UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities  Exchange
    Act of 1934

          For the quarterly period ended September 30, 1997

                                       or

[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

           For the transition period from         to

                          Commission File Number 0-6547

                         MCI COMMUNICATIONS CORPORATION

             (Exact name of registrant as specified in its charter)

                      Delaware                         52-0886267
           (State or other jurisdiction of           (IRS Employer
            incorporation or organization)         Identification No.)

             1801 Pennsylvania Avenue, N.W., Washington, D.C. 20006
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (202) 872-1600

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

As of September 30, 1997, the registrant had outstanding  135,998,932  shares of
Class A common stock and 560,491,503 shares of common stock.


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                                     PAGE 2

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES

                                    FORM 10-Q

                    For The Quarter Ended September 30, 1997



                                      INDEX


                                                                   Page No.
                                                                   --------

PART I:  FINANCIAL INFORMATION

   ITEM 1:  FINANCIAL STATEMENTS

    Statements of Operations for the three and nine months ended
    September 30, 1997 and 1996                                           3
   
    Balance Sheets as of September 30, 1997 and December 31, 1996         4-5

    Statements of Cash Flows for the nine months ended
    September 30, 1997 and 1996                                           6

    Statement of Stockholders' Equity for the nine months
    ended September 30, 1997                                              7

    Notes to Interim Condensed Consolidated Financial
    Statements                                                            8-11

   ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS                 12-26


PART II:  OTHER INFORMATION

   ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS           27

   ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K                              28


SIGNATURE                                                                 29

EXHIBIT INDEX                                                             30



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                                     PAGE 3
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS
                     (In millions, except per share amounts)
                                   (unaudited)

                                     Three Months Ended       Nine Months Ended
                                       September 30,             September 30,
                                      ------------------      -----------------
                                        1997        1996        1997       1996
                                      ------      ------      ------     ------ 


REVENUE                               $4,819      $4,685     $14,545    $13,741
                                      ------      ------      ------     ------
OPERATING EXPENSES
  Cost of services                     3,018       2,370      8,090       7,056
  Sales, operations and general        1,444       1,304      4,028       3,718
  Depreciation                           543         430      1,475       1,223
                                    --------    --------   --------    --------
TOTAL OPERATING EXPENSES               5,005       4,104     13,593      11,997
                                    --------    --------   --------    --------
INCOME (LOSS) FROM OPERATIONS           (186)        581        952       1,744

Interest expense                         (58)        (51)      (174)       (153)
Interest income                            4           7         14          27
Equity in income (losses) of
  affiliated companies                   (46)        (28)      (107)       (128)
Other income (expense), net                6          (1)        (1)         (1)
                                      ------    --------    --------    -------
INCOME (LOSS) BEFORE INCOME TAXES AND
  TRUST DISTRIBUTIONS                   (280)        508         684      1,489

Income tax (provision) benefit           113        (189)       (246)      (570)

Distributions on subsidiary Trust  
  mandatorily redeemable preferred
  securities                              15          15          45         20
                                    --------    --------    --------    -------
NET INCOME (LOSS)                     $ (182)     $  304     $   393    $   899
                                    ========    ========    ========    =======
EARNINGS (LOSS) PER COMMON AND
  COMMON EQUIVALENT SHARE             $ (.26)     $  .44     $   .56    $  1.29

Weighted average number of shares
  of common stock and common stock
  equivalents outstanding                695         691         705        695

Dividends declared per common share   $    -      $    -     $  .025    $  .025

See accompanying Notes to Interim Condensed Consolidated Financial Statements.


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                                     PAGE 4

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (unaudited)

                                               September 30,       December 31,
                                                   1997                1996
                                                -----------         -----------
                                                         (In millions)
ASSETS

CURRENT ASSETS
  Cash and cash equivalents                         $   139             $   187
  Marketable securities                                  10                 161
  Receivables, net of allowance for
    uncollectibles of $344 and $273 million           3,561               3,480
  Other assets                                          893                 888
                                                    -------             -------
   TOTAL CURRENT ASSETS                               4,603               4,716
                                                    -------             -------

PROPERTY AND EQUIPMENT, net                          13,783              12,174
  
OTHER ASSETS
  Noncurrent marketable securities                       10                  58
  Other assets and deferred charges, net                971                 678
  Investment in affiliates                              605                 690
  Investment in News Corp.                            1,350               1,350
  Investment in DBS                                   1,029                 893
  Goodwill, net                                       2,366               2,419
                                                    -------             -------
   TOTAL OTHER ASSETS                                 6,331               6,088
                                                    -------             -------
   TOTAL ASSETS                                     $24,717             $22,978
                                                    =======             =======









See accompanying Notes to Interim Condensed Consolidated Financial Statements.


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                                     PAGE 5

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (unaudited)
                                               September 30,       December 31,
                                                    1997              1996
                                                -----------        -----------
                                                         (In millions)
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable                                   $1,038             $  992
  Accrued telecommunications expense                  2,312              2,045
  Other accrued liabilities                           1,925              1,806
  Long-term debt due within one year                  2,052                203
                                                     ------             ------
   TOTAL CURRENT LIABILITIES                          7,327              5,046
                                                     ------             ------
NONCURRENT LIABILITIES
  Long-term debt                                      3,282              4,798
  Deferred taxes and other                            2,037              1,723
                                                     ------             ------
   TOTAL NONCURRENT LIABILITIES                       5,319              6,521
                                                     ------             ------

COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED
   SECURITIES OF SUBSIDIARY TRUST HOLDING SOLELY
   JUNIOR SUBORDINATED DEFERRABLE INTEREST
   DEBENTURES OF THE COMPANY                            750                750
 
STOCKHOLDERS' EQUITY
  Class A common stock, $.10 par value,
    authorized 500 million shares, issued
    136 million shares                                   14                 14
Common stock, $.10 par value, authorized
    2 billion shares, issued
    560 million shares                                   60                 60
Additional paid in capital                            6,394              6,410
Retained earnings                                     5,607              5,231
Treasury stock, at cost,
    32 and 44 million shares                           (754)            (1,054)
                                                   --------           --------
   TOTAL STOCKHOLDERS' EQUITY                        11,321             10,661
                                                   --------           --------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 24,717           $ 22,978
                                                   ========           ========



See accompanying Notes to Interim Condensed Consolidated Financial Statements.


