Englewood, Colo. -- MediaOne Group Inc., the third-largest
domestic MSO, warned analysts last Thursday that its U.S. cable business would generate
cash-flow growth of only about 2 percent this year and 5 percent in 1999.
Top-line revenue growth should be about 10 percent next
year, even as basic-cable rates rise by 5 percent or less, the company said. This
year's pro forma revenue growth should be about 11 percent. Internal subscriber
growth -- just over 1 percent this year and about 1.5 percent next year -- figures to be
below the industry norm of about 2 percent.
MediaOne said it expects to post a double-digit cash-flow
increase in 2000.
MediaOne's third-quarter cable results, released in
early November, disappointed some. Since then, most analysts have cut their projections,
so last week's forecast was no shock. MediaOne's share price fell by 51 cents
last Thursday, to $40.50.
The company pinned some blame on aging Continental
Cablevision Inc. operations that it bought in 1996. Making required customer-care
improvements -- like updating billing systems and consolidating call centers -- will drain
$55 million from cash flow in each of the next two years.
At the same time, MediaOne touted successful new-service
launches, such as high-speed data (80,000 customers at year-end) and telephony (10,000).