<PAGE>
                                                        http://www.mitel.com

                              UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549
                                FORM 10-Q

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

              For the quarterly period ended June 26, 1998

                                   OR

   [ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934
   
                      Commission file number 1-8139

                           MITEL CORPORATION

        (Exact name of registrant as specified in its charter)
 
           CANADA                                   NONE

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

       350 Legget Drive
       P.O. Box 13089
       Kanata, Ontario, Canada                     K2K 1X3 

     (Address of principal                      (Postal Code)
       executive offices)

  Registrant's telephone number, including area code:  (613) 592-2122

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  ( )

The number of common shares outstanding as at July 31, 1998 was 116,536,681.

                                    1
<PAGE>
                              MITEL CORPORATION

                                   INDEX

PART I.  FINANCIAL INFORMATION (Unaudited)

ITEM 1.  FINANCIAL STATEMENTS

         Consolidated Balance Sheets -
         June 26, 1998 and March 27, 1998 . . . . . . . . . . . . . . . . . 3

         Consolidated Statements of Retained Earnings -
         Three months ended June 26, 1998 and June 27, 1997 . . . . . . . . 4

         Consolidated Statements of Income -
         Three months ended June 26, 1998 and June 27, 1997. . . . . . . . .5

         Consolidated Statements of Cash Flows - 
         Three months ended June 26, 1998 and June 27, 1997. . . . . . . . .6

         Notes to the Consolidated Financial Statements . . . . . . . . . . 7

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . 17

PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . .27

                                    2
<PAGE>
                              Mitel Corporation
                    (incorporated under the laws of Canada)
                         CONSOLIDATED BALANCE SHEETS
                      (in millions of Canadian dollars)
                                 (Unaudited)
<TABLE>
<CAPTION>
                                                      June 26,   March 27,
                                                      1998       1998
                                                      --------   --------
<S>                                                   <C>        <C>
ASSETS
Current assets:
  Cash and short-term investments                     $   60.8   $  151.7
  Accounts receivable                                    302.0      288.0
  Inventories (Note 3)                                   185.3      162.2
  Prepaid expenses                                        18.9       19.8
  Investment tax credits recoverable (Note 6)              7.7        7.5
                                                      --------   --------
                                                         574.7      629.2
Capital assets:
  Fixed assets (Note 4)                                  550.1      549.3
  Other assets (Notes 5 & 6)                             107.6       59.2
                                                      --------   --------
                                                      $1,232.4   $1,237.7
                                                      ========   ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities            $  256.5   $  290.7
  Income and other taxes payable                          10.2       19.6
  Deferred revenue                                        32.0       32.7
  Current portion of long-term debt (Note 7)              39.5       40.3
                                                      --------   --------
                                                         338.2      383.3
Long-term debt (Note 7)                                  383.6      379.6
Pension liability                                         12.9       12.2
Deferred income taxes                                     28.4       27.1
                                                      --------   --------
                                                         763.1      802.2
                                                      --------   --------
Shareholders' equity:
  Capital stock (Note 7)
     Preferred shares                                     37.2       37.2
     Common shares                                       157.9      157.3
  Contributed surplus                                     32.3       32.3
  Retained earnings                                      216.7      202.9
  Translation account (Note 8)                            25.2        5.8
                                                      --------   --------
                                                         469.3      435.5
                                                      --------   --------
                                                      $1,232.4   $1,237.7
                                                      ========   ========
</TABLE>
     (See accompanying notes to the consolidated financial statements)
                                    3
<PAGE>
                             Mitel Corporation
                CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                      (in millions of Canadian dollars)
                                (Unaudited)
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Retained earnings, beginning of period                $ 202.9    $ 114.2

Net income for the period                                14.6       18.2
                                                      -------    -------
                                                        217.5      132.4

Dividends on preferred shares (Note 9)                   (0.8)      (0.8)
                                                      -------    -------
Retained earnings, end of period                      $ 216.7    $ 131.6
                                                      =======    =======
</TABLE>

   (See accompanying notes to the consolidated financial statements)

                                    4
<PAGE>
                             Mitel Corporation
                      CONSOLIDATED STATEMENTS OF INCOME
          (in millions of Canadian dollars, except per share amounts)
                               (Unaudited)
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Revenue:
  Products                                            $ 288.4    $ 162.5
  Service                                                22.2       19.5
                                                      -------    -------
                                                        310.6      182.0
                                                      -------    -------
Cost of sales (excluding amortization):
  Products                                              142.9       80.6
  Service                                                15.1       11.4
                                                      -------    -------
                                                        158.0       92.0
                                                      -------    -------
Gross margin                                            152.6       90.0
                                                      -------    -------
Expenses:
  Selling and administrative                             63.1       49.2
  Research and development (net)                         40.2       15.8
  Investment tax credits related to prior years' 
   research and development (Note 6)                     (6.1)      (7.4)
  Amortization                                           28.9        9.2
                                                      -------    -------
                                                        126.1       66.8
                                                      -------    -------
Operating income                                         26.5       23.2

Interest:
  Income                                                  1.6        1.2
  Expense                                                (8.5)      (0.9)
                                                      -------    -------
Income before income taxes                               19.6       23.5

Income tax expense                                        5.0        5.3
                                                      -------    -------
Net income for the period                             $  14.6    $  18.2
                                                      =======    =======
Net income for the period attributable to common
 shareholders after preferred share dividends         $  13.8    $  17.4
                                                      =======    =======
Net income per common share (Note 7)                  $  0.13    $  0.16
                                                      =======    =======
</TABLE>
    (See accompanying notes to the consolidated financial statements)

                                    5
<PAGE>
                              Mitel Corporation
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (in millions of Canadian dollars)
                                (Unaudited)
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
CASH PROVIDED BY (USED IN)

Operating activities:
  Net income for the period                           $  14.6    $  18.2
  Amortization                                           29.4        9.2
  Investment tax credits                                 (3.5)      (3.6)
  Gain on sale of capital assets                         (0.4)      (0.8)
  Other non-cash operating items                          0.3        0.2
  Increase in working capital                           (69.4)     (18.8)
                                                      -------    -------
    Total                                               (29.0)       4.4
                                                      -------    -------
Investing activities:
  Additions to capital assets                           (13.3)      (9.8)
  Proceeds from disposal of capital assets                0.8        6.8
  Acquisitions (Note 10)                                (46.6)         -
  Net change in non-cash balances related to 
   investing activities                                  (5.0)     (12.2)
                                                      -------    -------
     Total                                              (64.1)     (15.2)
                                                      -------    -------
Financing activities:
  Increase in long-term debt                              5.5        8.2
  Repayment of long-term debt                            (3.2)      (3.9)
  Debt issue costs                                       (1.9)         -
  Dividends on preferred shares (Note 9)                 (0.8)      (0.8)
  Issue of common shares (Note 7)                         0.6        0.1
                                                      -------    -------
     Total                                                0.2        3.6
                                                      -------    -------
Effect of currency translation on cash                    2.0        0.7
                                                      -------    -------
Decrease in cash and short-term investments             (90.9)      (6.5)

