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 June 30, 1998

                                       or

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

               For the transition period from           to 
                                              ---------    ----------
                          Commission File No. 333-05017

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

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

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

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







     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months and (2) has been  subject to such  filing
requirements for the past 90 days. Yes  X   No
                                       ---     ---


     The Company has no  publicly-traded  shares of capital stock.  As of August
13, 1998, the Company had 13,864,941 shares of common stock outstanding.


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



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


Item 1 - Financial Statements
------
     <S>                                                                                                          <C>
     Condensed Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997 (Unaudited)..............     2

     Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 1998
         and 1997 (Unaudited).................................................................................     3

     Condensed Consolidated Statement of Stockholder's Deficit for the Six Months Ended June 30, 1998
         (Unaudited)..........................................................................................     4

     Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997
         (Unaudited).........................................................................................      5

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


Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations...............     13
------                                                                                        


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


Item 5 - Other Information...................................................................................     19
------                    

Item 6 - Exhibits and Reports on Form 8-K....................................................................     19
------                                   
</TABLE>



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<TABLE>
<CAPTION>

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


                                                                                            As of             As of
                                                                                           June 30,        December 31,
                                                                                             1998             1997
                                                                                           --------       -------------
ASSETS
<S>                                                                                        <C>              <C>
Current assets
   Cash and cash equivalents........................................................       $  4,118         $ 12,344
   Restricted cash..................................................................            258              420
   Short-term investments...........................................................             --           12,325
   Subscriber receivables...........................................................          3,567            2,548
   Related party receivables........................................................          1,329            1,942
   Other receivables................................................................          1,592            1,220
   Prepaids.........................................................................          1,958            1,468
   Other current assets.............................................................            568              717
                                                                                           --------         --------
       Total current assets.........................................................         13,390           32,984

Property, plant and equipment, net of accumulated depreciation of $115,280 and
   $78,179, respectively............................................................        163,434          183,101
License fees, net of accumulated amortization of $4,449 and $3,773, respectively....          4,641            5,691
Goodwill, net of accumulated amortization of $10,010 and $8,044, respectively.......         42,139           43,017
Deferred financing costs, net of accumulated amortization of $2,243 and $1,306,
   respectively.....................................................................         12,258           13,393
Other non-current assets, net.......................................................             25              846
                                                                                           --------         --------
       Total assets.................................................................       $235,887         $279,032
                                                                                           ========         ========

LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities
   Accounts payable and accrued liabilities, including related party payables of
     $3,999 and $1,596, respectively................................................       $ 26,519         $ 25,023
   Construction payables............................................................          1,916            6,008
   Related party note payable.......................................................          4,999            4,999
   Current portion of long-term debt................................................          2,615            1,825
                                                                                           --------         --------
       Total current liabilities....................................................         36,049           37,855

Due to parent.......................................................................          7,320            5,394
Senior discount notes and other debt................................................        407,314          387,094
Other long-term liabilities.........................................................          1,493            1,426
                                                                                           --------         --------
       Total liabilities............................................................        452,176          431,769
                                                                                           --------         --------

Minority interest in subsidiary.....................................................         11,813           11,416
                                                                                           --------         --------

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, 13,864,941 shares
     issued and outstanding.........................................................            139              139
   Additional paid-in capital.......................................................        175,498          139,621
   Cumulative translation adjustments...............................................        (30,847)         (28,964)
   Accumulated deficit..............................................................       (372,892)        (274,949)
                                                                                           --------         --------
       Total stockholder's deficit..................................................       (228,102)        (164,153)
                                                                                           --------         --------
       Total liabilities and stockholder's deficit..................................       $235,887         $279,032
                                                                                           ========         ========

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

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

                                                         For the Three Months Ended           For the Six Months Ended
                                                                   June 30,                           June 30,
                                                         ---------------------------         -------------------------
                                                           1998              1997              1998             1997
                                                         ---------        ----------         --------          -------
<S>                                                     <C>               <C>               <C>               <C>
Service and other revenue.............................  $   20,570        $   16,219        $   41,178        $   30,711

System operating expense, including related party
   expense of $1,185, $919, $2,232 and $1,321,
   respectively.......................................     (19,021)          (11,807)          (32,607)          (21,869)
System selling, general and administrative expense....     (12,864)          (11,771)          (24,064)          (22,805)
Corporate general and administrative expense,
   including related party expense of $1,987, $197,
   $4,347 and $385, respectively......................      (2,064)             (293)           (4,528)             (576)
Depreciation and amortization.........................     (23,930)          (18,431)          (51,891)          (35,736)
                                                        ----------         ---------        ----------        ----------
       Net operating loss.............................     (37,309)          (26,083)          (71,912)          (50,275)

Equity in income (losses) of affiliated companies,
   net................................................         955            (1,077)              470            (1,443)
Interest income, including related party income of
   $155, $268, $309 and $533, respectively............         222               331               560               812
Interest expense, including related party expense of
   $462, $316, $932 and $611, respectively............     (14,423)          (10,109)          (27,721)          (18,995)
Other expense, net....................................        (811)             (549)           (1,405)             (767)
                                                        ----------        ----------        ----------        ----------
       Net loss before minority interest..............     (51,366)          (37,487)         (100,008)          (70,668)

Minority interest in subsidiary.......................       1,140                --             2,065                --
                                                        ----------        ----------        ----------        ----------
       Net loss.......................................  $  (50,226)       $  (37,487)       $  (97,943)       $  (70,668)
                                                        ==========        ==========        ==========        ==========

Basic and diluted loss per common share...............  $    (3.62)       $    (2.70)       $    (7.06)       $    (5.10)
                                                        ==========        ==========        ==========        ==========

Weighted-average number of common shares
   outstanding........................................  13,864,941        13,864,941        13,864,941        13,864,941
                                                        ==========        ==========        ==========        ==========

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

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


                                           Common Stock         Additional      Cumulative
                                       ---------------------     Paid-In        Translation        Accumulated
                                        Shares       Amount      Capital        Adjustments          Deficit        Total
                                       --------     --------    ----------      -----------        -----------    ---------     
<S>                                    <C>            <C>        <C>             <C>               <C>            <C>
Balances, January 1, 1998...........   13,864,941     $139       $139,621        $(28,964)         $(274,949)     $(164,153)

Capital contributions from parent...           --       --         35,877              --                 --         35,877
Change in cumulative translation
   adjustments......................           --       --             --          (1,883)                --         (1,883)
Net loss............................           --       --             --              --            (97,943)       (97,943)
                                       ----------     ----       --------        --------          ---------      ---------
Balances, June 30, 1998.............   13,864,941     $139       $175,498        $(30,847)         $(372,892)     $(228,102)
                                       ==========     ====       ========        ========          =========      =========