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                                     PAGE 6

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                          Nine Months Ended
                                                             September 30,
                                                          -------------------
                                                           1997           1996
                                                         ------         ------
                                                              (In millions)
OPERATING ACTIVITIES
  Receipts from customers                               $14,108        $13,267
  Payments to suppliers and employees                   (11,316)       (10,580)
  Taxes paid                                               (303)          (497)
  Interest paid                                            (218)          (163)
  Interest and dividends received                             8             28
                                                       --------       --------
        CASH FROM OPERATING ACTIVITIES                    2,279          2,055
                                                       --------       --------
INVESTING ACTIVITIES
  Capital expenditures for property and equipment        (2,642)        (2,423)
  Purchases, maturities and sales of
    marketable securities, net                              199            176
  Investment in News Corp.                                    -           (350)
  Investment in DBS                                        (146)          (268)
  Investment in affiliates                                  (45)           (32)
  Acquisition of businesses                                   -            (24)
  Other, net                                                 (2)            (8)
                                                       --------       --------
        CASH USED FOR INVESTING ACTIVITIES               (2,636)        (2,929)
                                                       --------       --------
        NET CASH FLOW BEFORE FINANCING ACTIVITIES          (357)          (874)
                                                       --------       --------
FINANCING ACTIVITIES
  Issuance (payment) of Debentures and other debt, net     (259)           492
  Commercial paper and bank credit facility
    activity, net                                           319           (368)
  Issuance of Trust preferred securities, net                 -            726
  Issuance of common stock for employee plans               359            342
  Purchase of treasury stock                                (93)          (522)
  Payment of dividends on common stock and
    Class A common stock                                    (17)           (17)
                                                       --------       --------
        CASH FROM FINANCING ACTIVITIES                      309            653
                                                       --------       --------
Net decrease in cash and cash equivalents                   (48)          (221)
Cash and cash equivalents - beginning balance               187            471
                                                       --------       --------
Cash and cash equivalents - ending balance            $     139      $    250
                                                       ========       ========
Reconciliation of net income to cash from
  operating activities:
Net income                                            $     393      $     899
Adjustments to net income:
  Depreciation and amortization                           1,501          1,267
  Equity in (income) losses of affiliated companies         107            127
  Deferred income tax provision                             (37)           192
Net change in operating activity accounts  
  other than cash and cash equivalents:
  Receivables                                               (81)          (419)
  Operating accounts payable                               (195)           122
  Other operating activity accounts                         591           (133)
                                                       --------       --------
Cash from operating activities                        $   2,279      $   2,055
                                                       ========       ========
  See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>


                                     PAGE 7

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                        STATEMENT OF STOCKHOLDERS' EQUITY
                                   (unaudited)



                                                              Treas.      Total
                      Class A             Addit'l             Stock,     Stock-
                       Common    Common   Paid in   Retained    at     holders'
                        Stock     Stock   Capital   Earnings   Cost      Equity
                       ------    ------   -------   -------- -------    -------
                                        (In millions)
Balance at
  December 31, 1996       $14       $60    $6,410    $5,231  $(1,054)   $10,661

Common stock issued
  for employee stock
  and benefit plans and
  other activity
  (14 million shares)       -         -       (16)        -      387        371

Net income                  -         -         -       393        -        393

Common stock dividends      -         -         -       (17)       -        (17)

Treasury stock
  purchased
  (2 million shares)        -         -         -        -       (87)       (87)
                        -----     -----    ------    ------    -----    -------
Balance at
  September 30, 1997      $14       $60    $6,394    $5,607   $ (754)   $11,321
                        =====     =====    ======    ======   ======    =======









See accompanying Notes to Interim Condensed Consolidated Financial Statements.


<PAGE>


                                     PAGE 8

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1. GENERAL

The accompanying  unaudited interim condensed  consolidated financial statements
have  been  prepared  in  accordance  with  the  rules  and  regulations  of the
Securities and Exchange  Commission  (SEC). The interim  condensed  consolidated
financial  statements  include the consolidated  accounts of MCI  Communications
Corporation and its majority-owned subsidiaries (collectively, the company) with
all  significant  intercompany   transactions  eliminated.  In  the  opinion  of
management,  all adjustments  (consisting only of normal recurring  adjustments)
necessary for a fair statement of the financial position,  results of operations
and cash flows for the interim periods presented have been made. The preparation
of the financial statements includes estimates that are used when accounting for
revenue,  allowances for uncollectible receivables,  telecommunications expense,
depreciation and amortization,  employee benefit plans and taxes. Actual results
could differ from those estimates.  Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted accounting principles (GAAP) have been condensed or omitted pursuant to
such SEC rules and  regulations.  These financial  statements  should be read in
conjunction  with the  company's  Annual  Report on Form 10-K for the year ended
December 31, 1996.

NOTE 2. MERGER AGREEMENT WITH WORLDCOM, INC.

On November 9, 1997,  the company  entered into an Agreement  and Plan of Merger
(the Agreement) with WorldCom,  Inc., a Georgia corporation  (WorldCom),  and TC
Investments  Corp.,  a Delaware  corporation  and a  wholly-owned  subsidiary of
WorldCom  (Merger  Sub),  pursuant to which the company will merge with and into
Merger Sub (the Merger).  As a result of the Merger,  (a) each outstanding share
of the company's common stock, par value $.10 per share (other than shares owned
by WorldCom or Merger Sub or held by the  company)  will be  converted  into the
right to receive that number of shares of WorldCom common stock,  par value $.01
per share, equal to the quotient determined by dividing $51.00 by the average of
the high and low sale prices of WorldCom  common stock as reported on The Nasdaq
National Market on each of the twenty  consecutive  trading days ending with the
third trading day  immediately  preceding the effective  time of the Merger (the
Exchange Ratio),  provided that the Exchange Ratio shall not be less than 1.2439
or greater than 1.7586;  and (b) each outstanding share of the company's Class A
common  stock  (other than  shares of Class A common  stock owned by WorldCom or
Merger Sub or held by the company)  shall be converted into the right to receive
$51.00 in cash, without interest thereon. The combined companies plan to operate
under the MCI WorldCom name.

<PAGE>


                                     PAGE 9

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

Concurrent   with   the   Agreement,   the   company,   WorldCom   and   British
Telecommunications  plc (BT) entered into an agreement whereby (i) the Agreement
and Plan of Merger,  dated as of  November  3, 1996,  as amended  (the BT Merger
Agreement),  among the company, BT and Tadworth Corporation was terminated; (ii)
WorldCom agreed to pay BT $450,000,000 and expenses not in excess of $15,000,000
in order to induce BT to waive its rights under, and agree to terminate,  the BT
Merger  Agreement;  (iii) BT agreed to  support  and vote its  shares of Class A
Common Stock in favor of the Merger; and (iv) BT may exercise its call option to
acquire  the  company's   shares  in  Concert   Communications   Services  (CCS)
immediately  following the effective  date of the Merger.  The company will be a
distributor  of CCS services on a  nonexclusive  basis for five years  following
BT's exercise of its call option.

