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 September 30, 1997

                                       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. AND SUBSIDIARY
                                FORM 10-Q

                 FOR THE QUARTER ENDED SEPTEMBER 30, 1997

                                  INDEX
                                      PAGE
PART I.    Financial Information

Item 1.  Consolidated Financial Statements
         Galaxy Telecom, L.P. and Subsidiary ..................3

         Notes to Consolidated Financial Statements............7

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations........11

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

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

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







                                       2
<PAGE>






                   GALAXY TELECOM, L.P. AND SUDSIDIARY
                       CONSOLIDATED BALANCE SHEETS



                                             September 30,    December 31,
  ASSETS                                            1997          1996
                                              -------------   ------------
                                                 (Unaudited)

  Cash and cash equivalents                    $  5,510,192   $  2,338,345
  Subscriber receivables, net of allowance
   for doubtful accounts of $199,631 and
   $411,950, respectively                         5,348,311      5,998,127
  Systems and equipment, net                    142,092,754    144,822,616
  Intangible assets, net                         58,878,839     62,330,152
  Prepaids and other                              2,434,353      2,008,768
                                               ------------   ------------

     Total assets                              $214,264,449   $217,498,008
                                               ============   ============


       LIABILITIES AND PARTNERS' CAPITAL

  Accounts payable and accrued expenses        $ 21,658,218   $ 17,738,261
  Subscriber deposits and deferred revenue        5,023,107      4,763,327
  Long-term debt and other obligations          177,102,613    169,737,608

     Total liabilities                          203,783,938    192,239,196
                                               ------------   ------------

Commitments and contingencies


  Partners' Capital:
     General partners                             3,479,511     18,257,812
     Limited partners                             7,001,000      7,001,000
                                               ------------   ------------

     Total partners' capital                     10,480,511     25,258,812
                                               ------------   ------------

     Total liabilities and partners' capital   $214,264,449   $217,498,008
                                               ============   ============




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









                                       3
<PAGE>







                  GALAXY TELECOM, L.P. AND SUDSIDIARY
                 CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                           For the three months ended        For the nine months ended
                                                 September 30,                    September 30,
                                                 -------------                    -------------
                                               1997            1996            1997            1996
                                          --------------  ------------    ------------    ------------
                                           (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
<S>                                       <C>             <C>             <C>             <C>

Revenues                                  $ 17,362,684    $ 15,889,468    $ 51,333,357    $ 45,909,789
                                          ------------    ------------    ------------    ------------

Operating expenses:
    Systems operations                       8,069,528       7,451,611      23,420,184      20,783,320
    Selling, general and administrative      2,189,666       1,508,784       5,980,386       4,780,868
    Management fee to affiliate                781,321         714,786       2,310,119       2,065,645
    Depreciation and amortization            6,198,209       5,468,178      18,473,534      15,769,583
                                             ---------       ---------      ----------      ----------

    Total operating expenses                17,238,724      15,143,359      50,184,223      42,710,645
                                          ------------    ------------    ------------    ------------


Operating income                               123,960         746,109       1,149,134       3,199,144

Interest expense                            (5,285,888)     (5,181,112)    (15,635,671)    (14,643,448)
Interest income and other                     (129,225)         54,873        (291,764)         87,919

    Net loss                              $ (5,291,153)   $ (4,380,130)   $(14,778,301)   $(11,356,385)
                                          ============    ============    ============    ============

<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 CHANGES IN PARTNERS' CAPITAL



<TABLE>
<CAPTION>

                                                                    Limited Partners
                             General      -----------------------------------------------------------------------
                             Partners          Class B       Class C        Class D       Class E          Total          Total
                           ------------    ------------   ------------   ------------   ------------   ------------   ------------
<S>                        <C>             <C>            <C>            <C>              <C>          <C>            <C>

Balance at January 1,
    1997                    18,257,812         1,000        416,000       6,384,000        200,000      7,001,000     25,258,812


