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

                                    FORM 10-Q

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

                      For the quarter ended March 31, 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 May 15,
1998, the Company had 13,864,941 shares of common stock outstanding.


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



                                                                                                                 Page
                                                                                                                Number
                                                                                                                ------

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


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

     Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 1998
         and 1997 (Unaudited).................................................................................     3

     Condensed Consolidated Statement of Stockholder's Deficit for the Three Months Ended
         March 31, 1998 (Unaudited)..........................................................................      4

     Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 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....................................................................     20
------                                   

</TABLE>


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

                                                                                           March 31,        December 31,
                                                                                             1998               1997
                                                                                           ---------        -----------
<S>                                                                                        <C>               <C>
ASSETS
Current assets
   Cash and cash equivalents........................................................       $  1,920          $ 12,344
   Restricted cash..................................................................            420               420
   Short-term investments...........................................................             --            12,325
   Subscriber receivables...........................................................          2,682             2,548
   Related party receivables........................................................          1,872             1,942
   Other current assets.............................................................          3,052             3,405
                                                                                           --------          --------
       Total current assets.........................................................          9,946            32,984

Property, plant and equipment, net of accumulated depreciation of $102,235 and
   $78,179, respectively............................................................        176,323           183,101
License fees, net of accumulated amortization of $4,278 and $3,773, respectively....          5,254             5,691
Goodwill, net of accumulated amortization of $9,027 and $8,044, respectively........         43,475            43,017
Deferred financing costs, net of accumulated amortization of $1,824 and $1,306,
   respectively.....................................................................         12,959            13,393
Other non-current assets, net.......................................................          1,731               846
                                                                                           --------          --------
       Total assets.................................................................       $249,688          $279,032
                                                                                           ========          ========

LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities
   Accounts payable and accrued liabilities, including related party payables of
     $2,806 and $1,596, respectively................................................       $ 23,612          $ 24,617
   Construction payables............................................................          4,635             6,008
   Accrued funding obligation.......................................................            841               406
   Related party note payable.......................................................          4,999             4,999
   Current portion of long-term debt................................................          2,055             1,825
                                                                                           --------          --------
       Total current liabilities....................................................         36,142            37,855

Due to parent.......................................................................          6,285             5,394
Senior discount notes and other debt................................................        399,562           387,094
Other long-term liabilities.........................................................          1,692             1,426
                                                                                           --------          --------
       Total liabilities............................................................        443,681           431,769
                                                                                           --------          --------

Minority interest in subsidiary.....................................................          9,940            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 and
     13,864,941 shares issued and outstanding, respectively.........................            139               139
   Additional paid-in capital.......................................................        145,447           139,621
   Cumulative translation adjustments...............................................        (26,853)          (28,964)
   Accumulated deficit..............................................................       (322,666)         (274,949)
                                                                                           --------          --------
       Total stockholder's deficit..................................................       (203,933)         (164,153)
                                                                                           --------          --------

       Total liabilities and stockholder's deficit..................................       $249,688          $279,032
                                                                                           ========          ========

            The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
                                                              2
<PAGE>
<TABLE>
<CAPTION>
                                               UIH AUSTRALIA/PACIFIC, INC.
                                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Stated in thousands, except share and per share amounts)
                                                       (Unaudited)



                                                                                   For the Three Months Ended
                                                                                           March 31,
                                                                                 -----------------------------
                                                                                   1998                1997
                                                                                 --------            ---------
<S>                                                                              <C>                 <C>
Service and other revenue..................................................      $ 20,608            $ 14,492

System operating expense, including related party expense of $1,047 and
   $402, respectively......................................................       (13,586)            (10,062)
System selling, general and administrative expense.........................       (11,200)            (11,034)
Corporate general and administrative expense, including management fees
   to a related party of $2,360 and $188, respectively.....................        (2,464)               (283)
Depreciation and amortization..............................................       (27,961)            (17,305)
                                                                                 --------            --------
       Net operating loss..................................................       (34,603)            (24,192)

