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U.S. Securities and Exchange Commission
Washington, D.C. 20549
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                                Form  10-K
                                     


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Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
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Commission File Number 1-6746


                                     
                                     
                      Indiana Bell Telephone Company,
                               Incorporated
                                     
                                     

                                           -----------------------------
                                           An Indiana Corporation
                                           -----------------------------
                                           240 North Meridian Street
                                           Indianapolis, Indiana  46204
                                           -----------------------------
                                           
                                           I.R.S. Employer Identification
                                           Number 35-0407820
                                           
                                           Telephone number   (800) 257-0902
                                           



Securities registered under Section 12(b) of the Act:  None



WE ARE A WHOLLY OWNED SUBSIDIARY OF AMERITECH CORPORATION AND MEET THE
CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(A) AND (B) OF FORM 10-K.
THEREFORE, WE ARE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT
PERMITTED BY GENERAL INSTRUCTION I(2).

We have no securities registered under Section 12(g) of the Act.  We are
and during the past 90 days have been subject to certain filing
requirements under Sections 13 and 15 (d) of the Securities Exchange Act of
1934 and have filed all the required reports during the preceding 12
months.

At February 28, 1999, 13,490,876 common shares were outstanding.

<PAGE>

   
   
                             TABLE OF CONTENTS
                                     
                                  PART I
                                     
 Item                                                        Page
 ----                                                        ----
  1.   Business
        (Abbreviated pursuant to
         General Instruction I(2)).......................      1
  
  2.   Properties
        (Abbreviated pursuant to
         General Instruction I(2)).......................      8
  
  3.   Legal Proceedings................................       8
  
  4.   Submission of Matters to a Vote of Security
        Holders..........................................      9

                                     
                                  PART II
                                     
  5.   Market for Registrant's Common Equity and
        Related Stockholder Matters.....................       9
  
  6.   Selected Financial Data..........................      10
  
  7.   Management's Discussion and Analysis of Results of
        Operations (Abbreviated pursuant to
        General Instruction I(2)).......................      11
  
  7A.  Quantitative and Qualitative Disclosures about
        Market Risk   ..................................      16
  
  8.   Financial Statements and Supplementary Data......      18
  
  9.   Changes in and Disagreements with Accountants
        on Accounting and Financial Disclosure..........      30
                                     
                                 PART III
                                     
  
  10.  Directors and Executive Officers
       of the Registrant................................      30
  
  11.  Executive Compensation...........................      30
  
  12.  Security Ownership of Certain Beneficial Owners
        and Management..................................      30
  
  13.  Certain Relationships and Related Transactions...      30
                                     
                                  PART IV
                                     
  14.  Exhibits, Financial Statement Schedules
        and Reports on Form 8-K.........................      31

       Glossary.........................................      33

       Schedule II - Valuation and Qualifying Accounts..     F-1
                                     










                                     
                                     
                                     i
   
   <PAGE>


                                     
 When reading this annual report, you should be familiar with the
 terminology unique to our business.  We have defined a number of
            terms in the Glossary beginning on page 33.
                                 
                              PART I
Item 1.  Business.

The Company

   Indiana  Bell Telephone Company, Incorporated, formed under  the
laws of the State of Indiana, has its principal office at 240 North
Meridian  Street, Indianapolis, Indiana 46204 (telephone number  1-
800-257-0902).   We  are  one  of the five  wholly  owned  landline
communications subsidiaries of Ameritech Corporation,  incorporated
in  1983 under the laws of the State of Delaware.  Ameritech is the
parent  company  of numerous other communications  businesses  with
principal  executive  offices at 30 South  Wacker  Drive,  Chicago,
Illinois  60606 (telephone number 1-800-257-0902).  We are  managed
by  our  sole  shareowner  rather than  a  board  of  directors  as
permitted by Indiana law.

   Ameritech  is  a global diversified, full-service communications
company  which  provides  local  and  long-distance  telephone  and
cellular  service, paging, security, cable TV, Internet access  and
directory  publishing  services.  Ameritech's  1998  revenues  were
$17.2  billion.   Ameritech  has  organized  its  operations  using
customer-focused  business  units,  which  aggregate   into   three
reportable segments: communications; information and entertainment;
and international.  The operations of Indiana Bell are included  in
the  results  of  several business units, and accordingly,  Indiana
Bell  is  not  managed as a separate entity.  All of  the  business
units  that  include the results of Indiana Bell are  reflected  in
Ameritech's  communications segment.  The products and services  of
the  Ameritech  companies are marketed under the "Ameritech"  brand
identity,  in  all  50 states and 40 countries.   Indiana  Bell  is
regionally  identified  and does business as  "Ameritech  Indiana,"
selling  principally landline local telephone service as  described
below.

Proposed Merger with SBC Communications Inc.

   On  May  11,  1998, Ameritech and SBC Communications Inc.  (SBC)
jointly  announced their signing of a definitive  merger  agreement
(Merger  Agreement).  The Merger Agreement provides that  a  wholly
owned  subsidiary of SBC will be merged into Ameritech (the Merger)
and  Ameritech will become a wholly owned subsidiary of  SBC.   The
Merger  is  intended to be accounted for as a pooling of  interests
and to be a tax-free reorganization.  In the Merger, each share  of
Ameritech  common stock (other than shares owned by Ameritech,  SBC
or  their  respective  subsidiaries) will  be  converted  into  and
exchanged for 1.316 shares of SBC common stock.

   The  Merger has been approved by the Board of Directors and  the
shareowners  of  each  company,  but  remains  subject  to  various
regulatory  approvals,  principally by the  Federal  Communications
Commission  (FCC), the Illinois Commerce Commission (ICC)  and  the
Public Utility Commission of Ohio (PUCO).

   On  March  23,  1999, the Department of Justice entered  into  a
consent  decree with Ameritech and SBC that would provide  a  basis
for  Department  of  Justice clearance of  both  the  SBC-Ameritech
merger   and   SBC's  proposed  acquisition  of  Comcast   Cellular
Corporation.   The  consent decree requires the parties  to  divest
certain   "overlapping"  cellular  properties  in  17  markets   in
Illinois, Indiana and Missouri, including, as previously undertaken
by  Ameritech and SBC, those in Chicago and St. Louis.   Under  the
proposed  consent  decree, Ameritech is  obligated  to  divest  its
cellular  telephone  interests in St. Louis and  other  markets  in
Missouri,  as  well  as  its interests in three  other  markets  in
Illinois  where there is an overlap with Comcast.  In the remaining
markets  in Illinois (including Chicago) and Indiana where SBC  and
Ameritech  have  overlapping  cellular  properties,  the   proposed
consent  decree allows Ameritech and SBC to choose which  of  their
two cellular properties to divest.  If Ameritech and SBC consummate
their  merger  before they have completed these  divestitures,  the
remaining  properties  to be divested will be  transferred  to  and
controlled  by  a trustee appointed by the Department  of  Justice.
The  divestitures, whether made by SBC, Ameritech or  the  trustee,
must  be completed within 180 days from the earlier of the time  of
consummation  of  the  merger or the time the parties  receive  the
final  approvals  needed for the merger  from  the  FCC.   After  a
required  60-day  comment  period on the  proposed  consent  decree
(which is expected to begin shortly), the Department of Justice  is
expected  to  reply to any public comments and seek final  approval
and  entry  of the decree by the U.S. District Court in Washington,
D.C.

   On March 29, 1999, the hearing examiners of the ICC issued their
proposed  order approving the Merger subject to certain conditions.
The more significant conditions are to return to customers 100%  of
the  net  Merger-related savings, which may be reduced  to  50%  if
certain performance requirements are met.  Further, SBC must ensure
certain employment levels will not be reduced due to

                           PAGE 1
<PAGE>

the   Merger,   and   that  capital  investments   and   charitable
contributions  in  Illinois are continued generally  at  historical
levels.   The  proposed  order is subject  to  normal  due  process
proceedings before it goes to the commissioners of the  ICC  for  a
vote.   Under Illinois law, such vote must occur on or before  June
24, 1999.

   In  February  1999,  the PUCO staff, Ameritech,  SBC,  the  Ohio
Consumers'  Counsel and certain consumer groups and new competitors
of Ameritech in Ohio signed a proposed merger settlement agreement.
The proposed settlement, which requires formal PUCO approval, among
other  things would guarantee Ameritech Ohio workforce  levels  for
two  years,  extend  the Advantage Ohio price cap  plan  for  basic
residential phone rates, provide for certain discounts  for  resold
local residential service and residential unbundled local loops  to
foster   facilities-based  residential  competition,  set   various
competitive  and service quality benchmarks and establish  monetary
penalties  if  those benchmarks are not met, and provide  financing
for consumer education and community technology funds.

   More  detailed information relating to the terms and  conditions
of  the Merger is contained in the Joint Proxy Statement/Prospectus
of Ameritech and SBC dated October 15, 1998.

Indiana Bell's Full Service Communications Business

   Indiana  Bell  is  responsible  within  its  service  areas  for
providing  telephone and other communications services, subject  to
regulation  by  the  FCC and the state regulatory  commission,  the
Indiana  Utility Regulatory Commission (IURC).  We furnish  a  wide
variety  of  advanced  communications  services,  including   local
exchange  and  toll service and network access, and  communications
products  to  business,  residential  and  communications   company
customers in an operating area comprised of seven Local Access  and
Transport  Areas  (LATAs) in Indiana.  These  LATAs  are  generally
centered on a city or other identifiable community of interest, and
each  LATA marks the boundary within which we may provide telephone
service.  We provide two basic types of communications services:

-  We   transport  communications  traffic  between  a   customer's
   equipment and the telephone exchange offices located within  the
   same  LATA  (intraLATA service).  These services  include  local
   exchange,  private  line and intraLATA toll services  (including
   800 and special services for data, radio and video transport).
-  In  addition, we provide exchange access service, which links  a
   subscriber's  telephone or other equipment to  the  transmission
   facilities  of  long-distance carriers, which  in  turn  provide
   communications  service  between  LATAs  (interLATA,  or   long-
   distance, service).
   
   We  serve  about 64% of the population and 28% of the geographic
area  of  Indiana.   The  remainder  of  the  state  is  served  by
nonaffiliated telephone companies.

   In  addition,  we provide public telephone and  local  and  toll
operator  services (including collect calls, third number  billing,
person-to-person  and  calling card calls).  A  national  directory
assistance  service is offered by us in parts  of  Indiana  and  by
other  Ameritech  subsidiaries in the  other  four  states  in  the
Ameritech  region.   We offer call management  services  (including
voice  mail, Caller ID, call waiting and call forwarding), as  well
as digital network services (such as online database access and fax
messaging,  document sharing functions and video  conferencing  for
desktop computers).  We provide billing and collection services for
several  companies,  including billing for  long-distance  services
offered  by certain long-distance carriers.  We currently  offer  a
single  monthly statement for phone service and a variety of  other
Ameritech  services as well as around-the-clock  customer  service,
for all residential, small business and home office customers.

   We  market  our  local phone services on a  wholesale  basis  to
certain  other  companies that resell our  network  services.   Our
customers  are  other network and information providers,  including
cellular  and personal communications services and competing  local
service  companies, who buy our services to use  in  their  product
offerings.

   In  1998, we added 78,000 customer access lines, primarily as  a
result  of second line additions and increased business usage.   We
now  serve  2,241,000 lines in Indiana, a 3.6% increase over  lines
served in 1997. Demand for speed and access drove record growth  in
our data services, reflecting, among other things, strong increases
in  sales  of high-speed lines and high-capacity circuits.   Demand
for call management services also grew, as customers sought greater
convenience and control over their telephone communications.

   
                          PAGE 2
<PAGE>


   Under an agreement with Ameritech Publishing, Inc., an Ameritech
subsidiary  doing  business as Ameritech Advertising  Services,  we
furnish  to  Ameritech Publishing certain services and data  to  be
used  by  them  in  publishing  and  distributing  classified   and
alphabetical directories.  In exchange, we receive compensation for
our services and data.

   Ameritech  Services, Inc. (ASI), a company we own  jointly  with
the  other  four  Ameritech  landline communications  subsidiaries,
provides us with technical services, procurement, marketing,  human
resources  management and regulatory planning,  as  well  as  labor
contract  bargaining oversight and coordination.  ASI is  a  shared
resource,  providing  operational support for  the  five  Ameritech
landline  communications subsidiaries and integrated communications
and information systems for all Ameritech companies.

   In  1998,  about 89% of our total operating revenues  were  from
communications  services and the remainder  were  principally  from
billing  and collection services, rents, directory advertising  and
other  miscellaneous nonregulated operations.   About  68%  of  the
revenues   from   communications  services  were  attributable   to
intrastate operations.

Regulatory Environment - Federal

   Among  other  things,  the FCC develops and implements  policies
concerning  interstate  communications by  wire.   In  addition  to
developing   regulations  to  carry   out   the   intent   of   the
Telecommunications Act of 1996 (the 1996 Act), the  FCC  prescribes
for  certain communications companies a uniform system of  accounts
and rules for apportioning costs between regulated and nonregulated
services.  The FCC, in consultation with representatives  of  state
regulatory commissions, is also responsible for the principles  and
standard procedures used to separate regulated property, plant  and
equipment  costs,  revenues, expenses, taxes and  reserves  between
those applicable to interstate services under FCC jurisdiction  and
those  applicable to intrastate services under the jurisdiction  of
the applicable state regulatory commission.

The Telecommunications Act of 1996

   In  general, the 1996 Act includes provisions designed  to  open
local  exchange markets to competition and to afford  the  regional
holding  companies  (RHCs)  and their  affiliates  the  competitive
opportunity  to provide interLATA (long-distance) services.   Under
the  1996  Act, the RHCs ability to provide in-region long-distance
services  is  dependent  upon their satisfaction  of,  among  other
conditions,   a  14-point  "competitive  checklist"   of   specific
requirements for opening the local market to competition.

