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


                                  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, 1999

                                       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                              84-0273800
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation of organization)


                 1801 California Street, Denver, Colorado 80202
                         Telephone Number (303) 672-2700
                                   -----------


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>





                          U S WEST Communications, Inc.
                                    Form 10-Q
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS


Item                                                                                                       Page
                         PART I - FINANCIAL INFORMATION
<S>                                                                                                         <C>
1.      Financial Statements

               Consolidated Statements of Income -
                       Three months and nine months ended September 30, 1999 and 1998.................      3

               Consolidated Balance Sheets -
                        September 30, 1999 and December 31, 1998......................................      4

               Consolidated Statements of Cash Flows -
                        Nine months ended September 30, 1999 and 1998.................................      5

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

2.      Management's Discussion and Analysis of Financial
               Condition and Results of Operations....................................................     11

3.      Quantitative and Qualitative Disclosures
               About Market Risk......................................................................     18
</TABLE>

<TABLE>
<CAPTION>

                           PART II - OTHER INFORMATION
<S>                                                                                                        <C>

1.      Legal Proceedings.............................................................................     25

2.      Changes in Securities and Use of Proceeds.....................................................     25

6.      Exhibits and Reports on Form 8-K..............................................................     25

</TABLE>



<PAGE>


                          U S WEST Communications, Inc.
                        CONSOLIDATED STATEMENTS OF INCOME
                              (dollars in millions)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                      Three Months                        Nine Months
                                                                    Ended September 30,                 Ended September 30,
                                                                   1999            1998               1999              1998

<S>                                                               <C>              <C>                <C>               <C>
Operating revenues:
      Local services..........................................    $1,979           $1,805             $5,779            $5,291
      Access services.........................................       688              660              2,057             1,996
      Long-distance services..................................       138              199                459               595
      Other services..........................................       110               75                262               221
                                                             -------------    ------------      -------------      ------------
         Total operating revenues.............................     2,915            2,739              8,557             8,103
                                                             -------------    ------------      -------------      ------------
                                                             -------------    ------------      -------------      ------------
Operating expenses:
      Employee-related expenses...............................       935              868              2,719             2,550
      Other operating expenses................................       636              625              1,923             1,969
      Depreciation and amortization...........................       571              544              1,713             1,580
                                                             -------------    ------------      -------------      ------------
         Total operating expenses.............................     2,142            2,037              6,355             6,099
                                                             -------------    ------------      -------------      ------------

Operating income..............................................       773              702              2,202             2,004
                                                             -------------    ------------      -------------      ------------
                                                             -------------    ------------      -------------      ------------
Other expense:
      Interest expense........................................       102              103                289               288
      Other expense-net.......................................         9               20                 33                76
                                                             --------------   -------------     --------------     -------------

        Total other expense-net..............................       111              123                322               364
                                                             --------------   -------------     --------------     -------------

Income before income taxes....................................       662              579              1,880             1,640
Provision for income taxes....................................       251              219                713               630
                                                             --------------   -------------     --------------     -------------


Net income....................................................      $411             $360             $1,167            $1,010
                                                             ==============   =============     ==============     =============
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.


<PAGE>


                          U S WEST Communications, Inc.
                           CONSOLIDATED BALANCE SHEETS
                              (dollars in millions)
<TABLE>
<CAPTION>
                                                                                            September 30,     December 31,
                                                                                                1999              1998
                                                                                                ----              ----
                                                                                             (unaudited)
ASSETS
<S>                                                                                            <C>               <C>
Current assets:
    Cash and cash equivalents.......................................................             $66               $68
    Accounts receivable, less allowance for uncollectibles of
    $51 and $48, respectively.......................................................           1,703             1,619
    Inventories and supplies........................................................             187               154
    Deferred tax assets.............................................................             121               113
    Prepaid and other...............................................................              98                61
                                                                                           ----------------     -------------

Total current assets..................................................................         2,175             2,015
Property, plant and equipment-net.....................................................        15,423            14,681
Other assets-net......................................................................         1,303               882
                                                                                           ----------------     -------------

Total assets..........................................................................       $18,901           $17,578
                                                                                           ================     =============


LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
    Short-term debt.................................................................          $1,767              $789
    Accounts payable................................................................           1,489             1,411
    Accrued expenses................................................................           1,677             1,383
    Advance billings and customer deposits..........................................             341               326
                                                                                           ----------------     -------------
Total current liabilities.............................................................         5,274             3,909
Long-term debt........................................................................         4,976             5,154
Postretirement and other postemployment benefit obligations...........................         2,426             2,458
Deferred income taxes.................................................................         1,045               898
Unamortized investment tax credits....................................................           158               159
Deferred credits and other............................................................           558               537

Commitments and Contingencies

Stockholder's equity:
      Common stock-one share without par value, owned by parent.......................         8,081             8,080
      Cumulative deficit..............................................................        (3,617)           (3,617)
                                                                                           ----------------     -------------

Total stockholder's equity............................................................         4,464             4,463
                                                                                           ----------------     -------------

Total liabilities and stockholder's equity............................................       $18,901           $17,578
                                                                                           ================     =============
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.

<PAGE>


                          U S WEST Communications, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (dollars in millions)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                                  Nine Months Ended
                                                                                                    September 30,
                                                                                                1999            1998
                                                                                                ----            ----
<S>                                                                                            <C>              <C>
OPERATING ACTIVITIES
Net income................................................................................     $1,167           $1,010
   Adjustments to net income:
      Depreciation and amortization.......................................................      1,713            1,580
      Deferred income taxes and amortization of investment tax credits....................        134               90
   Changes in operating assets and liabilities:
      Accounts receivable.................................................................        (84)             (38)
      Inventories, supplies and other current assets......................................        (58)             (19)
      Accounts payable, accrued expenses and advance billings.............................        294               16
      Other...............................................................................       (160)              43
                                                                                            --------------  --------------
      Cash provided by operating activities...............................................      3,006            2,682
                                                                                            --------------  --------------

INVESTING ACTIVITIES
   Expenditures for property, plant and equipment.........................................     (2,590)          (1,880)
   Payments on disposals of property, plant and equipment.................................        (30)             (14)
   Other..................................................................................          -              (24)
                                                                                            --------------  --------------
   Cash used for investing activities.....................................................     (2,620)          (1,918)
                                                                                            --------------  --------------

FINANCING ACTIVITIES
   Net proceeds from short-term debt......................................................        986              457
   Proceeds from issuance of long-term debt...............................................         17                -
   Repayments of long-term debt...........................................................       (307)            (411)
   Dividends paid on common stock.........................................................     (1,084)            (842)
   Equity infusions from U S WEST.........................................................          -               63
                                                                                            --------------  --------------

   Cash used for financing activities.....................................................       (388)            (733)
                                                                                            --------------  --------------

CASH AND CASH EQUIVALENTS
   Increase (decrease)....................................................................         (2)              31
   Beginning balance......................................................................         68               26
                                                                                            --------------  --------------

   Ending balance.........................................................................        $66              $57
                                                                                            ==============  ==============
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.



<PAGE>



                          U S WEST Communications, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  For the nine months ended September 30, 1999
                              (dollars in millions)
                                   (unaudited)


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Presentation.  The consolidated  financial  statements include the
accounts of U S WEST  Communications,  Inc. (the "Company") and its wholly owned
subsidiaries. We are a wholly owned subsidiary of U S WEST, Inc. ("U S WEST").

