<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 September 25, 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 executive offices)   (Postal Code)

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 November 2, 1998 was 
116,672,556.

                                    1

<PAGE>
                               MITEL CORPORATION

                                    INDEX

PART I.   FINANCIAL INFORMATION (Unaudited)

ITEM 1.   FINANCIAL STATEMENTS

          Consolidated Balance Sheets -
          September 25, 1998 and March 27, 1998 . . . . . . . . . . . . . 3

          Consolidated Statements of Retained Earnings -
          Three months ended September 25, 1998 and September 26, 1997 
          Six months ended September 25, 1998 and September 26, 1997 . . .4

          Consolidated Statements of Income -
          Three months ended September 25, 1998 and September 26, 1997
          Six months ended September 25, 1998 and September 26, 1997. . . 5

          Consolidated Statements of Cash Flows - 
          Six months ended September 25, 1998 and September 26, 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 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . .27

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>
                                                      Sept. 25,  March 27,
                                                      1998       1998
                                                      -------    -------
<S>                                                  <C>        <C>
ASSETS
Current assets:
  Cash and short-term investments                     $  91.3    $ 151.7
  Accounts receivable                                   349.5      288.0
  Inventories (Note 3)                                  199.0      162.2
  Prepaid expenses                                       17.8       19.8
  Investment tax credits recoverable (Note 6)             7.7        7.5
                                                      -------    -------
                                                        665.3      629.2
Capital assets:
  Fixed assets (Note 4)                                 555.1      549.3
  Other assets (Notes 5 & 6)                            111.6       59.2
                                                      -------    -------
                                                     $1,332.0   $1,237.7
                                                      =======    =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities            $ 257.9    $ 290.7
  Income and other taxes payable                         12.5       19.6
  Deferred revenue                                       32.7       32.7
  Current portion of long-term debt (Note 7)             32.7       40.3
                                                      -------    -------
                                                        335.8      383.3
Long-term debt (Note 7)                                 268.7      379.6
Pension liability                                        13.6       12.2
Deferred income taxes                                    40.8       27.1
                                                      -------    -------
                                                        658.9      802.2
                                                      -------    -------
Shareholders' equity:
  Capital stock (Note 7)
     Preferred shares                                    37.2       37.2
     Common shares                                      331.0      157.3
  Contributed surplus                                    32.3       32.3
  Retained earnings                                     221.2      202.9
  Translation account (Note 8)                           51.4        5.8
                                                      -------    -------
                                                        673.1      435.5
                                                      -------    -------
                                                     $1,332.0   $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      Six Months Ended
                                 Sept. 25,  Sept. 26,    Sept. 25,  Sept. 26,
                                 1998       1997         1998       1997
                                 -------    -------      -------    -------
<S>                              <C>        <C>          <C>        <C>
Retained earnings, beginning 
 of period                       $ 216.7    $ 131.6      $ 202.9    $ 114.2

Net income for the period           12.8       23.3         27.4       41.5
                                 -------    -------      -------    -------
                                   229.5      154.9        230.3      155.7

Cost of common share issue          (7.5)         -         (7.5)         -

Dividends on preferred 
 shares (Note 9)                    (0.8)      (0.8)        (1.6)      (1.6)
                                 -------    -------      -------    -------

