FORM 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 1998

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

For the transition period from to

Commission File Number: 1-8610

SBC COMMUNICATIONS INC.

Incorporated under the laws of the State of Delaware
I.R.S. Employer Identification Number 43-1301883

175 E. Houston, San Antonio, Texas 78205-2233
Telephone Number 210-821-4105

Securities registered pursuant to Section 12(b) of the Act: (See attached
Schedule A)

Securities registered pursuant to Section 12(g) of the Act: None.

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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )

Based on composite closing sales price of $52 7/8 per share on February 26,
1999, the aggregate market value of all voting and non-voting stock held by
non-affiliates was $103,706,200,000.

As of February 26, 1999, 1,962,346,336 shares of Common Stock were
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

(1) Portions of SBC Communications Inc.'s Annual Report to Shareowners for
the fiscal year ended December 31, 1998 (Parts I and II).

(2) Portions of SBC Communications Inc.'s Notice of 1999 Annual Meeting and
Proxy Statement dated March 12, 1999 (Parts III and IV).

SCHEDULE A

Securities Registered Pursuant To Section 12(b) Of The Act:

Name of each exchange
Title of each class on which registered

Common Shares (Par Value $1.00 Per Share) New York, Chicago and
Pacific Stock Exchanges

7.75 % Exchangeable Notes, New York Stock Exchange
Due March 15, 2001

7.56% Pacific Telesis Group New York Stock Exchange
Corporation-obligated mandatorily
redeemable preferred securities of
subsidiary trusts

8.50% Pacific Telesis Group New York Stock Exchange
Corporation-obligated mandatorily
redeemable preferred securities of
subsidiary trusts

TABLE OF CONTENTS

Item Page
- ----- ----
PART I

1. Business....................................................... 4
2. Properties..................................................... 18
3. Legal Proceedings.............................................. 18
4. Submission of Matters to a Vote of Security Holders............ 18

Executive Officers of the Registrant.............................. 19

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters.......................................... 20
6. Selected Financial and Operating Data.......................... 20
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................... 20
7A. Quantitative and Qualitative Disclosures about Market Risk..... 20
8. Financial Statements and Supplementary Data.................... 20
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure..................................... 20

PART III

10. Directors and Executive Officers of the Registrant............. 21
11. Executive Compensation......................................... 21
12. Security Ownership of Certain Beneficial Owners and Management. 21
13. Certain Relationships and Related Transactions................. 21

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 22

PART I
ITEM 1. BUSINESS

GENERAL

SBC Communications Inc. (SBC) is a holding company whose subsidiaries and
affiliates operate predominantly in the communications services industry.
SBC's subsidiaries and affiliates provide wireline and wireless
telecommunications services and equipment, directory advertising,
publishing and cable television services. SBC's principal Wireline
subsidiaries are Southwestern Bell Telephone Company (SWBell), providing
telecommunications services over approximately 16 million access lines in
Texas, Missouri, Oklahoma, Kansas and Arkansas (five-state area), and
Pacific Bell (PacBell), providing telecommunications services over
approximately 18 million access lines in California. SBC also provides
telecommunications services through The Southern New England Telephone
Company (SNETel) subsidiary over approximately 2 million access lines in
Connecticut, and over approximately 300,000 access lines in Nevada through
its Nevada Bell subsidiary. (SWBell, PacBell, SNETel and Nevada Bell are
collectively referred to as the Telephone Companies.) The Telephone
Companies provide local exchange services within authorized regions
(in-region) and are subject to regulation by each state in which they
operate and by the Federal Communications Commission (FCC). SBC was
incorporated under the laws of the State of Delaware in 1983 and has its
principal executive offices at 175 E. Houston, San Antonio, Texas
78205-2233 (telephone number 210-821-4105).

SBC was formed as one of the original seven regional holding companies (RHCs)
created to hold AT&T Corp.'s (AT&T) local telephone companies. AT&T divested
SBC by means of a spin-off of stock to its shareowners on January 1, 1984
(divestiture) resulting in SBC becoming a separate publicly traded company.
The divestiture was made pursuant to a consent decree, referred to as the
Modification of Final Judgment (MFJ), issued by the United States District
Court for the District of Columbia (District Court).

On February 8, 1996, the Federal Government enacted the Telecommunications
Act of 1996 (Telecom Act), a major, wide-ranging amendment to the
Communications Act of 1934.

By its specific terms, the Telecom Act supersedes the jurisdiction of the
District Court with regard to activities occurring after the date of
enactment. The FCC is given authority for all post-enactment conduct, with
the District Court retaining jurisdiction of pre-enactment conduct for a
five-year period. As a result of these provisions, on April 11, 1996 the
District Court issued its Opinion and Order terminating the MFJ and
dismissing all pending motions as moot, thereby effectively ending 13 years
regulation of RHCs under the MFJ.

In December 1997, the United States District Court for the Northern District
of Texas ruled that parts of the Telecom Act were unconstitutional on the
grounds that they improperly discriminate against certain subsidiaries of SBC
by imposing restrictions that prohibit certain of the Telephone Companies by
name from offering interLATA long distance and other services that other
Local Exchange Carriers are free to provide. In September 1998, the United
States Court of Appeals for the Fifth Circuit (5th Circuit) reversed this
decision and ruled that the challenged provisions of the Telecom Act were
constitutional. In January 1999, the United States Supreme Court declined to
hear an appeal of the 5th Circuit's decision.

Additional information relating to the Telecom Act is contained in the 1998
SBC Annual Report to Shareowners under the heading "Operating Environment and
Trends of the Business" beginning on page 11, and is incorporated herein by
reference pursuant to General Instruction G(2).

Business Combinations

Ameritech Corporation

On May 11, 1998, SBC announced a definitive agreement to merge an SBC
subsidiary with Ameritech Corporation (Ameritech) in a transaction in which
each share of Ameritech common stock will be converted into and exchanged for
1.316 shares of SBC common stock (equivalent to approximately 1,450 million
shares). After the merger, Ameritech will be a wholly-owned subsidiary of
SBC. The transaction, which has been approved by the board of directors and
shareowners of each company, is intended to be accounted for as a pooling of
interests and to be a tax-free reorganization. The merger is subject to
certain regulatory approvals including the FCC and state commissions in Ohio
and Illinois. If approvals are granted, the transaction is expected to close
in 1999. Additional information on this matter is contained in Note 3 of the
1998 SBC Annual Report to Shareowners, and is incorporated herein by
reference pursuant to General Instruction G(2).

Pacific Telesis Group

On April 1, 1997, SBC and Pacific Telesis Group (PAC) completed the merger of
an SBC subsidiary with PAC, in a transaction in which each outstanding share
of PAC common stock was exchanged for 1.4629 shares of SBC common stock
(equivalent to approximately 626 million shares). With the merger, PAC
became a wholly-owned subsidiary of SBC. The transaction has been accounted
for as a pooling of interests and a tax-free reorganization. Additional
information on this matter is contained in Note 2 of the 1998 SBC Annual
Report to Shareowners, and is incorporated herein by reference pursuant to
General Instruction G(2).

Southern New England Telecommunications Corporation

On October 26, 1998, SBC and Southern New England Telecommunications
Corporation (SNET) completed the merger of an SBC subsidiary with SNET, in a
transaction in which each share of SNET common stock was exchanged for 1.7568
shares of SBC common stock (equivalent to approximately 120 million shares).
SNET became a wholly-owned subsidiary of SBC effective with the merger and
the transaction has been accounted for as a pooling of interests and a
tax-free reorganization. Additional information on this matter is contained
in Note 2 of the 1998 SBC Annual Report to Shareowners, and is incorporated
herein by reference pursuant to General Instruction G(2).

