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 June 30, 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      Six months ended
                                              June 30,               June 30,
                                          ------------------    --------------------
                                           1999       1998       1999        1998
------------------------------------------------------------------------------------
<S>                                     <C>        <C>        <C>         <C>
Operating Revenues
Local service                           $ 1,426    $ 1,360    $  2,819    $  2,674
Network access:
  Interstate                                626        579       1,239       1,137
  Intrastate                                263        280         521         552
Long distance service                       185        192         376         381
Other                                       302        289         623         557
------------------------------------------------------------------------------------
Total operating revenues                  2,802      2,700       5,578       5,301
------------------------------------------------------------------------------------

Operating Expenses
Operations and support                    1,465      1,474       2,896       2,857
Depreciation and amortization               532        496       1,047         976
------------------------------------------------------------------------------------
Total operating expenses                  1,997      1,970       3,943       3,833
------------------------------------------------------------------------------------
Operating Income                            805        730       1,635       1,468
------------------------------------------------------------------------------------

Other Income (Expense)
Interest expense                            (95)       (93)       (189)       (182)
Other income (expense) - net                  3          2           4          (8)
------------------------------------------------------------------------------------
Total other income (expense)                (92)       (91)       (185)       (190)
------------------------------------------------------------------------------------

Income Before Income Taxes                  713        639       1,450       1,278
------------------------------------------------------------------------------------

Income Taxes                                262        237         534         474
------------------------------------------------------------------------------------

Net Income                              $   451    $   402    $    916    $    804
------------------------------------------------------------------------------------

See Notes to Financial Statements.
</TABLE>


<PAGE>


<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
-----------------------------------------------------------------------------------
BALANCE SHEETS
Dollars in millions
<CAPTION>
-----------------------------------------------------------------------------------
                                                            June 30,   December 31,
                                                         --------------------------
                                                             1999          1998
-----------------------------------------------------------------------------------
<S>                                                     <C>            <C>
Assets                                                     (Unaudited)
Current Assets
Cash and cash equivalents                                $        67   $        60
Accounts receivable - net of allowances for
     uncollectibles of $61 and $47                             1,825         1,953
Prepaid expenses                                                 300           174
Deferred income taxes                                            102           152
Other current assets                                             197           199
-----------------------------------------------------------------------------------
Total current assets                                           2,491         2,538
-----------------------------------------------------------------------------------
Property, Plant and Equipment - at cost                       33,546        32,602
 Less: Accumulated depreciation and amortization              20,031        19,398
-----------------------------------------------------------------------------------
Property, Plant and Equipment - Net                           13,515        13,204
-----------------------------------------------------------------------------------
Other Assets                                                     107            37
-----------------------------------------------------------------------------------
Total Assets                                             $    16,113   $    15,779
-----------------------------------------------------------------------------------

Liabilities and Shareowner's Equity
Current Liabilities
Intercompany loans                                       $     2,051   $     1,766
Current portion of long-term obligations                         204            64
-----------------------------------------------------------------------------------
Total debt maturing within one year                            2,255         1,830
Accrued taxes                                                    743           526
Accounts payable and accrued liabilities                       2,178         2,323
-----------------------------------------------------------------------------------
Total current liabilities                                      5,176         4,679
-----------------------------------------------------------------------------------
Long-Term Debt                                                 4,210         4,358
-----------------------------------------------------------------------------------

Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes                                            527           461
Postemployment benefit obligation                              2,469         2,528
Unamortized investment tax credits                               178           193
Other noncurrent liabilities                                     279           298
-----------------------------------------------------------------------------------
Total deferred credits and other noncurrent liabilities        3,453         3,480
-----------------------------------------------------------------------------------

Shareowner's Equity
Common stock - one share, no par value                             1             1
Paid-in surplus                                                2,545         2,545
Retained earnings                                                728           716
-----------------------------------------------------------------------------------
Total shareowner's equity                                      3,274         3,262
-----------------------------------------------------------------------------------
Total Liabilities and Shareowner's Equity                $    16,113   $    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>
------------------------------------------------------------------------------------
                                                                Six months ended
                                                                     June 30,
                                                               ---------------------
                                                                1999        1998
------------------------------------------------------------------------------------
<S>                                                          <C>         <C>
Operating Activities
Net income                                                   $     916   $    804
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                                  1,047        976
  Provision for uncollectible accounts                              75         63
  Amortization of investment tax credits                           (15)       (16)
  Deferred income tax expense                                      117         26
  Other - net                                                     (139)      (486)
------------------------------------------------------------------------------------
Total adjustments                                                1,085        563
------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                        2,001      1,367
------------------------------------------------------------------------------------

