8-K

                                    FORM 8-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                 CURRENT REPORT

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

       Date of Report (Date of earliest event reported): December 18, 1997


                        TELEPHONE AND DATA SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)


      Iowa                       1-8251                    36-2669023
 (State or other               (Commission                (IRS Employer
jurisdiction of               File Number)             Identification No.)
incorporation)

   30 North LaSalle Street, Chicago, Illinois           60602
         (Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code:  (312) 630-1900


                                 Not Applicable
          (Former name or former address, if changed since last report)













Item 5.   Other Events.

         On December 18, 1997,  Telephone and Data Systems,  Inc.  ("TDS" or the
"Company")  today  announced  a corporate  restructuring  designed to unlock the
value of TDS's business units for shareholders.  The plan,  unanimously approved
by the TDS Board of  Directors,  would create three new classes of common stock,
commonly known as "Tracking  Stocks,"  which are intended to separately  reflect
the  performance  of  United  States  Cellular  Corporation  [AMEX:USM],  Aerial
Communications,  Inc. [NASDAQ:AERL] and TDS Telecommunications  Corporation, the
Company's cellular,  PCS and landline telephone  businesses,  respectively.  The
tracking  stocks  will be  created in  connection  with a change in the state of
incorporation  of the Company from Iowa to Delaware.  The plan will be submitted
for approval by shareholders at a special meeting in early 1998.

         This  Current  Report  on Form 8-K is being  filed for the  purpose  of
filing the news release issued by the Company  relating to such  announcement as
an exhibit.

Item 7.           Financial Statements and Exhibits

         Exhibits

         The exhibits  accompanying  this report are listed in the  accompanying
Exhibit Index.




                                        2





                                   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, thereto duly authorized.




Telephone and Data Systems, Inc.
(Registrant)

Date:    December 29, 1997


By:  /s/ GREGORY J. WILKINSON
Gregory J. Wilkinson
Vice President and Controller
(principal accounting officer)












                                        3






                                  EXHIBIT INDEX


Exhibit Number                       Description of Exhibit
- --------------                       ----------------------
      99                             News Release dated December 18, 1997



                                        4

EX-99

                                                    Exhibit 99









Contacts:    Murray L. Swanson                         Karen M. Stewart
             Executive Vice President - Finance        Vice President
             (312) 630-1900                            - Investor Relations
             murray.swanson@teldta.com                 (608) 828-8316 
                                                       karen.stewart@teldta.com
FOR RELEASE:  IMMEDIATE

                   TDS ANNOUNCES RESTRUCTURING PLAN TO ENHANCE
                                SHAREHOLDER VALUE

December  18,  1997,  Chicago,  Illinois  -  Telephone  and Data  Systems,  Inc.
[AMEX:TDS]  today  announced  a corporate  restructuring  designed to unlock the
value of TDS's business units for shareholders.  The plan,  unanimously approved
by the TDS Board of  Directors,  would create three new classes of common stock,
commonly known as "Tracking  Stocks,"  which are intended to separately  reflect
the  performance  of  United  States  Cellular  Corporation  [AMEX:USM],  Aerial
Communications,  Inc. [NASDAQ:AERL] and TDS Telecommunications  Corporation, the
Company's cellular,  PCS and landline telephone  businesses,  respectively.  The
tracking  stocks  will be  created in  connection  with a change in the state of
incorporation  of the Company from Iowa to Delaware.  The plan will be submitted
for approval by shareholders at a special meeting in early 1998.

LeRoy T. Carlson,  Jr. (Ted),  TDS's President and CEO, said, "For some time, we
have felt that the price of TDS  shares  has not fully  reflected  the  inherent
value of each of the business  units. By creating three new classes of stock, we
will give  shareholders  the  opportunity to invest in separate  securities that
specifically reflect each underlying  business.  Our plan will improve liquidity
for the publicly traded equity of U.S. Cellular and Aerial, maintain certain tax
consolidation  advantages  for TDS,  sustain our credit  capacity  and  preserve
financial  flexibility  for TDS  management to maximize the long-term  growth of
shareholder value."

Subject to TDS shareholder  approval and  effectiveness of the  reincorporation,
TDS has made offers to U.S.  Cellular's  and  Aerial's  boards of  directors  to
acquire  all of the  publicly  traded  equity  of U.S.  Cellular  and  Aerial in
"roll-up" mergers. Under the TDS offer to U.S. Cellular, the public shareholders
of U.S. Cellular, who currently own 18.9% of the common equity of U.S. Cellular,
would  exchange such shares for shares of the TDS tracking  stock related to the
business of U.S.  Cellular which  represent 18.9% of the equity interest in U.S.
Cellular.  The TDS offer to Aerial provides that public  shareholders of Aerial,
who  currently  own 17.5% of the common  equity of Aerial,  would  exchange such
shares for shares of the TDS  tracking  stock  related to the business of Aerial
which represent 17.5% of the equity interest in Aerial.

Following shareholder approval and the effectiveness of the reincorporation, TDS
intends to issue TDS Telecom tracking stock in a public offering for cash, which
would  represent  approximately  15- 25% of the  equity  value  of TDS  Telecom.
Proceeds from this offering will be used for general  corporate  purposes at TDS
Telecom.

Following these transactions, TDS intends to distribute shares of tracking 
stock relating to the

                                        5





businesses of USM, AERL and TDS Telecom in the form of a stock dividend on a pro
rata basis to holders of Series A Common  Shares and Common Shares of TDS. It is
currently  expected that this distribution  would take place in mid-1998,  after
the completion of the TDS Telecom public  offering,  the USM merger and the AERL
merger.

