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 December 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                  (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 February 2, 1999 was 116,702,956.

                                    1

<PAGE>
                             MITEL CORPORATION

                                   INDEX

PART I.  FINANCIAL INFORMATION (Unaudited)

ITEM 1.  FINANCIAL STATEMENTS

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

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

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

         Consolidated Statements of Cash Flows - 
         Nine months ended December 25, 1998 and December 26, 1997. . . . 6

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

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . 16

PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . .26

                                    2

<PAGE>
                             Mitel Corporation
                   (incorporated under the laws of Canada)
                        CONSOLIDATED BALANCE SHEETS
                     (in millions of Canadian dollars)
                               (Unaudited)
<TABLE>
<CAPTION>
                                                       Dec. 25,   March 27,
                                                       1998       1998
                                                       -------    -------
<S>                                                    <C>        <C>
ASSETS
Current assets:
  Cash and cash equivalents                            $  95.0    $ 117.2
  Short-term investments                                     -       34.5
  Accounts receivable                                    329.0      288.0
  Inventories (Note 3)                                   217.6      162.2
  Prepaid expenses and other                              26.4       27.3
                                                       -------    -------
                                                         668.0      629.2
Fixed assets (Note 4)                                    549.5      549.3
Other assets (Note 5)                                    116.5       59.2
                                                       -------    -------
                                                      $1,334.0   $1,237.7
                                                       =======    =======
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued liabilities            $  225.8   $  290.7
  Income and other taxes payable                          13.2       19.6
  Deferred revenue                                        31.4       32.7
  Current portion of long-term debt                       34.2       40.3
                                                       -------    -------
                                                         304.6      383.3
Long-term debt                                           271.2      379.6
Pension liability                                         14.1       12.2
Deferred income taxes                                     37.6       27.1
                                                       -------    -------
                                                         627.5      802.2
                                                       -------    -------
Shareholders' equity:
  Capital stock (Note 6)
     Preferred shares                                     37.2       37.2
     Common shares                                       331.1      157.3
  Contributed surplus                                     32.3       32.3
  Retained earnings                                      238.2      202.9
  Translation account (Note 7)                            67.7        5.8
                                                       -------    -------
                                                         706.5      435.5
                                                       -------    -------
                                                      $1,334.0   $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    Nine Months Ended
                                   Dec.25,    Dec.26,    Dec.25,    Dec.26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Retained earnings, 
 beginning of period               $ 221.2    $ 154.1    $ 202.9    $ 114.2

Net income for the period             17.8       25.6       45.2       67.1
                                   -------    -------    -------    -------
                                     239.0      179.7      248.1      181.3

Cost of common share issue               -          -       (7.5)         -

Dividends on preferred 
 shares (Note 8)                      (0.8)      (0.8)      (2.4)      (2.4)
                                   -------    -------    -------    -------
Retained earnings, end of period   $ 238.2    $ 178.9    $ 238.2    $ 178.9
                                   =======    =======    =======    =======
</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    Nine Months Ended
                                   Dec.25,    Dec.26,    Dec.25,    Dec.26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Revenue (Note 9)                   $ 358.1    $ 215.5    $1,032.8   $ 602.5

Cost of sales (Note 9)               174.4      104.9       517.3     299.1
                                   -------    -------    -------    -------
Gross margin                         183.7      110.6       515.5     303.4
                                   -------    -------    -------    -------
Expenses:
  Selling and administrative          89.7       57.8       234.4     162.8
  Research and development - net 
  (Note 10)                           38.2        8.0       106.3      24.6
  Amortization                        30.5       10.0        89.4      28.5
                                   -------    -------    -------    -------
                                     158.4       75.8       430.1     215.9
                                   -------    -------    -------    -------
Operating income                      25.3       34.8        85.4      87.5

