FORM 10-Q

                                       United States
                             SECURITIES AND EXCHANGE COMMISSION
                                   Washington, D.C. 20549



(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, 1999

                                             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 1-2346

                            SOUTHWESTERN BELL TELEPHONE COMPANY

                    Incorporated under the laws of the State of Missouri
                      I.R.S. Employer Identification Number 43-0529710

                          530 McCullough, San Antonio, Texas 78215
                              Telephone Number: (210) 821-4105


THE REGISTRANT,  A WHOLLY-OWNED SUBSIDIARY OF SBC COMMUNICATIONS INC., 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>



PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
------------------------------------------------------------------------------------
STATEMENTS OF INCOME
Dollars in millions
(Unaudited)
<CAPTION>
------------------------------------------------------------------------------------
                                                                Three months ended
                                                                     March 31,
                                                                --------------------
                                                                 1999        1998
------------------------------------------------------------------------------------
<S>                                                          <C>          <C>  
Operating Revenues
Local service                                                 $  1,393    $  1,314
Network access:
  Interstate                                                       613         558
  Intrastate                                                       258         272
Long distance service                                              191         189
Other                                                              321         268
------------------------------------------------------------------------------------
Total operating revenues                                         2,776       2,601
------------------------------------------------------------------------------------

Operating Expenses
Operations and support                                           1,431       1,383
Depreciation and amortization                                      515         480
------------------------------------------------------------------------------------
Total operating expenses                                         1,946       1,863
------------------------------------------------------------------------------------
Operating Income                                                   830         738
------------------------------------------------------------------------------------

Other Income (Expense)
Interest expense                                                   (94)        (89)
Other income (expense) - net                                         1         (10)
------------------------------------------------------------------------------------
Total other income (expense)                                       (93)        (99)
------------------------------------------------------------------------------------

Income Before Income Taxes                                         737         639
------------------------------------------------------------------------------------

Income Taxes                                                       272         237
------------------------------------------------------------------------------------

Net Income                                                    $    465    $    402
------------------------------------------------------------------------------------

See Notes to Financial Statements.
</TABLE>


<PAGE>


<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
-----------------------------------------------------------------------------------
BALANCE SHEETS
Dollars in millions
-----------------------------------------------------------------------------------
<CAPTION>
                                                           March 31,   December 31,
                                                         --------------------------
                                                             1999         1998
-----------------------------------------------------------------------------------
<S>                                                      <C>           <C>
Assets                                                     (Unaudited)
Current Assets
Cash and cash equivalents                                $        82   $        60
Accounts receivable - net of allowances for
     uncollectibles of $47 and $47                             1,767         1,953
Prepaid expenses                                                 326           174
Deferred income taxes                                            126           152
Other current assets                                             227           199
-----------------------------------------------------------------------------------
Total current assets                                           2,528         2,538
-----------------------------------------------------------------------------------
Property, Plant and Equipment - at cost                       33,003        32,602
 Less: Accumulated depreciation and amortization              19,691        19,398
-----------------------------------------------------------------------------------
Property, Plant and Equipment - Net                           13,312        13,204
-----------------------------------------------------------------------------------
Other Assets                                                      71            37
-----------------------------------------------------------------------------------
Total Assets                                             $    15,911   $    15,779
-----------------------------------------------------------------------------------

Liabilities and Shareowner's Equity
Current Liabilities
Intercompany loans                                       $     2,122   $     1,766
Current portion of long-term obligations                         204            64
-----------------------------------------------------------------------------------
Total debt maturing within one year                            2,326         1,830
Accrued taxes                                                    601           526
Accounts payable and accrued liabilities                       2,071         2,323
-----------------------------------------------------------------------------------
Total current liabilities                                      4,998         4,679
-----------------------------------------------------------------------------------
Long-Term Debt                                                 4,209         4,358
-----------------------------------------------------------------------------------

Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes                                            494           461
Postemployment benefit obligation                              2,465         2,528
Unamortized investment tax credits                               185           193
Other noncurrent liabilities                                     284           298
-----------------------------------------------------------------------------------
Total deferred credits and other noncurrent liabilities        3,428         3,480
-----------------------------------------------------------------------------------