Post-merger initiatives

Several strategic decisions resulted from the PAC and SNET merger integration
processes. The decisions resulted from an extensive review of operations
throughout the merged company and include significant integration of
operations and consolidation of some administrative and support functions.
Additional information on this matter is contained in Note 2 of the 1998 SBC
Annual Report to Shareowners, and is incorporated herein by reference
pursuant to General Instruction G(2).

Reorganization

SBC is centralizing several key functions that will support the operations of
the Telephone Companies, including network planning, strategic marketing and
procurement. It is also consolidating a number of corporate-wide support
activities, including research and development, information technology,
financial transaction processing and real estate management. The Telephone
Companies will continue as separate legal entities. These initiatives
continue to result in the creation of some jobs and the elimination and
realignment of others, with many of the affected employees changing job
responsibilities and in some cases assuming positions in other locations.

SBC recognized charges during 1998 and 1997 in connection with the SNET and
PAC merger initiatives. Charges arising out of the merger relating to
relocation, retraining and other effects of consolidating certain operations
are being recognized in the periods those charges are incurred. Additional
information on these matters is contained in Note 2 of the 1998 SBC Annual
Report to Shareowners, and is incorporated herein by reference pursuant to
General Instruction G(2).

BUSINESS OPERATIONS

SBC is among the largest telecommunications companies in the United States,
with approximately 37 million access lines and approximately 6.9 million
wireless customers in the United States. SBC serves the nation's two most
populous states, California and Texas. SBC service areas includes 8 of the
nation's 10 largest metropolitan areas, 19 of the nation's 50 largest
metropolitan areas. SBC has investments in telecommunications businesses in
selected international markets, including Mexico, France, South Africa, Chile,
South Korea, Switzerland, Israel and Taiwan. SBC's broad operations offer
customers an expansive range of services and products, varying by market,
including: local exchange services, wireless communications, long distance
services, Internet services, telecommunications equipment, messaging, paging,
and directory advertising. Services and products are provided through several
subsidiaries. These services and products (which are described more fully
below) include wireline and wireless telecommunications services, sales of
advertising for and publication of yellow pages and white pages directories,
sales of customer premises, private business exchange (PBX) and wireless
equipment, enhanced services, Internet services, and cable television
services.

SBC's revenues are categorized for financial reporting purposes as landline
local service (substantially all of which was provided by the Telephone
Companies), wireless subscriber (provided by Southwestern Bell Mobile Systems,
Inc. (Mobile Systems), Pacific Bell Mobile Services (PBMS), SNET Cellular,
Inc. and SNET Mobility, Inc., collectively referred to as SBC Wireless),
network access (provided by the Telephone Companies), long distance service
(substantially all of which was provided by the Telephone Companies and SNET
America, Inc. (SAI)), directory advertising (principally provided by
Southwestern Bell Yellow Pages, Inc. (SWBYP), Pacific Bell Directory (PB
Directory), and SNET Information Services, Inc. (SNETIS) and other (including
equipment sales at SBC Wireless, the Telephone Companies, and SNET Diversified
Group, Inc. nonregulated products and services and billing and collection
services for interexchange carriers provided by the Telephone Companies,
Internet services provided by Pacific Bell Internet (PBI), Southwestern Bell
Internet Services (SBIS), and SNETIS, and cable television services provided
by SNET Personal Vision, Inc. (SNET Personal Vision)).

With the passage of the Telecom Act, SBC Wireless offers interLATA and
intraLATA wireless long distance services. In 1996, two SBC subsidiaries,
Southwestern Bell Communications Services, Inc. and Pacific Bell
Communications, began offering wireline interLATA long distance services to
customers in selected areas outside the Telephone Companies' authorized
regions (out-region). The Telephone Companies provide intraLATA long distance
services in-region. SAI provides interLATA long distance services primarily
to customers in Connecticut, and is prohibited from completing calls to SBC's
other in-region states.

The following table sets forth for SBC the percentage of total operating
revenues by any class of service which accounted for 10% or more of total
operating revenues in any of the last three fiscal years.

- ------------------------------------------------ -------------------------------
Percentage of Total
Operating Revenues
- ------------------------------------------------ -------------------------------
1998 1997 1996
- ------------------------------------------------ ---------- --------- ----------
Landline local service 39% 39% 38%
Wireless subscriber 13% 13% 12%
Network access 23% 23% 25%
Long distance 8% 9% 10%
- ------------------------------------------------ ---------- --------- ----------

Landline local services involve the transport of wireline telecommunications
traffic between telephones and other customer premises equipment (CPE)
located within the same local service calling area. Landline local services
include: basic local exchange service, certain extended area service,
dedicated private line services for voice and special services, directory
assistance and various vertical services, including custom calling services,
call control options, messaging and Caller ID services.

Wireless subscriber services involve the transport of wireless local area
traffic between wireless telephones and other CPE, wireless long distance,
and roaming services.

Until the passage of the Telecom Act, SBC's long distance services involved
the transport of intraLATA telecommunications traffic, except for certain
wireless service areas that cover more than one LATA, for which SBC had
obtained MFJ waivers. Beginning in 1996, SBC began providing both interLATA
and intraLATA long distance services to its wireless customers, as well as
wireline interLATA long distance services in selected out-region areas
according to the rules of the Telecom Act. With completion of the SNET merger
in 1998, SBC now also provides wireline interLATA long distance to its
in-region customers in Connecticut. Long distance services also include
other services such as Wide Area Telecommunications Service (WATS or 800
services) and other special services.

Network access services connect a subscriber's telephone or other equipment
to the transmission facilities of other carriers that provide long distance
(principally interLATA) and other communications services. Network access
services are either switched, which use a switched communications path
between the carrier and the customer, or special, which use a direct
nonswitched path.

Operating Segments

In June 1997, the Financial Accounting Standards Board issued Statement No.
131, "Disclosures About Segments of an Enterprise and Related Information"
(FAS 131), which establishes standards for the way that public business
enterprises report information about operating segments in quarterly and
annual financial statements. FAS 131 changes segment reporting from an
industry segment basis to an operating segment basis defined based on how the
business is managed. SBC adopted FAS 131 in the fourth quarter of 1998.
Under the predecessor accounting standard, SBC operated in a single industry
segment. Under FAS 131, SBC has four reportable segments: Wireline,
Wireless, Directory and Other. The Wireline segment provides landline
telecommunications services, including local, network access and long
distance services, messaging and Internet services and sells customer premise
and private business exchange equipment. The Wireless segment provides
wireless telecommunications services, including local and long distance
services, and sells wireless equipment. The Directory segment sells
advertising for and publication of yellow pages and white pages directories
and electronic publishing. The Other segment includes SBC's international
investments and other domestic operating subsidiaries. Disclosures required
by FAS 131 are included in Note 9 of the 1998 SBC Annual Report to
Shareowners, and are incorporated herein by reference pursuant to General
Instruction G(2).

Wireline

Wireline is SBC's largest operating segment, providing approximately 77% of
SBC's operating revenues in 1998. The Telephone Companies provide landline
telecommunications services to approximately 23.3 million residential and
13.4 million business access lines in the eight states in which they
operate. During 1998 total access lines grew by 4%, of which 46% of the
increase was due to growth in California and over 32% of the increase was due
to growth in Texas.

During 1998, the Telephone Companies continued to expand their offering of
vertical services throughout their operating areas. These services include,
among other things, Caller ID, a feature which displays the telephone number
of the person calling and the caller's name in certain markets; Caller ID
Call Waiting, a feature which displays the telephone number and caller's
name in certain markets when the customer is on a call; Call Return, a
feature that redials the number of the last incoming call; Call Blocker, a
feature which allows customers to automatically reject calls from a
designated list of telephone numbers; and voice messaging.

Southwestern Bell Messaging Services, Inc. provides voice messaging services
under the registered trademark CallNotes to residential and business
customers. Pacific Bell Information Services, a subsidiary of PacBell, has
several registered trademark products, which include residential voice
messaging services (The Message Center), business messaging services (Pacific
Bell Voice Mail), and business call management services (Pacific Bell Call
Management). PBI, SBIS, and SNETIS provide Internet services in selected
in-region metropolitan areas.

