Electric Lightwave, Inc.                           Form 10-Q


















                                Quarterly Report Pursuant To Section 13 or 15(d)
                                          of The Securities Exchange Act of 1934


                                    For The Quarterly Period Ended June 30, 1999



<PAGE>





                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 June 30, 1999

                                       OR

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

                 For the transition period from _____ to _____

                         Commission file number 0-23393


                            ELECTRIC LIGHTWAVE, INC.
             (Exact name of registrant as specified in its charter)

                Delaware                                        93-1035711
    (State or other jurisdiction of                           (I.R.S. Employer
     incorporation or organization)                          Identification No.)


                               4400 NE 77th Avenue
                           Vancouver, Washington 98662
               (Address, zip code of principal executive offices)


        Registrant's telephone number, including area code (360) 816-3000


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  twelve 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 ninety days.
                                 Yes |X| No |_|

The number of shares outstanding of the registrant's class of common stock as of
July 29, 1999 were:

                         Common Stock Class A  8,751,063
                         Common Stock Class B 41,165,000


<PAGE>



================================================================================
Electric Lightwave, Inc.
<TABLE>
<CAPTION>

Index
<S>                                                                     <C>
                                                                        Page No.
Part I.      Financial Information
   Item 1.   Financial Statements

     Balance Sheets at June 30, 1999 and December 31, 1998 (unaudited).....2
     Statements of Operations for the Three Months Ended
       June 30, 1999 and 1998 (unaudited)..................................3

     Statements of Operations for the Six Months Ended
       June 30, 1999 and 1998 (unaudited)..................................4

     Condensed Statements of Cash Flows for the Six Months Ended
       June 30, 1999 and 1998 (unaudited)..................................5
     Notes to Financial Statements.........................................6

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

   Item 3.   Quantitative and Qualitative Disclosures About Market Risk...19

Part II.     Other Information
   Signature .............................................................23


</TABLE>
                                        1
<PAGE>

Electric Lightwave, Inc.
PART I.       FINANCIAL INFORMATION
Item 1.    Financial Statements

Balance Sheets

(In thousands)
(Unaudited)
<TABLE>
<CAPTION>

Assets
                                                 June 30, 1999    December 31, 1998
                                                ---------------  ------------------
<S>                                                  <C>              <C>
Current assets:
   Cash ..........................................   $  18,189        $  13,120
   Trade receivables, net ........................      25,722           20,320
   Other receivables .............................       1,434            2,671
   Other current assets ..........................       1,821            1,953
                                                      ---------        ---------
     Total current assets ........................      47,166           38,064
                                                      ---------        ---------

Property, plant and equipment ....................     693,449          528,582
Less accumulated depreciation and amortization ...     (55,723)         (40,912)
                                                      ---------        ---------
   Property, plant and equipment, net ............     637,726          487,670
                                                      ---------        ---------

Other assets .....................................       8,602            6,575
                                                      ---------        ---------

     Total assets ................................   $ 693,494        $ 532,309
                                                      =========        =========

Liabilities And Equity

Current liabilities:
   Accounts payable and accrued liabilities ......   $  63,307        $  61,760
   Current portion of long-term debt .............      15,380              351
   Due to Citizens Utilities Company .............      10,138            5,254
   Other accrued taxes ...........................       7,793            5,577
   Other current liabilities .....................       7,590            5,024
                                                      ---------        ---------
     Total current liabilities ...................     104,208           77,966

Deferred credits and other .......................       1,649            1,834
Deferred income taxes payable ....................       2,492            1,760
Long-term debt ...................................     503,250          302,256
                                                      ---------        ---------
     Total liabilities ...........................     611,599          383,816
                                                      ---------        ---------

Shareholders' equity:
   Common stock issued, $.01 par value
     Class A .....................................          87               86
     Class B .....................................         412              412
   Additional paid-in-capital ....................     323,484          321,926
   Deficit .......................................    (242,088)        (173,931)
                                                      ---------        ---------
     Total shareholders' equity ..................      81,895          148,493
                                                      ---------        ---------

     Total liabilities and shareholders' equity ..   $ 693,494        $ 532,309
                                                      =========        =========
</TABLE>


                             See accompanying notes.

                                       2
<PAGE>



Statements of Operations

<TABLE>
<CAPTION>

(In thousands, except per-share amounts)
(Unaudited)                                     For the three months ended June 30,
                                                         1999             1998
                                                      ---------        ---------
<S>                                                  <C>              <C>
Revenues .......................................     $  46,095        $  21,443
                                                      ---------        ---------

Operating expenses:
   Network access ..............................        23,702            9,860
   Operations ..................................         9,633            6,528
   Selling, general and administrative .........        29,447           17,588
   Depreciation and amortization ...............         8,150            3,780
                                                      ---------        ---------
     Total operating expenses ..................        70,932           37,756
                                                      ---------        ---------

   Loss from operations ........................       (24,837)         (16,313)

Interest expense and other .....................         8,068            1,467
                                                      ---------        ---------

   Net loss before income taxes ................       (32,905)         (17,780)

Income tax expense (benefit) ...................           300           (3,022)
                                                      ---------        ---------

   Net loss ....................................     $ (33,205)       $ (14,758)
                                                      =========        =========

Net loss per common share:
     Basic .....................................     $    (.67)       $    (.30)
     Diluted ...................................     $    (.67)       $    (.30)

Weighted average shares outstanding ............        49,822           49,694

</TABLE>

                             See accompanying notes.

                                       3
<PAGE>



Statements of Operations
<TABLE>
<CAPTION>


(In thousands, except per-share amounts)
(Unaudited)                                       For the six months ended June 30,
                                                         1999             1998
                                                      ---------        ---------

<S>                                                  <C>              <C>
Revenues .........................................   $  84,311        $  41,500
                                                      ---------        ---------

Operating expenses:
   Network access ................................      48,926           19,072
   Operations ....................................      18,667           11,774
   Selling, general and administrative ...........      56,214           32,963
   Depreciation and amortization .................      15,144            7,664
                                                      ---------        ---------
     Total operating expenses ....................     138,951           71,473
                                                      ---------        ---------

   Loss from operations ..........................     (54,640)         (29,973)

Interest expense and other .......................      12,847            2,211
                                                      ---------        ---------

   Net loss before income taxes and cumulative
     effect of change in accounting principle ....     (67,487)         (32,184)

Income tax expense (benefit) .....................         670           (5,471)
                                                      ---------        ---------

   Net loss before cumulative effect of change in
     accounting principle ........................     (68,157)         (26,713)

Cumulative effect of change in accounting principle
   (net of $577 income tax benefit) ..............          --            2,817
                                                      ---------        ---------

   Net loss ......................................   $ (68,157)       $ (29,530)
                                                      =========        =========

Net loss per share before cumulative effect of
   change in accounting principle:
     Basic .......................................   $   (1.37)       $    (.54)
     Diluted .....................................   $   (1.37)       $    (.54)

Net loss per common share:
     Basic .......................................   $   (1.37)       $    (.59)
     Diluted .....................................   $   (1.37)       $    (.59)

Weighted average shares outstanding ..............      49,812           49,690

</TABLE>

                             See accompanying notes.

