--------------------------------------------------------------------------------


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


                 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1998

                                       OR

                ( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. 1-10588


                                INTELLICALL, INC.
             (Exact name of registrant as specified in its charter)

       Delaware                                              75-1993841
(State or other jurisdiction of                           (I.R.S. Employer 
 incorporation or organization)                         Identification number)

                            2155 Chenault, Suite 410
                              Carrollton, TX 75006
                    (Address of Principal Executive Offices)

                                 (972) 416-0022
              (Registrant's telephone number, including area code)


Indicate by check mark  whether the  Registrant  (1) has filed all reports 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 ___       

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                                           Outstanding at
               Class                                      November 16,1998
Common Stock $.01 par value                                  10,007,042
--------------------------------------------------------------------------------



<PAGE>





INDEX

INTELLICALL, INC.

Part I.        Financial Information

     Item 1.   Financial Statements

               Balance Sheets at September 30, 1998
               (Unaudited) and December 31, 1997...............................1

               Statements of Operations for each of the
               three month periods ended September 30, 1998 and 1997
               (Unaudited)       ..............................................3

               Statements of Operations for each of the
               nine month periods ended September 30, 1998 and 1997
               (Unaudited)      ...............................................4

               Statements  of Cash Flows for each of the nine  month  periods
               ended September 30, 1998 and 1997
               (Unaudited)       ..............................................5

               Notes to Financial Statements...................................6

     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...............................20

Signatures....................................................................21










<PAGE>



Part I.  Financial Information
     Item 1.  Financial Statements

INTELLICALL, INC.
       BALANCE SHEETS
       ASSETS
      (in thousands)
<TABLE>
<CAPTION>

                                                                              September 30, 1998    December 31, 1997
                                                                                    (unaudited)
<S>                                                                                         <C>                  <C>
Current assets

     Restricted cash ..................................................                     $  19                $ 2,488

     Cash and cash equivalents ........................................                       331                     66

     Receivables.......................................................                    17,168                 34,881

          Less allowance for doubtful accounts.........................                     5,524                  6,211
                                                                                        ---------              ---------

                                                                                           11,644                 28,670

     Inventories, net..................................................                     4,004                  5,002

     Related party, net................................................                       884                     --

     Other current assets..............................................                       370                  1,908
                                                                                        ---------              ---------

          Total current assets.........................................                    17,252                 38,134

Fixed assets, net......................................................                     1,462                  8,387

Capitalized software costs, net........................................                     2,370                  2,968

Notes receivable, net..................................................                     1,126                  1,125

Intangible assets, net.................................................                       771                 31,802

Investment in unconsolidated investee..................................                     1,913                     --

Other assets, net......................................................                     1,321                  2,373
                                                                                        ---------              ---------

                                                                                         $ 26,215               $ 84,789
                                                                                         ========               ========
</TABLE>



See notes to financial statements.


                                      - 1 -

<PAGE>



INTELLICALL, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands, except share information)

<TABLE>
<CAPTION>

                                                                            September 30,1998        December 31, 1997
                                                                            (Unaudited)
<S>                                                                                   <C>                      <C>
Current liabilities
     Accounts payable..........................................                       $ 1,824                  $11,320
     Accrued transmission, customer commissions and billing
         charges...............................................                         1,362                   12,222
     Deferred revenue..........................................                            84                    1,262
     Accrued liabilities.......................................                         1,134                    4,456
     Capital lease obligation, current.........................                            --                      157
     Current portion of long-term debt ........................                         1,000                    4,928
                                                                                     --------             ------------
     Total current liabilities.................................                         5,404                   34,345
Long-term debt ................................................                         9,746                   21,217
Deferred gain on sale to unconsolidated investee...............                           968                       --
Capital lease obligation .....................................                             --                      843
Other liabilities..............................................                           250                      948
Minority interest..............................................                            --                    6,769
Commitments and contingent liabilities.........................                            --                       --
                                                                                   ----------            -------------
      Total liabilities                                                                16,368                   64,122
Redeemable preferred stock Series B-2, $100 par value;
     zero and 111,960 shares issued and outstanding,
     respectively..............................................                            --                   11,196
Redeemable preferred stock Series B-3, $300 par value; zero                                       
     and 6,667 shares issued and outstanding,
     respectively..............................................                            --                    2,000
Stockholders' equity
     Preferred stock, $.01 par value; 1,000,000 shares
         authorized;  2,690 and 4,000 shares issued
         and outstanding, respectively.........................                             1                        1
     Common stock, $.01 par value; 20,000,000 shares
          authorized; 9,947,446 and 9,471,944 shares issued,
          respectively.........................................                            98                       95
     Additional paid-in capital................................                        57,873                   57,486
     Less common stock in treasury, at cost;
          24,908 shares........................................                          (258)                    (258)
     Accumulated deficit.......................................                       (47,867)                 (49,853)
                                                                                    ---------                  -------
          Total stockholders' equity...........................                         9,847                    7,471
                                                                                   ----------                  -------
                                                                                     $ 26,215                 $ 84,789
                                                                                     ========                 ========
</TABLE>
See notes to financial statements.

                                      - 2 -

<PAGE>



INTELLICALL, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share information)


<TABLE>
<CAPTION>

                                                                                    THREE MONTHS ENDED
                                                                                        September 30,
                                                                                1998                 1997
                                                                                ----                 ----
<S>                                                                          <C>               <C>
Revenues and sales:
         Service revenues                                                    $  8,542          $    24,991
         Equipment sales                                                        4,755                5,770
                                                                              -------               ------
                                                                               13,297               30,761
                                                                             --------          -----------

Cost of revenues and sales:
         Service revenues                                                       8,060               22,750
         Equipment sales                                                        3,728               10,410
                                                                             --------             --------
                                                                               11,788               33,160
                                                                              -------             --------

Gross profit:
         Service revenues                                                         482                2,241
         Equipment sales                                                        1,027               (4,640)
                                                                             --------           ----------
                                                                                1,509                2,399)