Since 1996, the Telephone Companies have been offering certain local services
on a "wholesale" basis to competitors, as well as providing elements of the
Telephone Companies' networks on an "unbundled" basis for local competition.
These services are being offered as specified by the Telecom Act and state
actions and interconnection agreements. The Telecom Act and the regulations
promulgated by federal and state agencies to implement it have resulted in
SBC facing increased competition in significant portions of its business. At
December 31, 1998, SBC provided wholesale services to approximately 800,000
access lines. Management cannot quantify the impact to SBC's business in
1999 from local exchange competition, as uncertainty exists as to the breadth
and scope of competitors' offering of local exchange services to all portions
of the market in-region, and as certain regulations, tariffs and negotiations
governing such competition are not yet finalized.

Customer Premises Equipment and Other Equipment Sales

Equipment offerings at SWBell, PacBell, and SNET Diversified Group, Inc. range
from single-line and cordless telephones to sophisticated digital PBX systems,
all of which can be offered with the Telephone Companies' central office based
solutions. PBX is a private telephone switching system, usually located on a
customer's premises, which provides intra-premise telephone services as well
as access to the public switched network.

New Products

As part of its continuing strategy to be among the leaders in the
communications services industry, SBC is constantly developing new services
and products. It currently is introducing four new data products. These data
products include Asymmetrical Digital Subscriber Line (ADSL), Integrated
Pathway, Managed Frame Relay and Dedicated Business Internet. All four of
these new products are targeted primarily to meet the growing demand for data
communications products resulting from the increased use of advanced
information technology in the marketplace. ADSL enables customers to transfer
over existing telephone lines, data, graphics, audio and video files at
speeds up to 1.5 megabits per second. ADSL allows customers to
simultaneously make a phone call and access information via the Internet or
an office local area network. ADSL is the subject of a pending FCC review.
Additional information on the pending FCC review of ADSL is contained in the
1998 SBC Annual Report to Shareowners on page 12, and is incorporated herein
by reference pursuant to General Instruction G(2).

National-Local Strategy

Contingent upon completion of the Ameritech transaction, SBC plans to
implement a "national-local" strategy, in which it will offer local services
across the country in combination with major national and international
operations. The strategy allows SBC to expand from a regional company to a
company that provides services in "national-local" and global markets. SBC
believes this expansion will better position it to compete head-to-head with
incumbent local telephone companies, competitive local exchange carriers,
data networks, long distance carriers and global competitors. In February
1999, SBC announced that Boston, Massachusetts; Miami, Florida; and Seattle,
Washington will be the first markets in which SBC will compete under the
"national-local" strategy.

Wireless

SBC Wireless offers a wide variety of wireless services in 19 of the top 50
metropolitan markets across the United States using both traditional cellular
and new personal communication services (PCS) networks. Including both
networks, at the end of 1998, SBC Wireless operations provided local wireless
services to 6,851,000 customers throughout its wireless markets. In addition,
since the enactment of the Telecom Act, SBC began offering wireless long
distance services to its traditional cellular customers, and at year-end 1998
had been selected as the long distance carrier by approximately 4,601,000, or
78%, of its customers. SBC provides long distance services to all of its
PCS wireless customers.

SBC Wireless also has numerous "roaming agreements" with other wireless
carriers which allows its subscribers to use their wireless service
throughout the United States and Canada by accessing other carrier's networks
where SBC Wireless does not operate networks or hold wireless licenses.

SBC Wireless offers digital service, including advanced features in most of
the metropolitan areas where it is licensed to provide wireless service.
Mobile Systems first began providing commercial digital service in Chicago in
July 1993. Digital service improves sound quality, provides a greater degree
of privacy on individual calls, increases call-handling capacity of the
networks, allows additional service offerings, and reduces exposure to
billing fraud.

Cellular

At the end of 1998, wireless services were provided to 5,924,000 traditional
cellular customers. SBC provides traditional cellular services in 5 of the
nation's top 10 metropolitan areas, as follows: Washington, D.C.; Chicago,
Illinois; Boston, Massachusetts; Dallas-Fort Worth, Texas; and Houston, Texas.
Additionally, portions of the Connecticut wireless market fall within the New
York consolidated metropolitan service area (MSA). SBC is licensed to provide
service in 45 rural service areas (RSAs) and is currently providing service in
all of these markets. Each RSA is contiguous to an existing metropolitan
service area or another RSA operated by SBC, which allows for the expansion of
service in a way that may add value to customers' service. SBC also operates
one RSA in Arkansas under an interim operating authority granted by the FCC,
and operates several MSAs and RSAs in Arkansas related to cellular networks and
licenses received in exchange for certain SBC PCS licenses, discussed below.

In January 1997, Mobile Systems began doing business within the five-state area
as Southwestern Bell Wireless, Inc. Mobile Systems operates in out-region
areas under the name of Cellular One by means of licenses from Cellular One
Group, a partnership among affiliates of Mobile Systems, AT&T Wireless Services
and Vanguard Cellular Systems, Inc. These areas include MSAs, such as
Washington, D.C.; Chicago, Illinois; Albany, Buffalo, and Rochester, New York
and Boston, Massachusetts; and RSAs in Illinois, Massachusetts, New York,
Virginia and West Virginia. Cellular One offers, on a resale basis, wireline
interLATA long distance service in all out-region markets where it provides
local wireless service. In January 1997, Cellular One also began a trial
offering wireline local service, on a resale basis, in Rochester, New York.
SBC subsequently ended the Rochester trial and will no longer offer wireline
local service there.

SNET Cellular and its affiliates provide directly or indirectly retail and
wholesale wireless services and telecommunications equipment in the states of
Connecticut and Rhode Island, and portions of Massachusetts.

Mobile Systems also markets wireless communications equipment in each of its
service areas.

On January 20, 1999, SBC announced it has agreed to acquire Comcast Cellular
Corporation (Comcast Cellular), the wireless subsidiary of Comcast
Corporation, in a transaction valued at $1.674 billion. Under the terms of
the agreement, SBC will pay $400 million in cash and assume Comcast
Cellular's current debt of $1.274 billion. The transaction will be accounted
for through the purchase accounting method. Comcast Cellular offers analog
and digital wireless services to more than 800,000 subscribers in
Pennsylvania, Delaware, New Jersey and Illinois. The largest market in which
Comcast Cellular operates is Philadelphia, Pennsylvania. SBC for several
years has been operating the Illinois properties it is purchasing under a
previous agreement between the two companies. The transaction, which is
subject to regulatory approvals, is expected to be completed by the third
quarter of 1999.

PCS

In 1993, the FCC adopted an order allocating radio spectrum and outlining the
development of licenses for new PCS. PCS utilizes wireless
telecommunications digital technology at a higher frequency radio spectrum
than cellular, but using lower powered transmission equipment. Like
cellular, it is designed to permit access to a variety of communications
services regardless of subscriber location. SBC or affiliates hold PCS
licenses in the Major Trading Areas of Los Angeles-San Diego, California; San
Francisco-San Jose, California; and Tulsa, Oklahoma. The California licenses
cover substantially all of California and Nevada. SBC is currently operating
in all its major California-Nevada markets and Tulsa, Oklahoma. During 1996,
SBC received several AT&T cellular networks in Arkansas, in exchange for PCS
licenses previously held by SBC for Memphis, Tennessee and Little Rock,
Arkansas and other considerations.

PBMS was formed to offer PCS services across California and Nevada. The
network incorporates the Global System for Mobile Communications standard,
which is widely used internationally, and phones that it markets feature a
built-in pager and answering machine. PBMS began trials in August 1996,
began offering services in January 1997, and by mid-1997 provided widespread
offerings of PCS services to all of California and Nevada. At the end of
1998, PBMS provided wireless services to 809,000 customers over its PCS
networks. Mobile Systems also provided wireless services to 37,000 customers
over its PCS networks in Tulsa, Oklahoma.

