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

                                  FORM 10-Q

    X  QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
EXCHANGE ACT OF 1934

For the Quarterly period ended June 30, 1998

                                      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 33-95298

                              GALAXY TELECOM, L.P.
            Exact name of Registrant as specified in its charter)


             Delaware                          43-1697125
  --------------------------------       -------------------
 (States or other jurisdiction of         (IRS Employer
 incorporation or organization)         Identification Number)


 1220 North Main, Sikeston, Missouri              63801
  --------------------------------       -------------------
(Address of principal executive offices)       (zip code)

Registrant telephone number, including area code: (573) 472-8200

Indicate by check mark whether the Registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
previous 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>


                             GALAXY TELECOM, L.P.
                                  FORM 10-Q

                     FOR THE QUARTER ENDED JUNE 30, 1998

                                    INDEX
                                                                        PAGE
PART I.    Financial Information

Item 1.    Consolidated Financial Statements
              Galaxy Telecom, L.P.  ........................................3
              Notes to Consolidated Financial Statements....................6

Item 2.   Management's Discussion and Analysis of
              Financial Condition and Results of Operations................10

Item 3. - Quantitative and qualitative disclosures
               about market risk...........................................15

PART II.  Other Information................................................16

Signatures    .............................................................17

Exhibit Index .............................................................18


                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1. - FINANCIAL STATEMENTS

                     GALAXY TELECOM, L.P. AND SUDSIDIARY
                         CONSOLIDATED BALANCE SHEETS
                                 (Unaudited)

<TABLE>
<CAPTION>

                                                          June 30,     December 31,
                                                            1998           1997
                                                        -------------    -------------
    ASSETS
<S>                                                    <C>              <C>

Cash and cash equivalents                              $   3,027,238    $   2,403,098
Subscriber receivables, net of allowance
   for doubtful accounts of $134,303 and
   $154,692, respectively                                  5,144,473        5,424,260
Systems and equipment, net                               124,339,026      138,729,592
Intangible assets, net                                    51,427,808       57,193,102
Prepaids and other                                         3,493,601        3,297,573
                                                       -------------    -------------

   Total assets                                        $ 187,432,146    $ 207,047,625
                                                       =============    =============


   LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)

Accounts payable and accrued expenses                  $  14,718,666    $  17,152,286
Subscriber deposits and deferred revenue                   5,261,910        5,434,097
Long-term debt and other obligations                     172,669,299      179,250,312
                                                       -------------    -------------

     Total liabilities                                   192,649,875      201,836,695

Commitments and contingencies

Partners' Capital (Deficit):
   General partners                                       (5,217,729)            --
   Limited partners                                             --          5,210,930
                                                       -------------    -------------

   Total partners' capital (deficit)                      (5,217,729)       5,210,930
                                                       -------------    -------------
   Total liabilities and partners' capital (deficit)   $ 187,432,146    $ 207,047,625
                                                       =============    =============


<FN>

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



                                       3
<PAGE>



                     GALAXY TELECOM, L.P. AND SUDSIDIARY
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
<TABLE>
<CAPTION>

                                         For the three months ended       For the six months ended
                                                   June 30                         June 30
                                           ------------------------        ------------------------
                                              1998           1997             1998          1997
                                         ------------    ------------    ------------    ------------

<S>                                      <C>             <C>             <C>             <C>
Revenues                                 $ 17,471,933    $ 17,304,835    $ 34,803,001    $ 33,970,673
                                         ------------    ------------    ------------    ------------

Operating expenses:
   Systems operations                       8,207,353       7,551,823      16,195,030      15,350,656
   Selling, general and administrative      1,967,392       2,120,022       4,185,955       3,790,720
   Management fee to affiliate                785,904         778,838       1,564,122       1,528,798
   Depreciation and amortization            6,145,303       6,268,358      12,347,246      12,275,325
                                         ------------    ------------    ------------    ------------

Total operating expenses                   17,105,952      16,719,041      34,292,353      32,945,499
                                         ------------    ------------    ------------    ------------
Operating income                              365,981         585,794         510,648       1,025,174

Interest expense                           (5,343,330)     (5,273,521)    (10,547,793)    (10,349,783)
Other income (expense)                     (1,593,381)       (168,617)       (391,514)       (162,539)
                                         ------------    ------------    ------------    ------------
   Net loss                              $ (6,570,730)   $ (4,856,344)   $(10,428,659)   $ (9,487,148)
                                         ============    ============    ============    ============
<FN>