Cash and short-term investments, beginning of period    151.7      143.3
                                                      -------    -------
Cash and short-term investments, end of period        $  60.8    $ 136.8
                                                      =======    =======
</TABLE>

  (See accompanying notes to the consolidated financial statements)

                                    6
<PAGE>
                              MITEL CORPORATION
                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
          (in millions of Canadian dollars, except per share amounts)
                                (Unaudited)

1.   In the opinion of Management, the unaudited consolidated financial 
statements reflect all adjustments, which consist only of normal and 
recurring adjustments, necessary to present fairly the financial position at 
June 26, 1998 and the results of operations and the changes in financial 
position for the three month periods ended June 26, 1998 and June 27, 1997, 
in accordance with accounting principles generally accepted in Canada. (See 
also Note 11).

These financial statements should be read in conjunction with the financial 
statements and notes thereto contained in the Company's Annual Report on Form 
10-K for the year ended March 27, 1998.  The Company's fiscal year-end is the 
last Friday in March.

2.   Due to the cyclical nature of the business, the results of operations 
for the periods presented are not necessarily indicative of the results to be 
expected for the full year.  

3.   The components of inventory are:
<TABLE>
<CAPTION>
                                                      June 26,   March 27,
                                                      1998       1998
                                                      -------    -------
<S>                                                   <C>        <C>
Raw materials                                         $  54.5    $  53.4
Work-in-process                                          75.1       60.3
Finished goods                                           55.7       48.5
                                                      -------    -------
                                                      $ 185.3    $ 162.2
                                                      =======    =======
</TABLE>

4.   Fixed assets:
<TABLE>
<CAPTION>
                                                      June 26,   March 27,
                                                      1998       1998
                                                      -------    -------
<S>                                                   <C>        <C>
Cost                                                  $ 860.3    $ 831.2
Accumulated amortization                               (310.2)    (281.9)
                                                      -------    -------
                                                      $ 550.1    $ 549.3
                                                      =======    =======
</TABLE>

                                    7
<PAGE>
5.   Other assets:
<TABLE>
<CAPTION>
                                                      June 26,   March 27,
                                                      1998       1998
                                                      -------    -------
<S>                                                   <C>        <C>
Cost:
  Patents, trademarks, and other                      $  21.5    $  21.3
  Other intangible assets                                74.1       27.6
  Investment tax credits recoverable                     13.8       10.5
  Promissory note                                        10.6       10.3
                                                      -------    -------
                                                        120.0       69.7
                                                      -------    -------
Less accumulated amortization:
  Patents, trademarks, and other                          7.3        7.2
  Other intangible assets                                 5.1        3.3
                                                      -------    -------
                                                         12.4       10.5
                                                      -------    -------
                                                      $ 107.6    $  59.2
                                                      =======    =======
</TABLE>
On May 8, 1998, the Company acquired completed and in-process research and 
development ("R&D") and other intangible assets in connection with the 
acquisition of certain assets of the Customer Premise Equipment Business Unit 
of Centigram Communications Corporation (See also Note 10).  The business is 
now defined as Advanced Messaging.  The acquired intangible assets will be 
amortized over a period of ten years, the expected useful life of the assets.

On May 19, 1998, the Company acquired completed R&D and other intangible 
assets in connection with the acquisition of certain assets of Telecom 
Sciences Corporation Limited ("TSc") (See also Note 10).  The business is now 
defined as ISDN PBX.  The acquired intangible assets will be amortized over a 
period of seven years, the expected useful life of the assets.

6.   Income taxes

As at June 26, 1998, the Company recognized a net Canadian investment tax 
credit ("ITC") asset of $21.5 (March 27, 1998 - $18.0) related to prior 
years' research and development expenses.  

The ITCs recognized in first quarter earnings were comprised of two 
components:  

1) the recognition of ITCs in the first quarter of Fiscal 1999 for which 
management believes there is sufficient evidence of expected profitability 
from operations in the foreseeable future to provide reasonable assurance for 
accruing a future benefit related to ITCs, amounting to $3.5, or $0.03 per 
share, (1998 - $3.6, or $0.03 per share); and, 

2) ITCs realized for tax purposes in the first quarter of Fiscal 1999, 
amounting to $2.6 (1998 - $3.8).  The benefit of recording these ITCs 
contributed to reducing the impact of a higher effective income tax rate in 
Canada, combining to result in an insignificant impact to net earnings. 

                                    8
<PAGE>
As at March 27, 1998, the Company had tax loss carryforwards of approximately 
$100.0 for which no accounting benefit was recognized and which are available 
to reduce future years' income for tax purposes.  These tax loss 
carryforwards expire as follows: 2002 - $2.8; 2003 - $16.5; 2004 - $7.1; 2005 
to 2013 - $73.6.  The tax loss carryforwards relate to operations in the 
United States, Germany and Hong Kong.  As at March 27, 1998, the Company had 
Canadian investment tax credit carryforwards of approximately $45.5 for which 
no accounting benefit was recognized and which are available to reduce future 
years' income taxes.  These investment tax credits expire during the years 
from 2000 to 2008.  In addition, the Company had timing differences of 
approximately $30.0 for which no accounting benefit was recognized.

7.   Capital stock:
a)
<TABLE>
<CAPTION>
                                                    June 26,     March 27,
                                                    1998         1998
                                                    -----------  -----------
<S>                                                 <C>          <C>
Shares outstanding:

  Preferred shares - R&D Series                       1,616,500    1,616,500
  Common shares                                     108,519,256  108,394,631
</TABLE>

There were no preferred shares repurchased during the three months ended June 
26, 1998.