Equity in losses of affiliated companies...................................          (485)               (366)
Interest income............................................................           185                 216
Interest expense, including related party expense of $317 and $30,
   respectively............................................................       (13,145)             (8,621)
Other expense, net.........................................................          (594)               (218)
                                                                                 --------            --------
       Net loss before minority interest...................................       (48,642)            (33,181)

Minority interest in subsidiary............................................           925                  --
                                                                                 --------            --------
         
       Net loss............................................................      $(47,717)           $(33,181)
                                                                                 ========            ========

Basic and diluted loss per common share....................................      $  (3.44)           $  (2.39)
                                                                                 ========            ========

Weighted-average number of common shares outstanding.......................    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, December 31, 1997.........  13,864,941    $139       $139,621        $(28,964)        $(274,949)     $(164,153)

Capital contributions from parent...          --      --          5,826              --                --          5,826
Change in cumulative translation
   adjustments......................          --      --             --           2,111                --          2,111
Net loss............................          --      --             --              --           (47,717)       (47,717)
                                      ----------    ----       --------        --------         ---------      ---------

Balances, March 31, 1998............  13,864,941    $139       $145,447        $(26,853)        $(322,666)     $(203,933)
                                      ==========    ====       ========        ========         =========      =========











         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 Three Months Ended
                                                                                                     March 31,
                                                                                            --------------------------
                                                                                              1998              1997
                                                                                            --------          --------
<S>                                                                                         <C>               <C>
Cash flows from operating activities:
Net loss................................................................................    $(47,717)         $(33,181)
Adjustments to reconcile net loss to net cash flows from operating activities:
   Depreciation and amortization........................................................      27,961            17,305
   Equity in losses of affiliated companies.............................................         485               366
   Minority interest share of losses....................................................        (925)               --
   Accretion of interest on senior notes and amortization of deferred financing costs...      11,695             8,524
   Increase in subscriber receivables...................................................         (95)             (691)
   Decrease (increase) in related party receivables.....................................         118              (379)
   Increase in other assets.............................................................        (601)           (1,379)
   Increase in technical assistance agreement payables..................................         991               397
   Increase in accounts payable, accrued liabilities and other..........................         662             8,859
                                                                                            --------          --------

Net cash flows used in operating activities.............................................      (7,426)             (179)
                                                                                            --------          --------
Cash flows from investing activities:
Purchase of short-term investments......................................................          --            (3,256)
Sale of short-term investments..........................................................      12,325            21,896
Investments in and advances to affiliated companies and other investments...............         (51)               --
Purchase of property, plant and equipment...............................................     (18,354)          (12,886)
Decrease in construction payables.......................................................      (1,389)          (20,888)
                                                                                            --------          --------

Net cash flows used in investing activities.............................................      (7,469)          (15,134)
                                                                                            --------          --------
Cash flows from financing activities:
Capital contributions from parent.......................................................       3,668                --
Borrowing on related party payables to parent...........................................          --             1,312
Deferred financing costs................................................................          --               472
Borrowing on other debt.................................................................         624                --
Payment on capital leases and other debt................................................        (187)             (348)
                                                                                            --------          --------

Net cash flows provided by financing activities.........................................       4,105             1,436
                                                                                            --------          --------

Effect of exchange rates on cash........................................................         366            (1,029)
                                                                                            --------          --------
Decrease in cash and cash equivalents...................................................     (10,424)          (14,906)
Cash and cash equivalents, beginning of period..........................................      12,344            19,220
                                                                                            --------          --------
Cash and cash equivalents, end of period................................................    $  1,920          $  4,314
                                                                                            ========          ========

Non-cash investing and financing activities:
   Non-cash capital contribution from parent............................................    $  2,158          $     --
                                                                                            ========          ========
   Decrease in unrealized loss on investment............................................    $     --          $    266
                                                                                            ========          ========
   Assets acquired with capital leases..................................................    $     77          $    310
                                                                                            ========          ========

Supplemental cash flow disclosures:
   Cash received for interest...........................................................    $    224          $    281
                                                                                            ========          ========
   Cash paid for interest...............................................................    $  1,132          $     --
                                                                                            ========          ========

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

<PAGE>
                           UIH AUSTRALIA/PACIFIC, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF MARCH 31, 1998
                     (Monetary amounts stated in thousands)
                                   (Unaudited)

1.   ORGANIZATION AND BACKGROUND

     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 March 31, 1998.