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

                                       4
<PAGE>

                     GALAXY TELECOM, L.P. AND SUBSIDIARY
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                              For the six months ended June 30,
                                                              --------------------------------
                                                                     1998             1997
                                                                 ------------    ------------
<S>                                                               <C>            <C>
Cash flows from operating activities:

Net loss                                                          (10,428,659)   $ (9,487,148)
Adjustments to reconcile net loss to net cash
provided by operating activities:
   Depreciation expense                                            10,396,089      10,222,693
   Amortization expense                                             1,951,157       2,052,632
   Amortization included in interest expense                          467,388         467,386
   Provision for doubtful accounts receivable                         631,584         965,921
   Loss on sale of assets                                             254,787         139,043

Changes in assets and liabilities:
   Subscriber receivables                                            (351,797)       (419,218)
   Prepaids and other                                                (196,028)        (51,041)
   Accounts payable and accrued expenses                           (2,433,620)     (2,942,788)
   Subscriber deposits and deferred revenue                          (172,187)         89,747
                                                                 ------------    ------------
   Net cash provided by operating activities                          118,714       1,037,227
                                                                 ------------    ------------
Cash flows from investing activities:

Acquisition of cable systems-net of trades                           (133,633)           --
Capital expenditures                                               (4,801,432)     (6,988,691)
Proceeds from sale of assets                                       12,609,509         394,693
Other intangible assets                                              (374,172)       (235,746)
                                                                 ------------    ------------

   Net cash provided by(used in)investing activities                7,300,272      (6,829,744)
                                                                 ------------    ------------
Cash flows from financing activities:

Borrowings under revolver                                           4,425,000       7,921,413
Payments on revolver                                              (13,650,000)       (300,000)
Net borrowings (payments) on other debt                             2,613,987         (42,711)
Debt issuance costs                                                  (183,833)        (15,240)
                                                                 ------------    ------------
   Net cash provided by(used in)financing activities               (6,794,846)      7,563,462
                                                                 ------------    ------------
Net increase in cash and cash equivalents                             624,140       1,770,945
                                                                 ------------    ------------
Cash and cash equivalents, beginning of period                      2,403,098       2,338,345
                                                                 ------------    ------------

Cash and cash equivalents, end of period                         $  3,027,238    $  4,109,290
                                                                 ============    ============

<FN>

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

</FN>
</TABLE>

                                       5
<PAGE>

GALAXY TELECOM, L.P. AND SUBSIDIARY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED

1.  BASIS OF PRESENTATION AND OTHER INFORMATION

      The attached unaudited interim consolidated financial statements of Galaxy
Telecom,  L.P. and its subsidiary  ("Galaxy" or the "Partnership") are presented
in  accordance  with  the  requirements  of  Article  10 of  Regulation  S-X and
consequently do not include all of the footnote disclosures required for audited
financial  statements by generally accepted accounting  principles.  The results
for the three and six month  periods  ended  June 30,  1998 are not  necessarily
indicative  of the results to be expected for the entire 1998 fiscal year. It is
suggested that the  accompanying  consolidated  financial  statements be read in
conjunction  with  Galaxy's  Annual  Report on Form  10-K/A  for the year  ended
December 31, 1997.

      The following  notes,  insofar as they are  applicable to the three months
and six months ended June 30, 1998 and 1997,  are not audited.  In  management's
opinion,  all  adjustments,   consisting  of  only  normal  recurring  accruals,
considered  necessary for a fair  presentation  of such  consolidated  financial
statements are included.

2.    RECENT ACCOUNTING PRONOUNCEMENTS

      In June 1997, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures about
Segments of an Enterprise and Related  Information," which establishes standards
for the way that public business  enterprises report information about operating
segments  in annual  financial  statements  and  requires  that  those  business
enterprises  report  information  about operating  segments in interim financial
statements  issued to shareholders.  It also  establishes  standards for related
disclosures  about products and services,  geographic areas and major customers.
SFAS No. 131 is effective for financial  statements  for years  beginning  after
December 15, 1997.

      Management  does not  believe the  implementation  of SFAS No. 131 will
have a material effect on its financial statements.