Subsequent to the quarter ended June 26, 1998, the Company entered into an 
agreement with a syndicate of underwriters to issue 8 million common shares 
of the Company at an agreed price of $21.50 per share for total proceeds of 
$172.0.  The transaction concluded on July 23, 1998.  Net proceeds of 
approximately $164.1 were received by the Company, of which approximately 
$123.1 was applied to repay a portion of the term loans entered into in 
connection with the Plessey acquisition.  The balance of the proceeds will be 
used for general corporate purposes.  (See also part c.)

b) A summary of the Company's stock option activity is as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended 
                                                      June 26,   June 27,
                                                      1998       1997
                                                      ---------  -------
<S>                                                   <C>        <C>
Outstanding options:

Balance, beginning of period                          6,251,888  3,238,638
Granted                                                 169,250  1,044,000
Exercised                                              (124,625)   (29,225)
Cancelled                                               (28,500)   (10,875)
                                                      ---------  ---------
Balance, end of period                                6,268,013  4,242,538
                                                      =========  =========
</TABLE>

                                    9
<PAGE>
Available for grant at June 26, 1998 were 102,775 (March 27, 1998 - 243,525) 
common shares.  The exercise prices on stock options issued range from $1.10 
to $21.09 per share with exercise periods extending to June, 2008. 

At the 1998 Annual General Meeting on July 23, 1998, shareholders approved a 
resolution which established the maximum number or common shares in respect 
of which options may be granted under the 1991 Stock Option Plan for Key 
Employees and Non-Employee Directors at 16,000,000 common shares.

c) The net income per common share figures were calculated based on net 
income after the deduction of preferred share dividends and using the 
weighted monthly average number of shares outstanding during the respective 
periods as follows:

<TABLE>
<CAPTION>
                                                      Three Months Ended 
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Weighted average shares outstanding (millions)          108.5      107.4
                                                      =======    =======
</TABLE>

d) The pro forma net income per common share giving effect to the common 
share issue described in Note 7 a) as if the issue had taken place at the 
beginning of Fiscal 1999 is presented as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended 
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Pro forma net income per common share, after
 giving effect to the issuance of additional shares   $  0.06    $  0.16
                                                      =======    =======
Weighted average shares outstanding (millions)          116.5      107.4
                                                      =======    =======
</TABLE>

                                    10
<PAGE>
8.   The following table summarizes changes in the translation account:
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Balance, beginning of period                          $   5.8    $   2.5
Increase (decrease):
  Movements in exchange rates - 
     United States Dollar                                10.0        0.2
     United Kingdom Pound Sterling                        6.1        2.1
     Swedish Krona                                        2.0       (0.3)
     Other currencies                                     1.3          -
                                                      -------    -------
Balance, end of period                                $  25.2    $   4.5
                                                      =======    =======
</TABLE>

9.   The Company has not declared or paid any dividends on its common shares. 
During the first quarter, a $0.50 per share dividend was declared and paid on 
the preferred shares.

10.  Acquisitions

(A)  On May 8, 1998, the Company acquired certain assets of the Customer 
Premises Equipment Business Unit of Centigram Communications Corporation, now 
defined as Advanced Messaging, for cash consideration of U.S.$22.0.  The 
Company also purchased receivables and inventories related to that business 
for approximately U.S.$4.8 in cash. The Advanced Messaging business, based in 
San Jose, California, provides productivity-enhancing, enterprise-wide 
messaging solutions to organizations around the world through a broad network 
of distributors and agents.  The acquisition was accounted for by the 
purchase accounting method.  The purchase price allocation was based on fair 
values assigned to net assets as determined by an independent valuation firm 
using standard valuation techniques.  An amount of $35.9 was allocated to 
identifiable intangible assets which include completed and in-process 
research and development and other intangible assets.  The difference between 
the purchase price and the fair value of the net assets amounted to $0.6, 
which was recorded as goodwill.  The identifiable intangible assets and the 
goodwill are being amortized over ten years.  The allocation to net assets 
included $2.9 in respect of acquisition costs and costs to integrate the 
operations of the acquired company.  The purchase transaction is summarized 
as follows:

                                    11
<PAGE>
Net assets acquired, at approximate fair value:
<TABLE>
<S>                                    <C>
Current assets                         $   6.6
Capital assets                            39.2
                                       -------
Total assets                              45.8

Current liabilities                        7.2
                                       -------
Total net assets                       $  38.6
                                       =======
Cash consideration                     $  38.6
                                       =======
</TABLE>

Pro forma financial information for the acquisition as if the business had 
been acquired at the beginning of Fiscal 1999 is not presented due to the 
insignificant impact on the Company's results of operations.

(B)  On May 19, 1998, the Company acquired the products, technology, research 
and development facilities and sales and marketing organization of Glasgow-
based TSc for cash consideration of $8.0.  TSc, now defined as ISDN PBX, 
provides ISDN business products for the small-to-medium enterprise market.  

The acquisition was accounted for by application of the purchase accounting 
method in which the results of operations were included in the Company's 
accounts from the date of acquisition.  An amount of $4.5 was allocated to 
identifiable intangible assets relating to completed R&D.  The difference 
between the purchase price and the fair value of the net assets amounted to 
$2.0, which was recorded as goodwill.  The completed R&D and goodwill are 
being amortized over seven years. The allocation to net assets included $2.0 
in respect of acquisition costs and costs to integrate the operations of the 
acquired company.  The purchase transaction is summarized as follows:

Net assets acquired, at approximate fair value:
<TABLE>
<S>                                    <C>
Current assets                         $   2.4
Capital assets                             7.6
                                       -------
Total assets                              10.0

Current liabilities                        2.0
                                       -------
Total net assets                       $   8.0
                                       =======
Cash consideration                     $   8.0
                                       =======
</TABLE>
Pro forma financial information for the acquisition as if the business had 
been acquired at the beginning of Fiscal 1999 is not presented due to the 
insignificant impact on the Company's results of operations.

                                    12
<PAGE>
11.  United States accounting principles

The consolidated financial statements have been prepared in accordance with 
accounting principles generally accepted in Canada (Canadian GAAP), which, in 
the case of the Company, conform in all material respects with those in the 
United States (U.S. GAAP) and with the requirements of the Securities and 
Exchange Commission (SEC), except as fully described in Note 22 to the 
consolidated financial statements as at March 27, 1998. 

