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 March 31, 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 0-27176


                               SAVILLE SYSTEMS PLC
             (Exact name of registrant as specified in its charter)


                               Republic of Ireland
         (State or other jurisdiction of incorporation or organization)

                                 Not Applicable
                      (I.R.S. Employer Identification No.)

                   IDA Business Park, Dangan, Galway, Ireland
          (Address of principal executive offices, including zip code)


                               011-353-9-152-6611
              (Registrant's telephone number, including area code)

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. |X| Yes  | |No

Number of shares  outstanding of the registrant's class of Ordinary Shares as of
April 30, 1998 was 38,503,394.


<PAGE>



                               SAVILLE SYSTEMS PLC

                                FORM 10-Q REPORT

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                TABLE OF CONTENTS

                                                                        

                         PART I - FINANCIAL INFORMATION                     PAGE

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets as at March 31, 1998 
         (unaudited)and December 31, 1997                                      3

         Consolidated Statements of Income for the three months ended          4
         March 31, 1998 and 1997 (unaudited)

         Consolidated Statements of Cash Flows for the three months            5
         ended March 31, 1998 and 1997 (unaudited)

         Notes to Consolidated Financial Statements (unaudited)              6-9

Item 2.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations                                         10-15


                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings                                                    16

Item 2.  Changes in Securities                                                16

Item 3.  Defaults Upon Senior Securities                                      16

Item 4.  Submission of Matters to a Vote of Security Holders                  16

Item 5.  Other Information                                                    16

Item 6.  Exhibits and Reports on Form 8-K                                     16


SIGNATURES                                                                    17




<PAGE>


Saville Systems PLC


CONSOLIDATED BALANCE SHEETS


(in thousands of U.S. dollars, except share data amounts)

<TABLE>

                                                                     March 31    December 31
                                                                       1998          1997
                                                                   (unaudited)
----------------------------------------------------------------------------- ---------------
<S>                                                                <C>           <C> 
ASSETS
Current
Cash and cash equivalents                                           $ 44,729       $  55,785
Short-term investments                                                30,867          13,015
Accounts receivable, less allowance for doubtful accounts
of  $1,845 and $1,687, respectively                                   30,845          22,373
Prepaid expenses and other assets                                      5,594           3,581
----------------------------------------------------------------------------- ---------------
Total current assets                                                 112,035          94,754
Property and equipment, net                                           12,331          10,621
Other assets                                                           4,425               -
----------------------------------------------------------------------------- ---------------
Total assets                                                        $128,791        $105,375
----------------------------------------------------------------------------- ---------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable                                                       5,722           5,336
Accrued compensation and related benefits                              5,759           5,248
Accrued expenses and other liabilities                                 4,167           3,084
Income taxes payable                                                   6,804           7,167
Deferred revenue                                                       5,913           3,402
Current portion of long-term liabilities                               1,140             134
----------------------------------------------------------------------------- ---------------
Total current liabilities                                             29,505          24,371
Long-term liabilities                                                  1,302             336
Minority interest                                                        250             366
----------------------------------------------------------------------------- ---------------
Total liabilities                                                     31,057          25,073
----------------------------------------------------------------------------- ---------------

Shareholders' equity
Ordinary Shares, nominal value $0.0025 per share
     Authorized:  75,000,000
     Issued and outstanding:  38,219,696 and 37,504,596                   96              94
Deferred Ordinary Shares, nominal value IR(pound)1.00 per share
     Authorized, issued and outstanding:  30,000                          48              48
Additional paid-in capital                                            45,937          37,734
Retained earnings                                                     51,946          42,750
Accumulated other comprehensive income                                 (293)           (324)
----------------------------------------------------------------------------- ---------------
Total shareholders' equity                                            97,734          80,302
----------------------------------------------------------------------------- ---------------
Total liabilities and shareholders' equity                          $128,791        $105,375
----------------------------------------------------------------------------- ---------------
</TABLE>

See accompanying notes



<PAGE>


Saville Systems PLC


CONSOLIDATED STATEMENTS OF INCOME

(unaudited)
(in thousands of U.S. dollars, except share and per share data)

<TABLE>

                                                                 Three months ended
                                                              March 31         March 31
                                                                1998             1997
---------------------------------------------------------------------- -----------------
<S>                                                           <C>              <C> 
REVENUE
Services                                                      $29,939           $16,515
License fees                                                    8,083             3,615
---------------------------------------------------------------------- -----------------
Total revenue                                                  38,022            20,130
---------------------------------------------------------------------- -----------------

