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, 1999

                                             or

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

                        For the transition period from       to     

                               Commission File Number 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
                                             
<TABLE>
PACIFIC BELL
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
Dollars in millions
(Unaudited)
--------------------------------------------------------------------------------
<CAPTION>
                                                           Three months ended
                                                                March 31,
                                                      --------------------------
                                                           1999            1998
--------------------------------------------------------------------------------
<S>                                                       <C>           <C>
Operating Revenues
Local service                                             $ 1,219       $ 1,166
Network access:
  Interstate                                                  513           479
  Intrastate                                                  186           180
Long distance service                                         269           306
Other                                                         176           141
--------------------------------------------------------------------------------
Total operating revenues                                    2,363         2,272
--------------------------------------------------------------------------------
Operating Expenses
Operations and support                                      1,307         1,300
Depreciation and amortization                                 468           451
--------------------------------------------------------------------------------
Total operating expenses                                    1,775         1,751
--------------------------------------------------------------------------------
Operating Income                                              588           521
--------------------------------------------------------------------------------
Other Income (Expense)
Interest expense                                             (103)         (106)
Other income (expense) - net                                   28            (2)
--------------------------------------------------------------------------------
Total other income (expense)                                  (75)         (108)
--------------------------------------------------------------------------------
Income Before Income Taxes                                    513           413
--------------------------------------------------------------------------------
Income Taxes                                                  203           161
--------------------------------------------------------------------------------
Net Income                                                $   310       $   252
--------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements.
</TABLE>

<PAGE>


<TABLE>
PACIFIC BELL
------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
------------------------------------------------------------------------------
<CAPTION>
                                                   March 31,      December 31,
                                                 ------------------------------
                                                     1999            1998
------------------------------------------------------------------------------
<S>                                               <C>               <C>
Assets                                            (Unaudited)
Current Assets
Cash and cash equivalents                           $      35       $      15
 Accounts receivable - net of allowances for
  uncollectibles of $160 and $161                       1,895           2,015
Prepaid expenses                                          215              90
Deferred income taxes                                     428             280
Other current assets                                       29              31
------------------------------------------------------------------------------
Total current assets                                    2,602           2,431
------------------------------------------------------------------------------
Property, Plant and Equipment - at cost                30,169          29,871
  Less: Accumulated depreciation and amortization      18,544          18,272
------------------------------------------------------------------------------
Property, Plant and Equipment - Net                    11,625          11,599
------------------------------------------------------------------------------
Other Assets                                            1,180           1,063
------------------------------------------------------------------------------
Total Assets                                        $  15,407       $  15,093
------------------------------------------------------------------------------

Liabilities and Shareowner's Equity
Current Liabilities
Intercompany loans                                  $   1,496       $   1,551
Current portion of long-term obligations                  103             103
------------------------------------------------------------------------------
Total debt maturing within one year                     1,599           1,654
------------------------------------------------------------------------------
Accrued taxes                                             386             122
Accounts payable and accrued liabilities                2,435           2,669
------------------------------------------------------------------------------
Total current liabilities                               4,420           4,445
------------------------------------------------------------------------------
Long-Term Debt                                          4,614           4,614
------------------------------------------------------------------------------
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes                                   1,210           1,082
Postemployment benefit obligation                         850             894
Unamortized investment tax credits                        141             149
Other noncurrent liabilities                              606             649
------------------------------------------------------------------------------
Total deferred credits and other noncurrent liabilities 2,807           2,774
------------------------------------------------------------------------------

Shareowner's Equity
Common shares ($1 par value)                              225             225
Capital in excess of par value                          4,206           4,210
Retained earnings (deficit)                              (865)         (1,175)
------------------------------------------------------------------------------
Total shareowner's equity                               3,566           3,260
------------------------------------------------------------------------------
Total Liabilities and Shareowner's Equity           $  15,407       $  15,093
------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements.
</TABLE>


<PAGE>

<TABLE>
PACIFIC BELL
-----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash and cash equivalents
(Unaudited)
-----------------------------------------------------------------------------
<CAPTION>
                                                        Three months ended
                                                             March 31,
                                                  ---------------------------
                                                       1999           1998
-----------------------------------------------------------------------------
<S>                                                   <C>            <C>  
Operating Activities
Net income                                            $  310         $  252
Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation and amortization                         468            451
   Provision for uncollectible accounts                   33             40
   Amortization of investment tax credits                 (8)           (10)
   Deferred income tax expense                            (4)             7
   Other - net                                          (221)          (491)
-----------------------------------------------------------------------------
Total adjustments                                        268             (3)
-----------------------------------------------------------------------------
Net Cash Provided by Operating Activities                578            249
-----------------------------------------------------------------------------

