UNITED STATES SECURITIES AND EXCHANGE COMMISSION
			                      WASHINGTON, D. C.  20549
				                            FORM 10-K

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

For the fiscal year ended             December 31, 1996 
                     			  -------------------------------------------------
                            				    OR

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

For the transition period from                      to       
                      		       --------------------    --------------------
Commission file number:                       1-6 469  
                     			---------------------------------------------------

            		  CAROLINA TELEPHONE AND TELEGRAPH COMPANY        
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          	(Exact name of registrant as specified in its charter)  

      	   North Carolina                            56-0931189                 
----------------------------------       ----------------------------------    
   (State or other jurisdiction of                 (I.R.S. Employer        
    incorporation or organization)                 Identification No.)

14111 Capital Boulevard, Wake Forest, North Carolina        27587   
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      	(Address of principal executive offices)          (Zip Code)

                      			      919-554-7900    
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         	(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  None

This registrant meets the conditions set forth in General Instruction I(1)(a) 
and (b) of Form 10-K and is therefore filing this form with the reduced 
disclosure format.

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 
                                          						      -----      -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K. [X]

There is no voting stock held by non-affiliates.
There are 3,626,510 shares of common stock, par value $20, outstanding at 
December 31, 1996 and as of the date of filing of this report.
Documents incorporated by reference:  None
<PAGE>
CAROLINA TELEPHONE AND TELEGRAPH COMPANY
Securities and Exchange Commission
Form 10-K, Part I


Item 1.  Business

     Carolina Telephone and Telegraph Company (the Company), a wholly-owned 
subsidiary of Sprint Corporation (Sprint), was incorporated under the laws of 
the State of North Carolina in 1968, and in 1969 acquired all of the public 
utility assets of the predecessor company of the same name pursuant to a plan 
of merger.  The Company's principal offices are located at 14111 Capital 
Boulevard, Wake Forest, North Carolina 27587-5900 and its telephone number is 
(919) 554-7900.  The term "Company" herein refers to the present Company and, 
as the context requires, its predecessor of the same name which was 
incorporated in the State of North Carolina in 1900, as well as its 
wholly-owned subsidiaries, Carolina Telephone Long Distance, Inc., SC One 
Company and Joint Underground Locating Services, Inc.

     The Company is engaged in the business of furnishing communications 
services, mainly local and long distance services and network access, and 
selling telecommunications equipment.  The Company serves 144 exchange areas 
in all or part of 50 counties generally in the eastern portion of North 
Carolina.  As of December 31, 1996, the Company had an investment in property, 
plant and equipment of $876,626,000, net of accumulated depreciation.  
Operating revenues for the year 1996 amounted to $837,657,000.

     The principal industries in the Company's service area are agriculture, 
textiles, chemicals and tourism.  Military installations, including Fort 
Bragg, Camp Lejeune, Cherry Point Marine Corps Air Station, the U.S. Coast 
Guard Base at Elizabeth City and Pope Air Force Base, contribute significantly 
to the economy of the area.

     Digital switching equipment and fiber optic cable represent a substantial 
portion of the Company's expansion of long distance facilities.  At December 
31, 1996, the Company served 1,043,356 access lines, distributed among 144 
exchange areas as follows:  Fayetteville, 14.6 percent; Greenville, 5.5 
percent; Rocky Mount, 4.5 percent; Jacksonville, 4.2 percent; Wilson, 3.1 
percent; New Bern, 3.0 percent; and all other areas less than 3.0 percent 
each.

     In addition to furnishing local service, the Company's central offices 
and toll lines are connected with other telephone companies and with the 
nationwide toll networks of interexchange carriers.  Toll calls may thus be 
made from any telephone in the Company's service area to anywhere in the 
United States and most other countries.  Other telecommunications services, 
for the most part furnished in conjunction with other telephone companies, 
include facilities for private line service, data transmission, radio and 
television program transmission, mobile radio telephone, cellular and wide 
area telecommunications service.

     Revenues from communications services, principally telephone service, 
constitute about 77.2 percent of the total 1996 operating revenues of the 
Company.  A significant portion of the Company's network access revenues are 
derived from access charge billings to AT&T Corporation (AT&T).  However, the 
Company does not believe its revenues are dependent upon AT&T, as customers' 
demand for interLATA long distance telephone service is not tied to any one 
long distance carrier.  As the market share of AT&T's long distance 

<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                      Form 10-K Part I


Item 1.  Business (continued)

competitors increases, the percent of revenues derived from network access 
services provided to AT&T decreases.  Other revenues are derived in large part 
from the sale of telephone directory listings, the sale of telecommunications 
equipment, the lease of network facilities, providing operator services and 
processing customer toll billings for interexchange carriers, primarily AT&T.

     The following tables show certain information regarding access lines in 
service and toll messages handled for the periods indicated.

              			  Access Lines
						                                             Change
	       Number at End of Period                 During Period
Period    Residence   Business    Total        Number  % Change
------    ---------   --------    -----        ------  --------
 1996      792,173     251,183  1,043,356       51,310     5.2
 1995      763,923     228,123    992,046       44,081     4.7
 1994      738,815     209,150    947,965       42,431     4.7
 1993      710,977     194,557    905,534       42,693     4.9
 1992      681,167     181,674    862,841       36,343     4.4


                      			  Toll Messages
	     Total For Year                   Average Messages Per Day
Period      Number     % Change           Number    % Change
------      ------     --------           ------    -------- 
 1996    560,193,027      4.5            1,534,775      4.5
 1995    536,211,752     11.7            1,469,073     11.7
 1994    480,122,986      5.9            1,315,405      5.9
 1993    453,494,308      6.9            1,242,450      7.2
 1992    424,096,621      8.8            1,158,734      8.5


     On December 31, 1996, the Company had 3,739 employees, of which 2,026 or 
54.2 percent were represented by the Communications Workers of America, and 
118 or 3.2 percent were represented by the International Brotherhood of 
Electrical Workers for collective bargaining purposes.  The Company had no 
material work stoppages caused by labor controversies.

     The Company's environmental compliance and remediation expenditures are 
primarily related to the operation of standby power generators.  The 
expenditures arise in connection with permits, standards compliance or 
occasional remediation associated with generators, batteries or fuel storage.  
The Company's expenditures relating to environmental compliance and 
remediation have had no significant effect upon capital expenditures or 
earnings of the Company, and future effects are not expected to be material.

     Carolina Telephone Long Distance, Inc. (CTLD) is a North Carolina 
corporation formed in 1987.  In 1987, the North Carolina Utilities Commission 
granted CTLD a certificate for the provision of services.  In February 1997, 
CTLD filed with the North Carolina Utilities Commission its notice of 
intention to cease providing all but nonswitched, private line services 
effective April 30, 1997.

<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                      Form 10-K Part I


Item 1.  Business (continued)

     The Company is subject to the jurisdiction of the Federal Communications 
Commission (FCC) and the North Carolina Utilities Commission (Commission).

     Effective January 1, 1991, the FCC adopted a price cap regulatory format 
for the Regional Bell Operating Companies and the GTE local exchange 
companies.  Other local exchange companies (LECs) could voluntarily become 
subject to price cap regulation.  Under price caps, prices for access service 
must be adjusted annually to reflect industry average productivity gains (as 
specified by the FCC), inflation and certain allowed cost changes.  The 
Company elected to be subject to price cap regulation.  During 1995, the FCC 
adopted modifications to the price cap plan to reset productivity elections, 
change certain rate adjustment methods, address new service offerings and 
generally reduce regulatory requirements.  Under these changes, the Company 
elected a productivity factor that allows it to avoid sharing of interstate 
access earnings.  On December 24, 1996, the FCC issued a Notice of Proposed 
Rule Making relative to Access Charge Reform.  The FCC is seeking to make the 
access charge system more economically efficient and more consistent with the 
development of local competition in the telecommunications industry.

     Effective July 1, 1995, the North Carolina General Assembly enacted 
legislation that enabled incumbent local exchange telephone companies such as 
the Company to elect to have its intrastate rates, terms and conditions for 
services determined pursuant to a price cap form of regulation.  The Company 
filed a petition in October 1995 to elect price regulation, and the Commission 
approved a price regulation plan effective June 24, 1996.  The approved plan 
required $30 million in rate reductions with $15 million scheduled on the 
effective date of the plan and the remaining $15 million to occur in $5 
million increments on each of the next three anniversary dates of the plan.  
Rate reductions are targeted for touchtone, access, intraLATA toll and complex 
business services.  The price regulation will allow the Company to adjust 
prices for basic, interconnection and non-basic services, using an inflation-
based formula.  As a consumer safeguard, the Company will cap residential 
rates at its June 24, 1996 level for the initial three years of the plan.