Other income and expenses:
  Interest income                      1.6        1.4         4.3       3.9
  Interest expense                    (6.7)      (1.0)      (31.0)     (2.9)
                                   -------    -------    -------    -------
Income before income taxes            20.2       35.2        58.7      88.5
Income tax expense                     2.4        9.6        13.5      21.4
                                   -------    -------    -------    -------
Net income  for the period         $  17.8    $  25.6     $  45.2   $  67.1
                                   =======    =======    =======    =======
Net income for the period attributable  to common shareholders after
 preferred share dividends         $  17.0    $  24.8     $  42.8   $  64.7
                                   =======    =======    =======    =======
Net income per common share (Note 6)
   Basic                           $  0.15    $  0.23    $  0.38    $  0.60
                                   =======    =======    =======    =======
   Fully diluted                   $  0.14    $  0.22    $  0.37    $  0.59
                                   =======    =======    =======    =======
Weighted average number of common 
  shares outstanding                 116.7      107.9      113.5      107.6
                                   =======    =======    =======    =======
</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>
                                                       Nine Months Ended
                                                       Dec.25,    Dec.26,
                                                       1998       1997
                                                       -------    -------
<S>                                                    <C>        <C>
CASH PROVIDED BY (USED IN)
Operating activities:
  Net income for the period                            $  45.2    $  67.1
  Amortization of capital and other assets               104.0       28.5
  Investment tax credits                                  (7.0)     (14.0)
  Deferred income taxes                                    4.6          -
  Gain on sale of capital assets                          (0.4)      (0.7)
  Other non-cash operating items                           0.9        0.7
  Increase in working capital (Note 14)                 (136.9)     (34.0)
                                                       -------    -------
    Total                                                 10.4       47.6
                                                       -------    -------
Investing activities:
  Change in short-term investments                        34.5       12.4
  Additions to capital and other assets - net of 
   capital lease additions                               (52.0)     (19.5)
  Proceeds from disposal of capital assets                 2.1        6.8
  Acquisitions (Note 11)                                 (46.6)     (21.6)
  Net change in non-cash balances related to 
   investing activities                                   (3.0)      (4.1)
                                                       -------    -------
     Total                                               (65.0)     (26.0) 
                                                       -------    -------
Financing activities:
  Increase in long-term debt                               0.2        1.8
  Repayment of long-term debt                           (116.7)      (4.3)
  Repayment of capital lease liabilities                 (19.0)     (11.1)
  Debt issue costs                                        (2.0)         -
  Dividends on preferred shares (Note 8)                  (2.4)      (2.4)
  Issue of common shares - net (Note 6)                  166.2        1.9
  Net change in non-cash balances related to 
   financing activities                                    0.8          -
                                                       -------    -------
     Total                                                27.1      (14.1) 
                                                       -------    -------
Effect of currency translation on cash                     5.3        1.5
                                                       -------    -------
Increase (decrease) in cash and short-term investments   (22.2)       9.0

Cash and cash equivalents, beginning of period           117.2       55.5
                                                       -------    -------
Cash and cash equivalents, end of period               $  95.0    $  64.5
                                                       =======    =======
</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 
December 25, 1998 and the results of operations and the changes in financial 
position for the three and nine month periods ended December 25, 1998 and 
December 26, 1997, in accordance with accounting principles generally 
accepted in Canada. (See also Note 13).  The Company has adopted the new 
recommendations of Section 1540 of the CICA Handbook "Cash Flow Statements" 
and has restated the comparative period's financial information to conform to 
this revised standard.  Accordingly, cash and cash equivalents includes 
highly liquid investments with original maturities of less than three months.  
In addition, non-cash items such as assets acquired under capital lease are 
excluded from the statements of cash flows.

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.  Inventories:
<TABLE>
<CAPTION>
                                                       Dec. 25,   March 27,
                                                       1998       1998
                                                       -------    -------
<S>                                                    <C>        <C>
Raw materials                                          $  54.4    $  53.4
Work-in-process                                           86.4       60.3
Finished goods                                            76.8       48.5
                                                       -------    -------
                                                       $ 217.6    $ 162.2
                                                       =======    =======
</TABLE>
4.  Fixed assets:
<TABLE>
<CAPTION>
                                                       Dec. 25,   March 27,
                                                       1998       1998
                                                       -------    -------
<S>                                                    <C>        <C>
Cost                                                   $ 918.8    $ 831.2
Accumulated amortization                                (369.3)    (281.9)
                                                       -------    -------
                                                       $ 549.5    $ 549.3
                                                       =======    =======
</TABLE>
                                    7

