MEDIAONE GROUP INC, 10-K, 1999-03-30

MEDIAONE GROUP INC
10-K, 1999-03-30
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

/ / TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 1-8611
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MEDIAONE GROUP, INC.

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A DELAWARE I.R.S. EMPLOYER IDENTIFICATION
CORPORATION NO. 84-0926774

188 INVERNESS DRIVE WEST, COLORADO 80112
TELEPHONE NUMBER (303) 858-3000
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Securities registered pursuant to Section 12(b) of the Act:

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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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MediaOne Group, Inc. Common Stock New York Stock Exchange
($0.01 per share, par value) Pacific Stock Exchange
7.96% Trust Originated Preferred Securities New York Stock Exchange
(Liquidation Amount $25 per Preferred Security)
8.25% Trust Originated Preferred Securities New York Stock Exchange
(Liquidation Amount $25 per Preferred Security)
9.30% Trust Originated Preferred Securities New York Stock Exchange
(Liquidation Amount $25 per Preferred Security)
9.50% Trust Originated Preferred Securities New York Stock Exchange
(Liquidation Amount $25 per Preferred Security)
9.04% Trust Originated Preferred Securities New York Stock Exchange
(Liquidation Amount $25 per Preferred Security)
6-1/4% Exchangeable Notes due August 15, 2001 New York Stock Exchange
MediaOne Group, Inc. Series D Convertible Preferred Stock New York Stock Exchange
($1.00 per share, par value)
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Securities registered pursuant to Section 12(g) of the Act:
None

At February 26, 1999 603,632,468 shares of MediaOne Group, Inc. common stock
were outstanding.

At February 26, 1999 the aggregate market value of MediaOne Group, Inc.
voting stock held by non-affiliates was approximately $32,897,769,506.

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES _X_ NO ____

DOCUMENTS INCORPORATED BY REFERENCE.

Portions of the Registrant's definitive Proxy Statement to be issued in
connection with the 1999 Annual Meeting of Shareholders are incorporated by
reference into Parts II and III.

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

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TABLE OF CONTENTS
PART I

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ITEM PAGE
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1. Business.................................................................. 1
2. Properties................................................................ 5
3. Legal Proceedings......................................................... 5
4. Submission of Matters to a Vote of Security Holders....................... 5

PART II

5. Market for the Registrant's Common Equity and Related Stockholder
Matters................................................................. 6
6. Selected Financial Data................................................... 6
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 6
7A. Quantitative and Qualitative Disclosure About Market Risk................. 6
8. Consolidated Financial Statements and Supplementary Data.................. 6
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.............................................................. 7

PART III

10. Directors and Executive Officers of the Registrant........................ 7
11. Executive Compensation.................................................... 7
12. Security Ownership of Certain Beneficial Owners and Management............ 7
13. Certain Relationships and Related Transactions............................ 7

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......... 7
Independent Accountants' Report........................................... 7
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PART I

ITEM 1. BUSINESS

GENERAL

MediaOne Group, Inc. ("MediaOne Group" or the "Company") is incorporated
under the laws of the State of Delaware and has its principal executive offices
at 188 Inverness Drive West, Englewood, Colorado 80112, telephone number (303)
858-3000. MediaOne Group (NYSE: UMG) is one of the world's largest broadband
communications companies, bringing the power of broadband and the Internet to
more than seven million customers in the United States, Europe and Asia. The
Company also has interests in some of the world's fastest-growing wireless
communications businesses, serving more than four million customers outside the
United States. For 1998, the businesses now part of MediaOne Group produced $7.1
billion in proportionate revenue. (Financial information concerning MediaOne
Group's operations is set forth in the Consolidated Financial Statements and
Notes thereto, which begin on page 46.) At December 31, 1998, MediaOne Group and
its subsidiaries employed a total of 16,847 people.

Prior to June 12, 1998, MediaOne Group was known as "U S WEST, Inc." On June
12, 1998, U S WEST, Inc. (the "Old U S WEST") separated its businesses into two
independent public companies (the "Separation"). Until the Separation, Old U S
WEST conducted its businesses through two groups: U S WEST Media Group and U S
WEST Communications Group. Upon the Separation, Old U S WEST was renamed
"MediaOne Group, Inc." and retained the multimedia businesses of U S WEST Media
Group, except for U S WEST Dex, Inc., the domestic directory business, which
became aligned with U S WEST Communications Group. The telecommunications
businesses of U S WEST Communications Group, along with the domestic directory
business of U S WEST Dex, Inc., became an independent public company and
retained the "U S WEST, Inc." name.

MediaOne Group bases its strategy on the belief that advanced networks will
continue to grow in importance to how we live, work and play. Over time, this
global phenomenon will result in networks being increasingly critical and
delivering ever-increasing value to consumers and, consequently, to our
shareholders.

RECENT DEVELOPMENT

On March 22, 1999, MediaOne Group announced that it had entered into a
merger agreement with Comcast Corporation ("Comcast") whereby MediaOne Group
would be merged into Comcast. The merger agreement calls for MediaOne Group
common shareholders to receive 1.1 shares of Comcast Class A Special Common
Stock for each share of MediaOne Group common stock held. The transaction will
be tax-free to MediaOne Group shareholders. Subject to the approval of both
shareholder groups and various federal, state and local regulatory bodies, the
merger could be completed as early as year-end 1999. While the merger agreement
prohibits MediaOne Group from soliciting competing acquisition proposals,
MediaOne Group may, subject to compliance with the terms of the merger agreement
and payment of a $1.5 billion fee to Comcast, accept a superior proposal that is
submitted within 45 days of the date of the merger agreement.

OPERATIONS

MediaOne Group is the third largest cable television system operator in the
United States. MediaOne Group has operations and investments in two principal
areas: (i) domestic broadband communications, and (ii) international broadband
and wireless communications. Among its investments, MediaOne Group holds a
25.51% interest in Time Warner Entertainment Company, L.P. ("TWE"), a provider
of cable programming, filmed entertainment and broadband communications services
that is the second largest cable television system operator in the United
States.

DOMESTIC BROADBAND COMMUNICATIONS--MEDIAONE NETWORKS. As of December 31,
1998, MediaOne Group's domestic cable television systems passed approximately
8.5 million homes and provided service to

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approximately 5.0 million basic cable subscribers. MediaOne Group's systems
include large clusters in Atlanta, Massachusetts, California, Florida, Detroit
and Minneapolis/St. Paul. As of December 31, 1998, approximately 97% of MediaOne
Group's total basic subscribers were located in clusters with a population
greater than 100,000 (after giving effect to announced swaps). MediaOne Group
believes that its operating scale in key markets generates significant benefits,
including operating efficiencies, and enhances its ability to develop and deploy
new broadband technologies and services.

MediaOne Group's domestic cable services are marketed under the "MediaOne"
brand and are operated by its wholly owned subsidiary, MediaOne of Delaware,
Inc. ("MediaOne"). MediaOne Group's cable systems offer customers various levels
(or "tiers") of cable programming services consisting of broadcast television
signals available off-the-air in any locality, televisions signals from
so-called "super stations" originating in distant cities (such as WGN), various
satellite-delivered non-broadcast channels (such as CNN, MTV, USA Network, ESPN,
the Discovery Channel and Nickelodeon), displays of information featuring news,
weather, stock and financial market reports and programming originated locally
by the systems (such as public, governmental and educational access channels).
MediaOne Group's systems also provide premium programming service to their
customers for an extra monthly charge. These premium programming services
include HBO, Cinemax, Showtime, The Movie Channel, Encore and regional sports
networks. Customers generally pay initial connection charges and fixed monthly
fees for a tier of programming services and additional fixed monthly fees for
premium programming services. MediaOne Group also offers pay-per-view
programming of movies and special events for an additional per-program charge.

MediaOne Group's systems have channel capacity and addressability that are
among the highest in the cable industry. MediaOne Group's systems are located
primarily in suburban communities adjacent to major metropolitan markets and in
mid-sized cities that generally are densely populated and geographically
diverse. MediaOne Group believes that the geographic diversity of its system
clusters reduces its exposure to economic, competitive or regulatory factors of
any particular region.

MediaOne Group is upgrading its cable systems to create broadband hybrid
fiber-coax ("HFC") networks. These HFC networks will provide increased channel
capacity for the delivery of additional cable programming and facilitate the
delivery of additional services, such as telephony services, enhanced video
services, Internet access services and high-speed data services. MediaOne Group
is selectively upgrading its systems and expects that it will have approximately
70% of its systems upgraded to 750 MHz by the end of 1999. MediaOne Group has
already begun to offer additional services over upgraded HFC networks in certain
markets. On June 15, 1998, MediaOne Group entered into a joint venture with Time
Warner, Inc. ("TWX"), TWE and Time Warner Entertainment-Advance/Newhouse
Partnership ("TWE/AN") to provide high speed data ("HSD") services. The parties
to the joint venture contributed certain of their respective HSD assets to the
joint venture in exchange for common equity interests. In addition, Microsoft
Corporation and Compaq Computer Corporation each contributed approximately $212
million for respective 10% preferred equity interests in the joint venture,
which are convertible into common equity interests. Assuming the conversion of
the preferred shares and taking into account MediaOne Group's ownership in TWE,
MediaOne Group would hold a proportionate diluted common equity interest in the
joint venture of 34.6%. MediaOne Group will provide the HSD services under the
"Road Runner" brand name.

DOMESTIC BROADBAND COMMUNICATIONS--TIME WARNER CABLE. MediaOne Group owns a
25.51% priority capital and residual equity interest in TWE. The remaining
interests in TWE are owned by TWX. TWE is engaged in the cable programming,
filmed entertainment and broadband communications businesses. TWE, through Time
Warner Cable, its cable division, is the second-largest cable television system
operator in the United States. Time Warner Cable owns or manages cable systems
in 34 states. These systems include 33 clusters of more than 100,000
subscribers, including Time Warner Cable of New York City, the largest cluster
in the United States. More than 62% of Time Warner Cable's subscribers are
located in Florida, New York, North Carolina, Ohio and Texas. As of December 31,
1998, Time Warner Cable owned

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cable television systems that passed approximately 17.5 million homes and
provided service to approximately 10.8 million basic cable subscribers. Of these
systems, systems passing approximately 10.1 million homes and providing service
to approximately 6.3 million subscribers are owned by Time Warner
Entertainment-Advance/Newhouse Partnership ("TWE-A/N"), a partnership in which
TWE owns a 64.8% interest, the Advance/Newhouse Partnership ("A/N") owns a 33.3%
interest and TWX owns a 1.9% interest. In addition, Time Warner Cable manages
cable television systems owned by TWX which, as of December 31, 1998, passed
approximately 3.1 million homes and provided service to approximately 1.8
million cable television subscribers. Time Warner Cable's cable services are
marketed under the "Time Warner Cable" brand. Time Warner Cable offers cable
programming services over its networks similar to those offered by MediaOne
Group under the MediaOne brand. Like MediaOne Group, Time Warner Cable is
upgrading its cable systems to provide increased channel capacity and to
facilitate the delivery of additional services.

INTERNATIONAL BROADBAND COMMUNICATIONS. MediaOne Group owns interests in
various providers of broadband communications services in international markets
in continental Europe, the United Kingdom and Asia. As of December 31, 1998,
these interests represented approximately 2.6 million proportionate homes passed
and 993,000 proportionate subscribers.

Among its international broadband interests, MediaOne Group holds a 29.9%
interest in Telewest Communications plc ("Telewest"), the largest provider of
combined cable and telecommunications services in the United Kingdom. Telewest
is constructing broadband networks capable of providing a broad range of video,
telephony and data services. As of December 31, 1998, Telewest had approximately
999,000 cable subscribers and 1,565,000 telephone lines. MediaOne Group also
holds interests in other providers of cable and broadband communications
services in international markets, including a 97.1% interest in Cable Plus
a.s., a provider of cable and telephony services in the Czech Republic; a 50%
interest in A2000 (KTA), a provider of cable and telephony services in the
Netherlands; a 25% interest in Telenet, a provider of cable and telephony
services over an HFC network in portions of Belgium; a 25% interest in Singapore
Cablevision Pte Ltd, a joint venture that is constructing a broadband network in
Singapore; and a 25% interest in Titus Communications Corp. ("Titus") and a 19%
interest in Chofu Cable Television ("Chofu"), each of which is constructing
cable television systems in Japan. TWX also holds a 25% interest in Titus and a
19% interest in Chofu.

INTERNATIONAL WIRELESS COMMUNICATIONS. MediaOne Group owns interests in
various providers of wireless communications services in international markets
in continental Europe, the United Kingdom and Asia. As of December 31, 1998,
these interests represented 72.8 million proportionate potential customers and
approximately 1,734,000 proportionate customers.

Among its international wireless interests, MediaOne owns a 50% interest in
Mercury Personal Communications ("One 2 One"), which provides personal
communications services ("PCS") in the United Kingdom under the brand "One 2
One." The remaining 50% of One 2 One is owned by Cable & Wireless plc. One 2 One
was the first PCS service in the world to commence operations in 1993. As of
December 31, 1998, One 2 One's networks served approximately 1,921,000 customers
and provided coverage to approximately 96% of Great Britain's population.
MediaOne Group also holds interests in various other providers of wireless
communications services in international markets, including a 49% interest in
Westel 900 and a 49% interest in Westel Radiotelefon, providers of cellular
service in Hungary; 24.5% interests in Eurotel Praha and Eurotel Bratislava,
providers of wireless services in portions of the Czech and Slovak Republics; a
22.5% interest in Polska Telefonia Cyfrowa, a provider of Global Systems for
Mobile Communications ("GSM") cellular services in Poland; a 49% interest in BPL
Cellular Telecommunications, a provider of GSM cellular services in certain
regions of India; and a 66.5% interest in the Russian Telecommunications
Development Corp., a provider of cellular services in certain cities in Russia.

REGULATION. The products and services of MediaOne Group are subject to
varying degrees of regulation. Under the Telecommunications Act of 1996 (the
"Telecommunications Act"), it is anticipated

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that the regulation of all but basic tier cable and equipment rates will be
discontinued effective March 31, 1999. However, as described below, the Company
must seek the permission of the Federal Communications Commission ("FCC") to end
rate regulation for cable systems covered by MediaOne's social contract. The
Telecommunications Act also eliminated certain cross-ownership restrictions
among cable operations, broadcasters and multipoint multichannel distribution
services ("MMDS") operations and removed barriers to competition with local
exchange carriers ("LECs").

The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") provided for the regulation of rates for certain cable
television services and for equipment and installation charges. The FCC was
charged with setting the standards for rate regulation, but also approved
"social contracts" as an alternative form of regulation. MediaOne's Social
Contract was the first approved by the FCC. The Social Contract is a six-year
agreement covering most of MediaOne's franchises and settled all of MediaOne's
outstanding rate complaints. As part of the Social Contract, MediaOne agreed to,
among other things, invest at least $1.7 billion in domestic system rebuilds and
upgrades through the year 2000 to expand channel capacity and improve system
reliability and picture quality. As of December 31, 1998, the investment
commitment had been met; however, the Company must still upgrade all systems
covered by the Social Contract to a minimum of 550MHz, with at least half being
upgraded to 750 MHz. The Social Contract also provides that, if the laws and
regulations applicable to services offered in any MediaOne franchise change in a
manner that would have a material favorable financial impact on MediaOne, the
Company may petition the FCC to terminate the Social Contract. The sunset of
rate regulation for the upper tiers of cable service represents such a change
and the FCC may not unreasonably refuse to terminate the rate regulation
provision of the Social Contract.

Cable television systems are also subject to local regulation, typically
imposed through the franchising process. Local officials may be involved in the
initial franchise selection, franchise service area, construction standards,
safety, rate regulation of the lowest tier of service and equipment and
installation rates, customer service standards, billing practices,
community-related programming and services, franchise renewal and imposition of
franchise fees.

MediaOne Group is also subject to various regulations in the foreign
countries in which it has operations. In the United Kingdom, the licensing,
construction, operation, sale and acquisition of cable and wireline and wireless
communications systems are regulated by various government entities, including
the Department of Trade and Industry and the Department of National Heritage.

In June, 1998, the FCC issued formal rules providing for the retail sale of
set-top television boxes which integrate security and non-security functions. On
January 1, 2005, cable companies will no longer be permitted to sell or lease
new integrated boxes to their subscribers. In addition, cable companies must
provide subscribers with related security modules that plug into set-top boxes
that are purchased from consumer electronics retailers by July 1, 2000. In
February 1999, MediaOne Group partnered with various manufacturers of digital
set-top boxes in order to provide an open conditional access system, which would
be compliant with domestic OpenCable-TM- specifications.

COMPETITION. MediaOne Group's cable television systems generally compete
for viewer attention and advertising dollars with other providers of video
programming, including direct broadcast satellite ("DBS") systems, MMDS systems,
local multipoint distribution services systems, satellite master antenna
television ("SMATV") systems and other cable companies providing services in
areas where MediaOne Group operates. In addition, certain LECs, including RBOCs,
are beginning to offer video programming in competition with MediaOne Group's
cable services. In the past, federal cross-ownership restrictions have limited
entry by LECs into the cable television business. The Telecommunications Act has
eliminated many of these barriers, thereby enhancing the ability of LECs to
provide video programming in competition with MediaOne Group. The extent of such
competition in any franchise area is dependent, in part, upon the quality,
variety and price of the programming provided by these services. Many of these
competitive services are generally not subject to the same local government
regulation that affects cable television. The cable television services offered
by MediaOne Group also face competition for viewers and advertising

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from other communications and entertainment media, including off-air television
broadcasting services, movie theaters, video tape rentals and live sporting
events. The competition faced by MediaOne Group's cable systems may increase in
the future with the development and growth of new technologies.

As MediaOne Group continues to offer additional services over its HFC
networks, MediaOne Group will face additional competition. The high-speed data
and telephony services offered by MediaOne Group face competition from other
providers, including regional bell operating companies, LECs, inter-exchange
carriers ("IXCs"), Internet service providers and other providers of local
exchange and on-line services. The degree of competition will be dependent upon
the state and federal regulations concerning entry, interconnection requirements
and the degree of unbundling of the LECs' networks. Competition will be based
upon product, service quality, breadth of services offered and, to a lesser
extent, on price.

MediaOne Group's international broadband and wireless communications
businesses also face competition in their respective markets. Telewest's cable
television services compete with broadcast television stations, DBS services,
SMATV systems and certain narrowband operators in the United Kingdom. Telewest's
communications services compete with domestic telephone companies in the United
Kingdom, such as British Telecommunications plc. One 2 One competes with three
cellular operators in the United Kingdom. Competition is based upon price,
geographic coverage and quality of the services offered.

ITEM 2. PROPERTIES.

MediaOne Group's principal physical assets consist of cable television
operating plant and equipment, including signal receiving, encoding and decoding
devices, headends and distribution systems and customer house drop equipment for
each of its cable television systems. The signal receiving apparatus typically
includes a tower, antenna, ancillary electronic equipment and earth stations for
reception of satellite signals. Headends, consisting of related electronic
equipment necessary for the reception, amplification and modulation of signals,
are located near the receiving devices. The physical components of cable
television systems require maintenance and periodic upgrading to keep pace with
technological changes.

MediaOne Group owns or leases parcels of real property for signal reception
sites (antenna towers and headends), microwave facilities and business offices
in each of its market areas and owns most of its service vehicles. MediaOne
Group believes that its properties, both owned and leased and taken as a whole,
are in good operating condition and are suitable and adequate for MediaOne
group's business operations.

ITEM 3. LEGAL PROCEEDINGS.

MediaOne Group, Inc. and its subsidiaries are subject to claims and
proceedings arising in the ordinary course of business. While complete assurance
cannot be given as to the outcome of any contingent liabilities, in the opinion
of MediaOne Group, any financial impact to which MediaOne Group and its
subsidiaries are subject is not expected to be material in amount to MediaOne
Group's operating results or its financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

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EXECUTIVE OFFICERS OF MEDIAONE GROUP, INC.

Pursuant to General Instructions G(3), the following information is included
as an additional item in Part I:

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NAME POSITION AGE PRESENT POSITION
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A. Gary Ames Executive Vice President 54 1998(1)

Roger A. Christensen Executive Vice President and Chief Administrative Officer 50 1998

Frank M. Eichler Executive Vice President--Law & Public Policy,
General Counsel and Secretary 42 1998

Douglas D. Holmes Executive Vice President--Strategy and Business Development 38 1998

Charles M. Lillis President, Chief Executive Officer and Chairman of the Board 57 1998(2)

Janice C. Peters Executive Vice President 47 1998(3)

Richard A. Post Executive Vice President and Chief Financial Officer 40 1998
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(1) Mr. Ames is also President and Chief Executive Officer of MediaOne
International, Inc.

(2) In connection with the Separation, Mr. Lillis became the President, Chief
Executive Officer and Chairman of MediaOne Group, Inc. Mr. Lillis was
previously President and Chief Executive Officer of the U S WEST Media
Group.

(3) Ms. Peters is also President and Chief Executive Officer of MediaOne.

Executive Officers are not elected for a fixed term of office, but serve at
the discretion of the Board of Directors.

With the exception of Ms. Peters, who joined One 2 One in 1996, each of the
above executive officers has held a managerial position with Old U S WEST or an
affiliate of Old U S WEST since at least 1988.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The information required by this item is included in Note 25, Quarterly
Financial Data, on page 99. The US markets for trading in MediaOne Group common
stock are the New York Stock Exchange and the Pacific Stock Exchange. As of
February 26, 1999, MediaOne Group common stock was held by approximately 543,084
registered shareholders.

ITEM 6. SELECTED FINANCIAL DATA.

Reference is made to the information set forth on pages 11 through 13.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Reference is made to the information set forth on pages 14 through 43.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

Reference is made to the information set forth on pages 31 and 33.

ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Reference is made to the information set forth on pages 46 through 99.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this item with respect to executive officers is
set forth in Part I, page 6, under the caption "Executive Officers of MediaOne
Group, Inc."

The information required by this item with respect to Directors is included
in the MediaOne Group definitive Proxy Statement ("Proxy Statement") under
"Election of Directors" and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this item is included in the Proxy Statement
under "Election of Directors" and "Executive Compensation" and is incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this item is included in the Proxy Statement
under "Stock Ownership" and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Not applicable.

PART IV

ITEM 14. FINANCIAL STATEMENT SCHEDULES, REPORTS ON FORM 8-K AND EXHIBITS.

(a) Documents filed as part of this report:

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(1) Report of Independent Accountants......................................... 44

(2) Consolidated Financial Statements:
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996..................................................... 46 through 47
Consolidated Balance Sheets as of December 31, 1998 and 1997.............. 48
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996..................................................... 49
Consolidated Statements of Shareowners' Equity for the years ended
December 31, 1998, 1997 and 1996........................................ 50
Notes to Consolidated Financial Statements................................ 51 through 99

(3) Unaudited Pro Forma Condensed Combined Statement of Operations and Notes
for the year ended December 31, 1998.................................... 100 through 102

(4) Consolidated Financial Statement Schedule II--Valuation and Qualifying
Accounts................................................................ S-1
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Financial statement schedules other than those listed above have been omitted
because the required information is contained in the financial statements and
notes thereto, or because such schedules are not required or applicable.

(b) Reports on Form 8-K:

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MediaOne Group filed the following reports on Form 8-K during the fourth
quarter of 1998:

(i) Current Report dated October 28, 1998 and filed on November 3, 1998,
providing notification of a filing with the Securities & Exchange
Commission by MediaOne Finance Trust III (the "Trust"), a wholly-owned
subsidiary of MediaOne Group, of $500,000,000 aggregate liquidation
amount of its 9.04% Trust Originated Preferred Securities at a public
offering price of $25 per preferred security. Proceeds from the sale
were invested into $500,000,000 aggregate principal amount of 9.04%
Subordinated Deferred Interest Notes due 2038 of MediaOne Group Funding,
Inc., the payment of which are guaranteed by MediaOne Group.

(ii) Current Report dated November 3, 1998 and filed on November 4, 1998,
providing notification of a Press Release by MediaOne Group announcing
its third quarter earnings results.

(iii) Current Report dated December 17, 1998 and filed December 17, 1998,
providing notification of a conference call scheduled for December 17,
1998 between MediaOne Group and various analysts to discuss the
operations and strategy of certain of MediaOne Group's business units
as well as certain details regarding its expected performance in 1999.

Exhibits identified in parentheses below are on file with the Securities and
Exchange Commission ("SEC") and are incorporated herein by reference. All other
exhibits are provided as part of this electronic submission.

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EXHIBIT
NUMBER
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(2-A) -- Form of Separation Agreement between MediaOne Group, Inc. and U S WEST, Inc. (Exhibit 2-A to Form
10-K, for the fiscal year ended December 31, 1997, File No. 1-8611).
(2-B) -- Form of Employee Matters Agreement between MediaOne Group, Inc. and U S WEST, Inc. (Exhibit 2-B to
Form 10-K, for the fiscal year ended December 31, 1997, File No. 1-8611).
(2-C) -- Form of Tax Sharing Agreement between MediaOne Group, Inc. and U S WEST, Inc. (Exhibit 2-C to Form
10-K, for the fiscal year ended December 31, 1997, File No. 1-8611).
(3-A) -- Form of Restated Certificate of Incorporation of MediaOne Group, Inc. (Annex A-2 to definitive proxy
statement on Schedule 14A dated April 20, 1998, File No. 1-8611).
(3-B) -- Form of Amended and Restated Bylaws of MediaOne Group, Inc. (Exhibit 3(ii) to Current Report on Form
8-K dated June 24, 1998, File No. 1-8611).
(4-A) -- Form of Amended and Restated Rights Agreement between MediaOne Group, Inc. and its Rights Agent
(Exhibit 1 to Form 8-A filed on February 11, 1999 and Exhibit 4 to Current Report filed on Form 8-K
dated February 9, 1999 and filed on February 11, 1999, File No. 1-8611).
(4-B) -- No instrument which defines the rights of holders of long and intermediate term debt of MediaOne
Group, Inc. and all of its subsidiaries is filed herewith pursuant to Regulation S-K, Item
601(b)(4)(iii)(A). Pursuant to this regulation, the Registrant hereby agrees to furnish a copy of any
such instrument to the SEC upon request.
10-A -- MediaOne Group, Inc. Executive Short-Term Incentive Plan.
10-B -- Amended MediaOne Group 1994 Stock Plan.
10-C -- MediaOne Group Executive Life Insurance Plan.
10-D -- MediaOne Group Executive Disability Plan.
10-E -- MediaOne Group Non-Qualified Pension Plan.
10-F -- MediaOne Group Mid-Career Pension Plan.
10-G -- MediaOne Group Deferred Compensation Plan.
10-H -- MediaOne Group Executive Financial Counseling Plan.
</TABLE>

8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ---------
<C> <C> <S>
10-I -- Form of Executive Non-Qualified Stock Option Agreement.
10-J -- Form of LTIP Option Agreement.
10-K -- Form of Executive Restricted Stock Agreement.
10-L -- Form of Executive Retention Agreement (Restricted Stock Only).
10-M -- Form of Executive Retention Agreement (Restricted Stock and Options).
(10-N) -- Admission Agreement dated as of May 16, 1993 between Time Warner Entertainment Company, L.P. and U S
WEST, Inc. (Exhibit 10 to Current Report on Form 8-K dated May 24, 1993 (File No. 1-8611).
(10-O) -- Form of Executive Change of Control Agreement (Exhibit 10g to Form 10-Q for fiscal quarter ended June
30, 1998, File No. 1-8611).
(10-P) -- Form of Change of Control Agreement for Chief Executive Officer (Exhibit 10e to Form 10-Q for fiscal
quarter ended June 30, 1998, File No. 1-8611).
(10-Q) -- Form of Business Unit Change of Control Agreement (Exhibit 10f to Form 10-Q for fiscal quarter ended
June 30, 1998, File No. 1-8611).
(10-R) -- Form of Executive Severance Agreement (Exhibit 10ab to Form 10-K for fiscal year ended December 31,
1995, File No. 1-8611).
12 -- Computation of Ratio of Earnings to Fixed Charges of MediaOne Group, Inc.
21 -- Subsidiaries of MediaOne Group, Inc.
23 -- Consent of Independent Accountants.
24 -- Powers of Attorney.
27 -- Financial Data Schedule.
99 -- Annual Report on Form 11-K for the MediaOne Savings Plan/ESOP for the year ended December 31, 1998, to
be filed by amendment.
</TABLE>

9
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Englewood, State of Colorado, on March 30, 1999.

<TABLE>
<S> <C> <C>
MediaOne Group, Inc.

By: /s/ RICHARD A. POST
-----------------------------------------
Richard A. Post
EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
</TABLE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<S> <C>
PRINCIPAL EXECUTIVE OFFICER

/s/ Charles M. Lillis* Chairman of the Board,
President and Chief
Executive Officer

PRINCIPAL FINANCIAL OFFICER:

/s/ Richard A. Post Executive Vice President and
Chief Financial Officer

DIRECTORS:

/s/ Kathleen A. Cote*

/s/ Robert L. Crandall*

/s/ Grant A. Dove*

/s/ Allan D. Gilmour*

/s/ Pierson M. Grieve*

/s/ Charles M. Lillis*

/s/ Charles P. Russ, III*

/s/ Louis A. Simpson*

/s/ John "Jack" Slevin*

/s/ Daniel W. Yohannes*
</TABLE>

*By: /s/ RICHARD A. POST
-------------------------
Richard A. Post
(FOR HIMSELF AND AS
ATTORNEY-IN-FACT)

Dated March 30, 1999

10
<PAGE>
MEDIAONE GROUP, INC.
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DOLLARS IN MILLIONS (EXCEPT PER SHARE AMOUNTS)
FINANCIAL DATA:(1)
Sales and other revenues(2)............................ $ 2,882 $ 3,847 $ 1,837 $ 1,330 $ 925
Income (loss) from continuing operations(3)............ 1,430 (827) (357) (102) 23
Income from discontinued operations(1)................. 25,208 1,524 1,535 1,423 1,403
Net income(4).......................................... 26,305 697 1,178 1,317 1,426

Total assets........................................... $ 28,192 $ 26,783 $ 27,727 $ 11,847 $ 10,331
Total debt(5).......................................... 5,422 8,963 8,806 2,073 1,791
Preferred stock subject to mandatory redemption,
Preferred Securities and other(6).................... 2,260 1,180 1,131 651 51

Shareowners' equity.................................... 12,789 11,324 11,549 7,948 7,382

OTHER DATA:
EBITDA(7).............................................. $ 943 $ 1,287 $ 430 $ 294 $ 115
Domestic statistics (in thousands):
Cable subscribers.................................... 4,965 4,910 4,866 490 459
Homes passed......................................... 8,512 8,373 8,294 848 814
High speed data subscribers.......................... 84 21 -- -- --
Residential telephone lines.......................... 13 -- -- -- --
Percentage of debt to total capital(5, 6).............. 26.5% 41.8% 41.0% 19.4% 19.4%
Capital expenditures(5)................................ $ 1,726 $ 1,502 $ 643 $ 370 $ 308
Employees.............................................. 16,847 16,351 17,809 6,495 6,259

PROPORTIONATE OTHER DATA:(8)
Proportionate EBITDA(7, 8)............................. $ 1,878 $ 1,620 $ 659 $ 497 $ 328
Domestic statistics (in thousands):
Cable subscribers.................................... 7,719 7,524 7,562 2,908 2,372
Homes passed......................................... 12,964 12,313 12,191 4,551 3,952
High speed data subscribers.......................... 110 28 -- -- --
Residential telephone lines.......................... 13 -- -- -- --
International statistics (in thousands):
Cable subscribers.................................... 993 899 1,151 617 226
Homes passed......................................... 2,581 2,030 2,450 1,172 576
Telephone lines...................................... 487 403 303 141 69
Wireless customers................................... 1,734 1,018 509 308 169
POP's................................................ 72,754 76,927 77,320 44,300 38,300

MEDIAONE GROUP STOCK INFORMATION:(1, 3, 9)
Basic earnings (loss) per common share from:
Continuing operations................................ $ 2.18 $ (1.45) $ (0.74) $ (0.22)
Discontinued operations.............................. 40.51 0.57 0.58 0.52

Diluted earnings (loss) per common share from:
Continuing operations................................ 2.10 (1.45) (0.74) (0.22)
Discontinued operations.............................. 37.70 0.57 0.58 0.52

Average common shares outstanding (thousands):
Basic common shares.................................. 607,648 606,749 491,924 470,549
Diluted common shares................................ 652,955 606,749 491,924 470,549
Number of common shareowners of record................. 551,991 648,077 705,341 770,346
</TABLE>

11
<PAGE>
- ------------------------

(1) On June 12, 1998, U S WEST, Inc. ("Old U S WEST") separated its businesses
into two independent public companies (the "Separation"). Prior to the
Separation, Old U S WEST conducted its businesses through two groups: U S
WEST Media Group ("Media Group") and U S WEST Communications Group
("Communications Group"). Upon Separation, Old U S WEST was renamed MediaOne
Group, Inc. ("MediaOne Group" or the "Company") and retained the businesses
of Media Group, except for U S WEST Dex, Inc. ("Dex"), the domestic
directory business. The telecommunications businesses of Communications
Group became an independent public company and retained the "U S WEST, Inc."
name ("New U S WEST"). In addition, Dex was aligned with New U S WEST.
MediaOne Group has accounted for the distribution to shareowners of New U S
WEST as a discontinuance of the businesses comprising New U S WEST. 1998
income from discontinued operations includes a gain on Separation of $24,461
($40.25 per share of MediaOne Group Stock). See Note 24--Discontinued
Operations--to the Consolidated Financial Statements.

