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Data and Digital Fuel Mediacom Advances

11/10/2002 7:00 PM Eastern

Mediacom Communications Corp. — fueled largely by gains in its high-speed data and digital cable businesses — reported a 10.8 percent rate of revenue growth and cash-flow growth of 17.2 percent in the third quarter.

Revenue for the period totaled $233.7 million, while operating cash flow was $97.5 million, Mediacom said.

The digital-subscriber rolls increased by 19,000 in the period, to 348,000, while high-speed data customers were up 22,000 in the third quarter, to 167,000 susbcribers.

In a conference call with analysts, Mediacom chairman and CEO Rocco Commisso said the MSO completed a total repricing and repackaging of its digital offering on the systems it acquired from AT&T Broadband.

"We have corrected a flawed structure," Commisso said during the call.

That was apparent in the third-quarter results. Revenue growth at the former AT&T systems was 10.4 percent for the quarter, while system cash flow rose 18.6 percent and operating cash flow was up 26.6 percent.

In its Mediacom LLC systems, revenue rose 11.2 percent, with system cash flow up 9 percent and operating cash flow up 8.6 percent.

Commisso said the significant rise in the former AT&T systems was due to Mediacom's ability to drastically reduce overhead at those properties.

In the fourth quarter, Mediacom expects revenue to grow between 11.6 percent and 13 percent, to $237 million to $240 million. Fourth-quarter operating cash-flow growth is expected to fall between 10 percent and 12.2 percent, or $99 million and $101 million. Mediacom expects to show free cash flow — operating cash flow after capital expenditures and interest payments are made — during the second half of 2003.

Basic-susbcriber growth was essentially flat for the period, adjusting for the acquisition of 3,000 subscribers in the first quarter. Mediacom lowered its basic-subscriber guidance for the full year to between 1.591 million and 1.597 million, compared to previous estimates of 1.6 million.

Mediacom stock was on a roll after the earnings announcement, rising $1.20 per share, or 21.5 percent, in the two days after Nov. 4, and finishing at $6.78 per share in 4 p.m. trading Nov. 6.

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