===============================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    FORM 10-Q



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

                For the Quarterly Period Ended September 30, 1998


                                       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 1-3040

                          U S WEST Communications, Inc.

A Colorado Corporation                              IRS Employer No. 84-0273800

                 1801 California Street, Denver, Colorado 80202

                         Telephone Number (303) 896-3099

THE  REGISTRANT,  A  WHOLLY  OWNED  SUBSIDIARY  OF U S  WEST,  INC.,  MEETS  THE
CONDITIONS SET FORTH IN GENERAL  INSTRUCTION H(1)(a) and (b) OF FORM 10-Q AND IS
THEREFORE  FILING THIS FORM WITH REDUCED  DISCLOSURE  FORMAT PURSUANT TO GENERAL
INSTRUCTION H(2).

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    __
===============================================================================



<PAGE>



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


Form 10-Q - Part I                                U S WEST Communications, Inc.

                                    FORM 10-Q
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

Item                                                                                                    Page
                         PART I - FINANCIAL INFORMATION


<S>        <C>                                                                                          <C>   

1.         Financial Statements

                Consolidated Statements of Income -
                     Three and Nine Months Ended September 30, 1998 and 1997                               3

                Consolidated Balance Sheets -
                     September 30, 1998 and December 31, 1997                                              4

                Consolidated Statements of Cash Flows -
                     Nine Months Ended September 30, 1998 and 1997                                         6

                Notes to Consolidated Financial Statements                                                 7

2.         Management's Analysis of the Results of Operations - (Reduced
                disclosure format pursuant to General Instruction H(2))                                   11


                           PART II - OTHER INFORMATION



1.         Legal Proceedings                                                                              18

5.         Other Information                                                                              18

6.         Exhibits and Reports on Form 8-K                                                               18

</TABLE>












<PAGE>



Form 10-Q - Part I

CONSOLIDATED  STATEMENTS OF                       U S WEST COMMUNICATIONS, INC.
INCOME (Unaudited)
<TABLE>
<CAPTION>

------------------------------------------------------- ---------------------------- ----------------------------
                                                                Three Months Ended            Nine Months Ended
                                                                   September 30,                 September 30,
Dollars in millions                                              1998          1997          1998           1997
------------------------------------------------------- -------------- ------------- ------------- --------------
<S>                                                     <C>            <C>           <C>           <C>   

Operating revenues:
     Local service                                             $1,398        $1,314        $4,117         $3,739
  Interstate access service                                       693           663         2,102          2,028
  Intrastate access service                                       208           208           616            608
  Long-distance network services                                  199           231           595            721
  Other services                                                  241           193           673            548
                                                        -------------- ------------- ------------- --------------
     Total operating revenues                                   2,739         2,609         8,103          7,644

Operating expenses:
  Employee-related expenses                                       868           850         2,550          2,498
  Other operating expenses                                        544           479         1,709          1,303
  Taxes other than income taxes                                    81           100           260            300
  Depreciation and amortization                                   544           528         1,580          1,574
                                                        -------------- ------------- ------------- --------------
     Total operating expenses                                   2,037         1,957         6,099          5,675
                                                        -------------- ------------- ------------- --------------

Operating income                                                  702           652         2,004          1,969

Interest expense                                                  103            93           288            282
Gains on sales of rural telephone exchanges                         -            30             -             77
Other expense - net                                                20            11            76             51
                                                        -------------- ------------- ------------- --------------

Income before income taxes                                        579           578         1.640          1,713

Provision for income taxes                                        219           220           630            653
                                                        -------------- ------------- ------------- --------------

NET INCOME                                                       $360          $358        $1,010        $ 1,060
                                                        ============== ============= ============= ==============

</TABLE>








See Notes to Consolidated Financial Statements.


<PAGE>



Form 10-Q - Part I

CONSOLIDATED BALANCE SHEETS                       U S WEST COMMUNICATIONS, INC.
(Unaudited)
<TABLE>
<CAPTION>

------------------------------------------------------------------------- ----------------- -------------------
                                                                              September 30,       December 31,
Dollars in millions                                                               1998                1997
------------------------------------------------------------------------- ----------------- -------------------
<S>                                                                       <C>               <C>   

ASSETS

Current assets:
     Cash and cash equivalents                                                         $57               $  26
     Accounts and notes receivable  - net                                            1,646               1,608
     Inventories and supplies                                                          200                 124
     Deferred tax asset                                                                162                 226
     Prepaid and other                                                                  64                  68
                                                                          ----------------- -------------------

Total current assets                                                                 2,129               2,052


Gross property, plant and equipment                                                 34,265              33,182
Accumulated depreciation                                                            19,967              19,041
                                                                          ----------------- -------------------

Property, plant and equipment - net                                                 14,298              14,141

Other assets                                                                           899                 815
                                                                          ----------------- -------------------

Total assets                                                                       $17,326             $17,008
                                                                          ================= ===================


</TABLE>








See Notes to Consolidated Financial Statements.