Net loss for period
 (unaudited)               (14,778,301)           --             --             --             --             --      (14,778,301)
                           ------------    -----------   ------------    ------------   ------------   ------------   ------------

Balance at September 30,
 1997  (unaudited)        $  3,479,511    $     1,000   $    416,000    $  6,384,000   $    200,000   $  7,001,000   $ 10,480,511
                           ============    ===========   ============    ============   ============   ============   ============

<FN>

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


                                       5
<PAGE>


                   GALAXY TELECOM, L.P. AND SUBSIDIARY
                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                            For the nine months ended
                                  September 30,
                                                     -----------------------
                                                     1997              1996
                                                   ----------       ---------
                                                  (Unaudited)      (Unaudited)
Cash flows from operating activities:

Net loss                                         $(14,778,301)   $(11,356,385)
Adjustments to reconcile net loss to net cash
provided by operating activities:

  Depreciation expense                             15,394,589      12,209,164
  Amortization expense                              3,078,945       2,779,551
  Amortization of debt issue costs                    701,082         780,868
  Financeable interest                                   --           404,670
  Provision for doubtful accounts receivable        1,496,115         845,290
  Loss on sale of assets                               93,954          28,477

Changes in assets and liabilities:
  Subscriber receivables                             (846,299)     (3,672,571)
  Prepaids and other                                 (425,585)       (855,746)
    Accounts payable and accrued expenses           3,919,957         195,661
  Subscriber deposits and deferred revenue            259,780       2,962,453

Net cash provided by operating activities           8,894,237       4,321,432
                                                 ------------    ------------

Cash flows from investing activities:
Acquisition of cable systems                             --       (13,171,100)
Capital expenditures                              (13,620,486)    (13,123,006)
Proceeds from sale of assets                          921,280          54,990
Other intangible assets                              (343,189)       (166,154)
                                                 ------------    ------------

Net cash used in investing activities             (13,042,395)    (26,405,270)

Cash flows from financing activities:

Borrowings under revolver                           7,925,000      21,185,000
Payments on revolver                                 (801,377)           --
Net borrowings (payments) on other debt               196,382        (121,026)
                                                 ------------    ------------

Net cash provided by financing activities           7,320,005      21,063,974
                                                 ------------    ------------

Net increase (decrease) in cash                     3,171,847      (1,019,864)

Cash and cash equivalents, beginning of period      2,338,345       3,430,835

Cash and cash equivalents, end of period         $  5,510,192    $  2,410,971
                                                 ============    ============



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


                                       6
<PAGE>


GALAXY TELECOM, L.P. AND SUBSIDIARY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED


1.    STATEMENT OF ACCOUNTING PRESENTATIONS AND OTHER INFORMATION

      The  accompanying  unaudited  interim  financial  statements  and  related
disclosures  are  prepared in  accordance  with  generally  accepted  accounting
principles applicable to interim financial information and with the instructions
to Form 10-Q and  consequently  do not include all of the  footnote  disclosures
required  for audited  financial  statements  by generally  accepted  accounting
principles.  The results for  September  30, 1997,  and for the three months and
nine  months  then ended are not  necessarily  indicative  of the  results to be
expected for the entire 1997 fiscal year. The accompanying  financial statements
should  be read in  conjunction  with the  Partnership's  Annual  Report on Form
10-K/A for the year ended December 31, 1996.

     Galaxy Telecom Capital Corp. ("Capital Corp."), a Delaware corporation, was
formed July 26, 1995 and was funded August 1, 1995 as a wholly owned  subsidiary
of the  Partnership.  Capital Corp. did not have any significant  operations for
the period ended September 30, 1997.

      The following  notes,  insofar as they are  applicable to the three months
and nine  months  ended  September  30, 1997 and  September  30,  1996,  are not
audited.  In management's  opinion,  all adjustments,  consisting of only normal
recurring  accruals  considered  necessary  for  a  fair  presentation  of  such
financial statements are included.