<PAGE>
5.  Other assets:
<TABLE>
<CAPTION>
                                                       Dec. 25,   March 27,
                                                       1998       1998
                                                       -------    -------
<S>                                                    <C>        <C>
Cost:
  Patents, trademarks, and other                       $  15.7    $  13.4
  Other intangible assets                                 81.9       27.6
  Promissory note                                         11.0       10.3
  Long-term receivables                                   30.1       18.4
                                                       -------    -------
                                                         138.7       69.7
                                                       -------    -------
Less accumulated amortization:
  Patents, trademarks, and other                           7.9        7.2
  Other intangible assets                                 14.3        3.3
                                                       -------    -------
                                                          22.2       10.5
                                                       -------    -------
                                                       $ 116.5    $  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 11).  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 11).  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.  Capital stock:

a)
<TABLE>
<CAPTION>
                                                   Dec. 25,     March 27,
                                                   1998         1998
                                                   -----------  -----------
<S>                                                <C>          <C>
Shares outstanding:
  Preferred shares - R&D Series                      1,616,300    1,616,500
  Common shares                                    116,685,556  108,394,631
</TABLE>

There were 200 preferred shares repurchased during the nine months ended 
December 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 
                                    8

<PAGE>
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 was 
retained for general corporate purposes.

b)  A summary of the Company's stock option activity is as follows:
<TABLE>
<CAPTION>
                                                   Nine Months Ended 
                                                   Dec.25,      Dec.26,
                                                   1998         1997
                                                   ---------    ---------
<S>                                                <C>          <C>
Outstanding options:
Balance, beginning of period                       6,251,888    3,238,638
Granted                                              361,250    1,112,500
Exercised                                           (290,925)    (571,875)
Cancelled                                           (275,750)     (38,250)
                                                   ---------    ---------
Balance, end of period                             6,046,463    3,741,013
                                                   =========    =========
</TABLE>
Available for grant at December 25, 1998 were 10,358,025 (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 November, 
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.

7.  The following table summarizes changes in the translation account:
<TABLE>
<CAPTION>
                                   Three Months Ended    Nine Months Ended
                                   Dec.25,    Dec.26,    Dec.25,    Dec.26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Balance, beginning of period       $  51.4    $   2.8    $   5.8    $   2.5
Increase:
  Movements in exchange rates - 
     United States Dollar             10.2        1.2       27.7        1.4
     United Kingdom Pound Sterling     3.8        5.5       27.5        5.1
     Swedish Krona                     0.5        0.2        3.7        0.6
     Other currencies                  1.8          -        3.0        0.1
                                   -------    -------    -------    -------
Balance, end of period             $  67.7    $   9.7    $  67.7    $   9.7
                                   =======    =======    =======    =======
</TABLE>
                                    9

<PAGE>
8.  The Company has not declared or paid any dividends on its common shares. 
During the third quarter, a $0.50 per share dividend was declared and paid on 
the preferred shares.

9.  The components of revenue were:
<TABLE>
<CAPTION>
                                   Three Months Ended    Nine Months Ended
                                   Dec.25,    Dec.26,    Dec.25,    Dec.26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Products                           $ 332.0    $ 194.3    $ 959.1    $ 542.1
Service                               26.1       21.2       73.7       60.4
                                   -------    -------    -------    -------
                                   $ 358.1    $ 215.5    $1,032.8   $ 602.5
                                   =======    =======    =======    =======
</TABLE>
The components of cost of sales were:
<TABLE>
<CAPTION>
                                   Three Months Ended    Nine Months Ended
                                   Dec.25,    Dec.26,    Dec.25,    Dec.26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Products                           $ 157.1    $  91.6    $ 468.8    $ 262.1
Service                               17.3       13.3       48.5       37.0
                                   -------    -------    -------    -------
                                   $ 174.4    $ 104.9    $ 517.3    $ 299.1
                                   =======    =======    =======    =======
</TABLE>

10.  Research and Development

The research and development expenses were net of $5.6 and $22.4 in R&D 
government assistance, including ITCs, for the respective three and nine 
month periods ended December 25, 1998 (three months ended December 26, 1997 - 
$10.1; nine months ended December 26, 1997 - $27.1).

11.  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 
                                    10

<PAGE>
standard valuation techniques.  An amount of $35.9 was allocated to 
identifiable intangible assets that 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. As at December 25, 1998, the liability in 
respect of acquisition and integration costs was $1.5.

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.  As at December 25, 1998, the liability in respect of 
acquisition and integration costs was $nil.

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. 