Selling, general and administrative expenses                                    2,219                3,572
Provision for doubtful accounts                                                    93                  273
Research and development expenses                                                 286                  257
                                                                               ------              -------

Operating loss                                                                 (1,089)              (6,501)

Interest income                                                                    80                  216

Interest expense                                                                 (376)                (619)

Equity in loss of investee                                                        (88)                  --

Minority interest                                                                  --                  (83)
                                                                           ----------              -------

Loss before income taxes                                                       (1,473)              (6,987)

Income tax expense                                                                 --                 (142)
                                                                           ----------           ----------

Net loss                                                                    $  (1,473)          $   (7,129)
                                                                            =========           ==========

Basic net loss per share                                                    $    (.15)          $     (.76)
                                                                            =========           ==========

Weighted average number of shares outstanding                                   9,912                9,334
                                                                            =========           ==========

Fully diluted net loss per share                                            $    (.15)          $     (.76)
                                                                            =========           ==========

Shares used in fully diluted net loss per share calculation                     9,912                9,334
                                                                          ===========           ==========
</TABLE>
See notes to financial statements.

                                      - 3 -

<PAGE>



INTELLICALL, INC.
STATEMENTS OF OPERATIONS(UNAUDITED)
(in thousands, except share information)
<TABLE>
<CAPTION>

                                                                                   NINE MONTHS ENDED
                                                                                        September 30,
                                                                                1998                 1997
                                                                                ----                 ----

<S>                                                                         <C>                <C>
Revenues and sales:
         Service revenues                                                   $  21,689          $   65,276
         Equipment sales                                                       12,338              13,721
                                                                             --------          ----------
                                                                               34,027              78,997
                                                                             --------          ----------

Cost of revenues and sales:
         Service revenues                                                      20,342              59,202
         Equipment sales                                                        9,797              18,508
                                                                              -------            --------
                                                                               30,139              77,710
                                                                              --------           --------

Gross profit:
         Service revenues                                                       1,347               6,074
         Equipment sales                                                        2,541              (4,787)
                                                                             --------           ---------
                                                                                3,888               1,287

Selling, general and administrative expenses                                    6,485               8,876
Provision for doubtful accounts                                                   237                 525
Research and development expenses                                                 843                 455
                                                                               ------              ------

Operating loss                                                                 (3,677)             (8,569)

Interest income                                                                   239                 445

Interest expense                                                               (1,159)             (1,831)

Gain on sale of assets                                                          6,892                  --

Equity in loss of investee                                                       (418)                 --

Minority interest                                                                  --                (129)
                                                                             --------            --------

Income (loss) before income taxes                                               1,877             (10,084)

Income tax expense                                                                 --                (142)
                                                                            ----------          ---------

Net income (loss)                                                           $    1,877          $ (10,226)
                                                                            ==========          =========

Basic net income (loss) per share                                           $      .19          $   (1.12)
                                                                            ==========          =========

Weighted average number of shares outstanding                                    9,716              9,211
                                                                             =========          =========

Fully diluted net income (loss) per share                                   $      .17          $   (1.12)
                                                                            ==========          =========

Shares used in fully diluted net income (loss) per share calculation            10,926              9,211
                                                                            ==========          =========
</TABLE>
See notes to financial statements.

                                      - 4 -

<PAGE>



INTELLICALL, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
(in thousands)                                                                     NINE MONTHS ENDED

                                                                                        September 30,
                                                                                1998                 1997
                                                                                ----                 ----

<S>                                                                          <C>                 <C>
Operating Activities:
         Net income (loss)                                                   $  1,877            $ (10,226)
         Adjustments to reconcile net income (loss) to
           net cash provided by operating activities:
           Depreciation and amortization                                        1,496                4,667
           Provision for doubtful accounts                                        237                  934
           Provision for inventory                                                225                4,382
           Equity in loss of investee                                             418                   --
           Minority interest in income of ILD                                      --                  129
           Changes in operating assets and liabilities (See Note 1):
              Restricted cash                                                      (7)                  (3)
              Receivables                                                       3,055               (5,379)
              Inventories                                                         743                  175
              Related party                                                      (754)                  --
              Other current assets                                                281                  314
              Notes receivable                                                    117                    8
              Accounts payable                                                 (4,160)               1,633
              Accrued transmissions, commissions and billing charges           (1,283)               3,407
              Accrued liabilities                                                  18                1,088
              Deferred revenue                                                     --                 (595)
              Deferred gain on sale to unconsolidated investee                    968                   --
              Other                                                             1,572               (2,454)
                                                                            ---------            ---------
Net cash provided by (used in) operating activities                             4,803               (1,920)
Investing activities:
         Purchase of equipment                                                   (368)                (807)
         Capitalized software                                                    (750)              (1,162)
         Acquisition of WorldCom assets                                            --              (10,021)
                                                                            ---------             --------
Net cash used in investing activities                                          (1,118)             (11,990)
Financing activities:
         Net (repayments on) proceeds from line of credit                      (3,787)               4,028
         Proceeds from issuance of stock                                          433                7,852
                                                                           ----------            ---------
Net cash (used in) provided by financing activities                            (3,354)              11,880
Net increase (decrease) in cash and cash equivalents                              331               (2,030)
Cash and cash equivalents at beginning of period                                   --                2,271
                                                                            ---------           ----------
Cash and cash equivalents at end of period                                  $     331            $     241
                                                                            =========            =========
Supplemental cash flow information:
         Interest paid                                                      $     656            $   1,281
                                                                            =========           ==========
Supplemental non cash information:
         Conversion of debt to equity                                       $     210           $    1,320
                                                                            =========           ==========
         Conversion of preferred stock to common stock                      $   1,310           $       --
                                                                            =========           ==========
         Stock issued in acquisition of WorldCom assets                            --           $   11,696
                                                                            =========           ==========
         Preferred stock dividend declared                                         --                   55
                                                                            =========           ==========
</TABLE>
See notes to financial statements.