Consummation of the Merger is subject to certain  conditions,  including receipt
of the approval of the Merger and the transactions  contemplated thereby, by the
stockholders  of the company  and  WorldCom  and receipt of required  regulatory
approvals.

NOTE 3.   DEBT

On July 23, 1997, the company entered into a $500 million  forward-starting swap
agreement at a fixed interest rate of 6.71%. 

NOTE 4.           RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Accounting Standards No. 130, Reporting Comprehensive Income, which is effective
for fiscal years  beginning  after December 15, 1997. The Statement  establishes
standards for reporting and displaying comprehensive income, as defined, and its
components.  The company plans to adopt the Statement's  disclosure standards in
1998.

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  131,  Disclosures  about  Segments  of an
Enterprise  and  Related  Information,  which  is  effective  for  fiscal  years
beginning after December 15, 1997. The Statement  establishes  standards for the
way companies report  information about operating segments in annual and interim
financial  statements.  The company  plans to adopt the  Statement's  disclosure
standards in 1998.




<PAGE>


                                     PAGE 10

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


NOTE 5.                               CONTINGENCIES

The  company,  in the  normal  course  of  business,  is a party to a number  of
lawsuits and  regulatory  and other  proceedings  certain of which are described
below.

On November 4, 1996 and thereafter,  and on August 25, 1997 and thereafter,  the
company  and all of its  directors,  including  the two  directors  who are also
executive  officers of the company and the three  directors  elected by BT, were
named as  defendants  in a total of  fifteen  complaints  filed in the  Court of
Chancery in the State of  Delaware.  BT was named as a defendant  in thirteen of
the complaints. In addition, amended or revised complaints were filed in four of
those cases  commenced in November  1996 and in one of the cases filed in August
1997.  The  complaints  were  brought by alleged  stockholders  of the  company,
individually   and   purportedly  as  class  actions  on  behalf  of  all  other
stockholders of the company. The complaints allege breaches of fiduciary duty by
the company's directors in connection with the BT Merger Agreement. Seven of the
complaints in which BT was named as a defendant allege that BT aided and abetted
those  breaches  of duty.  Five of the  complaints  in  which BT was  named as a
defendant allege that BT owes fiduciary duties to the other  stockholders of the
company  and that it  breached  those  duties in  connection  with the BT Merger
Agreement.  The complaints seek damages and other relief.  

On or about October 8, 1997, all of the company's  directors,  including the two
directors who are also executive officers of the company and the three directors
elected by BT,  were named as  defendants  in a purported  derivative  complaint
filed in the  Court  of  Chancery  in the  State of  Delaware.  BT and  Tadworth
Corporation  were  also  named as  defendants,  and the  company  was named as a
nominal  defendant.  The plaintiff,  derivatively  and on behalf of the company,
alleges  breach of  fiduciary  duty by the  company's  directors  and aiding and
abetting those breaches of duty by BT in connection with the BT Merger Agreement
and WorldCom's  exchange offer. The complaint seeks injunctive relief,  damages,
and other  relief.  On November 14, 1997,  plaintiffs'  counsel and  defendants'
counsel  held a  conference  with the Court of  Chancery  in  Delaware  in which
plaintiffs'  counsel  requested  interim  injunctive  relief with respect to the
termination fee paid under the BT Merger Agreement, and requested that the Court
enter a mandatory injunction  requiring  defendants to allow  representatives of
the plaintiffs to participate in any further  negotiations.  Plaintiffs' counsel
also requested  expedited  treatment and the setting of an early trial date with
respect to plaintiffs' challenge to the termination fee paid under the BT Merger
Agreement and the different form of consideration  payable to BT contemplated by
the Agreement.  Citing the absence of irreparable  injury, the Court of Chancery
denied plaintiffs'  request for injunctive relief and expedited  treatment,  and
declined  to set an early  trial  date.  At the  conclusion  of the  conference,
plaintiffs'  counsel  indicated  that they would be seeking to file new  amended
complaints challenging aspects of the Merger and attempting to join additional
defendants as parties to the litigations.

On or about August 28, 1997, a complaint was filed in the federal district court
in Washington, D.C., by an alleged stockholder of the company,  individually and
putatively as a class action on behalf of  purchasers  of the  company's  shares
during the period from  August 14, 1997  through  August 20,  1997.  On or about
October 27, 1997,  another  complaint was filed in the federal district court in
Washington,  D.C., by two alleged stockholders of the company,  individually and
putatively as a class action on behalf of  purchasers  of the  company's  shares
during the period from  August 14, 1997  through  August 22,  1997.  On or about
October 31, 1997,  another  complaint was filed in the federal district court in
Washington,  D.C., by an alleged  stockholder of the company,  individually  and
putatively as a class action on behalf of  purchasers  of the  company's  shares
during  the  period  from July 10,  1997  through  August  22,  1997.  All three
complaints  allege that the company and certain of its  officers  and 

<PAGE>

                                    PAGE 11

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

directors  improperly failed to disclose material information about the company,
including that the company was  renegotiating  the terms of the Merger Agreement
with BT dated November 3, 1996 . The complaints seek damages and other relief.

The  defendants  believe that all of the  complaints  are without  merit and the
company  presently  does not expect that the above  actions will have a material
adverse effect on the consolidated  financial  position or results of operations
of the company.





<PAGE>


                                     PAGE 12
PART I.
ITEM 2.
                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

GENERAL
-------
The following  discussion  and analysis  provides  information  that  management
believes is relevant to an  assessment  and  understanding  of the  consolidated
results of operations and financial condition of MCI Communications  Corporation
and its subsidiaries (collectively,  the company). The discussion should be read
in conjunction with the interim condensed  consolidated financial statements and
notes  thereto and the  company's  Annual Report on Form 10-K for the year ended
December 31, 1996.

MERGER AGREEMENT WITH WORLDCOM, INC.
------------------------------------
On November 3, 1996,  the company  entered into an Agreement  and Plan of Merger
with British  Telecommunications  plc (BT), which was last amended on August 21,
1997 (the BT Merger Agreement).

On October 1, 1997,  WorldCom,  Inc. (WorldCom)  announced its intent to make an
exchange offer of shares of WorldCom common stock for all the outstanding common
stock and  Series A common  stock of the  company.  On  October  15,  1997,  GTE
Corporation  (GTE)  announced  its  intent  to  effect  a  negotiated   two-step
acquisition of all the outstanding common stock and Class A common stock of the
company.

