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 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 1-2346

                    SOUTHWESTERN BELL TELEPHONE COMPANY

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

                  175 E. Houston, San Antonio, Texas 78205
                      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

SOUTHWESTERN BELL TELEPHONE COMPANY
--------------------------------------------------------------------------------
STATEMENTS OF INCOME
Dollars in millions
(Unaudited)
--------------------------------------------------------------------------------
                                    Three months ended      Nine months ended
                                       September 30,          September 30,
                                   --------------------------------------------
                                     1997        1996        1997          1996
--------------------------------------------------------------------------------
Operating Revenues
Local service                     $ 1,337     $ 1,203     $ 3,898      $  3,495
Network access
   Interstate                         548         537       1,631         1,601
   Intrastate                         273         283         813           827
Long-distance service                 204         213         620           656
Other                                 266         220         743           632
--------------------------------------------------------------------------------
Total operating revenues            2,628       2,456       7,705         7,211
--------------------------------------------------------------------------------

Operating Expenses
Cost of services and products       1,002         897       2,910         2,628
Selling, general and                  485         468       1,525         1,332
  administrative
Depreciation and amortization         475         452       1,440         1,337
--------------------------------------------------------------------------------
Total operating expenses            1,962       1,817       5,875         5,297
--------------------------------------------------------------------------------
Operating Income                      666         639       1,830         1,914
--------------------------------------------------------------------------------

Other Income (Expense)
Interest expense                     (85)        (79)       (254)         (242)
Other income - net                     11           2          12             4
--------------------------------------------------------------------------------
Total other income (expense)         (74)        (77)       (242)         (238)
--------------------------------------------------------------------------------

Income Before Income Taxes            592         562       1,588         1,676
--------------------------------------------------------------------------------
Income Taxes                          218         208         591           623
--------------------------------------------------------------------------------
Net Income                        $   374     $   354     $   997      $  1,053
--------------------------------------------------------------------------------

See Notes to Financial Statements.


<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY
--------------------------------------------------------------------------------
BALANCE SHEETS
Dollars in millions
--------------------------------------------------------------------------------
                                               September 30,       December 31,
                                               --------------     --------------
                                                        1997               1996
--------------------------------------------------------------------------------
Assets                                           (Unaudited)
Current Assets
Cash and cash equivalents                        $        97          $      69
Accounts receivable - net of allowances for            1,789              1,674
uncollectibles of $30 and $23
Prepaid expenses                                         267                168
Deferred charges                                          43                 35
Deferred income taxes                                     98                 96
Other current assets                                     120                137
--------------------------------------------------------------------------------
Total current assets                                   2,414              2,179
--------------------------------------------------------------------------------
Property, Plant and Equipment - at cost               30,509             29,347
 Accumulated depreciation and amortization            18,234             17,588
--------------------------------------------------------------------------------
Property, Plant and Equipment - Net                   12,275             11,759
--------------------------------------------------------------------------------
Other Assets                                              44                 30
--------------------------------------------------------------------------------
Total Assets                                     $    14,733          $  13,968
--------------------------------------------------------------------------------

Liabilities and Shareowner's Equity
Current Liabilities
Debt maturing within one year                    $     1,107          $     921
Accounts payable and accrued liabilities               2,668              2,517
--------------------------------------------------------------------------------
Total current liabilities                              3,775              3,438
--------------------------------------------------------------------------------
Long-Term Debt                                         4,629              4,265
--------------------------------------------------------------------------------

Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes                                    320                209
Postemployment benefit obligation                      2,597              2,646
Unamortized investment tax credits                       231                255
Other noncurrent liabilities                             318                269
--------------------------------------------------------------------------------
Total deferred credits and other noncurrent            3,466              3,379
liabilities
--------------------------------------------------------------------------------

Shareowner's Equity
Common stock - one share, no par value                     1                  1
Paid-in surplus                                        2,667              3,687
Retained earnings (deficit)                              195              (802)
--------------------------------------------------------------------------------
Total shareowner's equity                              2,863              2,886
--------------------------------------------------------------------------------
Total Liabilities and Shareowner's Equity        $    14,733          $  13,968
--------------------------------------------------------------------------------

See Notes to the Financial Statements.