EXPENSES
Cost of services                                               14,048             8,037
Cost of license fees                                              280                88
Sales and marketing                                             1,922             1,202
Research and development                                        3,931             1,481
General and administrative                                      6,543             3,909
---------------------------------------------------------------------- -----------------
Total expenses                                                 26,724            14,717
---------------------------------------------------------------------- -----------------

Income from operations                                         11,298             5,413
Other income, net                                                 723               354
---------------------------------------------------------------------- -----------------

Income before income taxes                                     12,021             5,767
Provision for income taxes                                      2,825             1,325
---------------------------------------------------------------------- -----------------

Income before minority interest                                 9,196             4,442
Minority interest share in subsidiaries' net income                 -                40
---------------------------------------------------------------------- -----------------
Net income                                                    $ 9,196           $ 4,402
---------------------------------------------------------------------- -----------------

Basic earnings per share                                     $   0.24          $   0.12
Diluted earnings per share                                   $   0.23          $   0.11
---------------------------------------------------------------------- -----------------

(in thousands)
Ordinary shares                                                37,822            36,209
Ordinary shares assuming dilution                              40,845            38,551
---------------------------------------------------------------------- -----------------
</TABLE>


See accompanying notes



<PAGE>


Saville Systems PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
(in thousands of U.S. dollars)

<TABLE>
                                                               Three months ended
                                                              March 31       March 31
                                                                1998          1997
-------------------------------------------------------- -------------- --------------
<S>                                                      <C>            <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                     $ 9,196        $ 4,402
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                                    477            278
  Allowance for doubtful accounts                                  355            370
  Minority interest in net income                                    -             40
  Gain on sale of property and equipment                          (97)           (19)
  Compensation related to stock transactions                        51             60
Changes in operating assets and liabilities:
  Accounts receivable                                          (8,824)        (7,662)
  Prepaid expenses and other assets                            (1,240)          (205)
  Accounts payable                                               (565)            263
  Accrued compensation and related benefits                        511          (512)
  Accrued expenses and other liabilities                         1,083             54
  Income taxes payable                                           (363)            373
  Deferred revenue                                               2,511          2,381
-------------------------------------------------------- -------------- --------------
Net cash provided by (used in) operating activities              3,095          (177)
-------------------------------------------------------- -------------- --------------

CASH FLOWS FROM INVESTING ACTIVITIES
Net purchase of property and equipment                         (1,866)          (391)
Purchase of other assets                                       (2,425)              -
Purchase of short-term investments                            (17,852)        (7,000)
-------------------------------------------------------- -------------- --------------
Net cash used in investing activities                         (22,143)        (7,391)
-------------------------------------------------------- -------------- --------------

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term liabilities                                (31)           (43)
Proceeds from share issuances                                    7,955            706
Share issue costs                                                (121)           (46)
Tax benefit on employee stock transactions                         204            488
-------------------------------------------------------- -------------- --------------
Net cash provided by financing activities                        8,007          1,105
-------------------------------------------------------- -------------- --------------
-------------------------------------------------------- -------------- --------------
Effect of exchange rate changes on cash                           (15)              3
-------------------------------------------------------- -------------- --------------

Net decrease in cash and cash equivalents                     (11,056)        (6,460)
Cash and cash equivalents, beginning of period                  55,785         34,395
-------------------------------------------------------- -------------- --------------
Cash and cash equivalents, end of period                       $44,729        $27,935
-------------------------------------------------------- -------------- --------------

Short-term investments                                          30,867          8,000
-------------------------------------------------------- -------------- --------------
Cash and short-term investments                                $75,596        $35,935
-------------------------------------------------------- -------------- --------------

Supplementary disclosure of cash flow information:
  Cash paid for interest                                            30              3
  Cash paid for income taxes                                     3,000            548
</TABLE>

See accompanying notes


<PAGE>


Saville Systems PLC

Notes to Consolidated Financial Statements at March 31, 1998  (unaudited)


1.       Basis of Presentation

The accompanying  unaudited consolidated financial statements have been prepared
by the Company in accordance with U.S. generally accepted accounting  principles
for  interim   financial   information  and  with  instructions  to  Form  10-Q.
Accordingly,  certain  information and footnote  disclosure normally included in
the  Company's  audited  annual  consolidated  financial  statements  have  been
condensed  or  omitted  in  accordance  with the  rules and  regulations  of the
Securities and Exchange Commission. The unaudited interim consolidated financial
statements,  in the opinion of management,  reflect all adjustments  (consisting
only of normal and recurring  adjustments)  necessary for a fair presentation of
the  results  of the  interim  periods  ended  March  31,  1998 and 1997 and the
financial position at March 31, 1998.