                                      - 5 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS




NOTE 1 - CERTAIN ACCOUNTING POLICIES

         Basis  of  Presentation.   The  accompanying  financial  statements  of
Intellicall,  Inc. (the  "Company")  have been  prepared in accordance  with the
requirements of Form 10-Q and do not include all disclosures  normally  required
by generally  accepted  accounting  principles or those  normally made in annual
reports on Form 10-K.  The  financial  statements  as of  December  31, 1997 and
results of  operations  for the quarter  ended  September  30, 1997  include the
financial  position and results of operations  of the  Company's  majority-owned
subsidiary ILD Telecommunications,  Inc. ("ILD"). In the quarter ended March 31,
1998, the Company's  ownership  percentage of ILD decreased from 54% at December
31, 1997 to 42% at March 31, 1998. (See Note 5 herein).  Accordingly,  effective
January 1, 1998,  the  Company  accounted  for its  investment  in ILD under the
equity method of accounting  retroactively  to January 1, 1998. At September 30,
1998, the Company's  ownership in ILD remained at 42%. In management's  opinion,
all adjustments  necessary for a fair  presentation of the results of operations
for the periods shown have been made and are of a normal and recurring nature.

The results of operations  for the nine months ended  September 30, 1998 are not
necessarily  indicative of the results of operations  expected for the full year
1998. The financial  statements  herein should be read in  conjunction  with the
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.

         Statement Presentation.  Certain prior year amounts have been
reclassified to conform to current year presentation.

         Software  Development  Costs. The Company  capitalizes costs related to
the development of certain  software  products.  In accordance with Statement of
Financial  Accounting  Standards  No. 86,  capitalization  of costs  begins when
technological  feasibility  has been  established  and ends when the  product is
available  for  general  release to  customers.  Amortization  is computed on an
individual  product basis based on the products'  estimated  economic life using
the straight line method, not to exceed five years.

The amounts of software  development  costs  capitalized in the third quarter of
1998 and 1997 were $250,000 and  $271,000,  respectively.  The Company  recorded
$151,000  and  $397,000 of software  amortization  expense for the three  months
ended September 30, 1998 and 1997.

For the nine months ended  September 30, 1998 and 1997, the Company  capitalized
$750,000  and  $1,162,000,  respectively,  of software  development  costs.  The
software amortization expense recorded

                                      - 6 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS




was $405,000 and $1.4 million for the nine months ended  September  30, 1998 and
1997.

         Cash and Cash  Equivalents.  For  purposes  of the  balance  sheets and
statements of cash flows,  cash and cash equivalents  include  short-term liquid
investments purchased with remaining maturities of three months or less.

              Earnings  per Share:  Basic net  income  (loss) per share has been
computed in accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("FAS 128"),  using the weighted  average  number of common
shares outstanding.  The provision and disclosure  requirements for FAS 128 were
required to be adopted for interim and annual  periods ending after December 15,
1997, with restatement of EPS for all prior periods.

         The following  table sets forth a  reconciliation  of the numerator and
denominator used in the basic and diluted EPS computation for the three and nine
month periods ended September 30, 1998 and 1997, respectively:

<TABLE>
<CAPTION>

                                                               Three months    Three months     Nine months      Nine months
                                                                  ended           ended             ended            ended
                                                               September 30,    September 30,    September 30,    September 30,
                                                                   1998             1997             1998           1997    
                                                               -------------    -------------    -------------   -------------  

<S>                                                           <C>               <C>              <C>            <C>
Net income (loss)                                             $  (1,473)        $     (7,129)    $  1,877       $ (10,226)
Basic:
    Weighted average number of shares outstanding                 9,912                9,334        9,716           9,211
                                                                  =====                =====        =====           =====


Diluted:
   Weighted average number of shares outstanding used
       in the basic net income (loss) per share calculation       9,912                9,334        9,716           9,211
    Weighted average shares from assumed exercise of
        dilutive stock options and warrants, net of shares
        assumed to be repurchased with exercise proceeds             --                   --          208              --
     Assumed conversion of Series A Preferred Stock
        at beginning of period                                       --                   --        1,002              --
     Assumed conversion of convertible debt                          --                   --           --              --
                                                                -------              -------       ------         -------

     Weighted average number of shares outstanding used
         in the fully diluted net income (loss) per share
         calculation                                              9,912                9,334       10,926           9,211
                                                                  =====                =====       ======           =====
</TABLE>


         In accordance with FAS 128, options and warrants to purchase  2,915,705
and 2,932,740 shares respectively,  of Common Stock were excluded in the diluted
EPS  calculation  because they were  antidilutive  for the three months
ended  September  30,  1998  and  1997,  respectively.  For the nine months
ended September 30, 1998 and 1997, respectively, options and warrants to 
purchase 1,883,580

                                      - 7 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS




and 2,932,740 shares respectively, of Common Stock were excluded in
the diluted EPS calculations because they were antidilutive.  Conversion  of 
debt was antidilutive and therefore was excluded for both of the three and 
nine month period  calculations.  Conversion  of preferred  stock was excluded 
for 1998 and 1997,  third  quarter  calculations  as well as the nine month 1997
calculation because they were antidilutive.

         Disclosures  about  Reporting   Comprehensive  Income:  In  June  1997,
Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income" ("FAS 130"), was issued. FAS 130 establishes standards for reporting and
display of comprehensive income and its components (revenues,  expenses,  gains,
and losses) in a full set of general-purpose  financial statements.  It requires
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be reported in a financial statement that is
displayed with the same  prominence as other  financial  statements.  FAS 130 is
effective for fiscal years  beginning  after December 15, 1997. The Company will
adopt this Statement in the year ending December 31, 1998.  Reclassification  of
financial  statements for earlier periods  provided for comparative  purposes is
required upon adoption.  The Company has no components of  comprehensive  income
not already included in net income.

         Disclosures about Segments of an Enterprise and Related Information: In
June 1997,  Statement of Financial  Accounting  Standards No. 131,  "Disclosures
About  Segments of an  Enterprise  and Related  Information"  ("FAS  131"),  was
issued.  FAS  131  establishes  standards  for  the  way  that  public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders.  FAS 131
is effective for financial  statements for periods  beginning after December 15,
1997. The Company will adopt FAS 131 in the year ending December 31, 1998.