2.       RECENT ACCOUNTING PRONOUNCEMENTS

      In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 128,  "Earnings  per
Share" and No. 129,  "Disclosure of Information  about Capital  Structure." SFAS
No. 128 specifies the computation,  presentation and disclosure requirements for
earnings per share and is designed to improve earnings per share  information by
simplifying  the  existing  computational  guidelines  and revising the previous
disclosure  requirements.  SFAS No. 129  consolidates  the  existing  disclosure
requirements  to  disclose  certain   information   about  an  entity's  capital
structure. Both statements are effective for periods ending December 15, 1997.

                                       7
<PAGE>

      In June 1997,  the FASB  issued  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.
SFAS No. 130 is effective for fiscal years beginning after December 15, 1997.

      Also in June  1997,  the FASB  issued  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. 130
and No. 131 will have a material effect on its financial statements.

3.    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

      Cash paid for interest during the nine months ended September 30, 1997 was
approximately $9.2 million.  Cash paid for interest during the nine months ended
September 30, 1996 was approximately $16.3 million.

      During the first nine months of 1996, the  Partnership  traded the Shawnee
County Systems  located in Shawnee and Jefferson  counties in Kansas for the TCI
Systems located in various counties in northern Mississippi.

      During the first  nine  months of 1997,  the  Partnership  entered  into a
capital lease agreement with McLeod Network Services for approximately $288,000.
This  agreement  allows  connectivity  among various towns and cities located in
central Iowa within the Partnership's systems until March 31, 2002.

4.  RELATED PARTY TRANSACTIONS

      The Partnership  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 the Partnership's business. Management
fees are  calculated  at 4.5% of gross  revenues  as defined  in the  management
agreement. Management fees totaled $714,786 for the three months ended September
30, 1996 and $781,321 for the three months ended September 30, 1997.  Management
fees  totaled  $2,065,645  for the nine  months  ended  September  30,  1996 and
$2,310,119 for the nine months ended September 30, 1997.



                                       8
<PAGE>


5.    LONG-TERM DEBT

      Long-term debt consists of the following:

                                   September 30,    December 31,
                                        1997             1996
                                    ------------    ------------
                                     (Unaudited)

     Revolving Credit Facility      $57,000,000     $49,876,377
     Senior Subordinated Notes      120,000,000     120,000,000
        Unamortized discount           (480,000)       (525,000)
     Other                              582,613         386,231
                                   ------------    ------------
        Total                      $177,102,613    $169,737,608
                                   ============    ============


      Under the Revolving  Credit  Facility,  the Partnership may make revolving
borrowings of up to $68.0 million until December 31, 1997, subject to compliance
with certain conditions,  including certain financial covenants. On December 31,
1997,  outstanding  balances of the Revolving  Credit Facility will convert to a
term loan amortizing quarterly until a final maturity on December 31, 2002.

      6.   SALE OF CABLE TELEVISION SYSTEMS

           On April 7, 1997, the Partnership  sold its cable  television  system
located in Five Points,  South Carolina (the "Five Points  Sale"),  representing
311 basic subscribers for $372,645, or approximately $1,200 per subscriber.  The
Partnership  used most of the proceeds from the Five Points Sale to pay down the
principal of the Revolving Note.

           On August 1, 1997, the Partnership sold its cable television  systems
located in Lake Murray,  South Carolina (the "Lake Murray  Sale"),  representing
587 subscribers for $587,000 or $1,000 per subscriber.  The Partnership retained
ownership of all related equipment located in the two head-end  facilities.  The
Partnership  used  the  proceeds  from  the  Lake  Murray  Sale to pay  down the
principal of the Revolving Note.

      7.   PENDING SALES AND ACQUISITIONS

      On October 1, 1997 the Partnership  purchased one cable television  system
located in Nebraska from Tele-Communications,  Inc.("TCI") (the "Harmon System")
for $825,000 of cash considerations. As of September 30, 1997, the Harmon System
passed 3,115 homes in Douglas and Sarpy  counties and served 1,683  subscribers,
for a basic penetration rate of 54.0%.