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

     (1)  The  Company  holds an  effective  100%  economic  interest  in Austar
          through a combination of ordinary 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  complete  the  anticipated
build-out of Austar and 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 March 31,  1998,  the Company had a net  working  capital  deficit of
$23,390,  excluding related party payables of $2,806, 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 early 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 March 31, 1998 and the results of its operations for the three
months ended March 31, 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 basis
differences related to the excess of cost over net tangible assets acquired.

PROPERTY, PLANT AND EQUIPMENT

     Property,  plant and equipment are 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.
All  subscriber  premises  equipment  and  capitalized  installation  labor  are
depreciated over three years. Upon disconnection of a 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.  Depreciation expense is computed using the
straight-line method over the estimated useful lives shown below:

                                                                       Average
                                                                        Life
                                                                       -------

     Subscriber premises equipment and converters..............            3
     MMDS distribution facilities..............................         5-10
     Cable distribution networks...............................         5-10
     Office equipment, furniture and fixtures..................         3-10
     Buildings and leasehold improvements......................         6-10
     Other.....................................................          3-5

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

     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 INCOME

     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 by their nature in a financial  statement and (ii) display
the accumulated balance of other  comprehensive  income 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 months ended March 31, 1998 and 1997, the Company's only components of
other   comprehensive   income  were  the  changes  in  cumulative   translation
adjustments and the change in unrealized loss on investment (see Note 6).

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.

     In  accordance  with  Statement of Financial  Accounting  Standards No. 95,
"Statement of Cash Flows," cash flows from the  Company's  operations in foreign
countries are calculated at average rates 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.

NEW ACCOUNTING PRINCIPLE

     The American  Institute of Certified  Public  Accountants  recently  issued
Statement  of Position  98-5,  "Reporting  on the Costs of Start-Up  Activities"
("SOP 98-5"),  which is required to be adopted by affected  companies for fiscal
years  beginning  after  December  15,  1998.  SOP  98-5  defines  start-up  and
organization  costs,  which must be expensed as incurred.  The Company is in the
process of determining whether the adoption of this standard will have an impact
on its reported results of operations.

RECLASSIFICATIONS

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

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

     Investments in and advances to XYZ Entertainment are as follows:
<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:
         March 31, 1998...................            $19,095(1)             $(19,205)                $110           $ --
                                                      =======                ========                 ====           ====
         December 31, 1997................            $18,610(1)             $(18,720)                $110           $ --
                                                      =======                ========                 ====           ====
</TABLE>
       (1) Includes an accrued funding  obligation of $841 and $406 at March 31,
           1998 and December 31, 1997, respectively. 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.

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


4.   PROPERTY, PLANT AND EQUIPMENT

     Detail of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
                                                                                           As of             As of
                                                                                         March 31,       December 31,
                                                                                           1998              1997
                                                                                         ---------       ------------
     <S>                                                                                 <C>               <C>
     Subscriber premises equipment and converters...............................         $165,513          $160,413
     MMDS distribution facilities...............................................           56,585            55,093
     Cable distribution networks................................................           25,691            16,770
     Office equipment, furniture and fixtures...................................           11,921            10,813
     Buildings and leasehold improvements.......................................            6,520             5,647
     Other......................................................................           12,328            12,544
                                                                                         --------          --------
                                                                                          278,558           261,280
           Accumulated depreciation.............................................         (102,235)          (78,179)
                                                                                         --------          --------  
           Net property, plant and equipment....................................         $176,323          $183,101
                                                                                         ========          ========
</TABLE>

5.   SENIOR DISCOUNT NOTES AND OTHER DEBT

     Senior discount notes and other debt consists of the following:
<TABLE>
<CAPTION>
                                                                                           As of            As of
                                                                                         March 31,       December 31,
                                                                                           1998             1997
                                                                                         ---------       ------------
     <S>                                                                                 <C>               <C>
     May 1996 Notes (as defined below), net of unamortized discount.............         $288,969          $278,662
     September 1997 Notes (as defined below), net of unamortized discount.......           31,339            30,461
     Austar Bank Facility (as defined below)....................................           72,809            71,531
     Vendor financed equipment at Saturn........................................            4,122             3,730
     Capitalized lease obligations..............................................            3,361             3,441
     Mortgage note, interest at 7.548%, 7-year term.............................            1,017             1,094
                                                                                         --------          --------
                                                                                          401,617           388,919
           Less current portion.................................................           (2,055)           (1,825)
                                                                                         --------          --------
                                                                                         $399,562          $387,094
                                                                                         ========          ========
</TABLE>

