<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

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

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

For the quarterly period ended September 30, 1998
                                                        OR

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

For the transition period from               to
                               -------------    -------------

                         Commission File Number 0-24924

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

                           THE ASSOCIATED GROUP, INC.
             (Exact name of registrant as specified in its charter)

               DELAWARE                                 51-0260858
       (State of Incorporation)            (I.R.S. Employer Identification No.)

200 Gateway Towers, Pittsburgh, Pennsylvania              15222
  (Address of principal executive offices)              (Zip Code)

                                  412-281-1907
                        (Registrant's telephone number)

         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 each of the issuer's classes of
common stock, as of November 11, 1998:

                Common Stock, Class A                 18,765,924
                Common Stock, Class B                 19,380,790

<PAGE>

PART I--FINANCIAL INFORMATION

Item 1.  Financial Statements

                  THE ASSOCIATED GROUP, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          September 30,           December 31,
                                                                               1998                   1997
                                                                      --------------------------------------------
                                                                                  (dollars in thousands)
<S>                                                                  <C>                    <C>              
ASSETS
Current assets:
   Cash and cash equivalents                                          $        512,210       $         426,596
   Accounts receivable, less allowance for doubtful accounts
     (September 30, 1998--$2,189; December 31, 1997--$2,495)                     5,179                   3,188
   Receivable from related parties                                               2,650                   3,977
   Inventory held for resale                                                     2,362                   2,175
   Prepaid expenses and other assets                                             2,108                   2,485
   Restricted cash and investments                                              31,320                  30,373
   Deferred income taxes                                                         1,523                   1,523
                                                                      --------------------   ---------------------
                 Total current assets                                          557,352                 470,317

Property and equipment, net of accumulated
   depreciation and amortization (September 30, 1998--$35,984;
   December 31, 1997--$34,827)                                                 139,823                  33,837

Marketable equity securities, at fair value
   (cost: September 30, 1998--$6,958; December 31, 1997--$7,726)             1,200,324                 841,311
Notes receivable from related parties                                           20,294                  20,558
Restricted investments                                                          50,274                  64,702
Other noncurrent assets                                                         96,447                  72,397
                                                                      --------------------   ---------------------

Total assets                                                          $      2,064,514       $       1,503,122
                                                                      ====================   =====================
</TABLE>

See notes to consolidated financial statements

<PAGE>

                  THE ASSOCIATED GROUP, INC. AND SUBSIDIARIES
              CONSOLIDATED BALANCE SHEETS (UNAUDITED) - Continued

<TABLE>
<CAPTION>
                                                                         September 30,          December 31,
                                                                             1998                   1997
                                                                    -------------------------------------------
                                                                                (dollars in thousands)
<S>                                                                 <C>                    <C>               
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
   Accounts payable                                                 $          81,918      $           18,083
   Employee compensation                                                       14,948                   2,748
   Interest payable                                                            14,165                   3,354
   Short-term obligations                                                     141,990                 110,991
   Current portion of long-term debt                                            2,082                   2,082
   Other current liabilities                                                    4,726                   6,406
                                                                    --------------------       ----------------
                 Total current liabilities                                    259,829                 143,664

Deferred compensation                                                           3,187                   2,417
Long-term debt, excluding current portion                                     573,391                 306,244
Deferred income taxes                                                         368,080                 257,689
Minority interests                                                             83,060                 174,588

Commitments and contingencies                                                      -                       -

Stockholders' equity:
   Preferred stock, par value $.01 per share;
     authorized 5,000,000 shares; none issued                                      -                       -
   Class A Common Stock, par value $.10 per share;
     authorized 100,000,000 shares; 18,765,924 issued
     and outstanding in 1998 and 1997                                           1,876                   1,876
   Class B Common Stock, par value $.10 per share;
     authorized 50,000,000 shares; 19,380,790 and
     18,854,760 issued and outstanding in 1998 and 1997                         1,938                   1,885
   Additional paid-in capital                                                 149,830                 134,716
   Accumulated deficit                                                       (152,365)                (61,787)
   Accumulated other comprehensive income                                     775,688                 541,830
                                                                    --------------------   --------------------
                 Total stockholders' equity                                   776,967                 618,520
                                                                    --------------------   --------------------

Total liabilities and stockholders' equity                          $       2,064,514      $        1,503,122
                                                                    ====================   ====================
</TABLE>

See notes to consolidated financial statements

<PAGE>

                  THE ASSOCIATED GROUP, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Three Months Ended September 30,      Nine Months Ended September 30,
                                                             1998               1997               1998               1997
                                                      -----------------------------------    ------------------------------------
                                                              (amounts in thousands, except share and per share amounts)
<S>                                                    <C>                <C>                <C>               <C>          
Revenues                                               $       8,037      $       6,233      $      23,364     $      18,134

