UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 17, 1998
MediaOne Group, Inc.
(Exact name of registrant as specified in its charter)
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A Delaware Corporation Commission File IRS Employer Identification
(State of incorporation) Number 1-8611 No. 84-0926774
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7800 East Orchard Road, Englewood, Colorado 80111
(Address of principal executive offices)
Telephone Number (303) 793-6500
(Registrant's telephone number, including area code)
Item 5. Other Events
MediaOne Group, Inc. ("MediaOne Group" or the "Company") has scheduled a
December 17, 1998 conference call with various analysts to discuss the
operations and strategy of certain business units, as well as certain details
regarding its expected performance in 1999. The following is a summary of the
key points to be discussed during the conference call.
Domestic Cable Business
o EBITDA Growth - Normalizing for the effects of the PrimeStar transaction
and completed systems swaps and sales, the Company is anticipating EBITDA
(earnings before interest, taxes, depreciation and amortization) growth of two
percent for 1998 in its domestic cable business, and apporximately five percent
in 1999. By 2000, the Company should achieve double-digit EBITDA growth.
o Revenue Growth - Normalizing for the effects of the PrimeStar transaction
and completed systems swaps and sales, the Company expects total revenue growth
(which includes video and other services such as high-speed data and
telephony) in the range of 11 to 11.5%. In 1999, we expect total revenue growth
to be around ten percent despite significantly lower rate increases.
o Subscriber Growth - We expect to end 1998 with internal subscriber growth
of just over one percent. The Company believes that its service improvement and
other initiatives will lead to subscriber growth of approximately 1.5% in 1999.
o High-Speed Data - The Company expects its domestic cable business to
close 1998 with approximately 80,000 high-speed data customers (an increase of
approximately 57,000 for the year). In 1999, it expects to add upwards of
100,000 more customers. EBITDA losses should be reduced by half in 1999. By
2000, we expect our high-speed data business to be EBITDA positive.
o Telephony - The Company expects its domestic cable business to close 1998
with approximately 10,000 telephone customers and 14,000 telephone lines.
Current run rates suggest that we can more than triple the customer base by year
end 1999. Though EBITDA losses will grow for this product in 1999, we expect
that they will decline markedly in 2000, and that this business will produce
positive EBITDA by 2001.
o New Product Losses - MediaOne Group expects the domestic cable business
to incur losses of approximately $55 million in each of 1998 and 1999 in
connection with its deployment of high-speed data and telephony services.
o Other Initiatives - The Company is working on a number of different
initiatives to improve service and add to the capabilities of our domestic cable
business, including consolidating call centers, automated dispatch, convergent
customer care and billing systems, and financial systems. In total, we expect
the EBITDA impact of these systems to amount to approximately $20 million in
1998, and approximately $55 million in each of 1999 and 2000.
o 1999 Rate Increases - The Company anticipates average rate increases for
its basic cable services to be no higher than five percent in 1999.
o Domestic Cable Summary - In 1998, MediaOne Group added about 57,000 new
MediaOne Express customers, and launched telephony in six markets while adding
10,000 new customers. In 1999, the Company will focus on improving subscriber
growth, modernizing the business and driving new product growth.
International Businesses
o The Company has narrowed its focus to a handful of high-growth ventures.
These ventures should deliver approximately $200 million in proportionate EBITDA
in 1998, and more than $400 million in proportionate EBITDA in 1999.
o We expect to extract value from these ventures when they reach their peak
level of value, and we will look to exit ventures in which we cannot obtain an
acceptable level of control.
Time Warner Entertainment
o Our investment is increasing in value, and we fully exercise our
management and control rights within the partnership.
o Within the foreseeable future, we expect to receive cash distributions
from this asset.
Safe Harbor Statement Under Private Securities Litigation Reform Act of 1995
Some of the information presented herein constitutes "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Although MediaOne Group believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors that could cause actual results to
differ from expectations include: (i) greater than anticipated competition from
new entrants into the cable and wireless communications markets; (ii) changes in
demand for MediaOne Group's products and services; (iii) regulatory changes
affecting the cable and telecommunications industries; (iv) a change in economic
conditions in the various markets served by MediaOne Group's operations,
including international markets, that could adversely affect the level of demand
for cable, wireless or other services offered by MediaOne Group; (v) greater
than anticipated competitive activity requiring new pricing for services; (vi)
higher than anticipated start-up costs associated with new business
opportunities; (vii) higher than anticipated employee levels, capital
expenditures and operating expenses (such as costs associated with the year 2000
remediation); (viii) consumer acceptance of broadband services, including
telephony and data services, and wireless services; (ix) increases in fraudulent
activity with respect to broadband and wireless services; and (x) delays in the
development of anticipated technologies or the failure of such technologies to
perform according to expectations.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MediaOne Group, Inc.
By: /s/ STEPHEN E. BRILZ
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Stephen E. Brilz
Assistant Secretary
December 17, 1998
