FORM 10-Q


                       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 period ended September 30, 1996

                                       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

                One Bell Center, St. Louis, Missouri 63101-3099
                       Telephone Number:  (314) 235-9800


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

<TABLE>

PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements


SOUTHWESTERN BELL TELEPHONE COMPANY

STATEMENTS OF INCOME
Dollars in millions
(Unaudited)

<CAPTION>


                                                                Three months ended            Nine months ended
                                                                September 30,                  September 30,

                                                               1996            1995            1996           1995

<S>                                                    <C>             <C>             <C>             <C>
Operating Revenues
Local service                                            $   1,202.8     $   1,085.1     $   3,495.2     $  3,192.8
Network access                                                 820.1           780.8         2,427.9        2,290.7
Long-distance service                                          213.7           205.8           656.1          615.4
Other                                                          219.0           190.8           631.4          553.2

Total operating revenues                                     2,455.6         2,262.5         7,210.6        6,652.1


Operating Expenses
Cost of services and products                                  760.0           705.0         2,218.2        2,055.0
Selling, general and administrative                            604.2           564.1         1,741.1        1,636.5
Depreciation and amortization                                  452.1           442.9         1,337.3        1,325.9

Total operating expenses                                     1,816.3         1,712.0         5,296.6        5,017.4

Operating Income                                               639.3           550.5         1,914.0        1,634.7


Other Income (Expense)
Interest expense                                               (79.0)          (85.3)         (242.2)        (257.2)
Other income - net                                               1.7             4.5             4.0            9.3

Total other income (expense)                                   (77.3)          (80.8)         (238.2)        (247.9)


Income Before Income Taxes
  and Extraordinary Loss                                       562.0           469.7         1,675.8        1,386.8


Income Taxes
Federal                                                        186.3           147.6           554.5          424.1
State and local                                                 22.1            16.6            68.5           49.9

Total income taxes                                             208.4           164.2           623.0          474.0


Income Before Extraordinary Loss                               353.6           305.5         1,052.8          912.8
Extraordinary Loss from Discontinuance
  of Regulatory Accounting, net of tax                           -          (2,819.3)            -         (2,819.3)

Net Income (Loss)                                        $     353.6     $  (2,513.8)    $   1,052.8     $ (1,906.5)


See Notes to Financial Statements.
</TABLE>

<TABLE>

SOUTHWESTERN BELL TELEPHONE COMPANY

BALANCE SHEETS
Dollars in millions

<CAPTION>

                                                                         September 30,             December 31,

                                                                                    1996              1995

<S>                                                                       <C>                 <C>
Assets                                                                            (Unaudited)
Current Assets
Cash and cash equivalents                                                   $          73.8     $         42.7
Accounts receivable - net of allowances for uncollectibles of
  $23.6 and $15.5                                                                   1,622.1            1,509.2
Material and supplies                                                                  79.9              130.6
Deferred charges                                                                       40.0               31.9
Deferred income taxes                                                                 102.3              143.3
Prepaid expenses and other current assets                                             266.9               81.4

Total current assets                                                                2,185.0            1,939.1

Property, Plant and Equipment - at cost                                            29,033.4           28,008.7
  Less: Accumulated depreciation and amortization                                  17,500.9           16,881.3

Property, Plant and Equipment - Net                                                11,532.5           11,127.4

Other Assets                                                                           40.8               75.4

Total Assets                                                                $      13,758.3     $     13,141.9

Liabilities and Shareowner's Equity
Current Liabilities
Debt maturing within one year                                               $       1,065.6     $        750.4
Accounts payable and accrued liabilities                                            2,323.8            2,289.8

Total current liabilities                                                           3,389.4            3,040.2

Long-Term Debt                                                                      4,192.8            4,217.1


Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes                                                                 194.6              174.3
Postemployment benefit obligation                                                   2,654.9            2,656.7
Unamortized investment tax credits                                                    262.6              286.0
Other noncurrent liabilities                                                          182.6               99.7

Total deferred credits and other noncurrent liabilities                             3,294.7            3,216.7


