UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                         Amendment No. 1 on Form 10-Q/A
                                  to Form 10-Q

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                For the quarterly period ended September 30, 1998

                                       OR

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

             FOR THE TRANSITION PERIOD FROM __________ TO __________

                         Commission File Number 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. Yes |x| No | |

Number of shares  outstanding of the registrant's class of Ordinary Shares as of
October 26, 1998 was 38,731,973.


<PAGE>


                                EXPLANATORY NOTE


This Amendment No. 1 on Form 10-Q/A amends the Registrant's  Quarterly Report on
Form 10-Q, as filed by the  Registrant on November 2, 1998 and is being filed to
reflect the restatement of the Registrant's  Consolidated  Financial Statements.
See  "Restatement of Quarterly  Financial  Statements" in Note 1 of the Notes to
the  Consolidated  Financial  Statements  for a discussion of the basis for such
restatement.


<PAGE>



                               SAVILLE SYSTEMS PLC

                         AMENDMENT NO. 1 ON FORM 10-Q/A
                                  TO FORM 10-Q

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                TABLE OF CONTENTS

                                                                            PAGE

Part I - Financial Information

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets as of September 30, 1998 
         (unaudited) and December 31, 1997                                     4

         Consolidated Statements of Income for the three months 
         and for the nine months ended September 30, 1998 
         and 1997 (unaudited)                                                  5

         Consolidated Statements of Cash Flows for the nine months ended       6
         September 30, 1998 and 1997 (unaudited)

         Notes to Consolidated Financial Statements (unaudited)             7-11

Item 2.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations                                         12-20


                           Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K                                     21


Signatures                                                                    22




<PAGE>


Saville Systems PLC

CONSOLIDATED BALANCE SHEETS

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

<TABLE>
                                                            Sept. 30    Dec. 31
                                                              1998        1997
                                                           (unaudited)
                                                           (restated)
--------------------------------------------------------- ----------- ----------
<S>                                                       <C>         <C> 
ASSETS
Current
Cash and cash equivalents                                   $ 37,240    $ 55,785
Short-term investments                                        44,604      13,015
Accounts receivable, less allowance for 
  doubtful accounts of  $1,740 and $1,687, respectively       37,827      22,373
Prepaid expenses and other assets                              5,120       3,581
--------------------------------------------------------- ----------- ----------
Total current assets                                         124,791      94,754
Property and equipment, net                                   12,390      10,621
Other assets, net                                             14,048         -
--------------------------------------------------------- ----------- ----------
Total assets                                               $ 151,229   $ 105,375
--------------------------------------------------------- ----------- ----------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable                                               3,256       5,336
Accrued compensation and related benefits                      6,263       5,248
Accrued expenses and other liabilities                         6,555       3,084
Income taxes payable                                           7,106       7,167
Deferred revenue                                               4,358       3,402
Current portion of long-term liabilities                       1,114         134
--------------------------------------------------------- ----------- ----------
Total current liabilities                                     28,652      24,371
Long-term liabilities                                          1,213         336
Minority interest                                                244         366
--------------------------------------------------------- ----------- ----------
Total liabilities                                             30,109      25,073
--------------------------------------------------------- ----------- ----------

Shareholders' equity
Ordinary Shares, nominal value $0.0025 per share
     Authorized:  75,000,000
     Issued and outstanding:  38,731,115 and 37,504,596           97          94
Deferred Ordinary Shares, nominal value 
     IR(pound)1.00 per share
     Authorized, issued and outstanding:  30,000                  48          48
Additional paid-in capital                                    62,680      37,734
Retained earnings                                             60,150      42,750
Accumulated other comprehensive income                       (1,855)       (324)
--------------------------------------------------------- ----------- ----------
Total shareholders' equity                                   121,120      80,302
--------------------------------------------------------- ----------- ----------
Total liabilities and shareholders' equity                 $ 151,229   $ 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     Nine months ended
                                     Sept. 30   Sept. 30    Sept. 30  Sept. 30
                                       1998       1997        1998      1997
                                    (restated)             (restated)
----------------------------------- ---------- ----------- --------- ----------
<S>                                <C>         <C>         <C>        <C>  
REVENUE
Services                             $ 31,332    $ 22,575   $92,385   $ 59,178
License fees                           11,245       6,006    31,125     15,026
----------------------------------- ---------- ----------- --------- ----------
Total revenue                          42,577      28,581   123,510     74,204
----------------------------------- ---------- ----------- --------- ----------

EXPENSES
Cost of services                       15,505      10,852    45,616     28,337
Cost of license fees                      372         165       922        381
Sales and marketing                     2,194       1,600     6,302      4,324
Research and development                5,362       2,805    15,261      6,816
General and administrative              9,373       5,325    24,024     14,147
Charge for purchased in-process 
  research and development                -            -      9,168         -
----------------------------------- ---------- ----------- --------- ----------
Total expenses                         32,806      20,747   101,293     54,005
----------------------------------- ---------- ----------- --------- ----------
Income from operations                  9,771       7,834    22,217     20,199
Other income, net                         837         596     2,191      1,509
----------------------------------- ---------- ----------- --------- ----------
Income before income taxes             10,608       8,430    24,408     21,708
Provision for income taxes              2,440       2,096     7,008      5,416
----------------------------------- ---------- ----------- --------- ----------
Income before minority interest         8,168       6,334    17,400     16,292
Minority interest share in 
    subsidiaries' net income               -           50        -         165
----------------------------------- ---------- ----------- --------- ----------
Net income                            $ 8,168      $6,284   $17,400   $ 16,127
----------------------------------- ---------- ----------- --------- ----------
Basic earnings per share               $ 0.21      $ 0.17    $ 0.45     $ 0.44
Diluted earnings per share             $ 0.20      $ 0.16    $ 0.43     $ 0.41
----------------------------------- ---------- ----------- --------- ----------
(in thousands)
Ordinary shares                        38,679      36,965    38,352     36,541
Ordinary shares assuming dilution      40,271      39,597    40,795     39,093
----------------------------------- ---------- ----------- --------- ----------
</TABLE>

