<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                             ____________________

                                   FORM 10-Q
                             ____________________


     (Mark one)
         [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the quarterly period ended March 31, 2001

                                      OR

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


                          Commission file number 1-7077


                           GTE SOUTHWEST INCORPORATED


    A Delaware Corporation    I.R.S. Employer Identification No. 75-0573444


        1095 Avenue of the Americas, Room 3868, New York, New York 10036


                         Telephone Number (212) 395-2121


       Former Address: 1255 Corporate Drive, SVC04C08, Irving, Texas 75038

                             ____________________


THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND
(b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE
FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X   No
                                      ----   ----
<PAGE>

                           GTE Southwest Incorporated

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                         CONDENSED STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                                                          Three Months Ended March 31,
                                                                              -------------------------------------------------
(Dollars in Millions) (Unaudited)                                                          2001                     2000
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>                      <C>
OPERATING REVENUES
    (including $.1 and $0 from affiliates)                                                 $342.6                   $425.2
                                                                              -------------------------------------------------

OPERATING EXPENSES
Operations and support (including $35.5 and $55.0 to affiliates)                            175.2                    206.5
Depreciation and amortization                                                                68.4                     74.5
                                                                              -------------------------------------------------
                                                                                            243.6                    281.0
                                                                              -------------------------------------------------

OPERATING INCOME                                                                             99.0                    144.2

OTHER INCOME AND (EXPENSE), NET
    (including $(1.7) and $0 from affiliate)                                                 (1.7)                     ---

INTEREST EXPENSE
    (including $.2  and $7.8 to affiliate)                                                   11.0                     19.5
                                                                              -------------------------------------------------

INCOME BEFORE PROVISION FOR INCOME TAXES
     AND EXTRAORDINARY ITEMS                                                                 86.3                    124.7

PROVISION FOR INCOME TAXES                                                                   31.2                     44.4
                                                                              -------------------------------------------------

INCOME BEFORE EXTRAORDINARY ITEM                                                             55.1                     80.3

EXTRAORDINARY ITEM
    Early extinguishment of debt, net of tax                                                  ---                     (4.6)
                                                                              -------------------------------------------------

NET INCOME                                                                                 $ 55.1                   $ 75.7
                                                                              =================================================
</TABLE>


                  See Notes to Condensed Financial Statements.

                                       1
<PAGE>

                          GTE Southwest Incorporated

                            CONDENSED BALANCE SHEETS


                                     ASSETS
                                     ------

<TABLE>
<CAPTION>
(Dollars in Millions) (Unaudited)                                                         March 31, 2001       December 31, 2000
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                    <C>
CURRENT ASSETS
Cash                                                                                            $   16.2               $    9.7
Short-term investments                                                                              43.9                   47.2
Notes receivable from affiliate                                                                       .8                   12.8
Accounts receivable:
    Trade and other, net of allowances for uncollectibles of $26.8 and $28.5                       202.0                  221.2
    Affiliates                                                                                      40.6                   38.6
Material and supplies                                                                               22.9                   21.1
Prepaid expenses                                                                                    14.9                    4.8
Deferred income taxes                                                                                8.4                    7.0
Other                                                                                               34.5                   22.1
                                                                                    ---------------------------------------------
                                                                                                   384.2                  384.5
                                                                                    ---------------------------------------------

PLANT, PROPERTY AND EQUIPMENT                                                                    4,472.0                4,413.7
Less accumulated depreciation                                                                    2,809.3                2,756.9
                                                                                    ---------------------------------------------
                                                                                                 1,662.7                1,656.8
                                                                                    ---------------------------------------------

PREPAID PENSION ASSET                                                                              406.3                  394.3
                                                                                    ---------------------------------------------

OTHER ASSETS                                                                                        66.5                   77.4
                                                                                    ---------------------------------------------

TOTAL ASSETS                                                                                    $2,519.7               $2,513.0
                                                                                    =============================================

</TABLE>

                  See Notes to Condensed Financial Statements.