                                       9
<PAGE>



      On July 22,  1997,  the  Partnership  signed a Letter of Intent with Eagle
Television,  Inc. to sell certain  assets of fourteen cable  television  systems
located in Southern Colorado.  The systems currently serve  approximately  3,300
subscribers  and the total  selling price is $3,500,000  and is  anticipated  to
close in December, 1997.

      On September 12, 1997, the Partnership  signed an Asset Purchase Agreement
with  NewPath  Communications,  L.C.  to  sell  certain  assets  of  140  of the
Partnership's  smallest cable  television  systems located in Missouri,  Kansas,
Iowa,  and Nebraska.  Certain terms of the  agreement  are  contingent  upon the
approval of the Partnership's  Board of Directors.  Such approval is expected to
be secured in the first  quarter of  calendar  98. The systems  currently  serve
approximately 18,000 subscribers and the total selling price is $16,200,000.

      On October 3, 1997, the  Partnership  signed a Letter of Intent with Jones
Financial  Group,  Ltd. to sell certain assets of two cable  television  systems
located in Kansas (Jefferson Place Apts.) and Missouri (Williamsburg Apts.). The
systems  currently  serve  approximately  280  subscribers and the total selling
price is $225,000 and is anticipated  to close in December,  1997. The Letter of
Intent  calls for seller to retain  ownership  of all  equipment  located at the
transmission site.

      On October 28, 1997 the  Partnership  signed an Asset  Exchange  Agreement
with High Country Cablevision  Partnership to trade certain assets of four cable
television  systems  located  in  Western  Nebraska  serving  approximately  850
subscribers  for  one  cable  television  system  located  in  Colorado  serving
approximately 800 subs. The closing is expected to take place in December, 1997.

      On November 10, 1997, the  Partnership  signed a Letter of Intent with The
Southern Kansas Telephone  Compnay,  Inc. to sell certain assets of twelve cable
television  systems  located in Southern  Kansas.  The systems  currently  serve
approximately  1,300 subscribers and the total selling price is $1,210,750.  The
closing is expected to take place in December, 1997.

      On  November  11,  1997,  the  Partnership  signed a Letter of Intent with
Comcast  to sell  certain  assets  of one cable  television  system  located  in
Lauderdale County,  Mississippi.  The system currently serves  approximately 900
subscribers  and the total  selling  price is  $1,150,000.  The Letter of Intent
calls for the  Partnership to retain  ownership of all equipment  located at the
transmission site. The closing is expected to take place in December, 1997.


                                       10
<PAGE>


      PART I.  FINANCIAL INFORMATION


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

      INTRODUCTION

      During  the  second   quarter  of  1996,   Galaxy   Telecom,   L.P.   (the
"Partnership") acquired certain cable television systems of Cablevision of Texas
III,  Empire  Communications,  Empire  Cable of  Kansas,  Hurst  Communications,
Midcontinent Cable Systems and High Plains Cable for an aggregate  consideration
of $13.4 million.

      On June 14, 1996, the Partnership  traded certain of its assets located in
Shawnee  County and  Jefferson  County,  Kansas for  certain  assets  comprising
approximately   six  cable  television   systems  of  TCI  located  in  northern
Mississippi.

      On November 1, 1996,  Galaxy acquired certain assets comprising five cable
television  systems of C-S Cable for a  purchase  price of  approximately  $2.27
million,  serving approximately 3,450 subscribers in five franchise areas in and
around Marion and Sumter Counties in Florida.

      On November 1, 1996,  Galaxy  traded assets  comprising  the Ranburn cable
system in Ranburn,  Alabama serving  approximately 110 subscribers for a similar
system in Mexia,  Alabama  serving  approximately  230  subscribers.  This trade
allowed Galaxy to trade a small system out of a non-targeted  service area for a
similar system in proximity to our targeted service areas.