     The enactment of the federal Telecommunications Act of 1996 (the Act) 
will enable direct competition in the Company's local exchange service market.  
The potential for immediate competition is increasing with eleven competitive 
carriers certificated (as of January 16, 1997) to provide services statewide.  
An important issue to be addressed by the Commission in 1997 will be the 
continuance of universally available telephone service at reasonable rates.  
The Commission will defer action until the FCC issues its final order on 
May 8, 1997 regarding universal service issues set forth in the Act.  The 
creation of an explicit universal service fund will enable the Company to 
more closely align its rates for competitive services (e.g., access services, 
intraLATA toll services and complex business services) with the cost to 
provide these services.

     The extent and ultimate impact of competition for LECs will continue to 
depend, to a considerable degree, on FCC and Commission actions, court 
decisions and possible federal or state legislation.  See "Management's 
Discussion and Analysis of Financial Condition and Results of Operations" for 
a discussion of the Act.

<PAGE>
                            				       Carolina Telephone & Telegraph Company
                                                 							 Form 10-K Parts I/II


Item 2.  Properties

     The properties of the Company consist principally of land, structures, 
facilities and equipment.  Central office equipment represents approximately 
41.3 percent of the Company's investment in telephone plant in service; land 
and buildings (occupied principally by central office equipment) represent 
7.3 percent; telephone instruments and related wiring and equipment including 
private branch exchanges (PBX) (substantially all of which are located on the 
premises of subscribers) represent 1.6 percent; connecting lines not on 
subscribers' premises (the majority of which are on or under public highways 
and streets and the remainder on or under private property) represent 43.9 
percent; and other telephone plant represents 5.9 percent.  Of the 144 
exchanges, 140 exchanges have central offices located on land owned by the 
Company and served 84.5 percent of the Company's access lines; 3 exchanges 
have central offices located in leased facilities and served 0.9 percent of 
the Company's access lines; and 1 exchange (Fayetteville) has central offices, 
some of which are located on land owned by the Company and some of which are 
located in leased facilities, and served an aggregate of 14.6 percent of the 
Company's access lines.

     Standard practices prevailing in the telephone industry are followed by 
the Company in the construction and maintenance of its plant and facilities; 
the Company considers that its plant and facilities are, as a whole, in sound 
physical and operating condition.

     The following table shows gross additions to and retirements of 
properties of the Company during the five years ended December 31 
(in thousands):

     			            Gross
			               Additions     Retirements
             			  ---------     -----------
	     1996         $158,586        $43,833
	     1995          146,146         49,211
	     1994          146,110         39,761
	     1993          146,543         51,020
	     1992          143,057         89,179


Item 3.  Legal Proceedings

     No material legal proceedings are pending to which the Company or its 
subsidiaries are a party or of which any of their property is the subject.

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

     Omitted under the provisions of General Instruction I.

Item 5.  Market for Registrant's Common Stock and Related Stockholder
       	 Matters

     The Registrant is a wholly-owned subsidiary of Sprint and consequently 
its common stock is not traded.


<PAGE>
                            				       Carolina Telephone & Telegraph Company
                     							                                Form 10-K Part II


Item 6.  Selected Financial Data (in thousands)
		     
               					                           December 31,
			                         1996       1995       1994       1993       1992   
		                     ------------------------------------------------------
Operating revenues     $  837,657 $  769,464 $  717,454 $  638,541 $  590,440

Net income (1)(2)         114,093     57,508     94,944     47,168     72,800

Total assets            1,118,044  1,052,378  1,138,522  1,078,929  1,025,295

Long term debt (excluding
 current maturities)      198,631    248,309    260,736    269,087    240,535


   (1) In 1995, the Company initiated a restructuring in an effort to stream-
line certain processes and reduce costs in an increasingly competitive 
marketplace.  As a result, the Company recorded an $8,079,000 nonrecuring 
charge in 1995, which reduced net income by $4,844,000.

   (2) Effective December 31, 1995, the Company determined that it no longer 
met the criteria necessary for the continued application of the provisions of 
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for 
the Effects of Certain Types of Regulation."  As a result of the decision to 
discontinue the application of SFAS No. 71, the Company recorded a noncash 
extraordinary charge of $42,424,000, net of income tax benefits of 
$51,523,000.

     Earnings and dividends per share information have been omitted because 
the Company is a wholly-owned subsidiary of Sprint.


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations

     The Company's financial well-being plays a vital role in its efforts to 
provide efficient, responsive, state-of-the art communication services to the 
rapidly growing North Carolina market amid the uncertainties created by 
deregulation.  In order to meet the challenges of this dynamic environment, 
the Company continues to seek ways to increase organizational efficiency 
through process improvements and careful control of construction expenditures 
and automation and consolidation of functions.  Concurrently, efforts have 
been undertaken to aggressively implement new technologies, including enhanced 
digital switching, fiber optics and pair gain devices that offer expanded 
services at reduced costs.

     The Company includes certain estimates, projections, and other forward-
looking statements in its reports, presentations and other material 
disseminated to the public.  There can be no assurance of future performance 
and actual results may differ materially from those in the forward-looking 
statements.  Factors that could cause actual results to differ materially




<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations (continued)

from estimates or projections contained in the forward-looking statements 
include:
   * the effects of vigorous competition in the markets in which the Company
     operates;
   * the impacts of any unusual items resulting from ongoing evaluations of 
     the Company's business strategies;
   * requirements imposed on the Company and its competitors by the Federal
     Communications Commission and North Carolina Utilities Commission under 
     the Telecommunications Act of 1996;
   * unexpected results of litigation filed against the Company; and
   * the possibility of one or more of the markets in which the Company 
     competes being affected by variations in political, economic or other 
     factors such as monetary policy, legal and regulatory changes or other 
     external factors over which the Company has no control.

Telecommunications Law
----------------------
     The Telecommunications Act of 1996 (the Act), which was signed into law 
in February 1996, promotes competition in all aspects of telecommunications.  
In particular, the Act removes barriers to competition that will enable local 
and long distance companies and cable TV companies to enter each other's 
markets.  The FCC is in the process of adopting several new rules, as required 
by the Act, to implement telecommunications competition.

     The Act eliminates regulatory barriers to entry into local telephone 
markets and imposes several obligations upon incumbent LECs.  They must allow 
local resale without unreasonable restrictions, provide number portability 
and dialing parity, afford access to rights-of-way, establish reciprocal 
compensation arrangements, negotiate interconnection agreements, provide 
nondiscriminatory access to unbundled network elements and allow collocation 
of interconnection equipment by competitors.

     The impact of the Act on the Company is unknown because a number of 
important implementation issues (such as the nature and extent of continued 
subsidies for local rates) still need to be decided by state or federal 
regulators.  However, the Act offers opportunities as well as risks.  The new 
competitive environment should lead to a reduction in local access fees, the 
largest single cost in providing long distance service today.  The risk 
aspect of local competition is that the market share of the Company is likely 
to decline.

Results of Operations
---------------------
     Operating revenues are classified as local service, network access, long 
distance, telecommunications equipment sales and other.  Local service 
revenues come from providing local telephone exchange services and leasing 
equipment.  Network access revenues are derived from billing other carriers 
and telephone customers for their use of the local network to complete long 
distance calls in those instances where the long distance service is not 
provided entirely by the Company.  Long distance revenues are derived 


<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations (continued)

Results of Operations (continued)
---------------------------------
principally from providing long distance services within designated areas.  
Telecommunications equipment revenues relate to equipment sales.  Other 
revenues primarily relate to directory advertising, billing and collection 
services for interexchange long distance carriers, operator services and 
network facilities leases.

     Operating revenues increased by $68,193,000 or 8.9 percent during the 
year ended December 31, 1996 as compared to 1995, reflecting increases in 
local service, network access service, telecommunications equipment sales and 
other revenues.

