SECURITIES AND EXCHANGE COMMISSION
                          Washington, DC 20549
                               FORM 10 - QSB

                QUARTERLY REPORT UNDER REGULATION SB OF THE
                       SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended                        Commission File Number:
  December 31, 1998                               2-96976-D
-----------------------                         ------------------

                      DCI TELECOMMUNICATIONS, INC.
       (Exact Name of Registrant as specified in its charter)

             COLORADO                            84-1155041
          ---------------                  -----------------------
   (State or other jurisdiction          (IRS Employer Identification
  of incorporation or organization)               Number)


           611 Access Road, Stratford, Connecticut  06615
     -------------------------------------------------------------
           (Address and zip code of principal executive offices)

                              (203) 380-0910
                            -----------------
           (Registrant's telephone number, including area code)

Indicate  by check mark whether the Registrant (1) has filed all  reports
required  by Regulation SB 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  the
filing requirements for at least the past 90 days.
                      YES __X__              NO_____

Indicate the number of shares outstanding of each of the issuer/s classes
of common stock, as of the last practicable date:

Number of Shares Outstanding        Class               Date
----------------------------       -------           ----------
       28,897,703              Common Stock,        January 22, 1999
                              $.0001 par value

<PAGE>

                        DCI TELECOMMUNICATIONS, INC.

                                  Index


     PART I  FINANCIAL INFORMATION

       Balance Sheet December 31, 1998                                3

       Statements of Operations
        Nine Months Ended December 31, 1998 and 1997
        Three Months Ended December 31, 1998 and 1997                 4

       Statements of Cash Flow
        Nine Months Ended December 31, 1998 and 1997                  5

       Notes to Unaudited Financial Statements
        December 31, 1998                                             6

       Management's Discussion and Analysis of
        Financial Condition and Results of Operations                 11

       PART II

       Other Information                                              18

       Signatures                                                     19






                                  2
<PAGE>

                      DCI Telecommunications, Inc.
                       Consolidated Balance Sheet
                               (unaudited)

                                                       December 31
          ASSETS                                            1998

Current Assets:
    Cash                                                 $2,112,629
    Investments                                              42,000
    Accounts receivable                                   4,866,888
    Receivable from SmarTalk                                650,000
    Prepaid expenses                                        264,492
    Inventory                                               543,961
                                                          ---------
Total Current Assets                                      8,479,970

Fixed Assets                                              1,912,409
Less: Accumulated depreciation                              331,577
                                                          ---------
Net Fixed Assets                                          1,580,832
                                                          ---------
Accounts receivable                                       1,027,074
Deferred costs                                              466,810
Deposits                                                    202,937
Other investments                                            37,142
Master Service Agreement                                 15,671,875

Other Assets
   -    costs in excess of
      net assets acquired:
     CardCall International                              3,870,249
     Muller Media                                        1,634,436
     CyberFax                                            1,033,975
     Travel Source                                           86,379
                                                         ----------
                                                          6,625,039
Less: Accumulated amortization                              465,250
                                                         ----------
Net other assets                                          6,159,789
                                                         ----------
Total Assets                                            $33,626,429
                                                        ===========

                                    3
<PAGE>

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
    Accounts payable and accrued expenses                $4,939,464
    Preferred stock dividend                                701,850
    Deferred Revenue                                        526,087
    Due to shareholders                                     130,127
    Income Taxes Payable                                    328,140
                                                         ----------
Total Current Liabilities                                 6,625,668

Long term accounts payable                                  776,339
Long Term Debt                                              128,041
Deferred Income Taxes                                       178,288
Due to joint venture partner                                664,451
                                                          ---------
Total Liabilities                                         8,372,787
                                                         ----------
Minority interests                                         (148,505)

Redeemable, convertible preferred stock,
  $1,000 par and redemption value, 2,000,000
  shares authorized, 2,312 shares issued and
  outstanding                                             2,312,500

Commitments and Contingencies

Shareholders' Equity:
    Common stock, $.0001 par value,
     500,000,000 shares authorized,
     28,557,376 shares issued and outstanding                 2,856
    Paid in capital                                      29,301,745
    Treasury Stock (1,155,000 shares at cost)            (4,127,439)
    Currency translation adjustment                         (47,043)
    Retained earnings subsequent to 12/31/95, date of
       quasi-reorganization (total deficit
       eliminated $4,578,587)                            (2,040,472)
                                                          ---------
Total Shareholders' Equity                               23,089,647
                                                         ----------
Total Liabilities and Shareholders' Equity              $33,626,429
                                                        ===========

