<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                ---------------


                                  FORM 10-Q
   (Mark One)
      X        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                     For the quarterly period ended September 30, 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 1-14108

                             360 COMMUNICATIONS COMPANY
               (Exact name of registrant as specified in its charter)


                                  Delaware
                  (State or other jurisdiction of incorporation)


                                  47-0649117
                      (I.R.S. Employer Identification No.)


                             8725 W. Higgins Road
                               Chicago, Illinois
                                  60631-2702
                                (773) 399-2500
         (Address and telephone number of principal executive offices)

  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


  On November 13, 1996, 123,307,468 shares of the registrant's Common Stock were
outstanding.




                                      
<PAGE>





                                TABLE OF CONTENTS


                          PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements..............................................1

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations.............................................10


                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings.................................................16

Item 2.   Changes in Securities ............................................*

Item 3.   Defaults Upon Senior Securities...................................*

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

Item 5.   Other Information.................................................17

Item 6.   Exhibits and Reports on Form 8-K..................................18
---------------
* No reportable information under this item.
                                                         

When used in this Report, the words "intends,"  "expects," "plans," 
"anticipates,"  "estimates,"  and similar  expressions  are intended to identify
forward looking  statements.  Specifically,  statements  included in this Report
that are not historical facts,  including statements about the Company's beliefs
and  expectations about continued market and industry growth, and ability to
maintain existing churn,  customer growth and increased  penetration  rates, are
forward   looking   statements.   Such  statements  are  subject  to  risks  and
uncertainties  that could cause actual results or outcomes to differ materially.
Such risks and uncertainties include, but are not limited to, the degree to 
which the Company is leveraged and the  restrictions imposed on the Company
under its existing debt instruments which may adversely affect the Company's
ability to finance its future operations, to compete effectively against better
capitalized competitors and to withstand downturns in its business or the 
economy generally;continued downward pressure on the prices charged for cellular
equipment and services resulting from increased competition in the Company's
markets; the lack of assurance that the Company's ongoing network improvements
and scheduledimplementation of digital technology in its markets will be
sufficient to meetor exceed the capabilities and quality of competing networks;
the impact resulting from the loss of the Sprint name and the uncertainties and
costs associated with the implementation of a new brand name;  the effect on the
Company's  operations and financial performance of changes in the regulation of
cellular  activities;  the degree to which the Company incurs  significant costs
due to cellular  fraud;  the impact on the Company's  operations  that may arise
from concerns  suggesting  cellular telephones may be linked to cancer; and the
other  factors  discussed  under the heading  "Certain  Risk  Factors"  in the
Company's Information Statement set forth as Exhibit 99 to the Company's Form 10
(File No.  1-14108)  filed with the Securities  and Exchange  Commission,  which
section is hereby  incorporated by reference herein.  Forward looking statements
included  in this  Report  speak  only as of the  date  hereof  and the  Company
undertakes no obligation to revise or update such  statements to reflect  events
or circumstances  after  the  date  hereof  or to  reflect  the  occurrence of
unanticipated events.


                                      
<PAGE>
                         PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

<TABLE>
<CAPTION>
                                 360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
                                         CONSOLIDATED BALANCE SHEETS
                                            (Thousands of Dollars)

                                                                    September 30,              December 31,
                                 ASSETS                                1996                        1995
                                                                   -------------               -------------
                                                                    (Unaudited)
<S>                                                             <C>                         <C>
Current Assets
Cash and Cash Equivalents                                        $        9,869              $       19,023
Accounts Receivable, less allowances
  of  $4,788 and $2,370,  respectively                                   89,257                      68,087
Other Receivables                                                        30,977                      29,799
Unbilled Revenue                                                         28,389                      23,481
Inventory                                                                17,002                      19,576
Other                                                                     6,267                       6,604
                                                                 ---------------             ---------------
    Total Current Assets                                                181,761                     166,570
                                                                 ---------------             ---------------

Property, Plant and Equipment                                         1,364,267                   1,151,157
Less: Accumulated Depreciation                                          395,237                     300,703
                                                                 ---------------             ---------------
Property, Plant and Equipment, net                                      969,030                     850,454
                                                                 ---------------             ---------------

Investments in Unconsolidated Entities                                  344,630                     318,287
Intangibles, net                                                        711,093                     632,756
Other Assets                                                             18,946                       5,179
                                                                 ---------------             ---------------
    Total Assets                                                 $    2,225,460              $    1,973,246
                                                                 ===============             ===============


                         LIABILITIES AND SHAREOWNERS' EQUITY

Current Liabilities
Trade Accounts and Other Payables                                $      110,162              $      111,770
Advance Billings                                                         25,178                      20,559
Accrued Taxes                                                            33,453                      19,690
Short-Term Borrowings                                                    45,650
Accrued Agent Commissions                                                 6,905                      15,417
Other                                                                    36,731                      27,092
                                                                 ---------------             ---------------
    Total Current Liabilities                                           258,079                     194,528
                                                                 ---------------             ---------------

Long-Term Debt                                                        1,362,720
Advances From and Notes to Affiliates                                                             1,517,729
                                                                 ---------------             ---------------

Deferred Credits and Other Liabilities
Deferred Income Taxes                                                   111,460                      99,168
Postretirement and Other Benefit Obligations                              5,931                      12,859
                                                                 ---------------             ---------------
    Total Deferred Credits and Other Liabilities                        117,391                     112,027
                                                                 ---------------             ---------------

Minority Interests in Consolidated Entities                             179,115                     146,894
                                                                 ---------------             ---------------

Shareowners' Equity
Common Stock ($.01 par value; 1,000,000,000 shares
 authorized; 116,863,074 shares issued and outstanding)                   1,169                      11,541
Additional Paid-In Capital                                              623,287                     360,978
Accumulated Deficit                                                    (316,301)                   (370,451)
                                                                 ---------------             ---------------
    Total Shareowners' Equity                                           308,155                       2,068
                                                                 ---------------             ---------------
    Total Liabilities and Shareowners' Equity                    $    2,225,460              $    1,973,246
                                                                 ===============             ===============

      The accompanying Notes are an integral part of the Consolidated  Financial Statements.
</TABLE>
                                     1
<PAGE>


<TABLE>
<CAPTION>


                                       360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                                  (Thousands of Dollars)
                                                       (Unaudited)



                                                            For the Three Months                  For the Nine Months
                                                            Ended September 30,                   Ended September 30,
                                                     ---------------------------------     --------------------------------
                                                          1996               1995               1996               1995
                                                     --------------     --------------     -------------     --------------
<S>                                                 <C>                <C>                <C>               <C>
OPERATING REVENUES
Cellular Service Revenues                            $     271,819      $     207,472      $    766,133      $     572,028
Equipment Sales                                              9,857             10,311            29,411             34,125
                                                     --------------     --------------     -------------     --------------
     Total Operating Revenues                              281,676            217,783           795,544            606,153
                                                     --------------     --------------     -------------     --------------

OPERATING EXPENSES
Cost of Service                                             24,148             17,488            68,492             50,489
Cost of Equipment Sales                                     25,046             27,324            71,010             77,933
Other Operations Expense                                    15,498             10,695            39,824             28,527
Sales, Marketing and Advertising Expenses                   48,527             35,697           143,146             97,719
General, Administrative and Other Expenses                  68,030             53,773           190,287            153,900
Depreciation and Amortization                               36,833             29,380           104,987             83,666
                                                     --------------     --------------     -------------     --------------
     Total Operating Expenses                              218,082            174,357           617,746            492,234
                                                     --------------     --------------     -------------     --------------

OPERATING INCOME                                            63,594             43,426           177,798            113,919
Interest Expense                                           (24,752)           (32,376)          (78,854)           (95,081)
Minority Interests in Net Income
   of Consolidated Entities                                (13,843)            (9,303)          (38,168)           (26,218)
Equity in Net Income of
   Unconsolidated Entities                                  16,339             12,003            40,359             23,566
Other Income (Expense), net                                    101             (1,236)              423             (1,188)
                                                     --------------     --------------     -------------     --------------
Income Before Income Taxes                                  41,439             12,514           101,558             14,998
Income Tax Expense                                          18,552              7,967            47,407             17,128
                                                     --------------     --------------     -------------     --------------
     Net Income (Loss)                               $      22,887      $       4,547      $     54,151      $      (2,130)
                                                     ==============     ==============     =============     ==============

Net Income (Loss) per Share (in Dollars)             $        0.20      $        0.04      $       0.46      $       (0.02)
                                                     ==============     ==============     =============     ==============

Weighted Average Shares
   Outstanding, in thousands                               117,086            116,844           117,060            116,600
                                                     ==============     ==============     =============     ==============



     The accompanying  Notes are an integral part of the Consolidated  Financial Statements.