(2) 1998, 1997 and 1996 sales and other revenues include $2,191, $2,070 and
$252, respectively, related to Continental Cablevision, Inc. ("Continental")
which was acquired by MediaOne Group on November 15, 1996 (the "Continental
Acquisition"). In addition, 1998, 1997, 1996, 1995 and 1994 sales and other
revenues include $361, $1,428, $1,183, $941 and $781, respectively, related
to the domestic wireless operations which were sold on April 6, 1998.

(3) 1998 income from continuing operations includes a net gain of $2,257 ($3.71
per share of MediaOne Group Stock) on the sale of the domestic wireless
businesses, net gains of $44 ($0.08 per share of MediaOne Group Stock) on
the sales of various domestic investments, net income of $20 ($0.04 per
share of MediaOne Group Stock) related to the domestic wireless businesses,
net loss from operations of $384 ($0.63 per share of MediaOne Group Stock)
related to Continental, and a net loss of $100 ($0.16 per share of MediaOne
Group Stock) related to the PrimeStar investment. 1997 income from
continuing operations includes net gains of $249 ($0.41 per share of
MediaOne Group Stock) on the sales of various domestic and international
investments, net income of $83 ($0.13 per share of MediaOne Group Stock)
related to the domestic wireless businesses and net loss from operations of
$356 ($0.59 per share of MediaOne Group Stock) related to Continental. 1996
income from continuing operations includes net income of $96 ($0.19 per
share of MediaOne Group Stock) related to the domestic wireless businesses,
net loss from operations of $71 ($0.15 per share of MediaOne Group Stock)
related to Continental and a charge of $19 ($0.04 per share of MediaOne
Group Stock) related to the sale of MediaOne Group's cable television
interests in Norway, Sweden and Hungary. 1995 income from continuing
operations includes a gain of $95 ($0.20 per share of MediaOne Group Stock)
from the merger of Telewest Communications plc ("Telewest") with SBC
CableComms (UK), net income of $58 ($0.12 per share of MediaOne Group Stock)
related to the domestic wireless businesses and costs of $9 ($0.02 per share
of MediaOne Group Stock) associated with the Recapitalization Plan discussed
in footnote 9 below. 1994 income from continuing operations includes a gain
of $105 ($0.23 per share) on the partial sale of MediaOne Group's joint
venture interest in Telewest, a gain of $41 ($0.09 per share) on the sale of
MediaOne Group's paging operations and net income of $33 ($0.07 per share)
related to the domestic wireless businesses.

(4) 1998 net income was reduced by an extraordinary item of $333 ($0.55 per
share of MediaOne Group Stock) for the early extinguishment of debt in
conjunction with the Separation. 1995 net income was reduced by an
extraordinary item of $4 ($0.01 per share of MediaOne Group Stock) for the
early extinguishment of debt.

(5) Debt at December 31, 1998, 1997 and 1996 includes debt related to the
Continental Acquisition. Debt and the percentage of debt to total capital
for years prior to 1998 exclude the capital assets segment which had been
discontinued and held for sale, and the discontinued operations of New U S
WEST which were distributed to shareowners effective June 12, 1998.
Percentage of debt to total capital includes Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding

12
<PAGE>
solely Company-guaranteed debentures ("Preferred Securities"), preferred
stock subject to mandatory redemption and the minority interest in Centaur
Funding Corporation ("Centaur"), as a component of total capital. Including
Preferred Securities, preferred stock subject to mandatory redemption, the
minority interest in Centaur and debt related to the capital assets segment
as components of debt, MediaOne Group's percentage of debt to total capital
would have been 37.5%, 48.1%, 47.4%, 30.7% and 29.7% at December 31, 1998,
1997, 1996, 1995 and 1994, respectively. Capital expenditures exclude the
capital assets segment and the discontinued operations of New U S WEST.

(6) Includes Preferred Securities of $1,061 at December 31, 1998, and $1,080 at
December 31, 1997 and 1996, and $600 at December 31, 1995; preferred stock
subject to mandatory redemption of $100 at December 31, 1998 and 1997, and
$51 at December 31, 1996, 1995 and 1994; and minority interest in Centaur of
$1,099 at December 31, 1998.

(7) MediaOne Group considers earnings before interest, taxes, depreciation,
amortization and other ("EBITDA") an important indicator of the operational
strength and performance of its businesses. EBITDA, however, should not be
considered an alternative to operating or net income as an indicator of the
performance of MediaOne Group's businesses, or as an alternative to cash
flows from operating activities as a measure of liquidity, in each case
determined in accordance with generally accepted accounting principles
("GAAP").

(8) Proportionate results represent the relative weight of the Company's
ownership in each of its respective domestic and international equity
ventures, combined with its consolidated results. Proportionate information
is not intended to replace financial and operating data prepared in
accordance with GAAP since proportionate results depart materially from
GAAP. However, MediaOne Group believes that proportionate financial and
operating data facilitate the understanding and assessment of its results.
Proportionate EBITDA excludes domestic wireless EBITDA of $114, $398, $307,
$226 and $161 for 1998, 1997, 1996, 1995 and 1994, respectively.

(9) Effective with the Separation on June 12, 1998, each outstanding common
share of Media Group stock remains outstanding and represents one share of
MediaOne Group common stock ("MediaOne Group Stock"). In addition, all
shares of Communications Group stock were canceled. See Note 17-- Earnings
Per Share--to the Consolidated Financial Statements--for a discussion of
Communications Group stock earnings per share. The average common shares of
MediaOne Group Stock outstanding for the year ended December 31, 1996
include 150,615,000 shares issued in connection with the Continental
Acquisition. Effective November 1, 1995, each share of common stock of Old U
S WEST was converted into one share each of Communications Group stock and
Media Group stock (the "Recapitalization Plan"). Earnings per common share
and dividends per common share for 1995 have been presented on a pro forma
basis to reflect the two classes of stock as if they had been outstanding
since January 1, 1995.

13
<PAGE>
MEDIAONE GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

Some of the information presented in or in connection with this report
constitutes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company 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 the Company'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 the Company, (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 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, or (x) delays in the development of anticipated technologies, or the
failure of such technologies to perform according to expectations.

On March 22, 1999, MediaOne Group announced that it had entered into a
merger agreement with Comcast Corporation ("Comcast") whereby MediaOne Group
would be merged into Comcast. The merger agreement calls for MediaOne Group
common shareowners to receive 1.1 shares of Comcast Class A Special Common Stock
for each share of MediaOne Group common stock held. The transaction will be
tax-free to MediaOne Group shareowners. Subject to the approval of both
shareowner groups, and various federal, state and local regulatory bodies, the
merger could be completed as early as year-end 1999. While the merger agreement
prohibits MediaOne Group from soliciting competing acquisition proposals,
MediaOne Group may, subject to compliance with the terms of the merger agreement
and payment of a $1.5 billion fee to Comcast, accept a superior proposal that is
submitted within 45 days of the date of the merger agreement.

THE SEPARATION

Prior to June 12, 1998, MediaOne Group, Inc. ("MediaOne Group" or the
"Company") was known as "U S WEST, Inc." ("Old U S WEST"). On June 12, 1998, Old
U S WEST separated its businesses into two independent public companies (the
"Separation"). Until the Separation, Old U S WEST conducted its businesses
through two groups: U S WEST Media Group (the "Media Group") and U S WEST
Communications Group (the "Communications Group"). The performance of Media
Group was reflected by the U S WEST Media Group Common Stock (the "Media Stock")
and the performance of the Communications Group was reflected by the U S WEST
Communications Group Common Stock (the "Communications Stock"). Upon Separation,
Old U S WEST was renamed "MediaOne Group, Inc." and retained the multimedia
businesses of Media Group, except for U S WEST Dex, Inc. ("Dex"), the domestic
directory business. The telecommunications businesses of the Communications
Group became an independent public company and retained the "U S WEST, Inc."
name ("New U S WEST"). In addition, Dex was aligned with New U S WEST (the "Dex
Alignment"). Each outstanding share of Media Stock remains outstanding and
represents one share of MediaOne Group Common Stock ("MediaOne Group Stock").
All issued and outstanding shares of Communications Stock were redeemed for
shares of New U S WEST, and all Communications Stock held as treasury stock by
Old U S WEST was canceled.

The Company accounted for the distribution of New U S WEST stock to the
Communications Group stockholders, and to the Media Group stockholders for the
Dex Alignment, as a discontinuance of the

14
<PAGE>
businesses comprising New U S WEST. Because the distribution was non pro-rata,
as compared with the businesses previously attributed to Old U S WEST's two
classes of stock, the distribution was accounted for at fair value and resulted
in a gain of $24,461, or $40.25 basic earnings per MediaOne Group share, net of
$114 of Separation costs (net of tax benefits of $37).

In connection with the Dex Alignment, (i) each holder of Media Stock
received as a dividend .02731 shares of New U S WEST common stock for each share
of Media Stock held (the "Dex Dividend"), and (ii) $3.9 billion of Old U S WEST
debt was refinanced by New U S WEST.

In conjunction with the Separation, MediaOne Group refinanced substantially
all of the indebtedness issued or guaranteed by Old U S WEST through a
combination of tender offers, prepayments and consent solicitations (the
"Refinancing"). Long-term debt outstanding of $4.9 billion was redeemed,
resulting in an extraordinary loss of $333, net of tax benefits of $209, or
$0.55 basic loss per MediaOne Group share. The loss was the result of
refinancing costs, including the difference between the market and face value of
the debt redeemed and a charge for unamortized debt issuance costs. MediaOne
Group financed the redemption with short-term commercial paper at a weighted
average interest rate of 5.85 percent. In addition, in accordance with the terms
of a separation agreement between MediaOne Group and New U S WEST (the
"Separation Agreement"), New U S WEST funded to MediaOne Group $3.9 billion
related to the Dex Alignment. Such funds were used to repay a portion of the
commercial paper issued in connection with the Refinancing.

BUSINESS DESCRIPTION

MediaOne Group has operations and investments in two principal areas: (i)
domestic broadband communications, and (ii) international broadband and wireless
communications. On April 6, 1998, MediaOne Group sold its domestic wireless
businesses to AirTouch Communications, Inc. ("AirTouch") in a tax-efficient
transaction (the "AirTouch Transaction"). This included MediaOne Group's 2.6
million domestic cellular communication customers, as well as its 25 percent
interest in PrimeCo Personal Communications, L.P. ("PrimeCo"). See Note
4--Domestic Acquisitions and Dispositions--to the Consolidated Financial
Statements.

DOMESTIC BROADBAND COMMUNICATIONS. The Company is the third largest cable
operator in the United States serving approximately 5.0 million cable customers
and passing 8.5 million homes. MediaOne Group's cable systems include large
clusters in Atlanta, Massachusetts, California, Florida, Detroit and
Minneapolis/St. Paul. The cable systems offer customers various levels of cable
programming services, including premium programming services such as HBO,
Cinemax, Showtime, The Movie Channel and Encore, as well as pay-per-view movies
and special events. The domestic cable and broadband operations of the Company
are managed by MediaOne of Delaware, Inc. ("MediaOne"), a subsidiary of MediaOne
Group.

In addition to its cable operations, the Company also holds significant
domestic cable and broadband investments including an investment in Time Warner
Entertainment Company L.P. ("TWE" or "Time Warner Entertainment"), the second
largest provider of cable television services in the United States, and
interests in programming that include E! Entertainment Television and New
England Cable News. MediaOne Group also holds an equity investment in a joint
venture called "ServiceCo, LLC" (the "HSD Joint Venture"). Such venture was
formed on June 15, 1998, with Time Warner, Inc., ("Time Warner"), TWE and Time
Warner Entertainment-Advance/Newhouse Partnership ("TWE/AN") to provide high
speed data ("HSD") services. The parties to the joint venture contributed
certain of their respective HSD assets into the HSD Joint Venture in exchange
for common equity interests. In addition, Microsoft Corporation and Compaq
Computer Corporation each contributed $212.5 for a respective 10 percent
preferred equity investment in the HSD Joint Venture, convertible into a
combined 20 percent common equity interest in the HSD Joint Venture. Assuming
the conversion of the preferred shares and taking into account MediaOne Group's
ownership in TWE, MediaOne Group would hold a proportionate diluted common
equity interest in the HSD Joint Venture of approximately 34.6 percent. MediaOne
Group will

15
<PAGE>
provide HSD services under the "Road Runner" brand name. See Note 4--Domestic
Acquisitions and Dispositions--to the Consolidated Financial Statements.

INTERNATIONAL BROADBAND COMMUNICATIONS. Internationally, the Company holds
an investment in Telewest Communications plc ("Telewest"), a provider of cable
television, telecommunications and Internet services to business and residential
customers in the United Kingdom. As a result of a rights offering to its
existing shareholders, including MediaOne Group, and the Company's partial
acquisition of a third party's ownership in Telewest, MediaOne Group now holds a
29.9 percent interest in Telewest. See Note 7--Net Investment in International
Ventures--to the Consolidated Financial Statements. The Company also holds
interests in cable and broadband properties in the Netherlands, Belgium, the
Czech Republic, Japan and Singapore.

INTERNATIONAL WIRELESS COMMUNICATIONS. MediaOne Group holds a 50 percent
joint venture interest in Mercury Personal Communications ("One 2 One"), a
provider of personal communications services ("PCS") in the United Kingdom, in
addition to interests in various wireless properties in Hungary, the Czech and
Slovak Republics, Poland, Russia and India.

The following discussion is based on MediaOne Group's Consolidated Financial
Statements prepared in accordance with generally accepted accounting principles
("GAAP").

RESULTS OF OPERATIONS--CONTINUING OPERATIONS--1998 COMPARED WITH 1997

<TABLE>
<CAPTION>
CHANGE
--------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS: 1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations................... $ 1,430 $ (827) $ 2,257 --
Adjustments to reported income (loss) from continuing
operations:
Domestic wireless operations............................. (20) (83) 63 (75.9)
Gain on sale of domestic wireless investment............. (2,257) -- (2,257) --
Gains on sales of investments............................ (44) (249) 205 (82.3)
Loss on PrimeStar investment............................. 100 -- 100 --
--------- --------- --------- ---------
Normalized loss from continuing operations................. $ (791) $ (1,159) $ 368 (31.8)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
CHANGE
BASIC EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS --------------------
AVAILABLE FOR MEDIAONE GROUP COMMON STOCK: 1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Earnings (loss) from continuing operations available for
common stock................................................ $ 2.18 $ (1.45) $ 3.63 --
Adjustments to reported earnings (loss) from continuing
operations:
Domestic wireless operations................................ (0.04) (0.13) 0.09 (69.2)
Gain on sale of domestic wireless investment................ (3.71) -- (3.71) --
Gains on sales of investments............................... (0.08) (0.41) 0.33 (80.5)
Loss on PrimeStar investment................................ 0.16 -- 0.16 --
Loss on redemption of Preferred Securities.................. 0.09 -- 0.09 --
--------- --------- --------- ---------
Normalized loss from continuing operations available for
common stock................................................ $ (1.40) $ (1.99) $ 0.59 (29.6)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

The decrease in normalized loss from continuing operations was primarily a
result of decreased equity losses generated by unconsolidated international
ventures and decreased interest expense due to lower debt levels at MediaOne
Group. The table above normalizes for significant one-time items that aid in the
comparability of the Company's performance year over year. Routine acquisitions
and dispositions are normalized within the discussions of revenues and operating
income which follow.

16
<PAGE>
SALES AND OTHER REVENUES

Corporate................................................................... 28 29 (1) (3.4)
Other(1).................................................................... 2 49 (47) (95.9)
--------- --------- --------- ---------
Current operations........................................................ 2,521 2,419 102 4.2

Domestic wireless(2)........................................................ 361 1,428 (1,067) (74.7)
--------- --------- --------- ---------
Total....................................................................... $ 2,882 $ 3,847 $ (965) (25.1)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

- ------------------------

(1) Primarily includes wholly-owned international directories which were sold in
the latter part of 1997.

(2) The domestic wireless businesses were sold to AirTouch effective 4/6/98.

MediaOne Group sales and other revenues decreased during 1998 primarily as a
result of the sales of the domestic wireless businesses in April, 1998, and the
wholly-owned international directories businesses during the latter part of
1997. Normalized for acquisitions and dispositions, total revenues increased
10.7 percent during 1998, due primarily to increases from the domestic cable and
broadband operations.

CABLE AND BROADBAND--DOMESTIC

<TABLE>
<CAPTION>
CHANGE
--------------------
REVENUES 1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Basic Cable................................................................. $ 1,704 $ 1,531 $ 173 11.3
Premium..................................................................... 322 326 (4) (1.2)
Pay-per-view................................................................ 52 55 (3) (5.5)
Advertising................................................................. 157 129 28 21.7
Equipment & Installation.................................................... 176 153 23 15.0
Other....................................................................... (28) -- (28) --
--------- --------- --------- ---------
Video......................................................................... 2,383 2,194 189 8.6
New Products.................................................................. 50 20 30 --
PrimeStar..................................................................... 34 109 (75) (68.8)
--------- --------- --------- ---------
Total revenues.............................................................. $ 2,467 $ 2,323 $ 144 6.2
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

Domestic cable and broadband revenues increased during 1998 due primarily to
increased video revenues, partially offset by the lack of PrimeStar direct
broadcast services ("DBS") revenues in the last three quarters of 1998.
Normalized for the one-time effects of cable system acquisitions and
dispositions, a change in classification of late fee revenues, and the
discontinuance of PrimeStar DBS revenues, total domestic cable and broadband
revenues increased 10.6 percent during 1998.

BASIC CABLE. Basic cable services revenues increased during 1998 due
primarily to a 9.5 percent increase in revenue per average cable subscriber and
increased basic subscribers. At December 31, 1998, basic cable subscribers were
4,965,000, an increase of 1.0 percent compared with the same period in 1997,
normalized for the effects of cable system acquisitions and dispositions. The
increase in revenue per subscriber is the result of expanded channel offerings,
repackaging of services and increased rates.

17
<PAGE>
PREMIUM. Premium service revenues decreased during 1998 due primarily to
discounting of premium service packages, movements of certain premium service
packages to basic, and a migration of customers to lower priced premium service
packages. In an effort to improve premium service revenues, the Company
repackaged its premium services and launched "NexTV" in September 1998, a
packaging program which clusters related premium channels. At December 31, 1998,
premium units were 4,176,000, an increase of 3.6 percent compared with the same
period in 1997, normalized for the effects of cable system acquisitions and
dispositions.

PAY-PER-VIEW. Pay-per-view revenues decreased during 1998 due to a lack of
major sporting events in 1998 as compared with 1997. The decline was slightly
offset by increased revenues on movies.

ADVERTISING. Advertising revenues increased during 1998 as a result of
expanded channel capacity, growth in local and national advertising sales, and
increased rates.

EQUIPMENT AND INSTALLATION. Equipment and installation revenues increased
in 1998 due primarily to subscribers upgrading converter boxes.

OTHER. Other revenues include franchise fee payments, revenues received for
guides and miscellaneous revenues. The decrease in other revenues during 1998 is
due primarily to the classification of late fee revenues in 1998; late fee
revenues were reflected in "other revenues" during 1997, whereas in 1998 these
revenues are classified as an offset to "selling, general and administrative
expenses."

VIDEO. Video revenue per average cable subscriber was $40.33 per month for
the year-ended December 31, 1998, an increase of 6.8 percent, compared with
$37.76 for the same period in 1997. Adjusted for the one-time effects of cable
system acquisitions and dispositions and a change in classification of late fee
revenues, video revenue per average cable subscriber increased 7.8 percent
during 1998. Video revenue per average cable subscriber has increased as a
result of expanded channel offerings, repackaging of services and increased
rates.

Video revenues increased 9.4 percent during 1998, normalized for the
one-time effects of cable system acquisitions and dispositions, and for the
change in classification of late fee revenues.

NEW PRODUCTS. New products revenues increased during 1998 due primarily to
the launch and customer growth of HSD Internet access services in new markets,
and growth in business dedicated telephony services.

At December 31, 1998, MediaOne Group had approximately 84,000 HSD customers
compared with 21,000 HSD customers for the same period in 1997, and was
available to over 3 million market-ready HSD homes. Market-ready homes are those
potential customers which are connected to the broadband network and which could
be provided and billed for service. HSD Internet access services are available
in 11 metro areas in the following states: California, Florida, Georgia,
Illinois, Massachusetts, Michigan, Minnesota, New Hampshire and Ohio.

On June 15, 1998, MediaOne Group formed the HSD Joint Venture with Time
Warner, TWE and TWE/AN to deliver HSD services. The HSD Joint Venture is
responsible for maintaining connections to the Internet, providing technical
customer support and developing national content. The parties to the joint
venture operate their respective HSD businesses and are responsible for their
respective customers' billing and customer service issues. Accordingly, MediaOne
Group continues to reflect HSD services revenues in its consolidated results, as
well as a service fee payable to the HSD Joint Venture for services provided.
MediaOne Group will provide HSD services under the "Road Runner" brand name.

18
<PAGE>
During 1998 MediaOne Group began offering residential telephony services to
six metro areas within the states of California, Florida, Georgia,
Massachusetts, and Virginia. As of December 31, 1998, residential telephony
services were available to approximately 530,000 market-ready homes.

During November 1998, MediaOne Group entered into a definitive agreement
with Hyperion Communications to sell the Company's investments in Continental
Fiber Technologies, Inc. and Alternet of Virginia, Inc., providers of business
telephony services in Jacksonville, Florida and Richmond, Virginia,
respectively, for approximately $80, (the "CLEC Businesses"). The sale is
expected to close in the first half of 1999. The CLEC Businesses contributed
business telephony revenues of $14 and operating losses of $3 during 1998. These
results have been included as part of New Products revenues and domestic cable
and broadband revenues and operating income.

PRIMESTAR. Prior to April 1, 1998, MediaOne Group distributed PrimeStar DBS
services to subscribers in its service areas, and as a result, reflected
consolidated operating results with respect to such subscribers. On April 1,
1998, MediaOne Group contributed its interest in PrimeStar Partners, L.P. ("Old
PrimeStar"), as well as its PrimeStar subscribers and certain related assets to
PrimeStar, Inc. ("PrimeStar") (the "PrimeStar Contribution"). Consequently,
subsequent to April 1, 1998, MediaOne Group no longer reflects consolidated
operating results for PrimeStar DBS services. In fourth-quarter 1998, MediaOne
Group wrote-off its investment in PrimeStar received as part of the PrimeStar
Contribution. See Note 4-- Domestic Acquisitions and Dispositions-- and Note
22--Subsequent Events--to the Consolidated Financial Statements.

CABLE AND BROADBAND--INTERNATIONAL. International cable and broadband
revenues represent the consolidated operations of Cable Plus a.s., a cable
operator in the Czech Republic.

OTHER. Other revenues in 1997 primarily included the Company's wholly-owned
international directory operations in the United Kingdom and Poland. Such
operations were sold in June and October 1997, respectively.

DOMESTIC WIRELESS. On April 6, 1998, MediaOne Group sold its domestic
wireless businesses to AirTouch pursuant to the AirTouch Transaction. See Note
4--Domestic Acquisitions and Dispositions--to the Consolidated Financial
Statements.

OPERATING INCOME (LOSS)

<TABLE>
<CAPTION>
CHANGE
--------------------
1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cable and broadband:
Domestic..................................................................... $ (159) $ (111) $ (48) 43.2
International................................................................ (7) (15) 8 (53.3)
--------- --------- --------- ---------
(166) (126) (40) 31.7
International wireless......................................................... (10) (13) 3 (23.1)
Corporate...................................................................... (148) (155) 7 (4.5)
Other(1)....................................................................... (8) (29) 21 (72.4)
--------- --------- --------- ---------
Current operations........................................................... (332) (323) (9) 2.8

Domestic wireless(2)........................................................... 93 353 (260) (73.7)
--------- --------- --------- ---------
Total.......................................................................... $ (239) $ 30 $ (269) --
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

- ------------------------

(1) Primarily includes wholly-owned international directories which were sold in
the latter part of 1997.

(2) The domestic wireless businesses were sold to AirTouch effective 4/6/98.

19
<PAGE>
During 1998, MediaOne Group's operating income decreased $269 to a loss of
$239, primarily a result of selling the domestic wireless businesses in April,
1998. Excluding the effects of the domestic wireless businesses, operating
income has decreased primarily as a result of greater depreciation and
amortization expenses from the domestic cable and broadband operations,
partially offset by decreased operating losses from the wholly-owned
international directories operations which were sold in 1997.

MediaOne Group's earnings before income taxes, depreciation, amortization
and other ("EBITDA") for 1998 were $943, compared with $1,287 during the same
period in 1997. Excluding the effect of the domestic wireless operations, EBITDA
would have been $795 in 1998, compared with $754 in the same period of 1997.
MediaOne Group considers EBITDA an important indicator of the operational
strength and performance of its businesses. EBITDA, however, should not be
considered an alternative to operating or net income as an indicator of the
performance of MediaOne Group's businesses, or as an alternative to cash flows
from operating activities as a measure of liquidity, in each case determined in
accordance with GAAP.

CABLE AND BROADBAND--DOMESTIC. Domestic cable and broadband operating
losses increased during 1998 due primarily to increased depreciation and
amortization expense. As MediaOne Group continues to upgrade its cable networks,
depreciation expense will continue to increase. During the first quarter of
1998, there was a one-time increase to depreciation and amortization expense of
$28 related to the termination of the sale of cable systems in Minnesota.
Depreciation and amortization expense had been suspended on these systems in
1997 while they were held for sale. This increase was offset by a reduction to
depreciation and amortization expense of $29 for systems held for sale during
1998.

During 1998, EBITDA for domestic cable and broadband operations was $941, an
increase of $11, or 1.2 percent, compared with $930 in 1997. Revenue increases
of $144, or 6.2 percent, exceeded increased programming costs of $50, or 9.5
percent, and increased operating, general and administrative costs of $83, or
9.6 percent. Of those amounts, the PrimeStar Contribution provided revenue
decreases of $75 and cost decreases of $63, including $25 of programming costs,
to total domestic cable and broadband EBITDA for the period. Normalized for the
one-time effects of cable system acquisitions and dispositions, domestic cable
and broadband EBITDA increased 2.2 percent.

Video EBITDA was $995 for 1998, an increase of $47, or 5.0 percent, compared
with $948 during 1997. Normalizing for acquisitions and dispositions, and
excluding Year 2000 implementation costs of $13 during 1998, video EBITDA was
$1,008 for 1998, an increase of $57, or 6.0 percent, compared with 1997.

New Products EBITDA was $(58), an increase in losses of $(24), or 70.6
percent, compared with EBITDA of $(34) in 1997. New Products revenue increases
of $30 were offset by New Products costs increases of $54 during the period.

Programming costs were $575 for 1998, an increase of $50, or 9.5 percent,
over 1997. Excluding programming costs related to PrimeStar DBS services,
programming costs increased 15.7 percent. The normalized increase was primarily
a result of greater programming costs per subscriber as a result of rate
increases, expanded channel offerings and growth in subscribers.

Operating, general and administrative costs were $951 during 1998, an
increase of $83, or 9.6 percent, over 1997. Increases in operating, general and
administrative costs were primarily a function of increases in employee costs
due to improvements in customer service, marketing and advertising costs
associated with the deployment of new products, such as HSD services and
residential telephony, as well as NexTV, and spending on initiatives to improve
the operations of the Company. These cost increases were partially offset by
decreased costs related to the PrimeStar Contribution. During 1998, MediaOne
Group incurred costs of $15 to improve reporting and billing systems, and to
create customer databases to serve customers more effectively, and costs of $13
for incremental Year 2000 implementation costs, for a total of $28.

20
<PAGE>
CABLE AND BROADBAND--INTERNATIONAL. The decrease in international cable and
broadband operating losses is the result of increased revenues and decreased
operating expenses, due primarily to efficiency gains and reduced headcount.

INTERNATIONAL WIRELESS. International wireless operating losses represent
the consolidated operations of Russian Telecommunications Development
Corporation ("RTDC"), a Russian venture, which holds various wireless
investments.

CORPORATE. The decrease in corporate operating losses during 1998 is due
primarily to a $30 charge in 1997 for management changes and moving costs
related to relocating MediaOne's operations from Boston to Denver. The decrease
was partially offset by increased overhead costs during 1998.

OTHER. Operating losses decreased $11 during 1998 due to the sales in 1997
of the wholly-owned international directories operations. In addition, costs
incurred for the development of domestic Internet content services have
decreased during 1998 primarily as a result of aligning certain of these
operations within the domestic cable and broadband operations.

INTEREST EXPENSE AND OTHER

<TABLE>
<CAPTION>
CHANGE
--------------------
1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest expense............................................................. $ (491) $ (678) $ 187 (27.6)
Equity losses in unconsolidated ventures..................................... (417) (909) 492 (54.1)
Gain on sale of domestic wireless investment................................. 3,869 -- 3,869 --
Gains on sales of investments................................................ 70 421 (351) (83.4)
Loss on PrimeStar investment................................................. (163) -- (163) --
Guaranteed minority interest expense......................................... (74) (87) 13 (14.9)
Other income (expense)--net.................................................. 83 16 67 --
</TABLE>

INTEREST EXPENSE. Interest expense decreased during 1998 due primarily to
the June 12, 1998 assumption by New U S WEST of $3.9 billion of debt related to
the Dex Alignment, the Refinancing which resulted in lower interest rate
commercial paper outstanding, and the assumption of $1,350 in debt by AirTouch
in the AirTouch Transaction. The reduction in interest expense was partially
offset by the third-quarter 1998 issuance of $1,686 of debt exchangeable into
AirTouch common stock and a charge of $16 related to the termination of various
interest rate swap agreements. The swap agreements were terminated since the
long term debt underlying the instruments was refinanced at the time of the
Separation. MediaOne Group's weighted average borrowing cost was 7.28 percent in
1998, compared with 6.95 percent in 1997.

EQUITY LOSSES IN UNCONSOLIDATED VENTURES. Equity losses decreased during
1998 due predominantly to a $200 charge in 1997 to write down the carrying value
of the investment in Malaysia to its fair value of zero and to recognize
probable funding commitments in connection with a shareholder support agreement
related to the investment in Indonesia. In addition, during 1998, the Company
suspended equity method accounting for the Company's investments in Malaysia and
Indonesia, compared with equity losses recognized in 1997 of $71 and $46,
respectively. The Company continues to monitor its investments in Indonesia and
Malaysia. See Note 7--Net Investment in International Ventures--to the
Consolidated Financial Statements.

Also contributing to the decrease in equity losses during 1998 were overall
improvements from the international wireless investments and the absence of
losses from the investment in PrimeCo, which was sold to AirTouch on April 6,
1998 pursuant to the AirTouch Transaction.

21
<PAGE>
GAIN ON SALE OF DOMESTIC WIRELESS INVESTMENT. On April 6, 1998, MediaOne
Group sold its domestic wireless businesses to AirTouch. Consideration under the
AirTouch Transaction consisted of (i) debt reduction of $1,350, (ii) the
issuance to MediaOne Group of $1,650 in liquidation preference of dividend
bearing AirTouch preferred stock (fair value of $1,493), and (iii) the issuance
to MediaOne Group of 59,314,000 shares of AirTouch common stock. The transaction
resulted in a pretax gain of $3,869, ($2,257 net of deferred taxes). MediaOne
Group is accounting for its investment in AirTouch under the cost method of
accounting, as available for sale securities. See Note 4--Domestic Acquisitions
and Dispositions--to the Consolidated Financial Statements.

GAINS ON SALES OF INVESTMENTS. During 1998, MediaOne Group sold: (a) shares
of Sportsline USA, Inc. and shares of Cable & Wireless Optus Limited resulting
in pretax gains of $12 ($8 after tax) and $9 ($6 after tax), respectively, (b) a
cable programming investment resulting in a pretax gain of $17 ($10 after tax),
(c) various domestic cable investments resulting in a pretax gain of $16 ($10
after tax) and (d) miscellaneous items resulting in a pretax gain of $16 ($10
after tax).

