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 September 30, 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

                         United Australia/Pacific, Inc.
                 (formerly known as UNITED 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 November 12,
1999, the Company had 17,810,249 shares of common stock outstanding.



<PAGE>


                                               UNITED AUSTRALIA/PACIFIC, INC.
                                                      TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------

                                               PART I - FINANCIAL INFORMATION
                                               ------------------------------


Item 1 - Financial Statements
------
     <S>                                                                                                          <C>
     Condensed Consolidated Balance Sheets as of September 30, 1999 (Unaudited) and December 31, 1998.........     2

     Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30,
         1999 and 1998 (Unaudited)............................................................................     3

     Condensed Consolidated Statement of Stockholder's Deficit for the Nine Months Ended September 30,
         1999 (Unaudited).....................................................................................     4

     Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 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...............     15
------

Item 3 - Quantitative and Qualitative Disclosures about Market Risk..........................................     23
------

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


Item 6 - Exhibits and Reports on Form 8-K....................................................................     26
------
</TABLE>



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

                                                                                                       As of          As of
                                                                                                   September 30,   December 31,
                                                                                                       1999           1998
                                                                                                   -------------   ------------
<S>                                                                                                  <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents.......................................................................   $ 12,872        $    181
  Short-term liquid investments...................................................................    271,326             763
  Subscriber receivables, net.....................................................................      8,090           6,322
  Related party receivables.......................................................................      2,390             746
  Prepaids and other current assets...............................................................      6,826           5,351
                                                                                                     --------        --------
     Total current assets.........................................................................    301,504          13,363
Investments in and advances to affiliated companies, accounted for under the equity method, net...     28,401          24,597
Property, plant and equipment, net of accumulated depreciation of $232,737 and $147,511,
 respectively.....................................................................................    223,569         122,968
Goodwill and other intangible assets, net of accumulated amortization of $25,071 and $17,512,
 respectively.....................................................................................     76,839          42,559
Deferred financing costs, net of accumulated amortization of $7,368 and $3,237, respectively......     17,666          11,675
Other non-current assets, net.....................................................................      2,803             870
                                                                                                     --------        --------
     Total assets.................................................................................   $650,782        $216,032
                                                                                                     ========        ========

LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
  Accounts payable................................................................................   $  3,154        $  5,426
  Accrued liabilities.............................................................................     44,211          28,522
  Construction payables...........................................................................      3,264           1,076
  Current portion of due to parent................................................................     12,792           3,665
  Short-term debt.................................................................................          -          36,738
  Current portion of other long-term debt.........................................................      1,239           2,189
                                                                                                     --------        --------
     Total current liabilities....................................................................     64,660          77,616

Due to parent.....................................................................................     10,177           6,578
Senior discount notes.............................................................................    394,453         356,640
Other long-term debt..............................................................................    227,074          68,086
Other long-term liabilities.......................................................................      1,516           1,741
                                                                                                     --------        --------
     Total liabilities............................................................................    697,880         510,661
                                                                                                     --------        --------
Minority interest.................................................................................     77,119               -

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......................................................................    311,305         215,624
  Deferred compensation...........................................................................    (19,685)              -
  Accumulated deficit.............................................................................   (392,662)       (481,240)
  Other cumulative comprehensive loss.............................................................    (23,353)        (29,191)
                                                                                                     --------        --------
     Total stockholder's deficit..................................................................   (124,217)       (294,629)
                                                                                                     --------        --------
     Total liabilities and stockholder's deficit..................................................   $650,782        $216,032
                                                                                                     ========        ========


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


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

                                                                    For the Three Months Ended    For the Nine Months Ended
                                                                           September 30,                September 30,
                                                                    --------------------------    --------------------------
                                                                       1999            1998          1999            1998
                                                                    ----------      ----------    ----------      ----------
<S>                                                                 <C>             <C>           <C>             <C>
Revenue..........................................................   $   41,745      $   21,795    $  106,565      $   62,558

System operating expense, including related party expense
  of $112, $990, $3,636 and $2,924, respectively.................      (28,397)        (20,933)      (75,842)        (50,684)
System selling, general and administrative expense...............      (13,587)        (12,294)      (35,928)        (34,216)
Corporate general and administrative expense, including
  allocated expense from related party of $1,549, $(96),
  $21,197 and $4,252, respectively...............................       (2,833)             75       (22,610)         (4,454)
Depreciation and amortization....................................      (25,086)        (22,379)      (75,029)        (73,014)
                                                                    ----------      ----------    ----------      ----------
     Net operating loss..........................................      (28,158)        (33,736)     (102,844)        (99,810)

Gain on sale of stock issued by subsidiary.......................      249,036               -       249,036               -
Interest income..................................................        2,430              32         2,497             158
Interest expense, including related party expense of $0,
  $264, $0 and $887,  respectively...............................      (17,635)        (14,166)      (50,672)        (41,461)
Other income (expense), net......................................          413            (683)       (5,353)         (1,847)
                                                                    ----------      ----------    ----------      ----------
Net income (loss) before other items.............................      206,086         (48,553)       92,664        (142,960)

Share in results of affiliated companies, net....................       (4,175)         (4,659)      (12,855)         (8,195)
Minority interest................................................        8,769               -         8,769               -
                                                                    ----------      ----------    ----------      ----------
     Net income (loss)...........................................   $  210,680      $  (53,212)   $   88,578      $ (151,155)
                                                                    ==========      ==========    ==========      ==========

Change in cumulative translation adjustments.....................        2,458          (3,669)        5,838             208
                                                                    ----------      ----------    ----------      ----------
     Comprehensive income (loss).................................   $  213,138      $  (56,881)   $   94,416      $ (150,947)
                                                                    ==========      ==========    ==========      ==========
Net income (loss) per common share:
     Basic net income (loss).....................................   $    11.82      $    (3.84)   $     4.97      $   (10.90)
                                                                    ==========      ==========    ==========      ==========
     Diluted net income (loss)...................................   $    11.51      $    (3.84)   $     4.84      $   (10.90)
                                                                    ==========      ==========    ==========      ==========
Weighted-average number of common shares outstanding:
     Basic.......................................................   17,810,249      13,864,941    17,810,249      13,864,941
                                                                    ==========      ==========    ==========      ==========
     Diluted.....................................................   18,298,249      13,864,941    18,298,249      13,864,941
                                                                    ==========      ==========    ==========      ==========




              The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
                                                              3
<PAGE>
<TABLE>
<CAPTION>


                                                   UNITED AUSTRALIA/PACIFIC, INC.
                                     CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER'S DEFICIT
                                            (Stated in thousands, except share amounts)
                                                            (Unaudited)

                                                                                                            Other
                                                                                                          Cumulative
                                             Common Stock       Additional                               Comprehensive
                                         --------------------    Paid-In      Deferred     Accumulated      Income
                                           Shares      Amount    Capital    Compensation     Deficit       (Loss)(1)       Total
                                         ----------  --------   ----------  ------------   -----------   -------------   ---------
<S>                                      <C>           <C>       <C>          <C>           <C>            <C>          <C>
Balances, December 31, 1998...........   17,810,249    $178      $215,624     $      -      $(481,240)     $(29,191)    $(294,629)

Cash contributions from parent........            -       -        29,639            -              -             -        29,639
Non-cash contributions from parent....            -       -        27,463            -              -             -        27,463
Net income............................            -       -             -            -         88,578             -        88,578
Equity transactions of subsidiaries...            -       -        38,579      (19,685)             -             -        18,894
Change in cumulative translation
  adjustments.........................            -       -             -            -              -         5,838         5,838
                                         ----------    ----      --------     --------      ---------      --------     ---------
Balances, September 30, 1999..........   17,810,249    $178      $311,305     $(19,685)     $(392,662)     $(23,353)    $(124,217)
                                         ==========    ====      ========     ========      =========      ========     =========



(1) As of September 30, 1999, Other Cumulative Comprehensive Income (Loss) represents foreign currency translation adjustments.





