</TABLE>


                                       2
<PAGE>


<TABLE>
<CAPTION>


                                   360 COMMUNICATIONS COMPANY AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                            (Thousands of Dollars)
                                                  (Unaudited)

                                                                        For the Nine Months
                                                                        Ended September 30,
                                                                 -------------------------------------
                                                                        1996                  1995
                                                                 ---------------       ---------------
<S>                                                           <C>                   <C>
Operating Activities
Net Income (Loss)                                              $       54,151        $       (2,130)
Adjustments to Reconcile Net Income (Loss) to Net
  Cash Provided by Operating Activities:
     Depreciation and Amortization                                    104,987                83,666
     Deferred Income Taxes                                             19,119                11,131
     Equity in Net Income of Unconsolidated
       Entities, net of distributions                                 (25,104)                2,462
     Minority Interests in Net Income of
       Consolidated Entities                                           38,168                26,218
     Changes in Operating Assets and Liabilities
        Receivables, net                                              (16,009)              (22,173)
        Other Current Assets                                           (1,410)                8,265
        Trade Accounts and Other Payables                               1,825                 2,512
        Accrued Expenses and Other
            Current Liabilities                                        10,267                   105
        Noncurrent Assets and Liabilities, net                           (868)                2,484
     Other, net                                                         5,266                (1,596)
                                                               ---------------       ---------------
Net Cash Provided by Operating Activities                             190,392               110,944
                                                               ---------------       ---------------

Investing Activities
Capital Expenditures                                                 (193,543)             (270,027)
Acquisitions                                                         (109,613)               ------
Investment in Unconsolidated Entities and Other                       (14,709)               (3,642)
                                                               ---------------       ---------------
Net Cash Used by Investing Activities                                (317,865)             (273,669)
                                                               ---------------       ---------------

Financing Activities
Net Borrowings under Bank Revolving Credit Facility                   448,543                ------
Proceeds from Long-Term Debt                                          900,000                ------
Net Short-Term Borrowings                                              45,650                ------
Increase (Decrease) in Advances from Affiliates                    (1,400,000)              161,012
Contributions from Minority Investors                                   4,881                 6,093
Distributions to Minority Investors                                    (9,275)               (6,341)
Equity Contributions                                                  130,355                ------
Other                                                                  (1,835)               ------
                                                               ---------------         -------------
Net Cash Provided by Financing Activities                             118,319               160,764
                                                               ---------------       ---------------

Decrease in Cash and Cash Equivalents                                  (9,154)               (1,961)
Cash and Cash Equivalents at Beginning of Period                       19,023                 5,527
                                                               ---------------       ---------------
Cash and Cash Equivalents at End of Period                     $        9,869        $        3,566
                                                               ===============       ===============




     The accompanying  Notes are an integral part of the Consolidated  Financial Statements.


</TABLE>



                                       3
<PAGE>




                     360  COMMUNICATIONS COMPANY AND SUBSIDIARIES

                NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


1. Basis of Consolidation and Presentation

      360   Communications  Company and its subsidiaries  (the "Company")
provide  wireless  voice  and  data  telecommunications  services.  The  Company
operates as a general and limited partner and majority owner of cellular systems
in  various  metropolitan  and rural  service  areas  and as a limited  minority
partner or manager in other cellular  systems.  On October 14, 1996, the Company
announced  plans to  consolidate  the North  Carolina  region with the Southeast
region.  The  expanded  region  includes  all markets in North  Carolina,  South
Carolina,  Florida and Alabama and is called the Southeast  region.  The Company
operates in three additional regions in the United States: Mid-Atlantic, Midwest
and West.

      The  Company  was a  wholly-owned  subsidiary  of  Centel  Corporation,  a
wholly-owned  subsidiary  of Sprint  Corporation  ("Sprint").  On March 7, 1996,
Sprint  completed the spin-off of the Company to Sprint  shareholders  through a
pro  rata  distribution  of  all  of  the  Common  Stock  of  the  Company  (the
"Spin-off"). For further discussion of the Spin-off, see Note 3.

      The accompanying  unaudited  consolidated financial statements include the
accounts of the Company and its  wholly-owned  and majority owned  subsidiaries.
The assets, liabilities and results of operations of entities (both corporations
and  partnerships)  in which the Company has a  controlling  interest  have been
consolidated.  The ownership interests of noncontrolling owners in such entities
are  reflected  as  minority  interests.  The  Company  accounts  for all  other
investees using the equity method of accounting.  All  significant  intercompany
accounts and transactions have been eliminated.

      The  unaudited  consolidated  financial  statements  have been prepared in
conformity with generally  accepted  accounting  principles and are presented in
accordance  with the  rules  and  regulations  of the  Securities  and  Exchange
Commission  applicable  to  interim  financial  information.  In  the  Company's
opinion, the unaudited consolidated financial statements include all adjustments
necessary to present fairly the financial position and results of operations for
each interim period  presented.  All such  adjustments are of a normal recurring
nature.  These  financials  should be read in conjunction  with the consolidated
financial  statements,  including the notes  thereto,  included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995.

      Certain amounts have been reclassified to conform to the presentation used
for the three months ended September 30, 1996.

2. Earnings Per Share

      Earnings per share was computed using weighted average shares outstanding,
including common stock equivalents, totaling 117,086,280 and 116,843,988 for the
three months ended  September 30, 1996 and 1995,  respectively,  and 117,059,755
and  116,600,000  for the  nine  months  ended  September  30,  1996  and  1995,
respectively.  In 1995, Net Income (Loss) per Share was recalculated  based upon
the number of Sprint  weighted  average shares  outstanding  for each respective
period, adjusted for a conversion ratio of 1 share of the Company's Common Stock
to 3 shares of Sprint common stock.

3. Spin-off

      On July 26, 1995,  Sprint announced that its Board of Directors decided to
pursue a tax-free Spin-off of the Company to Sprint  shareholders.  In the March
1995 Federal  Communications  Commission  ("FCC")  auction of wireless  Personal
Communications  Services ("PCS") licenses,  Sprint Spectrum LP won the rights to
several markets which overlap service territories operated by the Company. Under
FCC rules,  Sprint was  required  to divest or reduce its  cellular  holdings in
certain  markets  to clear  conflicts  with the PCS  licenses  awarded to Sprint
Spectrum LP. For these  reasons,  Sprint and its Board of  Directors  decided to
pursue a Spin-off of the cellular operations of Sprint.




                                       4
<PAGE>


3. Spin-off  (continued)

      On March 7, 1996, the Spin-off was  consummated.  In conjunction  with the
Spin-off,  the Company repaid $1.4 billion of intercompany  debt to Sprint.  The
remaining intercompany debt was contributed to the Company as Additional Paid-In
Capital. Funding for the repayment was derived from the proceeds of $900 million
of the Company's Senior Notes issued under an indenture  ("Indenture")  and $527
million of initial  borrowings under a $800 million  five-year  revolving credit
facility ("Credit  Facility") with a number of banks and institutional  lenders.
In  addition,  a  recapitalization  of the  Company's  Common Stock was effected
pursuant  to which  the  Company  split the 10  shares  of the then  issued  and
outstanding  Common  Stock into  116,733,983  new shares of the Common  Stock to
allow for the pro rata distribution of such stock to the common  shareholders of
Sprint. This distribution was effected as a tax-free stock dividend.

      On October 31,  1996,  the Credit  Facility  was  amended and  restated to
increase the Company's  borrowing  capacity  thereunder  from $800 million to $1
billion.

      The  Indenture and Credit  Facility  have general and financial  covenants
which place  certain  restrictions  on the Company.  The Company is limited with
respect to: the making of payments (dividends and distributions); the incurrence
of certain liens; the sale of assets under certain circumstances;  entering into
or  otherwise  permitting  any  subsidiary  distribution  restrictions;  certain
transactions with affiliates; certain consolidations, mergers and transfers; and
the use of loan proceeds.  In addition,  the Indenture and Credit Facility limit
the  aggregate  amount of  additional  borrowings  which can be  incurred by the
Company.