                                       4
<PAGE>



Condensed Statements of Cash Flows
<TABLE>
<CAPTION>


(In thousands)
(Unaudited)                                       For the six months ended June 30,
                                                         1999             1998
                                                      ---------        ---------
<S>                                                  <C>              <C>
Net cash used for operating activities ...........   $ (55,455)       $ (13,022)
                                                      ---------        ---------

Cash flows used for investing activities:
   Capital expenditures ..........................    (108,458)         (74,971)
                                                      ---------        ---------

Cash flows from financing activities:
   Net revolving bank credit facility proceeds
        (repayments) .............................    (154,000)          74,000
   Note issuance .................................     325,000              --
   Other, net ....................................      (2,018)             100
                                                      ---------        ---------
     Net cash provided by financing activities ...     168,982           74,100
                                                      ---------        ---------

Net increase (decrease) in cash ..................       5,069          (13,893)

Cash at January 1, ...............................      13,120           26,531
                                                      ---------        ---------
Cash at June 30, .................................   $  18,189        $  12,638
                                                      =========        =========




Supplemental cash flow information:
   Cash paid for interest, net of capitalized
        portion ..................................   $  11,210        $   1,836
   Non-cash increase in capital lease asset and
        obligation ...............................      45,195            2,174
</TABLE>

                            See accompanying notes.
                                       5
<PAGE>
Electric Lightwave, Inc.

Notes to Financial Statements

1.       Summary of Significant Accounting Policies

     a.   Basis of Presentation and Use of Estimates

           Electric  Lightwave,  Inc. is  referred to as "we",  "us" or "our" in
           this report. We have prepared these unaudited financial statements in
           accordance with generally accepted  accounting  principles (GAAP) for
           interim financial  information and with the instructions to Form 10-Q
           and Article 10 of Regulation S-X.  Accordingly,  we have condensed or
           omitted certain information and footnote disclosures. In our opinion,
           these  financial  statements  include all  adjustments  and recurring
           accruals  necessary  to present  fairly the  results  for the interim
           periods shown.

           Preparing financial statements in conformity with GAAP requires us to
           make  estimates and  assumptions  which affect the amounts of assets,
           liabilities,   revenues  and  expenses  we  have   reported  and  our
           disclosure of contingent  assets and  liabilities  at the date of the
           financial  statements.  The  results of the  interim  periods are not
           necessarily indicative of the results for the full year. We have made
           certain  reclassifications of balances previously reported to conform
           to the  current  financial  statement  presentation.  You should read
           these financial  statements in conjunction with the audited financial
           statements  and the related  notes  included in our Annual  Report on
           Form 10-K for the year ended December 31, 1998.

     b.   Capitalized Interest

           Property,  plant and equipment  includes  interest costs  capitalized
           during the installation and expansion of our communications networks.
           Approximately  $2,949,000  and  $2,050,000  of  interest  costs  were
           capitalized  in the  three  months  ended  June 30,  1999  and  1998,
           respectively,    with   approximately   $6,167,000   and   $3,838,000
           capitalized  in  the  six  months  ended  June  30,  1999  and  1998,
           respectively.

     c.   Reciprocal Compensation

           We   have   various   interconnection   agreements   with  U  S  West
           Communications, Inc.  (US  West)  and  GTE  Corporation   (GTE),  the
           Incumbent Local Exchange  Carriers  (ILECs) in the states in which we
           operate. These agreements govern reciprocal  compensation relating to
           the transport and  termination of traffic between the ILEC's networks
           and our network.  We recognize  reciprocal  compensation  revenues as
           earned,  based on the  terms of the  interconnection  agreements.  We
           recognized total net reciprocal  compensation  revenues for the three
           and six months ended June 30, 1999 of $8.1 million and $14.7 million,
           respectively.  Net trade accounts  receivable  relating to reciprocal
           compensation  at June 30, 1999  totaled  $11.0  million,  compared to
           $10.4 million at December 31, 1998.

           We have filed complaints with the Public Utility  Commissions  (PUCs)
           in Washington,  Utah,  Oregon,  Arizona and Idaho  requesting that US
           West  pay us for  reciprocal  compensation  charges  relating  to the
           termination  of  calls  to  Internet  Service  Providers  (ISPs),  as
           required by the interconnection  agreements.  The Washington and Utah
           PUCs ruled in our favor and accordingly, US West is now paying us for
           reciprocal compensation charges in these states. The Oregon PUC ruled
           in our  favor  in  April  1999.  However,  US West is  disputing  the
           termination rate included in the Oregon PUC approved  interconnection
           agreement. The complaints in Arizona and Idaho are pending.

                                       6
<PAGE>
Electric Lightwave, Inc.

Notes to Financial Statements - (Continued)


           On February 25, 1999, the FCC issued a Declaratory  Ruling and Notice
           of Proposed  Rulemaking that categorized  calls terminated to ISPs as
           "largely"  interstate  in  nature,  which  could  have the  effect of
           precluding these calls from reciprocal compensation charges. However,
           the   ruling   stated   that   ILECs  are   bound  by  the   existing
           interconnection  agreements and the state decisions that have defined
           them.  The FCC  gave  the  states  authority  to  interpret  existing
           interconnection  agreements.  Since the FCC order,  thirteen  states,
           including Oregon and Washington,  have ruled that calls terminated to
           ISPs should be included in the  calculation  to determine  reciprocal
           compensation.

           The  reciprocal  compensation  rates  defined in our  interconnection
           agreements  are subject to change both by state PUC cost  proceedings
           and by  renegotiation.  The Oregon PUC has  established  a lower rate
           than is reflected in our existing interconnection agreements. The new
           rate  is  approximately  70%  less  than  the  rate  in the  existing
           agreement.  We expect that the new rate will become  effective  as of
           some point in the first half of 1999.  Both the  Washington  and Utah
           PUCs have begun proceedings to set new reciprocal compensation rates.
           We estimate  that the  current  rates in  Washington  and Utah may be
           reduced by 50% or more in the second half of 1999. These three states
           comprise  a  substantial  portion  of  our  reciprocal   compensation
           revenues.   Also,  if  we  cannot  renegotiate  new   interconnection
           agreements upon expiration of our current agreements,  our reciprocal
           compensation revenues could decrease from current levels.

     d.   Net Loss Per Share

           We  follow  the  provisions  of  Statement  of  Financial  Accounting
           Standards   (SFAS)  128,   "Earnings   Per  Share"   which   requires
           presentation  of both basic and diluted  earnings  per share (EPS) on
           the face of the statement of operations.  Basic EPS is computed using
           the weighted average number of common shares  outstanding  during the
           period. The diluted EPS calculation assumes that all stock options or
           contracts  to issue common  stock were  exercised  or converted  into
           common stock at the beginning of the period. We have excluded certain
           common stock equivalents from our diluted EPS calculation  during the
           quarters  ended June 30, 1999 and 1998  because the effect would have
           reduced our net loss per share.


