U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                       
                                       
                                  Form 10-QSB

  X       Quarterly report under to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                 For the quarterly period ended June 30, 1997

          Transition report under to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                For the transitional period from           to
                                       
                        Commission File Number 0-24622

                         TELSCAPE INTERNATIONAL, INC.
       (Exact name of Small Business Issuer as specified in its charter)
                                       


                Texas                                    75-2433637
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                 identification number)
	 
	 
 4635 Southwest Freeway, Suite 800, Houston, Texas           77027
  (Address of principal executive offices)                (Zip Code)

         Issuer's telephone number including area code -- 713/968-0968

       ________________________________________________________________
   (Former name, former address and former fiscal year if changed since last
                                    report)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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

3,868,438 shares of Registrant's common stock ($.001 Par Value) were
outstanding as of August 12, 1997.

Transitional Small Business Disclosure Format (Check One): Yes _____ No  X

                          Telscape International, Inc.
                               Table of Contents
                                  Form 10-QSB
                                 June 30, 1997


                                                            Page

PART I.   FINANCIAL INFORMATION

   Item 1.   Financial Statements                              2

             Consolidated Balance Sheets -
             June 30, 1997 and December 31, 1996               2

             Consolidated Statements of Operations -
             Three Months and Six Months Ended
			 June 30, 1997 and 1996                            3

             Consolidated Statements of Cash Flows -
             Six Months Ended June 30, 1997 and 1996           4

             Notes to Consolidated Financial Statements        6

   Item 2.   Management's Discussion and Analysis of
             Financial Condition and Results of Operations     7

PART II.  OTHER INFORMATION

   Item 1.   Legal Proceedings                                14

   Item 4.   Submission of Matters to Vote of
             Security Holders                                 15

   Item 6.   Exhibits and Reports on Form 8-K                 15

          (a)    Exhibits

          (b)    Reports on Form 8-K

   Signatures                                                 16


                          Telscape International, Inc.
                          Consolidated Balance Sheets
<TABLE>
<CAPTION>
							
                                ASSETS				   June 30, 1997   December 31,
Current:					                            (unaudited)		   1996
<S>                                                    <C>             <C> 
	Cash and cash equivalents			               $   3,179,684   $    494,781 
	Accounts receivable, less allowance for doubtful			   		   
	    accounts of $328,000 and $57,000, respectively		1,946,396 	  2,034,728 
	Inventories				                                1,708,689 	  2,045,195 
	Prepaid expenses and other				                  651,161 	     90,216 
	     Total current assets				                7,485,930 	  4,664,920
Property and Equipment, net of accumulated				   		   
	depreciation and amortization				            1,732,959 	    983,102 
Goodwill, net of accumulated amortization				    3,063,367 	  3,173,759 
Deferred income taxes					                      409,710 	    192,167
Other assets					                              206,106 	    357,090 
	       Total assets			                       $   12,898,072  $  9,371,038 
							
LIABILITIES AND SHAREHOLDERS' EQUITY							
Current Liabilities:							
	Accounts payable			                       $	4,883,025  $  1,756,016 
	Accrued expenses				                          343,940 	    317,973 
	Customer deposits				                          251,173 	    405,859 
	Deferred income taxes				                      311,778 	    371,948
	Other liabilities				                           36,442 	      ---   
	Current portion of notes payable				          100,000 	      ---   
	Current portion of capital lease obligations			  100,460   	  ---   
	     Total current liabilities			 	            6,026,818 	  2,851,796 
							
Long term notes payable					                      200,000 	      ---   
Long term capital lease obligations					          213,026 	      ---
Minority interests					                          750,493 	    754,398
	       Total liabilities				                7,190,337 	  3,606,194
							
Shareholders' equity:							
	Preferred stock, $.001 par value, 5,000,000 shares					
	  authorized; without defined preference rights				 ---   		  ---   
	Series A preferred stock, $.001 par value, 1,000,000 					
	  shares authorized				                             ---   		  ---
	Series B non-voting preferred stock, $ .001 par value					
	 380,000 shares authorized, issued and outstanding			  380 		    380 
	Common stock, $.001 par value, 25,000,000 shares			   		   
	 authorized; 3,951,797 shares issued in 1997; and					
	 3,935,969 issued and outstanding in 1996			        3,952 	      3,936 
	Additional paid-in capital				               11,909,663 	 11,883,719 
	Treasury stock (83,359 shares at cost in 1997)			 (296,966)	      ---   
	Capital subscriptions receivable				         (600,000)	   (600,000)
	Accumulated deficit				                       (5,309,294)	 (5,523,191)
	     Shareholders' equity				                5,707,735 	  5,764,844
	     Total liabilities and shareholders' equity    $   12,898,072  $  9,371,038 
</TABLE>
                          
                          Telscape International, Inc.
                     Consolidated Statements of Operations
                                  (unaudited)
									
<TABLE>	   								
<CAPTION>
                                                     Three Months Ended 	        Six Months Ended 	
											   June 30, 1997  June 30, 1996   June 30, 1997	June 30, 1996
<S>									           <C>            <C>             <C>           <C> 
Revenues	                                   $   6,170,381  $	 840,846   $	9,941,301 	$	1,350,084 
									
Cost of revenues		                           3,468,504 	    507,934 	5,993,862 		  826,095 
									
Gross profit		                               2,701,877 	    332,912 	3,947,439 		  523,989 
									
