U.S. SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549

                                  FORM 12b-25
 
                         COMMISSION FILE NUMBER 0-27580
                                                -------


                           NOTIFICATION OF LATE FILING

 

 
                            CUSIP NUMBER 054529 20 1
                                         -----------
 
(Check One):                            
[X] Form 10-K and Form 10-KSB  [ ] Form 20-F  [ ] Form 11-K  [ ] Form 10-Q and 
Form 10-QSB  [ ] Form N-SAR
 
For Period Ended: December 31, 1997
                  -----------------
 
[ ] Transition Report on Form 10-K 
[ ] Transition Report on Form 20-F 
[ ] Transition Report on Form 11-K 
[ ] Transition Report on Form 10-Q 
[ ] Transition Report on Form N-SAR 
 
For the Transition Period Ended: 

Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
 
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates:
 
Part I--Registrant Information
 
Full Name of Registrant:    AvTel Communications, Inc.
                            --------------------------

Former Name if Applicable:
 
Address of Principal Executive Office (Street and Number):
City, State and Zip Code:
 
          505 Bath Street
          Santa Barbara, CA 93101


Part II--Rules 12b-25 (b) and (c)
 
If the subject report could not be filed without unreasonable effort or
expense and the registrant seeks relief pursuant to Rule 12b-25(b), the
following should be completed. 

(Check box if appropriate) [X]
 
     (a) The reasons  described  in  reasonable  detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
 
     (b) The subject annual report,  semi-annual  report,  transition  report on
Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof will be filed on or
before the  fifteenth  calendar day following  the  prescribed  due date; or the
subject  quarterly report or transition  report on Form 10-Q, or portion thereof
will be filed on or before the fifth  calendar day following the  prescribed due
date; and
 
     (c) The accountant's  statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.

Part III--Narrative
 
     State below in reasonable detail the reasons why Form 10-K and Form 10-KSB,
20-F,  11-K, 10-Q and Form 10-QSB,  N-SAR,  or the transition  report or portion
thereof could not be filed within the prescribed period:
 
     As  previously  reported  in the  Registrant's  Current  Report on Form 8-K
(event date December 1, 1997, as subsequently  amended) and in the  Registrant's
Form 10- KSB for the year ended September 30, 1997, the Registrant  acquired all
of the outstanding  capital stock of Matrix  Telecom,  Inc.  ("Matrix"),  a much
larger  privately-held  company,  on December 1, 1997. The acquisition of Matrix
was  accomplished by a  share-for-share  exchange  approved by the  Registrant's
shareholders  (the "Share  Exchange").  Also on December 1, 1997, the Registrant
completed   its    reincorporation    in   Delaware   by   way   of   a   merger
(the"Reincorporation Merger") with and into a wholly-owned subsidiary formed for
the sole purpose of the  Reincorporation  Merger. As part of the Reincorporation
Merger,  Registrant  also  effected a conversion  of shares that  resulted in an
effective one to four reverse stock split of its outstanding capital stock.

     For  accounting  purposes,  the Share  Exchange  was  treated  as a reverse
acquisition  of AvTel by Matrix  using the  purchase  method of  accounting.  In
connection with this reverse acquisition, the Registrant changed its fiscal year
end from September 30 to December 31. Upon  consummation  of the Share Exchange,
the Registrant retained KPMG Peat Marwick LLP, Matrix's auditors, as independent
auditors for the Registrant.

     Because of the time and effort  required on the part of the  Registrant and
its   management   in  order  to  (i)  complete  the  Share   Exchange  and  the
Reincorporation  Merger,  (ii)  oversee  the  combination  of  Matrix's  and the
Registrant's  business  operations,  (iii) oversee the audit of the  Registrant,
representing the combined entities after the Share Exchange, and (iv) transition
from  the   disclosure   requirements   of  Regulation  S-B  to  the  disclosure
requirements  of Regulation  S-K,  Registrant is unable to complete and file its
Form 10-K for the year ended  December  31,  1997,  by the  prescribed  due date
without  unreasonable effort or expense.  The Registrant will file its Form 10-K
for such  period no later  than  April 15,  1998,  the  fifteenth  calendar  day
following the due date.

Part IV--Other Information
 
     (1) Name and  telephone  number  of  person  to  contact  in regard to this
notification:

         Anthony E. Papa             (805) 685-0355 
         ---------------             ----- --------
             (Name)            (Area Code) (Telephone Number)
 
     (2) Have all other periodic  reports  required under section 13 or 15(d) of
the Securities  Exchange Act of 1934 or section 30 of the Investment Company Act
of 1940  during the  preceding  12 months or for such  shorter  period  that the
registrant was required to file such report(s) been filed?  If the answer is no,
identify report(s).
 
[X] Yes   [ ] No
 
     (3) Is it anticipated that any significant  change in results of operations
from the corresponding  period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
 
[X] Yes   [ ] No
 
     If so: attach an explanation of the anticipated  change,  both  narratively
and  quantitatively,  and, if  appropriate,  state the reasons why a  reasonable
estimate of the results cannot be made.

     As  noted  above,  the  Share  Exchange  was  accounted  for  as a  reverse
acquisition  of AvTel by Matrix using the purchase  method of  accounting.  As a
result,  Matrix  is  deemed  to be  the  Registrant's  predecessor  company  for
financial accounting purposes.  The following financial information is presented
on this basis.

     The Registrant  anticipates that it will report revenues for the year ended
December  31, 1997,  of $51.4  million.  This  compares  with  revenues of $71.6
million for the year ended December 31, 1996, a decline of approximately 28%. As
a  result,  the  Registrant  expects  to  report a  decline  in gross  margin of
approximately 36.5%, to $15.2 million in 1997 as compared with $23.9 million for
1996.

     The  reverse  acquisition  of AvTel by Matrix was  accounted  for using the
purchase method of accounting.  In order to value the consideration given in the
Share Exchange the market price of AvTel's common stock for a period immediately
preceding  the  announcement  of the Share  Exchange was used. As of the date of
acquisition,  the  Registrant  determined the fair value of the net tangible and
intangible assets and liabilities acquired. The underlying fair value of AvTel's
net assets was  substantially  less than the  indicated  market value of AvTel's
common and preferred  stock.  Accordingly,  the Registrant  recorded a charge to
income  of $9.1  million  immediately  subsequent  to the Share  Exchange.  As a
result,  the  Registrant  expects  to  report  a net loss of in  excess  of $9.6
million.  A more  exact  estimate  of the net loss  cannot be made at this time,
because the  Registrant  is still  determining  expense  related to the grant of
certain options by the predecessor company in 1997.


                           AvTel Communications, Inc.
                           --------------------------
                  (Name of Registrant as specified in charter)
 
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
 
Date: March 27, 1997

By /s/ ANTHONY E. PAPA
   --------------------
       Anthony E. Papa
       Chief Executive Officer
 

                                   ATTENTION
 
Intentional misstatements or omissions of fact constitute Federal Criminal
Violations (See 18 U.S.C. 1001).