UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                           Form 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the quarterly period ended June 30, 1997

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from         to        .
                                    -------    -------

     Commission File Number      0-18048      
                            ------------------

                   SA Telecommunications, Inc.
            ----------------------------------------
              (Exact name of small business issuer
                  as specified in its charter)

            Delaware                        75-2258519    
---------------------------------       -------------------
  State or other jurisdiction               IRS Employer
of incorporation or organization)       Identification Number


               1600 Promenade Center, 15th Floor,
                           Richardson, Texas   75080 
-----------------------------------------------------------------
            (Address of principal executive offices)

                         (972) 690-5888
-----------------------------------------------------------------
                   (Issuer's telephone number)

                               N/A
-----------------------------------------------------------------
       Former name, former address and former fiscal year,
                  if changed since last report)

Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes   X   No      
    -----    -----

There were 15,668,885 shares of the registrant's common stock
outstanding as of August 13, 1997.

Transitional Small Business Disclosure Format (Check One:)
Yes         No   X  
    -----      -----

<PAGE>


          SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES

                              INDEX


Part I.  Financial Information                             Page  
                                                         --------

     Item 1 - Financial Statements                               

        Consolidated Balance Sheets                         1-2
     
        Consolidated Statements of Operations               3

        Consolidated Statements of  Shareholders' 
           Equity (Deficit)                                 4

        Consolidated Statements of Cash Flows               5

        Notes to Consolidated Financial Statements          6-9

     Item 2. - Management's Discussion and Analysis
               or Plan of Operation                         10-20

Part II.  Other Information                                       

     
     Item 1. - Legal Proceedings                            20

     Item 2. - Changes in Securities                        21

     Item 4. - Submission of Matters to a Vote 
                   of Security Holders                      22
     
     Item 6. - Exhibits and Reports on Form 8-K             22


<PAGE>

Part I.  Financial Information

Item 1. Financial Statements

          SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                           (Unaudited)


                             ASSETS
                             ------

<TABLE>
<CAPTION>

                                                                               June 30,         December 31,
                                                                                1997                1996 
                                                                           --------------      -------------
<S>                                                                        <C>                 <C>
Current assets
   Cash and cash equivalents                                               $            -      $  14,360,466
   Accounts and notes receivable:
      Trade, net of allowance for doubtful accounts
         of $3,068,826 and $2,796,946, respectively                            5,239,091           7,035,710
      Other, net of allowance for doubtful 
         accounts of $0 and $31,479, respectively                                536,646           1,481,072
   Inventory                                                                     136,875             136,875
   Prepaid expenses and other                                                    559,495             594,081
                                                                           -------------       -------------
      Total current assets                                                     6,472,107          23,608,204
                                                                           --------------      -------------

Property and equipment                                                        12,759,174          10,054,937
Less accumulated depreciation and amortization                                (2,133,295)         (1,380,307)
                                                                           -------------       -------------

   Net property and equipment                                                 10,625,879           8,674,630
                                                                           --------------      -------------
Excess of cost over net assets acquired, net of accumulated amortization
     of $3,759,603 and $2,591,529, respectively                               26,121,727          27,902,634
                                                                           -------------       -------------
Other assets
    Debt issuance cost, net                                                    2,170,086           2,083,843
    Other                                                                        348,794             409,758
                                                                           -------------       --------------
    Total other assets                                                         2,518,880           2,493,601
                                                                           -------------       -------------
          Total assets                                                     $  45,738,593       $  62,679,069
                                                                           =============       =============


                          - Continued -

           The accompanying notes are an integral part
           of these consolidated financial statements.
</TABLE>

                               -1-

<PAGE>
          SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
             CONSOLIDATED BALANCE SHEETS - Continued
                           (Unaudited)

              LIABILITIES AND SHAREHOLDERS' EQUITY
              ------------------------------------

<TABLE>
<CAPTION>

                                                                        June 30,     December 31, 
                                                                          1997           1996
                                                                      ------------   ------------
<S>                                                                   <C>            <C>
Current liabilities
   Cash overdraft                                                     $    209,512   $          -
   Accounts payable                                                      1,002,153      2,023,955
   Accrued telecommunications expenses                                   6,121,642     11,360,002
   Other accrued expenses                                                2,307,526      2,382,504
   Acquisition obligation                                                  791,702      9,500,000
   Revolving line of credit                                              3,979,505              -
   Short-term notes payable                                                      -        782,239
   Current maturities of long-term obligations                             921,545        570,859
                                                                      ------------   ------------
      Total current liabilities                                         15,333,585     26,619,559
                                                                      ------------   ------------
Long-term obligations, less current maturities                          32,938,808     28,477,903
                                                                      ------------   ------------
Commitments and contingencies

Series A redeemable preferred stock, $.00001 par value,
250,000 shares authorized; 180,000 shares issued                         1,370,725      1,330,303
                                                                      ------------   ------------
Shareholders' equity (deficit):
   Common stock, $.0001 par value, 50,000,000 shares
      authorized; 16,866,353 and 16,858,053 issued, respectively             1,687          1,686
   Additional paid-in capital                                           26,407,406     26,402,671
   Retained deficit                                                    (26,459,603)   (16,299,038)
   Treasury stock (1,197,518 shares) at cost                            (3,854,015)    (3,854,015)
                                                                      ------------   ------------
      Total shareholders' equity (deficit)                              (3,904,525)     6,251,304
                                                                      -------------  ------------
Total liabilities and shareholders' equity                            $ 45,738,593   $ 62,679,069
                                                                      ============   ============

           The accompanying notes are an integral part
           of these consolidated financial statements.
</TABLE>

                               -2-

<PAGE>

          SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF OPERATIONS
                           (Unaudited)

<TABLE>
<CAPTION>

                                                               For the three months            For the six months
                                                                  ended June 30,                 ended June 30,
                                                            ---------------------------   ---------------------------
                                                                1997           1996           1997           1996
                                                            ------------   ------------   ------------   ------------
<S>                                                         <C>            <C>            <C>            <C>
Telecommunications revenues:
   Retail                                                   $  9,327,083   $  7,184,746   $ 18,706,741   $ 14,117,696
   Wholesale                                                   2,066,669         25,808      5,802,282        120,249
                                                            ------------   ------------   ------------   ------------
      Total telecommunications revenues                       11,393,752      7,210,554     24,509,023     14,237,945

Cost of revenues:
   Retail                                                      8,797,626      3,923,747     15,249,686      8,193,507
   Wholesale                                                   2,177,374         20,698      5,753,062         96,251
                                                            ------------   ------------   ------------   ------------
      Total cost of revenues                                  10,975,000      3,944,445     21,002,748      8,289,758
                                                            ------------   ------------   ------------   ------------

Gross profit                                                     418,752      3,266,109      3,506,275      5,948,187
                                                            -------------  ------------   ------------   ------------

Operating expenses:
   General and administrative                                  4,433,508      2,450,747      7,783,448      4,698,847
   Depreciation and amortization                               1,163,548        411,872      2,366,345        947,816
   Nonrecurring integration costs                                736,025              -      1,833,805              -
                                                            ------------   ------------   ------------   ------------

      Total operating expenses                                 6,333,081      2,862,619     11,983,598      5,646,663
                                                            ------------   ------------   ------------   ------------
Income (loss) from operations before other income (expense)
  and extraordinary item                                      (5,914,329)       403,490     (8,477,323)       301,524

Other income (expense):
   Interest expense                                             (920,528)      (348,593)    (1,710,310)      (693,860)
   Other, net                                                    107,290         32,487        127,490         47,590
                                                            ------------   ------------   ------------   ------------
      Total other income (expense)                              (813,238)      (316,106)    (1,582,820)      (646,270)
                                                            ------------   ------------   ------------   ------------
Income (loss) before extraordinary item                       (6,727,567)        87,384    (10,060,143)      (344,746)
                                                            ------------   ------------   ------------   ------------

Extraordinary item - gain on extinguishment of debt                    -      2,149,191              -      2,149,191
                                                            ------------   ------------   ------------   ------------
Net income (loss)                                             (6,727,567)     2,236,575    (10,060,143)     1,804,445
Preferred dividend requirements, including accretion             (50,211)       (72,713)      (100,422)      (147,922)
                                                            ------------   ------------   ------------   ------------
Net income (loss) applicable to common shareholders         $ (6,777,778)  $  2,163,862   $(10,160,565)  $  1,656,523
                                                            ============   ============   ============   ============