Retained earnings, end of period $ 221.2    $ 154.1      $ 221.2    $ 154.1
                                 =======    =======      =======    =======
</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    Six Months Ended
                                  Sept. 25,  Sept. 26,   Sept. 25,  Sept. 26,
                                  1998       1997        1998       1997
                                  -------    -------     -------    -------
<S>                               <C>        <C>         <C>        <C>
Revenue:
  Products                        $ 338.7    $ 185.3     $ 627.1    $ 347.8
  Service                            25.4       19.7        47.6       39.2
                                  -------    -------     -------    -------
                                    364.1      205.0       674.7      387.0
                                  -------    -------     -------    -------
Cost of sales (excluding amortization):
  Products                          168.8       89.9       311.7      170.5
  Service                            16.1       12.3        31.2       23.7
                                  -------    -------     -------    -------
                                    184.9      102.2       342.9      194.2
                                  -------    -------     -------    -------
Gross margin                        179.2      102.8       331.8      192.8
                                  -------    -------     -------    -------
Expenses:
  Selling and administrative         81.6       55.8       144.7      105.0
  Research and development (net)     41.4       17.7        81.6       33.5
  Investment tax credits related to prior years' research 
    and development (Note 6)         (7.4)      (9.5)      (13.5)     (16.9)
  Amortization                       30.0        9.3        58.9       18.5
                                  -------    -------     -------    -------
                                    145.6       73.3       271.7      140.1
                                  -------    -------     -------    -------
Operating income                     33.6       29.5        60.1       52.7
Other income and expenses:
  Interest income                     1.1        1.3         2.7        2.5
  Interest expense                   (7.0)      (1.0)      (15.5)      (1.9)
  Debt issue and other costs         (8.8)         -        (8.8)         -
                                  -------    -------     -------    -------
Income before income taxes           18.9       29.8        38.5       53.3
Income tax expense                    6.1        6.5        11.1       11.8
                                  -------    -------     -------    -------
Net income for the period         $  12.8    $  23.3     $  27.4    $  41.5
                                  =======    =======     =======    =======
Net income for the period attributable to common shareholders 
 after preferred share dividends  $  12.0    $  22.5     $  25.8    $  39.9
                                  =======    =======     =======    =======
Net income per common share (Note 7)
   Basic                          $  0.10    $  0.21     $  0.23    $  0.37
                                  =======    =======     =======    =======
   Fully diluted                  $  0.10    $  0.20     $  0.23    $  0.36
                                  =======    =======     =======    =======
</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>
                                                      Six Months Ended
                                                      Sept. 25,  Sept. 26,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
CASH PROVIDED BY (USED IN)
Operating activities:
  Net income for the period                           $  27.4    $  41.5
  Amortization                                           64.5       18.5
  Investment tax credits                                 (7.0)      (8.6)
  Debt issue and other costs expensed                     8.8          -
  Gain on sale of capital assets                         (0.5)      (0.8)
  Deferred income taxes                                  10.2        0.7
  Other non-cash operating items                          0.6        0.5
  Increase in working capital (Note 13)                (120.5)     (34.1)
                                                      -------    -------
    Total                                               (16.5)      17.7
                                                      -------    -------
Investing activities:
  Additions to capital assets                           (35.7)     (22.7)
  Proceeds from disposal of capital assets                1.9        6.8
  Acquisitions (Note 10)                                (46.6)     (21.6)
  Net change in non-cash balances related to 
   investing activities                                  (6.0)      (6.6)
                                                      -------    -------
     Total                                              (86.4)     (44.1)
                                                      -------    -------
Financing activities:
  Increase in long-term debt                              9.7       15.9
  Repayment of long-term debt                          (135.2)     (12.1)
  Debt issue costs                                       (1.9)         -
  Dividends on preferred shares (Note 9)                 (1.6)      (1.6)
  Issue of common shares - net (Note 7)                 166.2          -
  Net change in non-cash balances related to
   financing activities                                   0.8        0.7
                                                      -------    -------
     Total                                               38.0        2.9
                                                      -------    -------
Effect of currency translation on cash                    4.5        0.1
                                                      -------    -------
Decrease in cash and short-term investments             (60.4)     (23.4)

Cash and short-term investments, beginning of period    151.7      143.3
                                                      -------    -------
Cash and short-term investments, end of period        $  91.3    $ 119.9
                                                      =======    =======
</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 
September 25, 1998 and the results of operations and the changes in financial 
position for the three and six month periods ended September 25, 1998 and 
September 26, 1997, in accordance with accounting principles generally 
accepted in Canada. (See also Note 12).