Selling, general and administrative		           2,005,811 	    598,387 	3,637,609 		  999,931 
									
Operating income (loss)		                         696,066 	   (265,475)	  309,830 		 (475,942)

Other income (expense):									
    Interest, net		                               2,584 	     24,242           281 		   64,067 
    Foreign exchange gain (loss)		              20,369 	     10,484 	   27,192 		    7,556 
    Other		                                       8,281 	     44,450 	   30,528 		   44,450 
    Write-off of investment in operating venture    (196,462)		  ---   	 (196,462)		    ---   
    Litigation settlement 		                    (128,034)		  ---   	 (128,034)		    ---   
    Total other income (expense), net		        (293,262)		 79,176 	 (266,495)		  116,073
Income (loss) before income tax 									
benefit (expense) and minority interests		     402,804 	   (186,299)	   43,335 		 (359,869)
									
Domestic and foreign income 									
tax benefit (expense):									
    Current		                                     (54,522)		  ---        (111,055)		    ---   
    Deferred		                                 189,524 	    (20,451)	  277,712 		  (27,599)
Total domestic and foreign income 									
tax benefit (expense)		                         135,002 	    (20,451)	  166,657 		  (27,599)
Income (loss) before minority interests		         537,806 	   (206,750)	  209,992 		 (387,468)
Minority interests in subsidiaries 		                  49 	        264 	    3,905 		     (126)
									
Net income (loss)	                            $    537,855   $   (206,486)  $   213,897 	  $	 (387,594)
									
Net income (loss) per common share	            $	    0.13   $	  (0.07)  $	     0.05 	  $	    (0.16)
									
Weighted average common and 									
common equivalent shares outstanding		       3,988,549 	  2,779,313  	3,998,660 		2,372,598 

</TABLE>

                          Telscape International, Inc.
                     Consolidated Statements of Cash Flows
                                  (unaudited)

						                    		Six Months Ended June 30,
														1997		1996
Cash Flow From Operating Activities:				
  Net income (loss)								    $  213,897	$ (387,594)
  Adjustments to reconcile net income
     (loss)to net cash provided by (used in)
	 operating activities:				
    Allowance for doubtful accounts					   253,702      (5,630)
    Depreciation and amortization		               238,678  	39,889 
    Allowance for inventory obsolescence		         ---          (571)
    Accrued employee benefits		                     ---           661 
    Deferred income taxes		                         ---        11,453 
    Issuance of common stock and warrants for services  24,380 		 ---       
    Loss on sale of assets		                           997 		 ---       
    Write-off of investment in operating venture	   196,462 		 ---       
    Litigation settlement expense		                 3,034       ---       
    Interest amortized on discounted				
      short-term investments		                     ---        (8,196)
    Minority interest in subsidiary's				
      income (losses)		                            (3,905)		   625 
    Decrease in minority interests subscriptions				
      receivable for equipment credits utilized		     ---        45,966 
  Changes in operating assets and liabilities:				
    Accounts receivable		                          (182,959)    (12,647)
    Inventory		                                   336,506    (194,952)
    Prepaids and other assets		                  (612,146)     93,566 
    Accounts payable		                         3,144,598      54,675 
    Accrued liabilities		                           (62,757)     10,159 
    Other liabilities		                          (277,712)     46,349 
      Net cash provided by (used in)
	    operating activities		                 3,272,775    (306,247)
				
Cash Flow From Investing Activities:				
    Purchase of short term investments		             ---    (4,898,790)
    Redemption of short term investments		         ---     6,370,895 
    Purchases of property and equipment		          (667,437)    (76,472)
    Proceeds from the sale of assets		             3,550       ---       
    Proceeds from asset sale leaseback		           119,457 		 ---       
    Acquisition of subsidiary, net of cash acquired		 ---      (227,185)
    Investment in operating venture		                 ---      (196,462)
      Net cash provided by (used in) investment
	    activities		                              (544,430)    971,986 
				
Cash Flow From Financing Activities:				
    Capital lease payments		                       (45,022)     (2,558)
    Proceeds from issuance of common stock		         1,580      23,764 
      Net cash provided by (used in) financing
	    activities		                               (43,442)     21,206 
				
Net increase in cash and cash equivalents		     2,684,903     686,945 
				
Cash and cash equivalents at beginning of period	   494,781     173,255 
Cash and cash equivalents at end of period	     $	 3,179,684 	$  860,200 
				
Supplemental disclosure of cash flow information:				
				
   Interest paid	                             $	     7,762 	$	 ---       
   Taxes paid		                                   213,839 		 ---       
				
Supplemental disclosure of non-cash investing				
 and financing activities:				
				
   Property and equipment acquired by execution of				
   capital lease obligation:				
      Property and equipment		                  (328,985)		 ---       
      Capital lease financing		                   328,985       ---
				
   Issuance of notes and acquisition of treasury shares 				
   in litigation settlement:				
      Litigation settlement		                        (3,034)		 ---       
      Treasury stock		                          (296,966)      ---
      Notes payable		                               300,000       ---
				
   Issuance of preferred and common stock in exchange				
   for shares of common in connection with reverse				
   triangular merger:				
				
      Excess of cost over net assets acquired		     ---     2,857,280 
      Common stock		                                 ---        (1,605)
      Preferred stock		                             ---          (380)
      Additional paid-in capital		                 ---    (2,855,295)
		
		

                          Telscape International, Inc.
                  Notes to Consolidated Financial Statements
                                 (unaudited)

Note 1 - Financial statements

     The accompanying unaudited consolidated financial statements
include  the  accounts of Telscape International,  Inc.  and  its
subsidiaries (collectively, the "Company").