-------------------------------------------------------------------------------
Forward-looking Statements May Prove Inaccurate
The  company  has  made  certain  forward-looking   statements  in  Management's
Discussion   and  Analysis   that  are  subject  to  risks  and   uncertainties.
Forward-looking  statements include  information  concerning the possible future
results  of  operations  of the  company,  its long  distance  telecommunication
services (core)  business,  its  investments in ventures and developing  markets
(VDM)  businesses,  the possible future results of operations of the company and
MCI WorldCom  after the Merger and statements  preceded by,  followed by or that
include the words "believes", "expects",  "anticipates", or similar expressions.
For those  statements,  the company claims the protection of the safe-harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. The reader is cautioned that the following  important factors among
others, in addition to those contained elsewhere in Management's  Discussion and
Analysis,  could  adversely  affect the future results of the company,  its long
distance  telecommunication  services and VDM businesses and the company and MCI
WorldCom  after the Merger and could  cause those  results to differ  materially
from the statements and information expressed in the forward-looking statements:
material adverse changes in the economic conditions in the markets served by the
company;  a  significant  delay in the  expected  closing of the Merger;  future
regulatory  actions and conditions in the company's  operating areas,  including
the ability of the company to  implement  its local  strategy  and obtain  local
facilities at competitive rates and resulting  changes in the  implementation of
its local strategy;  and competition  from others in the U.S. and  international
long  distance  markets,  including  the entry of the  regional  Bell  operating
companies (RBOCs) and other companies into the long distance markets in the U.S.
For  additional  information  about  other  important  factors  that  should  be
considered,  the reader should read the company's Annual Report on Form 10-K for
the year ended  December  31,  1996 and all of the  company's  filings  with the
Securities and Exchange Commission subsequent thereto.

<PAGE>

                                     PAGE 13

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996



On November 9, 1997,  the company  entered into an Agreement  and Plan of Merger
(the Agreement) with WorldCom, a Georgia corporation,  and TC Investments Corp.,
a Delaware  corporation and a wholly-owned  subsidiary of WorldCom (Merger Sub),
pursuant to which the company will merge with and into Merger Sub (the  Merger).
As a result of the Merger,  (a) each  outstanding  share of the company's common
stock,  par value $.10 per share  (other than shares owned by WorldCom or Merger
Sub or held by the  company)  will be  converted  into the right to receive that
number of shares of WorldCom  common stock,  par value $.01 per share,  equal to
the quotient  determined  by dividing  $51.00 by the average of the high and low
sale prices of WorldCom  common stock as reported on the Nasdaq  National Market
on each of the twenty consecutive trading days ending with the third trading day
immediately  preceding  the effective  time of the Merger (the Exchange  Ratio),
provided  that the Exchange  Ratio shall not be less than 1.2439 or greater than
1.7586;  and (b) each  outstanding  share of the company's  Class A common stock
(other  than  shares of Class A common  stock owned by WorldCom or Merger Sub or
held by the  company)  shall be  converted  into the right to receive  $51.00 in
cash, without interest thereon. The combined companies plan to operate under the
MCI WorldCom name.

Concurrent with the BT Agreement,  the company,  WorldCom and BT entered into an
agreement  whereby (i) the BT Merger  Agreement  was  terminated;  (ii) WorldCom
agreed to pay BT $450,000,000 and expenses not in excess of $15,000,000 order to
induce BT to waive its  rights  under,  and  agree to  terminate,  the BT Merger
Agreement;  (iii) BT agreed  to  support  and vote its  shares of Class A Common
Stock in favor  of the  Merger;  and (iv) BT may  exercise  its call  option  to
acquire  the  company's   shares  in  Concert   Communications   Services  (CCS)
immediately  following the effective  date of the Merger.  The company will be a
distributor  of CCS services on a  nonexclusive  basis for five years  following
BT's exercise of its call option.

Consummation of the Merger is subject to certain  conditions,  including receipt
of the approval of the Merger and the transactions  contemplated  thereby by the
stockholders  of the company  and  WorldCom  and receipt of required  regulatory
approvals.


<PAGE>


                                     PAGE 14

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996


TELECOMMUNICATIONS REGULATORY ENVIRONMENT
-----------------------------------------
The  Telecommunications  Act of 1996 (the Act) was  enacted by  Congress to help
minimize  legal  barriers  to  local  telephone  market  entry  while  affording
residential  and  business  consumers  protection  from  unfair  competition  by
incumbent local exchange carriers  (ILECs).  A company is permitted to enter the
local market by constructing new facilities, leasing unbundled network elements,
reselling  local  network  capacity  or by  partnering  with  other  new  market
entrants.  The regional Bell operating  companies'(RBOCs) are permitted to offer
long  distance  services  outside  their  regions but are barred  from  offering
in-region long distance services until they open their own markets and encounter
facilities-based  local  competition.  The Act establishes  criteria pursuant to
which each RBOC  application to provide  in-region long distance  service may be
approved by the FCC, in consultation with the relevant state regulatory agencies
as well as the DOJ.

In order to  implement  the Act,  the FCC  outlined  a  trilogy  of issues to be
resolved to ensure  competition in the local  market-interconnection,  universal
service and access charge reform.  On May 7, 1997,  the FCC completed  action on
the trilogy  when it rendered its access  charge and  universal  service  reform
decisions.  The FCC  adopted a plan in a price cap  order  that it stated  would
reduce interstate access charges  approximately $1.7 billion on an industry-wide
basis.  However,  only $1.6 billion of such access charge  reductions  went into
effect on July 1, 1997. As part of its effort to establish cost based  services,
the FCC, in its access charge order  reclassified  certain  access  charges from
usage based to line based. The company  anticipates that it will pass through to
consumers the realized  savings from switched access charge  reductions,  net of
pre-subscribed interconnect carrier costs and new universal service obligations,
which are discussed below. The company has appealed the price cap and the access
charge reform orders.

The FCC's universal service order, which includes current subsidies paid by long
distance  carriers and new obligations to fund discounted  services for schools,
libraries,  rural health care  providers and low income  consumers,  will become
effective on January 1, 1998 and be funded by all  telecommunications  carriers.
This order is currently being appealed by several parties. These challenges seek
changes that could materially  affect the size of the universal service fund and
the company's required contributions.


<PAGE>


                                     PAGE 15

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

In an August 1997 decision, the FCC ordered ILECs to unbundle and provide access
to their  transport  facilities for the routing of new entrants'  local traffic.
This is an  important  mode of entry for  competitive  local  exchange  carriers
(CLECs). Without access to these facilities,  CLECs would be forced to duplicate
the  ILEC's  network by  constructing  their own local  transport  or by leasing
costly flat-rated dedicated transport.  The order is currently being appealed by
several  ILECs in the U.S.  Court of  Appeals  for the  Eighth  circuit  (Eighth
Circuit).