                                       2
<PAGE>

                          GTE Southwest Incorporated

                            CONDENSED BALANCE SHEETS

                     LIABILITIES AND SHAREOWNER'S INVESTMENT
                     ---------------------------------------

<TABLE>
<CAPTION>

(Dollars in Millions) (Unaudited)                                                         March 31, 2001    December 31, 2000
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                   <C>
CURRENT LIABILITIES
Debt maturing within one year                                                                   $    1.7              $    1.7
Accounts payable and accrued liabilities:
    Affiliates                                                                                      24.0                  47.4
    Other                                                                                          217.5                 241.5
Other liabilities                                                                                  106.2                  94.6
                                                                                    ---------------------------------------------
                                                                                                   349.4                 385.2
                                                                                    ---------------------------------------------

LONG-TERM DEBT                                                                                     646.8                 646.7
                                                                                    ---------------------------------------------

EMPLOYEE BENEFIT OBLIGATIONS                                                                       256.0                 238.2
                                                                                    ---------------------------------------------

DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes                                                                              232.1                 222.4
Unamortized investment tax credits                                                                    .1                    .1
Other                                                                                               61.3                  73.5
                                                                                    ---------------------------------------------
                                                                                                   293.5                 296.0
                                                                                    ---------------------------------------------

SHAREOWNER'S INVESTMENT
Common stock -  $100 stated value per share                                                        650.0                 650.0
  Authorized shares:   6,500,000
  Outstanding shares:  6,500,000
Contributed capital                                                                                425.2                 425.1
Accumulated deficit                                                                               (101.2)               (128.2)
                                                                                    ---------------------------------------------
                                                                                                   974.0                 946.9
                                                                                    ---------------------------------------------

TOTAL LIABILITIES AND SHAREOWNER'S INVESTMENT                                                   $2,519.7              $2,513.0
                                                                                    =============================================
</TABLE>

                  See Notes to Condensed Financial Statements.

                                       3
<PAGE>

                          GTE Southwest Incorporated

                       CONDENSED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                                            Three Months Ended March 31,
                                                                                  ---------------------------------------------
(Dollars in Millions) (Unaudited)                                                              2001                  2000
-------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                           <C>                   <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                     $ 93.9                $ 230.4
                                                                                    ---------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Net change in short-term investments                                                             3.3                    ---
Capital expenditures                                                                           (75.3)                (101.9)
Net change in notes receivable from affiliate                                                   12.0                    ---
Other, net                                                                                        .6                     .3
                                                                                    ---------------------------------------------
Net cash used in investing activities                                                          (59.4)                (101.6)
                                                                                    ---------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Principal repayments of borrowings and capital lease obligations                                 ---                  (62.0)
Net change in note payable to affiliate                                                          ---                    5.0
Dividend paid                                                                                  (28.0)                 (77.1)
                                                                                    ---------------------------------------------
Net cash used in financing activities                                                          (28.0)                (134.1)
                                                                                    ---------------------------------------------

NET CHANGE IN CASH                                                                               6.5                   (5.3)

CASH, BEGINNING OF PERIOD                                                                        9.7                   10.5
                                                                                    ---------------------------------------------

CASH, END OF PERIOD                                                                           $ 16.2                 $  5.2
                                                                                    =============================================
</TABLE>


                  See Notes to Condensed Financial Statements.

                                       4
<PAGE>

                          GTE Southwest Incorporated

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

1.    Basis of Presentation

      GTE Southwest Incorporated is a wholly owned subsidiary of GTE Corporation
(GTE), which is a wholly owned subsidiary of Verizon Communications Inc.
(Verizon Communications). The accompanying unaudited condensed financial
statements have been prepared based upon Securities and Exchange Commission
rules that permit reduced disclosure for interim periods. Our results of
operations for the three months ended March 31, 2000 include certain
reclassifications in presentation and certain retroactive adjustments to conform
accounting methodologies as a result of the merger of Bell Atlantic Corporation
and GTE on June 30, 2000. These financial statements reflect all adjustments
that are necessary for a fair presentation of results of operations and
financial position for the interim periods shown including normal recurring
accruals. The results for the interim periods are not necessarily indicative of
results for the full year. For a more complete discussion of significant
accounting policies and certain other information, you should refer to the
financial statements included in our 2000 Annual Report on Form 10-K.