     On May 14, 1996, the Company  raised total gross proceeds of  approximately
$225,115 from the private  placement of $443,000  aggregate  principal amount of
14% senior  discount  notes (the "May 1996  Notes").  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 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.

     On September 23, 1997, the Company received total gross proceeds of $29,925
from the private placement of $45,000  aggregate  principal amount of 14% senior
discount notes (the  "September  1997 Notes").  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.

     In July 1997, Austar secured a financing  facility from a bank for a senior
syndicated  term  debt  facility  in the  amount  of  Australian  $("A$")200,000
($155,000)  (the  "Austar  Bank  Facility").  The  proceeds  of the Austar  Bank
Facility have been and will be used 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

                                       9

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

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.  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.  As of March 31, 1998,  Austar had drawn the entire amount
of the working capital facility and the cash advance facility totaling A$110,000
($72,809 converted using the March 31, 1998 exchange rate).  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.

6.   COMPREHENSIVE INCOME

     The components of total comprehensive loss are as follows:
<TABLE>
<CAPTION>
                                                                                      For the Three Months Ended
                                                                                                March 31,
                                                                                      --------------------------
                                                                                        1998              1997
                                                                                      --------          --------
     <S>                                                                              <C>               <C>
     Net loss...................................................................      $(47,717)         $(33,181)
     Other comprehensive income (loss):
       Increase (decrease) in cumulative translation adjustments................         2,111            (1,011)
       Decrease in unrealized loss on investment................................            --               266
                                                                                      --------          --------
           Total comprehensive loss.............................................      $(45,606)         $(33,926)
                                                                                      ========          ========
</TABLE>

7.   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.

     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 March 31, 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% and is due on demand.

                                       10

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

     Included in the amount due to parent is the following:
<TABLE>
<CAPTION>
                                                                                     As of               As of
                                                                                   March 31,          December 31,
                                                                                     1998                 1997
                                                                                   ---------          ------------
     <S>                                                                            <C>                <C>
     Payable to parent for management fees, interest and invoices paid by UIH
       on the Company's behalf...............................................       $1,264             $   723
     Austar technical assistance agreement obligations.......................        3,957               2,629
     Saturn technical assistance agreement obligations.......................          552                 406
     Telefenua technical assistance agreement obligations....................        2,598               2,659
     United Wireless technical assistance agreement obligations..............          496                 487
     Other...................................................................          224                  86
                                                                                    ------              ------
                                                                                     9,091               6,990
         Less current portion................................................       (2,806)             (1,596)
                                                                                    ------              ------
                                                                                    $6,285              $5,394
                                                                                    ======              =======
</TABLE>
8.   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 eliminations.

     The Company's segment information is as follows:
<TABLE>
<CAPTION>
                                                                    As of and for the Three Months Ended
                                                                               March 31, 1998
                                                   ----------------------------------------------------------------------
                                                   Australia       New Zealand       Tahiti        Corporate      Total
                                                   ---------       -----------      --------       ---------    ---------
     <S>                                           <C>              <C>             <C>           <C>           <C>
     Service and other revenue...................  $ 19,316         $   155         $ 1,137       $     --      $ 20,608
     Net loss....................................  $(30,996)        $(1,805)        $  (607)      $(14,309)     $(47,717)
     Total assets................................  $193,969         $38,922         $10,739       $  6,058      $249,688
</TABLE>
<TABLE>
<CAPTION>
                                                                         For the Three Months Ended
                                                                               March 31, 1997
                                                   ----------------------------------------------------------------------
                                                   Australia       New Zealand       Tahiti        Corporate      Total
                                                   ---------       -----------      --------       ---------    ---------
     <S>                                           <C>              <C>              <C>           <C>          <C>
     Service and other revenue...................  $ 13,493         $    83          $ 916         $    --      $ 14,492
     Net loss....................................  $(21,719)        $(1,696)         $(537)        $(9,229)     $(33,181)
</TABLE>
9.   SUBSEQUENT EVENT