     The consolidated interim financial statements are unaudited. We
prepared the financial  statements in accordance with the  instructions for Form
10-Q and,  therefore,  did not include all information and footnotes required by
generally  accepted  accounting  principles.  In our  opinion,  we made  all the
adjustments  (consisting  only of normal  recurring  adjustments)  necessary  to
present fairly our consolidated  results of operations,  financial  position and
cash  flows  as of  September  30,  1999  and for  all  periods  presented.  The
statements  are subject to  year-end  audit  adjustment.  A  description  of our
accounting policies and other financial  information are included in the audited
consolidated  financial  statements  filed  with  the  Securities  and  Exchange
Commission  in our Form  10-K/A  for the  year  ended  December  31,  1998.  The
consolidated results of operations for the three and nine months ended September
30, 1999 are not  necessarily  indicative  of the results  expected for the full
year.

     We reclassified prior period revenue amounts to conform to the current year
presentation.  For a description of the  reclassifications,  see U S WEST's Form
8-K filed April 21, 1999.

     On January 1, 1999, we adopted the  accounting  provisions  required by the
American  Institute  of  Certified  Public  Accountants'  Statement  of Position
("SOP")  98-1,  "Accounting  for the Costs of  Computer  Software  Developed  or
Obtained for Internal Use." 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.
Adoption of the SOP  resulted in an increase in net income for the three  months
ended September 30, 1999 of $40 and $124 for the nine months ended September 30,
1999.


<PAGE>



NOTE 2:  SEGMENT INFORMATION

     We operate in three  segments:  retail  services,  wholesale  services  and
network services. The retail services segment provides local telephone services,
including  wireless,  data and long-distance  services.  The wholesale  services
segment  provides  access  services that connect  customers to the facilities of
interexchange carriers and interconnection to our telecommunications  network to
competitive  local exchange  carriers.  Our network  services  segment  provides
access   to  our   telecommunications   network,   including   our   information
technologies,  primarily to our retail services and wholesale services segments.
We  provide  our  services  to more than 25  million  residential  and  business
customers in Arizona,  Colorado, Idaho, Iowa, Minnesota,  Montana, Nebraska, New
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming.

     Following is a breakout of our segments,  which has been extracted from the
financial  statements of U S WEST.  Separate segment data is not provided to our
chief operating decision-maker for the Company. Certain revenues and expenses of
U S WEST are included in the segment  data,  which have been  eliminated  in the
reconciling items column.  Additionally,  because significant operating expenses
of the retail services and wholesale  services segments are not allocated to the
segments for decision-making  purposes,  management does not believe the segment
margins are representative of the actual operating results of the segments.  The
margin for the retail services and wholesale  services segments excludes network
and corporate  expenses.  The margin for the network  services  segment excludes
corporate  expense.  The "other"  category  includes our corporate  expenses and
intersegment  eliminations.  Asset information by segment is not provided to our
chief operating  decision-maker.  The total  communications and related services
column represents a total of the retail services, wholesale services and network
services segments.

<TABLE>
<CAPTION>
                                                         Total
                                                    Communications
                                                          and
                     Retail    Wholesale    Network    Related                 Reconciling   Consolidated
                    Services    Services    Services    Services     Other        Items          Total
                    --------    --------    --------    --------     -----        -----          -----
<S>                  <C>           <C>         <C>       <C>            <C>       <C>          <C>
Three Months Ended
September 30,
      1999
      ----
Operating
revenues.........    $2,270        $725         $63      $3,058          $-       ($143)       $2,915
Margin...........     1,560         549        (699)      1,410         (34)       (714)(1)       662
Capital
expenditures.....       144(2)       25         877      $1,046          (5)        (26)         1,015

      1998
      ----
Operating
revenues.........    $2,157        $643         $51      $2,851          $-       ($112)        2,739
Margin...........     1,554         464        (726)      1,292         (11)       (702) (1)      579
Capital
expenditures.....        49(2)        -         507         556          27         (10)          573

</TABLE>


<PAGE>


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

(1)  Adjustments  made to arrive at  consolidated  income  before  income  taxes
     include the following:

<TABLE>
<CAPTION>

                                                                         Three Months Ended September 30,
                                                                     ------------------------------------------
                                                                            1999                   1998
                                                                     -------------------    -------------------
<S>                                                                          <C>                    <C>
Taxes other than income taxes...................................             $99                    $79
Depreciation and amortization...................................             571                    544
Interest expense................................................             102                    103
Other amounts applicable to U S WEST, Inc.......................             (67)                   (44)
Other expense-net...............................................               9                     20
                                                                     -------------------    -------------------
                                                                            $714                   $702
                                                                     ===================    ===================
</TABLE>

(2)  Capital expenditures  reported for the retail services segment include only
     expenditures  for wireless  services and certain data services.  Additional
     capital  expenditures  relating to those  services  are included in network
     services capital expenditures.

<TABLE>
<CAPTION>
                                                         Total
                                                     Communications
                                                          and
                     Retail     Wholesale    Network   Related                 Reconciling   Consolidated
                    Services    Services    Services    Services     Other        Items          Total
                    --------    --------    --------    --------     -----        -----          -----
<S>                  <C>         <C>          <C>        <C>           <C>       <C>           <C>
Nine Months Ended
September 30,
      1999
      ----
Operating
revenues.........    $6,660      $2,134         $178     $8,972          $-       ($415)       $8,557
Margin...........     4,607       1,604       (2,083)     4,128        (70)      (2,178)(1)     1,880
Capital
expenditures.....       348(2)       65        2,346      2,759          33         (64)        2,728
      1998
Operating
revenues.........    $6,337      $1,916         $150     $8,403          $-       ($300)       $8,103
Margin...........     4,662       1,423       (2,031)     4,054        (199)     (2,215) (1)    1,640
Capital
expenditures.....       286(2)        -        1,539      1,825          68         (30)        1,863

</TABLE>

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


(1)  Adjustments  made to arrive at  consolidated  income  before  income  taxes
     include the following:
<TABLE>
<CAPTION>

                                                                          Nine Months Ended September 30,
                                                                     ------------------------------------------
                                                                            1999                   1998
                                                                     -------------------    -------------------
<S>                                                                         <C>                    <C>
Restructuring costs.............................................               $-                   $129
Taxes other than income taxes...................................              289                    262
Depreciation and amortization...................................            1,713                  1,580
Interest expense................................................              289                    288
Other amounts applicable to U S WEST, Inc.......................             (146)                  (120)
Other expense-net...............................................               33                     76
                                                                     -------------------    -------------------
                                                                           $2,178                 $2,215
                                                                     ===================    ===================
</TABLE>

(2)  Capital expenditures  reported for the retail services segment include only
     expenditures  for wireless  services and certain data services.  Additional
     capital  expenditures  relating to those  services  are included in network
     services capital expenditures.

     In  addition  to  the  operating  revenues  disclosed  above,  intersegment
operating revenues of the retail services and network services segment were:

<TABLE>
<CAPTION>
                                                Three Months Ended September 30,      Nine Months Ended September 30,
                                                --------------------------------      -------------------------------

                                                    1999              1998                1999              1998
                                                    ----              ----                ----              ----

<S>                                                 <C>                <C>                <C>                <C>
Retail services................................     $13                $7                 $34                $22
Network services...............................      15                16                  46                 48


</TABLE>


NOTE 3:  COMMITMENTS AND CONTINGENCIES

Commitments

     We have  entered into an agreement  with Olympic  Properties  of the United
States to sponsor the 2002 Salt Lake City Winter  Olympics and the U.S.  Olympic
Teams through 2004. As of September 30, 1999, we have a remaining  commitment of
$49 to be paid in a combination of cash and services through 2004.

Contingencies

     On May 1, 1996, the Oregon Public Utilities  Commission ("OPUC") approved a
stipulation  terminating prematurely our alternative form of regulation ("AFOR")
plan and it then  undertook  a review of our  earnings.  In May  1997,  the OPUC
ordered us to reduce our 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.  This
one-time  refund for interim  rates became  subject to refund when our AFOR plan
was terminated on May 1, 1996.