      The consolidated financial statements have been prepared in
accordance  with  generally  accepted accounting  principles  for
interim  financial information and the instructions to  quarterly
reports on Form 10-QSB and Regulation S-B.  Accordingly, they  do
not  include  all  of the information and footnotes  required  by
generally  accepted accounting principles for complete  financial
statements.   In  the  opinion  of  management,  all  adjustments
(consisting of normal recurring adjustments) considered necessary
for  a  fair presentation have been included.  Operating  results
for  the  three  and  six  months ended June  30,  1997  are  not
necessarily  indicative of the results that may be  expected  for
the  year  ending  December 31, 1997.  For  further  information,
refer  to  the  consolidated financial statements  and  footnotes
included  in the Company's annual report on Form 10-KSB  for  the
year ended December 31, 1996.

      The  Company  has not yet adopted Statement  of  Financial
Accounting   Standards  No.  128,  "Earnings  per  Share".   This
Statement  simplifies E.P.S. by eliminating  Primary  E.P.S.  and
common stock equivalents, replacing them with basic E.P.S.  which
reflects  no dilution. This Statement is effective for  financial
statements  for  both  interim and annual  periods  ending  after
December  15,  1997. The Company does not believe this  Statement
will have a material impact on its financial statements.

       Statement  of  Financial  Accounting  Standards  No.  130,
"Reporting  Comprehensive  Income",  establishes  standards   for
reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to  include
all changes in equity except those resulting from investments  by
owners and distributions to owners. Among other disclosures, SFAS
130  requires  that all items that are required to be  recognized
under current accounting standards as components of comprehensive
income  be  reported in a financial statement that  is  displayed
with the same prominence as other financial statements.

       Statement  of  Financial  Accounting  Standards  No.  131,
"Disclosure about Segments of a Business Enterprise", establishes
standards  for the way that public enterprises report information
about  operating  segments  in annual  financial  statements  and
requires   reporting  of  selected  information  about  operating
segments in interim financial statements issued to the public. It
also establishes standards for disclosures regarding products and
services, geographic areas and major customers.

        Both  SFAS  130  and  131  are  effective  for  financial
statements for the periods beginning after December 15, 1997  and
require comparative information for earlier years to be restated.
Due  to  the  recent issuance of these standards, management  has
been  unable to fully evaluate the impact, if any, they may  have
on future financial statement disclosures.

Note 2 - Foreign operations

      The  consolidated financial statements include amounts  for
the Company's 90%-owned Polish subsidiary, DTS/ZWUT ("DTS/ZWUT"),
the   Company's   wholly-owned  subsidiary,   Telereunion,   Inc.
("Telereunion")  and Telereunion's 97%-owned Mexican  subsidiary,
Vextro de Mexico, S.A. de C.V. ("Vextro") as follows:

     DTS/ZWUT (unaudited):

     As of June 30, 1997 and December 31, 1996, DTS/ZWUT had
total assets of $1,019,946 and $1,070,184, respectively, and net
assets of $794,964 and $823,715, respectively.

                                                       
              Six months ended June 30,       Three months ended June 30,
                   1997          1996                1997          1996
Net sales      $376,745      $679,196            $162,674      $169,958
Net loss        (28,751)       (6,252)            (27,596)      (10,156)

     Telereunion (unaudited)(1):

     As of June 30, 1997 and December 31, 1996, Telereunion had
total assets of $5,808,156 and $4,164,550, respectively, and net
assets of $407,619 and $465,668, respectively.
                                                     
                    Six months ended June 30,  Three months ended June 30,
                         1997          1996           1997          1996
Net sales          $5,547,663    $2,958,478     $2,881,286    $1,341,775
Net income (loss)     (41,666)     (157,348)        87,056        50,049

       (1)    The  unaudited  pro  forma  consolidated  financial
statements of Telereunion and Vextro have been prepared as if the
business  combination,  which  was  effected  May  17,  1996,  as
described in Note 5, had been consummated as of January 1,  1996.
The  information is not necessarily indicative of the results  of
operations  and financial position of Telereunion and  Vextro  as
they  may  be  in the future or as they might have been  had  the
business combination been consummated as of January 1, 1996.  The
pro  forma  consolidated financial statements should be  read  in
conjunction  with  the audited historical consolidated  financial
statements  and related notes in the Company's annual  report  on
Form 10-KSB for the year ended December 31, 1996.

Note 3 - Net income (loss) per share

     The net income (loss) per common and common equivalent share
is based on the weighted average number of shares of common stock
outstanding.   For  the quarters ended June 30,  1997  and  1996,
common  equivalent shares include stock options and warrants  for
80,605  and  81,962 shares, respectively,  calculated  by  the
treasury  stock method. The average market price during  each  of
the  periods  presented  has  been used  in  the  calculation  of
equivalent shares in all periods presented as this results in the
maximum dilutive effect.

       The  Board  of  Directors  of  the  Company  has  recently
discovered  that  certain options have, by their  express  terms,
terminated.   Accordingly,  the  Company   is   recognizing   the
termination of 90,998 options at an exercise price of  $0.80  per
share and the termination of 141,618 options at an exercise price
of  $1.35  per share issued under certain of the Company's  stock
option plans.