The results of operations for the interim periods are not necessarily indicative
of the results of operations  to be expected for the fiscal year.  These interim
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  of the Company  which are  contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.

Earnings per share amounts for comparative  periods have been restated to comply
with Statement of Financial Accounting Standards No. 128.

2.       Share Capital

During the quarter ended March 31, 1998,  the Company  issued  715,100  Ordinary
Shares to officers and employees pursuant to option exercises for aggregate cash
consideration of approximately $7,955,000. All of these shares were issued under
the 1995 Share Option Plan ("1995  Plan") with the  exception  of  approximately
62,000 issued under the 1996 Employee Share Purchase Plan ("1996 Plan").

The following table  summarizes the activity in Ordinary Share options under the
1995 and 1996 Plans from December 31, 1997 to March 31, 1998:

<TABLE>

                                      Number of Ordinary Share Options
----------------------------------------------- ---------------- --------------
                                Available for     Unexercised       Weighted
                                    grant                         average price
                                                                    per share
<S>                            <C>               <C>              <C>
Balance at December 31, 1997         5,449,408        4,279,435       $13.61

Options granted                     (2,028,473)       2,028,473        38.44
Options exercised                                      (715,100)       11.12
Options cancelled                       43,972          (43,972)       22.36

Balance at March 31, 1998            3,464,907        5,548,836       $22.94
----------------------------------------------- ---------------- --------------
</TABLE>


<PAGE>


Saville Systems PLC

Notes to Consolidated Financial Statements at March 31, 1998  (unaudited) 
(continued)


A summary of  Ordinary  Share  options  outstanding  as of March 31,  1998 is as
follows:

<TABLE>

------------------ ----------------- ----------------- ----------------- ----------------- -----------------
Total Outstanding      Range of          Weighted          Weighted       Exercisable at       Weighted
                   Exercise Prices       Average           Average        March 31, 1998       Average
                                      Exercise Price      Remaining                         Exercise Price
                                                         Contractual                        of Exercisable
                                                       Life (in years)                         Options
<S>               <C>                <C>               <C>                <C>               <C> 
------------------ ----------------- ----------------- ----------------- ----------------- -----------------
          280,528            $ 1.20        $  1.20           1.8               280,528          $ 1.20
        1,147,696      4.33 -  5.00           4.48           7.5               594,071            4.53
           40,590      7.50 - 13.32           8.79           7.8                25,256            8.19
        1,652,122     14.06 - 21.50          18.59           8.8               600,450           18.98
          209,000     21.75 - 32.56          29.44           9.5                  -                -
        2,218,900     33.50 - 51.38          38.12           9.5                  -                -
------------------ ----------------- ----------------- ----------------- ----------------- -----------------
        5,548,836    $1.20 - $51.38         $22.94           8.5             1,500,305          $ 9.76
------------------ ----------------- ----------------- ----------------- ----------------- -----------------
</TABLE>

In January 1998,  approximately  1,698,000 options were granted to employees and
directors  that may vest earlier than the original  three year vesting period if
the market price of the Company's American  Depositary Receipts (ADRs) increases
in specified time frames.  At March 31, 1998,  approximately  1,689,000 of these
options were outstanding.

3.        Comprehensive Income

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 130
(SFAS 130),  "Reporting  Comprehensive  Income"  which became  effective for the
Company's quarter ended March 31, 1998. The Company's  comprehensive  income was
as follows:

<TABLE>
                                                   Three months ended
                                                  March 31    March 31
                                                   1998         1997
-------------------------------------------- ------------ ------------------
                                             (in thousands of U.S. dollars)
<S>                                          <C>          <C>    

Net income                                        $9,196       $4,402
Foreign currency translation adjustment,              31         (33)
net of NIL tax                               ============ ============

Comprehensive income                              $9,227       $4,369
                                             ============ ============
</TABLE>

The earnings of the Company's non-Irish foreign subsidiaries, which give rise to
the foreign currency  translation  adjustments,  are reinvested with no plan for
repatriation.  Therefore,  there is no tax  effect  on this  component  of other
comprehensive income.