<PAGE>



Form 10-Q - Part I

CONSOLIDATED BALANCE SHEETS                       U S WEST COMMUNICATIONS, INC.
(Unaudited), continued
<TABLE>
<CAPTION>

---------------------------------------------------------------------- ------------------- --------------------
                                                                            September 30,         December 31,
Dollars in millions                                                                  1998                 1997
---------------------------------------------------------------------- ------------------- --------------------
<S>                                                                    <C>                 <C>  

LIABILITIES AND SHAREOWNER'S EQUITY

Current liabilities:
     Short-term debt                                                                 $850                $ 497
     Accounts payable                                                               1,231                1,439
     Employee compensation                                                            303                  321
     Dividends payable                                                                360                  192
     Advanced billing and customer deposits                                           319                  292
     Other                                                                            958                  982
                                                                       ------------------- --------------------

Total current liabilities                                                           4,021                3,723


Long-term debt                                                                      4,831                5,019
Postretirement and other postemployment
     benefit obligations                                                            2,371                2,365
Deferred income taxes                                                                 923                  891
Deferred credits and other                                                            717                  610

Contingencies

Shareowner's equity:
     Common shares - one share without par value,
        owned by parent                                                             8,080                8,017
     Cumulative deficit                                                           (3,617)              (3,617)
                                                                       ------------------- --------------------
Total shareowner's equity                                                           4,463                4,400
                                                                       ------------------- --------------------
Total liabilities and shareowner's equity                                         $17,326              $17,008
                                                                       =================== ====================
</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>


Form 10-Q - Part I

CONSOLIDATED STATEMENTS OF                      U S WEST COMMUNICATIONS, INC.
CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>

----------------------------------------------------------------------------- --------------- ---------------
Nine Months Ended September 30,                                                         1998            1997
----------------------------------------------------------------------------- --------------- ---------------
                                                                                   Dollars in millions
<S>                                                                           <C>             <C>   

OPERATING ACTIVITIES
   Net income                                                                         $1,010          $1,060
   Adjustments to net income:
      Depreciation and amortization                                                    1,580           1,574
      Gains on sales of rural telephone exchanges                                          -             (77)
      Deferred income taxes and amortization
         of investment tax credits                                                        90               1
   Changes in operating assets and liabilities:
      Accounts receivable                                                                (38)             37
      Inventories, supplies and other current assets                                     (19)            (55)
      Accounts payable and accrued liabilities                                            16             247
   Other - net                                                                            43             119
                                                                              --------------- ---------------
   Cash provided by operating activities                                               2,682           2,906
                                                                              --------------- ---------------

INVESTING ACTIVITIES
   Expenditures for property, plant and equipment                                     (1,880)         (1,291)
   Proceeds from (payments on) disposals of property,                                            
       plant and equipment                                                               (14)             21
   Purchase of PCS licenses                                                              (18)            (51)
   Proceeds from sales of rural telephone exchanges                                        -              51
   Other                                                                                  (6)              -
                                                                              --------------- ---------------
   Cash used for investing activities                                                 (1,918)         (1,270)
                                                                              --------------- ---------------

FINANCING ACTIVITIES
   Net proceeds from (repayments of) short-term debt                                    457             (700)
   Repayments of long-term debt                                                        (411)            (107)
   Dividends paid on common stock                                                      (842)          (1,009)
   Equity infusions from U S WEST                                                        63              260
                                                                              --------------- ---------------
   Cash used for financing activities                                                  (733)          (1,556)
                                                                              --------------- ---------------

CASH AND CASH EQUIVALENTS
   Increase                                                                              31               80
   Beginning balance                                                                     26               92
                                                                              =============== ===============
   Ending balance                                                                       $57            $ 172
                                                                              =============== ===============
</TABLE>

See Notes to Consolidated Financial Statements.


<PAGE>


Form 10-Q - Part I

                          U S WEST COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              For the Nine Months Ended September 30, 1998 and 1997
                              (Dollars in millions)
                                   (Unaudited)

A.   Summary of Significant Accounting Policies

Basis  of  Presentation.  U S  WEST  Communications,  Inc.  (the  "Company")  is
incorporated under the laws of the State of Colorado and is an indirect,  wholly
owned subsidiary of U S WEST, Inc. ("U S WEST").

Certain reclassifications within the Consolidated Financial Statements have been
made to conform to the current year presentation.

The  Consolidated  Financial  Statements  have  been  prepared  by the  Company,
pursuant to the interim  reporting  rules and  regulations of the Securities and
Exchange  Commission  ("SEC").  Certain  information  and  footnote  disclosures
normally accompanying financial statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
SEC rules and  regulations.  In the  opinion of the  Company's  management,  the
Consolidated  Financial  Statements include all adjustments,  consisting of only
normal  recurring  adjustments,   necessary  to  present  fairly  the  financial
information set forth therein. It is suggested that these Consolidated Financial
Statements  be read in  conjunction  with the  financial  statements  and  notes
thereto  included in the Company's  Form 10-K/A for the year ended  December 31,
1997.