     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,  Optus  Communications  Pty Limited ("Optus") has purportedly
terminated  its  lease  on two  transponders  currently  used  by  Australis  to
distribute  its  programming  to  both  Australis  and  Austar  subscribers.  In
addition,  franchise  agreements pursuant to which Austar purchases  programming
from  Australis  may be terminated  by Austar or  Australis.  Finally,  Austar's
management believes that programming  arrangements between Australis and certain
of its programming providers may be terminated by as early as May 15, 1998.

     As of May 15, 1998,  Austar continued to receive signal from Australis with
little disruption in service,  although this is not expected to continue. Austar
has anticipated the foregoing  events and has arranged for suitable  contingency
plans relating to both the  distribution  of signal and the purchase of the same
or substantially  similar  programming.  Austar has entered into agreements with
both Optus and Foxtel Management Pty Limited ("Foxtel") which address the issues
of continued  signal  propagation and continued access to current as well as new
programming for Austar. As of May 15, 1998, however,  these arrangements had not
been implemented  since Australis was still providing  programming to Austar and
certain of these  arrangements are conditional upon termination of the franchise
agreements.

                                       11
<PAGE>

     Under the terms of the Austar Bank  Facility,  the  termination of Austar's
franchise  agreements 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 has
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, subject to its contingency arrangements taking effect, there will
be no material adverse effect to Austar.



                                       12
<PAGE>

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


     THE FOLLOWING DISCUSSION CONTAINS,  IN ADDITION TO HISTORICAL  INFORMATION,
FORWARD-LOOKING  STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.  THE COMPANY'S
ACTUAL  RESULTS  MAY DIFFER  SIGNIFICANTLY  FROM THE  RESULTS  DISCUSSED  IN THE
FORWARD-LOOKING  STATEMENTS.  FACTORS  THAT COULD  CAUSE OR  CONTRIBUTE  TO SUCH
DIFFERENCES  INCLUDE,  BUT ARE NOT LIMITED TO, THOSE  DISCUSSED BELOW AND IN THE
COMPANY'S REPORT ON FORM 8-K DATED MAY 15, 1997.

     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 the results of its future
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, in
part, on their respective gross revenues.

LIQUIDITY AND CAPITAL RESOURCES

     As of March 31,  1998,  the Company had  invested a total of  approximately
$422.9 million in its projects as outlined below:

                                                                     As of
                                                                    March 31,
                                                                     1998
                                                                 --------------
                                                                 (In thousands)

         Austar............................................       $355,612(1)(2)
         Saturn............................................         28,376(1)(3)
         Telefenua.........................................         16,738
         XYZ Entertainment.................................         14,140
         United Wireless...................................          8,020
                                                                  --------
              Total........................................       $422,886
                                                                  ========

         (1)  Does not  include  amounts  contributed  to Austar  (approximately
              $11,000) and Saturn  (approximately  $2,920) 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$110,000  ($83,895 converted using the exchange rate on
              each  funding  date) of amounts  borrowed  under the  Austar  Bank
              Facility  and $28,773 paid by the Company to increase its economic
              interest  in Austar to  approximately  100%.  Does not include the
              $29,840 of non-cash  issuance of preferred stock by the Company to
              increase its economic interest in Austar to approximately 100%.
         (3)  Does not include the $7,800 of common stock  exchanged  for shares
              of the Company to  increase  the  Company's  interest in Saturn to
              100%  effective  July  1996 or the  $19,566  invested  by  another
              shareholder for its 35% interest in Saturn in July 1997.

          AUSTAR

               The  Company  anticipates  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;

                                       13
<PAGE>

          (ii) the level of churn,  that is, the level of  existing  subscribers
          who disconnect from Austar's service;  and (iii) the mix of DTH versus
          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-$75 million to continue on its current
          expansion  path for the period from April 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 ($59.6 million  converted using the March 31,
          1998  exchange  rate) under the Austar Bank  Facility  (assuming  that
          certain financial ratios are met, which ratios are not currently being
          met) 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 early 1999.