<PAGE>


Saville Systems PLC

Notes to Consolidated Financial Statements at March 31, 1998  (unaudited) 
(continued)


4.       Other Assets

In February 1998, the Company  purchased a  telecommunications  billing software
product for resale for an amount of $2.0 million in cash with a commitment of at
least $2.0 million in  royalties  to be paid over the next two years.  The total
cost of the software at March 31, 1998, including  acquisition costs and minimum
royalty payments, was approximately $4.1 million.  Long-term liabilities include
the $2.0  million  minimum  royalty  payments,  of which $1.0  million is due on
January  31,  1999  and  is  included  in  the  current   portion  of  long-term
liabilities.  The Company is  currently  undertaking  a review of the product to
confirm  that it is ready for sale.  Further  assessment  is  necessary to fully
evaluate the status of the product. Should the assessment determine that further
development  is required to  significantly  modify or integrate  the product for
future  sale  the  Company  would expense the relevant amounts.

Other  assets  at  March  31,  1998  also  includes  approximately  $370,000  of
acquisition costs as described in Note 6.

5.       Contingency

From time to time the  Company  may  receive  threats of or become  involved  in
litigation in the ordinary course of its business. During June 1997, the Company
received a letter from a customer  purporting to terminate its relationship with
the  Company  and  alleging  certain  failures  to perform by the  Company.  The
customer  alleges  damages of $12  million.  The Company has denied all of these
allegations and believes that they are without merit.  Management  believes that
this matter will have no material adverse effect on the Company's  operations or
financial position and accordingly, no provision for any liability has been made
in these financial statements.

6.       Subsequent Events

On April 3, 1998,  Saville Systems PLC and its wholly-owned  subsidiary  Saville
Systems Aust. Pty Ltd acquired  substantially all of the assets of BHA Pty Ltd.
("BHA")  and its  majority-owned  subsidiary  BHA  Computer  Pty Ltd.  ("BHAC"),
Australian   telecommunications  software  companies,  for  approximately  $15.8
million  in cash,  plus the  assumption  of  approximately  $3.3  million in net
liabilities.  The Company funded the  acquisition,  in part, by the borrowing of
approximately  $15.0 million from the Company's  working capital line of credit.
This entire amount  outstanding was repaid,  in part, by the Company through the
sale of 283,698 of its Ordinary  Shares to BHA for  aggregate  consideration  of
approximately $14.0 million.  The assets consist of those assets used by BHA and
BHAC in  developing  and marketing  customer  care and billing  software for the
telecommunications   industry,   including   property,   plant  and   equipment,
intellectual property and the benefit of current BHA and BHAC contracts.


7.        Recently Issued Accounting Standards

The Accounting  Standards  Executive  Committee has issued statement of position
97-2  "Software  Revenue  Recognition"  ("SOP 97-2") which is effective  for the
Company's  quarter  ended March 31,  1998.  The  Company's  revenue  recognition
policies  were largely  unaffected  by SOP 97-2 and are in  accordance  with its
requirements.


<PAGE>


Saville Systems PLC

Notes to Consolidated Financial Statements at March 31, 1998  (unaudited) 
(continued)


7.       Recently Issued Accounting Standards (continued)

Statement of position 98-1 "Accounting for Costs of Computer Software  Developed
or  Obtained  for  Internal  Use" ("SOP  98-1") has also been issued and will be
effective  for the  Company's  December  31, 1999 year end.  The Company has not
determined  the  impact,  if any,  of  this  pronouncement  on its  consolidated
financial statements.

The  Financial  Accounting  Standards  Board  (FASB)  has  issued  Statement  of
Financial  Accounting  Standards  No.  131  "Disclosures  about  Segments  of an
Enterprise  and  Related  Information"  which  is  effective  for the  Company's
December  31, 1998 year end. No  additional  disclosure  is required for interim
financial statements until the Company's quarter ending March 31, 1999.



<PAGE>


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


General

The  following  information  should be read in  conjunction  with the  Unaudited
Consolidated  Financial  Statements and Notes thereto included in Item 1 of this
Quarterly  Report and the Audited  Consolidated  Financial  Statements and Notes
thereto and  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations  contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997.

Results of Operations

Revenue

Total revenue increased 88.9% from $20.1 million in the three months ended March
31,  1997 to $38.0  million  in the three  months  ended  March 31,  1998 due to
overall increases in services and license fees as described below.

Services  revenue  increased  81.3% from $16.5 million in the three months ended
March 31, 1997 to $29.9  million in the three months  ended March 31, 1998.  The
increase  was   attributable   primarily  to  an  increase  in  consulting   and
implementation  services  provided to new  customers  and,  to a lesser  extent,
increases in projects for existing customers.

