FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

              |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 1998

                                       or

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

                         Commission File Number 33-83740

                        Diamond Cable Communications Plc
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

    England and Wales                                          N/A
-----------------------------------------               -------------------
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                         Identification No.)

  Diamond Plaza, Daleside Road
  Nottingham NG2 3GG, England                                  N/A
----------------------------------------                -------------------
(Address of principal executive offices)                    (Zip code)

                                 44-115-912-2217
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.


                               Yes X      No 

         The number of shares outstanding of the Registrant's Ordinary Shares of
2.5 pence each outstanding as of September 30, 1998 was 59,138,791.



<PAGE>


                        DIAMOND CABLE COMMUNICATIONS PLC

                                      INDEX

                                                                           Page


INTRODUCTION ............................................................     3

PART I.      FINANCIAL INFORMATION

Item 1.      Financial Statements

             Unaudited condensed consolidated statements of
               operations--Three and nine months ended
               September 30, 1998 and 1997...............................     5

             Condensed consolidated balance sheets--
               September 30, 1998 and December 31, 1997..................     6

             Unaudited condensed consolidated statements of
               shareholders' equity -- Three and nine months
               ended September 30, 1998..................................     7

             Unaudited condensed consolidated statements of cash flows --
               Nine months ended September 30, 1998
               and 1997..................................................     8

             Notes to the unaudited condensed consolidated
               financial statements......................................     9


Item 2.      Management's Discussion and Analysis of Results
               of Operations and Financial Condition.....................    14


Part II.     OTHER INFORMATION

Item 6.      Exhibits and Reports on Form 8-K............................    26


SIGNATURES...............................................................    27



                                        2

<PAGE>


                                  INTRODUCTION

         Diamond Cable Communications Plc (the "Company") is a public limited
company (with registered number 2965241) incorporated under the laws of England
and Wales. The Company is a holding company which holds all of the shares of (i)
Diamond Cable Communications (UK) Limited (formerly Diamond Cable (Nottingham)
Limited) ("DCL") and its subsidiaries and (ii) a group of companies comprising
East Midlands Cable Group Limited ("EMCG"), East Midlands Cable Communications
Limited and East Midlands Cable Holdings Limited (collectively "LCL"), in both
cases through intermediate holding companies, Diamond Holdings plc and Jewel
Holdings Limited ("Jewel"). References herein to the "Group" refer to the
Company and its subsidiaries, including, since September 27, 1995, LCL.

         The Group operates a telecommunications and cable television business
focused on the East Midlands area of England. The Group is currently
constructing a broadband fiber-optic network to serve the approximately 1.2
million homes and an estimated 60,600 businesses within its contiguous franchise
areas. As of September 30, 1998, the Group's cable television and
telecommunications network had passed by civils construction approximately
666,400 homes and an estimated 29,700 businesses, of which portions of the
network passing approximately 644,700 homes and an estimated 29,000 businesses
had been activated. As of that date, the Group also had approximately 214,600
residential telephone lines, 106,700 cable television subscribers and 36,200
business telephone lines. Through that date, (pound)531 million had been
invested (at original cost) in the construction of the network and related
systems.

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


         THIS DOCUMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, IDENTIFIED
AS SUCH, WITH RESPECT TO WHICH THE COMPANY IS SEEKING TO UTILIZE THE SAFE HARBOR
PROVIDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE
STATEMENTS ARE ACCOMPANIED BY, AND SHOULD BE READ IN CONJUNCTION WITH, AN
EXPLANATION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.




                                        3

<PAGE>



         The Company operates only in the United Kingdom and, accordingly,
publishes its financial statements in pounds sterling. In this Report,
references to "pounds sterling," "(pound)" "pence" or "p" are to the lawful
currency of the United Kingdom and references to "U.S. dollars," "$" or "(cent)"
are to the lawful currency of the United States. Merely for convenience, this
Report contains translations of certain pound sterling amounts into U.S. dollars
at specified rates. These translations should not be construed as
representations that the pound sterling amounts actually represent such U.S.
dollar amounts or could have been or could be converted into U.S. dollars at the
rate indicated or at any other rate. Unless otherwise indicated, the
translations of pounds sterling into U.S. dollars have been made at $1.6995 per
(pound)1.00, the noon buying rate in The City of New York for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate") on September 30, 1998. On November 10, 1998,
the Noon Buying Rate was $1.6580 per (pound)1.00.

         On June 16, 1998, the Company announced that all of the holders of its
outstanding ordinary shares of 2.5p each and deferred shares of 25p each have
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL Incorporated ("NTL"), an alternative telecommunications
company in the UK, the common stock of which is quoted on NASDAQ (NTLi). Under
the share exchange agreement between the Company's shareholders and NTL (the
"Share Exchange Agreement"), the Company's shareholders will receive one share
of NTL common stock for every four Ordinary Shares of the Company held subject
to adjustment in the event that the average NTL share price for a predetermined
period before closing of the transaction exceeds a specified price (which will
be $52.50 per share until November 16, 1998, increasing thereafter to $53 per
share until December 16, 1998, $53.50 per share until January 16, 1999 and $54
per share thereafter). Holders of the Company's deferred shares will receive one
share of NTL common stock for each deferred share held.

         The proposed share exchange is subject to a number of conditions,
including the receipt of required regulatory approvals (which have been
obtained) and approval by NTL shareholders. Although the transaction will not
require the prior approval of the holders of the Group's outstanding debt
securities, each of the indentures pursuant to which the Group's debt securities
were issued requires that offers to repurchase such debt securities be made to
holders of such securities subsequent to closing at a price of 101% of their
accreted value or princial amount, which may influence the ability of the
parties to complete the proposed share exchange in its current form.



                                        4

<PAGE>



PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                        DIAMOND CABLE COMMUNICATIONS PLC

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED SEPTEMBER 30,             NINTH MONTHS ENDED SEPTEMBER 30,
                                             --------------------------------------      --------------------------------------  


                                                 1997         1998          1998             1997                1998          1998
                                                ------       ------        ------           ------              ------        -----
                                                                         (note 1)                                           (note 1)
                                                                              (in thousands)
<S>                                       <C>           <C>                <C>         <C>                 <C>              <C>

REVENUE
Business telecommunications...............(pound)3,697  (pound) 4,651       $ 7,903    (pound)10,217     (pound)13,650    $ 23,198
Residential telephone.....................       7,518         11,975        20,351           20,450            32,806      55,754
Cable television..........................       4,187          6,110        10,384           11,884            17,466      29,683
                                               -------        -------       -------         --------           -------    --------
                                                15,402         22,736        38,638           42,551            63,922     108,635
                                               -------        -------       -------          -------           -------     -------

OPERATING COSTS AND EXPENSES
Telephone.................................      (3,173)        (4,469)       (7,595)          (8,710)          (12,390)    (21,057)
Programming...............................      (2,368)        (3,259)       (5,539)          (6,918)           (9,450)    (16,060)
Selling, general, and
  administrative..........................      (7,126)        (9,506)      (16,155)         (19,694)          (27,430)    (46,617)
Depreciation and amortization.............      (7,042)       (10,851)      (18,441)         (20,057)          (30,501)    (51,836)
                                               --------       --------      --------         --------          --------    --------
                                               (19,709)       (28,085)      (47,730)         (55,379)          (79,771)   (135,570)
                                               --------       --------      --------         --------          --------    --------
OPERATING LOSS............................      (4,307)        (5,349)       (9,092)         (12,828)          (15,849)    (26,935)

Interest income...........................       1,868          3,383         5,749            4,837            10,264      17,444
Interest expense and amortization of debt
  discount and expenses...................     (15,875)       (21,569)      (36,657)         (43,075)          (61,984)   (105,342)
Foreign exchange gains/(losses), net......     (16,457)        10,906        18,537          (22,180)           21,071      35,810
Unrealized gain on derivative financial
  instruments.............................       2,660             --            --            2,904                --          --
Realized gain on derivative financial
  instruments.............................          --             --            --           11,553               412         700
                                              --------       --------      --------         --------           -------   ---------