In an FCC auction concluded in January 1997, SBC acquired the following
additional PCS licenses for Basic Trading Areas that are within the
five-state area: Springfield, Missouri; McAlester, Oklahoma; Joplin,
Missouri; Pittsburgh, Kansas; Temple-Killeen, Texas; Waco, Texas; Tyler,
Texas and Longview-Marshall, Texas.

Directory

SWBYP publishes more than 45 million books of white and yellow pages
directories, representing approximately 342 directories, principally within
the five-state area. PB Directory, the publisher of Pacific Bell SMART
Yellow Pages, publishes 35 million books, representing approximately 114
directories in California and Nevada. SNETIS publishes over 4 million books
of white and yellow pages directories, representing approximately 48
directories, principally throughout Connecticut and adjacent communities.
SBC recognizes all directory advertising revenues and expenses in the month
the related directory is published. SWBYP nine largest revenue-producing
yellow pages directories are currently published in the second half of SBC's
fiscal year, while PB Directory's publishing schedule is spread throughout
the year for its directories. SWBYP directories are printed by
R.R. Donnelley & Sons, PB Directory's directories are printed by World Color
Press, and SNETIS directories are printed by Quebecor Printing.

International

International operations are included in the Other segment.

Mexico

A consortium consisting of SBC International, Inc.; a subsidiary of France
Telecom; and Carso Global Telecom, S.A. de C.V. (Carso Global); and certain
Mexican investors hold through a trust all of the outstanding AA Shares of
Telefonos de Mexico, S.A. de C.V. (Telmex), Mexico's largest national
telecommunications company. The AA shares held by the consortium represent
approximately 90% of the full voting shares and 28% of the equity of Telmex.
Carso Global holds a 44.9% interest in the consortium and the right to direct
the trustee with respect to the election of a majority of the directors of
Telmex, while SBC International and the France Telecom subsidiary each holds
a 24.5% interest and the right to direct the trustee with respect to a
minority of the directors. SBC International also owns approximately 4.3% of
the L Shares, which have limited voting rights. As a result of repurchases of
L Shares by Telmex since 1994, SBC International has sold portions of its
Class L shares to Telmex in order to maintain its investment at below 10% of
Telmex' total equity capitalization. As of February 1, 1999, SBC
International's total interest in Telmex represents approximately 9.8% of the
outstanding equity. In 1997, SBC issued approximately $396 million in 7 3/4%
Exchangeable Notes, due March 2001, which may be redeemed upon maturity in
either cash or Telmex L Shares, at SBC's option. At December 31, 1998, the
outstanding notes represented 3.2% of Telmex' L Shares.

Telmex provides wireline and wireless telecommunications services throughout
Mexico. At the end of 1998, Telmex had 9.9 million access lines in service
and provided cellular service to approximately 2.1 million subscribers.
Telmex also provides interLATA telecommunications services in the United
States jointly with Sprint Communications, LLC, and holds 49% of Grupo
Televisa's cable television subsidiary, Cablevision.

France

In October 1994, SBC International formed a strategic alliance with Compagnie
Generale des Eaux (CGE), a French diversified public company which in 1998
changed its name to Vivendi. Through this alliance, SBC International
acquired an indirect 10% ownership of Societe Francaise du Radiotelephone
S.A. (SFR), a nationwide cellular company in France, and minority ownership
interests in other communications businesses controlled by CGE, and CGE
obtained an effective 10% interest in SBC's wireless operations in
Washington, D.C.-Baltimore, and surrounding rural markets. SBC and CGE both
made contributions to the alliance. In 1997, SBC International contributed
its indirect 10% ownership of SFR shares and an additional $240 million to
acquire a 15% interest in Cegetel, S.A., a new French company formed by CGE
to provide a broad base of telecommunications services throughout France.
Operations on a limited scale, began in 1998. At the end of 1998, SFR had
4.2 million wireless subscribers and 602,000 long distance subscribers.

Chile

In February 1995, SBC International purchased 40% of VTR S.A. (VTR), a
privately owned telecommunications holding company in Chile. Through the
purchase of shares from a minority investor, offset by the subsequent sale in
1997 of a portion of those shares, SBC International's ownership has increased
to 44%. VTR is 56% indirectly owned by Grupo Luksic, a large Chilean
conglomerate. Through its subsidiaries, VTR provides local and cable
television services in Chile. In December 1997, VTR sold its wireless service
operations. At the end of 1998, local services were provided to approximately
141,000 access lines and cable television services were provided to
approximately 384,000 subscribers. Agreements were reached in 1998 for the
disposition of SBC International's remaining interest in VTR, subject to
certain conditions. The transaction is expected to close in 1999.

United Kingdom

In October 1995, SBC International combined its United Kingdom cable
television operations, which included Midlands Cable Communications and
Northwest Cable Communications, with those of Telewest Communications, plc, a
publicly held joint venture between Tele-Communications International, Inc.
and MediaOne Group, Inc. (formerly U S WEST, Inc.) The resulting entity,
Telewest Communications plc, merged with General Cable in 1998 to form the
largest cable television operator in the United Kingdom and also provides
local exchange services. Prior to the disposition in 1998 of its entire
holdings in Telewest, SBC owned approximately 10% of the company. Additional
information on this matter is contained in Note 7 of the 1998 SBC Annual
Report to Shareowners, and is incorporated herein by reference pursuant to
General Instruction G(2).

Israel

SBC International has investments in Israel through a 50% interest in Aurec
Limited and a 22.7% interest in Amdocs Limited (Amdocs). Aurec has interests
in companies involved in the publication of yellow page directories, outdoor
advertising, insurance underwriting, long distance, network data solutions,
and cable television. At the end of 1998, Golden Channels, an Aurec
affiliate providing cable television in Israel, had passed 640,000 households
and provided service to approximately 437,000 households, a penetration rate
of approximately 68%.

In 1996, a consortium in which SBC International participated received one of
two licenses for international telecommunications service in Israel. Other
consortium members are STET (Italy's national telephone company), the
US/Israeli Aurec Group, and the Israeli Globescom and Kahn groups. Aurec
holds an 8.25% interest in the Med-1 undersea cable linking Israel, Cypress
and Italy.

Amdocs is a leading provider of product-driven information systems solutions
to major telecommunications companies in the United States and around the
world. In June of 1998, Amdocs issued 18 million shares in an international
initial public offering. The company began in 1982 as a joint venture
between a subsidiary of SBC and an Israeli partner. SBC International owned
25.8% of the shares before the offering and 22.7% thereafter. This reduction
in ownership reflects both dilution from the Initial Public Offering (IPO)
and the sale of shares pursuant to an option granted by SBC International to
the IPO underwriters.

Australia

In 1997, SBC International sold its directory interests in Australia to
Telstra Corporation Limited, the principal provider of telecommunications
services in Australia.

South Africa

In 1997, SBC International acquired an effective 18% stake in Telkom, S.A.
Limited (Telkom), South Africa's state-owned local exchange, long distance,
and cellular company. SBC International's partner in the acquisition is
Telekom Malaysia, which acquired a 12% stake in Telkom. Telkom provides
complete wireline and wireless telecommunications services within South
Africa. At the end of 1998, Telkom had more than 4.9 million access lines in
service. In addition, at the end of 1998, Vodacom Group (Pty) Ltd, in which
Telkom has a 50% interest, provided cellular services to 1.5 million
subscribers.

In the third quarter 1998, SBC International sold its 15.5% interest in
Mobile Telephone Networks (MTN), one of two South African national cellular
companies, to the remaining shareholders of MTN. SBC International was
required to divest its interest in MTN as part of its acquisition of Telkom.

