UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                      For the quarter 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 No. 333-05017

                           UIH Australia/Pacific, Inc.
             (Exact name of Registrant as specified in its charter)

       State of Colorado                                         84-1341958
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

    4643 South Ulster Street, #1300
            Denver, Colorado                                       80237
(Address of principal executive offices)                        (Zip code)

       Registrant's telephone number, including area code: (303) 770-4001







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 and (2) has been subject to such filing requirements for
the past 90 days. Yes  X   No 
                      ---     ---

The Company has no  publicly-traded  shares of capital stock.  As of May 7, 1999
the Company had 17,810,249 shares of common stock outstanding.



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<CAPTION>
                                              UIH AUSTRALIA/PACIFIC, INC.
                                                  TABLE OF CONTENTS


                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------
                                            PART I - FINANCIAL INFORMATION
                                            ------------------------------


Item 1 - Financial Statements
------ 
     <S>                                                                                                          <C>
     Condensed Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 (Unaudited).............     2

     Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1999
         and 1998 (Unaudited).................................................................................     3

     Condensed Consolidated Statement of Stockholder's Deficit for the Three Months Ended March 31, 1999
         (Unaudited)..........................................................................................     4

     Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1999 and
         1998 (Unaudited)....................................................................................      5

     Notes to Condensed Consolidated Financial Statements (Unaudited)........................................      6


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

Item 3 - Quantitative and Qualitative Disclosures about Market Risk..........................................     24
------                                                             

                                            PART II - OTHER INFORMATION
                                            ---------------------------


Item 6 - Exhibits and Reports on Form 8-K....................................................................     27
------                                   
</TABLE>

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<TABLE>
<CAPTION>
                                                   UIH AUSTRALIA/PACIFIC, INC.
                                              CONDENSED CONSOLIDATED BALANCE SHEETS
                                      (Stated in thousands, except share and per share amounts)
                                                          (Unaudited)

                                                                                                         As of         As of
                                                                                                       March 31,    December 31,
                                                                                                         1999          1998
                                                                                                       ---------    ------------
<S>                                                                                                   <C>            <C>
ASSETS
Current assets
  Cash and cash equivalents....................................................................       $    172       $    181
  Restricted cash..............................................................................             --             --
  Short-term liquid investments................................................................            769            763
  Subscriber receivables, net..................................................................          6,999          6,322
  Related party receivables....................................................................          1,400            746
  Other receivables............................................................................            934            736
  Prepaids and other current assets............................................................          3,671          4,615
                                                                                                      --------       --------
         Total current assets..................................................................         13,945         13,363
Investments in and advances to affiliated companies, accounted for under
 the equity method, net........................................................................         27,328         24,597
Property, plant and equipment, net of accumulated depreciation of $175,052
 and $147,511, respectively....................................................................        125,933        122,968
Goodwill and other intangible assets, net of accumulated amortizaton of $19,520
 and $17,512, respectively.....................................................................         42,618         42,559
Deferred financing costs, net of accumulated amortization of $3,867 and $3,237,
 respectively..................................................................................         11,208         11,675
Other non-current assets, net..................................................................            814            870
                                                                                                      --------       --------
         Total assets..........................................................................       $221,846       $216,032
                                                                                                      ========       ========

LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
  Accounts payable.............................................................................       $ 12,187       $  5,426
  Accrued liabilities..........................................................................         14,940         28,522
  Construction payables........................................................................          1,972          1,076
  Current portion of due to parent.............................................................          4,712          3,665
  Short-term debt..............................................................................         57,088         36,738
  Current portion of other long-term debt......................................................          2,015          2,189
                                                                                                      --------       --------
        Total current liabilities..............................................................         92,914         77,616

Due to parent..................................................................................          8,233          6,578
Senior discount notes..........................................................................        368,816        356,640
Other long-term debt...........................................................................         70,825         68,086
Other long-term liabilities....................................................................          1,945          1,741
                                                                                                      --------       --------
        Total liabilities......................................................................        542,733        510,661
                                                                                                      --------       --------
Stockholder's deficit
  Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued and outstanding...             --             --
  Common stock, $0.01 par value, 30,000,000 shares authorized, 17,810,249 shares
   issued and outstanding......................................................................            178            178
  Additional paid-in capital...................................................................        235,643        215,624
  Accumulated deficit..........................................................................       (528,775)      (481,240)
  Other cumulative comprehensive loss..........................................................        (27,933)       (29,191)
                                                                                                      --------       --------
        Total stockholder's deficit............................................................       (320,887)      (294,629)
                                                                                                      --------       --------
        Total liabilities and stockholder's deficit............................................       $221,846       $216,032
                                                                                                      ========       ========

              The  accompanying  notes are an integral  part of these  condensed consolidated financial statements.
</TABLE>
                                                              2


<PAGE>
<TABLE>
<CAPTION>
                                                   UIH AUSTRALIA/PACIFIC, INC.
                                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                      (Stated in thousands, except share and per share amounts)
                                                          (Unaudited)

                                                                                                         For the Three Months Ended
                                                                                                                  March 31,
                                                                                                        ----------------------------
                                                                                                            1999             1998
                                                                                                        -----------      -----------
<S>                                                                                                     <C>              <C>
Revenue..........................................................................................       $   30,432       $   20,453

System operating expense, including related party expense of $1,393 and $973, respectively.......          (23,233)         (12,323)
System selling, general and administrative expense...............................................          (10,653)         (10,372)
Regional overhead expense........................................................................             (292)          (1,289)
Corporate general and administrative expense, including management fee to related party
 of $219 and $203, respectively..................................................................             (737)            (792)
Depreciation and amortization....................................................................          (24,461)         (27,409)
                                                                                                        ----------       ----------
        Net operating loss.......................................................................          (28,944)         (31,732)

Interest income..................................................................................               33              100
Interest expense, including related party expense of $0 and $317,  respectively..................          (14,922)         (13,116)
Other expense, net...............................................................................             (330)            (296)
                                                                                                        ----------       ----------
        Net loss before other items..............................................................          (44,163)         (45,044)

Share in results of affiliated companies, net....................................................           (3,372)          (2,289)
                                                                                                        ----------       ----------
        Net loss.................................................................................       $  (47,535)      $  (47,333)
                                                                                                        ==========       ==========
Basic and diluted loss per common share..........................................................       $    (2.67)      $    (3.41)
                                                                                                        ==========       ==========
Weighted-average number of common shares outstanding.............................................       17,810,249       13,864,941
                                                                                                        ==========       ==========

              The  accompanying  notes are an integral  part of these  condensed consolidated financial statements.
</TABLE>


                                                              3


<PAGE>
<TABLE>
<CAPTION>
                                                  UIH AUSTRALIA/PACIFIC, INC.
                                  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIT
                                        (Stated in thousands, except share amounts)
                                                          (Unaudited)
                                                                                                
                                                                                           Other        
                                             Common Stock      Additional                Cumulative     
                                         --------------------   Paid-In    Accumulated  Comprehensive   
                                           Shares      Amount   Capital      Deficit       Loss(1)         Total
                                         ----------  --------  ----------  -----------  ---------------  ---------
<S>                                      <C>           <C>      <C>         <C>           <C>            <C>
Balances, January 1, 1999..............  17,810,249    $178     $215,624    $(481,240)    $(29,191)      $(294,629)

Cash contributions from parent.........          --      --       19,230           --           --          19,230
Non-cash contributions from parent.....          --      --          789           --           --             789
Net loss...............................          --      --           --      (47,535)          --         (47,535)
Change in cumulative translation
 adjustments...........................          --      --           --           --        1,258           1,258
                                                                                                         --------- 
Total comprehensive loss...............                                                                     46,277
                                         ----------    ----     --------    ---------     --------       ---------
Balances, March 31, 1999...............  17,810,249    $178     $235,643    $(528,775)    $(27,933)      $(320,887)
                                         ==========    ====     ========    =========     ========       ========= 

(1)  As of March  31,  1999,  Other  Cumulative  Comprehensive  Loss  represents
     foreign currency translation adjustments.

               The  accompanying  notes are an integral  part of this  condensed consolidated financial statement.
</TABLE>


                                                              4




<PAGE>
<TABLE>
<CAPTION>
                                                  UIH AUSTRALIA/PACIFIC, INC.
                                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                                     (Stated in thousands)
                                                          (Unaudited)

                                                                                                     For the Three Months Ended
                                                                                                              March 31,
                                                                                                -----------------------------------
                                                                                                   1999                      1998
                                                                                                ---------                 ---------
<S>                                                                                             <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................................................       $(47,535)                 $(47,333)
Adjustments to reconcile net loss to net cash flows from operating activities:
  Depreciation and amortization..........................................................         24,461                    27,409
  Share in results of affiliated companies, net..........................................          1,777                     2,289
  Allocation of expense accounted for as capital contributions by parent.................            789                     1,774
  Accretion of interest on senior notes and amortization of deferred financing costs.....         12,731                    11,695
  Increase in subscriber receivables.....................................................           (447)                     (140)
  (Increase) decrease in related party receivables.......................................           (527)                      118
  Decrease (increase) in other assets....................................................          2,135                    (1,212)
  Increase in technical assistance agreement payables....................................          2,253                       991
  Decrease in accounts payable, accrued liabilities and other............................         (7,865)                      (86)
                                                                                                --------                  --------
Net cash flows from operating activities.................................................        (12,228)                   (4,495)
                                                                                                --------                  --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments................................................         (1,066)                       --
Sale of short-term liquid investments....................................................          1,060                    12,325
Investments in and advances to affiliated companies......................................         (5,177)                      (51)
Deconsolidation of New Zealand subsidiary................................................             --                    (9,881)
Purchase of property, plant and equipment................................................        (22,064)                  (11,442)
Increase in construction payables........................................................            852                       349
                                                                                                --------                  --------
Net cash flows from investing activities.................................................        (26,395)                   (8,700)
                                                                                                --------                  --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributions from parent...........................................................         19,230                     1,511
Borrowings of other debt.................................................................         18,941                        --
Borrowings (payments) on capital leases and other debt...................................             37                      (187)
                                                                                                --------                  --------
Net cash flows from financing activities.................................................         38,208                     1,324
                                                                                                --------                  --------
EFFECT OF EXCHANGE RATES ON CASH.........................................................            406                       448
                                                                                                --------                  --------
DECREASE IN CASH AND CASH EQUIVALENTS....................................................             (9)                  (11,423)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...........................................            181                    12,344
                                                                                                --------                  --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................................................       $    172                  $    921
                                                                                                ========                  ========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash received for interest...............................................................       $      8                  $    138
                                                                                                ========                  ========
Cash paid for interest...................................................................       $  2,311                  $  1,129
                                                                                                ========                  ========
DECONSOLIDATION OF NEW ZEALAND SUBSIDIARY:
Working capital..........................................................................       $     --                  $  4,159
Property, plant and equipment............................................................             --                   (26,484)
Goodwill and other intangible assets.....................................................             --                    (2,805)
Notes payable and other debt.............................................................             --                     3,833
Minority interest........................................................................             --                    11,416
                                                                                                --------                  --------
Total cash relinquished..................................................................       $     --                  $ (9,881)
                                                                                                ========                  ========