Costs and expenses:
   Cost of sales and services                                 28,644              2,616             61,087             9,660
   Direct research and development expenses                    2,513              1,738              6,090             5,042
   Sales, general and administrative expenses                 43,694             18,261            102,172            38,967
   Stock-based compensation expense                            6,721             14,062             21,774            51,935
   Depreciation and amortization expense                       4,636              1,392             10,803             4,060
                                                      ----------------- -----------------    ----------------  ------------------
                                                              86,208             38,069            201,926           109,664
                                                      ----------------- -----------------    ----------------  ------------------
Operating loss                                               (78,171)           (31,836)          (178,562)          (91,530)

Other income (expense):
   Gain on sale of marketable equity securities                    -                  -              1,162             2,485
   Gain on sale of wireless communications
     investment                                                    -             12,177                  -            12,177
   Interest and dividend income                                9,493                736             28,714             2,068
   Interest expense                                          (21,681)            (2,119)           (54,051)           (5,631)
   Other                                                        (436)               210               (735)              321
   Minority interests                                         46,348               (726)           103,652            (2,076)
                                                      ----------------- -----------------    ----------------  ------------------
                                                              33,724             10,278             78,742             9,344
                                                      ----------------- -----------------    ----------------  ------------------
Loss before income taxes                                     (44,447)           (21,558)           (99,820)          (82,186)

Income tax benefit                                             3,882              2,930              9,242            15,434
                                                      ----------------- -----------------    ----------------  ------------------

Net loss                                               $     (40,565)     $     (18,628)     $     (90,578)    $     (66,752)
                                                      ================= =================    ================  ==================

Net loss per common share                              $       (1.06)     $        (.50)     $       (2.38)    $       (1.78)
                                                      ================= =================    ================  ==================

Weighted average common shares outstanding                  38,104,027       37,565,414         37,986,194          37,563,612

</TABLE>

See notes to consolidated financial statements

<PAGE>

                  THE ASSOCIATED GROUP, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Nine Months Ended September 30,
                                                                            1998                         1997
                                                                    -----------------------------------------------
                                                                                  (dollars in thousands)
<S>                                                                   <C>                          <C>            
Cash Flows From Operating Activities
   Net loss                                                           $      (90,578)              $      (66,752)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
     Depreciation and amortization                                            10,803                        4,060
     Amortization of discount on long-term debt                               17,657                            -
     Provision for losses on accounts receivable                                 829                          872
     Gain on sale of investments                                              (1,162)                     (14,662)
     Stock-based compensation                                                 20,274                       51,935
     Minority interests                                                     (103,652)                       2,076
     Provision for deferred income taxes                                      (9,572)                     (15,807)
     Other                                                                     4,235                        2,281
     Change in assets and liabilities:
       Accounts receivable                                                    (2,820)                         104
       Inventory held for resale                                                (187)                          31
       Prepaid expenses and other assets                                         377                       (1,217)
       Accounts payable (excluding capital assets)                            21,744                         (997)
       Employee compensation                                                  12,200                        1,958
       Other current liabilities                                               9,129                        6,125
       Deferred compensation                                                     770                          724
                                                                    ------------------            -----------------
Net Cash Used In Operating Activities                                       (109,953)                     (29,269)

Cash Flows From Investing Activities
   Purchases of property and equipment, net                                  (71,256)                      (6,345)
   Proceeds from sale of investments                                           1,930                       23,883
   Purchase of marketable equity securities                                        -                         (871)
   Restricted cash and investments                                            13,481                            -
   Increase in receivable from related parties                                (1,955)                      (5,982)
   Investments in and acquisitions of wireless
       communications affiliates                                                   -                       (5,966)
   Other investing activities, net                                              (613)                        (163)
                                                                    ------------------            -----------------
Net Cash (Used In) Provided by Investing Activities                          (58,413)                       4,556

Cash Flows From Financing Activities
   Proceeds from short-term obligations                                       30,999                       51,765
   Repayment of short-term obligations                                             -                      (21,000)
   Proceeds from long-term debt                                              250,703                            -
   Repayment of long-term debt                                                (1,213)                      (1,209)
   Payment of debt issue costs                                               (27,539)                           -
   Other financing activities, net                                             1,030                           10
                                                                    ------------------            -----------------
Net Cash Provided By Financing Activities                                    253,980                       29,566
                                                                    ------------------            -----------------

Net Increase in Cash and Cash Equivalents                                     85,614                        4,853
Cash and Cash Equivalents at Beginning of Period                             426,596                        3,341
                                                                    ------------------            -----------------
Cash and Cash Equivalents at End of Period                            $      512,210               $        8,194
                                                                    ==================            =================
</TABLE>

See notes to consolidated financial statements

<PAGE>

THE ASSOCIATED GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of The Associated
Group, Inc. ("Associated") and Subsidiaries (the "Company," as used herein,
includes all consolidated subsidiaries, unless the context otherwise indicates)
have been prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine months ended September 30, 1998, are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997.