                  The accompanying notes are an integral part of this condensed consolidated financial statement.
</TABLE>
                                                                 4



<PAGE>
<TABLE>
<CAPTION>
                                                   UNITED AUSTRALIA/PACIFIC, INC.
                                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                                       (Stated in thousands)
                                                            (Unaudited)
                                                                                                       For the Nine Months Ended
                                                                                                             September 30,
                                                                                                      ----------------------------
                                                                                                         1999              1998
                                                                                                      ----------        ----------
<S>                                                                                                   <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...............................................................................      $  88,578         $(151,155)
Adjustments to reconcile net loss to net cash flows from operating activities:
  Gain on issuance of common equity securities by subsidiaries..................................       (249,036)                -
  Minority interest.............................................................................         (8,769)                -
  Depreciation and amortization.................................................................         75,029            73,014
  Share in results of affiliated companies, net.................................................          6,477             8,195
  Allocation of expense accounted for as capital contributions by parent........................          2,391             3,617
  Accretion of interest on senior notes and amortization of deferred financing costs............         41,647            36,279
  Stock-based compensation expense..............................................................         18,894                -
  Decrease in receivables, net..................................................................         (1,165)           (3,614)
  Decrease (increase) in other assets...........................................................          4,934            (3,568)
  Increase in accounts payable, accrued liabilities and other...................................          8,455             8,588
                                                                                                      ---------         ---------
Net cash flows from operating activities........................................................        (12,565)          (28,644)
                                                                                                      ---------         ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term liquid investments.......................................................       (270,044)                -
Sale of short-term liquid investments...........................................................          1,444            12,325
Investments in and advances to affiliated companies.............................................         (5,177)          (10,895)
Consolidation (deconsolidation) of New Zealand subsidiary.......................................            613            (9,881)
Purchase of property, plant and equipment.......................................................        (83,516)          (38,228)
Other...........................................................................................         (3,930)              121
                                                                                                      ---------         ---------
Net cash flows from investing activities........................................................       (360,610)          (46,558)
                                                                                                      ---------         ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributions from parent..................................................................         29,639            53,455
Issuance of common stock by subsidiary..........................................................        294,338                 -
Borrowings on the New Austar Bank Facility and Saturn Bank Facility.............................        198,168             9,410
Payment of the Austar Bank Facility.............................................................       (129,149)                -
Payments on capital leases and other debt.......................................................           (597)             (499)
Deferred financing costs........................................................................         (8,056)                -
                                                                                                      ---------         ---------
Net cash flows from financing activities........................................................        384,343            62,366
                                                                                                      ---------         ---------
EFFECT OF EXCHANGE RATES ON CASH................................................................          1,523             1,082
                                                                                                      ---------         ---------
DECREASE IN CASH AND CASH EQUIVALENTS...........................................................         12,691           (11,754)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD..................................................            181            12,344
                                                                                                      ---------         ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD........................................................      $  12,872         $     590
                                                                                                      =========         =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash received for interest......................................................................      $      28         $     259
                                                                                                      =========         =========
Cash paid for interest..........................................................................      $   5,611         $   3,808
                                                                                                      =========         =========
NON-CASH CONTRIBUTION FROM PARENT:
Investment in XYZ Entertainment.................................................................      $  25,072         $       -
                                                                                                      =========         =========
Non-cash capital contribution from parent.......................................................      $       -         $   6,155
                                                                                                      =========         =========
CONSOLIDATION/DECONSOLIDATION OF NEW ZEALAND SUBSIDIARY:
Working capital.................................................................................      $  10,162         $   4,159
Property, plant and equipment...................................................................        (80,656)          (26,484)
Elimination of investment in Saturn.............................................................         21,974                 -
Goodwill and other assets.......................................................................         (5,737)           (2,805)
Notes payable and other debt....................................................................         54,870             3,833
Minority interest...............................................................................              -            11,416
                                                                                                      ---------         ---------
Total cash received (relinquished)..............................................................      $     613         $  (9,881)
                                                                                                      =========         =========

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


<PAGE>


                         UNITED AUSTRALIA/PACIFIC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND NATURE OF OPERATIONS

United  Australia/Pacific,  Inc. (the "Company"),  a wholly-owned  subsidiary of
United  Asia/Pacific  Communications,   Inc.  ("UAP")  (formerly  known  as  UIH
Asia/Pacific  Communications,  Inc.), which is in turn an indirect  wholly-owned
subsidiary  of  UnitedGlobalCom,  Inc.  ("United")  (formerly  known  as  United
International  Holdings,  Inc.), 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
September 30, 1999.

          ***********************************************************
          *                                                         *
          *                         United                          *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *      United International Properties, Inc. ("UIPI")     *
          *                                                         *
          ***********************************************************
                                       *
                              100% (1) *
          ***********************************************************
          *                                                         *
          *                           UAP                           *
          *                                                         *
          ***********************************************************
                                       *
                              100%     *
          ***********************************************************
          *                                                         *
          *                     The Company(2)                      *
          *                                                         *
          ***********************************************************
                                       *
                              75.5%    *
          ***********************************************************
          *          Austar United Communications Limited           *
          *                    ("Austar United")                    *
          *                                                         *
          ***********************************************************
                                       *
                                       *
          ***********************************************************
          *                                                         *
          *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")                                 50.0%  *
          *New Zealand:                                             *
          * Saturn Communications Limited ("Saturn")        100.0%  *
          *                                                         *
          ***********************************************************


(1)  Effective  October 8, 1999,  UIPI  purchased the remaining 2.0% interest in
     UAP that it did not own.  The  seller  has the  right to  repurchase  these
     shares at the original sale price, plus interest at 14.0% per annum, at any
     time prior to October 8, 2000.
(2)  The Company also holds an up to 90.0%  economic  interest in Telefenua S.A.
     ("Telefenua") in Tahiti.


                                       6
<PAGE>
                         UNITED 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.  On July 27, 1999,  Austar United  acquired from the
minority  shareholder  of Saturn  ("SaskTel")  its 35.0%  interest  in Saturn in
exchange for 13,659,574 of Austar United's  shares,  thereby  increasing  Austar
United's ownership interest in Saturn from 65.0% to 100%. As a result, Saturn is
consolidated in these financial  statements effective July 27, 1999. 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  through
July 26, 1999. The change was made to comply with the consensus  guidance of the
Emerging Issues Task Force  regarding  Issue 96-16 ("EITF  96-16"),  and related
rules of the SEC, because SaskTel had 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  September  30,  1998 have been
adjusted to reflect the  deconsolidation  of Saturn  effective  as of January 1,
1998.  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 multi-channel  multi-point  distribution
system ("MMDS") or direct-to-home  ("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 estimated economic life of the asset.