      In June 1998,  the FASB issued SFAS No. 133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities."  SFAS No. 133 is effective for all fiscal
quarters of all fiscal years  beginning after June 15, 1999 (January 1, 2000 for
the  Partnership).  SFAS No. 133 requires  that all  derivative  instruments  be
recorded on the balance sheet at their fair value.  Changes in the fair value of
derivatives are recorded each period in current earnings or other  comprehensive
income,  depending  on whether a  derivative  is  designated  as part of a hedge
transaction and, if it is, the type of hedge transaction.

                                       6
<PAGE>

Management  of the  Partnership  anticipates  that,  due to its  limited  use of
derivative instruments, the adoption of SFAS No. 133 will not have a significant
effect on the Partnership's results of operations or its financial position.

3.    REPORTING COMPREHENSIVE INCOME

      In 1998,  Galaxy  adopted SFAS No. 130  "Reporting  Comprehensive  Income"
which  establishes  standards for reporting and display of comprehensive  income
and  its  components  in a full  set of  general-purpose  financial  statements.
Comprehensive loss was the same as net loss reported.

4.    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

      During the first six months of 1998, Galaxy traded four systems located in
and around  Sheridan  County,  Nebraska,  representing  853  subscribers for one
system located in Jefferson  County,  Colorado  representing  approximately  800
subscribers.


5.  RELATED PARTY TRANSACTIONS

      Galaxy  incurs  management  fees and  expenses  pursuant to the terms of a
management  agreement  with Galaxy Systems  Management,  Inc., an affiliate of a
general partner,  under which it manages Galaxy's business.  Management fees are
calculated  at 4.5% of gross  revenues as defined in the  management  agreement.
Management  fees  totaled  $785,904 for the three months ended June 30, 1998 and
$778,838  for the three  months  ended June 30,  1997.  Management  fees totaled
$1,564,122  for the six months  ended June 30, 1998 and  $1,528,798  for the six
months ended June 30, 1997.




                                       7
<PAGE>

6.  LONG-TERM DEBT

      Long-term debt consisted of the following:

                                               June 30,          December 31,
                                                 1998                 1997
                                            -------------        -------------
Revolving Credit Facility                   $  50,000,000        $  59,225,000
Senior Subordinated Notes                     120,000,000          120,000,000
Unamortized discount                             (435,000)            (465,000)
Other                                           3,104,299              490,312
                                            -------------        -------------
   Total                                    $ 172,669,299        $ 179,250,312
                                            =============        =============


7.    SALES, ACQUISITIONS AND TRADES

      On January 15, 1998,  Galaxy sold its cable television  systems located in
Wyoming  and  Idaho  (the  "Wyoming  Sale"),  representing  approximately  4,000
subscribers for $4.9 million,  or $1,225 per subscriber,  and recorded a gain on
sale of approximately  $711,000.  Galaxy used the proceeds from the Wyoming Sale
to pay down principal of the revolving note.

      On February 1, 1998,  Galaxy sold its cable  television  system located in
Hooper,  Nebraska,  representing 242 subscribers for approximately  $262,000, or
approximately $1,080 per subscriber.  Galaxy used the proceeds from this sale to
pay down principal of the revolving note.

      On March 31, 1998,  Galaxy sold two cable  television  systems  located in
Olathe,  Kansas and  Independence,  Missouri,  representing  250 subscribers for
approximately  $190,000,  or approximately $760 per subscriber.  Galaxy used the
proceeds from this sale to pay down principal of the revolving note.

      On March 31, 1998, Galaxy sold six cable television systems located in and
around Ottawa County,  Kansas,  representing  752 subscribers for  approximately
$623,000,  or approximately  $830 per subscriber.  Galaxy used the proceeds from
this sale to pay down principal of the revolving note.

      On March 31, 1998, Galaxy purchased five cable television  systems located
in Brooks and  Colquitt  Counties in  Georgia,  representing  approximately  300
subscribers for approximately $141,000, or approximately $470 per subscriber.

      On March 31,  1998,  Galaxy  traded  four  systems  located  in and around
Sheridan County,  Nebraska,  representing 853 subscribers for one system located
in Jefferson County, Colorado, representing approximately 800 subscribers.

                                       8
<PAGE>

       On April 30, 1998, Galaxy sold seven cable television  systems located in
and around Lincoln County,  Kansas,  representing  approximately 500 subscribers
for approximately  $395,000,  or approximately $790 per subscriber.  Galaxy used
the proceeds from this sale to pay down principal of the revolving note.

