FORM 10-Q

                                United States
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549



(Mark One)

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

                For the quarterly period ended March 31, 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 1-1414

                                 PACIFIC BELL

            Incorporated under the laws of the State of California
               I.R.S. Employer Identification Number 94-0745535

       140 New Montgomery Street, San Francisco, California 94105-3705
                       Telephone Number: (415) 542-9000


THE REGISTRANT, AN INDIRECTLY HELD WHOLLY-OWNED SUBSIDIARY OF SBC COMMUNICATIONS
INC., MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTION  H(1)(a) AND (b) OF
FORM 10-Q AND IS  THEREFORE  FILING  THIS FORM WITH  REDUCED  DISCLOSURE  FORMAT
PURSUANT TO GENERAL INSTRUCTION H(2).

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




<PAGE>




PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements


PACIFIC BELL AND SUBSIDIARIES
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
Dollars in millions
(Unaudited)
--------------------------------------------------------------------------------
                                                           Three months ended
                                                               March 31,
                                                   -----------------------------
                                                            1998           1997
--------------------------------------------------------------------------------
Operating Revenues
Local service                                            $ 1,118        $ 1,027
Network access:
  Interstate                                                 500            459
  Intrastate                                                 180            186
Long-distance service                                        306            305
Other                                                        189            162
--------------------------------------------------------------------------------
Total operating revenues                                   2,293          2,139
--------------------------------------------------------------------------------
Operating Expenses
Cost of services and products                                847            821
Selling, general and administrative                          474            285
Depreciation and amortization                                451            469
--------------------------------------------------------------------------------
Total operating expenses                                   1,772          1,575
--------------------------------------------------------------------------------
Operating Income                                             521            564
--------------------------------------------------------------------------------
Other Income (Expense)
Interest expense                                            (106)          (102)
Other income (expense) - net                                  (2)             4
--------------------------------------------------------------------------------
Total other income (expense)                                (108)           (98)
--------------------------------------------------------------------------------
Income Before Income Taxes and Cumulative
  Effect of Accounting Changes                               413            466
--------------------------------------------------------------------------------
Income Taxes                                                 161            185
--------------------------------------------------------------------------------
Income Before Cumulative Effect of
  Accounting Changes                                         252            281
--------------------------------------------------------------------------------
Cumulative Effect of Accounting Changes, net of                -            345
tax
--------------------------------------------------------------------------------
Net Income                                               $   252        $   626
--------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements.



<PAGE>







PACIFIC BELL AND SUBSIDIARIES
-------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
(Unaudited)
-------------------------------------------------------------------------------
                                                    March 31,         December
                                                                           31,
                                               --------------------------------
                                                          1998            1997
-------------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents                             $     53        $     43
Accounts receivable - net of allowances for
  uncollectibles of $164 and $152                        1,689           1,782
Prepaid expenses                                           116              53
Deferred income taxes                                      408             415
Other current assets                                        53              44
-------------------------------------------------------------------------------
Total current assets                                     2,319           2,337
-------------------------------------------------------------------------------
Property, Plant and Equipment - at cost                 28,993          28,695
  Less: Accumulated depreciation and amortization       17,761          17,442
-------------------------------------------------------------------------------
Property, Plant and Equipment - Net                     11,232          11,253
-------------------------------------------------------------------------------
Other Assets                                               813             749
-------------------------------------------------------------------------------
Total Assets                                           $14,364         $14,339
-------------------------------------------------------------------------------
Liabilities and Shareowner's Equity
Current Liabilities
Intercompany loans                                    $    596        $    542
Current portion of long-term obligations                     4               4
-------------------------------------------------------------------------------
Total debt maturing within one year                        600             546
-------------------------------------------------------------------------------
Accrued taxes                                              315             334
Accounts payable and accrued liabilities                 2,335           2,719
-------------------------------------------------------------------------------
Total current liabilities                                3,250           3,599
-------------------------------------------------------------------------------
Long-Term Debt                                           5,381           5,358
-------------------------------------------------------------------------------
Deferred Credits and Other Noncurrent
Liabilities
Deferred income taxes                                      966             957
Postemployment benefit obligation                          871             881
Unamortized investment tax credits                         178             188
Other noncurrent liabilities                               575             569
-------------------------------------------------------------------------------
Total deferred credits and other noncurrent liabilities  2,590           2,595
-------------------------------------------------------------------------------
Shareowner's Equity
Common shares ($1 par value)                               225             225
Capital in excess of par value                           4,918           4,814
Retained earnings (deficit)                             (2,000)         (2,252)
-------------------------------------------------------------------------------
Total shareowner's equity                                3,143           2,787
-------------------------------------------------------------------------------
Total Liabilities and Shareowner's Equity              $14,364         $14,339
-------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.