The following table reconciles the net income as reported on the consolidated 
statements of income to the net income that would have been reported had the 
financial statements been prepared in accordance with U.S. GAAP and the 
requirements of the SEC:
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Net income for the period in accordance with 
 Canadian GAAP                                        $  14.6    $  18.2
Translation of foreign currency denominated debt        (11.7)         -
Effect of deferral accounting related to foreign 
 exchange contracts                                      (9.5)      (0.6)
Write-off of acquired in-process R&D                     (5.2)         -
Amortization of acquired in-process R&D                   0.1          -
Adjustment to deferred income taxes                      (3.5)       3.7
                                                      -------    -------
U.S. GAAP and SEC requirements:
Net income (loss) for the period                        (15.2)      21.3
Dividends on cumulative preferred shares                 (0.8)      (0.8)
                                                      -------    -------
Adjusted net income (loss) for the period             $ (16.0)   $  20.5
                                                      =======    =======
Net income (loss) per common share:
   Basic                                              $ (0.15)   $  0.19
                                                      =======    =======
   Diluted                                            $ (0.15)   $  0.19
                                                      =======    =======
Weighted average shares for basic EPS (millions)        108.5      107.4
Weighted average shares on conversion of stock
  options (millions)                                        -        0.9
                                                      -------    -------
Adjusted weighted average shares and 
  share equivalents (millions)                          108.5      108.3
                                                      =======    =======
</TABLE>
Supplemental net income per common share giving effect to the common share 
issue described in Note 7 a) as if the issue had taken place at the beginning 
of Fiscal 1999 is presented as follows:

Supplemental net income (loss) per common share (see Note 7):

                                    13
<PAGE>
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
  Basic                                               $ (0.16)    $ 0.19
                                                      =======    =======
  Diluted                                             $ (0.16)    $ 0.19
                                                      =======    =======
Weighted average shares for basic EPS (millions)
 giving effect to the issue of 8.0 common shares
 as if it occurred on March 28, 1998 (See Note 7):      116.5      107.4
Weighted average shares on conversion of stock 
 options (millions)                                         -        0.9
                                                      -------    -------
Adjusted weighted average shares and share 
 equivalents giving effect to the issue of 8.0
 common shares as if it occurred on March 28,
 1998 (millions):                                       116.5      108.3
                                                      =======    =======
</TABLE>
The following options were excluded in the computation of diluted earnings 
per share because the options' exercise price exceeded the average market 
price of the common shares and, therefore, the effect would be antidilutive:

i)  All options outstanding at June 26, 1998 were excluded because they have 
an antidilutive impact on the basic net loss per common share.

ii) Options outstanding for the three months ended June 27, 1997 to purchase 
1,395,000 shares of common stock at an average exercise price of $8.88 per
share. 

The Company adopted Statement of Financial Accounting Standards No. 130, 
Reporting Comprehensive Income ("SFAS 130") effective March 28, 1998.  
SFAS No. 130 requires that items defined as other comprehensive income, such 
as foreign currency translation adjustments, be separately classified in the 
financial statements and that the accumulated balance of other comprehensive 
income be reported separately from retained earnings and additional paid-in 
capital in the equity section of the balance sheet.  The components of 
comprehensive income for the three months ended June 27, 1998 and June 26, 
1997 are as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 27,   June 26,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Comprehensive income for the period:
 Net income (loss) for the period                     $ (16.0)   $  20.5
 Other comprehensive income -
   Foreign currency adjustment                           19.4        2.0
                                                      -------    -------
Comprehensive income for the period                   $   3.4    $  22.5
                                                      =======    =======
</TABLE>
                                    14
<PAGE>
The Company adopted Statement of Financial Accounting Standards No. 131, 
Disclosures about Segments of an Enterprise and Related Information ("SFAS 
131") effective March 28, 1998.  SFAS No. 131 requires public companies to 
report certain information about operating segments in their financial 
statements, and establishes related disclosures about products and services 
geographic areas and major customers.  SFAS No. 131 does not need to be applied 
to interim financial statements in the initial year or application; however, 
comparative information for interim periods in the initial year of 
application will be reported in the financial statements for interim periods 
in Fiscal 2000.

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 27,   June 26,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Cash flow information presented in conformity in all 
material respects with U.S. GAAP:

Cash provided by (used in)

Operating activities - Canadian GAAP                  $ (29.0)   $   4.4
Deferred income taxes                                    (3.5)       3.7
Change in deferred tax asset                              3.5       (3.7)
                                                      -------    -------
Operating activities - U.S. GAAP                        (29.0)       4.4
                                                      -------    -------
Investing activities - Canadian GAAP                    (64.1)     (15.2)
Change in short-term investments                         24.2       48.2
Additions to capital assets under capital lease           3.6        7.4
                                                      -------    -------
Investing activities - U.S. GAAP                        (36.3)      40.4
                                                      -------    -------
Financing activities - Canadian GAAP                      0.2        3.6
Increase in capital leases                               (3.6)      (7.4)
                                                      -------    -------
Financing activities - U.S. GAAP                         (3.4)      (3.8)
                                                      -------    -------
Increase (decrease) in cash                             (68.7)      41.0
Effect of currency translation on cash flows              2.0        0.7
Cash position, beginning of period                      117.2       55.5
                                                      -------    -------
Cash position, end of period                          $  50.5    $  97.2
                                                      =======    =======
</TABLE>

                                    15
<PAGE>
Balance sheet items in conformity with U.S. GAAP and SEC requirements:
<TABLE>
<CAPTION>
                                                      June 26,   March 27,
                                                      1998       1998
                                                      -------    -------
<S>                                                   <C>        <C>
Cash                                                  $  50.5    $ 117.2
Short-term investments                                   10.3       34.5
Deferred tax asset                                       11.6       11.8
Fixed assets                                            525.9      525.1
Other assets                                            109.6       69.6
Accounts payable and accrued liabilities                271.5      284.5
Redeemable preferred shares                              34.4       34.4
Common shares                                           603.8      603.2
Contributed surplus                                       2.5        2.5
Deficit                                                (222.2)    (206.2)
</TABLE>

The Financial Accounting Standards Board has issued Statement of Financial 
Accounting Standards No. 133 Accounting for Derivative Instruments and 
Hedging Activities ("SFAS 133").  SFAS No. 133 will be effective for the  
Company's Fiscal 2001 year end. The Company has not determined the impact of 
this pronouncement on its consolidated financial statements.