See accompanying notes

<PAGE>

Saville Systems PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
(in thousands of U.S. dollars)
  
<TABLE>
                                                          Nine months ended
                                                         Sept. 30     Sept. 30
                                                           1998         1997
                                                        (restated)
------------------------------------------------------- --------- -------------
<S>                                                    <C>       <C> 
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                               $17,400       $16,127
Adjustments to reconcile net income to net cash
provided by operating activities:
  Depreciation of property and equipment                   2,058           975
  Amortization of other assets                             1,395            -
  Allowance for doubtful accounts                          2,762         1,010
  Minority interest in net income                              -           165
  (Gain) loss on sale of property and equipment            (122)            54
  Compensation related to stock transactions                 155            60
  Deferred taxes                                         (1,088)            -
  Charge for purchased in-process research                 
   and development                                        9,168             -
Changes in operating assets and liabilities:
  Accounts receivable                                   (18,218)      (13,777)
  Prepaid expenses and other assets                      (1,350)       (1,592)
  Accounts payable                                       (2,374)         2,372
  Accrued compensation and related benefits                1,015         2,422
  Accrued expenses and other liabilities                   2,828         1,939
  Income taxes payable                                      (61)         2,248
  Deferred revenue                                           956         4,022
------------------------------------------------------- --------- -------------
Net cash provided by operating activities                 14,524        16,025
------------------------------------------------------- --------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Net purchase of property and equipment                   (3,725)       (3,450)
Purchase of other assets                                 (2,089)            -
Net purchase of short-term investments                  (31,589)      (21,004)
Purchase of business assets                             (20,436)            -
------------------------------------------------------- --------- -------------
Net cash used in investing activities                   (57,839)      (24,454)
------------------------------------------------------- --------- -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term liabilities                          (97)            -
Advances on operating line of credit                      15,100            -
Repayments on operating line of credit                  (15,100)            -
Proceeds from share issuances                             24,505         8,059
Share issue costs                                          (418)         (140)
Tax benefit on employee stock transactions                   653           645
------------------------------------------------------- --------- -------------
Net cash provided by financing activities                 24,643         8,564
------------------------------------------------------- --------- -------------
Effect of exchange rate changes on cash                      127           (6)
------------------------------------------------------- --------- -------------
Net increase (decrease) in cash and cash equivalents    (18,545)           129
Cash and cash equivalents, beginning of period            55,785        34,395
------------------------------------------------------- --------- -------------
Cash and cash equivalents, end of period                 $37,240       $34,524
------------------------------------------------------- --------- -------------
Short-term investments                                    44,604        22,004
------------------------------------------------------- --------- -------------
Cash and short-term investments                          $81,844       $56,528
------------------------------------------------------- --------- -------------
  Supplementary disclosure of cash flow information:
  Cash paid for income taxes                               7,155         2,600

</TABLE>

See accompanying notes

<PAGE>

Saville Systems PLC

Notes to Consolidated  Financial Statements as of September 30, 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  September  30, 1998 and 1997 and the
financial position as of September 30, 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.

Restatement of Quarterly Financial Statements

The Company  recorded a one-time  charge for purchased  in-process  research and
development  ("IPRD") in its operating  results for the second  quarter of 1998.
This one-time  charge was recorded in accordance  with U.S.  generally  accepted
accounting  principles and established  industry  practice at that time, and was
supported by an independent third party valuation. Since that time, however, the
U.S. Securities and Exchange Commission ("SEC") has expressed views on valuation
methods for purchased  IPRD,  which differ from prior  industry  practice.  As a
result,  the Company evaluated the applicability of the SEC's views with respect
to the charge taken in the second quarter of 1998 and  voluntarily  adjusted its
IPRD charge. The Company  originally  recorded a one-time charge for IPRD in its
operating results for the second quarter of 1998 in the amount of $18.8 million.
After  revaluing the IPRD charge,  the Company  adjusted the one-time  charge to
$9.2  million  ($8.4  million  net of  related  tax  benefits),  representing  a
reduction  of $9.6 million to be  amortized  in  subsequent  periods as goodwill
($6.0 million) and completed technology ($3.6 million).  Additional amortization
due to this  adjustment  was $523,000 for the quarter  ended  September 30, 1998
($851,000 for the nine months ended  September 30, 1998).  The following  tables
outline the revisions to previously  reported unaudited  Consolidated  Financial
Statements (in thousands of U.S.
Dollars, except per share data).