         See Accompanying Notes to Consolidated Financial Statements





                                    3(a)
<PAGE>

                      DCI Telecommunications, Inc.
               Consolidated Statements of Operations
                               (unaudited)

                              Three Months Ended      Nine Months Ended
                                December 31,            December 31,
                              1998         1997       1998         1997

  Travel Service Sales     $  319,473  $  213,644  $  937,295  $ 793,044
  Product Sales            10,773,937   1,959,993  27,169,035  7,227,651
                           ----------  ----------  ---------- ----------
  Net Sales                11,093,410   2,173,637  28,106,330  8,020,695

  Cost of Sales - Travel      285,970     220,523     850,919    742,314
                - Product   9,705,229   1,701,871  24,309,929  6,225,507
                           ----------   ---------   --------- ----------
    Gross Profit            1,102,211     251,243   2,945,482  1,052,874

 Selling, General &
  Admin. Expenses             706,752     302,665   2,009,008    846,252
 Salaries and
  Compensation                686,687     175,158   1,879,811    755,924
 Amortization &
  Depreciation                156,612      39,705     422,160     56,168
 Professional and
    Consulting Fees           317,121      59,599     761,218    346,866
                            ---------    --------   --------- ----------
                            1,867,172     577,127   5,072,197  2,005,210

 Income (Loss)
   from Operations         (  764,961)   (325,884) (2,126,715)  (952,336)

Other Income and (Expense)    102,087      57,542      53,107    (39,137)

Minority Interest             136,504          --     148,505         --

  Net (Loss) - Continuing
               Operations  (  526,370)   (268,342) (1,925,103)  (991,473)

                                     4
<PAGE>

Loss from discontinued computer
  board operations                 --    (    882)         --   (559,840)

Gain from prepaid
   phone card contract             --   3,078,421          --  3,078,421

Discontinued prepaid phone
  card segment - U.K.              --    ( 96,683)         --   (647,948)

  Net Income (Loss)        (  526,370)  2,712,514  (1,925,103)   879,160

  Preferred dividend         (152,851)   (164,838)   (902,851)  (369,376)
                           ----------   ---------   ---------  ---------
                           (  679,221)  2,547,676  (2,827,954)   509,784

 Basic and diluted Net
  Income (Loss) per share
   - continuing operations     ($.03)     ($.03)      ($.13)     ($.09)
   - discontinued operations      --       $.18          --       $.13
                               -----     ------      ------    -------
Net Income (Loss)
   per common share            ($.03)     $ .15       ($.13)      $.04

  Weighted average common
   shares outstanding     25,008,134 16,555,424  21,856,972 14,401,093

     See Accompanying Notes to Consolidated Financial Statements







                                   4(a)
<PAGE>

                       DCI Telecommunications, Inc.
                  Consolidated Statements of Cash Flows
                               (unaudited)

                                               Nine Months Ended
                                                  December 31,
                                               1998          1997
Cash flows from (used in) operating activities:
Net loss from continuing operations       ($1,925,103)     ($991,473)
Adjustment to reconcile net loss from
 continuing operations to net cash from
 (used in) operating activities:
        Depreciation and amortization         422,160         56,168
        Stock issued for services                  --            800
        Minority interest                    (148,505)            --

   Changes in assets and liabilities:
     (Increase) Decrease in:
        Restricted cash                        60,246             --
        Accounts receivable                (2,538,988)      (341,984)
        Inventory                          (  435,982)        55,715
        Deposits                             (135,621)         2,894
        Prepaid expenses and deferred costs  (370,294)      (142,608)

     Increase (Decrease) in:
        Accounts payable and
          accrued expenses                    938,984        311,338
        Deferred revenue                      208,437             --
                                             --------       --------
           Total Adjustments               (1,999,563)      ( 57,677)
                                             --------       --------
Net cash (used in) operating activities    (3,924,666)    (1,049,150)
                                             --------       --------

Cash flows from (used in) investing activities:
        Additions to fixed assets            (565,872)       (95,069)
        Investment in CardCall International       --       (110,000)
        Cash acquired with acquisition      1,170,486             --
                                             --------       --------
Net cash from (used in) investing
    activities                                604,614       (205,069)
                                             --------       --------