Loss before income taxes..................     (32,111)       (12,629)      (21,463)         (58,789)          (46,086)     (78,323)
Income taxes..............................          --             --            --               --                --           --
                                              --------        --------      --------        ---------          --------   ---------
NET LOSS................................(pound)(32,111) (pound)(12,629)    $(21,463)  (pound)(58,789)   (pound)(46,086)    $(78,323)
                                              ========        ========      ========        =========          ========   =========

         See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>

                                       5

<PAGE>

                        DIAMOND CABLE COMMUNICATIONS PLC

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                               AT DECEMBER 31,             AT SEPTEMBER 30,
                                                                              ----------------             ----------------
                                                                                                              (UNAUDITED)
                                                                                   1997                  1998            1998
                                                                                  ------                ------          ------
                                                                                                                        (NOTE 1)
                                                                                                    (IN THOUSANDS)
<S>                                                                           <C>                 <C>                   <C>
                   ASSETS

Cash and cash equivalents ..............................................      (pound) 75,680      (pound) 186,190       $316,430
Trade receivables (net of allowance for doubtful accounts
  of (pound)2,788 at  December 31, 1997 and(pound)4,236 at
  September 30, 1998)...................................................               8,569                9,722         16,523
Other assets............................................................               4,470                2,448          4,160
Deferred financing costs (less accumulated
  amortization of (pound)2,627 at December 31, 1997
  and (pound)4,243 at September 30, 1998)...............................               15,533              20,910         35,536
Property and equipment, net (note 4)....................................              365,636             442,330        751,740
Goodwill (less accumulated amortization of (pound)10,914 at December 31,
1997 and(pound)14,551 at September 30, 1998)............................               86,046              82,409        140,054
Franchise costs (less accumulated amortization of
  (pound)116 at December 31, 1997 and(pound)137 at September 30, 1998)..                  423                 402            683
                                                                                     --------            --------       --------
TOTAL ASSETS............................................................       (pound)556,357      (pound)744,411     $1,265,126
                                                                                     ========            ========      =========
              LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable........................................................       (pound) 22,319      (pound) 27,595        $46,897
Other liabilities.......................................................               11,224              15,731         26,735
Senior discount notes...................................................              534,861             563,499        957,667
Senior notes............................................................                    -             199,725        339,432
Capital lease obligations...............................................                8,041               6,884         11,699
Mortgage loan...........................................................                2,423               2,397          4,074
Shareholders' equity
  Ordinary shares (70,000,000 authorized;
    59,138,791 issued at December 31, 1997 and
    at September 30, 1998).............................................                 1,478               1,478           2,512
Non-voting deferred shares (6 shares authorized and
  issued at December 31, 1997 and September 30, 1998)..................                     -                   -               -
Additional paid-in-capital.............................................               134,466             134,466         228,525
Accumulated other comprehensive loss...................................                  (204)             (3,027)         (5,144)
Accumulated deficit....................................................              (158,251)           (204,337)       (347,271)
                                                                                     --------            --------        --------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.............................        (pound)556,357      (pound)744,411      $1,265,126
                                                                                     ========            ========       =========

         See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

</TABLE>


                                        6

<PAGE>


                        DIAMOND CABLE COMMUNICATIONS PLC

                   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
                             OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                ADDITIONAL
                                                              NON-VOTING           PAID-
                                        ORDINARY SHARES     DEFERRED SHARES     IN-CAPITAL
                                        ---------------     ---------------     ----------
                                                 (IN THOUSANDS EXCEPT SHARE DATA)

                                      Number                  Number
                                      ------                  ------  
<S>                                 <C>         <C>             <C>    <C>    <C>
BALANCE AT JANUARY 1, 1998........  59,138,791  (pound)1,478    6      --     (pound)134,466
Unrealized loss on securities.....          --            --   --      --                 --

Net loss..........................          --            --   --      --                 --
                                   -----------  ------------  ------  ------   -------------
BALANCE AT SEPTEMBER 30, 1998.....  59,138,791  (pound)1,478    6      --     (pound)134,466
                                   ===========  ============  ======  ======   =============

BALANCE AT JULY 1, 1998...........  59,138,791  (pound)1,478    6      --     (pound)134,466
Unrealized gain on securities.....          --            --   --      --                 --

Net loss..........................          --            --   --      --                 --
                                   -----------  ------------  ------  ------   -------------
BALANCE AT SEPTEMBER 30, 1998.....  59,138,791  (pound)1,478    6      --     (pound)134,466
                                   ===========  ============  ======  ======   =============

---------------
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>

<TABLE>
<CAPTION>
                                       ACCUMULATED
                                          OTHER                                TOTAL
                                      COMPREHENSIVE       ACCUMULATED      SHAREHOLDERS'
                                          LOSS              DEFICIT           DEFICIT
                                      -------------       -----------      -------------
                                                 (IN THOUSANDS EXCEPT SHARE DATA)

<S>                                   <C>              <C>                  <C>
BALANCE AT JANUARY 1, 1998........   (pound) (204)     (pound)(158,251)     (pound)(22,511)
Unrealized loss on securities.....         (2,823)                  --              (2,823)

Net loss..........................             --              (46,086)            (46,086)
                                     -------------     ----------------     ---------------
BALANCE AT SEPTEMBER 30, 1998.....  (pound)(3,027)     (pound)(204,337)     (pound)(71,420)
                                     =============     ================     ===============

BALANCE AT JULY 1, 1998...........  (pound)(1,905)     (pound)(191,708)     (pound)(57,669)
Unrealized gain on securities.....         (1,122)                  --              (1,122)

Net loss..........................             --              (12,629)            (12,629)
                                     -------------     ----------------     ---------------
BALANCE AT SEPTEMBER 30, 1998.....  (pound)(3,027)     (pound)(204,337)     (pound)(71,420)
                                     =============     ================     ===============

---------------
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>


                                        7

<PAGE>



                        DIAMOND CABLE COMMUNICATIONS PLC

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED SEPTEMBER 30,
                                                                                   ------------------------------
                                                                            1997               1998               1998
                                                                         ----------         ----------         ----------
                                                                                                                 (NOTE 1)
                                                                                          (IN THOUSANDS)

<S>                                                                   <C>               <C>                    <C>
Cash flows from operating activities:
Net loss..........................................................    (pound)(58,789)   (pound)(46,086)        $(78,323)
Adjustments to reconcile net loss to net cash provided by operating
activities:
  Depreciation and amortization...................................            20,057            30,501           51,836
  Unrealized foreign exchange losses/(gains)......................            22,270           (20,982)         (35,659)
  Loss on disposition of assets...................................                99                 -                -
  Accretion of Senior Note discount...............................            39,865            46,964           79,816
  Provision for losses on accounts receivable.....................               795             1,448            2,461
  Amortization of deferred financing costs........................             1,837             1,616            2,746
  Change in operating assets and liabilities:
    Change in trade receivables...................................              (958)           (2,602)          (4,422)
    Change in other assets........................................            (3,007)            2,022            3,437
    Change in accounts payable....................................             5,646             2,944            5,003
    Change in other liabilities...................................            (5,744)            4,372            7,430
                                                                              ------            ------           ------
Net cash provided by operating activities.........................            22,071            20,197           34,325
                                                                              ------            ------           ------
Cash flows from investing activities:
  Cash invested in property and equipment.........................           (78,728)         (100,958)        (171,578)
  Proceeds from disposition of assets.............................                39                95              161
                                                                              ------           -------          -------
Net cash used in investing activities.............................           (78,689)         (100,863)        (171,417)
                                                                              ------           -------          -------
Cash flows from financing activities:
  Proceeds of issue of debt.......................................           153,692           202,381          343,946
  Debt financing costs............................................            (5,249)           (6,814)         (11,580)
  Repayment of mortgage loan......................................               (55)              (27)             (46)
  Capital element of capital lease repayments.....................            (1,187)           (1,541)          (2,619)
                                                                             -------           -------          -------
Net cash provided by financing activities.........................           147,201           193,999          329,701
                                                                             -------           -------          -------
Net increase in cash and cash equivalents.........................            90,583           113,333          192,609
Cash and cash equivalents at beginning of period..................            18,311            75,680          128,618
Effect of exchange rate changes on cash and cash equivalents......              (500)           (2,823)          (4,797)
                                                                             -------           -------          -------
                                                                      (pound)108,394    (pound)186,190         $316,430
Cash and cash equivalents at end of period........................           ====-==           =======          =======

