TELCO COMMUNICATIONS GROUP                     FOR IMMEDIATE RELEASE

                                                For More Information Contact:
                                                -----------------------------
                                                Nicholas A. Merrick, Chief
                                                Financial Officer
                                                Telco Communications Group, Inc.
                                                (703) 631-5632



                        TELCO COMMUNICATIONS GROUP, INC.

                     ANNOUNCES RECORD THIRD QUARTER EARNINGS


     CHANTILLY,  Va.  (October  29,  1996) - Telco  Communications  Group,  Inc.
(Nasdaq/NM:  TCGX) today  announced  record  results for its third quarter ended
September 30, 1996.  Revenues for the quarter  increased  95% to $113.8  million
from $58.3 million for the third quarter of 1995.  Net income was up 64% to $6.2
million, or $0.20 per share,  compared with net income of $3.8 million, or $0.13
per share,  for the third  quarter of 1995.  Net income for the third quarter of
1996 was  reduced by  approximately  $0.01 per share as the  result of  expenses
relating to the  prepayment of capital leases with the proceeds of the Company's
recently completed initial public offering.
        
     For the nine months ended September 30, 1996,  revenues rose 105% to $309.8
million compared with $150.9 million in the same period of last year. Net income
for the  year-to-date  period was up 33% to $14.6  million,  or $0.50 per share,
compared  with $11.0  million,  or $0.39 per share,  for the nine  months  ended
September 30, 1995.

     The increase in revenue  during the third quarter was due to an increase in
billed customer  minutes from both the Company's  Consumer and Commercial  Sales
Divisions.  Total billed customer  minutes of use were 771.8 million minutes for
the third quarter of 1996, a 104% increase  versus 379.2 million minutes for the
third  quarter of 1995.  The growth in the  Consumer  Division  was  largely the
result of increasing  Dial Around  revenues made  possible by  significant  mail
marketing activities into existing markets.

     Donald A. Burns,  President and Chief Executive  Officer of Telco,  stated,
"Our Dial Around  products  posted  outstanding  growth during the third quarter
almost  exclusively from markets already served.  With the recent  deployment of
our Las Vegas  switch,  we are now  poised to enter the ten  western  states not
currently  served by our Consumer  Division.  Our most recent switch addition in
Las  Vegas  now  provides  us  with   nationwide   origination  and  termination
capabilities  servicing both our Consumer Division and our recently  inaugurated
Commercial Sales Division."



                                                      
<PAGE>
TELCO Reports Third Quarter Results
Page 2
October 29, 1996


     The Company's  Commercial  Sales Division,  which was formed in April 1996,
provides telecommunications products and services to both commercial and carrier
customers.  Since its introduction,  the Commercial Sales Division has opened 19
sales  offices  employing  approximately  176  sales  personnel,  all  targeting
commercial  and  carrier  customers  on a pre  subscribed  basis.  For the third
quarter of 1996,  the  Commercial  Sales  Division  generated  revenues  of $5.9
million,  which  includes  both direct and dealer  revenue as well as  wholesale
carrier  revenue.  For the second  quarter of 1996,  the Company  generated $3.9
million  in  revenue   exclusively  from  wholesale  carrier  customers  and  no
significant commercial revenue from either the direct or dealer sales channels.

     "We are very pleased with the progress of the Commercial Sales Division, in
marketing to both commercial and carrier  customers.  Our underutilized  daytime
network  capacity,  coupled  with our  billing  and data  processing  expertise,
provides us with the  opportunity to diversify our revenue sources and to add to
the continuing  growth of the Company," Burns  continued.  "The Commercial Sales
Division's  successful  launch was  highlighted  by a product  offering that was
well-received  by  prospective  commercial and carrier  customers,  resulting in
revenue and expense levels that were in-line with budgetary targets."

     In August,  1996, the Company completed its initial public offering raising
approximately  $61.1  million in net  proceeds.  Burns noted that the  Company's
resulting  balance  sheet  provides a  debt-free  capital  structure  which is a
significant advantage in the highly competitive long distance industry.

     Telco   Communications   Group,  Inc.  is  a  rapidly  growing   nationwide
switch-based  provider of a full  spectrum of long  distance  telecommunications
products and services targeting  residential,  commercial and carrier customers.
Telco markets its residential products and services primarily through its Dial &
Save and Long Distance  Wholesale Club brand names. Telco markets its commercial
and  carrier  products  through  approximately  176  sales  professionals  in 19
regional offices in 14 states.
 

<PAGE>
TELCO Reports Third Quarter Results
Page 3
October 29, 1996
<TABLE>
<CAPTION>
                        TELCO COMMUNICATIONS GROUP, INC.
                         UNAUDITED FINANCIAL HIGHLIGHTS
             (In thousands, except per share and per minute amounts)


                                   Three Months Ended      Nine Months Ended
                                      September 30,          September 30,
                                   -------------------    -------------------
                                    1996       1995         1996       1995
                                    ----       ----         ----       ----
<S>                                <C>         <C>         <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net                   $113,768    $58,341       $309,774    $150,936
    Cost of services              67,729     36,338        183,260      92,833
                                ---------  ---------      ---------   ---------
Gross margin                      46,039     22,003        126,514      58,103
     Selling, general and
     administrative expenses      32,512     13,117         91,915      34,994
     Depreciation and
     amortization                  2,200        997          5,505       1,989
                                 ---------  ---------      ---------   ---------
                                 
Operating income                  11,327      7,889         29,094      21,120
Interest expense                   1,153        783          3,341       1,917
Other income                         374        (19)           491         (12)
Provision for income taxes         4,247      2,760         10,923       7,473
Minority interest                    135        560            689         678
                                ---------  ---------      ---------   ---------
Net income                        $6,166     $3,767        $14,632     $11,040 
                                ---------  ---------      ---------   ---------
                                ---------  ---------      ---------   ---------
Net income per share               $0.20      $0.13          $0.50       $0.39 
                                ---------  ---------      ---------   ---------
                                ---------  ---------      ---------   ---------
Weighted average number
 of shares outstanding            31,274     28,290         29,321      28,280


OTHER OPERATING DATA:
Minutes of use (in thousands)    771,835    379,153      2,128,107     964,048
Revenue per minute of use         $0.147     $0.154         $0.146      $0.157
Cost of services per minute
of use                            $0.088     $0.096         $0.086      $0.096

BALANCE SHEET DATA:
Cash and cash equivalents        $10,581
Total assets                     188,531
Total debt (including
capital lease obligations)            16
Shareholders' equity             134,871
</TABLE>