Note 4 - Investment in operating venture

      During  1996,  the Company invested $196,462  for  a  7.21%
equity  interest  in  a venture with Elterix,  a  Polish  company
developing  a private network for 70,000 telephone lines.  During
the  quarter ended June 30, 1997, a tentative sales agreement for
the sale of the Company's equity interest was not consummated and
as a result of Elterix's financial and operational condition, the
Company  evaluated  the  carrying value  of  its  investment  and
recorded a write off of $196,462 at June 30, 1997.

Note 5 - Business combinations

      On  May 17, 1996, the Company acquired all of the stock  of
Telereunion,    a   privately-   owned   Delaware    corporation.
Telereunion,  through  Vextro, is a telecommunications  equipment
and  service  company with operations primarily  in  Mexico.  The
acquisition  was  accounted  for under  the  purchase  method  of
accounting. The consolidated operations of Telereunion and Vextro
have  been  included in the Company's financial statements  since
the date of the acquisition.

Note 6 - Subsequent events

     On  July  22, 1997, pursuant to a stock purchase  agreement,
Telereunion  and Telscape USA, a wholly-owned subsidiary  of  the
Company , (collectively, the "Purchasers"), acquired all  of  the
outstanding  shares  of  Integracion  de  Redes  S.A.   de   C.V.
("Integracion")  and  Lan  and Wan S.A.  de  C.V.  ("Lan"),  both
Mexican   corporations    based  in  Mexico   City.   Integracion
distributes data and network integration equipment in Mexico  and
represents  certain manufacturers  and also provides  the  value-
added  service  of systems integration.  Lan  provides  labor and
management services to Integracion.  The acquisition was effective
July 1, 1997.

     Under the terms of the acquisition, the Purchasers paid cash
of  $10,000  to  the  shareholders of Lan.  As consideration  for
Integracion,   the   Purchasers  paid  the   following   to   the
shareholders of Integracion:  i) the sum of $120,000 in cash, ii)
an  aggregate  of  $2,201,000 in non-interest bearing  promissory
notes maturing at various dates through January 1, 2001, iii)  an
aggregate  of $999,000 in non-interest bearing convertible  notes
maturing on September 1, 1999, which are convertible into 333,000
shares  of  common stock of the Company at an exercise  price  of
$3.00  per share,  iv) warrants for the purchase of up to 100,000
shares  of  Common  Stock  of the Company  based  on  Integracion
meeting certain performance requirements and v) a covenant by the
Purchasers  to  pay $280,000 in the event that Integracion  meets
certain  performance  requirements over  the  cumulative  periods
beginning  January  1, 1997 and ending December  31,  2000.   The
$10,000  and  $120,000 paid at closing for Lan  and  Integracion,
respectively, was funded from working capital.  The acquistion will
be accounted for under the purchase method of accounting.

     Since the Integracion and Lan acquisitions were completed in
the  current  quarter, the Company's Form 10-QSB for the  quarter
ended   September   30,  1997  will  include  certain   financial
information on Integracion.

Item 2.   Management's  Discussion  and  Analysis  of   Financial
          Condition and Results of Operations

      Certain  statements  contained  herein  are  not  based  on
historical  facts, but are forward- looking statements  that  are
based  upon  numerous  assumptions about future  conditions  that
could prove not to be accurate.  Actual events, transactions  and
results  may  materially  differ  from  the  anticipated  events,
transactions  or  results  described  in  such  statements.   The
Company's  ability  to consummate such transactions  and  achieve
such   events  or  results  is  subject  to  certain  risks   and
uncertainties.  Such risks and uncertainties include, but are not
limited  to,  the existence of demand for and acceptance  of  the
Company's   products  and  services,  regulatory  approvals   and
developments, economic conditions, the impact of competition  and
pricing,  the Company's reliance on its permit from  the  Mexican
government,  the Company's reliance on certain key  vendors,  the
Company's  reliance  on   certain key  customers,  the  Company's
credit  risk  due  to  a  limited  number  of  customers  in  the
international  long  distance  business,  results  of   financing
efforts  and other factors affecting the Company's business  that
are  beyond  the  Company's control.  The Company  undertakes  no
obligation  and  does not intend to update, revise  or  otherwise
publicly  release the results of any revisions to these  forward-
looking  statements that may be made to reflect future events  or
circumstances.
      
                                    Outlook
                                
      The  quarter ended June 30, 1997, further demonstrated  the
Company's  shift in strategic focus to Mexico, Latin America  and
an  increased  emphasis  on service revenues  to  complement  its
telecommunications  equipment sales. The  Company  increased  its
revenues    from    the   international   long    distance    and
telecommunications  services  business  as  well  as   its   core
telecommunications equipment business.

      Future  trends  for the revenues and profitability  of  the
Company are difficult to predict. However, management anticipates
continued  growth  in each of the markets in  which  the  Company
competes.  The  Company  expects  growth  in  the  sales  of  its
telecommunications equipment  and services in Mexico. The Company
expects  continued  success  in its efforts  to  compete  in  the
international  long  distance business and  expects  to  have  an
increase in revenues as a result thereof.  Management has  within
the last year taken steps to reduce operating expenses, including
overhead,  that  should have the effect of  increasing  operating
margins,  provided that the Company's revenues  remain  level  or
increase.