Shareowner's Equity
Common stock - one share, no par value                             1             1
Paid-in surplus                                                2,545         2,545
Retained earnings                                                730           716
-----------------------------------------------------------------------------------
Total shareowner's equity                                      3,276         3,262
-----------------------------------------------------------------------------------
Total Liabilities and Shareowner's Equity                $    15,911   $    15,779
-----------------------------------------------------------------------------------

See Notes to Financial Statements.
</TABLE>


<PAGE>


<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
------------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash
and cash equivalents
(Unaudited)
------------------------------------------------------------------------------------
<CAPTION>
                                                                Three months ended
                                                                    March 31,
                                                               ---------------------
                                                                1999        1998
------------------------------------------------------------------------------------
<S>                                                          <C>         <C>
Operating Activities
Net income                                                   $     465   $    402
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                                    515        480
  Provision for uncollectible accounts                              32         30
  Amortization of investment tax credits                            (8)        (7)
  Deferred income tax expense                                       60        145
  Other - net                                                     (294)      (758)
------------------------------------------------------------------------------------
Total adjustments                                                  305       (110)
------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                          770        292
------------------------------------------------------------------------------------

Investing Activities
Construction and capital expenditures                             (643)      (531)
------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                             (643)      (531)
------------------------------------------------------------------------------------

Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                                356        955
Issuance of long-term debt                                           -        195
Repayment of long-term debt                                        (10)      (531)
Dividends paid                                                    (451)      (468)
Equity received from parent                                          -        100
------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities               (105)       251
------------------------------------------------------------------------------------
Net increase in cash and cash equivalents                           22         12
------------------------------------------------------------------------------------
Cash and cash equivalents beginning of year                         60         79
------------------------------------------------------------------------------------
Cash and Cash Equivalents End of Period                      $      82   $     91
------------------------------------------------------------------------------------

Cash paid during the three months ended March 31 for:
   Interest                                                  $      97   $     94
   Income taxes                                              $      60   $    113

See Notes to Financial Statements.
</TABLE>


<PAGE>


<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
--------------------------------------------------------------------------
STATEMENT OF SHAREOWNER'S EQUITY
Dollars in millions
(Unaudited)
----------------------------------------------------------------------------
<CAPTION>
                                          Common      Paid-in      Retained
                                           Stock      Surplus      Earnings
----------------------------------------------------------------------------
<S>                                    <C>          <C>          <C>      
Balance, December 31, 1998             $       1    $   2,545    $     716
Net income                                     -            -          465
Dividends to shareowner                        -            -         (451)
----------------------------------------------------------------------------
Balance, March 31, 1999                $       1    $   2,545    $     730
----------------------------------------------------------------------------

See Notes to Financial Statements.
</TABLE>


                              * * * *


<TABLE>
SELECTED FINANCIAL AND OPERATING DATA

<CAPTION>
At March 31, or for the three months then ended:        1999          1998
                                                       --------      -------
<S>                                                     <C>          <C>

  Debt ratio........................................    66.61%       66.65%
  Network access lines in service (000).............    16,704       16,025
  Access minutes of use (000,000)...................    15,887       15,066
  Resold lines (000)................................       589          341
  Number of employees...............................    50,420       50,740

</TABLE>


<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 
Dollars in millions

1. BASIS OF  PRESENTATION  Southwestern  Bell  Telephone  Company  (SWBell) is a
   wholly-owned  subsidiary  of SBC  Communications  Inc.  (SBC).  The financial
   statements have been prepared by SWBell pursuant to the rules and regulations
   of the  Securities  and  Exchange  Commission  (SEC) and,  in the  opinion of
   management,  include all  adjustments  (consisting  only of normal  recurring
   accruals)  necessary  to present  fairly the results for the interim  periods
   shown.  Certain  information and footnote  disclosures,  normally included in
   financial   statements   prepared  in  accordance  with  generally   accepted
   accounting  principles,  have been condensed or omitted  pursuant to such SEC
   rules and regulations.  Certain  reclassifications have been made to the 1998
   consolidated financial statements to conform with the 1999 presentation.  The
   results for the interim periods are not necessarily indicative of results for
   the full year. The financial  statements  contained  herein should be read in
   conjunction  with the  financial  statements  and notes  thereto  included in
   SWBell's  1998 Annual  Report on Form 10-K filed with the SEC.  Comprehensive
   income for SWBell is the same as net income  for all  periods  presented.  As
   SWBell  operates in only one of SBC's segments,  wireline  telecommunications
   services, separate segment reporting does not apply to SWBell.