B.  U S WEST Separation

On October 25, 1997,  the Board of  Directors of the former  parent of U S WEST,
herein  referred to as "Old U S WEST,"  adopted a proposal  to separate  Old U S
WEST into two independent  companies (the "Separation").  Old U S WEST conducted
its  businesses  through  two  groups:  the U S WEST  Communications  Group (the
"Communications Group"), which included the communications businesses of Old U S
WEST,  and the U S WEST Media  Group (the "Media  Group"),  which  included  the
multimedia businesses of Old U S WEST. On June 4, 1998,  shareholders of Old U S
WEST voted in favor of the Separation, which became effective June 12, 1998 (the
"Separation Date"). At that time, the Communications Group became an independent
public company  renamed "U S WEST,  Inc." and Media Group's  directory  business
known  as U S WEST  Dex,  Inc.  ("Dex")  was  aligned  with U S WEST  (the  "Dex
Alignment").  Old U S  WEST  has  continued  as an  independent  public  company
comprised of the current  businesses  of Media Group other than Dex and has been
renamed "MediaOne Group, Inc." ("MediaOne Group").


<PAGE>


Form 10-Q - Part I

                          U S WEST COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (Dollars in millions)
                                   (Unaudited)

The Separation was implemented  pursuant to the terms of a separation  agreement
(the "Separation  Agreement") between U S WEST and MediaOne Group. In connection
with the Dex Alignment,  (i) U S WEST  distributed,  as a dividend to holders of
MediaOne  Group common  stock,  an aggregate of $850 in value of U S WEST common
stock and (ii) $3.9  billion of Old U S WEST debt,  formerly  allocated to Media
Group, was refinanced by U S WEST (the "Dex Indebtedness").

Further  information  about the  Separation is contained in Old U S WEST's proxy
statement mailed to all Old U S WEST shareowners on April 20, 1998.

C.  Asset Impairment

During  second-quarter  1998, the Company recorded a non-cash charge of $21 (net
of a $14 tax benefit)  related to the  impairment of certain  long-lived  assets
associated with the Company's video operations in Omaha,  Nebraska. The impaired
assets primarily consist of underground cable and hardware. Recent technological
advances  have  permitted  the Company to pursue and use more  economical  Video
Digital  Subscriber  Line  ("VDSL")  technology in cable  overbuild  situations.
Because the projected future cash flows were less than the carrying  values,  an
impairment  loss was  recognized  in  accordance  with  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of." The amount of
impairment  was  determined  based on the net  present  value of the future cash
flows of the business,  discounted at the Company's cost of capital.  The pretax
charge is  recorded  in  "other  operating  expenses"  within  the  Consolidated
Statements of Income.

D.  Contingencies

There are pending regulatory actions in local regulatory jurisdictions that call
for price decreases, refunds or both.

Oregon. On May 1, 1996, the Oregon Public Utilities Commission ("OPUC") approved
a  stipulation   terminating  prematurely  the  Company's  alternative  form  of
regulation  ("AFOR")  plan,  and it then  undertook  a review  of the  Company's
earnings.  In May 1997,  the OPUC  ordered  the  Company  to reduce  its  annual
revenues  by  $97,  effective  May 1,  1997,  and to  issue a  one-time  refund,
including  interest,  of approximately $102 to reflect the revenue reduction for
the  period May 1, 1996  through  April 30,  1997.  The  one-time  refund is for
interim rates which became  subject to refund when the  Company's  AFOR plan was
terminated on May 1, 1996.


<PAGE>


Form 10-Q - Part I

                          U S WEST COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (Dollars in millions)
                                   (Unaudited)

The Company filed an appeal of the order and asked for an immediate  stay of the
refund with the Oregon  Circuit Court which granted the Company's  request for a
stay,  pending a full review of the OPUC's  order.  On February  19,  1998,  the
Oregon  Circuit Court  entered a judgment in the Company's  favor on most of the
appealed  issues.  The OPUC appealed to the Oregon Court of Appeals on March 19,
1998, and the appeal is pending.  The Company continues to charge interim rates,
subject to refund,  during the pendency of that  appeal.  The  potential  refund
exposure,  including interest,  at September 30, 1998, is not expected to exceed
$280.

Utah.  The Utah  Supreme  Court has  remanded a Utah Public  Service  Commission
("UPSC") order to the UPSC for hearing,  thereby  establishing two exceptions to
the rule against retroactive ratemaking: 1) unforeseen and extraordinary events,
and 2)  misconduct.  The  UPSC's  initial  order  denied a refund  request  from
interexchange  carriers ("IXCs") and other parties related to the Tax Reform Act
of 1986. The potential exposure,  including interest,  at September 30, 1998, is
not expected to exceed $170.

New Mexico.  The New Mexico State  Corporation  Commission  ("NMSCC")  issued an
order on May 29, 1998,  requiring  the Company to reduce its annual  revenues by
approximately  $22.  The Company  sought a rehearing  before the NMSCC which was
denied.  The NMSCC's order was then removed to the New Mexico  Supreme Court for
review  which  effectively  stays  the  order.  The  potential  for  retroactive
exposure, at September 30, 1998, is remote.