Shareowner's Equity
Common stock - one share, no par value                                                  1.0                1.0
Paid-in surplus                                                                     3,998.5            4,837.8
Retained earnings (deficit)                                                        (1,118.1)          (2,170.9)

Total shareowner's equity                                                           2,881.4            2,667.9

Total Liabilities and Shareowner's Equity                                   $      13,758.3     $     13,141.9


See Notes to Financial Statements.
</TABLE>

<TABLE>


SOUTHWESTERN BELL TELEPHONE COMPANY

STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash and cash equivalents
(Unaudited)

<CAPTION>

                                                                              Nine months ended
                                                                                 September 30,

                                                                                  1996               1995

<S>                                                                    <C>              <C>
Operating Activities
Net income (loss)                                                        $   1,052.8      $   (1,906.5)
Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation and amortization                                             1,337.3           1,325.9
   Provision for uncollectible accounts                                         70.6              58.5
   Amortization of investment tax credits                                      (23.4)            (34.4)
   Pensions and other postemployment expenses                                  101.3             (17.8)
   Deferred income taxes                                                        61.3              52.7
   Extraordinary loss, net of tax                                                -             2,819.3
   Other - net                                                                (389.9)           (249.2)

Total adjustments                                                            1,157.2           3,955.0

Net Cash Provided by Operating Activities                                    2,210.0           2,048.5


Investing Activities

Construction and capital expenditures                                       (1,629.0)         (1,237.7)

Net Cash Used in Investing Activities                                       (1,629.0)         (1,237.7)


Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                                            295.6             (12.8)
Issuance of other short-term borrowings                                        208.8              91.1
Repayment of other short-term borrowings                                       (88.8)            (60.0)
Issuance of long-term debt                                                      74.8             149.7
Repayment of long-term debt                                                   (201.1)           (117.0)
Dividends paid                                                              (1,039.2)           (885.4)
Net equity from parent                                                         200.0              28.0

Net Cash Used in Financing Activities                                         (549.9)           (806.4)

Net increase in cash and cash equivalents                                       31.1               4.4

Cash and cash equivalents beginning of year                                     42.7              46.1

Cash and Cash Equivalents End of Period                                  $      73.8   $          50.5


Cash paid during the nine months ended September 30 for:
     Interest                                                            $     237.2      $      255.1
     Income taxes                                                        $     498.4      $      392.2

See Notes to Financial Statements.
</TABLE>

<TABLE>


SOUTHWESTERN BELL TELEPHONE COMPANY

STATEMENTS OF SHAREOWNER'S EQUITY
Dollars in millions
(Unaudited)

<CAPTION>

                                                                                             Retained
                                                              Common      Paid-in          Earnings
                                                               Stock        Surplus         (Deficit)

<S>                                                     <C>          <C>               <C>
Balance, December 31, 1994                                $     1.0  $      5,389.9      $       22.6
Net income                                                      -               -            (1,906.5)
Dividend to shareowner                                          -            (383.7)           (494.9)
Net equity from parent                                          -              28.0               -

Balance, September 30, 1995                               $     1.0     $   5,034.2      $   (2,378.8)



Balance, December 31, 1995                                $     1.0     $   4,837.8      $   (2,170.9)
Net income                                                      -               -             1,052.8
Dividend to shareowner                                          -          (1,039.2)              -
Net equity from parent                                          -             200.0               -

Balance, September 30, 1996                               $     1.0     $   3,998.6      $   (1,118.1)


See Notes to Financial Statements.
</TABLE>

                              * * * *

<TABLE>

SELECTED FINANCIAL AND OPERATING DATA

At September 30, or for the nine months then ended:                        1996              1995

<S>                                                                      <C>              <C>
  Return on weighted average total capital*  . . . . . . . . .           21.55%            14.98%
  Debt ratio *  . . . . . . . . . . . . . . . . . . . . . . .            64.60%            65.22%
  Network access lines in service (000)   . . . . . . . . . .            14,799            14,074
  Access minutes of use (000,000)  . . . . . . . . . . . . . .           43,587            39,854
  Long-distance messages billed (000)  . . . . . . . . . . . .          753,004           751,405
  Number of employees . . . . . . . . . . . . . . . . . . . .            48,280            47,960