(c)  On February 12, 1998, the Company and certain of its wholly owned 
subsidiaries acquired 100 percent of the capital stock of the Plessey 
Semiconductors Group.  As at December 25, 1998, the liability in respect of 
acquisition costs was $nil (March 27, 1998 - $10.6) and $29.8 (March 27, 1998 
- $45.2) in respect of integration costs.

12.  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 which uses year 2000 dates is processed.  In addition, similar 
problems may arise in some systems that 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 that 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.

13.  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    Nine months Ended
                                   Dec.25,    Dec.26,    Dec.25,    Dec.26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Net income for the period in 
 accordance with Canadian GAAP     $  17.8    $  25.6    $  45.2    $  67.1
Effect of deferral accounting related to foreign exchange 
 contracts                            (6.6)      (9.5)     (25.4)      (9.8)
Translation of foreign currency 
 denominated debt                     (5.2)         -      (20.8)         -
Adjustment to deferred income taxes      -        0.8       (7.0)      (0.5)
Write-off of acquired in-process
 R&D                                     -          -       (5.2)      (2.7)
Amortization of acquired in-process
 R&D                                   0.2        0.1        0.5        0.1
Core redundancy provision for 
 acquisition                          (1.9)         -       (1.9)         -
                                   -------    -------    -------    -------
U.S. GAAP and SEC requirements:
Net income (loss) for the period       4.3       17.0      (14.6)      54.2
Dividends on cumulative 
 preferred shares                      0.8        0.8        2.4        2.4
                                   -------    -------    -------    -------
Adjusted net income (loss)
 for the period                    $   3.5    $  16.2    $ (17.0)   $  51.8
                                   =======    =======    =======    =======
Net income (loss) per common share:
   Basic                           $  0.03    $  0.15    $ (0.15)   $  0.48
                                   =======    =======    =======    =======
   Diluted                         $  0.03    $  0.15    $ (0.15)   $  0.48
                                   =======    =======    =======    =======
Weighted average shares for 
 basic EPS (millions)                116.7      107.9      113.5      107.6
Weighted average shares on conversion of stock options 
 (millions)                            1.2        1.6          -        1.1
                                   -------    -------    -------    -------
Adjusted weighted average 
 shares (millions)                   117.9      109.5      113.5      108.7
                                   =======    =======    =======    =======
</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)   Options outstanding for the three months ended December 25, 1998 to 
purchase 3,282,000 shares of common stock at an average price of $18.08 per 
share.
ii)  All options outstanding for the nine months ended December 25, 1998 were 
excluded because they have an antidilutive impact on the net loss per common 
share.
iii) Options outstanding for the nine months ended December 26, 1997 to 
purchase 328,500 shares of common stock at an average price of $9.76 per 
share.
                                    13

<PAGE>
The Company adopted 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 nine months ended 
December 25, 1998 and December 26, 1997 are as follows:
<TABLE>
<CAPTION>
                                   Three Months Ended    Nine months Ended
                                   Dec. 25,   Dec. 26,   Dec. 25,   Dec. 26,
                                   1998       1997       1998       1997
                                   -------    -------    -------    -------
<S>                                <C>        <C>        <C>        <C>
Comprehensive income for the period:

 Net income (loss) for the period  $   3.5    $  16.2    $ (17.0)   $  51.8
 Other comprehensive income -
   Foreign currency adjustment        16.3        6.9       61.9        7.2
                                   -------    -------    -------    -------
Comprehensive income for the 
 period                            $  19.8    $  23.1    $  44.9    $  59.0
                                   =======    =======    =======    =======
</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.

Balance sheet items in conformity with U.S. GAAP and SEC requirements:

<TABLE>
<CAPTION>
                                                       Dec.25,    March 27,
                                                       1998       1998
                                                       -------    -------
<S>                                                    <C>        <C>
Deferred tax asset                                     $  11.6    $  11.8
Fixed assets                                             525.3      525.1
Other assets                                             117.6       69.6
Accounts payable and accrued liabilities                 267.7      284.5
Redeemable preferred shares                               34.4       34.4
Common shares                                            769.5      603.2
Contributed surplus                                        2.5        2.5
Deficit                                                 (228.6)    (206.2)
</TABLE>

                                    14

<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.