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





<PAGE>
<TABLE>
<CAPTION>

                                               UIH AUSTRALIA/PACIFIC, INC.
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (Stated in thousands)
                                                       (Unaudited)
                                                                                            For the Six Months Ended
                                                                                                    June 30,
                                                                                           --------------------------
                                                                                             1998              1997
                                                                                           --------          --------
<S>                                                                                        <C>               <C>
Cash flows from operating activities:
Net loss..............................................................................     $(97,943)         $(70,668)
Adjustments to reconcile net loss to net cash flows from operating activities:
   Depreciation and amortization......................................................       51,891            35,736
   Equity in (income) losses of affiliated companies, net.............................         (470)            1,443
   Allocation of expense accounted for as capital contributions by parent.............        3,932                --
   Minority interest share of losses..................................................       (2,065)               --
   Accretion of interest on senior discount notes and amortization of
     deferred financing costs.........................................................       23,786            17,948
   Increase in subscriber receivables.................................................       (1,201)             (326)
   Increase in related party receivables..............................................         (315)             (425)
   Increase in other assets...........................................................       (2,326)           (2,103)
   Increase in related party payables.................................................        5,632             2,966
   Increase in accounts payable, accrued liabilities and other........................        1,292             6,903
                                                                                           --------          --------
Net cash flows from operating activities..............................................      (17,787)           (8,526)
                                                                                           --------          --------

Cash flows from investing activities:
Purchase of short-term investments....................................................           --            (3,663)
Proceeds from sale of short-term investments..........................................       12,325            22,303
Restricted cash released..............................................................          127                --
Investments in and advances to affiliated companies and other investments.............         (343)           (1,138)
Purchase of property, plant and equipment.............................................      (37,757)          (41,776)
Decrease in construction payables.....................................................       (3,912)          (28,163)
                                                                                           --------          --------
Net cash flows from investing activities..............................................      (29,560)          (52,437)
                                                                                           --------          --------

Cash flows from financing activities:
Capital contributions from parent.....................................................       31,945                --
Cash contributed from minority interest partner.......................................        3,533                --
Borrowing on related party payables to parent.........................................           --            11,633
Deferred financing costs..............................................................           --            (1,502)
Borrowing on other debt...............................................................        2,779            39,286
Payment on capital leases and other debt..............................................         (323)             (777)
                                                                                           --------          --------
Net cash flows from financing activities..............................................       37,934            48,640
                                                                                           --------          --------

Effect of exchange rates on cash......................................................        1,187               (38)
                                                                                           --------          --------

Decrease in cash and cash equivalents.................................................       (8,226)          (12,361)
Cash and cash equivalents, beginning of period........................................       12,344            19,220
                                                                                           --------          --------
Cash and cash equivalents, end of period..............................................     $  4,118          $  6,859
                                                                                           ========          ========

Non-cash investing and financing activities:
   Decrease in unrealized loss on investment..........................................     $     --          $   (295)
                                                                                           ========          ========
   Assets acquired with capital leases................................................     $    194          $     --
                                                                                           ========          ========
Supplemental cash flow disclosures:
   Cash received for interest.........................................................     $    259          $    329
                                                                                           ========          ========
   Cash paid for interest.............................................................     $  2,512          $    205
                                                                                           ========          ========

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

<PAGE>


                           UIH AUSTRALIA/PACIFIC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               AS OF JUNE 30, 1998
                     (Monetary amounts stated in thousands)
                                   (Unaudited)


1.   ORGANIZATION AND NATURE OF OPERATIONS

     UIH Australia/Pacific,  Inc. (the "Company"),  a wholly-owned subsidiary of
UIH  Asia/Pacific  Communications,  Inc.  ("UAP"),  which is in turn an indirect
98%-owned subsidiary of United International  Holdings, Inc. ("UIH"), was formed
on October 14,  1994,  for the purpose of  developing,  acquiring  and  managing
foreign multi-channel television, programming and telephony operations.

     The  following  chart  presents  a  summary  of the  Company's  significant
investments in multi-channel television, programming and telephony operations as
of June 30, 1998.

            ********************************************************
            *                        UIH                           *
            ********************************************************
                                      *
                               100%   *
                                      *
            ********************************************************
            *    United International Properties, Inc. ("UIPI")    *
            ********************************************************
                                      *
                               98%    *
                                      *
            ********************************************************
            *                        UAP                           *
            ********************************************************
                                      *
                               100%   *
                                      *
            ********************************************************
            *                   The Company                        *
            ********************************************************
                                      *
                                      *
                                      *
            ********************************************************
            * AUSTRALIA:                                           *
            *  CTV Pty Limited ("CTV") and STV Pty Limited         *
            *   ("STV")(collectively, "Austar")(1)            100% *
            *  Austar Satellite Pty Limited                        *
            *   ("Austar Satellite")                          100% *
            *  United Wireless Pty Limited                         *
            *   ("United Wireless")                           100% *
            *  XYZ Entertainment Pty Limited                       *
            *  ("XYZ Entertainment")                           25% *
            * NEW ZEALAND:                                         *
            *  Saturn Communications Limited ("Saturn")        65% *
            * TAHITI:                                              *
            *  Telefenua S.A. ("Telefenua")(2)                 90% *
            ********************************************************

     (1)  The  Company  holds an  effective  100%  economic  interest  in Austar
          through a combination of ordinary shares and convertible debentures.
     (2)  The Company owns an effective 90% economic interest in Telefenua.  The
          Company's  economic  interest will decrease to 75% and 64% once it has
          received a 20% and 40% internal  rate of return on its  investment  in
          Tahiti, respectively.

LIQUIDITY AND CAPITAL RESOURCES

     A substantial  portion of the Company's  investments  to date relate to its
investment in Austar, which is comprised primarily of multi-channel  multi-point
distribution systems ("MMDS") and direct-to-home  ("DTH") satellite  operations.
The Company  has  essentially  completed  the  construction  and  deployment  of
Austar's  entire MMDS  network  infrastructure  and has incurred  certain  other
significant  expenditures,  such as Austar's  National  Customer Service Center,
which contemplates  provision of MMDS and DTH services to a substantially larger
customer base than currently  exists. If additional  capital  financings are not
available to continue to connect new customers at Austar, the Company's revenues
will decline and the current net  operating  loss will increase over time due to
customer  disconnections,  which are normally  experienced  in  connection  with
multi-channel  television  operations.  In order to expand the customer  base of
Austar and  build-out  the  Company's  other  projects,  the Company will need a
significant amount of additional capital, which is not currently available.

                                       6
<PAGE>
                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     As of June 30,  1998,  the  Company had a net  working  capital  deficit of
$13,661,  excluding related party payables of $8,998, which are primarily due to
UIH. Due to the nature of the operation, the Company is able to slow the rate of
subscriber connections at Austar and network construction at the Company's other
projects  to adjust to the level of  funding  sources  that are  available.  The
Company believes it can, if necessary, substantially reduce the capital required
at Austar as the majority of future capital  expenditures will be for subscriber
installation and premises equipment, which are controllable by the Company based
upon the rate of new  subscriber  connections.  However,  the  Company  needs to
continue the present rate of new subscriber  connections to offset current churn
rates at Austar.  The Company is currently in the process of seeking  additional
sources of funds,  which could include private  equity,  bank and/or public debt
and the sale of certain  non-strategic  assets.  The  Company  may or may not be
successful in completing all or any of such  financings.  The Company  believes,
however,  that committed financial support from UIH combined with, if necessary,
reductions in the Company's  planned  capital  expenditures,  are  sufficient to
sustain its operations through at least mid-1999.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  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  consolidated financial statements include the accounts of
the Company and all subsidiaries  where it exercises majority control and owns a
majority economic interest.  Austar, Saturn,  Telefenua and United Wireless were
consolidated  for all periods  presented.  In November  1997, the Company formed
Austar  Satellite  and  began  consolidating  its  operations.  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

     In management's  opinion,  all adjustments (of a normal  recurring  nature)
have been made which are necessary to present  fairly the financial  position of
the Company as of June 30, 1998 and the results of its  operations for the three
and six months ended June 30, 1998 and 1997.  For a more complete  understanding
of the  Company's  financial  position  and results of its  operations,  see the
consolidated  financial  statements  of the Company  included  in the  Company's
annual report on Form 10-K for the year ended December 31, 1997.