* Reflects the impact of the 1995 third quarter extraordinary loss from discontinuance of
    regulatory accounting on shareowner's equity.
</TABLE>

SOUTHWESTERN BELL TELEPHONE COMPANY

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Dollars in millions


1.BASIS OF PRESENTATION - Southwestern Bell Telephone Company (Telephone
  Company) is a wholly-owned subsidiary of SBC Communications Inc. (SBC).  The
  financial statements have been prepared by the Telephone Company 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.  Management believes that the
  disclosures made are adequate to make the information presented not
  misleading.  Certain reclassifications have been made to the 1995 financial
  statements to conform with the 1996 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 the Telephone
  Company's 1995 Annual Report on Form 10-K.

2.EXTRAORDINARY LOSS - Effective September 1995, the Telephone Company
  discontinued its application of Statement of Financial Accounting Standards
  No. 71, "Accounting for the Effects of Certain Types of Regulation." Upon
  discontinuance of FAS 71, the Telephone Company recorded a non-cash,
  extraordinary charge of $2,819.3 (after a deferred tax benefit of $1,764.0).
  This charge is composed of an after-tax charge of $2,897.3 to reduce the net
  carrying value of telephone plant, partially offset by an after-tax benefit
  of $78.0 for the elimination of net regulatory liabilities.

SOUTHWESTERN BELL TELEPHONE COMPANY

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


RESULTS OF OPERATIONS


Southwestern Bell Telephone Company (Telephone Company) reported net income of
$353.6 for the third quarter and $1,052.8 for the first nine months of 1996.
Financial results for the third quarters and first nine months of 1996 and 1995
are summarized as follows:

<TABLE>
<CAPTION>

                                  Third Quarter                                   Nine-Month Period

                                                           Percent                                           Percent
                              1996           1995           Change              1996            1995          Change

<S>                    <C>            <C>                  <C>           <C>            <C>                  <C>
Operating revenues     $     2,455.6  $     2,262.5          8.5%        $    7,210.6   $    6,652.1           8.4%
Operating expenses     $     1,816.3  $     1,712.0          6.1%        $    5,296.6   $    5,017.4           5.6%
Income before
 extraordinary loss    $       353.6  $       305.5         15.7%        $    1,052.8   $      912.8          15.3%
Extraordinary Loss               -    $    (2,819.3)         -                    -     $   (2,819.3)          -
Net income (loss)      $       353.6  $    (2,513.8)         -           $    1,052.8   $   (1,906.5)          -


</TABLE>

The primary factor contributing to the increase in net income during the third
quarter and first nine months of 1996 was growth in demand for services and
products.

The Telephone Company's operating revenues in the third quarter and first nine
months of 1996 increased $193.1, or 8.5%, and $558.5, or 8.4%, over the third
quarter and first nine months of 1995.  Components of operating revenues for
the third quarters and first nine months of 1996 and 1995 are as follows:

<TABLE>
<CAPTION>

                                    Third Quarter                                 Nine-Month Period

                                                             Percent                                        Percent
                                1996            1995          Change            1996           1995          Change

<S>                       <C>            <C>                 <C>          <C>            <C>               <C>
Local service               $ 1,202.8      $ 1,085.1          10.8%         $  3,495.2     $  3,192.8        9.5%
Network access
   Interstate                   537.1          517.7           3.7             1,601.3        1,525.9        4.9
   Intrastate                   283.0          263.1           7.6               826.6          764.8        8.1
Long-distance service           213.7          205.8           3.8               656.1          615.4        6.6
Other                           219.0          190.8          14.8               631.4          553.2       14.1

       Total                $ 2,455.6      $ 2,262.5           8.5%         $  7,210.6     $  6,652.1        8.4%


</TABLE>

     Local service revenues increased in the third quarter and first nine months
     of 1996 due primarily to increases in demand, including increases in access
     lines and vertical services revenues.  The number of access lines increased
     by 5.2% since September 30, 1995, with approximately 29% of access line
     growth 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
     22%.