Cash flows from (used in) financing activities:
        Proceeds from stock
          options exercised                   690,527        105,094
        Purchase of treasury stock         (2,378,379)       (85,000)
        Due to joint venture                  644,451             --
        Payment of notes payable           (4,938,942)      (279,279)
        Increase in long term debt             93,226        273,151


                                    5
<PAGE>

        Proceeds from sale of
          preferred stock                   2,750,000      2,250,000
        Common stock dividend                (203,962)            --
        Advances from shareholders           (375,870)      (471,404)
        Sale of equity securities           8,124,761             --
                                             --------       --------
Net cash from financing activities          4,405,812      1,792,562
                                             --------       --------

Net cash used in discontinued operations           --       (671,390)

Net increase (decrease) in cash             1,085,400       (133,047)

Cash, beginning of year                     1,026,869        764,559
                                           ----------      ---------
Cash, end of period                        $2,112,629     $  631,512


                                              Nine Months Ended
                                                 December 31,
                                             1998           1997

Supplemental disclosures of cash flow information:

Cash paid for interest                      $83,000       $  43,000

Non cash investing and financing transactions:
     Acquisitions by stock issuance:
        CardCall International                   --      $7,008,952
        CyberFax                                 --      $1,033,975
     Preferred stock dividends             $750,000      $  369,376
     Stock issued for liabilities                --       $  40,000


     See Accompanying Notes to Consolidated Financial Statements

                                  5(a)

<PAGE>

DCI Telecommunications, Inc.
Notes to Unaudited Financial Statements December 31, 1998

NOTE 1.
-------

The  accompanying  unaudited financial statements have been  prepared  in
accordance  with  generally accepted accounting  principles  for  interim
financial   information  and  with  the  provisions  of  Regulation   SB.
Accordingly,  they  do not include all of the information  and  footnotes
required   by  generally  accepted  accounting  principles  for  complete
financial  statements.  In  the opinion of  management,  all  adjustments
(consisting of normal recurring adjustments) considered necessary  for  a
fair  presentation have been included. Certain restatements of prior year
numbers have been made to conform to the current years presentations,  to
report  the  acquisition of Edge Communications, Inc.  as  a  pooling  of
interest,  and to revise the effective acquisition dates of Muller  Media
and  CardCall  International Holdings to June 9, 1998 and May  29,  1997,
respectively.

The consolidated financial statements include the accounts of the Company
and  its  wholly  and majority owned subsidiaries. Material  intercompany
balances and transactions have been eliminated in consolidation.

The  results  of operations for the periods presented are not necessarily
indicative  of  the  results  to be expected  for  the  full  year.   The
accompanying financial statements should be read in conjunction with  the
Company's form 10-KSB/A filed for the year ended March 31, 1998.

Income (loss) per share was computed using the weighted average number of
common shares outstanding.

Note 2.  Acquisitions

CardCall International Holdings, Inc.
-------------------------------------

On  March  31,  1997,  DCI,  entered into  an  agreement  with   CardCall
International  Holdings,  Inc.  (CardCall), a  Delaware  corporation,  to
purchase  all  its  outstanding  common  stock  (8,238,125  shares)   and
warrants.  CardCall's board of directors  had approved the  agreement  on
March 29,1997, subject to shareholder approval.

CardCall  is  the parent company of CardCaller Canada, Inc.,  a  Canadian
corporation, and CardCall (UK) Limited, incorporated under  the  laws  of
the  United Kingdom. CardCall is in the business of designing, developing
and marketing, through distributors, prepaid phone cards that provide the
cardholder  access to long distance service through switching facilities.
DCI had previously invested $1,500,000 in CardCall, for which it received
$1,200,000 in notes payable 120 days from demand. The remaining  $300,000
did  not  have any stipulated repayment terms.  The Company  raised  this
money  through the issuance of DCI convertible preferred stock to certain
shareholders of CardCall.


                                    6

<PAGE>

By   May   29,1997,  the  shareholders  of  CardCall  had  approved   the
transaction. For each 100 shares of common stock of CardCall  held  by  a
shareholder, DCI will issue a warrant to purchase nine shares  of  common
stock  for  $4.00 per share on or before February 28, 2001. In  addition,
each  shareholder of CardCall may acquire 85 shares of DCI  common  stock
under  a subscription agreement, for each 100 shares of CardCall held  by
such  shareholder,  at  a  purchase price of $.20  per  share.  7,002,406
options to purchase DCI stock at $.20 per share were granted as a  result
of  this  transaction.   As  of September 30, 1998,  4,860,777  of  these
options  for shares of DCI stock had been exercised. Such options  expire
on  April 30, 2002. In accordance with the agreement, shares of DCI stock
received  from the exercise of options have restrictions as to when  they
can be sold ranging from September 1, 1997 to December 1, 1998.