     We filed an appeal of the  order  and  asked for an  immediate  stay of the
refund  with the Oregon  Circuit  Court  which  granted  our 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 our favor on most of the appealed  issues.
The OPUC  appealed  to the Oregon  Court of Appeals on March 19,  1998,  and the
appeal remains pending. We continue to charge interim rates,  subject to refund,
during the pendency of that appeal.

     On September 9, 1999, we reached a tentative  settlement agreement with the
OPUC staff whereby we would refund  approximately  $230 and provide ongoing rate
reductions  of $63. The  agreement  is subject to public  hearing and final OPUC
approval. We have reserved for the proposed refund.

Other Contingencies.  On October 1, 1999, a Fifth Amended Class Action Complaint
was filed in the District Court, Larimer County, Colorado,  against U S WEST and
us  purportedly  on behalf of 220,000  customers in the State of  Colorado.  The
complaint  alleges that from 1993 to the present,  we and U S WEST, in violation
of alleged statutory and common law obligations, willfully delayed the provision
of local telephone  service to the purported class members.  The complaint seeks
compensatory  damages for purported  class members,  disgorgement of profits and
punitive  damages.  The Company and U S WEST  intend to  vigorously  defend this
action.

     The New Mexico Public Regulation  Commission is expected shortly to rule on
a petition by its Staff to require us to reduce  revenues on an interim basis by
$29. Rates are interim pending the completion of a full rate case during 2000.

     We are  subject to other  legal  proceedings  and claims  that arise in the
ordinary course of business.  Although there can be no assurance of the ultimate
disposition  of  these  matters,  it is  management's  opinion,  based  upon the
information  available at this time, that the expected outcome,  individually or
in the  aggregate,  will not have a material  adverse  effect on our  results of
operations or financial position.


NOTE 4: SALE OF EXCHANGES

     In June 1999,  we entered into a series of  definitive  agreements  to sell
local-exchange  telephone properties serving  approximately 530,000 access lines
in nine states for approximately $1,650 in cash, subject to adjustment. Approval
of the sale is subject to review by federal and state regulatory  agencies.  The
transfer of ownership,  which will occur on a state-by-state  basis, is expected
to be completed over the next two years.




ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations (dollars in millions)

                Special Note Regarding Forward-Looking Statements

     Some  of  the   information   presented  in  this  Form  10-Q   constitutes
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation   Reform  Act  of  1995  (the  "Reform  Act").   Although  U  S  WEST
Communications, Inc. (the "Company," which may also be referred to as "we," "us"
or "our")  believes that its  expectations  are based on reasonable  assumptions
within the bounds of its knowledge of its businesses and  operations,  there can
be no  assurance  that  actual  results  will  not  differ  materially  from our
expectations.   Factors  that  could  cause   actual   results  to  differ  from
expectations include:

o    greater  than  anticipated  competition  from new  entrants  into the local
     exchange,  intraLATA (local access transport area) toll,  wireless and data
     markets, causing loss of customers and increased price competition;

o    changes in demand for our products and services,  including optional custom
     calling features;

o    higher than anticipated employee levels, capital expenditures and operating
     expenses  (such as costs  associated  with  interconnection  and Year  2000
     remediation);

o    the loss of significant customers;

o    pending  and future  state and federal  regulatory  changes  affecting  the
     telecommunications industry, including changes that could have an impact on
     the  competitive  environment  and  service  pricing in the local  exchange
     market;

o    acceleration of the deployment of advanced new services to customers,  such
     as  broadband  data,  wireless  and video  services,  which  would  require
     substantial expenditure of financial and other resources,

o    a change  in  economic  conditions  in the  various  markets  served by our
     operations;

o    higher  than  anticipated  start-up  costs  associated  with  new  business
     opportunities;

o    delays in our ability to begin offering interLATA long-distance services;

o    consumer acceptance of broadband services, including telephony, data, video
     and wireless services;

o    delays in the  development of anticipated  technologies,  or the failure of
     such technologies to perform according to expectations; and

o    the timing and  completion  of U S WEST'S  recently  announced  merger with
     Qwest  Communications  International  Inc.  ("Qwest")  and  the  subsequent
     integration of the businesses of the two companies.


     These cautionary  statements  should not be construed as an exhaustive list
or as any admission by us regarding the adequacy of the  disclosures.  We cannot
always  predict or  determine  after the fact what  factors  would cause  actual
results  to  differ  materially  from  those  indicated  by our  forward-looking
statements or other statements.  In addition,  consider  statements that include
the terms "believes," "belief," "expects," "plans," "objectives," "anticipates,"
"intends,"  or the like to be  uncertain  and  forward-looking.  All  cautionary
statements should be read as being applicable to all forward-looking  statements
wherever they appear.

     We do not  undertake  any  obligation  to  publicly  update or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed herein might not occur.

Results of Operations

Three and Nine Months Ended September 30, 1999 Compared with 1998

     Net income for the quarter ended  September 30, 1999,  increased by $51, or
14.2% to $411 compared to net income of $360 for the quarter ended September 30,
1998. Net income for the nine months ended September 30, 1999, increased $157 or
15.5% to $1,167,  compared  to net income of $1,010  for the nine  months  ended
September 30, 1998. We  experienced a 6.4% and 5.6% increase in revenues for the
three  and  nine  months  ended  September  30,  1999,  respectively,  over  the
comparable 1998 periods.  These increases were partially  offset by increases in
expenses  to support  our growth  initiatives,  enhanced  customer  service  and
greater network costs.

     The following sections provide a more detailed discussion of the changes in
revenues and expenses.

Operating Revenues
<TABLE>
<CAPTION>

                                     Three Months                                   Nine Months
                                  Ended September 30,                           Ended September 30,
                                   1999        1998          Increase            1999        1998         Increase

<S>                               <C>         <C>         <C>      <C>          <C>         <C>         <C>     <C>
Local services revenues........   $1,979      $1,805      $174     9.6%         $5,779      $5,291      $488    9.2%

</TABLE>


Local services  revenues.  Local services revenues include basic monthly service
fees,   fees  for  calling   services   such  as  voice   messaging  and  caller
identification,  wireless revenues,  subscriber access line charges, MegaBit(TM)
data services,  local number portability ("LNP") charges, public phone revenues,
and  installation  and  connection  charges.  State public  service  commissions
regulate most local service rates.

     Local  services  revenues  increased  primarily  due to  greater  sales  of
wireless and calling services.  Wireless services  accounted for $44 and $116 of
the revenue  increases  for the three and nine months ended  September 30, 1999,
respectively. Revenues from calling services increased $30 for the quarter ended
September 30, 1999 and $96 for the nine months ended  September  30, 1999,  over
comparable  1998 periods.  Additionally,  access line growth  contributed to the
rise in  revenues.  Second line  additions  by  residential  and small  business
customers  contributed  to access  line  growth  due to  continuing  demand  for
Internet  access  and data  transport  capabilities.  As of the end of the third
quarter of 1999, we had added 504,000 access lines, an increase of 3.1% over the
end of the third  quarter of 1998.  Of this  increase,  residential  second line
installations  accounted for 240,000  lines,  an increase of 16.0% compared with
the end of the third quarter of 1998.  Also  contributing  to the revenue growth
were  greater  revenues  from  inside  wire  maintenance   plans,  LNP  charges,
interconnection revenues and increases in the subscriber base of our Megabit(TM)
data services.  Partially  offsetting  these  increases were net regulatory rate
adjustments  and refunds of $2 for the three months ended September 30, 1999 and
$21 for the nine months ended  September  30,  1999,  over the  comparable  1998
periods.