      RESULTS OF OPERATIONS

      The following  table sets forth the  percentage  relationship  of selected
income  statement  items as a percent of revenues  for the three months and nine
months ended  September 30, 1997 and  September  30, 1996.  Amounts shown are in
thousands.

 <TABLE>
 <CAPTION>
                                         For the three months ended September 30,    For the nine months ended September 30,
                                                 1997                1996                     1997                 1996
                                           --------------       ---------------       ----------------      ---------------
                                           Amount    %age        Amount     %age       Amount     %age      Amount      %age
                                         --------    -----     --------    -----     --------    -----     --------    -----
<S>                                      <C>         <C>       <C>         <C>       <C>         <C>       <C>         <C>

Revenues                                 $ 17,363    100.0%    $ 15,889    100.0%    $ 51,333    100.0%    $ 45,910    100.0%
                                         --------    -----     --------    -----     --------    -----     --------    -----
Operating expenses:
   System operations                        8,070     46.5%       7,452     46.9%      23,420     45.6%      20,783     44.6%
   Selling, general and administrative      2,190     12.6%       1,509     11.5%       5,980     11.7%       4,873     11.2%
   Management fees to affiliate               781      4.5%         715      4.5%       2,310      4.5%       2,066      4.5%
   Depreciation and amortization            6,198     35.7%       5,468     35.2%      18,474     36.0%      14,989     32.6%
                                         --------    -----     --------    -----     --------    -----     --------    -----
   Total operating expenses                17,239     99.3%      15,143     95.1%      50,184     97.8%      42,711     92.9%
                                         --------    -----     --------    -----     --------    -----     --------    -----
Operating income                              124      0.7%         746      4.9%       1,149      2.2%       3,199      7.1%

    Interest expense                       (5,286)   (30.4%)     (5,181)   (30.6%)    (15,636)   (30.5%)    (14,643)   (32.0%)
    Other income (expense)                   (129)    (0.7%)         55     (0.1%)       (291)    (0.6%)         88      0.1%
                                         --------    -----     --------    -----     --------    -----     --------    -----

Net loss                                 $ (5,291)   (30.5%)   $ (4,380)   (25.8%)   $(14,778)   (28.8%)   $(11,356)   (24.8%)
                                         ========    =====     ========    =====     ========    =====     ========    =====
</TABLE>

                                       11
<PAGE>

      The following table sets forth demographic information as of September 30,
1997 as compared to December 31, 1996, March 31, 1997 and June 30, 1997.

                           December 31,   March 31,   June 30,    September 30,
                               1996         1997        1997          1997
                               ----         ----        ----          ----

   Homes Passed              292,768      283,948     283,948       289,531
   Basic Subscribers         182,552      178,819     177,708       176,057
   Basic Penetration          62.35%       62.97%      62.58%        60.81%
   Revenue per Subscriber     $28.45       $32.06      $32.82        $32.88

   Premium Subscribers        92,700       88,150      84,854        84,322
   Premium Penetration        50.78%       49.30%      47.75%        47.89%


      The  Partnership  generated  revenues  in the  amount of  $15,889,468  and
$45,909,789 for the three-month and nine-month periods ended September 30, 1996,
respectively.  For the  three-month  and nine-month  periods ended September 30,
1997 the  Partnership  generated  revenues  in the  amount  of  $17,362,684  and
$51,333,357,  respectively.  The  Partnership  was  able to  realize  additional
revenue by  increasing  basic  rates in certain  systems  during the first three
months of 1997 and, to a lessor  extent,  by increasing  revenue from  ancillary
sources such as advertising,  managed care services and distance learning.  As a
result,  average  revenue  per  subscriber  increased  from $29.58 for the three
months ended  September 30, 1996 to $32.88 for the three months ended  September
30, 1997.