Certain amounts in the financial statements for the 1997 periods have been
reclassified to conform to the financial statement presentation for the current
period. These reclassifications have no effect on the net losses.

Consolidated subsidiaries include Teligent, Inc. ("Teligent") (formerly
Teligent, L.L.C.), a development stage company founded in 1996 which intends to
be a provider of high-quality, low-cost voice, data and video
telecommunications services primarily to small and medium-sized businesses in
74 of the more populous U.S. metropolitan areas in which it holds licenses from
the Federal Communications Commission, and Grupo Portatel, S.A. de C.V. and
subsidiaries ("Grupo"), a cellular telephone service provider in southeastern
Mexico.

2.   MARKETABLE EQUITY SECURITIES

The cost and market value of marketable equity securities classified as
available for sale at September 30, 1998, are as follows:

<TABLE>
<CAPTION>
                                                                                 Cost of          Market Value of
                Name of Issuer and                          Number of          Each Issue           Each Issue
           Title of Each Issue                                Shares          In Thousands         In Thousands
-------------------------------------------------------- ----------------- -------------------- --------------------
<S>                                                         <C>               <C>                 <C>       
Tele-Communications, Inc.:
     Series A TCI Group Common Stock                          9,111,202           $ 2,559            $  356,476
     Series B TCI Group Common Stock                          7,123,167             1,178               311,639
     Series A TCI Ventures Group Common Stock                 6,737,548               946               120,855
     Series A Liberty Media Group Common Stock                8,180,955             1,339               300,139
     Series B Liberty Media Group Common Stock                2,651,944               273               104,420

TCI Satellite Entertainment, Inc.:
     Series A Common Stock                                    1,247,997               334                 3,588
     Series B Common Stock                                      707,185                90                 1,149

Others                                                          Various               239                 2,058
                                                                           -------------------- --------------------
                                                                                  $ 6,958            $1,200,324
                                                                           ==================== ====================
</TABLE>

In June 1998, AT&T Corp. announced that it had signed a definitive merger
agreement with Tele-Communications, Inc. ("TCI"). As stated in its Current
Report on Form 8-K dated June 23, 1998, AT&T will issue 0.7757 shares of AT&T
Common Stock for each share of Series A TCI Group Common Stock, and 0.8533
shares of AT&T Common Stock for each share of Series B TCI Group Common Stock.
The merger is subject to regulatory and other 

<PAGE>

approvals. TCI filed a Current Report on Form 8-K dated October 22,
1998 in which it confirmed that the AT&T merger is progressing and is 
expected to close in the first half of 1999.

Also in June 1998, TCI announced its intention to combine Liberty Media Group
and TCI Ventures Group concurrently with, but not conditional upon, the AT&T
merger. In the combination, which is subject to TCI shareholder approval, each
outstanding share of Series A and Series B TCI Ventures Group Common Stock
would be exchanged for .52 shares of Series A or Series B Liberty Media Group
Common Stock, respectively. Upon closing of the AT&T merger, the shareholders
of Liberty Media Group will be issued a separate tracking stock by AT&T to
continue their interests in the combined Liberty Media and TCI Ventures Group.

On January 8, 1998, the Board of Directors of TCI declared a two-for-one stock
split, effected in the form of a stock dividend, of Series A TCI Ventures Group
Common Stock, and a three-for-two stock split, effected in the form of a stock
dividend, of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock. Also in January 1998, the Company received 51,315
shares of Series B TCI Group Common Stock awarded in connection with the
settlement of class action litigation involving the merger of TCI and Liberty
Media Corporation in 1994.

During the first six months of 1998 and 1997, the Company sold certain
marketable securities for proceeds of approximately $1,930,000 and $2,512,000,
respectively. These sales resulted in pretax gains of $1,162,000 and $2,485,000
in 1998 and 1997, respectively.

The change in the unrealized gain on marketable equity securities, net of tax,
recorded as other comprehensive income within stockholders' equity was
$233,858,000 and $139,877,000 in the nine months ended September 30, 1998 and
1997, respectively.

3.    INVESTMENTS IN WIRELESS COMMUNICATIONS AFFILIATES

In August 1997, the Company sold its ownership interest in Corporacion
Mobilcom, S.A. de C.V. ("Mobilcom") to Nextel Communications, Inc. for proceeds
of approximately $21,371,000, and recognized a pretax gain on the sale of
approximately $12,177,000.

4.   SHORT-TERM OBLIGATIONS

The Company's outstanding short-term obligations were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                   September 30,           December 31,
                                                                        1998                   1997
                                                                  -----------------      -----------------
<S>                                                                  <C>                    <C>      
      Bank borrowing                                                 $  28,000              $  19,000
      Brokerage margin loan facilities                                 113,990                 91,991
                                                                  -----------------      -----------------
                                                                      $141,990               $110,991
                                                                  =================      =================
</TABLE>

At September 30, 1998, an aggregate of 8,511,202 and 6,737,548 shares of Series
A TCI Group Common Stock and Series A TCI Ventures Group Common Stock,
respectively, was pledged as collateral under the Company's short-term credit
facilities.