     While  local  services  revenues  increased  in 1999,  the growth  rate has
declined from 1998. The decline in the growth rate was primarily attributable to
increased  competition  as well as our customer  retention  strategy of offering
bundles of services to customers  at lower  prices in return for  entering  into
longer-term  contracts.  Additionally,  some  business  customers  have opted to
migrate from multiple single lines to high capacity lines, which decreases local
services  revenues but increases  access  services  revenues.  We believe we may
continue to experience  declining  growth rates as the level of customer  demand
slows and  competition  increases.  In June 1999,  we  entered  into a series of
definitive  agreements to sell 530,000 access lines in nine states for $1,650 in
cash, subject to adjustment.  The access lines accounted for 3.8% of fiscal 1998
local  services  revenues.  While  the sale is  expected  to  provide  us with a
one-time gain, it will negatively impact future local services revenue growth.

<TABLE>
<CAPTION>

                                      Three Months                                  Nine Months
                                   Ended September 30,                          Ended September 30,
                                    1999        1998         Increase             1999        1998        Increase

<S>                                 <C>         <C>        <C>      <C>          <C>         <C>         <C>    <C>
Access services revenues........    $688        $660       $28      4.2%         $2,057      $1,996      $61    3.1%

</TABLE>


Access services  revenues.  Access services  revenues are derived primarily from
charging interexchange  carriers,  such as AT&T and MCI WorldCom, for use of our
local  network  to  connect  customers  to their  long-distance  networks.  Also
included  in access  services  revenues  are  special  access and  private  line
revenues from end-users  buying  dedicated  local  exchange  capacity to support
their private networks.

     The growth in access services revenues was attributable to increased demand
for private line and special access services which increased $48 for the quarter
ended  September 30, 1999 and $134 for the nine months ended  September 30, 1999
over the  comparable  1998  periods.  Additionally,  demand  from  interexchange
carriers  contributed to the revenue  increase.  Access minutes of use increased
5.3% and 5.2%,  respectively,  for the three and nine months ended September 30,
1999. The growth in access minutes of use was partially  offset by mandated rate
reductions of $52 for the three months ended September 30, 1999 and $113 for the
nine months ended September 30, 1999.


<TABLE>
<CAPTION>

                                    Three Months                                  Nine Months
                                 Ended September 30,                          Ended September 30,
                                  1999        1998          Decrease            1999       1998            Decrease


<S>                               <C>         <C>       <C>      <C>            <C>        <C>       <C>        <C>
Long-distance services
revenues......................    $138        $199      ($61)    (30.7%)        $459       $595      ($136)     (22.9%)

</TABLE>


Long-distance  services  revenues.  Long-distance  services revenues are derived
from customer calls to locations  outside of their local calling area but within
the same LATA. The decrease in long-distance services revenues for the three and
nine months  ended  September  30, 1999 was  primarily  attributable  to greater
competition,  strategic  price  reductions,  and the expansion in the number and
size of extended area services,  resulting in revenue  declines of $55 and $118,
respectively.  Mandated  rate  reductions  of $8 and $25 for the  three and nine
months ended September 30, 1999,  respectively,  also contributed to the revenue
decreases.  As of  September  30,  1999,  customers in the 14 states in which we
operate were able to choose an alternative  provider for intraLATA calls without
dialing a special access code when placing a call.

     We believe we will continue to experience further declines in long-distance
services  revenues  as  regulatory  actions  provide  for  increased  levels  of
competition.  We are responding to competition  through  competitive  pricing of
intraLATA  long-distance  services and increased  promotional  efforts to retain
customers. See "Special Note Regarding Forward-Looking Statements" on page 11.

<TABLE>
<CAPTION>

                                      Three Months                                  Nine Months
                                   Ended September 30,                          Ended September 30,
                                    1999        1998         Increase            1999        1998         Increase

<S>                                 <C>          <C>       <C>     <C>           <C>         <C>        <C>    <C>
Other services revenues.........    $110         $75       $35     46.7%         $262        $221       $41    18.6%

</TABLE>


Other services revenues.  Other services revenues include billing and collection
services  for  interexchange  carriers  and  sales of  customer  equipment.  The
increases for the three and nine months ended  September 30, 1999 were primarily
attributable to billing and collection revenues.


<PAGE>


Operating Expenses

<TABLE>
<CAPTION>

                                    Three Months                                    Nine Months
                                Ended September 30,                             Ended September 30,
                                 1999          1998          Increase            1999       1998         Increase


<S>                              <C>           <C>        <C>      <C>          <C>        <C>         <C>      <C>
Employee-related expenses...     $935          $868       $67      7.7%         $2,719     $2,550      $169     6.6%


</TABLE>

Employee-related expenses. Employee-related expenses include salaries and wages,
benefits, payroll taxes and contract labor.

     Employee  related  expenses  for 1998  include $16 of costs  related to the
third  quarter  1998 work  stoppage.  Excluding  these  costs,  employee-related
expenses  increased 9.7% and 7.3%,  respectively,  for the three and nine months
ended  September  30,  1999.  Employee-related  expenses  increased  because  of
increased  commitments  towards improving  customer  service,  including meeting
requests for installation,  repair services and customer services,  resulting in
higher labor costs.  Additionally,  growth in several  sectors of the  business,
primarily  wireless  communications,  resulted  in  increased  employee  levels.
Across-the-board   wage   increases   also   contributed   to  the  increase  in
employee-related   expenses.   Partially  offsetting  these  increases  was  the
capitalization in 1999 of  employee-related  expenses associated with developing
internal use  software due to the adoption of the AICPA's  Statement of Position
("SOP")  98-1,  "Accounting  for the Costs of  Computer  Software  Developed  or
Obtained  for  Internal  Use." In  accordance  with  the  SOP,  $22 and $60 were
capitalized   for  the  quarter  and  nine  months  ended  September  30,  1999,
respectively.  An increase in pension credits of $31 also offset the increase in
employee-related expenses for the nine months ended September 30, 1999.

<TABLE>
<CAPTION>
                                      Three Months                                Nine Months
                                  Ended September 30,                         Ended September 30,
                                    1999       1998         Increase           1999         1998         Decrease

<S>                                 <C>        <C>        <C>      <C>        <C>          <C>        <C>      <C>
Other operating expenses........    $636       $625       $11      1.8%       $1,923       $1,969     ($46)    (2.3%)

</TABLE>


Other operating  expenses.  Other operating expenses include access charges paid
to carriers for the routing of local and  long-distance  traffic  through  their
facilities,  taxes  other than  income  taxes,  and other  selling,  general and
administrative  costs. Included in the nine months ended September 30, 1998 were
$129 of separation costs associated with the split from MediaOne Group, Inc. and
asset  impairment  charges.  Excluding these charges,  other operating  expenses
increased  $83,  or 4.5% for the nine  months  ended  September  30,  1999.  The
increases  in other  operating  expenses  for the quarter and nine months  ended
September 30, 1999, were primarily attributable to the following:

o    increased costs of product sales  associated  with our growth  initiatives,
     including wireless handset costs,

o    higher  access  charge  expenses  resulting  from  regulatory  rulings that
     require us to pay access  charges to carriers  for calls that  originate on
     our network and terminate on other carriers' networks,

o    higher property taxes,

o    Year 2000 remediation costs, and

o    higher rent expense  related to  increased  computer  hardware  leasing and
     increases in leasing costs associated with telephone poles.


     In addition,  the increase in other operating  expenses for the nine months
ended September 30, 1999, was also due to higher marketing and advertising costs
for  wireless  communications  services  and  calling  services  such as  caller
identification.

     Offsetting  the increases in other  operating  expenses were the effects of
capitalizing  $59 and $184 for the quarter and nine months ended  September  30,
1999, respectively, of costs associated with developing internal use software in
accordance with SOP 98-1.