The  transaction  was  initially recorded under the  purchase  method  of
accounting, effective April 1, 1997, however the Securities and  Exchange
Commission has ruled that the effective acquisition date is May 29, 1997.
The  total  purchase  price includes the $1,610,000 in  cash,  $2,545,000
assigned  value for the stock options, and assumption of net  liabilities
of  $2,853,000.  Goodwill  was  recorded  at  $7,008,000.  The  financial
statements  include the results of operations of CardCall since  May  29,
1997,  the effective date of acquisition. The goodwill is being amortized
over  20  years. The stock offering agreement called for the exchange  of
shares  by  DCI in the acquisition of CardCall. A condition in the  offer
was  that  the  number of DCI shares to be issued would be reduced  on  a
share  for share basis by the difference between 545, 455 and the  actual
number  of  shares  issued  in  the Series C preferred  stock  conversion
described  in  Note 10 to the financial statements. There  was  no  value
assigned  to the common stock that would be distributed per the  offering
agreement  as  these shares were not issued due to the number  of  common
shares  issued  in  the conversion of  the series C  preferred  stock  to
common stock. There was no value assigned to the common stock warrants as
the  exercise price of $4 was greater than the market value of the common
stock. The Company valued the options issued at $.30 per option ($.50-.20
exercise price). The difference ($1.60) between the exercise price,  $.20
and  the  stock valuation price of $1.80 was reduced by $1.30 for  a  50%
dilution factor, a 10% factor because the shares issued upon exercise  of
the options would be restricted and a 10% factor based upon the time from
when the shares could be exercised and tradable.
 
Edge Communications, Inc.
-------------------------

On  April 30,1998 the Company issued 4,385,715 shares of common stock for
all   of  the  outstanding  shares  of  Edge  Communications,  Inc.   The
acquisition has been accounted for as a pooling of interests, and

                                    7
<PAGE>

accordingly, the accompanying financial information has been restated  to
include the accounts of Edge for all periods presented. Net sales and net
(loss)  earnings of the separate companies prior to date  of  acquisition
are as follows:
                                                            Three Months
                        April 1, 1998    Nine Months Ended      Ended
                            through         December 31,     December 31,
                        April 30, 1998         1997             1997
                        --------------    ---------------     ---------
Net Sales:
DCI                         $  737,836         $3,185,484    $  932,182
Edge Communications, Inc.    1,092,500          4,835,211     1,241,455
                            ----------         ----------    ----------
Combined                    $1,830,336         $8,020,695    $2,173,637
                             =========         ==========    ==========

Net(Loss) From Continuing Operations:
DCI                          ($301,528)       ($1,023,211)    (606,172)
Edge Communications, Inc.      (56,492)            31,738      337,830
                            ----------         ----------    ---------
Combined                     ($358,020)         ($991,473)   ($268,342)
                            ==========         ==========    =========

Muller Media, Inc.
------------------

On  November  26, 1996, DCI entered into a stock purchase agreement  with
Muller  Media, Inc. (Muller), a New York corporation, to acquire 100%  of
the  outstanding  common  stock of Muller in a stock-for-stock  purchase,
with  DCI  exchanging 1,200,000 shares of common stock  for  all  of  the
shares  of  Muller capital stock. The DCI stock was valued at  $2.50  per
share  ($3 million in total) and is included in outstanding common  stock
for the years ending March 31, 1998 and 1997.

At  the  closing, the shares of Muller were transferred to DCI,  and  DCI
shares  were  issued to Muller shareholders and then placed  with  escrow
agents.   This was done to facilitate a "put" option which could only  be
exercised by Muller subsequent to the closing under the put option.   DCI
must  repurchase the shares for $3,000,000 if Muller exercised the  "put"
option,  which  commenced on the earlier of 120 days  from  December  27,
1996,  unless an extension was requested by DCI, which Muller  could  not
unreasonably withhold, or 14 days after DCI had received an aggregate  of
$3,000,000 in net proceeds from the sale of its capital stock. Extensions
were  granted  by Muller through June 3, 1998.  The selling  stockholders
had  an option to keep DCI stock or accept up to $3,000,000 in cash  from
DCI.