              The  accompanying  notes are an integral  part of these  condensed consolidated financial statements.
</TABLE>
                                                              5


<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF MARCH 31, 1999
   (Monetary amounts stated in thousands, except share and per share amounts)
                                   (Unaudited)

1.   ORGANIZATION AND NATURE OF OPERATIONS

UIH Australia/Pacific,  Inc. (the "Company"),  a wholly-owned  subsidiary of UIH
Asia/Pacific  Communications,  Inc.  ("UAP"),  which  is  in  turn  an  indirect
98.0%-owned  subsidiary of United  International  Holdings,  Inc.  ("UIH"),  was
formed on October  14,  1994,  for the  purpose  of  developing,  acquiring  and
managing foreign multi-channel television, programming and telephony operations.

The following chart presents a summary of the Company's significant  investments
in multi-channel  television,  programming and telephony  operations as of March
31, 1999.

          ***********************************************************
          *                                                         *
          *                           UIH                           *
          *                                                         * 
          ***********************************************************
                                       *
                                100%   *                 
          ***********************************************************
          *                                                         * 
          *      United International Properties, Inc. ("UIPI")     *
          *                                                         * 
          *********************************************************** 
                                       *
                                 98%   *                 
          ***********************************************************
          *                                                         *  
          *                           UAP                           *
          *                                                         *  
          *********************************************************** 
                                       *                 
                                100%   *
          ***********************************************************
          *                                                         *  
          *                       The Company                       *
          *                                                         *  
          *********************************************************** 
                                       *                 
                                       *                                  
          ***********************************************************
          *                                                         *
          *Australia:                                               * 
          * CTV Pty Limited and STV Pty Limited                     *
          *  (collectively, "Austar")                      100.0%   * 
          * United Wireless Pty Limited ("United                    * 
          *  Wireless")                                    100.0%   * 
          * XYZ Entertainment Pty Limited ("XYZ                     * 
          *  Entertainment")                                25.0%   * 
          *New Zealand:                                             * 
          * Saturn Communications Limited ("Saturn")        65.0%   * 
          *Tahiti:                                                  *
          * Telefenua S.A. ("Telefenua")                    90.0%   *
          *                                                         *
          ***********************************************************

LIQUIDITY AND CAPITAL RESOURCES

A  substantial  portion  of the  Company's  investments  to date  relate  to our
investment in Austar, which is comprised primarily of multi-channel  multi-point
distribution systems ("MMDS") and direct-to-home  ("DTH") satellite  operations.
Austar has essentially  completed the  construction and deployment of its entire
MMDS  network   infrastructure   and  has  incurred  certain  other  significant
expenditures,   such  as  Austar's  National  Customer  Service  Center,   which
contemplates  provision  of MMDS  and DTH  services  to a  substantially  larger
customer base than currently  exists.  In order to expand Austar's customer base
and build-out the Company's other projects,  the Company will need a significant
amount of  additional  capital.  As of March 31,  1999,  the  Company  had a net
working capital deficit of $74,257,  excluding related party payables of $4,712.
This working capital deficit  includes $57,088 of bank debt for Austar which was
refinanced as of April 28, 1999 (see Note 8).

                                       6
<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  ("GAAP")  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The  accompanying  interim  condensed   consolidated  financial  statements  are
unaudited and include the accounts of the Company and all subsidiaries where the
Company  exercises a controlling  financial  interest through the ownership of a
majority voting interest. The Company previously  consolidated the operations of
Saturn from July 1, 1996 through  September  30, 1998.  Prior to that time,  the
Company  accounted for its investment in Saturn under the equity method.  During
the fourth quarter of 1998, the Company  discontinued  consolidating the results
of  operations  of Saturn  effective  as of January 1, 1998 and  returned to the
equity  method of  accounting.  The change was made to comply with the consensus
guidance  of the  Emerging  Issues  Task Force  regarding  Issues  96-16  ("EITF
96-16"),  and related  rules of the SEC,  because the minority  shareholders  of
Saturn  have  participating  approval  or veto  rights  with  respect to certain
significant decisions of Saturn in the ordinary course of business. Accordingly,
the condensed  consolidated  statement of operations and statement of cash flows
for the  period  ended  March  31,  1998  have  been  adjusted  to  reflect  the
deconsolidation  of Saturn  effective  as of  January 1,  1998.  The  Company is
currently pursuing  alternatives which would allow for the future  consolidation
of Saturn. Effective October 1, 1998, the Company discontinued consolidating the
results  of  operations  of  Telefenua  due to an  other-than-temporary  loss of
control  and  began  using the  equity  method of  accounting.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS AND SHORT-TERM LIQUID INVESTMENTS

Cash and cash equivalents  include cash and investments with original maturities
of less than three months. Short-term liquid investments include certificates of
deposit,   commercial  paper  and  government  securities  which  have  original
maturities  greater  than three months but less than twelve  months.  Short-term
liquid investments are classified as available-for-sale and are reported at fair
market value.

INVESTMENTS  IN AND ADVANCES TO  AFFILIATED  COMPANIES,  ACCOUNTED FOR UNDER THE
EQUITY METHOD

For those investments in unconsolidated  subsidiaries and companies in which the
Company's voting interest is 20.0% to 50.0%, the Company's  investments are held
through a combination  of voting common stock,  preferred  stock,  debentures or
convertible debt and/or the Company exerts  significant  influence through board
representation  and  management  authority,  the equity  method of accounting is
used.  Under this  method,  the  investment,  originally  recorded  at cost,  is
adjusted to  recognize  the  Company's  proportionate  share of net  earnings or
losses of the  affiliate,  limited to the extent of the Company's  investment in
and advances to the  affiliate,  including any debt  guarantees or other funding
commitments.  The  Company's  proportionate  share of net  earnings or losses of
affiliates  includes  the  amortization  of the  excess  of its  cost  over  its
proportionate interest in each affiliate's net tangible assets.

PROPERTY, PLANT AND EQUIPMENT

Property,  plant  and  equipment  is stated  at cost.  Additions,  replacements,
installation costs and major improvements are capitalized,  and costs for normal
repair and  maintenance of property,  plant and equipment are charged to expense
as incurred. Upon disconnection of a MMDS or DTH subscriber,  the remaining book
value of the subscriber equipment, excluding converters which are recovered upon
disconnection,  and the unamortized portion of capitalized labor are written off
and accounted for as additional depreciation expense. Depreciation is calculated
using the straight-line method over the economic life of the asset.

The  economic  lives of property,  plant and  equipment  at  acquisition  are as
follows:

            Subscriber premises equipment and converters...     5-10 years
            MMDS/DTH distribution facilities...............     5-10 years
            Cable distribution networks....................     5-10 years
            Office equipment, furniture and fixtures.......     3-10 years
            Buildings and leasehold improvements...........     3-10 years
            Other..........................................     3-10 years

                                       7
<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

GOODWILL AND OTHER INTANGIBLE ASSETS

The excess of investments  in  consolidated  subsidiaries  over the net tangible
asset value at acquisition is amortized using the  straight-line  method over 15
years.  The acquisition of MMDS licenses has been recorded at fair market value,
and  amortization  expense is computed using the  straight-line  method over the
term of the license, up to a maximum of 15 years.

REVENUE RECOGNITION

Revenue is primarily  derived from the sale of  multi-channel  cable  television
services to subscribers and is recognized in the period the related services are
provided.  Initial  installation fees are recognized as revenue in the period in
which the installation  occurs, to the extent  installation fees are equal to or
less than direct selling costs, which are expensed.  To the extent  installation
fees exceed  direct  selling  costs,  the excess fees are deferred and amortized
over the average contract period.  All installation  fees and related costs with
respect to  reconnections  and  disconnections  are  recognized in the period in
which the reconnection or  disconnection  occurs because  reconnection  fees are
charged at a level equal to or less than related reconnection costs.

BASIC AND DILUTED LOSS PER SHARE

"Basic loss per share" is  determined  by dividing net loss  available to common
stockholders by the weighted-average  number of common shares outstanding during
each  period.  "Diluted  loss per share"  includes  the  effects of  potentially
issuable common stock, but only if dilutive. The Company's warrants are excluded
from the  Company's  diluted  loss per share  amounts  for all  years  presented
because their effect would be anti-dilutive

FOREIGN OPERATIONS AND FOREIGN EXCHANGE RATE RISK

The functional  currency for the Company's foreign  operations is the applicable
local currency for each  affiliate  company.  Assets and  liabilities of foreign
subsidiaries  are translated at exchange rates in effect at period-end,  and the
statements of operations are translated at the average exchange rates during the
period.  Exchange rate  fluctuations on translating  foreign currency  financial
statements  into U.S.  dollars  that  result in  unrealized  gains or losses are
referred to as translation  adjustments.  Cumulative translation adjustments are
recorded as a separate  component of  stockholder's  deficit and are included in
Other Cumulative Comprehensive Loss.

Transactions  denominated  in  currencies  other  than the  local  currency  are
recorded based on exchange rates at the time such transactions arise. Subsequent
changes in  exchange  rates  result in  transaction  gains and losses  which are
reflected in income as unrealized (based on period-end translations) or realized
upon settlement of the transactions.