          SATURN

               The  Company  anticipates  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  $50-$55 million for the
          period from April 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  $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 early 1999.

          OTHER

               The  Company   anticipates  that  the  aggregate  future  funding
          requirements for Telefenua,  XYZ Entertainment and United Wireless are
          less than $5 million.

     The  indentures  associated  with 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  upon  exercise.  The  warrants are  exercisable
through May 15, 2006.
                                       14
<PAGE>

     In May 1998,  Australis,  a major supplier of  programming  to Austar,  was
placed into receivership in Australia.  As a result of the  receivership,  Optus
has  purportedly  terminated  its lease on two  transponders  currently  used by
Australis  to  distribute   its   programming   to  both  Australis  and  Austar
subscribers.  In  addition,   franchise  agreements  pursuant  to  which  Austar
purchases  programming  from Australis may be terminated by Austar or Australis.
Finally,  Austar's  management  believes that programming  arrangements  between
Australis and certain of its programming providers may be terminated by as early
as May 15, 1998.

     As of May 15, 1998,  Austar continued to receive signal from Australis with
little disruption in service,  although this is not expected to continue. Austar
has anticipated the foregoing  events and has arranged for suitable  contingency
plans relating to both the  distribution  of signal and the purchase of the same
or substantially  similar  programming.  Austar has entered into agreements with
both Optus and Foxtel which address the issues of continued  signal  propagation
and continued access to current as well as new programming for Austar. As of May
15, 1998,  however,  these arrangements had not been implemented since Australis
was still providing  programming to Austar and certain of these arrangements are
conditional upon termination of the franchise agreements.

     Under the terms of the Austar Bank  Facility,  the  termination of Austar's
franchise  agreements 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 has
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, subject to its contingency arrangements taking effect, there will
be no material adverse effect to Austar.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 1998

     The  Company  incurred a net loss during the three  months  ended March 31,
1998 of $47.7 million,  which includes  non-cash items such as depreciation  and
amortization  expense  totaling  $28.0  million and accretion of interest on the
Notes and amortization of deferred financing costs totaling $11.7 million.

     Cash and cash equivalents  decreased $10.4 million from $12.3 million as of
December  31, 1997 to $1.9 million as of March 31,  1998.  Principal  sources of
cash during the three months ended March 31, 1998 included net proceeds from the
sale of short-term  investments of $12.3 million, cash contributions from parent
of $3.7 million and  borrowing on other debt as well as other  sources  totaling
$1.0 million.

     During the three months ended March 31, 1998, cash was used principally for
purchases of  property,  plant and  equipment  of $18.4  million to continue the
build-out of existing  projects,  primarily at Austar,  the funding of operating
activities of $7.4 million, a decrease in construction  payables of $1.4 million
and the  payment on capital  leases  and other debt of $0.2  million  during the
period.

FOR THE THREE MONTHS ENDED MARCH 31, 1997

     The  Company  incurred a net loss during the three  months  ended March 31,
1997 of $33.2 million,  which includes  non-cash items such as depreciation  and
amortization  expense  totaling  $17.3  million and accretion of interest on the
Notes and amortization of deferred financing costs totaling $8.5 million.

     Cash and cash equivalents  decreased $14.9 million from $19.2 million as of
December  31, 1996 to $4.3 million as of March 31,  1997.  Principal  sources of
cash during the three months ended March 31, 1997 included net proceeds from the
net decrease in short-term investments of $18.6 million,  borrowings from parent
of $1.3 million and deferred financing costs of $0.5 million.

     During the three months ended March 31, 1997, cash was used principally for
a decrease in construction  payables of $20.9 million, the purchase of property,
plant and  equipment  of $12.9  million to construct  Austar's  and  Telefenua's
systems,  the  payment  of  capital  leases and other debt as well as other uses
totaling  $1.3 million and the funding of operating  activities  of $0.2 million
during the period.