                                       7
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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

      Subscriber premises equipment and converters..........   3-10 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

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.

STAFF ACCOUNTING BULLETIN NO. 51 ("SAB 51") ACCOUNTING POLICY

Gains realized as a result of stock issuances by the Company's  subsidiaries are
recorded in the statement of operations,  except for any transactions which must
be credited directly to equity in accordance with the provisions of SAB 51.

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

"Basic net income  (loss) per share" is determined by dividing net income (loss)
available to common stockholders by the weighted-average number of common shares
outstanding  during each period.  "Diluted net income (loss) per share" includes
the effects of potentially  issueable  common stock,  but only if dilutive.  The
Company's  warrants are included in the Company's  diluted net income (loss) per
share amounts for the three and nine months ended September 30, 1999.

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 Income (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.

                                       8
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


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.

NEW ACCOUNTING PRINCIPLES

The Financial  Accounting  Standards Board ("FASB") 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. In June 1999, the FASB approved
Statement  No.  137,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities-Deferral  of the  Effective  Date of FASB  Statement  No. 133," which
amends SFAS 133 to be  effective  for all fiscal  quarters  of all fiscal  years
beginning after June 15, 2000. The Company is currently  assessing the effect of
this new standard.

3.  RESTRUCTURING OF ASSETS AND INITIAL PUBLIC OFFERING

In  June  1999,  the  Company's  interests  in  Austar,  United  Wireless,   XYZ
Entertainment  and Saturn were  contributed to Austar United in exchange for new
shares issued by Austar United.  On July 27, 1999,  Austar United  acquired from
SaskTel  its 35.0%  interest  in Saturn in  exchange  for  13,659,574  of Austar
United's shares, thereby increasing Austar United's ownership interest in Saturn
from 65.0% to 100%. In addition,  on July 27, 1999,  Austar United  successfully
completed an initial public  offering  ("Australian  IPO") selling 103.5 million
shares on the  Australian  Stock  Exchange,  raising  gross and net  proceeds in
Australian  dollars  ("A$")4.70  ($3.03)  per share of A$486.5  million  ($313.6
million)  and  A$456.5  million  ($294.3  million),  respectively.  Based on the
carrying value of the Company's investment in Austar United as of July 27, 1999,
the Company  recognized a gain of $249.0  million from the resulting  step-up in
the carrying amount of the Company's  investment in Austar United, in accordance
with SAB 51. No  deferred  taxes were  recorded  related to this gain due to the
Company's intent on holding its investment in Austar United indefinitely. Austar
United's  offering  reduced  the  Company's  ownership  interest  from  100%  to
approximately  75.5%.  Including all vested stock options  granted to employees,
the  Company's  ownership  interest in Austar United on a fully diluted basis is
approximately 73.9%.

4.  INVESTMENTS IN AND ADVANCES TO AFFILIATED COMPANIES, ACCOUNTED FOR UNDER THE
    EQUITY METHOD
<TABLE>
<CAPTION>
                                                              As of September 30, 1999
                           -------------------------------------------------------------------------------------------
                              Investments in          Cumulative Share        Cumulative
                              and Advances to           in Results of        Translation      Valuation
                           Affiliated Companies     Affiliated Companies     Adjustments      Allowance         Total
                           --------------------     --------------------     -----------      ----------       -------
                                                                   (In thousands)
     <S>                         <C>                     <C>                   <C>            <C>              <C>
     XYZ Entertainment (1)..     $44,306                 $(18,818)             $ 2,913        $     -          $28,401
     Telefenua..............      18,599                  (14,215)                   -         (4,384)(2)            -
                                 -------                 --------              -------        -------          -------
          Total.............     $62,905                 $(33,033)             $ 2,913        $(4,384)         $28,401
                                 =======                 ========              =======        =======          =======

                                                              As of December 31, 1998
                           -------------------------------------------------------------------------------------------
                              Investments in          Cumulative Share        Cumulative
                              and Advances to           in Results of        Translation      Valuation
                           Affiliated Companies     Affiliated Companies     Adjustments      Allowance         Total
                           --------------------     --------------------     -----------      ----------       -------
                                                                   (In thousands)
     Saturn.................     $49,808                 $(23,138)             $(2,881)       $     -          $23,789
     XYZ Entertainment......      19,363                  (18,666)                 111              -              808
     Telefenua..............      18,599                  (14,215)                   -         (4,384)(2)            -
                                 -------                 --------              -------        -------          -------
          Total.............     $87,770                 $(56,019)             $(2,770)       $(4,384)         $24,597
                                 =======                 ========              =======        =======          =======
</TABLE>
     (1) In June 1999, the 25.0% interest in XYZ  Entertainment  held by UAP was
         transferred to the Company at its carrying value of $25.1 million.
     (2) The  Company  has  reserved  the  remaining  balance  of the  Telefenua
         investment of $4.4 million due to the uncertainty of realization.

                                       9
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


5.  PROPERTY, PLANT AND EQUIPMENT
                                                         As of         As of
                                                     September 30,  December 31,
                                                         1999          1998
                                                     -------------  ------------
                                                            (In thousands)
     Subscriber premises equipment and converters...   $269,347       $187,247
     MMDS/DTH distribution facilities...............     63,068         54,725
     Cable distribution networks....................     82,555          2,009
     Office equipment, furniture and fixtures.......     18,505          9,810
     Buildings and leasehold improvements...........      4,890          2,841
     Other..........................................     17,941         13,847
                                                       --------       --------
                                                        456,306        270,479
        Accumulated depreciation....................   (232,737)      (147,511)
                                                       --------       --------
        Net property, plant and equipment...........   $223,569       $122,968
                                                       ========       ========

6.  GOODWILL AND OTHER INTANGIBLE ASSETS
                                                         As of         As of
                                                     September 30,  December 31,
                                                         1999          1998
                                                     -------------  ------------
                                                            (In thousands)
     Austar United..................................   $101,910       $      -
     Austar.........................................          -         60,071
                                                       --------       --------
                                                        101,910         60,071
        Accumulated amortization....................    (25,071)       (17,512)
                                                       --------       --------
        Net goodwill and other intangible assets....   $ 76,839       $ 42,559
                                                       ========       ========

7.  SENIOR DISCOUNT NOTES
                                                         As of         As of
                                                     September 30,  December 31,
                                                         1999          1998
                                                     -------------  ------------
                                                            (In thousands)
     May 1996 Notes (as defined below), net
      of unamortized discount.......................   $356,648       $321,687
     September 1997 Notes (as defined below),
      net of unamortized discount...................     37,805         34,953
                                                       --------       --------
        Total senior discount notes.................   $394,453       $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 $443.0 million (the "May 1996 Notes"), had an accreted
value of $356.6  million as of September  30,  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 $70.0
million 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 $447.4
million on May 15, 2001,  the date cash  interest  begins to accrue.  The quoted
fair market  value of these notes was  approximately  $340.0  million and $223.7
million as of September 30, 1999 and December 31, 1998, respectively.