14.  Net change in non-cash working capital balances related to operating 
activities:  
<TABLE>
<CAPTION>
                                                       Nine months Ended
                                                       Dec.25,    Dec.26,
                                                       1998       1997
                                                       -------    -------
<S>                                                    <C>        <C>
Accounts receivable                                    $  (9.9)   $ (17.4)
Inventories                                              (39.9)      (6.4)
Accounts payable and accrued liabilities                 (86.6)      (6.5)
Deferred revenue                                          (3.7)      (3.0)
Other                                                      3.2       (0.7)
                                                       -------    -------
                                                       $(136.9)   $ (34.0)
                                                       =======    =======
</TABLE>

15.  Comparative figures

Certain of the Fiscal 1998 comparative figures were reclassified so as to 
conform to the presentation adopted in Fiscal 1999.

                                    15

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

Total third quarter revenue grew by 66 percent to $358.1 from $215.5 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 Europe and North America.  By business 
unit and compared to the previous year's third quarter, Semiconductor revenue 
grew by 138 percent and BCS revenue was up 33 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. Higher sales volumes of PBX systems, telephone sets, and 
alternate network access products and the effects of consolidating recent 
acquisitions drove the BCS revenue growth.  During the first nine months of 
Fiscal 1999, revenue grew by 71 percent to $1,032.8 from $602.5 last year.  
The year-to-date growth rates were 135 percent for Semiconductor and 39 
percent for BCS when compared to the first nine months of Fiscal 1998.

The Company completed two acquisitions mid-way through the first quarter of 
Fiscal 1999.  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.  On May 19, 
1998, the Company acquired the business of Glasgow-based Telecom Sciences 
Corporation Limited, now operating 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 third quarter net income of $17.8, or $0.15 per share, 
compared to $25.6, or $0.23 per share, in the same quarter of last year.  
Third quarter earnings were not adversely affected, after interest and tax, 
by the consolidation of Plessey.  For the nine months ended December 25, 
1998, net income was $45.2, or $0.38 per share, compared to $67.1, or $0.60 
per share, in the same period of Fiscal 1998.

Net income and cash flows for each period, as determined by United States 
accounting principles, are detailed in Note 13 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 and nine months 
ended December 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 
                                    16

<PAGE>
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 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; custom 
silicon wafers; optoelectronic and power devices; 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: 
<TABLE>
<CAPTION>
                                   Nine months          Nine months
                                   Ended         % of   Ended         % of
                                   Dec.25, 1998  Total  Dec.26, 1997  Total
                                   ------------  -----  ------------  -----
<S>                                <C>           <C>    <C>           <C>
United States                      $  451.6       44 %  $  288.6       48 %
Europe                                364.0       35       182.9       30
Other Regions                         165.5       16        91.8       15
Canada                                 51.7        5        39.2        7
                                   ------------  -----  ------------  -----
                                   $1,032.8      100 %  $  602.5      100 %
                                   ========      =====  ========      =====
</TABLE>

For the nine month period ended December 25, 1998, the net movement in 
exchange rates from Fiscal 1998 favorably impacted total revenue by 7 percent 
($40.6) primarily as a result of changes in the UK pound sterling and US 
dollar exchange rates.  

                                    17

<PAGE>
Revenue, by product group, was distributed as follows:
<TABLE>
<CAPTION>
                                   Nine months          Nine months
                                   Ended         % of   Ended         % of
                                   Dec.25, 1998  Total  Dec.26, 1997  Total
                                   ------------  -----  ------------  -----
<S>                                <C>           <C>    <C>           <C>
Semiconductors                     $  479.3       46 %  $  203.8       34 %
Business Communications Systems       553.5       54       398.7       66
                                   ------------  -----  ------------  -----
                                   $1,032.8      100 %  $  602.5      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. Management is focused on 
targeting the semiconductor business toward certain high growth segments in 
the communications industries.  Technological advances and increasingly 
complex end user requirements affecting telecom and datacom networks are 
driving the high growth segments.

Semiconductor revenue increased by 135 percent from the first nine 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 Fiscal 1999, the Plessey operations were 
reorganized and integrated into Mitel's semiconductor business lines.  
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 35 percent of total revenue in the first nine months of Fiscal 1999 
as against 30 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 48 percent in the first nine months of last year to 44 
percent for the same period in Fiscal 1999.