Switzerland

In June 1997, SBC International purchased a 40% interest in diAx, a joint
venture formed to provide long distance telephone service in Switzerland.
SBC's partner in the joint venture is diAx Holdings, a consortium of Swiss
utility and insurance companies. Service was launched in May 1998, and at
the end of 1998, diAx provided services to 233,000 access lines (via equal
access).

In December 1997, SBC International formed a joint venture with diAx Holdings
for the purpose of submitting a bid for a wireless license. SBC
International's ownership interest in this joint venture, diAx Mobile, is
40%, with the remaining ownership interest being held by diAx Holdings. In
April 1998, diAx Mobile was also awarded a wireless license by the Swiss
government. Wireless service offerings began in late December 1998. The
award of the license is currently in litigation, as an unsuccessful bidder
for the license has challenged the award to diAx Mobile.

China

In December 1997, SBC International signed a Construction and Maintenance
Agreement with China Telecom and twelve other telecommunications companies to
construct a direct undersea cable link between the United States and China.
The cable is expected to be completed by the year 2000.

Japan

In the third quarter of 1998, SBC signed an agreement to participate in
building a state-of-the-art undersea communications pipeline directly linking
Japan and the United States. SBC will be one of 12 initial parties with an
ownership stake in the Japan-U.S. Cable Network and responsibility for
oversight, maintenance and administration. The consortium has agreed to
invest more than $1 billion in the network for the first phase of
construction. The network should be up and running in mid-year 2000.

South Korea

SBC has wireless interests in South Korea where its affiliate provided
wireless service to approximately 2.1 million subscribers at the end of 1998.

Taiwan

SBC International owns a 19.4% interest in a consortium that formed TransAsia
Telecommunications, Inc., a new cellular service provider in the southern
region of Taiwan. Service offerings commenced in January 1998, and at the
end of 1998, TransAsia Telecommunications, Inc. provided cellular service to
approximately 186,000 subscribers.

East Asia Financial Risks

Presently, SBC has limited investments in Eastern Asia and the Pacific Rim
and therefore does not anticipate a significant financial impact from recent
financial economic turmoil.

DOMESTIC VIDEO SERVICES

SBC also announced during 1997 that it is scaling back its limited direct
investment in certain video services in the areas also served by PacBell and
SWBell. As part of this curtailment, SBC halted construction on the Advanced
Communications Network (ACN) in California. As part of an agreement with the
ACN vendor, SBC paid the liabilities of the ACN trust that owns and finances
ACN construction and incurred costs to shut down all construction previously
conducted under the trust and received certain consideration from the
vendor. SBC also curtailed several other video-related activities, including
its broadband network video trials in Richardson, Texas and San Jose,
California. SBC and its joint venture partners are winding up the Tele-TV
joint venture in southern California.

Media Ventures, Inc. (Media Ventures), another SBC subsidiary, owned two
cable television systems serving the suburban Washington, D.C. area along
with a partner, Prime Cable (Prime). Media Ventures became the general
partner and retained an approximate 95% ownership interest in the Partnership
until 1998. Prime contributed $20 million to the Partnership and managed the
cable systems on behalf of the Partnership. SBC sold its Media Ventures'
interest in the Partnership to Prime and other investors in the third quarter
of 1998. In October 1998, SBC completed the sale of its interests in Prime
Cable of Chicago, Inc. to Prime and other investors. A PAC subsidiary had
acquired these interests prior to the merger with SBC.

In the fourth quarter of 1998, SBC sold 90% of the stock of subsidiaries that
operate a wireless video business in southern California to E.L. Acquisition,
Inc., a subsidiary of Prime.

During 1995, SBC, through SBC Interactive Media, Inc. (SBC Interactive), a
wholly-owned subsidiary of SBC, became an equal partner in Americast, a
venture with Ameritech Corporation, BellSouth Corporation, GTE, and The Walt
Disney Company, to design, market and deliver video programming and
interactive services. In 1996, SNET became a minority partner in this
venture. In mid-1997, SBC Interactive notified the venture of its withdrawal
of operations in territories served by SWBell. On October 7, 1997 the
remaining partners in the venture attempted to initiate arbitration against
SBC Interactive regarding the validity of its withdrawal. On October 15,
1997, SBC Interactive filed a declaratory judgement action in and sought a
preliminary injunction from Delaware Chancery Court to halt the arbitration
attempt. On December 24, 1997, the Chancery Court directed that the
arbitration proceed, and on January 22, 1998, SBC appealed that ruling. This
matter is still being litigated and is not material to the financial
statements.

SNET Personal Vision operates a cable television system in Connecticut, which
began deploying cable service in the first quarter of 1997. At the end of
1998, SNET Personal Vision provided service to approximately 24,000
households.

Additional information related to SBC's video operations is contained in Note
2 of the 1998 SBC Annual Report to Shareowners, and is incorporated herein by
reference pursuant to General Instruction G(2).

GOVERNMENT REGULATION

In the in-region states, the Telephone Companies are subject to regulation by
state commissions which have the power to regulate, in varying degrees,
intrastate rates and services, including local, long distance and network
access services. The Telephone Companies are also subject to the jurisdiction
of the FCC with respect to interstate and international rates and services,
including interstate access charges. Access charges are designed to compensate
the Telephone Companies for the use of their facilities for the origination or
termination of long distance and other communications by other carriers.

Additional information relating to federal and state regulation of the
Telephone Companies is contained in the 1998 SBC Annual Report to Shareowners
under the heading "Regulatory Environment" on page 11, and is incorporated
herein by reference pursuant to General Instruction G(2).

SBC's cable systems are subject to federal and local regulation, including
regulation by the FCC and local franchising authorities, concerning rates,
service and programming access.

IMPORTANCE, DURATION AND EFFECT OF LICENSES

The FCC authorizes the licenses for multiple wireless carriers in each
geographic market. The cellular licenses, of which there are only two in
each geographic region have a standard duration of ten years. Upon
application and a showing of compliance with FCC use and conduct standards,
licenses may be renewed. Renewal applications were filed and granted for the
following MSA markets during 1998: Bloomington-Normal, Illinois; Glen Falls,
New York; Laredo, Texas; Little Rock-North Little Rock, Arkansas; Pittsfield,
Massachusetts; and Pine Bluff, Arkansas. Renewal applications for eight RSA
markets will be filed in the following states during 1999: Illinois;
Missouri; New York; Oklahoma and Texas. Renewals of these licenses are
anticipated to be granted in late 1999 or early 2000.

Under the auction process of an FCC order outlining the development of PCS,
licenses with durations of ten years were awarded in 51 major markets. SBC's
licenses for Los Angeles-San Diego, California, San Francisco-San Jose,
California and Tulsa, Oklahoma expire in 2005. These licenses, upon
application and a showing of compliance with FCC use and conduct standards,
may be renewed.

Cable television systems generally are operated under nonexclusive permits or
"franchises" granted by local governmental authorities. Each franchise is
renewable upon a showing of compliance with established local and federal
standards. SBC sold its suburban Washington, D.C. cable systems and all
related franchises were transferred as part of the sale of the properties in
Montgomery County, Maryland; Arlington County, Virginia; and the City of
Gaithersburg, Maryland. During 1995, SBC received a franchise to operate a
cable system in Richardson, Texas, which expires in September 2013 and had
acquired a franchise agreement in the PAC merger with the city of San Jose,
California. In 1998, SBC reached agreement with the cities of San Jose,
California and Richardson, Texas to terminate the franchises that they had
granted SBC and its affiliates for video trials. On September 6, 1996, SNET
Personal Vision received an 11-year license that covers the state of
Connecticut. A number of SBC subsidiaries hold FCC channel licenses for
wireless video services. These subsidiaries also have numerous leases with
Instructional Television Fixed Service channel licensees to use their excess
channel capacity. The channels under these licenses and leases are primarily
in southern California.