Cash flows from the  Company's  operations in foreign  countries are  translated
based on their functional currencies. As a result, amounts related to assets and
liabilities reported in the consolidated statements of cash flows will not agree
to changes in the corresponding balances in the consolidated balance sheets. The
effects of exchange rate changes on cash balances held in foreign currencies are
reported as a separate line item below cash flows from financing activities.

Certain of the  Company's  foreign  operating  companies  have notes payable and
notes  receivable  that are  denominated  in a  currency  other  than  their own
functional currency.  In general, the Company and the operating companies do not
execute hedge  transactions to reduce the Company's exposure to foreign currency
exchange rate risks. Accordingly, the Company may experience economic loss and a
negative  impact on earnings and equity with respect to its holdings solely as a
result of foreign currency exchange rate fluctuations.


                                       8
<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NEW ACCOUNTING PRINCIPLES

The Statement of Position 98-5,  "Reporting on the Costs of Start-Up Activities"
("SOP 98-5") issued by the American  Institute of Certified  Public  Accountants
which defines start-up and organization costs which must be expensed as incurred
has been adopted.

The Financial  Accounting Standards Board recently issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities"   ("SFAS  133"),   which  requires  that  companies   recognize  all
derivatives  as either assets or liabilities in the balance sheet at fair value.
Under SFAS 133,  accounting  for  changes in fair market  value of a  derivative
depends on its intended use and  designation.  SFAS 133 is effective  for fiscal
years  beginning  after June 15, 1999.  The Company is currently  assessing  the
effect of this new standard.

3.   INVESTMENTS  IN AND ADVANCES TO AFFILIATED  COMPANIES,  ACCOUNTED FOR UNDER
     THE EQUITY METHOD
<TABLE>
<CAPTION>
                                                                 As of March 31, 1999
                           -------------------------------------------------------------------------------------------
                              Investments in          Cumulative Share        Cumulative
                              and Advances to           in Results of        Translation     Valuation
                           Affiliated Companies     Affiliated Companies     Adjustments      Allowance         Total
                           --------------------     --------------------     -----------      ----------       -------
     <S>                         <C>                     <C>                   <C>            <C>              <C> 
     Saturn...............       $55,990                 $(26,113)             $(3,550)       $    --          $26,327
     XYZ Entertainment....        19,363                  (18,473)                 111             --            1,001
     Telefenua............        18,599                  (14,215)                  --         (4,384)(1)           --
                                 -------                 --------              -------        -------          -------
          Total...........       $93,952                 $(58,801)             $(3,439)       $(4,384)         $27,328
                                 =======                 ========              =======        =======          =======


                                                               December 31, 1998
                           -------------------------------------------------------------------------------------------
                              Investments in          Cumulative Share        Cumulative
                              and Advances to           in Results of        Translation      Valuation
                           Affiliated Companies     Affiliated Companies     Adjustments      Allowance         Total
                           --------------------     --------------------     -----------      ---------        -------

     Saturn...............       $49,808                 $(23,138)             $(2,881)       $    --          $23,789
     XYZ Entertainment....        19,363                  (18,666)                 111             --              808
     Telefenua............        18,599                  (14,215)                  --         (4,384)(1)           --
                                 -------                 --------              -------        -------          -------
           Total..........       $87,770                 $(56,019)             $(2,770)       $(4,384)         $24,597
                                 =======                 ========              =======        =======          =======
</TABLE>

     (1) The  Company  has  reserved  the  remaining  balance  of the  Telefenua
         investment of $4,384 due to the uncertainty of realization.



                                       9
<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


4.   PROPERTY, PLANT AND EQUIPMENT

                                                          As of        As of
                                                        March 31,   December 31,
                                                          1999         1998
                                                        ---------   ------------

     Subscriber premises equipment and converters.....  $213,211    $ 187,247
     MMDS/DTH distribution facilities.................    58,782       54,725
     Cable distribution networks......................     2,084        2,009
     Office equipment, furniture and fixtures.........    10,228        9,810
     Buildings and leasehold improvements.............     2,989        2,841
     Other............................................    13,691       13,847
                                                        --------     --------
                                                         300,985      270,479
         Accumulated depreciation....................   (175,052)    (147,511)
                                                        --------     --------
         Net property, plant and equipment............  $125,933     $122,968
                                                        ========     ========

5.   GOODWILL AND OTHER INTANGIBLE ASSETS
                                                          As of        As of
                                                        March 31,   December 31,
                                                          1999         1998
                                                        ---------   ------------

     Austar...........................................   $57,718      $55,805
     Other............................................     4,420        4,266
                                                         -------      -------
                                                          62,138       60,071
         Accumulated amortization.....................   (19,520)     (17,512)
                                                         -------      -------
         Net goodwill and other intangible assets.....   $42,618      $42,559
                                                         =======      =======

6.   SHORT-TERM DEBT 
                                                          As of        As of
                                                        March 31,   December 31,
                                                          1999         1998
                                                        ---------   ------------

     Austar Bank Facility (see Note 8)................   $57,088      $36,738
                                                         -------      -------
         Total notes payable..........................   $57,088      $36,738
                                                         =======      =======

7.   SENIOR DISCOUNT NOTES

                                                          As of        As of
                                                        March 31,   December 31,
                                                          1999         1998
                                                        ---------   ------------

     May 1996 Notes (as defined below), net of
      unamortized discount............................  $332,950     $321,687
     September 1997 Notes (as defined below),
      net of unamortized discount.....................    35,866       34,953
                                                        --------     --------
         Total senior discount notes..................  $368,816     $356,640
                                                        ========     ========

MAY 1996 NOTES

The 14.0% senior notes,  which the Company issued in May 1996 at a discount from
their principal amount of $443,000 (the "May 1996 Notes"), had an accreted value
of $332,950 as of March 31, 1999. On and after May 15, 2001,  cash interest will
accrue  and  will be  payable  semi-annually  on each  May 15 and  November  15,
commencing November 15, 2001. The May 1996 Notes are due May 15, 2006. Effective
May 16, 1997, the interest rate on these notes increased by an additional  0.75%
per annum to 14.75%. On October 14, 1998, the Company consummated an equity sale
resulting in gross proceeds to the Company of $70,000 which reduced the interest
rate from 14.75% to 14.0% per annum.  Due to the increase in the  interest  rate
effective May 16, 1997 until consummation of the equity sale, the May 1996 Notes
will accrete to a principal  amount of $447,418 on May 15,  2001,  the date cash
interest  begins to accrue.  The quoted  fair  market  value of these  notes was
approximately  $279,600 and $223,700 as of March 31, 1999 and December 31, 1998,
respectively.

                                       10
<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SEPTEMBER 1997 NOTES

The 14.0% senior notes, which the Company issued in September 1997 at a discount
from their  principal  amount of $45,000 (the  "September  1997 Notes"),  had an
accreted value of $35,866 as of March 31, 1999. On and after May 15, 2001,  cash
interest  will  accrue  and  will be  payable  semi-annually  on each May 15 and
November 15, commencing  November 15, 2001. The September 1997 Notes are due May
15,  2006.  Effective  September  23,  1997,  the  interest  rate on these notes
increased by an additional  0.75% per annum to 14.75%.  On October 14, 1998, the
Company  consummated  an equity sale,  reducing the interest rate from 14.75% to
14.0% per annum.  Due to the increase in the interest rate  effective  September
23, 1997 until  consummation  of the equity sale,  the September 1997 Notes will
accrete to a principal amount of $45,448 on May 15, 2001, the date cash interest
begins to accrue.  The quoted fair market value of these notes was approximately
$28,400 and $22,700 as of March 31, 1999 and December 31, 1998, respectively.

On November 17, 1997, pursuant to the terms of the indentures  governing the May
1996 Notes and the September 1997 Notes (collectively, the "Notes"), the Company
issued  warrants  to  purchase  488,000  shares  of  its  common  stock,   which
represented  3.4% of the Company's common stock. The warrants are exercisable at
a  price  of  $10.45  per  share  which  would  result  in  gross   proceeds  of
approximately $5,100 upon exercise. The warrants are exercisable through May 15,
2006.  The  warrants  were  valued  at  $3,678  and have  been  reflected  as an
additional  discount  to the Notes on a  pro-rata  basis and as an  increase  in
additional paid-in capital.

8.   OTHER LONG-TERM DEBT
                                                          As of        As of
                                                        March 31,   December 31,
                                                          1999         1998
                                                        ---------   ------------

     Austar Bank Facility.............................   $69,775      $67,352
     Capitalized leases and other.....................     3,065        2,923
                                                         -------      -------
                                                          72,840       70,275
        Less current portion..........................    (2,015)      (2,189)
                                                         -------      -------
        Total other long-term debt....................   $70,825      $68,086
                                                         =======      =======

AUSTAR BANK FACILITY

In July 1997, Austar secured a senior syndicated term debt facility (the "Austar
Bank  Facility")  in the amount of A$200,000  ($126,863 as of March 31, 1999) to
fund Austar's subscriber  acquisition and working capital needs. The Austar Bank
Facility  consisted  of three  sub-facilities:  (i) A$50,000  revolving  working
capital  facility,  (ii) A$60,000 cash advance  facility and (iii) A$90,000 term
loan facility.  All of Austar's assets were pledged as collateral for the Austar
Bank Facility.  As of March 31, 1999,  Austar had drawn the entire amount of the
working  capital  facility  and the cash  advance  facility  totaling  A$110,000
($69,775  converted using the March 31, 1999 exchange rate). The working capital
facility was fully  repayable on June 30,  2000.  The cash advance  facility was
fully repayable pursuant to an amortization schedule beginning December 31, 2000
and ending June 30, 2004.