Excluding the growth resulting from the Plessey acquisition, the Company has 
experienced reduced demand from the Asia/Pacific region and in other emerging 
regions, such as Latin America and Eastern Europe, due to the prevailing 
adverse local economic conditions (see further discussion under "Other").  
This recent decline and the additional manufacturing capability acquired from 
Plessey combined to result in excess capacity in the Company's fabrication 
facilities ("fabs").  Accordingly, management is reviewing its operations and 
will take steps to consolidate the capacity levels to achieve better 
utilization of the fabs.  On January 22, 1999, the Company announced that it 
had commenced negotiations with the relevant Swedish Trade Unions concerning 
the transfer of all semiconductor CMOS manufacturing operations from Sweden 
to Mitel's other more technologically advanced fabrication sites.  The 
proposed transfer affects approximately 200 employees in Mitel's plant in 
Jarfalla, Sweden with the program expected to be completed within the next 
twelve months. The Swedish operation will operate as an IC fabless facility
                                    18

<PAGE>
focussed on the design, marketing, and sales of ASICs and as a manufacturer 
and marketer of optoelectronic devices.  The integration provisions 
established in connection with the acquisition of Plessey included the 
expected transfer costs of the proposed program.

Mitel continues to evaluate the adequacy of its integration and redundancy 
provisions through the implementation process of realizing synergies and 
integrating recently acquired businesses.

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 revenue increased by 39 percent over the first nine months of last year 
due to higher sales volumes of SX-2000 and SX-200 systems, including the 
associated pull-through of new system sets, 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 
that also produced additional revenue. U.S. direct channel sales benefited 
from increased installations of new systems as well as from upgrades in the 
existing customer base.

With respect to Europe, sales increased in the first nine months of Fiscal 
1999 due to strong growth in new system sales and system upgrades sold to the 
installed base, and to continued higher 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 51 percent and 50 
percent for the three and nine months ended December 25, 1998, respectively, 
unchanged from the respective periods in Fiscal 1998. The positive impact of 
higher sales volumes of BCS products offset the impact of reduced margins in 
some semiconductor products and of certain unfavorable manufacturing 
variances.

OPERATING EXPENSES

Selling and Administrative

Selling and administrative (S&A) expenses in the third quarter of Fiscal 1999 
were $89.7, or 25 percent of revenue, compared with $57.8, or 27 percent of 
revenue, for the comparable period in Fiscal 1998.  Year-to-date S&A expenses 
were $234.4, or 23 percent of revenue, 4 percentage points lower than the 
first nine 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
                                    19

<PAGE>
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 $38.2, or 11 percent of revenue, for the quarter 
ended December 25, 1998.  This compares to $8.0, or 4 percent of revenue, in 
the corresponding period of Fiscal 1998.  Year-to-date, R&D spending was 
$106.3, or 10 percent of revenue, compared to $24.6, or 4 percent of revenue, 
in the first nine months of Fiscal 1998.  These amounts are net of $5.6 and 
$22.4 in R&D government assistance, including ITCs, earned for the respective 
three and nine month periods ended December 25, 1998 (three months ended 
December 26, 1997 - $10.1; nine months ended December 26, 1997 - $27.1).  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.

Amortization

Amortization increased in the third quarter to $30.5 from $10.0 in the same 
quarter of Fiscal 1998.  Year-to-date, amortization expense was $89.4 
compared to $28.5 in the nine months ended December 26, 1997.  The increase 
was due to the inclusion of Plessey's operations, which comprise the 
amortization of manufacturing facilities in the United Kingdom, the 
amortization of the completed capital program at the Bromont semiconductor 
plant and the amortization of purchased intangible assets. 

OTHER INCOME AND EXPENSES

Interest income was $1.6 for the quarter ended December 25, 1998, up slightly 
from the $1.4 recorded in the corresponding quarter of Fiscal 1998.  Year-to-
date, interest income was $4.3 compared to $3.9 in the first nine months of 
last year.

Interest expense was $6.7 for the third quarter of Fiscal 1999 compared to 
$1.0 in the corresponding period of Fiscal 1998.  Year-to-date, interest 
expense, including the write-off of deferred debt issue and other costs, was 
$31.0 compared to $2.9 in the first nine 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.  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 was recorded as additional interest 
expense in the second quarter of Fiscal 1999.  This non-cash expense amounted 
to $8.8, or $0.08 per share.