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

     The Company  accounts for its  investment  in XYZ  Entertainment  under the
equity  method of  accounting.  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 contractual funding commitments.  The Company's proportionate share of net
earnings or losses of XYZ Entertainment  includes the amortization of the excess
of its cost over its  percentage  interest in XYZ  Entertainment's  net tangible
assets.

PROPERTY, PLANT AND EQUIPMENT

     Property,  plant and equipment is stated at cost.  Additions,  replacements
and  major  improvements  are  capitalized,  and  costs for  normal  repair  and
maintenance of property, plant and equipment are charged to expense as incurred.
With respect to the Company's MMDS and DTH operations,  all subscriber equipment
and  capitalized  installation  labor are  depreciated  using the  straight-line
method over estimated useful lives of three years. Upon  disconnection of a MMDS
or DTH  subscriber,  the  remaining  book  value  of the  subscriber  equipment,
excluding converters which are recovered upon disconnection, and the capitalized
labor are written off and accounted for as additional depreciation expense. MMDS
distribution  facilities and cable  distribution  networks are depreciated using
the straight-line method over estimated useful lives of five to ten years.

     With  respect  to  the  Company's  cable  distribution  networks,   initial
subscriber  installation  costs are capitalized and depreciated over a period no
longer than the  depreciation  period used for cable television plant and/or the
term of the license  agreement.  All  installation  fees and related  costs with
respect to reconnects  are  recognized  in the period in which the  reconnection
occurs.

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

     Office   equipment,   furniture  and  fixtures,   buildings  and  leasehold
improvements  are  depreciated  using the  straight-line  method over  estimated
useful lives of three to ten years.

     Assets  acquired under capital  leases are included in property,  plant and
equipment.  The  initial  amount of the  leased  asset and  corresponding  lease
liability  are recorded at the present value of future  minimum lease  payments.
Leased assets are amortized over the life of the relevant lease.

COMPREHENSIVE LOSS

     The Financial  Accounting  Standards  Board  recently  issued  Statement of
Financial Accounting Standards No. 130, "Reporting  Comprehensive Income" ("SFAS
130"),   which   requires  that  an  enterprise  (i)  classify  items  of  other
comprehensive  income  (loss) by their nature in a financial  statement and (ii)
display the accumulated balance of other comprehensive  income (loss) separately
from retained earnings and additional paid-in capital in the equity section of a
statement of financial position.  The Company adopted SFAS 130 effective January
1,  1998.  For the three  and six  months  ended  June 30,  1998 and  1997,  the
Company's only components of other comprehensive  income (loss) were the changes
in  cumulative  translation  adjustments  and the change in  unrealized  loss on
investment (see Note 7).

FOREIGN OPERATIONS

     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  the  exchange  rate  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.

     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 reporting currencies.  As a result, amounts related to
assets and liabilities reported on the condensed consolidated statements of cash
flows will not agree to changes in the  corresponding  balances on the condensed
consolidated  balance  sheets.  The  effects of  exchange  rate  changes on cash
balances held in foreign  currencies  are reported as a separate line below cash
flows from financing activities.

RECLASSIFICATIONS

     Certain  prior year  amounts  have been  reclassified  to conform  with the
current year presentation.

3.   JOINT VENTURE

     In May 1998,  Australis  Media Limited  ("Australis"),  a major supplier of
programming to Austar, was placed into receivership in Australia. As a result of
the receivership and the subsequent termination of various agreements on May 20,
21 and 22, 1998,  Australis ceased to be a provider of programming and signal to
Austar.

     On May 19,  1998,  Austar  entered  into a 50/50 joint  venture  with Optus
Vision Pty Limited  ("Optus")  for the  ownership  and  operation of a satellite
distribution  platform. As of May 21, 1998, this platform was fully operational.
In addition,  Austar has signed  agreements  with Foxtel  Management Pty Limited
("Foxtel")  under  which it will be provided  with  several  channels  currently
carried by Austar, including the eight-channel  programming package which is the
most  widely-distributed  programming package in Australia (the "Core Package").
These  developments  have caused only minor disruptions or changes in service to
Austar's existing customer base.

     Also as of May 19, 1998, Austar was granted  additional  programming rights
by Optus which would permit the carriage of certain  channels of programming not
previously  available to Austar.  The specific packages of service to be offered
by Austar pursuant to these arrangements have not yet been concluded, and Austar
was not carrying any of Optus' programming as of June 30, 1998.

     Under the terms of the senior  syndicated  term debt facility in the amount
of  Australian  $("A$")200,000  ($123,877 as of June 30, 1998) (the "Austar Bank

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

Facility"),  the termination of Austar's franchise  agreements with Australis is
an event of default if (i) the  termination  is  initiated  by Austar,  (ii) the
termination is not rectified  within seven days and (iii) the termination  would
likely have a material  adverse  effect on Austar.  Austar  received the advance
consent of the lenders under the Austar Bank Facility to terminate its franchise
agreement  with  Australis,  and  such  banks  have  not  given  notice  that  a
termination  would constitute a material  adverse effect.  Austar believes that,
based upon its  successful  migration  to the signal  platform  and  programming
agreements described above, there will be no such material adverse effect.

4. INVESTMENTS IN AND ADVANCES TO AN AFFILIATED COMPANY, ACCOUNTED FOR UNDER THE
   EQUITY METHOD
<TABLE>
<CAPTION>
                                               Investments in         Cumulative Equity       Cumulative
                                               and Advances to          in Losses of          Translation
                                             Affiliated Company      Affiliated Company       Adjustments       Total
                                             ------------------      ------------------       -----------       -----
       <S>                                         <C>                    <C>                    <C>            <C>
       As of:
         June 30, 1998....................         $18,140                $(18,250)              $110           $ --
                                                   =======                ========               ====           ====
         December 31, 1997................         $18,610(1)             $(18,720)              $110           $ --
                                                   =======                ========               ====           ====
</TABLE>
       (1) Includes an accrued funding  obligation of $406 at December 31, 1997.
           The Company does not have a  contractual  funding  obligation  to XYZ
           Entertainment;  however,  the  Company  would  face  significant  and
           punitive dilution if it did not make the requested fundings.