<TABLE>
<CAPTION>
                                    Three Months                                  Nine Months
                                Ended September 30,                           Ended September 30,
                                 1999         1998         Increase            1999         1998         Increase


<S>                             <C>          <C>         <C>     <C>         <C>          <C>         <C>      <C>
Depreciation and
amortization expense........    $571         $544        $27     5.0%        $1,713       $1,580      $133     8.4%

</TABLE>


Depreciation and  amortization  expense.  Depreciation and amortization  expense
increased primarily due to higher overall property, plant and equipment balances
resulting from  continued  investment in our network.  Additionally,  the useful
lives of certain assets were reduced, reflecting changes in technology,  causing
greater  depreciation  expense.  Partially  offsetting  the  increases  was  the
cessation  of  depreciation  associated  with the 530,000  access lines that are
under definitive sales agreements entered into in the second quarter of 1999.

<TABLE>
<CAPTION>
                                   Three Months                                 Nine Months
                               Ended September 30,                          Ended September 30,
                                 1999        1998         Decrease            1999        1998          Decrease

<S>                              <C>         <C>       <C>     <C>            <C>         <C>       <C>      <C>
Other expense-net...........     $111        $123      ($12)   (9.8%)         $322        $364      ($42)    (11.5%)

</TABLE>


Other  expense-net.  Interest  expense  for the  three  and  nine  months  ended
September 30, 1999 of $102 and $289, respectively,  remained consistent with the
comparable prior periods of $103 and $288, respectively.


Also included in other expense-net was other expense of $9 for the quarter ended
September 30, 1999, compared to $20 for the quarter ended September 30, 1998 and
other expense of $33 for the nine months ended  September 30, 1999,  compared to
$76 for the prior comparable  period. The decreases in other expense were due to
a reduction in  regulatory  interest  expense and gains on sales of real estate.
Additionally,  the  decrease  in other  expense-net  for the nine  months  ended
September  30,  1999  was  also  due  to  the  reduction  in  interest   expense
attributable to an anticipated  settlement of federal income tax liabilities for
tax years still under audit.

<TABLE>
<CAPTION>
                                      Three Months                                  Nine Months
                                   Ended September 30,                          Ended September 30,          Increase
                                    1999        1998          Increase           1999        1998           (Decrease)

Segment margin results:
<S>                                 <C>         <C>           <C>   <C>          <C>         <C>          <C>        <C>
Retail segment..................    $1,560      $1,554        $6    0.4%         $4,607      $4,662       ($55)      (1.2%)
Wholesale segment...............       549         464        85   18.3           1,604       1,423        181       12.7
Network segment.................      (699)       (726)       27    3.7          (2,083)     (2,031)       (52)      (2.6)

</TABLE>


Segment results. For segment reporting purposes, segment margins exclude certain
costs and expenses, including depreciation and amortization,  corporate expenses
and  taxes  other  than  income.  See  Note  2  to  the  consolidated  financial
statements.

     Margin from the retail services segment decreased for the nine months ended
September 30, 1999 from the  comparable  prior period due to operating  expenses
increasing  at a greater  rate than  revenue  growth.  Revenue  from the  retail
services  segment  increased  5.1% for the nine months ended  September 30, 1999
over the  comparable  1998  period,  primarily  due to growth in local  services
revenue.  The revenue increase was more than offset by higher operating expenses
driven by  growth  initiatives  and costs  associated  with  enhancing  customer
service.  For the  quarter  ended  September  30,  1999,  the retail  margin was
consistent  compared to the prior comparable period.  Margins from the wholesale
services segment increased as a result of greater demand for access services and
interconnect services,  partially offset by price reductions as mandated by both
federal and state  regulatory  authorities and higher operating costs associated
with access charge  expenses.  Margins from the network  services  increased for
three  months  ended  September  30,  1999,  due to higher  levels  of  software
capitalization. Margins from the network services segment decreased for the nine
months ended September 30, 1999 as a result of expenditures to support growth in
both the retail and wholesale services segments.




<TABLE>
<CAPTION>


                                      Three Months                                  Six Months
                                  Ended September 30,                           Ended September 30,
                                    1999       1998          Increase            1999        1998         Increase


<S>                                 <C>        <C>        <C>      <C>           <C>         <C>        <C>     <C>
Provision for income
taxes...........................    $251       $219       $32      14.6%         $713        $630       $83     13.2

</TABLE>


Provision for income  taxes.  The effective tax rate for the three months ended
September  30,  1999 of 37.9%  remained  consistent  with the rate for the three
months ended  September  30, 1998 of 37.8%.  The effective tax rate for the nine
months ended  September 30, 1999 of 37.9% remained  consistent with the rate for
the nine months ended September 30, 1998 of 38.4%.

Risk Management

     Over time,  we are exposed to market risks arising from changes in interest
rates.  The objective of our interest rate risk management  program is to manage
the level and  volatility  of our  interest  expense.  We may employ  derivative
financial  instruments to manage our interest rate risk  exposure.  We have also
employed  financial  derivatives  to hedge  interest  rate and foreign  currency
exposures  associated with particular debt issues to synthetically  obtain below
market  interest  rates.  We do not use  derivative  financial  instruments  for
trading purposes.

     As of September  30, 1999 and December  31,  1998,  approximately  $761 and
$123,  respectively,  of  floating-rate  debt was exposed to changes in interest
rates.  This exposure is primarily  linked to commercial paper rates and changes
in 3-month LIBOR. A  hypothetical  increase of 1% in commercial  paper rates and
3-month  LIBOR  would  not have had a  material  effect on our  earnings.  As of
September  30,  1999  and  December  31,  1998,  we  also  had  $222  and  $228,
respectively, of long-term fixed rate debt obligations maturing in the following
12 months.  Any new debt  obtained  to  refinance  this debt would be exposed to
changes in interest  rates. A  hypothetical  10% change in the interest rates on
this debt would not have had a material effect on our earnings.

     As of  September  30, 1999,  all  outstanding  interest  rate swaps and the
associated  debt  instrument  have  matured.  As of December  31,  1998,  we had
interest  rate swaps with  notional  amounts  of $155.  The swaps  synthetically
transformed  certain  of the  Company's  floating  rate  issues  into fixed rate
obligations.

     As of September  30, 1999 and  December 31, 1998,  we had also entered into
cross-currency swaps with notional amounts of $133 and $204,  respectively.  The
cross-currency  swaps  synthetically  transform  $100 and  $182 of  Swiss  Franc
borrowings at September 30, 1999 and December 31, 1998, respectively,  into U.S.
dollar  obligations.  Any gains  (losses) on the  cross-currency  swaps would be
offset by losses (gains) on the Swiss Franc debt obligations.



<PAGE>


Recent Regulatory Developments

Interconnection.  The FCC issued an order (the  "Order") in 1996 relating to the
Act that established  interconnection  costing and pricing rules which, from our
perspective,  significantly  impeded negotiations with new entrants to the local
exchange market,  state regulatory  commission  interconnection  rulemakings and
interconnection arbitration proceedings.

     On January 25, 1999,  the U.S.  Supreme Court  ("Supreme  Court")  issued a
ruling on our  appeal of the  Order.  The  Supreme  Court  affirmed  in part and
reversed in part the FCC Order.  Although the  decision  stated that the Act was
ambiguous and self-contradictory, the Supreme Court ruled that:

o    the FCC has authority to set pricing methodology;

o    unbundled  network  elements  ("UNEs")  must be  provided  in  cases  where
     necessary or the lack of availability would impair competition;

o    Incumbent local exchange  carriers  ("ILECs") must sell on a bundled basis,
     at the competitive  local exchange  carriers'  ("CLECs")  request,  network
     elements the ILEC uses itself on a bundled basis; and

o    CLECs  may pick and  choose  pricing  or other  terms and  conditions  from
     multiple contracts within certain bounds.