      On June 30,  1998,  Galaxy  sold one cable  television  system  located in
Goessel,  Kansas,  representing  approximately 100 subscribers for approximately
$110,000, or approximately $1,100 per subscriber.  Galaxy used the proceeds from
this sale to pay down principal of the revolving note.

      On June 30, 1998, Galaxy sold all of its cable television  systems located
in  central   Georgia,   representing   approximately   5,200   subscribers  for
approximately $6,120,000, or approximately $1,177 per subscriber, and recorded a
gain on sale of approximately $123,000.  Galaxy used the proceeds from this sale
to pay down principal of the revolving note.

8.   COMMITMENTS AND CONTINGENCIES

     Year 2000 Compliance

     The Partnership's  computer software programs utilize four digits to define
the applicable year; therefore, management of the Partnership believes it has no
internal risk  concerning  the Year 2000 issue.  Any problems the  Partnership's
suppliers  and  customers  may have  relative to this issue are not  expected to
affect the  Partnership.  The  Partnership has not incurred any costs related to
this issue and is not expecting to incur any such costs in the future.

     Litigation

     The Partnership is subject to various legal and administrative  proceedings
in the ordinary course of business.  Management believes the outcome of any such
proceedings  will  not  have a  material  adverse  effect  on the  Partnership's
consolidated financial position, results of operations or cash flows.





                                       9
<PAGE>


Item 2. --  MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND
      RESULTS OF OPERATIONS

      RECENT DEVELOPMENTS

      On January 15, 1998, Galaxy Telecom,  L.P. and its subsidiary ("Galaxy" or
the  "Partnership")  sold its cable  television  systems  located in Wyoming and
Idaho (the "Wyoming Sale"),  representing  approximately  4,000  subscribers for
$4.9  million,  or $1,225 per  subscriber.  Galaxy  used the  proceeds  from the
Wyoming Sale to pay down principal of the revolving note.

      On February 1, 1998,  Galaxy sold its cable  television  system located in
Hooper,  Nebraska,  representing 242 subscribers for approximately  $262,000, or
approximately $1,080 per subscriber.  Galaxy used the proceeds from this sale to
pay down principal of the revolving note.

      On March 31, 1998,  Galaxy sold two cable  television  systems  located in
Olathe,  Kansas and  Independence,  Missouri,  representing  250 subscribers for
approximately  $190,000,  or approximately $760 per subscriber.  Galaxy used the
proceeds from this sale to pay down principal of the revolving note.

      On March 31, 1998, Galaxy sold six cable television systems located in and
around Ottawa County,  Kansas  representing  752 subscribers  for  approximately
$623,000,  or approximately  $830 per subscriber.  Galaxy used the proceeds from
this sale to pay down principal of the revolving note.

      On March 31, 1998, Galaxy purchased five cable television  systems located
in Brooks and  Colquitt  Counties in  Georgia,  representing  approximately  300
subscribers for approximately $141,000, or approximately $470 per subscriber.

      On March 31,  1998,  Galaxy  traded  four  systems  located  in and around
Sheridan County,  Nebraska,  representing 853 subscribers for one system located
in Jefferson County, Colorado representing approximately 800 subscribers.

       On April 30, 1998, Galaxy sold seven cable television  systems located in
and around Lincoln County,  Kansas,  representing  approximately 500 subscribers
for approximately  $395,000,  or approximately $790 per subscriber.  Galaxy used
the proceeds from this sale to pay down principal of the revolving note.

      On June 30,  1998,  Galaxy  sold one cable  television  system  located in
Goessel,  Kansas,  representing  approximately 100 subscribers for approximately
$110,000, or approximately $1,100 per subscriber.  Galaxy used the proceeds from
this sale to pay down principal of the revolving note.



                                       10
<PAGE>

       On June 30, 1998, Galaxy sold all of its cable television systems located
in  central   Georgia,   representing   approximately   5,200   subscribers  for
approximately $6,120,000, or approximately $1,177 per subscriber, and recorded a
gain on sale of approximately $123,000.  Galaxy used the proceeds from this sale
to pay down principal of the revolving note.