Income (loss) per common share and common share equivalent:
   Continuing operations                                    $      (0.43)  $       0.01   $      (0.64)  $      (0.02)
   Extraordinary item                                                  -           0.11              -           0.12
                                                            ------------   ------------   ------------   ------------
   Net income (loss) per share                              $      (0.43)  $       0.12   $      (0.64)  $       0.10
                                                            ============   ============   ============   ============
   Net income (loss) per share applicable to common
   shareholders                                             $      (0.43)  $       0.12   $      (0.65)  $       0.10
                                                            ============   ============   ============   ============
Weighted average number of common share & common share 
equivalent outstanding                                        15,668,835     18,556,471     15,667,322     17,285,266
                                                            ============   ============   ============   ============
Income (loss) per common share - assuming full dilution:    
   Continuing operations                                                   $       0.01                  $      (0.02)
   Extraordinary item                                                              0.10                          0.11
                                                                           ------------                  ------------
   Net income per share                                                    $       0.11                  $       0.09
                                                                           ============                  ============
   Net income per share applicable to common shareholders                  $       0.11                  $       0.09
                                                                           ============                  ============
Weighted average number of common shares outstanding -
assuming full dilution                                                       20,493,575                    19,022,802
                                                                           ============                  ============


           The accompanying notes are an integral part
           of these consolidated financial statements.
</TABLE>

                               -3-

<PAGE>

          SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
                           (Unaudited)

<TABLE>
<CAPTION>

                                        Series B                             Additional
                                    Preferred Stock       Common Stock        paid-in       Retained      Treasury
                                   Shares      Amount    Shares    Amount     capital       deficit        Stock          Total
                                   -------   --------- ----------  -------  -----------   ------------   ----------    ----------
<S>                                <C>       <C>       <C>         <C>      <C>           <C>            <C>           <C>
Balances at December 31, 1995      125,000   $ 575,280 13,462,120  $ 1,346  $20,855,099   $(11,996,179)  $ (456,601)   $8,978,945
Private placements of common stock       -           -    251,700       25      369,975              -            -       370,000
Issuance of common stock for:
   Exercise of options                   -           -    347,836       35      137,004              -            -       137,039
   Exercise of warrants                  -           -  1,090,000      109    1,362,391              -            -     1,362,500
   Conversion of debt                    -           -    267,856       27      449,973              -            -       450,000
   Other                                 -           -    236,612       24      376,875              -            -       376,899
Issuance of common stock for
   acquisition of USC securities  (125,000)   (575,280)   843,023       84    1,613,230              -            -     1,038,034
Issuance of warrants                     -           -          -        -      368,927              -            -       368,927
Preferred dividend requirements,
    including accretion                  -           -          -        -            -       (147,922)           -      (147,922)
Net income for the period                -           -          -        -            -      1,804,445            -     1,804,445
                                  --------   --------- ----------  -------   ----------   ------------     --------   -----------
Balances at June 30, 1996                -   $       - 16,499,147  $ 1,650  $25,533,474   $(10,339,656)  $  (456,601) $14,738,867
                                  ========   ========= ==========  =======  ===========   ============   ==========   ===========
                                  
Balances at December 31, 1996            -   $       - 16,858,053  $ 1,686  $26,402,671    (16,299,038)  $(3,854,015) $ 6,251,304
                                                       
Issuance of common stock for                            
  exercise of options                    -           -      8,300        1        4,375              -             -        4,376
                                                        
Preferred dividend requirements,                       
  including accretion                    -           -          -        -            -       (100,422)            -     (100,422)
 Net loss for the period                 -           -          -        -            -    (10,060,143)            -  (10,060,143)
                                  --------   --------- ----------  -------  -----------   ------------   -----------  -----------
Balances at June 30, 1997                -   $       - 16,866,353  $ 1,687  $26,407,406   $(26,459,603)  $(3,854,015) $(3,904,525)
                                  ========   ========= ==========  =======  ===========   ============   ===========  ===========


           The accompanying notes are an integral part
           of these consolidated financial statements.
</TABLE>

                               -4-

<PAGE>

          SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (Unaudited)


<TABLE>
<CAPTION>

                                                                     For the six months
                                                                        ended June 30,
                                                                 ---------------------------
                                                                     1997           1996
                                                                 ------------   ------------
<S>                                                              <C>            <C>
Cash flows from operating activities:
   Net income (loss)                                             $(10,060,143)  $  1,804,445
   Adjustments to reconcile net income (loss) to net cash
    used in operating activities:
      Extraordinary item - gain on early extinguishment of debt             -     (2,149,191)
      Depreciation and amortization                                 2,366,345        947,816
      Provision for losses on accounts receivable                   1,351,718        400,063
      (Increase) decrease in: 
         Accounts and notes receivable                              1,389,327     (1,043,584)
         Prepaid expenses and other                                   (56,145)      (116,138)
         Other assets                                                 (23,002)      (590,321)
    Increase (decrease) in
         Accounts payable and accrued expenses                     (6,185,629)       403,995
                                                                 ------------   ------------

Net cash used in operating activities                             (11,217,529)      (342,915)
                                                                 ------------   ------------
Cash flows from investing activities:
   Additions to property and equipment                               (897,239)    (1,534,857)
   Additional cost of FCLD purchase                                    (1,061)             -
   Additional cost of Addtel purchase                                 (94,403)             -
   Acquisition obligation - Addtel                                 (8,000,000)             -
   Sale of assets                                                      71,583              -
                                                                 ------------   ------------

   Net cash used in investing activities                           (8,921,120)    (1,534,857)
                                                                 ------------   ------------

Cash flows from financing activities:
   Borrowings                                                       3,230,000      2,000,000
   Revolving line of credit                                         3,979,505              -
   Proceeds from exercise of warrants                                       -      1,359,149
   Proceeds from exercise of options                                    4,736        200,380
   Principal payments on long-term obligations                     (1,231,341)      (549,391)
   Debt issuance cost                                                (204,717)             -
                                                                 ------------   ------------
Net cash provided by financing activities                           5,778,183      3,010,138
                                                                 ------------   ------------
Increase (decrease) in cash and equivalents                       (14,360,466)     1,132,366

Cash at beginning of period                                        14,360,466        823,738
                                                                 ------------   ------------

Cash and equivalents at end of period                            $          -   $  1,956,104
                                                                 ============   ============



           The accompanying notes are an integral part
           of these consolidated financial statements.
</TABLE>

                               -5-

<PAGE>





          SA  TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The interim consolidated financial statements are those of
     SA Telecommunications, Inc. and subsidiaries (the
     "Company").  These interim consolidated financial statements
     are prepared pursuant to the requirements for reporting on
     Form 10-QSB.  The December 31, 1996 consolidated balance
     sheet data was derived from audited consolidated financial
     statements but does not include all disclosures required by
     generally accepted accounting principles.  The interim
     consolidated financial statements and notes thereto should
     be read in conjunction with the consolidated financial
     statements and notes included in the Company's latest annual
     report on Form 10-KSB/A.  In the opinion of management, the
     interim consolidated financial statements reflect all
     adjustments (consisting only of a normal recurring nature)
     necessary for a fair presentation of the consolidated
     financial position and consolidated results of operations
     for interim periods.  The current period consolidated
     results of operations are not necessarily indicative of
     results which ultimately will be reported for the full
     fiscal year ending December 31, 1997.

     All significant intercompany accounts and transactions have
     been eliminated.  Certain prior period amounts have been
     reclassified for comparative purposes.

NOTE B - REVOLVING LINE OF CREDIT

     On January 9, 1997, the Company completed a line of credit
     arrangement with Greyrock Business Credit ("Greyrock"), a
     division of NationsCredit Commercial Corporation.  The line
     of credit has a maximum availability of $10 million, with
     borrowings based on 80% of eligible accounts receivable and
     inventory other than receivables arising from
     telecommunications services rendered to customers by a
     regional Bell operating company, a Bell operating company, a
     local exchange company, a credit card company, or a provider
     of local telephone services.  The borrowings bear interest
     at a floating rate of 2.5% above the reference rate of Bank
     of America NT & SA, with a minimum interest rate of 9% per
     annum and a minimum interest amount of $10,000 per month. 
     The borrowings are secured by all the assets of the Company
     and its subsidiaries and the stock of the Company's
     subsidiaries.  The line of credit matures December 31, 1997
     and automatically renews for successive additional one year
     terms unless either party elects to terminate by giving
     written notice to the other not less than 60 days prior to
     the next maturity date.