2.       Change in Accounting Principle

           On April 3, 1998, the Accounting Standards Executive Committee of the
           AICPA released  Statement of Position  (SOP) 98-5,  "Reporting on the
           Costs of Start-Up Activities". The SOP requires that at the beginning
           of the fiscal year of adoption, any remaining deferred start-up costs
           be expensed and reported as a change in accounting principle.  Future
           costs of start-up activities should then be expensed as incurred.

           We adopted SOP 98-5 effective January 1, 1998. Previous to January 1,
           1998, we had capitalized certain third party direct costs incurred in
           connection with  negotiating and securing initial  rights-of-way  and
           developing network design for new markets or locations. These amounts
           were being  amortized over five years. We have reported the remaining
           net  book  value  of  these  deferred  amounts  of  $3,394,000  as  a
           cumulative  effect  of  a  change  in  accounting  principle  in  the
           statement of operations  for the six months ended June 30, 1998,  net
           of income tax benefit of $577,000.

                                      7
<PAGE>
Electric Lightwave, Inc.

Notes to Financial Statements - (Continued)


3.       Commitments and Contingencies

           Our license agreements for the exclusive use of long-haul  facilities
           connecting our Portland to Seattle,  Portland to Spokane and Portland
           to Eugene long-haul  transport  networks and for the exclusive use of
           the Phoenix network contain annual minimum usage requirements. If our
           traffic  on any of these  networks  falls  below  the  minimums,  the
           licensor will obtain the right to share usage of a specific number of
           fibers  with us. We have  entered  arbitration  to  resolve a dispute
           regarding the exclusive  use of our long-haul  facilities  connecting
           Portland to Seattle and Portland to Spokane.

           In March 1999,  we entered into a 20-year  fiber-swap  agreement,  in
           which we will  exchange  unused fiber on our network for unused fiber
           on another  carrier's  network.  This  exchange  will provide us with
           fiber from Salt Lake City to Denver, continuing on to Dallas. We will
           provide the other carrier with unused fiber on our long-haul  network
           that connects Spokane and Seattle,  Washington,  Portland and the Bay
           Area in California.  We anticipate  incorporating the other carrier's
           fiber into our network  during  2000.  We will pay the other  carrier
           approximately $101 million over 20 years beginning in 2000. The other
           carrier  will pay us  approximately  $77  million  over the same time
           period.

           In June 1999, we entered into a 20-year capital lease for capacity on
           a third  party's  network.  The lease calls for total  payments of $9
           million over the next four years.  As of June 30, 1999, we reported a
           capital  lease asset and related  obligation  of  approximately  $7.5
           million in our balance  sheet,  of which $2.5 million is presented in
           current portion of long-term  debt. We were  previously  leasing this
           capacity  through a private-line  services  agreement with this third
           party. The private-line  services  agreement allows us to utilize the
           third party's  national fiber optic network  through 2007, and had an
           initial  take-or-pay  commitment  of $122  million.  We  amended  the
           private-line  services  agreement in June 1999 to reflect that we are
           now leasing  certain  capacity  under the new capital  lease that had
           previously been leased under the private-line services agreement.  As
           a result of this amendment,  our total minimum  commitment  under the
           private-line  services  agreement  was reduced to $90 million for the
           remaining period of July 1, 1999 through December 31, 2007.

4.       Related Party Transactions

           Citizens  Utilities Company  (Citizens) owns approximately 82% of our
           common stock.  During 1998, Citizens announced its intent to separate
           its  telecommunications  businesses and its public service businesses
           into two stand-alone,  publicly traded  companies.  Through May 1999,
           Citizens  had  been  pursuing  its  separation  plans.  Subsequently,
           Citizens  announced that it had entered into two access line purchase
           agreements.  Entering into these purchase  agreements led Citizens to
           discontinue  its separation  plans.  Permanent  funding for Citizens'
           acquisitions   will  come  from  the  sale  of  the  public   service
           properties.   Citizens  is  continuing  to  investigate   and  review
           opportunities   for  the   acquisition   of  new   telecommunications
           properties.


                                       8
<PAGE>
Electric Lightwave, Inc.

Notes to Financial Statements - (Continued)


           This table  summarizes  the activity in the liability  account Due to
           Citizens for the six months ended June 30, 1999:
<TABLE>
<CAPTION>

           ($ in thousands)
           <S>                                                         <C>
           Balance, December 31, 1998.............................      $  5,254
           Guarantee fees.........................................         8,087
           Administrative services:
                Services provided by Citizens.....................         4,555
                ELI expenses paid by Citizens.....................         3,742
           Payments to Citizens...................................       (11,500)
                                                                        ---------
           Balance, June 30, 1999.................................      $ 10,138
                                                                        =========
</TABLE>

5.       Significant Customer

           During  the  three  and six  months  ended  June  30,  1999,  US West
           accounted for 18% of our total revenues.

6.       Income Taxes

           Citizens includes us in their consolidated  federal income tax return
           which uses a calendar year reporting  period.  We record income taxes
           as if we were a stand-alone  company.  We recorded income tax expense
           of $300,000  and  $670,000 in the three and six months ended June 30,
           1999,  respectively.  This expense represents the deferred tax effect
           of the increase in temporary  differences  between our GAAP financial
           statements  and our tax return that may not be fully  offset with the
           use of tax loss carryforwards when the timing differences  reverse in
           future periods.

           The income taxes  payable by Citizens'  consolidated  group have been
           reduced  as a  consequence  of our losses  for tax  purposes  in past
           years.  We would be able to  carry-forward  our tax  losses to future
           periods to offset net income for tax purposes in these future periods
           had we been  stand-alone  for tax  purposes.  Citizens  has agreed to
           reimburse us, in a tax-sharing agreement,  for the taxes we will have
           to  pay  as  a  result  of  not  being  able  to  use  our  tax  loss
           carryforwards in future periods.

7.       Long-term Debt

           The components of our long-term debt is as follows:

<TABLE>
<CAPTION>

            ($ in thousands)                           June 30, 1999       December 31, 1998
                                                     ----------------      --------------------
            <S>                                         <C>                   <C>
            Senior unsecured notes...............       $  325,000            $       --
            Revolving bank credit facility.......          130,000               284,000
            Capital leases.......................           48,250                18,256
                                                        ----------            ----------
                                                        $  503,250            $  302,256
                                                        ==========            ==========
</TABLE>

           We issued $325 million of five-year  senior  unsecured notes in April
           1999. The notes have an interest rate of 6.05% and will mature on May
           15, 2004.  Citizens has initially  guaranteed the notes for an annual
           fee of 4.0% of the  outstanding  balance.  See "Item 2,  Management's
           Discussion  and  Analysis  of  Financial  Condition  and  Results  of
           Operations - Liquidity and Capital Resources".

