks; fluctuations in currency exchange rates; foreign exchange controls which restrict repatriation of funds; technology export and import restrictions; seasonal reductions in business activity. Dependence on Effective Information Systems. The Company's management information systems must grow as the Company's business expands and are expected to change as new technological developments occur. There can be no assurance that the Company will not encounter delays or cost-overruns or suffer adverse consequences in implementing new systems when required. Industry Changes. The international telecommunications industry is changing rapidly due to deregulation, privatization, technological improvements, expansion of infrastructure and the globalization of the world's economies. In order to compete effectively, the Company must adjust its contemplated plan of development to meet changing market conditions. The telecommunications industry is marked by the introduction of new product and service offerings and technological improvements. The Company's profitability will depend on its ability to anticipate, assess and adapt 14

to rapid technological changes and its ability to offer, on a timely and cost-effective basis, services that meet evolving industry standards. Network Development; Migration of Traffic. The long-term success of the Company is dependent upon its ability to design, implement, operate, manage and maintain the Network. The Company could experience delays or cost overruns in the implementation of the Network, or its ability to migrate traffic onto its Network, which could have a material adverse effect on the Company. Dependence on Key Personnel. The loss of the services of K. Paul Singh, the Company's Chairman and Chief Executive Officer, or the services of its other key personnel, or the inability of the Company to attract and retain additional key management, technical and sales personnel (for which competition is intense in the telecommunications industry), could have a material adverse effect upon the Company. Government Regulation. The Company's operations are subject to constantly changing regulation. There can be no assurance that future regulatory changes will not have a material adverse effect on the Company, or that regulators or third parties will not raise material issues with regard to the Company's compliance or non-compliance with applicable regulations, any of which could have a material adverse effect upon the company. Natural Disasters. Many of the geographic areas where the Company conducts its business may be affected by natural disasters, including hurricanes and tropical storms. Hurricanes, tropical storms and other natural disasters could have material adverse effect on the business by damaging the network facilities or curtailing telephone traffic as a result of the effects of such events, such as destruction of homes and businesses. 15

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposures relate to changes in foreign currency exchange rates and to changes in interest rates. Foreign currency - Although the Company's functional currency is the United States dollar, a significant portion of the Company's net revenue is derived from its sales and operations outside the United States. In the future, the Company expects to continue to derive a significant portion of its net revenue and incur a significant portion of its operating costs outside the United States, and changes in exchange rates may have a significant effect on the Company's results of operations. The operations of affiliates and subsidiaries in foreign countries have been funded with investments and other advances. Due to the long-term nature of such investments and advances, the Company accounts for any adjustments resulting from translation as a charge or credit to "accumulated other comprehensive loss" within the stockholders' equity section of the consolidated balance sheet. The Company historically has not engaged in hedging transactions to mitigate foreign exchange risk. Interest rates - The Company's financial instruments that are sensitive to changes in interest rates are its (i) 1997 $225 million 11 3/4% senior notes due August 2004, (ii) 1998 $150 million 9 7/8% senior notes due May 2008, (iii) January 1999 $245.5 million 11 1/4% senior notes due January 2009, (iv) October 1999 $250 million 12 3/4% senior notes due October 2009, and (v) February 2000 $300 million 5 3/4% convertible subordinated debentures due 2007. As of March 31, 2000, the aggregate fair value of the 1997, 1998, 1999 and 2000 senior notes approximates their face value. 16

PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are involved from time to time in litigation incidental to the conduct of our business. We believe the outcome of pending legal proceedings to which we are a party will not have a material, adverse effect on our business, financial condition, results of operation or cash flow. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (a) In March 2000, the Company acquired Eco Software, Inc. ("Shore.Net"), a U.S. based, business-focused ISP for $44.5 million, comprised of $23.5 million in cash and 477,886 shares of our common stock. The Company issued the shares in reliance upon Section 4(2) of the Securities Act of 1933. Eco Software, Inc. was previously owned by less than 10 stockholders. (b) In February 2000, the Company acquired 51% of each of CS Communications Systems GmbH and CS Network GmbH ("Citrus"), a reseller of voice traffic and seller of telecommunications equipment and accessories for $1.0 million, comprised of $0.9 million in cash and 2,092 shares of the Company's common stock. The Company issued the shares in reliance upon Section 4(2) of the Securities Act of 1933. CS Communications Systems GmbH and CS Network GmbH were previously owned by less than 10 stockholders. (c) In February 2000, the Company acquired over 96% of the common stock of LCR Telecom Group, Plc ("LCR Telecom"), and subsequently the Company acquired the remaining shares for a total of 100%, in exchange for 2,216,632 shares of the Company's common stock valued at $73.4 million. The purchase price is subject to adjustment and may be increased to a total of 2,277,092 shares. The Company issued the shares in reliance upon Regulation D, promulgated under the Securities Act of 1933, and Regulation S, promulgated under the Securities Act of 1933. (d) In January 2000, the Company acquired Infinity Online Systems ("Infinity"), an ISP based in Ontario, Canada, for $2.3 million, comprised of $1.2 million in cash and 29,919 shares of the Company's common stock. The Company issued the shares in reliance upon Section 4(2) of the Securities Act of 1933. Infinity was previously owned by less than 10 stockholders. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (see index on page 19) (b) Reports on Form 8-K Form 8-K dated February 10, 2000, was filed to announce the Company's results of 17

operations for the quarter and year ended December 31, 1999. Form 8-K dated February 11, 2000, was filed to announce the anticipated offering of $250 million in aggregate principal amount of convertible subordinated debentures due 2007 in a private placement. Form 8-K dated March 10, 2000, was filed to announce that the initial purchasers of the February 2000 Debentures had exercised their $50 million over-allotment option granted pursuant to a purchase agreement dated February 17, 2000. 18

SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED Date May 15, 2000 By: /s/ Neil L. Hazard -------------------- ----------------------- Neil L. Hazard (Executive Vice President, Chief Financial Officer and Chief Accounting Officer) 19

EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of Primus; Incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-8, No. 333-56557 (the "S-8 Registration Statement"). 3.2 Amended and Restated Bylaws of Primus; Incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1, No. 333-10875 (the "IPO Registration Statement"). 4.1 Specimen Certificate of Primus Common Stock; Incorporated by reference to Exhibit 4.1 of the IPO Registration Statement. 4.2 Form of Indenture; Incorporated by reference to Exhibit 4.1 of the Registration Statement on Form S-1, No 333-30195 (the "1997 Senior Note Registration Statement"). 4.3 Form of Indenture of Primus, as amended and restated on January 20, 1999, between Primus and First Union National Bank; Incorporated by reference to Exhibit 4.3 of the 1998 Form 10-K. 4.4 Form of Warrant Agreement of Primus; Incorporated by reference to Exhibit 4.2 of the 1997 Senior Note Registration Statement. 4.5 Indenture, dated May 19, 1998, between Primus and First Union National Bank; Incorporated by reference to Exhibit 4.4 of the Registration Statement on Form S-4, No 333-58547 (the "1998 Senior Note Registration Statement"). 4.6 Specimen 9 7/8% Senior Note due 2008; Incorporated by reference to Exhibit A included in Exhibit 4.4 of the 1998 Senior Note Registration Statement. 4.7 Indenture, dated January 29, 1999, between Primus and First Union National Bank; Incorporated by reference to Exhibit 4.3 of the 1998 Form 10-K. 4.8 Specimen 11 1/4% Senior Note due 2009; Incorporated by reference to Exhibit A included in Exhibit 4.7. 4.9 Rights Agreement, dated as of December 23, 1998, between Primus and StockTrans, Inc., including the Form of Rights Certificate (Exhibit A), the Certificate of Designation (Exhibit B) and the Form of Summary of Rights (Exhibit C); Incorporated by reference to Exhibit 4.1 to the Company's 20

Registration Statement on Form 8-A, No 000-29092 filed with the Commission on December 30, 1998. 4.10 Form of legend on certificates representing shares of Common Stock regarding Series B Junior Participating Preferred Stock Purchase Rights; Incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form 8-A, No 000-29092 filed with the Commission on December 30, 1998. 4.11 Supplemental Indenture between Primus and First Union National Bank dated January 20, 1999; Incorporated by reference to Exhibit 4.3 to Amendment No. 1 to the Company's Registration Statement on Form S-4, No. 333-76965, filed with the Commission on May 6, 1999. 4.12 Amendment 1999-1 to the Primus Telecommunications Group, Incorporated Stock Option Plan; Incorporated by reference to Exhibit 10.14 to Post-Effective Amendment No. 1 to the Company's Registration Statement on Form S-4, No. 333-76965, filed with the Commission on August 2, 1999. 4.13 Specimen 11 3/4% Senior Note Due 2004; Incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-4, No. 333-90179, filed with the Commission on November 2, 1999 (the "November S-4"). 4.14 Indenture, dated October 15, 1999, between the Company and first Union National Bank; Incorporated by reference to the November S-4. 4.15 Specimen 12 3/4% Senior Note due 2009; Incorporated by reference to Exhibit A to Exhibit 4.14 hereto. 4.16 Indenture, dated February 24, 2000, between the Company and First Union National Bank; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 4.17 Specimen 5 3/4% convertible subordinated debenture due 2007; Incorporated by reference to Exhibit A to Exhibit 4.16 hereto. 10.1 Amendment No. 1 to Stockholder Agreement among Warburg, Pincus, K. Paul Singh, Primus, and TresCom, dated as of April 16, 1998; Incorporated by reference to Exhibit 10.1 of the Form 8-K for Amendments. 10.2 Switched Transit Agreement, dated June 5, 1995, between Teleglobe USA, Inc. and Primus for the provision of services to India; Incorporated by reference to Exhibit 10.2 of the IPO Registration Statement. 10.3 Hardpatch Transit Agreement, dated February 29, 1996, between Teleglobe USA, Inc. and Primus for the provision of services to Iran; Incorporated by reference to Exhibit 10.3 of the IPO Registration Statement. 21