     The agreements regarding the line of credit contain
     covenants which, among other matters, limit the ability of
     the Company and its subsidiaries to take the following
     actions without the consent of Greyrock:  (1) merge,
     consolidate and acquire or sell assets, (2) incur
     indebtedness outside the ordinary course of business which
     would have a material adverse effect on the Company and its
     subsidiaries taken as a whole or on the prospect of
     repayment of the obligations under the line of credit, (3)
     pay dividends other than stock dividends and certain
     dividends with respect to the Company's Series A Cumulative
     Convertible Preferred Stock ("Series A Preferred Stock"), 
     and (4) redeem, purchase or acquire its capital stock.

     Outstanding borrowings under the revolving line of credit at
     June 30, 1997 were $3,979,505.

                               -6-

<PAGE>

          SA  TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           (Unaudited)

NOTE C - STOCK OPTIONS

     On April 8, 1997, the Board of Directors granted options
     under the 1994 Employee Stock Option Plan to purchase up to
     275,000 shares of the Company's Common Stock to employees at
     a price of $1.53 per share (market value of the Common Stock
     on the date of grant) and 150,000 shares of Common Stock at 
     a price of $1.69 (110% of market value of the Common Stock on
     date of grant).  After a six-month waiting period, the shares
     acquired upon exercise may not be sold earlier than periods 
     varying from eighteen to thirty months.

     On May 30, 1997, pursuant to the terms of the 1994 Non-
     Employee Directors Plan, options were automatically granted
     to purchase up to 110,000 shares of the Company's Common
     Stock to non-employee directors at a price of $.81 per share
     (market value on the date of grant).  After a six-month
     waiting period, the shares acquired upon exercise may not be
     sold earlier than eighteen months. 

NOTE D - LONG TERM OBLIGATIONS

     On March 25, 1997, the Company completed a private placement
     of a $3,800,000 10% Convertible Debenture due 2006 (the
     "March Debenture") for a net of $3,230,000 on terms
     substantially identical to the terms of the Company's 10%
     Convertible Notes due 2006 (the "Notes").

NOTE E - NONRECURRING CHARGES

     The Company incurred an aggregate of $1,833,805 in
     nonrecurring integration charges in the first six months of
     1997 comprised of two components.  The first component is
     $450,578 principally in employee associated costs and
     settlements on discontinuance of the Company's international
     call back product line.  For the six months ended June 30,
     1997, revenues and cost of revenues attributable to the
     Company's discontinued international product line were
     $891,285 and $814,026, respectively.  While such amounts are
     also nonrecurring, they have not been separately identified
     as nonrecurring in the statement of operations.  The second
     component is $1,383,227 principally comprised of costs 
     associated with excess and duplicate personnel reductions
     to be eliminated in the integration of the Addtel acquisition.

NOTE F - EARNINGS (LOSS) PER SHARE

     For the three months and the six months ended June 30, 1996,
     earnings per share were calculated based upon the weighted
     average number of shares outstanding during the period plus
     the dilutive effect of stock options, stock warrants,
     convertible debentures and Series A Preferred Stock using
     the Modified Treasury Stock method.

                               -7-

<PAGE>

       SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES NOTES 
        TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                           (Unaudited)

<TABLE>
<CAPTION>

                                        For the Three Months     For the Six Months
                                           Ended June 30,          Ended June 30,
                                               1996                          1996
                                        --------------------     ------------------
<S>                                          <C>                      <C>
Primary:
     Average Shares Outstanding              15,689,431               15,397,430
     Stock Options                            3,540,249                3,242,197
     Stock Warrants                           2,572,606                1,799,097
                                             ----------               ----------
          Total                              21,802,286               20,438,724
     Less: Shares purchased under
           the Treasury Stock Method         (3,245,815)              (3,153,457)
                                             ----------               ----------
                                             18,556,471               17,285,267
                                             ==========               ==========

Full Dilution:
     Average Shares Outstanding              15,689,431               15,459,243
     Stock Options                            3,540,249                3,242,197
     Stock Warrants                           2,572,606                1,799,097
     Convertible Debentures                     603,768                  342,386
     Series A - Preferred Stock               1,333,336                1,333,336 
                                             ----------               ----------

          Total                              23,739,390               22,176,259
     Less: Shares purchased under
           the Treasury Stock Method         (3,245,815)              (3,153,457)
                                             ----------               ----------
                                             20,493,575               19,022,802 
                                             ==========               ==========
</TABLE>

NOTE G - SUBSEQUENT EVENTS

     On July 29, 1997, the Company began the implementation of a
     restructuring plan to more closely align the Company's expense
     levels with revenues.  The restructuring plan involved all 
     areas of the Company and included a reduction in force and
     reconfiguration of the Company's network coupled with the
     closing of substantially all of the Company's outlying sales
     offices in leased office locations.  Specifically, the Company
     terminated approximately 17% of the employees across a broad 
     spectrum of job classifications.

     On August 13, 1997, the Company completed a private
     placement of a $5,000,000 10% Convertible Debenture due 2006
     (the "August Debenture") for a net of $3,300,000 and amended
     the March Debenture by the attachment of an allonge (the
     "Amended March Debenture").  The terms of the August
     Debenture and the Amended March Debenture (the "Debentures")
     are substantially identical to the Notes.  The initial 
     conversion price of the Debentures is $1.50 per share, in each 
     case, as subject to adjustment and such the conversion price 
     under the Debentures is subject to adjustment upon issuances 
     of Common Stock or derivative securities convertible, 
     exchangeable or exercisable into Common Stock to certain persons
     at prices below the initial conversion price of the Debentures.

     On August 15, 1997, an indirect subsidiary of the Company
     conducting international call back business in Ecuador 
     completed a sale of substantially all of the assets of such
     business to Globalcommunications, S.A. ("Globalcom").  The
     purchase price for the assets was a formula consisting on an
     aggregate amount equal to the sum of each Monthly Revenue
     Percentage Amount (as defined) for the forty-two calendar 
     months following the closing date, but in no event

                               -8-

<PAGE>


       SA TELECOMMUNICATIONS, INC. AND SUBSIDIARIES NOTES 
        TO CONSOLIDATED FINANCIAL STATEMENTS - Continued    
                           (Unaudited)

greater than $900,000.









                               -9-

<PAGE>

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER SECURITIES
LITIGATION REFORM ACT OF 1995

This report contains forward looking statements regarding the
Company's business and future financial condition and results of
operations that involve risks and uncertainties.  Such statements
are based on an assessment of a variety of factors, contingencies
and uncertainties deemed relevant to management, including the
Company's current negative cash flow position, the Company's
historical operating losses, the need for integration of the
Company's acquisitions, the Company's liquidity position, the
regulatory environment, and other risks indicated in this and the
other filings with the Securities and Exchange Commission.  Words
or phrases such as "will continue", "anticipate", "expect",
"believe", "intend", "estimate", "project", "plan" or similar
expressions are intended to identify forward-looking statements. 
Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, the Company's
actual results may vary significantly from those indicated.  

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION OR PLAN OF OPERATION

The following is a discussion of the consolidated financial
conditions and results of operations of the Company for the three
month and six month periods ended June 30, 1997 and 1996.  It
should be read in conjunction with the Company's latest annual
report on Form 10-KSB/A.

General
-------

SA Telecommunications, Inc. is a publicly held holding company
which, through its operating subsidiaries, is a full-service
regional interexchange carrier providing a wide range of domestic
telecommunications services through its network of owned and
leased transmission and switching facilities.  As used herein,
the term the "Company" refers to SA Telecommunications, Inc. and
its subsidiaries, unless the context otherwise requires.

The Company primarily serves small and medium sized commercial
accounts in the west, southwest and south central United States. 
A vast majority of the Company's commercial and residential
customers are located in suburban, secondary and rural markets. 
In addition to providing "1+" domestic long distance services,
the Company also offers international long distance, wholesale
long distance, operator and wireless services, and other products
such as voice and data private lines, "800/888" services,
Internet access and travel cards.  The Company is also authorized
to resell local telephone service in Texas and California.