         Disclosures  about  Accounting for Derivative  Instruments  and Hedging
Activities:  In June, 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities" ("FAS 133") was
issued.  FAS 133 is  effective  for all  fiscal  quarters  of all  fiscal  years
beginning  after  June 15,  1999  (January  1,  2000 for the  Company).  FAS 133
requires  that all  derivative  instruments  be recorded on the balance sheet at
their fair value.  Changes in the fair value of  derivatives  are recorded  each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge  transaction and, if it is, the type
of hedge  transaction.  Management of the Company  anticipates  that, due to its
limited use of derivative  instruments,  the adoption of FAS 133 will not have a
significant  effect on the  Company's  results of  operations  or its  financial
position.



                                      - 8 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS





         Year 2000 Discussion.

         Background  and  Objectives  The Company has  undertaken a program (the
"Y2K  Program")  to ensure  that its  operations,  computer  systems and certain
products  are not  functionally  impaired  as a result of a failure to  properly
record in any  electronic  medium the correct time and date on and after January
1, 2000.  The Y2K Program is a multi-year  program which  commenced in 1997. Its
objectives are as follows:
         (A) to  determine  and assess the  operations  of the  Company  and its
customers which are at risk of experiencing a Y2K disruption;
         (B) to develop  test plans  which  simulate  processing  activities  of
Company-manufactured equipment in a post-1999 environment;
         (C)  to  prioritize   and  schedule   remedial   activities,   estimate
correlative costs and assign the necessary manpower;
         (D) to review and inventory all electronic hardware,  software, systems
and networks used by the Company in its operations;
         (E) to obtain  assurance  from key  vendors  that  their  products  and
services  used by the Company are Y2K  compliant,  or that suitable Y2K upgrades
will be made available to the Company;
         (F) to determine  whether  non-compliant  components  of the  Company's
systems or networks should be upgraded or replaced;
         (G) to empower and assign responsibilities for achieving Y2K compliance
to appropriate personnel within the Company; and
         (H) to monitor and control progress,  costs and final testing to ensure
timely Y2K compliance.

         The Company has assigned  responsibilities  for Y2K  compliance  to two
groups of employees as follows:
         (A) Engineering--responsible for devising test plans, conducting tests,
and developing suitable Y2K upgrades of certain equipment  manufactured and sold
by the Company prior to the year 2000; and
         (B)  Information   Systems--responsible   for  assessing  and  suitably
modifying or replacing  components of systems and networks used in the Company's
operations, including those used to process customer call records.

         Current Y2K Program Status.  The Engineering Group is currently
devising test plans and scripts for payphones currently supported by the 
Company. Although limited testing has occurred, it appears that modifications 
of the Company's currently supported payphones and of INET, the system 
controller of such payphones, are expected to be completed and tested by 
mid-1999.  Test plans and scripts for the N-Genius product line are currently
incomplete, and no testing has occurred.  The

                                      - 9 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS




design and  development  of Astratel 2 and N-Genius  product lines occurred with
Y2K  requirements in mind, for which reason,  extensive  modifications  of these
products to achieve Y2K compliance is not expected to be required.

         Pending  the  completion  of  testing,  neither  the  scope nor cost of
upgrading software used in the Company's  manufactured products can be estimated
with precision.  However,  knowledgeable engineers estimate that labor costs for
necessary  modifications  should not exceed  $150,000,  and such  modifications,
including  testing of modified  products,  are projected to be complete early in
the third quarter of 1999.

         The Company does not plan to test or modify products which it no longer
supports.  Additionally,  Y2K  modifications  may be  incorporated  in  software
releases   containing  other  upgrades  in  product   capability.   Y2K  product
modifications are expected to be completed principally by Company personnel.

         There can be no  assurances  that  tests  and  scripts  devised  by the
Company will detect all instances of Y2K  non-compliance,  or that the scope and
cost of work shown to be required upon  completion of testing will be consistent
with the Company's current  expectations,  or that appropriate personnel will be
available  when  required to make and test the  modifications,  or that upgraded
software will be installed in customer equipment on a timely basis.

         The Information Systems Group ("ISG") has largely completed the process
of evaluating  electronic  equipment and systems principally used by the Company
in  its   manufacturing,   accounting,   administration   and  human   resources
departments. Additionally the ISG has evaluated the Y2K compliance of the system
used to process  customer-submitted  call traffic data  (hereinafter  called the
"CTD System").  Based upon work which has been completed,  the ISG has concluded
that the CTD System will be made Y2K  compliant  as part of a broader  effort to
upgrade  it. The CTD System  upgrade is expected  to be  undertaken  by existing
Intellicall  personnel and completed by the third quarter of 1999. The projected
labor cost of the total system upgrade is approximately  $100,000,  of which the
portion  applicable to Y2K  compliance is minor.  There can be no assurance that
the CTD System  upgrade will be completed on time or within  budget,  or that it
will be sufficiently Y2K compliant to permit processing of customer call traffic
without material disruption or cost.

     The ISG has  obtained  written  assurance  from  third-party  vendors  that
the Company's  accounting,  MRP and payroll  systems will be Y2K  compliant in 
1998.  Letters of assurance  have been  requested  from other key  third-party
vendors concerning other equipment and systems utilized by the Company.  There 
can be no assurance  that the Company will receive  responses from all of its 
vendors in a timely manner,  or that such  responses will be accurate or 
complete.  Moreover, the Company has

                                     - 10 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS




not conducted,  and  will be  unable  to  conduct,  an  in-depth  evaluation  
of its third-party  providers in relation to their ability to adequately address
Y2K issues.

         The ISG has inventoried all personal computers, and related servers and
software used by the Company. The inventory is largely complete, on the basis of
which,  the  Company  has  tentatively  adopted  a plan to  spend  approximately
$125,000 for replacements and upgrades of the inventoried equipment and software
to  achieve  Y2K  compliance  and  otherwise  improved  performance.  Management
believes  that the  necessary  replacements  and upgrades  can be obtained  from
third-parties on a timely basis.