In July 1997, the U.S. Court of Appeals for the Eighth Circuit  determined  that
the FCC had  exceeded  its  authority  when it  established  a national  pricing
structure  for  interconnection  with the ILECs  pursuant to the Act. The Eighth
Circuit also held that certain  portions of the FCC rules,  such as the scope of
its enforcement  activities,  are invalid.  Most recently,  in October 1997, the
Eighth  Circuit  rendered  an  additional  decision,  invalidating  an FCC  rule
prohibiting  ILECs  from  disassembling   already  combined  elements  in  their
networks.  This  decision  means that new entrants may be forced to purchase and
then recombine the previously combined elements  themselves.  As a result of the
most  recent  decision , the  company  beleives  that new  entrants  will now be
subject to increased costs for disconnecting  and reconnecting  elements and new
customers  may  be  subject  to  delays  in  changing  local  telephone  service
providers. Although the Act was designed by Congress to deregulate the telephone
industry and encourage  competition in the local and long distance markets,  the
company believes the Eighth Circuit's rulings will delay local phone competition
because potential competitors to the ILECs,  including the company, will have to
continue to negotiate  interconnection  agreements in individual  states without
the benefit of uniform  pricing rules guided by a national  policy and will face
increased  costs and  operational  delays as they  enter the local  market.  For
further  discussion  of  these  matters  refer to  "Enterprise  Reporting-Local"
section.

<PAGE>


                                     PAGE 16

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

EARNINGS HIGHLIGHTS
-------------------
Income (loss) from  operations was $(186) million and $952 million for the three
and nine months ended September 30, 1997, respectively. Operating margin for the
three and nine months  ended  September  30, 1997  decreased to (3.9)% and 6.5%,
respectively,  from  12.4% and 12.7%,  in the  comparable  periods in 1996.  Net
income (loss) for the three and nine months ended  September 30, 1997  decreased
to $(182) million and $393 million, or $(0.26) and $.56 per share, respectively,
from $304  million  and $899  million,  or $0.44 and  $1.29 per  share,  for the
comparable periods in 1996. The 1997 third quarter net loss reflects expenses of
$432 million  associated  with a series of steps taken by the company to improve
its short and  long-term  financial  performance.  These steps  include  charges
associated with exiting and restructuring  several business customer  contracts,
eliminating  selected retail  channels and  discontinuing  certain  unprofitable
information technology services.

The company is continuing to evaluate additional steps to improve returns in the
core  and  VDM  businesses  through  new  customer  and  marketing  initiatives,
re-engineering certain processes and operations,  improved asset utilization and
resource  re-deployment.  In addition,  the company will also be taking steps in
the fourth quarter of 1997 to enhance  customer and employee  retention in light
of the company's recent merger  activities.  While these steps have not all been
finalized,  if taken,  they could  result in  material  expenses  impacting  the
company's  1997 results of  operations.  In the local  business,  given that the
company  anticipates   merging  with  WorldCom,   which  has  substantial  local
facilities,  the company is  re-addressing  its local  investments and costs and
expects to reduce local losses below previously disclosed estimates. For further
discussion of these matters refer to the  "Consolidated  Results of  Operations"
and "Enterprise Reporting-Local" section.

CONSOLIDATED RESULTS OF OPERATIONS
----------------------------------
Consolidated  revenue for the three and nine months  ended  September  30, 1997,
including the impact of $67 million in increased  uncollectible  provisions  and
other  actions,  increased  2.9% and 5.9% to $4.8  billion  and  $14.5  billion,
respectively,   from  the  comparable   periods  in  1996.  As  explained  under
"Enterprise Reporting",  for the three and nine months ended September 30, 1997,
core  business  revenue  increased  by $69 million and $598  million or 1.6% and
4.8%,  respectively,  from the prior year periods and  Ventures  and  Developing
Markets (VDM)  revenue  increased by $134 million and $373 million for the three
and nine months ended  September  30, 1997,  respectively,  over the  comparable
periods in 1996.  The company  expects  fourth quarter 1997 revenue growth to be
similar to the third quarter of 1997.
<PAGE>


                                     PAGE 17

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

Cost of  services  consists  of  telecommunications  expense  and costs of other
products and  services.  Telecommunications  expense is  primarily  comprised of
access fees paid to ILECs and other  domestic  service  providers,  and payments
made to foreign  telephone  companies  (international  settlements)  to complete
calls made to foreign countries from the U.S. by the company's customers. In the
VDM  businesses,   costs  of  other  products  and  services  primarily  include
equipment,  software and technology service costs. Consolidated cost of services
for the three and nine months ended  September 30, 1997  increased to $3 billion
and $8.1 billion,  respectively,  from the comparable periods in 1996 reflecting
$340 million in costs and  provisions  incurred in the third  quarter of 1997 to
exit and restructure certain business customer  contracts.  

Telecommunications expense, as a percent of core business revenue, increased 2.8
percentage  points for the three months ended September 30, 1997 compared to the
same period in 1996, due to the introduction of payphone  compensation costs and
fluctuations  in the revenue mix,  which were  partially  offset by a decline in
domestic  telecommunication  and  international  settlement  rates. For the nine
months ended September 30, 1997, telecommunications expense as a percent of core
business revenue remained consistent with the year ago period.

Sales,  operations and general expense  increased 10.7% and 8.3% to $1.4 billion
and $4  billion  for the  three  and  nine  months  ended  September  30,  1997,
respectively,  from the comparable periods in 1996. In the core business, sales,
operations and general expense for the three and nine months ended September 30,
1997 as a percentage of revenue decreased to 24.8% and 24.5%, respectively, from
26.9% and 26.1% in the same periods in 1996, respectively, primarily as a result
of continued  redeployment of certain resources and operations to local services
and other cost  containment  efforts.  The core business  sales,  operations and
general  expenses  includes  $57  million in costs for  severance  and  contract
commitment and termination  costs associated with the  discontinuance of certain
mass markets  retail  sales  channels  and certain  legal costs.  The VDM sales,
operations and general expense as a percentage of revenue for the three and nine
months  ended 1997  increased to 61.2% and 46.4%,  respectively,  from 32.3% and
32.2% in the same  periods  in  1996.  This  increase  was  attributable  to the
continued  development  in local  services  markets and  information  technology
services  and  the  related   increases  in  marketing   efforts  and  personnel
expenditures.  In  addition,  the VDM sales,  operations  and  general  expenses
include $34 million in expenses for redundant  facility and severance  costs and
contract  termination  costs  associated  with  the  discontinuance  of  certain
information and technology service operations. The company is continuing to work
towards  addressing the actions necessary to make its computer systems Year 2000
compliant. Estimated costs associated with this undertaking are preliminary, but
could exceed $200 million in aggregate  during the period between fourth quarter
of 1997 and December 31, 1998.