Consolidated Balance Sheet:

<TABLE>

                                                   September 30, 1998
------------------------------------------- ----------------------------------
                                                   Previously
                                                    reported         Restated
------------------------------------------- ----------------- ----------------
<S>                                          <C>              <C> 
Other assets, net                                     $6,266         $ 14,048

Income taxes payable                                   7,302            7,106

Retained earnings                                     51,554           60,150
Accumulated other comprehensive income               (1,237)          (1,855)
------------------------------------------- ----------------- ----------------
</TABLE>

<PAGE>


Consolidated Statements of Income:

<TABLE>

                                    Three months ended      Nine months ended
                                    September 30, 1998      September 30, 1998
----------------------------------------------------------  ------------------
                                     Previously            Previously
                                      reported   Restated   reported  Restated
----------------------------------------------- ---------- --------- ---------
<S>                                <C>          <C>        <C>        <C> 
Expenses:
   General and administrative          $ 8,851     $9,373   $23,174   $24,024
   Charge for purchased in-process
       research and development             -         -      18,808     9,168

Income from operations                  10,293      9,771    13,427    22,217

Income before income taxes              11,130     10,608    15,618    24,408

Provision for income taxes               2,560      2,440     6,814     7,008

Net income                               8,570      8,168     8,804    17,400

Basic earnings per share                $ 0.22     $ 0.21    $ 0.23    $ 0.45
Diluted earnings per share              $ 0.21     $ 0.20    $ 0.22    $ 0.43
----------------------------------------------- ---------- --------- ---------
</TABLE>


2.   Share Capital

During the three and nine month  periods  ended  September  30, 1998 the Company
issued  78,956  Ordinary  Shares for  approximately  $1.1  million  and  942,821
Ordinary Shares for approximately $10.5 million,  respectively,  to officers and
employees  pursuant to option exercises and stock issuances under the 1995 Share
Option Plan  ("1995  Plan") and the 1996  Employee  Share  Purchase  Plan ("1996
Plan").

During the three  months  ended June 30,  1998 the Company  also issued  283,698
Ordinary  Shares to BHA Pty Ltd. for aggregate  consideration  of  approximately
$14.0  million  in order to fund,  in  part,  an asset  acquisition.  See Note 4
"Acquisition and Other Assets".

The following table  summarizes the activity in Ordinary Share options under the
1995 and 1996 Plans from December 31, 1997 to September 30, 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                   (2,657,201)     2,657,201      36.05
Options exercised                       -         (942,821)      11.09
Options cancelled                     179,290     (179,290)      34.20
-------------------------------- ------------- ------------- --------------
Balance at September 30, 1998       2,971,497     5,814,525    $23.64
-------------------------------- ------------- ------------- --------------
</TABLE>

<PAGE>

A summary of Ordinary  Share options  outstanding as of September 30, 1998 is as
follows:
<TABLE>

------------------- ----------------- ----------------- ----------------- ----------------- -----------------
Total Outstanding       Range of          Weighted          Weighted       Exercisable at       Weighted
                    Exercise Prices       Average           Average        Sept. 30, 1998       Average
                                       Exercise Price      Remaining                         Exercise Price
                                                          Contractual                        of Exercisable
                                                        Life (in years)                         Options
------------------- ----------------- ----------------- ----------------- ----------------- -----------------
<S>                 <C>               <C>               <C>               <C>               <C> 
           235,528          $1.20          $1.20              1.3               235,528          $ 1.20
         1,094,784      4.33-5.00           4.49              6.9            1 ,021,449            4.45
            48,590     7.50-13.69           9.54              7.8                29,256            8.62
         1,859,381    14.06-21.50          18.08              8.5               650,634           18.75
           296,500    21.75-32.56          30.28              9.2                17,332           28.71
         2,143,442    33.50-50.25          38.24              9.3                18,666           33.75
           136,300    50.75-55.00          53.05              9.5                  -               -
------------------- ----------------- ----------------- ----------------- ----------------- -----------------
         5,814,525    $1.20-55.00         $23.64              8.2             1,972,865          $ 9.33
------------------- ----------------- ----------------- ----------------- ----------------- -----------------

</TABLE>

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:

(in thousands of U.S. dollars)

<TABLE>
                                  Three months ended     Nine months ended
                                 Sept. 30  Sept. 30    Sept. 30     Sept. 30
                                   1998      1997       1998         1997
                                (restated)            (restated)
------------------------------- ---------- ---------- ----------- -------------
<S>                             <C>        <C>        <C>        <C> 
Net income                        $8,168     $6,284     $17,400     $16,127
Foreign currency translation
    adjustment, net of NIL tax      (555)        (4)    (1,531)         (30)
                                ---------- ---------- ----------- -------------

Comprehensive income              $7,613     $6,280     $15,869     $16,097
                                ========== ========== =========== =============

</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.

4.    Acquisition

On  April  3,  1998,   the  Company   acquired  the  net  assets  of  Australian
telecommunications  software company BHA Pty Ltd. ("BHA") and its majority-owned
subsidiary  BHA Computer Pty Ltd.  ("BHAC") for  approximately  $15.8 million in
cash and the settlement of  approximately  $3.3 million in related bank debt, as
well as $906,000 in acquisition related costs and expenses including  applicable
duties and taxes. The Company funded the acquisition,  in part, by the borrowing
of  approximately  $15.1  million  from the  Company's  working  capital line of
credit.  The entire amount borrowed was repaid during the quarter ended June 30,
1998, in part,  from the proceeds  resulting from the issuance of 283,698 of the
Company's  Ordinary Shares to BHA for aggregate  consideration  of approximately
$14.0 million.

This asset acquisition was accounted for using the purchase method of accounting
and results have been included since the date of acquisition.  Pro forma results
have  not  been  provided  as the  impact  on  revenue  and net  income  are not
considered  material to the current and preceding periods.  The assets purchased
consist  of  those  assets  used by BHA and  BHAC in  developing  and  marketing
customer  care  and  billing  software  for  the  telecommunications   industry,
including property and equipment and completed technology and other intangibles.
The purchase price was allocated  among tangible and intangible  assets based on
estimated  fair values at the date of  acquisition.  The  aggregate  cost of the
acquisition  on the  acquisition  date exceeded the estimated  fair value of the
acquired net assets by $8.9 million,  which is being  amortized as goodwill on a
straight-line  basis  over the  estimated  useful  life of such  assets of seven
years. The balance remaining in goodwill as of September 30, 1998 is included in
Other Assets.  This balance is subject to translation to the reporting  currency
of the  Company as  required  by SFAS 52  "Foreign  Currency  Translation".  Any
changes in the balance due to foreign exchange fluctuations are recorded as part
of accumulated other comprehensive income.