<PAGE>


PACIFIC BELL AND SUBSIDIARIES
----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash and cash equivalents
(Unaudited)
----------------------------------------------------------------------------
                                                       Three months ended
                                                            March 31,
                                                  --------------------------
                                                        1998           1997
----------------------------------------------------------------------------
Operating Activities
Net income                                           $   252        $   626
Adjustments to reconcile net income to net
cash provided by operating activities:
   Depreciation and amortization                         451            469
   Provision for uncollectible accounts                   40             42
   Amortization of investment tax credits                (10)           (11)
   Deferred income tax expense                             7             77
   Cumulative effect of accounting changes, net of tax     -           (345)
   Other - net                                          (491)          (479)
----------------------------------------------------------------------------
Total adjustments                                         (3)          (247)
----------------------------------------------------------------------------
Net Cash Provided by Operating Activities                249            379
----------------------------------------------------------------------------
Investing Activities
Construction and capital expenditures                   (415)          (498)
----------------------------------------------------------------------------
Net Cash Used in Investing Activities                   (415)          (498)
----------------------------------------------------------------------------
Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                       53            302
Issuance of long-term debt                               197              -
Repayment of long-term debt                             (175)            (1)
Equity received from parent                              215             16
Dividends paid                                          (114)          (165)
----------------------------------------------------------------------------
Net Cash Provided by Financing Activities                176            152
----------------------------------------------------------------------------
Net increase in cash and cash equivalents                 10             33
----------------------------------------------------------------------------
Cash and cash equivalents beginning of year               43             57
----------------------------------------------------------------------------
Cash and Cash Equivalents End of Period              $    53        $    90
----------------------------------------------------------------------------
Cash paid during the three months ended March 31 for:
     Interest                                         $  141         $  143
     Income taxes                                     $  222        $    85

See Notes to Consolidated Financial
Statements.



<PAGE>


<TABLE>

PACIFIC BELL AND SUBSIDIARIES
-----------------------------------------------------------------------------------
STATEMENTS OF SHAREOWNER'S EQUITY
Dollars in millions
(Unaudited)
<CAPTION>
-----------------------------------------------------------------------------------
                                                       Capital in       Retained
                                          Common       Excess of        Earnings
                                          Shares       Par Value        (Deficit)
-----------------------------------------------------------------------------------
<S>                                          <C>           <C>            <C>     
Balance, December 31, 1997                   $225          $4,814         $(2,252)
Net income                                      -               -             252
Dividend to shareowner                          -            (114)              -
Net equity from parent                          -             218               -
-----------------------------------------------------------------------------------
Balance, March 31, 1998                      $225          $4,918         $(2,000)
-----------------------------------------------------------------------------------

<FN>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>

                                     * * * *

<TABLE>

SELECTED FINANCIAL AND OPERATING DATA*

<CAPTION>
At March 31, or for the three months then ended:                         1998            1997
                                                                --------------   -------------
<S>                                                                    <C>             <C>    

  Return on weighted average total capital.....................         15.80%          16.94%
  Debt ratio...................................................         65.55%          63.02%
  Network access lines in service (000)........................         17,578          16,770
  Access minutes of use (000,000)..............................         18,542          17,619
  Number of employees..........................................         45,880          44,780

<FN>
*Operating data may be periodically revised to reflect the most current information.
</FN>
</TABLE>





<PAGE>



PACIFIC BELL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Dollars in millions