                                      9
<PAGE>
Electric Lightwave, Inc.

Notes to Financial Statements - (Continued)


           We  incurred  $2.5  million of costs  related  to issuing  the senior
           unsecured  notes.  We have recorded  these amounts in other assets on
           our June 30, 1999 balance sheet,  and are amortizing them to interest
           expense  using the  effective  interest  method  over the term of the
           notes.

           We also recorded  $30,180,000 of long-term  capital lease obligations
           during the six months ended June 30, 1999. The obligations  primarily
           relate to constructed portions of our western long-haul networks.


                                       10
<PAGE>


Electric Lightwave, Inc.

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

--------------------------------------------------------------------------------
           We  caution  you that this  quarterly  report  on Form 10-Q  contains
           forward-looking  statements  within the meaning of the Securities and
           Exchange  Act of 1934.  Forward-looking  statements  (including  oral
           representations)  are only  predictions  or statements of our current
           plans,  which we review on a  continual  basis,  and are based on our
           beliefs,  expectations  and assumptions and on information  currently
           available to us. The words "may", "should",  "expect",  "anticipate",
           "intend",  "plan",  "continue",   "believe",  "estimate"  or  similar
           expressions   used  in  this   report  are   intended   to   identify
           forward-looking statements.

           The forward-looking  statements in this quarterly report on Form 10-Q
           involve certain risks,  uncertainties  and assumptions.  They are not
           guarantees  of future  performance.  Factors  that may  cause  actual
           results to differ  materially  from those expressed or implied in any
           forward-looking  statements  include,  but are not limited to, any of
           the following possibilities:


           *    if the local and overall economic  conditions of our markets are
                less favorable than we expected;

           *    if there are  changes in the  nature  and pace of  technological
                advances in our industry;

           *    if  competitive  pressure  in  the  telecommunications  industry
                increases  in any of our markets  because of the entrance of new
                competitors,  the combination of existing competitors and/or the
                more  effective  provision  of products  and  services  from our
                competitors, including ILECs, or other public utilities;

           *    if our business strategy or its execution,  including  financial
                performance goals, is not as successful as we anticipate;

           *    if we are not  able to  maintain  exclusive  use of fiber on our
                performance based leases;

           *    if state or federal  regulatory  changes  are  implemented  that
                assist  our  competitors,   impair  our  competitive   position,
                threaten our costs or impact our rate structures,  including the
                ability to bill reciprocal  compensation for calls terminated to
                ISPs;

           *    if we do not receive the services  and support  which we require
                from  the  regional   ILECs  or  cannot   maintain  our  current
                relationships with ILECs;

           *    if we are not able to effectively manage rapid growth, including
                integrating any businesses acquired;

           *    if we  are  not  able  to  correctly  identify  future  markets,
                successfully   expand  existing  ones,  or  successfully  expand
                through acquisitions;

           *    if the mix of products  and services we are able to offer in our
                target  markets  is  not  appropriate  to  the  demands  of  our
                customers; or

           *    if our stock price is volatile.

           You  should  consider  these  important  factors  in  evaluating  any
           statement  contained  in  this  report  and/or  made  by us or on our
           behalf.  We have no  obligation  to update or revise  forward-looking
           statements.

--------------------------------------------------------------------------------
                                       11
<PAGE>
Electric Lightwave, Inc.


           The following  information has not been audited. You should read this
           information in conjunction  with the condensed  financial  statements
           and related notes to financial statements included in this report. In
           addition,  please  see our  Management  Discussion  and  Analysis  of
           Financial  Condition  and Results of  Operations,  audited  financial
           statements  and related  notes  included in our Annual Report on Form
           10-K for the year ended December 31, 1998.

     Overview

           We have built an extensive  fiber-optic network in the western United
           States, which we use to provide products and services to customers in
           seven major  cities and their  surrounding  areas.  In  addition,  we
           provide data services in certain strategic markets across the nation.
           Our product offerings include:

           *    Network services - includes dedicated service between two points
                for a customer's  exclusive use. We offer this in both local and
                long-haul applications.

           *    Local  telephone  services - consists  of the  delivery of local
                dial   tone   and   related   services,   including   reciprocal
                compensation.

           *    Long  distance  services - includes  retail and  wholesale  long
                distance  phone  services,  including  our  prepaid  phone  card
                business.

           *    Data  services - includes  a wide range of  products  to deliver
                large  quantities  of data from one location to another  through
                Asynchronous  Transfer  Mode  (ATM),  Frame  Relay and  Internet
                Protocol  packet  technologies.  These  technologies  group data
                (voice,  video,  images  and  character-based  data)  into small
                packets of information and transmit the packets over a network.

           We are  investing  in our  network  in the  west  and are  developing
           long-haul  networks  that will  connect all of our seven major cities
           and several of our data-only  cities with  high-capacity  fiber-optic
           cable and electronics. Certain segments of our long-haul networks are
           currently  operational,  and we expect to complete  the  remainder of
           this  network in the  second  half of 1999.  During  March  1999,  we
           entered into a fiber-swap agreement,  which exchanges unused fiber on
           our  network  for unused  fiber on another  carrier's  network.  This
           exchange  will  provide us with  fiber  from Salt Lake City,  Utah to
           Denver,  Colorado and  continue on to Dallas,  Texas.  We  anticipate
           incorporating the other carrier's fiber into our network during 2000.

           In addition to our expansion  plans in the west, we are expanding our
           reach into key cities across the nation by offering  high-speed  data
           and  Internet  services.  We added  Atlanta,  Dallas,  San  Diego and
           Washington,  D.C.  during the first quarter of 1999 and Cleveland and
           Philadelphia  in April 1999. We plan to connect Austin and Houston by
           the end of 1999.  Our current data cities include  Atlanta,  Chicago,
           Cleveland,  Dallas, Las Vegas, Los Angeles,  New York,  Philadelphia,
           San Diego, San Francisco and Washington D.C.

           Citizens  Utilities Company  (Citizens) owns approximately 82% of our
           common stock.  During 1998, Citizens announced its intent to separate
           its  telecommunications  businesses and its public service businesses
           into two stand-alone,  publicly traded  companies.  Through May 1999,
           Citizens  had  been  pursuing  its  separation  plans.  Subsequently,
           Citizens  announced that it had entered into two access line purchase
           agreements.  Entering into these purchase  agreements led Citizens to
           discontinue  its separation  plans.  Permanent  funding for Citizens'
           acquisitions   will  come  from  the  sale  of  the  public   service
           properties.   Citizens  is  continuing  to  investigate   and  review
           opportunities   for  the   acquisition   of  new   telecommunications
           properties.