2. COMPLETION OF MERGERS On April 1, 1997,  SBC and Pacific  Telesis Group (PAC)
   completed the merger of an SBC subsidiary with PAC, in a transaction in which
   each outstanding share of PAC common stock was exchanged for 1.4629 shares of
   SBC common stock (equivalent to approximately  626 million shares).  With the
   merger, PAC became a wholly-owned subsidiary of SBC. The transaction has been
   accounted for by SBC as a pooling of interests and a tax-free reorganization.

   On  October  26,  1998,  SBC  and  Southern  New  England  Telecommunications
   Corporation  (SNET) completed the merger of an SBC subsidiary with SNET, in a
   transaction in which each share of SNET common stock was exchanged for 1.7568
   shares of SBC common stock  (equivalent to approximately 120 million shares).
   SNET became a  wholly-owned  subsidiary of SBC effective  with the merger and
   the transaction has been accounted for by SBC as a pooling of interests and a
   tax-free reorganization.

   Post-merger initiatives
   During the second quarter of 1997, SBC announced several strategic  decisions
   resulting  from the merger  integration  process that began with the April 1,
   1997 closing of its merger with PAC. The decisions resulted from an extensive
   review of operations  throughout the merged  company and include  significant
   integration  of  operations  and  consolidation  of some  administrative  and
   support functions.

   During the fourth quarter of 1998, SBC again  performed a complete  review of
   all  operations  affected by the merger with SNET to determine  the impact on
   ongoing  merger  integration  processes.  Review teams  examined  operational
   functions and evaluated all strategic initiatives.

   As a result of these reviews,  a benefit of $20 ($13 after tax) in the fourth
   quarter of 1998 and charges of $141 ($87 after tax) in the second  quarter of
   1997 were  recognized  by SWBell.  At March 31, 1999 and  December  31, 1998,
   remaining  accruals  for  anticipated  cash  expenditures  related  to  these
   decisions were approximately $26 and $27.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)- Continued 
Dollars in millions

3. SOFTWARE COSTS The American  Institute of Certified  Public  Accountants  has
   issued a Statement of Position (SOP) that requires  capitalization of certain
   computer  software  expenditures  beginning in 1999.  The SOP, which has been
   adopted  prospectively as of January 1, 1999,  requires the capitalization of
   certain costs incurred in connection  with  developing or obtaining  internal
   use  software.  Prior to the  adoption  of the  SOP,  the  costs of  computer
   software  purchased or developed  for internal use were expensed as incurred.
   However,  initial  operating  system software costs were, and continue to be,
   capitalized.

   With  comparable  levels of  software  expenditures,  the SOP  would  tend to
   increase net income in comparison  with SWBell's  former method of accounting
   for software  costs.  However,  the increases would be largest in the year of
   adoption  with  diminishing   levels  of  increases   compared  with  current
   accounting throughout the amortization period. Consequently,  given otherwise
   comparable  income  levels  excluding  software,   and  otherwise  comparable
   software  expenditures,  the effect of the SOP would be to increase income in
   the first year and decrease  income in each  subsequent year until the number
   of years affected by the SOP equals the  amortization  period.  The effect of
   adopting the SOP was to increase  net income for the quarter  ended March 31,
   1999 by approximately $10.



<PAGE>

SOUTHWESTERN BELL TELEPHONE COMPANY

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

RESULTS OF OPERATIONS

Overview  Financial results for Southwestern Bell Telephone Company (SWBell) for
the first quarter of 1999 and 1998 are summarized as follows:

---------------------------------------------------------------------------
                                                   Three-Month Period
                                              -----------------------------
                                                                   Percent
                                                   1999     1998   Change
---------------------------------------------------------------------------
Operating revenues                             $  2,776 $  2,601      6.7%
Operating expenses                             $  1,946 $  1,863      4.5%
Net income                                     $    465 $    402     15.7%
===========================================================================

SWBell's net income for the first quarter of 1999 increased  $63, or 15.7%.  The
primary  factor  contributing  to the  increase  in net income  during the first
quarter of 1999 was growth in demand for services and products.