LOSS ON PRIMESTAR INVESTMENT. During the fourth quarter of 1998, MediaOne
Group recorded a charge of $163 ($100 after tax) to reduce the carrying amount
of its investment in PrimeStar. In December 1998, PrimeStar management provided
a business plan to its board of directors, of which MediaOne Group is a part.
Additionally, in early 1999, PrimeStar announced that it was selling its DBS
medium-power business and assets to Hughes Electronics Corporation ("Hughes").
Based on the review of PrimeStar's business plan and on the anticipated sale to
Hughes, MediaOne Group believes that it will not receive proceeds on the sale of
its investment in PrimeStar, and therefore, reduced the carrying amount of its
investment to zero. See Note 22--Subsequent Events--to the Consolidated
Financial Statements.

GUARANTEED MINORITY INTEREST EXPENSE. Guaranteed minority interest expense
has decreased $21 during 1998 due primarily to the cash redemption on June 12,
1998, of $301 face value of 7.96 percent Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding solely
Company-guaranteed debentures ("Preferred Securities") and $237 face value of
8.25 percent Preferred Securities. The decrease was partially offset by the
issuance in October 1998 of $500 face value of 9.04 percent Preferred
Securities.

OTHER INCOME (EXPENSE)--NET. Other income during 1998 was favorably
impacted by decreased foreign exchange transaction losses of $51, dividend
income earned on the AirTouch preferred stock received in connection with the
AirTouch Transaction of $66, and the lack of minority interest expense of $37
from the domestic wireless operations due to the sale of these operations in
connection with the AirTouch Transaction. Such improvements were partially
offset by a $50 loss related to an interest rate swap agreement associated with
the AirTouch preferred stock and a related $20 loss for the purchase of a new
interest rate option. See Note 4--Domestic Acquisitions and Dispositions--to the
Consolidated Financial Statements.

(PROVISION) BENEFIT FROM INCOME TAXES FOR CONTINUING OPERATIONS

<TABLE>
<CAPTION>
CHANGE
--------------------
1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
(Provision) benefit for income taxes........................................ $ (1,208) $ 380 $ (1,588) --
Effective tax rate.......................................................... 45.8% 31.5%
</TABLE>

The increase in the effective tax rate is primarily a result of the gain on
the sale of the domestic wireless businesses. Excluding the gain on the sale of
the domestic wireless businesses, the effective tax rate would have been 32.8
percent.

22
<PAGE>
RESULTS OF OPERATIONS--CONTINUING OPERATIONS--1997 COMPARED WITH 1996

The following pro forma discussion gives effect to the acquisition by
MediaOne Group of Continental Cablevision, Inc. ("Continental") as though it had
occurred as of January 1, 1996 (the "Continental Acquisition").

<TABLE>
<CAPTION>
CHANGE
--------------------
LOSS FROM CONTINUING OPERATIONS: 1997 1996 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Loss from continuing operations............................... $ (827) $ (357) $ (470) --
Adjustments to reported loss from continuing operations:
Domestic wireless operations................................ (83) (96) 13 (13.5)
Gains on sales of investments............................... (249) -- (249) --
--------- --------- --------- ---------
Normalized loss from continuing operations.................... $ (1,159) $ (453) $ (706) --
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

<TABLE>
<CAPTION>
CHANGE
BASIC LOSS PER SHARE FROM CONTINUING OPERATIONS --------------------
AVAILABLE FOR MEDIAONE GROUP COMMON STOCK: 1997 1996 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Loss from continuing operations available for common stock.... $ (1.45) $ (0.74) $ (0.71) 95.9
Adjustments to reported loss from continuing operations:
Domestic wireless operations................................ (0.13) (0.19) 0.06 (31.6)
Gains on sales of investments............................... (0.41) -- (0.41) --
--------- --------- --------- ---------
Normalized loss from continuing operations available for
common stock................................................ $ (1.99) $ (0.93) $ (1.06) --
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

During 1997, the Continental Acquisition contributed approximately $356, or
$0.59 per share, of the increase in normalized loss from continuing operations.
The Continental Acquisition resulted in significant increases in interest,
depreciation and amortization charges. The remaining increase in loss from
continuing operations is primarily due to greater losses from unconsolidated
ventures.

SALES AND OTHER REVENUES

<TABLE>
<CAPTION>
CHANGE PRO CHANGE
-------------------- FORMA(1) --------------------
1997 1996 $ % 1996 $ %
--------- --------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Cable and broadband:
Domestic........................................ $ 2,323 $ 488 $ 1,835 -- $ 2,125 $ 198 9.3
International................................... 18 6 12 -- 6 12 --
--------- --------- --------- --------- ----------- --------- ---------
2,341 494 1,847 -- 2,131 210 9.9
Corporate......................................... 29 21 8 38.1 21 8 38.1
Other(2).......................................... 49 139 (90) (64.7) 139 (90) (64.7)
--------- --------- --------- --------- ----------- --------- ---------
Current operations.............................. 2,419 654 1,765 -- 2,291 128 5.6

Domestic wireless................................. 1,428 1,183 245 20.7 1,183 245 20.7
--------- --------- --------- --------- ----------- --------- ---------
Total............................................. $ 3,847 $ 1,837 $ 2,010 -- $ 3,474 $ 373 10.7
--------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- ----------- --------- ---------
</TABLE>

- ------------------------

(1) Gives effect to the Continental Acquisition as though it had occurred on
January 1, 1996.

(2) Primarily includes wholly-owned international directories which were sold in
the latter part of 1997.

The pro forma increase in MediaOne Group sales and other revenues was due
primarily to growth in domestic cable and broadband, and wireless service
revenues, partially offset by the sale in the latter part of 1997 of the
wholly-owned international directories businesses.

23
<PAGE>
CABLE AND BROADBAND--DOMESTIC. On a pro forma basis, domestic cable and
broadband revenues increased due primarily to growth in basic cable services
revenues and PrimeStar DBS services revenues.

BASIC CABLE. Basic cable services revenues increased $146, or 10.6 percent,
to $1,518 on a pro forma basis, primarily a result of rate increases. Rate
increases averaged approximately 6 to 8 percent and were primarily related to an
increase in programming costs and the addition of channels. Basic subscriber
growth of 1.6 percent, adjusted for dispositions and an acquisition, also
contributed to the increase in revenues.

PREMIUM. Premium service revenues decreased $20, or 5.8 percent, to $326 on
a pro forma basis, as a result of moving the Disney Channel to the basic service
tier in several markets and discounting of premium service packages.

EQUIPMENT AND INSTALLATION. Equipment and installation revenues increased
$19, or 14.3 percent, to $152 on a pro forma basis, as a result of rate
increases and subscriber growth.

VIDEO. Video revenue per average cable subscriber increased 4.7 percent to
$37.76 in 1997, from $36.06 in 1996. Basic subscriber growth of 1.6 percent,
adjusted for dispositions and an acquisition, also contributed to the increase
in revenues along with growth in equipment rental and installation revenues.

PRIMESTAR. PrimeStar DBS services contributed $40 to the increase in
domestic cable and broadband revenues principally as a result of a 31 percent
increase in DBS customers to 181,000 at December 31, 1997.

CABLE AND BROADBAND--INTERNATIONAL. International cable and broadband
revenues reflect the consolidation of Cable Plus associated with a restructuring
in 1996 whereby the Company's ownership interest increased to 94 percent.

OTHER. The decrease in other revenues is due primarily to the sale of the
Company's wholly- owned international directories operations during the latter
part of 1997.

DOMESTIC WIRELESS. Domestic wireless revenues increased during 1997 due
primarily to increased cellular service revenues of $198, or 18.4 percent, to
$1,276, and increased cellular equipment revenues of $47, or 44.8 percent, to
$152. Cellular service revenues increased due to a 27 percent increase in
subscribers during the year, partially offset by a 12 percent drop in average
revenue per subscriber to $46.42 per month. Cellular equipment revenues
increased as a result of a 14 percent increase in gross customer additions and
the introduction of digital handsets.

On April 6, 1998, the Company sold its domestic wireless businesses to
AirTouch pursuant to the AirTouch Transaction.

24
<PAGE>
OPERATING INCOME (LOSS)
<TABLE>
<CAPTION>
CHANGE PRO CHANGE
-------------------- FORMA(1) ---------
1997 1996 $ % 1996 $
--------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cable and broadband:
Domestic............................................. $ (111) $ (13) $ (98) -- $ (73) $ (38)
International........................................ (15) (7) (8) -- (7) (8)
--------- --------- --------- --------- ----- ---------
(126) (20) (106) -- (80) (46)
International wireless................................. (13) (3) (10) -- (3) (10)
Corporate.............................................. (155) (158) 3 (1.9) (158) 3
Other(2)............................................... (29) (18) (11) 61.1 (18) (11)
--------- --------- --------- --------- ----- ---------
Current operations................................... (323) (199) (124) 62.3 (259) (64)

Domestic wireless.................................... 353 243 110 45.3 243 110
--------- --------- --------- --------- ----- ---------
Operating income....................................... $ 30 $ 44 $ (14) (31.8) $ (16) $ 46
--------- --------- --------- --------- ----- ---------
--------- --------- --------- --------- ----- ---------

%
---------
<S> <C>
Cable and broadband:
Domestic............................................. 52.1
International........................................ --
---
57.5
International wireless................................. --
Corporate.............................................. (1.9)
Other(2)............................................... 61.1
---
Current operations................................... 24.7
Domestic wireless.................................... 45.3
---
Operating income....................................... --
---
---
</TABLE>

- ------------------------

(1) Gives effect to the Continental Acquisition as though it had occurred on
January 1, 1996.

(2) Primarily includes wholly-owned international directories which were sold in
the latter part of 1997.

MediaOne Group pro forma operating income increases were due primarily to
growth in domestic wireless, partially offset by higher domestic cable and
broadband operating losses.

CABLE AND BROADBAND--DOMESTIC. Pro forma domestic cable and broadband
revenue growth of $198, or 9.3 percent, to $2,323, was more than offset by
increases in programming costs, including programming for PrimeStar DBS
services, of $71, or 15.6 percent, to $525, increases in operating, marketing
and advertising, and general and administrative costs of $89, or 11.4 percent,
to $868, and increases in depreciation and amortization expense of $76, or 7.9
percent, to $1,041.

Programming cost increases are primarily a result of rate increases and
subscriber growth. Increases in operating, marketing and advertising, and
general and administrative costs are primarily a function of customer service
initiatives, costs associated with deployment of new services such as high-speed
data, advertising costs to implement the "MediaOne" brand and increased
professional fees. A reduction in the estimated remaining useful lives of
certain assets in accordance with planned re-build activities resulted in a
depreciation adjustment of $61 which accounts for the majority of the increase
in depreciation and amortization expense during 1997.

CORPORATE. Corporate operating losses include costs related to managing the
various MediaOne Group operations, predominantly the international operations,
and costs related to general and administrative services provided by the Company
to its subsidiaries, including executive management, legal, accounting and
auditing, tax, treasury, strategic planning, and public policy.

The 1997 results include a $30 charge for management changes and moving
costs related to relocating MediaOne's operations from Boston to Denver. This
charge was partially offset by savings associated with lower international staff
levels in 1997, combined with a 1996 charge of $10 related to the staff
reductions at international headquarters.

OTHER. Other operating losses include the Company's wholly-owned
international directories operations which were sold during 1997

DOMESTIC WIRELESS. The increase in domestic wireless operating income is a
result of revenue increases associated with the expanding subscriber base
combined with efficiency gains. Domestic cellular depreciation and amortization
increased 22.4 percent, to $180, largely as a result of network upgrades.

25
<PAGE>
INTEREST EXPENSE AND OTHER

<TABLE>
<CAPTION>
CHANGE
--------------------
1997 1996 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Interest expense................................................................ $ (678) $ (164) $ (514) --
Equity losses in unconsolidated ventures........................................ (909) (346) (563) --
Gains on sales of investments................................................... 421 -- 421 --
Guaranteed minority interest expense............................................ (87) (55) (32) 58.2
Other income (expense)-net...................................................... 16 (16) 32 --
</TABLE>

INTEREST EXPENSE. Interest expense increased in 1997 primarily as a result
of assuming, at market value, $6.5 billion of debt related to the Continental
Acquisition. MediaOne Group's weighted average borrowing cost was 6.95 percent
in 1997, compared with 6.80 percent in 1996.

EQUITY LOSSES IN UNCONSOLIDATED VENTURES. Equity losses increased $563 in
1997, predominantly a result of greater losses generated from international
ventures and the domestic investment in PrimeCo. PrimeCo launched service in
November 1996, and losses associated with this venture have increased $68 as a
result of start-up and other costs.

International equity losses increased $455 in 1997, due primarily to
ventures located in Asia, which included Indonesia, India, Malaysia, Japan and
Singapore. The ventures in Asia contributed $397 to the increase in
international equity losses due primarily to a $200 impairment charge recorded
in the period. During 1997 the Company determined that its investments in
Malaysia and Indonesia were impaired and in each case the fair value of the
investment was zero as of December 31, 1997. The Company recorded pretax charges
of $145 and $55 related to the ventures in Malaysia and Indonesia, respectively.
See Note 7--Net Investment in International Ventures--to the Consolidated
Financial Statements.

GAINS ON SALES OF INVESTMENTS. During 1997, the Company sold: (i) its 90
percent interest in Fintelco, for a pretax gain of $135 ($80 after tax), (ii)
its shares of Teleport Communications Group, Inc. ("TCG"), acquired in the
Continental Acquisition, for a pretax gain of $162 ($96 after tax), (iii) its
shares of Time Warner, acquired in the Continental Acquisition, for a pretax
gain of $44 ($25 after tax), (iv) its five percent interest in a French wireless
venture, for a pretax gain of $51 ($31 after tax), and (v) U S WEST Polska, its
wholly owned directory operation in Poland, for a pretax gain of $29 ($17 after
tax).

GUARANTEED MINORITY INTEREST EXPENSE. Guaranteed minority interest expense
reflects an increase of $32 related to the October 29, 1996 issuance of
Preferred Securities totaling $480.

OTHER INCOME--NET. Other income increased $32, to other income of $16, in
1997, due primarily to a 1996 pretax charge of $31 associated with the sale of
the Company's cable television interests in Norway, Sweden and Hungary.
Partially offsetting this increase were greater foreign exchange transaction
losses associated with loans to international ventures.

BENEFIT FROM INCOME TAXES FOR CONTINUING OPERATIONS

<TABLE>
<CAPTION>
CHANGE
--------------------
1997 1996 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Benefit for income taxes........................................................... $ 380 $ 180 $ 200 --
Effective tax rate................................................................. 31.5% 33.5%
</TABLE>

The decrease in the effective tax rate is primarily a result of the effects
of goodwill amortization associated with the Continental Acquisition.

26
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

OPERATING ACTIVITIES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash provided by operating activities.................................................. $ 564 $ 995 $ 431
</TABLE>

The decrease in the Company's cash provided by operating activities during
1998 is due primarily to the sale of the domestic wireless operations on April
6, 1998, as well as from interest payments and Separation costs paid. Partially
offsetting the decrease in cash provided by operating activities were increased
tax receipts of $85 from the Communications Group, the receipt in 1998 of $51 in
international dividends, primarily from Westel 450 and Westel 900, the Company's
European wireless investments in Hungary, and the receipt of $40 in dividends
from the AirTouch preferred stock.

During 1997, the Company's operating cash flow increased primarily due to
the effects of the Continental Acquisition. Partially offsetting the increase
were higher financing costs resulting from greater debt levels associated with
the Continental Acquisition.

Effective June 12, 1998, New U S WEST is no longer part of the consolidated
tax return of MediaOne Group. As of December 31, 1998, MediaOne Group had a $375
income tax receivable recorded for the estimated amount due from the carryback
of the 1998 taxable loss to the 1996 consolidated tax return. MediaOne Group
received $359 in the first quarter of 1999. MediaOne Group will receive a cash
benefit from any 1999 taxable loss in the year 2000 by the carryback of the loss
to the 1997 consolidated tax return. A cash benefit for any ordinary tax loss
incurred in the year 2000 may be recovered through the carryforward of the loss
against future taxable income.

MediaOne Group expects that cash from operations will not be adequate to
fund expected cash requirements in 1999. Additional funding will come from cash
on hand, 1999 asset sales and new debt financing, including the monetization of
AirTouch common stock.

INVESTING ACTIVITIES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash used for investing activities............................................... $ (2,401) $ (1,222) $ (807)
</TABLE>

Total capital expenditures at MediaOne Group, on a cash basis, were $1,726,
$1,522 and $627 during 1998, 1997 and 1996, respectively. The majority of the
capital expenditures in 1998 were devoted to upgrading the domestic cable
network and preparing for the provision of new and enhanced services. In 1999,
capital expenditures are expected to approximate $1.8 billion, primarily for the
domestic cable and broadband business.

27
<PAGE>
Investing activities of the Company include equity investments in
international ventures. The Company invested $583, $334 and $257 in
international ventures during 1998, 1997 and 1996, respectively. Investments
during 1998 were net of a $45 return of capital from a wireless investment in
the United Kingdom. During 1998, MediaOne Group invested $131 as a result of the
Company's participation in a rights offering by Telewest in connection with that
company's acquisition of General Cable, and $394 by purchasing an additional 175
million Telewest shares from another Telewest shareholder, for a total
investment in Telewest of $525. The remaining international investments made
during 1998 were capital contributions to its cable investments in Belgium, the
Netherlands, Japan and Singapore. The Company also made capital contributions to
ventures in the Slovak Republic, India and Indonesia. During 1997 MediaOne Group
made capital contributions to ventures in Belgium, India, Indonesia and Japan,
and purchased an additional 40 percent interest in Fintelco. The total
investment in Fintelco was subsequently sold in October 1997. Investments in
1996 included loans provided to One 2 One, the purchase of a 23 percent interest
in Polska Telefonia Cyfrowa, a venture to provide wireless service in Poland,
and the purchase of a 28 percent interest in Telenet, a venture in Belgium to
provide telephony services on the cable network. The Company anticipates that
investments in international ventures will approximate $160 in 1999 to fund
continued expansion in Belgium, the Netherlands, India, Japan and Singapore.

The Company also invested $108, $249 and $164 in 1998, 1997 and 1996,
respectively, in domestic ventures. Of such investments, $64, $213 and $132
related to contributions to PrimeCo during 1998, 1997 and 1996, respectively,
for network build activity. On April 6, 1998, the Company sold its investment in
PrimeCo in conjunction with the AirTouch Transaction. The remaining $44 of
investments in domestic ventures for 1998 related to investments in various
Internet content service providers.

MediaOne Group also purchased various domestic cable systems and investments
in 1998 totaling $92. Such purchases included a cable system in Michigan for $57
which serves approximately 31,000 cable subscribers.

During the first quarter of 1997, the Company paid the cash portion of the
Continental Acquisition consideration of $1,150 to the Continental shareowners.

During 1998, MediaOne Group sold various investments resulting in net
proceeds of $241, comprised of the following: (a) net proceeds of $77 related to
the PrimeStar Contribution, (b) various cable systems for net proceeds of $50,
(c) residual shares in Enhance Financial Services Group, Inc., and shares of
SportsLine USA, Inc. and Cable & Wireless Optus Limited for total net proceeds
of $46, (d) a cable programming investment for net proceeds of $38, and (e)
miscellaneous investments for net proceeds of $30. In addition, MediaOne Group
paid a net amount of $164 related to other activities as follows: (a) paid $215
related to the settlement of an interest rate swap agreement and the purchase of
a related put option, (b) received proceeds of $71 on the sale of a note
receivable, (c) restricted $26 of cash related to Centaur Funding Corporation
("Centaur"), a special purpose entity consolidated by the Company, and (d)
received $6 for miscellaneous asset sales.

Throughout 1997, the Company monetized nonstrategic assets, including
various domestic and international investments. Such asset sales generated total
proceeds of $2,058. Proceeds from sales of international investments totaled
$887, domestic investments totaled $931, assets held for sale totaled $231, and
disposals of property, plant and equipment totaled $9. International sales
consisted of: (a) a five percent interest in a French wireless venture for
proceeds of $81, (b) a 90 percent interest in Fintelco for proceeds of $641, (c)
Thomson Directories, the directory operation in the United Kingdom, and U S WEST
Polska, the directory operation in Poland, for net proceeds of $121 and $27,
respectively, and (d) other miscellaneous international investment sales for
proceeds of $17. Domestic sales were comprised of the sale of shares of TCG, for
net proceeds of $678, shares of Time Warner, for net proceeds of $220, and
miscellaneous asset sales, for proceeds of $33.

28
<PAGE>
FINANCING ACTIVITIES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash used for financing activities.................................................... $ (2,885) $ (801) $ (672)
</TABLE>

DEBT ACTIVITY

Total debt at December 31, 1998 was $5,422, a decrease of $3,541 compared
with December 31, 1997. Debt at December 31, 1998 includes debt related to the
capital assets segment which is now shown in the Consolidated Balance Sheet of
the Company. Prior to this time, the accounts of the capital assets segment had
been accounted for as discontinued operations and netted on the Consolidated
Balance Sheet into one line labeled "net investment in assets held for sale."
See Note 23--Net Investment in Assets Held For Sale--to the Consolidated
Financial Statements. MediaOne Group's percentage of debt to total capital at
December 31, 1998 was 26.5 percent compared with 41.8 percent at December 31,
1997. Including debt associated with the capital assets segment for both 1998
and 1997, Preferred Securities, the minority interest in Centaur and preferred
stock subject to mandatory redemption as components of debt, MediaOne Group's
percentage of debt to total capital at December 31, 1998, was 37.5 percent
compared with 48.1 percent at December 31, 1997.

On December 15, 1998, Centaur issued three series of preferred shares for
total net proceeds of $1,099, net of issuance costs of $31. Dividend and
redemption payments on certain of the preferred shares may only be made to the
extent AirTouch pays dividends or redeems its outstanding preferred shares held
by the Company. See Note 13--Minority Interest in Centaur Funding--to the
Consolidated Financial Statements. Proceeds from the issuance of the preferred
shares were loaned to a subsidiary of the Company and used for general corporate
purposes.

In October 1998, MediaOne Group issued $500 of 9.04 percent Preferred
Securities for net proceeds of $484. The proceeds from the issuance were used to
redeem outstanding commercial paper and for general corporate purposes. MediaOne
Group guarantees the payment of interest and redemption amounts to holders of
the Preferred Securities.

During August and September, 1998, MediaOne Group issued approximately
$1,686 of 6.25 percent exchangeable notes for net proceeds of $1,642. The notes
mature on August 15, 2001 and are mandatorily redeemable at MediaOne Group's
option into (i) shares of AirTouch common stock held by MediaOne Group, (ii) the
cash equivalent, or (iii) a combination of cash and AirTouch common stock. The
number of shares of AirTouch common stock to be exchanged for each exchangeable
note, and/or the cash equivalent, varies based upon the fair value of the
AirTouch common stock.

In December 1998, MediaOne Group also redeemed debt exchangeable into common
stock ("DECS") originally issued in 1995. Such DECS were redeemed with shares of
Enhance Financial Services Group, Inc., held by the Company. See Note
10--Debt--to the Consolidated Financial Statements.

On June 12, 1998, MediaOne Group tendered $4.9 billion notional amount of
long term debt. Also on June 12, 1998, MediaOne Group tendered for cash $301
face value of the 7.96 percent Preferred Securities and $237 face value of the
8.25 percent Preferred Securities originally issued in 1995 and 1996,
respectively. The cash redemption amount of $5.5 billion for the long term debt
and $582 for the Preferred Securities was financed with floating-rate commercial
paper with a weighted average interest rate of 5.85 percent. In addition, in
accordance with the terms of the Separation Agreement, New U S WEST funded to
MediaOne Group $3.9 billion related to the Dex Alignment. Such funds were used
to repay a portion of the commercial paper issued in connection with the
Refinancing.

During 1997, the Company redeemed its zero coupon subordinated notes, which
had a recorded value of $268. In addition, MediaOne redeemed a 10.625 percent
senior subordinated note with a recorded value

29
<PAGE>
of $110, including a premium of $10. The Company financed both redemptions with
floating-rate commercial paper.

In June 1997, the Company acquired cable systems serving approximately
40,000 subscribers in Michigan for cash of $25 and the issuance of approximately
$50 in liquidation value of Old U S WEST Series E Preferred Stock (the "Series E
Preferred Stock"). Effective with the Separation, the Series E Preferred Stock
remains outstanding and represents shares of Series E Preferred Stock of
MediaOne Group. The Series E Preferred Stock is redeemable at the Company's
option beginning five years from the date of issuance. The stockholders have the
right to elect cash upon redemption, or to convert their shares into MediaOne
Group Stock based on a predetermined formula.

In 1996, Old U S WEST issued $254 of exchangeable notes, or DECS, due May
15, 1999. Effective with the Separation, the DECS became the obligation of
MediaOne Group. Upon maturity, each such DECS will be exchanged by MediaOne
Group for shares of common stock of Financial Security Assurance Holdings Ltd.
("FSA") held by the Company or, at the Company's option, redeemed at the cash
equivalent.

On October 29, 1996, Old U S WEST refinanced commercial paper through the
issuance of 8.25 percent Preferred Securities totaling $480. In connection with
the Separation, the Company redeemed for cash and exchanged $450 face value of
such Preferred Securities. See Note 14--Preferred Securities--to the
Consolidated Financial Statements.

MEDIAONE GROUP CREDIT RATINGS

The following table provides credit ratings for MediaOne Group, primarily
debt issued by MediaOne Group Funding, Inc., the newly created financing
subsidiary of MediaOne Group, and MediaOne. The credit ratings are all
investment grade. MediaOne Group does not guarantee the outstanding senior and
subordinated debt of MediaOne.

<TABLE>
<CAPTION>
DUFF & STANDARD &
PHELPS POOR'S MOODY'S
------------ ------------ ---------
<S> <C> <C> <C>
MEDIAONE GROUP
Senior Unsecured Debt...................................................... BBB BBB Baa2
Commercial Paper........................................................... D-2 A-2 P-2
Preferred Securities....................................................... BBB- BB+(1) ba3
Centaur Preferred Shares--Series A......................................... Not Rated Not Rated aa1
Centaur Preferred Shares--Series B & C..................................... Not Rated BBB-(1) baa3

MEDIAONE
Senior Debt................................................................ BBB BBB Baa3
Subordinated Debt.......................................................... Not Rated BBB- Ba2
</TABLE>

- ------------------------

(1) In February 1999, Standard & Poor's announced a methodology change for the
rating of Preferred Securities and other similar instruments which is
reflected above. This change is not a credit event.

As a result of the announcement on March 22, 1999 of the proposed merger of
MediaOne Group with Comcast Corporation, the Company's debt and Preferred
Securities were placed on credit watch by Standard & Poor's with negative
implications, and by Moody's with direction uncertain. See Note 22-- Subsequent
Events--to the Consolidated Financial Statements.

The Centaur preferred shares Series B and C were placed under review for a
possible upgrade by Moody's as a result of actions on AirTouch credit.

30
<PAGE>
DIVIDENDS

The Company paid dividends on the Communications Stock totaling $519, $992
and $939 in 1998, 1997 and 1996, respectively. MediaOne Group no longer pays
dividends on the Communications Stock as it has been canceled effective June 12,
1998, as a result of the Separation.

CASH FROM DISCONTINUED OPERATIONS

Cash from discontinued operations was $4,953 through the date of the
Separation, and $1,091 and $1,149 in 1997 and 1996, respectively. Such amounts
consisted primarily of fundings to MediaOne Group for common dividends paid to
Communications Stock shareowners, dividends paid by Dex to MediaOne Group,
proceeds from the issuance of Communications Stock, and debt fundings and
repayments between MediaOne Group and New U S WEST. Also included in the 1998
amounts were the $3.9 billion of debt assumed by New U S WEST in connection with
the Dex Alignment, as well as $152 of net costs reimbursed to MediaOne Group as
a result of the Separation and the Refinancing. The $3.9 billion payment by New
U S WEST was used by MediaOne Group to repay commercial paper issued in the
Refinancing.

OTHER FINANCING ACTIVITIES

COMMITMENTS AND DEBT GUARANTEES. At December 31, 1998, MediaOne Group's
commitments and debt guarantees associated with its international and domestic
investments totaled approximately $310 and $240, respectively. In addition, a
MediaOne Group subsidiary guarantees debt, nonrecourse to the Company,
associated with its international investment in the principal amount of
approximately $880.

DEBT FACILITIES. In May 1998, MediaOne Group entered into 365-day and
5-year revolving bank credit facilities totaling $4.0 billion to support its
commercial paper program and to provide financing in conjunction with the
refinancing of substantially all of the indebtedness issued or guaranteed by Old
U S WEST. The facilities were reduced in December 1998 to a total capacity of
$3.0 billion. As of December 31, 1998, $2.8 billion was available on the
facilities.

SHELF REGISTRATIONS. Under registration statements filed with the
Securities and Exchange Commission as of November 4, 1998, the Company was
permitted to issue up to approximately $400 of new debt securities.

SHARE REPURCHASE. On August 7, 1998, the Board of Directors of MediaOne
Group authorized the repurchase of up to 25 million shares of the Company's
common stock. The shares may be repurchased over the next three years, dependent
on market and financial conditions. During 1998, MediaOne Group purchased and
placed into treasury approximately 8,682,000 shares of MediaOne Group Stock for
a total costs basis of $352. Prior to the Separation, Old U S WEST purchased and
placed into treasury $31 of Communications Stock. All outstanding shares of
Communications Stock held as treasury stock by Old U S WEST were canceled as of
the Separation date.

RISK MANAGEMENT

MediaOne Group is exposed to market risks arising from changes in interest
rates, foreign exchange rates and equity prices. Derivative financial
instruments are used to selectively manage these risks. MediaOne Group does not
use derivative financial instruments for trading purposes. The following
discussion does not include any impact from the Company's investment in Cable &
Wireless Optus Limited and options related to the sale of this investment since
it was sold during the first quarter of 1999. See Note 22--Subsequent Events--to
the Consolidated Financial Statements.

INTEREST RATE RISK MANAGEMENT. MediaOne Group is exposed to interest rate
risk from the investment in AirTouch preferred stock and other debt securities,
and debt issued by the Company. MediaOne Group historically entered into
interest rate swaps to minimize interest rate variability on floating rate debt,
and

31
<PAGE>
interest rate swaps and options to protect the value of the AirTouch preferred
stock. As of December 31, 1998, the Company had no outstanding interest rate
contracts.

Approximately $280 of MediaOne Group's debt is subject to changes in
interest rates. A hypothetical 10 percent increase in interest rates would
decrease the annual earnings of MediaOne Group by $1.

FOREIGN EXCHANGE RISK MANAGEMENT. MediaOne Group selectively enters into
forward and option contracts to manage the market risks associated with
fluctuation in foreign exchange rates after considering offsetting foreign
exposures among international operations. The use of forward and option
contracts allows MediaOne Group to fix or cap the cost of firm foreign
investment commitments, the amount of foreign currency proceeds from sales of
foreign investments, the repayment of foreign currency denominated receivables
and the repatriation of dividends. The market values of foreign exchange
positions, including the hedging instruments, are continuously monitored and
compared with predetermined levels of acceptable risk. All foreign exchange
contracts have maturities of one year or less. As of December 31, 1998, the
market value of foreign exchange contracts outstanding was not material.

MediaOne Group is exposed to foreign exchange risk associated with its cash
deposits, notes receivable and payable, and a cost method investment denominated
in a foreign currency. As of December 31, 1998, MediaOne Group had British
pound-denominated notes receivable and cash deposits in the translated amount of
$186, a British pound-denominated investment in marketable equity securities in
the translated amount of $106, a Czech Koruna-denominated note receivable and
cash deposits in the translated amount of $33, and a Czech Koruna-denominated
note payable in the translated amount of $30.

A hypothetical 10 percent adverse change in the British Pound and Czech
Koruna exchange rates as compared with the U.S. dollar would reduce the market
value of the cash deposits, investment and notes payable and receivable by $30
as of December 31, 1998.

EQUITY-PRICE RISK MANAGEMENT. MediaOne Group is exposed to market risks
associated with equity security prices related to its investments in marketable
equity securities. On a selective basis, MediaOne Group enters into option
contracts and exchangeable debt instruments to manage risks associated with
fluctuations in equity security prices.

The table below presents the impact of hypothetical movements in the equity
security prices related to MediaOne Group's combined position in marketable
equity securities and derivative contracts. The hypothetical change in stock
price movements for AirTouch and Internet related investments are based upon
stock price movements since December 31, 1998 and historical stock prices,
respectively.