5.   PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
                                                                                          As of              As of
                                                                                         June 30,         December 31,
                                                                                           1998               1997
                                                                                        ---------         -----------
     <S>                                                                                <C>                <C>
     Subscriber premises equipment and converters...............................        $ 165,853          $160,413
     MMDS distribution facilities...............................................           54,290            55,093
     Cable distribution networks................................................           26,644            16,770
     Office equipment, furniture and fixtures...................................           12,671            10,813
     Buildings and leasehold improvements.......................................            6,366             5,647
     Other......................................................................           12,890            12,544
                                                                                        ---------          --------
                                                                                          278,714           261,280
           Accumulated depreciation.............................................         (115,280)          (78,179)
                                                                                        ---------          --------
           Net property, plant and equipment....................................        $ 163,434          $183,101
                                                                                        =========          ========
</TABLE>
6.   SENIOR DISCOUNT NOTES AND OTHER DEBT
<TABLE>
<CAPTION>
                                                                                          As of              As of
                                                                                        June 30,         December 31,
                                                                                          1998               1997
                                                                                        --------         ------------
     <S>                                                                                <C>                <C>
     May 1996 Notes (as defined below), net of unamortized discount............         $299,652           $278,662
     September 1997 Notes (as defined below), net of unamortized discount.......          32,257             30,461
     Austar Bank Facility.......................................................          68,132             71,531
     Vendor financed equipment at Saturn........................................           5,881              3,730
     Capitalized lease obligations..............................................           3,010              3,441
     Mortgage note, interest at 7.548%, 7-year term.............................             997              1,094
                                                                                        --------           --------
                                                                                         409,929            388,919
           Less current portion.................................................          (2,615)            (1,825)
                                                                                        --------           --------
                                                                                        $407,314           $387,094
                                                                                        ========           ========
</TABLE>
MAY 1996 14% SENIOR DISCOUNT NOTES

     The  Company's  14% senior notes that were issued in May 1996 at a discount
from their  principal  amount of $443,000 (the "May 1996 Notes") had an accreted
value of $299,652 as of June 30, 1998. 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%,  until such time as the Company  consummates an issuance of

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

its capital stock resulting in gross proceeds to the Company of at least $70,000
(an "Equity  Sale").  Due to this increase in the interest  rates,  the May 1996
Notes will  accrete to a  principal  amount of $455,574 if an Equity Sale is not
consummated prior to May 15, 2001, the date cash interest begins to accrue.

SEPTEMBER 1997 14% SENIOR DISCOUNT NOTES

     The  Company's  14% senior  notes that were issued in  September  1997 at a
discount from their principal amount of $45,000 (the "September 1997 Notes") had
an accreted  value of $32,257 as of June 30,  1998.  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%,  until such time as the
Company  consummates an Equity Sale. Due to this increase in interest rates, the
September 1997 Notes will accrete to a principal  amount of $46,277 if an Equity
Sale is not consummated  prior to May 15, 2001, the date cash interest begins to
accrue.

AUSTAR BANK FACILITY

     In July 1997,  Austar  secured  the Austar Bank  Facility to fund  Austar's
subscriber  acquisition  and working  capital  needs.  The Austar Bank  Facility
consists  of  three  sub-facilities:  (i)  A$50,000  revolving  working  capital
facility,  (ii)  A$60,000  cash advance  facility and (iii)  A$90,000  term loan
facility.  This term loan  facility  will be  available  to the extent  that any
drawdown,   if  added  to  the  existing  aggregate  outstanding  balance  under
sub-facilities  (i) and (ii),  would not exceed five times annualized cash flows
(as defined),  and upon Austar having achieved and maintained total  subscribers
of at least  200,000.  All of Austar's  assets are pledged as collateral for the
Austar Bank Facility. In addition,  pursuant to the Austar Bank Facility, Austar
cannot  pay any  dividends,  interest  or fees  under its  technical  assistance
agreements prior to December 31, 2000.  Subsequent to December 31, 2000,  Austar
will be permitted  to make these types of  payments,  subject to certain debt to
cash flow ratios. As of June 30, 1998, Austar had drawn the entire amount of the
working  capital  facility  and the cash  advance  facility  totaling  A$110,000
($68,132  converted using the June 30, 1998 exchange rate).  The working capital
facility is fully repayable on June 30, 2000. The cash advance facility is fully
repayable  pursuant to an amortization  schedule beginning December 31, 2000 and
ending  June  30,  2004.  Although  management  does  not  expect  to  meet  the
requirements  for drawing down the term loan  facility  during  1998,  they have
engaged the lender under the Austar Bank  Facility in a discussion  regarding an
amendment  to the Austar Bank  Facility.  If approved,  such an amendment  would
allow  Austar to draw all or a portion of the  A$90,000  term loan  facility  in
advance of the time  period  currently  envisioned.  There can be no  assurance,
however, that such an amendment will ultimately be approved.

7.   COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
                                                          For the Three Months Ended          For the Six Months Ended
                                                                   June 30,                           June 30,
                                                          --------------------------          ------------------------
                                                            1998              1997              1998            1997
                                                          ---------         --------          --------        --------
     <S>                                                  <C>               <C>               <C>             <C>
     Net loss..........................................   $(50,226)         $(37,487)         $(97,943)       $(70,668)
     Other comprehensive loss
       Change in cumulative translation adjustments....     (3,994)           (2,382)           (1,883)         (3,393)
       Change in unrealized loss on investment.........         --              (561)               --            (295)
                                                          --------          --------          --------         -------
           Total comprehensive loss....................   $(54,220)         $(40,430)         $(99,826)       $(74,356)
                                                          ========          ========          ========        ========
</TABLE>
8.   RELATED PARTY

     Effective  May  1,  1996,  the  Company  and  UIH  Management,  Inc.  ("UIH
Management"),  an indirect  wholly-owned  subsidiary of UIH,  executed a 10-year
management  services agreement (the "Management  Agreement"),  pursuant to which
UIH Management performed certain administrative, accounting, financial reporting
and other services for the Company,  which has no separate employees of its own.
Pursuant to the Management Agreement,  the management fee was $750 for the first
year of  such  agreement  (beginning  May 1,  1996),  and it  increases  on each
anniversary date of the Management Agreement by 8% per year. Effective March 31,
1997, UIH Management  assigned its rights and  obligations  under the Management
Agreement to UAP, the Company's immediate parent, and extended the agreement for
20 years  from that date (the "UAP  Management  Agreement").  In  addition,  the
Company  reimburses UAP or UIH for any out-of-pocket  expenses including travel,
lodging  and  entertainment  expenses,  incurred  by UAP or UIH on behalf of the
Company.   In  December  1997,  UIH  began  allocating   corporate  general  and
administrative  expense to the  Company  in the form of  capital  contributions,
based on increased activity at the operating system level.  Management  believes
that this method of allocating costs is reasonable.

                                       10
<PAGE>
                           UIH AUSTRALIA/PACIFIC, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued) 

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

     As of June 30, 1998,  UIPI, the immediate  parent of UAP, had loaned $4,999
to  UIH  Australia/Pacific  Finance,  Inc.,  a  wholly-owned  subsidiary  of the
Company.  This loan accrues  interest at 15% per annum and is due on demand.  In
addition,  for the six months ended June 30, 1998, UAP invested $31,945 into the
Company in the form of capital contributions.

     Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
                                                                                    As of                As of
                                                                                   June 30,           December 31,
                                                                                     1998                 1997
                                                                                   --------           ------------
     <S>                                                                           <C>                  <C>
     Austar technical assistance agreement obligations.......................      $ 5,015              $ 2,629
     Telefenua technical assistance agreement obligations....................        2,894                2,659
     Saturn technical assistance agreement obligations.......................          716                  406
     United Wireless technical assistance agreement obligations..............          549                  487
     Payable to parent for management fees, interest and invoices paid by UIH
       on the Company's behalf...............................................        1,477                  723
     Other...................................................................          668                   86
                                                                                   -------              -------
                                                                                    11,319                6,990
         Less current portion................................................       (3,999)              (1,596)
                                                                                   -------              -------
                                                                                   $ 7,320              $ 5,394
                                                                                   =======              =======
</TABLE>

9.   SEGMENT INFORMATION

     The  Company's  reportable  segments are the various  countries in which it
operates  multi-channel  television,  programming  and/or telephony  operations.
These reportable  segments are managed  separately because each country presents
different  marketing  strategies  and  technology  issues  as well  as  distinct
economic  climates  and  regulatory  constraints.  The Company has  selected the
following   reportable   segments:   (i)  Australia,   including  the  Company's
investments in Austar,  Austar Satellite and United Wireless,  (ii) New Zealand,
including  the  Company's  investment  in Saturn,  (iii)  Tahiti,  including the
Company's investment in Telefenua and (iv) Corporate,  including various holding
companies and consolidating eliminations.
<TABLE>
<CAPTION>

                                                                    As of and for the Three Months Ended
                                                                                June 30, 1998
                                                   -----------------------------------------------------------------------
                                                   Australia     New Zealand      Tahiti        Corporate          Total
                                                   ---------     -----------     --------       ----------       ---------
     <S>                                           <C>             <C>           <C>            <C>              <C>  
     Service and other revenue...................  $ 19,218        $   260       $ 1,122        $    (30)        $ 20,570
     Net loss....................................  $(34,469)       $(2,202)      $  (666)       $(12,889)        $(50,226)
     Total assets................................  $176,037        $46,179       $10,560        $  3,111         $235,887

                                                                         For the Three Months Ended
                                                                                June 30, 1997
                                                   -----------------------------------------------------------------------
                                                   Australia     New Zealand      Tahiti        Corporate          Total
                                                   ---------     -----------     --------       ----------       ---------
     Service and other revenue...................  $ 15,162        $    98       $   959        $     --         $ 16,219
     Net loss....................................  $(23,793)       $(2,485)      $  (923)       $(10,286)        $(37,487)

                                                                          For the Six Months Ended
                                                                                June 30, 1998
                                                   -----------------------------------------------------------------------
                                                   Australia     New Zealand      Tahiti        Corporate          Total
                                                   ---------     -----------     --------       ---------        ---------
     Service and other revenue...................  $ 38,534        $   415       $ 2,259        $    (30)        $ 41,178
     Net loss....................................  $(65,465)       $(4,007)      $(1,273)       $(27,198)        $(97,943)
</TABLE>
                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                          For the Six Months Ended
                                                                                June 30, 1997
                                                   -----------------------------------------------------------------------
                                                   Australia     New Zealand      Tahiti        Corporate          Total
                                                   ---------     -----------     --------       ---------        ---------
     <S>                                           <C>             <C>           <C>            <C>              <C>
     Service and other revenue...................  $ 28,655        $   181       $ 1,875        $     --         $ 30,711
     Net loss....................................  $(45,512)       $(4,181)      $(1,460)       $(19,515)        $(70,668)
</TABLE>

10.  SUBSEQUENT EVENT

     On July 9, 1998,  Austar acquired certain  Australian pay television assets
of  East  Coast  Television  Pty  Limited  ("ECT"),   an  affiliate  of  Century
Communications Corp. ("Century"), and related assets for approximately $6,100 of
UIH's  newly-created  Series B Convertible  Preferred Stock.  ECT's subscription
television   business  includes   subscribers  and  certain  MMDS  licenses  and
transmission  equipment  serving  the areas in and around  Newcastle,  Gossford,
Wollongong and Tasmania.

                                       12
<PAGE>

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

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

     The  Company  conducts  no  operations  other than  through  its  operating
companies in which it holds varying interests.  Because the operating  companies
have not yet achieved the expected  subscriber  penetration  levels  anticipated
with mature operating systems,  the Company believes that its historical results
of  operations  discussed  herein are not  indicative  of future  results of its
operations.

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

FORWARD-LOOKING STATEMENTS

     Certain   statements  in  this  Report  may   constitute   "forward-looking
statements"   within  the  meaning  of  the  federal   securities   laws.   Such
forward-looking   statements  may  include,   among  other  things,   statements
concerning  the  Company's  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. Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements. Such 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  offered by the Company,  the Company's  ability to secure adequate
capital to fund system growth and development,  risks inherent in investment and
operations in foreign  countries,  changes in government  regulation,  and other
factors referenced in this Report.

LIQUIDITY AND CAPITAL RESOURCES

     As of June 30,  1998,  the  Company had  invested a total of  approximately
$450.9 million in its projects as outlined below:

                                                                  As of
                                                                 June 30,
                                                                   1998
                                                              --------------
                                                              (In thousands)
         Austar...........................................       $375,606(1)(2)
         Saturn...........................................         35,171(1)(3)
         Telefenua........................................         16,738
         XYZ Entertainment................................         14,433
         United Wireless..................................          8,950
                                                                 --------
              Total.......................................       $450,898
                                                                 ========

         (1)  Does not  include  amounts  contributed  to Austar  (approximately
              $11.0  million)  and  Saturn   (approximately   $2.9  million)  by
              shareholders   other  than  the   Company,   which   amounts  were
              contributed by such shareholders prior to the acquisition of their
              respective interests by the Company.
         (2)  Includes  A$110.0  million  ($83.9  million  converted  using  the
              exchange rate on each funding date) of amounts  borrowed under the
              Austar  Bank  Facility  and $28.8  million  paid by the Company to
              increase its economic  interest in Austar to  approximately  100%.
              Does not  include  the  $29.8  million  of  non-cash  issuance  of
              preferred stock by UIH to increase its economic interest in Austar
              to 90% in December 1995.
         (3)  Does not include the $7.8  million of common stock  exchanged  for
              shares of the Company to increase the Company's interest in Saturn
              to 100%  effective  July 1996 or the  $19.6  million  invested  by
              another shareholder for its 35% interest in Saturn in July 1997.

                                       13
<PAGE>

         AUSTAR

              The Company expects the need for additional  funding for Austar in
         the future.  The amount of capital  needed is dependent  primarily upon
         three factors:  (i) the number of new subscribers added; (ii) the level
         of churn,  that is, the level of existing  subscribers  who  disconnect
         from Austar's service;  and (iii) the mix of DTH satellite  compared to
         MMDS  installations.  Substantially all fixed costs required to operate
         Austar's  service  have  already  been  incurred.  The average  cost to
         install a subscriber  includes  variables such as equipment,  marketing
         and  sales  costs,  and  installation  fees.  The  average  cost  of  a
         subscriber  who  disconnects  is  reduced  by the  recovery  of certain
         equipment  (principally  converters),  and is further  reduced if a new
         subscriber is installed in a previously disconnected home. Austar plans
         to continue to expand and add subscribers;  however, the timing of such
         expansion  and the  funds  required  for  such  expansion  are  largely
         variable.  Based upon  current  plans and budgeted  churn,  Austar will
         require  approximately  $50-$60  million  to  continue  on its  current
         expansion  path for the period from July 1, 1998 to  December  31, 1998
         and approximately $50-$75 million for similar expansion plans for 1999.
         The  sources of funds for such  expansion  may  include  the raising of
         private or public equity,  continued investment by UIH, the drawdown of
         the remaining  amount ($55.7 million  converted using the June 30, 1998
         exchange  rate) under the Austar Bank Facility  (assuming  that certain
         financial  ratios are met, which ratios are not currently being met, or
         assuming  that the Austar  Bank  Facility  is  amended  to loosen  such
         covenants) or the sale of non-strategic  assets. The Company may or may
         not be  successful  in completing  all or any of such  financings.  The
         Company believes,  however,  that committed  financial support from UIH
         combined  with,  if  necessary,  reductions  in the  Company's  planned
         capital expenditures,  are sufficient to sustain its operations through
         at least mid-1999.