<PAGE>


<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
-----------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash
and cash equivalents
(Unaudited)
-----------------------------------------------------------------------------------
                                                                Nine months ended
                                                                  September 30,
<CAPTION>
                                                               --------------------
                                                                   1997       1996
-----------------------------------------------------------------------------------
<S>                                                         <C>          <C>    
Operating Activities
Net income                                                   $      997 $    1,053
Adjustments  to  reconcile   net  income  to  net  cash
  provided  by  operating activities:
   Depreciation and amortization                                  1,440      1,337
   Provision for uncollectible accounts                              87         71
   Amortization of investment tax credits                          (24)       (23)
   Deferred income tax expense                                      109         61
   Other - net                                                    (220)      (289)
-----------------------------------------------------------------------------------
Total adjustments
                                                                  1,392      1,157
-----------------------------------------------------------------------------------
Net Cash Provided by Operating Activities                         2,389      2,210
-----------------------------------------------------------------------------------

Investing Activities
Construction and capital expenditures                           (1,890)    (1,629)
-----------------------------------------------------------------------------------
Net Cash Used in Investing Activities                           (1,890)    (1,629)
-----------------------------------------------------------------------------------

Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                                 238        295
Issuance of other short-term borrowings                             120        209
Repayment of other short-term borrowings                          (195)       (89)
Issuance of long-term debt                                          487         75
Repayment of long-term debt                                       (101)      (201)
Dividends paid                                                  (1,175)    (1,039)
Equity received from parent                                         155        200
-----------------------------------------------------------------------------------
Net Cash Used in Financing Activities                             (471)       (550)
-----------------------------------------------------------------------------------
Net increase in cash and cash equivalents                            28         31
-----------------------------------------------------------------------------------
Cash and cash equivalents beginning of year                          69         43
-----------------------------------------------------------------------------------
Cash and Cash Equivalents End of Period                      $       97  $       74
-----------------------------------------------------------------------------------

Cash paid during the nine months ended September 30 for:
     Interest                                                $      237 $      237
     Income taxes                                            $      370 $      498

<FN>
See Notes to the Financial Statements.
</FN>
</TABLE>


<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

--------------------------------------------------------------------------
STATEMENT OF SHAREOWNER'S EQUITY

Dollars in millions
(Unaudited)
----------------------------------------------------------------------------
                                                                  Retained
                                          Common      Paid-in     Earnings
                                          Stock       Surplus     (Deficit)
----------------------------------------------------------------------------
Balance, December 31, 1996             $        1   $    3,687  $     (802)
                                                         
Net income                                      -            -          997
Dividend to shareowner                          -      (1,175)            -
Equity received from parent                     -          155            -
----------------------------------------------------------------------------
Balance, September 30, 1997            $        1   $    2,667  $       195
----------------------------------------------------------------------------

See Notes to Financial Statements.

                             * * * *


SELECTED FINANCIAL AND OPERATING DATA

At September 30, or for the nine months                  1997          1996
then ended:
                                                       -------       -------

  Return on weighted average total capital.............19.59%       21.55%

  Debt ratio...........................................66.70%       64.60%

  Network access lines in service (000)................15,556       14,797

  Access minutes of use (000,000)......................44,229       40,971

  Number of employees..................................50,870       48,280





<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 1996
   financial  statements to conform with the 1997 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 1996
   Annual  Report on Form  10-K.  During  the third  quarter  of 1997,  SWBell's
   commercial  paper was replaced by intercompany  loans from SBC.  Intercompany
   loans as of September 30, 1997 totaled $963.