<TABLE>
<CAPTION>
HYPOTHETICAL CHANGE IN
12/31/98 STOCK PRICE
------------------------ INCREASE IN FAIR DECREASE IN FAIR
INVESTMENT INCREASE DECREASE MARKET VALUE MARKET VALUE
- ------------------------------------------------------- ----------- ----------- ------------------- -----------------
<S> <C> <C> <C> <C>
AirTouch common stock
including Exchangeable Notes(1)...................... 30% 30% $ 780 $ 1,060
Internet related investments........................... 50% 50% 20 20
All other investments.................................. 10% 10% 20 20
----- ------
Total.................................................. $ 820 $ 1,100
----- ------
----- ------
</TABLE>

- ------------------------

(1) See Note 10--Debt--to the Consolidated Financial Statements.

The increase in the Company's exposure to equity price risk in 1998 is
primarily due to the receipt of AirTouch common shares in the AirTouch
Transaction, partially offset by the issuance of the Exchangeable Notes.

32
<PAGE>
The changes in interest rates, foreign exchange rates and equity security
prices are based on hypothetical movements in future market rates and are not
necessarily indicative of actual results that may occur. Future gains and losses
will be affected by actual changes in interest rates, foreign exchange rates,
equity security prices, and changes in derivative financial instruments employed
during the year.

COMPETITIVE AND REGULATORY ENVIRONMENT

CABLE AND BROADBAND--DOMESTIC. MediaOne Group's cable television systems
generally compete with other providers of video programming for viewer attention
and advertising dollars. Competitors include service providers such as
television broadcasters, DBS, multipoint multichannel distributions services
("MMDS"), local multipoint distribution services ("LMDS"), satellite master
antenna service ("SMATV"), video tape rentals stores, movie theaters and live
sporting events. In addition, as a result of the Telecommunications Act of 1996
(the "Telecommunications Act") certain local exchange carriers ("LECs"),
including Regional Bell Operating Companies ("RBOCs"), are beginning to offer
video programming in competition with the Company's cable services. The
competition faced by the Company's cable systems is likely to increase in the
future with the development and growth of new technologies.

As MediaOne Group continues to offer additional services over its hybrid
fiber-coax ("HFC") networks, MediaOne Group will face additional competition.
Both the HSD and telephone services offered by MediaOne Group will face
competition from other providers, including RBOCs and other incumbent LECs,
interexchange carriers ("IXCs"), Internet service providers ("ISPs") and other
providers of local exchange and on-line services. The degree of competition will
be dependent upon the state and federal regulations concerning entry,
interconnection requirements and the degree of unbundling of the incumbent LECs'
networks. Competition will be based upon product, service quality, breadth of
services offered, and to a lesser extent on price.

The products and services of the Company are subject to varying degrees of
regulation. Under the Telecommunications Act, it is anticipated that the
regulation of all but basic tier cable and equipment rates will be discontinued
effective March 31, 1999. However, as described below, the Company must seek the
Federal Communications Commission's ("FCC") permission to end rate regulation
for cable systems covered by Continental's Social Contract. The
Telecommunications Act also eliminated certain cross-ownership restrictions
among cable operations, broadcasters and MMDS operations and removed barriers to
competition with LECs.

The Cable Television Consumer Protection and Competition Act of 1992 (the
"1992 Cable Act") provided for the regulation of rates for certain cable
television services and for equipment and installation charges. The FCC was
charged with setting the standards for rate regulation, but also approved
"social contracts" as an alternative form of regulation. Continental's Social
Contract was the first approved by the FCC. The Social Contract is a six-year
agreement covering most of Continental's franchises and settled all of
Continental's outstanding rate complaints. As part of the Social Contract,
Continental agreed to, among other things, invest at least $1.7 billion in
domestic system rebuilds and upgrades through the year 2000 to expand channel
capacity and improve system reliability and picture quality. As of December 31,
1998, the investment commitment had been met; however, the Company must still
upgrade all systems covered by the Social Contract to a minimum of 550MHz, with
at least half being upgraded to 750 MHz. The Social Contract also provides that,
if the laws and regulations applicable to services offered in any MediaOne
franchise change in a manner that would have a material favorable financial
impact on MediaOne, the Company may petition the FCC to terminate the Social
Contract. The sunset of rate regulation for the upper tiers of cable service
represents such a change and the FCC may not unreasonably refuse to terminate
the rate regulation provision of the Social Contract.

33
<PAGE>
customer service standards, billing practices, community-related programming and
services, franchise renewal and imposition of franchise fees.

INTERNATIONAL. The Company's international broadband and wireless
communications businesses also face significant competition in their respective
markets. Telewest's cable television services compete with broadcast television
stations, DBS services, satellite master antenna service systems and certain
narrowband operators in the United Kingdom. Telewest's telecommunications
services compete with domestic telephone companies in the United Kingdom, such
as British Telecommunications plc. One 2 One competes with three cellular
operators in the United Kingdom. Competition is based upon price, geographic
coverage and the quality of the services offered. The wireless businesses in
Central Europe face similar competition.

CONTINGENCIES

Certain cable subsidiaries of the Company in Florida, Michigan, Minnesota
and Ohio have been named as defendants in various class action lawsuits
challenging such subsidiaries' policies for charging late payment fees when
customers fail to pay for subscriber services in a timely manner. MediaOne Group
is currently reviewing the lawsuits to determine what impact, if any, such
lawsuits may have on the operations of the Company.

YEAR 2000 READINESS

The statements made herein relating to the Year 2000 are designated as Year
2000 Readiness Disclosures for purposes of the Year 2000 Information and
Readiness Disclosure Act. MediaOne Group uses software and related technologies
throughout its business that may be affected by the date change in the year
2000. MediaOne Group established a corporate-wide Year 2000 program in 1997,
which in relation to other business projects and objectives has been assigned a
high priority. The inability of systems to appropriately recognize the year 2000
could result in a disruption of Company operations. More specifically, such a
failure could result in material operational impacts on various of the Company's
business operations, as identified in more detail in the chart below.

MediaOne Group is progressing through a comprehensive program to evaluate
and address the impact of the Year 2000 on its operations. MediaOne Group is
utilizing both internal and external resources in implementing the program. The
program consists of the following phases:

<TABLE>
<S> <C>
Phase
(I) Assessment--Structured evaluation, including a detailed inventory outlining the
impact that the Year 2000 may have on current operations.
(II) Detailed Plan--Establishment of priorities, development of specific action steps and
allocation of resources to address the issues as outlined in Phase I.
(III) Conversion--Implementation of the necessary changes, (i.e., repair, replacement or
retirement) as outlined in Phase II.
(IV) Testing--Verification that the conversions implemented in Phase III will be
successful in resolving the Year 2000 problem so that all inventory items will
function properly, both as individual units and on an integrated basis.
(V) Implementation--The final roll-out of fully tested components into an operational
unit.
</TABLE>

34
<PAGE>
MediaOne Group currently has activities underway in each of the five phases.
The current stage of activities varies based upon the type of component, system,
and/or service at issue.

MediaOne Group has identified three primary risk assessment levels for
various inventory items relative to the Year 2000 program. These levels are
high, medium and low, with high risk items being those that may have such an
impact on the business, that if the risk is not appropriately managed and/or
mitigated, the occurrence of the risk could have an adverse impact on the
operations of the business, its customers and its employees. Medium risks are
those that if they are not appropriately managed and/or mitigated, the
occurrence of the risk may cause major difficulties in managing the day-to-day
operations of the business, and/or have a significant impact on the ability to
deliver acceptable service to customers. Low risks are those that if they are
not appropriately managed and/or mitigated, the occurrence of the risk may cause
difficulties in managing the business, however should not severely impact
service delivery, cash flow, or critical management activities.

MediaOne Group has identified and prioritized four critical business
functions across its business operations in order to manage its Year 2000
program. The critical business functions are (i) customer service, which
includes service delivery, service disruption, network management and workforce
management; (ii) customer care and billing, which includes bill issuance and
access to functioning call centers; (iii) cash flow, which includes payment
processing, general ledger, accounts payable and accounts receivable; and (iv)
employees, health and safety, which includes payroll processing, pension fund
issues, and building operations and security.

MediaOne Group has identified two business areas that are subject to Year
2000 disclosures. These are Domestic Cable and Broadband, and Investments in
Unconsolidated Subsidiaries.

35
<PAGE>
DOMESTIC CABLE AND BROADBAND

The following chart describes the status of the Company's Year 2000 program
with respect to Domestic Cable and Broadband operations in the four critical
business functions identified above.

<TABLE>
<CAPTION>
ESTIMATED
DATE OF
BUSINESS FUNCTIONS CURRENT AREAS OF FOCUS OPERATIONAL IMPACT CURRENT STATUS COMPLETION
- -------------------- ---------------------------- ---------------------------- ----------------- -----------
<S> <C> <C> <C> <C>
Customer Service Head End Controller Inability to provide video, Early Phase IV Q2 1999
Digital Transmission telephony & data service to
Equipment customers
Switches
Ad Insertion
Network Surveillance

Customer Care & Subscriber Billings Loss of revenues Early Phase IV Q3 1999
Billing Ad Sales Billings Loss of customer
Call Center Operations provisioning and repair
Data Communications support
Desktop Computing

Cash Flow Financial Systems Interruption to cash Early Phase IV Q2 1999
receipts & disbursements
cycle

Employees, Health & Payroll & Benefit Systems Loss of support systems and Early Phase IV Q3 1999
Safety Facilities Functions employee disruption
</TABLE>

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES

MediaOne Group has significant investments in both domestic and
international cable and broadband operations as well as wireless operations.
Within this area MediaOne Group has separated the Year 2000 program between
domestic and international investments for improved analysis and program
management.

(I) DOMESTIC INVESTMENTS

The domestic investments include an investment in TWE, the second-largest
provider of cable television services in the United States. MediaOne Group also
holds a significant cost basis investment in AirTouch as a result of selling its
domestic wireless businesses to AirTouch on April 6, 1998.

MediaOne Group continues to monitor Year 2000 efforts at TWE. TWE has
represented to MediaOne Group that they continue to be in the conversion phase
of their Year 2000 program as of December 31, 1998. MediaOne Group is planning
to continue the audit of TWE and its progress relative to its Year 2000 program
during 1999, as deemed necessary. MediaOne Group will continue to monitor
information provided to the investor community by AirTouch to evaluate the
progress toward remediation of Year 2000 issues and to monitor MediaOne Group's
investment value.

(II) INTERNATIONAL INVESTMENTS

Internationally, MediaOne Group holds an investment in Telewest, the largest
provider of combined cable and broadband communications services in the United
Kingdom. MediaOne Group also holds interests in cable and broadband properties
in the Netherlands, Belgium, the Czech Republic, Japan and Singapore.
Additionally, MediaOne Group holds wireless interests which include a 50 percent
joint venture interest in One 2 One, a provider of PCS services in the United
Kingdom. MediaOne Group also

36
<PAGE>
owns interests in wireless properties in Hungary, the Czech and Slovak
Republics, Poland, Russia and India.

All of the fourteen key international ventures in which MediaOne Group has
an investment continue to be in the Conversion and Testing Phases. The current
stage of activities varies within each venture as well as upon the type of
component at issue. Based upon current information provided by the ventures to
MediaOne Group, costs of addressing potential problems are not expected to have
a material adverse impact on MediaOne Group's financial position.

THIRD PARTY RELATIONSHIPS

MediaOne Group has significant relationships and dependencies with regard to
systems and technology provided and supported by third party vendors and service
providers. As part of its Year 2000 program, MediaOne Group has established a
vendor compliance group to obtain formal Year 2000 compliance representation
from vendors who provide products and services to MediaOne Group. The scope of
this group includes vendors who provide information technologies, network
switching and elements, infrastructure, electronic trading partners and other
third party suppliers. The vendor compliance process is being performed
concurrently with the regional/business unit Year 2000 remediation activities.
In addition, the MediaOne Group Year 2000 legal team has established in parallel
a vendor contract analysis program. Because of the aforementioned reliance
placed on third party vendors, MediaOne Group's estimate of costs to be incurred
could change substantially should one or more of the vendors be unable to timely
deliver Year 2000 compliant products.

BUSINESS CONTINUITY

Business continuity teams are in place for the Year 2000 program and include
business contingency and response and recovery management. Initial contingency
plans for mission critical projects that had not completed testing by December
31, 1998 have been developed that include trigger dates and processes for
implementation of such plans if needed. Operational response and recovery plans
are being refined and expected to be in place by third quarter 1999. There can
be no assurance that the contingency plans developed by the Company will
eliminate all potential for service interruption.

COSTS OF YEAR 2000 PROGRAM

MediaOne Group has incurred approximately $22 of costs to implement its Year
2000 compliance program through the fourth quarter of 1998 and currently expects
to incur between $60 to $75 of costs in aggregate, of which $10 to $15 represent
capitalized expenditures. Of the total costs being incurred, approximately $50
to $65 are incremental to MediaOne Group. The funding of these costs will be
managed by the Company through its liquidity and capital resources plan.

RISKS ASSOCIATED WITH YEAR 2000 ISSUES

Due to the complexity of the issues presented by the Year 2000 and the
proposed solutions, and the interdependence of MediaOne Group on a global list
of third party suppliers, it is impossible to assess with any degree of accuracy
the impact of a failure in any one aspect or combination of aspects of the
Company's Year 2000 program in relation to the Company's critical business
function areas. MediaOne Group cannot provide assurance that actual results will
not differ from management's estimates due to the complexity of correcting the
systems and related technologies surrounding the Year 2000 issue.

Failure by MediaOne Group to complete its Year 2000 project in a timely or
complete manner, within its estimate of projected costs, or failure by third
parties, such as financial institutions and related networks, software
providers, local telephone companies, long distance providers, power providers,
etc., to correct their systems, with which MediaOne Group's systems
interconnect, could have a material impact on future results of operations and
financial position. Other factors which might cause a material difference from
management's estimate would include, but not be limited to, the availability and
cost of

37
<PAGE>
personnel with appropriate skills and abilities to locate and correct all
relevant computer code and similar uncertainties, as well as the collateral
effects on MediaOne Group of the Year 2000 problem on the economy in general, or
on MediaOne Group's business partners and customers in particular. However,
MediaOne Group believes that the Year 2000 issue can be mitigated through its
planned repair, replacement, or retirement of the relevant systems and related
technologies, that are within MediaOne Groups reasonable control.

FUTURE IMPLEMENTATION OF NEW ACCOUNTING STANDARDS

In the year 2000, the Company will adopt SFAS No. 133, "Accounting for
Derivative Instruments and for Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. Among other things, the statement requires that an entity recognize
all derivative instruments on the balance sheet as either assets or liabilities,
and to account for those instruments at fair value. The Company is evaluating
the impact of SFAS No. 133.

Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," was issued in March 1998. SOP
98-1, among other things, requires that certain costs of internal use software,
whether purchased or developed internally, be capitalized and amortized over the
estimated useful life of the software. Adoption of SOP 98-1 is required as of
January 1, 1999 and will not have a material impact on the results of operations
of the Company.

SOP 98-5, "Reporting on the Costs of Start-Up Activities," was issued in
April 1998. SOP 98-5 requires, among other things, that the costs related to
start-up activities of a new entity, facility, product or service be expensed.
Adoption of SOP 98-5 is required as of January 1, 1999, and will not have a
material impact on the results of operations of the Company.

OUTLOOK

The outlook section contains "forward looking information" 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. For a detailed listing of factors that could cause actual
results to differ from the Company's expectations, see the "Safe Harbor
Language" on page 14, incorporated herein by reference.

DOMESTIC CABLE AND BROADBAND BUSINESS

The following expectations are based on the cable systems held as of
December 31, 1998, and could be impacted by cable system acquisitions,
dispositions or trades.

CONSOLIDATED REVENUES. The Company expects total revenue growth around 10
percent during 1999. Total revenue includes video, HSD, telephony and other
services. Revenue growth will be driven by the following:

(i) Basic cable revenues--The Company anticipates average rate increases for
its basic cable services to be no higher than five percent in 1999.

(ii) Subscriber growth--As of year-end 1999, subscriber growth is expected to
be around 1.5 percent, on a comparable basis.

(iii) Premium services revenues--The negative trend in premium services
revenues is expected to reverse during 1999 as a result of the
introduction of "NexTV", a packaging proposition which focuses on
clustering related premium channels.

(iv) Pay per view revenues--Various sporting events in 1999 are expected to
generate increased revenues over 1998 and reverse the overall decrease in
this category.

38
<PAGE>
(v) Advertising revenues--MediaOne Group expects growth of approximately 20
percent in advertising revenues during 1999.

(vi) HSD revenues--The Company expects to increase its HSD customers by upwards
of 100,000 during 1999.

(vii) Telephony revenues--The telephony customer base is expected to more than
triple by year-end 1999.

CONSOLIDATED EBITDA. EBITDA growth is expected to be approximately five
percent in 1999. The Company anticipates double digit EBITDA growth by the year
2000. New Products are expected to incur total losses of $55 during 1999 as a
result of reduced EBITDA losses for HSD services, offset by increased EBITDA
losses for telephony services. The Company is also working on a number of
different initiatives to improve service and add to the domestic cable business
capabilities. The costs of such initiatives are expected to amount to
approximately $55 in each of 1999 and 2000.

TIME WARNER ENTERTAINMENT. The Company's investment in Time Warner
Entertainment continues to increase in value. Cash distributions from this asset
are expected in the foreseeable future.

INTERNATIONAL BUSINESS

The Company expects to approximately double proportionate EBITDA from its
international ventures in 1999. MediaOne Group continues to focus on high-growth
ventures. Management's expectations are to continue making select investments in
Europe and Asia as opportunities arise, to extract value from its international
ventures when they reach peak levels, and to exit those ventures in which it
cannot obtain an acceptable level of control.

In the third quarter of 1998, Russia experienced a political and economic
crisis which had a significant detrimental impact on the business climate. As a
result of the crisis, the Company conducted an evaluation of its investments in
Russia which are held by RTDC, a 66.5 percent owned subsidiary. The Company
concluded that the investments held by RTDC, although impacted by the crisis,
were not impaired at the present time. The future prospects for the Russian
economy are unknown. Although predictions vary, the political or economic
climate of Russia may decline further and could result in a change in the
assessment of its investments. As of December 31, 1998, the Company had a net
investment in RTDC of $11, a net receivable from the venture of $9, and an
outstanding guarantee of RTDC debt of $17.

The company owns a 49 percent interest in BPL Cellular Limited ("BPL
Cellular"), a wireless venture which provides cellular telephone service in
certain areas of India. In 1998, BPL Cellular made only partial payments on its
cellular license due to the India government. In recent months, the government
has indicated a willingness to re-examine its regulations applicable to cellular
carriers, including the license fee structure. BPL Cellular will require cash
from external sources to fund its operations in 1999 and is currently in
negotiations with banks regarding its interim and long-term financing needs. As
of December 31, 1998, the Company had a net investment in BPL Cellular of a
negative $53. The Company has recorded losses in excess of its capital
contributions due to outstanding loan guarantees of BPL Cellular's debt of
approximately $86. The Company also has an outstanding receivable from BPL
Cellular of $10.

* * * * * * * *

MediaOne Group from time to time engages in preliminary discussions
regarding restructurings, dispositions and other similar transactions. Any such
transaction may include, among other things, the transfer of certain assets,
businesses or interests, or the incurrence or assumption of indebtedness, and
could be material to the financial condition and results of operations of the
Company. There is no assurance that any such discussions will result in the
consummation of any such transaction.

39
<PAGE>
SELECTED PROPORTIONATE FINANCIAL DATA

The following table reflects the significant entities included in MediaOne
Group's Consolidated Financial Statements and the percent ownership by industry
segment. The proportionate financial and operating data for these entities are
summarized in the proportionate data tables that follow.
<TABLE>
<CAPTION>
DOMESTIC INTERNATIONAL
<S> <C> <C> <C>
CABLE AND BROADBAND CABLE AND BROADBAND WIRELESS COMMUNICATIONS

<CAPTION>
<S> <C> <C> <C>
C MediaOne of Delaware Cable Plus a.s. Russian
O 100% (Czech Republic) Telecommunications
N 97.1% Development Corp.
S (Russia)
O 66.5%
L
I
D
A
T
E
D

TWE Telewest (UK) One 2 One (UK)
25.51% 29.9% 50%
E A2000 (KTA) Westel 450
Q (Netherlands) (Hungary)
U 50% 49%
I Telenet Westel 900
T (Belgium) (Hungary)
Y 25% 49%
Singapore Cablevision EuroTel
M (Singapore) (Czech & Slovak
E 25% Republics)
T Titus Communications 24.5%
H Corp. (Japan) Polska Telefonia Cyfrowa
O 25% (Poland)
D Chofu Cable Television 22.5%
(Japan) BPL Cellular Limited
19.1% (India)
49%
</TABLE>

Effective December 31, 1997, MediaOne Group no longer reflects proportionate
information on Binariang SDN BHD in Malaysia and Aria WEST in Indonesia as the
Company's investments in these entities have been written-down to zero.

PROPORTIONATE RESULTS OF OPERATIONS--1998 COMPARED WITH 1997

The following table and discussion is not required by GAAP or intended to
replace the Consolidated Financial Statements prepared in accordance with GAAP.
It is presented supplementally because

40
<PAGE>
SELECTED PROPORTIONATE FINANCIAL DATA (CONTINUED)
MediaOne Group believes that proportionate financial and operating data
facilitate the understanding and assessment of its Consolidated Financial
Statements. The table does not reflect financial data of the capital assets
segment. The financial information included below departs materially from GAAP
because it aggregates the revenues and operating income of entities not
controlled by MediaOne Group with those of the consolidated operations of
MediaOne Group.

<TABLE>
<CAPTION>
DECEMBER 31, CHANGE
-------------------- --------------------
1998 1997 $ %
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PROPORTIONATE REVENUES
Cable and broadband:
Domestic(1)................................................................ $ 5,591 $ 5,210 $ 381 7.3
International.............................................................. 339 474 (135) (28.5)
--------- --------- --------- ---------
5,930 5,684 246 4.3

International wireless....................................................... 1,117 756 361 47.8
Corporate.................................................................... 20 17 3 17.6
Other(2)..................................................................... 65 114 (49) (43.0)
--------- --------- --------- ---------
Total proportionate revenues(3)............................................ $ 7,132 $ 6,571 $ 561 8.5
--------- --------- --------- ---------
--------- --------- --------- ---------
PROPORTIONATE EBITDA(4)
Cable and broadband:
Domestic(1)................................................................ $ 1,741 $ 1,641 $ 100 6.1
International.............................................................. 21 36 (15) (41.7)
--------- --------- --------- ---------
1,762 1,677 85 5.1

International wireless....................................................... 184 41 143 --
Corporate.................................................................... (69) (80) 11 (13.8)
Other........................................................................ 1 (18) 19 --
--------- --------- --------- ---------
Total proportionate EBITDA(3).............................................. $ 1,878 $ 1,620 $ 258 15.9
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>

- ------------------------

(1) The proportionate results are based on MediaOne Group's 25.51 percent pro
rata priority and residual equity interests in reported TWE results. The
reported TWE results are prepared in accordance with GAAP and have not been
adjusted to report TWE results on a proportionate basis.

(2) Primarily includes international directories.

(3) Amounts exclude proportionate revenues for the domestic wireless operations
of $354 and $1,340, and proportionate EBITDA of $114 and $398, for 1998 and
1997, respectively.

(4) Proportionate EBITDA represents MediaOne Group's equity interest in the
entities multiplied by the entity's EBITDA. As such, proportionate EBITDA
does not represent cash available to MediaOne Group.

41
<PAGE>
SELECTED PROPORTIONATE FINANCIAL DATA (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, CHANGE
-------------------- --------------------
PROPORTIONATE STATISTICS (IN THOUSANDS) 1998 1997 AMOUNT %
- ------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cable and broadband:
Domestic video subscribers(1).......................................... 7,719 7,524 195 2.6
Domestic homes passed.................................................. 12,964 12,313 651 5.3
Domestic HSD subscribers............................................... 110 28 82 --
Domestic telephone lines............................................... 13 -- 13 100.0

International video subscribers........................................ 993 899 94 10.5
International homes passed............................................. 2,581 2,030 551 27.1
International telephone lines.......................................... 487 403 84 20.8

International wireless:
Subscribers............................................................ 1,734 1,018 716 70.3
POPs................................................................... 72,754 76,927 (4,173) (5.4)
</TABLE>

- ------------------------

(1) The proportionate results are based on MediaOne Group's 25.51 percent pro
rata priority and residual equity interests in reported Time Warner
Entertainment Company L.P. ("TWE") results. The reported TWE results are
prepared in accordance with GAAP and have not been adjusted to report TWE
results on a proportionate basis.

Normalized for the one-time effects of acquisitions, dispositions and other
asset transactions, proportionate revenues increased $961, or 15.7 percent, and
EBITDA increased $317, or 20.7 percent.

CABLE AND BROADBAND--DOMESTIC. During 1998, normalized for the one-time
effects of cable system acquisitions and dispositions, and a change in
classification of the domestic cable late fee revenues, proportionate revenues
increased $538, or 10.7 percent. This is a result of increases in subscribers
and revenue per subscriber mainly due to expanded channel offerings, repackaging
of services and increased rates. Normalized for the one-time effects of cable
system acquisitions and dispositions, proportionate EBITDA increased $123, or
7.7 percent. This increase is primarily a result of higher revenues, partially
offset by higher programming fees, increased personnel costs related to customer
service initiatives and costs associated with the deployment of HSD and
telephony services. Proportionate EBITDA related to TWE operations increased
12.1 percent. TWE's results benefited from improved cable, programming and
filmed entertainment operations, and gains realized by asset sales.

CABLE AND BROADBAND--INTERNATIONAL. During 1998, normalized for asset
dispositions and the suspended proportionate reporting of the Malaysian and
Indonesian ventures in 1998, international cable and broadband proportionate
revenues increased $61, or 21.9 percent, due primarily to customer growth at
Telewest. During the same period, normalized proportionate EBITDA increased $32,
to a positive $21 in proportionate EBITDA, due to improved operations at
Telewest, partially offset by an increase in MediaOne Group international staff
costs.

Proportionate international cable subscribers totaled 993,000 at December
31, 1998, a 7.2 percent increase over last year on a comparable basis.
Telewest's cable television subscribers increased 13.4 percent over last year on
a comparable basis.

INTERNATIONAL WIRELESS. During 1998, proportionate revenues and EBITDA for
the international wireless operations increased due to the 80.1 percent increase
in the international wireless subscriber base to 1,734,000, on a comparable
basis. One 2 One, the PCS venture in the United Kingdom, and the digital
wireless operations in Hungary, Czech Republic, Slovakia, and Poland contributed
significantly to the increase. One 2 One added 454,000 proportionate customers,
a 90 percent increase from a year ago.

42
<PAGE>
SELECTED PROPORTIONATE FINANCIAL DATA (CONTINUED)
CORPORATE. During 1998, proportionate revenues for corporate operations
increased $3, or 17.6 percent, to $20. Proportionate EBITDA losses decreased
$11, or 13.8 percent, to $(69) primarily due to a $30 charge in 1997 for
management changes and moving costs related to relocating MediaOne's operations
from Boston to Denver, partially offset by increased overhead costs.

OTHER. Other reflects the results of the international directories
operations located in South America in both 1998 and 1997, and in Poland and the
United Kingdom in 1997. Also included are costs related to development
activities, primarily for the development of Internet content services.
Proportionate revenues decreased $49 during 1998, primarily due to the sale of
the United Kingdom and Poland international directories operations in the latter
part of 1997. Proportionate EBITDA increased $19 during 1998, primarily due to
the July 1998 transfer of an Internet content service operation to the domestic
cable and broadband operation, and to the sale in 1997 of the international
directories operations discussed above.

43
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREOWNERS OF MEDIAONE GROUP, INC.:

We have audited the accompanying Consolidated Balance Sheets of MediaOne
Group, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1997, and the related Consolidated Statements of Operations, Shareowners'
Equity and Cash Flows for each of the three years in the period ended December
31, 1998. These consolidated financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements and this
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MediaOne Group,
Inc. and subsidiaries as of December 31, 1998 and 1997, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule appearing on page S-1 of
this Form 10-K is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP
Denver, Colorado,
February 18, 1999 (except with
respect to the matters discussed
in Note 22, as to which the date
is March 22, 1999).

44
<PAGE>
REPORT OF MANAGEMENT

The Consolidated Financial Statements of MediaOne Group have been prepared
in conformity with generally accepted accounting principles applied on a
consistent basis. The integrity and objectivity of information in these
financial statements, including estimates and judgments, are the responsibility
of management, as is all other financial information included in this report.

MediaOne Group maintains a system of internal accounting controls designed
to provide reasonable assurance as to the integrity and reliability of financial
statements, the safeguarding of assets and the prevention and detection of
material errors or fraudulent financial reporting. Monitoring of such systems
includes an internal audit program designed to objectively assess the
effectiveness of internal controls and recommend improvements therein.

Limitations exist in any system of internal accounting controls based upon
the recognition that the cost of the system should not exceed the benefits
derived. MediaOne Group believes that the Company's system does provide
reasonable assurance that transactions are executed in accordance with
management's general or specific authorizations and is adequate to accomplish
the stated objectives.

The independent certified public accountants, whose report is included
herein, were engaged to express an opinion on our Consolidated Financial
Statements. Their opinion is based on procedures performed in accordance with
generally accepted auditing standards, including examining, on a test basis,
evidence supporting the amounts and disclosures in the Consolidated Financial
Statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.

In an attempt to assure objectivity, the financial information contained in
this report is subject to review by the Audit Committee of the Board of
Directors. The Audit Committee is composed of outside directors who meet
regularly with management, internal auditors and independent auditors to review
financial reporting matters, the scope of audit activities and the resolution of
audit findings.

Charles M. Lillis
PRESIDENT AND CHIEF EXECUTIVE OFFICER

Richard A. Post
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER

February 18, 1999

45
<PAGE>
MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
Sales and other revenues........................................................... $ 2,882 $ 3,847 $ 1,837

Operating expenses:
Cost of sales and other revenues................................................. 1,013 1,255 563
Selling, general and administrative.............................................. 926 1,305 844
Depreciation and amortization.................................................... 1,182 1,257 386
--------- --------- ---------
Total operating expenses....................................................... 3,121 3,817 1,793
--------- --------- ---------
Operating income (loss)............................................................ (239) 30 44

Interest expense................................................................... (491) (678) (164)
Equity losses in unconsolidated ventures........................................... (417) (909) (346)
Gain on sale of domestic wireless investment....................................... 3,869 -- --
Gains on sales of investments...................................................... 70 421 --
Loss on PrimeStar investment....................................................... (163) -- --
Guaranteed minority interest expense............................................... (74) (87) (55)
Other income (expense)--net........................................................ 83 16 (16)
--------- --------- ---------
Income (loss) from continuing operations before income taxes....................... 2,638 (1,207) (537)
(Provision) benefit for income taxes............................................... (1,208) 380 180
--------- --------- ---------
Income (loss) from continuing operations........................................... 1,430 (827) (357)

Income from discontinued operations--net of tax: (See Note 24)
Results of operations............................................................ 747 1,524 1,535
Gain on Separation............................................................... 24,461 -- --
--------- --------- ---------
Income before extraordinary item................................................... 26,638 697 1,178
Extraordinary item--early extinguishment of debt--net of tax....................... (333) -- --
--------- --------- ---------
NET INCOME......................................................................... $ 26,305 $ 697 $ 1,178
--------- --------- ---------
--------- --------- ---------
Preferred stock dividends and accretion............................................ (55) (52) (9)
Loss on redemption of Preferred Securities......................................... (53) -- --
--------- --------- ---------
EARNINGS AVAILABLE FOR COMMON STOCK(1)............................................. $ 26,197 $ 645 $ 1,169
--------- --------- ---------
--------- --------- ---------
</TABLE>

- ------------------------

(1) The Company distributed $25,345 as a dividend to New U S WEST stockholders
upon the Separation representing the fair value of the businesses comprising
New U S WEST.

The accompanying notes are an integral part of the Consolidated Financial
Statements.

46
<PAGE>
MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS
<S> <C> <C> <C>
MEDIAONE GROUP STOCK(1)

BASIC EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) from continuing operations................................... $ 2.18 $ (1.45) $ (0.74)
Income from discontinued operations(2)..................................... 0.26 0.57 0.58
Gain on Separation......................................................... 40.25 -- --
Extraordinary item--early extinguishment of debt........................... (0.55) -- --
---------- ---------- ----------
Basic earnings (loss) per common share....................................... $ 42.14 $ (0.88) $ (0.16)
---------- ---------- ----------
---------- ---------- ----------
BASIC AVERAGE COMMON SHARES OUTSTANDING...................................... 607,648 606,749 491,924
---------- ---------- ----------
---------- ---------- ----------
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
Income (loss) from continuing operations................................... $ 2.10 $ (1.45) $ (0.74)
Income from discontinued operations(2)..................................... 0.24 0.57 0.58
Gain on Separation......................................................... 37.46 -- --
Extraordinary item--early extinguishment of debt........................... (0.51) -- --
---------- ---------- ----------
Diluted earnings (loss) per common share..................................... $ 39.29 $ (0.88) $ (0.16)
---------- ---------- ----------
---------- ---------- ----------
DILUTED AVERAGE COMMON SHARES OUTSTANDING.................................... 652,955 606,749 491,924
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

- ------------------------

(1) For additional earnings per share information of MediaOne Group Stock and
earnings per share information of Communications Stock, see Note
17--Earnings Per Share--to the Consolidated Financial Statements.