     Local service revenues increased $48,990,000 or 16.2 percent during the 
year ended December 31, 1996 as compared to 1995.  Basic area service revenues 
contributed $35,425,000 to this increase, primarily attributable to a 5.2 
percent growth in access lines during 1996 and to the implementation of 
Expanded Local Calling Service (ELCS).  ELCS, which includes exchanges within 
an approximately 40-mile radius of a central office, allows residence 
customers to choose one of three local service options and business customers 
to choose one of two local service options that best fits their personal 
calling needs.  For the same period, revenue from custom calling features 
increased $13,102,000 as a result of access line gains, marketing promotions 
and the introduction of the pay-per-use option.  Also contributing to the 
increased local service revenues were higher maintenance revenues related 
principally to inside wiring and key and PBX systems.  Translink, Digilink, 
and the North Carolina Information Highway project contributed to an increase 
in local private line revenues.  Translink is an interexchange digital channel 
service which provides access transport between a customer's premises and the 
local serving office on a channelized basis over a high-capacity digital 
facility.  Digilink is a digital transmission service designed to transmit 
signals, end to end, over digital facilities routed through central offices.  
As part of the North Carolina Information Highway project, the Company is 
providing equipment to the state government to provide link-up capabilities 
for different schools and institutions.

     Network access revenues increased $16,673,000 or 7.6 percent during the 
year ended December 31, 1996 as compared to 1995.  The increase was primarily 
due to a 9.9 percent growth in interstate access minutes, an 8.8 percent 
growth in intrastate access minutes and a final resolution of contingent 
interstate revenue liabilities associated with prior years under Price Cap I.

     Long distance revenues decreased $34,354,000 or 36.3 percent during the 
year ended December 31, 1996 as compared to 1995.  Carolina Telephone Long 
Distance, Inc. experienced a 26.5 percent decrease in access lines due to 
aggressive advertising campaigns of its competitors.  The remaining decrease 
is the result of the implementation of ELCS, which changed the category of 
this revenue from long distance service revenues to local service revenues.




<PAGE>
                            				       Carolina Telephone & Telegraph Company
						                                                 	    Form 10-K Part II


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations (continued)

Results of Operations (continued)
---------------------------------
     Telecommunications equipment revenues increased $12,640,000 or 23.8 
percent during the year ended December 31, 1996 as compared to 1995.  The 
equipment sales revenue related principally to telephone instruments, PBX, 
data terminal/communications equipment, structured wiring plans and key 
systems.

     Other revenues increased $24,244,000 or 24.1 percent during the year 
ended December 31, 1996 as compared to 1995.  The increase primarily 
represents increases in general support asset rent revenue, customer late 
payment revenue and revenue from North Carolina Utility Services (NCUS) and 
Joint Underground Locating Services, Inc. (JULS).  Regulatory approval was 
given to the Company to charge customers for late payments in 1996.  In 
September 1996, Sprint contributed JULS to the Company.  JULS was previously 
owned by The United Telephone Company of Pennsylvania, an affiliate of the 
Company.  JULS operates a nonregulated line of business specializing in 
locating underground utility lines serving the following 13 states:  
Indiana, Minnesota, Massachusetts, Missouri, Nebraska, New Hampshire, New 
Jersey, New York, Ohio, Oklahoma, Pennsylvania, Texas and Wyoming.  JULS and 
NCUS, another nonregulated line of business specializing in locating 
underground utility lines, contributed $15,748,000 to the increase in other 
revenues in 1996.  The increase in JULS and NCUS revenues reflects an 
expansion of the service and an increase in the customer base in existing 
service areas as well as revenues attributable to administering the placement 
of buried service wires.

     Plant expense increased $11,940,000 or 5.7 percent during the year ended 
December 31, 1996 as compared to 1995.  The increase is primarily due to 
repair expenses incurred from ice storms and Hurricanes Bertha and Fran.  Also 
contributing to the increase are expenses for a new automated outside plant 
mapping and facilities management system.

     Customer operations expense increased $26,247,000 or 21.6 percent during 
the year ended December 31, 1996 as compared to 1995.  JULS and NCUS expenses 
contributed $11,295,000 to this increase.  JULS and NCUS expenses increased 
due to the expansion of its customer base as well as expenses attributable to 
administering the placement of buried service wires.  Customer operations-
marketing expense increased $4,721,000 primarily due to a more aggressive 
sales strategy as the Company continues to intensify its efforts to achieve 
an increased market share and gain knowledge of its customer expectations to 
differentiate the Company from competition.  Business office operations 
expense increased $4,556,000 primarily due to increased resources utilized to 
meet customer demands.  The remainder of the increase is due to uncollectible 
accounts and other individually insignificant expenses.  An increase in both 
revenues and the number of accounts being written off due to a more aggressive 
collection strategy contributed to the increase in uncollectible accounts.

     Cost of telecommunications equipment expenses increased $6,747,000 or 
17.8 percent during the year ended December 31, 1996 as compared to 1995.  
This increase is primarily due to an increase in equipment sales.

<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations (continued)

Results of Operations (continued)
---------------------------------
     In 1995, the Company initiated a restructuring in an effort to streamline 
certain processes and reduce costs in an increasingly competitive marketplace.  
These actions resulted in the planned elimination of approximately 150 
positions.  As a result, the Company recorded an $8,079,000 nonrecurring 
charge in 1995.  The accrued liability related to this charge specifically 
relates to the benefits that affected employees will receive upon termination.  
Through 1996, approximately 70 positions have been eliminated resulting in 
termination benefit payments of $2,521,000.  Substantially all of the 
remaining positions are expected to be eliminated during 1997, with the 
related costs expected to be paid during 1997 and 1998.

Non-operating Items
-------------------

Other Income

     Other income increased $6,275,000 or 72.9 percent during the year ended 
December 31, 1996 as compared to 1995.  In 1995, the Company transferred its 
investment in Rural Service Area cellular partnerships to its affiliate, 
Centel Corporation (Centel), in exchange for preferred stock issued by Centel.  
The increase in other income in 1996 was primarily due to dividends received 
on the Centel preferred stock.

Extraordinary Items

     In 1996, the Company incurred an extraordinary charge related to the 
early extinguishment of debt of $4,085,000, net of the related income tax 
benefit.

     At December 31, 1995, the Company adopted accounting principles for a 
competitive marketplace and discontinued applying SFAS No. 71 (see Note 7 of 
"Notes to Consolidated Financial Statements").  SFAS No. 71 requires 
accounting recognition of regulators' rate actions where appropriate.  The 
Company determined that it no longer met the criteria for applying SFAS No. 71 
due to changes in the regulatory framework and the evolving competitive 
environment.  As a result, the Company recorded an after-tax, noncash 
extraordinary charge of $42,424,000.

Accounting Changes

     Effective January 1, 1994, the Company changed its method of accounting 
for postemployment benefits by adopting SFAS No. 112.  See Note 2 of "Notes 
to Consolidated Financial Statements" for additional information about this 
accounting change which did not significantly impact the Company's financial 
statements.

Inflation
---------
      The effects of inflation on the operations of the Company were not 
significant during 1996, 1995 or 1994.
<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations (continued)

Financial Condition
-------------------
     The Company's assets increased $65,666,000 to $1.12 billion as of 
December 31, 1996 compared to December 31, 1995.  Customers and other 
accounts receivable increased $26,629,000 as a result of increased revenues, 
extended periods for deferred payments and some slowing in rate of customer 
payments.  Property, plant and equipment, net of accumulated depreciation, 
increased $27,524,000 as the Company must continually replace and construct 
new facilities.  Short-term borrowings increased $94,130,000, primarily due 
to redemption of debentures prior to scheduled debt maturities.  Currently, 
all short-term borrowing transactions are made with Sprint.  Long-term debt 
(including current maturities of long-term debt) as of December 31, 1996 
decreased $61,508,000 compared to December 31, 1995 primarily due to 
redemption of debentures prior to scheduled debt maturities.  Postretirement 
and other benefit obligations increased $10,916,000 as of December 31, 1996 
compared to December 31, 1995, primarily due to the current year's 
postretirement benefits costs.  The Company's total capitalization at 
December 31, 1996 totaled $851,215,000, consisting of long-term debt 
(including current maturities), short-term borrowings, and common stock and 
other stockholder's equity.  Short-term borrowings and long-term debt 
comprised 39.5 percent of total capitalization at December 31, 1996 compared 
to 38.4 percent at December 31, 1995.

Liquidity and Capital Resources
-------------------------------
     Cash flows from operating activities are the Company's primary source of 
liquidity.  Net cash provided by operating activities decreased $17,261,000 
during the year ended December 31, 1996.  The decrease in net cash provided 
by operating activities was primarily attributable to increases in accounts 
receivable, inventories and other current assets, offset by improved operating 
results.

     Net cash used by investing activities increased $11,056,000 during the 
year ended December 31, 1996.  In order to meet customer demands, the Company 
must continually replace and construct new facilities.  The Company's planned 
construction expenditures for 1997 are $157,635,000 which includes 
expenditures of $73,052,000 for central office equipment, $43,050,000 for 
cable facilities, $11,618,000 for general support assets and $29,915,000 for 
other expenditures.  The Company anticipates that the funds for these 
expenditures will be supplied primarily by operating activities.