The  impact  of  the  Supreme  Court  ruling  is  unclear  since  state
regulatory  commissions  generally  follow  the  FCC's  pricing  and  unbundling
requirements in setting UNE prices.  Further review of the legality of the FCC's
pricing  rules has been  argued  at the  Eighth  Circuit  Court of  Appeals.  On
November 5, 1999,  the FCC  released  its order  addressing  the  Supreme  Court
directives  regarding  unbundling and  Interconnection.  The full impact of this
order is presently unclear. However, it largely reaffirms, and in some instances
expands, the FCC's earlier unbundling decisions and may create significant risks
of arbitrage  for private  line,  special  access and local  business  revenues.
Appeals of this order are likely.  See "Special Note Regarding  Forward  Looking
Statements" on page 11.

InterLATA  Long-Distance  Entry.  Several regional Bell operating companies have
filed for entry into the  interLATA  long-distance  business.  Although  many of
these applications have been approved by state regulatory  commissions,  the FCC
has rejected all applications to date.

     We view entry into this  business as important to our strategy of providing
an  integrated  bundle of services to our  customers.  In 1999,  we withdrew our
previously filed applications to enter the interLATA  long-distance  business in
Wyoming  and  Montana.   We  filed  an   application   to  enter  the  interLATA
long-distance  business in Arizona in 1999. In April 1999,  the Nebraska  Public
Service  Commission  indicated it needed additional  information before making a
recommendation  to the  FCC.  We  expect  to  file  our  first  interLATA  entry
application  with the FCC for its review in 2000.  See "Special  Note  Regarding
Forward-Looking Statements" on page 11.

Access  Reform.  In its access  reform  order,  the FCC  mandated a  substantial
restructuring  of  interstate  access  pricing.  A  significant  portion  of the
services  that were charged using  minutes-of-use  pricing are now being charged
using  a  combination   of   minutes-of-use   rates,   flat-rate   presubscribed
interexchange  carrier charges  ("PICCs") and subscriber line charges  ("SLCs").
Although an increase in the SLC to multi-line business users occurred on July 1,
1997,  the bulk of the  mandated  pricing  changes  occurred on January 1, 1998.
Additional mandated pricing changes occurred on January 1, 1999 and July 1, 1999
and further  changes will be  implemented  on January 1, 2000 and 2001.  The net
effect of these changes will be to decrease  minutes-of-use charges and increase
flat-rate charges (i.e., PICCs and SLCs).

     The access  reform order also  continued  in place the current  rules under
which ILECs may not assess  interstate  access  charges on  information  service
providers and purchasers of UNEs.

     In February 1999, the FCC issued an order  declaring that Internet  traffic
is interstate  and opened a proceeding to determine the  appropriate  regulatory
structure.  The FCC required no change in the current  agreements for reciprocal
compensation with CLECs until it rules on this matter.

     Pending  before the FCC are several  areas of access  reform  including the
reduction  of  interstate  rates to reflect  the  receipt of  universal  service
support,  changing  the rate  structure  for  switched  access  to a flat  rated
structure,  an industry  proposal  for  changing  the general  access  structure
including the removal of the productivity  factor and a court remanded review of
the productivity factor.  Action on these items is expected by mid-2000 but some
items may be decided in 1999.

Advanced Telecommunications Services. On March 31, 1999, the FCC issued an order
establishing  expanded collocation  requirements for both conventional voice and
advanced  services.  The FCC also issued a FNPRM on "line sharing." Line sharing
allows a CLEC to provide advanced services over the same loop that the ILEC uses
to provide  analog  voice  service.  We expect the FCC to issue an order on line
sharing in the fourth quarter of 1999.

Long-Term Number Portability  Tariffs.  In July 1999, the FCC issued an order on
our LNP tariff that was  originally  effective in February 1999. The FCC's order
reduced our tariff from $0.54 per access line to $0.43 per access line.  The FCC
also required that the difference between $0.54 and $0.43,  previously collected
by the  Company,  be refunded to  customers.  We expect to pay the refund in the
fourth quarter of 1999.

Court  Remand of 6.5%  Productivity  Factor.  On May 21,  1999,  the District of
Columbia U.S. Court of Appeals  issued a ruling  reversing and remanding back to
the FCC its order requiring  ILECs to  retroactively  increase the  productivity
offset to price caps to 6.5% in their annual price cap filings.  The Court found
that the FCC's  order did not  justify  the  increase.  The FCC must  revise and
reissue its order by April 2000.

Universal Service Fees. On October 8, 1999, the FCC issued orders in response to
the Fifth Circuit Court of Appeals  mandate on Universal  Service.  These orders
were effective on November 1, 1999. The FCC will allow the fees the ILECs pay to
support  Universal  Service to be recovered in access  indefinitely.  ILECs that
wish to do so may remove the fees from access and  establish a separate end user
charge.  The FCC also  changed  the  rules to  remove  the  intrastate  end user
revenues  from the base for  calculating  the fees. A tariff  filing,  effective
November 1, 1999, will reduce the access rates which recover these fees.

Access Pricing  Flexibility.  The FCC issued an order on pricing  flexibility on
August 27, 1999.  The FCC removes many  vestiges of regulation  including  price
caps for  intraLATA  interstate  toll  because  long  distance  parity  has been
achieved  for all 14 states.  Various  levels of pricing  flexibility  up to and
including  the removal of Price Cap  regulation  are possible  when  competitive
triggers are reached by geographic  areas for special access and switched access
transport.   Some  pricing  flexibility  is  granted  for  switched  access  and
subscriber line charges when certain levels of competition  are  demonstrated by
geographical area.

Contingencies

     We have pending regulatory actions in local regulatory  jurisdictions.  See
Note 3 to the consolidated financial statements.

Other Items

     From  time to time,  we  engage in  discussions  regarding  restructurings,
dispositions,  acquisitions and other similar transactions. Any such transaction
could  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
our financial  condition and results of  operations.  There is no assurance that
any such discussions will result in the consummation of any such transaction.

Year 2000 Costs

Background.  We have  conducted  a  comprehensive  review of our  computer-based
systems and related software and are taking measures to ensure that such systems
will properly  recognize the year 2000 and continue to process  beyond  December
31,  1999.  The  systems  we  evaluated  include  systems  within (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 our
core  communications  business,  relies  on  remote  switches,   central  office
equipment,   interoffice   equipment  and  loop  transport   equipment  that  is
predominantly  provided  to  us by  telecommunications  network  vendors.  IT is
comprised of our internal  business systems that employ hardware and software on
an enterprise-wide basis,  including  operational,  financial and administrative
functions.  The Business Units,  which include  internal  organizations  such as
finance,  procurement,  directory services,  operator services,  wireless,  data
networks,   real  estate,   etc.,   employ  systems  that  support  desktop  and
departmental applications, as well as embedded computer chip technologies, which
relate  specifically to each of our Business Unit's  functions and generally are
not part of the Network or IT.

     We have approached year 2000  remediation  activities  through five general
phases:  (i)  inventory/assessment,   (ii)  planning,  (iii)  conversion,   (iv)
testing/certification and (v) implementation.  Additionally, we are continuously
monitoring  and  improving  our  year  2000  related  activities  and  progress,
communicating  with our  customers  and vendors,  participating  in  cooperative
testing with others and taking steps to assure that we have contingency plans in
place  prior to the end of 1999.  These  activities  will  continue  through the
remainder of 1999.