DCI  repurchased 400,000 shares of such common stock in March,  1998  for
$1,000,000  and completed the repurchase from the exercising  parties  on
June  9,  1998  upon payment of an additional $2,000,000.  The  financial
statements include the results of operations since June 9, 1998.

                                    8

<PAGE>

The transaction was recorded under the purchase method of accounting. The
total  purchase price includes $3,000,000 in cash, Goodwill was  recorded
at $1,634,436. The financial statements include the results of operations
of  Muller  since June 9, 1998, the date of acquisition. The goodwill  is
being amortized over 20 years.
                                    
NOTE 3.  Common and Preferred Stock
-----------------------------------

In  April, 1998 the Company issued $3,000,000 of Series F 8% non  -voting
convertible preferred shares. The shares are convertible to common  stock
90  days  from the issue date at the lesser of 75% of the average closing
bid price of the common stock for the ten days prior to conversion or $4.
The  securities must be converted into common shares within two years  of
the  issue  date.  In  connection  with  this  offering  50,000  warrants
exercisable at  $1.56 for a period of five years from the issue date were
granted to these preferred shareholders and 50,000 warrants, at the  same
terms,  were  granted  to  certain individuals as  finder  fees  for  the
placement of the preferred shares with investors.

During  the nine months ended December 31, 1998, the holders of  $687,500
of  preferred shares of Series F Convertible Preferred Stock  and  deemed
dividends of $171,750 were converted to 1,110,904 common shares.

During  the nine months ended December 31, 1998, the holders of  $610,050
of  preferred shares of Series E Convertible Preferred Stock  and  deemed
dividends of $163,785 were converted to 740,670 common shares.

During  the nine months ended December 31, 1998, the holders of  $305,000
of   preferred  shares  of  Series  A  Convertible  Preferred  Stock  and
dividends of $177,717 were converted to 321,811 common shares.

In  addition, options to purchase 3,988,543 common shares were  exercised
from which the Company received $690,528.

NOTE 4.  PhoneLine CardCall International
-----------------------------------------

On March 31, 1998 the Company and DataWave Systems Inc. (DataWave) formed
a  Canadian  company, PhoneLine CardCall International ("PhoneLine")  for
the  marketing,  sale  and  service of prepaid  long  distance  telephone
calling cards in Canada. DataWave and CardCaller Canada, Inc. contributed
fixed  assets,  Canadian business, and certain liabilities to  PhoneLine.
DCI owns 60% and DataWave 40% of the company.

The  Company's  consolidated financial statements  include  100%  of  the
assets,  liabilities and operations of PhoneLine. The ownership  interest
of  DataWave  is  recorded  as a minority interest  in  the  accompanying
financial statements.

NOTE 5. Wavetech International Merger
-------------------------------------
                                    
On November 6, 1998, the Company entered into a merger agreement with

                                  9

<PAGE>

Wavetech International. The agreement calls for the exchange of common
stock on a one share for one share basis, with Wavetech being the
surviving company, which will be renamed DCI Telecommunications. It will
be accounted for as a reverse merger. Wavetech is listed on the NASDAQ
Small Cap market (ITEL).

The merger is subject to a Form 4 declared effective by the Securities
and Exchange Commission, as well as a majority vote of the shareholders
of both corporations. Wavetech is a facilities based telecommunications
company and has approximately 2.8 million shares outstanding.

NOTE 6. IXC Communications Alliance
-----------------------------------

In December 1998, the Company formed an alliance with IXC Communications
Services, a public company listed on NASDAQ (IIXC). IXC received a 13%
position in the Company (4,250,000 shares) and DCI received a Master
Service Agreement fixing rates and various leases for a five year period.
DCI may lease dedicated lines in England, Spain, Italy and other
countries, and will be installing switches in IXC facilities in the U.S.
and abroad.

The Master Service Agreement has been capitalized at $15,671,875 and will
be amortized over five years.

                                    10

<PAGE>

NOTE 7. Pro Forma Financial Information
---------------------------------------------------

The  following  table  summarizes  the unaudited  pro  forma  results  of
operations of the Company for the nine months ended December 31, 1998 and
1997,  assuming  the  acquisitions of CardCall,  CyberFax,  Muller,  PEL,
Travel Source, Edge Communications, Wavetech International, Inc. and  the
joint  venture  had  occurred on April 1, 1997. The pro  forma  financial
information  presented is not necessarily indicative of  the  results  of
operations that would have occurred had the acquisitions taken  place  on
April 1, 1997 or of future results of operations.