     The primary source of financing for the Company has been long-term debt.  
In addition, the Company receives cash advances from Sprint.  Net cash used 
by financing activities decreased $28,639,000 during the year ended December 
31, 1996 primarily due to an increase in advances from Sprint, offset by 
dividend payments and the retirement of long-term debt.

     As of December 31, 1996, the Company had a total of $31,000,000 in 
one-year bank commitments.  The bank lines provide for short-term borrowings 
at market rates of interest and require annual commitment fees based on the 
unused portion.  Such lines of credit, which support commercial paper, may be 

<PAGE>                                       
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


Item 7.  Management's Discussion and Analysis of Financial Condition and 
       	 Results of Operations (continued)

Liquidity and Capital Resources (continued)
-------------------------------------------
withdrawn by the banks if there is a material adverse change in the financial 
condition of Sprint or the Company.  As of December 31, 1996, no amounts were 
borrowed against this credit facility.  The Company's short-term financing 
was provided by Sprint in 1996.  The weighted average interest rates on 
short-term borrowings in 1996, 1995 and 1994 were 5.5 percent, 5.9 percent 
and 4.6 percent, respectively.

     The Company is also authorized to issue and sell an additional 
$75,000,000 in debentures.  The debentures must be due within thirty years of 
the date of issue and cannot exceed an interest rate of 7.25 percent.

     Carolina Telephone Long Distance, Inc. (CTLD) is a North Carolina 
corporation formed in 1987.  In 1987, the North Carolina Utilities Commission 
(Commission) granted CTLD a certificate for the provision of services.  In 
February 1997, CTLD filed with the Commission its notice of intention to 
cease providing all but nonswitched, private line services effective April 30, 
1997.

































<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


Item 8. Financial Statements and Supplementary Data


		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		               INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                 							Page Reference
                                                        --------------
Report of Independent Auditors                          Page 14

Consolidated Balance Sheets as of 
  December 31, 1996 and 1995                            Pages 15 -16
  
Consolidated Statements of Income 
  for each of the three years 
  ended December 31, 1996                               Page 17
  
Consolidated Statements of Changes 
  in Stockholder's Equity for each 
  of the three years ended 
  December 31, 1996                                     Page 18
  
Consolidated Statements of Cash Flows 
  for each of the three years ended  
  December 31, 1996                                     Page 19
  
Notes to Consolidated Financial Statements              Pages 20 - 30



























<PAGE>
                           		 		       Carolina Telephone & Telegraph Company   
							                                                     Form 10-K Part II
							    

               		      REPORT OF INDEPENDENT AUDITORS
		      
The Board of Directors
Carolina Telephone and Telegraph Company

     We have audited the accompanying consolidated balance sheets of Carolina 
Telephone and Telegraph Company (the Company), a wholly-owned subsidiary of 
Sprint Corporation, as of December 31, 1996 and 1995, and the related 
consolidated statements of income, common stock and other stockholder's 
equity, and cash flows for each of the three years in the period ended 
December 31, 1996.  Our audits also included the financial statement schedule 
listed in the Index at Item 14(a).  These financial statements and the 
schedule are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these financial statements and the 
schedule based on our audits.

     We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the consolidated financial position 
of the Company at December 31, 1996 and 1995, and the consolidated results of 
its operations and its cash flows for each of the three years in the period 
ended December 31, 1996 in conformity with generally accepted accounting 
principles.  Also, in our opinion, the related financial statement schedule, 
when considered in relation to the basic financial statements taken as a 
whole, presents fairly in all material respects the information set forth 
therein.

     As discussed in Note 7 to the consolidated financial statements, the 
Company discontinued accounting for its operations in accordance with 
Statement of Financial Accounting Standards No. 71, "Accounting for the 
Effects of Certain Types of Regulation," in 1995.

                                                   							 ERNST & YOUNG LLP

Kansas City, Missouri
January 22, 1997










<PAGE>
		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
	                    		CONSOLIDATED BALANCE SHEETS
                      		December 31, 1996 and 1995
			                           (In thousands)


                                                 							1996          1995
Assets                                                  ----          ----
------
Current assets 
 Cash                                             $      414    $       54 
 Receivables, net of allowance for  
  doubtful accounts of $3,506 ($2,348 
  in 1995)    
   Customers and other                               107,193        81,710   
   Interexchange carriers                             23,174        25,955   
   Affiliated companies                                8,847         4,920 
  Inventories                                          9,118         6,884 
  Deferred income taxes                                3,988            23 
  Prepaid expenses and other                           1,023         1,578
						                                             ---------     ---------  
						                                               153,757       121,124
						     
						     
Property, plant and equipment                      1,939,608     1,818,491 
 Less accumulated depreciation                     1,062,982       969,389
						                                            ----------    ---------- 
						                                               876,626       849,102
						     
						     
Deferred charges and other assets 
 Investment in affiliated company                     29,043        29,043 
 Prepaid pension accrual                              51,991        43,725 
 Other                                                 6,627         9,384
			                                          			  ----------    ----------
						                                                87,661        82,152
				                                           	  ----------    ---------- 
				                                          		  $1,118,044    $1,052,378
		                                          				  ==========    ==========




















<PAGE>

		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                    	 CONSOLIDATED BALANCE SHEETS
			                     December 31, 1996 and 1995
			                          (In thousands)
			       
			       
				                                                 			1996          1995
Liabilities and Stockholder's Equity                    ----          ----
 Current liabilities 
  Outstanding checks in excess of cash balances   $    2,956    $    7,443 
  Short-term borrowings  
   Commercial paper                                        -        42,800  
   Advances from parent                              137,002            72 
  Current maturities of long-term debt                   842        12,672 
  Accounts payable  
   Vendors and other                                  17,993        14,532  
   Interexchange carriers                             18,911        20,389  
   Affiliated companies                               18,902        15,883 
  Accrued taxes                                        6,132        14,635 
  Advance billings and customer deposits              16,869        18,178 
  Accrued vacation pay                                 9,021         8,916 
  Accrued payroll                                      6,226         5,692
  Other                                                9,627        12,025
                                          						  ----------    ----------
						                                               244,481       173,237
						    
						    
Long-term debt                                       198,631       248,309


Deferred credits and other liabilities 
 Deferred income taxes                                89,513        77,841 
 Postretirement and other benefit obligations         62,740        51,824 
 Other                                                 7,939        13,900
                                          						  ----------    ----------
						                                               160,192       143,565
						     
						     
Common stock and other stockholder's equity  
 Common stock, par value $20 per share,   
  authorized-5,000,000 shares, issued and   
  outstanding-3,626,510 shares                        72,530        72,530  
 Capital in excess of par value                       75,744        71,991  
 Retained earnings                                   366,466       342,746
				                                          		  ----------    ----------
						                                               514,740       487,267
			                                          			  ----------    ----------   
			                                          			  $1,118,044    $1,052,378
						  








See accompanying notes to consolidated financial statements.
<PAGE>
		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                   CONSOLIDATED STATEMENTS OF INCOME  
              		Years ended December 31, 1996, 1995 and 1994
			                           (In thousands)

					                                        1996         1995         1994
                                  					      ----         ----         ----
Operating Revenues
 Local service                            $351,218     $302,228     $276,532
 Network access service                    235,642      218,969      204,928
 Long distance service                      60,192       94,546      108,688
 Telecommunications equipment               65,782       53,142       44,431
 Other                                     124,823      100,579       82,875
					                                     --------     --------     --------
					                                      837,657      769,464      717,454
					   
Operating Expenses
 Plant expense                             223,189      211,249      200,608
 Depreciation                              135,205      132,146      133,764
 Customer operations                       147,947      121,700       97,094
 Corporate operations                       71,863       68,514       65,815
 Cost of telecommunications equipment       44,595       37,848       31,906
 Restructuring costs                             -        8,079            -
 Other                                      19,979       17,675       15,365
					                                     --------     --------      -------
			                                   		   642,778      597,211      544,552
			                                    	  --------     --------     --------
Operating Income                           194,879      172,253      172,902

Interest expense                           (21,262)     (22,413)     (22,105)

Other income                                14,668        8,602          323
                                   					  --------     --------     --------
Income before income taxes and
 extraordinary items                       188,285      158,442      151,120
 
Income taxes                               (70,107)     (58,510)     (56,176)
	                                   				  --------     --------     --------
Income before extraordinary items          118,178       99,932       94,944