     Interstate network access revenues increased in the third quarter and first
     nine months of 1996 due primarily to an increase 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.  Reduced rates under the Federal Communications Commission's
     (FCC) revised price cap plan, which was effective August 1, 1995, partially
     offset the increases in the third quarter and, to a lesser extent, the
     first nine months of 1996.

     Intrastate network access revenues increased in the third quarter and first
     nine months of 1996 due primarily to increases in demand, including usage
     by alternative intraLATA toll carriers.

     Long-distance service revenues increased in the third quarter and first
     nine months of 1996 due to intraLATA toll pool settlements and the
     inclusion in 1995 of accruals for rate reductions relating to an appealed
     1992 rate order in Oklahoma.  The settlement of the appeals in October 1995
     eliminated the need to continue these accruals.  Absent these accruals and
     settlements, long-distance service revenues in the third quarter and first
     nine months of 1996 decreased due to the continuing impact of 
     price competition from alternative intraLATA toll carriers.
     Competition has had less impact on message volumes, which were relatively
     unchanged, due to deployment and promotion of optional calling plans.

     Other operating revenues consist of the Telephone Company's non-regulated
     services and products, billing and collection services performed for
     interexchange carriers and other miscellaneous revenues.  Other operating
     revenues increased in the third quarter and first nine months of 1996 due
     primarily to increased demand for the Telephone Company's non-regulated
     services and products.

The Telephone Company's operating expenses in the third quarter and first nine
months of 1996 increased $104.3, or 6.1%, and $279.2, or 5.6%, over the third
quarter and first nine months of 1995.  Components of operating expenses for the
third quarters and first nine months of 1996 and 1995 are as follows:


<TABLE>
<CAPTION>
                                  Third Quarter                                Nine-Month Period

                                                             Percent                                       Percent
                                1996           1995           Change              1996           1995       Change

<S>                       <C>            <C>                 <C>            <C>            <C>             <C>
Cost of services and
  products                  $   760.0      $   705.0           7.8%           $  2,218.2     $  2,055.0      7.9%

Selling, general and
  administrative                604.2          564.1           7.1               1,741.1        1,636.5      6.4

Depreciation and
  amortization                  452.1          442.9           2.1               1,337.3        1,325.9      0.9

  Total                     $ 1,816.3      $ 1,712.0           6.1%           $  5,296.6     $  5,017.4      5.6%


</TABLE>

     Cost of services and products increased for the third quarter and first
     nine months of 1996 due to demand related increases, primarily increases in
     switching system software license fees, network expansion and maintenance
     and annual compensation.  The nine-month increase was also attributable to
     demand related increases in materials.

     Selling, general and administrative expenses increased in the third quarter
     and first nine months of 1996 due to increases in employee-related
     expenses, including annual compensation and training, and contracted 
     services.  Also increasing nine-month results were
     higher operating taxes, including the 1996 Texas Infrastructure Fund
     assessments, which for the third quarter were partially offset by decreases
     in other operating taxes.

Interest expense decreased $6.3, or 7.4%, and $15.0, or 5.8%, in the third
quarter and first nine months of 1996 due to lower interest rates on short-term
debt and capitalization of interest during construction required by the
discontinuance of regulatory accounting in the third quarter of 1995.  Under
regulatory accounting, the Telephone Company accounted for a capitalization of
both interest and equity costs during periods of construction as other income.

Income taxes increased $44.2, or 26.9%, and $149.0, or 31.4%, in the third
quarter and first nine months of 1996 due to higher earnings and the effect on
taxes of the discontinuance of regulatory accounting in the third quarter of
1995.

Extraordinary Loss - As described in Note 2 to the financial statements, the
Telephone Company recorded an extraordinary loss of $2.8 billion from
discontinuance of regulatory accounting which included a reduction in plant
asset lives in the third quarter of 1995.


OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS


COMPETITION

Federal Legislation - In February 1996, the Telecommunications Act of 1996 (the
Act) was enacted as a comprehensive federal telecommunications law.  Among other
things, the Act established certain terms and conditions intended to promote
competition for the Telephone Company's local exchange services and defined
conditions SBC must comply with before being permitted to offer wireline
interLATA long-distance service in the Telephone Company's five-state area
(Texas, Missouri, Oklahoma, Kansas and Arkansas).  SBC may offer this service
after obtaining state approval for an interconnection agreement with a
predominantly facilities-based competitor serving residential and business
customers that complies with a 14 point competitive checklist and FCC approval
of SBC's checklist compliance.  The Act also directed the FCC to establish rules
and regulations to implement the Act, and to preempt specific state law
provisions under certain circumstances.

FCC Rules - In August 1996, the FCC adopted rules by which competitors could
connect with Local Exchange Carriers' (LEC) networks, including those of the
Telephone Company.  Some of the provisions of the rules addressed unbundling of
network elements, pricing for interconnection and unbundled elements (pricing
provisions), and resale of network services.  The FCC rules were appealed by
numerous parties, including SBC, other LECs, various state regulatory
commissions and the National Association of Regulatory Utility Commissioners.

FCC Rules Stayed - On October 15, 1996, the United States Court of Appeals for
the Eighth Circuit (Court) issued an order to stay the FCC's pricing provisions
and its rules permitting new entrants to "pick and choose" among the terms and
conditions of approved interconnection agreements.  Other provisions of rules
adopted by the FCC in August 1996 to implement the Act remain in effect.  The
terms of the stay will be in effect pending a review by the Court of the
appeal of the FCC rules, beginning in January 1997.  The FCC has filed a request
to vacate the Court's stay with the United States Supreme Court.

The effects of the FCC rules are dependent on many factors including, but not
limited to: the ultimate resolution of the pending appeals; the number and
nature of competitors requesting interconnection, unbundling or resale; and the
results of the state regulatory commissions' review and handling of related
matters within their jurisdictions.  Accordingly, an assessment of the impact of
the FCC rules on the Telephone Company's business is not possible.

Local Service Certification - Companies wishing to provide competitive local
service have filed numerous applications with state commissions throughout the
Telephone Company's five-state area, and the commissions of each state have
begun approving these applications.  The Texas Public Utility Commission (TPUC)
has approved the application of Sprint Corporation to be granted a certificate
of authority, waiving the build-out requirements specified under state law for
facilities-based certificates of authority.

Interconnection Agreements - Companies seeking to connect to the Telephone
Company's network and provide local service must enter into interconnection
agreements with the Telephone Company, which are then subject to approval by the
appropriate state commission.  The Telephone Company has entered into agreements
in each of its five states, and Texas, Missouri and Oklahoma commissions have
approved various agreements.  Several companies who have failed to agree on all
terms of an interconnection agreement with the Telephone Company have filed for
binding arbitration before the state commissions in the five-state area.  Only
one arbitration has been ruled on to date.

On October 31, 1996, the TPUC announced its ruling in a consolidated arbitration
hearing between the Telephone Company and AT&T Corp, MCI Telecommunications 
Corporation, MFS Communications Company, Inc., Teleport 
Communications Group, and American Communications
Services, Inc.  The TPUC approved interim interconnection rates to be charged by
the Telephone Company as well as certain other terms of interconnection between
the parties.  Agreements containing these rates and terms must be filed by
November 19, 1996 with the TPUC, which has stated it intends to 
issue its final ruling on the
agreements by December 19, 1996.  The Telephone Company was also ordered to file
revised cost support for the establishment of permanent rates with the TPUC by
January 15, 1997, with an anticipated effective date of April 1997.

As a result of these agreements, the Telephone Company expects that in 1997 it
will experience local exchange competition from one or more of these providers
in selected markets.  When these agreements are finalized, SBC intends to use
these and all other approved agreements as a part of its application to the FCC
to provide interLATA long-distance service in Texas.


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 third quarter ended
    September 30, 1996.


                                   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 5, 1996                       /s/ Richard G. Lindner

                                       Richard G. Lindner
                                       Vice President and Chief Financial
                                         Officer (Principal Accounting/
                                         Financial Officer)