                                       10
<PAGE>
                         UNITED 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 $45.0 million (the "September 1997 Notes"),  had
an accreted  value of $37.8  million as of September  30, 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 $45.4  million on May 15, 2001,  the date cash
interest  begins to accrue.  The quoted  fair  market  value of these  notes was
approximately  $34.5  million  and $22.7  million as of  September  30, 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 at that time.  The warrants are
exercisable  at a price of $10.45 per share which would result in gross proceeds
of  approximately  $5.1 million  upon  exercise.  The  warrants are  exercisable
through May 15,  2006.  The  warrants  were valued at $3.7 million 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
                                                     September 30,  December 31,
                                                         1999          1998
                                                     -------------  ------------
                                                            (In thousands)
     Austar Bank Facility...........................   $173,448       $ 67,352
     Saturn Bank Facility...........................     52,288              -
     Capitalized leases and other...................      2,577          2,923
                                                       --------       --------
                                                        228,313         70,275
          Less current portion......................     (1,239)        (2,189)
                                                       --------       --------
          Total other long-term debt................   $227,074       $ 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$200.0  million  to fund  its  subscriber
acquisition and working  capital needs.  Austar had drawn the full amount of the
facility  by April 1999 when it secured a new  syndicated  senior  secured  debt
facility (the "New Austar Bank  Facility") for A$400.0  million 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. As of September
30, 1999,  Austar had drawn A$266.0 million  ($173.4  million) on the New Austar
Bank  Facility.  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.

SATURN BANK FACILITY

On July 15, 1999,  Saturn closed a syndicated  senior debt facility (the "Saturn
Bank  Facility") in the amount of NZ$125.0  million ($64.7  million) to fund the
completion  of Saturn's  network.  As of September  30,  1999,  Saturn had drawn
NZ$101.0  million ($52.3 million)  against the facility and expects to draw down
the remaining  balance by the end of fourth quarter 2000. This debt facility has
an  interest  rate of 3.0% over the  current  base rate upon draw down which has
averaged  approximately  8.1%. The Saturn Bank Facility is repayable over a five
year period beginning fourth quarter 2001.

                                       11
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


9.   RELATED PARTY

Effective  May 1,  1996,  the  Company  and  United  Management,  Inc.  ("United
Management") (formerly known as UIH Management,  Inc.), an indirect wholly-owned
subsidiary of United,  executed a 10-year  management  services  agreement  (the
"Management  Agreement"),  pursuant to which United 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 $0.75  million  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,  United
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").  In  addition,  the  Company
reimburses  UAP or  United  for any  out-of-pocket  expenses  including  travel,
lodging and entertainment  expenses,  incurred by UAP or United on behalf of the
Company.  In  December  1997,  United  began  allocating  corporate  general and
administrative   expense  to  the   Company  in  the  form  of  deemed   capital
contributions,  based on  increased  activity  at the  operating  system  level.
Management believes that this method of allocating costs is reasonable.  For the
nine months  ended  September  30, 1999 and 1998,  the  Company  recorded  $21.2
million and $4.3 million,  respectively, in corporate general and administrative
expense  allocated from United and management  fees due from the Company to UAP.
The September  30, 1999 amount  includes  $17.6 million of non-cash  stock-based
compensation expense related to UAP stock appreciation rights.

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,  United has appointed
certain  of its  employees  to  serve  in  senior  management  positions  at the
operating  systems.  The operating  systems  reimburse United for certain direct
costs  incurred by United,  including  salaries and  benefits  relating to these
senior management  positions,  pursuant to the terms of the technical assistance
agreements.  For the nine months ended  September 30, 1999 and 1998, the Company
recorded  $3.6  million  and  $2.9  million,   respectively,  in  related  party
management fees due from the operating systems to UAP.  Effective June 24, 1999,
the rights under these management fee agreements, excluding Telefenua, have been
assigned  to Austar  United  as part of the  restructuring  associated  with the
Australian IPO.

In  addition,  effective  June 24,  1999,  United and Austar  United  executed a
management   services  agreement  pursuant  to  which  United  performs  certain
technical and consulting  services in return for a monthly  management  fee. The
monthly  fee  payable  by Austar  United to United in 1999 is $0.2  million  per
month. This amount may be adjusted before January 1 of each year by the board of
directors  of United  but may not  increase  by more than 15.0% in any one year.
This agreement also requires that Austar United  reimburse United for all direct
and other expenses reasonably incurred by United on behalf of Austar United. The
agreement will continue through December 31, 2010.

Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
                                                                                    As of         As of
                                                                                September 30,  December 31,
                                                                                    1999          1998
                                                                                -------------  ------------
                                                                                       (In thousands)
     <S>                                                                           <C>            <C>
     Austar United.............................................................    $ 1,714        $     -
     Austar technical assistance agreement obligations, including deferred
       management fees of $11,212 and $5,973, respectively (1).................     13,806          8,347
     Saturn technical assistance agreement obligations.........................      1,809              -
     United Wireless technical assistance agreement obligations................        723            605
     Payable to parent for management fees.....................................      1,741          1,056
     Other.....................................................................        489            235
                                                                                   -------        -------
                                                                                    20,282         10,243
          Less current portion.................................................    (10,105)        (3,665)
                                                                                   -------        -------
          Total due to parent..................................................    $10,177        $ 6,578
                                                                                   =======        =======
</TABLE>

     (1)  Austar United and UAP have the option of converting  these  management
          fees into equity.

                                       12
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


10.   STOCK OPTION PLAN

The Austar  United  Communications  Executive  Share Option Plan ("AU Plan") was
established  June 17,  1999.  Effective on the  Australian  IPO date of July 27,
1999,  certain  employees of United and Austar United were granted options under
the AU Plan in direct  proportion to their previous holding of UAP options under
the UAP stock  option  plan.  A total of  20,401,954  options  were granted at a
strike price of A$1.80 each,  A$2.90 below the  Australian  IPO price of A$4.70.
Each option holder was also given retroactive vesting through the Australian IPO
date to  reflect  vesting  under  the  old UAP  Plan,  resulting  in a total  of
9,126,018  options  vested.  The total  intrinsic value as of the Australian IPO
date was $38.6  million,  which was recorded in the  statement of  stockholder's
equity with a corresponding  deferred  compensation  amount of $21.0 million for
those options not yet vested.  The net $17.6 million of intrinsic value that was
previously recorded on UAP's books was recorded as a deemed capital contribution
from UAP to Austar  United as of June 30,  1999.  The Company  will  continue to
amortize deferred  compensation  under variable plan accounting as these options
vest on a  monthly  basis.  For the  two  months  ended  September  30,  1999 an
additional $1.3 million of compensation expense was recorded in the statement of
operations.  On July 27,  1999,  the AU Plan became a fixed  option plan for all
future grants.

11.   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 its 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,  management  fees,  non-cash  general and  administrative  expense
allocated from parent, stock-based compensation charges ("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.