Also during 1998, the Company purchased telecommunications  interconnect billing
software  technology  from a  Swedish  company  for a  total  of  $4.1  million,
including  acquisition costs. This was paid for by a cash outlay of $2.0 million
with a  commitment  of at least $2.0 million in minimum  royalty  payments to be
paid in 1999 and 2000. Minimum royalty payments  outstanding as of September 30,
1998 are included in Long-Term Liabilities.

The  value  assigned  to the  intangible  assets  purchased  as  part of the BHA
acquisition and to the interconnect  billing software  technology  purchased was
determined with the assistance of an independent  appraiser based on fair market
value using a risk  adjusted  discounted  cash flow  approach.  The  significant
assumptions that affected the valuations included potential revenues and cost of
completion,  as well as the timing of the product  releases.  In  addition,  the
selection of an  appropriate  discount  rate was a major factor in the valuation
analysis.  The valuation utilized a discount rate of 30% for the BHA acquisition
and  31%  for the  acquisition  of the  interconnect  billing  technology,  each
reflecting the  difficulties  and  uncertainties  in completing the  development
effort,  risks related to the viability and potential  changes to target markets
and the inherent uncertainty of predicting cash flows in the  telecommunications
billing industry.

Acquired incomplete  technology from the BHA acquisition,  specifically  billing
technology  (SavilleExpress)  and customer care  technology  (SavilleCare)  were
evaluated using a stage of completion approach.  The Company,  through extensive
interviews  and  analysis of data  concerning  the state of the  technology  and
required  development  work,  estimated the  stage-of-completion  at the date of
acquiring the products to be approximately  53% for  SavilleExpress  and 55% for
SavilleCare.   Each  of  the   purchased   technologies   required   significant
modifications  in  order  to  reach  technological  feasibility.  At the time of
acquisition,  additional development of SavilleExpress  included,  among others,
additional core functionality including tariffing, language support, data fields
to support different currencies, credit limit notification and automatic service
shut-off,  as well as revision of all existing  software  code to be  compatible
with different hardware platforms.  SavilleCare  required  substantial effort to
complete   the   technology   and  ensure  that  it  was  more  focused  on  the
telecommunications  industry than the original  product  design.  This included,
among others,  ensuring scalability existed as well as full functionality in the
areas  of  provisioning,   call  reporting  and  billing.   SavilleExpress   and
SavilleCare were completed in August 1998 and January 1999, respectively. Actual
revenue received and costs incurred to complete  SavilleCare were not materially
different than estimates made. Also, for SavilleExpress, costs of completion did
not differ  significantly from estimates.  However,  actual revenue received was
less than expected due to a change in market conditions.

Saville  IBP  had  significant   functionality   deficiencies  at  the  date  of
acquisition that had to be corrected as part of further  development so that the
product could be commercialized.  Specifically,  these  modifications  included,
among others, the addition of a critical application program interface, improved
detailed reporting capability,  datawarehousing  capability without slowing down
overall   information    technology   systems   and   scalability   for   larger
telecommunications operations. Saville IBP was completed in October 1998. Actual
costs to complete and revenue  received were not  significantly  different  from
estimates.

Based on this evaluation,  the Company assigned fair values to SavilleExpress of
$2.1 million, to SavilleCare of $3.0 million and to Saville IBP of $4.1 million.
These in-process  technologies had not reached technological  feasibility at the
time of  acquisition  and had no  alternative  future use in other  research and
development  projects or otherwise.  Accordingly,  the acquired  technology  was
expensed as  in-process  research  and  development  for a total  charge of $9.2
million to the Company's consolidated results in the second quarter of 1998.


5.   Recently Issued Accounting Standards

The  American  Institute  of  Certified  Public  Accountants  (AICPA) has issued
Statements of Position 97-2 "Software  Revenue  Recognition"  ("SOP 97-2") which
was effective  for the  Company's  quarter ended March 31, 1998 and Statement of
Position 98-4  "Deferral of the Effective Date of a Provision of SOP 97-2" ("SOP
98-4")  which  was  effective  as of  March  31,  1998.  The  Company's  revenue
recognition policies were largely unaffected by SOP 97-2 and SOP 98-4 and are in
accordance with their requirements.

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 provides
guidance on capitalization of the costs incurred for computer software developed
or obtained for internal  use. The Company has adopted SOP 98-1 as of January 1,
1998.

Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" ("SOP
98-5") has also been issued and will be effective for the Company's December 31,
1999 year end.  The  Company  does not  expect  any  significant  impact 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.

Statement of Financial  Accounting  Standards No. 133 "Accounting for Derivative
Instruments  and Hedging  Activities" has also been issued and will be effective
for the Company's fiscal quarter ending September 30, 1999. The Company does not
expect  any  significant  impact  of  this  pronouncement  on  its  consolidated
financial statements.