                              Nine Months Ending     Three Months Ending
                                 December 31,           December 31,
                             1998          1997        1998       1997
                             ----          ----        ----       ----

Net sales              $28,432,534    $11,297,635 $11,096,683 $3,043,006
                       -----------     ---------- -----------  ---------
Income (loss):
 Continuing operations $(2,678,209)  $ (2,289,799)  $(869,634) $(823,809)
 Discontinued operations        --      1,870,633          --  2,980,856
                      ------------   ------------  -----------  ---------
Net income (loss) before
 preferred dividends   $(2,678,209)   $(  419,166) $(869,634)$ 2,157,047
                          ========       ========  ========= ===========
Net income (loss) per share:
  Continuing operations  $   (.11)     $     (.11)     $(.04)      $(.04)
  Discontinued operations      --             .09         --         .16
                         --------     -----------  ---------  ----------
     Net income (loss)    $  (.11)      $    (.02)     $(.04)      $ .12
                         ========       =========  =========  ==========
Weighted average shares
  outstanding          24,466,441      20,076,624 24,386,441  18,746,856
                         ========        ======== ==========  ==========
                                    
                                   11
<PAGE>

               Management's Discussion and Analysis of
              Financial Condition and Results of Operations

Overview
--------

The   following   discussion  and  analysis  provides  information   that
management believes is relevant to an assessment and understanding of DCI
Telecommunications,   Inc.  and  its  subsidiaries   (collectively,   the
Company), consolidated results of operations and financial condition  for
the nine months ended December 31, 1998. The discussion should be read in
conjunction  with  the  Company's consolidated financial  statements  and
accompanying notes.

The Company, since its recent acquisitions, operates predominantly in the
telecommunications  industry  providing a broad  range  of  communication
service.  The  Company's  services include long distance,  prepaid  phone
cards, motion picture distribution, a travel agency, as well as real-time
fax  over  the  Internet. Through continued investments and  fiscal  1998
business acquisitions, the Company has expanded its business into rapidly
developing markets.

Recent Acquisitions and Dispositions
------------------------------------

In  the  quarter  ended  June  30, 1997, the  Company  acquired  CardCall
International   and   CyberFax.  CardCall  International,   through   its
subsidiaries CardCall UK and CardCaller Canada, sold prepaid phone cards.
In  the  third  quarter of fiscal 1998, the Company sold its  phone  card
distribution  contract in the U.K. for $9,000,000. Due to  a  non-compete
clause  in  the  sale agreement, CardCall UK discontinued its  operations
after  the  sale.  During  fiscal  1998  the  Company  also  discontinued
operations  of  Privilege  Enterprises Limited  and  its  Alpha  Products
division due to a lack of profitability.

On  March  31, 1998 the Company and DataWave Systems, Inc. formed  a  new
company,   PhoneLine   CardCall  International  ("PhoneLine")   for   the
marketing,  sale  and  service of prepaid long distance  phone  cards  in
Canada.  The  accompanying financial statements include  the  results  of
PhoneLine for the nine months ending December 31, 1998. This new  company
joins  together  two  of the larger prepaid phone  card  distributors  in
Canada,  and the Company is expecting economies of scale by facility  and
staff  reductions, as well as better long distance rates  with  carriers.
DCI owns 60% and DataWave 40% of PhoneLine.

During  the  quarter  ended  June  30, 1998  the  Company  acquired  Edge
Communications,  Inc.  This acquisition gave  the  Company  a  meaningful
entrance  into  the  U.S. prepaid phone card market. Edge  had  sales  of
$8,780,000  for  the  twelve months ended March 31,  1998  and  has  been
sustaining  rapid growth in the last several months. Edge  was  accounted
for as a pooling of interests.



                                   12
<PAGE>

Liquidity and Capital Resources
-------------------------------

At  December 31, 1998 the Company had unrestricted cash of $2,112,629 and
$42,000 of marketable securities. During the quarter ended June 30, 1998,
the Company sold SmarTalk stock realizing net proceeds of $8,125,000. The
Company repaid its loans of $4,939,000 which it had borrowed against  its
position in SmarTalk stock.

Also,  on  June 9, 1998 the former shareholders of Muller Media exercised
their  put  options  to  receive $2,000,000  in  cash,  and  the  Company
repurchased  800,000  shares of its common stock.  The  Company  received
$1,170,000 of Muller Media's cash with the acquisition.

Other  sources  of cash during the first nine months included  $2,750,000
from the sale of preferred stock, and $691,000 from the exercise of stock
options.