      Revenues.   In addition to the efforts in the international
long  distance area, there will be a continuing effort to  expand
the revenues generated from the Company's core telecommunications
equipment  business in both Mexico and Poland.  The Company  will
continue   to  focus  on  increasing  the  value-added   services
component  of  the Mexican business and will explore  the  value-
added  services  opportunities in Poland.  As  a  result  of  the
acquisition  of  Integracion,  the Company  expects  to  generate
revenues  in  the  data and networking market  through  equipment
sales and value-added services.

      Gross Margin. Since the Polish operations have historically
had  higher  margin equipment sales than the Mexican  operations,
gross  margin comparisons for period over period will be affected
accordingly  in  the  near  term.  See  discussion  of  "Cost  of
Revenues"  below. As the Mexican operations account for  more  of
the Company's revenues, the gross margins may decline relative to
the  gross  margins prevalent while the Company only  had  Polish
operations;  however,  the  Company's  non-Polish  revenues   are
evolving to have proportionately more international long distance
and  value-added  services  with proportionately  less  equipment
sales.   As  a  result,  Management expects the  Company's  gross
margins with respect to non-Polish revenues to improve.

     Operating Margin.  The Company's management team has taken a
number  of  steps  to  reduce operating expenses,  including  the
reduction  in  work  force  in Poland as  well  as  international
headquarters.  Management expects that these steps  will  improve
the  operating  margin of the Company. The  Company  has  already
experienced a significant improvement in operating margins as the
growth in sales has exceeded the growth in operating expenses.

                             Results of Operations

Three Months Ended June 30, 1997 Compared to Three Months Ended
June 30, 1996

      Revenues increased from $840,846 in 1996 to $6,170,381  in
1997.  This  increase of $5,329,535, or 634%, was due principally
to the acquisition of Telereunion and the revenues generated from
the  sale of international long distance. Revenues for the Polish
operations were relatively flat.

      Cost  of  Revenues  increased  from  $507,934  in  1996  to
$3,468,504 in 1997, or $2,960,570. The 583% increase in  cost  of
revenues  was due principally to the incremental cost of revenues
attributable to the acquisition of Telereunion and the additional
cost  of  revenues associated with the increase in  the  sale  of
international  long distance. This increase was offset  partially
by  a decrease in the cost of revenues associated with the Polish
operations.  The  cost  of revenues as a percentage  of  revenues
decreased from 60.4% to 56.2%, or 4.2%. The decrease in  cost  of
revenues as a percentage of revenues was due principally  to  the
increase  in the sales of international long distance and,  to  a
lesser extent, a decrease in the cost of revenues associated with
the Polish operations.

       Selling,  General  and  Administrative  Expenses  ("SG&A")
increased  from  $598,387  in 1996  to  $2,005,811  in  1997,  or
$1,407,424. The 235% increase in SG&A was due principally to  the
incremental  SG&A attributable to the acquisition of  Telereunion
and, to a lesser extent, the merger of Orion.

      Overall   SG&A as a percentage of  revenues decreased  from
71.2%  to  32.5%, or 38.7%.  This decrease was due to  the  lower
SG&A as a percentage of revenues associated with Telereunion  and
the  increase  in  revenues  rapidly  outpacing  the  growth   in
operating expenses.

      Other  Income (Expense) decreased from $79,176 in  1996  to
$(293,262) in 1997, or $372,438. The decrease in Other Income was
due  principally  to  the $196,462 write  off  of  the  Company's
investment  in  Elterix,  an  operating  joint  venture,  and   a
litigation settlement expense of $128,034.

      Income  Tax  Benefit (Expense) changed from an  income  tax
expense of $(20,451) in 1996 to a tax benefit of $135,002 in 1997
due   principally  to  the  Company's  utilization  of  its  loss
carryforwards to offset taxable income and the recognition  of  a
portion of the deferred tax benefits related to the Company's tax
loss carryforward.

      Net  Income (Loss). The Company experienced a net  loss  of
$(206,486)  in  1996 as compared to a net income of  $537,855  in
1997 due to a combination of the factors discussed above.


Six Months Ended June 30, 1997 Compared to Six Months Ended June
30, 1996

      Revenues increased from $1,350,084 in 1996 to $9,941,301 in
1997.  This  increase of $8,591,217, or 636%, was due principally
to the acquisition of Telereunion and the revenues generated from
the  sale  of  international  long  distance.  This  increase  in
revenues  was partially offset by a decline in the revenues  from
the Polish operations.

      Cost  of  Revenues  increased  from  $826,095  in  1996  to
$5,993,862 in 1997, or $5,167,767. The 626% increase in  cost  of
revenues  was due principally to the incremental cost of revenues
attributable to the acquisition of Telereunion and the additional
cost  of  revenues associated with the increase in  the  sale  of
international  long distance. This increase was offset  partially
by  a decrease in the cost of revenues associated with the Polish
operations.  The  cost  of revenues as a percentage  of  revenues
decreased  from 61.2% to 60.3%, or .9%. The decrease in  cost  of
revenues as a percentage of revenues was due principally  to  the
increase  in the sales of international long distance and,  to  a
lesser extent, a decrease in the cost of revenues associated with
the Polish operations.