   In  late 1997, a U.S. District Court in Texas ruled that certain
line-of-business  restrictions  in  the  1996  Act,  including  the
requirement  in  Section 271 that the RHCs  must  comply  with  the
competitive  checklist  before being  permitted  to  provide  long-
distance   services  to  local  phone  customers,  constituted   an
unconstitutional  bill of attainder by virtue  of  their  exclusive
applicability to the RHCs.  The U.S. Court of Appeals for the Fifth
Circuit  reversed that decision in September 1998, and  in  January
1999  the  U.S.  Supreme Court declined to hear an  appeal  of  the
appellate court decision.

   In  two  other  cases,  similar constitutional  challenges  were
rejected  by the U.S. Court of Appeals for the District of Columbia
Circuit  (the  D.C. Circuit Court).  In May 1998, the D.C.  Circuit
Court  found  that  Section  274 of  the  1996  Act,  which  covers
electronic   publishing   activities,   did   not   constitute   an
unconstitutional  bill  of attainder.  A petition  for  certiorari,
seeking review of that decision, is pending before the U.S. Supreme
Court.   In  December  1998, the D.C. Circuit Court  ruled  against
another  bill  of attainder constitutional challenge to  the  long-
distance provisions of Section 271 of the 1996 Act.

Local Interconnection and Unbundled Access

   In  January  1999, the U.S. Supreme Court issued its opinion  on
various  cross-appeals of the 1997 decision  of  the  U.S.  Circuit
Court  of Appeals for the Eighth Circuit (the Eighth Circuit Court)
relating  to  the  FCC's  1996 order on the  local  interconnection
provisions of the 1996 Act (the Interconnection Order).

   The  Supreme  Court  reversed portions  of  the  Eighth  Circuit
Court's earlier decision that had vacated several provisions of the
Interconnection  Order.   The  Court  decided  that  the  FCC   has
rulemaking  authority to implement the local competition provisions
of  the  1996 Act, including pricing methodology.  This  overturned
the  Eighth Circuit Court's ruling that the states were vested with
exclusive  jurisdiction over the pricing for local interconnection,
unbundled  network  elements and local service resale  provided  by
incumbent  local  exchange carriers (ILECs)  to  competitive  local
exchange  carriers (CLECs).  The Supreme Court also reinstated  the
FCC's  "pick  and  choose" rules allowing  CLECs  to  select  among
individual   provisions   from   other   existing   interconnection
agreements.

   
                          PAGE 3
<PAGE>


   The  Supreme  Court  upheld  the FCC's  determination  that  the
definition of a network element could include items beyond physical
facilities  and  equipment,  such as operational  support  systems,
operator services, directory assistance and vertical services  such
as  call  forwarding and caller identification.  It  further  ruled
that  the  FCC  could  bar ILECs from separating  already  combined
network elements.  However, the Supreme Court overturned the  FCC's
rule  identifying  and  requiring ILECs to offer  specific  network
elements,  finding that the FCC had not adequately  considered,  as
required by the 1996 Act, whether those specific unbundled  network
elements were "necessary" or whether the failure to provide  access
to  them might "impair" the ability of CLECs to provide competitive
services.  We believe that this ruling supports our view  that  the
objectives of the 1996 Act, including development and deployment of
advanced technologies desired by customers, will best be served  by
encouraging   infrastructure  investments,  rather   than   through
unlimited blanket access to all ILEC network elements.

   Since   the   Eighth   Circuit  Court's  1997   opinion,   local
interconnection matters and unbundled network element pricing  have
been   resolved   primarily   through  negotiated   interconnection
agreements  or  state  commission  arbitration  proceedings.    The
substantive  validity  of the FCC's pricing  rules,  including  its
total   element   long-run  incremental   cost   (TELRIC)   pricing
methodology,  was  not  before  the  Supreme  Court,  and  will  be
addressed by the Eighth Circuit Court on remand.  Pending  judicial
resolution   of  the  appropriate  pricing  methodologies   and   a
determination  by the FCC of which unbundled network elements  must
have  made available,  we expect to continue to negotiate and enter
into  interconnection  agreements and pursue,  through  appropriate
state or federal proceedings, timely recovery of our costs.

   In  February  1999, Ameritech sought review by the U.S.  Supreme
Court  of  the  separate Eighth Circuit Court  decision  last  year
regarding  shared  transport.  In 1998, the  Eighth  Circuit  Court
upheld the FCC's determination that "shared transport," which would
include  access  to  all of an ILEC's transport  facilities,  is  a
network element that should be made available to competitors on  an
unbundled basis.

   The  outcome  of future regulatory and judicial developments  in
this  area  is subject to continuing uncertainty.  We believe  that
the  pricing rules and methodologies generally adopted by our state
commission  with respect to our existing interconnection agreements
should  not differ materially from those that may be applied  under
proposed FCC pricing methodologies.  We further expect that  future
judicial  or  regulatory decisions will define reasonable  limiting
standards,  consistent with the purposes of the  1996  Act,  as  to
which  of  our existing network elements must be made available  to
competitors.   We  can  give  no assurance,  however,  that  future
regulatory  and  judicial determinations may not  have  a  material
adverse effect on our future revenues and operating margins.

Reciprocal Compensation

   A  number  of  CLECs  are  engaged in  regulatory  and  judicial
proceedings  with  various  ILECs,  including  Indiana  Bell,  with
respect to the payment of reciprocal compensation to the CLECs  for
calls originating on the ILECs' networks for dial-up connections to
access the Internet via Internet service providers (ISPs) served by
the  CLECs'  networks.   The  CLECs have asserted  that  reciprocal
compensation  for  such  calls is provided for  by  interconnection
agreements  between the CLECs and the ILECs.  Together  with  other
ILECs,  Ameritech has maintained that we are not required  to  make
such  reciprocal compensation payments pursuant to those agreements
because such traffic is interstate access service, not local.

   On  February 26, 1999, the FCC ruled that a substantial  portion
of  Internet traffic is interstate and therefore under federal  law
it  is  not subject to reciprocal compensation obligations.   As  a
result, the FCC issued a notice of proposed rulemaking to develop a
federal  inter-carrier  compensation  rule  for  Internet  traffic.
During  the  interim, the FCC concluded that state commissions  may
determine in arbitrations whether reciprocal compensation should be
paid  for this traffic.  In finding that dial-up calls to ISPs  are
largely interstate, the FCC concluded that dial-up traffic  to  the
Internet  does  not  terminate  at  the  ISP's  local  server,  but
continues  to  the  ultimate Internet website, which  is  often  in
another  state.  This echoed an earlier FCC opinion  and  order  in
response to a federal tariff application for a high-speed dedicated
Internet connection.  The FCC noted, however, that carriers  remain
bound by their existing interconnection agreements, and thus may be
subject  to  reciprocal  compensation  obligations  to  the  extent
provided  by  such interconnection agreements.  A number  of  CLECs
have filed petitions seeking federal appellate court review of  the
FCC's  ruling  on the interstate nature of dial-up calls  to  ISPs.
Various ILECs have challenged the FCC's order with respect  to  the
ability  of state commissions to impose reciprocal compensation  on
Internet traffic.

   
                          PAGE 4
<PAGE>


   Ameritech  believes that this FCC ruling confirms its view  that
Internet traffic is appropriately classified as interstate and that
reciprocal  compensation is not payable in connection with  dial-up
access  to  the Internet via ISPs.  Ameritech therefore intends  to
continue   to  pursue  judicial  appeals  of  the  contrary   state
commission  determinations that preceded this  FCC  ruling.   Cases
that   involve   appeals  by  Ameritech's  landline  communications
subsidiaries of adverse decisions are currently pending before  the
U.S.  Court  of  Appeals for the Seventh Circuit and U.S.  District
Courts in Michigan and Wisconsin.

   Ameritech  believes that its view, that reciprocal  compensation
is not payable in these circumstances, ultimately should be upheld.
However,  there can be no assurance as to that outcome or  that  we
will  not be required to begin to make such reciprocal compensation
payments  under existing interconnection agreements.   Pending  the
outcome of current judicial appeals, Ameritech's Illinois, Michigan
and  Wisconsin  landline  communications  subsidiaries  are  making
reciprocal  compensation  payments,  under  protest,  pursuant   to
existing  interconnection agreements with CLECs providing  services
to  ISPs.   In  addition to such payments, we are  making  periodic
accruals  of  amounts which may become payable in  Indiana  in  the
event our view is not ultimately upheld.

Universal Service, Access Charge Reform and Price Caps

   In  May  1997, the FCC issued three closely related orders  that
established rules to implement the universal service provisions  of
the  1996  Act  (the Universal Service Order) and  to  revise  both
interstate access charge pricing (the Access Reform Order) and  the
price cap plan for ILECs (the Price Cap Order).

Universal Service

   The  FCC's  Universal Service Order provides that all interstate
telecommunications  providers will be  required  to  contribute  to
universal  service  funding,  based  on  retail  telecommunications
revenues.   The Universal Service Order establishes a multi-billion
dollar  interstate  universal service fund to  help  link  eligible
schools  and  libraries and low-income consumers and  rural  health
care  providers to the global telecommunications network (including
the  Internet).   The  FCC  directed the phase-in  of  these  funds
through 1999.

Access Charge Reform

   In  its  Access  Reform  Order, the FCC restructured  interstate
access  pricing  and adopted changes to its tariff  structure  that
require ILECs to use rates that reflect the type of costs incurred.

   In  addition  to the changes introduced in connection  with  the
Access  Reform Order, we have implemented state changes that mirror
the   federal   access  reform  structure.   Various  interexchange
carriers  opposing  such changes have filed complaints  before  the
Illinois,  Michigan and Wisconsin state commissions  seeking  lower
access  charges.  The state commissions in Illinois  (the  Illinois
Commerce  Commission)  and Michigan (the  Michigan  Public  Service
Commission or MPSC), in response to such a complaint, have  ordered
Ameritech  to  split  the intrastate primary interexchange  carrier
charge  (PICC) into two separate per-line components, with one-half
of  the total charge payable by the intraLATA toll carrier and  the
other  half by the interLATA toll carrier.  A similar split of  the
intrastate   PICC  was  ordered  by  the  IURC   in   its   ongoing
investigation of universal service and access reform.  Accordingly,
the  revenues  they receive from this charge will decrease  to  the
extent  that Ameritech is the intraLATA toll carrier.  In addition,
the MPSC required that these changes be made retroactive to January
1,  1998,  when  the  initial tariffs for this charge  were  filed.
Ameritech has appealed the MPSC's order.

Price Caps

   Our   interstate  access  services  are  subject  to  price  cap
regulation, which limits prices rather than profits.  The Price Cap
Order  effectively reduced access charges by increasing  the  price
cap  productivity offset factor to 6.5% from the previous 5.3%  and
by  applying  this factor uniformly to all access  providers.   The
order  also required ILECs subject to price cap regulation  to  set
their  1997 price cap index assuming that the 6.5% factor had  been
in  effect  since July 1996.  Certain parties have sought  judicial
review  of the Price Cap Order, and a decision by the D.C.  Circuit
Court with respect to these matters currently is pending.

   We   currently  cannot  predict  the  precise  impact  of  these
regulatory changes on our business, especially as their nature  and
timing may evolve in connection with judicial and FCC consideration
of other provisions of the 1996 Act.

   
                          PAGE 5
<PAGE>


Number Portability

   On   May   5,   1998,  the  FCC  entered  an  order   to   allow
telecommunications carriers, such as Indiana Bell, to recover  over
a  five-year  period their carrier-specific costs  of  implementing
long-term number portability.  Long-term number portability  allows
customers to retain their local telephone numbers in the event they
change  local  exchange carriers.  We are completing implementation
of  long-term number portability in compliance with an FCC-mandated
schedule.    Our  number  portability  surcharge  became  effective
February  1,  1999,  subject to a designation  order,  which  could
result in a reduced surcharge and a partial refund.

Pay Phone Per Call Compensation

   In  February 1999, the FCC ruled on remand from the D.C. Circuit
Court  that the rate interexchange carriers are to pay us for their
customers'  "dial-around" access or toll-free calls originating  on
our  pay phones be decreased from $0.284 per call to $0.24 per call
commencing  upon the April 1999 effective date of the  order.   The
FCC also directed that a reduced rate of $0.238 per call be applied
retroactively  for  the period from October  7,  1997  through  the
effective  date of the FCC order.  Based on the February  1999  FCC
ruling,  which  we  may appeal, our previously reported  pay  phone
revenues  will be reduced by approximately $3.1 million, with  such
reduction to be reflected in the first quarter of 1999.

Audit Report on Continuing Property Records

   On  March 12, 1999, the FCC released the result of a staff-level
audit  of  the property records of certain central office equipment
maintained  by  Ameritech's  landline communications  subsidiaries,
including  Indiana  Bell, and the other RHCs.  Based  solely  on  a
physical  verification audit, this report alleged an overstatement,
and  consequently  recommended a write-off, of  approximately  $567
million  of  Ameritech's  central  office  equipment;  however   no
allocation  of  the  write-off  among  Ameritech's  five   landline
communication  subsidiaries  was  reflected  in  the   audit.    In
releasing  this audit report, the FCC stated that it did  not  pass
judgment  on  its accuracy or the reasonableness of its conclusions
or recommendations.