Investing Activities
Construction and capital expenditures                   (498)          (415)
-----------------------------------------------------------------------------
Net Cash Used in Investing Activities                   (498)          (415)
-----------------------------------------------------------------------------

Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                      (56)            53
Issuance of long-term debt                                 -            197
Repayment of long-term debt                                -           (175)
Net equity from parent                                     8            215
Dividends paid                                           (12)          (114)
-----------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities      (60)           176
-----------------------------------------------------------------------------
Net increase in cash and cash equivalents                 20             10
-----------------------------------------------------------------------------
Cash and cash equivalents beginning of year               15             43
-----------------------------------------------------------------------------
Cash and Cash Equivalents End of Period               $   35         $   53
-----------------------------------------------------------------------------
<FN>
Cash paid during the three months ended March 31 for:
     Interest                                         $  115         $  141
     Income taxes, net of refunds                     $  (31)        $  222

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


<PAGE>


<TABLE>
PACIFIC BELL
--------------------------------------------------------------------------------
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, 1998                  $ 225      $  4,210       $  (1,175)
Net income                                      -             -             310
Dividends to shareowner                         -           (12)              -
Net equity from parent                          -             8               -
--------------------------------------------------------------------------------
Balance, March 31, 1999                     $ 225      $  4,206       $    (865)
--------------------------------------------------------------------------------

See Notes to Consolidated Financial Statements.
</TABLE>

                                     * * * *


SELECTED FINANCIAL AND OPERATING DATA

At March 31, or for the three months then ended:         1999            1998
                                                     -----------      ----------
  Debt ratio.................................             63.53%          65.55%
  Network access lines in service (000)......             18,233          17,578
  Access minutes of use (000,000)*...........             18,750          17,656
  Resold lines (000).........................                266             260
  Number of employees........................             47,850          45,880

*1998 amounts have been restated.


<PAGE>


PACIFIC BELL

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 subsidiary Pacific
   Bell  Information  Services)  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).

   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.   Certain   reclassifications   have   been  made  to  the  1998
   consolidated financial statements to conform with the 1999 presentation.  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 1998 Annual Report on Form 10-K filed with the
   SEC.  Comprehensive  income  for  PacBell  is the same as net  income for all
   periods  presented.  As  PacBell  operates  in only  one of  SBC's  segments,
   wireline  telecommunications  services,  separate  segment  reporting  is not
   applicable to PacBell.

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

3. COMPLETION  OF MERGERS On April 1, 1997,  SBC and PAC completed the merger of
   an SBC subsidiary with PAC, in a transaction in which each outstanding  share
   of PAC  common  stock was  exchanged  for 1.4629  shares of SBC common  stock
   (equivalent to approximately 626 million shares). With the merger, PAC became
   a wholly-owned subsidiary of SBC. The transaction has been accounted for as a
   pooling of interests and a tax-free reorganization.

   On  October  26,  1998,  SBC  and  Southern  New  England  Telecommunications
   Corporation  (SNET) completed the merger of an SBC subsidiary with SNET, in a
   transaction in which each share of SNET common stock was exchanged for 1.7568
   shares of SBC common stock  (equivalent to approximately 120 million shares).
   SNET became a  wholly-owned  subsidiary of SBC effective  with the merger and
   the transaction has been accounted for by SBC as a pooling of interests and a
   tax-free reorganization.

   Post-merger initiatives
   During the  second  quarter  of 1997,  SBC  announced  PacBell  had  incurred
   after-tax  charges of $883 related to several strategic  decisions  resulting
   from the merger integration process that began with the April 1, 1997 closing
   of its  merger  with PAC,  which  included  $107 ($65  after  tax) of charges
   related to several  regulatory  rulings during the second quarter of 1997 and
   $276 ($173 after tax) for merger approval costs. The decisions  resulted from
   an extensive  review of operations  throughout the merged company and include
   significant   integration   of   operations   and   consolidation   of   some
   administrative and support functions.