4. Significant Equity Investments

      The  Company's  investments  in the Kansas City SMSA Limited  Partnership,
Orlando SMSA Limited  Partnership,  New York SMSA Limited  Partnership,  and GTE
Mobilnet of South Texas Limited  Partnership  meet the conditions  prescribed by
the Securities and Exchange Commission which require interim financial statement
disclosures for significant  equity  investments.  Selected  unaudited  combined
interim financial information follows (in thousands):

<TABLE>
<CAPTION>

                                                      For the Three Months                For the Nine Months
                                                       Ended September 30,                Ended September 30,
                                                  ---------------------------      ----------------------------
                                                     1996         1995                 1996           1995
   Results of Operations                            ------       ------               ------         ------   
<S>                                              <C>            <C>                <C>            <C>

       Cellular Service Revenues                  $ 317,190      $ 254,475          $ 912,229      $ 734,444
       Equipment Sales                               12,733          5,333             35,137         29,687
                                                  ---------      ---------          ---------      ---------
       Total Operating Revenues                     329,923        259,808            947,366        764,131

       Cost of Equipment Sales                       32,718         18,105             84,406         60,820
       Operating, Selling, General,
         Administrative and Other Expenses          168,889        122,413            474,003        389,271
       Depreciation and Amortization                 29,881         24,692             86,024         73,496
                                                  ---------      ---------          ---------      ---------        
       Total Operating Expenses                     231,488        165,210            644,433        523,587
                                                  ---------      ---------          ---------      ---------        
       Operating Income                              98,435         94,598            302,933        240,544
                                                                              
       Other Income (Expense), net                     (978)          (277)            (5,101)         2,635
                                                  ----------      ---------         ---------      ---------               
       Net Income                                 $  97,457       $ 94,321          $ 297,832      $ 243,179
                                                  ----------      ---------         ---------      ---------



</TABLE>

                                       5
<PAGE>



5.  Income Taxes

      During the third  quarter of 1996,  the Company  continued to evaluate and
identify  certain  tax  planning  strategies.  The  annual  effect  of these tax
planning  strategies  combined with the effect of increased  earnings  estimates
resulted in an effective  tax rate of 46.7% for the nine months ended  September
30, 1996.


6. Contingencies

      On or about  March 29,  1996,  a class  action  lawsuit was brought in the
Chancery Court of Washington  County,  Jonesborough,  Tennessee (the  "Tennessee
Action") on behalf of all customers in the Company's Tennessee markets regarding
customer  notification  of the  Company's  practice  with respect to billing for
fractional minutes of service. In April 1996, the original complaint was amended
to enlarge  the class of  plaintiffs  to  include  all  customers  in all of the
Company's service areas. In late April 1996, the Tennessee Action was removed to
the United States District Court for the Eastern District of Tennessee, Northern
Division.  The  Company  moved to dismiss the action and the  plaintiff  filed a
motion to remand.  On July 16, 1996,  the Tennessee  District  Court granted the
plaintiff's  motion to remand and  returned  the case to the  Chancery  Court of
Washington  County.  The Company's Motion to Dismiss is currently pending before
the Chancery Court.

      On or about May 28, 1996, a class action lawsuit was brought in the Common
Pleas Court of Erie County,  Ohio (the "Ohio Action") on behalf of all customers
in all of the Company's  service areas  regarding  notification of the Company's
practice with respect to billing for fractional minutes of service.  On June 25,
1996,  the Ohio Action was removed to the United States  District  Court for the
Northern District of Ohio, Western Division. On July 18, 1996, the Company filed
a Motion to Dismiss  Or, In The  Alternative,  Stay  pending  resolution  of the
Tennessee  Action.  The basis for the Motion to Stay is the duplicity of the two
actions.  On July 24, 1996, the plaintiff filed a Motion to Remand to return the
case to the state court.

      Discovery has not commenced in either case. The Company believes that both
lawsuits are without merit,  however,  the ultimate outcome of these matters and
the potential effect on the financial condition and results of operations of the
Company cannot be determined at this time.

      The Company is party to various  other legal  proceedings  in the ordinary
course  of  business.   Although  the  ultimate   resolution  of  these  various
proceedings  cannot be  ascertained,  management of the Company does not believe
that such  proceedings,  individually or in the aggregate,  will have a material
adverse  effect on the  results  of  operations  or  financial  position  of the
Company.


7. Acquisitions

      On  January  31,  1996,  the  Company  purchased  additional   partnership
interests in Centel Cellular Company of Ft. Walton Beach Limited Partnership and
Centel Cellular Company of Tallahassee Limited Partnership.  Also on January 31,
1996, the Company  purchased an operating license and related cellular assets in
the North Carolina RSA 14 market.  On February 23, 1996, the Company acquired an
operating license and related assets in the Ohio RSA 1 market.  In addition,  on
February 29, 1996,  the Company  purchased a 50% interest in South  Carolina RSA
No. 4 Cellular General  Partnership,  a 50% interest in South Carolina RSA No. 5
Cellular  General  Partnership  and a 50%  interest in South  Carolina RSA No. 6
Cellular General Partnership. The aggregate purchase price of these acquisitions
was approximately $109,613,000.



                                       6
<PAGE>



8. Contingencies of Unconsolidated Entities

      The GTE  Mobilnet of South Texas  Limited  Partnership,  (the "South Texas
partnership"),  an equity investee of the Company,  filed suit in 1994 against a
former agent and its principals alleging that the former agent continued to hold
itself  out as an  agent of the  South  Texas  partnership  after  its  contract
expired.  The former agent and its principals  subsequently filed a counterclaim
against  the South  Texas  partnership,  claiming  the South  Texas  partnership
falsely  represented to them that all agent  agreements  were identical and that
all agents  were paid the same  amount.  The  complaint  against the South Texas
partnership  alleges  fraud,  breach of covenant of good faith and fair dealing,
tortuous  interference  with plaintiffs'  business  relations,  violation of the
Texas Deceptive  Trade  Practices Act, and defamation.  The plaintiff is seeking
unspecified damages.

      On April 12,  1995,  a suit which  purports to be a class action was filed
alleging that the defendants  (including the South Texas  partnership)  violated
the  Telephone  Consumer  Protection  Act ("TCPA")  and invaded the  plaintiff's
privacy by sending  unauthorized  facsimiles  to the  plaintiffs.  The complaint
seeks  $500 in damages  for each  alleged  violation  of the TCPA,  plus  treble
damages, or in the alternative,  punitive damages.  In addition,  the plaintiffs
seek  interest,  cost and  attorney's  fees.  The  defendants  filed a motion to
dismiss  for want of  subject  matter  jurisdiction  and for  failure to state a
proper claim. At a recent hearing, the court ruled that the TCPA applied only to
interstate  faxing,  and  not to  intrastate  faxing,  such as  those  allegedly
associated  with the South Texas  partnership.  The action is stayed pending the
parties appeal.

      On January 25, 1996, a suit was filed against the South Texas  partnership
by a former  employee of GTE Mobilnet,  who alleges among other claims,  certain
employment discrimination charges. The plaintiff seeks unspecified damages.

      The  ultimate   outcome  of  these  three  matters  cannot   presently  be
determined.  Accordingly,  no provision for any liability that might result from
these  matters  has been made in the  financial  statements  of the South  Texas
partnership and the Company's financial statements.

      On July 26, 1995, Cellco Partnership ("Cellco"),  a partnership which is a
general  partner  in the New  York  SMSA  Limited  Partnership  (the  "New  York
partnership"),  an equity investee of the Company, was named as a defendant in a
class  action  lawsuit  brought by a  subscriber,  Mr.  Daniel J.  Mandell.  The
geographic scope of the class is uncertain but may include  geographic areas and
customers  serviced by the New York partnership.  The plaintiff alleges that the
defendant's  cellular  operations  are engaged in  fraudulent,  misleading,  and
deceptive  practices by concealing  the practice of rounding up airtime usage to
bill in full minute  increments.  The  plaintiff  seeks an  accounting of monies
received  as a  result  of the  above  conduct  by the  defendant,  compensatory
damages,  punitive  damages,  treble damages pursuant to the New Jersey Consumer
Fraud Act, and injunctive relief. The defendant's motion to dismiss on forum non
conveniens grounds was refiled. Although the defendant has informed the New York
partnership  that it  believes  that it has  meritorious  defenses to the claims
asserted  against  it, and intends to defend  itself  vigorously,  the  ultimate
outcome of this matter cannot be  determined  at the present time.  The New York
partnership  may be  allocated  a portion of the  damages  that may result  upon
adjudication  of this matter if the  plaintiffs  prevail in their action.  If an
adverse judgment is entered, the potential effect on the financial condition and
the results of operations of Cellco,  the New York  partnership  and the Company
cannot be ascertained at this time but may be material.