State Regulatory  Accruals.  The Company has accrued $200 at September 30, 1998,
which represents its estimated liabilities for all state regulatory proceedings,
predominately  the items  discussed  above.  It is  possible  that the  ultimate
liabilities  could exceed the amounts accrued by up to  approximately  $265. The
Company  will  continue to monitor and evaluate  the risks  associated  with its
local  regulatory  jurisdictions,  and will adjust  estimates as new information
becomes available.

In addition to its estimated liabilities for state regulatory  proceedings,  the
Company has an accrued  liability of  approximately  $160 at September  30, 1998
related to refunds in the state of Washington. Approximately $80 was refunded to
IXCs and independent  local exchange carriers during the nine-month period ended
September  30,  1998.  The  remaining  liability  is  expected to be refunded to
ratepayers by the first half of 1999, with the majority of the refunds occurring
in fourth-quarter 1998.



<PAGE>




Form 10-Q - Part I

                          U S WEST COMMUNICATIONS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (Dollars in millions)
                                   (Unaudited)

E.  New Accounting Standards

On January 1, 1999, the Company will adopt the accounting provisions required by
the AICPA  Statement  of Position  ("SOP")  98-1,  "Accounting  for the Costs of
Computer Software Developed or Obtained for Internal Use," issued in March 1998.
SOP 98-1,  among other  things,  requires  that  certain  costs of internal  use
software,   whether  purchased  or  developed  internally,  be  capitalized  and
amortized over the estimated useful life of the software.

Based on information  currently available,  adoption of the SOP may result in an
initial increase in net income in 1999 of approximately  $100-$150.  Thereafter,
in periods after adoption,  if software expenditures remain level, earnings will
decline  until the  amortization  expense  related to the  capitalized  software
equals the software costs expensed prior to the accounting change. The estimated
net income  impact for 1999 and  thereafter  may be subject to change as further
information  becomes  available.  Please see Part I - Item II-  "Forward-Looking
Information."

On June 15, 1998, the Financial  Accounting Standards Board issued SFAS No. 133,
"Accounting  for  Derivative  Instruments  and  for  Hedging  Activities."  This
statement   establishes   accounting  and  reporting  standards  for  derivative
instruments  and for  hedging  activities.  SFAS No. 133  requires,  among other
things,  that all  derivative  instruments be recognized at fair value as either
assets or  liabilities  on the balance  sheet and that  changes in fair value be
recognized  currently in earnings unless specific hedge accounting  criteria are
met. The Standard is effective for fiscal years  beginning  after June 15, 1999,
though earlier  adoption is permitted.  The financial  statement  impacts of the
Company's  adoption of the new standard are dependent upon the amount and nature
of future use of derivative instruments, and their relative changes in valuation
over time.


<PAGE>



Form 10-Q - Part I

Item 2. Management's Analysis of the Results of Operations (Dollars in millions)

Forward-Looking Information

Some  of  the  information  presented  in  or in  connection  with  this  report
constitutes  "forward-looking  statements"  within the  meaning  of the  Private
Securities Litigation Reform Act of 1995. Although the Company believes that its
expectations  are  based on  reasonable  assumptions  within  the  bounds of its
knowledge of its business and operations,  there can be no assurance that actual
results will not differ  materially  from its  expectations.  Factors that could
cause  actual  results to differ from  expectations  include:  (i) greater  than
anticipated  competition  from new entrants into the local  exchange,  intraLATA
toll,  data and  wireless  markets,  (ii)  changes in demand  for the  Company's
products and services,  including optional custom calling features, (iii) higher
than anticipated employee levels,  capital expenditures,  and operating expenses
(such  as  costs  associated  with  year  2000  remediation),  (iv)  the loss of
significant  customers,  (v) pending regulatory actions in state  jurisdictions,
(vi) regulatory  changes affecting the  telecommunications  industry,  including
changes that could have an impact on the  competitive  environment  in the local
exchange  market,  (vii) a change in economic  conditions in the various markets
served by the  Company's  operations  that could  adversely  affect the level of
demand for telephone, wireless, or other services offered by the Company, (viii)
greater  than  anticipated   competitive  activity  requiring  new  pricing  for
services,  (ix) higher  than  anticipated  start-up  costs  associated  with new
business  opportunities,  (x) increases in  fraudulent  activity with respect to
wireless services,  (xi) consumer  acceptance of broadband  services,  including
telephony,  data and wireless  services,  or (xii) delays in the  development of
anticipated  technologies,  or the  failure  of  such  technologies  to  perform
according to expectations.