The Company entered the telecommunications business in 1991
through the acquisition of North American Telecommunications
Corporation ("NATC"), a telecommunications provider offering
international call back long distance service to foreign
customers.  In 1994 and 1995, the Company acquired two Texas-
based switchless resellers, Long Distance Network, Inc. ("LDN")
of Dallas, Texas and U.S. Communications, Inc. ("USC") of
Levelland, Texas.  During 1996, the Company purchased
substantially all of the assets of First Choice Long Distance,
Inc. ("FCLD"), a switched reseller of long distance telephone
services located in Amarillo, Texas.  In addition, effective in
1996, the Company acquired the assets of Economy Communications,
Inc. ("Economy"), a switchless reseller of long distance
telephone services located in McKinney, Texas, acquired Uniquest
Communications, Inc. ("Uniquest"), a company engaged in third
party customer verification services and outbound telemarketing,
and purchased all of the stock of AddTel Communications, Inc.
("Addtel"), a switchless reseller of long distance services based
in Glendale, California.  The growth of the Company's customer
base has been largely the result of these acquisitions.

Also, during 1995 and 1996, the Company purchased and installed
switches in Dallas, Texas and Phoenix, Arizona and added leased
transmission facilities between these switches and the operator
switch acquired in the USC acquisition.  The Company expanded its
network through the acquisition of switching equipment in
Amarillo and Lubbock in connection with the FCLD acquisition. 
During the second quarter of 1997, the Company upgraded and moved
the Amarillo switch to Los Angeles, California, and during the
third quarter the Company currently plans to make the switch 
operational and add leased

                              -10-

<PAGE>

transmission facilities between this switch and its other
switches.

The Company markets its services in areas in the west, southwest
and south central United States served by its network primarily
under the "USC," "USI," "First Choice Long Distance," "Southwest
Long Distance Network," and "Addtel" trade names.  The Company
currently anticipates future growth will primarily result from
sales and marketing efforts of its direct sales force,
telemarketing, agent sales and mass marketing sales.

Results of Operations
---------------------

The following table sets forth certain items in the Company's
Consolidated Statements of Operations as a percentage of its
operating revenues for the three and six month periods ended June
30, 1997 and 1996.

<TABLE>
<CAPTION>

                                                   For the three        For the six
                                                    months ended        months ended
                                                      June 30,            June 30,
                                                  ---------------     ---------------
                                                  1997      1996      1997      1996
                                                  -----     -----     -----     -----
<S>                                                <C>       <C>       <C>       <C>
Revenue                                            100%      100%      100%      100%
Cost of revenue                                     96        55        86        58
                                                  -----     -----     -----     -----
Gross profit                                         4        45        14        42
Operating expenses:
   General and administrative                       39        34        32        33
   Depreciation and amortization                    10         6        10         7
   Nonrecurring integration costs                    7         -         7         -
                                                  -----     -----     -----     -----
Income (loss) from continuing operations           (52)        5       (35)        2
Other income (expense)                              (7)       (4)       (6)       (4)
Extraordinary gain on extinguishment of debt         -        30         -        15
                                                  -----     -----     -----     -----
Net income (loss)                                  (59)%      31%      (41)%      13%
                                                  =====     =====     =====     =====
</TABLE>

                              -11-

<PAGE>

THREE MONTHS ENDED JUNE 30, 1997 VERSUS THREE MONTHS ENDED JUNE
30, 1996

Revenues increased by $4,183,198, or 58%, from $7,210,554 for the
three months ended June 30, 1996 to $11,393,752 for the three
months ended June 30, 1997. Revenue minutes increased
approximately 32,000,000 or 97% from approximately 33,000,000
during the three months ended June 30, 1996 to approximately
65,000,000 for the same three month period in 1997.  The Addtel
acquisition contributed $3,055,098 in retail revenue and
$2,032,008 in wholesale revenue, and the FCLD acquisition
contributed $449,551 in retail revenue. The Company's marketing
strategy continues to be the aggressive marketing of its "1+"
services, which have a higher gross profit margin, and the de-
emphasizing of operator services and wholesale business which are
less profitable product lines.  

Gross profit on retail revenues decreased by $2,731,542 from
$3,260,999 for the three months ended June 30, 1996 to $529,457
for the same quarter in 1997.  The gross profit margin on these
revenues decreased by 39% from 45% for the three months ended
June 30, 1996 to 6% for the three months ended June 30, 1997. 
This decrease was primarily attributable to approximately
$2,145,000 of network inefficiencies and approximately 
$1,700,000 due to the revaluation and adjustment of certain
transmission and access charges which the Company previously
believed were overbilled by their long line transmission carriers
and several local exchange carriers.  Such network inefficiencies 
include, without limitation, routing problems, improved leased 
cost and elimination of excess capacity.

Gross profit on wholesale revenue decreased by $115,815 from
$5,110 for the three months ended June 30, 1996 to a negative
$110,705 for the same quarter in 1997.  The gross profit margin
on these wholesale revenues decreased by 25% from 20% for the
three months ended June 30, 1996 to a negative 5% for the three
months ended June 30, 1997 due to the lower margins associated
with the Addtel wholesale business and approximately $175,000
of credits granted to one wholesale customer during the second 
quarter of 1997.

The Company began phasing out the wholesale business obtained in
the Addtel acquisition during the second quarter and expects the
process to be completed during the third quarter of 1997.  The
wholesale business is substantially less profitable than the
retail business and bears a higher credit risk.   Addtel
wholesale revenues for the quarter ended June 30, 1997 were
$2,032,008.

Gross profit on total revenues decreased by $2,847,357 from
$3,266,109 for the three months ended June 30, 1996 to $418,752
for the same quarter in 1997.  The overall gross profit margin
decreased by 41% from 45% for the three months ended June 30,
1996 to 4% for the three months ended June 30, 1997.   The
overall decline in gross profit margin is due to the lower margin
wholesale revenue acquired in the Addtel acquisition, network
inefficiencies, and the reevaluation and adjustment of certain
transmission and access charges which the Company previously
believed were overbilled by their long line transmission carriers
and several local exchange carriers.

General and administrative expense increased by $1,982,761 from
$2,450,747 for the three months ended June 30, 1996 to $4,433,508
for the same quarter in 1997, and as a percentage of revenue,
increased from 34% in 1996 to 39% in 1997. The increase in total
general and administrative expense is primarily attributable to
the Addtel acquisition. The full impact of general and
administrative expense reductions from the continuing integration
of Addtel will not be realized until this process is completed,
which is currently expected to occur during the fourth quarter. 
The increase as a percentage of revenues is primarily
attributable to bad debts of approximately $409,000 
predominately related to one retail customer.

Depreciation and amortization expense increased by $751,676 from
$411,872 for the three months ended June 30, 1996 to $1,163,548
for the same quarter in 1997, and, as a percentage of revenues,
increased from 6% in 1996 to 10% in 1997.  This increase resulted
from higher depreciation and amortization charges arising from
the acquisitions of Addtel and FCLD, increased depreciation from
the acquisition of switching and other network equipment, and
amortization of debt issuance cost related to the Notes issued in
August 1996.

EBITDA (loss) decreased by $4,845,092 from $815,362 for the three
months ended June 30,1996 to a negative 

                              -12-

<PAGE>

$4,029,730 for the same quarter in 1997.  EBITDA (loss) was
negatively impacted by lower gross profit margins and by the
increase in general and administrative expenses.

During the three months ended June 30, 1997, the Company incurred
a $736,025 nonrecurring integration charge to operations
comprised of (i) $252,978 for discontinuing the Company's
international call back product line and (ii) $483,047 for
integration of the Addtel acquisition from 1996.

The $252,978 charge for discontinuing the Company's international
call back product line is principally comprised of employee
associated costs and bad debts.  The $483,047 charge for
integration of the Addtel acquisition is principally comprised of
costs associated with excess and duplicate personnel reductions. 
The integration of Addtel is currently expected to be completed
during the fourth quarter.

The Company had income from operations of $403,490 for the three
months ended June 30, 1996 compared to a loss of $5,914,329 for
the same quarter in 1997.  This decrease was primarily
attributable to lower gross profit margins, increased general and
administrative and depreciation and amortization expenses, and
nonrecurring charges.

The Company had net other expense of $316,106 for the three
months ended June 30, 1996 compared to net other expense of
$813,238 for the same quarter in 1997.  This increase was
primarily due to an increase in interest expense from $348,593 to
$920,528 related to the offering of the Company's 10% Convertible
Notes due 2006 in August 1996 (the "Notes") and the Company's 10%
Convertible Debenture due 2006 issued in March 1997 (the "March
Debenture").