Investing Activities
Construction and capital expenditures                           (1,365)    (1,246)
------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                           (1,365)    (1,246)
------------------------------------------------------------------------------------

Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                                285        926
Issuance of long-term debt                                           -        195
Repayment of long-term debt                                        (10)      (558)
Dividends paid                                                    (904)      (798)
Equity received from parent                                          -        100
------------------------------------------------------------------------------------
Net Cash Used in Financing Activities                             (629)      (135)
------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                 7        (14)
------------------------------------------------------------------------------------
Cash and cash equivalents beginning of year                         60         79
------------------------------------------------------------------------------------
Cash and Cash Equivalents End of Period                      $      67   $     65
------------------------------------------------------------------------------------

Cash paid during the six months ended June 30 for:
   Interest                                                  $     189   $    194
   Income taxes                                              $     165   $    151

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                                     -            -          916
Dividends to shareowner                        -            -         (904)
----------------------------------------------------------------------------
Balance, June 30, 1999                 $       1    $   2,545    $     728
----------------------------------------------------------------------------

See Notes to Financial Statements.
</TABLE>


                              * * * *


<TABLE>
SELECTED FINANCIAL AND OPERATING DATA

<CAPTION>
At June 30, or for the six months then ended:            1999          1998
                                                       --------      -------
<S>                                                    <C>          <C>

  Debt ratio........................................    66.38%       65.92%
  Network access lines in service (000).............    16,749       16,144
  Access minutes of use (000,000)...................    32,407       30,865
  Resold lines (000)................................       617          393
  Number of employees...............................    50,360       50,830
</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 is not applicable 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.  Remaining  accruals for  anticipated  cash
   expenditures  related to these decisions were  approximately  $20 at June 30,
   1999 and $27 at December 31, 1998.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

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

3. SOFTWARE COSTS The American  Institute of Certified Public Accountants 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 by  approximately  $26 for the
   second quarter of 1999 and by $36 for the first six months of 1999.



<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 six months of 1999 and 1998 are summarized as follows:

---------------------------------------------------------------------------
                                                     Six-Month Period
                                              -----------------------------
                                                                   Percent
                                                   1999     1998   Change
---------------------------------------------------------------------------
Operating revenues                             $  5,578 $  5,301      5.2%
Operating expenses                             $  3,943 $  3,833      2.9%
Net income                                     $    916 $    804     13.9%
===========================================================================

SWBell's net income for the first six months of 1999  increased  $112, or 13.9%.
The primary factor  contributing  to the increase in net income during the first
six months of 1999 was growth in demand for  services and products and a slowing
of growth in operating expenses due to merger related initiatives and benefits.

Operating  Revenues SWBell's  operating revenues increased $277, or 5.2%, in the
first six months of 1999.  Components  of  operating  revenues for the first six
months of 1999 and 1998 are as follows:

-----------------------------------------------------------------------------
                                                       Six-Month Period
                                              -------------------------------
                                                                     Percent
                                                  1999     1998      Change
-----------------------------------------------------------------------------
Local service                                 $  2,819  $ 2,674         5.4%
Network access:
   Interstate                                    1,239    1,137         9.0
   Intrastate                                      521      552        (5.6)
Long distance service                              376      381        (1.3)
Other                                              623      557        11.8
-------------------------------------------------------------------
     Total                                    $ 5,578   $ 5,301         5.2%
============================================================================

      Local service revenues increased for the first six months of 1999 by $145,
      or 5.4%,  due  primarily to increases in demand  totaling  more than $150,
      including  increases in demand for access lines,  vertical  services,  and
      data-related  services  revenues.  The number of access lines increased by
      3.8%  since  June 30,  1998,  of which  63% was due to  growth  in  Texas.
      Approximately  33% of access  line  growth was due to sales of  additional
      access  lines  to  existing  residential   customers.   Vertical  services
      revenues, which include custom calling services, including Caller ID, Call
      Waiting and other enhanced services, increased by nearly 12% totaling more
      than $516 for the first six  months of 1999.  The  increase  in demand was
      partially  offset by a decline in the public telephone  business  totaling
      approximately   $50.  Local  service  revenues  also  increased  with  the
      introduction  and deployment of extended local area service plans deployed
      in the third quarter of 1998 by approximately $20, resulting in a shift of
      revenue  from  long  distance  service.  The  overall  increase  to  total
      operating   revenues   resulting  from   introduction  of  the  plans  was
      approximately $6.