Results of Operations - Nine Months Ended September 30, 1998 Compared with 1997

Following  are  details of the  Company's  reported  net income,  normalized  to
exclude the effects of certain and nonrecurring and nonoperating items.
<TABLE>
<CAPTION>

------------------------------------------------------------ ----------------------------- -------------------------- --
                                                                     Nine Months Ended                 Increase
                                                                         September 30,      
                                                                                                  (Decrease)
                                                                       1998          1997            $           %
------------------------------------------------------------ ---------------- ------------- ------------ ------------
<S>                                                          <C>              <C>           <C>          <C>   

Reported net income                                                   $1,010        $1,060        $(50)        (4.7)
Adjustments to reported net income:
    Separation costs                                                      68             -           68            -
    Asset impairment                                                      21             -           21            -
    Gains on sales of rural telephone exchanges                            -          (48)           48            -
                                                             ---------------- ------------- ------------ ------------
Normalized income                                                     $1,099        $1,012          $87          8.6
============================================================ ================ ============= ============ ============
</TABLE>

During 1998, the Company's  normalized income increased $87, or 8.6 percent,  to
$1,099.  The increase is primarily due to higher  demand for services  partially
offset  by  interstate  access  rate  reductions  and  higher  operating  costs,
including increased start-up costs associated with growth initiatives and higher
expenses related to interconnection.


<PAGE>


Form 10-Q - Part I

Item  2.  Management's  Analysis  of  the  Results  of  Operations  (Dollars  in
millions), continued

Operating Revenues
<TABLE>
<CAPTION>

---------------------------------------------------------------- --------------------------- ------------------------
                                                                     Nine Months Ended              Increase
                                                                       September 30,               (Decrease)
                                                                        1998           1997           $          %
---------------------------------------------------------------- ------------ -------------- ------------ -----------
<S>                                                              <C>          <C>            <C>          <C>    

Local service                                                         $4,117         $3,739         $378        10.1
Interstate access service                                              2,102          2,028           74         3.6
Intrastate access service                                                616            608            8         1.3
Long-distance network services                                           595            721        (126)      (17.5)
Other services                                                           673            548          125        22.8
                                                                 ============ ============== ============ ===========
Total                                                                 $8,103         $7,644         $459         6.0
================================================================ ============ ============== ============ ===========
</TABLE>

Local Service Revenues.  Local service revenues increased $378, or 10.1 percent,
to $4,117, during the nine-month period. Excluding the non-recurring impact of a
regulatory  charge  in  last  year's  second  quarter,  local  service  revenues
increased  by 8.2 percent for the  nine-month  period.  Local  service  revenues
increased  primarily as a result of access line growth and increased  demand for
new products and services, and existing central office features.  Total reported
access lines increased  579,000,  or 3.7 percent,  during the past 12 months, of
which  243,000 was  attributable  to second  lines.  Second  line  installations
increased 19.4 percent.  Also  contributing to the increase in revenues were the
effects  of  rate  increases  of  $45  in  various   jurisdictions  and  interim
compensation revenues from IXCs as a result of Federal Communications Commission
("FCC") payphone orders, which took effect in April 1997.

Interstate Access Service Revenues. Interstate access service revenues increased
$74, or 3.6 percent, to $2,102,  primarily due to the effects of a change in the
classification of universal service fundings,  which increased  revenues by $61.
In 1997 these fundings were offset against  interstate  access service revenues.
Beginning in 1998 these  fundings are  recorded as access  expense  within other
operating expenses.  Excluding the effects of the  reclassification,  interstate
access revenues  increased $13, or 0.6 percent.  Increased demand for interstate
access  services,  as evidenced by a 6.8 percent  increase in billed  interstate
access minutes of use, was essentially offset by price reductions.

Intrastate Access Service Revenues. Intrastate access service revenues increased
by $8,  or 1.3  percent,  to $616,  primarily  due to higher  demand,  including
increased  demand  for  private  line  services,  partially  offset  by net rate
reductions.  Net rate  reductions  aggregated $23, the majority of which were in
the  state of  Washington.  Competitive  effects  are also  adversely  impacting
intrastate  access  revenue  growth.  Intrastate  billed  access  minutes of use
increased by 5.8 percent during the nine-month period.


<PAGE>


Form 10-Q - Part I

Item  2.  Management's  Analysis  of  the  Results  of  Operations  (Dollars  in
millions), continued

Long Distance Network Services Revenues. Long-distance network services revenues
decreased by $126,  or 17.5  percent,  to $595,  primarily due to the effects of
competition  and  rate  reductions  of  $37  in  several   jurisdictions,   most
significantly in the state of Washington.  Also contributing to the decline were
the   implementation  of  multiple  toll  carrier  plans  ("MTCPs")  in  various
jurisdictions  in  1997.  The  MTCPs  essentially  allow  independent  telephone
companies  to act as toll  carriers  and are net income  neutral to the Company,
with the  reduction in toll  revenues  largely  offset by  increased  intrastate
access service revenues and lower access expense.

Other Services Revenues. Revenues from other services increased by $125, or 22.8
percent,  primarily  as a result of  greater  sales of  wireless  communications
services  and  inside  wire  maintenance,   interconnection  rent  revenues  and
continued market penetration in voice messaging services.