INCOME TAXES

Income tax expense for the three and nine months ended December 25, 1998 was 
$2.4 and $13.5 compared to $9.6 and $21.4 for the comparable periods in 
Fiscal 1998.  The effective income tax rate as a percentage of pre-tax income 
was 12 percent and 27 percent in the respective third quarter periods of 
Fiscal 1999 and Fiscal 1998. The lower effective tax rate in the third
                                    20

<PAGE>
quarter of Fiscal 1999 was principally due to permanent differences 
associated with European operations, lower taxes in Canada arising from 
higher interest costs related to the term loans, and to tax recoveries in 
Sweden.  Year-to-date, the effective income tax rate, as a percentage of pre-
tax income, was 23 percent as compared to 24 percent in the first nine months 
of last year.  

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, resulting in the possibility that 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 invoices, or engage in similar normal business activities.  
The Company has been working on the Year 2000 problem since 1997.  A 
dedicated Year 2000 Program Management Office (PMO) was established in 
February 1998 to address compliance both externally, to our customers and 
suppliers and internally for the Company's business processes.  These 
internal processes include network and communications infrastructure, 
business software applications, manufacturing, facilities management, product 
development, sales, finance and human resources.  Management presently 
believes that with modifications to the Company's existing software and 
hardware and conversions to new software, the Year 2000 problem can be 
mitigated.  Despite the extensive efforts dedicated to the Year 2000 Program, 
there can be no assurance that all Year 2000 date compliance activities will 
be completed before problems associated with the Year 2000 transition 
potentially occur.

The Company has completed the evaluation of its major product offerings, 
including current and discontinued business telephone systems, peripherals 
and applications.  The majority of products have been classified as Compliant 
or having Compliant versions.

The Company has established a three-phase Year 2000 Readiness Program (the 
"Year 2000 Program") that addresses the key internal business processes and 
systems. Phase I was the Initial Assessment and included an overview of the 
Company and an assessment of its awareness and readiness for Year 2000.  
Consultants were engaged to assist with this review and with any necessary 
remedial plans.  Phase II included the Discovery and Strategy and involved 
the collection and assessment of a comprehensive inventory of all internal 
information systems equipment as well as a detailed assessment of the 
suppliers deemed to be affected by the Year 2000 Problem.  The third and 
current phase is the Implementation and consists of conversion, testing and 
deployment of identified mission critical systems as well as risk and 
contingency management activities.  The Company plans to have 90% of its 
mission critical systems Year 2000 ready by March 31, 1999.  The remaining 
mission critical systems, are expected to be Year 2000 ready by the summer of 
calendar 1999.  The non-mission critical systems will be addressed after 
March 31, 1999 and by the end of the calendar year.  The integration testing 
of internal systems is also planned for the spring of calendar 1999.

                                    21

<PAGE>
Under its comprehensive Vendor Management Program, initiated during Phase II 
of the Year 2000 Program, Mitel is actively working with its suppliers to 
determine the extent to which their operations and the products and services 
they provide are Year 2000 ready and to monitor their progress toward Year 
2000 capability.  The highest priority is given to suppliers that are 
critical to the business.  The program includes awareness letters, site 
visits, questionnaires as well as compliance agreement and warranties.  
Contingency plans, such as planned increased inventory levels or substitute 
suppliers, are being developed to address issues related to suppliers that 
are not considered to be making sufficient progress in becoming Year 2000 
capable in a timely manner.  The Company has also developed contingency plans 
to address possible changes in customer order patterns due to Year 2000 
issues.  Contingency plans will be reviewed on a regular basis as Mitel 
learns more about its suppliers' state of readiness.  The Company's target is 
to have all "high risk" suppliers' assessment of their Year 2000 readiness 
completed and to have the necessary contingency plans in place by March 31, 
1999.

It is currently expected that the total incremental direct costs of the Year 
2000 Program will not exceed $15.0.  Approximately $2.5 has been spent on 
direct Year 2000 Program costs to date and was funded through operating cash 
flows.  The program costs are primarily attributable to the purchase of new 
software and equipment and do not include estimates for potential litigation.  
As the Company continues to assess the last phases of the Year 2000 Program, 
estimated costs may change.