                                       13
<PAGE>
                         UNITED AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


<TABLE>
<CAPTION>
                    For the Three Months Ended   For the Three Months Ended   For the Nine Months Ended   For the Nine Months Ended
                        September 30, 1999           September 30, 1998           September, 1999             September 30, 1998
                    --------------------------   --------------------------   -------------------------   ------------- -----------
                                     Adjusted                     Adjusted                    Adjusted                    Adjusted
                    Revenue          EBITDA(1)   Revenue          EBITDA(1)   Revenue         EBITDA(1)   Revenue         EBITDA(1)
                    -------          ---------   -------          ---------   -------         ---------   -------         ---------
                          (In thousands)               (In thousands)              (In thousands)              (In thousands)
<S>                 <C>               <C>        <C>              <C>         <C>             <C>         <C>             <C>
Australia.........  $39,596           $ 703      $20,643          $(10,435)    $104,416       $  (738)    $59,147         $(19,541)
New Zealand.......    2,149            (832)           -                 -        2,149          (832)          -                -
Tahiti............        -               -        1,152                (7)           -             -       3,411              122
Corporate.........        -             (18)           -               (22)           -          (148)          -             (203)
                    -------           -----      -------          --------     --------       -------     -------         --------
     Total........  $41,745           $(147)     $21,795          $(10,464)    $106,565       $(1,718)    $62,558         $(19,622)
                    =======           =====      =======          ========     ========       =======     =======         ========
</TABLE>

                      As of           As of
                    September      December 31,
                      1999            1998
                    ---------------------------
                            Total Assets
                    ---------------------------
                          (In thousands)
Australia.........  $512,384        $181,169
New Zealand.......   128,602          23,789
Tahiti............         -               -
Corporate.........     9,796          11,074
                    --------        --------
     Total........  $650,782        $216,032
                    ========        ========

(1)  "Adjusted EBITDA"  represents net operating  earnings before  depreciation,
     amortization,  non-cash general and  administrative  expense allocated from
     parent,  stock-based  compensation  charges and management  fees.  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'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  statements  of operations as
follows:

<TABLE>
<CAPTION>
                                                                   For the Three Months           For the Nine Months
                                                                    Ended September 30,           Ended September 30,
                                                                  ------------------------      ------------------------
                                                                     1999          1998            1999          1998
                                                                  ----------    ----------      ----------    ----------
                                                                                      (In thousands)
                                                                  <S>            <C>             <C>          <C>
Net operating loss.............................................   $(28,158)      $(33,736)       $(102,844)    $(99,810)
Depreciation and amortization..................................     25,086         22,379           75,029       73,014
Stock-based compensation expense...............................      1,264              -           18,894            -
Non-cash general and administrative expense
  allocation from parent.......................................        823           (315)           2,391        3,617
Management fees................................................        838          1,208            4,812        3,557
                                                                  --------       --------        ---------     --------
     Consolidated Adjusted EBITDA..............................   $   (147)      $(10,464)       $  (1,718)    $(19,622)
                                                                  ========       ========        =========     ========
</TABLE>

                                       14
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 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.  Until June 24, 1999, Austar, Saturn, Telefenua
and United Wireless were also parties to technical  service  agreements with UAP
for which such operating  companies  paid to UAP fees based on their  respective
gross revenues. Effective June 24, 1999, these technical service agreements with
UAP, excluding Telefenua, were assigned to Austar Untied.

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 venturers, 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

As of September  30, 1999, we held (i) an effective  100%  economic  interest in
Austar,  (ii) a  100.0%  interest  in  Saturn,  (iii)  a 50.0%  interest  in XYZ
Entertainment and (iv) a 100% interest in United Wireless through Austar United.
In connection  with the July 1999  Australian  IPO, we decreased our interest in
Austar United from 100% to  approximately  75.5% (73.9% on a fully diluted basis
after vested employee options). We also hold an up to 90.0% economic interest in
Telefenua.

Immediately  prior to the Australian IPO, Austar United issued 13,659,574 shares
of Austar United to SaskTel for SaskTel's 35.0% interest in Saturn. As a result,
Saturn has been  consolidated in these financial  statements  effective July 27,
1999.  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 through July 26,
1999. The change was made to comply with the consensus  guidance of the Emerging
Issues Task Force regarding Issue 96-16 ("EITF 96-16"), and related rules of the
SEC, because SaskTel had  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 September 30, 1998 have been adjusted to reflect
the deconsolidation of Saturn effective as of January 1, 1998. 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.

                                       15
<PAGE>


SUMMARY OPERATING DATA

The following tables set forth certain unaudited operating data:
<TABLE>
<CAPTION>
                                                               As of September 30, 1999
                                   ------------------------------------------------------------------------------------
                                                                                                              Net
                                    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         360,708              17.3%             75.5%
 Saturn.....................           141,000          83,582          13,907              16.6%             75.5%
                                     ---------       ---------         -------
    Total...................         2,226,000       2,166,690         374,615
                                     =========       =========         =======

Telephony:
 Saturn.....................           141,000          83,071          20,547              24.7%             75.5%
                                     =========       =========         =======
Programming:
 XYZ Entertainment..........               N/A             N/A         870,972(1)             N/A             37.8%
                                     =========       =========         =======
Data:
 Saturn (2).................           141,000          83,071           4,826               5.8%             75.5%
                                     =========       =========         =======


                                                               As of September 30, 1998
                                   ------------------------------------------------------------------------------------
                                                                                                              Net
                                    Television                          Basic                               Economic
                                     Homes in          Homes         Subscribers/          Basic            Ownership
                                   Service Area        Passed           Lines           Penetration         Interest
                                   ------------      ----------      ------------       -----------         ---------
Multi-channel television:
 Austar.....................         2,085,000       2,072,706         251,255              12.1%            100.0%
 Saturn.....................           141,000          42,712           4,651              10.9%             65.0%
                                     ---------       ---------         -------
    Total...................         2,226,000       2,115,418         255,906
                                     =========       =========         =======
Telephony:
 Saturn.....................           141,000          26,974           4,190              15.5%             65.0%
                                     =========       =========         =======
Programming:
 XYZ Entertainment..........               N/A             N/A         647,255 (1)            N/A             50.0%
                                     =========       =========         =======
</TABLE>

(1)  This  figure  represents  the total  subscribers  to the  five-channel  XYZ
     Entertainment package.
(2)  Saturn launched data services in late 1998.