Year 2000 Issues
----------------

The  Year  2000  issue is the result of computer programs  being  written
using two digits rather than four to define the applicable year. In other
words,  date-sensitive software may recognize a date using  "00"  as  the
year 1900 rather than the Year 2000. This could result in system failures
or  miscalculations causing disruptions of operations,  including,  among
others,  a temporary inability to process transactions, send invoices  or
engage in similar normal business activities.

Company's State of Readiness

One   of  the  Company's  critical  internal  areas  is  its  information
technology   systems,  including  general  ledger,  accounts  receivable,
payable,  inventory  and  related  packages  for  DCI  and  each  of  its
subsidiaries.  In  this  regard, the parent  company  has  installed  new
software  that  is  Year 2000 compliant and plans  to  install  the  same
systems in each of its subsidiaries prior to September 30, 1999.

All  of  the  Company  owned switches, used to direct  and  monitor  long
distance  telephone traffic, are currently Year 2000 compliant  according
to  the  manufacturer.  Other  less critical  internal  systems  such  as
telephone and voice mail systems are in the process of being evaluated.

The  Company also has relationships with outside third parties that could
impact its business. The most important are the carriers that process and
monitor the Company's long distance and prepaid card phone calls. All the
carriers  expect to be Year 2000 compliant and are in various  stages  of
readiness.  The  Company's travel business is partially dependent  on  an
outside  reservation  system  representing  many  airlines.  This  system
expects  to  be  compliant by the end of 1998, and  accepting  year  2000
bookings by January 4, 1999.

                                 13
<PAGE>

Costs

The  Company  is addressing Year 2000 issues in house and at the  present
time  the  only  other costs involve the purchase of  financial  software
packages. Total costs are estimated at $110,000. Costs incurred  to  date
are approximately $23,000.

Risks

The Company believes that its most reasonable likely worst case Year 2000
scenario  would  be  if  any of its third party long  distance  telephone
carriers  were  unable to properly monitor or admit  authorized  personal
identification  numbered prepaid phone card calls through their  systems.
The  time frame for the carrier to fix the problem, or the ability of the
Company to recall prepaid phone cards and switch to another carrier  with
competitive rates, could cause a material business interruption.

The  risks  associated  with  the  failure  of  the  Company's  financial
software,  or third party payroll preparation and stock transfer  system,
are  considered  less  severe in that the Company believes  switching  to
other vendors or using other methods would be relatively easy.

The risk of failure of the third party airline reservation system is that
the  Company would have to secure its travel arrangements by methods that
would  be  more cumbersome and time consuming than the current  automated
system.

Contingency Plan

The  Company  is still evaluating whether it will develop  a  contingency
plan for any of the risks noted above. A decision is expected by June 30,
1999.

Consolidated Results of Operations
----------------------------------

                                           Nine Months Ended
                                             December 31,
                                            1998         1997
                                            ----         ----
Net Sales                              $28,106,330  $ 8,020,695
---------

Net  sales increased $20,085,635 in the 1998 nine months compared to  the
comparable  1997  period.  Edge sales of prepaid  phone  cards  increased
$15,801,511  due to rapid growth and new contracts. Muller  Media,  which
was  acquired as of June 9, 1998, accounted for approximately  $2,295,000
of  the  increase.  The  prepaid phone card sales of  PhoneLine  in  1998
exceeded CardCaller Canada 1997 sales by $1,270,000. Travel Source  sales
were up $137,000 in 1998, and European sales were up $534,000.

                                  14

<PAGE>
                                           1998        1997
                                           ----        ----
Cost of Sales                          $25,160,848  $6,967,821
-------------

Cost  of  sales in 1998 exceeded 1997 by approximately $18,193,000.  Edge
cost  of  sales  associated with higher sales  noted  above  resulted  in
$14,776,000 of the increase. Costs associated with the recently  acquired
Muller  Media  accounted for $1,608,000 of the increase.  PhoneLine  1998
costs  exceeded  CardCaller  Canada by  $1,049,000.  Cost  of  sales  for
European  operations were up $469,000 on increased sales.  Travel  Source
costs increased $100,000 on increased sales.

