Strong performance in its domestic-cable sector helped
drive Media One Group Inc.'s pro forma cash flow up by 15 percent and pro forma
revenue by 12 percent in the second quarter.
Cash flow in the period ended June 30 was $720 million,
compared with $479 million a year ago, on revenue of $1.9 billion, up from $1.7 billion in
1998. However, the company posted a net loss of $176 million or 31 cents per share for the
period, compared with a profit of $2.2 billion, or $3.46 per share in 1998.
Losses for the six-month period were $287 million or 52
cents per share, compared with net income of $1.9 billion, or $3.08 per share last year.
Cable operations were the shining light for the quarter,
especially as the company gears up for its pending $58.4 billion purchase by AT&T
Corp. That acquisition is expected to close by the end of the first quarter next year.
According to the company, domestic cable operations
reported pro forma revenue of $641 million, up 7.6 percent from the previous year. Also in
the quarter, revenue from high-speed Internet services and telephony increased by 200
percent to $24 million.
The company said it has increased the number of telephony
subscribers to 26,000 as of June 30 -- up from just 1,000 customers in 1998. Its
high-speed data customer rolls have swelled to 140,000 from 39,000 a year ago.
The company also introduced digital-video services in
Atlanta, Cleveland and Richmond, Va., during the quarter.
Cash flow in the domestic cable division was $248 million
during the period, up 5 percent from last year. In the six-month period, cash flow in the
cable segment was up 2.7 percent to $489 million.
In the six-month period, domestic cable revenue was up by
8.5 percent to $1.3 billion, and telephone and high-speed data increased by 155 percent to
$46 million. Basic cable subscribers rose 1.5 percent to 4.994 million, and homes passed
increased to 8.5 million from 8.4 million a year ago.
Cash flow margins continued to decline, as MediaOne
continues to invest in upgrading its plant. For the second quarter, cash flow margins were
37.3 percent, down from 39.1 percent a year ago. However, monthly broadband revenue per
subscriber was up during the period, to $44.46 from $40.84 a year ago.
Most analysts expected MediaOne to report lower margins as
it spends money on to upgrade systems, consolidate call centers and roll out new services.
And that is just what MediaOne has been doing. The company
said it is on target to have about 70 percent of its plant at 750-megahertz, two-way
capability by the end of the year.
"Our focus now is on keeping our business operating at
peak performance while we work through the [AT&T] merger process, including regulatory
filings and transfers of cable licenses," MediaOne chairman and CEO Charles Lillis
said in a prepared statement. "That focus is paying off. MediaOne continued to
deliver steady growth in revenues and new products while consolidating call centers and
implementing a new billing system."
MediaOne's 25 percent share of the Time Warner
Entertainment partnership also helped boost its quarterly returns. For the quarter,
MediaOne's share of TWE's reported revenue was up 10 percent to $781 million.
The company's share of the partnership's cash flow rose 9 percent to $393