                                       16

<PAGE>


SELECTED SYSTEM  OPERATING  DATA. The following  table displays  selected system
operating data in Austar's local currency and U.S. dollar:
<TABLE>
<CAPTION>
                                    For the Three Months Ended     For the Nine Months Ended
                                          September 30,                  September 30,
                                    --------------------------     ------------------------
                                      1999              1998         1999            1998
                                    --------          --------     --------        --------
                                          (In thousands)                 (In thousands)
     <S>                             <C>               <C>         <C>              <C>
     Austar (A$):
       Revenue....................   58,425             34,620     157,893           93,890
       Adjusted EBITDA (1)........   (1,484)           (16,355)    (12,135)         (25,795)

     Austar (US$):
       Revenue....................   37,935             20,588     102,121           58,934
       Adjusted EBITDA (1)........     (968)            (9,718)     (7,804)         (15,513)
</TABLE>

     (1) "Adjusted   EBITDA"    represents   net   operating   earnings   before
         depreciation, amortization, non-cash general and administrative expense
         allocated from parent and management fees.  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.   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 September 30, 1999, we had invested  approximately  $471.6  million in our
projects.  These fundings do not include  amounts  contributed  by  shareholders
other  than  the  Company,  proceeds  from the  Australian  IPO,  the  operating
subsidiary  bank  borrowings or amounts  contributed  in either cash or stock to
acquire additional economic interests.
                                                                       As of
                                                                  September 30,
     SOURCES OF FUNDINGS:                                              1999
                                                                  --------------
                                                                  (In thousands)
     Senior discount notes proceeds, net of offering costs......     $244,652
     Cash contributions and other equity from parent (1) (2)....      222,416
     Cash received for interest.................................        4,546
                                                                     --------
          Total.................................................     $471,614
                                                                     ========

                                                                       As of
                                                                  September 30,
     USES OF FUNDINGS:                                                 1999
                                                                  --------------
                                                                  (In thousands)
     Austar (1).................................................     $349,429
     Saturn.....................................................       44,612
     Telefenua..................................................       16,738
     XYZ Entertainment (2)......................................       41,553
     United Wireless............................................       11,344
     Other......................................................        7,938
                                                                     --------
          Total.................................................     $471,614
                                                                     ========

     (1)  Includes  issuance/use  of $29.8  million  and $6.2  million in United
          convertible preferred stock in 1995 and 1998, respectively, to acquire
          additional economic interests in Australia.
     (2)  Includes the non-cash  contribution  from UAP of $25.1  million for an
          additional 25.0% interest in XYZ Entertainment.

                                       17
<PAGE>


We are responsible for our  proportionate  share of capital  requirements of the
operating companies. We have funded our proportionate share to date with capital
contributions by United through UAP and proceeds from private debt offerings and
have  reduced  our  proportionate  share to date with  subsidiary  bank debt and
strategic  partner  contributions.  We do not  expect to  contribute  additional
capital  to  Austar  United  for  their  on-going   operating  and   development
requirements,  as future funding will come from the Australian IPO proceeds, the
New Austar Bank Facility, the Saturn Bank Facility and operating cash flow.

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999

We incurred a net profit  during the nine  months  ended  September  30, 1999 of
$88.6  million,   which  included   non-cash  items  such  as  depreciation  and
amortization expense totaling $75.0 million,  accretion of interest on the Notes
and  amortization  of deferred  financing  costs  totaling $41.6 million and the
stock-based compensation expense of $18.9 million.

Cash and cash  equivalents  increased  $12.7  million  from $0.2  million  as of
December 31, 1998 to $12.9 million as of September 30, 1999.  Principal  sources
of cash during the nine months ended  September 30, 1999 included  proceeds from
the Australian IPO of $294.3 million, borrowings on the New Austar Bank Facility
and the Saturn Bank Facility of $198.1 million,  cash  contributions from parent
of $29.6  million  and other  investing  and  financing  sources  totaling  $3.6
million.

During the nine months ended September 30, 1999,  cash was used  principally for
purchase of short-term  liquid  investments  of $270.0  million,  payment of the
Austar  Bank  Facility  of $129.1  million,  purchases  of  property,  plant and
equipment  totaling  $83.5  million to continue new  subscriber  connections  at
Austar  and the  build-out  of  existing  projects,  the  funding  of  operating
activities  of  $12.6  million,   deferred  financing  costs  of  $8.1  million,
investments  in and advances to  affiliated  companies of $5.2 million and other
uses totaling $4.4 million.

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

We incurred a net loss during the nine months ended September 30, 1998 of $151.2
million,  which included  non-cash items such as depreciation  and  amortization
expense  totaling  $73.0  million  and  accretion  of  interest on the Notes and
amortization of deferred financing costs totaling $36.3 million.

Cash and cash  equivalents  decreased  $11.7  million  from $12.3  million as of
December 31, 1997 to $0.6 million as of September 30, 1998. Principal sources of
cash during the nine months ended September 30, 1998 included cash contributions
from  parent  of  $53.5  million,  net  proceeds  from  the  sale of  short-term
investments  of $12.3  million,  borrowings  on the Austar Bank Facility of $9.4
million and other investing and financing sources of $1.2 million.

During the nine months ended September 30, 1998,  cash was used  principally for
the purchase of  property,  plant and  equipment  of $38.2  million to construct
Austar's and Telefenua's  systems,  the funding of operating activities of $28.6
million,  investments in and advances to affiliated  companies of $10.9 million,
the  deconsolidation of Saturn of $9.9 million and other investing and financing
uses totaling $0.5 million.

RESULTS OF OPERATIONS

On July 27, 1999,  Austar  United  acquired  from SaskTel its 35.0%  interest in
Saturn in exchange  for  13,659,574  of its shares,  thereby  increasing  Austar
United's  ownership  interest in Saturn from 65.0% to 100%. As a result,  Saturn
was  consolidated  in these  financial  statements  as of July 27, 1999.  We had
previously  discontinued  consolidating  the results of operations of Saturn and
returned to the equity  method of  accounting,  effective  as of January 1, 1998
(see Note 2 to our financial statements). Accordingly, the results of operations
for the three and nine months  ended  September  30, 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  and New Zealand  dollar per one U.S.
dollar.

                                               Australian    New Zealand
                                                 Dollars       Dollars
                                               ----------    -----------
     September 30, 1999.....................     1.5336        1.9316
     December 31, 1998......................     1.6332        1.8939
     September 30, 1998.....................     1.6855        2.0000
     December 31, 1997......................     1.5378        1.7161


                                       18
<PAGE>

REVENUE. We recognized revenue of $41.7 million and $106.6 million for the three
and nine  months  ended  September  30,  1999,  respectively,  compared to $21.8
million and $62.6  million for the same  periods in the prior year.  This was an
increase of $19.9  million and $44.0 million for the three and nine months ended
September 30, 1999, respectively,  compared to the amounts for the corresponding
periods in the prior year.

AUSTAR

Revenue for Austar increased $17.3 million,  or 84.0% from $20.6 million for the
three  months  ended  September  30, 1998 to $37.9  million for the three months
ended September 30, 1999.  Austar's revenue  increased $43.2 million,  or 73.3%,
from $58.9  million  for the nine  months  ended  September  30,  1998 to $102.1
million for the nine months ended  September 30, 1999. The U.S.  dollar increase
in revenue  was  positively  impacted by $2.8  million  and $3.1  million due to
fluctuation in exchange rates between the three and nine months ended  September
30, 1999,  respectively,  compared to the same  periods in the prior year.  On a
functional currency basis, Austar's revenue increased A$23.8 million from A$34.6
million for the three months ended  September 30, 1998 to A$58.4 million for the
three months ended  September 30, 1999, a 68.8%  increase.  Austar's  functional
currency  revenue  increased  A$64.0  million,  from A$93.9 million for the nine
months  ended  September  30, 1998 to A$157.9  million for the nine months ended
September 30, 1999, a 68.2%  increase.  These  increases  were  primarily due to
subscriber  growth  (360,708  at  September  30,  1999  compared  to  251,255 at
September  30, 1998) and increased  average  monthly  revenue per  subscriber as
Austar  continues to expand its customer base. The average  monthly  revenue per
subscriber  increased  A$7.48  ($4.88) from an average per subscriber of A$46.36
($30.23) for the nine months ended  September  30, 1998 to an average of A$53.84
($35.11) per  subscriber  for the nine months ended  September 30, 1999, a 16.1%
increase.