Extraordinary items 
 Discontinuation of regulatory 
  accounting principles, net                     -      (42,424)           - 
 Early extinguishment of debt, net          (4,085)           -            -
                                   					  --------     --------     -------- 
Net income                                $114,093     $ 57,508     $ 94,944
                                   					  ========     ========     ========











See accompanying notes to consolidated financial statements.
<PAGE>
		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
      	   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
		              Years ended December 31, 1996, 1995 and 1994               
                          				(In thousands)                   
				

					                                       Capital in
			                            	  Common    Excess of    Retained
				                              Stock     Par Value    Earnings       Total  
                            				  ------    ----------   --------       -----
Balance at January 1, 1994       $72,530      $71,991    $305,765    $450,286

  Net income                           -            -      94,944      94,944

  Cash dividends on common stock       -            -     (31,188)    (31,188)
                            				 -------      -------    --------    --------
Balance at December 31, 1994      72,530       71,991     369,521     514,042  

  Net income                           -            -      57,508      57,508
					   
  Cash dividends on common stock       -            -     (84,283)    (84,283)
                             			 -------      -------    --------    --------
Balance at December 31, 1995      72,530       71,991     342,746     487,267  

  Net income                           -            -     114,093     114,093

  Cash dividends on common stock       -            -     (90,373)    (90,373)

  Contribution of JULS                 -        3,753           -       3,753 
                            				 -------      -------    --------    --------
Balance at December 31, 1996     $72,530      $75,744    $366,466    $514,740



























See accompanying notes to consolidated financial statements.
<PAGE>
		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                 CONSOLIDATED STATEMENTS OF CASH FLOWS
             		 Years ended December 31, 1996, 1995 and 1994
	                          			(In Thousands)
		                                          				1996        1995        1994
Operating Activities                            ----        ----        ----
Net income                                  $114,093     $57,508     $94,944 
 Adjustments to reconcile net income
  to net cash provided by operating
  activities:      
   Depreciation                              135,205     132,146     133,764   
   Deferred income taxes and    
    investment tax credits                     9,005      (8,738)     (4,936)   
   Extraordinary losses, net                   4,085      42,424           -   
   Changes in operating assets and    
    liabilities:     
     Receivables, net                        (26,629)      1,471     (26,029)   
     Inventories and other current      
      assets                                  (1,679)      8,101      (5,886)   
     Accounts payable, accrued      
      expenses and other current      
      liabilities                            (11,056)    (11,608)     (7,599)   
     Noncurrent assets and      
      liabilities, net                        (4,088)     14,350       9,607   
   Other, net                                  1,904       2,447         (69)
	                                   				    --------    --------    --------
 Net cash provided by operating activities   220,840     238,101     193,796
 
Investing Activities 
 Capital expenditures                       (158,586)   (146,146)   (146,110) 
 Other, net                                   (4,143)     (5,527)    (11,238)
                                   					    --------    --------    --------
Net cash used by investing activities       (162,729)   (151,673)   (157,348)

Financing Activities 
 Retirements of long-term debt               (61,508)     (8,569)       (574) 
 Net increase (decrease) in   
  short-term borrowings                      (42,800)      9,200      (7,500) 
 Net increase (decrease) in advances  
  from parent company                        136,930      (2,738)      2,810 
 Dividends paid                              (90,373)    (84,283)    (31,188)
                                   					    --------    --------    --------
Net cash used by financing activities        (57,751)    (86,390)    (36,452)
					                                       --------    --------    --------
Increase (Decrease) in Cash                      360          38          (4)
Cash at Beginning of Year                         54          16          20
					                                       --------    --------    --------
Cash at End of Year                         $    414    $     54    $     16
                                            ========    ========    ========
Supplemental Cash Flow Information 
 Cash paid for interest, net of  
  amounts capitalized                       $ 22,046    $ 22,994    $ 22,504 
 Cash paid for income taxes                   66,498      70,714      57,189
 
Noncash Activities 
 Exchange of investment in affiliated  
  partnership for investment in  
  affiliated preferred stock                $      -    $ 29,043    $      -
See accompanying notes to consolidated financial statements.
<PAGE>                                       
	                            			       Carolina Telephone & Telegraph Company   
							                                                     Form 10-K Part II


		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                           December 31, 1996


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation and Presentation

     The consolidated financial statements include the accounts of Carolina 
Telephone and Telegraph Company and its wholly-owned subsidiaries, Carolina 
Telephone Long Distance, Inc., SC One Company and Joint Underground Locating 
Services, Inc. (JULS).  All significant intercompany transactions have been 
eliminated.  The Company is a wholly-owned subsidiary of Sprint Corporation 
(Sprint); accordingly, earnings per share information has been omitted.

     The consolidated financial statements are prepared in conformity with 
generally accepted accounting principles (GAAP).  GAAP requires management to 
make estimates and assumptions that affect the reported amounts of assets and 
liabilities.  Those estimates and assumptions also affect the disclosure of
contingent assets and liabilities at the date of the financial statements and 
the reported amounts of revenues and expenses during the reporting period.  
Actual results could differ from those estimates.

     Certain amounts previously reported for prior years have been 
reclassified to conform to the current year presentation in the accompanying 
consolidated financial statements.  These reclassifications had no effect on 
the results of operations or stockholder's equity as previously reported.

     The Company adopted accounting principles for a competitive marketplace 
and discontinued accounting for the economic effects of regulation pursuant 
to Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for 
the Effects of Certain Types of Regulation," effective December 31, 1995 (see
Note 7).

Operations

     The Company provides local exchange services, access by telephone 
customers and other carriers to local exchange facilities, sales of 
telecommunications equipment and long distance services in North Carolina.

     In September 1996, Sprint contributed JULS to the Company.  JULS was 
previously owned by The United Telephone Company of Pennsylvania, an affiliate 
of the Company.  Although the contribution of JULS to the Company results in 
a change in reporting entity, prior years' financial statements have not been 
restated due to the insignificance of its impact to the financial position 
and operations of the Company.  JULS operates a nonregulated line of business 
specializing in locating underground utility lines serving the following 13 
states:  Indiana, Minnesota, Massachusetts, Missouri, Nebraska, New Hampshire, 
New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Texas and Wyoming.




				       
<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


     		            CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                           December 31, 1996


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition

     Service revenues are recognized as communications services are rendered.
Sales of telecommunications equipment are recognized upon delivery of 
products to customers.

Cash 

     As part of its cash management program, the Company uses controlled 
disbursement banking arrangements.  Outstanding checks in excess of cash 
balances are reflected as a current liability on the consolidated balance 
sheets.  The Company had sufficient funds available to fund these outstanding 
checks when they were presented for payment.

Inventories

     Inventories consist of materials and supplies stated at average cost and 
equipment held for resale stated at the lower of average cost or market.

Property, Plant and Equipment

     Property, plant and equipment is recorded at cost.  Generally, ordinary 
asset retirements and disposals are charged against accumulated depreciation 
with no gain or loss recognized.  Repairs and maintenance costs are expensed 
as incurred.

Depreciation

     The cost of property, plant and equipment is generally depreciated on a 
straight-line basis over estimated economic useful lives.  Prior to the 
discontinued use of SFAS No. 71 as of December 31, 1995, the cost of property, 
plant and equipment had been generally depreciated on a straight-line basis 
over the lives prescribed by regulatory commissions (see Note 7).

Income Taxes

     The operations of the Company are included in the consolidated federal 
income tax return of Sprint.  Federal income tax is calculated by the Company 
on the basis of its filing a separate return.  

     Deferred income taxes are provided for certain temporary differences 
between the carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for tax purposes (see Note 3).

     Investment tax credits (ITC) related to regulated telephone property, 
plant and equipment have been deferred and are being amortized over the 
estimated useful lives of the related assets.

<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


		                 CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      		      December 31, 1996

2.  EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plan

     Substantially all employees of the Company are covered by a 
noncontributory defined benefit pension plan.  Benefits for plan participants 
represented by collective bargaining units are based on negotiated schedules 
of defined amounts.  For participants not covered by collective bargaining 
agreements, the plan provides pension benefits based on years of service and 
participants' compensation.

     The Company's policy is to make annual contributions to the plan equal 
to an actuarially determined amount consistent with applicable federal tax 
regulations.  The funding objective is to accumulate funds at a relatively 
stable rate over the participants' working lives so that benefits are fully 
funded at retirement.  At December 31, 1996, the plan's assets consisted 
principally of investments in corporate equity securities and U.S. government 
and corporate debt securities.