The Company recognized a gain on extinguishment of debt of
$2,149,191 for the three months ended June 30, 1996.  This gain
relates to the Company's redemption of securities issued in
connection with the USC acquisition for an aggregate of 843,023
shares of the Company's Common Stock and $308,500 of cash.  These
securities redeemed included (i) notes having an aggregate
principal amount of $3,150,000 and bearing interest at 11% per
annum, (ii) an aggregate of 125,000 shares of Series B Cumulative
Convertible Preferred Stock and (iii) a warrant which was
exercisable into an aggregate of 1,050,000 shares of the
Company's Common Stock at any time prior to July 31, 2000 at a
per share exercise price of $1.25.

The Company had net income of $2,236,575 for the three months
ended June 30, 1996 as compared to a net loss of $6,727,567 for
the same quarter in 1997.  The net loss was primarily
attributable to lower gross profit margins, the nonrecurring
charges, increased general and administrative and depreciation
and amortization expenses and increased interest expense incurred
in connection with the Notes and March Debenture.  The net income
in 1996 was primarily attributable to the one time extraordinary
gain on extinguishment of debt and improved profit margins on
increased revenues.

SIX MONTHS ENDED JUNE 30, 1997 VERSUS SIX MONTHS ENDED JUNE 30,
1996

Revenues increased $10,271,078, or 72%, from $14,237,945 for the
six months ended June 30, 1996 to $24,509,023 for the six months
ended June 30, 1997.   Revenue minutes increased approximately
71,000,000 or 104% from approximately 68,000,000 during the six
months ended June 30, 1996 to approximately 139,000,000 for the
same six month period in 1997.  The acquisition of Addtel
contributed $6,270,118 in retail revenue and $5,221,078 in
wholesale revenue, and the acquisition of FCLD contributed
$1,027,330 in retail revenue. The Company's marketing strategy
continues to be the aggressive marketing of its "1+" services,
which have a higher gross profit margin, and the de-emphasizing
of operator services and wholesale business which are less
profitable product lines. 
 
During the six months ended June 30, 1997, the Company incurred a
$1,833,805 nonrecurring integration charge to operations
comprised of (i) $450,578 for discontinuing the Company's
international call back product line and (ii) $1,383,227 for
integration of the Addtel acquisition from 1996.

                              -13-

<PAGE>

The $450,578 charge for discontinuing the Company's international
call back product line is principally comprised of employee
associated costs and settlements and bad debts.  The $1,383,227
charge for integration of the Addtel acquisition is principally
comprised of costs associated with excess and duplicate personnel
reductions.  The integration of Addtel is currently expected to
be completed during the fourth quarter.

In May 1997, the Company began an internal analysis of first
quarter escalating line costs, which management initially
believed were attributable to programming errors related to its
billing software procedures.  Upon further review and analysis by
the Company and its professional advisors, the determination was
made that the escalation in line costs was due to network
inefficiencies and not related to unbilled and unbillable revenue
to any significant extent.  Accordingly, the $522,141 previously
reported in the first quarter as "Nonrecurring unbillable revenue
costs" was reclassified as cost of revenues.

In connection with its analysis, management of the Company has 
strived to identify and correct the inefficiencies in the Company's
network and implemented certain corrective measures.  However, to date,
management has not completed its line cost analysis and may implement
further corrective measures if other ineffiiencies are identified or
the currentl identifed inefficiencies do not respond to the measures
currently in place.  While management of the Company currently believes 
that the Company's gross profit margins will be positively impacted
somewhat during the third quarter by such corrections as well as the 
Company's reduction in force instituted July 29, 1997, there can be 
no assurance that such measures will result in any positive impact to 
the Company's short or long term financial position.  Futhermore, no 
assurances can be given that the Company will identify all or any of 
the perceived inefficiencies or that if identified, the Company will
be able to construct or implement adequate cirrective measures.

Gross profit on retail revenues decreased by $2,467,134 from
$5,924,189 for the six months ended June 30, 1996 to $3,457,055
for the same period in 1997.  The gross profit margin on these
retain revenues decreased by 24% from 42% for the six months
ended June 30, 1996 to 18% for the six months ended June 30,
1997.  This decrease was primarily attributable to approximately
$2,993,000 of network inefficiencies and the reevaluation and 
adjustment of certain transmission and approximately $1,700,000
due toand access charges which the Company previously believed 
were overbilled by their long line transmission carriers and 
several local exchange carriers.  Such network inefficiencies
include, without limitation, routing problems, improved lease
cost, carrier routings and elimination of excess capacity.

Gross profit on wholesale revenues increased by $25,222 from
$23,998 for the six months ended June 30, 1996 to $49,220 for the
same period in 1997.  The gross profit margin on these wholesale
revenues decreased by 19% from 20% for the six months ended June
30, 1996 to 1% for the six months ended June 30, 1997 due to the
lower margins associated with the Addtel wholesale business and
approximately $175,000 of credits granted to one wholesale customer
 during the second
quarter of 1997.

Gross profit on total revenues decreased by $2,441,912 from
$5,948,187 for the six months ended June 30, 1996 to $3,506,275
for the same period in 1997.  The overall gross profit margin
decreased by 28% from 42% for the six months ended June 30, 1996
to 14% for the six months ended June 30, 1997.   The overall
decline in gross profit margin is due to the lower margin
wholesale revenue acquired in the Addtel acquisition, network
inefficiencies, and the reevaluation and adjustment of certain
transmission and access charges which the Company previously
believed were overbilled by their long line transmission carriers
and several local exchange carriers.

General and administrative expense increased by $3,084,601 from
$4,698,847 for the six months ended June 30, 1996 to $7,783,448
for the same quarter in 1997, and as a percentage of revenue,
decreased from 33% in 1996 to 32% in 1997.  The increase in total
general and administrative expense is primarily attributable to
the Addtel acquisition.  The full impact of the general and
administrative expense reductions from the continuing integration
of Addtel will not be realized until this process is completed,
which is currently expected to occur during the fourth quarter. 
The decrease as a percentage of revenues is attributable to cost
containment measures instituted in the first quarter offset by
bad debts of approximately $409,000 predominately related to 
one retail customer.

Depreciation and amortization expense increased by $1,418,529
from $947,816 for the six months ended June 30, 1996 to
$2,366,345 for the same quarter in 1997, and as a percentage of
revenues, increased from 7% in 1996 to 10% in 1997.  This
increase resulted from higher depreciation and amortization
charges arising from the acquisitions of FCLD 

                              -14-

<PAGE>

and Addtel, increased depreciation from the acquisition of
switching and other network equipment, and amortization of debt
issuance cost related to the Notes issued in August 1996.

EBITDA (loss) decreased by $5,603,770 from a positive $1,249,340
for the six months ended June 30, 1996 to a negative $4,354,430
for the same period in 1997.  EBITDA (loss) was negatively
impacted by lower gross profit margins and by the increase in
general and administrative expenses.

During the six months ended June 30, 1997, the Company incurred a
$1,833,805 nonrecurring integration charge to operations
comprised of (i) $450,578 for discontinuing the Company's
international call back product line and (ii) $1,383,227 for
integration of the Addtel acquisition from 1996.

The $450,578 charge for discontinuing the Company's international
call back product line is principally comprised of employee
associated costs and settlements and bad debts.  The $1,383,227
charge for integration of the Addtel acquisition is principally
comprised of costs associated with excess and duplicate personnel
reductions.  The integration of Addtel is currently expected to
be completed during the fourth quarter.

The Company had income from operations of $301,524 for the six
months ended June 30, 1996 versus a loss from  operations of
$8,477,323 for the same period in 1997.  This decrease was
primarily attributable to lower gross profit margins, increased
general and administrative and depreciation and amortization
expenses, and nonrecurring charges.

The Company had net other expense of $646,270 for the six months
ended June 30, 1996 compared to the net other expense of
$1,582,820 for the same period in 1997.  This increase was
primarily due to an increase in interest expense from $693,860 to
$1,710,310 related to the offering of the Notes and the March
Debenture.

The Company recognized a gain on extinguishment of debt of
$2,149,191 for the six months ended June 30, 1996.  This gain
relates to the Company's redemption of securities issued in
connection with the USC acquisition for an aggregate of 843,023
shares of the Company's Common Stock and $308,500 of cash.  These
securities redeemed included (i) notes having an aggregate
principal amount of $3,150,000 and bearing interest at 11% per
annum, (ii) an aggregate of 125,000 shares of Series B Cumulative
Convertible Preferred Stock, and (iii) a warrant which was
exercisable into an aggregate of 1,050,000 shares of the
Company's Common Stock at any time prior to July 31, 2000 at a
per share exercise price of $1.25.