   One-time  charges  related to the strategic  decisions  reached by the review
   teams  totaled $1  billion  ($645  after tax) in the second  quarter of 1997.
   During the fourth quarter of 1998, SBC again  performed a complete  review of
   all  operations  affected by the merger with SNET to determine  the impact on
   ongoing merger integration processes.  This review resulted in no significant
   additional  financial  effect 


<PAGE>


PACIFIC BELL

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions

   on PacBell. At March 31, 1999 and December 31, 1998, remaining accruals   for
   anticipated cash expenditures related to these   decisions were approximately
   $55 and $61.

4. SOFTWARE COSTS The American  Institute of Certified  Public  Accountants  has
   issued a Statement of Position (SOP) that requires  capitalization of certain
   computer  software  expenditures  beginning in 1999.  The SOP, which has been
   adopted  prospectively as of January 1, 1999,  requires the capitalization of
   certain costs incurred in connection  with  developing or obtaining  internal
   use  software.  Prior to the  adoption  of the  SOP,  the  costs of  computer
   software  purchased or developed  for internal use were expensed as incurred.
   However,  initial operating  system  software costs were, and continue to be,
   capitalized.

   With  comparable  levels of  software  expenditures,  the SOP  would  tend to
   increase net income in comparison with PacBell's  former method of accounting
   for software  costs.  However,  the increases would be largest in the year of
   adoption  with  diminishing   levels  of  increases   compared  with  current
   accounting throughout the amortization period. Consequently,  given otherwise
   comparable  income  levels  excluding  software,   and  otherwise  comparable
   software  expenditures,  the effect of the SOP would be to increase income in
   the first year and decrease  income in each  subsequent year until the number
   of years affected by the SOP equals the  amortization  period.  The effect of
   adopting the SOP was to increase  net income for the quarter  ended March 31,
   1999 by approximately $7.


<PAGE>


PACIFIC BELL

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

RESULTS OF OPERATIONS 

Overview  Financial  results for  Pacific  Bell  (PacBell,  which  includes  its
subsidiary) for the first quarter of 1999 and 1998 are summarized as follows:

---------------------------------------------------------------------------
                                                   Three-Month Period
                                              -----------------------------
                                                                   Percent
                                                  1999     1998    Change
---------------------------------------------------------------------------
Operating revenues                              $ 2,363  $ 2,272      4.0%
Operating expenses                              $ 1,775  $ 1,751      1.4%
Net income                                      $   310  $   252     23.0%
===========================================================================

PacBell  reported net income of $310 for the first  quarter of 1999 and $252 for
the first quarter of 1998. The primary factor  contributing to this increase was
growth in demand for  services and products and a slowing of growth in operating
expenses due to merger related initiatives and benefits.

Operating Revenues  PacBell's  operating revenues increased $91, or 4.0%, in the
first quarter of 1999. Components of operating revenues for the first quarter of
1999 and 1998 are as follows:

----------------------------------------------------------------------------
                                                   Three-Month Period
                                              ------------------------------
                                                                     Percent
                                                 1999         1998   Change
----------------------------------------------------------------------------
Local service                                 $  1,219  $ 1,166         4.5%
Network access:
   Interstate                                      513      479         7.1
   Intrastate                                      186      180         3.3
Long distance service                              269      306       (12.1)
Other                                              176      141        24.8
-------------------------------------------------------------------
     Total                                    $  2,363  $ 2,272         4.0%
============================================================================

      Local service Local service revenues  increased $53, or 4.5%, in the first
      quarter  of  1999  due  primarily  to  increased  demand,   which  totaled
      approximately $59, including  increases in access lines, data and vertical
      services  revenues.  The number of access lines increased by approximately
      3.7% in the first quarter of 1999, with  approximately  48% 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, voice mail and other enhanced
      services,  increased by approximately 26% and totaled  approximately  $199
      for the first quarter of 1999.

      Additionally,  local  service  revenues  increased  as  a  result  of  the
      California  High Cost Fund (CHCFB) which also had the effect of decreasing
      two other types of operating  revenues.  In the first quarter of 1999, the
      CHCFB increased local service revenues by approximately  $25 and decreased
      long distance revenues by approximately $23 and intrastate  network access
      revenues by approximately  $12. The net effect on total operating revenues
      for the CHCFB was a  decrease  of $10.  The  California  Public  Utilities
      Commission  (CPUC)  has  stated  that the CHCFB is  intended  to  directly
      subsidize the provision of service to high cost areas and allow PacBell to
      set 


<PAGE>
PACIFIC BELL

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

RESULTS OF OPERATIONS - Continued

      competitive   rates for  other   services.  The increase in local  service
      revenues was partially offset by decreases of approximately  $24 resulting
      from rate reductions under CPUC price cap orders.