      We have reclassified certain amounts from prior year's data to conform to
the 2001 presentation.

2.    Revenue Recognition

      We recognize revenue when services are rendered based on usage of our
local exchange network and facilities. For other products and services, revenues
are generally recognized when services are rendered or products are delivered to
customers.

      We defer nonrecurring service activation revenues and costs and amortize
them over the expected term of the customer relationship. The deferred costs are
equal to the activation fee revenue and any excess cost is expensed immediately.
The deferred costs represent incremental direct costs associated with certain
nonrecurring fees, such as service activation and installation fees.

3.    Long-Lived Assets

      We assess the impairment of long-lived assets under Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" whenever events
or changes in circumstances indicate that the carrying value may not be
recoverable. A determination of impairment (if any) is made based on estimates
of future cash flows.

4.    Dividend

      On May 1, 2001, we declared and paid a dividend in the amount of $58.0
million to GTE.

5.    Derivatives and Hedging Activities

      Effective January 1, 2001, we adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities." SFAS No. 133
requires that all derivatives, including derivatives embedded in other financial
instruments, be measured at fair value and recognized as either assets or
liabilities on our balance sheet. Changes in the fair values of derivative
instruments not qualifying as hedges under SFAS No. 133 or any ineffective
portion of hedges are recognized in earnings in the current period. Changes in
the fair values of derivative instruments used effectively as hedges are
recognized in earnings, along with changes in the fair value of the hedged item.
Changes in the fair value of the effective portions of cash flow hedges are
reported in other comprehensive income (loss), and recognized in earnings when
the hedged item is recognized in earnings. We presently do not have any
derivative instruments or hedging activities and, consequently, SFAS No. 133 did
not have an impact on our financial statements.

                                       5
<PAGE>

                          GTE Southwest Incorporated

6.    Shareowner's Investment
<TABLE>
<CAPTION>

                                                                                               Contributed         Accumulated
(Dollars in Millions)                                                     Common Stock             Capital             Deficit
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                  <C>                <C>
Balance at December 31, 2000                                                    $650.0               $425.1             $(128.2)
Net income                                                                                                                 55.1
Dividend declared                                                                                                         (28.0)
Other                                                                                                    .1                 (.1)
                                                                      ----------------------------------------------------------
Balance at March 31, 2001                                                       $650.0               $425.2             $(101.2)
                                                                      ==========================================================
</TABLE>

      Net income and comprehensive income were the same for the three months
ended March 31, 2001 and 2000.

7.    Commitments and Contingencies

      Various legal actions and regulatory proceedings are pending to which we
are a party. We have established reserves for specific liabilities in connection
with regulatory and legal matters which we currently deem to be probable and
estimable. We do not expect that the ultimate resolution of pending regulatory
and legal matters in future periods will have a material effect on our financial
condition, but could have a material effect on our results of operations.

      Several state and federal matters may require us to refund a portion of
the revenues collected in the current and prior periods. The outcome of each
pending matter, as well as the time frame within which each matter will be
resolved, is not presently determinable.

      Federal regulatory conditions to the Bell Atlantic - GTE merger include
certain commitments to, among other things, promote competition and the
widespread deployment of advanced services, while helping ensure that consumers
continue to receive high-quality, low cost telephone services. In some cases,
there are significant penalties associated with not meeting these commitments.
The cost of satisfying these commitments could have a significant impact on net
income in future periods.

                                       6
<PAGE>

                          GTE Southwest Incorporated

Item 2.  Management's Discussion and Analysis of Results of Operations
         (Abbreviated pursuant to General Instruction H(2).)

      This discussion should be read in conjunction with the Financial
Statements and Notes to Financial Statements.