<PAGE>


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

Overview

Saville Systems PLC (the  "Company") is a leading  provider of customer care and
billing solutions for service providers in the  telecommunications  market.  The
Company offers an innovative  convergent billing platform product called Saville
CBP(R)  ("CBP")  that  operates on DB2/400  and  Oracle/UNIX  platforms  for the
telecommunications  and energy markets. The  Oracle/UNIX-based  platform of this
software was introduced to the market in December 1997,  with the second version
of this software product released in September 1998. In addition, Saville offers
its  customers a full range of  professional  services.  The  Company  assists a
customer in analyzing the customer's requirements and then designs, develops and
implements a customer care and billing solution. The customer can either license
CBP from Saville or a customer care and billing solution,  including CBP, can be
provided by a Company  operated  service  bureau.  Saville  has also  introduced
facilities management services,  which allows customers to contract with Saville
to manage the operation of the  customized  billing  software on customer  owned
hardware.  Additionally,  Saville is developing  relationships  with  authorized
integrators  to  provide  implementation  services  to  purchasers  of  the  CBP
products.  Saville also assists its  customers on an ongoing basis by addressing
their changing  business needs through future  enhancements  and developments to
their customer care and billing solutions.

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  49.0% from $28.6  million in the three  months  ended
September  30, 1997 to $42.6  million in the three  months ended  September  30,
1998, and increased  66.4% from $74.2 million in the nine months ended September
30, 1997 to $123.5  million in the nine months ended  September  30, 1998 due to
overall  increases in services and license  fees as described  below.  While the
Company   expects  the  current   growth  rate  to  be  tempered  by   continued
consolidation  in the  U.S.  telecommunications  marketplace,  weakening  credit
markets  and a slowdown in global  growth,  the Company  believes  that  revenue
growth will be strong in 1999.

Services  revenue  increased  38.8% from $22.6 million in the three months ended
September 30, 1997 to $31.3 million in the three months ended September 30, 1998
and increased  56.1% from $59.2  million in the nine months ended  September 30,
1997 to $92.4 million in the nine months ended  September 30, 1998. The increase
in both  periods was  attributable  primarily to an increase in  consulting  and
implementation  services  provided to new customers as well as continued service
to existing customers. To a lesser extent,  increased service bureau revenue due
to new  initiatives,  as well as the inclusion of revenue from the operations of
the Company's  Australian  subsidiary since the acquisition of the assets of BHA
and BHAC in April 1998, contributed to the increase.

License fees revenue increased 87.2% from $6.0 million in the three months ended
September  30, 1997 to $11.2  million in the three  months ended  September  30,
1998, and increased 107.1% from $15.0 million in the nine months ended September
30, 1997 to $31.1  million in the nine months  ended  September  30,  1998.  The
increase in both the  quarterly  and nine month results was due primarily to the
recognition of license fee revenue on customization  projects commencing in late
1997 and in 1998.

Cost of Services

Cost of services  increased  42.9% from $10.9  million in the three months ended
September  30, 1997 to $15.5  million in the three  months ended  September  30,
1998, and increased  61.0% from $28.3 million in the nine months ended September
30, 1997 to $45.6  million in the nine months ended  September  30,  1998.  As a
percentage of services revenue,  cost of services increased from 48.1% and 47.9%
in the three months and nine months ended September 30, 1997 to 49.5% and 49.4%,
respectively,  in the same  periods in 1998.  The  overall  increase  in cost of
services 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.  The  increase  in cost of  services  as a  percentage  of
services  revenue is due  primarily to the training of current  personnel on the
UNIX platform,  the hiring of additional  UNIX-skilled personnel in anticipation
of additional services related to the Company's UNIX-based CBP product, and to a
lesser extent, higher cost of services as a percentage of service revenue at the
Company's Australian  subsidiary as a result of the acquisition of BHA and BHAC.
Additionally,  computer  system costs incurred to support the Company's  growing
development and service bureau base  contributed to the overall  increase in the
cost of services.  As the market demands for skilled  employees and  contractors
increase,  the  Company  expects  that the costs to  attract,  retain  and train
personnel will continue to increase.  Also, as the Company  continues to expand,
it expects the overall costs of services to increase accordingly.

Cost of License Fees

Cost of license fees  increased  125.5% from  $165,000 in the three months ended
September 30, 1997 to $372,000 in the three months ended September 30, 1998, and
increased  142.0% from  $381,000 in the nine months ended  September 30, 1997 to
$922,000 in the nine months ended  September 30, 1998.  This increase was due to
an increase in commission  expense resulting  primarily from the increase in the
license fees earned by the Company,  and to a lesser extent, from an increase in
license fees eligible for commissions in 1998 compared to 1997.

Sales and Marketing

Sales and  marketing  expenses  increased  37.1% from $1.6  million in the three
months  ended  September  30,  1997 to $2.2  million in the three  months  ended
September  30, 1998,  and  increased  45.7% from $4.3 million in the nine months
ended  September 30, 1997 to $6.3 million in the nine months ended September 30,
1998. As a percentage of total revenue,  sales and marketing  expenses decreased
from 5.6% and 5.8% in the three months and nine months ended  September 30, 1997
to 5.2% and 5.1%, respectively,  in the same periods in 1998. The overall dollar
increase was  primarily due to the  Company's  continued  expansion of its sales
force  globally,  including in North  America,  Europe,  Latin  America and Asia
Pacific, the associated expansion of its infrastructure, and to a lesser extent,
the inclusion of the sales and  marketing  costs in Australia as a result of the
acquisition  of the assets of BHA and BHAC.  The  Company  anticipates  that the
continued  emphasis on its North  American and European  marketing  efforts will
increase  its sales and  marketing  expenses  in  absolute  dollars  through the
remainder of 1998 but expects any such expenses to remain at similar levels as a
percentage of total revenue.