      Network access Interstate  network access revenues increased $34, or 7.1%,
      in the first quarter of 1999 due primarily to increased  demand for access
      services by interexchange  carriers,  primarily special access, and growth
      in end-user charges  attributable to an increasing access line base, which
      collectively  resulted in an increase of  approximately  $44. In addition,
      customer number portability cost recovery contributed approximately $17 to
      the increase.  Partially  offsetting  these  increases were the effects of
      PacBell's  rate  reduction  of  approximately  $29  related to the Federal
      Communications Commission's (FCC) productivity factor adjustment.

      Intrastate  network  access  revenues  increased $6, or 3.3%, in the first
      quarter of 1999 attributable to increased demand of $23, offset in part by
      the effect of the CHCFB described above in local service of  approximately
      $12 and by CPUC rate reductions of approximately $3.

      Long distance  service  decreased  $37, or 12.1%,  in the first quarter of
      1999  due  to  the  effect  of  the  CHCFB  noted  in  local   service  of
      approximately $23 and by CPUC rate reductions of approximately $9.

      Other operating  revenues increased $35, or 24.8%, in the first quarter of
      1999 due  primarily  to  increased  sales from  nonregulated  products and
      services  totaling  approximately  $12 and  increased  equipment  sales of
      approximately $25.

Operating Expenses  PacBell's  operating expenses increased $24, or 1.4%, in the
first  quarter of 1999.  Components  of total  operating  expenses for the first
quarter of 1999 and 1998 are as follows:

---------------------------------------------------------------------------
                                                   Three-Month Period
                                              -----------------------------
                                                                    Percent
                                                1999      1998      Change
---------------------------------------------------------------------------
Operations and support                        $  1,307  $ 1,300        0.5%
Depreciation and amortization                      468      451        3.8
------------------------------------------------------------------
   Total operating expenses                   $  1,775  $ 1,751        1.4%
===========================================================================

      Operations support increased $7, or 0.5%,  in the  first quarter of 1999. 
      The  increase    includes     costs  of   approximately   $74  related to 
      progression in the merger  implementation process  including charges from 
      centralized   support   functions   throughout  SBC  and   other    merger
      initiatives.  Operations  and  support also   increased due to  increased
      costs  for  materials,   wages  and  salaries  and  right-to-use  fees of 
      approximately  $53. In addition,  costs associated with  reciprocal
      compensation   for  the   termination   of  Internet   traffic   increased
      approximately  $8. These  increases  were offset by reductions in contract
      labor, benefits and employee training and development of approximately $22
      and a reduction in other non-labor costs of approximately  $61 due in part
      to merger initiative  benefits and first quarter 1998 storm related costs.
      In addition, expenditures for interconnection, customer number portability
      and local  competition   initiatives decreased approximately $33.  Another
      contribution offsetting the increase in operations and


<PAGE>


PACIFIC BELL

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

RESULTS OF OPERATIONS - Continued

      support  expense  was  the   change in  accounting  for   software  costs
      (see    Note 4  of Notes to  the  Consolidated  Financial    Statements), 
      which  resulted  in  approximately  $12 of such costs  being   capitalized
      rather than expensed at March 31, 1999.

      Depreciation and amortization expense increased $17, or 3.8%, in the first
      quarter of 1999.  The increase was due  primarily to overall  higher plant
      levels of approximately $15.

Other income  (expense) - net was net income of $28 in the first quarter of 1999
due  primarily  to a gain  recognized  from the sale of  PacBell's  interest  in
Advanced Communications Network (ACN) of $24. In 1997, ACN was written off as an
impairment in conjunction with the merger with PAC.

Income Taxes increased $42, or 26.1%, in the first quarter of 1999 primarily due
to higher income before income taxes.