   Ameritech  has issued a response to the audit that, among  other
things,  disputes  the  validity of its  auditing  and  statistical
sampling  methods.  We also dispute the practical  consequences  of
the  FCC's property audit while under a price cap regulatory  plan.
Further,  in the event the FCC required us to write central  office
equipment  off  our books, we believe there would be no  accounting
impact  on  net  plant  because  we  follow  the  group  method  of
depreciation.   Under  this method plant  retirements  are  charged
against the accumulated depreciation balance.

   The  FCC  has announced plans to seek public comment  on  issues
raised by the audit results.

Regulatory Environment - State

   We  are  also subject to regulation by the IURC with respect  to
certain  intrastate  rates and services.  In June  1994,  the  IURC
approved an alternative regulation proposal - Opportunity Indiana -
that  eliminated  rate-of-return regulation and  replaced  it  with
price  regulation.   Under  the plan,  we  instituted  market-based
pricing   and  flexibility  for  competitive  services,   including
Centrex,  dedicated  communications services,  800  service,  WATS,
operator services and business intraLATA toll service.

   In  1997,  we  filed a revised alternative regulation  plan  and
requested an interim extension of Opportunity Indiana which was due
to  expire  at  the end of 1997.  In December 1997, the  Commission
issued  a final order on interim relief in the Opportunity  Indiana
proceeding.   The order addressed the manner in which  we  will  be
regulated  until such time as a longer term replacement  regulatory
structure   is  finalized.   The  ruling  extended  most   of   the
alternative  regulation plan that had been  in  place  since  1994.
However,  we  were  also  ordered to reduce  our  rates  for  basic
residential  and  business  service by 4.6%  and  to  continue  our
infrastructure  spending  on fiber optics for  interested  schools,
hospitals and government centers, and on contributions to a fund to
provide distance learning equipment and courses in schools all over
the  state.   We  have initiated an appeal of  this  order  to  the
Indiana Court of Appeals, and we expect that briefing on the appeal
will conclude in the first quarter of 1999.  Until such time as the
Court  of  Appeals  issues  a ruling, we  will  operate  under  the
provisions  of the IURC's final order on interim relief,  with  the
exception  of the requirement to reduce basic local service  rates.
Because  Indiana  law  provides that we can continue  charging  our
current  rates  until the order is entered on the appeal,  we  will
maintain basic local rates at their current levels.

   
                          PAGE 6
<PAGE>


Long-distance Services

   InterLATA  long-distance is a $1 billion  market  in  our  local
service  area.   Under the 1996 Act, Ameritech and the  other  RHCs
must  open  their  respective  local  markets  to  competition   by
implementing  a 14-point checklist before they can offer  interLATA
long-distance  services  to  their local  landline  customers.   In
considering   an  application  to  offer  interLATA   long-distance
service, the FCC must determine whether or not an RHC has satisfied
the  statutory  criteria, including the competitive  checklist  and
various structural and accounting rules, and whether its entry into
long-distance is consistent with the public interest.   An  RHC  is
restricted from providing interLATA long-distance service until the
FCC  determines that these criteria have been met.  The  FCC  gives
substantial  weight  to  Department of Justice  recommendations  in
reviewing RHC applications to enter the market.  In preparation, we
have  negotiated or arbitrated numerous agreements with competitors
to  allow  interconnection access to our network elements at  cost-
based  rates and purchase of our local services at wholesale  rates
for resale to the public.

   FCC  rules  require  that  interLATA  long-distance  service  be
offered   by   Ameritech's  long-distance   subsidiary,   Ameritech
Communications  Inc.,  which is certified to provide  long-distance
service  in  all  states outside the Ameritech  five-state  region.
Accordingly,  Ameritech's entry into this market will not  generate
long-distance revenues for Indiana Bell.

Evolution of the Industry

   Growing  customer  need  for  new  services,  new  technologies,
regulatory reform and corporate alliances are accelerating the pace
of  change  and  creating intense competition in the communications
industry.   We  believe that more competition in  our  industry  is
inevitable.

   With   the   passage  of  the  1996  Act  and  other  regulatory
initiatives,  our local service markets have been more  extensively
opened  to  new  competitors, many of which are  believed  to  have
initially  targeted  high-volume  business  customers  in   densely
populated   areas.   Interconnection  agreements  with  competitive
service  providers require us to provide interconnection or  access
to   unbundled   network   elements   at   cost-based   rates   and
telecommunications services at discounted, wholesale rates.   These
agreements  and  applicable tariffs may  result  in  some  downward
pressure on our local service revenues, as a portion of our revenue
shifts  from local service at retail prices to network  access  and
wholesale  services at lower rates and as some competitors  provide
services using their own networks, in whole or in part.  We  cannot
predict with certainty the impact that these and other developments
ultimately  may have on our future business, results of  operations
or financial condition.

Patents, Trademarks and Other Intellectual Property

   Indiana Bell, through its parent, Ameritech, has rights  to  use
various  patents,  copyrights, trademarks  and  other  intellectual
property necessary to conduct its business.  We do not believe that
the  expiration  of  any  of  our  intellectual  property,  or  the
nonrenewal  of  rights  to use it, would have  a  material  adverse
affect on our business.

Indiana Bell's Human Resources

   We  employed 3,849 people as of December 31, 1998, compared with
4,002  as  of  December  31, 1997.  The Communications  Workers  of
America  (CWA)  and  the  International Brotherhood  of  Electrical
Workers (IBEW) represent about 3,250 of our employees.  Of those so
represented, about 93% are represented by the CWA and about 7%  are
represented by the IBEW, both of which are affiliated with the AFL-
CIO.

   During  June  1998,  the IBEW ratified a new five-year  contract
effective  June  28,  1998.   The  contract  provides  basic   wage
increases  of  11.2% (compounded) over three years and  a  one-time
$500  signing  bonus  per  employee.   In  addition,  the  contract
addresses  benefits,  pensions, work rules and  other  wage-related
items.   The contract will be re-opened in 2001 to address  certain
economic wage issues for the final two years of the contract.

   The  CWA  reached similar terms under an agreement  ratified  by
union  membership on July 17, 1998.  The CWA contract was effective
August  9,  1998  and  expires on March  31,  2001.   The  contract
provides  basic  wage  increases of  11.2%  (compounded)  over  the
contract period and a one-time $500 signing bonus per employee, and
also  addresses  benefits, pensions, work  rules  and  other  wage-
related items.

   
                          PAGE 7
<PAGE>


Environmental Matters

   Indiana  Bell  is subject to a number of environmental  matters,
primarily  as  a  result of contractual sharing arrangements  among
Ameritech and the other RHCs that continue in effect and relate  to
predivestiture contingent liabilities of AT&T Corp.  Our  financial
statements reflect a recorded liability for our estimated share  of
such  contingent liabilities in accordance with generally  accepted
accounting principles.

Item 2.  Properties.

General

   The  large  number  and widespread locations of  Indiana  Bell's
properties  make  it difficult to provide detailed descriptions  of
the  physical  characteristics of the  individual  components.   In
general,  however,  we can categorize our investment  in  property,
plant and equipment at year-end 1998 as follows:

-  "Land  and  Buildings,"  consisting of  land  we  own  including
   improvements   (namely  central  and  administrative   offices),
   represents 9% of our total investment;
-  "Central office equipment," including switching and transmission
   equipment and related facilities, represents 40%;
-  "Cable, wiring and conduit (or outside plant)," including aerial
   cable,  poles, underground cable, conduit and wiring, represents
   46%;
-  "Other,"  including motor vehicles, computers and other  support
   assets, represents 4%; and,
-  "Plant under construction" represents 1%.
   
   Virtually  all  of our plant investment is attributable  to  the
communications segment.

Capital Expenditures

   Our  total investment in property, plant and equipment increased
from  about $3.0 billion at year-end 1993 to $3.4 billion at  year-
end  1998,  after giving effect to retirements but before deducting
accumulated  depreciation  at  either  date.   Growth  in   capital
expenditures  was driven by demand in our business  and  regulatory
requirements,  such  as  those related to the  1996  Act.   Capital
expenditures,  the  single largest use  of  our  funds,  were  $196
million in 1998, $178 million in 1997 and $203 million in 1996.

   Our  capital spending is based on customer needs and Ameritech's
overall  business  plans.  Investments in  technologies  that  will
enable  us  to  provide  customers with new products  and  services
represent  a high priority.  We continued to modernize our  network
throughout   1998.    By   investing  in   our   telecommunications
infrastructure,  we  can anticipate and meet  the  demands  on  the
network  by  customers  seeking Internet access,  high  speed  data
transmission,   information  management  and  other  communications
services.

   The  FCC  recently issued a staff-level audit report  concerning
certain  of our property records.  Refer to Item 1 for a discussion
of this audit report.

Item 3.  Legal Proceedings.

   We  are  a  party  to  various legal and regulatory  proceedings
arising in the ordinary course of business.  While there can be  no
assurance as to the ultimate outcome of any pending proceedings, as
of  the  date of this report, Ameritech does not believe  that  any
pending  legal proceedings to which Indiana Bell or its  properties
are  subject  are  required  to  be  disclosed  as  material  legal
proceedings pursuant to this item.

   In November 1997, we reached an agreement in principle to settle
class  action  lawsuits regarding our inside wire  maintenance  and
LINE-BACKERr  services.   Those customers who  subscribe  to  these
services  pay  a  monthly fee to cover repairs to inside  telephone
wiring  and  jacks.   They  thereby avoid  charges  for  labor  and
material at the time of repair.  The lawsuits charged unfair  sales
practices  and  violations of the antitrust laws allegedly  arising
from  our  sales and marketing practices.  The settlement  consists
of, among other things, free calling cards and pay-per-use services
over specified time periods, as well as billing credits.

   
                          PAGE 8
<PAGE>


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

   Omitted pursuant to General Instruction I(2).

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

   We  are  a  wholly  owned  subsidiary of Ameritech  Corporation.
Accordingly,  our common stock is not publicly traded.   Management
declares  quarterly dividends at its discretion,  typically  in  an
amount  equal to a substantial portion of estimated net income  for
the quarter.

   
                          PAGE 9
<PAGE>


   
   
                                PART II
                                   
Item 6.  Selected Financial Data.

             INDIANA BELL TELEPHONE COMPANY, INCORPORATED
                        SELECTED FINANCIAL DATA
                         (Dollars in Millions)
                                   
                               1998      1997      1996      1995      1994
                               ----      ----      ----      ----      ----
Revenues
 Local service...........  $  723.7  $  676.3  $  634.1  $  572.1  $  531.2
 Interstate
  network access.........     274.5     272.1     258.9     242.9     243.2
 Intrastate
  network access.........      73.7      78.5      81.5      89.8     103.6
 Long-distance...........     136.6     140.3     151.6     150.7     152.3
 Other...................     154.5     132.7     125.7     156.9     137.8
                           --------  --------  --------  --------  --------
Total revenues...........   1,363.0   1,299.9   1,251.8   1,212.4   1,168.1
Operating expenses*......     903.4     866.4     836.3     799.4     951.3
                           --------  --------  --------  --------  --------
Operating income.........     459.6     433.5     415.5     413.0     216.8
Interest expense.........      17.4      17.5      16.1      17.4      17.3
Other income, net........       5.3       5.1       3.8       2.1       4.8
Income taxes.............     175.1     159.5     141.8     146.8      67.3
                           --------  --------  --------  --------  --------
Income before
 extraordinary items.....     272.4     261.6     261.4     250.9     137.0
Extraordinary items **...       -         -         -         -      (220.7)
                           --------  --------  --------  --------  --------
Net income (loss)........  $  272.4  $  261.6  $  261.4  $  250.9  $  (83.7)
                           --------  --------  --------  --------  --------
Total assets.............  $1,628.8  $1,594.4  $1,595.7  $1,568.2  $1,541.5
Property, plant
 and equipment, net......  $1,186.7  $1,197.0  $1,215.3  $1,192.2  $1,227.6
Capital expenditures,
 net.....................  $  196.4  $  178.4  $  203.2  $  153.6  $  140.1
Long-term debt...........  $  233.9  $  233.9  $  234.0  $   85.8  $   86.1
Debt ratio...............      25.3%     28.5 %    30.4 %    27.3 %    34.1 %
Return on average
 equity..................      37.1%     37.8 %    38.8 %    39.3 %   (12.0)%
Return on average
 total capital...........      29.2%     29.0 %    29.1 %    28.8 %    (5.8)%
Pretax interest
 coverage................      31.6      25.1      29.8      26.2      14.1
Customer lines,
 end of year (000s)......     2,241     2,163     2,086     2,018     1,924
Customer lines served by -
 Digital electronic
  offices................      87.8%     87.6 %    82.1 %    80.3 %    78.3 %
 Analog electronic
  offices................      12.2%     12.4 %    17.9 %    19.7 %    21.7 %
Customer lines
 per employee............       582       540       515       482       438
Employees, end of year...     3,849     4,002     4,052     4,188     4,398
-------------------
 
   * Operating  expenses  in    1995 include  a  net  work  force
     restructuring credit of $36.9 million, while 1994  operating
     expenses  include  a nonmanagement work force  restructuring
     charge of $93.5 million.
     
 **  We  had a noncash after-tax extraordinary charge in 1994  of
     $220.7  as a result of the discontinuance of the application
     of FAS 71 (accounting in a regulatory environment).
   
                         PAGE 10
<PAGE>


 
 
 
Item 7.  Management's Discussion and Analysis of Results of
         Operations.
         (Dollars in Millions)

   Following  is  a discussion and analysis of the results  of  our
operations  for the year ended December 31, 1998 and for  the  year
ended December 31, 1997, which is based on the Statements of Income
and Reinvested Earnings.  Other pertinent data is also set forth in
Selected Financial Data.