                                       12
<PAGE>
Electric Lightwave, Inc.

     a.  Liquidity and Capital Resources

           We used net debt  borrowings  of $171 million to fund  operating  and
           capital  expenditures  in the first half of 1999. The source of these
           borrowings was our revolving bank credit facility and $325 million of
           notes we issued during April 1999 in a private  placement.  The notes
           are five-year senior unsecured notes,  have an interest rate of 6.05%
           and will  mature on May 15,  2004.  We used the  majority  of the net
           proceeds from the issuance to repay outstanding  borrowings under our
           revolving  bank credit  facility.  As a result,  we have $270 million
           remaining  available  through  November 2002 under the revolving bank
           credit  facility to fund future  operating and capital  expenditures.
           Citizens has guaranteed  both the revolving bank credit  facility and
           the notes for a fee of 3.25% and 4.0%, respectively,  assessed on the
           respective outstanding balances.

           We expect  that the $270  million  remaining  on our  revolving  bank
           credit  facility  will be  adequate  to fund  operating  and  capital
           expenditures  through the first quarter 2000. At that point,  we will
           need to obtain additional debt or equity financing. We cannot provide
           assurance that we will be able to obtain such  financing,  or that we
           will be able to obtain it on reasonable terms.

           We continue to invest in the installation,  development and expansion
           of our  new  and  existing  communications  networks.  A  significant
           portion of these  expenditures  is incurred  before any  revenues are
           realized.  Our capital additions were  approximately  $165 million in
           the first half of 1999,  including  $45 million in  non-cash  capital
           lease  additions.  These  expenditures,  combined  with our operating
           expenses,  have resulted in operating losses and negative cash flows.
           We expect to continue  incurring  operating  losses and negative cash
           flows until we can  establish an adequate  customer  base and revenue
           stream to support our network.  We cannot  provide  assurance that we
           will achieve or sustain profitability or generate sufficient positive
           cash flow to fund our operating and capital  requirements  or service
           debt.

           We continue  to evaluate  opportunities  to generate  revenue  growth
           through making substantial  investments in the continued  development
           of our existing  networks,  new  long-haul  routes and entry into new
           markets.  These  opportunities may include  acquisitions and/or joint
           ventures  that are  consistent  with our business  plan of generating
           revenue  growth  through  expansion of our network and customer base.
           Any such acquisitions,  investments and/or strategic arrangements, if
           available,   could  require  additional  financial  resources  and/or
           reallocation of our financial resources.

           In June 1999, we entered into a 20-year capital lease for capacity on
           a third  party's  network.  The lease calls for total  payments of $9
           million over the next four years.  As of June 30, 1999, we reported a
           capital  lease asset and related  obligation  of  approximately  $7.5
           million in our balance  sheet,  of which $2.5 million is presented in
           current portion of long-term  debt. We were  previously  leasing this
           capacity  through a private-line  services  agreement with this third
           party. The private-line  services  agreement allows us to utilize the
           third party's  national fiber optic network  through 2007, and had an
           initial  take-or-pay  commitment  of $122  million.  We  amended  the
           private-line  services  agreement in June 1999 to reflect that we are
           now leasing  certain  capacity  under the new capital  lease that had
           previously been leased under the private-line services agreement.  As
           a result of this amendment,  our total minimum  commitment  under the
           private-line  services  agreement  was reduced to $90 million for the
           remaining period of July 1, 1999 through December 31, 2007.

           We also added short and long-term  capital lease  obligations  to our
           June 30, 1999 balance sheet of approximately  $12.6 million and $25.1
           million,  respectively.  These  obligations  were  the  result  of  a
           constructed portion of our western long-haul  networks.  Payments for
           this capital lease are due over the next two years.

                                       13
<PAGE>

Electric Lightwave, Inc.


     Other Matters

           Year 2000

           The Year 2000  (Y2K)  issue  stems  from the fact that many  computer
           programs  worldwide  use two digits,  rather than four, to define the
           applicable year. For instance,  many computers on January 1, 2000 may
           assume  that  01/01/00  is the first day of the year 1900 rather than
           2000. Massive system failures may occur globally if this issue is not
           properly   addressed.   We  have  developed  a  Y2K  Initiative  (the
           Initiative)  to mitigate the impact of the Y2K issue for our internal
           systems  and  the  systems  that we rely  on  indirectly  from  third
           parties.

           Under the Initiative,  we have formed a cross-functional  Y2K project
           team that reports to the Chief Information Officer (CIO). The CIO has
           authority  to  establish  methodologies,  approve  expenditures,  and
           marshal  additional  resources as necessary.  A full-time  consultant
           project  manager,  who  reports  regularly  to the CIO,  manages  the
           Initiative and oversees the project team. The CIO is responsible  for
           researching,  planning,  executing,  implementing  and completing the
           Initiative.

           The three functional categories evaluated in the Initiative include:

           *    Communications  Network - software and electronics  that process
                voice  and  data  information  relating  to  our  communications
                operations, including transmission equipment,

           *    Information  Technology (IT) - consists of all internal hardware
                and software used to support our  financial  and  administrative
                operations, and

           *    Facilities - consists of all systems  necessary to run an office
                including  security  systems,   fire  suppression,   generators,
                rectifiers, batteries and components with embedded technology at
                our headquarters and leased facilities.

           The  Initiative  is  composed  of three  primary  phases  that we are
           applying to each of the three functional categories.

           *    Phase I - Inventory and assessment

                Inventory  and  assessment  is the  process of  identifying  all
                relevant   systems   and   information   sources   company-wide,
                performing a risk-based analysis of each, categorizing each risk
                according to its impact on our mission, and making a preliminary
                determination  of  Y2K  compliance.  Phase  I  is  substantially
                complete for all functional categories.

           *    Phase II - Remediation

                Remediation  is the process of making  changes to the  hardware,
                software or services in order to become Y2K compliant.  Phase II
                is substantially complete for all functional categories.

                                       14
<PAGE>

Electric Lightwave, Inc.

           *    Phase III - Testing, contingency planning and certification

                Testing is the process of verifying  that systems and  processes
                will  continue to operate  properly in the Year 2000 and beyond.
                Testing  is  required  for  all  mission-critical   systems  and
                information  sources.  We have performed  steps to test hardware
                and  software  and reviewed  testing  documentation  prepared by
                vendors or service providers.  Testing is substantially complete
                for  all  functional  categories  except  Facilities,  which  we
                anticipate to be completed by September 30, 1999.

                Contingency   planning  is  required  for  all  mission-critical
                systems  and  information  sources.  The  contingency  plan will
                include  an  evaluation  of the  system  or  information  source
                business   risk,   vulnerabilities,    contingency   steps   and
                containment  measures.  Contingency  Planning is underway and is
                expected to be complete by September 30, 1999.

                Year  2000   certification   is  achieved  when  all  year  2000
                milestones have been successfully  completed and approved by the
                project  manager.  We expect  certification  to be  complete  by
                October 30, 1999.