Operating Revenues

SWBell's  operating  revenues  increased  $175, or 6.7%, in the first quarter of
1999.  Components  of operating  revenues for the first quarter of 1999 and 1998
are as follows:

----------------------------------------------------------------------------
                                                   Three-Month Period
                                              ------------------------------
                                                                     Percent
                                                  1999     1998      Change
----------------------------------------------------------------------------
Local service                                 $  1,393  $ 1,314         6.0%
Network access:
   Interstate                                      613      558         9.9
   Intrastate                                      258      272        (5.1)
Long distance service                              191      189         1.1
Other                                              321      268        19.8
-------------------------------------------------------------------
     Total                                    $ 2,776   $ 2,601         6.7%
============================================================================

      Local  service  revenues  increased  $79, or 6.0%, in the first quarter of
      1999 due  primarily  to increases in demand  totaling  approximately  $64,
      contributing were increases in demand for access lines including wholesale
      lines, vertical services,  and data-related services revenues.  The number
      of access lines  increased by 4.2% since March 31, 1998,  of which 65% was
      due to growth in Texas. Approximately 32% of access line growth was due to
      sales of additional access lines to existing  residential  customers,  and
      approximately  37% of access  line  growth  was due to sales of  wholesale
      lines, primarily business lines. Vertical services revenues, which include
      custom  calling  services,  call  control  options,  Caller  ID and  other
      services,  increased by 12% totaling  more than $250 for the first quarter
      of 1999.  Local service  revenues also increased with the introduction and
      deployment  of extended  local area service  plans in the third quarter of
      1998 by  approximately  $8,  resulting  in a shift of  revenue  from  long
      distance  service of  approximately  $7.  The  overall  increase  to total
      operating revenues resulting from introduction of the plans was $1.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

RESULTS OF OPERATIONS - Continued

      Network access Interstate  network access revenues increased $55, or 9.9%,
      in the first quarter of 1999 due largely to increases in demand for access
      services by interexchange  carriers,  including special access, and growth
      in revenues from end-user  charges,  attributable to an increasing  access
      line base totaling  approximately $60.  Additional  increases totaling $15
      were related to customer number portability cost recovery implemented this
      quarter and access reform issues.  Partially  offsetting  these  increases
      were the effects of the annual rate reduction of approximately $21 related
      to the federal productivity factor adjustment.

      Intrastate  network access  revenues  decreased $14, or 5.1%, in the first
      quarter of 1999.  Decreases of approximately  $17 were driven primarily by
      state  regulatory  rate order  reductions and  elimination of a state toll
      pool program.  The elimination of the toll pool program had an offset that
      increased   long   distance   revenues.   Overall   demand   increased  by
      approximately $5, including usage by alternative intraLATA toll carriers.

      Long distance  service  revenues were  essentially  unchanged in the first
      quarter of 1999. Long distance revenues increased by approximately $20 due
      to the  elimination  of a state  toll pool  program  of which  SWBell  had
      generally been a net contributor and expanded area charges  implemented in
      Texas.  These  increases  were  partially  offset by  reduced  demand  for
      services as a result of price competition from alternative  intraLATA toll
      carriers  and  regulatory  rate  orders  totaling  approximately  $11.  As
      discussed  in  local  service,   long  distance   revenues   decreased  by
      approximately  $7 due to the  introduction and deployment of extended area
      local service plans.

      Other operating  revenues increased $53, or 19.8%, in the first quarter of
      1999.  Approximately  $33 was due to  increased  demand  for  nonregulated
      services  and   products,   including   consumer   equipment  and  network
      integration services.  Also contributing to the increase was the June 1998
      repricing of maintenance and trouble diagnosis  services related to inside
      wire located on customers'  premises of approximately  $12 and an increase
      in state universal fund net receipts of approximately $9.