1. BASIS  OF  PRESENTATION  The  consolidated  financial  statements  have  been
   prepared by Pacific  Bell  (PacBell,  which also  includes  its  subsidiaries
   Pacific Bell  Information  Services  and Pacific  Bell  Network  Integration)
   pursuant  to the  rules  and  regulations  of  the  Securities  and  Exchange
   Commission  (SEC) and, in the opinion of management,  include all adjustments
   (consisting  only of normal recurring  accruals)  necessary to present fairly
   the  results  for  the  interim  periods  shown.  PacBell  is a  wholly-owned
   subsidiary of Pacific  Telesis Group (PAC), a wholly-owned  subsidiary of SBC
   Communications  Inc. (SBC). On March 31, 1998, PacBell distributed the shares
   of Pacific  Bell  Directory,  Pacific  Bell  Mobile  Services,  Pacific  Bell
   Internet  Services and PB COMM Switches,  Inc. to PAC.  PacBell has accounted
   for  this  distribution  as a  change  in  reporting  entity;  the  financial
   statements  of all periods  presented  have been  restated to show  financial
   information  for  the new  reporting  entity.  This  restatement  reflects  a
   reduction  of net income of $69 and $89 for the three  months ended March 31,
   1998  and  1997  and a  reduction  of  income  before  cumulative  effect  of
   accounting changes of $91 for the three months ended March 31, 1997.

   Certain information and footnote disclosures,  normally included in financial
   statements   prepared  in  accordance  with  generally  accepted   accounting
   principles,  have  been  condensed  or  omitted  pursuant  to SEC  rules  and
   regulations.  The  results  for  the  interim  periods  are  not  necessarily
   indicative  of  results  for  the  full  year.  The  consolidated   financial
   statements   contained   herein  should  be  read  in  conjunction  with  the
   consolidated  financial  statements  and notes thereto  included in PacBell's
   1997 Annual Report on Form 10-K filed with the SEC.  Comprehensive income for
   PacBell is the same as Net Income for all periods presented.

2. CONSOLIDATION The consolidated  financial  statements include the accounts of
   PacBell  and its  subsidiaries.  All  significant  intercompany  transactions
   within PacBell are eliminated in the consolidation process.

3. CONFORMING  ACCOUNTING  CHANGES  PacBell's  results  include  the  effects of
   changes to conform  accounting  methodologies  between  SBC and  PacBell  for
   pensions and postretirement  benefits. These changes were recorded by PacBell
   in the  second  quarter  of  1997,  retroactive  to  January  1,  1997,  as a
   cumulative  effect of accounting  changes of $345,  net of deferred  taxes of
   $239,  and  increased  income before  income taxes and  cumulative  effect of
   accounting  changes  and net income for the first  quarter of 1997 by $21 and
   $13. The changes in accounting for pension and  postretirement  benefits were
   to adopt  SBC's  methodology  of  amortizing  gains and losses on assets held
   within those benefit plans.

4. SOFTWARE  COSTS  PacBell  currently  expenses  costs as incurred for software
   purchased  or  developed  for  internal  use,  except for  initial  operating
   software  costs,  which are  capitalized  and amortized over the lives of the
   associated  hardware.  The American Institute of Certified Public Accountants
   has issued a Statement of Position (SOP) that will require  capitalization of
   certain  computer  software  expenditures  beginning  in 1999,  with  earlier
   adoption permitted.

   PacBell did not elect to early adopt the provisions of the SOP. Management is
   currently  evaluating the impact of the change in accounting  required by the
   SOP, but is not able to quantify the effect at this time.  The SOP would tend
   to cause an increase in net income in the first year of adoption.



<PAGE>


PACIFIC BELL AND SUBSIDIARIES

Item 2.  Management's Discussion and Analysis of Results of Operations
Dollars in millions

RESULTS OF OPERATIONS

Overview  Financial  results for  Pacific  Bell  (PacBell,  which  includes  its
subsidiaries)  for the first  three  months of 1998 and 1997 are  summarized  as
follows:

---------------------------------------------------------------------------
                                                Three-Month Period
                                              -----------------------------
                                                                   Percent
                                                   1998     1997   Change
---------------------------------------------------------------------------
Operating revenues                             $  2,293 $  2,139      7.2%
Operating expenses                             $  1,772 $  1,575     12.5%
Income before cumulative effect of             $    252 $    281    (10.3)%
accounting changes
Cumulative effect of accounting changes            -    $    345      -
Net income                                     $    252 $    626      -
===========================================================================


PacBell reported net income of $252 for the first quarter of 1998 and net income
of $626 for the first quarter of 1997.  First quarter 1997 net income includes a
cumulative  net benefit of $345  resulting from  accounting  changes  related to
conforming accounting  methodologies between PacBell and SBC Communications Inc.
(SBC) for, among other items, pensions and postretirement benefits.