         See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>

                                        8

<PAGE>



       NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PREPARATION

         Diamond  Cable  Communications  Plc (the  "Company")  owns and operates
cable television and  telecommunications  systems through its subsidiaries.  The
unaudited  consolidated financial statements of the Company and its subsidiaries
(the  "Group") have been prepared in  accordance  with U.S.  generally  accepted
accounting  principles  and the  rules and  regulations  of the  Securities  and
Exchange Commission (the "SEC").  Accordingly,  certain information and footnote
disclosures  normally included in consolidated  financial statements prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted.  The  consolidated  financial  statements are stated in pounds sterling
((pound)).  Merely for convenience the consolidated financial statements contain
translations of certain pound sterling  amounts into U.S. dollars at $1.6995 per
(pound)1.00, the noon buying rate in the City of New York for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York on September 30, 1998.

2.   RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS

         The financial  statements as of and for the periods ended September 30,
1998 and 1997 are unaudited.  However,  in the opinion of the  management,  such
statements  include  all  adjustments   (consisting  only  of  normal  recurring
accruals)  necessary  for a fair  presentation  of the  results  for the periods
presented.  The results of operations for any interim period are not necessarily
indicative of the results for the full year.  The interim  financial  statements
should be read in  conjunction  with the financial  information  included in the
Company's 1997 Annual Report on Form 10-K filed with the SEC.

3.   COMPREHENSIVE LOSS

         SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997,
and is effective for accounting  periods beginning after December 15, 1997. SFAS
No. 130 establishes  standards for reporting and display of comprehensive income
and its components.  Comprehensive  loss for the nine-month periods to September
30, 1997 and 1998 is shown below:



                                        9

<PAGE>

<TABLE>
<CAPTION>
                                                                             NINE MONTHS ENDED SEPTEMBER 30,
                                                                  -------------------------------------------------
                                                                       1997               1998              1998
                                                                  ---------------    --------------      ----------
                                                                                                           (NOTE 1)
                                                                                      (IN THOUSANDS)
<S>                                                                   <C>               <C>                <C>
Net loss..........................................................    (pound)(58,789)   (pound)(46,086)    $(78,323)
Other comprehensive loss net of tax:-
  Unrealized loss on securities...................................              (500)           (2,823)      (4,797)
                                                                      --------------    --------------     --------

Comprehensive loss...............................................     (pound)(59,289)   (pound)(48,909)    $(83,120)
                                                                      ==============    ==============     ========
</TABLE>


4.  PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>

                                        LAND AND          CABLE           OFFICE          MOTOR
                                       BUILDINGS         NETWORK        EQUIPMENT        VEHICLES          TOTAL
                                     -------------    ------------   -------------    -------------    -------------

                                                                     (IN THOUSANDS)
ACQUISITION COSTS
<S>                                   <C>           <C>               <C>                 <C>          <C>    

Balance at January 1, 1998.......     (pound)5,111  (pound)405,652     (pound)9,017       (pound)606   (pound)420,386
Additions........................            1,511         100,506            1,109              506          103,632
Dispositions.....................                -            (271)              (5)            (213)            (489)
                                       -----------   -------------      -----------       ----------   --------------
Balance at September 30, 1998....            6,622         505,887           10,121              899          523,529
                                       -----------   -------------      -----------       ----------   --------------
ACCUMULATED DEPRECIATION

Balance at January 1, 1998.......              478          49,695            4,369              208           54,750
Charge for period................              143          25,046            1,515              139           26,843
Dispositions.....................                -            (220)              (5)            (169)            (394)
                                       -----------   -------------       ----------      -----------   --------------
Balance at September 30, 1998....              621          74,521            5,879              178           81,199
                                       -----------   -------------       ----------      -----------   --------------
SEPTEMBER 30, 1998 NET BOOK VALUE            6,001         431,366            4,242              721          442,330
                                      ============  ==============     ============      ===========   ==============
DECEMBER 31, 1997 NET BOOK VALUE      (pound)4,633  (pound)355,957     (pound)4,648       (pound)398   (pound)365,636
                                      ============  ==============     ============      ===========   ==============
</TABLE>


The estimated useful life of set-top boxes and initial subscriber  installations
was reduced  from seven  years to three years with effect from  January 1, 1998.
The effect of the change in  estimated  useful life was to reduce net income for
the period by (pound)5.0 million ($8.5 million).

5.  COMMITMENTS AND CONTINGENCIES

         The Company is obligated under the terms of its existing licenses,  and
under the milestone  requirements of its local delivery  licenses  ("LDLs"),  to
construct cable systems passing a predetermined  number of premises.  Should the
Company fail to achieve these  milestones,  without license  modifications,  the
Director General could commence



                                       10

<PAGE>



proceedings  to  require  compliance.   Similarly,  the  Independent  Television
Commission ("ITC") may commence proceedings to require compliance with the build
milestones  in the LDLs.  If the  Company is unable to comply,  its  licenses in
respect of which milestones have not been met could be revoked, which could have
a material adverse effect on the Company.

6.   ISSUE OF 1998 NOTES

         On February 6, 1998,  Diamond  Holdings  plc  ("Diamond  Holdings"),  a
subsidiary of the Company, issued  (pound)135,000,000 in principal amount of its
10% Senior Notes due February 1, 2008 and  $110,000,000  in principal  amount of
its 9 1/8% Senior Notes due February 1, 2008  (together,  the "1998 Notes".) The
1998 Notes have been fully and  unconditionally  guaranteed by the Company as to
principal,  interest and other  amounts  due.  Net proceeds  received by Diamond
Holdings  amounted to approximately  (pound)195  million after issuance costs of
approximately (pound)7 million.

7.   SHARE EXCHANGE AGREEMENT

         On June 16, 1998, the Company  announced that all of the holders of its
outstanding  ordinary  shares of 2.5p each and deferred  shares of 25p each have
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL, an alternative telecommunications company in the UK, the
common  stock of which is  quoted  on NASDAQ  (NTLi).  Under the Share  Exchange
Agreement, the Company's shareholders will receive one share of NTL common stock
for every four Ordinary  Shares of the Company held subject to adjustment in the
event that the average NTL share price for a predetermined period before closing
of the  transaction  exceeds a specified  price  (which will be $52.50 per share
until November 16, 1998,  increasing  thereafter to $53 per share until December
16, 1998, $53.50 per share until January 16, 1999 and $54 per share thereafter).
Holders of the  Company's  deferred  shares will receive one share of NTL common
stock for each deferred share held.

         The  proposed  share  exchange  is subject  to a number of  conditions,
including  the  receipt  of  required  regulatory  approvals  (which  have  been
obtained) and approval by NTL  shareholders.  Although the transaction  will not
require  the prior  approval  of the  holders of the  Group's  outstanding  debt
securities, each of the indentures pursuant to which the Group's debt securities
were issued  requires that offers to repurchase  such debt securities be made to
holders  of such  securities  subsequent  to closing at a price of 101% of their
accreted  value or  principal  amount,  which may  influence  the ability of the
parties to complete the proposed share exchange in its current form.



                                       11

<PAGE>


If such offers should be required, there can be no assurance that the Company or
Diamond  Holdings will have  sufficient  funds,  or be able to raise  sufficient
funds, to effect such repurchases.