5.   LONG-TERM DEBT

On February 20, 1998, Teligent completed an offering of $440 million 11 1/2%
Senior Discount Notes due 2008 (the "Discount Notes"). The Discount Notes carry
zero-coupon interest until March 1, 2003, after which the Discount Notes pay
interest at 11 1/2%, payable March 1 and September 1 through March 1, 2008.
Teligent received proceeds of approximately $243,145,000 from the offering, net
of offering expenses of approximately $7,558,000.

<PAGE>

On July 2, 1998, Teligent entered into a credit agreement providing for
borrowings up to an aggregate of $800 million (the "Credit Agreement") to be
used for working capital and genrral corporate purposes, including the purchase
of telecommunications equipment, software, and services. Under the Credit
Agreement, up to $780 million will be available on behalf of Nortel in lieu of
an earlier financing commitment from Nortel. Borrowings under the Credit
Agreement are subject to certain conditions, and are secured by substantially
all of the assets of Teligent.

The Company's long-term debt, net of current portion, consists of the following
(in thousands):

<TABLE>
<CAPTION>
                                                                   September 30,           December 31,
                                                                        1998                   1997
                                                                  -----------------      -----------------
<S>                                                               <C>                    <C>     
   Teligent 11 1/2% Senior Notes due 2007                                $300,000               $300,000
   Teligent 11 1/2% Senior Discount Notes due 2008                        268,360                      -
   Grupo loans                                                              5,031                  6,244
                                                                    --------------            ----------- 
                                                                         $573,391               $306,244
                                                                    ==============            ===========
</TABLE>

6.   MINORITY INTEREST

The minority interest liability and related income or expense reflects the
outside minority ownership of consolidated subsidiaries. However, in 1997 the
minority interest for the three and nine month periods ended September 30, 1997
did not reflect the minority interest in Teligent's losses of $12,353,000 and
$36,068,000 (income effects to the Company) as a result of the negative equity
position of Teligent at that time. If such minority interests were recognized,
the Company's losses would have been ($6,275,000), or $(.17) per share, and
($30,684,000), or $(.82) per share, for the respective three and nine months
ended September 30, 1997.

7.   CAPITAL STOCK AND PER SHARE DATA

During the nine months ended September 30, 1998, shares outstanding of the
Company's Class B Common Stock increased by 526,030 shares as a result of stock
option exercises.

Loss per common share data is presented in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, and is calculated using the
weighted average number of common shares outstanding. Fully diluted net loss
per share including stock options is not presented since the effect of
including the stock options would be antidilutive.

8.   COMPREHENSIVE INCOME

As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this statement had no impact on the Company's net losses or stockholders'
equity.

During the nine months ended September 30, 1998 and 1997, total comprehensive
income amounted to $143,280,000 and $73,125,000, respectively, including other
comprehensive income for the unrealized gains and losses on the Company's
available-for-sale securities. Accumulated other comprehensive income
represents unrealized gains on marketable equity securities, net of deferred
taxes of $417,678,000 and $291,755,000, as of September 30, 1998 and December
31, 1997, respectively.

<PAGE>

9.   INCOME TAXES

The Company's financial statements reflect the income tax effects of the
consolidated income tax return of Associated as well as the separate income tax
returns of Grupo and Teligent. As a result of the merger of Teligent, L.L.C.
into Teligent in November 1997, the Company's pro-rata share of Teligent,
L.L.C.'s losses for the period prior to the merger were included in
Associated's tax returns; however, subsequent to the merger Teligent files
separate income tax returns. Teligent has recorded a valuation allowance to
offset the income tax benefit generated in the respective three and nine months
ended September 30, 1998, resulting in a reduction in the Company's
consolidated effective tax rate as compared to the statutory rate.

<PAGE>

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

         This Form 10-Q contains certain "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors including, but not limited to economic, key employee,
competitive, governmental and technological factors affecting the Company's
growth, operations, markets, products, services, licenses and other factors
discussed in the Company's other filings with the Securities and Exchange
Commission. These factors may cause the actual results, performance or
achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Given these uncertainties, prospective
investors are cautioned not to place undue reliance on such forward-looking
statements.