Research and Development

Research and development expenses increased 91.2% from $2.8 million in the three
months  ended  September  30,  1997 to $5.4  million in the three  months  ended
September 30, 1998,  and  increased  123.9% from $6.8 million in the nine months
ended September 30, 1997 to $15.3 million in the nine months ended September 30,
1998.  As a  percentage  of total  revenue,  research and  development  expenses
increased from 9.8% and 9.2% in the three months and nine months ended September
30, 1997, respectively, to 12.6% and 12.4%, respectively, in the same periods in
1998.  Both the  overall  increase  and the  increase as a  percentage  of total
revenue was due to  development  efforts by the Company on its CBP  products for
both the DB2/400 platform and UNIX platform, including the release of the second
version of its UNIX-based  product and a scheduled  release of its DB2/400 based
product  later this year.  To a lesser  extent,  the  development  of technology
acquired in 1998 contributed to the overall increase in research and development
expenses.  The Company  intends to continue  to invest  resources  to expand and
enhance its product  offerings in the future and therefore expects that research
and development  expenses will remain at similar levels throughout the remainder
of 1998.

General and Administrative

General and  administrative  expenses  increased  76.0% from $5.3 million in the
three months ended  September 30, 1997 to $9.4 million in the three months ended
September 30, 1998,  and  increased  69.8% from $14.1 million in the nine months
ended September 30, 1997 to $24.0 million in the nine months ended September 30,
1998.  As a percentage of total  revenue,  general and  administrative  expenses
increased  from 18.6% in the three months ended  September  30, 1997 to 22.0% in
the same  period  in 1998 and  increased  from  19.1% in the nine  months  ended
September 30, 1997 to 19.5% in the same period in 1998. The overall  increase in
costs was attributable,  in part, 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,  including  the
acquisition  of the assets of BHA and BHAC in April 1998 which  included,  among
other  costs,  amortization  of goodwill  and  complete  technology.  Additional
general and  administrative  expenses  in 1998 were  attributable  to  increased
provisions to maintain the Company's  allowance for doubtful  accounts  based on
current and future market  conditions and recent  write-offs of certain customer
balances.

Charge for Purchased In-Process Research and Development

The charge for purchased  in-process  research and  development  is based on the
fair  value  of  acquired  technology  that  had not yet  reached  technological
feasibility  and has no  future  alternative  use.  The  value  assigned  to the
intangible  assets  purchased  as  part  of  the  BHA  acquisition  and  to  the
interconnect  billing  software  technology  purchased was  determined  with the
assistance of an independent  appraiser  based on fair market value using a risk
adjusted  discounted  cash  flow  approach.  The  significant  assumptions  that
affected the valuations  included potential revenues and cost of completion,  as
well as the timing of the product  releases.  In addition,  the  selection of an
appropriate  discount  rate was a major factor in the  valuation  analysis.  The
valuation  utilized a discount rate of 30% for the BHA  acquisition  and 31% for
the  acquisition of the  interconnect  billing  technology,  each reflecting the
difficulties  and  uncertainties  in completing the  development  effort,  risks
related  to the  viability  and  potential  changes  to target  markets  and the
inherent uncertainty of predicting cash flows in the telecommunications  billing
industry.

Acquired incomplete  technology from the BHA acquisition,  specifically  billing
technology  (SavilleExpress)  and customer care  technology  (SavilleCare)  were
evaluated using a stage of completion approach.  The Company,  through extensive
interviews  and  analysis of data  concerning  the state of the  technology  and
required  development  work,  estimated the  stage-of-completion  at the date of
acquiring the products to be approximately  53% for  SavilleExpress  and 55% for
SavilleCare.   Each  of  the   purchased   technologies   required   significant
modifications  in  order  to  reach  technological  feasibility.  At the time of
acquisition,  additional development of SavilleExpress  included,  among others,
additional core functionality including tariffing, language support, data fields
to support different currencies, credit limit notification and automatic service
shut-off,  as well as revision of all existing  software  code to be  compatible
with different hardware platforms.  SavilleCare  required  substantial effort to
complete   the   technology   and  ensure  that  it  was  more  focused  on  the
telecommunications  industry than the original  product  design.  This included,
among others,  ensuring scalability existed as well as full functionality in the
areas  of  provisioning,   call  reporting  and  billing.   SavilleExpress   and
SavilleCare were completed in August 1998 and January 1999, respectively. Actual
revenue received and costs incurred to complete  SavilleCare were not materially
different than estimates made. Also, for SavilleExpress, costs of completion did
not differ  significantly from estimates.  However,  actual revenue received was
less than expected due to a change in market conditions.

Saville  IBP  had  significant   functionality   deficiencies  at  the  date  of
acquisition that had to be corrected as part of further  development so that the
product could be commercialized.  Specifically,  these  modifications  included,
among others, the addition of a critical application program interface, improved
detailed reporting capability,  datawarehousing  capability without slowing down
overall   information    technology   systems   and   scalability   for   larger
telecommunications operations. Saville IBP was completed in October 1998. Actual
costs to complete and revenue  received were not  significantly  different  from
estimates.

Based on this evaluation,  the Company assigned fair values to SavilleExpress of
$2.1 million, to SavilleCare of $3.0 million and to Saville IBP of $4.1 million.
These in-process  technologies had not reached technological  feasibility at the
time of  acquisition  and had no  alternative  future use in other  research and
development  projects or otherwise.  Accordingly,  the acquired  technology  was
expensed as  in-process  research  and  development  for a total  charge of $9.2
million to the Company's consolidated results in the second quarter of 1998.

Other Income, Net

Other  income,  net  increased  40.4% from  $596,000 in the three  months  ended
September 30, 1997 to $837,000 in the three months ended September 30, 1998, and
increased 45.2% from $1.5 million in the nine months ended September 30, 1997 to
$2.2 million in the nine months ended  September  30, 1998.  Increased  interest
income on larger  cash and  short-term  investment  balances  accounted  for the
majority of the increase in other income, net.