     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>
                                                      Sept. 25,  March 27,
                                                      1998       1998
                                                      -------    -------
     <S>                                              <C>        <C>
     Raw materials                                    $  54.2    $  53.4
     Work-in-process                                     81.3       60.3
     Finished goods                                      63.5       48.5
                                                      -------    -------
                                                      $ 199.0    $ 162.2
                                                      =======    =======
</TABLE>

4.   Fixed assets:
<TABLE>
<CAPTION>
                                                      Sept. 25,  March 27,
                                                      1998       1998
                                                      -------    -------
     <S>                                              <C>        <C>
     Cost                                             $ 895.2    $ 831.2
     Accumulated amortization                          (340.1)    (281.9) 
                                                      -------    -------
                                                      $ 555.1    $ 549.3
                                                      =======    =======
</TABLE>
                                    7

<PAGE>
5.   Other assets:
<TABLE>
<CAPTION>
                                                      Sept. 25,  March 27,
                                                      1998       1998
                                                      -------    -------
     <S>                                              <C>        <C>
     Cost:
       Patents, trademarks, and other                 $  22.7    $  21.3
       Other intangible assets                           80.4       27.6
       Investment tax credits recoverable                17.3       10.5
       Promissory note                                   10.8       10.3
                                                      -------    -------
                                                        131.2       69.7
                                                      -------    -------
Less accumulated amortization:
  Patents, trademarks, and other                          7.6        7.2
  Other intangible assets                                12.0        3.3
                                                      -------    -------
                                                         19.6       10.5
                                                      -------    -------
                                                      $ 111.6    $  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 operated as the Advanced Messaging business unit under the name Baypoint 
Innovations.  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 September 25, 1998, the Company recognized a net Canadian investment 
tax credit ("ITC") asset of $25.0 (March 27, 1998 - $18.0) related to prior 
years' research and development expenses.

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 
2000 to 2008.  In addition, the Company had timing differences of 
approximately $30.0 for which no accounting benefit was recognized.
                                    8

<PAGE>
7.   Capital stock:
     a)
<TABLE>
<CAPTION>
                                                    Sept. 25,    March 27,
                                                    1998         1998
                                                    -------      -------
     <S>                                            <C>          <C>
     Shares outstanding:
       Preferred shares - R&D Series                  1,616,500    1,616,500
       Common shares                                116,670,181  108,394,631
</TABLE>
There were no preferred shares repurchased during the six months ended 
September 25, 1998.

On July 23, 1998, the Company, through a syndicate of underwriters, issued 8 
million common shares at a price of $21.50 per share and for total proceeds 
of $172.0.  Net proceeds of $164.1 were received by the Company, of which 
$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 were 
retained for general corporate purposes.

     b)   A summary of the Company's stock option activity is as follows:
<TABLE>
<CAPTION>
                                                    Six Months Ended 
                                                    Sept. 25,  Sept. 26,
                                                    1998       1997
                                                    ---------  ---------
     <S>                                            <C>        <C>
     Outstanding options:
     Balance, beginning of period                   6,251,888  3,238,638
     Granted                                          333,250  1,070,500
     Exercised                                       (275,550)  (180,325)
     Cancelled                                       (131,625)   (30,875)
                                                    ---------  ---------
     Balance, end of period                         6,177,963  4,097,938
                                                    =========  =========
</TABLE>
Available for grant at September 25, 1998 were 10,241,900 (March 27, 1998 - 
243,525) common shares.  The exercise prices on stock options issued range 
from $1.10 to $30.00 per share with exercise periods extending to August, 
2008. 

At the 1998 Annual General and Special Meeting of Shareholders on July 23, 
1998, shareholders approved a resolution which established the maximum number 
of 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, an increase of 10,200,000 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:
                                    9

<PAGE>
<TABLE>
<CAPTION>
                                   Three Months Ended    Six Months Ended
                                   Sept. 25,  Sept. 26,  Sept. 25,  Sept. 26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Weighted average shares 
 outstanding (millions)              115.3      107.5      111.9      107.5
                                   =======    =======    =======    =======
</TABLE>

