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)  August 25, 1997 
                                                  ---------------

                       AvTel Communications, Inc.
                       --------------------------
         (Exact name of registrant as specified in its charter)

                      Commission File No.   0-27580  
                                            ---------


                     Utah                              87-0378021          
          --------------------------------         ------------------
           (State or other jurisdiction of         (I.R.S. Employer
            incorporation or organization)          Identification No.)


130 Cremona Drive, Santa Barbara, California  93117     
- ----------------------------------------------------
(Address of principal executive offices)    (Zip Code)


Registrant's telephone number, including area code: 805-685-0355  
                                                    ------------

==============================================================
(Former Name or Former Address, if changed since last report)



 
INFORMATION TO BE INCLUDED IN THE REPORT

ITEM 5.   OTHER EVENTS                    
          ------------

          As previously reported, on April 29, 1997, the Registrant entered 
into a Stock Exchange Agreement (the "Exchange Agreement") with Matrix 
Telecom, Inc., a Texas corporation ("Matrix"), pursuant to which persons or 
entities who own the issued and outstanding common stock of Matrix ("Matrix 
Stockholders") will transfer to the Registrant all of their Matrix stock and, 
in exchange, the Registrant will issue to the Matrix Stockholders shares of 
the Registrant's common stock.

          On August 25, 1997, the Registrant and Matrix entered into an 
Amendment to Stock Exchange Agreement (the "Amendment").  The Amendment 
modifies the Exchange Agreement to (i) extend the time for closing to no later 
than November 30, 1997, (ii) reflect the acquisition of Best Connections, Inc. 
by Matrix, (iii) finalize the terms of Registrant's reincorporation from Utah 
to Delaware, (iv) provide for an effective 1 for 4 reverse stock split as part 
of such reincorporation, (v) provide that all outstanding shares of Matrix 
common stock will be acquired in exchange for 9,582,514 shares (after 
adjustment for the 1 for 4 reverse stock split described above) of the 
Registrant's common stock, (vi) provide that Matrix Stockholders holding at 
least 90% of the outstanding shares of Matrix common stock must enter into the 
share exchange contemplated by the Exchange Agreement, (vii) increase the 
amount of the bridge loan from Matrix to the Registrant from $500,000 to 
$750,000 and to adjust the interest rate on such loan, (viii) update the 
disclosure schedules and (ix) make certain other changes to the Exchange 
Agreement, all as set forth in more detail in the Amendment.  A copy of the 
Amendment is attached hereto as Exhibit 2, and is incorporated by this 
reference into this report.

          The consummation of the transactions under the Stock Exchange 
Agreement is subject to the satisfaction of a number of conditions, including 
approval of the Registrant's shareholders of the terms and conditions of the 
amended Stock Exchange Agreement and the reincorporation of the Registrant in 
the state of Delaware.  The Registrant now expects to hold a special meeting 
of its shareholders in October 1997 to approve these transactions.

          The Registrant issued a press release with respect to the Amendment 
on August 28, 1997.  A copy of such press release is attached hereto as 
Exhibit 99, and is incorporated by this reference into this report.



 
ITEM 7.   FINANCIAL STATEMENTS AND EXHIBITS
          ---------------------------------

     C.   EXHIBITS.                                   Page Number 
                                                    In Sequential 
                                                        Numbering 
                                                           System

Exhibit 2.   Stock Exchange Agreement, dated as 
             of August 29, 1997, by and between 
             AvTel Communications, Inc. and Matrix 
             Telecom, Inc.                                    5   

Exhibit 27.  Financial Data Schedule.    None

Exhibit 99.  Press Release dated August 28, 1997             13  
                                                               





                            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.