License  fees  revenue  increased  123.6% from $3.6  million in the three months
ended March 31, 1997 to $8.1  million in the three  months  ended March 31, 1998
due primarily to additional  recognition  of license fees  arrangements  for the
Company's  convergent  billing  product  called  Saville  CBPTM  (CBP) that were
negotiated  in 1997 and on new deals  negotiated  in 1998 located  mostly in the
United States.

Cost of Services

Cost of services  increased  74.8% from $8.0  million in the three  months ended
March 31,  1997 to $14.0  million in the three  months  ended March 31, 1998 but
decreased  as a  percentage  of services  revenue from 48.7% in the period ended
March 31,  1997 to 46.9% in the same  period in 1998.  The  overall  increase in
expenses was primarily due to additional  personnel  hired to support the growth
of the  Company,  as well as  additional  costs  incurred  to attract and retain
qualified  personnel.   As  the  market  demands  for  those  skilled  employees
increases,  the Company  expects that the costs to attract and retain  personnel
will continue to increase.  Also, as the Company continues to expand, it expects
the costs of services to increase accordingly.

Cost of License Fees

Cost of license  fees  increased  218.2% from  $88,000 in the three months ended
March 31, 1997 to  $280,000  in the three  months  ended  March 31,  1998.  This
increase  was due to an  increase  in  commission  expense  resulting  from  the
increase in the license fees earned by the Company.


<PAGE>


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


Sales and Marketing

Sales and  marketing  expenses  increased  59.9% from $1.2  million in the three
months  ended March 31, 1997 to $1.9 million in the three months ended March 31,
1998.  This increase was primarily due to the Company's  continued  expansion of
its sales force  globally,  including North America,  Europe,  Latin America and
Asia Pacific,  and the associated  expansion of its infrastructure.  The Company
anticipates that the  establishment of new sales offices and the continued focus
of the North  American  marketing  efforts will increase its sales and marketing
expenses in absolute  dollars through the remainder of 1998, but are expected to
remain at similar levels to 1997 as a percentage of total revenue.

Research and Development

Research  and  development  expenses  increased  165.4% from $1.5 million in the
three  months  ended March 31, 1997 to $3.9  million in the three  months  ended
March 31, 1998 and  increased as a percentage  of total revenue from 7.4% in the
three  months  ended March 31,  1997 to 10.3% in the same  period in 1998.  This
increase  was due to  increased  development  efforts by the  Company on its CBP
products  for both  the  DB2/400  platform  and UNIX  platform  and on  creating
innovative  billing and customer care products.  The Company intends to continue
to invest resources to expand its product  offerings in the future and therefore
expects that research and development  expenses will continue to increase during
1998 in absolute dollars but remain at similar levels to 1997 as a percentage of
total revenues.

General and Administrative

General and  administrative  expenses  increased  67.4% from $3.9 million in the
three  months  ended March 31, 1997 to $6.5  million in the three  months  ended
March 31, 1998 and  decreased as a percentage of total revenue from 19.4% in the
three  months  ended  March 31,  1997 to 17.2% in the same  period in 1998.  The
additional costs were  attributable to additional  senior and middle  management
and  recruiting  and  infrastructure  costs  associated  with the  growth in the
Company's employee base and the expansion of the Company's business.

Other Income and Expenses

Other income and other  expenses,  increased  104.2% from  $354,000 in the three
months  ended March 31, 1997 to  $723,000  in the three  months  ended March 31,
1998.  Increased  interest  income  on  larger  cash and  short-term  investment
balances accounted for the majority of the increase in other income.

Provision for Income Taxes

The Company  recorded a tax  provision of $1.3 million in the three months ended
March 31, 1997 representing an effective tax rate of 23.0%. Comparatively, a tax
provision  of $2.8 million was recorded in the three months ended March 31, 1998
representing an effective tax rate of 23.5%. The Company's effective tax rate is
largely  dependent on the proportion of the Company's income earned in different
tax  jurisdictions.  The  Company is  currently  eligible  for a 10% tax rate on
"manufacturing"  income earned in the Republic of Ireland.  The standard rate of
income tax that applies to  non-manufacturing  income,  such as income earned on
the Company's Irish cash  investments,  was 32% (36% during 1997). The Company's
effective tax rate reflects the tax relief on  manufacturing  income  subject to
this reduced rate of tax which is below the statutory  rates of Ireland,  Canada
and the United States. There can be no assurances that the Company will continue
to be  eligible  for the  reduced  tax rate for  manufacturing  income in future
periods.