The Company had net income of $1,804,445 for the six months ended
June 30, 1996 as compared to a net loss of $10,060,143 for the
same period in 1997.  The net loss was primarily attributable to
lower gross profit margins, the nonrecurring charges, increased
general and administrative and depreciation and amortization
expenses and increased interest expense incurred in connection
with the Notes and March Debenture.  The net income was primarily
attributable to the one time extraordinary gain on extinguishment
of debt and improved profit margins on increased revenues.

Liquidity and Capital Resources
-------------------------------

On August 12, 1996, the Company completed a $27.2 million private
placement of the Notes, which are generally convertible at any
time prior to maturity at a conversion price of $2.55 per share,
subject to adjustments in certain circumstances. The Notes are
redeemable at the option of the Company in whole or in part at
any time on or after August 15, 1999 at annual redemption prices
starting at 107% of principal, plus accrued interest to the
redemption date. Each holder of the Notes has the right to
require the Company to repurchase the Notes in the event that all
three of the following events occur: (i) the Company incurs
certain indebtedness, (ii) the Pro-Forma Interest Coverage (as
defined in the Indenture with respect to the Notes) is less than
2.0 to 1, and (iii) the average closing price of the Company's
Common Stock is less than $2.00 per share for the preceding
twenty trading days (the "$2 Minimum Threshold").   Semi-annual
cash interest payments of $1.4 million will be due on the Notes
during each February and August until August 2006.

                              -15-

<PAGE>

The Company used the net proceeds received from the offering of
the Notes of approximately $25.4 million after deducting
estimated transaction related fees and expenses to (i) refinance
existing bank debt to Norwest Bank Minnesota, N.A.  of
approximately $7 million, (ii) exercise the Company's option to
purchase 843,023 shares of the Company's Common Stock from former
USC shareholders for approximately $2.9 million, (iii) redeem or
repurchase certain of the Company's outstanding debentures for
$2.1 million, and (iv) approximately $13.4 million was utilized
to effect the Addtel and FCLD acquisitions and for network
expansion and working capital. 

On January 9, 1997, the Company completed a line of credit
arrangement with Greyrock Business Credit ("Greyrock"), a
division of NationsCredit Commercial Corporation.  The line of 
credit has maximum availability of $10 million, with borrowings
based on 80% of eligible accounts receivable and inventory, other
than receivables arising from telecommunications services  
rendered to customers which are billed to the customers by 
regional Bell operating company, a Bell operating
company, a local exchange company, a credit card company, or a
provider of local telephone services. The borrowings are secured
by all of the assets of the Company and its subsidiaries and the
stock of the Company's subsidiaries. The line of credit matures
December 31, 1997 and automatically renews for successive
additional one year terms unless either party elects to terminate
by giving written notice to the other not less than 60 days prior
to the next maturity date. 

The borrowings bear interest at a floating rate of 2.5% above the
reference rate of Bank of America NT & SA, provided that the
interest rate is not less than 9% per annum. Interest is payable
monthly and to the extent that accrued interest does not equal
$10,000 per month, the Company is required to pay an unused line
of credit fee of such difference. The initial borrowing by the
Company under this facility aggregated $1.6 million principal
amount on January 9, 1997, and as of June 30, 1997, the Company
had $3,979,505 principal amount of indebtedness under such
facility. Proceeds from this line were used to make the
$1,382,667 interest payment on the Notes on February 15, 1997.

In order to improve the Company's working capital position and
help mitigate shortfalls, the Company reached an agreement with
Greyrock during the second quarter to expand the borrowing base
of eligible accounts receivable to include both unbilled and
billed receivables.  Although loan balances fluctuate daily based
on the amounts of  accounts receivable and collection, the
Company has generally reached the maximum borrowing amount
available based on the new calculation of eligible amounts
receivable.

The agreements regarding the line of credit contain covenants
which, among other matters, limit the ability of the Company and
its subsidiaries to take the following actions without the
consent of Greyrock: (1) merge, consolidate and acquire or sell
assets, (2) incur indebtedness outside the ordinary course of
business which would have a material adverse effect on the
Company and its subsidiaries taken as a whole or on the prospect
of repayment of the obligations under the line of credit, (3) pay
dividends other than stock dividends and certain dividends with
respect to the Company's Series A Cumulative Convertible
Preferred Stock ("Series A Preferred Stock"), and (4) redeem, 
purchase or acquire its capital stock. 

On March 25, 1997, the Company completed a private placement of
a $3.8 million principal amount of the March Debenture, and on
August 13, 1997, the Company completed a private placement of a
$5.0 million principal amount of the Company's 10% Convertible
Debenture due 2006 (the "August Debenture").  In connection with
the issuance of the August Debenture, the March Debenture was 
amended by the attachment of an allonge, and both the March 
Debenture, as amended and the August Debentures (the "Debentures")
are initially convertible at any time prior to maturity at a 
conversion price of $1.50 per share, subject to adjustments in 
certain circumstances.  Both the Debentures are redeemable at 
the option of the Company in whole or in part at any time on 
or after August 15, 1999 at annual redemption prices starting 
at 107% of principal, plus accrued interest to the redemption 
date.  Each holder has the right to require the Company to 
purchase the Debentures in the event that all three of the 
following events occur: (i) the Company incurs certain 
indebtedness, (ii) the Pro-Forma Interest Coverage (as defined in
the Debentures the same as such term is defined in the Indenture
with respect to the Notes) is less than 2.0 to 1, and (iii) the
$2 Minimum Threshold is not met.

                              -16-

<PAGE>

The Company used approximately $1.5 million of the $3.2 million
of net proceeds received from the sale of the March Debenture to
reduce indebtedness outstanding from time to time under the
Greyrock Facility, and used the remaining $1.7 million for
working capital.  The Company used approximately $1.5 million of
the $3.3 million of net proceeds received from the sale of the
August Debenture to make the August 15, 1997 interest payment on
the Notes and the Debentures, and the Company plans to use the
remainder for general corporate purposes, including the payment
of past due invoices from creditors of the Company and its
subsidiaries, including long line and local exchange carriers,
and litigation settlements.

Since October 22, 1996, the $2 Minimum Threshold has not been
met. Additionally, the Company's Pro Forma Interest Coverage
remains less than 2.0 to 1. Therefore, if the Company incurs
additional indebtedness (other than as permitted under the
Indenture and the Debentures), then the holder of the Notes and
the Debentures would have the right to require the Company to
repurchase the Notes and the Debentures.  Should holders of the
Notes or the Debentures ever have the ability to cause the
Company to repurchase the Notes or the Debentures, there can be
no assurance that the Company would have sufficient liquidity to
effect such repurchase.  As of June 30, 1997, after taking into
account the indebtedness represented by the August Debenture, the
Company would have been able to incur approximately $6.2 million in
additional indebtedness under the Indenture and the Debentures. 
The Company presently anticipates entering into extended payment
terms with one or more creditors which may involve promissory
notes which would further reduce this amount.

The Company experienced negative cash flow from operating
activities of $11,217,529 for the six months ended June 30, 1997
as compared to $342,915 for the like period in 1996. These
negative cash flows include approximately $215,000 of claims for
the six months ended June 30, 1997 and approximately $542,000
claims for the six months ended June 30, 1996, each related to
amounts for transmission and access charges which the Company has
paid but believes were overbilled by the Company's long line
transmission carriers and several local exchange carriers. Total
claims receivable at June 30, 1997 are approximately $215,000. 
The Company has been and intends to continue to vigorously pursue
settlement of these disputed charges by demanding cash repayment
or credit against future billings.  In addition, the Company has
withheld approximately $1,047,000 on invoiced amounts from its long
line carriers regarding on-going dispute over credit amounts. 
Any failure of the Company to ultimately obtain such repayments
or credit against future billings would have a material adverse
effect on the Company's cash flow and results of operations.

In conjunction with the reevaluation of certain transmission and
access charges which the Company previously believed were
overbilled by their long line transmission carriers and local
exchange carriers, the Company incurred a non-cash charge of
approximately $1.2 million to cost of revenues during the second
quarter of 1997.

The overall deterioration in cash flow used in operating
activities is principally attributable to increased operating
losses, the decrease in other accounts receivable due to the
reevaluation of certain transmission and access charges which the
Company previously believed were overbilled by their long line
transmission carriers and several local exchange carriers,  and
the significant decrease in accounts payable and accrued expenses
due to payment of contractual obligations with Addtel's line cost
vendors.  In order to have sufficient working capital for
operations and to make semi-annual cash interest payments on the
Notes and the Debentures of $1.8 million, the Company must expand
its available borrowings under the Greyrock credit facility,
obtain concessions in the amount and/or timing of vendor obligations,
borrow other additional funds or sell debt or equity securities or a
combination of the foregoing.