In  September,  1998,  Austar  received an amendment to the Austar Bank Facility
which allowed Austar to  temporarily  draw under the A$90,000 term loan facility
at an increased  interest  rate of 2.25% above the  professional  market rate in
Australia. As of March 31, 1999, Austar had drawn A$90,000 ($57,088) on the term
loan facility for a total  outstanding  balance of A$200,000.  On April 23, 1999
(subsequently executed and funded A$222,000 on April 28, 1999), Austar secured a
new  A$400,000  syndicated  senior  secured debt  facility (the "New Austar Bank
Facility") to refinance the A$200,000  Austar Bank Facility and to fund Austar's
subscriber  acquisition and working capital needs.  The New Austar Bank Facility
consists of two sub-facilities: (i) A$200,000 amortizing term facility ("Tranche
1") and (ii) A$200,000 cash advance  facility  ("Tranche 2"). Tranche 1 was used
to  refinance  the Austar Bank  Facility,  and Tranche 2 is  available  upon the
contribution of additional equity on a 2:1 debt-to-equity basis. All of Austar's
assets are pledged as collateral  for this  facility.  In addition,  pursuant to
this  facility,  Austar  cannot pay any  dividends,  interest  or fees under its
technical  assistance  agreements without the consent of the majority banks. The
New Austar  Bank  Facility  bears  interest at the  professional  market rate in
Australia  plus a margin  ranging from 1.75% to 2.25% based upon certain debt to
cash flow ratios. The New Austar Bank Facility is fully repayable pursuant to an
amortization schedule beginning December 31, 2002 and ending March 31, 2006.

                                       11
<PAGE>

                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


9.   RELATED PARTY

Effective May 1, 1996, the Company and UIH Management,  Inc. ("UIH Management"),
an  indirect  wholly-owned  subsidiary  of UIH,  executed  a 10-year  management
services  agreement  (the  "Management   Agreement"),   pursuant  to  which  UIH
Management performs certain administrative,  accounting, financial reporting and
other  services  for the  Company,  which has no separate  employees of its own.
Pursuant to the Management Agreement,  the management fee was $750 for the first
year of  such  agreement  (beginning  May 1,  1996),  and it  increases  on each
anniversary date of the Management  Agreement by 8.0% per year.  Effective March
31,  1997,  UIH  Management  assigned  its  rights  and  obligations  under  the
Management  Agreement to UAP, the Company's  immediate parent,  and extended the
agreement for 20 years from that date (the "UAP Management Agreement").  For the
three  months  ended March 31, 1999 and 1998,  the Company  recorded  $1,612 and
$1,176, respectively, in related party management fees. In addition, the Company
reimburses UAP or UIH for any out-of-pocket  expenses including travel,  lodging
and entertainment expenses,  incurred by UAP or UIH on behalf of the Company. In
December  1997,  UIH  began  allocating   corporate  and  regional  general  and
administrative  expense to the  Company  in the form of  capital  contributions,
based on increased activity at the operating system level.  Management  believes
that this method of allocating  costs is reasonable.  For the three months ended
March 31, 1999 and 1998, the Company recorded $789 and $1,774, respectively,  in
corporate and regional general and administrative expense allocated from UIH.

Austar,  Saturn,  Telefenua  and United  Wireless  are also parties to technical
assistance  agreements with UAP whereby such operating companies pay to UAP fees
based on their respective gross revenues. In addition, UIH has appointed certain
of its  employees  to serve in  senior  management  positions  at the  operating
systems.  The operating  systems reimburse UIH for certain direct costs incurred
by UIH,  including  salaries  and benefits  relating to these senior  management
positions, pursuant to the terms of the technical assistance agreements.

Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
                                                                                          As of          As of
                                                                                        March 31,     December 31,
                                                                                          1999           1998
                                                                                        ---------     ------------
     <S>                                                                                 <C>            <C>
     Austar technical assistance agreement obligations, including deferred.........
      management fees of $7,575 and $5,973, respectively (1).......................      $10,361        $ 8,347
     United Wireless technical assistance agreement obligations....................          658            605
     Payable to parent for management fees.........................................        1,274          1,056
     Other.........................................................................          652            235
                                                                                         -------        -------
                                                                                          12,945         10,243
             Less current portion..................................................       (4,712)        (3,665)
                                                                                         -------        -------
             Total due to parent...................................................      $ 8,233        $ 6,578
                                                                                         =======        =======
</TABLE>
     (1) UAP has the option of converting these management fees into equity.

10.  SEGMENT INFORMATION

The   Company's   business  has   historically   been  derived  from  its  video
entertainment segment. This service has been provided in various countries where
the Company owns and operates it systems.  Accordingly,  the  Company's  current
reportable segments are the various countries in which it operates multi-channel
television,  programming and/or telephony operations.  These reportable segments
are  evaluated  separately  because each country  presents  different  marketing
strategies  and  technology  issues as well as distinct  economic  climates  and
regulatory  constraints.  The key  operating  performance  criteria used in this
evaluation  include  revenue  growth,   operating  income  before  depreciation,
amortization  and stock-based  compensation  expense  ("Adjusted  EBITDA"),  and
capital  expenditures.  Senior  management  of the Company does not view segment
results below Adjusted EBITDA,  therefore,  interest income,  interest  expense,
provision for losses on investment  related costs,  gain on sale of investments,
share in results of affiliated companies, minority interests in subsidiaries and
other expenses are not broken out by segment below.

                                       12

<PAGE>
                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

<TABLE>
<CAPTION>

                For the Three Months Ended   For the Three Months Ended      As of         As of
                       March 31, 1999              March 31, 1998          March 31,    December 31,
                --------------------------   --------------------------      1999          1998
                                 Adjusted                    Adjusted     --------------------------
                Revenue         EBITDA (1)   Revenue         EBITDA (1)         Total Assets
                -------         ----------   -------         ----------   --------------------------  
<S>             <C>             <C>          <C>              <C>         <C>            <C>     
Australia.....  $30,432         $(2,061)     $19,316          $(1,385)    $185,410       $181,169
New Zealand...       --              --           --               --       26,327         23,789
Tahiti........       --              --        1,137              116           --             --
Corporate.....       --            (810)          --           (1,878)      10,109         11,074
                -------         -------      -------          -------     --------       --------  
   Total......  $30,432         $(2,871)     $20,453          $(3,147)    $221,846       $216,032
                =======         =======      =======          =======     ========       ========
</TABLE>

(1)  "Adjusted EBITDA" represents  earnings before net interest expense,  income
     tax  expense,  depreciation  and  amortization,   stock-based  compensation
     charges, minority interest, share in results of affiliated companies (net),
     currency exchange gains (losses) and other  non-operating  income (expense)
     items. Industry analysts generally consider Adjusted EBITDA to be a helpful
     way  to  measure  the  performance  of  cable  television   operations  and
     communications   companies.   Management  believes  Adjusted  EBITDA  helps
     investors to assess the cash flow from operations from period to period and
     thus to value the Company's business.  Adjusted EBITDA should not, however,
     be  considered a  replacement  for net income,  cash flows or for any other
     measure of  performance  or liquidity  under GAAP,  or as an indicator of a
     company's  operating  performance.  The Company is not entirely free to use
     the  cash  represented  by  Adjusted  EBITDA.   Several  of  the  Company's
     consolidated  operating companies are restricted by the terms of their debt
     arrangements.  Each  company  has its own  operating  expenses  and capital
     expenditure  requirements,  which can limit the Company's use of cash.  The
     Company's  presentation  of  Adjusted  EBITDA  may  not  be  comparable  to
     statistics  with a  similar  name  reported  by  other  companies.  Not all
     companies and analysts calculate EBITDA in the same manner.


Adjusted  EBITDA  reconciles  to the  consolidated  statement of  operations  as
follows:
                                                     For the Three Months
                                                        Ended March 31,
                                               -------------------------------
                                                  1999                  1998
                                               ---------             ---------

     Net operating loss..................      $(28,944)             $(31,732)
     Depreciation and amortization.......        24,461                27,409
     Management fees.....................         1,612                 1,176
                                               --------              --------
       Consolidated Adjusted EBITDA......      $ (2,871)             $ (3,147)
                                               ========              ======== 

                                       13

<PAGE>

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

The following  discussion and analysis of our financial condition and results of
operations  should  be read  in  conjunction  with  our  condensed  consolidated
financial  statements and related notes thereto included elsewhere herein.  Such
condensed  consolidated  financial  statements  provide  additional  information
regarding our financial activities and condition.

We have no employees of our own. UAP, our parent,  provides various  management,
financial reporting,  accounting and other services for us pursuant to the terms
of the UAP Management Agreement.  Austar, Saturn,  Telefenua and United Wireless
are also  parties  to  technical  service  agreements  with UAP for  which  such
operating companies pay to UAP fees based on their respective gross revenues.

Certain  statements in this report may constitute  "forward-looking  statements"
within  the  meaning  of the  federal  securities  laws.  These  forward-looking
statements  may include,  among other things,  statements  concerning our plans,
objectives and future economic prospects,  expectations,  beliefs,  future plans
and strategies,  anticipated events or trends and similar expressions concerning
matters that are not historical facts. These forward-looking  statements involve
known and unknown  risks,  uncertainties  and other  factors which may cause the
actual  results,   performance  or  achievements  or  industry  results,  to  be
materially  different  from  what  we say or  imply  with  such  forward-looking
statements.  These factors  include,  among other things,  changes in television
viewing preferences and habits by subscribers and potential  subscribers,  their
acceptance of new technology,  programming  alternatives and new services we may
offer,  our ability to secure  adequate  capital to fund other system growth and
development,  risks inherent in investment and operations in foreign  countries,
changes  in  government  regulation,  changes  in the  nature  of key  strategic
relationships with partners and joint ventures,  and other factors referenced in
this report. These forward-looking  statements apply only as of the date of this
report,  and we have no obligation  or plans to provide  updates or revisions to
these forward-looking  statements, or any other changes in events, conditions or
circumstances on which these  statements are based. Our statements  contained in
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations in this report related to Year 2000 issues are hereby  denominated as
"Year 2000  Statements"  within the  meaning  of the Year 2000  Information  and
Readiness Disclosure Act.

INTRODUCTION

We currently  hold (i) an effective  100%  economic  interest in Austar,  (ii) a
65.0% interest in Saturn,  (iii) a 25.0% interest in XYZ Entertainment,  (iv) an
up to 90.0%  economic  interest in Telefenua  and (v) a 100%  interest in United
Wireless. We previously  consolidated the operations of Saturn from July 1, 1996
through  September 30, 1998. Prior to that time, we accounted for our investment
in Saturn  under the  equity  method.  During the  fourth  quarter  of 1998,  we
discontinued  consolidating  the results of operations of Saturn effective as of
January 1, 1998 and returned to the equity method of accounting.  The change was
made to comply with the  consensus  guidance of the  Emerging  Issues Task Force
regarding Issues 96-16 ("EITF 96-16"), and related rules of the SEC, because the
minority shareholders of Saturn have participating  approval or veto rights with
respect to certain  significant  decisions of Saturn in the  ordinary  course of
business.  Accordingly,  the condensed  consolidated statement of operations and
statement of cash flow for the period ended March 31, 1998 have been adjusted to
reflect the  deconsolidation  of Saturn  effective as of January 1, 1998. We are
currently pursuing  alternatives which would allow for the future  consolidation
of Saturn. Effective October 1, 1998, we discontinued  consolidating the results
of operations of Telefenua  due to an  other-than-temporary  loss of control and
began using the equity method of accounting.