                                               1998        1997
                                             --------    --------
Selling, General & Administration Expense  $2,009,008    $846,252
-----------------------------------------

Selling,  general and administrative increased $1,163,000 over  the  1997
period.  CyberFax  costs  increased $75,000  principally  due  to  higher
research  and  development costs as its product  got  closer  to  market.
Expenses  of  the  newly  acquired Muller  contributed  $182,000  to  the
increase.  Increased operations in Europe added $135,000 to the increase.
SG&A  expenses  of  PhoneLine, a much larger  operation  than  CardCaller
Canada  in  1997,  accounted for $406,000 increased costs.  In  addition,
CardCaller  Canada was only owned for seven months of  the  1997  period.
SG&A expenses of Edge increased $283,000 due to large growth.

                                          1998        1997
                                          ----        ----
Salaries and Compensation             $1,879,811  $ 755,924
-------------------------

Salaries increased $1,123,887 over 1997 levels. Salaries at the corporate
level  increase  $257,000 due to wage increases and additional  personnel
added  due to growth. The acquisition of Muller accounts for $373,000  of
the  increase.  Salaries in Europe have increased $185,000 as  operations
have  now increased. Salaries at Edge have increased $162,000 principally
due  to  expanded operations. PhoneLine nine month salaries were  $90,000
higher than CardCallers 1997 seven months.

                                          1998       1997
                                          ----       ----
Amortization and Depreciation          $422,160     $56,168
-----------------------------

The $56,168 in 1997 represents depreciation expense for continuing
operations. Included in 1998 is depreciation of $206,910, amortization of
Travel Source goodwill of $3,750, Muller goodwill of $24,000, CyberFax
goodwill of $37,500 and CardCaller Canada goodwill of $150,000.

                                  15
<PAGE>

                                         1998        1997
                                         ----        ----
Professional and Consulting Fees      $761,218     $346,866
--------------------------------

Professional  fees increased $414,000 over the 1997 period.  Professional
fees at corporate were $278,000 higher than 1997 charges principally  due
to outside legal charges as the Company expands and additional accounting
charges for restatements. Edge professional fees also rose $83,000 due to
its  dramatic  growth. Legal and accounting fees of  the  newly  acquired
Muller  and increased CyberFax fees principally account for the remaining
difference.

                                        1998        1997
                                         ----       ----
Interest Expense                      ($83,162)   ($43,413)
Interest Income                       $136,269     $ 4,276
---------------                       --------     -------
Net Interest                           $53,107    ($39,137)

Interest  expense  increased in 1998 principally due to  corporate  short
term borrowing earlier in the year.

The $132,000 increase in interest income is a result of $38,000 earned by
DCI  on  short term investments plus $97,000 of interest earned on short-
term investments of the newly acquired Muller Media.

                                           1998       1997
                                           ----       ----
Discontinued operations - Computer Board     --    ($559,840)
----------------------- - Prepaid Phone
                            Card - UK        --    ($647,948)
                        - Gain on Phone
                           Card Contract     --   $3,078,421

The  computer board loss in 1997 reflects the discontinuance of the Alpha
Products  division at September 30, 1997. Included in the  loss  was  the
write-off  of  unamortized customer base totaling $493,000.  The  prepaid
phone card discontinued loss was due to a non-compete clause in the  1997
distribution contract sale to Smartalk for $9,000,000, which necessitated
the shut-down of the UK operations.

                                           1998       1997
                                           ----       ----
Preferred Dividends                     $902,851    $369,376
-------------------

Preferred  dividends increased $533,475 in 1998. The increase is  related
to  the  presumed  incremental yield the investor  may  derive  from  the
discounted  conversion  rate of preferred stock  issued  by  the  Company
during the year.

                                    16
<PAGE>

                           PART II
                      OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.
          Not applicable.

ITEM 2.  CHANGES IN SECURITIES.
          Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.
          Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
          Not applicable.

ITEM 5.  OTHER INFORMATION.
          Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
          Page 18







                                    17
<PAGE>

ITEM 6 - Exhibits and Reports on Form 8K

On November 16, 1998, the Company filed a Form 8K which included a merger
agreement  between  the  Company and Wavetech International,  Inc.  Dated
November 6, 1998.

On  January 14, 1999, the Company filed a Form 8K which involved a Master
Service Agreement with IXC Communications Services, Inc.















                                   18
<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.

                                      DCI TELECOMMUNICATIONS, INC.
                                              (Registrant)


Dated: February 17, 1999                By: Joseph J. Murphy
                                        ----------------
                                        Joseph J. Murphy
                                        President

                                        By: Russell B. Hintz
                                        ----------------
                                        Russell B. Hintz
                                        Chief Financial Officer




                                   19