COMPETITIVE AND REGULATORY ENVIRONMENT

IntraLATA  Toll Dialing  Parity In a January 1999  decision,  the United  States
Supreme  Court  (Supreme  Court)  ruled that the FCC had the  authority to issue
rules to guide the state  commissions in  implementing  intrastate and intraLATA
dialing  parity.  In March  1999,  the FCC  released an order  establishing  new
deadlines by which local exchange  carriers (LECs) must implement dialing parity
for intraLATA long distance calls. Specifically,  the FCC ordered carriers whose
dialing  parity  plans had been  approved  by a state  commission  to  implement
dialing  parity no later than May 7, 1999.  Carriers  that had not filed dialing
parity plans with their state  commissions  were  required to do so by April 22,
1999.  If state  commissions  have not approved the plans by June 22, 1999,  the
carriers must file them with the FCC for approval.  Carriers will be required to
implement  dialing  parity within 30 days of state or FCC  approval.    PacBell 
began  providing   dialing   parity  in  California  in early May 1999.  PacBell
anticipates that  implementation  of dialing parity will contribute to a loss of
intraLATA long distance revenue in 1999.

In March 1999, U S WEST,  Inc. (U S West) filed  pleadings in the Eighth Circuit
Court of Appeals  (Eighth  Circuit)  challenging  both the validity of the FCC's
March 1999 order and the  authority of the FCC to determine  the date by which a
state  must  provide  intraLATA  dialing  parity.  While SBC  believes  that the
pleadings  of U S West are  meritorious,  at present,  it is  uncertain  how the
Eighth Circuit will rule on these pleadings.

Pay Phone Per Call  Compensation  In February 1999, the FCC issued a ruling that
reduced the pay phone dial-around  access or toll free call rate from 28.4 cents
to 24  cents  per  call,  effective  April  1999.  In  addition,  the FCC  order
determined  that a reduced rate of 23.8 cents per call be applied  retroactively
from  October  1997  to  April  1999.  The  retroactive   rate  change  did  not
significantly affect PacBell's first quarter 1999 results of operations.

Customer Local Number  Portability  Long-term  customer local number portability
(LNP) allows customers to change local exchange carriers while maintaining their
existing  telephone  numbers.  In  December  1998,  the FCC  issued  an order on
recovery of costs incurred for LNP by LECs.  This order provides for the levying
of federally tariffed LNP monthly end-user charges for a five-year period,


<PAGE>


PACIFIC BELL

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

COMPETITIVE AND REGULATORY ENVIRONMENT - Continued

beginning in February 1999. PacBell began recovering LNP costs at the rate of 50
cents per access  line per month.  This rate is the  subject of an FCC  inquiry,
which is expected to be completed by mid-1999. Although PacBell cannot currently
predict the results of this rate inquiry,  it is not expected to have a material
impact on PacBell's results of operations or financial position.

FCC  Equipment  Audit In March 1999,  the FCC  released  the results of its 1997
audit  of  regional  holding  companies'  (RHCs)  and  GTE  Corporation's  (GTE)
telecommunications and other equipment. The FCC's audit alleged that each of the
RHCs and GTE were missing  millions of dollars in equipment.  Specifically,  the
audit alleged that PacBell was missing $527 in equipment.  PacBell believes that
the audit methodology was flawed and amounts of "missing" equipment dramatically
overstated.  For example,  the FCC's  auditors  sometimes  labeled  equipment as
missing  because it was not in the precise  location  indicated  in the property
records, even if it had been relocated. In April 1999, the FCC opened an inquiry
on the audit's  ramifications.  Among other  things,  the FCC is  interested  in
feedback on the audit  methodology and statistical  validity,  the impact of the
audit  findings  on  telephone  customers  and what  action the FCC should  take
against  the  RHCs  and  GTE.  As  PacBell  uses  composite  group  depreciation
accounting  for its  telephone  plant,  most  reductions  in plant levels (e.g.,
sales,  retirements) are not reflected in earnings, but are reflected as changes
in  accumulated  depreciation.  Accordingly,  if the write down of  equipment is
required,  it is not expected to have a material impact on PacBell's  results of
operations or financial position.

OTHER BUSINESS MATTERS

New Accounting  Standards In June 1998, the Financial Accounting Standards Board
issued  Statement No. 133,  "Accounting  for Derivative  Instruments and Hedging
Activities"  (FAS 133), which will require all derivatives to be recorded on the
balance sheet at fair value and changes in the fair value of the  derivatives to
be recorded in net income or comprehensive  income.  FAS 133 must be adopted for
years beginning after June 15, 1999, with earlier adoption permitted. Management
is currently  evaluating the impact of the change in accounting  required by FAS
133, but is not able to quantify the effect at this time.

