Pro forma cash flow rose 9 percent at MediaOne Group Inc.
in the third quarter ended Sept. 30, fueled mainly by increases in domestic cable
operations.
MediaOne Group reported pro forma operating cash flow of
$542 million for the period, on revenue of $2.1 billion, a 15 percent increase. The
company reported a net loss of $202 million, or 36 cents per share during the period,
compared to a loss of 32 cents per share a year ago.
But revenue at its domestic broadband business was up 11
percent to $674 million and cash flow was up 8 percent pro forma to $242 million. Domestic
basic-video subscriber growth for the period was 1.7 percent.
Driving those increases were gains in its telephony
offerings which grew by 16,000 customers in the quarter, to 42,000 subscribers
and in high-speed Internet services. Subscribers to its Road Runner high-speed
cable modem service rose by 33,000 or 24 percent in the period to 173,000
customers.
SG Cowen Securities Corp. cable analyst Gary Farber said
MediaOne offered analysts some guidance on its conference call, predicting it would end
next year with 300,000 digital subscribers, 150,000 telephone subscribers and 400,000
high-speed data customers.
MediaOne also announced that its shareholders
overwhelmingly approved the pending $58 billion merger with AT&T Corp.
"I'm quite pleased with both our operational results
and preparations for the merger with AT&T. Since the end of the second quarter, 99
percent of the voting shareholders approved the merger, and the FCC announced ownership
rules for cable companies that will allow the merger to close. Also, more than half of the
local franchises already meet all requirements to be transferred," MediaOne chairman
Chuck Lillis said in a prepared statement. "Internationally, we've received
phenomenal value for the investments we've sold, and the sales process is continuing
at a fast pace."
In the analyst conference call, MediaOne said it has
obtained franchise approvals for 61 percent of its systems, representing about 40 percent
of its subscriber base.
"I thought it was a god quarter," Farber said.
"It looks like the losses are coming down on some of the initiatives and the revenue
growth is pretty good."
Earlier, MediaOne said it would divest its international
holdings. It has already sold its stake in the One 2 One United Kingdom wireless operation
to Deutsche Telekom for about $5.7 billion. In October, Deutsche Telekom agreed to buy
most of MediaOne International's Central European and Russian wireless interests for
another $2 billion. Also, Microsoft has agreed to pay about $3 billion in stock for
MediaOne International's stake in U.K. broadband operator, Telewest.
On the domestic front, basic-cable revenue was $442
million, up 5.2 percent from the previous year. Operating cash flow for basic cable was up
4 percent to $257 million. Basic video penetration was flat at 58.7 percent, but monthly
revenue per subscriber increased slightly to $43.26 from $42.85. Total monthly broadband
revenue per subscriber also was up to $45.22 from $44.46 a year earlier.
For the quarter, MediaOne Group's share of Time Warner
Entertainment's reported revenue was $886 million, up 9 percent on a pro-forma basis over
third quarter 1998. MediaOne Group's share of TWE's reported earnings before interest,
taxes, depreciation, amortization and other associated costs for the quarter was $232
million, up 10 percent pro-forma over the same period last year.
For the nine-month period, the cable operations'
revenue climbed 8 percent to $1.9 billion. Operating cash flow at the domestic unit
increased 4.3 percent to $731 million.