12.  Net change in non-cash working capital balances related to operating 
activities:  
<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                      June 26,   June 27,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Accounts receivable                                   $  (0.5)   $   9.0
Inventories                                             (15.7)      (7.6)
Accounts payable and accrued liabilities                (52.9)     (20.0)
Deferred revenue                                         (1.5)      (0.9)
Other                                                     1.2        0.7
                                                      -------    -------
                                                      $ (69.4)   $ (18.8)
                                                      =======    =======
</TABLE>

                                    16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS
(in millions of Canadian dollars, except per share amounts)

Total revenue grew by 71 percent to $310.6 in the first quarter of Fiscal 
1999 from $182.0 in the same quarter of last year.  Mitel's revenue growth in 
the three months ended June 26, 1998 was driven by incremental revenue from 
recently acquired businesses and by strong Business Communications Systems 
(BCS) sales in North America and Europe. By business group, Semiconductor 
revenue grew by 146 percent and BCS revenue was up 31 percent from the 
previous year.  The Semiconductor growth was mainly attributable to the 
consolidation of the Plessey Semiconductors Group ("Plessey") which was 
acquired in the fourth quarter of Fiscal 1998.  The BCS revenue growth was 
driven by higher sales volumes of PBX systems, telephone sets, and alternate 
network access products and the effects of consolidating recent acquisitions.

The Company completed two acquisitions during Fiscal 1998 as well as two 
others mid-way through the first quarter of Fiscal 1999.  The most 
significant acquisition occurred on February 12, 1998 when the Company 
acquired Plessey, an international semiconductor company focused primarily on 
telecommunications and media applications.  The other three acquisitions 
related to the BCS business unit.  The BCS portfolio was strengthened on 
August 8, 1997 with the acquisition of the remote access technology business 
of Gandalf Technologies Inc.  In addition, on May 8, 1998, the Company 
acquired the Customer Premises Equipment Business Unit of Centigram 
Communications Corporation, now defined as Advanced Messaging.  The Advanced 
Messaging acquisition will complement Mitel's BCS communications portfolio 
with voice messaging solutions to meet increasing customer demand for 
voicemail and unified messaging solutions.  Finally, on May 19, 1998, the 
Company acquired the business of Glasgow-based Telecom Sciences Corporation 
Limited, now defined as ISDN PBX.  The ISDN PBX acquisition enhances Mitel's 
product portfolio with ISDN business products for the small-to-medium 
enterprise market. 

The Company reported net income of $14.6, or $0.13 per share, for the first 
quarter ended June 26, 1998 compared to $18.2, or $0.16 per share, in Fiscal 
1998's first quarter.  The Fiscal 1999 first quarter earnings were reduced by 
$0.05 per share, after interest and tax, due to the consolidation of Plessey.  
In addition, the prior year's first quarter net income benefited by $0.02 per 
share from a gain and other income related to the sale of the Boca Raton 
facility.

Subsequent to the quarter ended June 26, 1998, the Company entered into an 
agreement with a syndicate of underwriters to issue 8 million common shares 
of the Company at an agreed price of $21.50 per share for total proceeds of 
$172.0.  The transaction was completed on July 23, 1998.  Net proceeds of 
approximately $164.1 were received by the Company, of which approximately 
$123 was applied to repay a portion of the term loans incurred in connection 
with the Plessey acquisition.  The balance of the proceeds will be used for 
general corporate purposes.  All of the per share amounts referred to in this 
management's discussion and analysis and in the consolidated financial 
statements contained elsewhere in this Form 10-Q are exclusive of this common 
share issue.

                                    17
<PAGE>
Net income and cash flows for each period as determined by United States 
accounting principles are detailed in Note 11 to the consolidated statements 
included elsewhere in this Form 10-Q.

The following discussion and analysis explains trends in the Company's 
financial condition and results of operations for the three months ended June 
26, 1998 compared with the same period in the previous year, and is intended 
to help shareholders and other readers understand the dynamics of the 
Company's business and the key factors underlying its financial results.  
This discussion should be read in conjunction with the consolidated financial 
statements and notes included elsewhere in this Form 10-Q, and with the 
Company's audited consolidated financial statements and notes thereto for the 
year ended March 27, 1998.  Certain statements in this management's 
discussion and analysis constitute forward-looking statements within the 
meaning of the U.S. Private Securities Litigation Reform Act of 1995 that are 
based on current expectations, estimates and projections about the industries 
in which the Company operates, management's beliefs and assumptions made by 
management.  Such forward-looking statements involve known and unknown risks, 
uncertainties, and other factors which may cause the actual results, 
performance or achievements of the Company, or industry results, to be 
materially different from any future results, performance, or achievements 
expressed or implied by such forward-looking statements.  Such risks, 
uncertainties and assumptions include, among others, the following: general 
economic and business conditions; demographic changes; import protection and 
regulation; rapid technology development and changes; timing of product 
introductions; the mix of products/services; industry competition, industry 
capacity and other industry trends; and the ability of the Company to attract 
and retain key employees.

RESULTS OF OPERATIONS

Mitel's business is global and comprises the design, manufacture and sale of 
semiconductors, subsystems and systems to world markets in the communications 
industries. These products and related services include integrated circuits 
for wired and wireless applications, applications-specific integrated 
circuits, optoelectronic devices and custom silicon wafers; voice 
communications systems; networked voice and data systems, CTI systems and 
applications; telephony-enabled servers; public switching systems; and 
alternate network and remote access products.

The Company sells its products through both direct and indirect channels of 
distribution. Factors affecting the choice of distribution, among others, 
include: end-customer type, the level of product complexity and integration 
requirements, the stage of product introduction, geographic presence, 
location of markets and volume levels.

                                    18
<PAGE>
REVENUE

Revenue, based on the geographic location of Mitel's customers, was 
distributed as follows: 
<TABLE>
<CAPTION>
                            Three Months            Three Months 
                            Ended           % of    Ended           % of
                            June 26, 1998   Total   June 27, 1997   Total
                            -------------   -----   -------------   -----
   <S>                      <C>             <C>     <C>             <C>
   United States            $ 138.7           45%   $  91.7           51%
   Europe                     105.7           34       51.2           28
   Other Regions               50.7           16       26.0           14
   Canada                      15.5            5       13.1            7
                            -------         -----   -------         -----
                            $ 310.6          100%   $ 182.0          100%
                            =======         =====   =======         =====
</TABLE>

For the quarter ended June 26, 1998, the net movement in exchange rates from 
Fiscal 1998 favorably impacted total revenue by 4 percent ($6.7) primarily as 
a result of changes in the UK pound sterling and US dollar exchange rates.