RESULTS OF OPERATIONS

SERVICE AND OTHER  REVENUE.  The Company's  service and other revenue  increased
$6.1 million for the three  months  ended March 31, 1998  compared to the amount
for the corresponding period in the prior year as follows:

                                       15
<PAGE>

<TABLE>
<CAPTION>
                                                                          For the Three Months Ended
                                                                                 March 31,
                                                                          --------------------------
                                                                            1998              1997
                                                                          --------          --------
                                                                                (In thousands)
          <S>                                                             <C>                <C>
          Austar ................................................         $19,199            $13,469
          Saturn ................................................             155                 83
          Telefenua..............................................           1,137                916
          United Wireless........................................             117                 24
                                                                          -------            -------
                 Total service and other revenue.................         $20,608            $14,492
                                                                          =======            =======
</TABLE>

          AUSTAR

               Service and other revenue for Austar  increased $5.7 million,  or
          42.2%, from $13.5 million for the three months ended March 31, 1997 to
          $19.2 million for the three months ended March 31, 1998. This increase
          was  primarily  due to  subscriber  growth  (199,955 at March 31, 1998
          compared to 129,156 at March 31, 1997) as Austar continues to roll-out
          its services.

SYSTEM OPERATING  EXPENSE.  System operating  expense increased $3.5 million for
the  three  months  ended  March  31,  1998  compared  to  the  amount  for  the
corresponding period in the prior year as follows:
<TABLE>
<CAPTION>
                                                                    For the Three Months Ended
                                                                             March 31,
                                                                    --------------------------
                                                                      1998              1997
                                                                    --------          --------
                                                                          (In thousands)
          <S>                                                        <C>               <C>
          Austar ..............................................      $10,191           $ 8,467
          Saturn ..............................................        1,263               727
          Telefenua............................................          561               426
          United Wireless......................................          363               442
          Other  ..............................................        1,208                --
                                                                     -------           -------
                 Total system operating expense................      $13,586           $10,062
                                                                     =======           =======
</TABLE>
          AUSTAR

               Operating  expense for Austar  increased $1.7 million,  or 20.0%,
          from $8.5  million for the three  months ended March 31, 1997 to $10.2
          million for the three months ended March 31, 1998.  This  increase was
          primarily  due  to an  increase  in  satellite  programming  fees  and
          copyright costs,  which corresponds to the increase in subscribers and
          additional  basic  programming  services;  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 collections  costs. The remainder
          of the increase  related to increases in system  travel,  maintenance,
          vehicle costs and management fees.

               Austar has experienced high operating expense relative to service
          revenue  due to  certain  fixed  operating  expenses.  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 those related to programming
          and subscriber  management expense,  will vary in direct proportion to
          the number of subscribers.

          SATURN

               For the three months ended March 31, 1998,  the Company  reported
          system operating  expense from Saturn of $1.3 million,  an increase of
          $0.6 million, or 85.7%, compared with system operating expense of $0.7
          million  for the  corresponding  period  in 1997.  This  increase  was
          primarily due to an increase in personnel expenses in order to support
          Saturn's  build-out  of  its  hybrid  fiber  coaxial  network  in  the
          Wellington area.

                                       16
<PAGE>

          OTHER

               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.  The
          Company expects to launch programming services on the satellite during
          1998.

SYSTEM SELLING,  GENERAL AND ADMINISTRATIVE EXPENSE. System selling, general and
administrative  expense  increased $0.2 million for the three months ended March
31, 1998 compared to the amount for the  corresponding  period in the prior year
as follows:
<TABLE>
<CAPTION>
                                                                      For the Three Months Ended
                                                                               March 31,
                                                                      --------------------------
                                                                        1998              1997
                                                                      --------          --------
                                                                            (In thousands)
           <S>                                                        <C>               <C>
          Austar ..............................................       $ 9,573           $ 9,526
          Saturn ..............................................           828               650
          Telefenua............................................           517               473
          United Wireless......................................           282               385
                                                                      -------           -------
                 Total system selling, general
                  and administrative expense...................       $11,200           $11,034
                                                                      =======           =======
</TABLE>