      RESULTS OF OPERATIONS

      The following  table sets forth the  percentage  relationship  of selected
income  statement items as a percentage of revenues for the three months and six
months ended June 30, 1998 and June 30, 1997.  Amounts  shown are in  thousands.
<TABLE>
<CAPTION>

                                           For the three months ended June 30,           For the six months ended June 30,
                                         -------------------------------------       ---------------------------------------
                                                 1998                  1997                  1998                1997
                                         -------------------   -------------------   -------------------   ------------------
                                          Amount       %        Amount       %        Amount       %        Amount       %
                                         --------    -----     --------    -----     --------    -----     --------    -----
<S>                                      <C>         <C>       <C>         <C>       <C>         <C>       <C>         <C>

Revenues                                 $ 17,472    100.0%    $ 17,305    100.0%    $ 34,803    100.0%    $ 33,971    100.0%
                                         --------    -----     --------    -----     --------    -----     --------    -----

Operating expenses:
   System operations                        8,207     47.0%       7,552     43.6%      16,195     46.5%      15,351     45.2%
   Selling, general and administrative      1,967     11.2%       2,120     12.3%       4,186     12.0%       3,791     11.2%
   Management fees to affiliate               786      4.5%         779      4.5%       1,564      4.5%       1,529      4.5%
   Depreciation and amortization            6,146     35.2%       6,268     36.2%      12,347     35.5%      12,275     36.1%
                                         --------    -----     --------    -----     --------    -----     --------    -----
   Total operating expenses                17,106     97.9%      16,719     96.6%      34,292     98.5%      32,946     97.0%
                                         --------    -----     --------    -----     --------    -----     --------    -----
Operating income                              366      2.1%         586      3.4%         511      1.5%       1,025      3.0%

    Interest expense                       (5,343)   (30.6%)     (5,273)   (30.5%)    (10,548    (30.3%)    (10,350)   (30.5%)
    Other income (expense)                 (1,593)    (9.1%)       (169)    (1.0%)       (392)    (1.2%)       (162)    (0.4%)
                                         --------    -----     --------    -----     --------    -----     --------    -----
Net loss                                 $ (6,570)   (37.6%)   $ (4,856)   (28.1%)   $(10,429)   (30.0%)   $ (9,487)   (27.9%)
                                         ========    =====     ========    =====     ========    =====     ========    =====

</TABLE>


      The following table sets forth demographic information as of September 30,
1997, December 31, 1997, March 31, 1998 and June 30, 1998.

                            September 30,  December 31,   March 31,    June 30,
                                 1997          1997          1998      1998 (1)
                               -------      -------       -------     --------
  Homes Passed                 289,531      298,984       292,112      286,196
  Basic Subscribers            177,057      177,296       170,967      168,386
  Basic Penetration             60.81%       59.30%        58.53%       58.84%
  Revenue per Subscriber        $32.88       $32.85        $33.79       $34.32

  Premium Subscribers           84,322       84,252        82,477       80,355
  Premium Penetration           47.89%       47.52%        48.24%       47.72%

(1)  Includes the  demographic  information of the Central Georgia systems sold
     effective June 30, 1998.


                                       11
<PAGE>

      Galaxy generated revenues in the amount of $17,471,933 and $34,803,001 for
the three-month and six-month periods ended June 30, 1998, respectively. For the
three-month and six-month periods ended June 30, 1997, Galaxy generated revenues
in the amount of $17,304,835 and $33,970,673,  respectively.  Galaxy was able to
realize  additional  revenue by increasing basic rates in certain systems.  As a
result,  average  revenues per  subscriber  increased  from $32.82 for the three
months ended June 30, 1997 to $34.32 for the three months ended June 30, 1998.

      For the  three  months  ended  June 30,  1998 and 1997,  system  operating
expenses,   consisting  of  subscriber   costs,   technician  costs  and  system
maintenance costs, were $8,207,353 and $7,551,823, respectively. As a percentage
of revenues, these expenses increased from 43.6% for the three months ended June
30, 1997 to 47.0% in the  comparable  period of 1998.  For the six months  ended
June  30,  1998  and  1997,  system  operating  expenses  were  $16,195,030  and
$15,350,656,  respectively,  and, as a percentage  of revenues,  increased  from
45.2% for the six months ended June 30, 1997 to 46.5% in the  comparable  period
of 1998.  The increase in these  expenses was a result of increased  programming
costs to Galaxy.