       Selling,  General  and  Administrative  Expenses  ("SG&A")
increased  from  $999,931  in 1996  to  $3,637,609  in  1997,  or
$2,637,678. The 264% increase in SG&A was due principally to  the
incremental  SG&A attributable to the acquisition of  Telereunion
and, to a lesser extent, the merger of Orion.

      Overall   SG&A as a percentage of  revenues decreased  from
74.1%  to  36.6%, or 37.5%.  This decrease was due to  the  lower
SG&A as a percentage of revenues associated with Telereunion  and
the  increase  in  revenues  rapidly  outpacing  the  growth   in
operating expenses.

      Other  Income (Expense) decreased from $116,073 in 1996  to
$(266,495) in 1997, or $382,568. The decrease in Other Income was
due  principally  to  the $196,462 write  off  of  the  Company's
investment  in  Elterix,  a  litigation  settlement  expense   of
$128,034 and a decrease in net interest income of $63,786.

      Income  Tax  Benefit (Expense) changed from an  income  tax
expense of $(27,599) in 1996 to a tax benefit of $166,657 in 1997
due   principally  to  the  Company's  utilization  of  its  loss
carryforwards to offset taxable income and the recognition  of  a
portion of the deferred tax benefits related to the Company's tax
loss carryforward.

      Net  Income (Loss). The Company experienced a net  loss  of
$(387,594)  in  1996 as compared to a net income of  $213,897  in
1997 due to a combination of the factors discussed above.

                        Liquidity and Capital Resources

      Net  cash  provided by (used in) operating  activities  was
$3,272,775 and ($306,247) for the six months ended June 30,  1997
and  June  30,  1996,  respectively. The  increase  in  net  cash
provided  by  operations  in 1997 as compared  to  1996  was  due
primarily  to  an  increase in working capital,  primarily  as  a
result  of  an  increase  in  accounts  payable and a  decrease  in
inventory,  and higher depreciation and amortization  expense.  In
addition,  the  Company had net income for  the  period  in  1997
versus  a  loss  in  1996 and had significantly  higher  non-cash
expenses in 1997 as compared to 1996.

      Net  cash   provided by (used in) investing activities  was
($544,430)  and $971,986 for the six months ended June  30,  1997
and  June  30,  1996,  respectively. The  decrease  in  net  cash
provided  from  investing  activities  was  primarily  from   the
purchase  of certain property and equipment in 1997 coupled  with
the net proceeds from the redemption in short-term investments in
1996.

      Net  cash  provided by (used in) financing  activities  was
($43,442) and $21,206 for the six months ended June 30, 1997  and
June  30,  1996,  respectively. The increase of $64,648  was  due
principally  to capital lease payments in 1997 coupled  with  the
issuance of capital stock in 1996.

      As  of  June  30,  1997,  the Company  had  cash  and  cash
equivalents  of  $3,179,684  and  positive  working  capital   of
$1,459,112. The Company's cash requirements for fiscal  1997  and
beyond  will  depend primarily upon the cash generated  from  its
operations  to meet its capital expenditures and working  capital
requirements.  The  Company  does not  have  a  revolving  credit
facility  or  any  other  commercial lending  relationship.   The
Company  has been successful in financing the purchase of certain
capital  expenditures.  During the quarter ended March 31,  1997,
the Company executed an equipment lease in the amount of $325,000
payable at approximately 13.5%, which expires in February,  2000.
In  May  1997, Vextro signed a three year equipment lease in  the
amount of $250,000 payable at approximately 9%, which expires  in
May  2000.  The Company intends to finance its growth principally
through  cash  flow from operations and additional capital  lease
financing as appropriate; however, there can be no assurance that
this  cash flow will be sufficient nor that the Company  will  be
able  to obtain lease financing on commercially reasonable  lease
terms, if at all.

      In  connection  with  the acquisition of  Integracion,  the
Company incurred certain debt, portions of which are maturing  in
the  next 12 months. The Company believes that this debt  can  be
repaid  from  cash flow from operations of the Company;  however,
there  can be no assurance that this cash flow will be sufficient
to meet these obligations.

      The  Company  believes  that  its  current  cash  position,
available vendor financing and cash flow from operations will  be
sufficient to fund the Company's capital expenditures  and  other
cash  needs  for  the  next 12 months, absent  any  acquisitions;
however,  there can be no assurance that such will be  the  case.
Additional  funding through the incurrence of  debt  or  sale  of
additional  equity (or a combination of both) in  all  likelihood
will  be  required to meet the Company's growth  plans,  although
there  can  be  no assurance that such additional  funds  can  be
obtained  on acceptable terms, if at all. If necessary funds  are
not  available, the Company's business and results of  operations
and  the  future  expansion of the business could  be  materially
adversely affected.
                                
                                 Uncertainties

      The Company continues to face many risks and uncertainties,
including  general  and  specific  market  economic  risks.   The
exploitation of the opportunities presented by the Mexican market
are  expected  to  require substantial  capital.   Vextro  had  a
positive  cash flow from operations during the six  months  ended
June  30,  1997; however, to the extent Vextro does not  have  a
positive  net cash flow from its operations in 1997, it  can  be
expected that the Company would have to fund any shortfalls  from
its working capital. In addition, any capital expenditures needed
to  expand  the operations of Vextro and Integracion would likely
be funded  from the  working  capital  of the Company.  Any such
fundings  would reduce  the  funds available to finance and expand
the  Company's operations in Poland as well as the Company's strategy
to compete in  the international long distance services business.
Also, any economic  crises in Mexico could result in the need to
fund  any cash flow shortfalls of Vextro and Integracion.