<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

RESULTS OF OPERATIONS - Continued

Operating  Expenses SWBell's  operating  expenses increased $83, or 4.5%, in the
first quarter of 1999. Components of operating expenses for the first quarter of
1999 and 1998 are as follows:

---------------------------------------------------------------------------
                                                   Three-Month Period
                                              -----------------------------
                                                                    Percent
                                                  1999     1998     Change
---------------------------------------------------------------------------
Operations and support                        $  1,431  $   1,383      3.5%
Depreciation and amortization                      515        480      7.3
------------------------------------------------------------------
  Total                                       $  1,946  $   1,863      4.5%
===========================================================================

      Operations  and support  increased  $48, or 3.5%,  in the first quarter of
      1999. The increase includes costs associated with reciprocal  compensation
      for the termination of Internet  traffic of  approximately  $24. Wages and
      salaries  increased by  approximately  $32.  Research and  development and
      materials  increased  approximately  $24.  These  increases were partially
      offset by reductions in the use of contract labor,  agent  commissions and
      customer  number  portability  costs  totaling   approximately  $17.  Also
      offsetting  the increase was a reduction in right to use fees that are now
      capitalized with the implementation of the software  capitalization policy
      (see Note 3 of Notes to  Financial  Statements)  of  approximately  $9 and
      other non-labor related cost reductions of $15.

      Depreciation and amortization increased $35, or 7.3%, in the first quarter
      of 1999.  The net  increase was due  primarily  to increased  depreciation
      expense from overall higher plant levels.

Income Taxes increased $35, or 14.8%, in the first quarter of 1999 primarily due
to higher income before income taxes.

COMPETITIVE AND REGULATORY ENVIRONMENT

IntraLATA  Toll Dialing  Parity In a January 1999  decision,  the United  States
Supreme Court (Supreme Court) ruled that the Federal  Communications  Commission
(FCC)  had the  authority  to issue  rules to guide  the  state  commissions  in
implementing  intrastate and intraLATA  dialing  parity.  In March 1999, the FCC
released an order  establishing  new deadlines by which local exchange  carriers
(LECs)  must  implement  dialing  parity  for  intraLATA  long  distance  calls.
Specifically,  the FCC ordered  carriers  whose  dialing  parity  plans had been
approved by a state commission to implement  dialing parity no later than May 7,
1999.  Carriers  that had not  filed  dialing  parity  plans  with  their  state
commissions were required to do so by April 22, 1999. If state  commissions have
not approved the plans by June 22,  1999,  the carriers  must file them with the
FCC for approval.  Carriers will be required to implement  dialing parity within
30 days of state or FCC approval.

In Texas,  Oklahoma and Kansas,  SWBell began providing  dialing parity in early
May 1999.  In Arkansas  and  Missouri,  SWBell  filed  dialing  parity  plans in
accordance with the April 22, 1999 FCC deadline.  SWBell is scheduled to provide
dialing  parity in Arkansas in May 1999,  and in Missouri by the date ordered by
the state commission, which is expected to be during the second quarter of 1999.
SWBell  anticipates that  implementation  of dialing parity will contribute to a
loss of intraLATA revenue in 1999.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

COMPETITIVE AND REGULATORY ENVIRONMENT - Continued

In March 1999, U S WEST,  Inc. (U S West) filed  pleadings in the Eighth Circuit
Court of Appeals  (Eighth  Circuit)  challenging  both the validity of the FCC's
March 1999 order and the  authority of the FCC to determine  the date by which a
state  must  provide  intraLATA  dialing  parity.  While SBC  believes  that the
pleadings  of U S West are  meritorious,  at present,  it is  uncertain  how the
Eighth Circuit will rule on these pleadings.

InterLATA Long Distance  Application  SBC continues to seek entry into interLATA
long distance by requesting favorable  recommendation from state commissions and
approval from the FCC. In April 1999, the Texas Public Utility Commission (TPUC)
conditionally approved SWBell's interLATA long distance application, noting that
SWBell has met the 14-point checklist requirements of the Telecommunications Act
of 1996, intended to ensure its local market in Texas is open to competition.  A
final decision by the TPUC on whether to recommend SWBell's in-region  interLATA
long  distance  application  to the FCC is  expected  when  systems  testing  is
completed in mid-1999.  Once approved, the FCC will then have 90 days to rule on
the application.