(2) Amounts represent the operations of U S WEST Dex, Inc., which were
discontinued as of June 12, 1998.

The accompanying notes are an integral part of the Consolidated Financial
Statements.

47
<PAGE>
MEDIAONE GROUP, INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
DOLLARS IN MILLIONS
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................................... $ 415 $ 184
Accounts and notes receivable, less allowance for credit losses of $31 and $64,
respectively.............................................................................. 255 604
Income tax receivable....................................................................... 375 --
Current portion of deferred tax asset....................................................... 74 102
Prepaid and other........................................................................... 33 77
Marketable securities....................................................................... 48 --
Net investment in assets of discontinued operations......................................... -- 4,367
--------- ---------
Total current assets.......................................................................... 1,200 5,334

Property, plant and equipment-net............................................................. 4,069 4,272
Investment in AirTouch Communications......................................................... 5,919 --
Investment in Time Warner Entertainment....................................................... 2,442 2,486
Net investment in international ventures...................................................... 1,344 742
Net investment in assets held for sale........................................................ -- 419
Intangible assets-net......................................................................... 11,647 12,597
Other assets.................................................................................. 1,571 933
--------- ---------
Total assets.................................................................................. $ 28,192 $ 26,783
--------- ---------
--------- ---------

LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt............................................................................. $ 569 $ 735
Accounts payable............................................................................ 332 395
Employee compensation....................................................................... 80 109
Deferred revenue and customer deposits...................................................... 87 108
Other....................................................................................... 546 841
--------- ---------
Total current liabilities..................................................................... 1,614 2,188

Long-term debt................................................................................ 4,853 8,228
Deferred income taxes......................................................................... 6,035 3,276
Deferred credits and other.................................................................... 641 587
Commitments and contingencies.................................................................

Minority interest in Centaur Funding.......................................................... 1,099 --
Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding
solely Company-guaranteed debentures........................................................ 1,061 1,080
Preferred stock subject to mandatory redemption............................................... 100 100

Shareowners' equity:
Series D Preferred Stock--$1.00 per share par value, 20,000,000 shares authorized,
19,999,478 shares issued and outstanding.................................................. 927 923
Common shares--............................................................................. 10,324 10,876
MediaOne Group Stock--$0.01 per share par value, 2,000,000,000 shares authorized,
630,915,792 and 626,565,410 issued, and 603,475,920 and 607,807,934 outstanding,
respectively.............................................................................
Communications Stock--$0.01 per share par value, 2,000,000,000 shares authorized,
484,522,015 issued and 484,515,415 outstanding in 1997...................................
Retained earnings (deficit)................................................................. 669 (359)
LESOP guarantee............................................................................. -- (46)
Accumulated other comprehensive income (loss)............................................... 869 (70)
--------- ---------
Total shareowners' equity..................................................................... 12,789 11,324
--------- ---------
Total liabilities and shareowners' equity..................................................... $ 28,192 $ 26,783
--------- ---------
--------- ---------
</TABLE>

The accompanying notes are an integral part of the Consolidated Financial
Statements.

48
<PAGE>
MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income........................................................................... $ 26,305 $ 697 $ 1,178
Adjustments to net income:
Discontinued operations............................................................ (747) (1,524) (1,535)
Gain on Separation................................................................. (24,461) -- --
Extraordinary loss on debt extinguishment.......................................... 333 -- --
Depreciation and amortization...................................................... 1,182 1,257 386
Equity losses in unconsolidated ventures........................................... 417 909 346
Distribution from unconsolidated ventures.......................................... 51 9 14
Gain on sale of domestic wireless investment....................................... (3,869) -- --
Gains on sales of investments...................................................... (70) (421) --
Loss on PrimeStar investment....................................................... 163 -- --
Deferred income taxes and amortization of investment tax credits................... 1,579 (149) (68)
Provision for uncollectibles....................................................... 42 74 44
Separation costs paid................................................................ (140) -- --
Changes in operating assets and liabilities:
Accounts and notes receivable...................................................... 142 (163) (83)
Prepaid and other current assets................................................... (22) (44) 14
Accounts payable and accrued liabilities........................................... (304) 239 114
Other-net............................................................................ (37) 111 21
--------- --------- ---------
Cash provided by operating activities................................................ 564 995 431
--------- --------- ---------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment....................................... (1,726) (1,522) (627)
Payment to Continental Cablevision shareowners....................................... -- (1,150) --
Investments in international ventures................................................ (583) (334) (257)
Investments in domestic ventures..................................................... (108) (249) (164)
Purchase of miscellaneous assets..................................................... (92) (25) --
Proceeds from sales of investments................................................... 241 1,827 28
Cash from net investment in assets held for sale..................................... 31 231 213
Other-net............................................................................ (164) -- --
--------- --------- ---------
Cash used for investing activities................................................... (2,401) (1,222) (807)
--------- --------- ---------
FINANCING ACTIVITIES
Net proceeds from (repayments of) short-term debt.................................... 728 (3,556) 3,829
Repayments of long-term debt......................................................... (5,447) (379) (4,217)
Repayments of Preferred Securities................................................... (582) -- --
Proceeds from issuance of long-term debt-net......................................... 1,642 4,123 360
Proceeds from issuance of Preferred Securities-net................................... 484 -- 465
Proceeds from issuance of common stock............................................... 144 106 136
Proceeds from issuance of Centaur Funding Preference Shares-net...................... 1,099 -- --
Purchases of treasury stock.......................................................... (383) (53) (297)
Dividends paid on common stock....................................................... (519) (992) (939)
Dividends paid on preferred stock.................................................... (51) (50) (9)
--------- --------- ---------
Cash used for financing activities................................................... (2,885) (801) (672)
--------- --------- ---------
Cash provided by discontinued operations............................................. 4,953 1,091 1,149
--------- --------- ---------
CASH AND CASH EQUIVALENTS
Increase........................................................................... 231 63 101
Beginning balance.................................................................. 184 121 20
--------- --------- ---------
Ending balance..................................................................... $ 415 $ 184 $ 121
--------- --------- ---------
--------- --------- ---------
</TABLE>

The accompanying notes are an integral part of the Consolidated Financial
Statements.

49
<PAGE>
MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME/(LOSS)
-------------
PREFERRED COMMON RETAINED FOREIGN
STOCK STOCK EARNINGS LESOP CURRENCY
AMOUNT AMOUNT (DEFICIT) GUARANTEE TRANSLATION
----------- ----------- --------- ----------- -------------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1995......................... $ 8,228 $ (121) $ (127) $ (38)
Issuance of Communications Stock.................. 216
Issuance of MediaOne Group Stock for Continental
Acquisition..................................... 2,590
Other issuances of MediaOne Group Stock........... 38
Issuance of Series D Preferred Stock.............. $ 920
Purchase of treasury stock........................ (297)
Common dividends declared ($2.14 per
Communications share)........................... (1,024)
Preferred dividends............................... (9)
Other............................................. (34) (7) 36
Comprehensive Income:
Net income...................................... 1,178
Market value adjustments for debt and equity
securities, net...............................
Foreign currency translation.................... (1)
Other comprehensive income, net...............
Total comprehensive income........................
----- ----------- --------- ----- ---
BALANCE DECEMBER 31, 1996......................... 920 10,741 17 (91) (39)
Issuance of Communications Stock.................. 138
Issuance of MediaOne Group Stock.................. 40
Purchase of treasury stock........................ (53)
Common dividends declared ($2.14 per
Communications share)........................... (1,034)
Preferred dividends............................... 3 (52)
Other............................................. 10 13 45
Comprehensive Income:
Net income...................................... 697
Market value adjustments for debt and equity
securities, net...............................
Foreign currency translation.................... (56)
Other comprehensive income, net...............
Total comprehensive income........................
----- ----------- --------- ----- ---
BALANCE DECEMBER 31, 1997......................... 923 10,876 (359) (46) (95)
Issuance of Communications Stock.................. 24
Distribution of New U S WEST...................... (421) (24,924)
Issuance of MediaOne Group Stock.................. 81
Purchase of treasury stock........................ (383)
Common dividends declared ($0.535 per
Communications share)........................... (260)
Preferred dividends and accretion................. 4 (55)
Loss on redemption of Preferred Securities........ (53)
Other............................................. 147 15 46
Comprehensive Income:
Net income...................................... 26,305
Market value adjustments for debt and equity
securities and Exchangeable Notes, net........
Foreign currency translation.................... (4)
Other comprehensive income, net...............
Total comprehensive income........................
----- ----------- --------- ----- ---
BALANCE DECEMBER 31, 1998......................... $ 927 $ 10,324 $ 669 $ -- $ (99)
----- ----------- --------- ----- ---
----- ----------- --------- ----- ---

UNREALIZED
GAIN/(LOSS) ON
DEBT AND EQUITY COMPREHENSIVE
SECURITIES TOTAL INCOME
----------------- --------- --------------

<S> <C> <C> <C>
BALANCE DECEMBER 31, 1995......................... $ 6 $ (32)
Issuance of Communications Stock..................
Issuance of MediaOne Group Stock for Continental
Acquisition.....................................
Other issuances of MediaOne Group Stock...........
Issuance of Series D Preferred Stock..............
Purchase of treasury stock........................
Common dividends declared ($2.14 per
Communications share)...........................
Preferred dividends...............................
Other.............................................
Comprehensive Income:
Net income...................................... $ 1,178
Market value adjustments for debt and equity
securities, net............................... (5) (5)
Foreign currency translation.................... (1)
---------
Other comprehensive income, net............... (6) (6)
-------
Total comprehensive income........................ $ 1,172
----- --------- -------
-------
BALANCE DECEMBER 31, 1996......................... 1 (38)
Issuance of Communications Stock..................
Issuance of MediaOne Group Stock..................
Purchase of treasury stock........................
Common dividends declared ($2.14 per
Communications share)...........................
Preferred dividends...............................
Other.............................................
Comprehensive Income:
Net income...................................... 697
Market value adjustments for debt and equity
securities, net............................... 24 24
Foreign currency translation.................... (56)
---------
Other comprehensive income, net............... (32) (32)
-------
Total comprehensive income........................ $ 665
----- --------- -------
-------
BALANCE DECEMBER 31, 1997......................... 25 (70)
Issuance of Communications Stock..................
Distribution of New U S WEST......................
Issuance of MediaOne Group Stock..................
Purchase of treasury stock........................
Common dividends declared ($0.535 per
Communications share)...........................
Preferred dividends and accretion.................
Loss on redemption of Preferred Securities........
Other.............................................
Comprehensive Income:
Net income...................................... 26,305
Market value adjustments for debt and equity
securities and Exchangeable Notes, net........ 943 943
Foreign currency translation.................... (4)
---------
Other comprehensive income, net............... 939 939
-------
Total comprehensive income........................ $ 27,244
----- --------- -------
-------
BALANCE DECEMBER 31, 1998......................... $ 968 $ 869
----- ---------
----- ---------
</TABLE>

The accompanying notes are an integral part of the Consolidated Financial
Statements.

50
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

NOTE 1: THE SEPARATION

The Separation was consummated pursuant to the terms of a separation
agreement between MediaOne Group and New U S WEST (the "Separation Agreement").
The Company accounted for the distribution of New U S WEST stock to the
Communications Group stockholders, and to the Media Group stockholders for the
Dex Alignment, as a discontinuance of the businesses comprising New U S WEST. As
a result, certain financial information of Old U S WEST has been restated to
give effect to the classification of New U S WEST as a discontinued operation.
See Note 24--Discontinued Operations--to the Consolidated Financial Statements.

Prior to the Separation, Old U S WEST had outstanding two separate classes
of common stock which reflected the performance of its two groups. The
performance of Media Group was reflected by the U S WEST Media Group common
stock (the "Media Stock") and the performance of the Communications Group was
reflected by the U S WEST Communications Group common stock (the "Communications
Stock"). Upon Separation, and in accordance with the Separation Agreement, each
outstanding share of Media Stock remains outstanding and represents one share of
MediaOne Group common stock ("MediaOne Group Stock"). Each issued and
outstanding share of Communications Stock was redeemed for one share of New U S
WEST common stock. See Note 16--Shareowners' Equity--to the Consolidated
Financial Statements.

In connection with the Separation, MediaOne Group refinanced substantially
all of the indebtedness issued or guaranteed by Old U S WEST through a
combination of tender offers, prepayments and consent solicitations (the
"Refinancing"). See Note 10--Debt--to the Consolidated Financial Statements.

NOTE 2: BUSINESS OVERVIEW

MediaOne Group is a diversified global broadband communications company, and
the third largest cable television system operator in the United States with
large clusters in Atlanta, Massachusetts, California, Florida, Detroit, and
Minneapolis/St. Paul. The Company has operations and investments in two
principal areas: (1) domestic broadband communications, and (2) international
broadband and wireless communications. Among its investments, MediaOne Group
owns an investment in Time Warner

51
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2: BUSINESS OVERVIEW (CONTINUED)
Entertainment Company, L.P. ("TWE" or "Time Warner Entertainment"), which
provides cable programming, filmed entertainment and broadband communications
services, and is the second largest cable television system operator in the
United States. The Company also owns an investment in Telewest Communications
plc ("Telewest"), the largest provider of residential cable, telephone and
Internet access services in the United Kingdom.

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION. The Consolidated Financial Statements include the
accounts of the Company and its majority-owned subsidiaries. Effective on
December 31, 1998, the Consolidated Balance Sheet includes the accounts of the
capital assets segment. Prior to this time, the capital assets segment had been
reported as "net investment in assets held for sale." See Note 23--Net
Investment In Assets Held For Sale--to the Consolidated Financial Statements.
All significant intercompany amounts and transactions within continuing
operations have been eliminated. Investments in less than majority-owned
ventures are generally accounted for using the equity method.

Certain reclassifications within the Consolidated Financial Statements have
been made to conform to the current year presentation.

USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles ("GAAP") requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

CASH AND CASH EQUIVALENTS. Cash and cash equivalents include highly liquid
investments with original maturities of three months or less that are readily
convertible into cash and are not subject to significant risk from fluctuations
in interest rates.

PROPERTY, PLANT AND EQUIPMENT. The investment in property, plant and
equipment, including construction materials, is carried at cost less accumulated
depreciation. Additions, replacements and substantial betterments are
capitalized. Costs for normal repair and maintenance of property, plant and
equipment are expensed as incurred.

MediaOne of Delaware, Inc. ("MediaOne"), the domestic cable and broadband
subsidiary of the Company, provides for depreciation of certain property, plant
and equipment using various straight-line group methods and remaining economic
lives. When depreciable property, plant and equipment accounted for on the group
methods is retired or sold, the original cost less the net salvage value is
generally charged to accumulated depreciation. The Company's remaining assets
are depreciated using the straight-line method. Gains or losses on disposal are
included in income.

The Company depreciates buildings between 10 to 35 years, cable distribution
systems between 3 to 15 years, and general purpose computers and other between 3
to 20 years.

Interest related to qualifying construction projects, including construction
projects of equity method investees, is capitalized and reflected as a reduction
of interest expense. Amounts capitalized were $19, $36 and $38 for the years
ended 1998, 1997 and 1996, respectively.

52
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPUTER SOFTWARE. MediaOne capitalizes computer software, whether
purchased or developed internally. Capitalized software costs are amortized over
periods ranging up to 5 years. MediaOne Group expenses all other computer
software costs.

Capitalized computer software of $89 and $24 at December 31, 1998 and 1997,
respectively, is recorded in property, plant and equipment. MediaOne amortized
capitalized computer software costs of $13, $10 and $1 in 1998, 1997 and 1996,
respectively.

INTANGIBLE ASSETS. Intangible assets are recorded when the cost of acquired
companies exceeds the fair value of their net tangible assets. The costs of
identified intangible assets and goodwill are amortized by the straight-line
method over periods ranging from 5 to 25 years. These assets are evaluated for
impairment with other related assets, using the methodology as prescribed by
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of."

INVESTMENTS IN DEBT AND EQUITY SECURITIES. Debt and marketable equity
securities are classified as available for sale and are carried at fair market
value with unrealized gains and losses included in equity as a component of
other comprehensive income.

FOREIGN CURRENCY TRANSLATION. Assets and liabilities of international
subsidiaries and investments are translated at year-end exchange rates, and
income statement items are translated at average exchange rates for the year.
Resulting translation adjustments are included in equity as a component of other
comprehensive income. Gains and losses resulting from foreign currency
transactions are included in income.

FINANCIAL INSTRUMENTS. Synthetic instrument accounting is used for interest
rate swaps if the index, maturity, and amount of the instrument match the terms
of the underlying debt. Net interest accrued is recognized over the life of the
instruments as an adjustment to interest expense and is a component of cash
provided by operating activities. Any gain or loss on the termination of an
instrument that qualifies for synthetic instrument accounting would be deferred
and amortized over the remaining life of the original instrument.

Deferral accounting is used for foreign currency forward and purchased
option contracts which qualify for and are designated as hedges of firm equity
investment commitments and for forward and purchased option contracts which
qualify as hedges of future debt issues or investments in debt and equity
securities. To qualify for deferral accounting, the contracts must have a high
inverse correlation to the exposure being hedged, and reduce the risk or
volatility associated with changes in foreign exchange rates, interest rates, or
equity prices. Qualified foreign exchange contracts are carried at market value
with gains and losses recorded in equity until sale of the investment. Qualified
interest rate contracts are associated with the related debt and amortized as
yield adjustments. Qualified interest rate and equity contracts associated with
investments in debt or equity securities are carried at market value, with gains
and losses recorded to the associated investment account. Any gain or loss on
the termination of a contract that qualifies for deferral accounting would be
deferred and accounted for with the underlying transaction being hedged. If a
contract does not maintain the required correlation with the hedged item,
deferral accounting is terminated and a gain or loss is recognized in the
Consolidated Statement of Operations for the difference between the change in
the fair value of the contract and the change in the fair value of the hedged
item.

Market value accounting is used for derivative contracts which do not
qualify for synthetic instrument or hedge accounting. Market value accounting is
also used for foreign exchange contracts designated as

53
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
hedges of foreign denominated receivables and payables. These contracts are
carried at market value in other assets or liabilities with gains and losses
recorded as other income or expense. The Company does not enter into derivative
financial instruments for trading purposes.

STOCK OPTIONS. MediaOne Group accounts for its stock incentive plans in
accordance with Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees." The Company also follows the disclosure-only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." See Note
18--Stock Incentive Plans--to the Consolidated Financial Statements.

REVENUE RECOGNITION. Cable television, local telephone and high speed data
Internet access are generally billed monthly in advance, and revenues are
recognized the following month when services are provided. Revenues derived from
other cable television services, including pay-per-view and advertising, are
recognized as the service is provided.

ADVERTISING COSTS. Costs related to advertising are expensed as incurred.
Advertising expense was $114, $206 and $73 in 1998, 1997 and 1996, respectively.

INCOME TAXES. The provision for income taxes consists of an amount for
taxes currently payable or receivable and an amount for tax consequences
deferred to future periods.

EARNINGS PER COMMON SHARE. MediaOne Group computes basic and diluted
earnings per common share in accordance with SFAS No. 128, "Earnings Per Share."
See Note 17--Earnings Per Share--to the Consolidated Financial Statements.
Unless otherwise indicated, all per share amounts in the notes to the
Consolidated Financial Statements are computed based on basic weighted average
common shares outstanding.

FUTURE IMPLEMENTATION OF NEW ACCOUNTING STANDARDS. In the year 2000, the
Company will adopt SFAS No. 133, "Accounting for Derivative Instruments and for
Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments and for hedging activities. Among other
things, the statement requires that an entity recognize all derivative
instruments on the balance sheet as either assets or liabilities, and to account
for those instruments at fair value. The Company is evaluating the impact of
SFAS No. 133.

SOP 98-5, "Reporting on the Costs of Start-Up Activities," was issued in
April 1998. SOP 98-5 requires, among other things, that the costs related to
start-up activities of a new entity, facility, product or service be expensed.
Adoption of SOP 98-5 is required as of January 1, 1999 and will not have a
material impact on the results of operations of the Company.

54
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4: DOMESTIC ACQUISITIONS AND DISPOSITIONS

AIRTOUCH COMMUNICATIONS. On April 6, 1998, MediaOne Group sold its domestic
wireless businesses to AirTouch Communications, Inc. ("AirTouch") in a
tax-efficient transaction (the "AirTouch Transaction"). The AirTouch Transaction
was consummated pursuant to an agreement and plan of merger (the "AirTouch
Merger Agreement") dated as of January 29, 1998. The domestic wireless
businesses included cellular communication services provided to 2.6 million
customers in 12 western and midwestern states and a 25 percent interest in
PrimeCo Personal Communications, L.P. ("PrimeCo"). Pursuant to the AirTouch
Merger Agreement, AirTouch acquired these cellular and personal communications
services ("PCS") interests. Consideration under the AirTouch Transaction
consisted of (i) debt assumption of $1,350, (ii) the issuance to MediaOne Group
of $1,650 in liquidation preference of 5.143 percent dividend bearing AirTouch
preferred stock (fair value of $1,493), and (iii) the issuance to MediaOne Group
of 59,314,000 shares of AirTouch common stock. The transaction resulted in a
gain of $2,257, net of deferred taxes of $1,612.

MediaOne Group accounts for its investment in AirTouch stock under the cost
method of accounting, as available for sale securities. The AirTouch preferred
stock is stated at fair value on the Consolidated Balance Sheet, in accordance
with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." To minimize MediaOne Group's exposure to fluctuations in the fair
value of the AirTouch preferred stock, the Company entered into an interest rate
swap agreement in April 1998 and an interest rate option agreement in October
1998. The interest rate swap agreement matured in October 1998, and the interest
rate option agreement in December 1998.

During September 1998, the change in the value of the AirTouch preferred
stock and interest rate swap did not achieve the required correlation to
continue deferral accounting. Consequently, the Company recognized a net loss of
$31 (net of income tax benefits of $19) in other income for the change in the
fair value of the AirTouch preferred stock not offset by the fair value of the
interest rate swap agreement in accordance with SFAS No. 80, "Accounting for
Futures Contracts." In addition, the Company recorded a charge of $12 (net of
income tax benefits of $8) for the purchase of the interest rate option offset
by a gain on the portion of the interest rate option associated with the
issuance of Company-obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely Company-guaranteed debentures ("Preferred
Securities"). The gain on the interest rate option associated with the Preferred
Securities was $6 (net of income tax expense of $4).

In January 1999, AirTouch entered into an agreement to merge its operations
with a subsidiary of Vodafone Group Public Limited Company ("Vodafone"). See
Note 22--Subsequent Events--to the Consolidated Financial Statements.

CABLE SYSTEMS. In December 1998, the Company acquired Time Warner, Inc.'s
("Time Warner") cable systems in the cities of Dearborn and Wayne, Michigan for
$57. The systems serve approximately 31,000 subscribers. In addition, during
1998, MediaOne Group sold various cable television systems in California, Idaho,
Iowa and Washington, serving approximately 33,000 subscribers, for total
proceeds of $50.

On October 13, 1998, MediaOne Group and Tele-Communications, Inc. ("TCI")
signed a definitive agreement to exchange certain of MediaOne Group's cable
television systems in Illinois and Michigan for certain of TCI's cable
television systems in South Florida and California. The cable systems each serve
approximately 500,000 subscribers. Consummation of the exchange is expected to
occur in mid-1999, subject to regulatory approvals. These cable systems had a
net book value of $521 at December 31, 1998,

55
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4: DOMESTIC ACQUISITIONS AND DISPOSITIONS (CONTINUED)
and contributed revenues of $253 and operating income of $33 during 1998. In
addition, MediaOne Group entered into a definitive agreement to sell its cable
television systems in Reno, Nevada for approximately $21. The Nevada systems
served approximately 10,000 subscribers, and closed in the first quarter of
1999. In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," the Company
stopped depreciating and amortizing the systems held for sale.

In May 1997, pursuant to a Federal Communications Commission ("FCC") order,
the Company entered into an agreement to sell its cable systems in Minnesota
(the "Minnesota System") for proceeds of $600. Under the terms of the agreement,
the Company had the right to terminate the agreement at any time upon payment of
a $30 termination fee. As a result of the Separation, the Company was no longer
prohibited by federal law from owning the Minnesota System. In February 1998, in
response to Old U S WEST's petition, the FCC granted a waiver which permitted
the Company to retain the Minnesota System. The Company terminated the agreement
to sell the Minnesota System and otherwise settled all claims related thereto.

HIGH SPEED DATA JOINT VENTURE. On June 15, 1998, MediaOne Group formed a
joint venture with Time Warner, TWE and Time Warner
Entertainment-Advance/Newhouse Partnership ("TWE/AN") called "ServiceCo, LLC"
(the "HSD Joint Venture") to deliver high speed data ("HSD") services. The
parties to the joint venture contributed certain of their respective HSD assets
into the HSD Joint Venture in exchange for common equity interests of
approximately 31.4 percent for MediaOne Group, 10.7 percent for Time Warner,
25.0 percent for TWE and 32.9 percent for TWE/AN. In addition, Microsoft
Corporation and Compaq Computer Corporation each contributed $212.5 million for
a respective 10 percent preferred equity investment in the HSD Joint Venture.
The preferred shares are convertible into a combined 20 percent common equity
interest in the HSD Joint Venture. MediaOne Group will provide HSD services
under the "Road Runner" brand name.

Assuming the conversion of the preferred shares and taking into account
MediaOne Group's ownership in TWE, MediaOne Group would hold a proportionate
diluted common equity interest in the HSD Joint Venture of approximately 34.6
percent. MediaOne Group accounts for its investment in the HSD Joint Venture
under the equity method of accounting.

The HSD Joint Venture is responsible for maintaining connections to the
Internet, providing technical customer support and developing national content.
The parties to the joint venture operate their respective HSD businesses and are
responsible for their respective customers' billing and customer service issues.
Accordingly, MediaOne Group continues to reflect HSD service revenues in its
consolidated results, as well as a service fee payable to the HSD Joint Venture
for services provided.

COMPETITIVE LOCAL EXCHANGE BUSINESSES. During November 1998, MediaOne Group
entered into a definitive agreement with Hyperion Communications to sell the
Company's investments in Continental Fiber Technologies, Inc. and Alternet of
Virginia, Inc., providers of business telephony services in Jacksonville,
Florida and Richmond, Virginia, respectively, for approximately $80, (the "CLEC
Businesses"). The sale is expected to close in the first half of 1999. In
accordance with SFAS No. 121, the Company has stopped depreciating these assets.
The CLEC Businesses had a net book value at December 31, 1998 of $33, and
contributed revenues of $14 and operating losses of $3 during 1998.

56
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4: DOMESTIC ACQUISITIONS AND DISPOSITIONS (CONTINUED)

PRIMESTAR. Prior to April 1, 1998, the Company held a 10.4 percent interest
in PrimeStar Partners, L.P. ("Old PrimeStar"). In addition, MediaOne distributed
PrimeStar direct broadcast satellite ("DBS") services to subscribers in its
service areas and, as a result, reflected consolidated operating results with
respect to such subscribers. On April 1, 1998, the Company contributed its
interest in Old PrimeStar, as well as its PrimeStar subscribers and certain
related assets, to PrimeStar, Inc. ("PrimeStar"), a newly formed entity, in
exchange for an approximate 10 percent interest in PrimeStar and $77 in cash
(the "PrimeStar Contribution").

In December 1998, PrimeStar management provided a business plan to its board
of directors, of which MediaOne Group is a part. Additionally, in January 1999,
Hughes Electronics Corporation ("Hughes") entered into an agreement to purchase
PrimeStar's DBS assets. Based on its review of PrimeStar's business plan and on
the anticipated sale to Hughes, the Company believes it will not receive
proceeds on the sale of its investment in PrimeStar. As a result, MediaOne Group
recorded a charge of $163 ($100 after tax) to reduce the carrying amount of its
investment in PrimeStar to zero. MediaOne Group is currently a guarantor of
letters of credit for PrimeStar totaling approximately $100. See Note
22--Subsequent Events--to the Consolidated Financial Statements.

NOTE 5: OPERATING SEGMENTS

In fourth-quarter 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131 establishes
standards for reporting information about operating segments in annual financial
statements and requires selected information about operating segments in interim
financial reports issued to stockholders. It also establishes standards for
disclosures about products and services and geographic areas. Operating segments
are components of an enterprise for which separate financial information is
available and which is evaluated regularly by the Company's chief operating
decision maker, or decision making group, in deciding how to allocate resources
and assess performance. Operating segments are managed separately and represent
strategic business units that offer different products and serve different
markets.

The Company's reportable segments include: (1) domestic cable and broadband,
(2) international services, and (3) corporate and other. The domestic cable and
broadband segment is comprised of MediaOne and Multimedia Ventures. MediaOne
consists of cable television properties serving 5.0 million domestic subscribers
and passing 8.5 million domestic homes. Multimedia Ventures includes the
Company's equity interest in Time Warner Entertainment. The international
services segment includes the cable and broadband and wireless communications
operations located abroad, in addition to international corporate overhead.
Corporate and other includes the discontinued operations of New U S WEST,
capital assets (which was held for sale until December 31, 1998), investments in
domestic interactive services, the domestic wireless business (which was sold in
April 1998 in conjunction with the AirTouch Transaction), the international
directories operations (of which the wholly owned operations in the United
Kingdom and Poland were sold in 1997), and corporate overhead.

MediaOne Group believes that proportionate financial data facilitates the
understanding and assessment of its results. Therefore, "Sales and Other
Revenues" for each segment is presented on a proportionate basis. Proportionate
results reflect the relative weight of MediaOne Group's ownership in each of its
respective domestic and international equity ventures together with the
consolidated results of its subsidiaries. In addition, the Company believes
earnings before interest, taxes, depreciation, amortization and other ("EBITDA")
is an important indicator of the operating performance of its businesses. As
such,

57
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: OPERATING SEGMENTS (CONTINUED)
EBITDA is also presented, on a proportionate basis, for each segment. The
computation of EBITDA also excludes gains on asset sales, equity losses,
guaranteed minority interest expense, and restructuring charges. Adjustments
made to "Sales and Other Revenues" and EBITDA to arrive at proportionate results
are reversed in the column labeled "Eliminations and Adjustments," in
conformance with SFAS 131, so that in total, "Sales and Other Revenues" and
EBITDA reflect consolidated results. All other line items presented in the
tables reflect consolidated results.

Consolidated results for the operating segments reflect the accounting
policies described in Note 3-- Summary of Significant Accounting Policies--to
the Consolidated Financial Statements. Intersegment sales and transfers are
accounted for at fair value as if the sales were to third parties. For
proportionate results, the venture's management determines its accounting
policies.

Industry segment financial information follows. Certain prior year
information has been reclassified to conform with the 1998 presentation.

<TABLE>
<CAPTION>
DOMESTIC CABLE
&
BROADBAND
------------------------ ELIMINATIONS
MULTIMEDIA &
MEDIAONE VENTURES(1) INTERNATIONAL OTHER ADJUSTMENTS CONSOLIDATED
----------- ----------- ------------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1998
Sales and other revenues.................... $ 2,467 $ 3,124 $ 1,456 $ 439 $ (4,604) $ 2,882
EBITDA(2)................................... 941 800 205 46 (1,049) 943
Net income (loss)........................... (536) (11) (317) 27,169 -- 26,305
Equity gains (losses) in unconsolidated
ventures.................................. (24) 7 (352) (48) -- (417)
Total assets................................ 16,003 2,551 2,308 7,330 -- 28,192
Investments in equity ventures.............. 46 2,442 1,083 71 -- 3,642
Capital expenditures........................ 1,618 -- 12 96 -- 1,726
----------- ----------- ------ --------- ------------ ------------
1997
Sales and other revenues.................... $ 2,323 $ 2,887 $ 1,230 $ 1,471 $ (4,064) $ 3,847
EBITDA(2)................................... 930 711 77 300 (731) 1,287
Net income (loss)........................... (402) (21) (488) 1,608 -- 697
Equity gains (losses) in unconsolidated
ventures.................................. (22) 13 (775) (125) -- (909)
Total assets................................ 15,719 2,534 2,164 6,366 -- 26,783
Investments in equity ventures.............. 61 2,486 624 523 -- 3,694
Capital expenditures........................ 1,216 -- 21 265 -- 1,502
----------- ----------- ------ --------- ------------ ------------
1996
Sales and other revenues.................... $ 499 $ 2,768 $ 687 $ 1,295 $ (3,412) $ 1,837
EBITDA(2)................................... 196 580 (52) 242 (536) 430
Net income (loss)........................... (77) (32) (304) 1,591 -- 1,178
Equity gains (losses) in unconsolidated
ventures.................................. (3) 13 (320) (36) -- (346)
Total assets................................ 16,348 2,558 2,327 6,494 -- 27,727
Investments in equity ventures.............. 64 2,477 1,458 439 -- 4,438
Capital expenditures........................ 348 -- 18 277 -- 643
----------- ----------- ------ --------- ------------ ------------
</TABLE>

58
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: OPERATING SEGMENTS (CONTINUED)
- ------------------------

(1) Multimedia Ventures includes MediaOne Group's 25.51 percent equity interest
in TWE, as well as domestic cable overheads. The reported TWE results are
prepared in accordance with GAAP and have not been adjusted to report TWE
investments accounted for under the equity method on a proportionate basis.