PacBell's income before  cumulative  effect of accounting  changes for the first
quarter of 1997 of $281 includes a first  quarter 1997 $87 after-tax  settlement
gain  associated  with  lump-sum  pension  payments  that exceeded the projected
service and interest costs for 1996  retirements.  Excluding the 1997 settlement
gain,  PacBell's  reported income before cumulative effect of accounting changes
increased $58, or 29.9% for the first quarter of 1998.

Excluding the settlement gain, the primary factor  contributing to this increase
was growth in demand for  services and  products.  This  increase was  partially
offset by increased  costs  associated with merger  integration  costs and other
costs  associated  with the  merger  and  increases  in  employee  compensation,
including those resulting from higher force levels.

Revenues Components of operating revenues for the first quarter of 1998 and 1997
are as follows:

----------------------------------------------------------------------------
                                              Three Month Period
                                              ------------------------------
                                                                    Percent
                                                  1998     1997     Change
----------------------------------------------------------------------------
Local service                                 $  1,118  $ 1,027        8.9%
Network access:
   Interstate                                      500      459        8.9
   Intrastate                                      180      186       (3.2)
Long-distance service                              306      305        0.3
Other                                              189      162       16.7
-------------------------------------------------------------------
     Total                                    $  2,293  $ 2,139        7.2%
============================================================================

      Local  Service Local  service  revenues  increased in the first quarter of
      1998 due primarily to increases in demand,  including  increases in access
      lines and vertical services revenues. The number of access lines increased
      by 4.8% since March 31, 1997, with approximately 38% of access line growth
      due to the  sales  of  additional  access  lines to  existing  residential
      customers.  Vertical  services  revenues,  which  include  custom  calling
      services, call control options, Caller ID and other services, increased by
      approximately 18%. Additionally, Federal payphone deregulation implemented
      in April 1997  increased  local service and decreased  interstate  network
      access,  long-distance  service and other operating revenues;  the overall
      impact was a slight increase in total operating revenues.

      Network Access  Interstate  network access  revenues  increased $41 in the
      first quarter of 1998 due to demand for access  services by  interexchange
      carriers and growth in revenues from end-user  charges  attributable to an
      increasing  access line base.  Also  contributing  to the increase was the
      absence of the 1997 revenue offset required for net payments for long-term
      support which were designed to subsidize universal service. This change is
      discussed  further  in Cost of  Services  and  Products  below.  Partially
      offsetting  these  increases  were the  effects  of  PacBell's  1997  rate
      reduction  related  to the  Federal  productivity  factor  adjustment,  as
      discussed  in  the  1997  Annual   Report  on  Form  10-K,   and  payphone
      deregulation referred to above in Local Service.

      Intrastate network access revenues decreased slightly in the first quarter
      of 1998 due to  California  Public  Utility  Commission  (CPUC) rate order
      reductions and  implementation  of the February 1997  California high cost
      fund.

      Long-Distance Service revenues were unchanged in the first quarter of 1998
      as  increased  toll  messages due to the growing  California  economy were
      offset by the Federal payphone  deregulation  referred to in Local Service
      and rate reductions in CPUC price cap orders.

      Other operating  revenues  increased $27 for the first quarter of 1998 due
      primarily  to increased  demand for  PacBell's  nonregulated  products and
      services.