         SATURN

              The Company expects the need for additional  funding for Saturn in
         the future.  Saturn's  capital needs include capital for the completion
         of the  network  required  by  Saturn  to offer  cable  television  and
         telephony  services  and the  capital  required  to install  customers.
         Management  currently estimates that the Company's portion of the total
         funding  required for Saturn is  approximately  $45-$50 million for the
         period from July 1, 1998 until  Saturn has  sufficient  cash flows from
         operations  to cover such needs,  although  there can be no  assurances
         that further additional  capital will not be required.  Of this amount,
         approximately  $30-$35  million is required as a fixed cost to complete
         the  construction  of the network,  and the  remainder is required as a
         result of the installation of customers.  The sources of funds for such
         expansion  may  include  the  raising  of  private  or  public  equity,
         continued  investment  by UIH,  the  raising of  equipment  and/or bank
         financing  (where the Company has already  commenced  discussions  with
         several  potential  lenders) or the sale of non-strategic  assets.  The
         Company may or may not be successful  in completing  all or any of such
         financings.  The Company believes,  however,  that committed  financial
         support  from  UIH  combined  with,  if  necessary,  reductions  in the
         Company's planned capital  expenditures,  are sufficient to sustain its
         operations through at least mid-1999.

         OTHER

              The Company expects that the aggregate future funding requirements
         for Telefenua, XYZ Entertainment and United Wireless are less than $5.0
         million.

     The indentures  governing UIH's senior secured  discount notes due February
2008 and the Company's May 1996 Notes and  September  1997 Notes  (collectively,
the "Notes") place  restrictions on the Company and its restricted  subsidiaries
with respect to incurring  additional debt. The Company and all of the operating
companies are currently restricted under the UIH indentures. The Company, Austar
and Telefenua are restricted  under the Company's  indentures.  The restrictions
imposed by the UIH  indentures  will be eliminated  upon the retirement of UIH's
notes at their maturity in February 2008,  and the  restrictions  imposed by the
Company's  indentures  will be eliminated  upon the  retirement of the Company's
Notes at their  maturity in May 2006.  In addition,  pursuant to the Austar Bank
Facility,   Austar  cannot  pay  any  dividends,   interest  on  debentures  and
subordinated  debt, or fees under its technical  assistance  agreements prior to
December 31, 2000.  Subsequent to December 31, 2000, Austar will be permitted to
make these types of payments, subject to certain debt to cash flow ratios.

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

                                       14
<PAGE>

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 1998

     The Company  incurred a net loss during the six months  ended June 30, 1998
of $97.9  million,  which  included  non-cash  items  such as  depreciation  and
amortization  expense  totaling  $51.9  million and accretion of interest on the
Notes and amortization of deferred financing costs totaling $23.8 million.

     Cash and cash  equivalents  decreased $8.2 million from $12.3 million as of
December 31, 1997 to $4.1 million as of June 30, 1998. Principal sources of cash
during the six months  ended June 30,  1998  included  cash  contributions  from
parent of $32.0  million,  proceeds from the sale of short-term  investments  of
$12.3 million,  cash  contributions  from the minority  interest partner of $3.5
million,  borrowing on other debt of $2.8  million and exchange  rate effects on
cash and other sources totaling $1.3 million.

     During the six months ended June 30, 1998,  cash was used  principally  for
purchases of property,  plant and equipment  totaling  $37.8 million to continue
new  subscriber  connections  at Austar and the build-out of existing  projects,
primarily  Saturn,  the funding of  operating  activities  of $17.8  million,  a
decrease in  construction  payables  of $3.9  million and the payment on capital
leases and other investing and financing uses of $0.6 million.

FOR THE SIX MONTHS ENDED JUNE 30, 1997

     The Company  incurred a net loss during the six months  ended June 30, 1997
of $70.7  million,  which  included  non-cash  items  such as  depreciation  and
amortization  expense  totaling  $35.7  million and accretion of interest on the
Notes and amortization of deferred financing costs totaling $17.9 million.

     Cash and cash equivalents  decreased $12.3 million from $19.2 million as of
December 31, 1996 to $6.9 million as of June 30, 1997. Principal sources of cash
during the six months  ended June 30, 1997  included  borrowings  from  Austar's
interim financing facility of $39.3 million,  net proceeds from the net decrease
in short-term  investments of $18.6 million and borrowings  from parent of $11.6
million.

     During the six months ended June 30, 1997, cash was used  principally for a
decrease in  construction  payables of $28.2 million,  the purchase of property,
plant and  equipment  of $41.8  million to construct  Austar's  and  Telefenua's
systems,  the funding of operating activities of $8.5 million and the payment of
deferred  financing costs as well as other investing and financing uses totaling
$3.3 million.

RESULTS OF OPERATIONS

     EXCHANGE RATES. The Company translates revenue and expense from its foreign
subsidiaries  using the  weighted-average  exchange  rates  during  the  period.
However,  for ease of  presentation,  the spot  rates for the  countries  in the
Australia/Pacific  region are shown  below for the  Australian  dollar,  the New
Zealand dollar and the French Pacific franc, respectively, per one U.S. dollar.
<TABLE>
<CAPTION>
                                                Australia         New Zealand         Tahiti
                                                ---------         -----------         ------
         <S>                                     <C>                 <C>              <C>
         June 30, 1998...................        1.6145              1.9290           110.375
         December 31, 1997...............        1.5378              1.7161           109.690
         June 30, 1997...................        1.3266              1.4697           107.285
</TABLE>
SERVICE AND OTHER  REVENUE.  The Company's  service and other revenue  increased
$4.4 million and $10.5 million for the three and six months ended June 30, 1998,
respectively, compared to the amounts for the corresponding periods in the prior
year as follows:
<TABLE>
<CAPTION>
                                                            For the Three Months Ended          For the Six Months Ended
                                                                      June 30,                           June 30,
                                                            --------------------------          --------------------------
                                                              1998               1997             1998              1997
                                                            --------           -------          --------          --------
                                                                                    (In thousands)
        <S>                                                  <C>               <C>               <C>              <C>
        Austar.........................................      $19,147           $15,055           $38,346          $28,524
        Saturn ........................................          260                98               415              181
        Telefenua......................................        1,122               959             2,259            1,875
        United Wireless................................           41               107               158              131
                                                             -------           -------           -------          -------
               Total service and other revenue.........      $20,570           $16,219           $41,178          $30,711
                                                             =======           =======           =======          =======
</TABLE>
                                       15
<PAGE>
        AUSTAR

            Service and other  revenue for Austar  increased  $4.0  million,  or
        26.5%,  from $15.1  million for the three  months ended June 30, 1997 to
        $19.1  million for the three  months  ended June 30,  1998.  Service and
        other revenue for Austar  increased $9.8 million,  or 34.4%,  from $28.5
        million for the six months ended June 30, 1997 to $38.3  million for the
        six months ended June 30, 1998.  These  increases  were primarily due to
        subscriber  growth (215,275 at June 30, 1998 compared to 149,495 at June
        30, 1997) as Austar continues to roll-out its services.  These increases
        occurred  despite the negative impact of $4.3 million due to fluctuation
        in the exchange  rates  between the three months ended June 30, 1998 and
        1997 and the negative  impact of $7.5 million due to  fluctuation in the
        exchange rates between the six months ended June 30, 1998 and 1997.