                                       14

<PAGE>

SUMMARY OPERATING DATA

The following tables set forth certain unaudited operating data:
<TABLE>
<CAPTION>
                                                                   As of March 31, 1999
                                   ------------------------------------------------------------------------------------
                                    Television                          Basic                               Economic
                                     Homes in          Homes         Subscribers/          Basic            Ownership
                                   Service Area        Passed           Lines           Penetration         Interest
                                   ------------      ----------      ------------       -----------         ---------
<S>                                  <C>             <C>               <C>                  <C>              <C>
Multi-channel television:
  Austar.........................    2,085,000       2,083,108         311,119              14.9%            100.0%
  Saturn.........................      141,000          56,249           7,590              13.5%             65.0%
  Telefenua......................       31,000          20,128           6,125              30.4%             90.0%
                                     ---------       ---------         -------
        Total....................    2,257,000       2,159,485         324,834
                                     =========       =========         =======
Telephony:
  Saturn (1).....................      141,000          53,257          10,675              20.0%             65.0%
                                     =========       =========         =======
Programming:
  XYZ Entertainment..............          N/A(2)          N/A         750,439(3)             N/A             25.0%
                                     =========       =========         =======
Data:
  Saturn.........................      141,000          53,257             900(4)            1.7%             65.0%
                                     =========       =========         =======
</TABLE>
<TABLE>
<CAPTION>
                                                                   As of March 31, 1998
                                   ------------------------------------------------------------------------------------
                                    Television                          Basic                               Economic
                                     Homes in          Homes         Subscribers/          Basic            Ownership
                                   Service Area        Passed           Lines           Penetration         Interest
                                   ------------      ----------      ------------       -----------         ---------
<S>                                  <C>             <C>               <C>                  <C>              <C>
Multi-channel television:
  Austar.........................    1,635,000       1,589,000         199,955              12.6%            100.0%
  Saturn.........................      141,000          23,780           3,245              13.6%             65.0%
  Telefenua......................       31,000          20,128           6,104              30.3%             90.0%
                                     ---------       ---------         -------
        Total....................    1,807,000       1,632,908         209,304
                                     =========       =========         =======
Programming:
  XYZ Entertainment..............          N/A(2)          N/A         577,476(3)             N/A             25.0%
                                     =========       =========         =======
</TABLE>

(1)  In April 1998, Saturn launched business and residential  telephony services
     in the Wellington, New Zealand area.
(2)  The Company expects that XYZ  Entertainment's  programming  package will be
     marketed to virtually all of Australia's 6.5 million television  households
     by Australian multi-channel television providers.
(3)  This figure represents the total estimated  subscribers to the five-channel
     XYZ Entertainment package.
(4)  Saturn launched data services in late 1998.

                                       15

<PAGE>

SELECTED SYSTEM  OPERATING  DATA. The following  table displays  selected system
operating data in Austar's local currency:
<TABLE>
<CAPTION>
                                                                   For the Three Months Ended
                                                                            March 31,
                                                                   --------------------------
                                                                     1999              1998
                                                                   --------          --------
                                                                         (In thousands) 
     <S>                                                           <C>               <C> 
     Austar (A$):
       Revenue................................................      47,754            28,791
       System operating expense (1)...........................     (36,033)          (17,112)
       System selling, general and administrative expense.....     (16,340)          (14,340)
       Adjusted EBITDA (2)....................................      (2,433)           (1,297)
       Capital expenditures...................................      34,899            12,771
</TABLE>

     (1)  Includes management fees of A$2,186 and A$1,364 million, respectively.
     (2)  "Adjusted  EBITDA"  represents  earnings before net interest  expense,
          income  tax  expense,   depreciation  and  amortization,   stock-based
          compensation   charges,   minority  interest,   share  in  results  of
          affiliated companies (net), currency exchange gains (losses) and other
          non-operating  income (expense)  items.  Industry  analysts  generally
          consider   Adjusted  EBITDA  to  be  a  helpful  way  to  measure  the
          performance  of  cable   television   operations  and   communications
          companies.  We believe  Adjusted  EBITDA helps investors to assess the
          cash flow from  operations from period to period and thus to value our
          business.  Adjusted  EBITDA  should  not,  however,  be  considered  a
          replacement  for net  income,  cash flows or for any other  measure of
          performance or liquidity under GAAP, or as an indicator of a company's
          operating  performance.  We are not  entirely  free  to use  the  cash
          represented by Adjusted EBITDA.  Several of our consolidated operating
          companies are restricted by the terms of their debt arrangements. Each
          company  has  its  own  operating  expenses  and  capital  expenditure
          requirements,  which can limit our use of cash.  Our  presentation  of
          Adjusted  EBITDA may not be comparable  to  statistics  with a similar
          name  reported by other  companies.  Not all  companies  and  analysts
          calculate EBITDA in the same manner.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31,  1999,  we had  invested  approximately  $436.4  million  in our
projects.  These fundings do not include  amounts  contributed  by  shareholders
other than the Company or amounts contributed in either cash or stock to acquire
additional economic interests.

                                                                       As of
                                                                     March 31,
     SOURCES OF FUNDINGS:                                              1999
                                                                  --------------
                                                                  (In thousands)
     Senior discount notes proceeds, net of offering costs.....      $244,652
     Cash contributions and other equity from parent (1).......       187,264
     Cash received for interest................................         4,526
                                                                     --------
                                                                     $436,442
                                                                     ========

                                                                       As of
                                                                     March 31,
USES OF FUNDINGS:                                                      1999
                                                                  (In thousands)
                                                                  --------------
     Austar (1)................................................      $339,929
     Saturn....................................................        44,612
     Telefenua.................................................        16,738
     XYZ Entertainment.........................................        16,481
     United Wireless...........................................        10,764
     Other.....................................................         7,918
                                                                     --------
        Total..................................................      $436,442
                                                                     ========


     (1) Includes  issuance/use  of  $29.8  million  and  $6.2  million  in  UIH
         convertible preferred stock in 1995 and 1998, respectively,  to acquire
         additional economic interests in Australia.

                                       16
<PAGE>


We are responsible for our  proportionate  share of the capital  requirements of
the operating  companies.  We have funded our  proportionate  share to date with
capital  contributed by UIH and UAP and proceeds from private debt offerings and
have  reduced  our  proportionate  share to date with  subsidiary  bank debt and
strategic partner  contributions.  Through the private placement of the May 1996
Notes, we raised total gross proceeds of  approximately  $225.1  million.  These
notes  will  accrete  to an  aggregate  principal  amount of $447.4  million  at
maturity.  Through the private  placement of the September 1997 Notes, we raised
total gross proceeds of approximately $29.9 million. These notes will accrete to
an aggregate  principal  amount of $45.4 million at maturity.  Effective May 16,
1997,  the interest  rate on these notes  increased by an  additional  0.75% per
annum to 14.75%.  On October 14, 1998, we consummated  an equity sale,  reducing
the interest rate from 14.75% to 14.0% per annum.

AUSTAR

In July 1997,  Austar  secured the Austar Bank Facility in the amount of A$200.0
million  ($126.9  million  as of March  31,  1999) to fund  Austar's  subscriber
acquisition  and working  capital  needs.  The Austar Bank Facility  consists of
three  sub-facilities:  (i) A$50.0 million  revolving  working capital facility,
(ii) A$60.0  million  cash advance  facility and (iii) A$90.0  million term loan
facility.  All of Austar's assets were pledged as collateral for the Austar Bank
Facility.  As of March 31,  1999,  Austar  had drawn  the  entire  amount of the
working capital facility and the cash advance facility  totaling A$110.0 million
($69.8 million  converted using the March 31, 1999 exchange  rate).  The working
capital facility was fully repayable on June 30, 2000. The cash advance facility
was fully repayable pursuant to an amortization  schedule beginning December 31,
2000 and ending June 30, 2004.

In  September,  1998,  Austar  received an amendment to the Austar Bank Facility
which  allowed  Austar to  temporarily  draw under the A$90.0  million term loan
facility at an increased  interest rate of 2.25% above the  professional  market
rate in Australia.  As of March 31, 1999, Austar had drawn A$90.0 million ($57.1
million) on the term loan  facility for a total  outstanding  balance of A$200.0
million. On April 23, 1999 (subsequently  executed and funded A$222.0 million on
April 28, 1999),  Austar secured a new A$400.0 million syndicated senior secured
debt facility (the "New Austar Bank  Facility") to refinance the A$200.0 million
Austar Bank Facility and to fund  Austar's  subscriber  acquisition  and working
capital needs. The New Austar Bank Facility consists of two sub-facilities:  (i)
A$200.0 million  amortizing term facility ("Tranche 1") and (ii) A$200.0 million
cash advance facility  ("Tranche 2"). Tranche 1 was used to refinance the Austar
Bank Facility,  and Tranche 2 is available upon the  contribution  of additional
equity on a 2:1  debt-to-equity  basis.  All of  Austar's  assets are pledged as
collateral for this  facility.  In addition,  pursuant to this facility,  Austar
cannot  pay any  dividends,  interest  or fees  under its  technical  assistance
agreements  without  the  consent of the  majority  banks.  The New Austar  Bank
Facility  bears  interest at the  professional  market rate in Australia  plus a
margin  ranging from 1.75% to 2.25% based upon certain debt to cash flow ratios.
The New Austar Bank  Facility  is fully  repayable  pursuant to an  amortization
schedule beginning December 31, 2002 and ending March 31, 2006.