ADJUSTED  EBITDA.  Adjusted  EBITDA was negative  $0.1 million and negative $1.7
million for the three and nine months ended  September  30, 1999,  respectively,
compared  to negative  $10.5  million and  negative  $19.6  million for the same
periods in the prior year.  This was a decrease in the  Adjusted  EBITDA loss of
$10.4  million and $17.9  million for the three and nine months ended  September
30, 1999, respectively, compared to the amounts for the corresponding periods in
the prior year.

AUSTAR

Austar's  Adjusted EBITDA loss decreased $8.7 million,  or 89.7%,  from negative
$9.7  million for the three  months ended  September  30, 1998 to negative  $1.0
million for the three months ended September 30, 1999.  Austar's Adjusted EBITDA
loss decreased $7.7 million,  or 49.7%, from negative $15.5 million for the nine
months  ended  September  30, 1998 to negative  $7.8 million for the nine months
ended  September 30, 1999.  The U.S.  dollar  Adjusted  EBITDA loss decrease was
positively impacted by $0.1 million due to fluctuation in exchange rates between
the three months ended  September 30, 1999 and 1998 and the U.S. dollar Adjusted
EBITDA loss decrease was positively  impacted by $0.2 million due to fluctuation
in exchange  rates  between the nine months ended  September  30, 1999 and 1998.
These  decreases  in  Adjusted  EBITDA  loss for the three and nine  months were
primarily due to Austar achieving incremental sales growth while keeping certain
costs fixed, such as the national customer service center,  corporate management
staff  and  media-related  marketing  costs.  On a  functional  currency  basis,
Austar's  Adjusted  EBITDA loss decreased  A$14.9  million from negative  A$16.4
million for the three months ended  September 30, 1998 to negative A$1.5 million
for the three  months ended  September  30,  1999,  a 90.9%  decrease.  Austar's
functional currency Adjusted EBITDA loss decreased A$13.7 million, from negative
A$25.8 million for the nine months ended  September 30, 1998 to negative  A$12.1
million for the nine months ended September 30, 1999, a 53.1% decrease.

DEPRECIATION AND  AMORTIZATION  EXPENSE.  Depreciation and amortization  expense
increased  $2.7  million and $2.0  million  for the three and nine months  ended
September 30, 1999, respectively,  compared to the amounts for the corresponding
periods in the prior year as follows:
<TABLE>
<CAPTION>
                                             For the Three Months Ended    For the Nine Months Ended
                                                    September 30,                September 30,
                                             ---------------------------   -------------------------
                                               1999               1998       1999             1998
                                             --------           --------   --------         --------
                                                   (In thousands)              (In thousands)
<S>                                           <C>               <C>         <C>             <C>
Austar......................................  $23,229           $21,774     $72,183         $70,009
Saturn......................................    1,540                -        1,540              -
Other.......................................      317               605       1,306           3,005
                                              -------           -------     -------         -------
     Total depreciation and amortization
       expense..............................  $25,086           $22,379     $75,029         $73,014
                                              =======           =======     =======         =======
</TABLE>
                                       19
<PAGE>


AUSTAR

Depreciation  and  amortization  expense for Austar  increased $1.4 million,  or
6.4%,  from $21.8 million for the three months ended September 30, 1998 to $23.2
million  for the  three  months  ended  September  30,  1999.  Depreciation  and
amortization  expense  for Austar  increased  $2.2  million,  or 3.1% from $70.0
million for the nine months ended  September  30, 1998 to $72.2  million for the
nine months ended September 30, 1999. The U.S. dollar  increases were negatively
impacted by $1.7 million due to  fluctuation in exchange rates between the three
months ended September 30, 1999 and 1998 and negatively impacted by $2.1 million
due to fluctuation in exchange rates between the nine months ended September 30,
1999 and  1998.  On a  functional  currency  basis,  Austar's  depreciation  and
amortization expense decreased A$0.7 million,  from A$35.1 million for the three
months  ended  September  30, 1998 to A$34.4  million for the three months ended
September 30, 1999, a 2.0% decrease.  On a functional  currency basis,  Austar's
depreciation  and  amortization  expense  increased A$1.1 million,  from A$106.4
million for the nine months ended  September 30, 1998 to A$107.5 million for the
nine months ended September 30, 1999, a 1.0% increase.

CORPORATE   GENERAL   AND   ADMINISTRATIVE   EXPENSE.   Corporate   general  and
administrative  expense increased $3.0 million from $(0.1) million for the three
months ended September 30, 1998 due to an allocation  adjustment to $2.9 million
for  the  three  months  ended  September  30,  1999.   Corporate   general  and
administrative  expense  increased  $18.1 million from $4.5 million for the nine
months  ended  September  30, 1998 to $22.6  million  for the nine months  ended
September 30, 1999.  This increase was primarily  attributable  to a stock-based
compensation  charge of $18.9 million from the AU Plan for the nine months ended
September 30, 1999 compared to nil for the same period in 1998.

GAIN ON ISSUANCE OF SECURITIES BY  SUBSIDIARY.  On July 27, 1999,  Austar United
successfully  completed the  Australian  IPO selling 103.5 million shares on the
Australian  Stock Exchange  raising gross and net proceeds at A$4.70 ($3.03) per
share of A$486.5 million ($313.6 million) and A$456.5 million ($294.3  million),
respectively.  Based on the carrying value of our investment in Austar United as
of July 27,  1999,  we  recognized a gain of $249.0  million from the  resulting
step-up in the carrying amount of our investment in Austar United, in accordance
with SAB 51. No  deferred  taxes were  recorded  related to this gain due to our
intent on holding our investment in Austar United indefinitely.

INTEREST  EXPENSE.  Interest expense increased $3.5 million and $9.2 million for
the three and nine months ended  September 30, 1999,  respectively,  compared to
the amounts for the  corresponding  periods in the prior year.  These  increases
were primarily due to interest expense related to the Austar Bank Facility which
was $4.2 million and $12.1 million for the three and nine months ended September
30, 1999, respectively,  compared to $1.7 million and $5.3 million for the three
and nine months ended September 30, 1998, respectively.

OTHER  INCOME/EXPENSE.  Other expense,  net decreased $1.1 million for the three
months ended  September  30, 1999  compared to the  corresponding  period in the
prior year. Other expense,  net increased $3.5 million for the nine months ended
September  30, 1999 compared to the amount for the  corresponding  period in the
prior year. This increase was primarily due to a programming  license  write-off
of $3.7 million in May 1999.