8.  SUMMARIZED FINANCIAL INFORMATION

         The  following  table  presents   summarized   consolidated   financial
information for Diamond Holdings plc ("Diamond Holdings") as of and for the nine
months ended September 30, 1998. This summarized financial  information is being
provided  pursuant  to  Section G of Topic 1 of Staff  Accounting  Bulletin  No.
53--"Financial  Statement  Requirements  in Filings  Involving  the Guarantee of
Securities by a Parent".  The 1998 Notes have been  guaranteed by the Company as
to  principal,  interest and other  amounts  due.  The Company will  continue to
provide such summarized  financial  information for Diamond Holdings for as long
as the 1998 Notes remain outstanding and guaranteed by the Company.


                                             Diamond Holdings plc (note a)
                                             -----------------------------
                                      17 days ended           Nine months ended
                                      December 31, 1997       September 30, 1998
                                      -----------------       ------------------
                                                  (in thousands)
Summarized Consolidated Income
Statement Information

Revenue                                  (pound)-               (pound) 63,922
Operating costs and expenses                -                           77,919
Net loss for the period                  (pound)-               (pound)(50,334)
                                      =================       ==================


                                      December 31, 1997       September 30, 1998
                                      -----------------       ------------------
                                                  (in thousands)
Summarized Consolidated Balance
Sheet Information

Fixed and noncurrent assets              (pound)-                (pound)531,596
Current assets                             50                           170,048
                                      -----------------        -----------------
Total assets                             (pound)50               (pound)701,644
                                      =================        =================

Current liabilities                      (pound)-                (pound) 42,836
Noncurrent liabilities                      -                           818,494
Shareholders equity/(deficit)               50                         (159,686)
                                      -----------------        -----------------
Total liabilities and
shareholders interest                    (pound)50               (pound)701,644
                                      =================        =================

(a)      Diamond  Holdings  was  incorporated  on  December  15,  1997  and is a
         wholly-owned, direct subsidiary of Diamond Cable Communications Plc. On
         January 16,  1998  Diamond  Holdings  became the  intermediate  holding
         company  which  holds all of the shares of all Group  companies  (other
         than Diamond



                                       12

<PAGE>



         National Networks Limited, a company with no operations, and (pound)100
         called  up share  capital,  which  was  disposed  of by  Diamond  Cable
         Communications  plc on  November  6, 1998).  The  Summarized  Financial
         Information  shows operating  results as if Diamond Holdings became the
         intermediate holding company on January 1, 1998.



                                       13

<PAGE>



                        DIAMOND CABLE COMMUNICATIONS PLC

ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF RESULTS OF  OPERATIONS  AND
         FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

         The  Company  expended  net  cash  to  fund  investing   activities  of
approximately  (pound)110.1  million and (pound)100.9  million in the year ended
December 31, 1997 and the first nine months of 1998, respectively. The Company's
investing activities consisted almost exclusively of the ongoing construction of
the  network  ((pound)110.1  million in the year  ended  December  31,  1997 and
(pound)101.0  million in the first nine  months of 1998).  Net cash  provided by
financing  activities  in the year ended  December  31,  1997 was  approximately
(pound)146.6  million  and in the first  nine  months  of 1998 was  (pound)194.0
million. The Company's net cash provided by operating activities was (pound)20.9
million in the year ended December 31, 1997 and (pound)20.2  million in the nine
months  to  September  30,  1998.  The  Group's  cash and  funding  requirements
historically  have been met  principally  through the  issuance of the  Discount
Notes, as well as from equity capital, advances from its shareholders,  and from
bank and lease financing. In February 1998, a subsidiary of the Company, Diamond
Holdings,   issued  the  1998  Notes,  raising  net  proceeds  of  approximately
(pound)195  million.  The 1998 Notes are guaranteed by the Company as to payment
of  principal,  interest  and any other  amounts  due.  In  connection  with the
issuance of the 1998 Notes, the Group terminated its existing bank facility.

         The  further   development  and   construction  of  the  Group's  cable
television  and  telecommunications  network  will require  substantial  capital
investment.  The Group is obligated by the milestones in its  telecommunications
licenses and its LDLs to construct  and activate a network  passing an aggregate
of 1,021,894  premises within  prescribed time periods.  Failure by the Group to
meet its milestones could  potentially  subject the Group to enforcement  orders
from OFTEL or the ITC,  which could lead to revocation of the relevant  licenses
or a shortening of an LDL period or fines. The Group has met the final milestone
obligations  under all of its  telecommunications  licenses except in respect of
the Leicester and Loughborough  franchise.  The Group met the required quarterly
milestone obligation under its telecommunications  license for the Leicester and
Loughborough  franchise as at September 30, 1998.  Principally because of delays
by the  Department  of Trade and  Industry  in  granting  the  Group a  national
telecommunications  license,  and  consequent  delays  in  the  commencement  of
construction,  the Group did not meet its annual  milestones in six of its seven
LDL franchises at the end of 1997,  although  construction had commenced in five
of the seven LDL  franchises.  Following an application by the Group to the ITC,
on  March  26,  1998  the ITC  formally  modified  the  annual  build  milestone
obligations  in all of the Group's LDL  franchise  areas  except Vale of Belvoir
with effect from December 30, 1997. The Group has met the modified milestones in
all of its LDL franchises as at December 31, 1997.



                                       14

<PAGE>



         The Company  expects that the Group's  residential  cable  network will
extend  approximately 14,300 kilometers (plus 920 kilometers to interconnect the
residential  build) and pass  approximately  1.2 million  homes once  completed.
Based on the Group's current plans, the network will be substantially  completed
by the end of 2001. The Company currently  estimates that the additional capital
expenditures  from  October  1, 1998  required  for the  Group to  substantially
complete construction  sufficient to satisfy its aggregate milestone obligations
of  approximately  1.02  million  premises   (including   estimated   subscriber
connection expenses) will be approximately (pound)332 million,  although further
capital  expenditures  would be required to substantially  complete the network.
These   amounts  are  based  on  the  Group's   current  plans  and  could  vary
significantly  depending on changes in such plans as well as such other  factors
as the number of customers actually  connected to the network,  the availability
of  construction  resources,  the  impact of  competition  from  other  cable or
telecommunications  operators or television  delivery  platforms and the pace of
the Group's construction program.

         At  September  30,  1998,  the Group had  constructed  and  activated a
network  comprising  approximately  66% of its aggregate  milestones.  The Group
estimates  that  existing cash  resources  and estimated  future cash flows from
operations will be sufficient to complete the construction and activation of its
network to almost 84% of its aggregate final  milestones,  which level the Group
estimates it will achieve by the end of 1999 based on the Group's current plans.
Thereafter,  the Group will be required  to obtain  further  debt and/or  equity
financing  to  complete   construction   sufficient  to  satisfy  its  aggregate
milestones. To the extent that (i) the amounts required to construct the Group's
network to meet its milestones exceed its estimates,  (ii) the Group's cash flow
does not meet  expectations or (iii) the Group continues its construction of the
network  beyond its  milestone  obligations,  the amount of further  debt and/or
equity financing required will increase. There can be no assurance that any such
debt or equity financing will be available to the Group on acceptable commercial
terms or at all.

         The foregoing  information  with regard to expected  completion  times,
future capital expenditures and the sufficiency of funding is forward-looking in
nature. Due to a number of factors,  including those identified in the preceding
paragraph and below, actual results may differ materially from expected results.
In particular, the anticipated further funding requirements will depend upon the
Group's  cash flow  which,  in turn,  will  depend  upon a number of  variables,
including  revenue  generated  from  business  telecommunications,   residential
telephone and cable  television  services,  churn,  expenses such as programming
costs  and   interconnect   charges,   network   construction   and  development
expenditures and financing costs.  Adverse developments in any of these or other
areas could adversely  affect the Group's cash flow.  Moreover,  there can be no
assurance that (i) conditions  precedent to the  availability of funds under any
future debt  instruments  will be satisfied  when funds are  required;  (ii) the
Group will be able to generate sufficient cash from



                                       15

<PAGE>



operations  to meet  any  unfunded  portion  of its  capital  requirements  when
required;  (iii) the cost of  constructing  and  activating the network will not
increase  significantly;  (iv) the Group will not acquire  additional  franchise
areas,  which would require additional  capital  expenditures;  or (v) the Group
will not incur  losses from  foreign  currency  transactions  or its exposure to
foreign  currency  exchange  rate  fluctuations,  each of  which  factors  would
increase the Group's funding needs. In addition, the Group's strategies may vary
depending on when and whether the Share Exchange  Agreement and the transactions
contemplated  thereby  are  completed,  which  may  affect  the  forward-looking
information provided above.