      The  former  general  partner in the New York  partnership  was named as a
defendant  in a class  action  lawsuit  brought  on  behalf  of New York  retail
customers.  The plaintiffs have alleged that the general partner has overcharged
customers who  experienced an  involuntary  disconnection  ("dropped  calls") of
their mobile service calls during the period July 1985 through  September  1994.
Further,  the  plaintiffs  allege that the amount of credit  given for a dropped
call, the New York partnership  general partner's policy of requiring  customers
to  specifically  request such  credits,  and the absence of  sufficient  notice
advising  customers to actively  request such credits were  breaches of contract
and  deceptive  practice.  Discovery  is  ongoing  at this  time.  The New  York
partnership is not a defendant



                                       7
<PAGE>


8. Contingencies of Unconsolidated Entities (continued)

in this matter  having been  dismissed  from the case in the early stages of the
litigation.  The New York  partnership  has  been  informed  that the  defendant
intends to defend itself  vigorously but that the ultimate outcome of the matter
cannot be determined. The New York partnership may be allocated a portion of the
damages  that may result  upon  adjudication  of this  matter if the  plaintiffs
prevail in their action. If an adverse judgment is entered, the potential effect
on the financial  condition and the results of operations of the former  general
partner of the New York  partnership,  the New York  partnership and the Company
cannot be ascertained at this time but may be material.

         On July 2, 1996,  a class  action  lawsuit  was filed  against  Cellco.
Steven Kahn,  plaintiff,  alleges that the  defendant  has failed to  adequately
disclose  its  automatic   renewal   policy,   whereby  annual   agreements  are
automatically  renewed  unless a customer  cancels  the  agreement  prior to its
expiration.  The plaintiff contends that the renewals are unenforceable  under a
New York  statute  that  requires  a vendor to give  notice to the  consumer  by
personal service or certified mail of the automatic renewal at least 15 days and
not more than 30 days prior to renewal.  As a result, the plaintiff alleges that
the  defendant  has  breached  its  contracts by failing to provide the required
notice,  and  seeks a  ruling  that all  contracts  are  void or  voidable.  The
plaintiff  further  contends that the  defendant  has been unjustly  enriched by
charges it has collected from consumers who were  automatically  renewed without
legally sufficient notification.  The complaint seeks compensatory damages in an
amount not less than $10  million.  The class action is brought on behalf of all
New York customers who contracted with the defendant and who were  automatically
renewed since July 1990.  Defendant's motion to dismiss was served on August 28,
1996. It argues that the named plaintiff  lacks standing;  that the statute does
not apply to the defendant;  that actual notice was provided; and that the court
should  dismiss  the matter  based on the  primary  jurisdiction  doctrine.  The
ultimate  outcome of this matter cannot be  determined at the present time.  The
New York  partnership  may be allocated a portion of the damages that may result
upon adjudication of this matter if the plaintiff prevails in this action. If an
adverse judgment is entered, the potential effect on the financial condition and
results of operation of Cellco,  the New York partnership and the Company cannot
be ascertained at this time but may be material.

      On August 13, 1996, a class action lawsuit was filed against Bell Atlantic
Corporation  ("BAC") and NYNEX Corporation  ("NYNEX") d/b/a/ Bell Atlantic NYNEX
Mobile (BANM).  Christopher G. Kuhn, filing in Pennsylvania state court, alleges
concealed  full-minute  billing,  a  concealed  practice  of  charging  landline
termination fees, and concealed pricing  arrangements with agents.  The putative
class is all Cellco  subscribers  since February 1, 1990. Relief sought includes
statutory, treble and punitive damages, and injunctive relief. Cellco has agreed
to accept  service,  but has not been  served.  On  August  16,  1996,  a second
Pennsylvania state court action was filed against BAC and NYNEX d/b/a/ BANM. The
plaintiff, Larry Carroll, alleges that the defendant acted improperly by failing
to  adequately   disclose  its  practice  of  rounding-up  airtime  to  bill  in
full-minute increments,  failing to adequately disclose the practice of charging
the customer landline charges, and failing to adequately disclose  relationships
with agents.  In addition,  the complaint  alleges  failure to disclose  service
quality issues resulting in an increased number of redials and reconnects,  with
a corresponding increase in cost to customers.  The putative class is all Cellco
subscribers  since February 1, 1990.  Relief sought includes actual and punitive
damages and injunctive relief.  Cellco has agreed to accept service, but has not
been  served.  Although  Cellco has not yet been served in the two  Pennsylvania
actions,  it is likely  that the  complaints  will soon be  amended  to name it.
Cellco  has  informed  the New York  partnership  that it  believes  that it has
meritorious  defenses to the claims  asserted  against it, and intends to defend
itself  vigorously.  However,  the  ultimate  outcome  of the  matter  cannot be
determined  at the present  time.  The New York  partnership  may be allocated a
portion of the damages that may result upon  adjudication  of this matter if the
plaintiffs  prevail in their  action.  If an adverse  judgment is  entered,  the
potential effect on the financial condition and the results of operations of the
former general partner of the New York partnership, the New York partnership and
the Company cannot be ascertained at this time but may be material.

      On September  13, 1996,  Region 2 of the National  Labor  Relations  Board
filed an amended and consolidated  complaint against BAC, NYNEX, Cellco, the New
York partnership and various other affiliated  entities.  The complaint alleges,
in essence,  that the respondents operated as a single integrated enterprise and
as a single employer.  As such, Cellco was liable for the collective  bargaining
obligations  of its  NYNEX  partner.  The  substance  of the  charge is that the
respondents  unlawfully  refused  to  recognize  the  Communications  Workers of
America  (CWA)  as the  exclusive  representative  of the  Operating  Department
working  in the New York  Metropolitan  Area;  that the  respondents  unlawfully
repudiated the existing bargaining agreements; and unlawfully



                                       8
<PAGE>


8. Contingencies of Unconsolidated Entities (continued)

constructively  discharged certain employees.  Although the respondents  believe
they have  meritorious  defenses to the claims asserted against them, and intend
to defend  themselves  vigorously,  the ultimate outcome of the matter cannot be
determined  at the present  time.  The New York  partnership  may be allocated a
portion  of the  damages  that may result if a  judgment  is entered  separately
against Cellco.  If an adverse judgment is entered,  the potential effect on the
financial   condition  and  results  of  operations  on  Cellco,  the  New  York
partnership,  and the  Company  cannot  be  ascertained  at this time but may be
material.

      On August 13,  1996,  Cellco was named as the  defendant in a class action
lawsuit  brought by a subscriber,  Hector M. Roman,  alleging that the defendant
violated the  provisions of its form contract by billing  subscribers  for local
landline  charges  for calls made in their home  calling  areas.  Relief  sought
includes  compensatory  damages  of not less  than $5  million,  and  injunctive
relief. The action is brought on behalf of all of defendant's subscribers billed
for such charges.  The  defendant has filed a motion to dismiss  pursuant to the
doctrine of primary  jurisdiction and based on federal preemption.  The ultimate
outcome of this matter cannot be  determined  at the present time.  The New York
partnership  may be  allocated  a portion of the  damages  that may result  upon
adjudication  of this matter if the  plaintiff  prevails  in the  action.  If an
adverse judgment is entered, the potential effect on the financial condition and
results of the operations of Cellco,  the New York partnership,  and the Company
cannot be ascertained at this time but may be material.

      On August 16, 1996, a class action was filed  against  Cellco,  by Gary R.
Goldman. The complaint alleges that the defendant's  automatic renewal policy is
in  violation  of the notice  provision  of a New York  statute.  The  complaint
further alleges that the defendant acted improperly in charging termination fees
for contracts canceled beyond the initial terms of those contracts,  and that it
deliberately  advertised  its  services  in such a way to defraud  consumers  by
misleading  them into believing  that they had no obligation to pay  termination
charges after the expiration of the initial term of the contract.  The action is
brought on behalf of all New York customers who paid  termination  charges,  and
seeks  compensatory  damages and injunctive relief. The ultimate outcome of this
matter cannot be determined at the present time. The New York partnership may be
allocated a portion of the damages  that may result  upon  adjudication  of this
matter if the  plaintiff  prevails  in this  action.  If an adverse  judgment is
entered,  the  potential  effect  on the  financial  condition  and  results  of
operations  of  Cellco,  the New York  partnership,  and the  Company  cannot be
ascertained at this time but may be material.