By:  /s/ ANTHONY E. PAPA                 Date: September 10, 1997
     -------------------------                 ------------------ 
     Anthony E. Papa
     President and Chief Executive Officer



By:  /s/ JAMES P. PISANI                 Date: September 10, 1997
     -------------------------                 ------------------ 
     James P. Pisani     
     Executive Vice President and 
     Chief Financial Officer 
     (Principal Financial and Accounting Officer)






                  AMENDMENT TO STOCK EXCHANGE AGREEMENT
                        DATED AUGUST 25, 1997




                                                                 EXHIBIT 2
                  AMENDMENT TO STOCK EXCHANGE AGREEMENT


     This Amendment to Stock Exchange Agreement, dated August 25, 1997 is by 
and between Matrix Telecom, Inc. ("Matrix") and AvTel Communications, Inc. 
("AvTel").

                          W I T N E S S E T H

     WHEREAS, Matrix and AvTel have entered into that certain Stock Exchange 
Agreement, dated April 29, 1997 (the "Stock Exchange Agreement") which 
provided for, among other things, the exchange by the stockholders of Matrix 
of all of the issued and outstanding capital stock and options of Matrix for 
capital stock and options of AvTel;

     WHEREAS, by letter agreement, dated July 28, 1997 (the "Letter Agreement") 
the date by which completion of the transactions by the Stock Exchange 
Agreement is required to be completed was extended through November 30, 1997; 
and

     WHEREAS, as contemplated by Paragraph 9(b) of the Stock Exchange 
Agreement, AvTel and Matrix have agreed to effect the Reverse Stock Split (as 
defined in the Stock Exchange Agreement) by the conversion of each share of 
AvTel common stock into the right to receive 1/4 of a share of common stock of 
Newco (thereby effecting a four to one reverse stock split) pursuant to the 
terms of the Merger (as defined in the Stock Exchange Agreement);

     WHEREAS, since the date of the Stock Exchange Agreement, Matrix has 
acquired all of the issued and outstanding capital stock of Best Connections, 
Inc. in exchange for 376,727 shares of Matrix common stock;

     NOW THEREFORE, in consideration of the foregoing and for other good and 
valuable consideration, the receipt and sufficiency of which are hereby 
acknowledged, the parties agree as follows:

1.     Defined Terms.  Capitalized terms used herein, unless otherwise defined 
or the context requires otherwise, are used herein as defined in the Stock 
Exchange Agreement.

2.     Amendment to Paragraph 1.  Paragraph 1 of the Stock Exchange Agreement 
is hereby amended to read in its entirety as follows:





"At Closing (as hereinafter defined), the stockholders of Matrix listed on 
Schedule I (the "Stockholders") will deliver to AvTel 3,860,987 properly 
endorsed, unencumbered shares of Matrix common stock, representing 100% of the 
outstanding Matrix common stock, in exchange for 9,582,514 shares of common 
stock of AvTel, after giving effect to the Merger and Reverse Stock Split 
(defined below), which will not be registered under the Securities Act of 
1933, as amended."

3.     Amendment to Paragraph 2.  Paragraph 2 of the Stock Exchange Agreement 
is hereby amended by adding the following sentence at the end of the 
paragraph:

"Prior to the Closing, Matrix shall deliver to AvTel a duly executed Exchange 
Statement from each holder of a non-qualified stock option of Matrix in the 
form attached as Exhibit B."

4.     Amendment to Paragraph 3.  Paragraph 3 of the Stock Exchange Agreement 
is hereby amended to read in its entirety as follows:

     "At Closing, Matrix will cancel all non-qualified stock options (covering 
9,000 Matrix shares) that it has granted and that remain outstanding as of the 
date hereof, and AvTel will issue to the beneficiaries thereof, 22, 338 AvTel 
non-qualified stock options, after giving effect to the Merger and Reverse 
Stock Split, having the exercise period and exercise price set forth in 
Exhibit B hereto."

5.     Amendment to Paragraph 6.  Paragraph 6 of the Stock Exchange Agreement, 
including the heading thereto, is hereby deleted and replaced entirely by the 
following:

                       "[Intentionally Omitted.]"