<PAGE>

                                     PAGE 18

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996


Depreciation  expense  increased  26.3% and 20.6% for the three and nine  months
ended September 30, 1997 to $543 million and $1,475 million, respectively,  from
the  comparable  periods in 1996. The increases are primarily the result of 1996
and 1997  additions to the  communications  system  network to increase  network
capacity, redundancy and reliability, add product features and functionality and
support the company's local services  business.  Depreciation costs in the third
quarter of 1997 also  include $17 million of costs  related to the  disposal and
abandonment of assets associated with the  discontinuance of the  aforementioned
retail and information technology service operations.

Interest expense increased $7 million and $21 million, respectively, from the
comparable periods in 1996 due to increased 1997 debt balances.

Equity  losses of  affiliates  increased  $18 million for the three month period
ended  September 30, 1997 from the comparable  period in 1996,  primarily due to
continued  operating  losses  incurred  by Avantel.  For the nine  months  ended
September  30,  1997,  equity in losses  improved  as the company  recognized  a
reduction of $21 million from the  comparable  period in 1996,  primarily due to
reductions in losses on the former on-line project with News Corporation Limited
(News Corp.),  which ceased operations in 1996,  partially offset by an increase
in Avantel  operating  losses.  As further  discussed in "Enterprise  Reporting"
below,  due to the start-up  nature and current  operations  of several of these
affiliates,  the company  expects  equity in losses of  affiliated  companies to
continue for the remainder of 1997.

Distributions on subsidiary Trust mandatorily redeemable securities, issued
in May 1996, totaled $15 million and $45 million for the three and nine months
ended September 30, 1997, respectively.






<PAGE>


                                     PAGE 19

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

ENTERPRISE REPORTING
--------------------
This section  segregates the performance of the company's core business from its
VDM businesses and investments.  Core business services comprise a wide spectrum
of domestic and international  voice and data services,  including long distance
telephone,  data  communication,   teleconferencing,   Internet  and  electronic
messaging  services.  The company has invested in VDM businesses  outside of its
core business through acquisitions, alliances and other strategic initiatives in
the  local,  information  technology,  wireless,  international  and  multimedia
markets.  Investments  in these VDM  businesses  are  included in the  company's
financial  statements  as  consolidated   subsidiaries,   unconsolidated  equity
investments, or cost investments such the company's investment in News Corp.

The  following  information  was  prepared  using all  amounts  included  in the
company's  interim  condensed  consolidated  financial  statements  and reflects
estimates and allocations that management believes provide a reasonable basis on
which to present such information.

CORE BUSINESS RESULTS
---------------------
(In millions)                    Three Months Ended       Nine Months Ended
                                   September 30,           September 30,
                                 ---------------         ---------------
                                 1997      1996           1997       1996
                               ------    ------         ------     ------
Revenue                        $4,343    $4,274        $13,080    $12,482
Income from operations             75       617          1,389      1,831
Equity in income (losses)
  of affiliated companies           -         -              -          -
Net income                         48       381            855      1,131
Depreciation                      479       395          1,324      1,127
Net interest, income taxes
  and other expense               (27)     (236)          (534)      (700)
EBITDA*                           554     1,012          2,713      2,958

* EBITDA,  as defined by  management,  consists  of earnings  (loss),  excluding
equity in income  (losses) of  affiliates,  other  income  (expense),  net,  and
distributions on subsidiary Trust mandatorily  redeemable preferred  securities,
before interest, income taxes, depreciation and amortization.  EBITDA represents
a measure of the company's ability to generate cash flows and does not represent
net income or cash flows from operating,  investing and financing  activities as
defined  by GAAP.  EBITDA  should be  considered  in  addition  to, but not as a
substitute  for, or superior to, measures of financial  performance  reported in
accordance with GAAP.  Analysts often use EBITDA when evaluating the performance
of a company.  Readers are cautioned that the company's definition of EBITDA may
not be  comparable  to  similarly  titled  measures  used by other  companies or
analysts.

<PAGE>

                                     PAGE 20

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

The  following  discussion  focuses on  significant  financial  and  operational
results of the company's core business.

Core business  revenue for the three months ended  September 30, 1997  increased
1.6% from the year ago  period to $4.3  billion,  reflecting  the  impact of $67
million in additional  uncollectible  provisions required by recent bankruptcies
and delinquencies of business customer accounts and other actions.  Traffic grew
6.2% from the year ago  quarter.  As further  explained  below,  the  revenue to
traffic variance  reflects the strategic  de-emphasis of the wholesale  channel,
continued  competitive  pricing and industry wide  moderation in revenue growth.
Core business  revenue for the nine months ended  September  30, 1997  increased
4.8% from the comparable  year ago period while traffic grew 5.2%,  resulting in
revenue to traffic variance of (.4%). This variance reflects the transition away
from the high level of customer  acquisition  programs in the first half of 1996
and the company's focus on value, service and integration during 1997.

In the business market,  revenue  continued to grow in the three and nine months
ended September 30, 1997 from the comparable periods in 1996. Revenue growth was
driven by strong demand for data and Internet  services,  as well as a result of
the company's direction towards providing integrated services.  Offsetting these
gains were a decline in wholesale revenue due to management's de-emphasis of the
wholesale  market and the  restructuring  of this sales channel.  Revenue in the
mass market for the three and nine months  ended  September  30, 1997  decreased
from the  comparable  periods in 1996.  This is due to the  company's  continued
focus on high value customers,  service and integration,  which improve customer
retention.  The company  continued to  selectively  target high value  customers
through its  integrated  package  offering of inbound,  outbound,  wireless  and
Internet services and programs aimed at customer  retention while curtailing the
use of  high-cost  customer  acquisition  programs  during the nine months ended
September 30, 1997. As a result,  customer churn declined and customer  spending
improved in 1997 as compared to the same period a year ago.












<PAGE>


                                     PAGE 21

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

VENTURES AND DEVELOPING MARKETS RESULTS
---------------------------------------
(In millions)                  Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                              --------------------       -------------------
                                1997     1996             1997        1996
                               -----    -----            -----       -----
Revenue                         $608     $474           $1,800      $1,427
Loss from operations            (247)     (32)            (406)        (80)
Equity in income (losses) 
  of affiliated companies        (46)     (28)            (107)       (128)
Net loss                        (222)     (73)            (441)       (225)
Depreciation                      64       35              151          96
Net interest, income taxes
  and other expense               71      (13)              72         (17)
EBITDA*                         (183)       3             (255)         16

During the third quarter of 1997, the company  continued to make  investments in
its VDM businesses and strategic initiatives in an effort to expand its business
opportunities in these markets. The company invested  approximately $146 million
in local services,  $49 million in direct broadcast  satellite (DBS) development
costs and $7 million in affiliated  companies  during the third quarter of 1997.
Certain   information  about  the  company's  results  of  operations  in  these
businesses and strategic initiatives are provided below.