9.  Subsequent Event

      On  November 1, 1996,  the  Company  completed  its  previously  announced
acquisition (the "ICN  Acquisition") of Independent  Cellular Network,  Inc. and
affiliated  companies  (collectively,  the "Acquired  Companies")  which own and
operate  cellular  licenses and related  systems and assets in  Kentucky,  Ohio,
Pennsylvania and West Virginia.  The Acquired Companies provide cellular service
to approximately  140,000 customers in 20 markets  representing an estimated 3.2
million potential  customers.  The Company acquired the Acquired  Companies from
Independent   Cellular   Network   Partners   and  certain  of  its   affiliates
(collectively,  "ICNP") for approximately  $514 million,  comprised of 6,500,000
shares of the Company's Common Stock, $122 million in aggregate principal amount
of the Company's subordinated  non-negotiable promissory notes and the Company's
assumption of $240 million of  Independent  Cellular  Network  Partners'  senior
debt. The remaining portion of the purchase price was paid in cash.

      The  Company's  subordinated  non-negotiable  promissory  notes  issued in
connection with the ICN Acquisition are due October 31, 2006 and accrue interest
at the rate of 9.5% per annum,  which may be reduced to 9.0% upon the occurrence
of certain events,  payable semiannually.  Fifty percent of the interest due and
owing will be paid on each interest payment date and the remaining fifty percent
of the  interest  due and  owing  will be  capitalized  and  become  part of the
principal amount owed thereunder. The $240 million of senior debt assumed by the
Company in connection  with the ICN  Acquisition  was  refinanced,  and the cash
portion of the purchase price was funded, under the Credit Facility.  On October
31, 1996,  the Credit  Facility was amended and restated to permit,  among other
things,  the ICN  Acquisition and to increase the Company's  borrowing  capacity
thereunder from $800 million to $1 billion.


                                       9
<PAGE>



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


General

      The following is a discussion  and analysis of the  historical  results of
operations  and  financial  condition of the Company and factors  affecting  the
Company's  financial  resources.  This discussion  should be read in conjunction
with the consolidated  financial  statements,  including the notes thereto,  set
forth herein under  "Financial  Statements"  and the Company's  Annual Report on
Form 10-K for the fiscal year ended December 31, 1995. This discussion  contains
forward  looking  statements  which are qualified by reference to, and should be
read in conjunction  with, the Company's  statement  regarding  forward  looking
statements set forth on page (i) of this Report.


Results of Operations

Customer Growth Rate

      Cellular  customers  increased to  1,850,500  at September 30, 1996 from
1,348,500 at September 30, 1995,  resulting in a 37.2% increase.  For the three
months ended  September 30, 1996 and 1995, the Company added 100,200 and 107,200
customers,  respectively,  through internal growth.  For the nine months ended
September 30, 1996, customer growth through  acquisitions added 46,600 customers
and internal growth added 302,100 new customers, while in the corresponding 1995
period,  the Company  added  308,500 customers  through  internal  growth.  The
Company's  penetration  rate,  which is the number of  customers  divided by the
total population in its licensed  service areas, reached 8.84% at September 30,
1996  compared to 6.86% at  September  30,  1995.  During the three months ended
September  30,  1996 and 1995,  customer  churn, the average  monthly  rate of
customer  disconnects,  was 1.86% and 1.89%,  respectively,  and during the nine
months ended September 30, 1996 and 1995 was 1.80% and 1.79%, respectively.

Cellular Service Revenues

         Cellular  service  revenues  consist  primarily of charges for airtime,
access  fees,  roaming  fees  and  other  services.  Cellular  service  revenues
increased  31.0% and 33.9% in the three and nine months ended September 30, 1996
when compared to the corresponding 1995 periods,  principally from growth in the
number of cellular customers.  Increased distribution channels, expanded network
capacity,  declining  cellular  telephone  equipment  prices and  pricing  plans
targeted at  particular  market  segments  are key factors  contributing  to the
Company's  customer  growth.  In addition,  acquisitions  completed in the first
quarter of 1996 contributed  $11.0 million and $25.5 million of service revenues
in the three and nine months ended September 30, 1996, respectively.

      Consistent  with  the  rest of the  cellular  industry,  the  Company  has
experienced  increased  penetration in the consumer market, a trend attributable
to declining  cellular  telephone  equipment  prices and  increased  promotional
activities (i.e.  packaging,  special rate plans), an increased awareness of the
benefits  of  cellular  communications,   widespread  distribution  channels  in
consumer-oriented  retail  locations and expanded network coverage and capacity.
The Company  expects this trend to continue.  New  customers  generally use less
airtime  than  existing  customers,  causing  the  average  service  revenue per
customer per month to decline. As a result,  cellular service revenue growth has
not kept  pace with the level of  growth  in the  number of  customers.  Service
revenue per average  customer  per month was $50.34 and $53.35  during the three
months ended  September 30, 1996 and 1995,  respectively,  and $50.54 and $53.66
during the nine months  ended  September  30, 1996 and 1995,  respectively.  The
Company  expects  that  service  revenue  per  average  customer  per month will
continue to decline as penetration rates continue to increase.




                                       10
<PAGE>



      In an  effort to  increase  cellular  telephone  usage  through  increased
roaming airtime, the Company expects the continuation of the industry-wide trend
for negotiated reduced roaming rates between carriers, which may reduce revenues
derived from cellular  service users who roam into the  Company's  systems.  The
Company  expects  roaming  airtime to increase as reduced  roaming rates between
carriers are  ultimately  passed on to  customers,  thus  stimulating  increased
usage.  Roaming airtime minutes increased during the three and nine months ended
September 30, 1996,  when compared to the same periods in 1995, the major factor
contributing to the $15.5 million and $40.6 million  increase in roaming revenue
for the three and nine months ended September 30, 1996.

      Future  revenue  growth  will be  impacted  by the  Company's  success  in
maintaining  customer growth in existing markets,  additional  revenue generated
from the increasing  availability of a variety of enhanced services and products
and by the Company's  success in acquiring  additional  cellular  communications
systems to further  strengthen its existing  regional  clusters.  The percentage
growth rate of new  customers is expected to decline as the customer base grows.
Future revenue  growth will also be impacted by the Company's  entrance into the
long distance and paging  businesses.  In August,  the Company  began  marketing
residential  long  distance  service in 13 of the 14 states in which the Company
provides  wireless service and expects to offer service in New Mexico by the end
of the year. The Company also began reselling paging in two markets and plans to
expand service to its other existing markets by the end of the year. An improved
competitive  position,  reduced cellular churn and increased brand awareness are
expected as the long distance and paging service businesses mature.

Equipment Sales

      Equipment  sales  consist of  revenues  from sales of  cellular  telephone
equipment and accessories. Equipment sales decreased 4.4% and 13.8% in the three
and nine months ended September 30, 1996 when compared to the corresponding 1995
periods,  despite an increase in the number of telephone units sold. Competitive
market  pressures  have  resulted in a continued  trend of selling  equipment at
discounted  prices.  Although declining cellular telephone prices have generated
increased  activations  of cellular  service,  gross margins on equipment  sales
declined  in the nine  months  ended  September  30,  1996 when  compared to the
corresponding  1995 period as the Company continues to sell cellular  telephones
at or below cost. The Company  experienced a slight  improvement in the negative
gross margins in the three months ended  September 30, 1996 when compared to the
corresponding  1995 period,  however,  the Company  expects  competitive  market
pressures and negative gross margins on equipment sales to continue.

Cost of Service, Other Operations Expense, Sales, Marketing and Advertising
Expenses and General, Administrative and Other Expenses

      Cost  of  service,   other  operations  expense,   sales,   marketing  and
advertising  expenses and general,  administrative  and other expenses increased
due principally to growth in the cellular  customer base.  Expense levels in the
three months ended  September 30, 1996 were also impacted by charges  associated
with  start-up  expenses for  residential  long  distance  service and two major
hurricanes  that affected the Company.  During the three months ended  September
30, 1996 and 1995, these expenses as a percent of cellular service revenues were
57.5% and 56.7%,  respectively,  and during the nine months ended  September 30,
1996 and 1995 were 57.7% and 57.8%, respectively.