6.     Amendment to Paragraph 9(a).  The last sentence of Paragraph 9(a) 
of the Stock Exchange Agreement is hereby amended to read in its entirety as 
follows:

"At the effective time of the Merger, by virtue of the Merger, and without any 
action on the part of AvTel or Newco or the stockholders of Newco, each share 
of common stock and preferred stock, and each option of AvTel issued and 
outstanding immediately prior to the effective time of the Merger shall by 
virtue of the Merger be canceled and extinguished and be converted into the 
right to receive one quarter of a share of common stock or preferred stock or 
an option to acquire one quarter of a share of common stock, as applicable, 



of Newco; provided, however, that Newco shall not be required to issue any 
fractional shares of common stock or preferred stock but instead shall be 
entitled to purchase any fractional shares resulting from the Merger at the 
fair market value thereof. This ¼ to 1 conversion of shares is referred 
to herein as the "Reverse Stock Split."

7.     Amendment to Paragraph 9(b).  Paragraph 9(b) of the Stock Exchange 
Agreement shall be deleted in its entirety.

8.     Amendments to Paragraph 12.  

     (a) The $500,000 amount set forth in the first sentence of Paragraph 12 
is hereby deleted and replaced with $750,000.

     (b) The following clause is hereby inserted after clause (b) of Paragraph 
12 and clauses (c), (d) and (e) of Paragraph 12 are hereby renumbered to be 
clauses (d), (e) and (f), respectively:

     "(c) up to an additional $250,000 may be drawn by AvTel at any time on or 
after July 1, 1997 and prior to the earlier of (i) September 30, 1997, or (ii) 
the termination of this Agreement."

     (c)  The date "August 31, 1997" set forth in the first sentence of clause 
(d) of Paragraph 12 of the Stock Exchange Agreement (which after giving effect 
to this Amendment will become clause (e)) is hereby deleted and replaced with 
the date "October 31, 1997."

9.     Amendment to Paragraph 15.   Clause (f) of Paragraph 15 of the Stock 
Exchange Agreement is hereby amended to read in its entirety as follows:

"Stockholders holding at least 90% of the issued and outstanding common stock 
of Matrix shall have executed and delivered to Matrix an Exchange Statement."

10.     Amendment to Paragraph 19.  The date "July 1, 1997" set forth in the 
first sentence of Paragraph 19 is hereby deleted and replaced with the date 
"November 30, 1997", consistent with the terms of the Letter Agreement.

11.     Amendment to Schedules.  Schedules I, II, and VII of the Stock 
Exchange Agreement are hereby deleted and replaced with Schedules I, II, and 
VII attached hereto.




12.     Amendment to Registration Rights Agreement.  The Registration Rights 
Agreement included as Exhibit B to the Stock Exchange Agreement (Exhibit C 
after giving effect to this Agreement) is hereby amended by deleting Section 
2(b) thereof.

13.     Amendment to Exhibits.  Any references in the Stock Exchange Agreement 
to Exhibit B are hereby amended to refer to Exhibit C to the Stock Exchange 
Agreement and the Registration Rights Agreement previously included as Exhibit 
B to the Stock Exchange Agreement is hereby amended to become Exhibit C 
thereto.  Exhibit B to the Stock Exchange Agreement shall read entirely as set 
forth in Exhibit B attached hereto.

14.     Effectiveness of Amendment.  This Amendment shall become effective 
upon the execution hereof by each of the parties hereto.  Except as amended 
hereby, the Stock Exchange Agreement shall remain in full force and effect.

15.     Counterparts.  This Amendment may be executed simultaneously in 
counterparts, each of which shall be deemed to be an original, but all of 
which together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed 
on the dated first above written by their duly authorized representatives.




MATRIX TELECOM, INC.            AVTEL COMMUNICATIONS, INC.