Provision for Income Taxes

The Company  recorded a tax  provision  of $2.1  million and $5.4 million in the
three and nine months ended September 30, 1997 representing  effective tax rates
of 24.9% for both  periods.  Comparatively,  tax  provisions of $2.4 million and
$7.8 million were recorded in the three and nine months ended September 30, 1998
(before the deferred tax benefit of $773,000  recognized on the one-time  charge
for  purchased  in-process  research and  development  of $9.2  million.)  These
provisions  for the 1998  periods  represent  effective  tax  rates of 23.0% and
23.2%,  respectively.  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  and a 32% tax rate on  "non-manufacturing"
income,  such as income  earned on the  Company's  Irish cash  investments.  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, the United States, the United Kingdom and Australia.  There can
be no  assurances  that the Company will continue to be eligible for the reduced
tax rate for manufacturing income in future periods.

Liquidity and Capital Resources

On a  combined  basis,  cash and cash  equivalents  and  short-term  investments
increased $13.0 million from $68.8 million at December 31, 1997 to $81.8 million
at  September  30,  1998.  During the first nine  months of 1998,  cash and cash
equivalents  decreased  $18.5  million to $37.2  million at September  30, 1998,
while  short-term  investments  increased  $31.6  million  to $44.6  million  at
September 30, 1998.

During the nine months ended  September 30, 1998, net cash provided by operating
activities  was $14.5 million.  Net income for the nine month period,  excluding
the non-cash effect of the one-time charge for purchased in-process research and
development,  offset primarily by an increase in accounts receivable,  comprised
the majority of cash provided by operations.

The cash used in investing activities during the nine months ended September 30,
1998 was  comprised of $3.7 million to purchase  property  and  equipment,  $2.1
million  to  purchase  other  assets,   $31.6  million  invested  in  short-term
investments and $20.4 million to purchase the assets of BHA and BHAC,  including
the  repayment of $3.3 million in related  bank debt,  as well as  approximately
$0.9 million in acquisition related costs and expenses.

During the nine months ended September 30, 1998 net cash provided from financing
activities  was $24.6  million.  This was primarily due to the issue of Ordinary
Shares  relating  to the  asset  acquisition  of BHA and BHAC  and to  employees
pursuant  to  exercises  of options  under the 1995 Share  Option Plan and, to a
lesser extent, to shares issued under the 1996 Employee Share Purchase Plan. The
Company  and its  subsidiaries  have  available a $15.0  million  multi-currency
operating  line of credit  (the "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.  Total advances drawn on the
Line  of  Credit   during  the  nine  months  ended   September  30,  1998  were
approximately  $15.1 million and were used to fund, in part, the  acquisition of
the assets of BHA and BHAC (see Note 4). The entire  amount  borrowed was repaid
during the quarter  ended June 30,  1998 by the  Company,  in part,  through the
issuance  of 283,698  of its  Ordinary  to BHA for  aggregate  consideration  of
approximately $14.0 million.

The Company had capital lease  obligations in principal  amounts of $0.3 million
as of September 30, 1998 and  subsequent to such date has incurred no additional
capital lease  obligations.  Long-term  liabilities  include  approximately $2.0
million of minimum  royalty  payments due over the next two years as part of the
purchase  of  a   telecommunications   billing   software   product,   of  which
approximately  $1.0  million is due on January  31,  1999 and is included in the
current portion of long-term  liabilities.  In addition,  the Company expects to
continue to make property and equipment  expenditures  to support the growth and
worldwide expansion of the Company's business.

The Company believes that existing cash balances,  funds generated by operations
and the  availability  of the  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,  Australian dollars, New Zealand dollars and
Swiss Francs.  The impact of foreign currency  translation has not been material
to the Company's overall operations.

Year 2000 Readiness Disclosure

The Company is currently  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
considers "Year 2000 Ready" to mean that a product, when used in accordance with
its  associated  documentation,  is capable of correctly  processing,  providing
and/or  receiving  date data within and between the twentieth  and  twenty-first
centuries,  provided that all non-Saville products (i.e., hardware, software and
firmware) used with such product properly exchange accurate date data with it.

The Company's  internal systems include both its information  technology  ("IT")
and non-IT  systems.  The Company has  initiated an  assessment  of its material
internal IT systems  including its accounting and software  development  systems
and its non-IT systems  including its security  systems and building  equipment.
The Company  expects to complete  this  assessment  in early 1999. To the extent
that the  Company is not able to test the  technology  provided  by  third-party
vendors,  the Company is seeking assurances from such vendors that their systems
are Year 2000 Ready.  Although  the  assessment  is still  underway,  management
currently  believes  that all  material  systems  will be Year 2000  Ready  when
necessary and that the cost to address the issues is not  material.  The Company
currently does not have a contingency  plan in the event of a particular  system
not being Year 2000 Ready.  Such a plan will be  developed  if it becomes  clear
that the Company is not going to achieve its scheduled objectives.

The Company has designed, tested and continues to test the most current versions
of its  products  to be Year 2000  Ready.  However,  a portion of the  Company's
currently  installed  customer base may require upgrade or other  remediation to
become  Year 2000  Ready.  The  Company is  currently  taking  inventory  of its
existing  customers and will assess on a  case-by-case  basis  whether  testing,
upgrade or modification for Year 2000 Readiness is required. The Company expects
to complete this  assessment in early 1999. The Company's total cost relating to
these activities,  and any modifications  required thereby,  has not been and is
not  expected to be material to the  Company's  financial  position,  results of
operations, or cash flows. Any such expenditures to date have been, and any such
expenditures  in the  future are  expected  to be,  treated  as normal  business
expenses funded out of operating cash flow. The Company  believes that its legal
liability for such  activities  is limited and that any necessary  modifications
will be made on a timely basis. There can be, therefore, no assurance that there
will not be  increased  costs  associated  with the  implementation  of any such
activities or required  modifications  and there can be no assurance  that there
will be  significant  legal  liabilities,  either of which could have a material
adverse affect to the Company's operations and financial position.