We expect the need for additional  funding for Austar in the future.  The amount
of capital needed is dependent  primarily upon three factors:  (i) the number of
new subscribers  added;  (ii) the level of churn, that is, the level of existing
subscribers  who  disconnect  from  Austar's  service;  and (iii) the mix of DTH
satellite compared to MMDS installations. Substantially all fixed costs required
to operate  Austar's  service have already  been  incurred.  The average cost to
install a subscriber  includes variables such as equipment,  marketing and sales
costs, and  installation  fees. The average cost of a subscriber who disconnects
is reduced by the recovery of certain equipment (principally converters), and is
further  reduced if a new  subscriber is installed in a previously  disconnected
home.  Austar  plans to continue  to expand and add  subscribers;  however,  the
timing of such  expansion and the funds  required for such expansion are largely
variable.  Based upon  current  plans and  budgeted  churn,  Austar will require
approximately  $112.4  million to continue on its  current  expansion  path from
January 1, 1999 through December 31, 1999. The required capital for 1999 will be
funded  substantially  by the New Austar Bank  Facility and UIH.  The  remaining
sources of funds for such expansion may include the raising of private or public
equity by the Company or its  subsidiaries.  We currently plan that any proceeds
from an equity  offering  will be used to fund  operations or for the payment of
bank debt and not to redeem the May 1996 Notes or the September 1997 Notes.

SATURN

In July 1997,  Sasktel  Holdings,  Inc.  ("SaskTel")  purchased  a 35.0%  equity
interest in Saturn by investing  NZ$29.9 million  (approximately  $19.6 million)
directly  into Saturn for its  newly-issued  shares.  In November  1998,  Saturn
secured a  syndicated  senior debt  facility  in the amount of NZ$125.0  million
($70.0  million as of March 31, 1999) (the "Saturn Bank  Facility")  to fund the
completion  of  Saturn's  network.  Of this  amount,  NZ$83.3  million  has been
subscribed  for by  financial  institutions.  Until Saturn  obtains  irrevocable
commitments in the form of equity funding or additional underwriting commitments
for the  balance  of  NZ$41.7  million,  the  maximum  that may be drawn down is

                                       17
<PAGE>

NZ$73.0 million ($39.1 million as of March 31, 1999). If Saturn is successful in
obtaining  the  necessary  commitments  from other  financing  sources  which is
expected  to occur by the end of May  1999,  Saturn  may  borrow  an  additional
NZ$10.3 million from the initial syndicate of banks. If Saturn is not successful
in obtaining the necessary commitments,  the outstanding balance will be due May
31, 1999. As of March 31, 1999,  Saturn had drawn NZ$50.0 million ($26.8 million
as of March 31, 1999) on the loan facility at a rate of approximately  8.12% per
annum.  The  eight-year  debt  facility  has an  interest  rate of 3.0% over the
current base rate upon drawdown.

We expect the need for  additional  funding for Saturn in the  future.  Saturn's
capital needs  include  approximately  $37.2  million for the  completion of the
network required by Saturn to offer cable television and telephony  services and
approximately  $4.8 million until Saturn has sufficient  cash flows to cover its
operations and the capital required to install customers,  although there can be
no assurance that further additional  capital will not be required.  The sources
of funds for such expansion may include the Saturn Bank Facility, the raising of
private or public  equity by the Company or its  subsidiaries  and/or  continued
investment by UIH and SaskTel.  Even though we believe that this  financing will
be  successful,  we believe that committed  financial  support from UIH combined
with, if necessary,  reductions in planned capital expenditures,  are sufficient
to sustain its operations through at least mid-2000.

OTHER

The Company  expects that the  aggregate  future  funding  requirements  for XYZ
Entertainment and United Wireless are less than $2.0 million for 1999.

The indentures  governing UIH's senior secured  discount notes due February 2008
and the Company's Notes  (collectively,  the "Indentures") place restrictions on
the Company and its restricted subsidiaries with respect to incurring additional
debt.  The Company and all of the operating  companies are currently  restricted
under the UIH Indentures. The Company, Austar and Telefenua are restricted under
the Company's Indentures. The restrictions imposed by the UIH Indentures will be
eliminated  upon the  retirement  of UIH's  notes at their  maturity in February
2008,  and  the  restrictions  imposed  by  the  Company's  Indentures  will  be
eliminated  upon the retirement of the Company's  Notes at their maturity in May
2006. In addition,  pursuant to the New Austar Bank Facility,  Austar cannot pay
any dividends,  interest on debentures and subordinated  debt, or fees under its
technical assistance agreements without the consent of the majority banks.

On November  17, 1997,  pursuant to the terms of the  indentures  governing  the
Notes,  we issued  warrants to purchase a total of 488,000  shares of our common
stock,  which  represented  3.4% of the Company's common stock. The warrants are
exercisable  at a price of $10.45 per share which would result in gross proceeds
of  approximately  $5.1  million,  if  exercised.  The warrants are  exercisable
through May 15, 2006.

                                       18
<PAGE>

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1999

We  incurred a net loss  during the three  months  ended March 31, 1999 of $47.5
million,  which included  non-cash items such as depreciation  and  amortization
expense  totaling  $24.5 million and accretion of interest on the Notes totaling
$12.7 million.

Cash and cash equivalents remained the same at $0.2 million as of March 31, 1999
and December 31, 1998.  Principal  sources of cash during the three months ended
March 31,  1999  included  cash  contributions  from  parent  of $19.2  million,
borrowings  on other  debt of $18.9  million  and other  sources  totaling  $1.3
million.

During the three  months  ended March 31, 1999,  cash was used  principally  for
purchases of property,  plant and equipment  totaling  $22.0 million to continue
new subscriber connections at Austar and the build-out of existing projects, the
funding of operating activities of $12.2 million and investments in and advances
to affiliated companies of $5.2 million.

FOR THE THREE MONTHS ENDED MARCH 31, 1998

We  incurred a net loss  during the three  months  ended March 31, 1998 of $47.3
million,  which included  non-cash items such as depreciation  and  amortization
expense  totaling  $27.4 million and accretion of interest on the Notes totaling
$11.7 million.

Cash and cash  equivalents  decreased  $11.4  million  from $12.3  million as of
December  31, 1997 to $0.9 million as of March 31,  1998.  Principal  sources of
cash during the three months ended March 31, 1998 included net proceeds from the
sale of short-term  investments of $12.3 million, cash contributions from parent
of $1.5 million, and other investing and financing sources of $0.8 million.

During the three months ended March 31, 1998, cash was used  principally for the
purchase of property, plant and equipment of $11.4 million to construct Austar's
and Telefenua's  systems,  the funding of operating  activities of $4.5 million,
the  deconsolidation of Saturn of $9.9 million and other investing and financing
uses totaling $0.2 million.

RESULTS OF OPERATIONS

Effective as of January 1, 1998, we  discontinued  consolidating  the results of
operations of Saturn and returned to the equity  method of accounting  (see Note
2). Accordingly,  the results of operations for the three months ended March 31,
1998 have been restated to reflect the effect of this change.

EXCHANGE RATES. We translate  revenue and expense from our foreign  subsidiaries
using the weighted-average  exchange rates during the period.  However, for ease
of  presentation,  the spot  rates for the  countries  in the  Australia/Pacific
region are shown below for the  Australian  dollar and the New  Zealand  dollar,
respectively, per one U.S. dollar.

                                   Australian    New Zealand
                                     Dollars       Dollars
                                   ----------    -----------
     March 31, 1999.............     1.5765        1.8667
     December 31, 1998..........     1.6332        1.8939
     March 31, 1998.............     1.5108        1.8103
     December 31, 1997..........     1.5378        1.7161


REVENUE. Our revenue increased $9.9 million for the three months ended March 31,
1999 compared to the amounts for the  corresponding  period in the prior year as
follows:

                                                    For the Three Months Ended
                                                             March 31,
                                                  ------------------------------
                                                    1999                  1998
                                                  --------              --------
                                                           (In thousands)
     Austar..................................      $30,348              $19,199
     United Wireless.........................           84                  117
     Other...................................           --                1,137
                                                   -------              -------
        Total revenue........................      $30,432              $20,453
                                                   =======              =======

                                       19

<PAGE>


     AUSTAR

     Revenue for Austar  increased $11.0 million,  or 57.8%,  from $19.2 million
     for the three  months  ended March 31, 1998 to $30.3  million for the three
     months  ended March 31,  1999.  On a functional  currency  basis,  Austar's
     revenue increased A$19.0 million,  from A$28.8 million for the three months
     ended March 31, 1998 to A$47.8 million for the three months ended March 31,
     1999, a 66.0%  increase.  These  increases were primarily due to subscriber
     growth (311,119 at March 31, 1999 compared to 199,955 at March 31, 1998) as
     Austar  continues  to  roll-out  its  services.  The U.S.  dollar  increase
     occurred  despite the negative impact of $1.5 million due to fluctuation in
     exchange rates between the three months ended March 31, 1999 and 1998.

SYSTEM OPERATING  EXPENSE.  System operating expense increased $10.9 million for
the  three  months  ended  March  31,  1999  compared  to the  amounts  for  the
corresponding period in the prior year as follows:

                                                    For the Three Months Ended
                                                             March 31,
                                                  ------------------------------
                                                    1999                  1998
                                                  --------              --------
                                                           (In thousands)
     Austar..................................     $22,906               $11,399
     United Wireless.........................         327                   362
     Other...................................          --                   562
                                                  -------               -------
        Total system operating expense.......     $23,233               $12,323
                                                  =======               =======

     AUSTAR

     Operating expense for Austar increased $11.5 million, or 100.9%, from $11.4
     million for the three months ended March 31, 1998 to $22.9  million for the
     three months ended March 31, 1999. On a functional currency basis, Austar's
     operating  expense  increased  A$18.9 million,  from A$17.1 million for the
     three  months  ended March 31, 1998 to A$36.0  million for the three months
     ended March 31, 1999, a 110.5% increase. These increases were primarily due
     to an increase in satellite  programming  costs resulting from the May 1998
     agreements with Foxtel and Optus to obtain additional programming rights in
     connection with the  receivership of Australis Media Limited  ("Australis")
     as well as additional satellite platform costs associated with the May 1998
     joint venture with Optus. We expect that the  restructuring  of programming
     costs for certain  channels will result in somewhat  higher costs for these
     channels which will be offset by lower costs in the long-term when compared
     to Austar's  previous  agreements  with  Australis.  The  remainder  of the
     increase  between  periods was due to an increase in salaries  and benefits
     related  to  the  additional   personnel   necessary  to  support  Austar's
     establishment  of local and state offices in its markets and an increase in
     customer  subscriber  management  expense  related to volume  increases  in
     telephone,  billing and  collection  costs.  The U.S.  dollar  increase was
     positively  impacted by $1.1 million due to  fluctuation  in exchange rates
     between the three months ended March 31, 1999 and 1998.