By:   /s/ GARY L. FRIEDMAN      By: /s/ ANTHONY E. PAPA       
Title:    Secretary             Title: Chief Executive Officer






                                EXHIBIT B

                   FORM OF OPTION EXCHANGE STATEMENT

     The undersigned understands that the option or options to acquire common 
stock of AvTel Communications, Inc. ("Avtel") to be issued to the undersigned 
as consideration for options to acquire shares of common stock of Matrix 
Telecom, Inc. ("Matrix") pursuant to that certain Stock Exchange Agreement 
(the "Stock Exchange Agreement") entered into as of April 29, 1997 between 
Avtel and Matrix will not be registered under the Securities Act of 1933, as 
amended (the "1933 Act"), or any applicable state securities laws, but rather 
are being issued pursuant to the "private placement" exemption from 
registration provided by Section 4(2) under the 1933 Act and certain analogous 
state exemptions.  In connection with the offer and sale of the Avtel options 
to the undersigned pursuant to the Stock Exchange Agreement, the undersigned 
hereby represents and warrants as follows:

     (a)     The undersigned (i) has such knowledge and experience in 
financial and business matters that the undersigned is capable of evaluating 
the merits and risks of the prospective investment in Avtel options and the 
resulting Avtel shares to be issued upon the exercise of the options and (ii) 
is capable of assuming the risk of the loss of the entire investment in 
connection therewith.

     (b)     The undersigned is not acquiring the Avtel options pursuant to 
the Stock Exchange Agreement as a result of any general solicitation or 
general advertising, including advertisements, articles, notices or other 
communications published in any newspaper, magazine or similar media or 
broadcast over radio or television, or any seminar or meeting whose attendees 
have been invited by general solicitation or general advertising.

     (c) The Avtel options being acquired by the undersigned are acquired for 
the undersigned's own account for investment and not with a view toward 
subdivision, resale or redistribution thereof in a manner prohibited under the 
1933 Act or under the securities laws of any state, and the undersigned does 
not presently have any reason to anticipate any change in the undersigned's 
circumstances or other particular occasion or event that would create a need 
to sell such options.  The undersigned has no contract, undertaking, 
agreement, understanding or arrangement with any person to sell, transfer or 
pledge to any person any part or all of the Avtel options the undersigned is 
acquiring or any interest therein, and the undersigned has no present plans to 
enter into the same.





     (d) The undersigned received the annual report on Form 10-K filed by 
Avtel with respect to its most recently completed fiscal year (and the related 
proxy statement for Avtel's 1997 Annual Stockholder's Meeting) and all other 
documents filed by Avtel with the Securities Exchange Commission since the 
date of such Annual Report.  The undersigned has understood such materials and 
has had an opportunity to ask questions and receive answers about the terms 
and conditions of the offering and the issuance of Avtel options under the 
Stock Exchange Agreement, and has received all information that the 
undersigned has requested from Avtel concerning Avtel and the transactions 
contemplated by the Stock Exchange Agreement.

     (e) The undersigned has not relied, in connection with this transaction, 
upon any statements, representations, warranties or agreements other than 
those set forth in the documents referred to in clause (d) above and the Stock 
Exchange Agreement.

     (f) In connection with an intended exchange of the options to acquire 
shares of Matrix common stock held by the undersigned for options to acquire 
shares of Avtel common stock, the undersigned hereby directs that all Matrix 
options held by the undersigned be exchanged at the Closing (as defined in the 
Stock Exchange Agreement) for Avtel options in the manner contemplated by the 
Stock Exchange Agreement.  The officers of Matrix are hereby authorized to 
take all action on behalf of the undersigned and to act as attorney-in-fact, 
with full power of substitution, for the undersigned in connection with the 
consummation of the transactions contemplated by the Stock Exchange 
Agreement.  All Avtel options received are to be registered in the same name 
as the Matrix options held by the undersigned.

     (g) The undersigned hereby represents and warrants that the undersigned 
has full power to direct the exchange of the Matrix options as set forth above 
and that the options to acquire shares of Matrix common stock to be exchanged 
by the undersigned are free and clear of any liens or encumbrances.

     (h) The undersigned understands that a false statement herein may be a 
violation of law and could result in a claim for damages against the 
undersigned.