Costs and Expenses
<TABLE>
<CAPTION>

---------------------------------------------------------------- --------------------------- ------------------------
                                                                     Nine Months Ended              Increase
                                                                       September 30,               (Decrease)
                                                                        1998           1997           $          %
---------------------------------------------------------------- ------------ -------------- ------------ -----------
<S>                                                              <C>          <C>            <C>          <C>   

Employee-related expenses                                             $2,550         $2,498          $52         2.1
Other operating expenses (1)                                           1,709          1,303          406        31.2
Taxes other than income taxes                                            260            300         (40)      (13.3)
Depreciation and amortization                                          1,580          1,574            6         0.4
Interest expense                                                         288            282            6         2.1
Gains on sales of rural telephone exchanges                                -             77         (77)           -
Other expense - net                                                       76             51           25        49.0
---------------------------------------------------------------- ------------ -------------- ------------ -----------
<FN>
<F1>
(1) Includes  separation  expenses of $94 and an asset impairment  charge of $35
during second-quarter 1998.
</FN>
</TABLE>

Employee-Related Expenses. Total employee-related expenses increased $52, or 2.1
percent,  to $2,550,  during the  nine-month  period ended  September  30, 1998.
Employee-related  expenses include $16 of net costs incurred in conjunction with
the  1998  third-quarter  work  stoppage.  These  work  stoppage  costs  include
incremental travel costs,  contract labor costs and employee bonus costs paid to
management employees for work performed during the strike.  Partially offsetting
these  additional  costs  were lower  salaries  and wages and  overtime  savings
associated with occupational employees not working during the work stoppage.

Excluding these costs,  employee-related expenses increased $36, or 1.4 percent,
primarily due to increased  salaries an wages and higher  contract  labor costs.
The increase in salaries and wages was a result of workforce and wage  increases
which were  largely  offset by the  transfer of  approximately  1,200  employees
during third-quarter 1997 to an unregulated affiliate. The higher contract labor
costs were largely a result of systems development work (which includes expenses
related to interconnection and year 2000 costs) and marketing and sales efforts.
Partially offsetting these increases were pension credits.


<PAGE>


Form 10-Q - Part I

Item  2.  Management's  Analysis  of  the  Results  of  Operations  (Dollars  in
millions), continued

Other Operating Expenses.  Excluding nonrecurring charges as described in Note 1
to the above table, other operating expenses increased by $277, or 21.3 percent,
during 1998. The increase is primarily due to increased  affiliate  expense as a
result  of  the  above  referenced  transfer  of  employees  to  an  unregulated
affiliate, interconnection expenses and costs associated with growth initiatives
(primarily PCS),  including wireless handset costs and marketing and advertising
costs.  Other  operating  expenses also increased $61 as compared to 1997 due to
the  aforementioned  change  in  classification  of  universal  service  funding
expenses.  Partially  offsetting  the  increases  was a 1997 reserve  adjustment
associated with billing and collection activities performed for IXCs.

Other  operating  expenses  include $94 in costs incurred  during second quarter
that are directly attributable to the Separation. These Separation costs include
executive severance,  legal and financial advisory fees, securities registration
fees, printing and mailing costs, and internal systems and rearrangement costs.

During  second  quarter of 1998,  the Company also  recorded in other  operating
expenses a pretax charge of $35 related to the impairment of certain  long-lived
assets associated with the Company's video operations in Omaha, Nebraska. Recent
technological  advances  have  permitted  the  Company  to  pursue  and use more
economical VDSL technology in cable overbuild situations.  Because the projected
future  cash flows were less than the  carrying  values an  impairment  loss was
recognized in accordance  with SFAS No. 121. (See "Note C - Asset  Impairment" -
to the Consolidated Financial Statements.)

Taxes Other Than Income Taxes. Taxes other than income taxes decreased primarily
because of a third quarter  property tax  settlement in addition to  adjustments
related to the 1997 property tax accrual.

Interest  Expense.  The increase in interest  expense was  primarily a result of
higher average debt levels.

Gains On Sales of Rural Telephone Exchanges.  During the nine-month period ended
September  30, 1997,  the Company sold  selected  rural  telephone  exchanges in
Minnesota, Iowa, Nebraska, and South Dakota for pretax gains of $77.

Other  Expense  - Net.  Other  expense  increased  primarily  due to  additional
interest expense associated with the Company's state regulatory liabilities.

Provision for Income Taxes

The  effective  tax rate for the first  nine  months of 1998 is 38.4  percent as
compared to 38.1 percent  during the first nine months of 1997.  The increase in
the  effective  tax rate is  primarily  due to the  impact of  certain  expenses
related to the  Separation,  which are not deductible for tax purposes,  and the
effects of lower amortization of investment tax credits.  The effective tax rate
is expected to approximate 38.3 percent for the twelve months ended December 31,
1998.