     Austar  expects  operating  expense as a percentage  of service  revenue to
     decline  in  future  periods  because a  significant  portion  of  Austar's
     distribution  facilities and network costs,  such as local and state office
     staffing levels,  operating costs and wireless license costs,  have already
     been incurred and are fixed in relation to changes in  subscriber  volumes.
     Other  system  operating   expense,   such  as  certain  costs  related  to
     programming  and  subscriber   management  expense,  will  vary  in  direct
     proportion to the number of subscribers.

SYSTEM SELLING,  GENERAL AND ADMINISTRATIVE EXPENSE. System selling, general and
administrative  expense  increased $0.3 million for the three months ended March
31, 1999 compared to the amounts for the corresponding  period in the prior year
as follows:

                                       20
<PAGE>
<TABLE>
<CAPTION>
                                                                           For the Three Months Ended
                                                                                    March 31,
                                                                          ----------------------------
                                                                            1999                1998
                                                                          --------            -------- 
                                                                                 (In thousands)
     <S>                                                                  <C>                 <C>
     Austar.........................................................      $10,384             $ 9,573
     United Wireless................................................          269                 282
     Other..........................................................           --                 517
                                                                          -------             -------
        Total system selling, general and administrative expense....      $10,653             $10,372
                                                                          =======             =======
</TABLE>

     AUSTAR

     System selling,  general and administrative expense increased $0.8 million,
     or 8.3%,  from $9.6  million for the three  months  ended March 31, 1998 to
     $10.4  million for the three months  ended March 31, 1999.  On a functional
     currency  basis,  Austar's  selling,  general  and  administrative  expense
     increased  A$2.0  million,  from A$14.3  million for the three months ended
     March 31, 1998 to A$16.3 million for the three months ended March 31, 1999,
     a 13.9% increase.  The U.S dollar increase was positively  impacted by $0.5
     million due to fluctuation in exchange rates between the three months ended
     March 31, 1999 and 1998.

Depreciation and  Amortization  Expense.  Depreciation and amortization  expense
decreased $2.9 million for the three months ended March 31, 1999 compared to the
amounts for the corresponding period in the prior year as follow:
<TABLE>
<CAPTION>
                                                                           For the Three Months Ended
                                                                                    March 31,
                                                                          ----------------------------
                                                                            1999                1998
                                                                          --------            -------- 
                                                                                 (In thousands)
     <S>                                                                  <C>                 <C>
     Austar.........................................................      $24,296             $26,881
     United Wireless................................................          165                 159
     Other..........................................................           --                 369
                                                                          -------             -------
        Total depreciation and amortization expense.................      $24,461             $27,409
                                                                          =======             =======
</TABLE>

     AUSTAR

     Depreciation and amortization expense for Austar decreased $2.6 million, or
     9.7%, from $26.9 million for the three months ended March 31, 1998 to $24.3
     million for the three months ended March 31, 1999. On a functional currency
     basis,  Austar's  depreciation  and  amortization  expense  decreased A$2.1
     million,  from A$38.9  million for the three months ended March 31, 1998 to
     A$36.8  million for the three months ended March 31, 1999, a 5.4% decrease.
     The U.S.  dollar  increase was  positively  impacted by $0.3 million due to
     fluctuation in exchange rates between the three months ended March 31, 1999
     and 1998.

INTEREST  EXPENSE.  Interest expense increased $1.8 million for the three months
ended March 31, 1999 compared to the amounts for the corresponding period in the
prior year.  This increase was primarily due to interest  expense related to the
Austar  Bank  Facility  which was $2.6  million  and $1.5  million for the three
months ended March 31, 1999 and 1998, respectively.

                                       21

<PAGE>


YEAR 2000 READINESS DISCLOSURE

Our multi-channel  television,  programming and telephony operations are heavily
dependent upon computer  systems and other  technological  devices with embedded
chips. Such computer systems and other technological  devices may not be capable
of accurately recognizing dates beginning on January 1, 2000. This problem could
cause miscalculations,  resulting in our multi-channel  television and telephony
systems or programming services malfunctioning or failing to operate.

YEAR 2000  PROGRAM.  In response to possible  Year 2000  problems,  the Board of
Directors of UIH  established  a Task Force to assess the impact that  potential
Year 2000 problems may have on  company-wide  operations,  including the Company
and its operating companies,  and to implement necessary changes to address such
problems.  The Task  Force  reports  directly  to the UIH Board.  In  creating a
program  to  minimize  Year 2000  problems,  the Task Force  identified  certain
critical  operations  of our business.  These  critical  operations  are service
delivery  systems,  field and  headend  devices,  customer  service  and billing
systems and corporate management and administrative operations (e.g., cash flow,
accounts payable and accounts receivable, payroll and building operations).

The Task Force has established a three-phase  program to address  potential Year
2000 problems:

     (a) Identification  Phase: identify and evaluate computer systems and other
         devices (e.g., headend devices, switches and set top boxes) on a system
         by system basis for Year 2000 compliance.
     (b) Implementation Phase: establish a database and evaluate the information
         obtained in the Identification Phase,  determine priorities,  implement
         corrective procedures, define costs and ensure adequate funding.
     (c) Testing  Phase:  test the  corrective  procedures  to  verify  that all
         material compliance problems will operate on and after January 1, 2000,
         and develop, as necessary, contingency plans for material operations.

As of  March  31,  1999,  90.0%  of our  operating  systems  had  completed  the
Identification  Phase and the Task Force is working on the Implementation  Phase
for these  systems.  The Task  Force has  researched  almost  86.0% of the items
identified during the  Identification  Phase as to Year 2000 compliance.  Of the
items researched, 77.0% are either compliant or can be easily remediated without
significant  cost to us.  Currently,  the Task  Force  expects to  complete  its
research on  substantially  all of the items  identified  by mid-1999.  Based on
current data to date,  the computer  systems for all  corporate  operations  are
expected to be in  compliance  with Year 2000 by mid-1999 and should not require
material remediation or replacement.

The Task Force commenced the Testing Phase in first quarter 1999. The Task Force
is  supervising  the  Testing  Phase of the  computer  systems  for our  headend
controllers  and our customer  service  billing  systems and  routers.  Based on
current data to date,  we expect to complete  this testing by mid-1999.  At this
time, we anticipate  that all material  aspects of the program will be completed
before January 1, 2000.  Certain of our operating systems have not completed the
Identification  Phase,  including  Tahiti  and  certain  Australian  programming
interests.  Despite the Task Force's  attempts to include  these  systems in the
Year 2000  Programs,  these systems have not  responded.  Therefore,  we have no
information  on which to determine if these systems will be Year 2000  compliant
by December 31, 1999. If none of these systems are compliant,  we do not believe
that their operation failure will have a material adverse effect on our business
as a whole.  The  basis for  determining  the above  percentage  includes  these
systems.  In general,  UIH is managing the program with its internal Task Force.
In  addition,  we have  retained  independent  consultants  to  assist  with our
operations in New Zealand. The Task Force will continue to evaluate the need for
external  resources  to complete  the  Implementation  Phase and  implement  the
Testing  Phase.  In the event the Task Force elects to use  external  resources,
such resources may not, however, be available.

In addition to its program,  UIH is a member of a Year 2000 working group, which
has 12 cable  television  companies  and meets under the auspices of Cable Labs.
The dialogue with the other cable  operators has assisted UIH in developing  its
Year 2000  program.  Part of the agenda of the working  group is to develop test
procedures and contingency  plans for critical  components of operating  systems
for the benefit of all of its members.  The test  procedures  are expected to be
available to members, including UIH and the Company, during second quarter 1999.

THIRD  PARTY  DEPENDENCIES.  We  believe  our  largest  Year  2000  risk  is our
dependency upon third-party products. Two significant areas on which our systems
depend upon third-party products are programming and telephony interconnects. We
do not have the  ability  to  control  such  parties  in  their  assessment  and
remediation  procedures for potential  Year 2000 problems.  Should these parties
not be prepared for Year 2000,  their  systems may fail and we would not be able

                                       22
<PAGE>

to provide service to our customers. Notwithstanding these limitations, the Task
Force monitors the websites for all vendors used by us, to the extent available,
for information on such vendors' Year 2000 programs.  To the extent  applicable,
the Task Force  uses such  information  to verify  Year 2000  compliance  and to
implement  remediation  procedures.  We also  have  requested  information  from
various third parties on the status of their Year 2000 compliance programs in an
effort to prevent any possible  interruptions or failures. To date, responses to
such communications have been limited and the responses received state only that
the party is working on Year 2000 issues and does not have a definitive position
at this  time.  As a  result,  we are  unable to  assess  the risk  posed by our
dependence  upon such third  parties'  systems.  Vendors for critical  equipment
components,  such as the headend  controllers  mentioned  below,  have been more
responsive and we believe  substantially  all of our equipment will be Year 2000
compliant.  We cannot,  however,  give any  assurance  concerning  compliance of
equipment because such belief is based on information provided by vendors, which
cannot be independently  verified,  and because of the uncertainties inherent in
Year 2000 remediation.

The Task Force is  considering  certain  limited  contingency  plans,  including
preparing back-up  programming and stand-by power  generators.  Such contingency
plans may not,  however,  resolve the  problem in a  satisfactory  manner.  With
respect to other third-party  systems,  each operating system is responsible for
inquiring of their vendors and other entities with which they do business (e.g.,
utility  companies,  financial  institutions  and  facility  owners)  as to such
entities'  Year  2000  compliance  programs.  In  addition,  the Task  Force has
distributed a contingency plan to all of our operating  systems.  Such plan sets
forth preparation procedures and recovery solutions.