LOCAL
-----
The company  provides  switched  local service to both business and  residential
customers and it additionally  provides dedicated access and dark fiber services
to its core business  customers using the company-owned  network  facilities and
facilities or wholesale  services  provided by other  companies.  In addition to
these services,  the company  provides  infrastructure  support to the company's
core long  distance  network.  As of September  30,  1997,  the company had been
granted  authority  to  offer  local  exchange  services  in 38  states  and had
applications for such services pending in 10 other states.



<PAGE>


                                     PAGE 22

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

Local service revenue  increased by $47 million and $108 million  year-over-year
to $92 million and $237  million for the three and nine months  ended  September
30, 1997, respectively. A majority of this growth resulted from service provided
to  end  user  business  customers,   with  a  smaller  portion  resulting  from
residential  customer  revenue and services  provided to the core long  distance
network. The revenue derived from sales to the company's core business customers
and its long distance network remains the largest portion of local revenue.  Net
loss for the three and nine months  ended  September  30, 1997  increased by $99
million  and $185  million  year-over-year  to $118  million  and $229  million,
respectively.  EBITDA for the three and nine  months  ended  September  30, 1997
decreased by $142 million and $253 million  year-over-year to $(157) million and
$(288)  million,  respectively.  The  increase in net losses and the decrease in
EBITDA for the three and nine  months  ended  September  30,  1997  reflect  the
increased operating costs associated with the continued  investment in the local
market.  During  the third  quarter  of 1997,  the  company  added 7 local  city
networks,  bringing the total number of operational local city networks to 76 in
39 markets,  compared to 61 operational networks in 34 markets at the end of the
third quarter of 1996. In addition,  route miles increased 19% year-over-year to
3,305  miles  as of  September  30,  1997.  At  present,  the  company  provides
facilities-based  switched  local  services  in 25 markets  and  intends to have
service operational in over 30 markets by the end of 1997.

The company's  expansion and traffic growth in the local market  continued to be
hampered by changes in Federal and state  regulations  governing  the opening of
local markets,  exacerbated by anti-competitive behavior and delaying tactics of
the ILECS, as described under "Telecommunications Regulatory Environment".  This
environment  has continued  the delay of the  company's  entrance into the local
market,  and as a result the company will continue to incur  additional costs to
support  regulatory  efforts  and other local  problems.  Given that the company
anticipates merging with WorldCom,  which has substantial local facilities,  the
company is re-addressing  its local  investments and costs and expects to reduce
local losses below previously disclosed estimates.

<PAGE>


                                     PAGE 23

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

INFORMATION TECHNOLOGY SERVICES
-------------------------------
Information  technology  services  primarily  consist  of MCI  Systemhouse,  the
company's global systems integration subsidiary.  Revenue for the three and nine
months  ended  September  30, 1997  increased by $91 million and $297 million to
$430 million and $1,307 million,  respectively,  from the comparable  periods in
1996.  This revenue growth  reflects the  industry-wide  demand for  information
technology  services  for which  Systemhouse  is  becoming  a leading  provider,
particularly in the global  telecommunications  outsourcing market. Net loss for
the three and nine months ended  September 30, 1997 increased by $38 million and
$53 million,  respectively,  over the comparable  periods in 1996 to $57 million
and $99  million,  respectively.  EBITDA  for the  three and nine  months  ended
September 30, 1997 was $(21) million and $38 million, respectively,  compared to
$21 million and $87 million for the same  periods in 1996.  The  increase in net
loss  for  the  periods  reflect  $53  million  in  costs  associated  with  the
aforementioned  discontinuance of certain information and technology services as
well as the result of increases in sales,  operations  and general  expenses for
advanced  staffing  necessary  to  meet  the  increasingly   strong  demand  for
information technology services.

WIRELESS
--------
Wireless services  primarily  include the operations of MCI Wireless,  Inc., the
company's cellular provider,  and paging services.  Revenue for the three months
ended September 30, 1997 decreased by $3 million from the year ago period to $80
million.  This  decrease was primarily  attributable  to the decrease in average
revenue per cellular subscriber partially offset by an increase in the number of
cellular  customers of approximately 8% to 438,000.  Revenue for the nine months
ended September 30, 1997 decreased $29 million from the year ago period due to a
decrease in paging customers to 188,000, as the company continued to concentrate
on profitability per customer in the mass market and to de-emphasize stand alone
paging  services.  For the three and nine months ended  September 30, 1997,  net
loss was $13 million and $32 million,  respectively, and EBITDA was $(7) million
and $(13) million, respectively.


<PAGE>


                                     PAGE 24

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

INTERNATIONAL SERVICES
----------------------
CCS is the company's  24.9% owned  international  services  venture with BT that
provides a broad portfolio of advanced global communication services,  including
virtual  network,  frame  relay,  managed  bandwidth  and  packet  services,  to
multinational business customers worldwide.  CCS' distributor revenues increased
25% and 35%  year-over-year  to $200  million and $547 million for the three and
nine months ended September 30, 1997, respectively.  The company's share of CCS'
losses reported in accordance with U.S. GAAP for the three and nine months ended
September 30, 1997, decreased by $1 million and $5 million,  respectively,  from
the year ago periods to $6 million and $18 million, respectively.

Avantel is the  company's  44.5%  owned  Mexican  business  venture  which began
offering  a full  range  of  competitive  switched  long  distance  services  to
residential and business  customers on January 1, 1997. During the third quarter
of 1997,  Avantel's network became fully operational and Avantel is now offering
services throughout most of Mexico. In addition,  Avantel has obtained more than
a 10% share in the total Mexican long distance  market.  The company's  share of
Avantel's  losses  reported in accordance  with U.S. GAAP for the three and nine
months ended  September 30, 1997 increased by $20 million and $44 million to $29
million and $64 million, respectively,  from the comparable periods in 1996. The
company  expects  to  incur  additional  losses  on its  investment  as  Avantel
continues   to  expand  its   service   and   customer   bases  in  the  Mexican
telecommunications market.

MULTIMEDIA SERVICES
-------------------
The company's  investments in News Corp. and DBS comprise  Multimedia  Services.
Dividend income on the company's investment in News Corp. for the three and nine
months ended September 30, 1997 was  approximately  $15 million and $44 million,
respectively, compared to $15 million and $39 million for the comparable periods
in 1996.  The company has invested  $146 million in DBS in the nine months ended
September   30,  1997,   bringing  its  total   investment  in  the  project  to
approximately $1 billion as of September 30, 1997.