<PAGE>


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


Liquidity and Capital Resources

Cash and cash equivalents decreased $11.1 million from $55.8 million at December
31, 1997 to $44.7 million at March 31, 1998. This decrease was attributable to a
$17.9 million  increase in  short-term  investments  over the same period.  On a
combined basis,  therefore,  there was a total $6.8 million increase in cash and
short-term  investments  due primarily to cash  provided by  operations  and net
proceeds received from the issuance of Ordinary Shares offset by the purchase of
property and equipment and a software product.

Operating Activities

During the three months ended March 31, 1998,  $3.1 million of cash was provided
by  operating  activities  representing  an  increase of $3.3  million  over the
$177,000  of  cash  used  in  the  corresponding   period  in  1997.  The  major
contributors to this change were the cash provided by a $4.8 million increase in
net  income  and  a  $1.0  million   increase  in  accrued  expenses  and  other
liabilities, partially offset by a $1.0 million increase in prepaid expenses and
other assets.

Investing Activities

The net cash used in  investing  activities  during the three months ended March
31, 1998 was comprised of $1.9 million to purchase property and equipment,  $2.4
million to  purchase  other  assets and $17.9  million  invested  in  short-term
investments.  The Company continues to make property and equipment  expenditures
to support the growth of the Company as locations  are expanded  worldwide.  The
Company  expects to continue  to make  property  and  equipment  investments  to
support its business growth.

In February 1998, the Company  purchased a  telecommunications  billing software
product for resale for an amount of $2.0 million in cash with a commitment of at
least $2.0 million in royalties to be paid over the next two years. In addition,
the Company  incurred  acquisition  costs of $370,000 as part of the purchase of
the  assets  of BHA Pty  Ltd.  ("BHA")  and its  majority-owned  subsidiary  BHA
Computer  Pty Ltd.  ("BHA  Computer"),  Australian  telecommunications  software
companies,  which  occurred  in  April  1998.  The  assets  were  purchased  for
approximately  $15.8 million in cash, plus the assumption of approximately  $3.3
million in net liabilities.  The Company funded the acquisition, in part, by the
borrowing of approximately $15.0 million from the Company's working capital line
of credit.  The entire  outstanding  amount was repaid,  in part, by the Company
through  the  sale of  283,698  of its  Ordinary  Shares  to BHA  for  aggregate
consideration of approximately $14.0 million.

Financing Activities

During the three months ended March 31, 1998 net cash  provided  from  financing
activities  was $8.0  million.  This was primarily due to the issue of Ordinary
Shares pursuant to exercises of options under the employee stock option plan.

The Company and its subsidiaries  have available a $15.0 million  multi-currency
operating line of credit from a financial institution that expires on August 31,
1999 and bears  interest at rates  varying from 0.25% to 1% above the base rate.
This base rate  depends on the  currency of the funds drawn of the  facility and
includes the Canadian  U.S.  Dollar Base rate,  the Canadian Bank Prime rate and
LIBOR and DIBOR  rates.  No  advances  were  drawn on this  facility  during the
quarter ended March 31, 1998.


<PAGE>


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


The Company had capital lease obligations in principal amounts of $442,000 as of
March 31, 1998  ($470,000 at December 31, 1997) and  subsequent to such date has
incurred no additional capital lease obligations.  Long-term liabilities include
$2.0 million of minimum royalty  payments due over the next two years as part of
the purchase of a telecommunications billing software product.

As of March 31, 1998 the Company had $30.8  million in net accounts  receivable.
The average days sales  outstanding  ("DSO") at March 31, 1998 was approximately
74 days as compared to  approximately  102 at March 31, 1997.  DSO is calculated
based on the average daily sales of the immediately preceding three month period
divided by the net trade accounts receivable balance at the end of the period.

The Company believes that existing cash balances,  funds generated by operations
and the  availability of the Company's line of credit will be sufficient to meet
its anticipated  liquidity and working capital  requirements for the next twelve
months.

Foreign Currency Exposure

The Company's  international  sales are predominately  invoiced and paid in U.S.
currency  with the  exception of certain  clients who are invoiced  primarily in
Canadian  dollars,  Pounds  Sterling  and Swiss  Francs.  The  impact of foreign
currency translation has not been material to the Company's operations.