Despite  testing  by the  Company  and  current  and  potential  customers,  the
Company's  products and installed base may contain  undetected errors or defects
associated with year 2000 date functions.  Known or unknown errors or defects in
the  Company's IT systems,  non-IT  systems,  products or  installed  base could
result in delay or loss of revenue,  diversion of development resources,  damage
to the Company's  reputation,  or increased  service and warranty costs,  any of
which  could  materially  adversely  affect the  Company's  business,  operating
results,   or  financial   condition.   The  foregoing   assessment   represents
management's   best   estimates  at  the  present   time,   which  could  change
significantly in the future. In addition,  the Company is aware of the potential
for claims against it and other  companies for damages arising from products and
services provided by it and third party suppliers that were not Year 2000 Ready.
Because of the unprecedented nature of such litigation,  it is uncertain whether
or to what extent the Company may be affected by any such claims.

Certain Factors That May Affect Future Results

This Quarterly Report contains forward-looking  statements that involve a number
of  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  expectations  regarding  future
growth in revenues,  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  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.

Historically,   the   Company  has  been   dependent   on   long-term   customer
relationships.  To date, a substantial  portion of the Company's  total revenues
has  been  derived  from  a  relatively   small  number  of   customers,   which
concentration  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.  The Company's future success depends in large part on its ability
to maintain its current  relationships  and develop new  customer  relationships
with successful telecommunications and energy service providers. There can be no
assurance  that the Company will be able to develop and maintain such  long-term
relationships or that the service  providers that are or become customers of the
Company  will be  successful.  In  addition,  the  telecommunications  market is
presently experiencing significant merger,  consolidation and alliance formation
activity  among both  established  and start-up  carriers.  A  consolidation  or
alliance affecting one of the Company's  customers could result in such customer
shifting to another billing  system,  thus decreasing such customer's use of the
Company's  services.  A  significant  decrease in business from any of its major
customers or the failure of the Company to compete effectively for new customers
in the  telecommunications  and energy  markets,  would have a material  adverse
effect on the Company's business, financial condition and results of operations.

The Company's  quarterly and annual operating results may fluctuate from quarter
to quarter and year to year depending on various  factors  including new product
development  and other  expenses,  introduction  of new products by competitors,
fluctuations in the numbers and types of customer contracts (i.e. service bureau
or license) signed in any given quarter, the hiring of additional staff, pricing
pressures, the effect of acquisitions,  the evolving and unpredictable nature of
the markets in which the  Company's  products  and services are sold and general
economic conditions.

The billing and customer  care  industry is intensely  competitive.  The Company
competes  with both  independent  providers of systems and  services  similar to
those offered by the Company and with internal  billing  departments of existing
telecommunications   and   energy   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.

The market for the Company's  products is characterized  by rapid  technological
change,  frequent new product  introductions,  evolving  industry  standards and
changing customer needs. The Company has recently  introduced its UNIX-based CBP
for Oracle product and has just released an additional  version of this product.
In addition to the resources  used for this  scheduled  release,  the Company is
currently  devoting  significant  resources  to develop,  refine and enhance its
DB2/400-based  CBP product and additional  customer care and billing  technology
acquired in the past nine months.  The Company  believes that its future success
will  depend in large part on its  ability to  maintain  and enhance its current
product and service  offerings  and to  continually  develop and  introduce  new
products  and  services  that will keep pace  with  technological  advances  and
satisfy evolving customer requirements.  If the Company is unable to develop and
introduce new products and services in a timely manner,  or if the Company's new
products,   developments   and  enhancements  do  not  perform  or  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.  Additionally,  credit markets for smaller  telecommunications
companies in the U.S. have weakened  recently which could  adversely  affect the
Company's ability to attract and maintain relationships with such companies.

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.

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 BHAC.  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.

The Company regards its software products as proprietary and relies primarily on
a combination of statutory and common law copyright,  trademark and trade secret
laws,  customer  licensing  agreements,  employee and third-party  nondisclosure
agreements and other methods to protect its proprietary  rights.  These laws and
contractual   provisions  provide  only  limited  protection  of  the  Company's
proprietary rights. Despite the Company's precautions,  it may be possible for a
third party to copy or otherwise obtain and use the Company's technology without
authorization.  Furthermore,  the laws of certain countries in which the Company
sells its  products do not  protect  the  Company's  software  and  intellectual
property  rights to the same  extent,  as do the laws of the United  States.  If
unauthorized  copying or misuse of the  Company's  products  was to occur to any
substantial degree, the Company's business,  results or operations and financial
condition could be materially adversely affected.

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,  Australian,  United Kingdom 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.

<PAGE>


                               SAVILLE SYSTEMS PLC

                           PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

              27.0   Financial Data Schedule

         (b)  Reports on form 8-K

              None


<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly caused this  Amendment No. 1 on Form 10-Q/A to Form 10-Q to
be signed on its behalf by the undersigned thereunto duly authorized.

                              SAVILLE SYSTEMS PLC
                              (Registrant)



Date:  March 15, 1999         By:   /s/Christopher A. Hanson
       --------------               ------------------------
                                    Christopher A. Hanson
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)