2. COMPLETION OF MERGER 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 0.73145 of a share of SBC common
   stock (equivalent to approximately 313 million shares).  With the merger, PAC
   became a wholly-owned subsidiary of SBC. The transaction was accounted for as
   a pooling of interests and a tax-free reorganization.

   Post-merger initiatives
   During the second quarter 1997,  SBC announced  several  strategic  decisions
   resulting  from the merger  integration  process  that began with the April 1
   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.  In connection with these  initiatives,  SWBell recognized
   several charges during the second  quarter.  Following is a discussion of the
   most significant of these charges.

   Reorganization  SBC will  centralize  several key functions that will support
   the  operations  of SWBell,  Pacific Bell  (PacBell,  which also includes its
   subsidiaries)  and  Nevada  Bell,   including  network  planning,   strategic
   marketing   and   procurement.   It  is  also   consolidating   a  number  of
   corporate-wide  support  activities,   including  research  and  development,
   information  technology,  financial  transaction  processing  and real estate
   management.  SWBell, PacBell, and Nevada Bell will continue as separate legal
   entities.  These initiatives will result in the creation of some jobs and the
   elimination  and realignment of others,  with many of the affected  employees
   changing job  responsibilities  and in some cases assuming positions in other
   locations.

   SWBell  recognized a charge of approximately  $57 ($36 net of tax) during the
   second quarter of 1997 in connection with these initiatives.  This charge was
   comprised mainly of postemployment benefits,  primarily related to severance.
   Other charges arising out of the merger related to relocation, retraining and
   other effects of consolidating certain operations are being recognized in the
   periods those charges are incurred.

   Impairments/asset  valuation As a result of SBC's merger  integration  plans,
   strategic review of domestic operations and organizational alignments, SWBell
   reviewed  the  carrying  value of  related  long-lived  assets . This  review
   included estimating  remaining useful lives and cash flows. Where this review
   indicated  impairment,  discounted  cash flows  related to those  assets were
   analyzed  to  determine  the amount of the  impairment.  As a result of these
   reviews,  in the second  quarter  of 1997  SWBell  wrote off some  assets and
   recognized impairments to the value of other assets with a combined charge of
   $84 ($51 after tax),  including the write off of voice dial  equipment  which
   will be discontinued.


<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 nine months of 1997 and 1996 are summarized as follows:

---------------------------------------------------------------------------
                                                   Nine-Month Period
                                              -----------------------------
                                                                   Percent
                                                   1997     1996   Change
---------------------------------------------------------------------------
Operating revenues                             $  7,705 $  7,211      6.9%
Operating expenses                             $  5,875 $  5,297     10.9%
Net income                                     $    997 $  1,053     (5.3)%
===========================================================================

SWBell's  nine-month net income  includes  after-tax  charges of $168 reflecting
strategic   initiatives   resulting   from  SBC   Communications   Inc.'s  (SBC)
comprehensive  review of operations of the merged company, the impact of several
regulatory  rulings  during  the  second  quarter of 1997,  costs  incurred  for
customer  number  portability  since the merger and charges  for ongoing  merger
integration  costs,  primarily  related to the movement of employees.  Excluding
these charges, SWBell reported net income of $1,165 for the first nine months of
1997,  10.6%  higher  than the first  nine  months of 1996 net income of $1,053.
SWBell currently  anticipates  additional  after-tax  charges for ongoing merger
integration  costs,  primarily  related to movement of  employees,  and customer
number portability of $100 to $150 during the remainder of 1997.

Excluding these charges, the primary factors contributing to the increase in net
income  during the first nine  months of 1997 was growth in demand for  services
and products.