SYSTEM OPERATING  EXPENSE.  System operating  expense increased $7.2 million and
$10.7  million for the three and six months ended June 30,  1998,  respectively,
compared  to the  amounts  for the  corresponding  periods  in the prior year as
follows:
<TABLE>
<CAPTION>
                                                            For the Three Months Ended          For the Six Months Ended
                                                                      June 30,                            June 30,
                                                            --------------------------          ------------------------
                                                              1998             1997               1998             1997
                                                            --------         ---------          --------         --------
                                                                                   (In thousands)
        <S>                                                  <C>             <C>                <C>              <C>
        Austar ........................................      $15,450         $  9,999           $25,641          $18,466
        Saturn ........................................        1,593              932             2,856            1,659
        Austar Satellite...............................        1,075               --             2,283               --
        Telefenua......................................          581              459             1,142              885
        United Wireless................................          322              417               685              859
                                                             -------          -------           -------          -------
               Total system operating expense..........      $19,021          $11,807           $32,607          $21,869
                                                             =======          =======           =======          =======
</TABLE>
        AUSTAR

            Operating expense for Austar increased $5.5 million,  or 55.0%, from
        $10.0  million for the three months ended June 30, 1997 to $15.5 million
        for the three months ended June 30, 1998.  Operating  expense for Austar
        increased $7.1 million,  or 38.4%, from $18.5 million for the six months
        ended June 30, 1997 to $25.6  million for the six months  ended June 30,
        1998.  These  increases  were  primarily due to an increase in satellite
        programming costs resulting from the May 1998 agreements with Foxtel and
        Optus to obtain  additional  programming  rights in connection  with the
        receivership of Australis as well as additional satellite platform costs
        associated  with the May 1998 joint venture with Optus (see Note 3). The
        Company expects that the  restructuring of programming costs for certain
        channels  will result in somewhat  higher  costs in the  short-term  for
        these channels which will be offset by lower costs in the long-term when
        compared to Austar's previous  agreements with Australis.  The remainder
        of the increase  between  periods was due to an increase in salaries and
        benefits  related  to the  additional  personnel  necessary  to  support
        Austar's  launch  of local  and  state  offices  in its  markets  and an
        increase in customer  subscriber  management  expenses related to volume
        increases in telephone,  billing and collection  costs.  These increases
        were  positively  impacted  by $3.6  million due to  fluctuation  in the
        exchange rates between the three months ended June 30, 1998 and 1997 and
        positively  impacted by $5.3 million due to  fluctuation in the exchange
        rates between the six months ended June 30, 1998 and 1997.

            During  the  three  months  ended  June 30,  1998,  Austar  incurred
        one-time  charges  of $1.4  million as a result of the  receivership  of
        Australis  and the  subsequent  termination  of various  agreements  and
        incurred  additional  programming expense of $2.0 million related to its
        new programming  agreements and $0.7 million related to the operation of
        the joint venture with Optus.

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

                                       16
<PAGE>

        SATURN

            For the three  months  ended June 30,  1998,  the  Company  reported
        system  operating  expense from Saturn of $1.6  million,  an increase of
        $0.7 million,  or 77.8%,  compared with system operating expense of $0.9
        million for the  corresponding  period in 1997. For the six months ended
        June 30, 1998, the Company reported system operating expense from Saturn
        of $2.9  million, an  increase of  $1.2 million, or 70.6%, compared with
        system operating expense of $1.7 million for the corresponding period in
        1997.  These  increases were primarily due to an increase in programming
        costs related to the launch of additional  sports  programs  during 1998
        and an  increase  in  personnel  expenses  in order to support  Saturn's
        build-out of its hybrid fiber coaxial  network in the  Wellington  area.
        These  increases  were  positively  impacted  by  $0.3  million  due  to
        fluctuation  in the exchange  rates  between the three months ended June
        30,  1998  and 1997  and  positively  impacted  by $0.6  million  due to
        fluctuation  in the exchange rates between the six months ended June 30,
        1998 and 1997.

         AUSTAR SATELLITE

              In September 1997, the Company commenced  transponder fee payments
         for a satellite service fee of approximately  $0.4 million per month as
         part of its five-year agreement with Optus Networks Pty Limited. In May
         1998,  Austar  Satellite began billing the joint venture between Austar
         and  Optus for the  transponder  rental.  The  Company  eliminates  all
         related party accounts in consolidation.

SYSTEM SELLING,  GENERAL AND ADMINISTRATIVE EXPENSE. System selling, general and
administrative expense increased $1.1 million and $1.3 million for the three and
six months  ended June 30, 1998,  respectively,  compared to the amounts for the
corresponding periods in the prior year as follows:
<TABLE>
<CAPTION>

                                                             For the Three Months Ended          For the Six Months Ended
                                                                       June 30,                           June 30,
                                                             --------------------------          ------------------------
                                                               1998              1997              1998            1997
                                                             --------          --------          --------        --------
                                                                                     (In thousands)
         <S>                                                  <C>              <C>               <C>              <C>
         Austar ........................................      $10,740          $10,083           $20,313          $19,609
         Saturn ........................................        1,313              746             2,141            1,396
         Telefenua......................................          584              538             1,101            1,011
         United Wireless................................          227              404               509              789
                                                              -------          -------           -------          -------
                Total system selling, general and
                  administrative expense................      $12,864          $11,771           $24,064          $22,805
                                                              =======          =======           =======          =======
</TABLE>

         SATURN

              System selling,  general and administrative expense increased $0.6
         million,  or 85.7%,  from $0.7  million for the three months ended June
         30, 1997 to $1.3  million  for the three  months  ended June 30,  1998.
         System  selling,  general and  administrative  expense  increased  $0.7
         million,  or 50.0%, from $1.4 million for the six months ended June 30,
         1997 to $2.1  million  for the six months  ended June 30,  1998.  These
         increases  were  primarily  due to increases in marketing and promotion
         costs as well as additional  personnel  costs related to the April 1998
         launch of Saturn's telephony services.  These increases were positively
         impacted  by $0.3  million due to  fluctuation  in the  exchange  rates
         between the three  months  ended June 30, 1998 and 1997 and  positively
         impacted  by $0.5  million due to  fluctuation  in the  exchange  rates
         between the six months ended June 30, 1998 and 1997.

CORPORATE   GENERAL   AND   ADMINISTRATIVE   EXPENSE.   Corporate   general  and
administrative expense increased $1.8 million and $3.9 million for the three and
six months  ended June 30, 1998,  respectively,  compared to the amounts for the
corresponding  periods in the prior year.  These increases were primarily due to
an increase  in the  allocation  of UIH  corporate  general  and  administrative
expense to the Company in the form of capital contributions,  based on increased
activity at the operating system level.  Management believes that this method of
allocating costs is reasonable.