Pay Phone Per Call  Compensation  In February 1999, the FCC issued a ruling that
reduced the pay phone dial-around  access or toll free call rate from 28.4 cents
to 24  cents  per  call,  effective  April  1999.  In  addition,  the FCC  order
determined  that a reduced rate of 23.8 cents per call be applied  retroactively
from  October  1997  to  April  1999.  The  retroactive   rate  change  did  not
significantly affect SWBell's first quarter 1999 results of operations.

Customer Local Number  Portability  Long-term  customer local number portability
(LNP) allows customers to change local exchange carriers while maintaining their
existing  telephone  numbers.  In  December  1998,  the FCC  issued  an order on
recovery of costs incurred for LNP by LECs.  This order provides for the levying
of  federally  tariffed  LNP monthly  end-user  charges for a five-year  period,
beginning in February 1999.  SWBell began recovering LNP costs at the rate of 48
cents per access  line per month.  This rate is the  subject of an FCC  inquiry,
which is expected to be completed by mid-1999.  Although SWBell cannot currently
predict the results of this rate inquiry,  it is not expected to have a material
impact on SWBell's results of operations or financial position.

Texas Public Utility  Regulatory  Act Under the Texas Public Utility  Regulatory
Act,  which became  effective in May 1995,  SWBell  elected to move from rate of
return  regulation to price  regulation  with  elimination of earnings  sharing.
Basic local service rates are capped at existing levels for four years following
the election,  i.e.,  until September 1999. The TPUC is prohibited from reducing
switched access rates charged by LECs to interexchange  carriers while rates are
capped.  The  Texas  legislature  is  currently   considering  many  aspects  of
telecommunications  regulation,  including access fees and pricing  flexibility.
The TPUC may also consider  these  factors.  The outcome of  legislation or TPUC
rulings,  if any are enacted or issued,  on these matters is not determinable at
this time.

FCC Audit In March  1999,  the FCC  released  the  results  of its 1997 audit of
regional   holding    companies'    (RHCs)   and   GTE    Corporation's    (GTE)
telecommunications and other equipment. The FCC's audit alleged that each of the
RHCs and GTE were missing  millions of dollars in equipment.  Specifically,  the
audit alleged that SWBell was missing $1.2 billion in equipment. SWBell believes
that the audit  methodology  was  flawed  and  amounts  of  "missing"  equipment
dramatically  overstated.  For example,  the FCC's  auditors  sometimes  labeled
equipment as missing because it was not in the precise location indicated in the
property records,  even if it had been relocated.  In April 1999, the FCC opened
an  inquiry  on the  audit's  ramifications.  Among  other  things,  the  FCC is
interested in feedback on the audit  methodology and statistical  validity,  the
impact of the audit  findings  on  telephone  customers  and what action the FCC
should  take  against  the  RHCs  and  GTE.  As  SWBell  uses  composite   group
depreciation accounting for its telephone plant, most reductions in plant levels
(e.g., sales,  retirements) are not reflected in earnings,  but are reflected as
changes in accumulated depreciation.  Accordingly,  if a write down of equipment
is required, it is not expected to have a material impact on SWBell's results of
operations or financial position.


<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

OTHER BUSINESS MATTERS

New Accounting  Standards In June 1998, the Financial Accounting Standards Board
issued  Statement No. 133,  "Accounting  for Derivative  Instruments and Hedging
Activities"  (FAS 133), which will require all derivatives to be recorded on the
balance sheet at fair value and changes in the fair value of the  derivatives to
be recorded in net income or comprehensive  income.  FAS 133 must be adopted for
years beginning after June 15, 1999, with earlier adoption permitted. Management
is currently  evaluating the impact of the change in accounting  required by FAS
133, but is not able to quantify the effect at this time.

See Note 3 to the Financial  Statements  for a discussion of the new  accounting
standard on software costs.