         Assuming  consummation of the Share Exchange Agreement,  the holders of
the Company's  outstanding  Discount  Notes and the 1998 Notes issued by Diamond
Holdings will have the right to require the issuer  thereof to  repurchase  such
securities at a price of 101% of their accreted value or principal amount. There
can be no assurance  that the Company or Diamond  Holdings will have  sufficient
funds, or be able to raise sufficient funds, to effect such repurchases.

SELECTED OPERATING DATA

         The  following  table sets forth  certain data  concerning  the Group's
franchises at and for the years ended  December 31, 1996 and 1997 and at and for
the  six-month  period  ended  June 30,  1998 and the  nine-month  period  ended
September 30, 1998.


<TABLE>

                                                          DECEMBER 31,          JUNE 30,       SEPTEMBER 30
                                                          ------------          --------       ------------
                                                      1996          1997          1998              1998
                                                      ----          ----          ----              ----
<S>                                                  <C>          <C>            <C>              <C>
Homes passed by civils construction(1)..........     453,496      536,110        616,110          666,416
Homes activated(2)..............................     347,246      508,801        601,082          644,679
Homes marketed(3)...............................     252,601      405,787        504,049          549,605
Student services rooms marketed(4)..............           -        1,805          7,086            8,126
BUSINESS TELECOMMUNICATIONS
Business customers accounts.....................       3,935        5,723          6,671            7,176
Business lines connected........................      18,932       27,124         33,947           36,241
Private circuits(5).............................         226          258            304              310
Average lines per business(6)...................         4.8          4.7            5.1              5.1
Average monthly revenue per line(7)(8)..........(pound)50.17 (pound)46.26   (pound)44.50     (pound)43.05
Pro-forma average monthly revenue per line(8)...(pound)51.25 (pound)46.26   (pound)44.50     (pound)43.05
RESIDENTIAL TELEPHONE(4)
Residential lines connected.....................     104,460      157,171        197,369          214,630
Penetration rate of homes marketed(9)...........       41.4%        38.6%          38.6%            38.5%
Average monthly revenue per line(8)(10).........(pound)18.40 (pound)18.75   (pound)18.77     (pound)18.77
Pro-forma average monthly revenue per line(8)...(pound)18.64 (pound)18.75   (pound)18.77     (pound)18.77
Churn(11)(12)...................................       20.6%        16.3%          14.2%            13.7%
CABLE TELEVISION
Basic service subscribers.......................      59,242       83,793         98,694          106,761
Penetration rate of homes marketed(13)..........       23.5%        20.6%          19.6%            19.4%
Average monthly revenue per subscriber(14)......(pound)18.03 (pound)19.84   (pound)19.88     (pound)19.59
Churn(11)(12)...................................       40.9%        32.7%          26.3%            24.2%

--------------------
</TABLE>


                                       16

<PAGE>



(1)      Homes  passed  by  civils is the  number  of homes  (excluding  student
         services rooms) that have had ducting buried outside.

(2)      Homes  activated  is the number of homes  (excluding  student  services
         rooms) that are capable of  receiving  cable  service  without  further
         extension of transmission lines, apart from the final connection to the
         home.

(3)      Homes  marketed  is the number of homes  activated  (excluding  student
         services rooms) for which the initial  marketing phase  (including door
         to door direct marketing) has been completed.

(4)      During 1997 the Group began to provide telephone  services and internet
         access to students at a number of large  educational  establishments in
         its  franchise  area.  Academic  terms make this  business  seasonal in
         nature. In order to fairly present the results, the Company has adopted
         the following  policy:  (i) rental revenue is recognized  evenly over a
         full twelve  month period (or the balance of the period to the start of
         the next academic year if shorter),  (ii) call revenue is recognized in
         the  month in which it is earned  and is  incorporated  in  residential
         telephone  average monthly revenue per line,  (iii) a student  services
         line is recognized as the equivalent of 3/4 of a residential line, (iv)
         each  student  room at which  service is available is treated as a home
         marketed and  incorporated in the calculation of residential  telephone
         penetration  and, (v) any net decrease in the number of students taking
         the service  between one  academic  year and another is ignored for the
         purposes of calculating residential telephone churn.

(5)      Private circuits are point-to-point  customer specific  connections for
         which a fixed annual rental charge is made.


(6)      Average lines per business account is calculated by dividing the number
         of business lines connected on the given date by the number of business
         customer accounts on such date.

(7)      The average  monthly  business  telecommunications  revenue per line is
         calculated  by  dividing  (i)  business   telecommunications  line  and
         equipment  rental,  outgoing  call  charges and  incoming  call charges
         (including  revenue from private  circuits)  for the period by (ii) the
         average  number  of  business   telecommunications  lines  and  private
         circuits  (calculated  as a simple  average of the number of subscribed
         lines and private  circuits at the end of each month during the period)
         and dividing  that amount by 12 (for the years ended  December 31, 1996
         and 1997),  by six (for the six months  ended June 30, 1998) or by nine
         (for the nine months ended September 30, 1998).

(8)      The  calculation  of the  average  monthly  revenue  per line (for both
         residential telephone and business telecommunication  revenues) for the
         year to December 31, 1996 reflects the  reduction in revenues  stemming
         from rebates to BT on incoming termination revenues relating in part to
         1995 but  recorded in full against  revenues in 1996.  The rebates were
         calculated in accordance with revised  interconnect  agreements with BT
         that were made effective  retroactively  from April 1995. The pro-forma
         average  monthly revenue per line (for both  residential  telephone and
         business  telecommunications  revenues)  gives  effect  to the  revised
         interconnect  agreements  as if they had been in effect from April 1995
         and allocates to each period the portion of the rebates that relates to
         such period.

(9)      Penetration rate of homes marketed is calculated by dividing the number
         of residential  lines,  including  student services lines recognized at
         the equivalent of 3/4 of a residential line connected on the given date
         by the total  number  of homes  marketed  and  student  services  rooms
         marketed as of such date, expressed as a percentage.

(10)     The  average  monthly   revenue  per  residential   telephone  line  is
         calculated  by dividing (i) line and  equipment  rental,  outgoing call
         charges and  incoming  call  charges for the period by (ii) the average
         number of residential  telephone lines  (calculated as a simple average
         of the number of  subscribed  lines at the end of each month during the
         period) and  dividing  that amount by 12 (for the years ended  December
         31, 1996 and 1997),  by six (for the six months ended June 30, 1998) or
         by nine (for the nine months ended  September 30,  1998).  Call revenue
         from student  services  lines is recognized in the month in which it is
         earned and is  incorporated  in residential  telephone  average monthly
         revenue per line,  with each student  services  line  recognized as the
         equivalent of 3/4 of a residential line.


<PAGE>


(11)     Churn   is   calculated   by   dividing   net   disconnections   (total
         disconnections  less the  number  of  disconnected  accounts  for which
         service  is  later  restored)  in a period  by the  average  number  of
         subscribers in the period (calculated as a simple average of the number
         of subscribers  at the end of each month during the period).  Churn for
         the six months ended June 30, 1998 is  annualized  by  multiplying  the
         amount as  calculated  above by two.  Churn for the nine  months  ended
         September  30,  1998  is  annualized  by  multiplying   the  amount  as
         calculated above by 1 1/3.