      Economies of scale in the three and nine months ended  September  30, 1996
were offset by increased  expense  levels  experienced in the three months ended
September 30, 1996.  The Company  incurred  $680,000 of  additional  maintenance
expenses  caused by two major  hurricanes  and  $808,000  of  start-up  expenses
incurred in connection with the initiation of residential long distance service.
In the  three  and nine  months  ended  September  30,  1996,  bad debt  expense
increased  $2.9  million  and $5.8  million,  respectively,  due to the  overall
increase in the level of consumer  debt  delinquencies  nationwide.  The Company
continues to expect a gain in future economies of scale from serving  additional
customers,  improved  operational  support  systems,  strong  revenue growth and
improved productivity.


                                       11
<PAGE>


      In the three and nine months  ended  September  30,  1996,  expenses  were
impacted  by  $5.3  million  and  $21.5  million,  respectively,  of  additional
advertising, promotional and other marketing expense associated with the planned
introduction  of the Company's new brand name. This increase also resulted in an
increase in sales,  marketing and  advertising  costs to acquire a new customer.
Such costs were $312 and $291 during the three months ended  September  30, 1996
and 1995, respectively, and $317 and $286 during the nine months ended September
30, 1996 and 1995, respectively.

      In an effort to control costs associated with acquiring new customers, the
Company has begun to utilize more extensively an internal sales force located in
Company retail  outlets.  Incremental  sales costs at a Company retail store are
significantly  lower than  commissions  paid to national  dealers.  Although the
Company  intends to  continue  to support its large  dealer  network,  continued
increases in its own retail distribution  channels are planned.  The Company has
experienced  lower churn levels in the  consumer  segment  acquired  through its
retail distribution channel,  thereby helping to control the cost of growing its
customer base.  The Company is unable to anticipate  whether the cost to add new
customers will increase as savings  associated with the transition to the use of
an internal  sales force levels off, the growth rate of new  customers  declines
and competition for local and national dealers intensifies.

      Following the Spin-off,  the Company  began to perform  certain  functions
previously  provided to the Company by Sprint. The undertaking of such functions
is not  expected  to  have a  significant  impact  on  the  Company's  operating
expenses.

Depreciation and Amortization

      Acquisitions  of  cellular  communications  systems  generated  intangible
assets,  such as FCC license costs and goodwill,  which are being amortized over
40 years. During the three and nine months ended September 30, 1996 amortization
expense  increased  12.2%  and  10.1%,   respectively,   when  compared  to  the
corresponding  periods in 1995.  The increase is  attributable  to  acquisitions
completed in the first quarter of 1996.

      During the three and nine months  ended  September  30, 1996  depreciation
expense  increased  27.9%  and  28.7%,   respectively,   when  compared  to  the
corresponding  period in 1995.  During the three months ended September 30, 1996
and 1995,  depreciation as a percent of cellular  service revenues was 11.6% and
11.9%,  respectively,  and during the nine months ended  September  30, 1996 and
1995 was 11.6% and 12.1%, respectively.  The increase in depreciation expense in
1996 when compared to the corresponding  1995 periods is the result of increased
capital investment in the Company's cellular network.

Interest Expense

      Interest  expense  decreased in the three and nine months ended  September
30, 1996 when compared to the corresponding  prior year periods due to decreases
in interest  rates and  borrowing  levels.  Prior to the  Spin-off,  the Company
borrowed from Sprint,  primarily to fund construction costs and start-up losses,
at interest  rates based on prime plus 2 percent and a 30 day  commercial  paper
rate. The annualized  average  interest rate for the three and nine months ended
September 30, 1995 was 8.7% and 8.3%, respectively. The annualized interest rate
for the  three  and nine  months  ended  September  30,  1996 was 7.0% and 7.2%,
respectively.  Current borrowings consist of $450 million of 7 1/8% Senior Notes
due 2003,  $450  million of 7 1/2% Senior Notes due 2006,  borrowings  under the
Credit Facility with interest rates based on the London  Interbank  Offered Rate
plus 50 basis points and market based short-term borrowings.



                                       12
<PAGE>




Equity in Net Income of Unconsolidated Entities

      "Equity in Net Income of Unconsolidated Entities" represents the Company's
share of  operating  results of cellular  systems in which the Company  does not
have a controlling  interest.  Equity earnings  increased for the three and nine
months  ended  September  30,  1996,  when  compared to the prior year  periods,
primarily  as a result  of  increased  income  generated  by  minority  cellular
investments which continue to mature and increase penetration.

      The South Texas and New York  partnerships,  two of the  Company's  equity
investees,  are parties to separate  legal  proceedings.  Because the outcome of
such legal proceedings has not been determined by the partnerships, no provision
for any liability that may result upon  adjudication of that litigation has been
made in the unaudited interim consolidated  financial statements.  The Company's
combined investments in these partnerships, including intangible assets recorded
in connection with the acquisitions of these partnerships, was $225.2 million at
September  30,  1996  and  its  combined  equity  in the  net  income  of  these
partnerships,  net of  amortization of intangible  assets,  was $6.6 million and
$18.2  million  for  the  three  and  nine  months  ended  September  30,  1996,
respectively. In view of the uncertainty regarding such litigation, there can be
no  assurance  that the  outcome  of such  litigation  will not have a  material
adverse  effect on the  Company's  investment  in these  partnerships  or in its
equity in the combined income of such partnerships.

Competition

      Cellular carriers compete primarily against the other cellular carriers in
each market.  However,  companies  with PCS  licenses  have begun to offer their
products and services in several of the Company's serving areas. The Company has
prepared  for  this new  competitive  environment  by  enhancing  its  networks,
expanding its service territory and offering new features, products and services
to its customers.  The Company  believes it will benefit from its position as an
incumbent  in  the  cellular  field  with  a  high  quality  network,  extensive
geographic  footprint  that is not  capacity  constrained,  strong  distribution
channels,  superior customer service capabilities and an experienced  management
team.  However,  there can be no assurance that these  measures will  completely
mitigate the pressures associated with the expected increase in the level of PCS
competition.


Liquidity and Capital Resources

Spin-off

      On March 7, 1996, the Spin-off was  consummated.  In conjunction  with the
Spin-off,  the Company repaid $1.4 billion of intercompany  debt to Sprint.  The
remaining intercompany debt was contributed to the Company as Additional Paid-In
Capital. Funding for the repayment was derived from the proceeds of $900 million
of the  Company's  Senior Notes issued under the  Indenture  and $527 million of
initial borrowings under the Credit Facility. In addition, a recapitalization of
the Company's Common Stock was effected  pursuant to which the Company split the
10 shares of the then issued and outstanding  Common Stock into  116,733,983 new
shares of the Common Stock to allow for the pro rata  distribution of such stock
to the common  shareholders  of Sprint.  This  distribution  was  effected  as a
tax-free stock dividend.

Cash Flows - Operating Activities

      Cash  flows from  operating  activities  were  $190.4  million  and $110.9
million for the nine months  ended  September  30, 1996 and 1995,  respectively.
Operating cash flow increases are due to improved  operating  results.  Although
future  operating  cash flows will  continue to be impacted by the  advertising,
promotional and other marketing  expenses  associated with the  introduction and
promotion  of the  Company's  new brand  name,  the Company  expects  cash flows
generated by operating activities to continue to increase.



                                       13
<PAGE>


Cash Flows - Investing Activities

      During the nine months  ended  September  30, 1996 and 1995 the  Company's
investing   activities   used  cash  of  $317.9  million  and  $273.7   million,
respectively,  of which  capital  expenditures  were  $193.5  million and $270.0
million,  respectively.  The decrease in capital  expenditures was the result of
the  maturing  of  the  Company's  network.   In  previous  years,  the  Company
concentrated on satisfying FCC cellular systems build-out requirements regarding
the  expansion  of the  geographic  footprint  or coverage  area of Company held
licenses, in addition to capital investment to support customer growth. With the
geographic  areas  of  its  licensed  areas  essentially  covered,  the  Company
currently  focuses  on capital  investment  to  support  customer  growth and on
improving customer call quality. In August 1996, the Company began offering Code
Division  Multiple Access ("CDMA")  digital  technology to the Company's new and
existing customers in Las Vegas,  Nevada. The introduction of CDMA technology in
Las Vegas  followed  a six month  market  trial that  began in early  1996.  The
Company plans to implement a gradual  transition to CDMA technology in its other
markets on a market by market basis as additional  network  capacity is required
to  accommodate  growth in call volume.  This approach  should  provide time for
anticipated  digital technology  improvements to be proven,  while also avoiding
premature  capital  expenditures.  The Company  expects that its  investment  in
digital technology will increase over time as network capacity needs warrant.