MAJOR CUSTOMER

No customer accounted for more than 10% of SBC's consolidated revenues in
1998, 1997 or 1996.

COMPETITION

Wireline and Wireless

Information relating to wireline and wireless competition is contained in the
1998 SBC Annual Report to Shareowners under the heading "Competition"
beginning on page 15, and is incorporated herein by reference pursuant to
General Instruction G(2).

International

Information relating to international competition is contained in the 1998
SBC Annual Report to Shareowners under the heading "Competition" on page 15,
and is incorporated herein by reference pursuant to General Instruction G(2).

Directory

Information relating to directory advertising and publishing competition is
contained in the 1998 SBC Annual Report to Shareowners under the heading
"Competition" on page 15, and is incorporated herein by reference pursuant to
General Instruction G(2).

Customer Premises Equipment, Wireless Equipment and Other Equipment Sales

SBC faces significant competition from numerous companies in marketing its
telecommunications equipment.

RESEARCH AND DEVELOPMENT

Certain company-sponsored basic and applied research was conducted at Bell
Communications Research, Inc. (Bellcore). The Telephone Companies owned a
two-seventh interest in Bellcore, with the remainder owned by the other four
remaining RHCs. In November 1997, the RHCs sold Bellcore to a third party but
continue to have a research agreement with Bellcore. The RHCs have retained
the activities of Bellcore that coordinate the Federal Government's
telecommunications requirements for national security and emergency
preparedness.

Applied research is also conducted at SBC Technology Resources, Inc. (TRI), a
subsidiary of SBC. TRI provides research, technology planning and evaluation
services to SBC and its subsidiaries.

EMPLOYEES

As of December 31, 1998, SBC and its subsidiaries employed 129,850 persons.
Approximately two-thirds of the employees are represented by the
Communications Workers of America (CWA). New agreements between the CWA and
the Telephone Companies were reached in April 1998, and September 1998
for SNET, covering an estimated 80,000 employees through April 1,
2001. Among other items, the agreements specify an 11% increase in wages
over the life of the contracts. A new three-year agreement (which covers an
estimated 2,000 employees) was reached in 1998 between the CWA and SWBYPS,
that is effective December 5, 1998 through December 7, 2001. In August
1998, PB Directory reached a new four-year agreement with the International
Brotherhood of Electrical Workers, covering approximately 1,000 employees in
northern and southern California. Among other items, both the SWBYPS and PB
Directory agreements include an approximate 11% increase in compensation
over the life of the contracts. The CWA also represents an estimated 3,000
employees in other subsidiaries of SBC.

RECENT DEVELOPMENTS

Reciprocal Compensation Ruling

In February 1999, the FCC ruled that a substantial portion of Internet
communications is interstate traffic and therefore subject to federal
jurisdiction. The FCC noted that carriers were bound by existing
interconnection contracts as interpreted by state commissions. The FCC will
issue rules determining the extent, if any, such communications are subject
to reciprocal compensation. The FCC also ruled that, in the context of
interpreting particular interconnection agreements, the state commissions
might determine that reciprocal compensation was appropriately based on the
agreement of the parties or other factors. SBC believes that the FCC ruling
should prevent state commissions from imposing reciprocal compensation on
this traffic.

Ameritech Ohio Agreement

On February 23, 1999, SBC and Ameritech signed an agreement with the staff of
the Public Utilities Commission of Ohio (PUCO), the Ohio Consumers' Counsel,
the Edgemont Neighborhood Coalition and Parkview Areawide Seniors (a consumer
group representing senior citizens in Northern Ohio) to recommend approval of
the merger between SBC and Ameritech. Time Warner Telecom and CoreComm,
competitive providers of local service in Ohio, have also signed the
agreement as non-opposing stipulating parties. The agreement provides for
certain commitments from SBC and Ameritech, including capping rates for basic
local service until January 2002; maintaining a specified level of full-time
equivalent employees in Ohio for two years; establishing and maintaining
minimum customer service standards for two years subsequent to the merger
close, including potential penalties for non-compliance with the minimum
standards; providing residential unbundled loop discounts and making various
charitable contributions within three years of the merger. The agreement
requires approval by the PUCO before implementation.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this form contains forward-looking statements that
are subject to risks and uncertainties. SBC claims the protection of the
safe harbor for forward-looking statements provided by the Private Securities
Litigation Reform Act of 1995.

The following factors could cause SBC's future results to differ materially
from those expressed in the forward-looking statements: (1) adverse
economic changes in the markets served by SBC or changes in available
technology; (2) the final outcome of various FCC rulemakings and judicial
review, if any, of such rulemakings; (3) the final outcome of various state
regulatory proceedings in SBC's eight-state area, and judicial review, if
any, of such proceedings; and (4) the timing of entry and the extent of
competition in the local and intraLATA toll markets in SBC's eight-state
area. Readers are cautioned that other factors discussed in this form,
although not enumerated here, also could materially impact SBC's future
earnings.

ITEM 2. PROPERTIES

The properties of SBC do not lend themselves to description by character and
location of principal units. At December 31, 1998, 93% of the property,
plant and equipment of SBC was owned by the Wireline subsidiaries. Network
access lines represented 42% of the Wireline subsidiaries' investment in
telephone plant; central office equipment represented 40%; land and
buildings represented 10%; other miscellaneous property, comprised
principally of furniture and office equipment and vehicles and other work
equipment, represented 5%; and information origination/termination equipment
represented 3%.

ITEM 3. LEGAL PROCEEDINGS

Six putative class actions in Texas, Missouri, Oklahoma, and Kansas that
involved the provision by SWBell of maintenance and trouble diagnosis services
relating to telephone inside wire located on customer premises have been
settled during 1998. These actions alleged that SWBell's sales practices in
connection with these services violated antitrust, fraud and/or deceptive
trade practices statutes. The trial court has approved the settlement, which
is not expected to materially affect the financial results of SBC.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

A special meeting of the shareowners of SBC was held on December 10, 1998, in
San Antonio, Texas. Shareowners representing 1,535,760,506 shares of common
stock were present in person or were represented at the meeting by proxy
where two items were submitted for vote.

Shareowners approved at the meeting the issuance of shares of common stock of
SBC pursuant to the Agreement and Plan of Merger among Ameritech, SBC and an
SBC subsidiary, dated as of May 10, 1998, pursuant to which Ameritech would
become a wholly-owned subsidiary of SBC. The vote was 1,321,416,117 FOR and
21,533,264 AGAINST, with 12,326,431 ABSTAINING.

Shareowners approved and adopted a proposal to amend the Bylaws of SBC to
provide the maximum number of persons that may serve as directors on the Board
of Directors of SBC be increased to 25 from 21. The vote was 1,465,067,133
FOR and 54,245,254 AGAINST, with 16,448,119 ABSTAINING.

EXECUTIVE OFFICERS OF THE REGISTRANT

Name Age Position Held
Since

Edward E. Whitacre Jr. 57 Chairman and Chief Executive Officer 1/1990

J. Cliff Eason 51 President - SBC International 6/1997

Royce S. Caldwell 60 President - SBC Operations 7/1995

Cassandra C. Carr 54 Senior Executive Vice President - 10/1998
External Affairs

James D. Ellis 55 Senior Executive Vice President and 3/1989
General Counsel

Charles E. Foster 62 Group President - SBC 7/1995

Karen E. Jennings 48 Senior Vice President - Human Resources 10/1998

James S. Kahan 51 Senior Vice President - Corporate 7/1993
Development

Donald E. Kiernan 58 Senior Vice President, Treasurer and 7/1993
Chief Financial Officer

Stanley T. Sigman 51 President and Chief Executive Officer 4/1997
SBC Wireless Inc.