Results of Operations

Revenues

   Total  operating  revenues were $1,363.0 million  for  1998  and
$1,299.9 million for 1997.  The increase of $63.1 million  or  4.9%
consisted of the following:

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
     Local service.........   $ 723.7   $ 676.3   $   47.4      7.0

   Local  service revenues include basic monthly service  fees  and
usage charges, fees for call management services, installation  and
connection  charges  and  public  phone  revenues.  Local   service
revenues  increased  in  1998 due primarily  to  volume  increases,
reflecting  strong growth in the demand for data services.   Growth
in  ISDN  lines  and  high-capacity circuits,  resulting  from  the
proliferation  of  fax  machines,  Internet  usage   and   computer
communications,  drove  the  volume  increases.   Sales   of   call
management  services,  such as call waiting  and  Caller  ID,  also
increased,  as  did the usage of these services  on  a  pay-per-use
basis.  Access lines in service increased 3.6% to 2,241,000  as  of
December  31, 1998 compared with 2,163,000 as of December 31,  1997
(restated to standardize counting of voice-grade equivalent lines).

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
     Network access
      Interstate...........   $ 274.5   $ 272.1   $    2.4      0.9
      Intrastate...........      73.7      78.5       (4.8)    (6.1)

   Network  access  revenues  are  fees  charged  to  interexchange
carriers  that  use  our local landline communications  network  to
connect customers to their long-distance network.  In addition, end
users  pay  flat  rate access fees to connect to the  long-distance
networks.    These  revenues  result  from  both   interstate   and
intrastate services.  Interstate network access revenues  increased
in  1998  due primarily to an increase in network minutes  of  use,
resulting  from overall growth in the volume of calls  handled  for
interexchange carriers.  Beginning in 1998, as a result of a change
in  the FCC's mechanism for funding universal service, we accounted
for expenses related to universal service funding as a component of
other  operating  expenses, rather than  a  revenue  offset.   This
resulted  in  a  revenue  increase of  approximately  $6.1  million
compared  with the prior year.  Net rate reductions resulting  from
access  charge  reform  effective  July  1,  1997,  and  additional
reductions  that  took  effect July 1, 1998, partially  offset  the
increase.   In  addition, a change in reporting  classification  of
certain  pay phone revenues from interexchange carriers  for  their
customers'  use of our pay phone reduced interstate network  access
revenues and increased miscellaneous revenues by approximately $9.8
million  in  1998.   Minutes  of use related  to  interstate  calls
increased by 3.6% in 1998 compared with the prior year.

   Intrastate  network  access  revenues  decreased  in  1998   due
primarily  to rate reductions resulting from access charge  reform,
combined  with a change in reporting classification of certain  pay
phone  revenues  as discussed above.  This change in classification
reduced   intrastate   network  access   revenues   and   increased
miscellaneous  revenues  by approximately  $1.1  million  in  1998.
Volume  increases,  resulting primarily from increased  demand  for
network  access with respect to intrastate calls, partially  offset
the decrease.  Minutes of use related to intrastate calls increased
by 5.3% compared with the prior year.

   
                         PAGE 11
<PAGE>


                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Long-distance.........  $ 136.6   $ 140.3   $   (3.7)    (2.6)

   Long-distance  service revenues result from  customer  calls  to
locations outside of their local calling areas, but within the same
Local  Access  and  Transport Area (LATA).   Long-distance  service
revenues  decreased  in  1998  due primarily  to  volume  decreases
resulting from increased competition among providers of local  toll
calling  services.   Rate  increases partially  offset  the  volume
decrease.

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Other.................  $ 154.5   $ 132.7   $   21.8     16.4

   Other   revenues   include  revenues  derived   from   directory
advertising,   billing   and  collection  services,   inside   wire
installation  and  maintenance  services  and  other  miscellaneous
services.   Other  revenues increased in 1998 due  primarily  to  a
change  in  classification  of  certain  pay  phone  revenues  from
interexchange  carriers, as discussed above.  Growth  in  equipment
sales  and  other nonregulated services, such as voice  mail,  also
contributed to the increase.

Operating Expenses

   Total  operating expenses in 1998 increased by $37.0 million  or
4.3%  to  $903.4  million.   The increase resulted  primarily  from
higher  depreciation  and  amortization  expense,  as  well  as  an
increase in other operating expenses, as discussed below.

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Employee-related
       expenses.............  $ 220.8   $ 215.1   $    5.7      2.6

   Employee-related  expenses increased in 1998  due  primarily  to
wage  rate  and  bonus increases, partially offset by  lower  force
levels  and  decreased  overtime expenses.  An  increase  in  other
employee benefits also contributed to the increase.

   Most  of  our  nonmanagement  work force  (about  85%  of  total
employees)  is represented by either the CWA or the  IBEW.   During
June  1998,  the  IBEW ratified a new five-year contract  effective
June 28, 1998.  The contract provides basic wage increases of 11.2%
(compounded) over three years and a one-time $500 signing bonus per
employee.   In addition, the contract addresses benefits, pensions,
work rules and other wage-related items.  The contract will be  re-
opened  in  2001  to address certain economic wage issues  for  the
final two years of the contract.

   The  CWA  reached similar terms under an agreement  ratified  by
union  membership on July 17, 1998.  The CWA contract was effective
August  9,  1998  and  expires on March  31,  2001.   The  contract
provides  basic  wage  increases of  11.2%  (compounded)  over  the
contract period and a one-time $500 signing bonus per employee, and
also  addresses  benefits, pensions, work  rules  and  other  wage-
related items.

   There  were  3,849 employees as of December 31,  1998,  compared
with 4,002 as of December 31, 1997.

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Depreciation and
       amortization.........  $ 209.8   $ 199.0   $   10.8      5.4

   Depreciation  and  amortization expense increased  in  1998  due
primarily to higher average property, plant and equipment  balances
resulting  from  continued network expansion.  Higher  depreciation
rates,  resulting from increasing investments in newer technologies
that  have  shorter  depreciable lives,  also  contributed  to  the
increase.

   
                         PAGE 12
<PAGE>


                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Other operating
       expenses.............  $ 423.6   $ 405.5   $   18.1      4.5

   Other  operating  expenses increased in 1998  due  primarily  to
higher  access  charge  expenses resulting  from  state  commission
rulings  (which  we  are  contesting) that require  local  exchange
carriers  to  pay  reciprocal  compensation  for  calls  by   their
customers  to  the  Internet via Internet service providers  (ISPs)
who,  in  turn, are customers of competing local exchange carriers.
Higher  contract and affiliated services expenses related primarily
to systems programming and network support, also contributed to the
increase.   A  decrease in uncollectibles resulting  from  improved
collections  of  past-due accounts, combined  with  a  decrease  in
advertising  expenses,  resulting  primarily  from  the  timing  of
promotions  and other marketing campaigns, partially  offset  these
increases.

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Taxes other than
       income taxes.........  $  49.2   $  46.8   $    2.4      5.1

   Taxes  other  than  income taxes consist of property  taxes  and
other  taxes  not  directly related to earnings.  The  increase  in
taxes  other  than income taxes was attributable to an increase  in
property  tax expense resulting from higher assessed valuations  in
1998.

Other Income and Expenses

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Interest expense......  $  17.4   $  17.5   $   (0.1)    (0.6)

   Interest  expense  decreased  in 1998  due  primarily  to  lower
interest on borrowings from the Ameritech short-term funding  pool,
reflecting lower average debt balances, combined with a decrease in
interest expense related to company-owned life insurance.

                                                     Change
                                                     Income   Percent
                                 1998      1997    (Expense)  Change
                                 ----      ----    --------   ------
      Other income,
       net..................  $   5.3   $   5.1   $    0.2      3.9

   Other  income,  net  includes  equity  earnings  of  affiliates,
interest  income  and  other  nonoperating  items.   Other   income
increased  in 1998 due primarily to increased interest  income.   A
decrease  in  equity earnings from Ameritech Services, Inc.  (ASI),
largely resulting from the impact of ASI's gain on the sale of  its
investment  in  Bellcore  in November 1997,  partially  offset  the
increase.

                                                   Increase   Percent
                                 1998      1997   (Decrease)  Change
                                 ----      ----    --------   ------
      Income taxes..........  $ 175.1   $ 159.5   $   15.6      9.8

   Income  taxes increased in 1998 due primarily to the tax impacts
resulting from the centralization of the administration of benefits
for  employees  as  further discussed in Note B,  as  well  as  the
increase in pretax earnings discussed above.

   
                         PAGE 13
<PAGE>


Other Matters

   Refer to Item 1 for a discussion of Federal and State regulatory
matters and competition.

Year 2000 readiness

   The  Year  2000 issue exists because many computer  systems  and
applications, including those embedded in equipment and facilities,
use  two-digit rather than four-digit date fields to  designate  an
applicable year.  As a result, the systems and applications may not
properly  recognize the year 2000 or process data that include  it,
potentially   causing  data  miscalculations  or  inaccuracies   or
operational malfunctions or failures.

   Ameritech  has  established  a  centrally  managed,  companywide
(rather  than  by subsidiary) initiative to identify, evaluate  and
address Year 2000 issues.  Begun in May 1996, Ameritech's Year 2000
effort  covers  network  and  supporting  infrastructure  for   the
provision  of local switched and data telecommunications  services.
Also  within  the  scope  of this initiative  are  operational  and
financial information technology (IT) systems and applications, end-
user  computing resources and building systems, such  as  security,
elevator and heating and cooling systems.  In addition, the project
includes   a  review  of  the  Year  2000  compliance  efforts   of
Ameritech's  key  suppliers and other principal business  partners,
and  as appropriate, the development of joint business support  and
continuity  plans for Year 2000 issues.  While this  initiative  is
broad  in  scope, it is structured to identify and  prioritize  our
efforts for mission-critical systems, network elements and products
and key business partners.

   Work   is   progressing  in  the  following  phases:  inventory,
assessment,   remediation,  testing,  deployment  and   monitoring.
Although  the  pace  of the work varies among Ameritech's  business
units  and  the  phases  often are conducted  in  parallel,  as  of
December  31,  1998,  Ameritech  had  substantially  completed  the
inventory and assessment phases; the remediation phase was  nearing
completion;  and  the  testing  and  deployment  phases  were  well
underway.

   As  of  December  31,  1998, the majority  of  network  elements
requiring corrective activity, including substantially all  of  the
core  network switches and other network components that we  regard
as  mission-critical, have been made Year 2000 ready  and  deployed
back  into production.  As of December 31, 1998, more than  90%  of
Ameritech's    total   identified   IT   applications,    including
substantially  all  determined to be  mission-critical,  have  been
remediated,  and  a  majority  of all corrected  applications  have
completed  certification  testing  and  been  deployed  back   into
production.  Ameritech has also made substantial progress  in  Year
2000   readiness  preparations  for  its  remaining  infrastructure
components  (buildings  and  physical  facilities,  internal  voice
telephone  systems,  and  desktop  PCs),  and  these  efforts   are
scheduled  to be completed in mid-1999.  Final integration  testing
for  certain  critical systems and processes  is  scheduled  to  be
completed by the end of the third quarter of 1999.

   With  the  majority  of  our various systems  remediated  and  a
substantial portion of those already tested and deployed back  into
production,  Ameritech believes we are well positioned to  complete
the  remediation  and  deployment of  our  remaining  systems,  any
additional  testing that may be necessary, and the  development  of
our  business  contingency and continuity plans in advance  of  the
Year  2000  transition.  However, our ability  to  meet  that  goal
remains  dependent upon a variety of factors, including the  timely
provision  of necessary upgrades and modifications by our suppliers
and  contractors.  In some instances, upgrades or modifications are
not expected to be available until mid- or late-1999.

   Ameritech  has  sought  Year  2000  readiness  information  from
various  third-party  suppliers  on  whom  we  depend  for  certain
products   or  essential  services  (such  as  electric  utilities,
interexchange  carriers,  etc.), but Ameritech  has  no  method  of
ensuring  that these suppliers will convert their critical  systems
and processes in a timely manner.  Ameritech is developing business
contingency  and continuity plans (see discussion  below),  and  is
continuing  to  work  with key suppliers  as  part  of  a  supplier
compliance program to seek to minimize such risks.

   As  is  the  case  for other communications services  providers,
there  exists a worst case scenario possibility that a  failure  to
correct  a Year 2000 program in one or more of our mission-critical
network  elements  or  IT applications could  cause  a  significant
disruption  or  interruption  in certain  of  our  normal  business
functions.   Based  on Ameritech's assessments and  work  to  date,
Ameritech  believes  that  any  such  material  disruption  to  our
operations  due  to  failure  of an internal  system  is  unlikely.
However, due to the uncertainty inherent

                          PAGE 14
<PAGE>

in Year 2000 issues generally and those that are beyond our control
in particular (e.g. the final Year 2000 readiness of our suppliers,
customers, utilities, and interconnecting carriers), there  can  be
no  assurance  that  one or more such failures  would  not  have  a
material  impact  on  our  results  of  operations,  liquidity   or
financial condition.

   There  may  also  be  Year  2000  issues  in  customer  premises
equipment (CPE), including CPE that we have sold or maintained  and
CPE  that  is  used in connection with 911 services.  Although  the
customer   generally  is  responsible  for  CPE,  customers   could
attribute  a Year 2000 disruption in their CPE to a malfunction  of
our  network service.  Ameritech has taken steps to encourage  many
of  our  customers potentially at risk to undertake  the  necessary
assessment  and  remedial activities to avoid a Year  2000  problem
with their equipment and systems.