SHARE  IN  RESULTS  OF  AFFILIATED  COMPANIES,  NET.  Our  share in  results  of
affiliated  companies  totaled a loss of $4.2 million and $12.9  million for the
three and nine months ended September 30, 1999,  respectively,  compared to $4.7
million and $8.2 million for the same periods in the prior year as follows:
<TABLE>
<CAPTION>
                                             For the Three Months Ended    For the Nine Months Ended
                                                    September 30,                September 30,
                                             ---------------------------   -------------------------
                                               1999               1998       1999             1998
                                             --------           --------   --------         --------
                                                   (In thousands)              (In thousands)
<S>                                           <C>               <C>         <C>             <C>
Saturn (1)..................................  $(2,679)          $(4,056)    $ (6,324)       $(8,062)
XYZ Entertainment...........................   (1,496)             (603)      (6,531)          (133)
                                              -------           -------     --------        -------
Total share in results of affiliated
 companies, net.............................  $(4,175)          $(4,659)    $(12,855)       $(8,195)
                                              =======           =======     ========        =======
</TABLE>

(1)  Equity  in  losses  through  July 26,  1999  only,  due to  acquisition  of
     additional 35.0% by Austar United.

                                       20
<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 United 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 United  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 September  30, 1999,  97.0% 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  100% of the items
identified during the  Identification  Phase as to Year 2000 compliance.  Of the
items researched, 95.0% are either compliant or can be easily remediated without
significant  cost to us. Based on current data to date, the computer systems for
all corporate operations are expected to be in compliance prior to Year 2000 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, testing will continue to the end of 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  percentages  includes  these
systems.  In general,  United 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 results of which are not included in the above
percentages.

In addition to its  program,  United 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  United 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.  These test procedures
and plans have been  completed and made available to members,  including  United
and the Company.

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
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.  For  example,  this is how the  Task  Force
learned that previously compliant reports on computer hardware and software from
third party vendors have been  re-classified  as  non-compliant  or  conditional
compliant. Such changes are not within the control of the Company.


                                       21
<PAGE>


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 99.0% of the headend controllers, which are the
most critical  component of the headend devices have been upgraded and tested as
compliant.  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 estimates the cost for the
Year 2000  program to be $1.5  million.  The cost  includes  certain  identified
replacement and remediation  procedures and external consultants.  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  completion  of the project.  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.


                                       22
<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.

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
                                                    ----------- -----------
     September 30, 1999............................   1.5336      1.9316
     December 31, 1998.............................   1.6332      1.8939
     September 30, 1998............................   1.6855      2.0000
     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.


                                       23
<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  (the Notes),  Australian  dollars  (New Austar Bank  Facility)  and New
Zealand dollars (Saturn Bank Facility).
<TABLE>
<CAPTION>
                                                                      As of September 30, 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 Notes.......................    $394,453                        $374,578
    Average interest rate................................       14.00%                          15.04%
  Variable rate NZ$ denominated Saturn Bank Facility.....    $ 52,288                        $ 52,288
    Average interest rate................................        8.03%                           8.03%
  Variable rate A$ denominated New Austar Bank Facility..    $173,448                        $173,448
    Average interest rate................................        7.65%                           7.65%
</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 (Notes),  Australian  dollars (New Austar Bank Facility) and New Zealand
dollars (Saturn Bank Facility).
<TABLE>
<CAPTION>
                                                                                  As of September 30, 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 Notes.......................    $ -        $ -     $ -       $    -   $     -    $394,453     $394,453
  Variable rate NZ$ denominated Saturn Bank Facility.....    $ -        $ -     $647      $5,177   $ 9,319    $ 37,145     $ 52,288
  Variable rate A$ denominated New Austar Bank Facility..    $ -        $ -     $  -      $   -    $51,553    $121,895     $173,448

</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 four interest rate swaps to manage interest rate exposure on
the New Austar Bank Facility.  Two of these swap  agreements  expire in 2002 and
effectively  convert an  aggregate  principal  amount of A$50.0  million  ($32.6
million as of September 30, 1999) of variable  rate,  long-term  debt into fixed
rate  borrowings.  The other two swap  agreements  expire in 2004 and convert an
aggregate principal amount of A$100.0 million ($65.2 million as of September 30,
1999) of  variable  rate,  long-term  debt into  fixed  rate  borrowings.  As of
September 30, 1999, the  weighted-average  fixed rate under these agreements was
7.95%. As a result of these swap  agreements,  interest expense was increased by
approximately A$0.3 million ($0.2 million) during the third quarter 1999.

In addition,  we have an interest rate swap to manage our exposure on the Saturn
Bank  Facility  which  effectively  converts an  aggregate  principal  amount of
NZ$60.6  million  ($31.4  million as of September  30,  1999) of variable  rate,
long-term  debt into fixed rate  borrowings.  The interest  rate swap includes a
stepped fix rate with an  additional  margin which is expected to decline as the
debt to EBITDA ratio declines.  As of September 30, 1999, the average fixed rate
under the  agreement  was 9.34%.  As a result of this swap  agreement,  interest
expense was increased by approximately  NZ$0.2 million ($0.1 million) during the
third quarter 1999.


                                       24
<PAGE>


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 September 30, 1999, we estimate
that we would have paid approximately  A$3.4 million ($2.2 million) to terminate
the agreements on the New Austar Bank Facility.

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 and
New Zealand dollars.
<TABLE>
<CAPTION>
                                                                                  As of September 30, 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 (New Austar Bank Facility)...........      $  -       $  -    $   -    $32,603     $  -     $65,206      $97,809
  Average pay rate %...................................      7.95%      7.95%    7.95%      7.95%    7.95%       7.95%        7.95%
  Average receive rate %...............................      7.65%      7.65%    7.65%      7.65%    7.65%       7.65%        7.65%

Variable to fixed (Saturn Bank Facility)...............      $  -       $   -   $   -    $     -     $  -     $31,373      $31,373
  Average pay rate %...................................      9.34%      9.09%   10.19%     10.19%    9.69%       9.94%        9.74%
  Average receive rate %...............................      8.03%      8.03%    8.03%      8.03%    8.03%       8.03%        8.03%
</TABLE>



                                       25
<PAGE>



                           PART II - OTHER INFORMATION


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

(a)  Exhibits

     10.1      Supplemental  Deed  dated  July  15,  1999  by and  among  Saturn
               Communications  Limited,  as the  Borrower,  Kiwi  Cable  Company
               Limited,  as  Guarantor,  SaskTel  Holding (New Zealand) Inc. and
               Saturn (NZ)  Holding  Company Pty Ltd,  as the  Mortgagors,  each
               financial  institution specified as a bank in Schedule 1 attached
               thereto, and Toronto Dominion Australia Limited, as the Agent.

     10.2      Second Supplemental Deed and Capital  Contribution dated July 29,
               1999 by and among Saturn Communications Limited, as the Borrower,
               Kiwi  Cable  Company   Limited,   as  Guarantor,   Austar  United
               Communications  Limited and Saturn (NZ) Holding  Company Pty Ltd,
               as the Mortgagors, and Toronto Dominion Australia Limited, as the
               Agent.

     27.1      Financial Data Schedule

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

     Date of Filing            Date of Event         Item Reported
     ---------------------     -----------------     ------------------------
     July 28, 1999             July 27, 1999         Item 5 - Other Events




                                       26
<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.



UNITED AUSTRALIA/PACIFIC, INC.



Date:      November 15, 1999
           ---------------------------------

By:        /S/ Valerie L. Cover
           ---------------------------------
           Valerie L. Cover
           Controller
           (A Duly Authorized Officer and Principal Financial Officer)








                                       27