           We anticipate  the cost to address the Y2K issue to be  approximately
           $2 million.  This cost estimate is based on current information,  and
           there  are no  guarantees  that  costs  will  not be  higher  than we
           anticipate.  As of June 30, 1999,  we had incurred $.9 million of Y2K
           costs.

           Within the  Communications  Network,  we depend on the ILEC and other
           carriers to provide  systems  that are Y2K  compliant  to allow us to
           connect  with  some  of  our  customers.  Within  IT,  we  depend  on
           appropriately  skilled  internal  and  external  experts  to  develop
           software.  Within  Facilities,  we depend  on  utility  suppliers  to
           provide  services to allow our network to continue to operate.  If we
           do not comply with Y2K, the worst case scenario would be a disruption
           of service or the  inability  to bill or  collect  revenues  from our
           customers,  which  could  have  a  material  adverse  effect  on  our
           business.  However,  we  believe  this is  unlikely  and that we will
           succeed in mitigating  Y2K issues.  As an added  precaution,  we have
           formed  a Y2K  Rapid  Response  Team  composed  of  experts  from key
           operational  departments  that will be able to quickly respond in the
           event of Y2K failures.

           Reciprocal Compensation

           We have various interconnection  agreements with US West and GTE, the
           ILECs in the  states in which we  operate.  These  agreements  govern
           reciprocal  compensation relating to the transport and termination of
           traffic  between the ILEC's  networks and our  network.  We recognize
           reciprocal compensation revenues as earned, based on the terms of the
           interconnection   agreements.  We  recognized  total  net  reciprocal
           compensation  revenues  for the three and six  months  ended June 30,
           1999 of $8.1  million  and  $14.7  million,  respectively.  Net trade
           accounts receivable  relating to reciprocal  compensation at June 30,
           1999 totaled $11.0 million, compared to $10.4 million at December 31,
           1998.

           We have filed complaints with the Public Utility  Commissions  (PUCs)
           in Washington,  Utah,  Oregon,  Arizona and Idaho  requesting that US
           West  pay us for  reciprocal  compensation  charges  relating  to the
           termination  of  calls  to  Internet  Service  Providers  (ISPs),  as
           required by the interconnection  agreements.  The Washington and Utah
           PUCs ruled in our favor and accordingly, US West is now paying us for
           reciprocal compensation charges in these states. The Oregon PUC ruled
           in our  favor  in  April  1999.  However,  US West is  disputing  the
           termination rate included in the Oregon PUC approved  interconnection
           agreement. The complaints in Arizona and Idaho are pending.

                                       15
<PAGE>

Electric Lightwave, Inc.

           On February 25, 1999, the FCC issued a Declaratory  Ruling and Notice
           of Proposed  Rulemaking that categorized  calls terminated to ISPs as
           "largely"  interstate  in  nature,  which  could  have the  effect of
           precluding these calls from reciprocal compensation charges. However,
           the   ruling   stated   that   ILECs  are   bound  by  the   existing
           interconnection  agreements and the state decisions that have defined
           them.  The FCC  gave  the  states  authority  to  interpret  existing
           interconnection  agreements.  Since the FCC order,  thirteen  states,
           including Oregon and Washington,  have ruled that calls terminated to
           ISPs should be included in the  calculation  to determine  reciprocal
           compensation.

           The  reciprocal  compensation  rates  defined in our  interconnection
           agreements  are subject to change both by state PUC cost  proceedings
           and by  renegotiation.  The Oregon PUC has  established  a lower rate
           than is reflected in our existing interconnection agreements. The new
           rate  is  approximately  70%  less  than  the  rate  in the  existing
           agreement.  We expect that the new rate will become  effective  as of
           some point in the first half of 1999.  Both the  Washington  and Utah
           PUCs have begun proceedings to set new reciprocal compensation rates.
           We estimate  that the  current  rates in  Washington  and Utah may be
           reduced by 50% or more in the second half of 1999. These three states
           comprise  a  substantial  portion  of  our  reciprocal   compensation
           revenues.   Also,  if  we  cannot  renegotiate  new   interconnection
           agreements upon expiration of our current agreements,  our reciprocal
           compensation revenues could decrease from current levels.

     b.  Results of Operations

         Revenues

           Revenues  increased  in the three and six months  ended June 30, 1999
           over  the  respective  periods  in 1998 due to the  expansion  of our
           network and  customer  base.  Since June 30, 1998,  we completed  our
           fiber network in Spokane, Washington, where we are providing our full
           suite of services. Also, since June 30, 1998, we have begun providing
           high-speed  data and Internet  services in various  cities across the
           nation, including Atlanta, Chicago, Cleveland, Dallas, Las Vegas, Los
           Angeles,  New  York,  Philadelphia,  San  Diego,  San  Francisco  and
           Washington,  D.C.  We also  added  631  customers  and  113  building
           connections,  47% and 17%  increases,  respectively,  since  June 30,
           1998.
<TABLE>
<CAPTION>

                                   For the three months                    For the six months
                                      ended June 30,                         ended June 30,
                                --------------------------------       ---------------------------------
                                                            %                                      %

($ in thousands)                   1999         1998       Incr.          1999          1998      Incr.
                                ---------     --------    ------       ---------     --------    ------
<S>                            <C>           <C>            <C>       <C>           <C>            <C>
Network services............   $   12,983    $   8,371      55%       $   23,407    $  17,478      34%
Local telephone services....       18,600        7,769     139%           32,908       13,793     139%
Long distance services......        9,245        1,899     387%           17,775        3,721     378%
Data services...............        5,267        3,404      55%           10,221        6,508      57%
                               ----------    ---------    ------      ----------    ---------    ------
     Total                     $   46,095    $  21,443     115%       $   84,311    $  41,500     103%
                               ==========    =========                ==========    =========

</TABLE>

                                       16
<PAGE>

Electric Lightwave, Inc.

           Network Services
           Network services revenues  increased in both the three and six months
           ended June 30, 1999 over the respective periods in 1998 primarily due
           to sale of  additional  circuits to new and existing  customers.  The
           increased  revenues  in the six  months  ended  June  30,  1999  were
           partially  offset by a decrease  in revenue  of $1.2  million  from a
           significant  customer primarily due to the expiration of a short-term
           contract in the first quarter 1998.

           Local Telephone Services
           Local telephone services revenues increased in both the three and six
           months  ended  June 30,  1999 over the  respective  periods  in 1998.
           Included in this  category  were  reciprocal  compensation  revenues,
           which increased $4.9 million,  or 152%, and $8.8 million, or 148%, in
           the three and six months ended June 30, 1999, respectively,  over the
           same periods in 1998.  Our ISDN PRI product  revenues  increased $3.3
           million,  or 154%,  and $5.7  million,  or 162%, in the three and six
           months  ended June 30, 1999,  respectively,  over the same periods in
           1998. Over the same periods,  local dial tone services increased $2.6
           million, or 110%, and $4.7 million, or 108%, respectively.