      In the first quarter of 1996, the Company acquired cellular  properties in
South  Carolina,  North  Carolina and Ohio and acquired  additional  partnership
interests in Florida. The aggregate purchase price of these acquisitions totaled
$109.6 million.

      On a limited basis,  the Company has increased its ownership  interests in
certain of its controlled markets.  To the extent feasible,  the Company intends
to exchange some or all of its minority  investments in cellular  communications
systems for  increased  ownership  interests  in its  controlled  markets or for
ownership interests in new markets in which it could obtain control.

Cash Flows - Financing Activities

      During the nine months ended September 30, 1996 and 1995 net cash received
from financing  activities was $118.3 million and $160.8 million,  respectively.
In  1995,  cash  received  from  financing  activities   principally   reflected
borrowings  from  Sprint.  Following  the  Spin-off,  capital  to  meet  funding
requirements is not available from Sprint and its  subsidiaries.  In conjunction
with the  Spin-off,  the Company  repaid $1.4  billion of  intercompany  debt to
Sprint.  The  remaining  intercompany  debt was  contributed  to the  Company as
Paid-In  Capital.  Funding for the  repayment  was derived from  proceeds of the
Company's  Senior Notes issued under the Indenture and initial  borrowings under
the Credit Facility.  As part of its cash management  program,  the Company also
incurs short-term borrowings based on market interest rates to support its daily
cash  requirements.  The aggregate  amount of these borrowings is limited to $50
million under certain debt covenants.

Liquidity and Capital Requirements

      Substantial  capital is  required  to expand  and  operate  the  Company's
existing  cellular  systems  and to acquire  interests  in  additional  cellular
systems.  The  Company  meets its funding  requirements  through  existing  cash
resources,  cash flow from operations and borrowings  under the Credit Facility.
Prior to the  Spin-off,  the  Company  borrowed  from  Sprint to the  extent its
existing cash needs were not met through  existing cash resources and cash flows
from operations.

      Including  capital  expenditures  to be  incurred  in the  fourth  quarter
related to the recently  completed ICN Acquisition,  the Company expects to make
capital  expenditures,  of approximately $300 million in 1996. Funding for these
expenditures is expected to be derived from existing cash  resources,  cash flow
from operations and borrowings  under the Credit  Facility.  These  expenditures
expand and enhance existing cellular systems.  Enhancements include a minimal
level of digital technology deployment.



                                       14
<PAGE>


      Contingencies  have  been  identified   regarding  class  action  lawsuits
regarding  customer  notification  as to the practice of billing for  fractional
minutes of service.  The  ultimate  outcome of these  matters and the  potential
effect on the  financial  condition  and  results of  operations  of the Company
cannot  be  determined  at this  time.  In  addition,  contingencies  have  been
identified  in the South Texas and New York  partnerships,  the outcome of which
cannot presently be determined.

      For the next several years,  the Company does not expect its operations to
generate  sufficient  cash flows to meet both future  capital  requirements  for
operating  activities  and  cash  requirements  for  acquisitions  of  ownership
interests in cellular communications systems. Acquisition activities may include
acquisitions of new cellular communications systems or additional investments in
cellular  communications systems in which the Company already holds an ownership
interest.  The  Company  expects  that it will  need to raise  additional  funds
through borrowings under the Credit Facility, the public or private sale of debt
or the issuance of equity securities to make such  acquisitions,  subject to the
limitations  of an  agreement  entered  into for a period of two years after the
Spin-off by the Company and Sprint  designed to preserve the tax-free  status of
the  Spin-off.  The Company  believes  that it will be able to obtain the needed
access  to the  capital  markets  on  suitable  terms and  that,  together  with
borrowings  under the Credit  Facility and net cash provided by  operations,  it
will have adequate  capital to satisfy its projected  funding  requirements  for
operations in 1996 and  thereafter.  However,  acquisitions  and possibly  other
contingencies  may require access to the capital  markets in addition to funding
under the Credit Facility.  There can be no assurance that access to the capital
markets can be obtained in amounts and on terms  adequate to meet its objectives
or that the borrowings or net cash from  operations will be adequate to meet the
Company's projected funding requirements.

      At September  30, 1996,  the Company was not restricted or limited in its
borrowing capacity under the Credit Facility. The aggregate amount of additional
borrowings  which can be incurred  is  ultimately  limited by certain  covenants
included in the Credit Agreement and the Indenture.

      On  November 1, 1996,  the  Company  completed  its  previously  announced
acquisition (the "ICN  Acquisition") of Independent  Cellular Network,  Inc. and
affiliated  companies  (collectively,  the "Acquired  Companies")  which own and
operate  cellular  licenses and related  systems and assets in  Kentucky,  Ohio,
Pennsylvania and West Virginia.  The Acquired Companies provide cellular service
to approximately  140,000 customers in 20 markets  representing an estimated 3.2
million potential  customers.  The Company acquired the Acquired  Companies from
Independent   Cellular   Network   Partners   and  certain  of  its   affiliates
(collectively,  "ICNP") for approximately  $514 million,  comprised of 6,500,000
shares of the Company's Common Stock $122 million in aggregate  principal amount
of the Company's subordinated  non-negotiable promissory notes and the Company's
assumption of $240 million of  Independent  Cellular  Network  Partners'  senior
debt. The remaining portion of the purchase price was paid in cash.

      The  Company's  subordinated  non-negotiable  promissory  notes  issued in
connection with the ICN Acquisition are due October 31, 2006 and accrue interest
at the rate of 9.5% per annum,  which may be reduced to 9.0% upon the occurrence
of certain events,  payable semiannually.  Fifty percent of the interest due and
owing will be paid on each interest payment date and the remaining fifty percent
of the  interest  due and  owing  will be  capitalized  and  become  part of the
principal amount owed thereunder. The $240 million of senior debt assumed by the
Company in connection  with the ICN  Acquisition  was  refinanced,  and the cash
portion of the purchase price was funded, under the Credit Facility.  On October
31, 1996,  the Credit  Facility was amended and restated to permit,  among other
things,  the ICN  Acquisition and to increase the Company's  borrowing  capacity
thereunder from $800 million to $1 billion.



                                       15
<PAGE>



                          PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

      On or about  March 29,  1996,  a class  action  lawsuit was brought in the
Chancery Court of Washington  County,  Jonesborough,  Tennessee (the  "Tennessee
Action") on behalf of all customers in the Company's Tennessee markets regarding
customer  notification  of the  Company's  practice  with respect to billing for
fractional minutes of service. In April 1996, the original complaint was amended
to enlarge  the class of  plaintiffs  to  include  all  customers  in all of the
Company's service areas. In late April 1996, the Tennessee Action was removed to
the United States District Court for the Eastern District of Tennessee, Northern
Division.  The  Company  moved to dismiss the action and the  plaintiff  filed a
motion to remand.  On July 16, 1996,  the Tennessee  District  Court granted the
plaintiff's  motion to remand and  returned  the case to the  Chancery  Court of
Washington  County.  The Company's Motion to Dismiss is currently pending before
the Chancery Court.

      On or about May 28, 1996, a class action lawsuit was brought in the Common
Pleas Court of Erie County,  Ohio (the "Ohio Action") on behalf of all customers
in all of the Company's  service areas  regarding  notification of the Company's
practice with respect to billing for fractional minutes of service.  On June 25,
1996,  the Ohio Action was removed to the United States  District  Court for the
Northern District of Ohio, Western Division. On July 18, 1996, the Company filed
a Motion to Dismiss  Or, In The  Alternative,  Stay  pending  resolution  of the
Tennessee  Action.  The basis for the Motion to Stay is the duplicity of the two
actions.  On July 24, 1996, the plaintiff filed a Motion to Remand to return the
case to the state court.

      Discovery has not commenced in either case. The Company believes that both
lawsuits are without merit,  however,  the ultimate outcome of these matters and
the potential effect on the financial condition and results of operations of the
Company cannot be determined at this time.

      The Company is party to various  other legal  proceedings  in the ordinary
course  of  business.   Although  the  ultimate   resolution  of  these  various
proceedings  cannot be  ascertained,  management of the Company does not believe
that such  proceedings,  individually or in the aggregate,  will have a material
adverse  effect on the  results  of  operations  or  financial  position  of the
Company.



                                       16
<PAGE>




Item 5.  Other Information.