Revenues SWBell's  operating  revenues for the first nine months of 1997 reflect
reductions of $66 related primarily to the impact of several  regulatory rulings
during  the  second  quarter  of  1997.  Excluding  these  reductions,  SWBell's
operating revenues increased $560, or 7.8%. Components of operating revenues for
the first nine months of 1997 and 1996 are as follows:

----------------------------------------------------------------------------
                                                     Nine Month Period
                                              ------------------------------
                                                                    Percent
                                                  1997     1996     Change
----------------------------------------------------------------------------
Local service                                 $  3,898  $ 3,495       11.5%
Network access:
   Interstate                                    1,631    1,601        1.9
   Intrastate                                      813      827       (1.7)
Long-distance service                              620      656       (5.5)
Other                                              743      632       17.6
-------------------------------------------------------------------
     Total                                    $ 7,705   $ 7,211        6.9%
============================================================================

      Local  Service  revenues  increased  in the first nine  months of 1997 due
      primarily to increases in demand,  including increases in access lines and
      vertical services  revenues.  The number of access lines increased by 5.1%
      since  September  30,  1996,  of which  67% was due to  growth  in  Texas.
      Approximately  30% of access  line  growth was due to sales of  additional
      access  lines  to  existing  residential   customers.   Vertical  services
      revenues,  which  include  custom  calling  options,  Caller  ID and other
      enhanced services,  increased by approximately 24%. Additionally,  Federal
      payphone  deregulation  increased  local  service  revenues and  decreased
      long-distance  and  interstate  network  access;  the overall impact was a
      slight increase in total operating revenues.

<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 reflect charges of $52
      due to the adverse impacts of several recent regulatory issues,  including
      recovery of certain  employee-related  expenses and the retroactive effect
      of the productivity factor adjustment mandated in the July 1, 1997 Federal
      price  cap  filing.  Without  these  impacts,  interstate  network  access
      revenues  increased  in the  first  nine  months  of 1997 due  largely  to
      increases in demand for access services by interexchange carriers.  Growth
      in revenues from end-user  charges,  attributable to an increasing  access
      line base, also  contributed to the increase.  Partially  offsetting these
      increases was the effect of the rate reduction related to the productivity
      factor adjustment.

      Intrastate  network access revenues  decreased  slightly in the first nine
      months  of  1997  as  modest  increases  in  demand,  including  usage  by
      alternative  intraLATA toll  carriers,  were more than offset by net price
      decreases resulting from state regulatory rate orders.

      Long-Distance  Service revenues decreased in the first nine months of 1997
      due  primarily  to  the  impact  of  price  competition  from  alternative
      intraLATA  toll carriers and the  introduction  and deployment of extended
      area local service plans. The decrease in  long-distance  service revenues
      also reflects impacts of state regulatory rate orders.

      Other  operating  revenues  increased in the first nine months of 1997 due
      primarily   to  sales  of  business   systems   communications   equipment
      attributable to the December 1996 movement of the business of Southwestern
      Bell  Telecommunications  Inc. (Telecom), a wholly-owned subsidiary of SBC
      which marketed  business and residential  communications  equipment,  into
      SWBell. Results also reflect increases in demand for SWBell's nonregulated
      services and products.  These  increases were somewhat offset by decreases
      in sales of Caller  ID  equipment  resulting  from  outsourcing  Caller ID
      equipment sales to an external vendor during 1997.

Expenses SWBell's  operating  expenses for the first nine months of 1997 reflect
$193 of charges related to strategic  initiatives resulting from a comprehensive
review of operations  (see Note 2 to the Financial  Statements),  costs incurred
for customer number  portability since the merger and charges for ongoing merger
integration costs.  Excluding these charges,  operating expenses increased $385,
or 7.3%.  Components of operating expenses for the first nine months of 1997 and
1996 are as follows:

---------------------------------------------------------------------------
                                                   Nine-Month Period
                                              -----------------------------
                                                                    Percent
                                                1997      1996      Change
---------------------------------------------------------------------------
Cost of services and products                 $  2,910  $ 2,628       10.7%
Selling, general and administrative              1,525    1,332       14.5
Depreciation and amortization                     1,440   1,337        7.7
------------------------------------------------------------------
   Total                                      $  5,875  $ 5,297       10.9%
===========================================================================