(12)     Since the beginning of 1997,  the Group's  reported  churn has excluded
         from net  disconnected  accounts  subscribers  who disconnect  from the
         service when moving residence and reconnect to the service in their new
         residence.  Previously, those subscribers were not identified under the
         Group's  information  system and were  therefore  included in the churn
         calculation  as  disconnected  accounts.  If churn for 1997 and the six
         months to June 30,  1998 were  calculated  on the basis used in periods
         prior to 1997,  annualized  churn  would  have been 36.9% and 31.2% for
         cable  television  and  21.3%  and  19.8%  for  residential  telephone,
         respectively.  If churn for the nine months to September  30, 1998 were
         calculated on the basis used in periods prior to 1997, annualized churn
         would have been 30.6% for cable  television  and 19.7% for  residential
         telephone.  The difference  between churn on the new and prior bases is
         not necessarily  indicative of the adjustment that would arise if churn
         for prior periods were restated.









                                       17

<PAGE>



(13)     Penetration rate of homes marketed is calculated by dividing the number
         of homes  receiving  basic  cable  television  on the given date by the
         total  number  of  homes  marketed  as of  such  date,  expressed  as a
         percentage.

(14)     The  average  monthly  revenue  per  cable  television   subscriber  is
         calculated  by dividing  total  cable  television  subscriber  revenues
         (excluding  installation revenues) for the period by the average number
         of cable television subscribers  (calculated as a simple average of the
         number of basic service subscribers at the end of each month during the
         period) and  dividing  that amount by 12 (for the years ended  December
         31, 1996 and 1997),  by six (for the six months ended June 30, 1998) or
         by nine (for the nine months ended September 30, 1998).


RESULTS OF OPERATIONS FOR THE THREE AND NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1997 AND 1998

         The  Group  continued  to  experience  increases  in  its  subscribers,
revenues and expenses during the nine-month  period ended September 30, 1998. In
general,  these  increases were  attributable to the Group's  continued  network
construction, activation and marketing of new homes and businesses. Homes passed
by  civils  construction  increased  by  130,306  (24.3%)  and  homes  activated
increased by 135,878  (26.7%) from December 31, 1997 to September 30, 1998.  The
Group   has   met   the   final   milestone   obligations   under   all  of  its
telecommunications  licenses except in respect of the Leicester and Loughborough
franchise.  The Group met the required quarterly milestone  obligation under its
telecommunications  license for the Leicester and  Loughborough  franchise as at
September 30, 1998.

         In order to improve the management and quality of the residential sales
force,  commencing  in  February  1997,  the  Company  began to develop  its own
internal sales force through direct hiring of residential  sales people.  All of
these sales staff  underwent a training  process  which the Group  believes  has
increased their long-term effectiveness but which hindered their productivity in
the short-term. Sales performance was affected by increased competitive activity
during 1997 and 1998,  in  particular  from BT, CWC,  BSkyB and, in the relevant
period,   Ionica,  and  at  September  30,  1998,   residential  telephone  line
penetration  remained  relatively  steady  at  38.5%,  compared  to  38.6% as at
December 31, 1997. Cable television penetration at September 30, 1998 had fallen
to 19.4% from 20.6% at December  31,  1997.  Penetration  rates for  residential
telephone and cable television were 38.5% and 20.1%, respectively,  at September
30, 1997.

     REVENUE

         For the three months ended  September  30, 1998,  total  revenues  were
(pound)22.7  million, a 48% increase over total revenues of (pound)15.4  million
for the comparable  period in 1997. For the nine months ended September 30, 1998
total revenues were (pound)63.9  million,  a 50% increase over total revenues of
(pound)42.6   million  for  the  comparable  period  in  1997.  This  growth  is
attributable  to increases in revenues in all three of the Group's primary lines
of business.

         Business Telecommunications.  Business telecommunications revenues were
(pound)4.7 million and (pound)13.7  million for the three and nine-month periods
respectively  ended  September  30,  1998  compared  to  (pound)3.7  million and
(pound)10.2 million, respectively, for the comparable periods in 1997,



                                       18

<PAGE>



representing  increases  of 26% and 34%,  respectively.  The growth in  reported
revenues  is due  primarily  to an  increase  in the  number of  business  lines
installed  from 25,405 at September 30, 1997 to 36,241 at September 30, 1998, an
increase  of  43%.  The  average   monthly   revenue  per  line  decreased  from
(pound)46.80  in the nine months to September  30, 1997 to  (pound)43.05  in the
comparable  period in 1998.  The  decrease was due to a  combination  of, (i) an
increase in centrex lines which have a lower average revenue per line than other
business  customer lines (centrex  services  represented  43.6% and 49.5% of the
total number of business  lines at September  30, 1997 and  September  30, 1998,
respectively)  and (ii)  reductions  in  certain  tariffs in  response  to price
reductions by  competitors,  offset in part by increased call usage per line and
higher line rental charges which were  increased in September  1997. The Company
may lower prices in the future if necessary for competitive reasons.

         Residential Telephone.  Residential telephone revenues were (pound)12.0
million and (pound)32.8 million in the three and nine-month periods respectively
to September 30, 1998 compared to (pound)7.5  million and  (pound)20.5  million,
respectively,  for the comparable periods in 1997, representing increases of 59%
and 60%,  respectively.  The  growth in  residential  telephone  revenue  is due
primarily  to an  increase  in the number of  residential  telephone  lines from
136,925 at September 30, 1997 to 214,630 at September 30, 1998,  representing an
increase  of  57%.  Average  monthly  revenue  per  line  was  (pound)18.80  and
(pound)18.74 in the three and nine-month periods, respectively, to September 30,
1997 and (pound)18.76 and (pound)18.77,  respectively, in the comparable periods
in 1998.  The  relatively  stable  level of average  revenues was largely due to
increased  call usage  which  largely  offset  reductions  in call and  incoming
termination  tariffs  during 1997 and the first nine  months of 1998.  The churn
rates  (annualized)  were  12.9%  and  13.7%  for the  three  and  nine  months,
respectively,   to   September   30,  1998  as  compared  to  17.0%  and  17.5%,
respectively,  in the comparable  periods in 1997. The relatively  high churn in
the first nine months of 1997 was  attributable  in part to the application of a
stricter disconnect policy relating to non-payment.

         Cable Television.  Cable television  revenues increased from (pound)4.2
million and (pound)11.9 million in the three and nine-month periods to September
30, 1997  respectively  to  (pound)6.1  million and  (pound)17.5  million in the
comparable periods in 1998, representing increases of 46% and 47%, respectively.
This growth in cable television  revenue was primarily due to an increase in the
number of the Company's cable television  subscribers  which rose from 71,435 at
September  30, 1997 to 106,761 at September  30,  1998,  an increase of 49%. The
Company's  average monthly revenue per subscriber was relatively  stable,  being
(pound)19.09  and  (pound)19.59  for the three and nine months to September  30,
1998, respectively, compared to (pound)19.17 and (pound)19.75 for the comparable
periods in 1997.

         The  Group's  churn  rates  were 20.3% and 24.2% for the three and nine
months  respectively  to September  30, 1998 as compared to churn rates of 29.7%
and 37.7% in the comparable periods in 1997. The Group believes



                                       19

<PAGE>



that the  reduction  in churn  this year is largely  the result of new  policies
introduced  by the  Group  to  reduce  churn,  including  that  it now  requires
subscribers  to pay an  installation  fee in  connection  with  new  residential
services. In addition,  the Group introduced other policies which contributed to
the reducing trend in churn between comparable periods including improvements in
the management and quality of the sales force,  the introduction of more program
packaging  choice  for  customers  and  increased  focus  on  the  retention  of
customers.