      As  in any recently deregulated market, drastic changes and
adjustments of regulations or changes in government policies  may
occur  from  time to time that will directly affect the  Company.
The  Company's  competitive  position in  the  telecommunications
services and long distance markets depends heavily on the license
granted  by the Mexican government. Should this permit be revoked
for  whatever reason, the Company would be severely  impaired  or
unable  to  provide many of its telecommunications  services.  In
addition,  the Company relies on other carriers to  complete  the
transmission  of  certain  telecommunications  services.  To  the
extent  that  any of these carriers was to no longer do  business
with  the  Company,  the Company would either  have  to  find  an
alternate source or not be able to provide those services.

      In  Poland,  the Company faces a number of risks, including
the risks associated with the continuing conversion of the Polish
economy from a communist economy to a market economy, competitive
factors,  the  risks  of  its  customers  being  able  to  obtain
financing for their purchases of the Company's products, risks of
the  collectibility  of  accounts receivable  generally  and  the
availability  of products that will be approved for  use  in  the
Company's  foreign  markets.  In addition, the  Company  believes
that  the  markets in which it participates could be  subject  to
numerous factors that will contribute to the slow growth  of  its
business  in those markets, such as the lack of capital  for  the
creation of infrastructure, lack of governmental support for  the
telecommunication  industry and intense  competition  from  other
vendors with substantially greater resources and name recognition
than  the  Company.  Also, many of the products or components  of
the  products  manufactured by the Company are subject  to  price
fluctuations  which  are  beyond the Company's  control  and  can
affect  the Company's ability to price its products competitively
and,   thus,   the   overall  profitability   of   the   Company.
Furthermore,  the  Company  faces the  challenge  of  maintaining
product  lines  that reflect the rapidly improving  and  changing
technology of the telecommunications industry.

      The international long distance market, although large  and
rapidly  growing,  is also very competitive.   The  Company  will
compete   in  this  market  with  companies  that  have   greater
experience  and  substantially greater resources, both  financial
and  otherwise.  In  addition,  the  Company  will  face  certain
additional  risks in competing in this market, including  changes
in U.S. and foreign government regulations and telecommunications
standards, dependence on strategic partners, tariffs,  taxes  and
other  trade  barriers,  the potential  for  nationalization  and
economic   downturns   and  political  instability   in   foreign
countries.  In addition, the Company could be adversely  affected
by   a   reversal   in   the   trend   toward   deregulation   of
telecommunication  carriers.  The  Company's  international  long
distance business is heavily dependent upon a strategic marketing
relationship  with  a third party for much of  its  international
long  distance  business.  To  the  extent  that  this  strategic
relationship were to terminate for any reason, the Company  would
have to find an alternate source of customers which would have  a
material adverse affect on the Company's operations. Furthermore,
this  strategic relationship creates a credit concentration  risk
for  the  Company.  The Company will be increasingly  exposed  to
these risks as it expands its presence in this market.

      The  Company is also pursuing a strategy of growth  through
selective  acquisitions. However, there can be no assurance  that
any  acquisition will be completed, financing will be  available,
attractive  candidates will be identified in the future,  or   if
completed, any acquisition will be beneficial to the Company.

Foreign Currency Risk

      The  general economic conditions of Poland and  Mexico  are
greatly  affected  by  the fluctuations  in  exchange  rates  and
inflation.  The Company's foreign currency risk is  mitigated  in
Mexico  due to the fact that many of the Company's customers  are
multinational  firms that pay in U.S. dollars. In addition,  most
of  the  customers that do pay in pesos pay at the spot  exchange
rate  in effect at the time of payment as opposed to the exchange
rate  at  the  time  the  receivable is  created.  The  Company's
functional currency in both Poland and Mexico is the U.S.  dollar
because  the  majority of its transactions are in such  currency.
However,  from time to time the Company transacts  in  the  local
currency  and  thus faces foreign currency risk with  respect  to
these  transactions. In the international long distance  services
business, the U.S.-originated calls will be paid in U.S. dollars;
however, the Company also expects to derive a certain portion  of
its  revenues  from calls originated outside  of  the  U.S.  thus
exposing  the  Company  to  additional exchange  rate  risk.  The
Company may choose to limit its exposure to foreign currency risk
through  the  purchase of forward foreign exchange contracts   or
similar  hedging strategies. There can be no assurance  that  any
foreign currency hedging strategy would be successful in avoiding
exchange-related losses.

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings.

Mark Vance v. Telscape International, Inc.
     
     As  previously  disclosed in the Company's  10-KSB  for  the
period  ended  December 31, 1996, on or about January  17,  1997,
Mark  Vance,  a  former officer of the Company, filed  a  lawsuit
against  the  Company,  styled Case No. 9-02268;  Mark  Vance  v.
Telscape  International,  Inc.; in the 295th  District  Court  of
Harris  County, Texas.  The plaintiff has prayed  for  relief  of
$350,000 in damages plus pre-judgment and post-judgment interest.
The  plaintiff  alleged breach of contract, breach  of  fiduciary
duty,  breach of a duty of good faith and fair dealing and  fraud
in  connection  with the termination of his employment  with  the
Company which occurred on January 10, 1997.