FINANCIAL CONDITION

         The Company has funded significant start-up operating and capital
costs for its wireless communications related businesses and interests,
primarily Teligent and TruePosition Inc. ("TruePosition"), during 1998 and
1997. The Company expects to continue to incur substantial costs developing its
businesses and technologies. Currently, the Company's cash requirements (other
than those of Teligent - see below) are principally being met by i) borrowings
under margin loan facilities and bank demand loans, and ii) proceeds from the
sale of investments. The Company's bank demand loans and margin loan facilities
are secured by shares of Tele-Communications, Inc. Series A TCI Group Common
Stock and Tele-Communications, Inc. Series A TCI Ventures Group Common Stock.
Borrowings under one margin loan facility are limited to 65% of the market
value of the pledged stock, up to a maximum of $200,000,000. Borrowings under
the other two brokerage margin loan facilities are limited to 50% of the market
value of the pledged stock. Borrowings under the bank demand loans and margin
loan facilities bear interest at variable rates based upon the Fed Funds rate
plus an applicable margin.

         As of November 11, 1998, based on (a) the market value of the
8,511,202 and 6,737,548 shares of Series A TCI Group Common Stock and Series A
TCI Ventures Group Common Stock, respectively, pledged in the aggregate and (b)
aggregate outstanding short-term obligations under the credit facilities
described above of approximately $144,551,000, the Company's unused borrowing
capacity is approximately $154,670,000. A significant portion of the Company's
assets are liquid, and can be pledged as security for added borrowing capacity.
Given the market value of the remaining shares of the Company's marketable
equity securities portfolio that can be pledged as additional security, the
Company's borrowing facilities may provide for maximum aggregate unused
borrowings of approximately $548,043,000 as of November 11, 1998. The Company's
ability to meet cash needs in the near term for future development depends in
large part on the value of the marketable equity securities. The Company
periodically evaluates its financial position and alternative financing
arrangements.

 Teligent

         Teligent, founded in 1996, is a full-service, integrated communications
company competing in the small and medium-sized business market. To date
Teligent's activities have focused on the acquisition of licenses and
authorizations, the hiring of management and other key personnel, the raising of
capital, the acquisition of equipment, the development of operating systems, and
the negotiation of interconnection agreements. In October 1998, Teligent
launched service in its first ten major metropolitan markets of its integrated
package of lower cost local, long-distance, high speed data and dedicated
Internet services. Teligent launched service in five additional markets in
November 1998. In connection with initiating service, Teligent has launched
major sales and advertising campaigns and expects to incur significant marketing
costs in the fourth quarter of 1998. Teligent has experienced significant
operating and net losses and negative operating cash flow to date and expects to
continue to experience operating and net losses and negative operating cash flow
until such time as it develops a revenue-generating customer base sufficient to
fund operating expenses. Teligent's operations have been funded by both capital
invested by strategic investors (including the Company) and its initial public
offering of Class A Common Stock completed in November 1997, as well as debt
offerings. In addition to its offering of $300 million Senior Notes in November
1997, Teligent completed an offering of $440 million 11 1/2% Senior Discount
Notes due 

<PAGE>

2008 (the "Discount Notes") on February 20, 1998. The Discount Notes carry
zero-coupon interest until March 1, 2003, after which the Discount Notes pay
interest at 11 1/2%, payable March 1 and September 1, through March 1, 2008.
Teligent received proceeds of approximately $243,145,000 from the offering, net
of offering expenses of approximately $7,558,000. On July 2, 1998, Teligent
entered into a credit agreement providing for borrowings up to an aggregate of
$800 million (the "Credit Agreement"), to be used for working capital and
general corporate purposes, including the purchase of telecommunications
equipment, software and services. Under the Credit Agreement, up to $780 million
will be avaliable on behalf of Nortel in lieu of an earlier financing commitment
from Nortel. Borrowings under the Credit Agreement are subject to certain
conditions, and are secured by substantially all of the assets of Teligent. As
of November 11, 1998 no borrowings were outstanding under the Credit Agreement.

Historical Cash Flows

         Net cash used in operating activities was $109,953,000 and $29,269,000
for the nine months ended September 30, 1998 and 1997, respectively. The
Company's operating cash needs increased in the 1998 period primarily for
start-up expenses of Teligent which launched full commercial service in October
of 1998. Net cash used in investing activities was $58,413,000 in the nine
months ended September 30, 1998 compared to net cash provided of $4,556,000 for
the same period of 1997. The change between periods was primarily due to a net
increase of $64,911,000 in 1998 payments for the purchase of property and
equipment, primarily by Teligent, offset by 1997 payments of $5,966,000 for
investments in and acquisitions of wireless communications affiliates. The
Company also sold certain investments in the first nine months of 1997, for
proceeds of $23,883,000, compared to investment sale proceeds of $1,930,000 in
the same period of 1998. Net cash provided by financing activities in the 1998
and 1997 periods was $253,980,000 and $29,566,000, respectively. The increase
of $224,414,000 is principally from the net proceeds of Teligent's 11 1/2%
Senior Discount Notes issued in February 1998, the proceeds of which will be
used to fund the capital requirements of Teligent.

OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998, COMPARED 
   TO THE THREE MONTHS ENDED SEPTEMBER 30, 1997

         Revenues increased $1,804,000, or 29% in the 1998 period compared to
the 1997 period. The increase is attributable to an increase in wireless
communications revenues, principally a result of growth in Grupo's cellular
subscriber base. Cost of sales and services increased $26,028,000, principally
due to operating costs incurred by Teligent for the acquisition of operating
sites, deployment of equipment, and other start-up activities associated with
its launch of full commercial service which initiated in ten major metropolitan
markets in October, and an additional five markets in November of 1998. Direct
research and development expenses were $2,513,000 and $1,738,000 in the 1998
and 1997 periods, respectively, primarily for expenditures of TruePosition.
Sales, general and administrative expenses were $43,694,000 and $18,261,000 in
the 1998 and 1997 periods, respectively. The increase of $25,433,000 was
principally the result of expenditures relating to the start-up of Teligent's
operations.

         Stock-based compensation expense of $6,721,000 and $14,062,000 was
recognized in the three months ended September 30, 1998 and 1997, respectively.
The expense is principally associated with Teligent equity awards issued to its
employees and directors prior to its initial public offering. The 1997 expense
is the result of the increase in the fair value of Teligent, the granting of
additional awards, and the additional vesting of outstanding awards during the
third quarter of 1997. By their terms, these awards were considered to be
"variable awards" and therefore gave rise to compensation expense. At the time
of Teligent's initial public offering in November 1997, the awards were
converted into options to purchase Teligent common stock ("Conversion Options")
having the same vesting schedule, vesting  rights and term as the original
awards. This conversion created a measurement date whereby the variable awards
were converted to non-variable stock options. The intrinsic value of the
unvested Conversion Options was determined as of the time of conversion, and is
being amortized ratably over their remaining vesting period.

         Depreciation and amortization expense increased from $1,392,000 in the
three months ended September 30, 1997, to $4,636,000 in the same period of
1998, principally due to Teligent's volume of fixed asset purchases in 1997 and
continuing in 1998.

<PAGE>

         A pretax gain of $12,177,000 was realized in the third quarter of 1997
on the sale of the Company's ownership interest in Mobilcom to Nextel for
proceeds of approximately $21,371,000. Interest and dividend income was
$9,493,000 and $736,000 in the 1998 and 1997 periods, respectively. The
increase in 1998 of $8,757,000 is primarily the result of a higher level of
invested funds raised from Teligent's debt and equity offerings in the fourth
quarter of 1997 and its debt offering in the first quarter of 1998. Interest
expense was $21,681,000 and $2,119,000 in the 1998 and 1997 periods,
respectively, reflecting the higher level of long-term debt of Teligent.
Minority interests were $46,348,000 and $(726,000) in the 1998 and 1997
periods, respectively. The change is the result of the minority interests in
the net loss of Teligent in the 1998 period. Such interest was not recognized
in the 1997 period due to the negative equity position of Teligent in the 1997
period.

         The Company recognized an income tax benefit (net of foreign tax
expense of Grupo) at an effective rate of approximately 9% and 14% in the 1998
and 1997 periods, respectively. The principal difference between the 1998
effective tax rate and the statutory rate is from valuation allowances recorded
by Teligent (see Note 9 to the consolidated financial statements included
elsewhere herein). The principal difference between the 1997 effective tax rate
and the statutory rate is the recognition by the Company of 100% of the net
loss of Teligent (which was a limited liability company, taxed as a
partnership, until November 1997) with no minority interest adjustment, while
the Company's tax benefit reflects 55% of such loss (the Company's ownership
interest in Teligent as of September 30, 1997).

         The Company's net loss was $40,565,000 for the three months ended
September 30, 1998, compared to a net loss of $18,628,000 for the three months
ended September 30, 1997. The higher loss in the 1998 period resulted primarily
from increased operating, administrative, and interest costs for the start-up
of Teligent in 1998.

OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998,  
   COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1997

         Revenues increased $5,230,000, or 29% in the 1998 period compared to
the 1997 period. The increase is attributable to an increase in wireless
communications revenues, principally a result of growth in Grupo's cellular
subscriber base. Cost of sales and services increased $51,427,000, principally
due to operating costs incurred by Teligent for the acquisition of operating
sites, deployment of equipment, and other start-up activities associated with
its launch of full commercial service which initiated in ten major metropolitan
markets in October, and an additional five markets in November of 1998.

         Direct research and development expenses were $6,090,000 and
$5,042,000 in the 1998 and 1997 periods, respectively, primarily for
expenditures of TruePosition. Sales, general and administrative expenses were
$102,172,000 and $38,967,000 in the 1998 and 1997 periods, respectively. The
increase of $63,205,000 was principally the result of expenditures relating to
the start up of Teligent's operations.