(2) EBITDA should not be considered an alternative to operating or net income as
an indicator of the performance of MediaOne Group's businesses, or as an
alternative to cash flows from operating activities as a measure of
liquidity, in each case determined in accordance with GAAP.

A portion of general and administrative costs, including executive
management, legal, tax, accounting and auditing, treasury, strategic planning
and public policy services, are directly assigned to the Company's subsidiaries
based on actual utilization or are allocated based on operating expenses, number
of employees, external revenues, average capital and/or average equity.

Total assets are those assets and investments that are used in, or pertain
to, each segment's operations. The "Other" column includes primarily cash; debt
and equity securities; net assets of discontinued operations and net investment
in assets held for sale for the capital assets segment in 1997 and 1996; the
domestic wireless businesses; investments in domestic interactive services; and
other corporate assets.

The following table presents a geographic breakout for proportionate
revenues and EBITDA and a reconciliation to consolidated amounts:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 1997 1996
- -------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
PROPORTIONATE REVENUE:
United States............................................... $ 5,966 $ 6,571 $ 4,356
United Kingdom.............................................. 856 609 416
Central Europe.............................................. 510 378 301
Asia and other.............................................. 154 353 176
--------- --------- ---------
Proportionate revenue......................................... 7,486 7,911 5,249
Less: Proportionate adjustments............................... (4,604) (4,064) (3,412)
--------- --------- ---------
Consolidated revenues....................................... $ 2,882 $ 3,847 $ 1,837
--------- --------- ---------
--------- --------- ---------
PROPORTIONATE EBITDA:
United States............................................... $ 1,779 $ 1,937 $ 998
United Kingdom.............................................. 106 (23) (45)
Central Europe.............................................. 169 102 82
Asia and other.............................................. (62) 2 (69)
--------- --------- ---------
Proportionate EBITDA.......................................... 1,992 2,018 966
Less: Proportionate adjustments............................... (1,049) (731) (536)
--------- --------- ---------
Consolidated EBITDA......................................... $ 943 $ 1,287 $ 430
--------- --------- ---------
--------- --------- ---------
</TABLE>

CONTINENTAL ACQUISITION. On November 15, 1996, the Company acquired
Continental Cablevision, Inc. ("Continental"), the third largest cable operator
in the United States (the "Continental Acquisition" or the "Acquisition"), and
accounted for the Acquisition by the purchase method of accounting.
Continental's results of operations have been included in the consolidated
results of operations

59
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: OPERATING SEGMENTS (CONTINUED)
since the Acquisition date. Had the Acquisition occurred at the beginning of
1996, MediaOne Group's consolidated revenues would have been $3,543, loss from
continuing operations would have been $801, and basic loss per share of MediaOne
Group Stock would have been $1.37.

NOTE 6: INVESTMENT IN TIME WARNER ENTERTAINMENT

On September 15, 1993, the Company acquired 25.51 percent pro-rata priority
capital and residual equity interests ("equity interests") in Time Warner
Entertainment for an aggregate purchase price of $2.553 billion. TWE owns and
operates substantially all of the entertainment assets previously owned by Time
Warner, consisting primarily of its filmed entertainment, programming-HBO and
cable television businesses.

The Company has an option to increase its pro-rata priority capital and
residual equity interests in TWE from 25.51 percent up to 31.84 percent
depending upon cable operating performance. The option is exercisable, in whole
or in part, between January 1, 1999 and May 31, 2005, for an aggregate cash
exercise price ranging from $1.25 billion to $1.8 billion, depending upon the
year of exercise. Either TWE or the Company may elect that the exercise price
for the option be paid with partnership interests rather than cash.

Pursuant to the TWE Partnership Agreement, there are four levels of capital.
From the most to least senior, the capital accounts are: senior preferred (held
by the general partners); A preferred priority capital (held pro rata by the
general and limited partners); B preferred priority capital (held by the general
partners); and residual equity capital (held pro rata by the general and limited
partners). Of the $2.553 billion contributed by the Company, $1.658 billion
represents a preferred priority capital and $895 represents residual equity
capital. The TWE Partnership Agreement provides for special allocations of
income and distributions of partnership capital. Partnership income, to the
extent earned, is allocated as follows: (1) to the partners so that the economic
burden of the income tax consequences of partnership operations is borne as
though the partnership was taxed as a corporation ("special tax allocations");
(2) to the partners' preferred capital accounts in order of priority described
above, at various rates of return ranging from 8 percent to 13.25 percent; and
(3) to the partners' residual equity capital accounts according to their
residual partnership interests. To the extent partnership income is insufficient
to satisfy all special allocations in a particular accounting period, the
unearned portion is carried over until satisfied out of future partnership
income. Partnership losses generally are allocated in reverse order, first to
eliminate prior allocations of partnership income, except senior preferred and
special tax income, next to reduce initial capital amounts, other than senior
preferred, then to reduce the senior preferred account and finally, to eliminate
special tax allocations.

60
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6: INVESTMENT IN TIME WARNER ENTERTAINMENT (CONTINUED)
A summary of the contributed capital and priority capital rates of return
follows:

<TABLE>
<CAPTION>
PRIORITY LIMITED PARTNERS
CAPITAL RATES (OWNERSHIP %)
OF RETURN(D) TIME ----------------------
UNDISTRIBUTED CUMULATIVE (% PER ANNUM WARNER MEDIA
CONTRIBUTED PRIORITY COMPOUNDED GENERAL TIME ONE
PRIORITY OF CONTRIBUTED CAPITAL CAPITAL(A) CAPITAL(B) QUARTERLY) PARTNERS WARNER GROUP
- ------------------------------------------ ------------- ----------- --------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Senior preferred.......................... $ 500 $ 600(c) 8.00% 100.00% -- --
A Preferred priority capital.............. 5,600 12,800 13.00% 63.27% 11.22% 25.51%
B Preferred priority capital.............. 2,900 6,800 13.25% 100.00% -- --
Residual equity capital................... 3,300 3,300 -- 63.27% 11.22% 25.51%
</TABLE>

- ------------------------

(a) Represents the estimated fair value of net assets contributed as of
formation of TWE, excluding partnership income or loss allocated thereto.

(b) Cumulative priority capital is not necessarily indicative of the fair value
of the underlying priority capital interests.

(d) To the extent income allocations are concurrently distributed, the priority
capital rates of return on the A preferred capital and the B preferred
capital are 11% and 11.25%, respectively.

Cash distributions are required to be made to the partners to permit them to
pay income taxes at statutory rates based on their allocable taxable income from
TWE ("Tax Distributions"). The aggregate amount of such Tax Distributions is
computed generally by reference to the taxes that TWE would have been required
to pay if it were a corporation. Tax Distributions are paid to the partners on a
current basis. For distributions other than those related to taxes or the senior
preferred, the TWE Partnership Agreement requires certain cash distribution
thresholds be met to the limited partners before the general partners receive
their full share of distributions. No cash distributions have been made to the
Company.

Through the TWE management committee, the Company and Time Warner jointly
direct the businesses and affairs of TWE cable systems, subject in certain cases
to regulatory approval. The TWE management committee has full discretion and
final authority with respect to the businesses and affairs of such cable
systems. The TWE management committee consists of six voting members, of which
three members are designated by the Company and three members are designated by
Time Warner. Each voting member of the TWE management committee has one vote.
Any action required or permitted to be taken by the TWE management committee
must be approved by a majority of its members. Determinations of the TWE
management committee are binding upon TWE and the TWE board of representatives.

The Company accounts for its investment in TWE under the equity method of
accounting. The excess of fair market value over the book value of total
partnership net assets implied by the Company's initial investment was $5.7
billion. This excess is being amortized on a straight-line basis over 25 years.
The Company's recorded share of TWE operating results represents allocated TWE
net income or loss adjusted for the amortization of the excess of fair market
value over the book value of the partnership net assets. As a result of this
amortization and the special income allocations described above, the Company's
recorded pretax share of TWE operating results before extraordinary item was $7,
$11 and $(4) in 1998, 1997 and 1996, respectively.

61
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6: INVESTMENT IN TIME WARNER ENTERTAINMENT (CONTINUED)

As consideration for its expertise and participation in the cable operations
of TWE, the Company earned a management fee of $130 over five years, ending in
September 1998. The fee was payable over a four-year period beginning in 1995,
and final payment was received in September 1998. Management fees of $18, $26
and $26 were recorded to other income in 1998, 1997 and 1996. The Consolidated
Balance Sheets included a management fee receivable of $42 at December 31, 1997.
In addition, MediaOne purchases cable television programming from TWE and Time
Warner at market prices. These services totaled $142, $110 and $23 in 1998, 1997
and 1996, respectively.

Summarized financial information for TWE is presented below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
SUMMARIZED OPERATING RESULTS 1998 1997 1996
- ------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Revenues..................................................... $ 12,246 $ 11,318 $ 10,852
Operating expenses(1, 2)..................................... 10,527 9,874 9,774
Interest and other expense, net(3, 4)........................ (1,301) (722) (798)
Income before income taxes and extraordinary item............ 418 722 280
Income before extraordinary item............................. 326 637 210
Net income................................................... 326 614 210
</TABLE>

- ------------------------

(1) Includes depreciation and amortization of $1,436, $1,370 and $1,235, in
1998, 1997 and 1996, respectively.

(2) Operating expenses are reflected net of approximately $90 and $200 of net
gains related to the sale or exchange of certain cable television systems in
1998 and 1997, respectively.

(3) Includes corporate services of $72, $72 and $69 in 1998, 1997 and 1996,
respectively, and minority interest expense of $264, $305 and $207 in 1998,
1997 and 1996, respectively.

(4) 1998 interest and other expense includes a charge of approximately $210
principally to reduce the carrying value of TWE's interest in PrimeStar.
1997 interest and other expense includes a gain of approximately $250
related to the sale of TWE's interest in E! Entertainment Television, Inc.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
SUMMARIZED FINANCIAL POSITION 1998 1997
- -------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Current assets(5)........................................................................... $ 4,183 $ 3,622
Noncurrent assets(6)........................................................................ 18,047 17,109
Current liabilities......................................................................... 4,936 3,974
Noncurrent liabilities, including minority interests........................................ 11,584 9,306
Senior preferred capital.................................................................... 603 1,118
Partners' capital(7)........................................................................ 5,107 6,333
</TABLE>

- ------------------------

(5) Includes cash of $87 and $322 at December 31, 1998 and 1997, respectively.

(6) Includes a loan receivable from Time Warner of $400 at December 31, 1998 and
1997.

(7) Contributed capital is based on the estimated fair value of the net assets
that each partner contributed to the partnership. The aggregate of such
amounts is significantly higher than TWE's partners' capital as reflected in
this Summarized Financial Position, which is based on the historical cost of
the contributed net assets.

62
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6: INVESTMENT IN TIME WARNER ENTERTAINMENT (CONTINUED)
TIME WARNER TELECOM. On July 14, 1998, TWE, TWE-A/N and Time Warner
contributed the assets and liabilities of the Time Warner competitive local
exchange business (the "Time Warner Telecom Business") into a newly formed
entity, Time Warner Telecom LLC ("TW Telecom"). The Time Warner Telecom Business
had been jointly operated by the parties to provide telephony services to
business customers in their respective cable markets. TWE and TWE-A/N
distributed their ownership interest in TW Telecom on a pro rata basis to Time
Warner, MediaOne Group and Advance/Newhouse. As a result, MediaOne Group now
holds an 18.85 percent interest in TW Telecom. Since the investment in TW
Telecom resulted from a distribution by TWE, MediaOne Group's investment balance
in TWE was reduced in 1998 by $48, the book value of the TW Telecom investment
attributable to MediaOne Group. As of December 31, 1998, the investment in TW
Telecom is included in "Other Assets" in the Consolidated Balance Sheet. The
Company uses the cost method of accounting for its investment in TW Telecom.

NOTE 7: NET INVESTMENT IN INTERNATIONAL VENTURES

COMBINED FINANCIAL RESULTS OF INTERNATIONAL EQUITY INVESTMENTS. The
following table reflects summarized combined financial information for the
Company's investments in international ventures, accounted for on the equity
method. Information for 1998 excludes activity related to the Company's
investment in Binariang SDN BHD in Malaysia and Aria WEST in Indonesia. Both
investments were determined to be impaired at the end of 1997 and the Company
terminated or suspended equity method accounting on such investments in 1998.
See additional discussion under "EVALUATION OF ASIAN INVESTMENTS."

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
COMBINED RESULTS OF OPERATIONS 1998 1997 1996
- ------------------------------------------------------------------------------------ --------- --------- ---------
<S> <C> <C> <C>
Revenues............................................................................ $ 4,031 $ 3,353 $ 1,869
Operating losses.................................................................... (161) (601) (540)
Net loss............................................................................ (948) (1,696) (857)
</TABLE>

- ------------------------

Note: Combined Results of Operations for Continental international ventures
have been included since the date of Acquisition.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
COMBINED FINANCIAL POSITION 1998 1997
- --------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Current assets............................................................................... $ 1,535 $ 1,140
Property, plant and equipment--net........................................................... 7,889 6,625
Other assets................................................................................. 2,541 1,610
--------- ---------
Total assets................................................................................. $ 11,965 $ 9,375
--------- ---------
--------- ---------
Current liabilities.......................................................................... $ 1,630 $ 1,570
Long-term debt............................................................................... 7,388 5,527
Other liabilities............................................................................ 1,177 389
Equity....................................................................................... 1,770 1,889
--------- ---------
Total liabilities and equity................................................................. $ 11,965 $ 9,375
--------- ---------
--------- ---------
</TABLE>

INTERNATIONAL ACQUISITIONS AND DISPOSITIONS. On September 1, 1998,
Telewest, a cable and telecommunications provider in the United Kingdom,
acquired General Cable PLC ("General Cable"), a cable

63
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: NET INVESTMENT IN INTERNATIONAL VENTURES (CONTINUED)
provider in the United Kingdom, for approximately $1.1 billion in stock and
cash. Telewest raised cash for the acquisition through a rights offering to its
existing shareholders, including MediaOne Group. MediaOne Group purchased 85
million new Telewest shares at a cost of $131. In addition, MediaOne Group
recorded an estimated gain in equity of $39, net of deferred taxes of $25,
related to Telewest's acquisition of General Cable. On November 10, 1998,
MediaOne Group purchased an additional 175 million Telewest shares from
Southwestern Bell International Holdings at a price of $2.25 per share, or $394.
The Company now holds a 29.9 percent interest in Telewest. Telewest, which is
the only equity method investment of the Company for which a quoted market price
is available, had a market value of $1,803 and $464 at December 31, 1998 and
1997, respectively.

In November 1998, MediaOne Group converted its note with Cable & Wireless
Optus Limited ("Optus") into 50 million Optus shares and entered into a put
option to lock in a floor price of Australian $1.44 per Optus share. The put
options expire during the first quarter of 1999. The Company also acquired 24.2
million Optus shares, related to MediaOne Group's anti-dilution rights, for $30.
Such shares were subsequently sold for $39, realizing an after tax gain on the
sale of $6. The Company accounts for its investment in Optus using the cost
method of accounting. At December 31, 1998, the investment is stated in the
Consolidated Balance Sheet at the investment's fair market value of $105. During
the first quarter of 1999, MediaOne Group sold its investment in the 50 million
Optus shares. See Note 22--Subsequent Events--to the Consolidated Financial
Statements.

In July 1998, Westel 900, a digital wireless service company in Hungary,
repurchased shares of its stock. This repurchase resulted in an increase in
MediaOne Group's interest in Westel 900 to 49.0 percent from 46.6 percent.

During the first quarter of 1997, the Company sold its five percent interest
in a French wireless venture for proceeds of $81. The Company recognized a gain
of $31, net of income tax expenses of $20. On October 27, 1997, the Company sold
its 90 percent interest in Fintelco, S.A. ("Fintelco"), a cable and
telecommunications venture located in Argentina, for proceeds of $641. The
Company acquired a 50 percent interest in Fintelco in connection with the
Continental Acquisition and then acquired an additional 40 percent interest in
August 1997, to bring its total interest in Fintelco to 90 percent. The Company
recognized a gain on the sale of $80, net of income tax expenses of $55.

64
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: NET INVESTMENT IN INTERNATIONAL VENTURES (CONTINUED)
The Company's key equity method investments in international ventures
follow:

<TABLE>
<CAPTION>
PERCENTAGE OF
OWNERSHIP
DECEMBER 31,
--------------------
VENTURE(1) 1998 1997
- ------------------------------------------------------------------------------ --------- ---------
<S> <C> <C>
CABLE AND BROADBAND
Telewest Communications, United Kingdom....................................... 29.9 26.8
A2000 (KTA), Netherlands...................................................... 50.0 50.0
Telenet, Belgium.............................................................. 25.0 25.0
Singapore Cablevision, Singapore.............................................. 25.0 25.0
Titus Communications Corp., Japan............................................. 25.0 25.0
Chofu Cable Television, Japan................................................. 19.1 19.1
WIRELESS
One 2 One, United Kingdom..................................................... 50.0 50.0
Delta Telecommunications, Russia(2)........................................... 42.5 42.5
Moscow Cellular Communications, Russia(2)..................................... 22.0 22.0
Westel Radiotelefon, Hungary.................................................. 49.0 49.0
Westel 900 GSM Mobile Telecommunications, Hungary............................. 49.0 46.6
Eurotel Praha, Czech Republic................................................. 24.5 24.5
Eurotel Bratislava, Slovak Republic........................................... 24.5 24.5
Polska Telefonia Cyfrowa, Poland.............................................. 22.5 22.5
BPL Cellular Limited, India................................................... 49.0 49.0
</TABLE>

- ------------------------

(1) MediaOne Group also holds a 50 percent investment in a South American
directory operation.

(2) Investments are held by Russian Telecommunications Development Corporation
owned 66.5 percent by the Company.

At December 31, 1998 and 1997, the difference between the carrying amount
and the Company's interest in the underlying equity of the international
ventures was approximately $160 and $23, respectively. The increase during 1998
was due primarily to a purchase premium of $136 related to Telewest shares
acquired during the year, which is being amortized over 20 years. The remaining
difference has been allocated primarily to licenses and is being amortized over
lives ranging from 5 to 20 years.

FOREIGN CURRENCY TRANSACTIONS. The Company selectively enters into forward
and purchased option contracts to manage the market risks associated with
fluctuations in foreign exchange rates after considering offsetting foreign
exposures among international operations. The use of forward and purchased
option contracts allows the Company to fix or cap the cost of firm foreign
investment commitments, the amount of foreign currency proceeds from sales of
foreign investments, the repayment of foreign currency denominated receivables
and the repatriation of dividends. All foreign exchange contracts have
maturities of one year or less. The use of such contracts was limited in 1998
and 1997. As of December 31, 1998, there were no foreign exchange contracts
outstanding. As of December 31, 1997, the market value of foreign exchange
contracts outstanding was not material.

Forward contracts were selectively used to hedge foreign denominated
proceeds from the sale of foreign investments and foreign denominated
receivables during 1998 and 1997. Foreign currency pretax hedging gains of $1
and $5 were included in earnings in the years ended December 31, 1998 and 1997,

65
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: NET INVESTMENT IN INTERNATIONAL VENTURES (CONTINUED)
respectively. The counterparties to these contracts are major financial
institutions. The Company is exposed to credit loss in the event of
nonperformance by these counterparties. The Company does not have significant
exposure to an individual counterparty and does not anticipate nonperformance by
any counterparty.

Foreign currency transaction pretax gains of $13 and pretax losses of $40
were included in earnings in the years ended December 31, 1998 and 1997,
respectively.

EVALUATION OF ASIAN INVESTMENTS. During 1997, the value of the Malaysian
currency declined 36 percent and the Indonesian currency declined 57 percent as
compared with the U. S. dollar. As a result of this significant decline, the
Company reviewed its investments in Malaysia and Indonesia and concluded that
each investment was impaired and in each case the fair value of the investment
was zero as of December 31, 1997. The Company recorded pretax charges of $145
and $55 in 1997 related to the ventures in Malaysia and Indonesia, respectively.

In the case of Malaysia, the charge of $145 in 1997 was to recognize that
the investment was impaired and to write down the carrying value of the
investment to its fair value of zero. The following factors were considered by
management in determining that the investment was impaired:

- The venture had negative cash flow and no ability to meet its debt
obligations of $482 due in 1998.

- As determined on a U. S. GAAP basis, the venture's liabilities exceeded
its assets as of December 31, 1997, making the venture insolvent at that
time.

- The business plan for the venture contemplated a significant contribution
to cash flows from the wireline business. The actual and potential cash
flows of the venture have been severely diminished by the inability of the
venture to effectively establish the wireline business.

During 1998, British Telecom acquired a 33.3 percent stake in Binariang SDN
BHD, the investment in Malaysia, and assumed MediaOne Group's loan guarantee of
the venture. As a result, the Company's interest in the venture was diluted to
12.6 percent from 19 percent, and the Company considers its investment to be a
cost method investment. MediaOne Group continues to evaluate opportunities to
exit this venture.

In the case of Indonesia, the net book value of the venture had been reduced
to its fair value of zero through recognition of $43 of equity losses during
1997. The $55 charge in 1997 was to recognize probable funding commitments in
connection with a shareholder support agreement. The probable funding
commitments consisted of the Company's remaining contractual commitment under
the shareholder support agreement of $19 and its partners' remaining commitments
of $36, as of December 31, 1997. Under the terms of the shareholder support
agreement, each shareholder is responsible for the full unfunded liability if
the other shareholders do not meet their proportionate obligations. As a result,
the Company has accrued for its partners' share of the commitment under the
shareholder support agreement. During 1998, MediaOne Group funded $6 under the
shareholder support agreement and the partners funded $10. The Company is
currently attempting to restructure its investment in Indonesia.

66
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: NET INVESTMENT IN INTERNATIONAL VENTURES (CONTINUED)
The following factors were considered by management in 1997 in determining
that the Indonesian investment was impaired and that accrual of the Company's
and its partners' funding liabilities were necessary:

- As determined on a U. S. GAAP basis, the venture's liabilities,
predominantly U. S. dollar denominated debt, exceeded its assets as of
December 31, 1997.

- Management believed the venture was not viable given the political and
economic uncertainties in Indonesia.

- The venture had ceased funding capital projects.

The Company's other ventures in Asia, located in Japan, Singapore and India,
were evaluated for impairment at December 31, 1997. Such evaluation indicated
there was no impairment as the fair value of these ventures exceeded their
recorded values.

NOTE 8: PROPERTY, PLANT AND EQUIPMENT

The composition of property, plant and equipment follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Land and buildings......................................................... $ 117 $ 321
Cable distribution systems................................................. 3,736 2,787
Cellular systems........................................................... -- 1,124
General purpose computers and other........................................ 785 857
Construction in progress................................................... 299 482
--------- ---------
4,937 5,571
Less accumulated depreciation.............................................. 868 1,299
--------- ---------
Property, plant and equipment--net......................................... $ 4,069 $ 4,272
--------- ---------
--------- ---------
</TABLE>

Property, plant and equipment balances at December 31, 1998 reflect the
disposition of the assets of the domestic wireless businesses which were sold in
connection with the AirTouch Transaction. Depreciation expense was $657, $727
and $255 for the years ended 1998, 1997 and 1996, respectively.

NOTE 9: INTANGIBLE ASSETS

The composition of intangible assets follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Identified intangibles, primarily franchise value....................... $ 9,089 $ 9,185
Goodwill................................................................ 3,741 4,159
--------- ---------
12,830 13,344
Less accumulated amortization........................................... 1,183 747
--------- ---------
Total intangible assets--net............................................ $ 11,647 $ 12,597
--------- ---------
--------- ---------
</TABLE>

Intangible assets at December 31, 1998 reflect the disposition of the assets
of the domestic wireless businesses which were sold in connection with the
AirTouch Transaction. Amortization expense for 1998, 1997 and 1996 was $525,
$530 and $131, respectively.

67
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10: DEBT

On June 12, 1998, $4.9 billion notional medium and long-term debt was
redeemed as part of the Refinancing for a total cash redemption amount of $5.5
billion. MediaOne Group extinguished the debt by issuing commercial paper at a
weighted-average interest rate of 5.85 percent. In accordance with the
Separation Agreement, New U S WEST funded to MediaOne Group $3.9 billion related
to the Dex Alignment. The Company used the funds to repay a portion of the
amount of commercial paper issued in connection with the Refinancing. Debt
extinguishment costs related to the Refinancing totaled $333 (net of income tax
benefits of $209) and are reflected in the Consolidated Statements of Operations
as an extraordinary item. In addition to refinancing costs, such costs included
the difference between the market and face value of the debt redeemed and a
charge for unamortized debt issuance costs. MediaOne Group financed the debt
extinguishment costs by issuing commercial paper, net of a $140 reimbursement by
New U S WEST for shared costs.

Remaining commercial paper issued in connection with the Refinancing was
subsequently repaid with proceeds generated from the Exchangeable Notes
offering, as described below in "Long-term Debt."

In connection with the AirTouch Transaction, AirTouch assumed $1,350 of
short-term debt from MediaOne Group.

SHORT-TERM DEBT

The components of short-term debt follow:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Notes payable:
Commercial paper............................................................ $ 216 $ 750
Bank loan................................................................... -- 17
Current portion of long-term debt............................................. 353 266
Allocated to the capital assets segment-net................................... -- (100)
Allocated to discontinued operations.......................................... -- (198)
--------- ---------
Total......................................................................... $ 569 $ 735
--------- ---------
--------- ---------
</TABLE>

The weighted-average interest rate on commercial paper was 6.09 percent and
6.15 percent at December 31, 1998 and 1997, respectively. In May 1998, MediaOne
Group entered into 365-day and 5-year bank credit facilities totaling $4.0
billion to support its commercial paper program. The facilities were reduced
effective December 1998 to a total of $3.0 billion. At December 31, 1998, $2.8
billion was available on the facilities.

The bank loan at December 31, 1997 was a floating-rate loan denominated in
Czech Koruna. In January 1997, the Company paid the cash portion of the
Continental Acquisition consideration totaling $1,150. This payment was financed
with commercial paper.

On December 15, 1998, $130 of Debt Exchangeable for Common Stock ("DECS")
matured. Effective with the Separation, the DECS became the obligation of
MediaOne Group. In accordance with the terms of the original debt issuance, the
DECS were redeemed for shares of Enhance Financial Services Group, Inc.
("Enhance") held by MediaOne Group. In addition, the Company settled an option
issued in 1997 for the purchase of MediaOne Group's residual shares of Enhance
common stock at the DECS

68
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10: DEBT (CONTINUED)
maturity, resulting in a pretax gain of $9. As a result of both transactions,
the Company has disposed of its ownership in shares of Enhance.

On May 13, 1996, Old U S WEST issued $254 of DECS due May 15, 1999, in the
principal amount of $26.63 per note. The notes bear annual interest at 7.625
percent. Effective with the Separation, the DECS became the obligation of
MediaOne Group. Upon maturity, the DECS will be mandatorily redeemed by the
Company for shares of Financial Security Assurance Holdings Ltd. ("FSA") held by
MediaOne Group or the cash equivalent, at MediaOne Group's option. The number of
shares to be delivered at maturity varies based on the per share market price of
FSA. If the market price is $26.63 per share or less, one share of FSA will be
delivered for each note; if the market price is between $26.63 and $32.48 per
share, a fractional share is delivered so that the value at maturity is equal to
$26.63; if the market price is greater than $32.48 per share, .8197 of a share
is delivered for each note. At December 31, 1998, the FSA shares had a market
price of $54.25 per share.

LONG-TERM DEBT

In August and September 1998, MediaOne Group issued 29 million shares of
6.25 percent Exchangeable Notes (the "Exchangeable Notes") for an issuance price
of $58.125 per note, or gross proceeds of $1,686. The notes mature on August 15,
2001 and are mandatorily redeemable at MediaOne Group's option into (i) shares
of AirTouch common stock held by MediaOne Group, (ii) the cash equivalent, or
(iii) a combination of cash and AirTouch common stock. The number of shares of
AirTouch common stock to be exchanged at maturity for each Exchangeable Note,
and/or the cash equivalent, varies based upon the fair value of the AirTouch
common stock, as follows:

(a) If the fair value of AirTouch common stock is greater than or equal to
$71.75 per share, each Exchangeable Note is equivalent to .8101 of a
share of AirTouch common stock;

(b) If the fair value of AirTouch common stock is less than or equal to
$58.125 per share, each Exchangeable Note is equivalent to one share of
AirTouch common stock; or

(c) If the fair value of AirTouch common stock is less than $71.75 per share
but greater than $58.125 per share, each Exchangeable Note is equivalent
to a fractional share of AirTouch common stock equal to the percent of
the initial issuance price per Exchangeable Note versus the fair value of
the AirTouch common stock per share.

The Exchangeable Notes are unsecured obligations of MediaOne Group, ranking
equally in right of payment with all other unsecured and unsubordinated
obligations of MediaOne Group. MediaOne Group used the proceeds from the debt
issuance to reduce outstanding commercial paper and for general corporate
purposes.

The Exchangeable Notes are being accounted for as an indexed debt instrument
since the maturity value of the Exchangeable Notes is dependent upon the fair
value of the underlying AirTouch common stock. The Company has, therefore,
eliminated the market risk on a decline in the AirTouch common stock value below
$58.125 per share on 29 million of the 59.3 million shares held by the Company.
The maturity value of the Exchangeable Notes was increased by $16 from its
original issuance value to reflect the corresponding increase in the fair value
of the underlying AirTouch common stock at December 31, 1998. At December 31,
1998, the AirTouch common stock had a fair value of $72.4375 per share; MediaOne
Group would be entitled to 19 percent of the fair value in excess of $71.75 per
share on 29 million shares of AirTouch common stock. Since the AirTouch common
stock is a cost method investment being accounted

69
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10: DEBT (CONTINUED)
for as "available for sale" securities under SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," changes in the maturity
value of the Exchangeable Notes are being recorded in equity as unrealized gains
or losses. See Note 22--Subsequent Events--to the Consolidated Financial
Statements for a discussion of the potential merger of AirTouch with Vodafone.

In conjunction with the Refinancing, MediaOne Group assumed from Old U S
WEST $351 of medium and long-term debt securities which remained outstanding
after the Refinancing. The debt securities were already reflected in the
outstanding debt balances of MediaOne Group's restated Consolidated Balance
Sheet as of December 31, 1997.

Since the capital assets segment is no longer being accounted for as assets
held for sale as of the end of 1998, its debt balances are now reflected in the
Company's consolidated debt balances. As such, long-term debt of the Company
increased $155 and short-term debt increased $43 at December 31, 1998, related
to debt balances of the capital assets segment. See Note 23--Net Investment in
Assets Held for Sale--to the Consolidated Financial Statements. The long-term
debt increase primarily represents non recourse loans issued in September 1997
by MediaOne Financial Services, Inc. ("Financial Services"), a subsidiary of the
Company and a member of the capital assets segment, which are securitized by
certain finance receivables of Financial Services. The loans bear interest at an
average rate of 6.9 percent and mature in April, 2009.

In January 1997, the Company issued medium- and long-term debt totaling $4.1
billion, at a weighted-average interest rate of 7.47 percent, related to the
refinancing of outstanding commercial paper issued in conjunction with the
refinancing of $3,657 of the debt assumed from Continental in the Continental
Acquisition. As discussed above, the majority of such debt was extinguished in
1998 as a result of the Separation and the Refinancing.