                   360 COMMUNICATIONS COMPANY AND SUBSIDIARIES

                SELECTED PROPORTIONATE OPERATING RESULTS AND DATA

                                   (Unaudited)

     The following table sets forth  supplemental  financial data reflecting the
proportionate  consolidation  of entities in which the Company  holds  interests
significant to its operations.  This presentation differs from the consolidation
methodology  used to prepare the  Company's  principal  financial  statements in
accordance with Generally Accepted Accounting Principles ("GAAP") (see Note 1 of
"360  Communications   Company  and  Subsidiaries  Notes  to  Unaudited  Interim
Consolidated   Financial   Statements"   set  forth  herein   under   "Financial
Statements") and does not reflect operating results in accordance with GAAP. The
proportionate  operating  data  reflects the Company's  ownership  percentage of
entities  consolidated  for  financial  reporting  purposes  and  the  Company's
ownership percentage of certain of its significant unconsolidated entities which
are  accounted for under the equity  method for  financial  reporting  purposes.
Because  significant  assets of the  Company are not  consolidated,  the Company
believes  the  following   proportionate   operating   results   facilitate  the
understanding and assessment of the overall extent of its investments.  However,
the operating data presented below are not indicative of the cash flow available
to the Company with respect to its interests in  unconsolidated  entities.  Such
interests are subject to partnership  agreements and other restrictions limiting
the Company's  ability to effect  distributions  of cash and other assets of the
entity in which the Company holds a noncontrolling interest. The following table
is not required by GAAP, and is not intended to replace and should not be viewed
as being of greater  significance  than, or in isolation from, the  consolidated
financial statements prepared in accordance with GAAP.

<TABLE>
<CAPTION>



                                                 For the Three Months       For the Nine Months
                                                    Ended and as of           Ended and as of
                                                   September 30,(1)<F1>      September 30,(1)<F1>
                                                ---------------------      ----------------------
                                                  1996        1995            1996         1995
                                                --------    --------        --------      --------
                                                             (Thousands of Dollars)
Operating Results:
<S>                                           <C>          <C>         <C>              <C>

Operating Revenues
Cellular Service Revenues                      $ 268,403    $ 208,500     $  757,546    $ 573,772
Equipment Sales                                   10,374        9,570         30,476       33,118
                                               ---------    ---------     ----------    ----------
Total Operating Revenues                         278,777      218,070        788,022      606,890
                                               ---------    ---------     ----------    ----------
Operating Expenses
Cost of Equipment Sales                           25,272       24,650         70,986       72,584
Operating, Selling, General, Administrative
 and Other Expenses                              152,646      118,487        431,463      331,809
Depreciation and Amortization                     37,675       29,760        107,570       86,045
                                               ---------    ---------     ----------   ----------
    Total Operating Expenses                     215,593      172,897        610,019      490,438
                                               ---------    ---------     ----------   ----------                                 
Operating Income                               $  63,184    $  45,173   $    178,003   $  116,452
                                               ---------    ---------     ----------   ----------                                 
Other Operating Data:
EBITDA (2)<F2>                               $   100,859  $    74,933    $   285,573   $  202,497
EBITDA Margin (3)<F3>                              37.58%       35.94%         37.70%       35.29%
Capital Expenditures (4)<F4>                 $    54,858  $    83,494    $   196,141   $   247,941
Selected Net POPs (5)<F5>                     21,214,434   20,007,309     21,214,434    20,007,309
Proportionate Customers (6)<F6>                1,807,069    1,299,593      1,807,069     1,299,593
Average Proportionate Customers (7)<F7>        1,751,722    1,204,843      1,654,986     1,154,169
Churn                                                1.9%         2.0%           1.9%          1.8%
Penetration                                          8.5%         6.5%           8.5%          6.5%
Service Revenue per Average Customer per
 Month                                       $     51.07  $     57.68    $     50.86   $     55.24



                                       17
<PAGE>




<FN>
-------------
Notes to Selected Proportionate Operating Results and Data

<F1>
 (1) The  proportionate   operating  results  include  the  Company's  ownership
     percentage of entities  consolidated  for financial  reporting  purposes as
     well as the Company's ownership percentage of certain unconsolidated equity
     investments  which  are  significant  to  the  Company,  consisting  of the
     Company's  investments  in cellular  partnerships  serving  markets such as
     Chicago,  IL;  Houston,  TX;  Kansas City,  MO; New York,  NY;  Omaha,  NE;
     Orlando, FL; and Richmond, VA.
<F2>
(2)  EBITDA is defined as operating  income plus  depreciation  and amortization
     and is included herein as supplemental  disclosure  because it is generally
     considered  useful  information  regarding a  company's  ability to service
     debt. EBITDA,  however, is not a measure determined in accordance with GAAP
     and should not be  considered  in  isolation  or as an  alternative  to net
     income (loss),  cash flow provided by operating  activities or other income
     or cash flow data  prepared  in  accordance  with GAAP or as a measure of a
     company's  performance or liquidity.  Proportionate  EBITDA  represents the
     Company's  ownership interest in the respective  entities multiplied by the
     entities' EBITDA and,  therefore,  does not represent cash available to the
     Company.
<F3>
(3) EBITDA Margin represents EBITDA divided by Cellular Service Revenues.
<F4>
(4) Capital Expenditures exclude acquisitions.
<F5>
(5) Selected Net POPs are the  estimated  market  population  multiplied  by the
    Company's  ownership  interest in each presented market and excludes certain
    markets as described above.
<F6>
(6) Proportionate customers reflect total customers in each presented market in
    which the Company owns an interest  multiplied by the Company's ownership interest.
<F7>
(7) Average Proportionate  Customers represents a simple average of beginning of
    period plus end of period proportionate customers
    divided by 2.

</FN>
</TABLE>



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

(a)  Exhibits:

    Exhibits are listed in the Exhibit Index.

(b)  Reports on Form 8-K:

    On Form 8-K, dated July 16, 1996 under, "Item 5. Other Events," the Company
filed a press release announcing its consolidated operating  results for the
second quarter of 1996 and the Company's plans to begin offering CDMA digital
technology to its Las Vegas customers in early August 1996.



                                       18
<PAGE>



  



                                  SIGNATURE



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


                         360  Communications Company


                         By: /s/ Gary L. Burge
                            --------------------------
                             Gary L. Burge
                             Senior Vice President - Finance
                             (Principal Accounting Officer)



Date:  November 14, 1996





                                       19
<PAGE>



                               EXHIBIT INDEX


Exhibit
Number                         Description of Exhibits

2.3        First  Amendment to Exchange and Merger Agreement, dated as of
           November 1, 1996,  by and among Independent  Cellular Network
           Partners, James A. Dwyer,  Jr., David Winstel,  CC Industries,  Inc.,
           Ohio Cellular RSA,  L.P.,  Ohio RSA  Corporation,  Quality  Cellular
           Communications  of Ohio,  Inc., Cellular Plus,  L.P.,  C-Plus,  Inc.,
           Quality Cellular Plus  Communications,  Inc., Henry Crown and
           Company  (Not  Incorporated  ) and  360 Communications
           Company.  (Filed  as  Exhibit  2.3 to the Company's  Current  Report
           on Form 8-K dated November 1, 1996,  File No. 1-14108,  and
           incorporated herein by reference.)

3.1        Amended and Restated Certificate of Incorporation of 360
           Communications Company, as amended as of March 4, 1996.*

3.2        Amended and Restated Bylaws of 360 Communications Company.*

3.3        Certificate of Designation of First Series Junior  Participating
           Preferred Stock of 360 Communications Company. (Filed as Exhibit 3.3
           to Amendment No. 4 to  Registration Statement No.33-99756 and
           incorporated herein by reference.)

4.1        360 Communications Company's 7 1/8% Senior Note Due 2003 and7 1/2%
           Senior Note Due 2006.*


4.2        Indenture dated as of March 7, 1996 between 360 Communications 
           Company and Citibank,  N.A.,  as Trustee.*

4.3        Form of 360 Communications Company Common Stock, $0.01 par value,
           certificate.*

4.4        Form of 360 Communications  Company's  Subordinated  Non-Negotiable
           Promissory  Note (included in Exhibit 2.2 to the Company's Quarterly
           Report on Form 10-Q for the quarterly period ended June 30,1996,
           File No. 1-14108, and incorporated herein by reference).

27         Financial Data Schedule.


------------
*  Filed as an  Exhibit  to the  Company's  Annual  Report  on Form 10-K for the
   fiscal year ended December 31, 1995 and incorporated herein by reference.





                                       20
<PAGE>