   Ameritech   currently  estimates  that  it  and   all   of   its
subsidiaries combined, including Indiana Bell, will incur  expenses
of approximately $250 million through 2001 in connection with their
anticipated Year 2000 efforts, of which approximately $108  million
had  been  incurred through December 31, 1998.  The timing  of  our
expenses  may  vary and is not necessarily indicative of  readiness
efforts  or progress to date.  Ameritech anticipates that a portion
of its Year 2000 expenses will not be incremental costs, but rather
will   represent  the  redeployment  of  existing   IT   resources.
Ameritech  also expects to incur certain capital improvement  costs
(totaling approximately $30 million) to support this project.  Such
capital  costs  ($12  million as of December 31,  1998)  are  being
incurred  sooner than originally planned but, for  the  most  part,
would have been required in the normal course of business.

   As  part  of  its Year 2000 initiative, Ameritech is  evaluating
scenarios that may occur as a result of the century change  and  is
in  the  process of developing contingency and business  continuity
plans  tailored  for  Year  2000-related occurrences.   Contingency
planning  to maintain and restore service in the event  of  natural
disasters,  power failures and software-related problems  has  been
part  of  our standard operation for many years, and we are working
to  leverage this experience in the development of contingency  and
continuity  plans  tailored to meet Year  2000-related  challenges.
This work is being performed through centrally managed, companywide
teams organized by critical business functions (including ordering,
provisioning,   maintenance,  billing  and   power).    Ameritech's
contingency  and business continuity plans are expected  to  assess
the potential for business disruption in various scenarios, and  to
provide   for  key  operation  back-up,  recovery  and  restoration
alternatives.

   The  above  information  is  based on Ameritech's  current  best
estimates, which were derived using numerous assumptions of  future
events,  including  the availability and future  costs  of  certain
technological and other resources, third-party modification actions
and  other  factors.   Given the complexity  of  these  issues  and
possible  unidentified risks, actual results  may  vary  materially
from  those anticipated and discussed above.  Specific factors that
might   cause   such   differences  include,  among   others,   the
availability  and  cost  of personnel trained  in  this  area,  the
ability  to  locate  and correct all affected  computer  code,  the
timing  and success of Year 2000 remedial efforts of our  customers
and suppliers, and similar uncertainties.

New accounting pronouncements

   In  March  1998,  the  American Institute  of  Certified  Public
Accountants  (AICPA)  issued  Statement  of  Position  (SOP)  98-1,
"Accounting  for  the  Costs  of  Computer  Software  Developed  or
Obtained  for  Internal  Use."   This  SOP  provides  authoritative
guidance  for  the  capitalization  of  certain  costs  related  to
computer   software  developed  or  obtained   for   our   internal
applications, such as:

-  External  direct  costs  of  materials  and  services,  such  as
   programming costs,
-  Payroll  costs  for  employees devoting  time  to  the  software
   project, and
-  Interest costs to be capitalized.
   
   Costs incurred during the preliminary project stage, as well  as
training and data conversion costs, are to be expensed as incurred.
The  SOP is effective for fiscal years beginning after December 15,
1998.   We  will adopt SOP 98-1 in the first quarter  of  1999  and
estimate  that  the  impact  will be to  decrease  software-related
expenses  for  Ameritech  and  all of its  subsidiaries,  including
Indiana  Bell,  by  $200 million to $250 million  in  the  year  of
adoption.   We  have  historically expensed most computer  software
costs  as incurred and will be required to continue to expense  all
Year 2000 modification costs as incurred.

   
                         PAGE 15
<PAGE>


   In  June  1998  the Financial Accounting Standards Board  (FASB)
issued  FAS 133, "Accounting for Derivative Instruments and Hedging
Activities."   This statement provides standardized accounting  and
disclosure  guidance for derivative instruments and the  derivative
portion  of certain similar contracts.  It amends FAS 52,  "Foreign
Currency  Translation" and FAS 107, "Disclosures about Fair  Values
of  Financial  Instruments," and it supersedes a  number  of  other
financial accounting standards.

   The  statement requires entities that use derivative instruments
to  measure  these  instruments at fair value and  record  them  as
assets  or  liabilities  on the balance sheet.   It  also  requires
entities to reflect the gains or losses associated with changes  in
the  fair value of these derivatives, either in earnings  or  as  a
separate component of comprehensive income, depending on the nature
of the underlying contract or transaction.

   FAS  133  is  effective for all fiscal quarters of fiscal  years
beginning  after  June 15, 1999, and is to be  adopted  as  of  the
beginning  of  the  fiscal  year.  At the  time  of  adoption,  all
derivative  instruments  are  to be  measured  at  fair  value  and
recorded on the balance sheet.  Any differences between fair  value
and  carrying amount at that time will be recorded as a  cumulative
effect of a change in accounting principle, in either net income or
other  comprehensive  income,  as appropriate.   Adoption  of  this
statement  may or may not have a material impact on our results  of
operations  or  financial position in a given year, depending  upon
the  nature and magnitude of derivative activity that we engage  in
and the changes in market conditions with respect to interest rates
or other underlying values.  We have not yet quantified the impacts
of  the initial adoption of FAS 133 on our results of operations or
financial  condition, nor have we determined when we will implement
the new standard.

Private securities litigation reform act safe harbor statement

   Some of the information presented in, or in connection with, any
section of this Annual Report on Form 10-K may constitute "forward-
looking  statements" within the meaning of the  Private  Securities
Litigation  Reform  Act of 1995 that involve  potential  risks  and
uncertainties.   Our  future results could differ  materially  from
those  discussed  here.  Some of the factors that  could  cause  or
contribute to such differences include:

-  Changes in economic and market conditions that impact the demand
   for our products and services;
-  The  effects  of  vigorous competition in  the  local  exchange,
   intraLATA toll or data markets;
-  Federal     regulatory    developments    that    impact     the
   telecommunications industry and pending regulatory issues  under
   state jurisdiction;
-  Potential   additional  costs  to  comply  with  the  regulatory
   requirements of entry into the interLATA long-distance market;
-  The  effects of growing demand for wireless technology which may
   reduce or replace landline services provided by Indiana Bell;
-  The  timing of, and potential regulatory or other considerations
   relating  to,  the consummation of Ameritech's  proposed  merger
   with SBC;
-  The  impact  of  new  technologies and the potential  effect  of
   delays in development or deployment of such technologies; and,
-  The  potential  impact of issues related to year  2000  software
   compliance.
   
   The   words   "expect,"  "believe,"  "anticipate,"   "estimate,"
"project,"  and  "intend" and similar expressions are  intended  to
identify   forward-looking   statements.    These   forward-looking
statements  are found at various places throughout the Management's
Discussion and Analysis and elsewhere in this report.

   You  should  not  place undue reliance on these  forward-looking
statements,  which are applicable only as of the date  hereof.   We
have  no  obligation  to  revise  or update  these  forward-looking
statements to reflect events or circumstances that arise after  the
date hereof or to reflect the occurrence of unanticipated events.

Item 7A.  Quantitative and Qualitative Disclosures
          About Market Risk

   We  are  exposed  to  market  risks primarily  from  changes  in
interest  rates.   To  manage our exposure to  these  fluctuations,
Ameritech  occasionally  enters into various  hedging  transactions
that  have  been  authorized according to documented  policies  and
procedures.   Ameritech  does  not  use  derivatives  for   trading
purposes,  to generate income or to engage in speculative activity,
and Ameritech never uses leveraged derivatives.

   
                         PAGE 16
<PAGE>


   Our  exposure  to  interest rate fluctuations results  primarily
from  our  borrowings from the Ameritech short-term  funding  pool,
which  Ameritech funds using commercial paper borrowings, and  from
potential  changes in the fair value of our fixed rate  debentures.
Ameritech  estimated the potential loss that it  could  incur  from
adverse   changes   in  interest  rates  using  the   value-at-risk
estimation model.  The value-at-risk model uses historical interest
rates to estimate the volatility and correlation of these rates  in
future periods.  It estimates a potential loss in fair market value
using the variance/co-variance statistical modeling technique.

   Using a confidence level of 95%, Ameritech estimated that, for a
given  one-day period, we could incur potential fair  value  losses
related  to long-term debt of $2.4 million as of December 31,  1998
and $1.5 million as of December 31, 1997.  The increase in 1998  in
the  amount of fair value at risk was due primarily to an  increase
in  the  volatility of interest rates, mostly resulting from market
activity in the third and fourth quarters of 1998.  These estimated
fair value losses would have no impact on our results of operations
or  financial condition.  Ameritech did not estimate our  potential
losses  related  to  the  short-term  funding  pool  because  their
commercial  paper  borrowings  are  not  readily  attributable   to
individual subsidiaries.

   The  value-at-risk  model assumes that all  movements  in  these
rates  will be adverse and disregards the possibility that interest
rates  could move in our favor.  Actual experience has  shown  that
gains  and  losses  tend to offset each other  over  time,  and  we
believe  it  is  unlikely that we could experience losses  such  as
these over an extended period of time.  These amounts should not be
considered  estimates of future losses, since  actual  results  may
differ  significantly  depending upon  activity  in  the  financial
markets.

   
                         PAGE 17
<PAGE>


   
   
Item 8.  Financial Statements and Supplementary Data.

             REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                 
To the Shareowner of Indiana Bell Telephone Company, Incorporated

   We  have audited the accompanying balance sheets of Indiana Bell
Telephone  Company,  Incorporated (an Indiana  Corporation)  as  of
December  31, 1998 and 1997, and the related statements  of  income
and  reinvested earnings and cash flows for each of the three years
in  the period ended December 31, 1998.  These financial statements
and  the schedule referred to below are the responsibility  of  the
company's management.  Our responsibility is to express an  opinion
on  these  financial  statements and this  schedule  based  on  our
audits.

   We  conducted  our audits in accordance with generally  accepted
auditing  standards.   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  referred  to  above
present fairly, in all material respects, the financial position of
Indiana  Bell  Telephone Company, Incorporated as of  December  31,
1998 and 1997, and the results of its operations and its cash flows
for  each of the three years in the period ended December 31, 1998,
in conformity with generally accepted accounting principles.

   Our audits are made for the purpose of forming an opinion on the
basic  financial  statements  taken  as  a  whole.   The  financial
statement  schedule  included in Item  14(a)(2)  is  presented  for
purposes of complying with the Securities and Exchange Commission's
rules and is not a required 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.




ARTHUR ANDERSEN LLP


Chicago, Illinois
January 21, 1999

   
                         PAGE 18
<PAGE>



                                 
               INDIANA BELL TELEPHONE COMPANY, INCORPORATED
               STATEMENTS OF INCOME AND REINVESTED EARNINGS
                           (Dollars in Millions)
                                     
                                              Year Ended December 31,
                                              -----------------------
                                            1998        1997        1996
                                            ----        ----        ----

 Revenues
   Local service...................    $   723.7   $   676.3   $   634.1
   Interstate network access.......        274.5       272.1       258.9
   Intrastate network access.......         73.7        78.5        81.5
   Long-distance...................        136.6       140.3       151.6
   Other...........................        154.5       132.7       125.7
                                       ---------   ---------   ---------
                                         1,363.0     1,299.9     1,251.8
                                       ---------   ---------   ---------
 Operating expenses
   Employee-related expenses.......        220.8       215.1       212.8
   Depreciation and amortization...        209.8       199.0       183.5
   Other operating expenses........        423.6       405.5       393.6
   Taxes other than income taxes...         49.2        46.8        46.4
                                       ---------   ---------   ---------
                                           903.4       866.4       836.3
                                       ---------   ---------   ---------
 Operating income..................        459.6       433.5       415.5
 Interest expense..................         17.4        17.5        16.1
 Other income, net.................          5.3         5.1         3.8
                                       ---------   ---------   ---------
 Income before income taxes........        447.5       421.1       403.2
 Income taxes......................        175.1       159.5       141.8
                                       ---------   ---------   ---------
 Net income........................        272.4       261.6       261.4
 Reinvested earnings,
  beginning of year................        110.9        93.4        66.4
 Less, dividends...................        254.0       244.1       234.4
                                       ---------   ---------   ---------
 Reinvested earnings,
  end of year......................    $   129.3   $   110.9   $    93.4
                                       =========   =========   =========



The accompanying notes are an integral part of the financial statements.

   
                         PAGE 19
<PAGE>



                                     
               INDIANA BELL TELEPHONE COMPANY, INCORPORATED
                               BALANCE SHEETS
                           (Dollars in Millions)
                                     
                                                  As of December 31,
                                                 -------------------
                                                   1998        1997
                                                   ----        ----
  Assets

   Current assets
     Cash and temporary
      cash investments.....................   $     0.8   $     0.1
     Receivables, net
      Customers and agents
       (less allowance for
       uncollectibles of $26.9 in 1998
       and $20.3 in 1997)..................       213.8       212.8
      Other................................         8.4         6.1
     Material and supplies.................        11.5         4.9
     Prepaid and other.....................        13.4         9.0
                                              ---------   ---------
                                                  247.9       232.9
                                              ---------   ---------
   Property, plant and equipment
     In service............................     3,414.9     3,292.8
     Under construction....................        20.7        15.3
                                              ---------   ---------
                                                3,435.6     3,308.1
     Less, accumulated depreciation........     2,248.9     2,111.1
                                              ---------   ---------
                                                1,186.7     1,197.0
                                              ---------   ---------
   Investments, principally
    in affiliates..........................        46.6        47.0
   Other assets and deferred charges.......       147.6       117.5
                                              ---------   ---------
  Total assets.............................   $ 1,628.8   $ 1,594.4
                                              =========   =========
  Liabilities and shareowner's equity

   Current liabilities
     Debt maturing within one year
      Ameritech............................   $    15.5   $    40.5
     Accounts payable
      Ameritech Services, Inc. (ASI).......        34.5        21.1
      Ameritech and affiliates.............        22.8        19.1
      Other................................        71.6        70.1
     Other current liabilities.............       136.9       137.2
                                              ---------   ---------
                                                  281.3       288.0
                                              ---------   ---------
   Long-term debt..........................       233.9       233.9
                                              ---------   ---------
   Deferred credits and other long-term liabilities
     Accumulated deferred
      income taxes.........................        81.7        67.1
     Unamortized investment
      tax credits..........................        12.5        15.2
     Postretirement benefits
      other than pensions..................       245.7       257.7
     Long-term payable to ASI..............         6.6         7.2
     Other.................................        32.2        36.5
                                              ---------   ---------
                                                  378.7       383.7
                                              ---------   ---------
   Shareowner's equity
     Common stock ($40 par value;
      15,000,000 shares
      authorized; 13,490,876
      issued and outstanding)..............       539.6       539.6
     Proceeds in excess of par value.......        66.0        38.3
     Reinvested earnings...................       129.3       110.9
                                              ---------   ---------
                                                  734.9       688.8
                                              ---------   ---------
  Total liabilities and
   shareowner's equity.....................   $ 1,628.8   $ 1,594.4
                                              =========   =========

  The accompanying notes are an integral part of the financial statements.
   