         Stock-based compensation expense of $21,774,000 and $51,935,000 has
been recognized in the nine months ended September 30, 1998 and 1997. The
expense is principally associated with Teligent equity awards issued to its
employees and directors prior to its initial public offering. The 1997 expense
is the result of the increase in the fair value of Teligent, the granting of
additional awards, and the additional vesting of outstanding awards during the
first nine months of 1997. By their terms, these awards were considered to be
"variable awards" and therefore gave rise to compensation expense. At the time
of Teligent's initial public offering in November 1997, the awards were
converted into Conversion Options having the same vesting schedule, vesting
rights and term as the original awards. This conversion created a measurement
date whereby the variable awards were converted to non-variable stock options.
The intrinsic value of the unvested Conversion Options was determined as of the
time of conversion, and is being amortized ratably over their remaining vesting
period.

         Depreciation and amortization expense increased from $4,060,000 in the
nine months ended September 30, 1997, to $10,803,000 in the same period of
1998, principally due to Teligent's volume of fixed asset purchases in 1997 and
continuing in 1998.

         The Company recognized pretax gains on the sales of certain marketable
equity securities of $1,162,000 and $2,485,000 in the nine months ended
September 30, 1998 and 1997, respectively. A pretax gain of $12,177,000 

<PAGE>

was realized in the third quarter of 1997 on the sale of the Company's
ownership interest in Mobilcom to Nextel for proceeds of approximately
$21,371,000. Interest and dividend income was $28,714,000 and $2,068,000 in the
1998 and 1997 periods, respectively. The increase in 1998 of $26,646,000 is
primarily the result of a higher level of invested funds raised from Teligent's
debt and equity offerings in the fourth quarter of 1997 and its debt offering
in the first quarter of 1998. Interest expense was $54,051,000 and $5,631,000
in the 1998 and 1997 periods, respectively, reflecting the higher level of
long-term debt of Teligent. Minority interests were $103,652,000 and
($2,076,000) in the 1998 and 1997 periods, respectively. The change is the
result of the minority interests in the net loss of Teligent in the 1998
period. Such interest was not recognized in the 1997 period due to the negative
equity position of Teligent.

         The Company recognized an income tax benefit (net of foreign tax
expense of Grupo) at an effective rate of approximately 9% and 19% in the 1998
and 1997 periods, respectively. The principal difference between the 1998
effective tax rate and the statutory rate is from valuation allowances recorded
by Teligent (see Note 9 to the consolidated financial statements included
elsewhere herein). The principal difference between the 1997 effective tax rate
and the statutory rate is the recognition by the Company of 100% of the net
loss of Teligent (which was a limited liability company, taxed as a
partnership, until November 1997) with no minority interest adjustment, while
the Company's tax benefit reflects 55% of such loss (the Company's ownership
interest in Teligent as of September 30, 1997).

         The Company's net loss was $90,578,000 for the nine months ended
September 30, 1998, compared to a net loss of $66,752,000 for the nine months
ended September 30, 1997. The higher loss in the 1998 period resulted primarily
from increased operating, administrative, and interest costs for the start up
of Teligent in 1998.

YEAR 2000

         The Company continues to assess its exposure to problems which may
arise from the inability of certain computer programs to properly recognize
dates in the year 2000. The Company's exposure to the "Year 2000" problem
arises from potential problems within its internal information and operating
systems, as well as the impact of the Year 2000 on the Company's significant
vendors, suppliers, and investees. Based on information gathered to date, much
of the Company's information and operating systems are currently Year 2000
compliant. Management expects that, based on representations from the vendors
of these systems, all necessary modifications to non-compliant systems will be
in place by the end of 1999 and the cost will not be material to the Company.
However, the Company cannot ensure the performance and Year 2000 readiness of
its outside vendors and suppliers, and in the event any Year 2000 problems are
not resolved, the Company may experience some interruption or failure of
important business operations. The following summarizes the Year 2000 status of
operating subsidiaries and investees that the Company believes could have a
material impact to its operations and financial condition.

Teligent

         In September 1998, Teligent management presented a report to Teligent's
Audit Committee outlining issues and areas that they felt should be considered
in connection with Teligent's preparation of a Year 2000 plan. Subsequently,
Teligent appointed a Year 2000 committee to lead a company-wide effort to assess
the scope of risks and ensure applications will function properly. Teligent's
Year 2000 committee is in the early stages of conducting its assessment, but is
making progress in identifying and evaluating Year 2000 issues and policies
regarding the compliance of internal and external systems and applications. The
committee expects to complete a written plan by year-end 1998, and testing of
Teligent's systems is targeted to be compeleted by June 1999.