Revenue, by product group, was distributed as follows:
<TABLE>
<CAPTION>
                            Three Months            Three Months
                            Ended           % of    Ended           % of
                            June 26, 1998   Total   June 27, 1997   Total
                            -------------   -----   -------------   -----
   <S>                      <C>             <C>     <C>             <C>
   Semiconductors           $ 154.7           50%   $  63.0           35%
   Business Communications
      Systems                 155.9           50      119.0           65
                            -------         -----   -------         -----
                            $ 310.6          100%   $ 182.0          100%
                            =======         =====   =======         =====
</TABLE>

Semiconductors

Mitel manufactures and sells semiconductor products in the following 
categories: wired communication components, wireless communication 
components, application-specific integrated circuit systems, optoelectronic 
components, and power and automotive. The Company also provides foundry 
services to third parties on a contract basis. 

Semiconductor revenue increased by 146 percent from last year principally due 
to the effects of consolidating the operations of Plessey which was acquired 
in the fourth quarter of Fiscal 1998.  Following the acquisition and during 
the first quarter of Fiscal 1999, the Plessey operations were re-organized 
and are being integrated into Mitel's semiconductor business lines.  Overall, 
Mitel continues to benefit from the world-wide growth in the communications 

                                    19
<PAGE>
segment of the semiconductor industry and growth in the market for ASICs, 
particularly for medical applications.  Technological advances and 
increasingly complex end user requirements affecting telecom and datacom 
networks have stimulated the demand for Mitel's wired and wireless 
communication components and ASICs.

Management believes the Plessey acquisition significantly enhances the 
Company's operations, technologies and product portfolio.  At the time of the 
acquisition, the Plessey group was incurring losses.  It is anticipated that 
Plessey will have a dilutive effect on the Company's earnings in the first 
half of Fiscal 1999.

The Plessey acquisition also provided Mitel with enhanced market coverage in 
Europe, resulting in 34 percent of total revenue in the first quarter being 
generated in Europe as against 28 percent in the same period last year.  This 
acquisition also had the effect of reducing the proportion of total revenue 
recorded in the United States from 51 percent in the first quarter last year 
to 45 percent for the same period in Fiscal 1999.

Business Communications Systems

Business Communications Systems (BCS) comprise PBX and peripheral products, 
open communications systems, applications, systems integration, the GX5000 
public switching system, and alternate network and remote access products.  
All of the Company's service revenue relates to BCS, primarily PBX.  

Compared to the first quarter of Fiscal 1998, BCS product revenue in Fiscal 
1999 increased by 34 percent, from $99.5 to $133.7, due to higher sales 
volumes of SX-2000 and SX-200 systems, including the associated pull-through 
of new system sets; incremental sales of remote access products; increased 
shipments of alternate network access products; and additional revenues from 
the recently acquired Advanced Messaging and ISDN PBX businesses. 

U.S. indirect channel sales benefited from a strong North American economy 
and from increased demand from the small to medium sized business segment for 
Mitel's SX-200 ML and SX-200 EL switches.  In addition, Mitel's new line of 
telephone sets was launched during the first quarter of Fiscal 1999 to drive 
additional revenue. U.S. direct channel sales benefited from strong growth in 
the installation of new systems as well as from upgrades in the existing 
customer base.

With respect to Europe, sales increased in the first quarter of Fiscal 1999 
due to system upgrades sold to the installed base and to continued demand for 
Mitel's alternate network access products.
 
BCS sales into the Asia Pacific region continue to be adversely affected by 
the ongoing effects of weakened economies and intense price competition in 
that region.  Management believes this trend will continue for the 
foreseeable future without a significant impact on the Company's consolidated 
results of operations.

Service revenue grew mainly due to the managed service business in the U.K. 
where telecom product-related services are channeled through outsourcing 
companies. 

                                    20
<PAGE>
GROSS MARGIN

As a percentage of total revenue, total gross margin was 49 percent for the 
three months ended June 26, 1998, the same percentage as in the corresponding 
period of Fiscal 1998.  The quarter's product gross margin was 50 percent in 
Fiscal 1999, equal to the margin posted in the first quarter of Fiscal 1998.  
The product gross margin remained unchanged due to the positive impact of 
higher sales volumes of BCS products partially offset by the effect of 
reduced gross margins in the Plessey operations. The service gross margin was 
32 percent for the quarter ended June 26, 1998, a decrease of 10 percentage 
points from the respective period in Fiscal 1998, but in line, overall, with 
the margin posted in Fiscal 1998.  The service gross margin declined due to 
the mix of large, competitively-priced service contracts entered into during 
Fiscal 1998.

OPERATING EXPENSES

Selling and Administrative

Selling and administrative (S&A) expenses in the first quarter of Fiscal 1999 
were $63.1, or 20 percent of sales, compared with $49.2, and 27 percent of 
sales, for the comparable period in Fiscal 1998.  S&A expenses decreased as a 
percentage of sales primarily due to the revenue growth and to the 
consolidation of the Plessey operations where S&A expenses as a percentage of 
sales were lower than the Company's average.  The improvement was partially 
offset by the effects of consolidating the recently-acquired Advanced 
Messaging and ISDN PBX businesses, described elsewhere in this management's 
discussion and analysis.  

Research and Development

R&D expenses amounted to $40.2, or 13 percent of revenue, for the quarter 
ended June 26, 1998.  This compares to $15.8, or 9 percent of revenue, in the 
corresponding period of Fiscal 1998.  These amounts are exclusive of related 
R&D amortization and net of Canadian federal government R&D incentives 
earned.  R&D increased due to the inclusion of Plessey's results of 
operations where R&D as a percentage of sales was higher than the Company's 
historical average and to other increases in Mitel Semiconductor.

Investment Tax Credits

The Company earns ITCs in its Canadian operations.  ITCs are credits related 
to specific qualifying expenditures that are prescribed by Canadian tax 
legislation.  In Mitel's case, these ITCs relate primarily to research and 
development expenses.  The ITCs are recorded only when the enterprise has 
made the qualifying expenditures, provided there is reasonable assurance that 
the benefits will be realized.  When the ITCs are not accrued in the year in 
which the qualifying expenditures are made because there is no reasonable 
assurance that the credits will be realized, such credits are accrued in a 
subsequent year when reasonable assurance of realization is first obtained.