                         PAGE 20
<PAGE>




               INDIANA BELL TELEPHONE COMPANY, INCORPORATED
                          STATEMENTS OF CASH FLOWS
                           (Dollars in Millions)
                                     
                                              Year Ended December 31,
                                              -----------------------
                                            1998        1997        1996
                                            ----        ----        ----

Cash flows from operating activities:
 Net income........................    $   272.4   $   261.6   $   261.4
 Adjustments to net income:
   Depreciation and amortization...        209.8       199.0       183.5
   Deferred income taxes, net......          7.6         9.8        21.2
   Investment tax credits, net.....         (2.7)       (3.3)       (3.3)
   Capitalized interest............         (0.8)       (0.8)       (1.0)
   Change in accounts receivable...         (3.3)       15.7         5.5
   Change in material and supplies.        (11.1)       (4.7)       (7.0)
   Change in certain other
    current assets.................         (4.3)       (3.4)        5.9
   Change in accounts payable......         18.6       (26.1)      (10.5)
   Change in certain other
    current liabilities............          6.2        15.2        11.7
   Change in certain noncurrent
    assets and liabilities.........        (20.5)      (21.8)      (22.5)
   Other operating activities, net.          0.9         0.5        (4.1)
                                       ---------   ---------   ---------
Net cash from operating
  activities.......................        472.8       441.7       440.8
                                       ---------   ---------   ---------

Cash flows from investing activities:
 Capital expenditures, net.........       (195.7)     (177.7)     (202.2)
 Additional investments............          -          (9.9)        -
 Proceeds from
   disposals of property,
   plant and equipment, net........          1.4         2.9         3.0
 Other investing activities, net...          1.2         0.4         0.1
                                       ---------   ---------   ---------
Net cash from investing
  activities.......................       (193.1)     (184.3)     (199.1)
                                       ---------   ---------   ---------

Cash flows from financing activities:
 Intercompany financing, net.......        (25.0)      (13.3)      (96.8)
 Issuances of long-term debt.......          -           -         148.4
 Retirements of long-term debt.....          -          (0.2)       (0.3)
 Dividend payments.................       (254.0)     (244.1)     (293.0)
 Other financing activities, net...          -           0.2         -
                                       ---------   ---------   ---------
Net cash from financing
  activities.......................       (279.0)     (257.4)     (241.7)
                                       ---------   ---------   ---------

Net increase in cash and
 temporary cash investments........          0.7         -           -
Cash and temporary cash
  investments, beginning of year...          0.1         0.1         0.1
                                       ---------   ---------   ---------
Cash and temporary cash
  investments, end of year.........    $     0.8   $     0.1   $     0.1
                                       =========   =========   =========



The accompanying notes are an integral part of the financial statements.
   
                         PAGE 21
<PAGE>




           INDIANA BELL TELEPHONE COMPANY, INCORPORATED
                   NOTES TO FINANCIAL STATEMENTS
                       (Dollars in Millions)
                                 
A.  Significant Accounting Policies

   Nature   of   Operations  -  Indiana  Bell  Telephone   Company,
Incorporated is a wholly owned subsidiary of Ameritech  Corporation
(Ameritech).   Ameritech  is  also  the  parent  of  Illinois  Bell
Telephone  Company, Michigan Bell Telephone Company, The Ohio  Bell
Telephone  Company,  and  Wisconsin Bell, Inc.  (referred  to  with
Indiana Bell collectively as the "Ameritech landline communications
subsidiaries").   We  provide  a  wide  variety  of  communications
services  in  Indiana, including local exchange and  toll  service,
network  access and telecommunications products and are an integral
part of Ameritech's communications segment.

   See  discussion  of Competition and Regulatory  developments  in
Part I, Item 1 - Business.

   Basis  of Accounting - We have prepared the financial statements
in  accordance with generally accepted accounting principles (GAAP)
based on the books and records of Indiana Bell.

   Use  of  Estimates - The preparation of financial statements  in
conformity  with  GAAP requires management to  make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets   and
liabilities  as  of  the date of the financial statements  and  the
reported  amounts  of  revenues and expenses during  the  reporting
period.  Actual results could differ from those estimates.

   Transactions  with Affiliates - We have various agreements  with
affiliated  companies.  Below is a description of  the  significant
arrangements followed by a table of the amounts involved.

   1.    Ameritech  Services,  Inc.  (ASI)  -  ASI,  an  Ameritech-
controlled  affiliate  in  which we have  10%  ownership,  provides
planning, development, management, procurement and support services
to  all of the Ameritech landline communications subsidiaries.   We
also provide certain services and facilities to ASI.

   
   
                                      1998        1997        1996
                                      ----        ----        ----
  Purchases of
   materials and charges
    for services from ASI.....    $  283.8    $  271.8   $   263.9
  Recovery of
   costs for services
    provided to ASI...........         7.0         7.2         6.9

   2.    Ameritech  (our  parent)  -  Ameritech  provides   various
administrative, planning, financial and other services to us, which
are billed at cost.

                                      1998        1997        1996
                                      ----        ----        ----
    Charges incurred..........    $   21.4    $   14.7   $    13.4

   3.   Ameritech Publishing, Inc. (API), a wholly owned subsidiary
of  Ameritech doing business as Ameritech Advertising Services - We
have  an  agreement with API under which we furnish to API  certain
services  and data to be used by API in publishing and distributing
classified  and alphabetical directories.  In exchange, we  receive
compensation for the services and data.

                                      1998        1997        1996
                                      ----        ----        ----
    Fees paid to Indiana Bell
     by API....................   $    1.6    $    1.7   $     2.1
    Fees paid by Indiana Bell

     to API....................        0.7         0.3         1.9

   4.   Ameritech  Information Systems, Inc. (AIS), a wholly  owned
subsidiary  of Ameritech - We reimburse AIS for costs  incurred  by
AIS  in  connection  with  the  sale of  network  services  by  AIS
employees.

                                      1998        1997        1996
                                      ----        ----        ----
    Charges incurred...........   $   12.9    $   17.6   $    12.3

   
                         PAGE 22
<PAGE>


   5.   Bell  Communications Research, Inc. (Bellcore)  -  Bellcore
provides   research   and  technical  support   to   the   landline
communications subsidiaries.  Prior to November 1997, ASI had a one-
seventh ownership interest in Bellcore and billed us for costs.  In
November  1997, ASI sold its interest in Bellcore.  The amount  for
1997 below includes charges incurred through the date Bellcore  was
sold.

                                      1998        1997        1996
                                      ----        ----        ----
    Charges incurred...........   $    -      $   10.7   $     9.3

   Property,  Plant  and Equipment - We state property,  plant  and
equipment  at  original cost.  The provision  for  depreciation  is
based  principally  on  the straight-line remaining  life  and  the
straight-line equal life group methods of depreciation  applied  to
individual categories of property, plant and equipment with similar
characteristics.

   We  use average plant lives, generally ranging from three to  30
years depending upon the type of asset.  In general, the lives used
for   certain  communications  assets  and  office  equipment  have
shortened due to the use of newer technologies.

   Generally,  when  depreciable plant is retired,  the  amount  at
which  such plant has been carried in property, plant and equipment
in  service  is charged to accumulated depreciation.  The  cost  of
maintenance and repairs of plant is charged to expense.

   Investments - Our investment in ASI (10% ownership) is reflected
in  the financial statements using the equity method of accounting.
Our investment in ASI was $26.7 million as of December 31, 1998 and
$26.1  million  as  of  December 31,  1997.   We  carry  all  other
investments at cost.  Derivative transactions, if any, are executed
by  Ameritech.  We had no derivative transactions in 1998, 1997  or
1996.

   Material and Supplies - We state inventories of new and reusable
material  and  supplies at the lower of cost or  market  with  cost
generally determined on an average-cost basis.

   Income  Taxes - Ameritech includes Indiana Bell in  the  federal
income  tax  return  filed by Ameritech and its  subsidiaries.   We
determine  our  provision for income taxes on  a  separate  company
basis.

   We  determine deferred tax assets and liabilities at the end  of
each  period  based on differences between the financial  statement
bases  of  assets and liabilities and the tax bases of  those  same
assets  and liabilities, using the currently enacted statutory  tax
rates.  We measure deferred income tax expense as the change in the
net deferred income tax asset or liability during the year.

   We  use  the  deferral method of accounting for  investment  tax
credits by amortizing realized credits as reductions to tax expense
over the life of the plant that gave rise to the credits.

   Temporary Cash Investments - We state temporary cash investments
at  cost  which approximates market value.  We consider all  highly
liquid,  short-term investments with an original maturity of  three
months or less to be cash equivalents.

   Advertising Costs - We charge advertising costs to operations as
incurred.

   Software Costs - We have historically expensed most software and
related  license  fees  as incurred.  Beginning  in  1999,  we  are
required,  because of a change in GAAP, to capitalize a significant
portion  of  software developed or obtained for our  internal  use.
See  our  discussion  of  new accounting  pronouncements  in  Other
Matters  in  Management's Discussion and  Analysis  of  Results  of
Operations.

   Revenue  Recognition  -  We  generally  recognize  revenues   as
services  are provided or products are delivered to customers.   We
bill  certain  local  telephone revenues in advance,  resulting  in
deferred revenues.

   Short-Term Financing Arrangement - Ameritech provides short-term
financing   and  cash  management  services  to  its  subsidiaries,
including  Indiana  Bell.  Ameritech issues  commercial  paper  and
notes   and  secures  bank  loans  to  fund  the  working   capital
requirements  of  its  subsidiaries and invests  short-term  excess
funds on their behalf.  (See Note F).

   
                         PAGE 23
<PAGE>


   The results of this agreement were as follows:

                                      1998        1997        1996
                                      ----        ----        ----
   
  Interest charged to
   Indiana Bell
    by Ameritech
    for financing.............    $    0.2    $    0.6   $     5.8
  Cash management interest
   income earned
    by Indiana Bell...........         3.0         1.0         0.2

   Reclassifications  -  We made certain reclassifications  to  the
December 31, 1997 balances to correspond to the presentation as  of
December 31, 1998.

B.  Investment in Preferred Stock

   In  June  1997,  Ameritech  centralized  the  administration  of
benefits for employees who had retired from Indiana Bell and  other
subsidiaries as of December 31, 1996.  In connection therewith,  we
hold  approximately $10.2 million in preferred stock issued by  the
Ameritech  subsidiary  responsible  for  administration  of   these
benefits.   This subsidiary began paying benefits on our behalf  in
July  1997.   We  account for these benefit payments  made  on  our
behalf as a capital contribution in the shareowner's equity section
of  the  balance  sheets,  with a corresponding  reduction  in  the
postretirement benefit obligation.  These contributions were  $27.7
million in 1998 and $12.8 million in 1997.

C.  Income Taxes

   The components of income tax expense were as follows:

                                         1998       1997        1996
                                         ----       ----        ----
Federal
   Current........................  $   149.5  $   134.1   $   110.2
   Deferred, net...................       6.7        8.8        13.2
   Investment tax credits, net.....      (2.7)      (3.3)       (3.3)
                                    ---------  ---------   ---------
 Total.............................     153.5      139.6       120.1
                                    ---------  ---------   ---------
State and local
   Current.........................      20.7       18.9        13.7
   Deferred, net...................       0.9        1.0         8.0
                                    ---------  ---------   ---------
   Total...........................      21.6       19.9        21.7
                                    ---------  ---------   ---------
Total income tax expense..........  $   175.1  $   159.5   $   141.8
                                    =========  =========   =========

   Total  income taxes paid were $171.2 million in 1998, $159.6  in
1997 million and $127.4 million in 1996.

   The  following  is  a  reconciliation of the  statutory  federal
income  tax rate for each of the past three years to our  effective
tax  rate (computed by dividing total income tax expense by  income
before income taxes):

                                         1998       1997        1996
                                         ----       ----        ----
Statutory federal income
 tax rate.........................       35.0%      35.0%       35.0%
 State income taxes, net of
  federal benefit.................        3.1        3.1         3.5
 Reduction in tax expense due to
   amortization of investment tax
   credits........................       (0.4)      (0.5)       (0.5)
 Tax impact of centralization
   of administration of
   certain benefits (Note B)......        1.7        0.9         -
 Other............................       (0.3)      (0.6)       (2.8)
                                     --------   --------    --------
Effective income tax rate.........       39.1%      37.9%       35.2%
                                     ========   ========    ========

   
                         PAGE 24
<PAGE>


   As  of  December 31, 1998 and 1997 the components  of  long-term
accumulated deferred income taxes were as follows:

                                              1998        1997
                                              ----        ----
    Deferred tax assets
     Postretirement and
      postemployment benefits.......     $    77.9   $    88.7
     Other..........................          16.0        11.9
                                         ---------   ---------
                                              93.9       100.6
                                         ---------   ---------
    Deferred tax liabilities
     Accelerated depreciation.......         127.2       125.2
     Prepaid pension cost...........          41.2        37.5
     Other..........................           7.2         5.0
                                         ---------   ---------
                                             175.6       167.7
                                         ---------   ---------
    Net deferred tax liability......     $    81.7   $    67.1
                                         =========   =========

   Deferred  income taxes in current assets and liabilities  relate
primarily to temporary differences resulting from vacation pay  and
uncollectibles, and amounts in 1998 and 1997 were not material.  We
had  immaterial valuation allowances against certain  deferred  tax
assets as of December 31, 1998 and 1997.