      For the three  months  ended  September  30, 1996 and  September  30, 1997
systems operations,  consisting of subscriber costs, technician costs and system
maintenance costs, increased from $7,451,611 to $8,069,528,  respectively.  As a
percentage of revenues,  these expenses decreased slightly from 46.9% in 1996 to
46.5% in 1997.  For the nine months ended  September  30, 1996 and September 30,
1997 system  operating  expenses  increased  from  $20,783,320  to  $23,420,184,
respectively, and, as a percentage of revenues, increased slightly from 45.3% in
1996 to  45.6% in 1997.  The  increase  in  these  expenses  are a result  of an
increase in programming  fees charged to the Partnership  offset  partially by a
reduction in costs due to a decrease in the number of subscribers.


    Selling, general and administrative expenses, which include office rents and
maintenance,  marketing costs and corporate expenses,  increased from $1,508,784
to  $2,189,666  for the three months ended  September 30, 1996 and September 30,
1997, respectively,  and from $4,872,965 to $5,980,386 for the nine months ended
September  30, 1996 and September 30, 1997,  respectively.  For the  three-month
period ended  September 30, these expenses  increased as a percentage of revenue
from 9.5% in 1996 to 12.6% in 1997. This increase is attributable to an increase
in  contract  marketing  expenses  in an effort to attract  and  maintain  basic
subscribers within existing systems and a decrease in the amount reimbursed from
programmers. For the nine-month periods ended September 30, 1996 and 1997, these
expenses increased from 10.6% to 11.7%, respectively.

                                       12
<PAGE>


      For the three  months  ended  September  30, 1996 and  September  30, 1997
depreciation and amortization expense was $5,468,178,  or 34.4% of revenues, and
$6,198,209,  or 35.7% of  revenues,  respectively.  For the  nine  months  ended
September 30, 1996 and September 30, 1997, depreciation and amortization expense
was $14,988,715,  or 32.6% of revenues,  and $18,473,534,  or 36.0% of revenues,
respectively.   The  increase  in  depreciation  and  amortization   expense  is
attributable to the increase in fixed assets from purchases and acquisitions.

      For the three  months ended  September  30, 1996 and  September  30, 1997,
interest  expense was  $5,181,112  and  $5,285,888,  respectively.  For the nine
months ended  September 30, 1996 and September  30, 1997,  interest  expense was
$14,643,448  and  $15,635,671,  respectively.  This  increase  was a  result  of
additional borrowings under the Partnership's Revolving Credit Facility. For the
three months ended September 30, 1996 and 1997, interest income and other, which
includes interest income, loss on extraordinary items and other expenses,  was a
net income of $54,873 in 1996 and a net  expense of  $129,225  in 1997.  For the
nine months ended  September 30, 1996 and 1997,  interest income and other was a
net  income  of  $87,919  in  1996  and a  net  expense  of  $291,764  in  1997,
respectively.

      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 September  30, 1997,  the  Partnership  had  $13,292,856  in current
assets,  including  $5,510,192  in cash  and  cash  equivalents,  $5,348,311  in
subscriber  receivables  and $2,434,353 in prepaids and other.  As of such date,
total current  liabilities (other than notes payable) exceeded current assets by
$13,388,469.  The  Partnership  expects  to fund  this  deficiency  through  its
operating cash flows and available funds under the Revolving Credit Facility.

      Due  to  the  results  of  operations  discussed  above,  the  Partnership
generated   operating  cash  flows,   defined  as  earnings   before   interest,
depreciation and amortization  expense and extraordinary items, of $6,214,287 or
39.1% of operating revenues, and $6,322,169, or 36.4% of operating revenues, for
the  three  months  ended  September  30,  1996  and  1997,  respectively,   and
$18,187,859,  or 39.6%  of  operating  revenues,  and  $19,622,668,  or 38.2% of
operating  revenues,  for the nine  months  ended  September  30, 1996 and 1997,
respectively.