         The  success  of  Intellicall's   business  is  dependent  on,  and  is
interconnected with, numerous third-party suppliers. The depth and complexity of
interconnectivity  raises the  probability  that an  unforeseen  Y2K problem may
arise,  notwithstanding  the best  efforts of the Company and its  suppliers  to
avoid  one.  Consequently,   there  can  be  no  assurance  that  the  Company's
operations,  financial condition or prospects will not be materially impaired by
an unanticipated non-compliant Y2K event.

          Risk Assessment and Contingency Plans.  The Company carries business
interruption insurance, but its policy does not cover, and it is unable to
purchase a policy that covers, business interruption losses arising from Y2K
non-compliance.  Although the risks of Y2K losses exist, management of the
Company believes, based on its current assessment of the cost and work scope
required to achieve Y2K compliance, that there is a small but not insignificant
risk of a material loss resulting from the occurrence of a non-compliant event
for the following reasons.
          (A) Most of the Company's software used in its accounting, human 
resources, payroll and production functions is purchased software from a 
reliable third-party vendors, each of which is expected to make necessary Y2K 
modifications of the software available to the Company on a timely basis.
          (B) Y2K modifications likely to be required of proprietary software 
used in the Company's manufactured equipment and to process call traffic are 
believed to be less challenging to make than other modifications routinely made
by the Company to its proprietary software.
          (C) The Company makes extensive use of off-the-shelf software in its
personal computers.
          (D) The distributed, non-interactive nature of much of the software 
used by the Company and its suppliers reduces the possibility of a broad-based,
system-wide Y2K loss.

          Notwithstanding management's belief that a material Y2K loss is 
improbable, there can be no assurance that such a loss will not occur in spite 
of the best efforts of the Company and its suppliers to timely achieve Y2K 
compliance.



                                     - 11 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS





NOTE 2 - LONG-TERM DEBT AND LINE OF CREDIT

         The Company's debt consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                                                                September 30, 1998    December 31, 1997
<S>                                                                             <C>                   <C>
Intellicall, Inc.
         8% Convertible subordinated notes, due 2000                            $      2,630          $    2,840
         8% Convertible subordinated notes, due 2001                                   5,000               5,000
         Convertible subordinated note, due 1999                                       1,000               1,000
         Asset-based note collateralized by certain assets, due 1999                   2,464               4,114
         Installment note, due 1998                                                       --                  28
                                                                                 -----------           ---------
                                                                                      11,094              12,982
         Less unamortized debt discount                                                 (348)               (450)
                                                                                   ----------          ---------
                                                                                      10,746              12,532
                                                                                   ---------           ---------

ILD Telecommunications, Inc. related debt                                                --              13,613
                                                                                  ----------           ---------


              Total debt                                                              10,746              26,145

         Less: Current portion of long-term debt                                      (1,000)             (4,928)
                                                                                 -----------          ----------
              Total long-term debt                                               $     9,746          $    21,217
                                                                                 ===========          ===========
</TABLE>


         On  February  15,  1994,  the  Company  issued a $1.0  million,  10.0%,
convertible,   subordinated  note  to  T.J.  Berthel  Investments,  L.P.,  whose
ownership also controls 7.2% of the Company's outstanding common stock. Interest
is payable  quarterly and commenced March 31, 1994. The entire  principal amount
matures on March 31, 1999.  The note may be converted by the holder into 160,000
shares of the Company's Common Stock at any time.

         On December 29, 1995, the Company completed the sale of $7.5 million of
8.0%  convertible  subordinated  notes,  due  December  31,  2000,  to Banca Del
Gottardo in Lugano, Switzerland. The notes were issued with warrants to purchase
300,000 shares of the Company's  Common Stock at $4.20 per share.  The notes are
convertible  into 1,785,714  shares of the Company's  Common Stock at a price of
$4.20 per  share.  As of  September  30,  1998,  $4.87  million of the Banca Del
Gottardo Notes were converted to 1,159,517 shares of the Company's Common Stock.
Interest is payable semi-annually and commenced June 30, 1996.

                                     - 12 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS





         On November 22, 1996, the Company completed the sale of $5.0 million of
8.0%  convertible  subordinated  notes,  due  November  22,  2001,  to Banca Del
Gottardo in Lugano, Switzerland. The notes were issued with warrants to purchase
200,000 shares of the Company's  Common Stock at $5.00 per share.  The notes are
convertible  into one million shares of the Company's Common Stock at a price of
$5.00 per share. Interest is payable semi-annually and commenced May 1997.

         On November  22,  1996,  the Company  entered  into a Loan and Security
Agreement  (the "Loan  Agreement")  with Finova Capital  Corporation  ("Finova")
pursuant  to which  Finova  agreed to loan the  Company up to  $12,000,000  (the
"Loan")  based on an available  borrowing  base.  The  borrowing  base  consists
primarily of call traffic and trade equipment receivables and inventory, subject
to eligibility  requirements determined by Finova. Amounts loaned subject to the
borrowing base are determined by percentages  established in the Loan Agreement,
but are within the discretion of Finova.  Such percentages are subject to change
based on experience and Finova's expectations regarding future collectibility of
receivables and usage of inventory.

         The Loan is evidenced by a Secured  Revolving  Credit Note (the "Note")
payable to the order of Finova.  Borrowings  under the Loan bear interest at the
rate of prime plus 1.75%. The interest rate may be decreased prospectively by up
to 0.5%  based on  future  profitability  of the  Company.  Also the Loan has an
unused  line fee equal to one  quarter of one  percent  (0.25%) per annum of the
unused portion of the total facility and a facility fee equal to one-half of one
percent  (0.50%)  per annum of the amount of the total  facility  payable on the
first  anniversary  of the Loan  Agreement and one each  subsequent  anniversary
thereof. Interest is paid monthly.