           The  increases  were  the  result  of  an  increase  in  access  line
           equivalents  installed of 67,026 or 123%,  from June 30, 1998 to June
           30, 1999.  Also, in the second quarter of 1999, we began  recognizing
           reciprocal  compensation  revenues  from US West in Idaho  and GTE in
           Washington.  The ISDN PRI  growth  has  largely  come  from  sales to
           Internet Service Providers.

           Long Distance Services
           Long distance services  revenues  increased in both the three and six
           months  ended  June 30,  1999  over the  respective  periods  in 1998
           primarily  due to increased  revenues  from prepaid  services,  which
           increased  $5.3 million,  or 2,041%,  and $11.4  million,  or 2,697%,
           respectively.  The  increases  were  due to  large  increases  in the
           minutes  processed as a result of adding large volume  customers.  In
           the second quarter 1999, we modified the terms of some of our prepaid
           programs,  and  discontinued  others.  As  a  result,  we  anticipate
           significantly  less revenue from  prepaid  services in the  remaining
           quarters of 1999  compared to current  levels.  Retail and  wholesale
           long distance revenues accounted for the remainder of the increase in
           each period, driven by increased minutes processed.

           Data Services
           Data  services  revenues  increased  in both the three and six months
           ended June 30, 1999 over the respective periods in 1998 primarily due
           to strong  customer  demand  for these  products.  Revenues  from our
           Internet services product  increased $1.6 million,  or 151%, and $2.7
           million, or 132%, respectively. Additionally, our frame relay product
           revenues increased by $.5 million,  or 43%, and $1.3 million, or 57%,
           respectively.


                                       17
<PAGE>

Electric Lightwave,Inc.

         Operating Expenses

           Operating  expenses  increased in both the three and six months ended
           June 30, 1999 over the respective  periods in 1998. This increase was
           due to our  growth in  network  and  customer  base as  reflected  in
           revenues as well as increased  long  distance  network  access costs,
           expansion  of our sales  force and the costs  incurred to support our
           national data expansion.

<TABLE>
<CAPTION>

                                   For the three months                    For the six months
                                      ended June 30,                         ended June 30,
                                --------------------------------       ---------------------------------
                                                            %                                      %
<S>                                <C>          <C>                       <C>           <C>
($ in thousands)                   1999         1998       Incr.          1999          1998      Incr.
                                ---------     --------    ------       ---------     ---------   -------
   Network access......       $  23,702    $   9,860       140%       % 48,926      $ 19,072      157%
   Operations..........           9,633        6,528        48%         18,667        11,774       59%
   Selling, general and
     administrative....          29,447       17,588        67%         56,214        32,963       71%
   Depreciation and
     amortization......           8,150        3,780       116%         15,144         7,664       98%
                                -------    ---------                  --------      --------
        Total..........       $  70,932    $  37,756        88%       $138,951      $ 71,473       94%
                              =========    =========                  ========      ========
</TABLE>

           Network Access
           Network access expenses include resold product expenses.  The primary
           components  are  usage-based  charges for  carrying  and  terminating
           traffic on another carrier's network.

           Network  access  expenses  increased in both the three and six months
           ended  June 30,  1999  over  the  respective  periods  in 1998 due to
           overall revenue growth and an increase in long distance costs related
           to our prepaid  services  programs.  We have also  incurred  expenses
           relating to our national data  expansion  before we have been able to
           realize significant related revenues.

           Operations
           Operations expenses consist of costs related to providing  facilities
           based network and enhanced communications services other than network
           access  costs.   The  primary   components  of  these   expenses  are
           right-of-way  and  telecommunications  equipment  leases  as  well as
           operations and engineering personnel costs.

           Operations  expenses increased in both the three and six months ended
           June 30, 1999 over the respective periods in 1998 due to increases in
           payroll and related  expenses  to support  the  expanded  delivery of
           services, and an expanded customer service organization.

           Selling, General and Administrative
           Selling,  general and administrative  expenses include all direct and
           indirect  sales  channel  expenses  and  commissions,  as well as all
           general and administrative expenses.

           Selling,  general and administrative  increased in both the three and
           six months  ended June 30, 1999 over the  respective  periods in 1998
           due to  increases  in payroll  and  related  expenses  to support the
           delivery  of  services in  existing  and new  markets  including  the
           national  data  expansion.  We  increased  our  sales  force  to  178
           employees, a 58% increase over June 30, 1998.

           Depreciation and Amortization
           Depreciation  and  amortization   expenses  include  depreciation  of
           communications  network assets including  fiber-optic cable,  network
           electronics,   network   switching   and  network   data   equipment.

                                       18
<PAGE>

Electric Lightwave, Inc.

           Depreciation and amortization expense increased in both the three and
           six months  ended June 30, 1999 over the  respective  periods in 1998
           due  to  higher  plant  in  service   balances  for  newly  completed
           communications network facilities and electronics.

           Interest Expense and Other
<TABLE>
<CAPTION>

                                               For the three months                    For the six months
                                                  ended June 30,                         ended June 30,
                                        -----------------------------------     ------------------------------
           <S>                         <C>          <C>            <C>        <C>          <C>           <C>
                                                                     %                                     %
           ($ in thousands)              1999          1998         Incr.        1999        1998        Incr.
                                        -------       -------       -------     -------     ------      ------
           Interest expense and
            other.................     $ 8,068      $  1,467        450%      $ 12,847     $ 2,211       481%
</TABLE>

           Interest  expense  increased  in both the three and six months  ended
           June 30, 1999 over the  respective  periods in 1998  primarily due to
           higher levels of long-term debt  outstanding.  At June 30, 1999, $503
           million of long-term debt was  outstanding,  compared to $147 million
           at June 30, 1998.

          Income Tax Expense (Benefit)
<TABLE>
<CAPTION>

                                               For the three months                    For the six months
                                                  ended June 30,                         ended June 30,
                                        -----------------------------------     ------------------------------
           <S>                         <C>          <C>            <C>        <C>          <C>           <C>
                                                                     %                                     %
           ($ in thousands)              1999          1998         Incr.        1999        1998        Incr.
                                        -------       -------       -------     -------     ------      ------
           Income tax expense
            (benefit).............     $  300       $ (3,022)        N/A      $   670      $(6,048)       N/A
</TABLE>

           In 1998,  we were able to  recognize  a tax  benefit for our tax loss
           carryforwards to a limited extent of our deferred tax liabilities. In
           1999, the benefit of our tax loss  carryforwards is not able to fully
           offset the deferred tax expense  associated  with current year timing
           differences.