         Generally, Teligent contractually requires its key vendors and
suppliers to certify they are Year 2000 compliant. With respect to other vendors
and suppliers with which Teligent's systems interface and exchange data, the
Company expects to initiate communication on an ongoing basis to discuss their 
Year 2000 compliance. Teligent has not determined the exact cost of addressing
the Year 2000 problem. Based on current assessments and plans, Teligent does not
expect that the Year 2000 issue, including the cost of making its critical
systems and applications compliant, will have a material effect on its business
operations, or its financial position or results of operations. However, if
appropriate modifications are required and not made by Teligent's key suppliers
and vendors on a timely basis, Teligent's actual costs or timing for Year 2000
compliance may differ materially from current estimates.

TruePosition

         TruePosition has completed its assessment of the Year 2000 issue and
believes that its wireless location system will be Year 2000 compliant with the
purchase of certain software upgrades which are currently available without
significant cost. Full compliance is expected to be achieved in early 1999.
Certain components of the system are manufactured by third parties and Year
2000 compliance is currently dependent on the representations made by and
performance of those third parties. Testing to measure compliance with the Year
2000 is expected to be completed in 1999.

Portatel

         Portatel is working with the vendors of its information and operating
systems to identify and remedy all Year 2000 problems. The cost of modification
or replacement and testing of these systems to ensure Year 2000 compliance has
not yet been determined, but is not expected to be material to the Company.
While Portatel anticipates that the steps being taken will bring their systems
into compliance by December 1999, failure to do so could result in the inability
of Portatel to provide service to its customers and carry out normal business
operations until such time as the problem is remedied.

TCI

         The Company's investment in TCI is a significant portion of its
assets. A significant decline in the value of the TCI investment (or AT&T if the
proposed merger of TCI and AT&T is completed as expected) resulting from any
adverse effects of the Year 2000 problem could have a significant impact on the
Company's financial condition. TCI has indicated that it is assessing and
working to remedy all Year 2000 problems within their computer systems and
operations, with an expected completion date of July 1999. More information on
the Year 2000 efforts of TCI and AT&T can be found in current periodic filings
of those companies filed with the Securities and Exchange Commission.

<PAGE>

PART II--OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits. The following exhibits are filed as part of this Form
             10-Q:

                  Exhibit
                  Number                    Description
                  -------                    -----------
                    3.1     Restated Certificate of Incorporation, filed as
                            Exhibit 3.1 to Registration Statement on Form 10/A 
                            dated November 15, 1994 and incorporated herein by 
                            reference.

                    3.2     Amended and Restated By-Laws, filed as Exhibit 3.2 
                            to Registration Statement on Form 10/A dated
                            November 15, 1994 and incorporated herein by 
                            reference.           

                    4.1     Common Stock Certificates, filed as Exhibits 4.2
                            and 4.3 to Form 8-K, dated December 22, 1994 and
                            incorporated herein by reference.

                    4.2     Rights Agreement, dated as of December 15, 1994, by
                            and between the Company and Mellon Bank, N.A., 
                            filed as Exhibit 4.1 to Form 8-K, dated December 
                            22, 1994 and incorporated herein by reference.
                            
                    27      Article 5 Financial Data Schedule for Quarterly
                            Report on Form 10-Q for the nine months ended
                            September 30, 1998 (filed only electronically with
                            the Securities and Exchange Commission).


         (b) Reports on Form 8-K. The Company did not file any reports on Form
         8-K during the three months ended September 30, 1998.

<PAGE>

                                   SIGNATURES

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

                                          THE ASSOCIATED GROUP, INC.
                                                 (Registrant)

Date:  November 13, 1998                 By:  /s/ Myles P. Berkman
                                              --------------------------------
                                               Myles P. Berkman
                                 Chairman, President, Chief Executive Officer
                                                 and Treasurer
                                 (Principal Financial and Accounting Officer)

<PAGE>

                                 EXHIBIT INDEX

                                                                    Page Where
                                                                     Found or
   Exhibit                                                         Incorporated
   Number                                                          by Reference
   -----------                                                     -------------

      3.1     Restated Certificate of Incorporation, filed as            *
              Exhibit 3.1 to Registration Statement on Form 10/A 
              dated November 15, 1994 and incorporated herein by 
              reference.

      3.2     Amended and Restated By-Laws, filed as Exhibit 3.2         *
              to Registration Statement on Form 10/A dated
              November 15, 1994 and incorporated herein by 
              reference.           

      4.1     Common Stock Certificates, filed as Exhibits 4.2           *
              and 4.3 to Form 8-K, dated December 22, 1994 and
              incorporated herein by reference.

      4.2     Rights Agreement, dated as of December 15, 1994, by        *
              and between the Company and Mellon Bank, N.A., 
              filed as Exhibit 4.1 to Form 8-K, dated December 
              22, 1994 and incorporated herein by reference.

      27      Article 5 Financial Data Schedule for Quarterly 
              Report on Form 10-Q for the nine months ended              ** 
              September 30, 1998.

------------------
*  Previously filed and incorporated by reference
** Filed only electronically with the Securities and Exchange Commission