     Pension costs or credits are determined for each subsidiary of Sprint 
based on a direct calculation of service costs and projected benefit 
obligations, and an appropriate allocation of unrecognized prior service 
costs, transition asset and plan assets.  Net periodic pension credits 
recorded by the Company were $6,675,000, $7,341,000 and $5,125,000 in 1996, 
1995 and 1994, respectively.

Defined Contribution Plans

     Sprint sponsors defined contribution employee savings plans covering 
substantially all employees of the Company.  Participants may contribute 
portions of their compensation to the plans.  Contributions of participants 
represented by collective bargaining units are matched by the Company based 
upon defined amounts as negotiated by the respective parties.  Contributions 
of participants not covered by collective bargaining agreements are also 
matched by the Company.  For these participants, the Company provides matching 
contributions in common stock equal to 50.0% of participants' contributions 
up to 6.0% of their compensation.  In addition, Sprint may, at the discretion 
of the Board of Directors, provide additional matching contributions based on 
the performance of Sprint's common stock compared with other 
telecommunications companies.  The Company's matching contributions were 
$3,909,000, $3,598,000 and $3,258,000 in 1996, 1995 and 1994, respectively.

Postretirement Benefits

     Sprint provides postretirement benefit (principally medical benefits) 
arrangements covering substantially all employees of the Company.  Employees 
retiring before specified dates are eligible for these benefits at no cost or 
reduced cost.  Employees retiring after specified dates are eligible for these 
benefits on a shared cost basis.  The Company funds the accrued costs as 
benefits are paid.

<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


		                 CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     			      December 31, 1996

2.  EMPLOYEE BENEFIT PLANS (continued)

Postretirement Benefits (continued)

     Net postretirement benefit costs are determined for each subsidiary of 
Sprint based on a direct calculation of service costs and accumulated 
postretirement benefit obligations and an appropriate allocation of 
unrecognized prior service costs, unrecognized net gains and transition 
obligation.  Net postretirement benefit costs recorded by the Company were 
$14,498,000, $17,457,000 and $14,121,000 in 1996, 1995 and 1994, respectively.

Postemployment Benefits

     Effective January 1, 1994, the Company adopted SFAS No. 112, "Employers' 
Accounting for Postemployment Benefits."  Upon adoption, the Company 
recognized certain previously unrecorded obligations for benefits being 
provided to former or inactive employees and their dependents, after 
employment but before retirement.  The resulting charge did not significantly 
impact the Company's financial statements.  Such postemployment benefits 
offered by the Company include severance, disability and worker's 
compensation benefits, including the continuation of other benefits such as 
health care and life insurance coverage.

3.  INCOME TAXES

     The components of income tax expense are as follows (in thousands):

				                                  	 1996        1995          1994
                                  					 ----        ----          ----         
Current income tax expense
 Federal                              $49,780     $54,744       $49,872  
 State                                 11,322      12,504        11,240
				                                  -------     -------       -------
				                                   61,102      67,248        61,112

Deferred income tax expense (benefit)  
 Federal                                7,234      (5,777)       (1,912)  
 State                                  1,771      (1,023)          632  
 Amortization of deferred ITC               -      (1,938)       (3,656) 
                            				      -------     -------       -------
	                                   				9,005      (8,738)       (4,936)
				                                  -------     -------       -------
Total income tax expense              $70,107     $58,510       $56,176
                                      =======     =======       =======







<PAGE>
                            				       Carolina Telephone & Telegraph Company   
							                                                     Form 10-K Part II
							    
							    
		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                          December 31, 1996
			      
3.  INCOME TAXES (continued)        

     The differences which cause the effective income tax rate to vary from 
the statutory federal income tax rate of 35 percent in 1996, 1995 and 1994 
are as follows (in thousands):  
				                                        1996        1995        1994
                                   					    ----        ---         ----
  Federal income tax provision at the 
   statutory rate                        $ 65,900    $ 55,455    $ 52,892
  Less amortization of deferred ITC             -       1,938       3,656
				                                   	 --------    --------    --------
  Expected federal income tax 
   provision after amortization 
   of deferred ITC                         65,900      53,517      49,236
   
  Effect of 
   Reversal of rate differentials               -        (862)       (972) 
   State income tax, net of federal  
    income tax effect                       8,510       7,463       7,717 
   Other, net                              (4,303)     (1,608)        195
			                                    	 --------    --------    --------
   Income tax provision, including ITC   $ 70,107    $ 58,510    $ 56,176
			                                      ========    ========    ========
  Effective income tax rate                 37.2%       36.9%       37.2%
  
     The income tax benefits allocated to other items are as follows 
(in thousands):                    
			                                  		  1996        1995
	                                  				  ----        ----
Extraordinary loss on discontinued 
 use of SFAS No. 71                    $     -     $51,523
Extraordinary losses on early 
 extinguishments of debt                 2,728           -
 
     Deferred income taxes are provided for the temporary differences between 
the carrying amounts of the Company's assets and liabilities for financial 
statement purposes and their tax bases.  The sources of the differences that 
give rise to the deferred income tax assets and liabilities as of December 
31, 1996 and 1995, along with the income tax effect of each, are as follows 
(in thousands):
			                                   		  1996                   1995
	                           			   Deferred Income Tax    Deferred Income Tax
				                              Assets   Liabilities   Assets   Liabilities
				                              -------------------------------------------
Property, plant and equipment      $     -    $ 96,081   $     -     $ 90,520
Postretirement and other benefits   21,227           -    19,807            -
Expense accruals                     8,187           -     9,407            -
Prepaid pension costs                    -      19,998         -       17,233
Other, net                           1,140           -       721            -
			                            	   -------     -------   -------      -------
			                            	   $30,554    $116,079   $29,935     $107,753
<PAGE>                                       
				                                   Carolina Telephone & Telegraph Company   
							                                                     Form 10-K Part II
							    
		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
	             	  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                          December 31, 1996
			      
4.  LONG-TERM DEBT

     Long-term debt as of December 31 is as follows (in thousands):

			                           Interest Rates        1996         1995
                    			       --------------        ----         ----
   Debentures, maturities      
      1996 - 2000              4.50% - 6.63%     $ 50,825     $ 63,433     
      2001 - 2005              6.13% - 7.25%      100,000      100,000     
      2013 - 2016              6.75% - 9.00%       50,000      100,000
   
   Other notes, maturities      
      1996 - 1998              6.90% - 7.32%           22           87
   
   Unamortized debt discount                       (1,374)      (2,539) 
                                           					  -------      -------   
				                                          		  199,473      260,981
					   
   Less current maturities                            842       12,672
						                                            -------      -------
   Long-term debt                                $198,631     $248,309 
 
     
     Long-term debt maturities during each of the next five years are as
follows (in thousands): 
              			      Year      Amount 
			                    ----      ------
			                    1997     $   842 
			                    1998           5 
			                    1999           - 
			                    2000      50,000 
			                    2001           -   
			      
     As of December 31, 1996, the Company had lines of credit with banks 
totaling $31,000,000; no borrowings were outstanding.  The bank lines, which 
are renewable in May 1997, provide for short-term borrowings at market rates 
of interest and require annual commitment fees.  Lines of credit may be 
withdrawn by the banks if there is a material adverse change in the financial 
condition of Sprint or the Company.

     The Company's short-term financing was provided by Sprint in 1996.  The 
weighted average interest rates on short-term borrowings in 1996, 1995 and 
1994 were 5.5 percent, 5.9 percent and 4.6 percent, respectively.

     The Company is in compliance with all restrictive or financial covenants 
relating to its debt arrangements at December 31, 1996.






<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


		                 CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                           December 31, 1996


4.  LONG-TERM DEBT (continued)

     During 1996, the Company redeemed prior to scheduled maturities 
$50,000,000 of debentures with an interest rate of 9.0 percent.  Prepayment 
penalties incurred in connection with early extinguishments of debt and the 
write-off of related debt issuance costs, net of the related income tax 
benefits, are reflected as an extraordinary loss in the consolidated 
statements of income.


5.  COMMITMENTS AND CONTINGENCIES

     Gross rental expense aggregated $6,859,000, $6,171,000 and $4,614,000 in 
1996, 1995 and 1994, respectively.  Minimum rental commitments as of December 
31, 1996 are as follows (in thousands):

          		   1997       $646  
		             1998        327  
		             1999        276  
           	   2000        206  
		             2001        176  
		             Thereafter   31   

     Various lawsuits arising in the ordinary course of business are pending 
against the Company.  Management cannot predict the ultimate outcome of these 
actions, but believes they will not result in a material effect on the 
Company's financial statements.