     (i) The undersigned understands and agrees that the undersigned shall 
receive the number of options to acquire Avtel shares listed below, that the 
exercise price of such options shall be $2.24 per share, that all such options 
shall be fully vested when issued and that the options shall expire at the 
close of business on December 31, 2002 unless they shall have been exercised 
by the undersigned on or before such date.


                    Signature_______________________________

                    Print Name______________________________

                    Date:___________________________________

                    No. of Matrix Options Held:_________

                    No. of Avtel Options to be acquired:_____






                                PRESS RELEASE





               AVTEL COMMUNICATIONS ANNOUNCES REVISED AGREEMENT
                    FOR THE ACQUISITION OF MATRIX TELECOM

             Best Connections Distribution and Sales Organization
                         Now Part of the Transaction 



     Santa Barbara, California, August 28, 1997  -- AvTel Communications, Inc. 
(OTC:AVCO) today announced revised terms for its agreement to acquire Matrix 
Telecom, Inc., a privately-held domestic and international long distance 
telephone company with a customer base of more than 200,000.  Under the 
revised agreement, AvTel will reincorporate by forming a Delaware 
corporation.  Each AvTel share will be exchanged for 1/4 share in the new 
corporation (an effective 1-for-4 reverse split), and Matrix will be acquired 
through the issuance of 9,582,514 shares of the new AvTel common stock.  The 
number of new AvTel shares to be outstanding will total 11,616,720.

     The transaction is subject to the approval of the shareholders of AvTel 
and Matrix.  AvTel is in the process of filing a proxy statement for a 
shareholders' meeting tentatively scheduled for September 26 in Santa Barbara.

     These terms reflect the acquisition by Matrix of BestConnections, Inc., a 
national distribution and sales organization that holds contracts with 
third-party sales forces, such as affinity groups and industry sales groups 
with more than 3,000 independent sales agents.  BestConnections provides 
training resources, marketing materials and administrative services to its 
client companies, including Matrix Telecom.

     Anthony E. Papa, Chairman and CEO of AvTel Communications, commented:  
"We are pleased to be nearing a closing date for the acquisition of Matrix, 
and are particularly pleased that, in the interim, BestConnections could 
become part of the transaction.  BestConnections brings in-depth, experienced 
marketing and promotional talent to the new company, along with valuable 
contracts with third-party distributors of telecommunications services.  
Moreover, we will now be able to effect significant savings by consolidating 
intermediary commissions, and expect to realize substantial economics of scale 
in administration and billing.  AvTel's Business Network Services Division 
will utilize BestConnections' marketing and promotional capabilities to 
further fortify the Company's third-party distribution channels."





     James P. Pisani, Executive Vice President and COO of AvTel, added:  "Upon 
completion of the acquisition, AvTel will operate two primary business units:  
Business Network Services, which was launched in November of last year, and 
Mass Market Services, which will be comprised of the consolidated sales 
departments of Matrix and BestConnections.  Both divisions will continue to 
provide valuable telecommunications services to corporate customers, 
individuals and the SOHO market.  Our Internet services subsidiary will expand 
the portfolio of services offered to local businesses and individuals in 
select geographic markets by integrating the product resources acquired with 
Matrix."

     Matrix is fully certified by the FCC and registered in all 48 contiguous 
states and Hawaii.  In addition, the company holds billing agreements with all 
the Regional Bell Operating Companies, GTE and other independent telephone 
companies.  Matrix provides domestic and international long distance telephone 
service, wireless paging, 800 numbers and calling cards to individuals and 
business customers.

     AvTel Communications, Inc. is a non-facilities based telecommunications 
carrier that provides a comprehensive array of broadband network services 
integrating voice, data and video networking solutions for small to mid-sized 
business customers.  AvTel markets a variety of products and services tailored 
around its PointStream private-line facilities, FrameLink Frame Relay 
facilities, and Internet access through its subsidiaries.