Certain Factors That May Affect Future Results

This Quarterly Report contains forward-looking statements that involve risks and
uncertainties.  The Company's actual results may differ  significantly  from the
results  discussed  in  the  forward-looking  statements,  including  statements
regarding the Company's  plans to expand its  international  and North  American
sales  presence,  the Company's  plans to continue its research and  development
efforts,  the Company's  expectation  that it will continue to make property and
equipment  investments in 1998, the Company's plans for strategic  acquisitions,
the  Company's  belief that its  existing  cash  balance and funds  generated by
operations  will be  sufficient  to meet its  anticipated  liquidity and working
capital  requirements  for the next twelve months,  the possible adverse foreign
currency  exposure  involved  with  international  expansion,  and the Company's
general  expectations  of  growth.  A number of  uncertainties  exist that could
affect the Company's future operating results,  including,  without  limitation,
the Company's  ability to retain  existing  customers and attract new customers,
the  Company's  ability to attract  and retain  qualified  employees,  the costs
associated  with  significant  increases in number of  employees,  the Company's
continuing ability to develop products that are responsive to the evolving needs
of its customers, increased competition,  changes in operating expenses, foreign
currency  exchange rates, the Company's  continued  ability to take advantage of
favorable tax treatment currently available to the Company, and general economic
factors.

To date, a substantial  portion of the Company's total revenues has been derived
from a relatively small number of customers. This concentration of customers can
cause the Company's  revenues and earnings to fluctuate from quarter to quarter,
based on these  customers'  requirements  and the  timing  of  their  orders.  A
significant  decrease in business from any of its major  customers  would have a
material  adverse effect on the Company's  business,  financial  condition,  and
results of operations.

The Company  competes  with both  independent  providers of systems and services
like  the   Company  and  with   internal   billing   departments   of  existing
telecommunications  service providers,  many of which have substantially greater
financial,  technical,  sales, marketing and other resources, as well as greater
name recognition,  than the Company.  There can be no assurance that the Company
will be able to compete  successfully with its existing  competitors or with new
competitors.


<PAGE>


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


The Company's future success depends in large part on its ability to develop new
customer  relationships  with successful  telecommunications  service providers.
There  can be no  assurance  that  the  Company  will be able  to  develop  such
relationships or that the service providers that become customers of the Company
will be  successful.  Historically,  the Company has been dependent on long-term
customer relationships and therefore,  the failure of the Company's customers to
compete  effectively  in the  telecommunications  market  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

Although  the Company has  introduced  its  UNIX-based  CBP for Oracle  product,
almost  all of the  Company's  billing  and  customer  care  customers  run  the
Company's software on the DB2/400 platform,  which represents a leading platform
for existing and new billing systems. If there should be a rapid shift away from
the current use of the DB2/400 platform by the  telecommunications  industry for
billing,  the Company would be required to expend substantial  capital resources
to develop new software  and enhance  existing  software  and likely  experience
delays or losses in customer orders.

The  Company's  success  will depend  upon its  ability to enhance its  existing
products  and to introduce  new  products  and  features  that meet the changing
requirements of new and existing  customers.  The Company is currently  devoting
significant  resources to develop,  refine and enhance its base software modules
for both its UNIX-based and DB2/400-based  products. If the Company were unable,
due to resource, technological or other constraints, to adequately anticipate or
respond to such changes,  or if the Company's  new  products,  developments  and
enhancements do not gain market acceptance,  the Company's  business,  financial
condition and results of operations would be materially adversely affected.

The Company's international business is subject to risks such as fluctuations in
exchange rates,  difficulties or delays in developing and supporting non-English
language versions of the Company's  products,  political and economic conditions
in various jurisdictions, unexpected changes in regulatory requirements, tariffs
and  other  trade  barriers,  difficulties  in  staffing  and  managing  foreign
operations and longer accounts receivable payment cycles. Specifically, the Asia
Pacific region has  experienced a recent  downturn in economic  conditions,  the
continuation  of which could  adversely  affect the Company's  ability to expand
into this region.

Recently,  the Company has expanded  its  operations  rapidly,  which has placed
significant demands on the Company's  administrative,  operational and financial
personnel and systems.  Additional  expansion by the Company may further  strain
the  Company's  management,  financial  and  other  resources.  There  can be no
assurance that the Company's  systems,  procedures,  controls and existing space
will be adequate to support expansion of the Company's operations. The Company's
future  operating  results  will  substantially  depend  on the  ability  of its
officers  and key  employees  to  manage  changing  business  conditions  and to
implement and improve its operational,  financial control and reporting systems.
If the Company is unable to respond to and manage changing business  conditions,
the quality of the Company's  services,  its ability to retain key personnel and
its results of operations could be materially adversely affected.