D.  Property, Plant and Equipment

   The components of property, plant and equipment are as follows:

                                              1998        1997
                                              ----        ----
     Land............................    $    11.1   $    11.1
     Buildings.......................        291.2       285.4
     Central office equipment........      1,369.8     1,271.6
     Cable, wiring and conduit.......      1,582.8     1,528.2
     Other...........................        160.0       196.5
                                         ---------   ---------
                                           3,414.9     3,292.8
     Under construction..............         20.7        15.3
                                         ---------   ---------
                                           3,435.6     3,308.1
     Less, accumulated depreciation..      2,248.9     2,111.1
                                         ---------   ---------
                                         $ 1,186.7   $ 1,197.0
                                         =========   =========

   Depreciation expense on property, plant and equipment was $209.6
in 1998, $199.0 million in 1997 and $183.5 million in 1996.

E.  Employee Benefit Plans

   Pension  Plans  -  Ameritech maintains  noncontributory  defined
benefit  pension plans for substantially all of our  employees,  as
well  as  postretirement healthcare and life  insurance  plans  for
substantially all retirees and their dependents.

   The  following table provides information on our pension credits
and postretirement benefit costs for the Ameritech plans:

                                     1998         1997       1996
                                     ----         ----       ----
  Pension credits.............    $  (10.0)   $   (7.9)  $   (11.8)
  Postretirement
    benefit costs.............        23.6        24.7        27.4

   
                         PAGE 25
<PAGE>


   Ameritech  allocates  pension  credits  to  us  based  upon  the
percentage  of compensation for the management plan  and  based  on
number  of  employees  for the nonmanagement plan.   They  allocate
retiree  health care cost to us on a per participant basis, whereas
group  life  insurance  is allocated based on compensation  levels.
For  the pension plans, the fair value of plan assets available for
plan  benefits  as  of  December 31, 1998  exceeded  the  projected
benefit  obligations.  For the postretirement health care and  life
insurance  plans,  the  postretirement  benefit  obligation  as  of
December  31, 1998 exceeded the fair value of plan assets available
for plan benefits.

   Certain  disclosures  are required to be  made  under  FAS  132,
"Employers'  Disclosures  about Pensions and  Other  Postretirement
Benefits,"  of  the  components of pension credits,  postretirement
benefit  costs  and the funded status of the plans,  including  the
actuarial  present value of accumulated plan benefits,  accumulated
or  projected benefit obligation and the fair value of plan assets.
We  do  not present such disclosures because the structure  of  the
Ameritech  plans  does not permit the plans'  data  to  be  readily
disaggregated.

   Ameritech  has advised us of the following assumptions  used  to
calculate  pension credits, postretirement benefit  costs  and  the
funded status of the plans:

                              Pension Benefits Retiree Health and Life
                              ---------------- ----------------------
                                1998      1997      1998      1997
                                ----      ----      ----      ----
Discount rate................   6.75%     7.0 %     6.75%     7.0 %
Expected return..............   8.4 %     8.4 %     8.4 %     8.4 %
Compensation increase rate...   4.1 %     4.1 %     4.1 %     4.1 %

   The  assumed health care cost trend rate for 1998 was  7.6%  and
8.0% in 1997 and is assumed to decrease by 0.4% per year to 4.0% in
2007 and remain at that level.  A one percentage-point increase  in
the  assumed  health care cost trend rate would have increased  the
1998 annual expense by approximately 16.7%, while a one percentage-
point  decrease  in the assumed health care cost trend  rate  would
have decreased 1998 annual expense by approximately 13.4%.

   Management  Work Force Reductions - Effective January  1,  1995,
management  employees  who are asked to  leave  Indiana  Bell  will
receive a severance payment under the Management Separation Benefit
Program (MSBP).  We account for this benefit in accordance with FAS
112,  "Employers' Accounting for Postemployment Benefits," accruing
the separation cost when incurred.  The number of employees leaving
under  the  MSBP and the predecessor plan was 3 in 1997 and  30  in
1996.   No employees left in 1998 under the MSBP or the predecessor
plan.

   Settlement   gains   result  from  the   payment   of   lump-sum
distributions  from the pension plans to former employees  and  are
recorded as a credit to other operating expense.  Settlement gains,
net  of  termination costs, under the plans were $0 in  1998,  $0.6
million  in  1997 and $2.4 million in 1996.  The involuntary  plans
are  funded  from our operations and required no cash  payments  in
1998 and cash payments of $0.7 million in 1997 and $0.5 million  in
1996.

F.  Debt Maturing Within One Year

   We  include  debt  maturing within  one  year  as  debt  in  the
computation  of  debt  ratios.   Debt  maturing  within  one   year
consisted of the following as of December 31:

                                               1998        1997
                                               ----        ----
      Notes payable - Ameritech.......    $    15.5   $    40.5
                                          =========   =========

      Weighted average interest
       rate of notes payable,
       year-end.......................          5.4%        5.8%
                                          =========   =========

   
                         PAGE 26
<PAGE>


G.  Long-Term Debt

   Long-term debt consists principally of debentures issued by us.

   The   following  table  sets  forth  interest  rates,  scheduled
maturities  and other information on long-term debt outstanding  as
of December 31:

                                                   1998        1997
                                                   ----        ----
Forty year 4 3/8% debentures,
   due June 1, 2003 .......................   $    20.0   $    20.0
Forty year 4 3/4% debentures,
   due October 1, 2005.....................        25.0        25.0
Forty year 5 1/2% debentures,
   due April 1, 2007.......................        40.0        40.0
Thirty year 7.3% debentures,
   due August 15, 2026.....................       150.0       150.0
                                              ---------   ---------
                                                  235.0       235.0
Unamortized discount, net..................        (1.6)       (1.6)
Other .....................................         0.5         0.5
                                              ---------   ---------
Total .....................................   $   233.9   $   233.9
                                              =========   =========

   We have filed a shelf registration statement with the Securities
and  Exchange  Commission for issuance of up to $225.0  million  in
unsecured debt securities.  As of December 31, 1998, $150.0 million
of debt had been issued under this shelf registration.

   Over the next five years, only the forty year 4 3/8 % debentures
maturing on June 1, 2003 are scheduled to be retired.

H.  Commitments and Contingencies

   We lease certain facilities and equipment used in our operations
under operating leases.  Rental expense under operating leases  was
$12.4  million  in 1998, $7.8 million in 1997 and $8.2  million  in
1996.   In  addition, rental expense for the leasing  of  equipment
through  Ameritech's lease financing subsidiary  was  approximately
$3.2  million  in  1998, $1.6 million in 1997 and $0.9  million  in
1996.   As  of  December  31,  1998, the aggregate  minimum  rental
commitments  under external noncancelable leases were approximately
as follows:

     Years                                  Operating
     -----                                  ---------
     1999..............................     $    0.3
     2000..............................          0.2
     2001..............................          0.2
     2002..............................          0.1
     2003..............................          0.1
     Thereafter........................          0.1
                                            --------
     Total minimum lease commitments...     $    1.0
                                            ========

I.  Financial Instruments

   The  following table presents the estimated fair  value  of  our
financial instruments as of December 31, 1998 and 1997:

                                                     1998
                                                -------------
                                            Carrying      Fair
                                              Value      Value
                                              -----      -----
       Cash and temporary cash
        investments....................    $    0.8   $    0.8
       Debt............................       253.7      284.8
       Long-term payable to ASI
        (for postretirement benefits)..         6.6        6.6
       Other assets....................        12.5       12.5
       Other liabilities...............         4.8        4.8
      
   
                         PAGE 27
<PAGE>


                                                     1997
                                                -------------
                                            Carrying      Fair
                                              Value      Value
                                              -----      -----
       Cash and temporary cash
        investments....................    $    0.1   $    0.1
       Debt............................       280.6      287.8
       Long-term payable to ASI
        (for postretirement benefits)..         7.2        7.2
       Other assets....................        13.6       13.6
       Other liabilities...............         6.1        6.1
      
   We  used  the following methods and assumptions to estimate  the
fair value of financial instruments:

   Cash  and  temporary  cash  investments  -  The  carrying  value
approximates fair value because of the short-term maturity of these
instruments.

   Debt -  The carrying amount (including accrued interest) of debt
maturing  within one year approximates fair value  because  of  the
short-term  maturities involved.  We estimated the  fair  value  of
long-term  debt based on the year-end quoted market price  for  the
same or similar issues.

   Other  assets  and  liabilities -  These  financial  instruments
consist  primarily of other investments and customer deposits.   We
based the fair values of these items on expected cash flows or,  if
available, quoted market prices.

   Long-term  payable  to  ASI  (for  postretirement  benefits)   -
Carrying value approximates fair value.

J.  Stock Options

   During 1995, the Financial Accounting Standards Board issued FAS
123, "Accounting for Stock-Based Compensation."  This pronouncement
requires that Ameritech calculate the value of stock options at the
date of grant using an option pricing model.  Ameritech elected the
"pro  forma,  disclosure  only" option  permitted  under  FAS  123,
instead  of  recording  a  charge  to  operations.   Some  of   our
management personnel receive Ameritech stock options; however,  the
portion  of the option programs allocable to our employees  is  not
significant.

K.  Shareowner's Equity

   Changes  in total shareowner's equity in 1998 and 1997 consisted
of net income and dividend declarations reflected on the statements
of income and accumulated deficit, as well as capital contributions
discussed  in  Note  B.   Changes in shareowner's  equity  in  1996
consisted of only net income and dividends declared.  As  a  wholly
owned  subsidiary  of  Ameritech Corporation,  we  do  not  declare
dividends  on  a  per-share basis.  Management  declares  quarterly
dividends  at  it  discretion, typically  equal  to  a  substantial
portion of estimated net income for the quarter.

L.  Additional Financial Information

                                                  As of December 31,
                                                  ------------------
                                                   1998        1997
                                                   ----        ----
   Balance Sheets
   Other current liabilities:
     Accrued payroll.......................   $     5.7   $     7.5
     Compensated absences..................        14.7        14.5
     Accrued taxes.........................        53.1        52.6
     Income taxes deferred one year........       (13.2)      (15.6)
     Advance billings and customer
       deposits............................        42.8        42.8
     Accrued interest......................        14.2        13.7
     Other.................................        19.6        21.7
                                              ---------   ---------
      Total................................   $   136.9   $   137.2
                                              =========   =========

   
                         PAGE 28
<PAGE>


   Advertising costs were $12.6 million in 1998, $17.1  million  in
1997 and $13.4 million in 1996.  Interest paid was $16.9 million in
1998, $16.7 million in 1997 and $13.0 million in 1996.

   No  customer  accounted for more than 10% of revenues  in  1998,
1997 or 1996.

M.  Other Income, Net

   The components of other income, net were as follows:

                                       1998        1997        1996
                                       ----        ----        ----
   Equity earnings of ASI.....    $     2.5   $     5.5   $     3.9
   Other, net.................          2.8        (0.4)       (0.1)
                                  ---------   ---------   ---------
     Total....................    $     5.3   $     5.1   $     3.8
                                  =========   =========   =========

N.  Quarterly Financial Information (Unaudited)

                                           Operating    Net
                                 Revenues     Income    Income
                                 --------     ------    ------
   1998
   ----
    First Quarter..............   $  330.8  $  119.6  $   70.3
    Second Quarter.............      339.9     113.7      67.0
    Third Quarter..............      345.9     111.4      65.5
    Fourth Quarter.............      346.4     114.9      69.6
                                  --------  --------  --------
      1998 Total...............   $1,363.0  $  459.6  $  272.4
                                  ========  ========  ========

   1997
   ----
    First Quarter..............   $  316.4  $  113.5  $   68.8
    Second Quarter.............      327.4     111.2      67.6
    Third Quarter..............      325.7     106.5      62.5
    Fourth Quarter.............      330.4     102.3      62.7
                                  --------  --------  --------
      1997 Total...............   $1,299.9  $  433.5  $  261.6
                                  ========  ========  ========

   We  have included all adjustments necessary for a fair statement
of results for each period.

O.  Segment Information

   Indiana   Bell  is  a  wholly  owned  subsidiary  of   Ameritech
Corporation.  Ameritech has organized its operations using customer-
focused   business   units,  and  Ameritech's  management   reviews
operating  results and allocates resources based on this structure.
These  business  units aggregate to three reportable  segments  for
Ameritech as a consolidated entity: communications; information and
entertainment; and international.  The operations of  Indiana  Bell
are  included  in  the  results  of  several  business  units,  and
accordingly,  Indiana  Bell is not managed as  a  separate  entity.
However,  all  of the business units that include  the  results  of
Indiana  Bell are reflected in Ameritech`s communications  segment.
Indiana  Bell  therefore  has operations  in  only  one  reportable
segment:  communications.  We derive revenues from  local  service,
network  access,  long  distance service  and  other  miscellaneous
revenues.   Revenues derived from each of these services are  shown
in separate captions on the income statements on page 19.