<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II


		                 CAROLINA TELEPHONE AND TELEGRAPH COMPANY
	              	  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                           December 31, 1996


6.  RELATED PARTY TRANSACTIONS

     Related party transactions of the Company are as follows (in thousands):

Affiliate Company   Transaction Description            1996     1995     1994
-----------------------------------------------------------------------------  
		                  The Company:
-----------------------------------------------------------------------------
North Supply          Purchased telecommunications,
Company               construction and maintenance 
		                    equipment and materials and 
		                    supplies.                     $44,653  $42,274  $55,609
-----------------------------------------------------------------------------
Sprint                Reimbursed affiliate for data 
		                    processing services, other 
		                    data-related costs and certain 
		                    management costs.              50,614   51,606   52,119
-----------------------------------------------------------------------------
Sprint                Entered into cash advance and 
		                    borrowing transactions.  
		                    Interest expense on advances.(1)
		      
		                    (1)Interest is computed on the 
		                    prior month's thirty-day average 
		                    commercial paper index, as 
		                    published in the Federal Reserve 
		                    Statistical Release H.15, plus 
		                    15 basis points.                 3,583      491       -
-----------------------------------------------------------------------------
Sprint Long           Provided network access,  
Distance Division     operator, billing and 
		                    collection services and the
		                    lease of network facilities.    23,576   21,715  20,558
-----------------------------------------------------------------------------
Sprint Long           Received interexchange tele-
Distance Division     communications services.         4,321    8,063  15,669
-----------------------------------------------------------------------------
Sprint Publishing     Received fees for the right to
and Advertising       publish telephone directories 
		                    in the Company's territory, 
		                    listing and billing and 
		                    collection services.            22,529   22,448  21,607
-----------------------------------------------------------------------------
Other Sprint Local    Received reimbursement for
Operating Companies   certain salaries and other 
		                    costs incurred for the benefit 
		                    of its affiliates (net).         7,546    4,691     690
-----------------------------------------------------------------------------


<PAGE>
                            				       Carolina Telephone & Telegraph Company 
							                                                     Form 10-K Part II

     		            CAROLINA TELEPHONE AND TELEGRAPH COMPANY
	              	  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                           December 31, 1996

6.  RELATED PARTY TRANSACTIONS (continued)

Affiliate Company   Transaction Description            1996     1995     1994
-----------------------------------------------------------------------------
              		    The Company:
-----------------------------------------------------------------------------
Sprint Mid-Atlantic   Paid management fees for certain
Telecom, Inc.         salaries and other costs incurred 
		                    by the management company on 
		                    behalf of the Company.          72,715   59,153  48,420
-----------------------------------------------------------------------------
Centel Corporation    Received dividends on in- 
		                    vestment in preferred stock.    14,282    6,632       -  
-----------------------------------------------------------------------------
     
     Certain directors and officers of the Company are also directors or 
officers of banks at which the Company conducts borrowings and related 
transactions.  The terms are comparable with other banks at which the Company 
has similar transactions.
				       

7.  ADOPTION OF ACCOUNTING PRINCIPLES FOR A COMPETITIVE MARKETPLACE

     Effective December 31, 1995, the Company determined that it no longer met 
the criteria necessary for the continued application of the provisions of  
SFAS No. 71.  As a result of the decision to discontinue the application of 
SFAS No. 71, the Company recorded a noncash, extraordinary charge of 
$42,424,000, which is net of an income tax benefit of $51,523,000.

     The Company's determination that it was no longer eligible for the 
continued application of the accounting required by SFAS No. 71 was based on 
changes in the regulatory framework, which continues to evolve from rate-base 
regulation to price regulation and the convergence of competition in the 
telecommunications industry.  Based on these occurrences, the Company no 
longer believed that it could be assured that prices could be maintained at 
levels which would provide for the recovery of specific costs.

     The components of the extraordinary charge recognized due to the 
discontinued application of SFAS No. 71 are as follows (in thousands):

						                                                Pre-tax     After-tax
						                                                -------     ---------
Increase to the accumulated depreciation balance    $ 103,277     $  61,926
Recognition of switch software asset                  (15,772)       (9,457)
Elimination of other net regulatory assets              6,442         3,863
                                          						     --------      --------
Total                                               $  93,947        56,332
Tax-related net regulatory liabilities                              (13,225)
Accelerated amortization of investment tax credits                     (683)
                                                        								   --------
Extraordinary charge                                              $  42,424     

<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part II

		                 CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                           December 31, 1996

7.  ADOPTION OF ACCOUNTING PRINCIPLES FOR A COMPETITIVE MARKETPLACE 
    (continued)

     The adjustment to the accumulated depreciation balance was determined by 
the completion of depreciation reserve and impairment studies.  The 
depreciation reserve study analyzed, by individual plant asset categories, 
the impacts of regulator-prescribed depreciable asset lives compared with the 
Company's estimated economic lives.  The results identified the cumulative 
under depreciation of certain asset categories.  The impairment study, which 
validated the results of the depreciation study, estimated the impact on 
future revenues caused by price changes and developing industry competition 
and the resulting effects on cash flows.

     The discontinued application of SFAS No. 71 also required the Company to 
eliminate from its consolidated balance sheet the effects of any actions of 
regulators that had been recognized as assets and liabilities under SFAS No. 
71, but would not have been recognized as assets and liabilities by 
enterprises in general.

     The tax-related adjustments were required to adjust deferred income tax 
amounts to the currently enacted statutory rates and to eliminate tax-related 
regulatory assets and liabilities.  The Company uses the deferral method of 
accounting for investment tax credits and amortizes the credits as a 
reduction to tax expense over the life of the asset that gave rise to the tax 
credit.  Since plant asset lives were shortened, the investment tax credits 
were adjusted to reduce the unamortized balance by a corresponding amount.


8.  ADDITIONAL FINANCIAL INFORMATION

Restructuring Charge

     In 1995, the Company initiated a restructuring in an effort to streamline 
ertain processes and reduce costs in an increasingly competitive marketplace.  
These actions resulted in the planned elimination of approximately 150 
positions.  As a result, the Company recorded an $8,079,000 nonrecurring 
charge in 1995.  The accrued liability related to this charge specifically 
relates to the benefits that affected employees will receive upon termination.  
Through 1996, approximately 70 positions have been eliminated resulting in 
termination benefit payments of $2,521,000.  Substantially all of the 
remaining positions are expected to be eliminated during 1997, with the 
related costs expected to be paid during 1997 and 1998.

Major Customer Information

     Operating revenues from AT&T Corporation resulting primarily from 
network access, billing and collection services and the lease of network 
facilities aggregated $100,952,000, $107,605,000 and $109,074,000 during 1996, 
1995 and 1994, respectively.

	
	
<PAGE>
                            				       Carolina Telephone & Telegraph Company   
							                                                     Form 10-K Part II

		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
	             	  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
			                          December 31, 1996

8.  ADDITIONAL FINANCIAL INFORMATION (continued)

Major Customer Information (continued)     

     The Company's customer and other accounts receivable are not subject to 
significant concentration of credit risk due to the large number of customers 
in the Company's customer base.

     The principal industries in the Company's service area include 
agriculture, textiles, chemicals and tourism.  Military installations, 
including Fort Bragg, Camp Lejeune, Cherry Point Marine Air Corps Station, 
the U.S. Coast Guard Base in Elizabeth City and Pope Air Force Base 
contribute significantly to the economy of the area.

Financial Instruments

     The Company estimates the fair value of its financial instruments using 
available market information and appropriate valuation methodologies.  
Accordingly, the following estimates are not necessarily indicative of the 
values the Company could realize in a current market exchange.  Although 
management is not aware of any factors that would affect the estimated fair 
value amounts presented as of December 31, 1996, those amounts have not been 
comprehensively revalued for purposes of these financial statements since 
that date.  Therefore, estimates of fair values subsequent to that date may 
differ significantly from the amounts presented below.

     The Company's financial instruments primarily consist of long-term debt, 
including current maturities, with carrying amounts of $199,473,000 and 
$260,981,000 and estimated fair values of $197,753,000 and $281,173,000 at 
December 31, 1996 and 1995, respectively.  The fair values of the Company's 
long-term debt are estimated based on quoted market prices for publicly traded 
issues.  The carrying value of the Company's other financial instruments 
appproximate fair value at December 31, 1996 and 1995.

     The Company has not invested in derivative financial instruments.

















<PAGE>
                            				       Carolina Telephone & Telegraph Company
						                                              Form 10-K Parts II/III/IV


		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
		               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      	      December 31, 1996


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

       	   None

Item 10. Directors and Executive Officers of the Registrant

       	   Omitted under the provisions of General Instruction I.