The Company separately recorded Canadian ITCs related to prior years' R&D 
amounting to $6.1 in the first quarter of Fiscal 1999 and $7.4 in the 
corresponding period of Fiscal 1998. The ITC accrual was comprised of two 
components in both periods.  Fiscal 1999's first component amounted to $2.6 

                                    21
<PAGE>
which relates to ITCs that are expected to be realized for tax purposes in 
that year.  The Company recorded $3.8 under the same circumstances in the 
first quarter of Fiscal 1998.  The benefit of recording these ITCs was offset 
by a corresponding increase in tax expense to result in no impact to net 
earnings for both periods. The second component of the Fiscal 1999 first 
quarter accrual amounted to $3.5, or $0.03 per share, which was approximately 
the same amount recorded in the corresponding period of Fiscal 1998.  The 
second component related to management's assessment that reasonable assurance 
exists for accruing the benefit of ITCs expected to be realized for tax 
purposes in the foreseeable future.  The reasonable assurance is derived from 
management's assessment that there is sufficient evidence of profitability in 
the near future from operations in which these carryforwards arose. 

Amortization

Amortization increased in the first quarter of Fiscal 1999 to $28.9 from $9.2 
in the respective quarter of Fiscal 1998.  The increase was due to the 
inclusion of Plessey's operations which principally comprise manufacturing 
facilities in the United Kingdom.  In addition, the Company has in recent 
years entered in a major capital program at its other semiconductor plants, 
resulting in higher amortization charges.

INVESTMENT AND INTEREST INCOME

Investment and interest income was $1.6 for the quarter ended June 26, 1998, 
up from the $1.2 recorded in the corresponding quarter of Fiscal 1998.

INTEREST EXPENSE

Interest expense was $8.5 for the first quarter of Fiscal 1999 compared to 
$0.9 in the respective period of Fiscal 1998.  The increase in interest 
expense over last year's first quarter resulted from the new term loans 
incurred by the Company on February 12, 1998 in connection with the Plessey 
acquisition.  Interest expense also includes the proportionate amortization 
of capitalized debt issue costs associated with the term loans.  The 
quarterly interest expense is expected to decrease in future quarters after 
applying the proceeds from the July 1998 common share issue against the term 
loans.

INCOME TAXES

Income tax expense for the three months ended June 26, 1998 was $5.0 compared 
to $5.3 for the same quarter in Fiscal 1998. Before accounting for the ITCs, 
income tax expense for Fiscal 1999's first quarter was $2.4 compared to $1.5 
in the respective period of Fiscal 1998.  The effective income tax rate, 
before accounting for the ITCs and as a percentage of pre-tax income, was 4 
percent and 8 percent in the respective first quarter periods of Fiscal 1999 
and Fiscal 1998.  The higher effective tax rate in Fiscal 1999 was due to 
higher provincial income taxes in Canada offset by expected tax recoveries 
for European operations.

Management periodically reviews the virtual certainty or reasonable 
assurance, as applicable, of realizing the loss and ITC carryforward and 
timing difference benefits in the determination of their accounting 
recognition.  Such review may result in the recording of the accounting 

                                    22
<PAGE>
benefit for these timing differences and investment tax credit carryforwards, 
as the circumstances warrant, and the recognition of loss carryforwards, as 
realized.  Management believes there is sufficient evidence of expected 
profitability from the Company's Canadian operations in the foreseeable 
future to provide reasonable assurance for recording a future benefit on the 
balance sheet of $21.5 related to ITCs, $18.0 of which was recorded in Fiscal 
1998.  The accounting for the ITCs is more fully described in the investment 
tax credit section of this management's discussion and analysis.

YEAR 2000

What is referred to as the Year 2000 problem ("Year 2000 problem") is the 
result of computer programs being written using two digits rather than four 
to define the applicable year.  Any of the Company's computer systems and 
products that have date-sensitive software may recognize a date using "00" as 
the Year 1900 rather than the Year 2000.  This could result in a system 
failure or miscalculations causing disruptions of operations, including, 
amount other things, a temporary inability to process transactions, send 
invoices, or engage in similar normal business activities.  Management has 
formed a Year 2000 Compliance Project and Program Office to establish and 
ensure Mitel's compliance with what is commonly known as the "Year 2000 
problem".  In addition, consultants were engaged to assist with a 
comprehensive review of the Company's state of readiness and to assist with 
any necessary remedial plans for the Year 2000 date change.  This review 
encompassed supporting information technology systems, product lines, and 
business supply chain systems and infrastructure.  Management presently 
believes that with modifications to the Company's existing software and 
conversions to new software, the Year 2000 problem can be mitigated.  
However, if such modifications and conversions are not made, or are not 
completed on a timely basis, the Year 2000 problem could have a material 
adverse effect on the Company's business, financial condition and results of 
operations.  Management further believes that the cost of either repairing or 
replacing certain business systems to ensure business continuance beyond Year 
2000 should not have a significant impact on the results of operations.  The 
cost of the Year 2000 project is estimated at approximately $15.0 and is 
being funded through operating cash flows.  These costs are primarily 
attributable to the purchase of new software and equipment which will be 
expensed or capitalized on a basis consistent with the Company's accounting 
policies for capital assets.  Other than seeking representations and 
assurances, the Company has not made an assessment as to whether any of its 
customers, suppliers or service providers will be affected by the date 
change.  The Company's business, financial condition and results of 
operations may be adversely impacted should the efforts of customers, 
suppliers or service providers for the Company to address the Year 2000 issue 
prove to be inadequate.

OTHER

The Asia Pacific region encountered unstable local economies and significant 
devaluation in its currencies during Fiscal 1998.  This region represented 13 
percent of the Company's revenue for the quarter ended June 26, 1998 and 10 
percent of revenue in the respective period of Fiscal 1998.  The majority of 
the Asia Pacific sales relate to semiconductor operations.  Asia Pacific 
receivables, net of reserves, were approximately 1 percent of the Company's 

                                    23
<PAGE>
total assets as at June 26, 1998.  To the extent the Asia Pacific region 
grows in importance to the Company, or that the factors affecting the region 
begin to adversely affect customers in other geographic locations, the 
Company's business, operating results and financial condition could be 
adversely affected.

Management periodically evaluates the financial and operational independence 
of its foreign operations and the resulting accounting classification of the 
foreign subsidiaries as self-sustaining enterprises.  Should a foreign 
subsidiary cease to be classified as self-sustaining, then translation gains 
or losses on consolidating the foreign subsidiary's financial statements 
would be charged to operating income instead of a separate component of 
shareholders' equity.

The Company manages foreign currency risk by protecting the estimated future 
currency cash flows of each operating division, and certain significant 
transactions, from adverse foreign exchange fluctuations.  The Company does 
not engage in a trading or speculative hedging program.  Interest rate risk 
is managed by entering into interest rate swap contracts. 