Expenses Components of operating expenses for the first quarter of 1998 and 1997
are as follows:

---------------------------------------------------------------------------
                                               Three-Month Period
                                              -----------------------------
                                                                    Percent
                                                1998      1997      Change
---------------------------------------------------------------------------
Cost of services and products                 $    847  $   821        3.2%
Selling, general and administrative                474      285       66.3
Depreciation and amortization                      451      469       (3.8)
------------------------------------------------------------------
   Total                                      $  1,772  $ 1,575       12.5%
===========================================================================

      Cost of services and products for the first quarter of 1998 increased $26,
      or 3.2%,  over the first quarter of 1997.  This increase was due primarily
      to the January 1, 1998  implementation  of the Federal  Universal  Service
      Fund which replaced the 1997 net payments for long-term support which were
      accounted for as an offset against  Interstate  Network  Access  Revenues.
      Also increasing expenses were employee  compensation,  including increases
      related  to  force  additions,  interconnection  costs,  additional  costs
      associated  with El Nino  storms  and  continuing  costs for local  number
      portability  implementation  of $14. These increases were partially offset
      by a reduction in right-to-use fees and contract labor.  Selling,  general
      and  administrative  expense  for the first  quarter  of 1997  reflects  a
      settlement  gain of $146 associated  with lump-sum  pension  payments that
      exceeded the projected  service and interest  costs for 1996  retirements.
      Excluding the 1997 settlement gain,  selling,  general and  administrative
      costs would have increased $43, or 10.0%.  This was due to increased costs
      associated with merger  implementation and other costs associated with the
      consolidation of operations  since the merger.  These costs were partially
      offset by a decrease in contract labor.

      Depreciation and amortization for the first quarter of 1998 decreased $18,
      or 3.8%. This decrease was due primarily to reduced depreciation on analog
      switching  equipment and reduced effective  composite  depreciation rates.
      These decreases were partially offset by increased  depreciation resulting
      from higher plant levels.

Income Tax expense for 1997 included taxes of $59 on the pension settlement gain
discussed in Selling,  General and Administrative expense.  Excluding this item,
income taxes were higher in 1998  primarily  due to higher  income before income
tax.

Cumulative Effect of Accounting Changes, as discussed in Note 3 to the financial
statements,  include  the effect of  changes  applied  retroactively  to conform
accounting  methodologies between PacBell and SBC effective January 1, 1997. The
cumulative after-tax effect of these one-time changes is $345.



<PAGE>


PACIFIC BELL AND SUBSIDIARIES

Item 2.  Management's Discussion and Analysis
Dollars in millions

OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS

COMPETITIVE AND REGULATORY ENVIRONMENT

Long-distance   Application   SBC   continues  to  seek  entry  into   interLATA
long-distance through the courts and by approval from the Federal Communications
Commission (FCC). PacBell has a section 271 application pending with the CPUC to
provide interLATA long-distance service in California.

OTHER BUSINESS MATTERS

Employees  A tentative  labor  agreement  was  reached on April 7, 1998  between
PacBell and the  Communications  Workers of America  (CWA) to replace a contract
that  would  expire  on  August  8,  1998.  The  new  agreement  is  subject  to
ratification by the CWA membership and covers  approximately 34,000 employees of
PacBell through April 1, 2001. Among other items, the contract  specifies an 11%
increase in wages over the life of the contract.



<PAGE>


PACIFIC BELL AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a)   Exhibits

      Exhibit 12  Computation of Ratios of Earnings to Fixed Charges.

      Exhibit 27  Financial Data Schedule.

(b)   Reports on Form 8-K

      On  February  13,  1998,  PacBell  filed a  Current  Report  on Form  8-K,
      reporting  on  Item 7.  Financial  Statements  and  Exhibits.  The  Report
      contained  exhibits related to PacBell's issuance of $200 million of the 6
      1/8% Notes due February 15, 2008.

      On  February  10,  1998,  PacBell  filed a  Current  Report  on Form  8-K,
      reporting on Item 5. Other Events.  The Report contained  selected PacBell
      financial  statement  information  for the  three-month  and  twelve-month
      periods ended December 31, 1997 and 1996.

      On January 9, 1998,  PacBell filed a Current Report on Form 8-K/A amending
      a Current  Report  dated  April 4,  1997  reporting  on Item 4.  Change in
      Registrant's Certifying Accountant.



<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.

                                       PACIFIC BELL




May 11, 1998                           /s/ Robert B.Pickering
                                       Robert B. Pickering
                                       Vice President and Chief Financial
                                       Officer (Principal Accounting/
                                       Financial Officer)