RESULTS OF OPERATIONS
---------------------

      We reported net income of $55.1 million for the three month period ended
March 31, 2001, compared to net income of $75.7 million for the same period in
2000. Our results were affected by special items, as described below.

Merger-related Costs

      In connection with the Bell Atlantic-GTE merger, which was completed in
June 2000, we recorded pre-tax transition costs of $2.4 million in the first
quarter of 2001 (including $.5 million allocated from Verizon Services). These
costs were recorded in Operations and Support Expense. Verizon Services Corp. is
a wholly owned subsidiary of Verizon Communications Inc. (Verizon
Communications) that provides various centralized services on behalf of Verizon
Communications' subsidiaries.

      These costs consisted of costs to integrate systems, consolidate real
estate, relocate employees and meet certain regulatory conditions of the merger.
They also included costs for advertising and other costs to establish the
Verizon brand. Transition costs were expensed as incurred.

Sales of Non-strategic Access Lines

      During 2000, we sold all of our switched access lines in Oklahoma,
Arkansas, New Mexico, as well as selected switched access lines in Texas. The
net assets held for sale were $667.4 million at March 31, 2000 and no assets
remained held for sale at December 31, 2000. The operating revenues and net
income contributed by these properties in the first quarter of 2000 were
approximately $120.0 million and $49.2 million, respectively. On an annual
basis, the total operating revenues and net income contributed by the sold
properties were approximately $314.8 million and $129.1 million, respectively,
for the year ended December 31, 2000. Cash proceeds from the sales totaled
$2,002.8 million at December 31, 2000.

Extraordinary Charge

      In January 2000, we retired $46.7 million of long-term debt prior to
stated maturity and recorded an after-tax extraordinary charge of $4.6 million
(net of tax benefits of $2.5 million).


OPERATING REVENUE STATISTICS
----------------------------

<TABLE>
<CAPTION>
                                                                             2001                  2000             % Change
-------------------------------------------------------------------------------------------------------------------------------
At March 31,
Access Lines in Service (in thousands)
<S>                                                                           <C>                  <C>                  <C>
   Residence                                                                  1,167                1,176                (.8)%
   Business                                                                     657                  605                8.6
   Public                                                                        15                   17              (11.8)
                                                                  --------------------------------------------
                                                                              1,839                1,798                2.3
                                                                  ============================================
Three Months Ended March 31,
Minutes of Use from Carriers and CLECs  (in millions)                         2,027                2,008                 .9
                                                                  ============================================
</TABLE>

       The above schedule excludes access lines and minutes of use associated
with the sales of non-strategic access lines in 2000.

                                       7
<PAGE>

                          GTE Southwest Incorporated

OPERATING REVENUES
------------------
(Dollars in Millions)

<TABLE>
<CAPTION>
                                                            Three Months Ended March 31,
                                                   -----------------------------------------
                                                                2001                 2000
--------------------------------------------------------------------------------------------
<S>                                                           <C>                  <C>
Local services                                                $198.2               $242.6
Network access services                                        110.7                146.3
Long distance services                                           6.5                  9.3
Other services                                                  27.2                 27.0
                                                   -----------------------------------------
Total                                                         $342.6               $425.2
                                                   =========================================
</TABLE>


LOCAL SERVICES

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                       $(44.4)      (18.3)%
--------------------------------------------------------------------------------

      Local service revenues are earned from the provision of local exchange,
local private line, wire maintenance, voice messaging and value-added services.
Value-added services are a family of services that expand the utilization of the
network, including products such as Caller ID, Call Waiting and Return Call. The
provision of local exchange services not only includes retail revenues, but also
includes local wholesale revenues from unbundled network elements (UNEs),
interconnection revenues from local exchange carriers, certain data transport
revenues and wireless interconnection revenues.

      The decrease in local service revenues was principally due to the effect
of non-strategic access lines sold during 2000. This decrease was partially
offset by revenue increases resulting from certain regulatory decisions
including the implementation of the Texas Universal Service Fund (USF) in 2000,
and by higher payments received from competitive local exchange carriers for
interconnection of their networks with our network and increased demand for our
value-added services as a result of new packaging of services.