Based on currently available information, management does not believe that 
the modifications and conversions discussed above, related to the Company's 
internal systems or products sold to customers, will have a material adverse 
impact on the Company's business, financial condition or results of 
operations.  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 believes that the most reasonably likely 
worst case Year 2000 scenarios would relate to third party systems rather 
than the Company's internal systems or products.  The Company believes the 
risks are greatest with utilities (e.g. electricity supply, water), 
telecommunications, transportation and critical suppliers that are outside 
the Company's control.

OTHER

The Asia Pacific region encountered unstable local economies and significant 
devaluation in its currencies during Fiscal 1998 and through Fiscal 1999 to 
date.  This region represented 12 percent of the Company's revenue for the 
nine months ended December 25, 1998 and 11 percent of revenue in the 
corresponding period of Fiscal 1998.  The majority of the Company's Asia 
Pacific sales relate to semiconductor operations.  Asia Pacific receivables, 
net of reserves, were approximately 2 percent of the Company's total assets 
as at December 25, 1998.  To the extent the Asia Pacific region grows in 
importance to the Company, or 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.

                                    22

<PAGE>
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.

On January 1, 1999, eleven of fifteen member countries of the European Union 
established fixed conversion rates between their existing currencies ("legacy 
currencies") and one common currency - the Euro.  The Euro will trade on 
currency exchanges and may be used in business transactions.  The conversion 
to the Euro eliminates currency exchange rate risk between the member 
countries.  Beginning in January 2002, new Euro-denominated bills and coins 
will be issued, and legacy currencies will be withdrawn from circulation.  
Mitel's operating subsidiaries that are affected by the Euro conversion have 
established plans to address the issues raised by the Euro currency 
conversion.  These issues include, among others, the need to adapt computer 
and financial systems, competitive impacts of cross-border price 
transparency, and recalculating currency risk.  The Company does not expect 
any required system conversion costs to be material due to the existing 
ability to transact in multiple currencies.  Due to significant 
uncertainties, the Company cannot reasonably estimate the effects one common 
currency will have on pricing and the resulting impact, if any, on the 
Company's financial condition or its results of operations.

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 
December 25, 1998, order backlog was $259.3 compared to $283.7 at September 
25, 1998, $300.1 at June 26, 1998 and $279.5 at March 27, 1998.  The decrease 
in backlog from the end of the second quarter was attributable to a decrease 
in semiconductor orders arising partly from a reduction in order lead times.  
Most of the backlog is scheduled for delivery in the next twelve months.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash, cash equivalents and short-term investment balances of 
$95.0 at December 25, 1998 compared to $151.7 at March 27, 1998.  All of the 
December 25, 1998 cash balance was held in either cash or highly liquid cash 
equivalents.  The decrease of $56.7 was mainly due to the first quarter 
acquisitions of the Advanced Messaging and ISDN PBX business which, together, 
amounted to $46.6, reductions of year-end payables, including 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.
                                    23

<PAGE>
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 
bear interest at a variable 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 term loans are subject to mandatory prepayments out of 
certain insurance proceeds and defined excess cash flow received by the 
Company and in the event of asset sales (other than inventory), equity 
offerings or debt issuance by the Company.  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 $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.

Cash flow from operations before working capital changes amounted to $147.3 
during the first nine months of Fiscal 1999, up $65.7 from $81.6 during the 
first nine months of Fiscal 1998.  Since March 27, 1998, the Company's 
working capital, as reflected in the consolidated statements of cash flows, 
increased by $136.9 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 and other additions were $52.0 during the nine months ended 
December 25, 1998 compared with $19.5 in the previous year, net of capital 
lease additions of $13.7 and $20.0 for the two respective periods.  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 nine 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.

                                    24

<PAGE>
Long-term debt decreased due to scheduled repayments of $12.1 and a 
prepayment of $123.1 against the term loans (described above).

As at December 25, 1998, the Company's capitalization was comprised of 30 
percent debt, 4 percent preferred equity, and 66 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 cash equivalent balances of $95.0 as at December 25, 
1998, the Company has an unused revolving credit facility of approximately 
$113.9 (U.S. $73.5).  In accordance with Company policy, cash equivalent and 
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 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 December 
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

February 3, 1999                                 /S//JEAN-JACQUES CARRIER
----------------                                 --------------------
Date                                             Jean-Jacques Carrier
                                                 Vice President of Finance
                                                  and Chief Financial Officer
</TABLE>
                                    26