8.   The following table summarizes changes in the translation account:
<TABLE>
<CAPTION>
                                   Three Months Ended    Six Months Ended
                                   Sept. 25,  Sept. 26,  Sept. 25,  Sept. 26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Balance, beginning of period       $  25.2    $   4.5    $   5.8    $   2.5
Increase (decrease):
  Movements in exchange rates - 
     United Kingdom Pound Sterling    17.6       (2.5)      23.7       (0.4)
     United States Dollar              7.5        0.1       17.5        0.2
     Swedish Krona                     1.2        0.7        3.2        0.4
     Other currencies                 (0.1)         -        1.2        0.1
                                   -------    -------    -------    -------
Balance, end of period             $  51.4    $   2.8    $  51.4    $   2.8
                                   =======    =======    =======    =======
</TABLE>

9.   The Company has not declared or paid any dividends on its common shares. 
During the second 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 
operated as the Advanced Messaging business unit under the name Baypoint 
Innovations, 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, 
                                    10

<PAGE>
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:
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:
                                    11

<PAGE>
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.

11.  Uncertainty due to the Year 2000 Issue

The Year 2000 Issue arises because many computerized systems use two digits 
rather than four to identify a year.  Date-sensitive systems may recognize 
the year 2000 as 1900 or some other date, resulting in errors when 
information using year 2000 dates is processed.  In addition, similar 
problems may arise in some systems which use certain dates in 1999 to 
represent something other than a date.  The effects of the Year 2000 Issue 
may be experienced before, on, or after January 1, 2000, and, if not 
addressed, the impact on operations and financial reporting may range from 
minor errors to significant systems failure which could affect an entity's 
ability to conduct normal business operations.  It is not possible to be 
certain that all aspects of the Year 2000 Issue affecting the entity, 
including those related to the efforts of customers, suppliers, or other 
third parties, will be fully resolved.

12.  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:
                                    12

<PAGE>
<TABLE>
<CAPTION>
                                   Three Months Ended    Six Months Ended
                                   Sept. 25,  Sept. 26,  Sept. 25,  Sept. 26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Net income for the period in 
 accordance with Canadian GAAP     $  12.8    $  23.3    $  27.4    $  41.5
Translation of foreign currency 
 denominated debt                     (3.9)         -      (15.6)         -
Effect of deferral accounting related
 to foreign exchange contracts        (9.3)       0.3      (18.8)      (0.3)
Write-off of acquired in-process R&D     -       (2.7)      (5.2)      (2.7)
Amortization of acquired 
 in-process R&D                        0.2          -        0.3          -
Adjustment to deferred income taxes   (3.5)      (5.0)      (7.0)      (1.3)
                                   -------    -------    -------    -------
U.S. GAAP and SEC requirements:

Net income (loss) for the period      (3.7)      15.9      (18.9)      37.2
Dividends on cumulative preferred 
 shares                               (0.8)      (0.8)      (1.6)      (1.6)
                                   -------    -------    -------    -------
Adjusted net income (loss) 
 for the period                    $  (4.5)   $  15.1    $ (20.5)   $  35.6
                                   =======    =======    =======    =======
Net income (loss) per common share:
   Basic                           $ (0.04)   $  0.14    $ (0.18)   $  0.33
                                   =======    =======    =======    =======
   Diluted                         $ (0.04)   $  0.14    $ (0.18)   $  0.33
                                   =======    =======    =======    =======
Weighted average shares for 
 basic EPS (millions)                115.3      107.5      111.9      107.5
Weighted average shares on 
 conversion of stock options (millions)  -        1.3          -        1.1
                                   -------    -------    -------    -------
Adjusted weighted average shares and 
  share equivalents (millions)       115.3      108.8      111.9      108.6
                                   =======    =======    =======    =======
</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 September 25, 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 September 26, 1997 to 
purchase 905,500 shares of common stock at an average exercise price of $9.37 
per share.
                                    13

<PAGE>
iii)  Options outstanding for the six months ended September 26, 1997 to 
purchase 984,000 shares of common stock at an average exercise price of $9.31 
per share.