BACKLOG

As orders are frequently booked and shipped within the same fiscal month, 
order backlog is not necessarily indicative of a sales outlook for the month, 
quarter, or year.  This is most true for the Company's business 
communications systems since manufacturing lead times for semiconductor 
products are generally longer because of the nature of the production 
process.  At June 26, 1998, order backlog was $300.1 compared to $279.5 at 
March 27, 1998.  The increase in backlog was mostly attributable to stronger 
bookings by both of the Semiconductor and BCS divisions.  Most of the backlog 
is scheduled for delivery in the next twelve months.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and short-term investment balances of $60.8 at June 26, 
1998 compared to $151.7 at March 27, 1998.  The decrease of $90.9 was mainly 
due to the Advanced Messaging and ISDN PBX acquisitions which together 
amounted to $46.6, to reductions of year-end payables and to integration 
costs for the Plessey operations.

Cash flow from operations before working capital changes amounted to $40.4 
during the first quarter of Fiscal 1999, up 74 percent from $23.2 in the 
first quarter of Fiscal 1998.  Since March 27, 1998, the Company's working 
capital, as reflected in the consolidated statements of cash flows, increased 
by $69.4 primarily due to reductions in year-end payables associated with the 
record Fiscal 1998 sales volumes and to higher inventory levels necessary to 
support the growth in the business.  The Company maintains a minimum of 
critical inventory to ensure continuity of supply for its manufacturing 
requirements.  Most of the security supply inventory is carried at the 
Company's semiconductor plants.

Fixed asset additions were $13.1 during the quarter ended June 26, 1998 
compared with $9.8 in the previous year.  The additions were primarily 
related to semiconductor manufacturing capacity and technology enhancements 
as well as continuing improvements to the Company's information technology 
resources.  Other capital assets increased in the first quarter of  Fiscal 

                                    24
<PAGE>
1999 from the end of Fiscal 1998 primarily due to the acquisition of the 
Advanced Messaging and ISDN PBX businesses in May of 1998.  Purchased R&D and 
other intangible assets totaling $42.9 were recorded for the excess of the 
purchase price over the fair value of the tangible assets acquired, based 
primarily on allocations by an independent valuation firm using standard 
valuation techniques.  The purchased intangible assets will be amortized over 
a period ranging from 7 to 10 years.

Total long-term debt, net of repayments, increased by $3.2 from the end of 
Fiscal 1998 due to fixed asset additions financed through capital leases.  
Shortly after the end of the first quarter, the Company made its first 
regularly scheduled repayment on the term loans, described below, which 
amounted to $3.8 in principal and $6.6 in interest.

The two term loans, respectively the AXELsSM* Series B loan and the Tranche A 
Term Loan, were entered into on February 12, 1998 with a syndicate of banks 
led by Goldman, Sachs Credit Partners L.P. as the syndication agent and the 
Canadian Imperial Bank of Commerce as the administrative agent.  The AXELs 
Series B loan will be repaid quarterly on a nominal basis with 95 percent of 
the original amount of U.S.$150.0 due on December 2003.  The Tranche A Term 
Loan will be repaid quarterly on a graduated basis over five years and 
matures on February 2003.  The term loans are at a variable interest rate 
based on the lower of a defined base rate or the London Inter Bank Offer Rate 
(LIBOR) plus a premium.  The Company entered into an interest rate swap prior 
to the Fiscal 1998 year-end to fix the base interest rate on a portion of 
each of the term loans.  The interest rate swap is considered to be an 
effective hedge of the variable interest rates on the term loans.  The 
Company is subject to certain restrictive covenants and commitments and is 
required to maintain certain financial ratios for the purpose of ensuring the 
Company's ability to meet its obligations under the credit agreement.  The 
Company is subject to certain mandatory prepayments in the event of asset 
sales (other than inventory), equity offerings and debt issuance, certain 
insurance proceeds, and defined excess cash flow.  Mandatory prepayments 
range from 75 percent to 100 percent of the net cash proceeds and would be 
paid on a defined pro-rata basis subject to certain constraints toward the 
senior secured term loans.  Management believes the Company is in compliance 
with the obligations and restrictive covenants under the credit agreement.  
On July 23, 1998, and in connection with the common share issue described 
elsewhere in this management's discussion and analysis, approximately $123.0 
was repaid against the term loans, of which approximately $44.0 was against 
the AXELs Series B loan and approximately $79.0 was against the Tranche A 
Term Loan.

The pension liability of $12.9 relates to the unfunded pension obligation in 
Mitel Semiconductor AB.  Under applicable Swedish law, companies are not 
required to fund the pension obligation, but instead operate on a "pay as you 
go" basis.  The pension obligation is actuarially determined in accordance 
with applicable laws and regulations in Sweden and is fully insured by a 
Swedish regulatory agency.

As at June 26, 1998, the Company's capitalization was comprised of 47 percent 
debt, 4 percent preferred equity, and 49 percent common equity.  This  
compares to 49 percent debt, 4 percent preferred equity, and 47 percent 
common equity at the end of Fiscal 1998.  After giving effect to the July 
1998 common share issue, the Company's capitalization as at June 26, 1998 
would have been comprised of 32 percent debt, 4 percent preferred equity, and 
64 percent common equity.
                                    25
<PAGE>
In addition to cash and short-term investment balances of $60.8 as at June 
26, 1998, the Company has an unused revolving credit facility of 
approximately $104.1 (U.S.$71.0).  In accordance with Company policy, short-
term investment balances are primarily comprised of high-grade money market 
instruments with original maturity dates of less than one year.

Management believes the Company is in a position to meet all foreseeable 
business cash requirements and debt service from its cash balances on hand, 
existing financing facilities and cash flow from operations.
_________
SM* AXEL is a registered service mark of Goldman, Sachs & Co.
M Mitel (design) Mitel, SX-200, SX-2000 and GX5000 are registered.

                                    26
<PAGE>
PART II - OTHER INFORMATION

Item 6. Reports on Form 8-K

a)    Reports on Form 8-K

      There were no reports on Form 8-K filed for the three months ended 
      June 26, 1998.

                                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.
<TABLE>
<S>                                             <C>
                                                MITEL CORPORATION

July 24, 1998                                   /S// JEAN-JACQUES CARRIER
-------------                                   ----------------------------
Date                                            Jean-Jacques Carrier
                                                Vice President of Finance
                                                 and Chief Financial Officer
</TABLE>

                                    27
<PAGE>
                               EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit                Description
-------                -----------
<S>                    <C>
27                     Financial Data Schedule
</TABLE>
                                    28