Network  update.   With  regard  to  the  Network,   we  are  working  with  our
telecommunications  network vendors to obtain and convert to compliant  releases
of  hardware  and  software.  We also are  testing,  at our own  initiative,  in
cooperation  with  certain of our  customers,  vendors and other major  wireline
telecommunications  companies,  network  equipment over multiple  configurations
involving a broad  spectrum of services.  Toward this end, we participate in 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  Telcordia  (formerly  known as Bellcore),  a former  affiliate
engaged in  telecommunications  industry  research,  development and maintenance
activities,  to engage in inter-region  interoperability testing. No significant
issues have been found to date.  We also  participate  in (i) the FCC's  Network
Reliability and  Interoperability  Council IV working group,  which is tasked to
evaluate the year 2000 readiness of the public  telecommunications  network, and
(ii) the Alliance for Telecommunications  Industry Solutions ("ATIS"),  which is
testing  inter-network  interoperability,  and which,  in  conjunction  with the
Cellular  Telecommunications  Industry Association  ("CTIA"), is testing network
interoperability  with wireless networks.  Our  inventory/assessment,  planning,
conversion  and  network   testing/certification  phases  for  the  Network  are
complete.   Cooperative  testing  with  certain  customers,  vendors  and  other
telecommunications  companies  is expected to continue for the rest of the year.
As of September 30, 1999, our Network  remediation  implementation was complete.
Substantial progress has been made with Network contingency planning activities.
We anticipate that the remainder of the Network contingency  planning activities
will be complete by the fourth quarter, 1999.

IT update.  Within IT, we have identified  approximately  570 applications  that
support  our  critical  business  processes,  such as billing  and  collections,
network  monitoring,  repair and ordering.  The  inventory/assessment,  planning
phases and conversion for such IT applications are complete. As of September 30,
1999,  approximately  99% of IT testing  activities and 99% of IT implementation
had been  completed.  We  anticipate  that each of these  phases  for IT will be
complete  by  November  1999.   Substantial  progress  has  been  made  with  IT
contingency  planning  activities.  We  anticipate  that the remainder of the IT
contingency planning activities will be complete by the fourth quarter, 1999.

Business  Units update.  Within our Business  Units,  it is estimated that as of
September 30, 1999,  approximately  100% of the  inventory/assessment  activity,
100% of the planning activity,  99.8% of the conversion  activity and 99% of the
testing and remediation  implementation  activities were complete. We anticipate
that each of these  phases  will be  complete  in the  Business  Units for major
conversions  and  upgrades  by the  fourth  quarter  of 1999.  We have  recently
initiated Business Unit contingency  planning activities and we anticipate those
will be complete by the fourth quarter, 1999.

Costs relating to year 2000. We have spent approximately $232 from the beginning
of 1997 through the end of the third  quarter of 1999 on year 2000  projects and
activities.  Virtually  all year 2000  related  expenditures  are  being  funded
through operations.

Contingency  plan. We cannot provide assurance that the results of our year 2000
compliance  efforts or the costs of such efforts will not differ materially from
estimates or  expectations.  Accordingly,  we are developing  year 2000 specific
business continuity and contingency plans to address high risk areas as they are
identified.  Our year 2000 contingency planning activities will include training
of crisis managers on year 2000 issues and potential  business  impacts to their
particular process areas,  reviewing and modifying existing business  continuity
plans to address  year 2000 issues and  establishing  rapid  response  teams and
communications  procedures  for  each  of  the  major  critical  operations  and
facilities to handle  potential  post-implementation  year 2000 failures.  These
year 2000 specific  contingency  planning  activities  are to be in place by the
fourth  quarter of 1999.  In  addition,  we have in place our  standard  overall
business  continuity,  contingency  and disaster  recovery plans (such as diesel
generator  back-up  power  supply  sources for our  Network,  Network  rerouting
capabilities,  computer data and records  safe-keeping  and back-up and recovery
procedures) which will be verified,  and as appropriate,  augmented for specific
year 2000 contingencies.

Dependencies.    Within   Network,    we   are   highly   dependent   upon   our
telecommunications  network vendors to provide year 2000 compliant  hardware and
software in a timely  manner,  and on third parties that are assisting us in the
focused  testing and  implementation  phases  regarding the Network.  Because of
these  dependencies,  we have  developed  and  implemented  a vendor  compliance
process  whereby  we have  obtained  written  assurances  of  timely  year  2000
compliance from most of our critical vendors (not only for Network, but also for
IT and the Business Units). In addition,  we monitor and actively participate in
coordinated Network testing activities,  as discussed above, with respect to the
Forum,  ATIS and Telcordia.  Within IT, we depend 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,  we have
developed detailed timetables, resource plans and standardized year 2000 testing
requirements for identified critical applications (irrespective of whether these
applications  are used  primarily  by IT, the  Network or the  Business  Units).
Within  the  Business  Units,  we are  dependent  on vendor  supplied  goods and
services  and  operability  of the Network and  critical  IT and  Business  Unit
specific  applications.  Because of these dependencies,  we are implementing the
same type of vendor  compliance  processes and application  planning and testing
processes at the Business  Units, as discussed above with respect to the Network
and IT. Overall,  we have sought compliance  assurances from approximately 7,765
vendors concerning  approximately  25,769 products and have received  assurances
for 99.6% of those  products as of  September  30, 1999.  During  1999,  we will
continue to pursue  assurances of timely year 2000  compliance for the remaining
critical vendors.

     As  with  any  large-scale  computer-related  project  such  as  year  2000
remediation,  the testing phase may require resources in excess of other project
phases and the other project  phases may be affected by and  dependent  upon the
results of the testing phase.

Summary.  In management's  view, the most reasonably  likely worse case scenario
for year 2000 failure prospects we face is that a limited number of important IT
and/or Business Unit specific  applications may unexpectedly  fail. In addition,
there may be unexpected problems with the Network relating to the year 2000. Our
failure  or the  failure  by  certain  of our  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  significant  and  costly  disruption  of  our  operations,  possibly
impacting  the Network and  impairing  our ability to bill or collect  revenues.
However,  while no assurance can be given,  management believes that our efforts
at remediation and testing, year 2000 specific contingency planning, and overall
business  continuity,  contingency and disaster recovery planning will likely be
successful,  and that the  aforementioned  "worse case  scenario" is unlikely to
develop or significantly disrupt our financial operations.

     The above discussion  regarding year 2000 contains many statements that are
"forward-looking" within the meaning of the Reform Act. Although we believe that
our  estimates are based on  reasonable  assumptions,  we cannot assure you that
actual results will not differ  materially from these  expectations,  beliefs or
estimates. See "Special Note Regarding Forward-Looking Statements" on page 11.

New Accounting Standards

     On June 15, 1998, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards ("FAS") No. 133,  "Accounting for Derivative
Instruments and Hedging Activities." This statement  establishes  accounting and
reporting standards for derivative  instruments and for hedging activities.  FAS
No. 133  requires,  among  other  things,  that all  derivative  instruments  be
recognized at fair value as assets or  liabilities on the balance sheet and that
changes in fair value  generally  be  recognized  currently  in earnings  unless
specific  criteria are met. The standard is effective  for our 2001 fiscal year,
though earlier adoption is permitted.  Financial  statement  impacts of adopting
the new  standard  depend  upon the  amount  and  nature  of the  future  use of
derivative instruments and their relative changes in valuation over time. Had we
adopted FAS No. 133 in 1999, its impact on the consolidated financial statements
would not have been material.


<PAGE>


                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

     Our Company  and its  subsidiaries  are  subject to claims and  proceedings
arising in the ordinary  course of business.  For a discussion of these actions,
see "Note 3:  Commitments and  Contingencies"  - to the  Consolidated  Financial
Statements.


Item 2.  Changes in Securities and Use of Proceeds

     The  following  describes  securities  issued by us within the past  fiscal
quarter  and prior to the filing of this Form 10-Q which were  privately  placed
and not registered under the Securities Act of 1933, as amended (the "Securities
Act").  We believe that the following  issuances of securities  were exempt from
the registration  requirements of the Securities Act, pursuant to the exemptions
set forth in Section 4(2), Rule 144A, and Regulation S thereof.