      Cost of services and  products for the first nine months of 1997  reflects
      charges of $41 relating to strategic  initiatives,  including  charges for
      customer number portability. Excluding these charges, cost of services and
      products  increased  $241,  or 9.2%,  in the first nine months of 1997 due
      primarily to increases in employee  compensation,  network  expansion  and
      maintenance  and  interconnection  costs.  Results also reflect  increased
      expenses for business systems communications  equipment now sold by SWBell
      (formerly sold by Telecom as described above).

<PAGE>

SOUTHWESTERN BELL TELEPHONE COMPANY

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

RESULTS OF OPERATIONS - Continued

      Selling,  general and administrative  expense for the first nine months of
      1997 reflects one-time charges of $115,  including the $57 charge relating
      to  reorganization  (see Note 2 to the  Financial  Statements).  Excluding
      these charges, selling, general and administrative expenses increased $78,
      or 5.9%,  in the first nine months of 1997 due  primarily  to increases in
      sales  agents   commissions,   employee   compensation,   advertising  and
      uncollectibles.

      Depreciation  and  amortization for the first nine months of 1997 reflects
      one-time  charges of $37 for the write off of voice dial  equipment  which
      will be discontinued (see Note 2 to the Financial  Statements).  Excluding
      this charge,  depreciation and amortization increased $66, or 4.9%, in the
      first  nine  months  of 1997 due  primarily  to  growth  in plant  levels.
      Depreciation  and  amortization  for the  first  nine  months of 1997 also
      reflects a $69  decrease due to an increase in copper cable life caused by
      a limited  deployment of asymmetrical  digital  subscriber line equipment.
      This  decrease was mostly  offset by a change in the  effective  composite
      rate for other plant categories.

Interest expense increased $12, or 5.0%, in the first nine months of 1997 due to
increased debt levels.

Income  taxes  decreased  $32,  or 5.1%,  in the first  nine  months of 1997 due
primarily to lower income before income taxes.


<PAGE>


SOUTHWESTERN BELL TELEPHONE COMPANY

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

OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS

COMPETITIVE AND REGULATORY ENVIRONMENT

State  Interconnection  Agreements/  Reselling  Developments SWBell continues to
enter into  interconnection  agreements with companies desiring to provide local
service in its operating territory. Approximately 180 interconnection agreements
have  been  reached,   and  most  have  been  approved  by  the  relevant  state
commissions.  AT&T Corp. (AT&T) and other competitors are reselling SWBell local
exchange  services,  and as of September 30, 1997,  there were more than 150,000
access lines supporting services resold by competitors.

Federal  Interconnection In September 1997, 28 state  commissions,  the National
Association of Regulatory  Utilities  Commissioners  and the D.C. Public Service
Commission,  along with many companies who have Local Exchange  Carriers  (LECs)
including SBC,  filed  petitions to enforce the July 18, 1997 ruling of the U.S.
Court of Appeals  for the Eighth  Circuit in St.  Louis (8th  Circuit)  that the
right to set local exchange prices,  including the pricing  methodology used, is
reserved  exclusively  to the  states.  The  petitions  respond  to the  Federal
Communications Commission's (FCC) rejection of Ameritech Corporation's interLATA
long-distance application in Michigan in which the FCC stated it is applying its
own pricing standards to interLATA applications.  The petitioners assert the FCC
is violating state  authority.  On October 14, 1997, the 8th Circuit granted the
LECs' petitions for rehearing and ruled that they do not have to deliver network
elements to competitors in anything other than completely unbundled form.

Payphone  Deregulation/Market  Price Adjustments Final price deregulation of the
payphone  industry took effect October 7, 1997.  SWBell raised  payphone  prices
throughout its operating territories,  beginning in October 1997. The new prices
are the result of federal telecommunications  deregulation,  which prohibits the
subsidy of  payphone  service  directly or  indirectly  from  telephone  service
operations and allows payphone providers to determine their own pricing.