10.4 Employment Agreement, dated June 1, 1994, between Primus and K. Paul Singh; Incorporated by reference to Exhibit 10.5 of the IPO Registration Statement. ** 10.5 Primus 1995 Stock Option Plan; Incorporated by reference to Exhibit 10.6 of the IPO Registration Statement. ** 10.6 Primus 1995 Director Stock Option Plan; Incorporated by reference to Exhibit 10.7 of the IPO Registration Statement. ** 10.7 Registration Rights Agreement, dated July 31, 1996, among Primus, Quantum Industrial Partners LDC, S-C Phoenix Holdings, L.L.C., Winston Partners II LDC and Winston Partners LLC; Incorporated by reference to Exhibit 10.11 of the IPO Registration Statement. 10.8 Service Provider Agreement between Telstra Corporation Limited and Axicorp Pty., Ltd., dated May 3, 1995; Incorporated by reference to Exhibit 10.12 of the IPO Registration Statement. 10.9 Dealer Agreement between Telstra Corporation Limited and Axicorp Pty., Ltd. dated January 8, 1996; Incorporated by reference to Exhibit 10.13 of the IPO Registration Statement. 10.10 Hardpatch Transit Agreement dated October 5, 1995 between Teleglobe USA, Inc. and Primus regarding the provision of services to India; Incorporated by reference to Exhibit 10.14 of the IPO Registration Statement. 10.11 Master Lease Agreement dated as of November 21, 1997 between NTFC Capital Corporation and Primus Telecommunications, Inc.; Incorporated by reference to Exhibit 10.17 of Primus's Annual Report on Form 10-K for the year ended December 31, 1997 (the "1997 10-K"), as amended on Form 10-K/A dated April 30, 1998. 10.12 Primus Employee Stock Purchase Plan; Incorporated by reference to Exhibit 10.15 of the 1997 Senior Note Registration Statement. ** 10.13 Primus 401(k) Plan; Incorporated by reference to Exhibit 4.4 of the Primus Registration Statement on Form S-8 (No. 333-35005). 10.14 Registration Rights Agreement, dated May 19, 1998, among Primus Telecommunications Group, Incorporated, Primus Telecommunications, Incorporated, Primus Telecommunications Pty. Ltd. and Lehman Brothers, Inc.; Incorporated by reference to Exhibit 10.23 of the 1998 Senior Note Registration Statement. 10.15 Primus Telecommunications Group, Incorporated-TresCom International Stock Option Plan Incorporated by reference to Exhibit 4.1 of the S-8 Registration Statement. ** 10.16 Warrant Agreement between the Company and Warburg, Pincus Investors, L.P.; Incorporated by reference to Exhibit 10.6 to the TresCom For S-1. 22

10.17 Form of Indemnification Agreement between the Company and its directors and executive officers Incorporated by reference to Exhibit 10.23 to the TresCom Form S-1. 10.18 The Company's 1998 Restricted Stock Plan; Incorporated by reference to Exhibit 10.33 to Amendment No. 1 to the Company's Registration Statement on Form S-3, No. 333-86839, filed with the Commission on September 17, 1999. 10.19 Agreement for the Reciprocal Purchase of Capacity On the Systems of Each of the Company and Global Crossing Holdings Ltd. Effective as of May 24, 1999; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 10.20 Indefeasible Right of Use Agreement between Primus Telecommunications, Inc. and Qwest Communications Corporation dated December 30, 1999. *** 10.21 Common Stock Purchase Agreement between the Company and Pilot Network Services, Inc. dated December 28, 1999; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 10.22 Warrant to purchase up to 200,000 shares of common stock of Pilot Network Services, Inc. dated December 28, 1999; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 10.23 Loan Agreement between Primus Telecommunications, Inc. and NTFC Capital Corporation dated November 22, 1999; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 10.24 Resale Registration Rights Agreement among the Company, certain of its subsidiaries, Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith, Incorporated and Morgan Stanley & Co. Incorporated dated February 24, 2000; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 10.25 Multi-Currency Credit Facility Agreement between Primus Telecommunication Limited and Ericsson I.F.S; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 21.1 Subsidiaries of the Registrant; Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 27.1 Financial Data Schedule for the Company for the three months ended March 31, 2000. * * Filed herewith ** Compensatory benefit plan *** Confidential treatment has been requested. The copy filed as an exhibit omits the information subject to the confidential treatment request. 23

5 THIS SCHEDULE CONTAINS SUMMARY INFORMAION EXTRACTED FROM THE BALANCE SHEET OF PRIMUS TELECOMMUNICATIONS GROUP, INCORPORATED AT MARCH 31, 2000 AND THE INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS

3-MOS DEC-31-2000 MAR-31-2000 683,148 43,371 226,953 37,621 0 987,428 388,718 63,402 1,907,413 398,714 1,247,458 0 0 400 251,584 1,907,413 0 292,333 0 207,435 101,437 4,380 29,942 (43,252) 0 (43,252) 0 0 0 (43,252) (1.14) (1.14)