      Selling,  general and administrative  expenses, which include office rents
and  maintenance,   marketing  costs  and  corporate  expenses,  decreased  from
$2,120,022 to  $1,967,392  for the three months ended June 30, 1998, as compared
to the three  months ended June 30,  1997,  and  increased  from  $3,790,720  to
$4,185,955  for the six months ended June 30, 1998 as compared to the six months
ended June 30, 1997.  For the  three-month  period ended June 30, these expenses
decreased as a percentage  of revenue from 12.3% in 1997 to 11.2% in 1998.  This
decrease was  attributable  to an effort to control costs  associated with local
service or call centers.  For the six-month period ended June 30, these expenses
increased  from 11.2% in 1997 to 12.0% in 1998,  due to a decrease in the amount
of reimbursements  from  programmers,  primarily in the first quarter of 1998 as
compared to the first quarter of 1997.

      For the  three  months  ended  June 30,  1998 and 1997,  depreciation  and
amortization expense was $6,145,303,  or 35.2% of revenues,  and $6,268,358,  or
36.2% of  revenues,  respectively.  For the six months  ended June 30,  1998 and
1997,  depreciation  and  amortization  expense  was  $12,347,246,  or  35.5% of
revenues,  and  $12,275,325,  or 36.1% of  revenues,  respectively.  The  slight
increase  in  depreciation  and  amortization  expense for the  six months ended
June 30, 1998, was  attributable to the increase in fixed assets from purchases,
offset by the sale of cable television systems.

      For the three  months ended June 30, 1998 and 1997,  interest  expense was
$5,343,330 and $5,273,521,  respectively. For the six months ended June 30, 1998
and 1997, interest expense was $10,547,793 and $10,349,783,  respectively.  This
increase was a result of additional borrowings under the Partnership's Revolving
Credit Facility.  During the first six months of 1997, Galaxy paid $13.7 million
towards the principal of the  Revolving  Credit  Facility.  For the three months
ended June 30, 1998 and 1997, other income  (expense),  which includes  interest
income  and  other  expenses,  was a net  expense  of  $1,593,381  and  $168,617
respectively.  The three months ended June 30, 1998,  included a loss on sale of
systems of approximately $1,500,000.  



                                       12
<PAGE>

      The  Partnership  pays no income  taxes,  although  it is required to file
federal and state income tax returns for informational purposes only. All income
or loss "flows  through" to the partners of the  Partnership as specified in the
Partnership's limited partnership agreement.

      LIQUIDITY AND CAPITAL RESOURCES:

      As of June 30, 1998,  Galaxy had $3,027,238 in cash and cash  equivalents.
As of such date,  total  liabilities  less long-term debt exceeded cash and cash
equivalents by $16,953,338.  Galaxy expects to fund this deficiency  through its
operating cash flows and the Revolving Credit Facility.

      The Partnership  generated  earnings  before  interest,  depreciation  and
amortization  expense,  of  $4,917,903,  or 28.1%  of  operating  revenues,  and
$6,685,535,  or 38.6% of operating revenues, for the three months ended June 30,
1998 and 1997,  respectively,  and $12,466,380,  or 35.8% of operating revenues,
and $13,137,960,  or 38.7% of operating revenues,  for the six months ended June
30, 1998 and 1997, respectively.

      Galaxy had aggregate  indebtedness of  approximately  $172.7 million as of
June 30, 1998,  representing $120 million of 12.375% Senior  Subordinated  Notes
due in 2005 (the "Notes") and $52.7 million of bank debt.  The Revolving  Credit
Facility,  which  has  been  periodically  amended,  with the  latest  amendment
occurring  in March  1998,  allows the  Partnership  to borrow up to $63 million
until  September  1998  when the  outstanding  balance  converts  to a term loan
payable  in  quarterly  installments  escalating  annually  from 6 percent to 30
percent of the converted  balance  through  December 2002. The Revolving  Credit
Facility  requires Galaxy to maintain  compliance with certain  financial ratios
and other  covenants.  The financial  covenants in the Revolving Credit Facility
may limit Galaxy's ability to borrow under the Revolving Credit Facility. Galaxy
presently  intends to utilize the  Revolving  Credit  Facility  to fund  capital
expenditures, repay the term loan and acquire additional cable systems.

                                       13
<PAGE>

     As of June 30,  1998,  Galaxy had $124.3  million in systems and  equipment
consisting of $113.9  million of cable  television  systems and $10.4 million of
vehicles,  equipment,  buildings and office  equipment,  all net of  accumulated
depreciation. Galaxy had capital expenditures of $4.8 million for the six months
ended June 30, 1998. For the six months ended June 30, 1997,  Galaxy had capital
expenditures of $7.0 million.  These capital  expenditures  were financed mainly
through the Revolving  Credit  Facility and cash flows from  operations.  During
1998,  Galaxy's  capital  expenditures  were  primarily  used  to add  channels,
eliminate headends by  interconnecting  adjacent systems with fiber-optic cable,
and construct wide-area networks for distance learning and data services.