<PAGE>


Form 10-Q - Part I

Item  2.  Management's  Analysis  of  the  Results  of  Operations  (Dollars  in
millions), continued

Year 2000 Costs

During  1997 the  Company  conducted a  comprehensive  high level  review of its
computer systems and related software to ensure that systems properly  recognize
the year 2000 and continue to process data.  The systems  evaluated  include (i)
the  Public  Switched  Telephone  Network  (the  "Network"),   (ii)  Information
Technologies  ("IT") and (iii) individual Business Units (the "Business Units").
The Network,  which  processes voice and data  information  relating to the core
communications  business,   relies  on  remote  switches,   central  office  and
interoffice  equipment,  and  loop  transport  equipment  that is  predominately
provided by telecommunications network vendors.

IT is comprised of the Company's  internal business systems that employ hardware
and software with an enterprise-wide scope, including operational, financial and
administrative   functions.   The  Business   Units,   which  include   internal
organizations such as finance,  procurement,  operator services,  wireless, data
networks,   real  estate,   etc.,   employ  systems  that  support  desktop  and
departmental applications that relate specifically to their business and are not
generally part of the Network or IT.

The Company's  approach to year 2000 remediation  activities is broken down into
five general phases: (i) inventory/assessment,  (ii) planning, (iii) conversion,
(iv) testing/certification and (v) implementation.

With  regard to the  Network,  the  Company is working  with  telecommunications
network  vendors to obtain  compliant  releases of hardware  and  software.  The
Company is also working on a focused testing approach given the requirement that
Network testing must be done over multiple equipment  configurations involving a
broad spectrum of services. The inventory/assessment and planning phases for the
Network are  complete  and  management  expects  that the  testing/certification
phases will be completed by December 1998, with implementation completed by July
1999. To facilitate Network testing, the Company participates,  along with other
major  wireline  providers of  telecommunications  services,  as a member of the
Telco Year 2000 Forum (the  "Forum"),  an  organization  that addresses the year
2000 readiness of network elements and network  interoperability.  The Forum has
contracted  with  Bellcore,  a former  affiliate  engaged in  telecommunications
industry  research,   development  and  maintenance  activities,  to  engage  in
inter-region  interoperability testing. The Company is also participating in the
FCC Network Reliability and Interoperability  Council IV working group, which is
tasked to  evaluate  the Year 2000  readiness  of the public  telecommunications
network.

Within IT, the Company has identified the applications that support its critical
business processes such as billing and collection,  network  monitoring,  repair
and ordering. The  inventory/assessment  and planning phases for IT are complete
and management  expects that  conversion will be completed by the end of 1998 or
shortly thereafter, with testing and implementation continuing through 1999.




<PAGE>


Form 10-Q - Part I

Item  2.  Management's  Analysis  of  the  Results  of  Operations  (Dollars  in
millions), continued

Within the Business Units, the Company is generally in the  inventory/assessment
phase,  though some Business  Units have  completed  this phase and are into the
planning,  conversion and testing/certification  phases. Accordingly, a majority
of the Business Units have established project plans and associated schedules to
accomplish  the  remaining  phases.  The  objective  is to  complete  any  major
conversions or upgrades by third-quarter 1999.

The Company  has spent  approximately  $90 through the third  quarter of 1998 on
year 2000 projects and  activities.  The estimated total  incremental  costs for
year 2000 related projects and activities are  approximately  $185 through 1999,
excluding capital expenditures. Additional incremental capital expenditures over
the same period will  approximate  $50-$70.  Year 2000  project  costs are being
funded  through  operations.  Though  year 2000 costs will  directly  impact the
reported  level of future net income,  the  Company  intends to manage its total
cost structure,  including  deferral of non-critical  projects,  in an effort to
mitigate  the  impact  of year 2000  costs on its  historical  rate of  earnings
growth. The estimate stated above may be subject to change.

Management  cannot provide assurance that the result of its year 2000 compliance
efforts or the cost of such efforts will not differ  materially  from estimates.
Accordingly,  year 2000 specific  business  continuity and contingency plans are
being  developed to address high risk areas as they are  identified.  These year
2000  specific   contingency   plans  will  conform  to  detailed   Company-wide
requirements  now being  established by the Company's Year 2000 Program  Office.
These plans will be in place no later than third-quarter 1999. In addition,  the
Company has in place its standard overall business  continuity,  contingency and
disaster  recovery plans (such as diesel generator  back-up power supply sources
for its  Network,  Network  rerouting  capabilities,  and  computer  back-up and
recovery  procedures)  which will be verified,  and if required,  augmented  for
specific year 2000 scenarios.

