8-K

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                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549



                                  FORM 8-K



                               Current Report

   Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


        Date of Report (Date of Earliest Event Reported)   July 26, 1999
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                         AVTEL COMMUNICATIONS, INC.
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           (Exact Name of Registrant as Specified in its Charter)



                                  Delaware
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               (State or Other Jurisdiction of Incorporation)


          0-27580                                    87-0378021
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   (Commission File Number)                 (I.R.S. Employer Identification No.)


501 Bath Street, Santa Barbara, California              93101
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 (Address of Principal Executive Offices)             (Zip Code)


                               (805) 884-6300
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            (Registrant's Telephone Number, Including Area Code)



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Item 5. Other Events.

        On July 26, 1999, AvTel Communications, Inc. announced that it had
entered into a Letter of Intent with Platinum Equity Holdings, LLC, to sell
its residential long distance business.  For further information on this
proposed transaction, please see the attached press release.

Item 7: Financial Statements, Pro Forma Financial Information and Exhibits.

        (c)     Exhibits

                99.1 Press Release, dated July 26, 1999.








                                 SIGNATURES

        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 hereunto duly authorized.


                                      AVTEL COMMUNICATIONS, INC.



Dated: August 2, 1999                 By: /s/ Anthony E. Papa
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                                         Anthony E. Papa
                                         Chairman and Chief Executive Officer

EX-99.1

                                                                Exhibit 99.1

SANTA BARBARA, Calif.-- July 26, 1999 -- AvTel Communications Inc. (NASDAQ:
AVCO), a single-source provider of integrated voice, data and Internet
services, today announced that it has entered into a Letter of Intent with
Platinum Equity Holdings, LLC to sell its residential long distance
business.

AvTel's residential long distance business unit contributed approximately
$5,621,000 in revenues for the three-month period ended March 31, 1999.  The
group currently represents approximately 58% of AvTel's total revenues and 72%
of AvTel's total losses.

This unit sells and markets a bundled portfolio of personal telephone services
and Internet access through independent distributors and agents to residential
customers and small-office, home-office (SOHO) customers.  The sale does not
include AvTel's corporate network solutions group, local Internet services
group and application development team, which include Silicon Beach
Communications, WestNet Communications, Remote Lojix, Inc., Addictive Media
and the customer support teams for those units.

Under the terms of Letter of Intent, Platinum Equity Holdings, LLC will acquire
100% of the stock of Matrix Telecom, an AvTel wholly-owned subsidiary based in
Ft Worth, TX.  The consideration to AvTel from the transaction is valued at
approximately $7.9 million, and consists of a combination of cash, assumption
of indebtedness, certain contingent payments and future services. The value of
the transaction could be affected by the future performance of the unit being
transferred.  Additionally, it is anticipated that Matrix Telecom will continue
to purchase Internet technical support, WEB development and hosting services
from AvTel.  The closing of the transaction is subject to negotiation and
execution of a definitive agreement, as well as regulatory and other approvals.

"The sale of our residential long distance business allows our management
team to substantially increase our overall focus on building and managing
integrated corporate network solutions," stated Anthony E. Papa, AvTel's
Chairman and Chief Executive Officer. "AvTel's business units that provide
data, voice and Internet solutions for business customers continue to
thrive and prosper. In the quarter ended March 31, 1999, we reported a 100%
increase in revenues in our Business Markets Group over the prior year's
quarter, while our residential long distance revenues declined by 45% for
that same period. This sale will allow us to focus on the area of our
business that is growing the fastest. AvTel provides a variety of services
that collectively form a comprehensive enterprise-wide network for
businesses. Our services include carrier transport facilities for data,
Internet access, voice and video conferencing, network design and
installation, service, centralized support and help desk management,
application development and hosting. We are a true single-source solution
provider for the medium-size business."

AvTel operates regional offices in New York City, Atlanta, Southern Florida,
Dallas, Chicago, Southern California, Santa Barbara and San Francisco, which
provide services to business customers.  The Company anticipates opening
additional offices in other target markets in 2000.

"We will aggressively increase our sales and acquisition activities in the
areas of network solutions for business customers," added Mr. Papa.  "Many
businesses today are taking advantage of some sort of new technology or
computer advancement requiring network connectivity.  We are our business
customer's total solutions partner.  In some cases, we are the single-source
provider; while in others we may only handle the transport facilities or field
service.  However, in all cases we are building a long-term relationship with
the IT professionals within an organization to be their service partner
throughout the lifecycle of their enterprise."

Platinum Equity Holdings, LLC, (www.peh.com) based in Los Angeles, is one of
the top-10 privately held information technology companies in the United
States.  Platinum specializes in acquiring and operating mission-critical
technology organizations and technology-enabled service companies throughout
the world.

AvTel Communications Inc. is a provider of broadband network services
integrating voice, data and Internet connectivity for business customers.
The Company markets and sells a broad range of advanced network services
including network design, installation, carrier transport, remote
monitoring and maintenance through direct sales professionals. The Company
provides a host of connectivity services including dedicated private line,
frame relay, ATM, ADSL, and dial-up Internet access through more than 700
points-of-presence (POPs). For further information, please visit the
Company's Web site at www.avtel.com.

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All statements in this news release other than statements of historical
fact are forward-looking statements that involve substantial risks and
uncertainties. A Letter of Intent is not a binding agreement. There can be
no assurances that the Matrix sale referenced herein will be consummated,
nor that it will be consummated on the terms referenced herein, or on a
timely basis. Reference is made to the Company's Annual Report on Form
10-K/A for the year ended Dec. 31, 1998, to the Quarterly Report on Form
10-Q/A for the quarter ended March 31, 1999, and to the company's other
reports filed with the Securities and Exchange Commission for a discussion
of such risks and uncertainties and other factors that may have material
effect on the company's business.

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