The Task Force is working closely with the  manufacturers of our headend devices
to remedy any Year 2000  problems  assessed  in the  headend  equipment.  Recent
information from the two primary  manufacturers of such equipment  indicate that
most of the  equipment  used in our  operating  systems are not date  sensitive.
Where such equipment needs to be upgraded for Year 2000 issues, such vendors are
upgrading  without  charge.  These upgrades are expected to be completed  before
year-end  1999,  but such a process  is not  wholly  within  our  control or our
systems' control.  Approximately 92.0% of the headend controllers, which are the
most critical component of the headend devices have been upgraded.  With respect
to billing and customer care systems,  we use standard billing and customer care
programs  from several  vendors.  The Task Force is working with such vendors to
achieve Year 2000  compliance  for all systems.

COSTS OF  COMPLIANCE.  The Task Force is not able to determine  the full cost of
its Year 2000 program and its related impact on our financial condition.  In the
course of our business,  we have made substantial  capital  adjustments over the
past few years in improving  our systems,  primarily for reasons other than Year
2000. Because these upgrades also resulted in Year 2000 compliance,  replacement
and remediation  costs have been low. The Task Force has,  however,  revised its
estimates  of the cost for the  Year  2000  program  to $1.0  million.  The cost
includes certain identified  replacement and remediation procedures and external
consultants,   and  has  been  increased  because  of  system  acquisitions  and
additional  date  sensitive  items  that  require   research  as  to  Year  2000
compliance.  Such estimate does not, however,  include internal costs because we
do not  separately  track the internal costs incurred for the Year 2000 program.
Although  no  assurance  can be made,  we  believe  that  the  known  Year  2000
compliance  issues can be  remedied  without a  material  financial  impact.  No
assurance can be made,  however,  as to the total cost for the Year 2000 program
until all of the data has been  gathered.  In  addition,  we can not predict the
financial impact we will incur if Year 2000 problems are caused by third parties
upon which our systems are dependent or experienced by entities in which we hold
investments.  The  failure of any one of these  parties to  implement  Year 2000
procedures  could have a material adverse impact on our operations and financial
condition.


                                       23
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
------------------------------------------------------------------

INVESTMENT PORTFOLIO

We do not use derivative  financial  instruments in our  non-trading  investment
portfolio.  We place our cash and cash  equivalent  investments in highly liquid
instruments that meet high credit quality standards with original  maturities at
the date of purchase  of less than three  months.  We also place our  short-term
investments in liquid  instruments that meet high credit quality  standards with
original  maturities at the date of purchase of between three and twelve months.
We also limit the amount of credit exposure to any one issue,  issuer or type of
instrument. These investments are subject to interest rate risk and will fall in
value if market interest rates increase,  however, we do not expect any material
loss with respect to our investment portfolio.

IMPACT OF FOREIGN CURRENCY RATE CHANGES

We are exposed to foreign  exchange rate  fluctuations  related to the operating
subsidiaries'  monetary  assets and  liabilities  and the  financial  results of
foreign  subsidiaries when their respective  financial statements are translated
into U.S.  dollars during  consolidation.  Our exposure to foreign exchange rate
fluctuations  also  arises  from  intercompany  charges  such  as  the  cost  of
equipment,  management  fees  and  certain  other  charges.  These  intercompany
accounts are predominantly denominated in the functional currency of the foreign
subsidiary.

The operating  companies' monetary assets and liabilities are subject to foreign
currency exchange risk as certain  equipment  purchases and payments for certain
operating expenses,  such as programming expenses, are denominated in currencies
other than their own functional currency. In addition,  certain of the operating
companies  have notes payable and notes  receivable  which are  denominated in a
currency other than their own functional currency. Foreign currency rate changes
also affect our share in results of our  unconsolidated  affiliates  such as XYZ
Entertainment and Saturn.

The spot rates for the countries in the Australia/Pacific region are shown below
for the Australian and New Zealand dollars per one U.S. dollar.

                                       Australian    New Zealand
                                         Dollars       Dollars
                                       ----------    -----------
     March 31, 1999.................     1.5765         1.8667
     December 31, 1998..............     1.6332         1.8939
     March 31, 1998.................     1.5108         1.8103
     December 31, 1997..............     1.5378         1.7161

In general,  the  Company  and the  operating  companies  do not  execute  hedge
transactions  to reduce our  exposure to foreign  currency  exchange  rate risk.
Accordingly,  we may experience  economic loss and a negative impact on earnings
and equity with respect to our holdings  solely as a result of foreign  currency
exchange rate fluctuations.

The countries in which the operating companies now conduct business generally do
not restrict the removal or  conversion of local or foreign  currency,  however,
there  is no  assurance  this  situation  will  continue.  We may  also  acquire
interests in companies that operate in countries where the removal or conversion
of currency is restricted.

                                       24

<PAGE>


INTEREST RATE SENSITIVITY

The table below provides  information  about our primary debt  obligations.  The
information  is presented in U.S.  dollar  equivalents,  which is our  reporting
currency.  The  instrument's  actual  cash  flows are  denominated  in both U.S.
dollars (May 1996 and September 1997 Notes) and Australian  dollars (Austar Bank
Facility).
<TABLE>
<CAPTION>
                                                                   As of March 31, 1999
                                                        ------------------------------------------
                                                        Book Value                      Fair Value
                                                        ----------                      ----------
                                                   (U.S. dollars, in thousands, except interest rates)
     <S>                                                 <C>                             <C>
     Long-term and short-term  debt:
          Fixed rate USD Denominated...........          $368,816                        $308,041
           Average interest rate...............            14.00%                          17.41%
          Variable rate A$ Denominated.........          $126,863                        $126,863
           Average interest rate...............             6.75%                           6.75%

</TABLE>

The table  below  presents  principal  cash flows and  related  weighted-average
interest  rates  by  expected  maturity  dates  for our  debt  obligations.  The
information  is presented in U.S.  dollar  equivalents,  which is our  reporting
currency.  The  instrument's  actual  cash  flows are  denominated  in both U.S.
dollars (May 1996 and September 1997 Notes) and Australian  dollars (Austar Bank
Facility).
<TABLE>
<CAPTION>
                                                                     As of March 31, 1999
                                             ------------------------------------------------------------------------
                                               1999      2000      2001      2002      2003    Thereafter     Total
                                             --------  --------  --------  --------  --------  ----------   --------- 
                                                         (U.S. dollars, in thousands, except interest rates)
     <S>                                      <C>         <C>       <C>       <C>       <C>    <C>          <C>
     Long-term and short-term debt:
          Fixed rate USD Denominated........       --     --        --        --        --     $368,816     $368,816
           Average interest rate............       --     --        --        --        --       14.00%       14.00%
          Variable rate A$ Denominated......  $57,088     --        --        --        --     $ 69,775     $126,863
           Average interest rate............    6.75%     --        --        --        --        6.75%        6.75%
</TABLE>

Interest  rate swap  agreements  are used by the Company  from time to time,  to
manage  interest rate risk on its floating rate debt  facilities.  Interest rate
swaps are entered into depending on our assessment of the market,  and generally
are used to  convert  the  floating  rate  debt to  fixed  rate  debt.  Interest
differentials  paid or received under these swap  agreements are recognized over
the  life  of the  contracts  as  adjustments  to  the  effective  yield  of the
underlying  debt,  and related  amounts  payable  to, or  receivable  from,  the
counterparties  are included in the consolidated  balance sheet.  Currently,  we
have two interest rate swaps to manage interest rate exposure on the Austar Bank
Facility.  These  swap  agreements  expire in 2002 and  effectively  convert  an
aggregate  principal  amount of A$50.0  million  ($31.7  million as of March 31,
1999) of variable rate,  long-term debt into fixed rate borrowings.  As of March
31,  1999,  the  weighted-average  fixed rate under these  agreements  was 7.94%
compared to a  weighted-average  variable  rate on the Austar  Bank  Facility of
6.75%. As a result of these swap  agreements,  interest expense was increased by
approximately A$0.2 million ($0.1 million) during first quarter 1999.

Fair values of the  interest  rate swap  agreements  are based on the  estimated
amounts  that  we  would  receive  or pay to  terminate  the  agreements  at the
reporting  date,  taking into  account  current  interest  rates and the current
creditworthiness of the  counterparties.  As of March 31, 1999, we estimate that
we would have paid  approximately  A$1.3 million ($0.8 million) to terminate the
agreements.

The table below provides  information  about our interest rate swaps.  The table
presents  notional  amounts  and  weighted-average  interest  rates by  expected
(contractual)  maturity  dates.  Notional  amounts  are  used to  calculate  the
contractual  payments to be exchanged  under the contract.  The  information  is
presented in U.S.  dollar  equivalents  (in  thousands),  which is our reporting
currency.  The  instrument's  actual cash flows are  denominated  in  Australian
dollars.

                                       25

<PAGE>
<TABLE>
<CAPTION>
                                                                     As of March 31, 1999
                                             ------------------------------------------------------------------------
                                               1999      2000      2001      2002      2003    Thereafter     Total
                                             --------  --------  --------  --------  --------  ----------   --------- 
                                                         (U.S. dollars, in thousands, except interest rates)
<S>                                           <C>        <C>       <C>     <C>          <C>        <C>       <C>
Interest Rate Swaps:
     Variable to fixed.................         --          --       --    $31,716      --         --        $31,716
     Average pay rate %................      8.00%       8.00%    8.00%      8.00%      --         --          8.00%
     Average receive rate %............      6.75%       6.75%    6.75%      6.75%      --         --          6.75%
</TABLE>



                                                                        26
<PAGE>

                           PART II - OTHER INFORMATION


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

(a)  Exhibits

     10.1      A$400,000 Syndicated Senior Secured Debt Facility Agreement dated
               April 23, 1999,  among Austar  Entertainment  Pty Limited,  Chase
               Securities  Australia  Limited,  the Guarantors named therein and
               the financial institutions named therein. (1)

     27.1      Financial Data Schedule


               (1)  Incorporated  by  reference  from the Annual  Report on Form
                    10-K of United International  Holdings,  Inc. for the period
                    ended December 31, 1998 (File No 0-21974).

(b)  Reports on Form 8-K filed during the quarter.

     None.



                                       27
<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.



UIH AUSTRALIA/PACIFIC, INC.



Date:  May 14, 1999
       ---------------------------------------------
By:    /S/ Valerie L. Cover
       ---------------------------------------------
       Valerie L. Cover
       Controller
       (A Duly Authorized Officer and Principal Financial Officer)


                                       28