NETWORK ACCESS SERVICES

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                       $(35.6)      (24.3)%
--------------------------------------------------------------------------------

      Network access revenues are earned from end-user subscribers and from long
distance and other competing carriers who use our local exchange facilities to
provide usage services to their customers. Switched access revenues are derived
from fixed and usage-based charges paid by carriers for access to our local
network. Special access revenues originate from carriers and end-users that buy
dedicated local exchange capacity to support their private networks. End-user
access revenues are earned from our customers and from resellers who purchase
dial-tone services.

      The decrease in network access revenues was principally related to the
effect of non-strategic access lines sold during 2000. Mandated price reductions
on certain interstate access services and other regulatory decisions also
contributed to the decline in network access revenues. The Federal
Communications Commission (FCC) regulates rates that we charge long distance
carriers and end-user subscribers for interstate access services. We are
required to file new access rates with the FCC each year. In July 2000, we
implemented the Coalition for Affordable Local and Long Distance Service (CALLS)
plan. Rates included in the July 2000 CALLS plan will be in effect through June
2001.

      These decreases were partially offset by the effect of certain regulatory
matters in 2000 and increased demand for special access services. The increased
demand for special access services reflects a continuing expansion of the
business market, particularly for high-capacity, high-speed digital services.

                                       8
<PAGE>

                          GTE Southwest Incorporated

LONG DISTANCE SERVICES

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                        $(2.8)      (30.1)%
--------------------------------------------------------------------------------

      Long distance revenues are earned primarily from calls made to points
outside a customer's local calling area, but within our service area (intraLATA
toll). IntraLATA toll calls originate and terminate within the same LATA, but
generally cover a greater distance than a local call. These services are
regulated by state regulatory commissions except where they cross state lines.
Other long distance services that we provide include 800 services and Wide Area
Telephone Service (WATS).

      The decline in long distance revenues was principally caused by the effect
of non-strategic access lines sold during 2000.


OTHER SERVICES

      2001 - 2000                                               Increase
--------------------------------------------------------------------------------
      First Quarter                                        $.2            .7%
--------------------------------------------------------------------------------

      Our other services include such services as billing and collections for
long distance carriers and affiliates, facilities rentals to affiliates and
nonaffiliates, public (coin) telephone and customer premises equipment (CPE).
Other service revenues also include fees paid by customers for nonpublication of
telephone numbers and multiple white page listings and fees paid by an affiliate
for usage of our directory listings.

      Growth in other service revenues was driven primarily from an increase in
CPE sales and higher billing and collection revenues. These increases were
substantially offset by the effect of the sales of non-strategic access lines
during 2000.


OPERATING EXPENSES
------------------
(Dollars in Millions)


OPERATIONS AND SUPPORT

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                       $(31.3)      (15.2)%
--------------------------------------------------------------------------------

      Operations and support expenses consist of employee costs and other
operating expenses. Employee costs consist of salaries, wages and other employee
compensation, employee benefits and payroll taxes. Other operating expenses
consist of contract services including centralized services expenses allocated
from Verizon Services, rent, network software costs, operating taxes other than
income, the provision for uncollectible accounts receivable, reciprocal
compensation, and other costs.

      Operations and support expenses decreased primarily due to the effect of
non-strategic access lines sold during 2000. Lower costs for pension and
benefits and materials and supplies, as well as the effect of lower work force
levels also contributed to the reduction in operating expenses. The first
quarter of 2001 reflects a reduction in directory publishing expenses allocated
from an affiliate.

      These increases were partially offset by the effect of a pre-tax gain
recorded in the first quarter of 2000 associated with lump-sum settlements of
pension obligations for certain active and former employees. Higher
interconnection and related costs associated with reciprocal compensation
arrangements with competitive local exchange and other carriers to terminate
calls on their network, merger-related transition costs recorded in the first
quarter of 2001, and salary and wage increases for management and non-management
employees also offset operating expense increases, but to a lesser extent.