The Company will adopt Statement of Financial Accounting Standards No. 130, 
Reporting Comprehensive Income ("SFAS 130") for the fiscal year ended March 
26, 1999.  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 and six months ended 
September 25, 1998 and September 26, 1997 are as follows:
<TABLE>
<CAPTION>
                                   Three Months Ended   Six Months Ended
                                   Sept. 25,  Sept. 26,  Sept. 25,  Sept. 26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>

Comprehensive income for the period:

 Net income (loss) for the period  $  (4.5)   $  15.1    $ (20.5)   $  35.6

 Other comprehensive income -
   Foreign currency adjustment        26.2       (1.7)      45.6        0.3
                                   -------    -------    -------    -------
Comprehensive income for the 
 period                            $  21.7    $  13.4    $  25.1    $  35.9
                                   =======    =======    =======    =======
</TABLE>
The Company will adopt Statement of Financial Accounting Standards No. 131, 
Disclosures about Segments of an Enterprise and Related Information ("SFAS 
131") for the fiscal year ended March 26, 1999.  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 of 
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.
                                    14

<PAGE>
<TABLE>
<CAPTION>
                                                      Six Months Ended
                                                      Sept. 25,  Sept. 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                  $ (16.5)   $  17.7
Deferred income taxes                                    (7.0)      (1.3)
Change in deferred tax asset                              7.0        1.3
                                                      -------    -------
Operating activities - U.S. GAAP                        (16.5)      17.7
                                                      -------    -------
Investing activities - Canadian GAAP                    (86.4)     (44.1)
Change in short-term investments                         34.5       51.9
Additions to capital assets under capital lease          10.4       13.2
                                                      -------    -------
Investing activities - U.S. GAAP                        (41.5)      21.0
                                                      -------    -------
Financing activities - Canadian GAAP                     38.0        2.9
Increase in capital leases                              (10.4)     (13.2) 
                                                      -------    -------
Financing activities - U.S. GAAP                         27.6      (10.3) 
                                                      -------    -------
Increase (decrease) in cash                             (30.4)      28.4
Effect of currency translation on cash flows              4.5        0.1
Cash position, beginning of period                      117.2       55.5
                                                      -------    -------
Cash position, end of period                          $  91.3    $  84.0
                                                      =======    =======
</TABLE>
Balance sheet items in conformity with U.S. GAAP and SEC requirements:
<TABLE>
<CAPTION>
                                                      Sept. 25,  March 27,
                                                      1998       1998
                                                      -------    -------
<S>                                                   <C>        <C>
Cash                                                  $  91.3    $ 117.2
Short-term investments                                      -       34.5
Deferred tax asset                                       11.6       11.8
Fixed assets                                            530.9      525.1
Other assets                                            110.3       69.6
Accounts payable and accrued liabilities                286.1      284.5
Redeemable preferred shares                              34.4       34.4
Common shares                                           769.4      603.2
Contributed surplus                                       2.5        2.5
Deficit                                                (226.7)    (206.2)
</TABLE>
                                    15

<PAGE>
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.

13.  Net change in non-cash working capital balances related to operating 
activities:  
<TABLE>
<CAPTION>
                                                      Six Months Ended
                                                      Sept. 25,  Sept. 26,
                                                      1998       1997
                                                      -------    -------
<S>                                                   <C>        <C>
Accounts receivable                                   $ (36.6)   $ (16.3)
Inventories                                             (23.3)      (6.9)
Accounts payable and accrued liabilities                (57.0)      (9.8)
Deferred revenue                                         (2.0)      (1.5)
Other                                                    (1.6)       0.4
                                                      -------    -------
                                                      $(120.5)   $ (34.1)
                                                      =======    =======
</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 second quarter revenue grew by 78 percent to $364.1 from $205.0 in the 
same quarter of last year. Mitel's revenue growth was driven by incremental 
revenue from recently acquired businesses and by strong Business 
Communications Systems (BCS) sales in North America and Europe.  By business 
unit and compared to the previous year's second quarter, Semiconductor 
revenue grew by 123 percent and BCS revenue was up 53 percent.  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.  During the first half 
of Fiscal 1999, revenue grew by 74 percent to $674.7 from $387.0 last year.  
The year-to-date growth rates were 134 percent for Semiconductor and 42 
percent for BCS when compared to the first six months of Fiscal 1998.