Item 11. Executive Compensation

       	   Omitted under the provisions of General Instruction I.

Item 12. Security Ownership of Certain Beneficial Owners and Management

       	   Omitted under the provisions of General Instruction I.

Item 13. Certain Relationships and Related Transactions

       	   Omitted under the provisions of General Instruction I.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

 (a)  1. The consolidated financial statements of the Company filed as
         part of this report are listed in the Index to Consolidated 
       	 Financial Statements on page 13.

      2. The consolidated financial statement schedule of the Company
       	 filed as part of this report is listed in the Index to
       	 Consolidated Financial Statement Schedules on page 32.

 (b)     The Registrant was not required to file a report on Form 8-K
       	 during the last quarter of 1996.

 (c)     The exhibits filed as part of this report are listed in the
	        Index to Exhibits on pages 34 - 36.
 

				       
				       










<PAGE>                                       
				                                   Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part IV


		                CAROLINA TELEPHONE AND TELEGRAPH COMPANY
	           INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
			                          (ITEM 14(a)2.)


                                                        								      Page
For each of the three years in the period ended December 31, 1996:  Reference
								                                                            ---------

Schedule II  - Valuation and Qualifying Accounts - Consolidated      Page 33









































All other schedules have been omitted since the required information is not 
present or is not present in amounts sufficient to require submission of the 
schedule, or because the information required is included in the consolidated 
financial statements, including the notes thereto.
<PAGE>
                             			       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part IV


       SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS - CONSOLIDATED

        	       Years Ended December 31, 1996, 1995 and 1994

                     			      (In thousands)


				                                                 		Deductions
                                                							----------
					                                       Additions    Accounts
                           				Balance at  ---------   charged off   Balance
	                           			beginning   Charged to     net of     at end
	                           			 of year     expense    collections   of year
                    			       -----------  ----------  -----------   -------
Year ended December 31, 1996
----------------------------
Deducted from assets:
Allowance for uncollectible 
   accounts                        $2,348      $5,831      $4,673     $3,506

Year ended December 31, 1995
----------------------------
Deducted from assets:
Allowance for uncollectible 
   accounts                        $1,775      $3,474      $2,901     $2,348

Year ended December 31, 1994
----------------------------
Deducted from assets:
Allowance for uncollectible 
    accounts                       $1,938      $2,371      $2,534     $1,775
























<PAGE>
                            				       Carolina Telephone & Telegraph Company
 							                                                    Form 10-K Part IV


                   			      INDEX TO EXHIBITS
			                          	  ITEM 14(c)

Exhibit No.
     3     Articles of incorporation and by-laws (filed as Exhibit 3 to 1980
       	   Annual Report Form 10-K and incorporated herein by reference).

     4     Instruments defining the rights of security holders, including
       	   indentures, contained in documents previously filed with the
	          Securities and Exchange Commission are incorporated herein by
	          reference.

	    4(A)  Indenture dated as of February 1, 1963, from the Company to
       		  Bankers Trust Company, Trustee (See Current Report Form 8-K
		         for February 1963, Exhibit 4-F).

	    4(B)  Indenture dated as of March 1, 1965, from the Company to
       		  Bankers Trust Company, Trustee (See Current Report Form 8-K
		         for February 1965, Exhibit A).

	    4(C)  Indenture dated as of March 1, 1966, from the Company to
       		  Bankers Trust Company, Trustee (See Current Report Form 8-K
		         for March 1966, Exhibit A).

	    4(D)  Indenture dated as of January 15, 1968, from the Company to
       		  North Carolina National Bank as Trustee (See Registration
		         No. 2-27816, Exhibit 4-J).

	    4(E)  Indenture dated as of October 1, 1970, from the Company to
       		  Bankers Trust Company, as Trustee (See Registration No. 2-
		         38292, Exhibit 4-J).

	    4(F)  Supplemental Indenture from the Company to Bankers Trust
       		  Company dated as of March 28, 1969 supplementing Indenture
		         dated as of July 1, 1948 (See Registration No. 2-34018,
		         Exhibit 4-K).

	    4(G)  Supplemental Indenture from the Company to Bankers Trust
       		  Company dated as of March 28, 1969 supplementing Indenture
		         dated as of August 1, 1952 (See Registration No. 2-34018,
       		  Exhibit 4-L).

	    4(H)  Supplemental Indenture from the Company to Bankers Trust
       		  Company dated as of March 28, 1969 supplementing Indenture
		         dated as of August 1, 1957 (See Registration No. 2-34018,
       		  Exhibit 4-M).









<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part IV


                    			INDEX TO EXHIBITS (CONTINUED)
	                            		 ITEM 14(c)

Exhibit No.
	    4(I)  Supplemental Indenture from the Company to Bankers Trust
       		  Company dated as of March 28, 1969 supplementing Indenture
		         dated as of February 1, 1963 (See Registration No. 2-34018,
		         Exhibit 4-N).

	    4(J)  Supplemental Indenture from the Company to Bankers Trust
       		  Company dated as of March 28, 1969 supplementing Indenture
		         dated as of March 1, 1965 (See Registration No. 2-34018,
		         Exhibit 4-O).

	    4(K)  Supplemental Indenture from the Company to Bankers Trust
       		  Company dated as of March 28, 1969 supplementing Indenture
		         dated as of March 1, 1966 (See Registration No. 2-34018,
		         Exhibit 4-P).

	    4(L)  Supplemental Indenture from the Company to North Carolina
       		  National Bank dated as of March 28, 1969 supplementing
		         Indenture dated as of January 15, 1968 (See Registration 
		         No. 2-34018, Exhibit 4-Q).

	    4(M)  Indenture dated as of August 1, 1969, from the Company to
       		  Bankers Trust Company (See Registration No. 2-34018, Exhibit
		         4-A).

	    4(N)  Indenture dated as of October 1, 1971, from the Company to
       		  Bankers Trust Company (See Registration No. 2-41721, Exhibit
		         2-A).

	    4(O)  Indenture dated as of November 1, 1973, from the Company to
       		  Bankers Trust Company (See Registration No. 2-49251, 
		         Exhibit 2-A).

	    4(P)  Indenture dated as of May 1, 1978, from the Company to
       		  Bankers Trust Company (See Registration No. 2-61151, 
		         Exhibit 2-A).

	    4(Q)  Indenture dated as of October 26, 1978, from the Company to
        	  Bankers Trust Company (See Administrative Proceeding File
		         No. 3-5541, Exhibit 5).

	    4(R)  Indenture dated as of December 27, 1979 from the Company to
       		  Bankers Trust Company (See the Company's Application, File
		         Nos. 2-34018, 2-38292, 2-41721, 2-49251, and 2-61151, 
       		  Exhibit 5).







<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part IV


 			                  INDEX TO EXHIBITS (CONTINUED)
				                           ITEM 14(c)

Exhibit No.
	    4(S)  Indenture dated as of May 15, 1986 from the Company to
       		  Bankers Trust Company (See Amendment No. 1 to Registration
		         No. 33-5350, Exhibit 4-A).

	    4(T)  Indenture dated as of December 1, 1992 from the Company to
       		  Bankers Trust Company (See Registration No. 33-54936,
		         Exhibit 4).

	    4(U)  Indenture dated as of August 15, 1993 from the Company to
       		  Bankers Trust Company (See Registration No. 33-64476,
		         Exhibit 4).

    12     Computation of Ratio of Earnings to Fixed Charges.

    23     Consent of Ernst & Young LLP.

    27     Financial Data Schedule.


































<PAGE>
                            				       Carolina Telephone & Telegraph Company
							                                                     Form 10-K Part IV


                           				  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                	CAROLINA TELEPHONE & TELEGRAPH COMPANY

Date:  March 24, 1997        By  s/F. E. Westmeyer                              
       --------------            ---------------------------------------       
                            				 F. E. Westmeyer, Vice President-Finance



     Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed below by the following persons on behalf of the 
Registrant and in the capacities and on the dates indicated.



     Date                               Signature and Title
     ----                               -------------------

March 24, 1997                   s/ W. E. McDonald                              
--------------                   ---------------------------------------
                            				 W. E. McDonald, President, Director    
				                                and Chief Executive Officer


March 24, 1997                   s/ M. B. Fuller                                
--------------                   ---------------------------------------
                             			 M. B. Fuller, Director


March 24, 1997                   s/ D. A. Jensen                                
--------------                   ---------------------------------------
                            				 D. A. Jensen, Director


















<PAGE>