      We continue to incur expenditures related to reciprocal compensation
arrangements with competitive local exchange carriers and other carriers to
terminate calls on their network. In March 2000, the United States Court of
Appeals for the District of Columbia Circuit reversed and remanded the FCC's
February 1999 order that concluded that calls to the Internet through Internet
service providers (ISP) do not terminate at the ISP but are single interstate
calls.  The FCC had concluded that calls to the Internet are not therefore
subject to reciprocal compensation under section 251(b)(5) of the
Telecommunications Act, but left it to state regulatory commissions to determine
whether local interconnection agreements entered into with competing carriers
required the payment of compensation on such calls.

      On April 27, 2001, the FCC released an order responding to the court's
remand. The FCC found that Internet-bound traffic is interstate and subject to
the FCC's jurisdiction. Moreover, the FCC again found that Internet-bound
traffic is not subject to reciprocal compensation under section 251(b)(5) of the
Telecommunications Act. Instead, the FCC established federal rates that decline
from $0.0015 to $0.0007 over a three year period. The FCC order also sets caps
on the total minutes that may be subject to any intercarrier compensation and
requires that incumbent local exchange carriers must offer to pay reciprocal
compensation for local traffic at the same rate as they are required to pay on
Internet-bound traffic.


                                       9
<PAGE>

                          GTE Southwest Incorporated

DEPRECIATION AND AMORTIZATION

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                        $(6.1)       (8.2)%
--------------------------------------------------------------------------------

      Depreciation and amortization expense decreased primarily as a result of
lower rates of depreciation. The decrease was partially offset by growth in
depreciable telephone plant as a result of increased capital expenditures for
higher growth services and increased software amortization costs.


OTHER INCOME AND (EXPENSE), NET

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                        $(1.7)       --
--------------------------------------------------------------------------------

      The change in other income and (expense), net, is primarily attributable
to equity losses recognized from our investment in Verizon Advanced Data Inc.
(VADI). VADI is a wholly owned subsidiary of Verizon Communications that
provides new exchange access services. At March 31, 2001, our ownership in VADI
was 2.27%.


INTEREST EXPENSE

      2001 - 2000                                             (Decrease)
--------------------------------------------------------------------------------
      First Quarter                                        $(8.5)      (43.6)%
--------------------------------------------------------------------------------

      Interest expense includes costs associated with borrowings and capital
leases, net of interest capitalized as a cost of acquiring or constructing plant
assets.

      Interest expense decreased in the first quarter of 2001, compared to the
same period in 2000, primarily due to overall lower levels of average
borrowings.


EFFECTIVE INCOME TAX RATES

      Three Months Ended March 31,
--------------------------------------------------------------------------------
      2001                                                      36.2%
--------------------------------------------------------------------------------
      2000                                                      35.6%
--------------------------------------------------------------------------------

      The effective income tax rate is the provision for income taxes as a
percentage of income before provision for income taxes, extraordinary items and
cumulative effect of change in accounting principle. Our effective income tax
rate was higher for the three months ended March 31, 2001, compared to the same
period in 2000, due to a reduction in investment tax credit amortization and
equity losses associated with our investment in VADI, for which we do not
recognize income tax benefits. These factors were partially offset by a
reduction in the effective tax rate for state income taxes.

                                      10
<PAGE>

                          GTE Southwest Incorporated

                          PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

              There were no proceedings reportable under this Item.


Item 6.       Exhibits and Reports on Form 8-K


              (b) There were no Current Reports on Form 8-K filed during the
quarter ended March 31, 2001.


                                      11
<PAGE>

                            GTE Southwest Incorporated

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                    GTE Southwest Incorporated




Date:  May 15, 2001                 By  /s/ Edwin F. Hall
                                       --------------------------------
                                            Edwin F. Hall
                                            Controller


        UNLESS OTHERWISE INDICATED, ALL INFORMATION IS AS OF MAY 7, 2001.

                                      12