All of the above executive officers have held high-level managerial positions
with SBC or its subsidiaries for more than the past five years, except for
Ms. Jennings, who has held high-level managerial positions since 1995. Prior
to that, Ms. Jennings held responsible managerial positions with SBC.
Executive officers are not appointed to a fixed term of office.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The number of shareowners of record as of December 31, 1998 and 1997 were
1,005,621 and 1,059,158. Other information required by this Item is included
in the 1998 SBC Annual Report to Shareowners under the headings "Quarterly
Financial Information" on page 37, "Selected Financial and Operating Data" on
page 5, and "Stock Trading Information" on page 41, which are incorporated
herein by reference pursuant to General Instruction G(2).

ITEM 6. SELECTED FINANCIAL AND OPERATING DATA

Information required by this Item is included in the 1998 SBC Annual Report
to Shareowners under the heading "Selected Financial and Operating Data" on
page 5 which is incorporated herein by reference pursuant to General
Instruction G(2).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

Information required by this Item is included in the 1998 SBC Annual Report
to Shareowners on page 6 through page 19, which is incorporated herein by
reference pursuant to General Instruction G(2).

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this Item is included in the 1998 SBC Annual Report
to Shareowners under the heading "Market Risk" on page 17 through page 19,
which is incorporated herein by reference pursuant to General Instruction
G(2).

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this Item is included in the 1998 SBC Annual Report
to Shareowners on page 20 through page 37, which is incorporated herein by
reference pursuant to General Instruction G(2).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

No changes in accountants or disagreements with accountants on any accounting
or financial disclosure matters occurred during the period covered by this
report.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure at the end of Part I of this report
since the registrant did not furnish such information in its definitive proxy
statement prepared in accordance with Schedule 14A. Other information
required by this Item 10 is included in the registrant's definitive proxy
statement, dated March 12, 1999, under the headings "Board of Directors"
beginning on page 4 and "Section 16(a) Beneficial Ownership Reporting
Compliance" beginning on page 31 which is incorporated herein by reference
pursuant to General Instruction G(3).

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item is included in the registrant's definitive
proxy statement, dated March 12, 1999, under the headings "Compensation of
Directors" from page 13 through page 14, and "Compensation Committee
Interlocks and Insider Participation", "Executive Compensation", "Pension
Plans", and "Contracts with Management" from page 19 through page 31, which
are incorporated herein by reference pursuant to General Instruction G(3).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this Item is included in the registrant's definitive
proxy statement, dated March 12, 1999, under the heading "Common Stock
Ownership of Directors and Officers" on page 15, which is incorporated herein
by reference pursuant to General Instruction G(3).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this Item is included in the registrant's definitive
proxy statement, dated March 12, 1999, under the heading "Compensation of
Directors" from page 13 through page 14 and "Contracts with Management" from
page 30 through 31, which are incorporated herein by reference pursuant to
General Instruction G(3).

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents filed as a part of the report:
Page
----

(1) Report of Independent Auditors.......................... *
Financial Statements covered by Report of Independent Auditors:
Consolidated Statements of Income....................... *
Consolidated Balance Sheets............................. *
Consolidated Statements of Cash Flows................... *
Consolidated Statements of Shareowners' Equity.......... *
Notes to Consolidated Financial Statements.............. *

*Incorporated herein by reference to the appropriate portions of the
registrant's annual report to shareowners for the fiscal year ended
December 31, 1998. (See Part II.)

Page
----

(2) Financial Statement Schedules:
II - Valuation and Qualifying Accounts.................. 26

Financial statement schedules other than those listed above have been
omitted because the required information is contained in the financial
statements and notes thereto, or because such schedules are not required
or applicable.

(3) Exhibits:

Exhibits identified in parentheses below, on file with the Securities
and Exchange Commission (SEC), are incorporated herein by reference as
exhibits hereto. Unless otherwise indicated, all exhibits so
incorporated are from File No. 1-8610.

Exhibit
Number

2-a Agreement and Plan of Merger, among Pacific Telesis Group, SBC
Communications Inc. and SBC Communications (NV) Inc., dated as of
April 1, 1996. (Exhibit 2 to Form 8-K, dated April 1, 1996.)

2-b Agreement and Plan of Merger, among Southern New England
Telecommunications Corporation, SBC Communications Inc., and SBC
(CT), dated as of January 4, 1998. (Exhibit 2 to Form 8-K, dated
January 4, 1998.)

2-c Agreement and Plan of Merger among Ameritech Corporation, SBC and
SBC Delaware, Inc., dated as of May 10, 1998. (Exhibit 2 to Form
8-K, dated May 10, 1998.)

3-a Restated Certificate of Incorporation, filed with the Secretary
of State of Delaware on April 28, 1998. (Exhibit 3-a to Form
10-Q dated March 31, 1998.)

3-b Certificate of Designation, filed with the Secretary of State of
Delaware on March 31, 1997.

3-c Bylaws dated June 26, 1998.

4-a Pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), no instrument
which defines the rights of holders of long-term debt of the
registrant or any of its consolidated subsidiaries is filed
herewith. Pursuant to this regulation, the registrant hereby
agrees to furnish a copy of any such instrument to the SEC upon
request.

4-b Support Agreement dated November 10, 1986, between SBC and SBC
Communications Capital Corporation. (Exhibit 4-b to Registration
Statement No. 33-11669.)

4-c Resolutions guaranteeing certain obligations of Pacific Telesis
Group. (Exhibit 4-g to Form 10-K for 1997.)

10-a Short Term Incentive Plan. (Exhibit 10-a to Form 10-K for 1997.)

10-b Senior Management Long Term Incentive Plan. (Exhibit 10-b to
Form 10-K for 1992.)

10-c Supplemental Life Insurance Plan. (Exhibit 10-c to Form 10-K for
1997.)

10-d Supplemental Retirement Income Plan. (Exhibit 10-d to Form 10-K
for 1997.)

10-e Senior Management Deferred Compensation Plan (effective for Units
of Participation Having a Unit Start Date Prior to January 1,
1988), revised July 30, 1993. (Exhibit 10.5 to Registration
Statement No. 33-54795.)

10-f Senior Management Deferred Compensation Plan of 1988 (effective
for Units of Participation Having a Unit Start Date of January 1,
1988 or later), revised July 30, 1993. (Exhibit 10.6 to
Registration Statement No. 33-54795.)

10-g Senior Management Long Term Disability Plan. (Exhibit 10-f to
Form 10-K for 1986.)

10-h Salary and Incentive Award Deferral Plan. (Exhibit 10-h to Form
10-K for 1997.)

10-i Financial Counseling Program. (Exhibit 10-i to Form 10-K for
1997.)

10-j Supplemental Health Plan. . (Exhibit 10-j to Form 10-K for 1997.)

10-k Retirement Plan for Non-Employee Directors. (Exhibit 10-k to
Form 10-K for 1997.)

10-l Form of Indemnity Agreement, effective July 1, 1986, between SBC
and its directors and officers. (Appendix 1 to Definitive Proxy
Statement dated March 18, 1987.)

10-m Forms of Change of Control Severance Agreements for officers of
SBC and certain officers of SBC's subsidiaries (Exhibit 10-p to
Form 10-K for 1988.)

10-n Forms of Change of Control Severance Agreements for officers of
SBC and certain officers of SBC's subsidiaries (Approved November
21, 1997). (Exhibit 10-n to Form 10-K for 1997.)

10-o Stock Savings Plan. (Exhibit 10-o to Form 10-K for 1997.)

10-p 1992 Stock Option Plan. (Exhibit 10-p to Form 10-K for 1997.)

10-q Officer Retirement Savings Plan. (Exhibit 10-q to Form 10-K for
1997.)

10-r 1996 Stock and Incentive Plan.

10-s Non-Employee Director Stock and Deferral Plan. (Exhibit 10-s to
Form 10-K for 1997.)

10-t Pacific Telesis Group Deferred Compensation Plan for Nonemployee
Directors. (Exhibit 10gg to Form 10-K for 1996 of Pacific
Telesis Group (Reg. 1-8609).)