The components of long-term debt follow:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Senior unsecured notes, debentures and medium-term notes................... $ 2,346 $ 7,275
Senior subordinated debt................................................... 300 300
Exchangeable Notes......................................................... 1,702 --
Debt exchangeable for common stock......................................... -- 254
Securitized loans.......................................................... 154 --
Insurance company notes.................................................... -- 36
Capital lease obligations.................................................. 1 6
Other...................................................................... 89 81
Unamortized discount--net.................................................. -- (8)
Unamortized premium--net................................................... 261 284
--------- ---------
Total...................................................................... $ 4,853 $ 8,228
--------- ---------
--------- ---------
</TABLE>

Senior unsecured notes and debentures and senior subordinated debt totaling
$2.3 billion as of December 31, 1998 were assumed by the Company in connection
with the Continental Acquisition and are not guaranteed by the Company. These
notes and debentures limit MediaOne's ability to, among other things, pay
dividends, create liens, incur additional debt, dispose of property, investments
and leases, and require certain minimum ratios of cash flow to debt and cash
flow to related fixed charges.

70
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10: DEBT (CONTINUED)
During 1997, the Company redeemed its zero coupon subordinated notes due
June 25, 2011. Upon redemption, the notes had a recorded value of $268. The debt
extinguishment resulted in a loss of $3 (net of income tax benefits of $2)
primarily related to the write-off of deferred debt issuance costs. Also during
1997, MediaOne redeemed a 10.625 percent senior subordinated note with a
recorded value of $110, including a premium of $10. The debt extinguishment
resulted in a gain of $3 (net of income tax expenses of $2). The Company
financed the redemptions with floating-rate commercial paper.

Interest rates and maturities of long-term debt at December 31st follow:

<TABLE>
<CAPTION>
MATURITIES
-----------------------------------------------------
THERE- TOTAL TOTAL
INTEREST RATES 2000 2001 2002 2003 AFTER 1998 1997
- --------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Above 5% to 6%............................... $ -- $ -- $ -- $ 1 $ -- $ 1 $ 10
Above 6% to 7%............................... 5 1,705 42 24 172 1,948 2,498
Above 7% to 8%............................... -- -- 1 -- 44 45 2,730
Above 8% to 9%............................... 1 204 -- 100 1,375 1,680 1,717
Above 9% to 10%.............................. 2 1 -- -- 525 528 575
Above 10%.................................... -- -- -- -- 300 300 335
--------- --------- --------- --------- --------- --------- ---------
$ 8 $ 1,910 $ 43 $ 125 $ 2,416 4,502 7,865
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Capital lease obligations and other.......... 90 87
Unamortized discount--net.................... -- (8)
Unamortized premium--net..................... 261 284
--------- ---------
Total........................................ $ 4,853 $ 8,228
--------- ---------
--------- ---------
</TABLE>

Interest payments, net of amounts capitalized, were $709, $572 and $232 for
1998, 1997 and 1996, respectively, of which $33, $47 and $59, respectively,
related to the capital assets segment.

INTEREST RATE RISK MANAGEMENT

The objective of an interest rate risk management program is to minimize the
total cost of debt over time and the interest rate variability. This is achieved
through the use of interest rate swaps, which adjust the ratio of fixed- to
variable-rate debt. Under an interest rate swap, the Company agrees with another
party to exchange interest payments at specified intervals over a defined term.
Interest payments are calculated by reference to the notional amount based on
the fixed- and variable-rate terms of the swap agreements. MediaOne Group had no
swaps or interest rate contracts outstanding as of December 31, 1998.

During fourth-quarter 1996, the Company purchased $1.5 billion notional of
put options on U. S. Treasury Bonds to protect against an increase in interest
rates in conjunction with the 1997 refinancing of debt assumed from Continental
in connection with the Continental Acquisition. The contracts closed in January
1997 and a deferred gain of $5 was recognized. The gain was recognized in 1998
in conjunction with the Refinancing as part of the loss on debt extinguishment.

71
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11: FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair values of cash equivalents, other current amounts receivable and
payable, and short-term debt approximate carrying values due to their short-term
nature.

The carrying values of mandatorily redeemable preferred stock and long-term
receivables approximate the fair values based on quoted market prices or
discounting future cash flows. The carrying value of foreign exchange contracts
approximate the fair values based on estimated amounts the Company would receive
or pay to terminate such agreements. It is not practicable to estimate the fair
value of financial guarantees because there are no quoted market prices for
similar transactions.

The fair values of interest rate swaps are based on estimated amounts the
Company would receive or pay to terminate such agreements taking into account
current interest rates and creditworthiness of the counterparties.

The fair values of long-term debt, including debt associated with the
capital assets segment, and Preferred Securities and Minority interest in
Centaur Funding, are based on quoted market prices where available or, if not
available, are based on discounting future cash flows using current interest
rates.

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1998 1997
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Debt (includes short-term portion)....................................... $ 5,422 $ 5,861 $ 9,335 $ 9,910
Interest rate swap agreements--assets.................................... -- -- -- --
Interest rate swap agreements--liabilities............................... -- -- -- 19
----------- --------- ----------- ---------
Debt--net................................................................ $ 5,422 $ 5,861 $ 9,335 $ 9,929
----------- --------- ----------- ---------
Minority interest in Centaur Funding..................................... $ 1,099 $ 1,169 $ -- $ --
Preferred Securities..................................................... $ 1,061 $ 1,073 $ 1,080 $ 1,110
</TABLE>

The unamortized cost and estimated market value of debt and equity
securities follow:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------------------------ --------------------------
GROSS GROSS GROSS
UNREALIZED UNREALIZED FAIR UNREALIZED
SECURITIES COST GAINS LOSSES VALUE COST GAINS
- ---------------------------------------------- --------- ----------- ------------- --------- --- -------------
<S> <C> <C> <C> <C> <C> <C>
Equity securities............................. $ 3,045 $ 1,609 $ -- $ 4,654 $ 21 $ 19
Debt securities............................... 1,782 2 (19) 1,765 18 --
Securitized loan.............................. -- -- -- -- 55 --
--------- ----------- ----- --------- --- ---
Total......................................... $ 4,827 $ 1,611 $ (19) $ 6,419 $ 94 $ 19
--------- ----------- ----- --------- --- ---
--------- ----------- ----- --------- --- ---

GROSS
UNREALIZED FAIR
SECURITIES LOSSES VALUE
- ---------------------------------------------- ------------- ---------
<S> <C> <C>
Equity securities............................. $ -- $ 40
Debt securities............................... -- 18
Securitized loan.............................. (3) 52
----- ---------
Total......................................... $ (3) $ 110
----- ---------
----- ---------
</TABLE>

Investments in debt and equity securities are classified as available for
sale and are carried at market value. Debt and equity securities for 1998
primarily represent AirTouch preferred and common securities received during the
year in connection with the AirTouch Transaction. Net unrealized gains

72
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11: FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

and losses on marketable securities are included in comprehensive income. The
market value of these securities is based on quoted market prices where
available or, if not available, is based on discounting future cash flows using
current interest rates.

As of December 31, 1998, MediaOne Group held investments in debt securities
of $33 with contractual maturities less than one year, $37 with contractual
maturities greater than one year through five years, and $1,695 with contractual
maturities greater than five years through the year 2020. Investments in debt
securities may not be held to their contractual maturities as the Company may
sell these securities in response to liquidity needs and changes in interest
rates.

During 1997, the Company received proceeds of $898 from the sales of
Teleport Communications Group, Inc. ("TCG") and Time Warner shares, and realized
pretax gains totaling $206.

NOTE 12: LEASING ARRANGEMENTS

The Company has entered into operating leases for office facilities,
equipment and real estate. Rent expense under operating leases was $56, $74 and
$42 in 1998, 1997 and 1996, respectively. Future minimum lease payments as of
December 31, 1998, under noncancelable operating leases follow:

<TABLE>
<CAPTION>
YEAR
- --------------------------------------------------------------------------------------
<S> <C>
1999.................................................................................. $ 32
2000.................................................................................. 24
2001.................................................................................. 22
2002.................................................................................. 18
2003.................................................................................. 16
Thereafter............................................................................ 37
---------
Total................................................................................. $ 149
---------
---------
</TABLE>

NOTE 13: MINORITY INTEREST IN CENTAUR FUNDING

On December 15, 1998, Centaur Funding Corporation ("Centaur"), a special
purpose entity consolidated by MediaOne Group, issued three series of preferred
shares to external investors (the "Preference Shares") as well as $25 of common
securities. The Company owns all of the outstanding common securities,
representing a 9.9 percent voting interest in Centaur. Centaur was formed for
the principal purpose of raising capital through the issuance of the Preference
Shares. The net proceeds from the issuance of the Preference Shares were loaned
to MediaOne SPCII, LLC ("MediaOne SPCII"), a subsidiary of MediaOne Group (the
"MediaOne SPC II Notes"). Principal and interest payments on the MediaOne SPC II
Notes are expected to be Centaur's principal source of funds to make dividend
and redemption payments on the Preference Shares. In addition, the dividend
payments and certain redemption payments on the Preference Shares will be
determined by reference to the dividend and redemption activity of the 5.143
percent Class D Cumulative Preferred Shares, Series 1998 of AirTouch (the "Class
D ATI Shares") and the 5.143 percent Class E Cumulative Preferred Shares, Series
1998 of AirTouch (the "Class E ATI Shares" and collectively with the Class D ATI
Shares, the "AirTouch Preferred Shares"). The AirTouch Preferred Shares are
owned by MediaOne SPCII. Payments on the Preference Shares are neither
guaranteed nor secured by MediaOne Group. The sole assets of Centaur are the
MediaOne SPC II Notes

73
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13: MINORITY INTEREST IN CENTAUR FUNDING (CONTINUED)
and the proceeds from the sale of the common securities, which may be invested
in certain eligible investments as outlined in Centaur's articles of
incorporation.

The AirTouch Preferred Shares, 75 percent of the outstanding common stock of
MediaOne International Holdings, Inc., (the "International Stock"), and a
certain intercompany note receivable from MediaOne of Colorado, a wholly owned
subsidiary of the Company, to MediaOne SPCII and certain other assets are
properties of MediaOne SPCII and are not available to pay creditors of any
member of the Company, other than creditors of MediaOne SPCII. The International
Stock owned by MediaOne SPCII may be transferred or dividended by MediaOne SPCII
to another member of the MediaOne Group if such transfer or dividend is in
compliance with certain covenants and limitations. MediaOne SPCII is a limited
liability company, the membership interest of which is owned by MediaOne SPCI
LLC ("MediaOne SPCI"), a wholly owned subsidiary of the Company. That membership
interest is the property of MediaOne SPCI and is not available to pay creditors
of any member of MediaOne Group, other than creditors of MediaOne SPCI.

The three series of Centaur preferred shares are as follows:

<TABLE>
<CAPTION>
SERIES A SERIES B SERIES C TOTAL
--------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Dividend Rate.................................................... Variable 9.08% None
Maturity Date.................................................... None 4/21/2020(1) 4/21/2020(1)
Shares Outstanding............................................... 400 934,500 715,500
Book Value....................................................... $ 97 $ 909 $ 93 $ 1,099
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
Liquidation Value................................................ $ 100 $ 934 $ 716 $ 1,750
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
Voting Interest in Centaur....................................... 11.1% 49.0% 30.0%
</TABLE>

- ------------------------

(1) Maturity dates of the Series B and Series C Preference Shares are referenced
to the AirTouch Preferred Shares.

The Auction Market Preference Shares, Series A (the "Series A Preference
Shares") have a liquidation value of two hundred and fifty thousand dollars per
share, and were recorded at their liquidation value less issuance costs of $3.
Dividends on the Series A Preference Shares are payable quarterly as and when
declared by Centaur's Board of Directors out of funds legally available.

The 9.08 percent Cumulative Preference Shares, Series B (the "Series B
Preference Shares") have a liquidation value of one thousand dollars per share,
and were recorded at their liquidation value less issuance costs of $25.
Dividends on the Series B Preference Shares are payable quarterly in arrears
when declared by Centaur's Board of Directors out of funds legally available. In
addition, dividends may be declared and paid only to the extent that dividends
have been declared and paid on the AirTouch Preferred Shares.

The Preference Shares, Series C (the "Series C Preference Shares") have a
liquidation value of one thousand dollars per share at maturity, and were
recorded at their fair value less issuance costs of $3. The value of the Series
C Preference Shares will be accreted to reach its liquidation value upon
maturity.

Certain redemption payments on the Series B and Series C Preference Shares
will be determined by reference to the redemption of the AirTouch Preferred
Shares. On April 7, 2018, all of the outstanding shares of the Class E ATI
Shares must be redeemed. The Class E ATI Shares represent 50 percent of the

74
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13: MINORITY INTEREST IN CENTAUR FUNDING (CONTINUED)
AirTouch Preferred Shares. Consequently, if AirTouch redeems all of the Class E
ATI Shares, Centaur must redeem 50 percent of the outstanding Series B and
Series C Preference Shares. In addition, AirTouch has the option on or after
April 7, 2018, to redeem the Class D ATI Shares. If AirTouch redeems all or a
portion of the Class D ATI Shares, then Centaur would be obligated to redeem the
same percentage of the Series B and Series C Preference Shares. Any remaining
Series B and Series C Preference Shares would be redeemed upon maturity on April
21, 2020, to the extent that AirTouch has redeemed the remaining Class D ATI
Shares.

The Series A, Series B and Series C Preference Shares are recorded as
"Minority Interest in Centaur Funding" on the Consolidated Balance Sheets of the
Company. The Series B Preference Shares rank equally with the Series C
Preference Shares as to redemption payments and upon liquidation, and the Series
B and Series C Preference Shares rank senior to the Series A Preference Shares
and the common shares of Centaur as to redemption payments and upon liquidation.

The Series B Preference Shares rank senior to the Series A Preference Shares
and the common shares with respect to dividend payments. Centaur may only pay a
dividend to its common shareholder when its assets, including the MediaOne SPC
II Notes, exceed the liquidation preference and accumulated and unpaid dividends
on the Series B and Series C Preference Shares by $28 after paying the common
dividends, and when it has a cash balance, including qualified investments, in
excess of $28 after paying the common dividend.

At December 31, 1998, Centaur held $26 in cash for its exclusive use. Since
Centaur's cash management options are limited to non-affiliated, risk-free
investments, and it is restricted from loaning the $26 in cash to MediaOne Group
and its subsidiaries, Centaur's cash balance is not included in the Company's
cash and cash equivalents balance. Instead, Centaur's cash balance has been
classified in the Consolidated Balance Sheets of the Company as part of "Other
Assets."

75
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14: COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY COMPANY-GUARANTEED DEBENTURES

The following table summarizes the Company-obligated mandatorily redeemable
preferred securities of subsidiary trust holding solely Company-guaranteed
debentures (the "Preferred Securities") outstanding as of December 31, 1998:

<TABLE>
<CAPTION>
PREFERRED SECURITIES 7.96% 8.25% 9.30% 9.50% 9.04% TOTAL
- ------------------------ ---------------- --------------- ---------------- --------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Subsidiary.............. Financing I Financing II Finance I Finance II Finance III
Maturity Date........... Sept. 30, 2025 Oct. 29, 2036 Sept. 30, 2025 Oct. 29, 2036 Dec. 31, 2038
Shares Outstanding...... 1,312,910 1,185,618 10,658,108 8,520,289 20,000,000
Book Value.............. $33 $30 $274 $224 $500 $1,061
---------------- --------------- ---------------- --------------- --------------- ---------
---------------- --------------- ---------------- --------------- --------------- ---------
Liquidation Value....... $33 $30 $266 $213 $500 $1,042
---------------- --------------- ---------------- --------------- --------------- ---------
---------------- --------------- ---------------- --------------- --------------- ---------

Value at Issuance....... $33 $30 $274 $224 $500
Common Securities....... 19 15 9 7 15
---------------- --------------- ---------------- --------------- ---------------
Subordinated Debt
Securities............ $52 $45 $283 $231 $515
---------------- --------------- ---------------- --------------- ---------------
---------------- --------------- ---------------- --------------- ---------------
</TABLE>

THE EXCHANGE OFFER

On June 12, 1998, MediaOne Group tendered for cash or exchange all of the
outstanding Preferred Securities (the "Exchange Offer"). At that time, the
Company had outstanding $600 face value of 7.96 percent Preferred Securities of
Old U S WEST Financing I ("Financing I"), a subsidiary of Old U S WEST, and $480
face value of 8.25 percent Preferred Securities of Old U S WEST Financing II
("Financing II"), a subsidiary of Old U S WEST. Of the total outstanding, $301
face value of 7.96 percent Preferred Securities and $237 face value of 8.25
percent Preferred Securities were redeemed for cash. The cash redemption amount
of $570 was financed by issuing commercial paper at a weighted average interest
rate of 5.85 percent, which was subsequently repaid with net proceeds from the
Exchangeable Notes issuance. See Note 10--Debt--to the Consolidated Financial
Statements.

In addition, $266 face value of 7.96 percent Preferred Securities of
Financing I were exchanged for $274 fair value of 9.30 percent Preferred
Securities issued by MediaOne Finance Trust I ("Finance I"), a subsidiary of
MediaOne Group, and $213 face value of 8.25 percent Preferred Securities of
Financing II were exchanged for $224 fair value of 9.50 percent Preferred
Securities issued by MediaOne Finance Trust II ("Finance II"), a subsidiary of
MediaOne Group. The Preferred Securities of Finance I and Finance II were
recorded as issued at fair value of $25.75 and $26.30 per security,
respectively. Finance I and Finance II also issued $9 and $7, respectively, of
common securities which are held by MediaOne Group. With the exception of the
dividend rates, the terms and maturity of the Finance I and Finance II Preferred
Securities are substantially the same as those of the Financing I and Financing
II Preferred Securities, respectively.

The Preferred Securities of Financing I and Financing II which were neither
redeemed for cash nor exchanged for new Preferred Securities remain outstanding
and their respective common securities were retained by MediaOne Group.

As a result of the Exchange Offer, MediaOne Group recorded a charge to
equity of $53, after tax benefits of $28. Such charge represented redemption
costs, including the difference between the face and

76
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14: COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY COMPANY-GUARANTEED DEBENTURES (CONTINUED)
market value of the securities, and a charge for unamortized issuance costs.
Also included was a charge of $19 related to market value premiums on the
exchanged securities.

On October 23, 1998, MediaOne Finance Trust III ("Finance III"), a
subsidiary of MediaOne Group, issued $500 of 9.04 percent Preferred Securities
and $15 of common securities. The common securities are held by MediaOne Group.

Total proceeds from the issuance of the Preferred Securities and the common
securities of Financing I and Financing II (the "Old Trusts"), and Finance I,
Finance II and Finance III, (the "New Trusts", and collectively with the Old
Trusts, "the Trusts"), were used to purchase Subordinated Deferrable Interest
Notes (the "Subordinated Debt Securities") from MediaOne Group Funding, Inc.
("MediaOne Funding"), a wholly owned subsidiary of MediaOne Group, the
obligations under which are fully and unconditionally guaranteed by MediaOne
Group (the "Debt Guarantees"). The Subordinated Debt Securities have the same
interest rate and maturity date as the Preferred Securities to which they
relate. The sole assets of the Trusts are and will be the Subordinated Debt
Securities and the Debt Guarantees. In the Exchange Offer, the Subordinated Debt
Securities that relate to the remaining outstanding Preferred Securities of the
Old Trusts were assumed by MediaOne Group and the related Debt Guarantees were
extinguished.

MediaOne Group has guaranteed the payment of interest and redemption amounts
to holders of the Preferred Securities when the Trusts have funds available for
such payments (the "Payment Guarantee") as well as the Company's and MediaOne
Funding's undertaking to pay all of the costs, expenses and other obligations
(the "Expense Undertaking") of the Old Trusts and the New Trusts, respectively.
The Payment Guarantee and the Expense Undertaking, including MediaOne Group's
guarantee with respect thereto, considered together with MediaOne Funding's
obligations under the indenture and Subordinated Debt Securities and MediaOne
Group's obligations under the indenture, declaration and Debt Guarantees,
constitute a full and unconditional guarantee by MediaOne Group of the Trusts'
obligations under the Preferred Securities. The interest and other payment dates
on the Subordinated Debt Securities are the same as the distribution and other
payment dates on the Preferred Securities. Under certain circumstances, the
Subordinated Debt Securities may be distributed to the holders of Preferred
Securities and common securities in liquidation of the Trusts.

All of the Subordinated Debt Securities are redeemable by the Company or
MediaOne Funding at a redemption price of $25.00 per security, plus accrued and
unpaid interest. If the Company or MediaOne Funding redeems the Subordinated
Debt Securities, the Trusts are required to concurrently redeem their respective
Preferred Securities at $25.00 per share plus accrued and unpaid distributions.
The 9.30 percent and the 7.96 percent Subordinated Debt Securities are
redeemable in whole or in part at any time on or after September 11, 2000. The
9.50 percent and the 8.25 percent Subordinated Debt Securities are redeemable in
whole or in part at any time on or after October 29, 2001. The 9.04 percent
Subordinated Debt Securities are redeemable in whole or in part at any time on
or after October 28, 2003.

NOTE 15: PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION

On June 30, 1997, Old U S WEST acquired cable systems serving approximately
40,000 subscribers in Michigan for cash of $25 and the issuance of 994,082
shares of Old U S WEST Series E Preferred Stock (the "Series E Preferred Stock")
with a fair value of $50. Dividends are payable quarterly at the annual rate of
6.34 percent. Effective with the Separation, the Old U S WEST Series E Preferred
Stock remains outstanding and represents shares of MediaOne Group Series E
Preferred Stock. The Series E Preferred

77
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15: PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION (CONTINUED)
Stock was recorded at fair value of $50.00 per share at June 30, 1997, which was
equal to its liquidation value. Upon redemption, the preferred stockholders may
elect to receive cash or convert their Series E Preferred Stock into MediaOne
Group Stock. Cash redemption is equal to the Series E Preferred Stock's
liquidation value of $50.00 per share, plus accrued dividends. The number of
shares of MediaOne Group Stock to be received upon conversion is $47.50 per
share divided by the then current market price of MediaOne Group Stock. The
conversion rate is subject to adjustment by the Company under certain
circumstances.

The Series E Preferred Stock is redeemable as follows: (a) the Company may
call for redemption all or any part of the Series E Preferred Stock beginning on
June 30, 2002; (b) on a yearly basis beginning August 1, 2007, and continuing
through August 1, 2016, the Company will redeem 49,704 shares of Series E
Preferred Stock, and on June 30, 2017, all of the remaining outstanding shares
of Series E Preferred Stock; or (c) all of the outstanding Series E Preferred
Stock shall be redeemed upon the occurrence of certain events, including the
dissolution or sale of all or substantially all of MediaOne Group.

On September 2, 1994, Old U S WEST issued to Fund American Enterprises
Holdings Inc. ("FFC") 50,000 shares of a class of 7 percent Series C Cumulative
Redeemable Preferred Stock (the "Series C Preferred Stock") for a total of $50.
See Note 23--Net Investment in Assets Held for Sale--to the Consolidated
Financial Statements. Effective with the Separation, the Series C Preferred
Stock remains outstanding and represents shares of Series C Preferred Stock of
MediaOne Group. The Series C Preferred Stock was recorded at the fair market
value of $51 at the issue date. The Company has the right commencing September
2, 1999, to redeem the shares for one thousand dollars per share plus unpaid
dividends and a redemption premium. The shares are mandatorily redeemable in
2004 at face value plus unpaid dividends. At the option of FFC, the preferred
stock also can be redeemed for common shares of FSA. The market value of the
option was $79 and $71 (based on the Black-Scholes model) at December 31, 1998
and 1997, respectively, with no carrying value.

The Series E and Series C Preferred Stocks rank senior to all classes of
MediaOne Group's common stock, are subordinated to any senior debt and the
Preferred Securities, and rank equally with the Series D Preferred Stock. See
Note 16--Shareowners' Equity--to the Consolidated Financial Statements.

NOTE 16: SHAREOWNERS' EQUITY

Prior to the Separation, Old U S WEST had outstanding two separate classes
of common stock. Upon Separation, and in accordance with the terms of the
Separation Agreement, each outstanding share of Media Stock remains outstanding
and represents one share of MediaOne Group Stock. Each share of Media Stock held
as treasury stock by Old U S WEST now represents one share of MediaOne Group
Stock held as treasury stock by MediaOne Group. All issued and outstanding
shares of Communications Stock were redeemed for shares of New U S WEST common
stock. In addition, since the distribution of New U S WEST was accounted for at
fair value, retained earnings were reduced by $24,924 and common stock was
reduced by $421, representing the fair value of the businesses comprising New U
S WEST previously held by Old U S WEST.

COMMON STOCK. For 1998, other activity includes $44 for tax benefits on
stock option exercises, a $39 gain related to the acquisition of General Cable
by Telewest, a $39 gain on the exercise of a call option on shares of the
Company's stock, and miscellaneous activity of $25. In connection with the
November 15,

78
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16: SHAREOWNERS' EQUITY (CONTINUED)
1996, Continental Acquisition, the Company issued 150,615,000 shares of MediaOne
Group Stock to Continental shareowners, valued at $2,590.

SHARE REPURCHASE. On August 7, 1998, the Board of Directors of MediaOne
Group authorized the repurchase of up to 25 million shares of the Company's
common stock over the next three years, dependent on market and financial
conditions. During 1998, MediaOne Group purchased and placed into treasury
approximately 8,682,000 shares of MediaOne Group stock at an average purchase
price of $40.51 per share, or a total cost basis of $352. Prior to the
Separation, Old U S WEST purchased and placed into treasury $31 of
Communications Stock. All outstanding shares of Communications Stock held as
treasury stock by Old U S WEST were canceled as of the Separation date. During
1997 and 1996, the Company purchased and placed into treasury 2,838,000 and
15,919,000 shares of MediaOne Group Stock, at an average purchase price per
share of $18.71 and $18.66, and a total cost basis of $53 and $297,
respectively.

Following is a roll-forward of share activity during the three years ended
December 31, 1998:

<TABLE>
<CAPTION>
COMMON SHARES
---------------------------------
MEDIAONE GROUP COMMUNICATIONS
STOCK STOCK
---------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE DECEMBER 31, 1995................................. 472,314 473,635
Issuance of Communications Stock........................ 6,822
Issuance of MediaOne Group Stock for Continental
Acquisition........................................... 150,615
Other issuances of MediaOne Group Stock................. 1,853
Purchase of treasury stock.............................. (15,919)
------- ---------------
BALANCE DECEMBER 31, 1996................................. 608,863 480,457
Issuance of Communications Stock........................ 4,058
Issuances of MediaOne Group Stock....................... 1,783
Purchase of treasury stock.............................. (2,838)
------- ---------------
BALANCE DECEMBER 31, 1997................................. 607,808 484,515
Issuance of Communications Stock........................ 1,101
Distribution of New U S WEST............................ (485,042)
Issuance of MediaOne Group Stock........................ 4,350
Purchase of treasury stock.............................. (8,682) (574)
------- ---------------
BALANCE DECEMBER 31, 1998................................. 603,476 --
------- ---------------
------- ---------------
</TABLE>

SERIES D PREFERRED STOCK. On November 15, 1996, Old U S WEST issued
19,999,478 shares of 4.5 percent, 20 year, Series D Preferred Stock (the "Series
D Preferred Stock") to Continental shareowners as partial consideration for the
Continental Acquisition. Dividends are payable quarterly on the nonvoting Series
D Preferred Stock as and when declared by the Board of Directors of MediaOne
Group (the "Board of Directors") out of funds legally available. Effective with
the Separation, the Series D Preferred Stock remains outstanding and represents
Series D Preferred Stock of MediaOne Group. The Series D Preferred Stock has a
liquidation value of $50 per share and was recorded at the November 15, 1996
fair value of $46 per share. The Series D Preferred Stock is convertible at any
time at the option of the holder into 1.98052 shares of MediaOne Group Common
Stock per share of Series D Preferred Stock. Since

79
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16: SHAREOWNERS' EQUITY (CONTINUED)
holders of the Series D Preferred Stock did not participate in the Dex Dividend
upon Separation, the Board of Directors adjusted the conversion rate of the
Series D Preferred Stock from 1.905 shares of MediaOne Group Common Stock per
share of Series D Preferred Stock to 1.98052 per share. Between November 15,
1999 and November 15, 2001, the Series D Preferred Stock is redeemable at par,
at the option of the Company, into shares of MediaOne Group Stock if the market
price of MediaOne Group common shares has closed at or above $34.08 per share
for at least 20 of the 30 consecutive trading days prior to the notice of
redemption. After November 15, 2001, the Series D Preferred Stock is redeemable
at par, at the option of the Company, in cash, MediaOne Group Stock, or any
combination of cash and stock. If MediaOne Group Stock is elected, the number of
shares to be issued will be determined based on the average market price for the
ten consecutive trading days ending on the third business day prior to
redemption, reduced by five percent. On November 15, 2016, the Company is
required to redeem the Series D Preferred Stock, at its election, for cash,
MediaOne Group Stock, or any combination of cash and stock. Upon certain events,
including the disposition of all or substantially all of the properties and
assets attributed to MediaOne Group, the Series D Preferred Stock becomes
mandatorily redeemable. The Series D Preferred Stock ranks senior to all classes
of MediaOne Group common stock, is subordinated to any senior debt and the
Preferred Securities, and ranks equally with the Series E and C Preferred
Stocks.

LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN ("LESOP"). MediaOne Group sponsors
a defined contribution savings plan for substantially all employees of MediaOne
Group, except for foreign national employees. Effective in 1997, employees of
the Atlanta cable systems also became eligible to participate in the defined
contribution savings plan. Borrowings associated with the LESOP were repaid in
May 1998. Prior to that time, the borrowings associated with the LESOP, which
were unconditionally guaranteed by Old U S WEST, were included in the
Consolidated Balance Sheets of the Company and corresponding amounts were
recorded as reductions to shareowners' equity. Contributions from Old U S WEST
as well as dividends on unallocated shares held by the LESOP ($1, $3 and $5 in
1998, 1997 and 1996, respectively) were used for debt service.

The Company matched a percentage of eligible employee contributions with
shares of MediaOne Group Stock. Shares in the LESOP were released as principal
and interest were paid on the debt. At December 31, 1998, 12,831,958 shares of
MediaOne Group Stock and 12,537,710 shares of Communications Stock had been
allocated from the LESOP to participants' accounts. At December 31, 1998, there
are no remaining MediaOne Group shares to be allocated.

The Company recognizes expense based on the cash payments method. MediaOne
Group's contributions to the plan (excluding dividends) were $8, $9 and $10 in
1998, 1997 and 1996, respectively, of which $1, $1 and $2, respectively, have
been classified as interest expense.

SHAREHOLDER RIGHTS PLAN. The Board of Directors has adopted a shareholder
rights plan which, in the event of a takeover attempt, would entitle existing
shareowners to certain preferential rights. The rights expire on April 6, 1999,
and are redeemable by MediaOne Group at any time prior to the date they would
become effective. The expiration date for the rights has been extended to the
year 2009. See Note 22-- Subsequent Events--to the Consolidated Financial
Statements.

COMPREHENSIVE INCOME. During 1998, MediaOne Group adopted the provisions of
SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes
standards for reporting comprehensive income and its components within the
financial statements. Comprehensive income includes net income

80
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16: SHAREOWNERS' EQUITY (CONTINUED)
and other changes to equity not included in net income, such as foreign currency
translation and unrealized gains or losses on debt and equity securities.

Of the total net unrealized gains on debt and equity securities during 1998,
$826 (net of deferred taxes of $530), relates to the Company's investment in
AirTouch common and preferred stock acquired in connection with the AirTouch
Transaction. During 1998, MediaOne Group recorded an unrealized gain of $147
related to its investment in AirTouch preferred stock. This unrealized gain was
fully offset by a loss on an interest rate swap agreement which was designed to
minimize the Company's exposure to fluctuations in the fair value of the
AirTouch preferred stock as a result of interest rate changes.