SBC's  Year  2000  Project  SBC  operates   numerous   date-sensitive   computer
applications  and systems  throughout its  businesses.  Since 1996, SBC has been
working to upgrade its networks and computer  systems to properly  recognize the
Year  2000  and  continue  to  process   critical   operational   and  financial
information.  Companywide  teams are in place to address and  resolve  Year 2000
issues and  processes  are under way to evaluate  and manage the risks and costs
associated with preparing SBC's  date-impacted  systems and networks for the new
millennium.

SBC is using a  four-step  methodology  to address  the issue.  The  methodology
consists of inventory and assessment,  hardware and software fixes,  testing and
deployment.  SBC  measures  its  progress  by tracking  the number of  completed
hardware and software applications,  network components,  personal computers and
building facilities that can correctly process Year 2000 dates.

The  inventory and  assessment  phase is estimated to require 20% of the overall
effort and includes the  identification of items (i.e.,  line-by-line  review of
software code, switch generics, vendor products, etc.) that could be impacted by
the Year  2000 and the  determination  of the work  effort  required  to  ensure
compliance.  The inventory and assessment phase has been completed. This process
involved reviewing over 340 million lines of software code, 1,200 central office
switches,  7,000 company  buildings,  conducting an inventory and  assessment of
117,000  personal  computers  and  coordinating  with 1,500  suppliers of 15,000
products  to obtain  adequate  assurance  they will be Year  2000  compliant  or
determine and address any appropriate contingency plans or backup systems.

Making the hardware and software fixes is the second phase of the process and is
estimated to require 25% of the overall effort. This activity involves modifying
program code,  upgrading computer software and upgrading or replacing  hardware.
As of March 31, 1999, SBC had completed 96% of the hardware and software fixes.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

OTHER BUSINESS MATTERS - Continued

Testing involves ensuring that hardware and software fixes will work properly in
1999 and  beyond  and  occurs  both  before  and after  deployment.  Testing  is
estimated to comprise 45% of the overall effort. Testing began early in 1998 and
is 89%  complete.  Contingency  plans and backup  systems  are  currently  being
written.

Deployment  involves  placing the "fixed"  systems  into a live  environment  to
ensure they are working properly. Additional testing is done after deployment as
well. Deployment is estimated to require 10% of the overall effort. Ninety-three
percent of the deployment phase was completed as of March 31, 1999.

SBC has  budgeted  $265 on the entire  project,  with  approximately  $171 spent
through March 31, 1999. As testing and hardware and software fixes are estimated
to require most of the expenditures,  there is not a strict correlation  between
expenditures and project completion.

The activities involved in SBC's Year 2000 project necessarily require estimates
and  projections,  as described  above, of activities and resources that will be
required in the future.  These  estimates and  projections  could change as work
progresses on the project.



<PAGE>


Item 3. Quantitative and Qualitative Disclosures about Market Risk
Dollars in millions

There has been no material  change in SWBell's  market risks since  December 31,
1998.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information  set forth in this report contains  forward-looking  statements that
are subject to risks and uncertainties. SWBell claims the protection of the safe
harbor  for  forward-looking  statements  provided  by  the  Private  Securities
Litigation Reform Act of 1995.

The following  factors could cause SWBell's future results to differ  materially
from those expressed in the  forward-looking  statements:  (1) adverse  economic
changes in the markets served by SWBell or changes in available technology;  (2)
the final outcome of various FCC  rulemakings  and judicial  review,  if any, of
such rulemakings;  (3) the final outcome of various state regulatory proceedings
in SWBell's  operating areas, and judicial review,  if any, of such proceedings;
and (4) the  timing of entry  and the  extent  of  competition  in the local and
intraLATA toll markets in SWBell's  operating areas.  Readers are cautioned that
other factors discussed in this report, although not enumerated here, also could
materially impact SWBell's future earnings.



<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a)   Exhibits

      Exhibit 12  Computation of Ratios of Earnings to Fixed Charges.

      Exhibit 27  Financial Data Schedule.

(b)   Reports on Form 8-K

      There were no reports on Form 8-K filed during the quarter ended March 31,
      1999.




<PAGE>




                                         SIGNATURE


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.

                                       Southwestern Bell Telephone Company




May 11, 1999                                               
                                       /S/ William B. McCullough
                                       William B. McCullough
                                       Vice President and Chief Financial
                                       Officer