     OPERATING COSTS AND EXPENSES

         Telephone  expenses,  consisting  principally of  interconnect  charges
payable to BT,  Mercury,  Energis  and Global One were  (pound)3.2  million  and
(pound)8.7  million in the three and  nine-month  periods to September 30, 1997,
respectively,  and (pound)4.5  million and (pound)12.4  million in the three and
nine-month  periods to September  30,  1998,  respectively.  As a percentage  of
combined business  telecommunications and residential telephone revenues,  these
direct costs decreased from 28% in the three and nine-month periods to September
30, 1997,  respectively,  to 27% in each of the  comparable  periods in 1998 due
primarily to reduced interconnect tariffs paid to these operators.

         Direct costs for cable television  programming,  which generally depend
on the number of  subscribers  and  per-subscriber  rates charged by programming
suppliers, increased from (pound)2.4 million and (pound)6.9 million in the three
and  nine-month  periods to September  30,  1997,  respectively,  to  (pound)3.3
million and (pound)9.5 million in the respective  comparable periods in 1998. As
a percentage of cable television revenues, these direct costs decreased from 57%
in the  three-month  period ended  September  30, 1997 to 53% in the  comparable
period in 1998 and from 58% to 54% in the  nine-month  periods to September  30,
1997 and 1998, respectively.  The decrease was in large part due to an increased
proportion of subscribers on higher margin basic and premium program packages in
1998 compared to the comparable periods in 1997.

         Selling,  general and administrative  expenses as a percentage of total
revenues  in the three and  nine-month  periods to  September  30, 1997 were 46%
compared to 42% and 43%, respectively,  in the comparable periods in 1998. These
costs  increased  by 33% and 39%,  respectively,  from the three and  nine-month
periods to September 30, 1997 to the  comparable  periods in 1998.  The increase
was due to higher  administration  and sales  force  costs  associated  with the
expansion of the Company's  business,  together with LDL cash bid payments which
commenced in 1998.

         Depreciation  and  amortization  expenses  increased  by 54%  from  the
three-month period to September 30, 1997 to the comparable period in 1998 and by
52% from the nine-month period to September 30, 1997 to the comparable period in
1998. This increase was  attributable to a combination of the increasing size of
the Company's network and the



                                       20

<PAGE>



additional depreciation resulting from a change in the estimated useful lives of
set-top boxes and initial subscriber  installations.  In anticipation of changes
in  technology,  the  estimated  useful  lives  of  set-top  boxes  and  initial
subscriber installations was reduced from seven years to three years with effect
from January 1, 1998.  The effect of the change in estimated  useful life on the
depreciation  charge for the three and nine-month  periods to September 30, 1998
was an increase of (pound)2.0 million and (pound)5.0 million, respectively.

         The Group continues to review the potential  consequences of changes in
technology,  its network infrastructure and the industry structure within the UK
in general for its plans,  operations  and the assessment of the useful lives of
its assets.

     INTEREST INCOME/EXPENSE

         Interest expense was (pound)21.6 million and (pound)62.0 million in the
three and nine-month periods ended September 30, 1998, respectively, compared to
(pound)15.9  million and (pound)43.1  million in the comparable periods in 1997.
The  increase  is due  primarily  to the  accretion  on the  Discount  Notes  of
(pound)15.9  million and (pound)47.0 million in the three and nine-month periods
to September 30, 1998 (compared to (pound)14.9 million and (pound)39.9  million,
respectively,  in the comparable periods in 1997) and interest on the 1998 Notes
of  (pound)4.9  million  and  (pound)12.8  million  in the three and nine  month
periods to September 30, 1998, respectively.  In addition,  amortization of debt
financing costs was (pound)0.6 million and other interest expense was (pound)0.2
million in the three  months to  September  30,  1998,  compared  to  (pound)0.6
million and (pound)0.4 million,  respectively,  in the three months to September
30, 1997.  Amortization of debt financing costs was (pound)1.6 million and other
interest  expense was  (pound)0.6  million in the nine months to  September  30,
1998,  compared to (pound)1.8 million and (pound)1.4 million,  respectively,  in
the nine months to September 30, 1997.  Interest received was (pound)3.4 million
in the three months to September 30, 1998 compared to (pound)1.9  million in the
three months to September 30, 1997. Interest received was (pound)10.3 million in
the nine months to September 30, 1998 compared to (pound)4.8 million in the nine
months to September  30, 1997 and the increase  was  primarily  due to temporary
investment of the proceeds of the 1998 Notes.

     FOREIGN EXCHANGE

         A  substantial  portion of the Group's  existing debt  obligations  are
denominated  in U.S.  dollars,  while the  Group's  revenues  and  accounts  are
generated and stated in pounds sterling.  Foreign currency translation gains and
losses, except for unrealized gains and losses on available-for-sale securities,
are reported as part of the profit or loss of the Group. In the three months and
nine months ended September 30, 1997 the Group  recognized net foreign  exchange
losses of (pound)16.5 million and (pound)22.2 million,  respectively,  primarily
due to the  unrealized  loss on  translation  of its  liability  on the Discount
Notes. Because of changes



                                       21

<PAGE>



in prevailing rates, during the three months ended September 30, 1998, the Group
recorded a net foreign exchange gain of (pound)10.9  million and during the nine
months ended  September 30, 1998 the Group recorded a net foreign  exchange gain
of (pound)21.1  million  primarily due to the unrealized gains on translation of
its liability on the Discount Notes and 1998 Notes.

     DERIVATIVE FINANCIAL INSTRUMENTS

         Realized  gains  on  derivative  financial  instruments  of  (pound)0.4
million in the nine months to  September  30,  1998  consists  primarily  of the
settlement on the two  (pound)50  million  foreign  exchange  forward  contracts
referred to below which were closed on June 17, 1998.

         The  Company  entered  into a  foreign  exchange  forward  contract  on
November 1, 1996 for settlement on May 6, 1997 to sell  (pound)200  million at a
rate of $1.6289 to (pound)1.  On January 31, 1997 an  offsetting  agreement  was
entered into at a rate of $1.6014 to (pound)1.  The  offsetting  contracts  were
settled on February 6, 1997 with a payment of approximately  (pound)3.4  million
to the Company. Because of changes in prevailing rates, the Company recorded for
the year ended December 31, 1996, an unrealized loss of approximately (pound)8.1
million on the pounds sterling sell forward  contract which partially offset the
gain  that  was  recorded  on the  translation  of the U.S.  dollar  denominated
obligations  on the  Discount  Notes  issued  in 1994 and 1995  during  the same
period.  During  the first  quarter  of 1997,  the  Company  recorded  a gain of
approximately  (pound)11.5  million  on the two  offsetting  forward  contracts,
reflecting the reversal of an (pound)8.1  million loss referred to above and the
approximately  (pound)3.4  million cash payment on settlement of the  contracts.
The realized gain on the foreign  exchange forward contract in the first quarter
of 1997 largely offset the unrealized  loss that was recorded in the same period
on the  translation of the U.S. dollar  denominated  obligations on the Discount
Notes.  The Company entered into a foreign exchange forward contract on June 23,
1997 for  settlement  on June 25,  1998 to sell  (pound)50  million at a rate of
$1.6505 to (pound)1.  The Company also entered into a foreign  exchange  forward
contract  on June 27,  1997 for  settlement  on July 1,  1998 to sell  (pound)50
million  at a rate of  $1.6515  to  (pound)1.  On June 16,  1998 two  offsetting
agreements  were entered  into at rates of $1.6326 and $1.6322 to (pound)1.  The
offsetting  contracts were settled on June 17, 1998 with a payment of (pound)1.1
million to the  Company.  Because of changes in  prevailing  rates,  the Company
recorded  for  the  year  ended   December  31,  1997  an  unrealized   gain  of
approximately  (pound)0.7  million on the two  (pound)50  million  sell  forward
contracts. During the first half of 1998 the Company recorded a realized gain of
approximately  (pound)0.4 million on the settlement of the offsetting  contracts
reflecting the cash payment on settlement of the contracts in excess of the gain
recognized  during  1997.  The Company  continues to monitor  conditions  in the
foreign  exchange  market and may from time to time enter into foreign  currency
contracts  based on its  assessment of foreign  currency  market  conditions and
their effect on the Company's operations and financial condition. Therefore,



                                       22

<PAGE>



changes in currency exchange rates may continue to have a material effect on the
results of  operations  of the Group and may  materially  affect  the  Company's
ability to satisfy its obligations, including obligations under outstanding debt
instruments, as they become due.