     On  June  19,  1997 the Company filed a motion  for  summary
judgment  on  the plaintiff's claims. On July 17, 1997,  after  a
hearing on the motion, the presiding judge granted the motion for
summary  judgment  in  part and denied it  in  part.  As  to  the
plaintiff's claims for breach of fiduciary duty and the  duty  of
good  faith  and  fair dealing, the presiding judge  granted  the
motion  for  summary  judgment. As to the plaintiff's  breach  of
contract  claim,  the court granted the Company's  motion  as  to
damages for a three year period. On April 15, 1997, the plaintiff
abandoned his fraud claim in a Rule 11 Agreement.
     
     The  Company intends to vigorously defend itself against any
remaining claims that the plaintiff may have and believes it  has
meritorious defenses thereto, although there can be no assurances
as  to  the  successful  defense of these  claims.  In  addition,
whether  or  not the Company were to prevail in litigation,  such
litigation is time consuming and costly.

In Re:  The Estate of Nina Jean Obel, Deceased et al v. Telscape
International, Inc. et al

     Effective  May  23,  1997,  the  Company  entered   into   a
compromise and settlement agreement ("Agreement") with respect to
the  above-referenced lawsuit ("Lawsuit") which was disclosed  in
the  Company's  10-KSB and 10-QSB for the periods ended  December
31,  1996  and  March 31, 1997, respectively.  The Agreement  was
subject to court approval and dismissal of the case both of which
have occurred.

     Pursuant  to the Agreement, the Company agreed to repurchase
all  of  the 83,359 shares of Company common stock owned  by  the
plaintiffs   for   total   consideration   of   $425,000.     The
consideration was paid $125,000 in cash upon the execution of the
Agreement and the balance is to be paid out over three  years  in
six  semi-annual  payments  of  $50,000  each.   The  outstanding
principal  balance accrues simple interest at 6% per  annum.   In
return  for  this consideration, the plaintiffs  have  agreed  to
release Telscape and the other defendant from any and all  claims
in connection with the Lawsuit.

Item 4.   Submission of Matters to a Vote of Security Holders

      The  Company's Annual Meeting of Shareholders was  held  on
June 16, 1997, to elect six members of the Board of Directors  to
a one year term and to ratify the selection of BDO Seidman LLP as
the Company's independent accountants.

     The votes were cast as follows:

                                        Withhold
                         Number of      Authority
     Nominee             Votes For      to Vote

     E. Scott Crist      2,941,453      12,850
     Manual Landa        2,942,453      11,850
     Oscar Garcia        2,942,453      11,850
     Ricardo Orea        2,942 453      11,850
     Todd M. Binet       2,941,013      13,290
     Darrel O. Kirkland  2,941,452      12,850

      With respect to the proposal to ratify the selection of BDO
Seidman LLP, the number of votes cast for, against and the number
of abstentions were 2,940,803, 10,500 and 3,000, respectively.

Item 6.    Exhibits and Reports on Form 8-K

          (a)  Exhibits.  See Index to Exhibits on page 17.

          (b)  Reports on Form 8-K.

     On  June  10, 1997, the Company filed a report on  Form  8-K
reporting  that  the Company had entered into  a  compromise  and
settlement agreement in the lawsuit In Re:The Estate of Nina Jean
Obel,  Deceased et al v. Telscape International, Inc. et al which
had  been previously disclosed in the Company's 10-KSB and 10-QSB
for  the  periods  ended December 31, 1996 and  March  31,  1997,
respectively.

                           Signatures


     In accordance with the requirements of the Exchange Act, the
issuer has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                   Telscape International, Inc.
                                   (Registrant)


Date: August 14, 1997              By: /s/ E. SCOTT CRIST
                                   E. Scott Crist
                                   President and Chief Executive Officer


Date: August 14, 1997              By: /s/ TODD M. BINET
                                   Todd M. Binet
                                   Executive Vice President and
								   Chief Financial Officer (Principal Financial
								   and Chief Accounting Officer)

                       Index of Exhibits

Exhibit No.               Description

  3.1     -    Articles of Incorporation of the
               Registrant, as amended (filed as Exhibit 3.1 to
               the Company's Registration Statement No. 33-80542-
               D and incorporated herein by reference)
  3.2     -    Bylaws of the Registrant, as amended
               (filed as Exhibit 3.2 to the Company's
               Registration Statement No. 33-80542-D and
               incorporated herein by reference)
  4.1     -    Form of Certificate evidencing Common Stock
			   (filed as Exhibit 4.1 to the Company's Registration
			   Statement No. 33-80542-D and incorporated herein by
			   reference)
  4.2     -    Form of Warrant Agreement between
               American Stock Transfer & Trust Company and the
               Company (filed as Exhibit 4.2 to the Company's
               Registration Statement No. 33-80542-D and
               incorporated herein by reference)
  4.3     -    Form of Warrant Certificate evidencing
               the Warrants (filed as Exhibit 4.3 to the
               Company's Registration Statement No. 33-80542-D
               and incorporated herein by reference)
  4.4     -    Form of Statement of the establishment of
               the Series B non-voting, non-participating Preferred
               Stock (filed as Exhibit 4.1 to the Company's Report
               on Form 10-QSB for the quarter ended June 30, 1996
               and incorporated herein by reference)
*11.1     -    Statements regarding computation of per
               share earnings
*27.1     -    Financial Data Schedule
_________________
*Filed herewith