<PAGE>

SOUTHWESTERN BELL TELEPHONE COMPANY

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

OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS-Continued

Portions of the  Telecommunication  Act of 1996 (Telecom Act) Challenged In July
1997, SBC brought suit in the U.S.  District Court for the Northern  District of
Texas,   seeking  a   declaration   that  a  portion  of  the   Telecom  Act  is
unconstitutional on the grounds that it improperly  discriminates against SBC by
imposing  restrictions that prohibit SBC from offering  interLATA  long-distance
and other services that other LECs are free to provide. The suit challenges only
that  portion of the Telecom Act that  excludes  SBC from  competing  in certain
lines of  business.  SBC is  currently  awaiting a decision  by the court on its
motion for summary judgement.

FCC Pre-empts  Portions of Texas Public  Utility  Regulatory  Act (PURA) The FCC
pre-empted  and voided  portions of PURA that  required  certain new entrants to
build  telephone  networks  to cover a 27  square-mile  area in any market  they
entered.  Also  pre-empted  were rules that excluded  competitors  from entering
markets with fewer than 31,000 access lines and limited  resale of Centrex phone
services.  Texas  regulators  have  already  given  AT&T and MCI  Communications
Corporation waivers of the build-out requirement that was pre-empted, and SWBell
has dismissed all appeals relating to this issue.

Price Cap Regulation Approved in Missouri The Missouri Public Service Commission
(MPSC)  issued an order  determining  that  SWBell is now  subject  to price cap
regulation.  Prices in effect as of December  31,  1996 are the initial  maximum
allowable rates for services.  Maximum  allowable rates cannot be adjusted until
January  1, 2000 for basic and  access  services  and until  January 1, 1999 for
non-basic  services.  On an exchange basis where a competitor begins operations,
the January 1, 1999 freeze on maximum allowable rates for non-basic  services is
removed.  After those dates, caps may be adjusted based on one of two government
indices.  In an exchange  where  competition  for basic local service exists for
five years,  services will be declared competitive and subject to market pricing
unless the MPSC finds effective competition does not exist.

OTHER BUSINESS MATTERS

Over the next few years,  SWBell is expecting to incur  significant  capital and
software  expenditures  for  interconnection  and customer  number  portability.
SWBell expects the capital costs and expenses  associated  with customer  number
portability,  which allows customers to switch to new local competitors and keep
the same phone number, to total up to $600 on a pre-tax basis over the next four
years. Full recovery of customer number  portability costs is required under the
Telecom  Act;  however,  the  FCC  has not  yet  determined  when  or how  those
significant  costs will be recovered.  SWBell has filed a tariff for recovery of
these  costs.  No action has been taken by the FCC on this  tariff,  pending the
issuance  of its  order on  customer  number  portability.  SWBell  is unable to
predict the  likelihood of the FCC  permitting  the tariff to become  effective.
Capital costs and expenses  associated with  interconnection  will vary based on
the number of  competitors  seeking  interconnection  and  markets  entered  and
customers served by those competitors.  Accordingly,  SWBell is currently unable
to reasonably estimate these costs.



<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

      On July 15, 1997 SWBell filed a Current  Report on Form 8-K,  reporting on
      Item 7,  Financial  Statements and Exhibits.  In the report,  SWBell filed
      exhibits  relating to the issuance of 6 5/8% Notes due July 15, 2007 and 
      7 3/8% Debentures due July 15, 2027.




<PAGE>




                                   SIGNATURES


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

                                       Southwestern Bell Telephone Company




November 12, 1997                      /s/ Richard G. Lindner
                                       ----------------------
                                       Richard G. Lindner
                                       Vice President and Chief Financial
                                       Officer (Principal Accounting/
                                       Financial Officer)