<PAGE>


                                     PAGE 25

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996


In June  1997,  the  company  and News  Corp.  entered  into an  agreement  with
Primestar Partners,  L.P. (Primestar) for the sale and transfer of substantially
all of their assets relating to the DBS business,  including the DBS license but
excluding two of the four satellites  under  construction.  This  transaction is
part of a larger  transaction  that involves the  consolidation of Primestar and
TCI Satellite  Entertainment,  Inc. into a newly formed entity (New  Primestar).
Concurrent  with the closing of the  Primestar  transaction,  the  company  will
acquire  preferred  shares in a subsidiary of News Corp. for a face amount equal
to the company's  cost of obtaining the FCC license plus interest  thereon.  The
company  will also  receive  from  Primestar  consideration  for its 19.9% joint
venture interest,  an interest in New Primestar in the form of cash and interest
bearing  non-voting New Primestar  securities.  The process in which the company
and  News  Corp.  will  allocate  the  proceeds  and  recover  their  respective
investments  in the DBS business has yet to be  completed.  The  transaction  is
subject to regulatory approvals,  including approval by the FCC of the company's
transfer of the DBS license to New Primestar.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
----------------------------------------------------
CASH FLOWS
----------
Cash from  operating  activities  increased  by $224 million for the nine months
ended  September 30, 1997 to $2,279 million from the comparable  period in 1996.
This  increase is  primarily  the result of an  increase  in  customer  receipts
resulting from the growth in revenue and a decrease in taxes paid,  offset by an
increase in payments to suppliers and employees  resulting  from the increase in
costs of services and sales, operations and general expense.

Cash used for investing activities decreased by $293 million for the nine months
ended  September 30, 1997 to $2,636 million from the  comparable  period in 1996
primarily  because of a $472 million reduction in cash used for the DBS and News
Corp.  investments  offset by higher  capital  expenditures.  In the first  nine
months of 1997,  the company  used cash of $2,642  million,  an increase of $219
million,  for capital  expenditures  primarily for network  deployment and local
services.  The company also invested an additional  $146 million for  additional
satellite construction and other costs for its DBS investment and $45 million in
investments in its affiliates. No additional amounts were invested in News Corp.
during 1997.

Cash from  financing  activities  decreased  by $344 million for the nine months
ended September 30, 1997 to $309 million from the comparable period in 1996. The
reduction is  primarily  the result of  financing  activities  that had occurred
during  1996  when the  company  issued  approximately  $750  million  aggregate
principal amount of 8% Cumulative Quarterly Income Preferred Securities,  Series
A and $800 million in aggregate principal amount of Senior Debentures and Notes

<PAGE>

                                     PAGE 26

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996


which did not recur in 1997.  In addition,  for the nine months ended  September
30,  1997,  the company  repaid $259  million in  debentures  and other debt and
reduced treasury stock repurchases to $93 million from $522 million  repurchased
in the year ago period .  Offsetting  these net  proceeds  was a net increase in
commercial paper issuance of $687 million.
                                    
CAPITAL RESOURCES AND LIQUIDITY
-------------------------------
For the nine months ended  September  30, 1997,  the company  funded its capital
expenditures  and its  investment in the VDM businesses  primarily  through cash
from operations and commercial paper issuance. The company believes that it will
be able to meet its current and foreseeable  liquidity and capital  requirements
through  its  cash  flows  from  operating  activities  and  its  existing  debt
facilities.  At September 30, 1997, the company had  approximately  $2.2 billion
available  under its  commercial  bank  program  and bank  credit  facility.  In
addition,  the company has a $1.2 billion shelf  registration  in effect,  which
covers the  issuance of debt  securities  with a range of  maturities  at either
fixed or variable  rates.  In addition,  the company  expects that its revolving
credit  loan  agreement  expiring  on April 28, 1998 will be renewed or similiar
financing will be obtained.  On July 23, 1997,  the company  entered into a $500
million  notional  amount  forward-starting  swap agreement to hedge future debt
issuances a fixed interest rate of 6.71%.

EBITDA
------
Reflecting  the  impact  of the  aforementioned  actions  and  cost  provisions,
Consolidated  EBITDA decreased 18.2% to $2,427 million for the nine months ended
September  30, 1997 from $2,967  million for the year ago period  primarily as a
result of the reduction in operating  income for the nine months ended September
30, 1997.  EBITDA,  as defined by  management,  consists of earnings,  excluding
equity in income  (losses) of  affiliates,  other  income  (expense),  net,  and
distributions on subsidiary Trust mandatorily  redeemable preferred  securities,
before interest, income taxes, depreciation and amortization.  EBITDA represents
a measure of the company's ability to generate cash flows and does not represent
net income or cash flows from operating,  investing and financing  activities as
defined  by GAAP.  EBITDA  should be  considered  in  addition  to, but not as a
substitute  for, or superior to, measures of financial  performance  reported in
accordance with GAAP.  Analysts often use EBITDA when evaluating the performance
of the company.  Readers are cautioned  that the company's  definition of EBITDA
may not be comparable to similarly  titled  measures used by other  companies or
analysts.


<PAGE>


                                     PAGE 27

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q


PART II. OTHER INFORMATION

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                           NONE



<PAGE>


                                     PAGE 28

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q


PART II.  OTHER INFORMATION (continued)

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

a)Exhibits

Exhibit No.                Description
-----------                -----------

      11                   Computation of Earnings per Common Share.

      12                   Computation of Ratio of Earnings to Fixed Charges.

      27                   Financial Data Schedule as of September 30, 1997.

      99(a)                Capitalization Schedule as of September 30, 1997.
 

b)Reports on Form 8-K

The company  filed two  Current  Reports on Form 8-K during the  quarter.  These
reports were file on July 14, 1997 and August 26, 1997.








<PAGE>


                                     PAGE 29

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q



                                    SIGNATURE
                                    ---------



Pursuant to the requirements of the Securities Exchange Act of 1934, the

registrant has duly caused this report to be signed on its behalf by the

undersigned thereunto duly authorized.




                                   MCI COMMUNICATIONS CORPORATION




Date:  November 14, 1997           Signed:  /s/ David M. Case
                                            -----------------------
                                            David M. Case
                                            Vice President and Controller






<PAGE>


                                     PAGE 30

                 MCI COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                  EXHIBIT INDEX





 Exhibit No.                Description
 -----------                -----------

      11                    Computation of Earnings per Common Share.

      12                    Computation of Ratio of Earnings to Fixed Charges.

      27                    Financial Data Schedule as of September 30, 1997.

      99(a)                 Capitalization Schedule as of September 30, 1997.