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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                ----------------
                                  FORM 10-Q/A-1

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


 X      QUARTERLY REPORT  PURSUANT TO  SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934
 For the quarterly 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 1-8251

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                        TELEPHONE AND DATA SYSTEMS, INC.
-------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)

            Iowa                                       36-2669023
------------------------------            ------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

                30 North LaSalle Street, Chicago, Illinois 60602
           -----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)
       Registrant's telephone number, including area code: (312) 630-1900
                                 Not Applicable
             ------------------------------------------------------
           (Former address of principal executive offices) (Zip Code)
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
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                Class                      Outstanding at October 31, 1996
   ------------------------------         ---------------------------------
     Common Shares, $1 par value                  54,219,146 Shares
Series A Common Shares, $1 par value               6,907,109 Shares

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                        TELEPHONE AND DATA SYSTEMS, INC.
                        --------------------------------
                                 Amendment No. 1


              The  undersigned  registrant  hereby  amends  the  following  item
included in its Quarterly  Report on Form 10-Q for the quarter  ended  September
30, 1996, as set forth in the pages attached hereto:

              Part I.     Financial Information

                           Management's Discussion and Analysis of Results of
                              Operations and Financial Condition

              The 1996 breakdown of net income and earnings  per  share  between
operations, PCS development costs, paging restructuring costs and gains from the
sales of non-strategic  investments  in the second full paragraph and table on
page 2 under the "Results of Operations - Nine Months Ended 9/30/96  Compared to
Nine Months Ended 9/30/95" is hereby amended to read as follows:


Excluding gains on the sales of cellular  interests and other  investments,  PCS
development  costs and paging  restructuring  charges,  along  with the  related
income taxes and minority  interest,  net income  available to common would have
been  $63.3  million,  or $1.04 per  share,  in the first  nine  months of 1996,
compared to $52.8 million, or $.91 per share, in the first nine months of 1995.

                                              Nine Months Ended September 30,
                                              -------------------------------
                                                  1996               1995
                                                  ----               ----
                                                  (Dollars in thousands, 
                                                 except per share amounts)

Net Income Available to Common As Reported    $     115,281     $      86,916
    Add:   PCS Development Costs                      8,711             4,641
           Paging Restructuring Costs                 3,023             1,013
    Less:  Effects of Gains                         (63,718)          (39,777)
                                              -------------     -------------
As Adjusted                                   $      63,297     $      52,793
                                              =============     =============

Earnings Per Share As Reported                $        1.89     $        1.49
    Add:   PCS Development Costs                        .14               .08
           Paging Restructuring Costs                   .05               .02
    Less:  Effects of Gains                           (1.04)             (.68)
                                              -------------     -------------
As Adjusted                                   $        1.04     $         .91
                                              =============     =============






<PAGE>




              The 1996 breakdown of net income and earnings  per  share  between
operations, PCS development costs, paging restructuring costs and gains from the
sales of non-strategic  investments  in the first full  paragraph and table on
page 7 under the caption  "Three Months Ended  9/30/96  Compared to Three Months
Ended 9/30/95" is hereby amended to read as follows:


Net income  available to common for the third  quarter of 1996 and 1995 included
significant gains from the sales of non-strategic cellular interests and certain
other  investments,  increased PCS  development  costs and paging  restructuring
charges.  Excluding these gains, PCS development costs and paging  restructuring
charges,  along with the related income taxes and minority interest,  net income
available to common  would have been $24.7  million,  or $.40 per share,  in the
third  quarter of 1996,  compared to $25.5  million,  or $.44 per share,  in the
third quarter of 1995.
                                               Three Months Ended September 30,
                                               --------------------------------
                                                    1996             1995
                                                    ----             ----
                                                    (Dollars in thousands, 
                                                   except per share amounts)

Net Income Available to Common As Reported     $      22,200     $      42,338
   Add:   PCS Development Costs                        3,075             3,250
          Paging Restructuring Costs                   2,334             1,013
   Less:  Effects of Gains                            (2,929)          (21,081)
                                               -------------     -------------
       As Adjusted                             $      24,680     $      25,520
                                               =============     =============

Earnings Per Share As Reported                 $         .36     $         .72
   Add:   PCS Development Costs                          .05               .06
          Paging Restructuring Costs                     .04               .02
   Less:  Effects of Gains                              (.05)             (.36)
                                               -------------     -------------
       As Adjusted                             $         .40     $         .44
                                               =============     =============






<PAGE>



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



                        TELEPHONE AND DATA SYSTEMS, INC.
                       ----------------------------------
                                  (Registrant)






Date  March 6, 1997                        /s/ GREGORY J. WILKINSON
                                           -------------------------------
                                           Gregory J. Wilkinson,
                                           Vice President and Controller
                                           (Principal Accounting Officer)













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