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 operating as the Advanced Messaging business 
unit under the name Baypoint Innovations.  The Advanced Messaging acquisition 
complements 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 second quarter net income of $12.8, or $0.10 per share, 
compared to $23.3, or $0.21 per share, in the same quarter of last year. The 
Fiscal 1999 quarterly earnings were reduced by $0.08 per share due to 
deferred debt issue and other costs expensed.  The earnings reduction was 
connected to the partial repayment of the U.S. term loans on July 23, 1998.  
In addition, second quarter earnings were adversely affected by $0.03 per 
share, after interest and tax, due to the consolidation of Plessey.  Fiscal 
1998 quarterly earnings benefited by $0.02 per share relative to Fiscal 1999 
in respect of investment tax credit (ITCs) recorded.  For the six months 
ended September 25, 1998, net income was $27.4, or $0.23 per share, compared 
to $41.5, or $0.37 per share, in the first half of Fiscal 1998.

Net income and cash flows for each period, as determined by United States 
accounting principles, are detailed in Note 12 to the consolidated statements 
included elsewhere in this Form 10-Q.
                                    17

<PAGE>
The following discussion and analysis explains trends in the Company's 
financial condition and results of operations for the three and six months 
ended September 25, 1998 compared with the same periods 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, application-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.

REVENUE

Revenue, based on the geographic location of Mitel's customers, was 
distributed as follows: 
                                    18

<PAGE>
<TABLE>
<CAPTION>
                                 Six Months             Six Months
                                 Ended           % of   Ended           % of
                                 Sept. 25, 1998  Total  Sept. 26, 1997  Total
                                 -------         -----  -------         -----
<S>                              <C>             <C>    <C>             <C>
United States                    $ 301.5           45%  $ 191.8           50%
Europe                             226.9           33     109.8           28
Other Regions                      112.9           17      59.6           15
Canada                              33.4            5      25.8            7
                                 -------         -----  -------         -----
                                 $ 674.7          100%  $ 387.0          100%
                                 =======         =====  =======         =====
</TABLE>
For the six month period ended September 25, 1998, the net movement in 
exchange rates from Fiscal 1998 favorably impacted total revenue by 6 percent 
($22.7) 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>
                                 Six Months             Six Months
                                 Ended           % of   Ended           % of
                                 Sept. 25, 1998  Total  Sept. 26, 1997  Total
                                 -------         -----  -------         -----
<S>                              <C>             <C>    <C>             <C>
Semiconductors                   $ 316.8          47 %  $ 135.6           35%
Business Communications Systems    357.9          53      251.4           65
                                 -------         -----  -------         -----
                                 $ 674.7          100%  $ 387.0          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 134 percent from the first six months of 
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 half of Fiscal 1999, the Plessey 
operations were re-organized and integrated into Mitel's semiconductor 
business lines. The growth in Mitel's semiconductor business, particularly in 
wired communication components and ASICs, is being driven by technological 
advances and increasingly complex end user requirements affecting telecom and 
datacom networks.  However, management believes that Semiconductor sales 
growth will be lower in the second half of Fiscal 1999, principally due to 
the competitive market conditions and expected delays in ramping up sales of 
certain new products.
                                    19

<PAGE>
Management believes the Plessey acquisition has significantly enhanced the 
Company's operations, technologies and product portfolio.  The Plessey 
acquisition also provided Mitel with enhanced market penetration in Europe, 
resulting in an increase in the proportion of total revenues generated in 
Europe to 33 percent of total revenue in the first six months of Fiscal 1999 
as against 28 percent in the same period last year.  This acquisition also 
had the effect of reducing the proportion of total generated recorded in the 
United States from 50 percent in the first half of 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.  

BCS product revenue increased by 42 percent over the first half of last year 
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 increased demand by the small to 
medium sized business segment for Mitel's SX-200 ML and SX-200 EL switches.  
In addition, Mitel launched a new line of telephone sets in early Fiscal 1999 
which also produced 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 half of Fiscal 1999 due 
to new system sales, system upgrades sold to the installed base and continued 
demand for Mitel's alternate network access products.