<PAGE>


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


The Company's  strategy  includes the acquisition of businesses and technologies
that  complement or augment the  Company's  existing  business and products.  On
April 3, 1998, the Company completed its acquisition of substantially all of the
assets  of  BHA  and  BHA  Computer.  In  addition,  the  Company  purchased  an
interconnect   telecommunications  software  product  from  a  Swedish  company.
Promising  acquisitions  are  difficult to identify and complete for a number of
reasons,  including  competition among prospective buyers and the need to obtain
regulatory approvals,  including antitrust approvals.  There can be no assurance
that  the  Company  will be able to  complete  future  acquisitions  or that the
Company will be able to successfully integrate any acquired businesses. In order
to finance  such  acquisitions,  it may be  necessary  for the  Company to raise
additional  funds  through  public  or  private  financing.  Any  equity or debt
financing,  if available  at all, may be on terms that are not  favorable to the
Company,  and in the case of equity  offerings,  may result in  dilution  to the
Company's shareholders.

Fluctuations  in  exchange  rates  may have a  material  adverse  effect  on the
Company's results of operations,  particularly its operating margins,  and could
also result in exchange losses.  The impact of future exchange rate fluctuations
on the Company's results of operations cannot be accurately predicted.  To date,
the Company has not sought to hedge the risks  associated  with  fluctuations in
exchange rates, but may undertake such transactions in the future.  There can be
no  assurance  that any hedging  techniques  implemented  by the Company will be
successful  or that the Company's  results of operations  will not be materially
adversely affected by exchange rate fluctuations.

From time to time,  the  Company may  receive  threats of or become  involved in
litigation  in the ordinary  course of its business.  In June 1997,  the Company
received a letter from a customer  purporting to terminate its relationship with
the  Company  and  alleging  certain  failures  to perform by the  Company.  The
customer  alleges  damages of $12  million.  The Company has denied all of these
allegations and believes that they are without merit. There can be no assurance,
however, as to the outcome of this or any other dispute that may arise.

The Company has  significant  operations and generates a substantial  portion of
its taxable  income in the  Republic of Ireland,  and,  under an  incentive  tax
program due to terminate in 2010,  is taxed on its  "manufacturing  income" at a
rate that is  substantially  lower than U.S. tax rates.  If the Company could no
longer  qualify  for this  lower tax rate or if the tax laws were  rescinded  or
changed,  the Company's net income could be materially  adversely  affected.  In
addition,  if U.S.,  Canadian or other foreign tax authorities were to challenge
successfully  the manner in which profits are  recognized  among the Company and
its subsidiaries,  the Company's effective tax rate could increase, and its cash
flow and results of operations could be materially adversely affected.

The Company is reviewing  its products and  operations  to ensure that they will
not be adversely  affected by year 2000  software  failures,  which can arise in
time-sensitive  software  applications  that  utilize  a field of two  digits to
define the applicable year. In such applications,  a date using "00" as the year
may be  recognized  as the year 1900  rather than the year 2000.  The  Company's
released  software  products are  currently  year 2000 ready,  and therefore the
Company does not believe that it will need to  undertake  material  research and
development  efforts in this  regard.  The  Company's  review,  correction,  and
upgrade of its internal  systems to ensure year 2000  readiness is ongoing.  The
Company believes that any correction or upgrade  necessary to make the Company's
major internal  systems year 2000 ready will be completed by early 1999 and that
the  cost of such  actions  will  not  have a  material  adverse  effect  on the
Company's  results  of  operations  or  financial  condition.  There  can  be no
assurances,  however,  that  there  will not be a delay in, or  increased  costs
associated with, the  implementation of such corrections or upgrades or that the
Company  will suffer no material  adverse  effects  from the year 2000  problem,
including  due to the lack of readiness on the part of third party  suppliers of
goods and services to the Company's operations.


<PAGE>


                               SAVILLE SYSTEMS PLC

                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

         None

Item 5.  Other Information

         None


Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits

               27.0   Financial Data Schedule

         (b)   Reports on form 8-K

               The  Company  filed a current  Report on Form 8-K dated  
               April 3,1998.


<PAGE>


                                   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.

                                     SAVILLE SYSTEMS PLC
                                     (Registrant)


Date:     May 5, 1998                By:      /s/ John J. Boyle, III
                                              John J. Boyle, III
                                              Chairman and CEO




Date:     May 5, 1998                By:      /s/ Christopher A. Hanson
                                              Christopher A. Hanson
                                              Chief Financial Officer
                                              (Principal Financial and 
                                               Accounting Officer)