<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 $102, or 9.0%,
      in the first six  months of 1999 due  largely to  increases  in demand for
      access services by interexchange  carriers,  special access, and growth in
      revenues from end-user charges,  attributable to an increasing access line
      base  totaling   approximately   $122.   Additional   increases   totaling
      approximately  $24  were  related  to  customer  number  portability  cost
      recovery,  net of a Federal  Communications  Commission (FCC)  retroactive
      rate  decrease  implemented  in the  second  quarter  of  1999,  effective
      February  1999  and  access  reform  issues.  Partially  offsetting  these
      increases   were  the  effects  of  the  July  1998  rate   reduction   of
      approximately $45 related to the federal productivity factor adjustment.

      Intrastate  network access  revenues  decreased $31, or 5.6%, in the first
      six months of 1999.  Decreases of approximately  $35 were driven primarily
      by state regulatory rate order  reductions  including a rate reduction due
      to the  elimination of a state toll pool program  effective  January 1999.
      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 six
      months of 1999. Long distance revenues  increased by approximately $20 due
      to the  elimination  of payments made to a state toll pool program in 1998
      and by  approximately  $11 due to 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  $17.  As
      discussed  in  local  service,   long  distance   revenues   decreased  by
      approximately  $14 due to the introduction and deployment of extended area
      local service plans.

      Other operating  revenues increased $66, or 11.8%, in the first six months
      of 1999.  Approximately  $32 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  $27 and an increase
      in state universal fund net receipts of approximately $8.

Operating  Expenses SWBell's  operating expenses increased $110, or 2.9%, in the
first six months of 1999.  Components  of  operating  expenses for the first six
months of 1999 and 1998 are as follows:

---------------------------------------------------------------------------
                                                      Six-Month Period
                                              -----------------------------
                                                                    Percent
                                                  1999     1998     Change
---------------------------------------------------------------------------
Operations and support                        $  2,896  $   2,857      1.4%
Depreciation and amortization                    1,047        976      7.3
------------------------------------------------------------------
  Total                                       $  3,943  $   3,833      2.9%
===========================================================================

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

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

RESULTS OF OPERATIONS - Continued


      Operations and support  increased $39, or 1.4%, in the first six months of
      1999. The increase includes costs associated with reciprocal  compensation
      for the  termination  of  Internet  traffic of  approximately  $55.  Other
      increases  include wages and salaries of approximately  $48,  research and
      development and materials of  approximately  $21 and benefits and employee
      related costs of approximately  $13. These increases were partially offset
      by reductions in the use of contract labor and customer number portability
      costs  totaling  approximately  $37.  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 $39, a reduction in property and
      other taxes of $12 and other non-labor related cost reductions of $22.

      Depreciation  and  amortization  increased  $71, or 7.3%, in the first six
      months  of  1999.   The  net  increase  was  due  primarily  to  increased
      depreciation expense from overall higher plant levels.

Income Taxes  increased $60, or 12.7%, in the first six months of 1999 primarily
due to higher income before income taxes.

COMPETITIVE AND REGULATORY ENVIRONMENT

Texas Legislation In May 1999, the Texas legislature adopted Senate Bill 560, as
amended. The bill, which will become law on September 1, 1999, extends incentive
regulation  indefinitely,  provides more pricing flexibility on certain products
offered by SWBell, such as Caller ID, operator service and directory assistance,
and allows SWBell to package some services in ways attractive to customers.  The
bill also  requires  SWBell to reduce the  intrastate  switched  access  rate it
charges  to long  distance  carriers  by 1 cent on  September  1,  1999 and by 2
additional  cents on the earlier of SWBell's entry into the long distance market
or July 1, 2000. This 1 cent reduction in intrastate  access rates taking effect
on September 1, 1999 is expected to result in a reduction of intrastate  network
access revenues of approximately $25 for the remainder of 1999.

Reciprocal  Compensation  is  billed to SWBell  by  Competitive  Local  Exchange
Carriers  (CLECs) for the termination of certain local exchange  traffic to CLEC
customers.   SBC   Communications   Inc.   (SBC)   believes   that   under   the
Telecommunications  Act  of  1996  (Telecom  Act)  the  state  commissions  have
authority to order reciprocal compensation only for intrastate or local traffic,
while the FCC has authority  over  interstate  and  interexchange  traffic.  SBC
believes most Internet  traffic is interexchange  and interstate.  Several state
commissions have taken the position that Internet  communications  is intrastate
or local traffic and ordered  SWBell to pay reciprocal  compensation  to certain
CLECs  pursuant to existing  contracts.  In February 1999, the FCC declared that
Internet  traffic is not  intrastate  or local  traffic but instead is primarily
interstate subject to interstate jurisdiction. However, the FCC added that state
commissions,  interpreting  existing  contracts and consistent with federal law,
might nevertheless order payment of reciprocal compensation for Internet traffic
in certain circumstances. In March 1999, MCI WorldCom filed an appeal of the FCC
ruling and certain local exchange  carriers also appealed;  the outcome of these
appeals is pending.  SWBell has been  recording  expense  for amounts  sought by
certain  CLECs for the  termination  of  Internet  traffic to  Internet  Service
Providers.