The Company began phasing out Addtel's wholesale business during
the second quarter and expects the process to be completed during
the third quarter of 1997.  Management anticipates that this
phase out will have an immaterial effect on the Company's overall
gross profit margin.  However, cash flow has been and will be
negatively impacted during and after the phase out because
wholesale accounts receivable are generally collected in 30 days
after customer billing and related line costs are generally
payable in 60 to 90 days from carrier invoice date.

                              -17-

<PAGE>

Cash used in investing activities was $8,921,120 for the second
quarter of 1997 versus $1,534,857 for the like quarter in 1996.
Of the total in the second quarter of 1997, $8,000,000 was
utilized in the acquisition of Addtel.  $897,239 of the total
during the first six months of 1997 versus $1,534,857 during the
first six months of 1996 was attributable to expenditures for
property and equipment primarily related to switching equipment
and network associated costs. 

Cash provided by financing activities was $5,778,183 during the
first six months of 1997 versus $3,010,138 during the first six
months of 1996. The majority of the increase in 1997 is
attributable to the sale of the March Debenture in March 1997 and
borrowings under the Greyrock facility.

On July 29, 1997 the Company began the implementation of a
restructuring plan to more closely align the Company's expense
levels with revenues.  The restructuring plan involved all areas
of the Company and included a reduction in force and
reconfiguration of the Company's network coupled with the closing
of substantially all of the Company's outlying sales offices in
leased office locations.   Specifically, the Company terminated
approximately 17% of the employees across a broad spectrum of job
classifications.  Management of the Company currently believes
that general and administrative expenses and cost of revenues
will be reduced from these actions beginning in the last month of
the third quarter.

As of August 11, 1997, the Company entered into an agreement with
the former shareholders of Addtel (the "Former Shareholders"),
pursuant to which purchase price adjustments and indemnification
claims adjustments were made to the $1.5 million portion of the
initial $9.5 million purchase price for the Company's purchase of
all the issued and outstanding capital stock of Addtel.  Such
adjustments resulted in such $1.5 million of the remaining
purchase price being reduced to $792,000.  Interest at the rate
of 5.3% per annum will continue to accrue on such adjusted amount
until paid.  Management presently expects to negotiate extended
payment terms which may result in a promissory note.  Such
promissory note would further reduce the availability of
additional permitted indebtedness under the Notes and Debentures.

The Company has past due invoices from WorldCom, Inc.
("WorldCom"), MCI Communications, Inc. and other long line and
local exchange carriers aggregating approximately $4.9 million as
of August 15, 1997.  As is standard in such contracts, such
carriers have the right to terminate services to the Company for
nonpayment upon the expiration of limited periods of time after
written notice of termination.  Management of the Company
currently believes that termination by WorldCom, MCI and/or US
West, which involve a total of approximately $4.1 million as of
such date, would have a material adverse effect on the Company's
operations.
 
Although management of the Company currently believes that cash
flows generated from operations will improve with the full
integration of Addtel, the reduction in expenses associated with
the reduction in force and reconfiguration of the Company's
telecommunications network as part of the restructuring plan, the
Company's working capital is not sufficient to meet current
obligations without an infusion of additional working capital
and/or extensions of payments to creditors.

Semi-annual cash interest payments of approximately $1.8 million
will be due on the Notes and Debentures each August 15, and
February 15 beginning February 15, 1998 until August 15, 2006. 
As of June 30, 1997, the Company's total consolidated liabilities
(including the Notes, the March Debenture and the indebtedness
outstanding under the Greyrock Facility on such date) was $48.3
million.  At June 30, 1997, the Company's long term debt was
$33.9 million, of which $.9 million was the current portion. Of
such long term debt, $27,200,000 principal amount is attributable
to the Notes and $3,800,000 principal amount is attributable to
the March Debenture.

                              -18-

<PAGE>

Previously, management of the Company believed that, among other
sources of cash, additional debt was available to the Company to
the extent that it was unable to develop one or more sources of
cash flow prior to the date on which payments were due on its
obligations.  Management now believes that unless the Company's
financial position improves, it will be difficult for  the
Company to borrow significant additional amounts in the future
even though such amounts may constitute additional permitted
indebtedness under the indenture with respect to the Notes and
the Debentures.  As of June 30, 1997, and taking into effect the
issuance of the August Debenture, the Company would be entitled
to incur approximately $6.2 million of such additional permitted
indebtedness.  Such amount does not include approximately $3.3 
million which the Company presently owes to WorldCom for
telecommunications services, for which the Company is negotiating
with WorldCom to be paid in the form of a promissory note.  As
such, management of the Company believes that its ability to make
cash interest payments on the Notes and the Debentures is
becoming increasingly more dependent upon (i) improved financial
performance of the Company, (ii) investing in companies or assets
that will provide substantial cash flow, (iii) selling equity
through public or private offerings or to strategic business
partners willing to acquire an interest in the Company or its
businesses, (iv) developing one or more sources of significant
cash flow prior to the date on which cash interest obligations
are due, including the sale, merger, consolidation of the Company
and/or its assets, or (v) refinancing all or a portion of the
Notes, and/or other debt of the Company.   There can be no
assurances that these or other sources of funds will be
available.

At June 30, 1997, the Company had a cash and cash equivalent
balance of $-0- as compared to $14,360,466 at December 31, 1996. 
The decline in cash was principally attributable to (i) the $8
million purchase price of Addtel, (ii) $11.2 million cash used in
operating activities, and (iii) $1.2 million and $897,000 for
principal payments and capital expenditures, respectfully.  The
decline was partially offset by $3.2 million net proceeds from
the sale of the March Debenture and $4 million under the Greyrock
line of credit.  As of June 30, 1997, working capital was a
negative $8,861,478 as compared to a negative $3,011,355 at
December 31, 1996. 

On July 31, 1997, pursuant to the terms of the Company's Series A
Preferred Stock, a dividend of $129,600 accrued and accumulated 
with respect to the shares of Series A Stock outstanding on such 
date.  The Company does not currently have sufficient capital 
surplus to pay such dividend either in cash or in kind under 
Delaware corporate law.

Capital Expenditures
--------------------

Capital expenditures for the six months ended June 30, 1997
totaled $2,911,804, of which $2,014,565 was financed.  The
majority of these capital expenditures relate to switching
equipment acquired by means of capital leases and network costs. 
Other than additional fixed facilities such as switching
equipment requirements as the network expands and peripheral
equipment and software such as billing systems to support such
expansion, future capital expenditures are expected to be
minimal.  The Company's future capital expenditures related to
network expansion will be made primarily to acquire switches and
related equipment.  Additional switching equipment would require
significant capital expenditures by the Company.   

Holiday and Seasonal Variations in Revenues
-------------------------------------------

The Company's revenues, and thus its potential earnings, are
affected by holiday and seasonal variations.  A substantial
portion of the Company's revenues are generated by direct dial
domestic long distance commercial customers, and, accordingly,
the Company experiences decreases in revenues around holidays
(both domestic and international) when commercial customers
reduce their usage.  The Company's fourth fiscal quarter ending
December 31, which includes the Thanksgiving, Hanukkah, Christmas
and New Year's Eve holidays, and the Company's first fiscal
quarter ending March 31, historically have been the slowest
revenue periods of the Company's fiscal year.  The Company's
fixed operating expenses, however, do not decrease during these
quarters.  Accordingly, the Company will likely experience lower
revenues and earnings in its first and fourth fiscal quarters
when compared with the other fiscal quarters.

                              -19-

<PAGE>

Effect of Inflation
-------------------

Inflation is not a material factor affecting the Company's
business.  Historically, transmission and switched service costs
per minute have decreased as the volume of minutes increased. 
General operating expenses such as salaries, employee benefits
and occupancy costs are, however, subject to normal inflationary
pressures.  Management has been able to contain these expenses
through cost control measures.