CORPORATE   GENERAL   AND   ADMINISTRATIVE   EXPENSE.   Corporate   general  and
administrative  expense  increased $2.2 million for the three months ended March
31, 1998 compared to the amount for the corresponding  period in the prior year.
This  increase  was  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  $10.7  million for the three months ended March 31, 1998  compared to
the amount for the corresponding period in the prior year as follows:
<TABLE>
<CAPTION>
                                                                    For the Three Months Ended
                                                                             March 31,
                                                                    --------------------------
                                                                      1998              1997
                                                                    --------          --------
                                                                          (In thousands)
          <S>                                                        <C>               <C>
          Austar ..............................................      $26,881           $16,503
          Saturn ..............................................          552               395
          Telefenua............................................          369               240
          United Wireless......................................          159               167
                                                                     -------           -------
                 Total depreciation and amortization expense...      $27,961           $17,305
                                                                     =======           =======
</TABLE>

          AUSTAR

               Deprecation and amortization  expense from Austar increased $10.4
          million, or 63.0%, from $16.5 million for the three months ended March
          31, 1997 to $26.9  million for the three  months ended March 31, 1998.
          This  increase was 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.

EQUITY IN LOSSES OF AFFILIATED COMPANIES. The Company experienced an increase in
equity in losses from XYZ  Entertainment  of $0.1  million from $0.4 million for
the three months ended March 31, 1997 to $0.5 million for the three months ended
March 31, 1998.

INTEREST  EXPENSE.  Interest expense increased $4.5 million for the three months
ended March 31, 1998 compared to the amount for the corresponding  period in the
prior year. This increase was primarily due to greater  accretion of interest on
the Notes,  which was caused by the  additional  accretion  of  interest  on the
September 1997 Notes and the increase of the interest rate to 14.75%  compounded
semi-annually  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 $1.5 million for the three months ended March 31, 1998.

                                       17
<PAGE>

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,  such
as matters  relative  to the effect on Austar of  Australis  being  placed  into
receivership in Australia and other statements of 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,  the  availability  of
programming  to replace  that  supplied by  Australis  and of suitable  means to
distribute signal to subscribers and other factors referenced in this report.




                                       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
                                                                               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%(3)
     Saturn.............................           141,000         23,780           3,245            13.6%            65%
     Telefenua..........................            31,000         20,128           6,104            30.3%            90%(4)
     XYZ Entertainment..................               N/A(1)         N/A         577,476(2)           N/A            25%
                                                 ---------      ---------         -------
           Total........................         1,807,000      1,632,908         786,780
                                                 =========      =========         =======
</TABLE>
<TABLE>
<CAPTION>

                                                                                   As of
                                                                               March 31, 1997
                                                 ----------------------------------------------------------------------------
                                                 Television
                                                  Homes in                                                          Economic
                                                  Service         Homes            Basic             Basic          Ownership
     Operating System                               Area       Serviceable      Subscribers       Penetration       Interest
     ----------------                            ----------    -----------      -----------       -----------       ---------
     <S>                                         <C>            <C>               <C>                <C>             <C>
     Austar.............................         1,622,000      1,571,000         129,156             8.2%           100%(3)
     Saturn.............................           141,000         16,281           2,052            12.6%           100%
     Telefenua..........................            31,000         19,584           5,537            28.3%            90%(4)
     XYZ Entertainment..................               N/A(1)         N/A         390,000(2)          N/A             25%
                                                 ---------      ---------         -------
           Total........................         1,794,000      1,606,865         526,745
                                                 =========      =========         =======
</TABLE>
(1)  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,   including  Austar,
     Australis,  Foxtel and East Coast Television Pty Limited.
(2)  This figure represents the total estimated subscribers to the eight-channel
     Galaxy  package  to which XYZ  Entertainment  supplies  four  channels.  In
     addition,  XYZ  Entertainment  launched  a  fifth  channel,  the  Lifestyle
     Channel, on September 1, 1997.
(3)  The  Company  holds  an  effective   100%  interest  in  Austar  through  a
     combination of ordinary and convertible debentures.
(4)  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.


                                       19
<PAGE>


                    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.




                                       20
<PAGE>



                                    SIGNATURE


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



UIH AUSTRALIA/PACIFIC, INC.



Date:      May 15, 1998
           -------------------------------------

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









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