                                       13
<PAGE>

      The Partnership had aggregate indebtedness of approximately $177.1 million
as  of  September  30,  1997,   representing  $120  million  of  12.375%  Senior
Subordinated Notes due in 2005 (the "Notes") and $57.0 million of bank debt. The
bank debt includes a Revolving  Credit  Facility under which the Partnership may
make  revolving  borrowings  of up to $68.0  million  until  December  31, 1997,
subject to  compliance  with certain  conditions,  including  certain  financial
covenants.  On December 31, 1997,  outstanding  balances of the Revolving Credit
Facility will convert to a term loan amortizing quarterly until a final maturity
on December 31, 2002. The Revolving Credit Facility  requires the Partnership to
maintain  compliance  with certain  financial  ratios and other  covenants.  The
financial covenants in the Revolving Credit Facility may limit the Partnership's
ability to borrow under the Revolving Credit Facility. The Partnership presently
intends to utilize the Revolving  Credit Facility to fund capital  expenditures,
repay the term loan and acquire additional cable systems.

      It is anticipated that several of the pending sales will close before year
end, and could generate approximately $11,000,000 of cash to be used to pay down
the revolver.  Discussions are in progress with the existing bank group to amend
the loan  agreement.  Said  discussions  include,  but are not  limited  to, the
extension of the date to correct the revolving line of credit to a term loan.

      As of September 30, 1997,  the  Partnership  had $142.1 million in systems
and equipment consisting of $130.8 million of cable television systems and $11.3
million of  vehicles,  equipment,  buildings  and office  equipment,  all net of
accumulated depreciation. The Partnership had capital expenditures (exclusive of
system  acquisitions)  of $13.6 million for the nine months ended  September 30,
1997. For the nine months ended  September 30, 1996, the Partnership had capital
expenditures  (exclusive of system acquisitions) of $13.1 million. These capital
expenditures were financed mainly through the Revolving Credit Facility and cash
flows from operations.  During the first nine months of 1997, the  Partnership's
capital  expenditures  were  primarily  used to purchase  computers  and related
equipment  to expand and  interconnect  administrative  offices,  add  channels,
eliminate headends by  interconnecting  adjacent systems with fiber-optic cable,
and construct wide-area networks for distance learning and data services.

      The  Partnership's  cash  flows  have  been  sufficient  to meet  its debt
service,  working  capital  and  capital  expenditure  requirements,   with  the
exception  of  acquisitions  of certain  cable  systems,  which have been funded
principally through the proceeds of the notes and borrowings under the Revolving
Credit  Facility.  The  Partnership  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 its ability to obtain additional  capital in the public
and private debt markets in the future.


                                       14
<PAGE>

      RECENT ACCOUNTING PRONOUNCEMENTS

      For  information  on the  impact of  future  changes  in  accounting
standards see note 2 of the Galaxy Telecom,  L.P.  Consolidated  Financial
statements appearing elsewhere herein.

      SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

      The  statements  contained in the Form 10-Q relating to the  Partnership's
operating results, and plans and objectives of management for future operations,
including  plans  or  objectives  relating  to the  Partnership's  products  and
services,  constitute  forward  looking  statements  within  the  meaning of the
Private  Securities  Litigation  Reform  Act  of  1995.  Actual  results  of the
Partnership 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  the   Partnership'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 The
Partnership's securities filings.

      The  Partnership's  future  revenues and  profitability  are  difficult to
predict  due to a variety of risks and  uncertainties,  including  (i)  business
conditions and growth in the Partnership's existing markets, (ii) the successful
launch of  systems  and  technologies  in new and  existing  markets,  (iii) the
Partnership's  existing  indebtedness  and the need for additional  financing to
fund subscriber growth and system and technological development, (iv) government
regulation,  including  FCC  regulations,  (v) the  Partnership'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.

      Because of the foregoing  uncertainties affecting the Partnership'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 the Partnership's future performance. In addition,
the  Partnership's  participation  in a developing  industry  employing  rapidly
changing technology may result in significant  volatility in the market value of
the 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  the
Partnership 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 the  Partnership's  other  securities
filings.

                                       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 September 30, 1997.



                                       16
<PAGE>

(c)    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: November 14, 1997    _ \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













                                       18