                   Part II - OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

On July 23, 1997, a suit was filed against the Company by NTS
Communications, Inc. in the 364th District Court of Lubbock
County, Texas, Cause No. 97-560,640 (NTS COMMUNICATIONS, INC. VS.
SA TELECOMMUNICATIONS, INC., D/B/A/ U.S. COMMUNICATIONS, INC.,
D/B/A/ LONG DISTANCE NETWORK, INC., AND D/B/A/ SOUTHWEST LONG
DISTANCE NETWORK, INC.).  On August 6, 1997, the plaintiff
amended its original petition to add USC, LDN and Southwest 
Long Distance Network, Inc. as defendants.  The suit was filed
by a vendor alleging nonpayment of telecommunications services 
provided by such vendor to the Company under a contract with 
the Company in the amount of $864,436.10 and seeks such amount
plus interest and attorney's fees.  The Company anticipates 
filing an answer in this lawsuit as soon as it has completed 
its internal review and investigation of the allegations made.

On February 24, 1997, the parties reached a settlement with
respect to the lawsuit filed in the 101st Judicial District Court
for Dallas County, Texas, Cause No. 95-07136-E (SILVIO AVYAM V.
SA HOLDINGS, INC. AND NORTH AMERICAN TELECOMMUNICATIONS
CORPORATION), the terms of which were not material to the
Company.  As part of such settlement, the lawsuit in Dallas,
Texas was dismissed on June 10, 1997 and the criminal complaint
filed by Mr. Avyam in Guatemala City, Guatemala against NATC, the
Company's former President and Chief Operating Officer and two
other NATC employees was also dismissed.

The Company filed suit on January 23, 1996 against Dickinson &
Co., an investment banking firm ("Dickinson"), its parent,
Dickinson Holding Corp. and Polish Telephone and Microwave
Corporation ("PTMC") in the 298th Judicial District Court for
Dallas County, Texas, Cause No. 96-00768-M (SA
TELECOMMUNICATIONS, INC. F/K/A SA HOLDINGS V. DICKINSON CO. &
DICKINSON HOLDINGS CORP. AND POLISH TELEPHONE AND MICROWAVE
CORPORATION). The Company has alleged, among other claims, that
Dickinson intentionally and willfully breached its fiduciary duty
to the Company under its financial consulting agreement with the
Company and that it interfered with the business relationship
between the Company and PTMC in conspiracy with the other two
defendants. The Company is seeking an unspecified amount of
actual and exemplary damages and recovery of attorneys fees. The
matter is presently scheduled for trial on November 24, 1997. 

On December 19, 1996, a suit was filed in the Circuit Court of
the 20th Judicial Circuit, St. Clair County, Illinois (THE PEOPLE
OF THE STATE OF ILLINOIS VS. LONG DISTANCE NETWORK, INC.), Cause
No. 96CH394. This is a suit by the Attorney General of the State
of Illinois against LDN alleging violations of Sections 2 and 2DD
of the Illinois Consumer Fraud and Deceptive Business Practices
Act ("Consumer Fraud Act") arising out of LDN's use of an
independent agent to solicit long distance customers through the
use of the agent's sweepstakes promotion. The suit states that
the Attorney General has received approximately 26 consumer
complaints through December 1996 and basically alleges that
Illinois consumers have had their chosen long distance carrier
switched without valid authorization (through misrepresentation
and/or forgery), and that the sweepstakes promotion constituted
an illegal lottery. Plaintiff is seeking among other remedies:
(i) findings that LDN has violated such sections of the Consumer
Fraud Act and assessing a civil penalty in the amount of up to
$50,000 per violation if the court finds LDN engaged in such acts
with intent to defraud, and if without intent to defraud, a
single penalty of up to $50,000, (ii) a permanent injunction
against such acts and such sweepstakes promotion, (iii) a
declaration that all contracts entered into between LDN and
Illinois consumers as a result of such acts be rescinded,
(iv) full restitution to all Illinois consumers who paid for
telephone charges billed by or on behalf of LDN as a result of
such actions and cancellation of any related charges assessed
against Illinois residents, and (v) costs of prosecution and
investigation. The parties have entered into a stipulation
extending the time for LDN's answer in such suit while the
parties are engaged in negotiations aimed at resolving these
matters. A case management conference is currently scheduled on
August 26, 1997.

                              -20-

<PAGE>


The Company is a party, from time to time, in routine litigation
incident to its business.  Management believes that it is
unlikely that the final outcome of any of these claims or
proceedings to which the Company is currently a party if
determined adverse to the Company would have a material adverse
effect on the Company's financial position or results of
operations.

Item 2. CHANGES IN SECURITIES.

(c)  On August 13, 1997, the Company sold the August Debenture to
     an accredited investor for $3.5 million.  The August
     Debenture matures on August 15, 2006.  As part of such
     transaction, the March Debenture issued by the Company in
     the principal amount of $3.8 million was amended by the
     attachment of an allonge.  The August Debenture and the
     March Debenture as so amended are currently convertible at
     any time prior to maturity, unless previously redeemed, into
     shares of Common Stock of the Company at an initial
     conversion price of $1.50 per share (currently an aggregate
     of 5,866,666 shares of Common Stock), subject to adjustment
     in certain circumstances.  The transaction was effected in
     reliance upon Section 4(2) of the Securities Act of 1933, as
     amended (the "Act").  The purchaser was provided with access
     to all relevant information regarding the Company.  The
     purchaser represented to the Company that it was an
     "accredited investor" as defined under the Act and that the
     August Debenture was purchased for investment purposes only
     and not with a view toward distribution.
     
Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Annual Meeting of Stockholders of the Company on May
29, 1997, holders of 12,372,995 shares of the Company's Common
Stock were present in person or by proxy, constituting a quorum. 
The proposals described below were voted on by such stockholders
of the Company as follows:

(1)  A proposal to elect four (4) directors for a three-year term
     or until their respective successors are elected and
     qualified as follows: John Q. Ebert, Dean A. Thomas, John H.
     Nugent and Barry J. Williams, M.D.  Such Proposal was
     approved as follows:

     Nominee                     For         Against        Abstain
     --------------           ----------     -------        -------
     John Q. Ebert *          12,272,250     21,179         79,570
     Dean A. Thomas           12,260,700     32,425         79,570
     John H. Nugent           12,272,100     21,325         79,570
     Barry J. Williams, M.D.  12,265,600     27,825         79,570

     *    Mr. Ebert resigned from the Board of Directors
          effective as of July 3, 1997.



                              -21-

<PAGE>

(2)  A proposal to approve and adopt certain amendments to the
     Company's 1994 Employee Stock Option Plan. Such proposal was
     approved as follows:

             For         Against        Abstain
          ---------      -------        -------
          4,014,142      589,128        27,305

(3)  A proposal to ratify the Board of Director's appointment of
     Price Waterhouse LLP as independent public accountants for
     the Company for the fiscal year ending December 31, 1997. 
     Such proposal was approved as follows:
             For         Against        Abstain
          ----------     -------        -------
          12,309,295     51,450         12,250


Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

Exhibit
No.       Description
---       -----------

3.1       Amended and Restated Bylaws of Registrant*

10.1      Purchase Agreement dated August 13,1997 between
          Registrant and Northstar High Total Return Fund*

10.2      Consulting Agreement dated August 13, 1997 between
          Registrant and Howard Curd*

27.1      Financial Data Schedule*
___________
*    Filed herewith

(b)  Reports on Form 8-K

      The Company filed on July 7, 1997, a Current Report on Form
      8-K dated July 3, 1997, announcing the election of John H.
      Nugent as interim President and Chief Operating Officer
      replacing Paul R. Miller in such position.  No financial
      statements were filed.

      The Company filed on July 22, 1997, a Current Report on Form
      8-K dated July 21, 1997, announcing the resignation of Jack
      W. Matz, Jr. as Chairman and Chief Executive Officer of the
      Company and the election of Howard F. Curd as Chairman of 
      the Board of Directors.  No financial statements were filed.

                              -22-

<PAGE>

     In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed by the undersigned
thereunto duly authorized.

Date:  August 19, 1997             SA TELECOMMUNICATIONS, INC.



                                   By:  /s/ HOWARD F. CURD
                                        --------------------------
                                        Howard F. Curd
                                        Chairman of the Board


                                   By:   /s/ J. DAVID DARNELL
                                        --------------------------
                                        J. David Darnell
                                        Vice President, Finance and
                                        Chief Financial Officer




                              -23-

<PAGE>


                        INDEX TO EXHIBITS

Exhibit No.         Description
-----------         -----------

3.1                 Amended and Restated Bylaws of Registrant*

10.1                Purchase Agreement dated August 13,1997
                    between Registrant and Northstar High Total
                    Return Fund*

10.2                Consulting Agreement dated August 13, 1997
                    between Registrant and Howard Curd*

27.1                Financial Data Schedule*

_____________
*    Filed herewith





                              -24-