     NET LOSS

         As a result of the  foregoing  factors,  the  Group  had net  losses of
(pound)12.6 million in the three-month period ended September 30, 1998, compared
to net losses of (pound)32.1  million in the comparable  period of 1997, and net
losses of (pound)46.1 million for the nine-month period ended September 30, 1998
compared to net losses of (pound)58.8 million in the comparable period in 1997.

     INFORMATION SYSTEMS - YEAR 2000

         The future operations of the Group depend on its network infrastructure
and certain other systems performing correctly over the change of millennium and
on  subsequent  dates.  The correct  handling of date  information  is therefore
essential   and   detailed   test   programs   are   underway  for  all  crucial
telecommunications and cable television network and systems infrastructure.

         The  Group  plans to  install  year  2000  compliant  software  for the
telecommunications  switches and network  control systems by the end of December
1998. Cable television  infrastructure that is not currently year 2000 compliant
is scheduled to be upgraded by March 1999.

         Other systems critical to business  operations,  such as the subscriber
management  system and the financial and accounting  systems,  are maintained by
the vendors.  The vendors have supplied versions of these critical systems which
are designed to be year 2000  compliant and are currently  subject to a thorough
testing  program due for completion by December 1998. The vendors have expressed
confidence  that any  problems  that may  currently  exist can be rectified in a
timely manner. The personal computer and local area network  infrastructures are
to be  surveyed  and  tested,  and  non-compliant  elements  are  expected to be
replaced by March 1999.

         The Group  depends,  to some extent,  on third party  suppliers for the
supply of telecommunications, cable television, systems for customer service and
billing,  as well as building  facilities  and supplies.  Maintenance  contracts
exist for critical  elements and assurance has been sought from all suppliers of
critical  services  that  they will  continue  to supply  the  services  without
interruption.

         Costs incurred in connection with year 2000 compliance are not expected
to be material.  Software upgrades to the network,  cable television and systems
infrastructure are supplied as part of the normal maintenance contracts. Minimal
cost  has  been  incurred  to  date,   and  it  is  estimated   that  a  further
(pound)100,000 will be required for replacement of local area



                                       23

<PAGE>



network and personal  computer  elements.  Other  components  being replaced are
otherwise due for replacement through obsolescence.

         Should the  telecommunications  network fail to operate  correctly over
the date  change,  the  business  of the  Group  would be  materially  adversely
affected.  Similarly,  should the cable  television  network  or the  subscriber
management system and personal computer network fail to operate correctly,  this
could also have  materially  adverse  consequences  to the Group.  The impact of
failure of the critical network, cable television and system components could be
significant.  Therefore, significant effort is being devoted to rigorous testing
programs to ensure that any potential problems are identified and rectified in a
timely manner.  Despite the efforts being expended by the Group, there can be no
assurance  that year 2000  compliance  issues  will not have a material  adverse
effect on the Group's operations.

     RECENT DEVELOPMENTS

         On April 23, 1998 the  Department  of Trade and Industry  announced the
U.K. government's intention to progressively end the policy of granting only one
cable  television  license for a franchise  area.  Any  operator  can now seek a
licence to compete in the  provision of broadcast  entertainment  in those areas
outside  current  cable  franchises.  From  January 1, 2001  competition  within
current cable franchises will also be permitted.

         On June 16, 1998, the Company  announced that all of the holders of its
outstanding  ordinary  shares of 2.5p each and deferred  shares of 25p each have
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL, an alternative telecommunications company in the UK, the
common  stock of which is  quoted  on NASDAQ  (NTLi).  Under the Share  Exchange
Agreement, the Company's shareholders will receive one share of NTL common stock
for every four Ordinary  Shares of the Company held subject to adjustment in the
event that the average NTL share price for a predetermined period before closing
of the  transaction  exceeds a specified  price  (which will be $52.50 per share
until November 16, 1998,  increasing  thereafter to $53 until December 16, 1998,
$53.50 per share until January 16, 1999 and $54 per share  thereafter).  Holders
of the Company's  deferred shares will receive one share of NTL common stock for
each deferred share held.

         The  proposed  share  exchange  is subject  to a number of  conditions,
including  the  receipt  of  required  regulatory  approvals  (which  have  been
obtained) and approval by NTL  shareholders.  Although the transaction  will not
require  the prior  approval  of the  holders of the  Group's  outstanding  debt
securities, each of the indentures pursuant to which the Group's debt securities
were issued  requires that offers to repurchase  such debt securities be made to
holders  of such  securities  subsequent  to closing at a price of 101% of their
accreted  value or  principal  amount,  which may  influence  the ability of the
parties to complete the proposed share exchange in its current form.



                                       24

<PAGE>



If such offers should be required, there can be no assurance that the Company or
Diamond  Holdings will have  sufficient  funds,  or be able to raise  sufficient
funds, to effect such repurchases.

         In June  1998,  the ITC  issued a  formal  direction  to all  licensees
including the Group  prohibiting the inclusion of minimum carriage  requirements
in all new  programming  agreements  entered  into  from July 1,  1998.  Minimum
carriage  requirements  effectively require the Group to transmit a channel to a
minimum number or percentage of customers and reduce the Group's  flexibility in
adapting  programming  packages.  The prohibition applies to existing agreements
from July 1, 1998 for digital  reception  and from  January 1, 2000 for analogue
reception.  The ITC allowed  exceptions from the prohibition on minimum carriage
requirements  for the first 12 months of  carriage  of any new  channel  and has
since  also  made  exceptions  for  Live  TV and  Performance,  which  are  both
cable-exclusive  channels, and for certain new BBC channels. The ITC's direction
has been the subject of an  unsuccessful  challenge  brought by certain  program
suppliers.  Leave to  appeal  has been  sought  from  the  court by the  program
suppliers but has not yet been granted.

         The ITC's  direction  also  required that from  September 1, 1998,  the
Group  make  available  access  to  premium  channels  from  any  basic  tier of
programming and to make all premium  channels  available to customers on an a la
carte basis. The Group has implemented changes to its retail offering to reflect
this.  Management  anticipates that, provided the direction is upheld, the Group
will have the opportunity to negotiate future programming agreements which allow
for greater packaging flexibility and customer choice.

         In October 1998,  BSkyB  launched its digital DTH satellite  service in
the U.K.  In  addition  to  existing  channels  offered  by BSkyB as part of its
analogue service, BSkyB's digital service includes expanded numbers of movie and
sports channels, an expanded number of pay per view channels and a number of new
channels, together with an electronic program guide.

         ONdigital plans to launch its digital  terrestrial  service in the U.K.
in November 1998. The digital  terrestrial service will require a set top box to
decode encrypted  digital  terrestrial  signals.  The initial service offered by
ONdigital  is expected to include a choice of 12 basic  channels (7 of which the
Group offers) in addition to the free-to-air digital terrestrial  channels and a
range of 6 premium channels (4 of which the Group offers)  including  certain of
BSkyB's sports and movie channels.



                                       25

<PAGE>



                        DIAMOND CABLE COMMUNICATIONS PLC

PART II.     OTHER INFORMATION

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K

             (a)  Exhibits -

                  None.

             (b)  Reports on Form 8-K -

                  None.





                                       26

<PAGE>



                                   SIGNATURES

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


                                            DIAMOND CABLE COMMUNICATIONS PLC



Date: November  , 1998                         By:
                                                  ----------------------------
                                                  Robert Goad
                                                  (Chief Executive Officer)



Date: November  , 1998                         By:
                                                  ----------------------------
                                                  Nicholas Millard
                                                  (Chief Financial Officer)



Date: November  , 1998                         By:
                                                  ----------------------------
                                                  Duncan Craig
                                                  (Chief Accounting Officer)



                                       27