See Note 4 of Notes to Consolidated Financial Statements for a discussion of the
new accounting standard on software costs.

SBC's  Year  2000  Project  SBC  operates   numerous   date-sensitive   computer
applications  and systems  throughout its  businesses.  Since 1996, SBC has been
working to upgrade its networks and computer  systems to properly  recognize the
Year  2000  and  continue  to  process   critical   operational   and  financial
information.  Companywide  teams are in place to address and  resolve  Year 2000
issues and  processes  are under way to evaluate  and manage the risks and costs
associated with preparing SBC's  date-impacted  systems and networks for the new
millennium.

SBC is using a  four-step  methodology  to address  the issue.  The  methodology
consists of inventory and assessment,  hardware and software fixes,  testing and
deployment.  SBC  measures  its  progress  by tracking  the number of  completed
hardware and software applications,  network components,  personal computers and
building facilities that can correctly process Year 2000 dates.


<PAGE>


PACIFIC BELL

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

OTHER BUSINESS MATTERS - Continued 

The  inventory and  assessment  phase is estimated to require 20% of the overall
effort and includes the  identification of items (i.e.,  line-by-line  review of
software code, switch generics, vendor products, etc.) that could be impacted by
the Year  2000 and the  determination  of the work  effort  required  to  ensure
compliance.  The inventory and assessment phase has been completed. This process
involved reviewing over 340 million lines of software code, 1,200 central office
switches,  7,000 company  buildings,  conducting an inventory and  assessment of
117,000  personal  computers  and  coordinating  with 1,500  suppliers of 15,000
products  to obtain  adequate  assurance  they will be Year  2000  compliant  or
determine and address any appropriate contingency plans or backup systems.

Making the hardware and software fixes is the second phase of the process and is
estimated to require 25% of the overall effort. This activity involves modifying
program code,  upgrading computer software and upgrading or replacing  hardware.
As of March 31, 1999, SBC had completed 96% of the hardware and software fixes.

Testing involves ensuring that hardware and software fixes will work properly in
1999 and  beyond  and  occurs  both  before  and after  deployment.  Testing  is
estimated to comprise 45% of the overall effort. Testing began early in 1998 and
is 89%  complete.  Contingency  plans and backup  systems  are  currently  being
written.

Deployment  involves  placing the "fixed"  systems  into a live  environment  to
ensure they are working properly. Additional testing is done after deployment as
well. Deployment is estimated to require 10% of the overall effort. Ninety-three
percent of the deployment phase was completed as of March 31, 1999.

SBC has  budgeted  $265 on the entire  project,  with  approximately  $171 spent
through March 31, 1999. As testing and hardware and software fixes are estimated
to require most of the expenditures,  there is not a strict correlation  between
expenditures and project completion.

The activities involved in SBC's Year 2000 project necessarily require estimates
and  projections,  as described  above, of activities and resources that will be
required in the future.  These  estimates and  projections  could change as work
progresses on the project.


<PAGE>


PACIFIC BELL

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Dollars in millions

There has been no material  change in PacBell's  market risks since December 31,
1998.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this form contains forward-looking  statements that are
subject to risks and  uncertainties.  PacBell  claims the protection of the safe
harbor  for  forward-looking  statements  provided  by  the  Private  Securities
Litigation Reform Act of 1995.

The following  factors could cause PacBell's future results to differ materially
from those expressed in the  forward-looking  statements:  (1) adverse  economic
changes in the markets served by PacBell or changes in available technology; (2)
the final outcome of various FCC  rulemakings  and judicial  review,  if any, of
such  rulemakings;  (3) the final  outcome  of  various  CPUC  proceedings,  and
judicial review,  if any, of such  proceedings;  and (4) the timing of entry and
the extent of competition in the local and intraLATA toll markets in California.
Readers are cautioned  that other factors  discussed in this form,  although not
enumerated here, also could materially impact PacBell's future earnings.


<PAGE>


PACIFIC BELL

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

      There were no reports on Form 8-K filed during the quarter ended March 31,
      1999.


<PAGE>



                                         SIGNATURE


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

                                       PACIFIC BELL




May 11, 1999                           /s/ Robert B. Pickering
                                       Robert B. Pickering
                                       Vice President and Chief Financial
                                       Officer