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

GROSS MARGIN

As a percentage of total revenue, total gross margin was 49 percent for both 
the three and six months ended September 25, 1998, 1 percentage point lower 
than the respective periods in Fiscal 1998.  The product gross margin was 50 
percent in the second quarter and first six months of Fiscal 1999, 1 
percentage point below that recorded in the comparative periods of Fiscal 
1998.  The product gross margin was negatively impacted by reduced gross 
margins in Semiconductors, partially offset by the positive impact of higher 
sales volumes of BCS products. The service gross margin was 37 percent and 34 
percent for the respective three and six months ended September 25, 1998, 
representing a decrease of 1 and 6 percentage points from the respective 
periods in Fiscal 1998.  The service gross margin declined due to the mix of 
large, competitively-priced service contracts entered into during the second 
half of Fiscal 1998.
                                    20

<PAGE>
OPERATING EXPENSES

Selling and Administrative

Selling and administrative (S&A) expenses in the second quarter of Fiscal 
1999 were $81.6, or 22 percent of revenue, compared with $55.8, and 27 
percent of revenue, for the comparable period in Fiscal 1998.  Year-to-date 
S&A expenses were $144.7, or 21 percent of revenue, 6 percentage points lower 
than the first six months of the last fiscal year.  S&A expenses decreased as 
a percentage of sales primarily due to revenue growth and 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 $41.4, or 11 percent of revenue, for the quarter 
ended September 25, 1998.  This compares to $17.7, or 9 percent of revenue, 
in the corresponding period of Fiscal 1998.  Year-to-date, R&D spending was 
$81.6, or 12 percent of revenue, compared to $33.5, or 9 percent of revenue, 
in the first half 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 recognized 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 $7.4 and $13.5 in the second quarter and first half of Fiscal 
1999, respectively. In the corresponding periods of Fiscal 1998, the Company 
recorded Canadian ITCs of $9.5 and $16.9, respectively.

Amortization

Amortization increased in the second quarter to $30.0 from $9.3 in the same 
quarter of Fiscal 1998.  Year-to-date, amortization expense was $58.9 
compared to $18.5 in the six months ended September 26, 1997.  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 embarked on a major capital program at its other 
semiconductor plants, resulting in higher amortization charges.
                                    21

<PAGE>
OTHER INCOME AND EXPENSES

Interest income was $1.1 for the quarter ended September 25, 1998, down 
slightly from the $1.3 recorded in the corresponding quarter of Fiscal 1998.  
Year-to-date, investment and interest income was $2.7 compared to $2.5 in the 
first half of last year.

Interest expense, before the write-off of deferred debt issue and other 
costs, was $7.0 for the second quarter of Fiscal 1999 compared to $1.0 in the 
respective period of Fiscal 1998.  Year-to-date, interest expense, before the 
write-off, was $15.5 compared to $1.9 in the first six months of Fiscal 1998.  
The increase in interest expense resulted from the 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.  

On July 23, 1998, the Company repaid $123.1 against the U.S. dollar term 
loans.  Accordingly, a proportionate amount of the related deferred debt 
issue costs and deferred foreign exchange losses were expensed.  This non-
cash expense amounted to $8.8, or $0.08 per share, in the second quarter of 
Fiscal 1999.

INCOME TAXES

Income tax expense for the three and six months ended September 25, 1998 was 
$6.1 and $11.1 compared to $6.5 and $11.8 for the comparable periods in 
Fiscal 1998.  The effective income tax rate as a percentage of pre-tax income 
was 32 percent and 22 percent in the respective second quarter periods of 
Fiscal 1999 and Fiscal 1998.  Year-to-date, the effective income tax rate, as 
a percentage of pre-tax income, was 29 percent as compared to 22 percent in 
the first half of last year.  The higher effective tax rate in Fiscal 1999 
was due to higher income taxes in Europe.