         The initial  term of the Loan  Agreement  is three years at which time,
unless extended, all amounts then outstanding must be repaid. The Loan Agreement
contains prepayment  penalties in the event it is terminated prior to expiration
of its initial  term.  The Loan is secured by first and prior liens and security
interests encumbering substantially all of the assets of the Company,  including
inventory,  equipment, accounts receivable, general intangibles,  trademarks and
tradenames.  The Loan  Agreement  contains  various  restrictions  (including  a
prohibition   against  the  payment  of   dividends,   limitations   on  capital
expenditures,  and restrictions on investments) and financial ratio  maintenance
requirements (including minimum working capital and net worth requirements).  As
of September 30, 1998 the Company was in compliance with all covenants.

         At  December  31,  1997 ILD  Telecommunications,  Inc.  (ILD) had $13.6
million of long term debt due from 1998 through 2001 at interest  rates  ranging
from 9% to 13.5%.



                                     - 13 -

<PAGE>


                                INTELLICALL, INC.
                          NOTES TO FINANCIAL STATEMENTS




NOTE 3 - INVENTORY

         As of  September  30, 1998 and December 31,  1997,  the  Company's  net
inventories consisted of the following (in thousands):

                                               September 30,       December 31,
                                                   1998               1997
                                               -------------       -----------
         Raw materials                        $    2,848          $    2,491
         Work-in-process                             360                 378
         Finished goods                              796               2,133
                                              ----------            --------
              Total inventories, net               4,004          $    5,002
                                              $=========          ==========


NOTE 4 - EQUITY FINANCING

         On July 21,  1997 (the  "Closing  Date")  the  Company  entered  into a
Securities Purchase Agreement (the "Purchase Agreement") with four institutional
investors (the "Investors") pursuant to which the Investors purchased $4,000,000
of the Company's Series A Convertible  preferred stock (the "preferred  stock").
As of September 30, 1998,  $1,310,000 of the Company's  preferred stock had been
converted into 358,377  shares of the Company's  Common Stock.  During  November
1998,  1,000 shares of the Company's  preferred  stock were  converted to 84,504
shares of the Company's Common Stock.

         The preferred  stock,  plus all accrued stock  dividend  premiums at 7%
annually,  is convertible into Common Stock of the Company at the option of each
Investor at a conversion price equal to the lower of $5.05 per share (the "Fixed
Conversion  Price")  or eighty  percent  (80%) of the  volume  weighted  average
fifteen  day trading  price  preceding  the date of  conversion  (the  "Variable
Conversion Price").

         Any shares of preferred  stock  outstanding two years after the Closing
Date will automatically convert into Common Stock.

         The  Investors  may  require the  Company to redeem  certain  shares of
preferred  stock (i) in the event the number of shares of common stock  issuable
upon conversion  (based on the conversion  price in existence from time to time)
multiplied  by 1.25 would  exceed the maximum  number of shares of common  stock
which the Company can issue without shareholder  approval pursuant to applicable
New

                                     - 14 -

<PAGE>



York Stock  Exchange  Guidelines,  unless  shareholder  approval  is so obtained
within  120 days of such  occurrence,  (ii) in the  event the  Company  fails to
reserve an  adequate  number of shares of common  stock as  contemplated  by the
designation of preferred stock creating the preferred stock (the "Designation"),
unless such failure is cured by board of directors and/or shareholder  approvals
as required,  (iii) in the event the Company fails to honor a conversion  notice
and (iv) in other  events  as more  fully  set  forth  in the  Designation.  Any
redemptions,  however, are limited to the Company's borrowing availability under
its Loan Agreement with Finova.

         The  Designation  grants  to the  Company  the  option,  under  certain
circumstances,  to redeem for cash any shares of preferred  stock  submitted for
conversion  if the  Variable  Conversion  Price is less than $4.00 per share and
funds are available under the Company's Loan Agreement with Finova.

         The  Company  filed  a  registration  statement  on  the  common  stock
underlying the conversion of the preferred stock on September 5, 1997.

         In conjunction  with the issuance of the preferred  stock,  the Company
entered into a Second  Amendment to the Loan and Security  Agreement with Finova
(the "Second  Amendment").  The Second Amendment modified one financial covenant
and allowed the Company to redeem the  preferred  stock as  contemplated  in the
Designation  if (i) following and giving effect to such  redemption  the Company
shall have excess  borrowing  availability  under its borrowing base of not less
than $500,000, and shall have paid in full or made provision for payment in full
of all of the  Company's  accounts  payable  in  excess  of  $500,000  which are
outstanding  beyond  their due date and are not  contested  in good faith by the
Company and all bank overdrafts and (ii) at the time of such redemption no event
of Monetary Default,  as defined in the loan agreement with Finova, and no event
which,  with  notice or passage of time or both,  would  constitute  an event of
Monetary  Default  under the loan  agreement  with  Finova has  occurred  and is
continuing, or would result from such redemption.

NOTE 5 - SALE OF STOCK OF ILD TELECOMMUNICATIONS, INC.

         On March 30, 1998,  the Company sold to SMCO,  LLP 18,348.62  shares of
ILD Telecommunications, Inc. common stock. SMCO is an unrelated third party, the
negotiations for the sale transactions  were at arm's length,  and there were no
additional  obligations or elements of financial  consideration  relating to the
sale transaction. The Company sold the shares for $325.00 per share and recorded
a gain  on  the  sale  in the  amount  of  $5.6  million.  The  transaction  was
consummated on March 30, 1998.

         On  April  3,  1998 the  Company  sold  1,539  shares  of its  Series A
preferred stock in ILD  Telecommunications,  Inc. to SMCO Investments,  LLC. The
shares were sold for $325.00 per share, or $500,175, resulting in a gain on sale
of assets of $493,000, net of legal fees.