Within  Network,  the  Company  is highly  dependent  on the  telecommunications
network vendors to provide  compliant  hardware and software in a timely manner,
and on third parties that are  assisting  the Company in the focused  testing of
the  Network.  Because of these  dependencies,  the  Company has  developed  and
implemented a vendor compliance process whereby the Company has obtained written
assurances of timely year 2000 compliance from most of its critical vendors (not
only for Network, but also for IT and the Business Units). The Company continues
to pursue such assurances from the remaining critical vendors. In addition,  the
Company  monitors and  actively  participates  in  coordinated  Network  testing
activities,  as discussed above, with respect to the Forum and Bellcore.  Within
IT, the Company is dependent  on the  development  of software by experts,  both
internal and  external,  and the  availability  of critical  resources  with the
requisite  skill sets.  Because of this  dependency,  the Company has  developed
detailed   timetables,   resource  plans  and  standardized  year  2000  testing
requirements for all identified critical  applications  (irrespective of whether
these applications are used primarily by IT, the Network or the Business Units).
Within the Business Units, the Company is dependent on vendor supplied goods and
services, and operability of the Network, critical IT and business unit specific
applications.  Because of these  dependencies,  the Company is implementing  the
same type of vendor  compliance  process and  application  planning  and testing
process at the Business  Units,  as discussed  above with respect to the Network
and IT.



<PAGE>


Form 10-Q - Part I

Item  2.  Management's  Analysis  of  the  Results  of  Operations  (Dollars  in
millions), continued

In  management's  view,  the most  reasonable  worst case scenario for year 2000
failure  prospects faced by the Company is that a limited number of important IT
and/or Business Unit specific  applications may unexpectedly  fail. In addition,
no  assurance  can be given  that  there may not be  problems  with the  Network
relating  to year 2000.  Failure by the  Company or by certain of its vendors to
remediate year 2000 compliance issues in advance of the year 2000 and to execute
appropriate   contingency  plans  in  the  event  that  a  critical  failure  is
experienced,  could result in disruption of the Company's  operations,  possibly
impacting the Network and  impairing  the  Company's  ability to bill or collect
revenues.  However,  management believes that its efforts at advance remediation
and testing, obtaining written vendor assurances and advance vendor remediation,
year 2000  specific  contingency  planning,  and  overall  business  continuity,
contingency  and disaster  recovery  planning will be  successful,  and that the
aforementioned  "worst case  scenario"  is unlikely to develop or  significantly
disrupt the Company's financial operations.

The  above  discussion   regarding  year  2000  contains   statements  that  are
"forward-looking" within the meaning of the Private Securities Litigation Reform
Act of 1995.  Although  the Company  believes  that its  estimates  are based on
reasonable  assumptions,  there can be no assurance that actual results will not
differ materially from these estimates.

Union Contracts

On October 9, 1998, the  Communications  Workers of America ("CWA") informed the
Company that a majority of its voting members ratified new three-year  contracts
for the Company and U S WEST Business Resources,  Inc. employees.  The contracts
provide for salary  increases of 10.9  percent  over three  years,  effective in
August of each year, and pension increases totaling 21 percent over three years.
The contract also provides  employees with a $500 ratification  bonus in lieu of
additional future wage increases.  The agreement covers approximately 33,000 CWA
members.

Other Items

The Company from time to time  engages in  discussions  regarding  dispositions,
acquisitions and other similar  transactions.  Any such transaction may include,
among other things,  the transfer,  sale or acquisition  of significant  assets,
businesses or interests, including joint ventures, or the incurrence, assumption
or refinancing of indebtedness, and could be material to the financial condition
and results of  operations of the Company.  There is no assurance  that any such
discussions will result in the consummation of any such transaction.

Contingencies

The Company has pending  regulatory  actions in local  regulatory  jurisdictions
that call for price decreases,  refunds or both. (See "Note D - Contingencies" -
to the Consolidated Financial Statements.)



<PAGE>



Form 10-Q - Part II                               U S WEST Communications, Inc.

                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

The Company and its subsidiaries  are subject to claims and proceedings  arising
in the ordinary  course of business.  At the Company,  there are pending certain
regulatory  actions  in local  regulatory  jurisdictions  that  call  for  price
decreases,  refunds or both.  For a discussion of these  actions,  see "Note D -
Contingencies" - to the Consolidated Financial Statements.

Item 5.  Other Information

On October 9, 1998 the  Communications  Workers of America  informed the Company
that a majority of its voting members ratified both of the contracts for Company
and U S WEST Business Resources,  Inc.  employees.  Both contracts are effective
August 16, 1998 and will continue in effect until August 18, 2001.

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

Exhibit No.

12   Statement  regarding  computation of earnings to fixed charges ratio of
     U S WEST  Communications, Inc.

27   Financial Data Schedule

(b)  Reports on Form 8-K Filed During the Third Quarter of 1998

(i)      Form 8-K dated August 16, 1998  concerning a press  release  announcing
         the  work  stoppage  commenced  by  clerical  and  technical  employees
         represented by the Communications Workers of America.

(ii)     Form 8-K dated August 31, 1998 concerning a press release  announcing a
         tentative  agreement  reached on the Labor  Contract  between U S WEST,
         Inc. and the Communications Workers of America.



<PAGE>



Form 10-Q - Part II                               U S WEST Communications, Inc.


                                   SIGNATURES

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.


                                 U S WEST Communications, Inc.


                                        /s/ ALLAN R. SPIES
                                 By:___________________________________
                                 Allan R. Spies
                                 Vice President and Chief Financial Officer

November 6, 1998