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 
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 $25.0 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, 
among other things, a temporary inability to process transactions, send
                                    22

<PAGE>
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 six months ended September 25, 
1998 and 12 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 2.4 percent of the 
Company's total assets as at September 25, 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. 
                                    23

<PAGE>
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 
September 25, 1998, order backlog was $283.7 compared to $300.1 at June 26, 
1998 and $279.5 at March 27, 1998.  The decrease in backlog from the end of 
the first quarter was attributable to lower Semiconductor orders.  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 $91.3 at September 
25, 1998 compared to $151.7 at March 27, 1998.  The decrease of $60.4 was 
mainly due to the Advanced Messaging and ISDN PBX first quarter acquisitions 
which, together, amounted to $46.6; to reductions of year-end payables; and 
to integration costs for the Plessey operations which were offset, in part, 
by net proceeds retained from an equity offering completed in the second 
quarter of Fiscal 1999.

The Company has two term loans, respectively the AXELsSM* Series B loan and 
the Tranche A Term Loan, which 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 in 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, the Company, through a syndicate of underwriters, issued 8 
million common shares, at a price of $21.50 per share, for total proceeds of 
$172.0.  Net proceeds to the Company were of $164.1, of which $123.1 was 
applied to repay a portion of the term loans.  The balance of the proceeds 
was retained for general corporate purposes.
                                    24

<PAGE>
Cash flow from operations before working capital changes amounted to $104.0 
during the first half of Fiscal 1999, up $52.2 from $51.8 during the first 
six months of Fiscal 1998.  Since March 27, 1998, the Company's working 
capital, as reflected in the consolidated statements of cash flows, increased 
by $120.5 primarily due to reductions in year-end payables associated with 
the record Fiscal 1998 sales volumes and to higher receivable and inventory 
levels related to 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 $35.7 during the six months ended September 25, 
1998 compared with $22.7 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 during the first six months of 
Fiscal 1999 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 periods 
ranging from 7 to 10 years.

Before scheduled repayments of $12.1 and a prepayment of $123.1 against the 
term loans (described above), total long-term debt increased by $9.7 from the 
end of Fiscal 1998 due primarily to fixed asset additions financed through 
capital leases.

The pension liability of $13.6 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 September 25, 1998, the Company's capitalization was comprised of 31 
percent debt, 4 percent preferred equity, and 65 percent common equity.  This 
compares to 49 percent debt, 4 percent preferred equity, and 47 percent 
common equity at the end of Fiscal 1998.

In addition to cash and short-term investment balances of $91.3 as at 
September 25, 1998, the Company has an unused revolving credit facility of 
approximately $109.7 (U.S.$72.7).  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.
                                    25

<PAGE>
PART II - OTHER INFORMATION

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

The Annual Meeting of Shareholders was held on July 23, 1998 at the Chateau 
Laurier Hotel in Ottawa, Ontario, Canada.  At the Annual Meeting, the 
following matters were presented to shareholders for approval:

Motion 1:  In respect of electing seven directors to the Board;
Motion 2:  In respect of appointing Ernst & Young as the Company's auditors;
Motion 3:  In respect of amending the Company's 1991 Stock Option Plan for
            Key Employees and Non-Employee Directors;

The results of matters submitted to a vote of shareholders were as follows:

Motion 1:                     Shares
For                            72,872,782
Withheld                          139,841
Motion 2:                     Shares
For                              72,977,833
Withheld                             49,492

The following nine directors were elected at the 1998 Annual Meeting:  Dr. 
John B. Millard, Dr. Henry Simon, Mr. Jonathan I. Wener, Mr. Hubert T. 
Lacroix, Mr. Peter Van Cuylenburg, Mr. Anthony L. Craig, Mr. Donald W. 
Patterson, Mr. Andre Borrel, and Mr. Donald G. McIntyre.  

Motion 3:                     Shares
For                              36,408,379
Against                          34,226,304

The shareholders approved an increase in the number of common shares which 
may be granted to Key Employees and Non-Employee Directors from 5,800,000 to 
16,000,000.

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 September 
25, 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
                                              ----------------------------
November 5, 1998                              JEAN-JACQUES CARRIER
----------------                              ----------------------------
Date                                          Jean-Jacques Carrier
                                              Vice President of Finance
                                               and Chief Financial Officer
</TABLE>
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