                                     - 15 -

<PAGE>



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

Forward-Looking Statements - Cautionary Statements

         This Form 10-Q contains certain "forward-looking statements" within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"),  and Section 21E of the Securities  Exchange Act of 1934, as
amended (the "Exchange Act"). Specifically, all statements other than statements
of historical  facts included in this report  regarding the Company's  financial
position,  business  strategy  and plans and  objectives  of  management  of the
Company   for  future   operations   are   forward-looking   statements.   These
forward-looking statements are based on the beliefs of the Company's management,
as well  as  assumptions  made by and  information  currently  available  to the
Company's  management.  When  used  in  this  report,  the  words  "anticipate,"
"believe,"  "estimate,"  "expect,"  and "intend" and words or phrases of similar
import,  as they relate to the Company or Company  management,  are  intended to
identify   forward-looking   statements.   Such  statements   (the   "cautionary
statements")  reflect the current  view of the  Company  with  respect to future
events  and are  subject  to risks,  uncertainties  and  assumptions  related to
various factors including,  without  limitation,  competitive  factors,  general
economic  conditions,  customer  relations,   relationships  with  vendors,  the
interest rate environment, governmental regulation and supervision, seasonality,
product introductions and acceptance,  technological change, changes in industry
practices and one-time events.  Although the Company believes that  expectations
are reasonable, it can give no assurance that such expectations will prove to be
correct.  Based upon changing conditions,  should any one or more of these risks
or  uncertainties  materialize,  or  should  any  underlying  assumptions  prove
incorrect,  actual results may vary materially  from those  described  herein as
anticipated,  believed,  estimated, expected or intended. All subsequent written
and oral  forward-looking  statements  attributable  to the  Company  or persons
acting on its behalf are expressly qualified in their entirety by the applicable
cautionary statements.

Recent Developments

         Effective January 1, 1998, the Company changed its method of accounting
for  its  investment  in  ILD   Telecommunications,   Inc.   ("ILD")  from  full
consolidation  to the  equity  method,  since its  percentage  ownership  in ILD
declined  from 54% at December  31, 1997 to 42% in March 1998.  Under the equity
method, an investment in common stock is generally shown in the balance sheet of
an investor as a single amount. Likewise, an investor's share of net earnings or
losses from its  investment  is  ordinarily  shown in its income  statement as a
single amount.

Prior-year comparative financial information has not been restated to the equity
method and is presented as previously reported,  as is required under SEC rules.
In reviewing  the financial  statements  and  discussion  contained in this Form
10-Q,  the reader  must be aware that much of the  information  is not  directly
comparable as the operating  results and balance sheet of ILD were  consolidated
with those of the Company in 1997.



                                     - 16 -

<PAGE>



Financial Condition

Liquidity and Capital Resources

              During  the nine  months  ended  September  30,  1998 the  Company
generated $4,803,000 of cash from operating activities and from sales of (a) the
Company's  prepaid  calling card business and (b) a portion of its investment in
the  common  stock of ILD.  Additionally,  $433,000  of cash was  obtained  from
issuance of the Company's common stock.

              Cash was used  principally to reduce by $3,787,000 the outstanding
balance under the Company's  revolving  line of credit and to fund the Company's
operating  loss.  In  addition,  $750,000 of cash was  invested in software  and
product  development,  and  $368,000  of  cash  was  used  to  purchase  capital
equipment.  The net result of the foregoing  changes was an increase in cash and
cash equivalents of $331,000.

              In recent years, the Company has financed its net losses,  capital
expenditures and research and development costs through asset sales,  reductions
in working  capital and external  financing.  In the fourth  quarter of 1998 and
beyond,  management  of the Company  believes  that funds  required  for capital
spending,  new product  development,  debt  service and fixed  expenses  will be
generated  from  operations  and from funds  available to the Company  under its
revolving line of credit.  Funds  available from  operations will be positive if
equipment sales exhibit sufficiently rapid growth and the mix of equipment sales
shifts  in  favor of  higher-margin  equipment.  As of  September  30,  1998 the
Company's  available  borrowings  under its revolving line of credit amounted to
$2.8 million.

              If insufficient funds are generated from future operations, and if
funds were  unavailable  or  insufficiently  available to the Company  under its
revolving  line of credit,  the  Company  may be required to sell assets or seek
further  external  funding.  If such a  situation  were to  develop,  management
believes that  Intellicall  has adequate  opportunities  to obtain,  in a timely
manner, the funds required for its operations.


Results of Operations


         Service Revenues.  Total service revenues declined in the third quarter
and nine months ended  September  30, 1998 when  compared to the prior years due
primarily  to  adoption of the equity  method of  accounting  for the  operating
results of ILD,  effective January 1, 1998. In the third quarter and nine months
ended September 30, 1997, ILD's service revenues, including prepaid calling card
revenues, were $16.3 million and $34.9 million,  respectively.  If third-quarter
and  nine-month  service  revenues are adjusted so as to exclude ILD's  revenues
from the comparison,  third-quarter  services  revenues declined by $0.2 million
and nine-month  service revenues  declined by $8.7 million.  Of the $8.7 million
decline,  $7.2 million resulted from  discontinuation in June 1997 of Jail*Star,
the Company's marginally  profitable inmate services program. The remaining $1.5
million  portion of the decline  (and the $0.2  million  third-quarter  decline)
results from a continuing decline in the volume of per-phone call traffic due to
"dial-around"  partially offset by an increase in the number of phones utilizing
Intelli*Star  technology.  Dial-around is an increasingly  prevalent practice by
payphone users of accessing  operator service systems and long distance carriers
other than those used by payphone

                                     - 17 -

<PAGE>



owners.

         In June 1998,  and  continuing  into the third  quarter,  call  traffic
revenues  enjoyed  a burst  of  growth,  which  was  marginally  profitable  and
generated  by the  payphones  of one  customer.  In August  1998,  the  customer
initiated the  discontinuance of submissions to the Company of its call traffic,
which amounted to $3.1 million in the third quarter of 1998 and $5.8 million for
the nine-month 1998 period.


         Gross profit from  services  revenues  decreased  $1.8 million and $4.7
million for the three and nine months ended September 30, 1998,  compared to the
corresponding periods in 1997. Of these declines, $1.6 million and $3.6 million,
respectively, relate to 1997 ILD operations, while $0.2 million and $1.1 million
relate to the Company's continuing operations.

         These  declines  in  gross  profit  from  continuing  operations,  as a
percentage of declines in related service  revenues,  result from changes in the
mix of  service  revenues  from  1997  to 1998  periods.  In the  1997  periods,
profitable  unbundled service revenues and validation service revenues accounted
for larger portions of overall service  revenues than in 1998 periods,  when the
contributions of such revenue were negligible.