DEPRECIATION AND  AMORTIZATION  EXPENSE.  Depreciation and amortization  expense
increased $5.5 million and $16.2 million for the three and six months ended June
30, 1998, respectively, compared to the amounts for the corresponding periods in
the prior year as follows:

                                       17
<PAGE>

<TABLE>
<CAPTION>

                                                              For the Three Months Ended          For the Six Months Ended
                                                                       June 30,                             June 30,
                                                              --------------------------          --------------------------
                                                                1998              1997              1998              1997
                                                              ---------         --------          --------          --------
                                                                                     (In thousands)
         <S>                                                  <C>               <C>               <C>               <C>
         Austar ........................................      $21,354           $17,206           $48,235           $33,709
         Saturn ........................................          706               501             1,258               896
         Austar Satellite...............................        1,365                --             1,365                --
         Telefenua......................................          351               551               720               791
         United Wireless................................          154               173               313               340
                                                              -------           -------           -------           -------
                Total depreciation and amortization
                  expense...............................      $23,930           $18,431           $51,891           $35,736
                                                              =======           =======           =======           =======
</TABLE>
         AUSTAR

              Depreciation and  amortization  expense from Austar increased $4.2
         million,  or 24.4%,  from $17.2 million for the three months ended June
         30, 1997 to $21.4  million for the three  months  ended June 30,  1998.
         Depreciation  and  amortization  expense  from Austar  increased  $14.5
         million, or 43.0%, from $33.7 million for the six months ended June 30,
         1997 to $48.2  million for the six months  ended June 30,  1998.  These
         increases  were primarily due to the larger fixed asset base due to the
         significant deployment of operating assets to meet subscriber growth as
         well as an  increase  in  depreciation  expense  related to  subscriber
         disconnects.  These increases were positively  impacted by $4.4 million
         due to fluctuation in the exchange rates between the three months ended
         June 30, 1998 and 1997 and  positively  impacted by $8.7 million due to
         fluctuation in the exchange rates between the six months ended June 30,
         1998 and 1997.

INTEREST  EXPENSE.  Interest expense increased $4.3 million and $8.7 million for
the three and six months  ended June 30,  1998,  respectively,  compared  to the
amounts for the  corresponding  periods in the prior year.  These increases were
primarily due to the new  accretion of interest on the  September  1997 Notes as
well as continued  accretion on the May 1996 Notes at 14.75%  compared to 14% in
the prior year interim  period.  In addition,  interest  expense  related to the
Austar Bank Facility,  which was secured in July 1997, was $2.2 million and $3.7
million for the three and six months ended June 30, 1998, respectively.

YEAR 2000 CONVERSION

     UIH  has  established  a  task  force  to  coordinate  the  identification,
evaluation and  implementation  of changes to computer  systems and applications
necessary to achieve the  Company's  goal of a Year 2000 date  conversion  which
would  minimize  the  effect on  customers  and  avoid  disruption  to  business
operations.  The  highest  priority  for  compliance  is being  given to service
delivery systems, targeting customer care and field headend devices. The Company
is also focusing on field  equipment,  hardware and software tools,  programming
and  outside  forces that may affect the  Company's  operations,  including  the
Company's vendors, banks and utility companies. The task force's analysis of the
Year 2000 threat is on-going and will be  continuously  updated  throughout 1998
and 1999 as necessary.

     To date, the task force has authored and  distributed an inventory  package
to the  Company's  regional  systems  to  identify  all  business  and  computer
applications,  so the task force can identify potential compliance problems. The
task force is  currently  compiling a database of  information  based upon these
responses,  which is expected to be  completed by  September  30,  1998.  To the
extent  problems are  identified,  the task force plans to implement  corrective
procedures where necessary, then test the applications for Year 2000 compliance.
Each system is responsible for inquiring of their vendors and the other entities
with which they do business as to such  entities' Year 2000  compliance  status.
The total cost of compliance  and its effect on the Company's  future results of
operations  and  liquidity  is being  studied  by the task  force.  Based on the
preliminary data provided by the systems and at the corporate level, the Company
believes  that the known  Year 2000  issues can be  remedied  without a material
financial impact on the Company.  There can be no assurance,  however, as to the
total cost to the Company for complete compliance until all of the data has been
gathered. The Company expects to complete this entire project by June 30, 1999.

                                       18
<PAGE>

                           PART II - OTHER INFORMATION

                           ITEM 5 - OTHER INFORMATION

SUMMARY OPERATING DATA

     The following tables set forth certain unaudited operating data:
<TABLE>
<CAPTION>

                                                                                    As of
                                                                                June 30, 1998
                                                 ---------------------------------------------------------------------------
                                                 Television
                                                  Homes in                                                         Economic
                                                  Service         Homes            Basic              Basic        Ownership
     Operating System                               Area       Serviceable      Subscribers        Penetration     Interest
     ----------------                            ----------    -----------      -----------        -----------     ---------
     <S>                                         <C>            <C>               <C>                 <C>           <C>
     Austar.............................         1,635,000      1,632,691         215,275             13.2%         100%(1)
     Saturn (2).........................           141,000         36,613           3,635              9.9%          65%
     Telefenua..........................            31,000         20,128           6,120             30.4%          90%(3)
     XYZ Entertainment..................               N/A(4)         N/A         543,564(5)           N/A           25%
                                                 ---------      ---------         -------
           Total........................         1,807,000      1,689,432         768,594
                                                 =========      =========         =======
</TABLE>
<TABLE>
<CAPTION>

                                                                                    As of
                                                                                March 31, 1998
                                                 ---------------------------------------------------------------------------
                                                 Television
                                                  Homes in                                                         Economic
                                                  Service         Homes            Basic              Basic        Ownership
     Operating System                               Area       Serviceable      Subscribers        Penetration     Interest
     ----------------                            ----------    -----------      -----------        -----------     ---------
     <S>                                         <C>            <C>               <C>                 <C>           <C>
     Austar.............................         1,635,000      1,589,000         199,955             12.6%          100%(1)
     Saturn.............................           141,000         23,780           3,245             13.6%           65%
     Telefenua..........................            31,000         20,128           6,104             30.3%           90%(3)
     XYZ Entertainment..................               N/A(4)         N/A         577,476(5)           N/A            25%
                                                 ---------      ---------         -------
           Total........................         1,807,000      1,632,908         786,780
                                                 =========      =========         =======
</TABLE>

(1)  The  Company  holds  an  effective   100%  interest  in  Austar  through  a
     combination of ordinary shares and convertible debentures.
(2)  In April 1998, Saturn launched business and residential  telephony services
     in the Wellington,  New Zealand area. As of June 30, 1998, Saturn had 7,709
     homes connectable,  950 residential  telephony  subscribers and 73 business
     telephony subscribers.
(3)  The Company  holds an effective  90% economic  interest in  Telefenua.  The
     Company's  economic  interest  will  decrease  to 75% and  64%  once it has
     received a 20% and 40% internal rate of return on its investment in Tahiti,
     respectively.
(4)  The Company expects that XYZ  Entertainment's  programming  package will be
     marketed to virtually all of Australia's 6.5 million television  households
     by Australian multi-channel television providers.
(5)  This figure represents the total estimated subscribers to the eight-channel
     Core  Package  to  which  XYZ  Entertainment  supplies  four  channels.  In
     addition,  XYZ  Entertainment  launched  a  fifth  channel,  the  Lifestyle
     Channel, on September 1, 1997.


                    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     27.1     Financial Data Schedule

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

     None.

                                       19
<PAGE>


                                    SIGNATURE


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



UIH AUSTRALIA/PACIFIC, INC.



Date:      August 13, 1998
           -----------------------------------------------------------

By:        /S/ J. Timothy Bryan
           -----------------------------------------------------------
           J. Timothy Bryan
           Chief Financial Officer and Treasurer
           (A Duly Authorized Officer and Principal Financial Officer)


                                       20