Upon completion of these transactions,  U.S. Cellular and Aerial, as well as TDS
Telecom,  will be wholly owned subsidiaries of TDS, and approximately 80% of the
equity  value of each  subsidiary  will be  publicly  traded  in the form of TDS
tracking stocks.  Approximately  20% of the equity value of each subsidiary will
initially be retained by TDS along with all other  interests  held by TDS, which
will  continue to be  represented  by the Common  Shares and the Series A Common
Shares of TDS.  Upon  completion  of these  transactions,  holders of TDS Common
Shares will become entitled to elect one additional director to the TDS Board of
Directors.

Mr. Carlson continued, "This plan also will give shareholders the opportunity to
invest  in all of  TDS's  businesses,  or any  one  or  more  of our  businesses
individually,  depending on their investment objectives. We currently have three
companies that are at very different  stages of development.  U.S.  Cellular has
grown at an  explosive  rate over the past  several  years,  becoming  the major
contributor  of cash flow and  valuation to TDS. TDS Telecom,  our  historically
strong profit and cash flow generator, is well positioned within its territories
and is beginning to leverage its  strengths  into new markets and a much broader
product line. Aerial Communications,  our newest business, is in a start-up mode
and will require cash,  rather than generate it, over the next few years.  These
three  businesses,  with  their  different  cycles  of  development,  may  offer
different investors the investment  characteristics  they desire.  Investors and
analysts value each of these  businesses  separately,  and now our  shareholders
will have the opportunity to decide which of these investments appeals to them."

Immediately after the distribution of the tracking stocks, holders of TDS Common
and Series A Common Shares will continue to receive an aggregate  dividend which
is at least equal to the aggregate  dividend which such  shareholders  currently
receive from the Company.  The  aggregate  dividend will consist of the dividend
paid  on  TDS  Common  and  TDS  Series  A  Common  Shares,   which  will  equal
approximately 25% of the current dividend paid to these shares, and the dividend
paid on the Telecom Group Tracking Shares, which will equal approximately 75% of
the current dividend paid on TDS Common and Series A Common Shares. TDS does not
currently  anticipate  paying  dividends on the tracking  stocks  related to the
businesses of U.S. Cellular or Aerial Communications.

TDS is filing an  application  to list each of the tracking  stocks on the AMEX.
The  Common  Shares of TDS  would  continue  to be listed on the AMEX  under the
symbol "TDS."

TDS has filed a preliminary  proxy  statement and a registration  statement with
respect  to the  proposed  transaction  with the U.S.  Securities  and  Exchange
Commission  ("SEC"),  which is subject to review by the SEC.  This  announcement
does not constitute an offer to sell or the  solicitation of an offer to buy any
securities, nor does it constitute the solicitation of a proxy from shareholders
by TDS,  which will be made only by means of a proxy  statement/prospectus  once
the registration statement becomes effective,  in compliance with the Securities
Act of 1933, the Securities Exchange Act of 1934 and the rules of the SEC.

In addition to shareholder approval,  the transaction will be subject to various
federal and state regulatory approvals.

TDS is a  Chicago-based  telecommunications  company with  established  cellular
telephone,  local  telephone  and radio paging  operations  and  developing  PCS
operations. TDS strives to build value

                                        6




for  its  shareholders  by  providing  excellent   communications   services  in
attractive, closely related segments of the telecommunications industry.

Headquartered in Chicago, USM manages and invests in cellular systems throughout
the  United  States.  As  of  October  31,  USM  owned  interests   representing
approximately 25.9 million pops, making it the eighth largest cellular telephone
company in the United  States  based on pops.  USM managed  operational  systems
serving 142 markets as of that date.

Aerial  Communications,  headquartered in Chicago, holds licenses to provide PCS
service in areas covering 27.6 million of the U.S. population.  Aerial's markets
include Columbus, Ohio; Houston, Minneapolis, Kansas City, Pittsburgh and Tampa,
where the  Company  employs  Global  Systems for Mobile  Communications  ("GSM")
technology, the world's most popular.

TDS Telecom,  headquartered in Madison, Wisconsin, is the tenth-largest non-Bell
telephone  company in the United States.  TDS Telecom  provides local  telephone
service to over one million people through approximately 507,000 access lines in
rural,  small-town and suburban areas in 28 states. TDS Telecom's newer business
ventures include internet access,  structured wiring engineering and competitive
local exchange telephone services.



Internet Home Pages:          TDS                     http://www.teldta.com
                              USM                     http://www.uscc.com
                              AERL                    http://www.aerial1.com
                              TDS Telecom             http://www.tdstelecom.com


Private  Securities  Litigation  Reform  Act  of  1995  Safe  Harbor  Cautionary
Statement: This announcement contains  "forward-looking"  statements, as defined
in the  Private  Securities  Litigation  Reform  Act of 1995,  that are based on
current  expectations,  estimates  and  projections.  Statements  that  are  not
historical  facts,   including   statements  about  the  Company's  beliefs  and
expectations are forward-looking statements.  These statements contain potential
risks and uncertainties  and,  therefore,  actual results may differ materially.
The Company  undertakes  no obligation  to update  publicly any  forward-looking
statements, whether as a result of new information,  future events or otherwise.
Important factors that may affect these projections or expectations include, but
are not limited to:  changes in the overall  economy;  changes in competition in
markets  in  which  the  Company   operates;   advances  in   telecommunications
technology;  changes in the telecommunications  regulatory environment;  pending
and  future  litigation;  availability  of  future  financing;  start-up  of PCS
operations;   and  unanticipated   changes  in  growth  in  cellular  customers,
penetration  rates,  churn rates and the mix of products and services offered in
the Company's markets.  Readers should evaluate any statements in light of these
important factors.


                                        7