         Equipment Sales. Equipment sales were $4.8 million and $5.8 million for
the quarters ended September 30, 1998 and 1997, respectively,  and $12.3 million
and $13.7 million for the corresponding nine-month periods.

         Demand  for  the  Company's   payphones  and  related   equipment  from
independent payphone providers ("IPP's") continues to be markedly weaker than in
the  1997  third  quarter  and  nine-month   periods.   IPP  sales  declined  by
approximately  $2.4  million  from the third  quarter of 1997 to the  comparable
quarter  of 1998.  Comparing  the  nine-month  periods,  the IPP  sales  decline
amounted to $4.2 million.

         Delayed,   sporadic  and  negligible   payments  to  IPP's  related  to
dial-around  compensation  appear to have  diminished  the  incentives to expand
their  routes.  In lieu of route  expansion,  many IPP's  have  chosen to rotate
phones  within  their  routes  from one  location  (where  increased  numbers of
undercompensated  dial-around  calls have  rendered  a  location  insufficiently
profitable)  to  another  (where  a  higher  rate  of  coin  and  lower  rate of
dial-around  calls  increase  profitability).  Until the  amount  and  timing of
dial-around  compensation  payments become adequate and reliable,  management of
the Company  believes  that sales to IPP's will  continue to be impaired.  As of
November 13, 1998, management is unable to forecast either the form or timing of
the final resolution of the dial-around compensation issue.

         Partially  offsetting  weakness  in the IPP  market  segment  has  been
increased demand for the N-Genius product line from international customers and,
commencing in the 1998 third quarter,  demand from a regulated telephone company
for  Astratel 2 kits.  Although  international  sales have been  hampered by the
currency  weakness of Pacific  Rim and certain  Latin  American  countries,  the
Company's export sales have continued to expand in 1998. The Company's equipment
sales to the international and regulated telephone company segments increased by
$1.4  million in the third  quarter and $2.8  million for the nine months  ended
September 30, 1998 when compared with corresponding periods in 1997.

                                     - 18 -

<PAGE>



         The  Company's  gross profit on equipment  sales for the quarter  ended
September  30, 1998 was  $1,027,000,  or 21.6% of related  sales,  compared to a
$4,640,000 loss in the  corresponding  1997 quarter.  In the 1997 third quarter,
the  Company  provided   approximately   $6,000,000  for  inventory  losses  and
impairment of certain capitalized  software costs, without which gross profit in
the period would have been  $1,306,000,  or 22.6% of sales. The decline in gross
margin  from  22.6%  of sales in the  1997  third  quarter  to 21.6% in the 1998
quarter  resulted  principally from the  aforementioned  $1.0 million decline in
equipment sales volume.

         Gross profit from equipment  sales,  after  excluding the effect of the
$6,000,000 million charge in 1997 from the comparison,  increased from 
$1,213,000, or 8.8% of related sales, in the nine months ended September 1997 to
$2,541,000, or 20.6% of related sales in the 1998 nine-month period.  Although 
gross profit for the nine month period was adversely affected by the year-to-
year decline in nine month sales,  the Company  benefited  from  receipt in 1998
of a $518,000 order cancellation fee, from a $993,000  reduction in amortized
software  development costs,  from reduced product material costs, and from 
reduced overhead costs and labor efficiency.

         Selling,  General and Administrative Expenses. For the quarter and nine
months ended  September  30, 1997,  ILD's  selling,  general and  administrative
("SG&A") expenses were $1,576,000 and $3,095,000,  respectively. Excluding ILD's
SG&A  expenses  from  comparisons,  the  Company's  SG&A  expenses  increased by
$223,000,  or 11%,  and  $704,000,  or 12%,  from the  1997  third  quarter  and
nine-month  period,   respectively  to  the  corresponding  1998  periods.  Such
increased  expense results from higher sales and marketing costs,  higher public
and investor relation's costs and, for the nine-month  comparison only, the cost
of certain litigation in June 1998 of $112,500.

         Provision for Doubtful Accounts. Reflecting the improved credit quality
and lower level of the Company's  sales,  the  provision  for doubtful  accounts
declined  from  $273,000  in the third  quarter  of 1997 to $93,000 in the third
quarter of 1998.  Similarly,  the  provision  for  doubtful  accounts  fell from
$525,000 in the 1997  nine-month  period to $237,000 in the  corresponding  1998
period.

         Research and Development  Expenses.  Research and development  expenses
increased  $29,000  for the quarter  ended  September  30, 1998  compared to the
quarter  ended  September 30, 1997.  For the  nine-month  period,  such expenses
increased  $388,000 from 1997 to 1998 due principally to a $412,000 reduction of
capitalized software development costs in the 1998 period.

              Gain on Sale of Assets. During the nine months ended September 30,
1998 the  Company  reported  a  $493,000  gain from the sale of a portion of the
Company's ownership interest in ILD to an unrelated third party. (See Note 5.)

         Also,  during the nine  months  ended  September  30,  1998 the Company
reported gains on sales of assets totaling $6.4 million  resulting from the sale
of the Company's  prepaid  services  operation to ILD in January 1998 and from a
sale in March  1998 of a portion  of the  Company's  ownership  interest  in the
common stock of ILD to an unrelated third party.


                                     - 19 -

<PAGE>



Part II. Other Information

Item 6.   Exhibits and Reports on Form 8-K

         (a)  Exhibits: None

         (b)  Reports on Form 8-K:  None.


                                     - 20 -

<PAGE>



Signatures

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


                                          INTELLICALL, INC.



                           /s/ John J. McDonald, Jr.
                           ---------------------------------------- 
                                           John J. McDonald, Jr.
                                           President and
                                           Chief Executive Officer

                           /s/ R. Phillip Boyd
                           ---------------------------------------- 
                                          R. Phillip Boyd
                                          Vice President Finance
                                          and Chief Financial Officer


Date:  November 16, 1998


                                     - 21 -