     (a) On November 1, 1999,  and in reliance on Rule 144A and  Regulation S of
the  Securities  Act,  we issued  7.20%  Notes (the  "Notes")  in the  aggregate
principal  amount of  $750,000,000.  The Notes  will  mature  and the  principal
amount,  together with interest  accrued and unpaid thereon,  will be payable on
November  1, 2004.  The Notes will bear  interest  from  November  1, 1999 at an
interest  rate of 7.20% per annum.  Interest  will be computed on the basis of a
360-day year of twelve  30-day  months.  Salomon  Smith  Barney  Inc.,  ABN AMRO
Incorporated,  Banc  of  America  Securities  LLC,  and  Chase  Securities  Inc.
(collectively,  the  "Initial  Purchasers")  purchased  the Notes for  resale to
"qualified  institutional  buyers" as defined  under  Rule  144A,  and  non-U.S.
persons under  Regulation S, at 99.81% of their principal  amount  ($748,575,000
aggregate  proceeds to us before  deducting  commissions and expenses payable by
us). The Initial  Purchasers  received a commission in the amount of $4,500,000.
We plan to use the net proceeds from the sale of the Notes to repay a portion of
our commercial paper indebtedness and for general corporate purposes.  The Notes
are subject to registration  rights that require us to offer registered exchange
notes within 225 days of closing.


Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits filed for the Company through the filing of this Form 10-Q.

Exhibit No.

(2a)                Articles of Merger  including the Plan of Merger between The
                    Mountain States Telephone and Telegraph Company (renamed U S
                    WEST  Communications,  Inc.) and Northwestern Bell Telephone
                    Company.  (Incorporated  herein by this reference to Exhibit
                    2a to Form SE filed on January 8, 1991, File No. 1-3040).

(2b)                Articles of Merger  including the Plan of Merger between The
                    Mountain States Telephone and Telegraph Company (renamed U S
                    WEST  Communications,   Inc.)  and  Pacific  Northwest  Bell
                    Telephone Company. (Incorporated herein by this reference to
                    Exhibit 2b to Form SE filed on  January  8,  1991,  File No.
                    1-3040).

(3a)                Restated   Articles  of  Incorporation  of  the  Registrant.
                    (Incorporated herein by this reference to Exhibit 3a to Form
                    10-K/A filed on April 13, 1998, File No. 1-3040).

(3b)                Bylaws of the Registrant,  as amended.  (Incorporated herein
                    by this  reference  to  Exhibit 3b to Form  10-K/A  filed on
                    April 13, 1998, File No. 1-3040).

4                   No  instrument  which  defines the rights of holders of long
                    and  intermediate  term  debt  of the  Registrant  is  filed
                    herewith  pursuant to Regulation  S-K, Item 601(b) (4) (iii)
                    (A).  Pursuant to this  regulation,  the  Registrant  hereby
                    agrees to furnish a copy of any such  instrument  to the SEC
                    upon request.

(10a)               Reorganization   and  Divestiture   Agreement  dated  as  of
                    November 1, 1983,  between American  Telephone and Telegraph
                    Company,  U S WEST Inc.,  and  certain  of their  affiliated
                    companies,  including  The  Mountain  States  Telephone  and
                    Telegraph  Company,  Northwestern  Bell  Telephone  Company,
                    Pacific  Northwest  Bell  Telephone  Company  and  NewVector
                    Communications,  Inc.  (Exhibit  10a to  Form  10-K  for the
                    period ended December 31, 1983, File No. 1-3040).

(10b)               Shared Network  Facilities  Agreement dated as of January 1,
                    1984, between American Telephone and Telegraph Company, AT&T
                    Communications of the Midwest,  Inc. and The Mountain States
                    Telephone and Telegraph  Company.  (Exhibit 10b to Form 10-K
                    for the period ended December 31, 1983, File No. 1-3040).

(10c)               Agreement  Concerning  Termination  of the  Standard  Supply
                    Contract  effective  December  31,  1983,  between  American
                    Telephone and Telegraph  Company,  Western Electric Company,
                    Incorporated,  The Mountain  States  Telephone and Telegraph
                    Company and Central  Services  Organization  (Exhibit 10d to
                    Form 10-K for the period ended  December 31, 1983,  File No.
                    1-3040).

(10d)               Agreement  Concerning  Certain Centrally  Developed Computer
                    Systems  effective   December  31,  1983,  between  American
                    Telephone and Telegraph  Company,  Western Electric Company,
                    Incorporated,  The Mountain  States  Telephone and Telegraph
                    Company and Central  Services  Organization  (Exhibit 10e to
                    Form 10-K for the period ended  December 31, 1983,  File No.
                    1-3040).

(10e)               Agreement  Concerning  Patents,  Technical  Information  and
                    Copyrights  effective  December 31, 1983,  between  American
                    Telephone and Telegraph  Company and U S WEST, Inc. (Exhibit
                    10f to Form 10-K for the period  ended  December  31,  1983,
                    File No. 1-3040).

(10f)               Agreement   Concerning   Liabilities,    Tax   Matters   and
                    Termination  of Certain  Agreements  dated as of November 1,
                    1983,  between American Telephone and Telegraph Company, U S
                    WEST,  Inc.,  The Mountain  States  Telephone  and Telegraph
                    Company and certain of their affiliates (Exhibit 10g to Form
                    10-K  for the  period  ended  December  31,  1983,  File No.
                    1-3040).

(10g)               Agreement  Concerning  Trademarks,  Trade  Names and Service
                    Marks  effective   December  31,  1983,   between   American
                    Telephone  and  Telegraph  Company,   American   Information
                    Technologies   Corporation,   Bell   Atlantic   Corporation,
                    BellSouth   Corporation,   Cincinnati   Bell,   Inc.,  NYNEX
                    Corporation, Pacific Telesis Group, The Southern New England
                    Telephone  Company,  Southwestern  Bell  Corporation and U S
                    WEST,  Inc.  (Exhibit  10i to Form 10-K for the period ended
                    December 31, 1984, File No.
                    1-3040).

(10h)               Shareholders' Agreement dated as of January 1, 1988, between
                    Ameritech Services, Inc., Bell Atlantic Management Services,
                    Inc.,  BellSouth  Services,   Incorporated,   NYNEX  Service
                    Company,  Pacific Bell, Southwestern Bell Telephone Company,
                    The  Mountain  States   Telephone  and  Telegraph   Company,
                    Northwestern  Bell Telephone  Company and Pacific  Northwest
                    Bell Telephone  Company  (Exhibit 10h to Form SE dated March
                    5, 1992, File No. 1-3040).

(10i)               Form  of  Agreement  for  Purchase  and  Sale  of  Telephone
                    Exchanges,  dated  as of June  16,  1999,  between  Citizens
                    Utilities Company and U S WEST Communications, Inc. (Exhibit
                    99B to Form 8-K dated June 17, 1999, File No. 1-3040).

(10j)               364-Day $800 Million Credit  Agreement,  dated May 19, 1999,
                    with The Banks  Listed  Therein  and Morgan  Guaranty  Trust
                    Company of New York, as administrative agent.

(10k)               Amendment  No. 1 to  Credit  Agreement  dated as of June 11,
                    1999 to the 364-Day $800 Million Credit Agreement,  dated as
                    of May 19, 1998,  among U S WEST  Communications,  Inc., U S
                    WEST,  Inc., the Banks listed on the signature pages thereto
                    and  Morgan   Guaranty   Trust   Company  of  New  York,  as
                    administrative agent.

27                  Financial Data Schedule
-------------------
( )  Previously filed.



<PAGE>



(b) Reports on Form 8-K filed  during the Third  Quarter of 1999 and through the
filing of this form 10-Q:

(i)  Form 8-K dated October 22, 1999 providing unaudited third quarter financial
     statements for the Company




                                   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.



                        By: /S/ Allan R. Spies
                        ___________________________________
                        Allan R. Spies
                        Vice President and Chief Financial Officer

November 10, 1999