      Galaxy's cash flows have been sufficient to meet its debt service, working
capital and capital  expenditure  requirements.  Galaxy  expects that it will be
able to meet its short-term and long-term requirements for debt service, working
capital and capital  expenditures  and to fund future cable system  acquisitions
through its  operating  cash flows and  borrowings  under the  Revolving  Credit
Facility,  and its access to  additional  capital in the public and private debt
markets.

     For information on the impact of recent accounting  pronouncements see Note
2 to the consolidated financial statements appearing elsewhere herein.

      SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      The statements  contained in this Form 10-Q relating to Galaxy's operating
results, and plans and objectives of management for future operations, including
plans or  objectives  relating to Galaxy's  products  and  services,  constitute
forward  looking  statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform Act of 1995.  Actual results of Galaxy may differ  materially
from those in the forward looking  statements and may be affected by a number of
factors including the receipt of regulatory  approvals,  the success of Galaxy's
implementation of digital technology,  subscriber equipment availability,  tower
space  availability,  and the absence of interference,  as well as other factors
contained herein and in Galaxy's securities filings.

      Galaxy's future revenues and profitability are difficult to predict due to
a variety of risks and  uncertainties,  including  (i) business  conditions  and
growth in Galaxy's existing  markets,  (ii) the successful launch of systems and
technologies in new and existing markets,  (iii) Galaxy's existing  indebtedness
and the need for additional  financing to fund subscriber  growth and system and
technological  development,   (iv)  government  regulation,   including  Federal
Communications  Commission  regulations,  (v)  Galaxy's  dependence  on  channel
leases,  (vi) the  successful  integration  of  future  acquisitions  and  (vii)
numerous competitive factors,  including alternative methods of distributing and
receiving video transmissions.

                                       14
<PAGE>

      Galaxy expects to continue its subscriber  growth within existing  systems
and launch additional  systems.  Moderate  increases in revenues and subscribers
are anticipated in 1998; however,  the rate of increase cannot be estimated with
precision or certainty. Galaxy believes that general and administrative expenses
and depreciation  and amortization  expense will continue to increase to support
overall growth.

      Because of the foregoing uncertainties affecting Galaxy's future operating
results, past performance should not be considered to be a reliable indicator of
future performance, and investors should not use historical results or trends as
determinative   of  Galaxy's   future   performance.   In   addition,   Galaxy's
participation in a developing  industry  employing  rapidly changing  technology
could  result  in  significant  volatility  in the  market  value of the  Senior
Subordinated Notes.

      In addition to the matters noted above,  certain other  statements made in
this Form 10-Q are forward  looking.  Such statements are based on an assessment
of a variety of factors,  contingencies  and  uncertainties  deemed  relevant by
management,  including technological changes,  competitive products and services
and management  issues. As a result, the actual results realized by Galaxy could
differ materially from the statements made herein. Readers of this Form 10-Q are
cautioned not to place undue reliance on the forward looking  statements made in
this Form 10-Q or in Galaxy's other securities filings.

      For  information on the impact of recent  accounting  pronouncements,  see
Note 2 to the consolidated financial statements, appearing elsewhere herein.

Item 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.



                                       15
<PAGE>

PART II.  OTHER INFORMATION

Items 1 through 5.

None.

Item 6.  Exhibits and Reports on Form 8-K

(a)   Exhibits.  The following exhibits are included or incorporated by
      reference below.

      27.  Financial Data Schedule

(b)   Reports of Form 8-K. No reports on Form 8-K were filed  during the quarter
      ended June 30, 1998.



                                       16
<PAGE>

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.



                                      GALAXY TELECOM, L.P.
                                BY:   Galaxy Telecom, Inc.
                                      as General Partner




Date: August 14, 1998           /s/ J. Keith Davidson
                               -------------------------------------
                                BY:   J. Keith Davidson
                                      Vice President-Finance
                                     (Principal Financial Officer)











                                       17
<PAGE>

                                EXHIBIT INDEX

  Exhibit Number                        Description
 --------------------               ---------------------------
      27                            Financial Data Schedule