10-t(i) Resolutions amending the Plan, effective November 21,
1997. (Exhibit 10-v(i) to Form 10-K for 1997.)

10-u Pacific Telesis Group Outside Directors' Deferred Stock Unit Plan.
(Exhibit 10oo to Form 10-K for 1995 of Pacific Telesis Group
(Reg. 1-8609).)

10-v Pacific Telesis Group 1996 Directors' Deferred Compensation Plan.
(Exhibit 10qq to Form 10-K for 1996 of Pacific Telesis Group
(Reg. 1-8609).)

10-v(i) Resolutions amending the Plan, effective November 21,
1997. (Exhibit 10-v(i) to Form 10-K for 1997.)

10-w Pacific Telesis Group 1994 Stock Incentive Plan. (Attachment A
to Pacific Telesis Group's 1994 Proxy Statement filed March 11,
1994, and amended March 14 and March 25, 1994.)

10-w(i) Resolutions amending the Plan, effective January 1,
1995. (Attachment A to Pacific Telesis Group's 1995
Proxy Statement, filed March 13, 1995.)

10-x Pacific Telesis Group Nonemployee Director Stock Option Plan.
(Exhibit A to Pacific Telesis Group's 1990 Proxy Statement filed
February 26, 1990.)

10-x(i) Resolutions amending the Plan, effective April 1, 1994.
(Exhibit 10xx(i) to Form 10-K for 1996 of Pacific
Telesis Group (Reg. 1-8609).)

12 Computation of Ratios of Earnings to Fixed Charges.

13 Portions of SBC's Annual Report to shareowners for the fiscal
year ended December 31, 1998. Only the information incorporated
by reference into this Form 10-K is included in the exhibit.

21 Subsidiaries of SBC.

23-a Consent of Ernst & Young LLP.

23-b Consent of PricewaterhouseCoopers LLP.

24 Powers of Attorney.

27 Financial Data Schedule.

99-a Report of Independent Accountants PricewaterhouseCoopers LLP.

99-b Annual Report on Form 11-K for the SBC Savings Plan for the year
1998 to be filed under Form 10 K/A.

99-c Annual Report on Form 11-K for the SBC Savings and Security Plan
for the year 1998 to be filed under Form 10-K/A.

99-d Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Nonsalaried
Employees for the year 1998.

99-e Annual report on Form 11-K for the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried and
Nonsalaried Employees (LESOP) for the year 1998.

99-f Annual report on Form 11-K for the SNET Bargaining Unit Retirement
Savings Plan for the year 1998.

99-g Annual report on Form 11-K for the SNET Management Retirement
Savings Plan for the year 1998.

SBC will furnish to shareowners upon request, and without charge, a copy of
the annual report to shareowners and the proxy statement, portions of which
are incorporated by reference in the Form 10-K. SBC will furnish any other
exhibit at cost.

(b) Reports on Form 8-K:

On October 15, 1998, SBC filed a Form 8-K, including an Item 5. Other
Events, and an Item 7. Financial Statements and Exhibits. In the report,
SBC disclosed a press release discussing its third quarter 1998 earnings and
selected financial information for the periods ended September 30, 1998 and
1997.

On October 26, 1998, SBC filed a Form 8-K, including an Item 5. Other
Events, and an Item 7. Exhibits. In the report, SBC disclosed that it had
completed the merger with Southern New England Telecommunications
Corporation.

On October 30, 1998, SBC filed a Form 8-K, including an Item 5. Other
Events. In the report, SBC disclosed that its subsidiary, Pacific Bell
announced on October 29, 1998 it was commencing a fixed spread repurchase
offer for any and all of its outstanding 8.50% debentures due August 15,
2031; 7.75% debentures due September 15, 2032; and 7.50% debentures due
February 1, 2033.

On November 19, 1998, SBC filed a Form 8-K, including an Item 7. Financial
Statements and Exhibits. In the report, SBC disclosed unaudited financial
statements to reflect the proposed business combination of SBC and Ameritech
Corporation as and for the nine months ended September 30, 1998.

SBC COMMUNICATIONS INC. Schedule II - Sheet 1
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Allowance for Uncollectibles
Dollars in Millions

- -------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- -------------------------------------------------------------------------------------------------------------------
Additions
-------------------------------
(1) (2)
Charged
Balance at Charged to Other Balance
Beginning of to Costs and Accounts Deductions at End of
Description Period Expenses Note -Note (a) -Note (b) Period
- -------------------------------------------------------------------------------------------------------------------

Year 1998.............................. $ 430 513 278 749 $ 472
Year 1997.............................. $ 339 566 388 863 $ 430
Year 1996.............................. $ 303 438 254 656 $ 339

<FN>
(a) Amounts previously written off which were credited directly to this
account when recovered.

(b) Amounts written off as uncollectible.
</FN>

SBC COMMUNICATIONS INC. Schedule II - Sheet 2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Accumulated Amortization of Intangibles
Dollars in Millions

- ---------------------------------------------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E
- ---------------------------------------------------------------------------------------------------------------------
Additions
-------------------------------
(1) (2)

Balance at Charged Balance
Beginning of Charged to Other at End of
Description Period to Expense Accounts Deductions Period
- ---------------------------------------------------------------------------------------------------------------------

Year 1998.............................. $ 1,047 136 1 443(a) $ 741
Year 1997.............................. $ 638 410 5 6 $ 1,047
Year 1996.............................. $ 554 139 2 57(b) $ 638

<FN>
(a) Primarily related to the disposition of SBC Media Ventures, Inc. and an
impairment of an investment in wireless video.

(b) Primarily related to the disposition of Associated Directory Services,
Inc.
</FN>

SBC COMMUNICATIONS INC. Schedule II - Sheet 3
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Reserve for Restructuring
Dollars in Millions

(1) (2)
Balance at Charged Charged Balance
Beginning of to Costs and to Other Deductions at End of
Description Period Expenses Accounts -Note (a) Period
- ---------------------------------------------------------------------------------------------------------------------

Year 1998.............................. $ 7 - - 7 $ -
Year 1997.............................. $ 142 - - 135 $ 7
Year 1996.............................. $ 337 - - 195 $ 142

<FN>
(a) The 1996 amount reflects $(64) of costs for enhanced retirement benefits
paid from pension fund assets which do not require current outlays of
SBC's funds. This 1996 reversal of $64 resulted from revised estimates
of these retirement costs. The 1996 amount also includes non-cash net
pension and postretirement settlement gain charged against the
restructuring reserve of $66.
</FN>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on the 12th day
of March, 1999.

SBC COMMUNICATIONS INC.

By /s/ Donald E. Kiernan
(Donald E. Kiernan
Senior Vice President, Treasurer and
Chief Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

Principal Executive Officer:
Edward E. Whitacre, Jr.*
Chairman and
Chief Executive Officer

Principal Financial and
Accounting Officer:
Donald E. Kiernan
Senior Vice President, Treasurer
and Chief Financial Officer

/s/ Donald E. Kiernan
Directors: (Donald E. Kiernan, as attorney-in-fact
and on his own behalf as Principal
Edward E. Whitacre, Jr.* Financial Officer and Principal
Clarence C. Barksdale* Accounting Officer)
James E. Barnes*
August A. Busch III*
Royce S. Caldwell* March 12, 1999
Ruben R. Cardenas*
William P. Clark*
Martin K. Eby, Jr.*
Herman E. Gallegos*
Jess T. Hay*
Bobby R. Inman*
Charles F. Knight*
Mary S. Metz*
Haskell M. Monroe, Jr.*
Toni Rembe*
S. Donley Ritchey*
Joyce M. Roche'*
Richard M. Rosenberg*
Carlos Slim Helu'*
Patricia P. Upton*

* by power of attorney

EXHIBIT INDEX