          Cumulative Effect of Change in Accounting Principle
<TABLE>
<CAPTION>

                                               For the three months                    For the six months
                                                  ended June 30,                         ended June 30,
                                        -----------------------------------     ------------------------------
           <S>                         <C>          <C>            <C>        <C>          <C>           <C>
                                                                     %                                     %
           ($ in thousands)              1999          1998         Incr.        1999        1998        Incr.
                                        -------       -------       -------     -------     ------      ------
           Cumulative effect of
            change in accounting
            principle.............     $   --       $    --          N/A      $    --      $ 3,394       N/A
</TABLE>

           Cumulative  effect of change in  accounting  principle  represented a
           write-off of the unamortized  portion of deferred  start-up costs due
           to our adoption of AICPA  Statement of Position  98-5,  "Reporting on
           the costs of Start-Up Activities" in 1998.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

           We reduced our interest rate risk by issuing $325 million,  five-year
           senior unsecured notes in April 1999 that are guaranteed by Citizens.
           The notes have a fixed  interest rate of 6.05% and a guarantee fee of
           4.0%. We used the net proceeds from the issuance to repay outstanding
           borrowings under our floating rate bank credit facility.

                                       19
<PAGE>

Electric Lightwave, Inc.

PART II       OTHER INFORMATION
Item 1.       Legal Proceedings

              Subsequent to June 30, 1999, we resolved the legal proceedings and
              related  arbitration against US West as described in Item 3 of our
              1998 Form 10-K.  US West has  agreed to enter  into a purchase  of
              incremental  telecommunications  services from us over an 18-month
              period.

              In accordance with the terms of our contract with Bonneville Power
              Administration,  we  requested  arbitration  to  resolve a dispute
              regarding the exclusive use of our long-haul facilities connecting
              Portland to Seattle and Seattle to Spokane. We filed our Notice of
              Claim or Demand for  Arbitration  on April 19, 1999. It is pending
              before an arbitrator of the American Arbitration Association.

              We are party to routine litigation arising in the normal course of
              business.  We do not expect these matters,  individually or in the
              aggregate,  to have a  material  adverse  effect on our  financial
              position,  results of operations or cash flows.  We are also party
              to  various  proceedings  before  state  PUCs.  These  proceedings
              typically relate to authority to operate in a state and regulatory
              arbitration proceedings concerning our interconnection agreements.
              See "Part I.,  Management's  Discussion  and Analysis of Financial
              Condition  and  Results of  Operations  -  Liquidity  and  Capital
              Resources - Other Matters - Reciprocal Compensation".

Item 2.       Changes in Securities and Use of Proceeds

              None.

Item 3.       Defaults Upon Senior Securities

              None.

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

              We held our 1999  Annual  Meeting of the  Stockholders  on May 20,
              1999 to elect  directors and consider  proposals (i) to approve an
              amendment of the 1997 Equity Incentive Plan and (ii) to approve an
              amendment of the 1998 Employee  Stock  Purchase Plan, as discussed
              in the Company's proxy statement filed on April 9, 1999.

              The following  persons were elected directors to hold office until
              the next  annual  meeting  and until  their  successors  have been
              elected and qualified:

<TABLE>
<CAPTION>

                                                             Votes
                                          -----------------------------------------
                                             For (*)                   Abstained
                                          -----------------        ----------------
              <S>                         <C>                          <C>
              Daryl A. Ferguson           417,772,742                  448,396
              Guenther Greiner            417,700,942                  520,196
              Stanley Harfenist           417,777,242                  443,896
              David B. Sharkey            417,777,142                  443,996
              Robert A. Stanger           417,777,142                  443,996
              Leonard Tow                 417,768,743                  452,395
              Maggie Wilderotter          417,777,142                  443,996
</TABLE>

                                       20
<PAGE>

Electric Lightwave, Inc.

              The  stockholders  approved  the  amendment  of  the  1997  Equity
              Incentive Plan by a vote of 413,611,310 (*) votes For to 1,197,077
              votes  Against;  12,448 votes  Abstained and there were  3,400,303
              Broker Non-Votes.

              The stockholders also approved the amendment of the Employee Stock
              Purchase  Plan by a vote of  413,880,174  (*) Votes For to 821,157
              votes  Against;  10,035 votes  Abstained and there were  3,509,772
              Broker Non-Votes.

              (*) Includes  votes from the  41,165,000  shares of Class B common
              stock.  Citizens  owns all Class B Common  Stock and each share is
              entitled to 10 votes on each matter to be voted upon by holders of
              the Common Stock.

Item 5.    Other Information

              None.

Item 6.    Exhibits and Reports on Form 8-K

           a)        The exhibits below are filed as part of this report:
<TABLE>
<CAPTION>

Exhibit No.          Description
          <S>        <C>
          10.13      1997 Equity  Incentive  Plan, as amended  (incorporated  by
                     reference to Appendix A of our Proxy Statement for our 1999
                     Annual Meeting of Stockholders).

          10.21.1*   First  Amendment  to the Private  Line  Services  Agreement
                     between Electric Lightwave, Inc. and Qwest dated as of June
                     29, 1999.

          10.22      1998 Employee Stock Purchase Plan, as amended (incorporated
                     by reference to Appendix B of our Proxy  Statement  for our
                     1999 Annual Meeting of Stockholders).

          10.24.1    Indenture from Electric Lightwave,  Inc. to Citibank, N.A.,
                     dated  April 15,  1999,  with  respect to the 6.05%  Senior
                     Unsecured Notes due 2004.

          10.24.2    First Supplemental Indenture from Electric Lightwave, Inc.,
                     Citizens  Utilities  Company and Citizens  Newco Company to
                     Citibank,  N.A.  dated April 15, 1999,  with respect to the
                     6.05% Senior Unsecured Notes due 2004.

          10.24.3    Form of Electric  Lightwave,  Inc.  6.05% Senior  Unsecured
                     Notes due 2004.

          10.24.4    Letter of  Representations  to the Depository Trust Company
                     dated  April  28,1999,  with  respect  to the 6.05%  Senior
                     Unsecured Notes due 2004.

          27.1       Financial  Data  Schedule for the six months ended June 30,
                     1999.

          27.2       Restated  Financial  Data Schedule for the six months ended
                     June 30, 1998.
</TABLE>

                                       21
<PAGE>

                  *  Material  has  been  omitted  pursuant  to  a  request  for
                  confidential  treatment filed with the Securities and Exchange
                  Commission.

              b)  Reports on Form 8-K

              On May 4, 1999, we filed a Current  Report on Form 8-K, under Item
              5,  "Other  Events"   containing   first  quarter  1999  financial
              information.


                                       22
<PAGE>



Signature



              Pursuant to the  requirements  of the  Securities  Exchange Act of
              1934,  the  Registrant has duly caused this report to be signed on
              its behalf by the undersigned thereunto duly authorized.


              ELECTRIC LIGHTWAVE, INC.
              (Registrant)

              By:  /s/ Kerry D. Rea
                     Kerry D. Rea
                     Vice President and Controller





              August 2, 1999


















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