Telecom Unit Goes Public

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Time Warner Telecom Inc., the Greenwood Village,
Colo.-based telephony spinoff of Time Warner Inc., opened its initial public offering last
Wednesday at $14 per share, raising more than $252 million.

The company's shares traded fast and furious on its
opening day (May 12), rising by as much as 68 percent to $23.50 apiece at mid-afternoon,
and finally closing at $20.75, up $6.75.

TWT initially filed for the IPO last year, but the company
withdrew it due to poor market conditions.

However, the recent stock-market frenzy apparently changed
its mind.

Competitive local-exchange carrier stocks haven't been
as popular as cable stocks in recent months, but TWT may have received a jolt from its
cable connection: Time Warner Cable is the largest operator in the country, with more than
12 million subscribers.

TWT had originally expected to price its offering at
between $10 and $11 per share, upping that to $14 after its road show gauged increased
investor demand.

Morgan Stanley Dean Witter & Co., Lehman Bros. Inc. and
Bear Stearns & Co. served as underwriters for the offering.

TWT is a CLEC, providing telephony services to business.
The company's all-fiber network operates in about 19 cities, including New York;
Charlotte, N.C.; Houston; Orlando, Fla.; Indianapolis; Milwaukee; San Diego; and Honolulu.
It plans to enter Jersey City, N.J., and Dallas later this year.

TWT sold about 18 percent of its equity to the public.
After the offering, the company had a market capitalization of around $2.06 billion.

The company is still largely held by the three partners
that created it: Time Warner (61.98 percent), Advance/Newhouse (19.17 percent) and
MediaOne Group Inc. (18.85 percent).

Once MediaOne's pending merger with AT&T Corp. is
completed, its interest in TWT will be transferred to the long-distance giant.

Although TWT loses out on tapping into the lucrative
residential market, its revenue has increased dramatically by focusing on business
customers. Revenue more than doubled in 1998 to $121.9 million, and the company has pared
down its earnings before interest, taxes, depreciation and amortization -- also known as
EBITDA, or cash flow -- losses from $39.6 million in 1997 to $22.7 million in 1998.

For the first quarter ended March 31, revenue again more
than doubled to $47.6 million, and EBITDA loss was $542,000, compared with a loss of $7.8
million in the same period last year.

TWT expects to begin generating positive EBITDA by the
second quarter of this year.

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