P.  Proposed Merger with SBC Communications Inc.

   On  May  11,  1998, Ameritech and SBC Communications Inc.  (SBC)
jointly  announced their signing of a definitive  merger  agreement
(Merger  Agreement).  The Merger Agreement provides that  a  wholly
owned  subsidiary of SBC will be merged into Ameritech (the Merger)
and  Ameritech will become a wholly owned subsidiary of  SBC.   The
Merger  is  intended to be accounted for as a pooling of  interests
and to be a tax-free reorganization.  In the Merger, each share  of
Ameritech  common stock (other than shares owned by Ameritech,  SBC
or  their  respective  subsidiaries) will  be  converted  into  and
exchanged for 1.316 shares of SBC common stock.

   
                         PAGE 29
<PAGE>


   The  Merger has been approved by the Board of Directors and  the
shareowners  of  each  company,  but  remains  subject  to  various
regulatory  approvals,  principally by the  Federal  Communications
Commission  (FCC), the Illinois Commerce Commission (ICC)  and  the
Public Utility Commission of Ohio (PUCO).

   On  March  23,  1999, the Department of Justice entered  into  a
consent  decree with Ameritech and SBC that would provide  a  basis
for  Department  of  Justice clearance of  both  the  SBC-Ameritech
merger   and   SBC's  proposed  acquisition  of  Comcast   Cellular
Corporation.   The  consent decree requires the parties  to  divest
certain   "overlapping"  cellular  properties  in  17  markets   in
Illinois, Indiana and Missouri, including, as previously undertaken
by Ameritech and SBC, those in Chicago and St. Louis.

   On March 29, 1999, the hearing examiners of the ICC issued their
proposed  order approving the Merger subject to certain conditions.
The more significant conditions are to return to customers 100%  of
the  net  Merger-related savings, which may be reduced  to  50%  if
certain performance requirements are met.  Further, SBC must ensure
certain  employment levels will not be reduced due to  the  Merger,
and  that  capital  investments  and  charitable  contributions  in
Illinois  are  continued  generally  at  historical  levels.    The
proposed order is subject to normal due process proceedings  before
it goes to the commissioners of the ICC for a vote.  Under Illinois
law, such vote must occur on or before June 24, 1999.

   In  February  1999,  the PUCO staff, Ameritech,  SBC,  the  Ohio
Consumers'  Counsel and certain consumer groups and new competitors
of Ameritech in Ohio signed a proposed merger settlement agreement.
The proposed settlement, which requires formal PUCO approval, among
other  things would guarantee Ameritech Ohio workforce  levels  for
two  years,  extend  the Advantage Ohio price cap  plan  for  basic
residential phone rates, provide for certain discounts  for  resold
local residential service and residential unbundled local loops  to
foster   facilities-based  residential  competition,  set   various
competitive  and service quality benchmarks and establish  monetary
penalties  if  those benchmarks are not met, and provide  financing
for consumer education and community technology funds.

   More  detailed information relating to the terms and  conditions
of  the Merger is contained in the Joint Proxy Statement/Prospectus
of Ameritech and SBC dated October 15, 1998.

Q.  Calculation of Ratio of Earnings to Fixed Charges

   The  ratio of earnings to fixed charges of Indiana Bell for  the
years ended December 31 were 21.11 in 1998, 21.13 in 1997, 21.30 in
1996, 20.61 in 1995 and 8.59 in 1994.

   For   the  purpose  of  calculating  this  ratio,  (i)  we  have
calculated earnings by adding to income before interest expense and
extraordinary  item  the amount of related  taxes  on  income,  the
portion  of  rentals  representative of  the  interest  factor  and
undistributed equity earnings, (ii) we consider one-third of rental
expense to be the amount representing return on capital, and  (iii)
fixed charges comprise total interest expense, capitalized interest
and such portion of rentals.

Item 9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure.
   Not applicable.

                             PART III
                                 
Item 10.  Directors and Executive Officers of Registrant.
   Omitted pursuant to General Instruction I(2).

Item 11.  Executive Compensation.
   Omitted pursuant to General Instruction I(2).

Item 12.  Security Ownership of Certain Beneficial Owners
          and Management.
   Omitted pursuant to General Instruction I(2).

Item 13.  Certain Relationships and Related Transactions.
   Omitted pursuant to General Instruction I(2).

   
                         PAGE 30
<PAGE>


                              PART IV
                                 


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

(a)  Documents filed as part of the report:
 
    (1) Financial Statements:
 
                                                                  Page
                                                                  ----
        Selected Financial Data...................................  10
        Report of Independent Public Accountants..................  18
        Statements:
          Statements of
            Income and Reinvested Earnings........................  19
          Balance Sheets..........................................  20
          Statements of Cash Flows................................  21
          Notes to Financial Statements...........................  22
 
    (2) Financial Statement Schedule:
 
          II  Valuation and Qualifying Accounts..................  F-1
 
          Glossary...............................................   33
  
   We have omitted financial statement schedules other than the one
listed  above because the required information is contained in  the
financial statements and notes, or because such schedules  are  not
required or applicable.

    (3) Exhibits
 
   We   incorporate  by  reference  the  exhibits   identified   in
parentheses below, which are on file with the SEC.

   Exhibit
   Number
   ------
    3a -  Indiana Bell's Articles of Incorporation, as
          amended May 11, 1990 (Exhibit 3a to Form 10-K for
          1990, File No. 1-6746).
          
    3b -  Indiana Bell's By-laws, as amended April 7, 1990
          (Exhibit 3b to Form 10-K for 1990,
          File No. 1-6746).
          
    4 -   We are not required to file documents which define
          the rights of holders of long and intermediate term
          debt of Indiana Bell.  We have agreed to furnish a
          copy of these documents to the SEC on request.
          
    10 -  Reorganization and Divestiture Agreement between
          American Telephone and Telegraph Company, American
          Information Technologies Corporation and
          Affiliates, dated as of November 1, 1983 (Exhibit
          10a to Form 10-K for 1983 for American Information
          Technologies Corporation,
          File No. 1-8612).
          
    12 -  Computation of ratio of earnings to fixed charges
          for the five years ended December 31, 1998.
          
    23 -  Consent of Arthur Andersen LLP.
          
    27 -  Financial Data Schedule for the year ended
          December 31, 1998.
          
(b)  Reports on Form 8-K:

    We did not file a Form 8-K during the fourth quarter of 1998.

   
                         PAGE 31
<PAGE>


                            SIGNATURES
                            ----------
                                 
   Under  the requirements of the Securities Exchange Act of  1934,
an  authorized  company  official has signed  this  report  on  our
behalf.

   
   
                                    INDIANA BELL TELEPHONE COMPANY,
INCORPORATED

                                      /s/ Ronald G. Pippin
                                 -----------------------------
                                       Ronald G. Pippin,
                                 Vice President and Comptroller

March 29, 1999

   Under  the requirements of the Securities Exchange Act of  1934,
the  following persons have signed this report on our behalf in the
capacities indicated.

Principal Executive Officer:

 /s/ Kent A. Lebherz
-----------------------------
   Kent A. Lebherz,
      President

Principal Financial and Accounting Officer:

 /s/ Ronald G. Pippin
-----------------------------
  Ronald G. Pippin,
Vice President and Comptroller

Ameritech Corporation:

   /s/ Barry K. Allen
-----------------------------
     Barry K. Allen,
   Executive Vice President,
Regulatory and Wholesale Operations

The sole shareowner of the registrant, which is
managed by its sole shareowner rather than by
a board of directors.

March 29, 1999
   
                         PAGE 32


   
   
<PAGE>

GLOSSARY

Access charge -
---------------
a fee that local phone companies charge to long-distance carriers
for the handling of long-distance calls on the local network.

Access line -
-------------
a telephone line for voice, data or video reaching from a local
phone company to a home or business.

Bell operating companies -
--------------------------
the former Bell telephone subsidiaries of AT&T, including
Ameritech's five landline communications subsidiaries in Illinois,
Indiana, Michigan, Ohio and Wisconsin.

Bundled (unbundled) network elements -
--------------------------------------
two or more components of a regulated service for which one
inclusive rate is charged; separate components of a regulated
service for which separate rates are charged.

Call management services -
--------------------------
services that add value and convenience for phone customers, such
as call waiting, call forwarding and Caller ID.  These services are
sold to customers individually or in packages.

Customer premises equipment (CPE) -
-----------------------------------
communications equipment owned by customers, including telephones,
faxes and switches.

Data communications -
---------------------
digital transmissions through wired or wireless networks, usually
linking computers.

Dial 1 + -
----------
a feature that allows local phone customers to designate a carrier
other than the local service provider for toll calls within their
calling area by simply dialing 1 plus the telephone number.

Digital -
---------
an alternative to traditional analog communications, digital
systems transport information in the 1s and 0s of computer code for
improved clarity and quality.

Federal Communications Commission (FCC) -
-----------------------------------------
an independent government agency whose mission is to encourage
competition in all communications markets and to protect the public
interest.  The FCC develops and implements policy concerning
interstate communications by radio, television, wire, satellite and
cable.

Financial Accounting Standards Board (FASB) -
---------------------------------------------
the independent body responsible for setting accounting and
financial reporting standards to be followed by U.S. business
enterprises.

Gross receipts taxes -
----------------------
state and local taxes based upon the gross operating revenues
earned in a particular jurisdiction.  These taxes may be imposed on
general businesses or public utilities in lieu of other taxes.

High-capacity lines -
---------------------
lines  sold to customers that have large-volume data communications
needs  - such as long-distance carriers, Internet service providers
and large companies.

Interconnection -
-----------------
allowing a competitive local service provider to use the local
phone company's network, or elements of the network, to provide
local phone service to its customers.

Interexchange carriers (IXCs) -
-------------------------------
those companies primarily involved in providing long-distance voice
and data transmission services, such as AT&T, MCI WorldCom and
Sprint.

Internet -
----------
the global web of networks that connects computers around the
world, providing rapid access to information from multiple sources.

Internet service providers (ISPs) -
-----------------------------------
those companies providing access to the Internet and other computer-
based information networks.

   
                         PAGE 33
<PAGE>


GLOSSARY (cont'd.)

Intrastate revenues -
---------------------
that portion of revenues regulated by state rather than federal
authorities.

ISDN (Integrated Services Digital Network) -
--------------------------------------------
a  service that carries voice, data and video at the same time  and
offers several times the capacity of a conventional phone line.

Landline -
----------
referring to conventional wired phone service.

Local access -
--------------
the local portion of long-distance calls.

Local access and transport area (LATA) -
----------------------------------------
the boundary within which a local telephone company may provide
phone service.  It is usually centered around a city or other
identifiable community of interest.

Local exchange carrier (LEC) -
------------------------------
those companies primarily involved in providing local phone service
and access to the local phone network, including Ameritech's
landline communications subsidiaries in Illinois, Indiana,
Michigan, Ohio and Wisconsin.

Long-distance -
---------------
voice,  data  and  video communications to locations  beyond  local
service areas.

Operational support systems (OSS) -
-----------------------------------
the databases and information used to support the provision of
telephone service to end users.

Price caps -
------------
a form of regulation that sets maximum limits on the prices that
LECs can charge for access services instead of limits on rate of
return or profits.

Productivity factor -
---------------------
a portion of the interstate price cap formula that requires LECs to
reduce the price cap based on an assumed increase in productivity.

Regional holding companies (RHCs) -
-----------------------------------
the seven regional holding companies formed in connection with the
court-approved divestiture of certain assets of AT&T Corp.,
formerly American Telephone and Telegraph Company.  With the 1997
mergers of two of the RHCs, Pacific Telesis Group into SBC
Communications Inc. and NYNEX Corporation into Bell Atlantic
Corporation, five RHCs remain.

Securities and Exchange Commission (SEC) -
------------------------------------------
the federal agency that regulates the issuance and trading of
public debt and equity securities in the United States and monitors
compliance with these regulations.

Switched Minutes of Use -
-------------------------
the measure of time used to bill IXC's for access to our public
switched network.

Universal service -
-------------------
a concept designed to ensure access to the telecommunications
network in rural and low-income areas at affordable prices.
Funding typically comes from urban telecommunication operators.

Voice-grade equivalent -
------------------------
a channel or other portion of a high-capacity access line that can
be used to transmit voice or data traffic.

Voice mail -
------------
a service that automatically answers calls and distributes
messages.

   
                         PAGE 34
<PAGE>

                                        
                  INDIANA BELL TELEPHONE COMPANY, INCORPORATED
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                          ALLOWANCE FOR UNCOLLECTIBLES
                              (Dollars in Millions)
                                        
                                        
       COL. A        COL. B            COL. C                COL. D      COL. E
       ------        ------      -----------------           ------      ------
                                     Additions
                                 -----------------
                   Balance at   Charged       Charged                    Balance
                   Beginning        to       to Other                  at End of
                  of Period   Expense (a)  Accounts (b)  Deductions (c)  Period
                  ---------   ----------   -----------   -------------   ------
 
 Year 1998...........$  20.3    $  20.0       $ 28.6       $  42.0      $  26.9
 Year 1997...........   19.8       26.1         35.3          60.9         20.3
 Year 1996...........    2.9       32.8         34.6          50.5         19.8
 
 ----------------------
     
     
   (a)Excludes direct charges and credits to expense on the statements of
      income and reinvested earnings related to interexchange carrier
      receivables.
      
   (b)Includes principally amounts related to the interexchange carrier
      receivables which are being billed by us and amounts previously
      written off which were credited directly to this account when
      recovered, as well as a reclassification in 1996 of $3.8 million from
      current liabilities to more accurately state the allowance.
      
   (c)Amounts written off as uncollectible.

                              F-1


 <PAGE>