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 local  exchange  carriers.  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.  In July 1999,  the FCC
issued an order on SWBell's rate,  revising the rate to 33 cents,  with a refund
obligation for the period of February through July 1999.  SWBell recorded $10 in
the second quarter of 1999 related to the rate reduction.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

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

COMPETITIVE AND REGULATORY ENVIRONMENT - Continued

Federal  Access  Rates In May 1999,  the United  States Court of Appeals for the
District of  Columbia  Circuit  (Court of Appeals)  ruled that the FCC failed to
adequately  explain certain changes to part of the formula used to calculate the
access rates local  carriers,  such as SWBell,  charge long  distance  carriers.
Specifically, the Court of Appeals disagreed with the FCC's rationale for making
certain changes to the "X factor" adjustment,  the purpose of which is to ensure
that access rates decrease as local phone company  productivity  increases,  and
ordered the FCC to  reevaluate  the formula.  The Court of Appeals did not state
whether the FCC should have made specific  adjustments  that would have resulted
in either  higher or lower access  rates.  In a subsequent  order,  the Court of
Appeals  stayed the mandate of this decision  until April 1, 2000. The effect of
the Court of Appeal's  decision on SWBell's  results of operations and financial
position cannot be determined at this time.

Shared  Transport In June 1999, the United States Supreme Court (Supreme  Court)
set aside an August 1998 United States Court of Appeals for the Eighth Circuit (
8th  Circuit)  ruling that major  carriers,  such as SWBell,  could be forced to
lease, at a discount,  shared  transport  service for carrying phone calls among
telephone company central switching offices.  The 8th Circuit had held that such
shared  transport  was subject to mandatory  leasing  under the Telecom Act. The
Supreme Court  previously  ruled that the FCC ignored some limits in the Telecom
Act when it drew up  rules  for  mandatory  leasing  and in light of that  prior
ruling,  ordered the 8th Circuit to reconsider the shared transport ruling.  The
effect of this ruling on SWBell cannot be determined at this time.

OTHER BUSINESS MATTERS

New Accounting  Standards In June 1998, the Financial Accounting Standards Board
(FASB) 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. In June 1999,
the FASB issued  Statement No. 137,  "Accounting for Derivative  Instruments and
Hedging Activities-Deferral of the Effective Date of the FASB Statement No. 133"
(FAS 137) that among other  items,  defers the date that FAS 133 must be adopted
to years beginning after June 15, 2000.  Earlier  adoption is permitted.  SBC is
currently  evaluating the impact of the change in accounting required by FAS 133
and FAS 137, but is not able to quantify the effect at this time.

See  Note 3 of  Notes  to  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.  Company-wide  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
century.

<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

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

OTHER BUSINESS MATTERS - Continued

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 was estimated to require 20% of the overall
effort and included the identification and prioritization of items that could be
impacted by the Year 2000 and the  determination  of the work effort required to
ensure  compliance.  The inventory and  assessment  phase was completed in 1998.
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 124,000 personal  computers and coordinating with 1,500 suppliers.
SBC must obtain adequate assurance that the 15,000 products they provide will be
Year 2000 compliant or determine and address any appropriate  contingency  plans
or backup systems.

Making the hardware  and software  fixes was the second phase of the process and
was  estimated  to require 25% of the overall  effort.  This  activity  involved
modifying program code,  upgrading  computer software and upgrading or replacing
hardware. The hardware and software fixes were completed as of June 30, 1999.

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  substantially  complete.  Contingency  plans have been  written  and will be
finalized by August 31, 1999.

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-eight
percent of the deployment phase was completed as of June 30, 1999.

SBC has  budgeted  $265 on the entire  project,  with  approximately  $197 spent
through June 30, 1999.

The  activities  involved  in SBC's  Year 2000  project  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>


SOUTHWESTERN BELL TELEPHONE COMPANY

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 June 30,
      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



August 6, 1999                        /s/ William B. McCullough
                                      ________________________________________
                                      William B. McCullough
                                      Vice President and Chief Financial Officer