The following table presents the components of other comprehensive income
and their related tax impacts. It also presents reclassification adjustments
related to gains realized on the sale of debt and equity securities.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997
------------------------------- -------------------------------
PRE- AFTER- PRE- AFTER-
TAX TAX TAX TAX TAX TAX
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Unrealized gain (loss) on debt and equity securities
and Exchangeable Notes.............................. $ 1,556 $ (601) $ 955 $ 271 $ (109) $ 162
Less: Reclassification for gains realized in net
income.............................................. (20) 8 (12) (231) 93 (138)
--------- --------- --------- --------- --------- ---------
Net unrealized gain (loss)............................ 1,536 (593) 943 40 (16) 24

Foreign currency translation.......................... (6) 2 (4) (92) 36 (56)
--------- --------- --------- --------- --------- ---------

Other comprehensive income (loss)..................... $ 1,530 $ (591) $ 939 $ (52) $ 20 $ (32)
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------

<CAPTION>
1996
-----------------
PRE- TAX TAX AFTER- TAX
--- --- -----
<S> <C> <C> <C>
Unrealized gain (loss) on debt and equity securities
and Exchangeable Notes.............................. $ (6) $ 1 $ (5)
Less: Reclassification for gains realized in net
income.............................................. -- -- --
-- -- --
Net unrealized gain (loss)............................ (6) 1 (5)
Foreign currency translation.......................... (2) 1 (1)
-- -- --
Other comprehensive income (loss)..................... $ (8) $ 2 $ (6)
-- -- --
-- -- --
</TABLE>

NOTE 17: EARNINGS PER SHARE

The following table reflects the computation of basic and diluted earnings
(loss) per share for MediaOne Group Stock and Communications Stock, in
accordance with the provisions of SFAS No. 128, "Earnings Per Share." The
dilutive securities for 1998 represent the incremental weighted average shares
from potential share issuances associated with stock options for MediaOne Group
Stock and Communications Stock, and the assumed conversion of the convertible
Series D Preferred Stock for MediaOne Group Stock. The diluted earnings (loss)
and related per share amounts for 1997 and 1996 do not include potential share
issuances associated with stock options and the convertible Series D Preferred
Stock since the effect would have been antidilutive on the loss from continuing
operations.

81
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17: EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
(SHARES IN THOUSANDS)
<S> <C> <C> <C>
MEDIAONE GROUP STOCK:
Income (loss) from continuing operations..................................... $ 1,430 $ (827) $ (357)
Preferred stock dividends and accretion.................................... (55) (52) (9)
Loss on redemption of Preferred Securities................................. (53) -- --
---------- ---------- ----------
Income (loss) from continuing operations available to MediaOne Group Stock
shareowners used for basic earnings (loss) per share....................... 1,322 (879) (366)
Preferred stock dividends and accretion on assumed conversion.............. 49 -- --
---------- ---------- ----------
Income (loss) from continuing operations available to MediaOne Group Stock
shareowners used for diluted earnings (loss) per share..................... $ 1,371 $ (879) $ (366)
---------- ---------- ----------
---------- ---------- ----------
Income from discontinued operations used for basic and diluted earnings per
share
Results of operations(1)................................................... $ 158 $ 347 $ 286
---------- ---------- ----------
---------- ---------- ----------
Gain on Separation......................................................... $ 24,461 -- --
---------- ---------- ----------
---------- ---------- ----------
Extraordinary item--early extinguishment of debt--net of tax................. $ (333) $ -- $ --
---------- ---------- ----------
---------- ---------- ----------
Weighted average number of shares used for basic earnings (loss) per share... 607,648 606,749 491,924
Effect of dilutive securities:
Stock options.............................................................. 6,368 -- --
Series D Preferred Stock................................................... 38,939 -- --
---------- ---------- ----------
Weighted average number of shares used for diluted earnings (loss) per
share...................................................................... 652,955 606,749 491,924
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

- ------------------------

(1) Represents the operations of Dex, which were discontinued on June 12, 1998.

82
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 17: EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
(SHARES IN THOUSANDS)
<S> <C> <C> <C>
MEDIAONE GROUP STOCK:
BASIC EARNINGS (LOSS) PER SHARE:
Continuing operations........................................................ $ 2.18 $ (1.45) $ (0.74)
---------- ---------- ----------
---------- ---------- ----------
Discontinued operations--results of operations(1)............................ $ 0.26 $ 0.57 $ 0.58
---------- ---------- ----------
---------- ---------- ----------
Discontinued operations--gain on Separation.................................. $ 40.25 -- --
---------- ---------- ----------
---------- ---------- ----------
Extraordinary item--early extinguishment of debt--net of tax................. $ (0.55) -- --
---------- ---------- ----------
---------- ---------- ----------
DILUTED EARNINGS (LOSS) PER SHARE:
Continuing operations........................................................ $ 2.10 $ (1.45) $ (0.74)
---------- ---------- ----------
---------- ---------- ----------
Discontinued operations--results of operations(1)............................ $ 0.24 $ 0.57 $ 0.58
---------- ---------- ----------
---------- ---------- ----------
Discontinued operations--gain on Separation.................................. $ 37.46 -- --
---------- ---------- ----------
---------- ---------- ----------
Extraordinary item--early extinguishment of debt--net of tax................. $ (0.51) -- --
---------- ---------- ----------
---------- ---------- ----------

COMMUNICATIONS STOCK:(2)
Income from discontinued operations used for basic and diluted earnings per
share(3)................................................................... $ 589 $ 1,177 $ 1,249
---------- ---------- ----------
---------- ---------- ----------
Weighted average number of shares used for basic earnings per share.......... 484,972 482,751 477,549
Effect of dilutive securities:
Stock options................................................................ 4,097 -- --
---------- ---------- ----------
Weighted average number of shares used for diluted earnings per share........ 489,069 482,751 477,549
---------- ---------- ----------
---------- ---------- ----------
BASIC AND DILUTED EARNINGS PER SHARE:
Basic earnings per share from discontinued operations(3)..................... $ 1.21 $ 2.43 $ 2.62
---------- ---------- ----------
---------- ---------- ----------
Diluted earnings per share from discontinued operations(3)................... $ 1.20 $ 2.43 $ 2.62
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

- ------------------------

(1) Represents the operations of Dex, which were discontinued on June 12, 1998.

(2) The Communications Stock was canceled on June 12, 1998, effective with the
Separation.

(3) Represents the operations of the Communications Group, which were
discontinued on June 12, 1998, and included with New U S WEST.

83
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18: STOCK INCENTIVE PLANS

MediaOne Group maintains stock incentive plans for executives and other
employees and nonemployees, primarily members of the Board of Directors. The
Amended MediaOne Group 1994 Stock Plan (the "Plan") is a successor plan to the
Amended 1994 Stock Plan which was maintained by Old U S WEST. Under the Amended
1994 Stock Plan, each outstanding Old U S WEST stock option was converted into
one Media Group and one Communications Group stock option. Subsequently, each
group granted options primarily in its own stock. Effective on the Separation,
stock options, whether held by individuals who became MediaOne Group or New U S
WEST employees, continued to be outstanding as stock options for MediaOne Group
and New U S WEST. The number of MediaOne Group stock options and the exercise
prices were adjusted to preserve the economic value of the options before and
after the Dex Dividend. The Plan is administered by the Human Resources
Committee of the Board of Directors with respect to officers, executive officers
and outside directors and by a special committee with respect to all other
eligible employees and eligible nonemployees.

As of December 31, 1998, the maximum aggregate number of shares of MediaOne
Group Stock that could have been granted in any calendar year for all purposes
under the Plan was three-quarters of one percent (0.75 percent) of the shares
outstanding (excluding shares held in treasury) on the first day of such
calendar year. In the event that fewer than the full aggregate number of shares
available for issuance in any calendar year were issued in any such year, the
shares not issued may be added to the shares available for issuance in any
subsequent year or years. Options granted vest over periods up to three years
and may be exercised no later than 10 years after the grant date.

The compensation cost that has been included in income in accordance with
APB Opinion No. 25, "Accounting for Stock Issued to Employees," was $26, zero
and $1 in 1998, 1997 and 1996, respectively, all of which related to
modifications of stock option terms.

MediaOne Group has adopted the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but continues to account for the Plan
under APB Opinion No. 25. Had compensation cost for the Plan been determined
consistent with the fair value based accounting method under SFAS No. 123, the
pro forma net income and earnings per share for both the MediaOne Group Stock
and Communications Stock would have been the following.

84
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18: STOCK INCENTIVE PLANS (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1997 1996
1998 ---------------------- ----------------------
---------------------- BASIC BASIC
BASIC NET EARNINGS NET EARNINGS
NET EARNINGS INCOME (LOSS) PER INCOME (LOSS) PER
INCOME PER SHARE (LOSS) SHARE (LOSS) SHARE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
MEDIAONE GROUP STOCK:
As reported................................... $ 25,716 $ 42.14 $ (480) $ (0.88) $ (71) $ (0.16)
Pro forma..................................... $ 25,681 42.08 (501) (0.91) (82) (0.18)
COMMUNICATIONS STOCK:
As reported................................... -- -- 1,177 2.43 1,249 2.62
Pro forma..................................... -- -- 1,164 2.41 1,247 2.61
</TABLE>

The fair value based method of accounting for stock-based compensation plans
under SFAS No. 123 recognizes the value of options granted as compensation cost
over the options' vesting period and has not been applied to options granted
prior to January 1, 1995. Accordingly, the resulting pro forma compensation cost
is not representative of what compensation cost will be in future years.

Following are the weighted-average assumptions used in connection with the
Black-Scholes option-pricing model to estimate the fair value of options granted
during 1998, 1997 and 1996:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
MEDIAONE GROUP STOCK:
Risk-free interest rate.................................. 5.53% 6.40% 6.30%
Expected life............................................ 4.5 years 5.0 years 5.0 years
Expected volatility...................................... 30.0% 30.0% 28.5%
Weighted average grant date fair value................... $12.53 $7.81 $7.23
COMMUNICATIONS STOCK:
Risk-free interest rate.................................. 6.40% 6.50%
Expected dividend yield.................................. 5.80% 6.70%
Expected life............................................ 4.0 years 4.5 years
Expected volatility...................................... 25.0% 19.6%
Weighted average grant date fair value................... $5.70 $3.67
</TABLE>

85
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18: STOCK INCENTIVE PLANS (CONTINUED)

Data for outstanding options under the Plan is summarized as follows:

<TABLE>
<CAPTION>
MEDIAONE GROUP STOCK COMMUNICATIONS STOCK
------------------------- --------------------------
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE
SHARES PRICE SHARES PRICE
------------ ----------- ------------- -----------
<S> <C> <C> <C> <C>
Outstanding December 31, 1995................................. 9,708,166 $ 16.33 9,423,101 $ 24.39
------------ ----------- ------------- -----------
Granted..................................................... 5,523,728 19.36 3,624,602 30.97
Exercised................................................... (507,329) 14.93 (1,205,730) 22.37
Canceled or expired......................................... (610,471) 17.86 (429,058) 25.01
------------ ----------- ------------- -----------
Outstanding December 31, 1996................................. 14,114,094 $ 17.49 11,412,915 $ 26.67
------------ ----------- ------------- -----------
Granted..................................................... 8,733,782 20.33 9,491,642 34.87
Exercised................................................... (1,371,529) 16.30 (2,648,569) 25.41
Canceled or expired......................................... (1,027,388) 18.35 (637,411) 27.54
------------ ----------- ------------- -----------
Outstanding December 31, 1997................................. 20,448,959 $ 18.74 17,618,577 $ 31.23
------------ ----------- ------------- -----------
Granted..................................................... 6,088,849 36.40
Dex Adjustment.............................................. 827,038 0.90
Separation.................................................. -- -- (17,618,577) --
Exercised................................................... (4,391,697) 17.46
Canceled or expired......................................... (1,239,154) 21.84
------------ ----------- ------------- -----------
Outstanding December 31, 1998................................. 21,733,995 $ 23.13 -- --
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
</TABLE>

The number of exercisable options under the Plan and the weighted-average
exercise prices follow:

<TABLE>
<CAPTION>
MEDIAONE GROUP STOCK COMMUNICATIONS STOCK
----------------------- -----------------------
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE
EXERCISABLE OPTIONS AT: OF SHARES PRICE OF SHARES PRICE
- ----------------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
December 31, 1996................................................ 4,867,207 $ 16.74 3,881,100 $ 25.71
December 31, 1997................................................ 7,235,685 16.54 5,299,955 25.72
December 31, 1998................................................ 9,742,450 18.30 -- --
</TABLE>

86
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18: STOCK INCENTIVE PLANS (CONTINUED)
The following table summarizes the status of outstanding and exercisable
options under the Plan at December 31, 1998. The total options outstanding
represent 3.6 percent of the MediaOne Group common shares outstanding.

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
------------------------------------------ EXERCISABLE OPTIONS
WEIGHTED- -----------------------
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
- --------------------------------------------------- ------------ --------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
MEDIAONE GROUP STOCK
$9.81 - $14.87..................................... 2,190,892 4.37 $ 14.08 2,190,892 $ 14.08
$14.97 - $16.95.................................... 2,741,956 6.47 16.46 2,431,411 16.57
$17.06 - $17.78.................................... 2,991,600 8.08 17.75 251,696 17.50
$17.82 - $19.03.................................... 2,472,984 6.95 18.32 1,557,634 18.50
$19.10 - $19.83.................................... 2,449,508 6.55 19.74 1,837,436 19.77
$19.89 - $21.51.................................... 2,443,590 7.99 21.27 798,946 21.26
$21.75 - $33.40.................................... 2,647,064 8.65 29.16 622,030 30.03
$33.52 - $37.43.................................... 2,518,320 9.22 37.06 52,363 35.96
$37.49 - $49.13.................................... 1,277,731 9.54 44.93 42 44.38
$49.63 - $49.63.................................... 350 9.58 49.63 -- --
------------ --- ----------- ---------- -----------
21,733,995 7.48 $ 23.13 9,742,450 $ 18.30
------------ --- ----------- ---------- -----------
------------ --- ----------- ---------- -----------
</TABLE>

A total of 6,088,849, 8,733,782 and 5,523,728 MediaOne Group Stock options
were granted in 1998, 1997 and 1996, respectively. A total of 9,491,642 and
3,624,602 Communications Stock options were granted in 1997 and 1996,
respectively. Included in the total grants were 249,827 of modified MediaOne
Group Stock options and 198,027 of modified Communications Stock options
revalued as new grants during 1996. The modified MediaOne Group Stock options
were not significant in 1998 and 1997, and the Communications Stock options were
not significant during 1997. Including the modified options, the
weighted-average grant date fair value was $7.10 for MediaOne Group Stock
options and $3.87 for Communications Stock options in 1996. The exercise price
of MediaOne Group and Communications Stock options, excluding modified options,
equals the market price on the grant date. The exercise prices of modified stock
options may be greater or less than the market price on the revaluation date.

Approximately 4,046,000 and 2,700,000 shares of MediaOne Group Stock were
available for grant under the plans in effect at December 31, 1998 and 1997,
respectively, and 3,100,000 shares of Communications Stock were available for
grant under the plans in effect at December 31, 1997. Approximately 25,780,000
shares of MediaOne Group Stock were reserved for issuance under the Plan at
December 31, 1998.

87
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19: EMPLOYEE BENEFITS

MEDIAONE GROUP PLANS

Effective on the Separation, MediaOne Group established a new defined
benefit pension plan and a new retiree health care and life insurance plan for
certain of its employees. A portion of the existing assets of the Old U S WEST
pension plan were transferred at fair value to the MediaOne Group pension plan
such that the ratio of plan assets to plan liabilities, calculated on a
projected benefit obligation basis, was the same for the MediaOne Group and New
U S WEST pension plans. The existing assets of the Old U S WEST postretirement
plan were transferred to MediaOne Group in a similar manner, such that the ratio
of plan assets to plan liabilities, calculated on an accumulated postretirement
benefit obligation basis, was the same for MediaOne Group and New U S WEST.

The MediaOne Group defined benefit pension plan covers substantially all of
its employees, except for foreign national employees. Management benefits are
based on a final pay formula and MediaOne Group uses the projected unit credit
method for the determination of pension cost for financial reporting and funding
purposes. MediaOne Group's policy is to fund amounts required under the Employee
Retirement Income Security Act of 1974; no funding was required in 1998, 1997
nor 1996.

MediaOne Group also sponsors a nonqualified pension plan which pays
supplemental pension benefits to key executives in addition to amounts received
under the MediaOne Group pension plan. The obligation and annual expense for
this plan are included in the 1998 pension detail below.

MediaOne Group provides certain health care and life insurance benefits to
retired employees. MediaOne Group uses the projected unit credit method for the
determination of postretirement medical and life costs for financial reporting
purposes.

The components of the 1998 net periodic benefit cost for pension benefits
and for other postretirement benefits were $3 and $2, respectively, during the
year.

Below is a reconciliation of the change in the fair value of the plan assets
for the pension and postretirement plans for 1998:

<TABLE>
<CAPTION>
OTHER
PENSION POSTRETIREMENT
BENEFITS BENEFITS
----------- ---------------
<S> <C> <C>
Fair value of plan assets at beginning of year....................... $ -- $ --
Actual return on plan assets....................................... 10 --
Contributions for non-qualified plan............................... 4 --
Assets transferred from Old U S WEST............................... 194 4
Assets due from Old U S WEST....................................... 19 1
Benefits paid...................................................... (9) --
----- -----
Fair value of plan assets at end of year(1) $ 218 $ 5
----- -----
----- -----
</TABLE>

- ------------------------

(1) Pension assets include MediaOne Group stock of $1.

88
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19: EMPLOYEE BENEFITS (CONTINUED)
Below is a reconciliation of the change in the benefit obligation for the
pension and postretirement plans for 1998:

<TABLE>
<CAPTION>
OTHER
PENSION POSTRETIREMENT
BENEFITS BENEFITS
----------- ---------------
<S> <C> <C>
Net benefit obligation at beginning of year.......................... $ -- $ --
Service cost....................................................... 8 1
Interest cost...................................................... 6 --
Liability transferred from Old U S WEST............................ 190 23
Actuarial loss..................................................... 5 1
Benefits paid...................................................... (9) --
----- -----
Net benefit obligation at end of year................................ $ 200 $ 25
----- -----
----- -----
</TABLE>

The following table represents the funded status of the pension and
postretirement plans at December 31, 1998:

<TABLE>
<CAPTION>
OTHER
PENSION POSTRETIREMENT
BENEFITS BENEFITS
----------- ---------------
<S> <C> <C>
Funded status at end of year......................................... $ 18 $ (20)
Unrecognized actuarial (gain) loss................................. (47) 5
Unrecognized prior service cost.................................... 20 1
Unrecognized net transition (asset) obligation..................... (7) --
----- -----
Net accrued liability at end of year................................. $ (16) $ (14)
----- -----
----- -----
</TABLE>

The actuarial assumptions used to account for the plans are as follows:

<TABLE>
<CAPTION>
OTHER
PENSION POSTRETIREMENT
BENEFITS BENEFITS
--------------- ------------------------
<S> <C> <C>
WEIGHTED AVERAGE ASSUMPTIONS AS OF DECEMBER 31,
1998
Discount rate...................................... 6.75% 6.75%
Expected return on assets.......................... 8.75% 8.75%
Rate of compensation increase...................... 4.00% N/A
Health care cost trend on covered charges.......... N/A 8% decreasing to an
ultimate trend of 5% in
2011
</TABLE>

A one percent change in the assumed healthcare cost trend rate would have
increased the accumulated postretirement benefit obligation by $4 and decreased
it by $3. The impact on service and interest cost components would not have been
material.

OLD U S WEST PLANS

Prior to the Separation, MediaOne Group participated in the employee
benefits plans sponsored by Old U S WEST. Since both MediaOne Group and New U S
WEST belonged to a single pension and postretirement plan, assets were not
segregated until Separation. Pension and postretirement benefit costs were
allocated to MediaOne Group based on the ratio of MediaOne Group's service cost
to

89
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19: EMPLOYEE BENEFITS (CONTINUED)

the total service cost. MediaOne Group's share of the net pension cost (credit)
for 1997 and 1996 was $(3) and zero, respectively. MediaOne Group's share of the
net postretirement costs for 1997 and 1996 was $4 and $2, respectively.

NOTE 20: INCOME TAXES

The components of the provision for income taxes follow:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
FEDERAL:
Current.......................................................... $ (372) $ (210) $ (96)
Deferred......................................................... 1,358 (137) (88)
--------- --------- ---------
986 (347) (184)
--------- --------- ---------
STATE AND LOCAL:
Current.......................................................... (14) (20) (17)
Deferred......................................................... 203 (26) (11)
--------- --------- ---------
189 (46) (28)
--------- --------- ---------
FOREIGN:
Current.......................................................... 15 (1) 2
Deferred......................................................... 18 14 30
--------- --------- ---------
33 13 32
--------- --------- ---------
Provision (benefit) for income taxes............................... $ 1,208 $ (380) $ (180)
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company paid $24, $636 and $693 for income taxes in 1998, 1997 and 1996,
respectively, inclusive of the discontinued operations of New U S WEST and the
capital assets segment. Income taxes paid for the discontinued operations of New
U S WEST, through the Separation date of June 12, 1998, were $379, $906 and $814
in 1998, 1997 and 1996, respectively.

The effective tax rate differs from the statutory tax rate as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
(IN PERCENT)
<S> <C> <C> <C>
Federal statutory tax rate.............................................. 35.0 35.0 35.0
State income taxes--net of federal effect............................... 3.5 2.5 3.3
Foreign taxes--net of federal effect.................................... (1.8) (0.7) (3.9)
Goodwill amortization................................................... (4.5) (4.7) (2.4)
Other................................................................... 0.6 (0.6) 1.5
--- --- ---
Subtotal without gain on sale of domestic wireless...................... 32.8 31.5 33.5
Gain on sale of domestic wireless....................................... 13.0 -- --
--- --- ---
Effective tax rate...................................................... 45.8 31.5 33.5
--- --- ---
--- --- ---
</TABLE>

90
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20: INCOME TAXES (CONTINUED)
The components of the net deferred tax liability follow:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Intangible assets.......................................................... $ 2,685 $ 2,605
Property, plant and equipment.............................................. 284 270
State deferred tax liability-- net of federal effect....................... 867 667
Leases..................................................................... 557 585
Investment in AirTouch Communications...................................... 1,978 --
Other...................................................................... 95 253
--------- ---------
Deferred tax liabilities................................................. 6,466 4,380
--------- ---------
Postemployment benefits, including pension................................. -- 23
State deferred tax asset--net of federal effect............................ 87 74
Reserves................................................................... 189 45
Investments................................................................ 203 203
Net operating loss and tax credit carryforwards............................ 127 155
Valuation allowance........................................................ (279) (320)
Foreign currency translation adjustment.................................... 57 --
Other...................................................................... 121 357
--------- ---------
Deferred tax assets...................................................... 505 537
--------- ---------
Net deferred tax liability................................................. $ 5,961 $ 3,843
--------- ---------
--------- ---------
</TABLE>

In connection with the Continental Acquisition, the Company has acquired
operating loss carryforwards of approximately $217 for federal income tax
purposes, expiring in various years through 2011. The Company also acquired
investment tax credit carryforwards of approximately $50, expiring in various
years through 2005. Due to potential use limitations, a valuation allowance of
$279 has been established for the carryforwards and for a deferred tax asset
associated with an investment. If the realization of the carryforwards or
deferred tax asset becomes more likely than not in future periods, any reduction
in the valuation allowance will be allocated to reduce goodwill and acquired
intangible assets.

The current portion of the deferred tax asset was $74 and $102 at December
31, 1998 and 1997, respectively, resulting primarily from compensation-related
items and other accrued expenses. The net deferred tax liability includes $669
in 1997 related to the capital assets segment. Foreign operations contributed
pretax losses of $336, $604 and $362 during 1998, 1997 and 1996, respectively.

NOTE 21: COMMITMENTS AND CONTINGENCIES

MediaOne Group commitments and debt guarantees associated with its
investments totaled approximately $310 for its international investments and
$240 for its domestic investments. In addition, a MediaOne Group subsidiary
guarantees debt, non-recourse to MediaOne Group, associated with its
international investment of approximately $880.

91
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 21: COMMITMENTS AND CONTINGENCIES (CONTINUED)
currently reviewing the lawsuits to determine what impact, if any, such lawsuits
may have on the operations of the Company.

NOTE 22: SUBSEQUENT EVENTS

CABLE SYSTEMS. On February 2, 1999, MediaOne Group and Time Warner Cable, a
division of Time Warner and TWE, signed a definitive agreement to trade certain
cable systems. MediaOne Group will trade cable systems in Ohio, Maine and
California serving approximately 350,000 subscribers, while Time Warner Cable
will trade cable systems in Massachusetts, New Hampshire and Georgia serving
approximately 310,000 subscribers. MediaOne Group will also receive cash from
the trade. The transaction is expected to close in 1999.

On March 2, 1999, MediaOne Group and Cox Communications, Inc. ("Cox") signed
a definitive agreement to trade certain cable systems. MediaOne Group will trade
cable systems in Connecticut and Rhode Island serving approximately 51,000
subscribers, while Cox will trade cable systems in Massachusetts serving
approximately 54,000 subscribers. MediaOne Group will also pay cash for the
trade. The transaction is expected to close during the third quarter of 1999,
subject to legal and regulatory approval.

SHAREHOLDER RIGHTS PLAN. On February 9, 1999, the Board of Directors
approved a new shareholder rights plan to replace the existing plan upon
expiration. The new rights expire on April 6, 2009. The new shareholder rights
plan contains terms similar to the original plan.

INVESTMENT IN AIRTOUCH COMMUNICATIONS. On January 15, 1999, AirTouch
entered into a preliminary agreement with Vodafone Group Public Limited Company
("Vodafone") to merge its operations with a subsidiary of Vodafone. The proposed
terms of the preliminary merger agreement indicate that the outstanding common
shares of AirTouch would be converted into the right to receive five ordinary
shares of Vodafone and $9.00 in cash per AirTouch common share held. MediaOne
Group currently owns approximately 59.3 million shares of AirTouch common stock,
of which a maximum of 29 million shares could be used in the future to
extinguish the Exchangeable Notes outstanding. See Note 10--Debt--to the
Consolidated Financial Statements.

INVESTMENT IN PRIMESTAR. On January 22, 1999, PrimeStar announced that it
had reached an agreement with Hughes Electronics Corporation ("Hughes") to sell
its rights to acquire certain high-power satellite assets to Hughes for
approximately $35 in cash and the assumption by Hughes of $465 of certain
advances made by Old PrimeStar to Tempo Satellites, Inc. In addition, PrimeStar
agreed to sell its DBS medium-power business and assets to Hughes for
approximately $1.1 billion in cash and 4.871 million shares of General Motors
Class H common stock. The sales are contingent upon the receipt of various
regulatory approvals and the consent of certain third parties, including
PrimeStar lenders.

OPTUS SHARES. During the first quarter of 1999, MediaOne Group sold its
investment in the 50 million Optus shares held as of year-end 1998, for net
proceeds of $121 and a pre-tax gain of $119. In addition, during the first
quarter of 1999, MediaOne Group received 13.6 million Optus shares as a result
of having met certain performance measures at Optus, and purchased 5.6 million
additional Optus shares related to the Company's anti-dilution rights. MediaOne
Group is currently in the process of disposing of its remaining investment in
Optus shares.

COMCAST MERGER. On March 22, 1999, MediaOne Group announced that it had
entered into a merger agreement with Comcast Corporation ("Comcast") whereby
MediaOne Group would be merged into

92
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 22: SUBSEQUENT EVENTS (CONTINUED)
Comcast. The merger agreement calls for MediaOne Group common shareowners to
receive 1.1 shares of Comcast Class A Special Common Stock for each share of
MediaOne Group common stock held. The transaction will be tax-free to MediaOne
Group shareowners. Subject to the approval of both shareowner groups, and
various federal, state and local regulatory bodies, the merger could be
completed as early as year-end 1999. While the merger agreement prohibits
MediaOne Group from soliciting competing acquisition proposals, MediaOne Group
may, subject to compliance with the terms of the merger agreement and payment of
a $1.5 billion fee to Comcast, accept a superior proposal that is submitted
within 45 days of the date of the merger agreement.

NOTE 23: NET INVESTMENT IN ASSETS HELD FOR SALE

As of December 31, 1998, the disposal of assets held for sale of the capital
assets segment was substantially completed. Therefore, the Consolidated Balance
Sheet at December 31, 1998 includes the accounts of the capital assets segment.
Prior to this time, the capital assets segment had been accounted for in
accordance with Staff Accounting Bulletin No. 93, issued by the SEC, which
required discontinued operations not disposed of within one year of the
measurement date to be accounted for prospectively in continuing operations as a
"net investment in assets held for sale." The remaining assets of the capital
assets segment primarily represent long term lease finance receivables which
will be run-off. These receivables are reflected in "Other Assets" in the
Consolidated Balance Sheet for 1998. Beginning in 1999, the operations of the
capital assets segment will also be reflected in the Consolidated Statements of
Operations.

MediaOne Real Estate, Inc. ("Real Estate") sold various assets during 1998,
1997 and 1996 for proceeds of $182, $88 and $156, respectively. The sales
proceeds were in line with estimates. Proceeds from sales were primarily used to
repay related debt. As of December 31, 1998, the Company had substantially
completed the liquidation of this portfolio.

Building sales and operating revenues of the capital assets segment were
$208, $116 and $223 in 1998, 1997 and 1996 , respectively. During 1998, 1997 and
1996, income or losses from the capital assets segment were deferred and
included within the reserve for assets held for sale.

93
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 23: NET INVESTMENT IN ASSETS HELD FOR SALE (CONTINUED)
The components of net investment in assets held for sale as of December 31,
1997 follow:

<TABLE>
<CAPTION>
DECEMBER 31,
1997
-------------
<S> <C>
ASSETS
Cash and cash equivalents........................................................................... $ 54
Finance receivables--net............................................................................ 777
Investment in real estate--net of valuation allowance............................................... 156
Bonds, at market value.............................................................................. 119
Investment in FSA................................................................................... 365
Other assets........................................................................................ 197
------
Total assets........................................................................................ $ 1,668
------
------
LIABILITIES
Debt................................................................................................ $ 372
Deferred income taxes............................................................................... 669
Accounts payable, accrued liabilities and other..................................................... 197
Minority interests.................................................................................. 11
------
Total liabilities................................................................................... 1,249
------
Net investment in assets held for sale.............................................................. $ 419
------
------
</TABLE>

Finance receivables primarily consist of contractual obligations under
long-term leases with maturity dates ranging from 1999 to 2016 that MediaOne
Group intends to run off. Certain leases contain renewal options and buyout
provisions. These long-term leases consist mostly of leveraged leases related to
aircraft and power plants. For leveraged leases, the cost of the assets leased
is financed primarily through nonrecourse debt which is netted against the
related lease receivable. The components of finance receivables follow.

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Receivables.................................................................................... $ 671 $ 719
Unguaranteed estimated residual values......................................................... 431 431
--------- ---------
1,102 1,150
Less: Unearned income.......................................................................... 338 355
Credit loss and other allowances(1).......................................................... 138 18
--------- ---------
Finance receivables--net....................................................................... $ 626 $ 777
--------- ---------
--------- ---------
</TABLE>

- ------------------------

(1) Includes allowance for credit losses of $13 in 1998 and 1997, respectively.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK--FINANCIAL GUARANTEES

MediaOne Group retained certain risks in asset-backed obligations related to
the commercial real estate portfolio. As of December 31, 1998, the principal
amounts insured on asset-backed obligations were

94
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 23: NET INVESTMENT IN ASSETS HELD FOR SALE (CONTINUED)
$146 for maturity terms up to five years and $138 for maturity terms ranging
from 5 to 10 years, for a total principal amount insured of $284. As of December
31, 1997, the amounts were $449 for terms up to 5 years, and $266 for terms
ranging from 5 to 10 years, for a total amount of $715.

Concentrations of collateral associated with insured asset-backed
obligations follow:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
TYPE OF COLLATERAL 1998 1997
- -------------------------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
Commercial mortgages:
Commercial real estate.......................................................................... $ 37 $ 319
Corporate secured............................................................................... 247 396
--------- ---------
Total............................................................................................. $ 284 $ 715
--------- ---------
--------- ---------
</TABLE>

ADDITIONAL FINANCIAL INFORMATION

Information for Financial Services, a member of the capital assets segment,
follows:

<TABLE>
<CAPTION>
YEAR ENDED OR AS OF
DECEMBER 31,
-------------------------------
SUMMARIZED FINANCIAL INFORMATION 1998 1997 1996
- ------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Revenue............................................................ $ 17 $ 23 $ 26
Net finance receivables............................................ 625 824 859
Total assets....................................................... 858 1,208 1,058
Total debt......................................................... 199 363 236
Total liabilities.................................................. 846 1,121 998
Equity............................................................. 12 87 60
</TABLE>

NOTE 24: DISCONTINUED OPERATIONS

In accordance with Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations--Reporting the Effects of Disposal of a Segment of a
Business and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," the Consolidated Financial Statements reflect New U S WEST as a
discontinued operation. The assets and liabilities, revenues and expenses, and
the cash flows of New U S WEST have been separately classified in the
Consolidated Balance Sheets, Statements of Operations, and Statements of Cash
Flows.

The Company has accounted for the distribution of New U S WEST common stock
to the holders of Communications Stock, and to the holders of MediaOne Group
Stock for the Dex Alignment as a discontinuance of the businesses comprising New
U S WEST. The measurement date for discontinued operations accounting purposes
is June 4, 1998, the date upon which Old U S WEST's shareowners approved the
Separation. Because the distribution was non pro-rata, as compared with the
businesses previously attributed to Old U S WEST's two classes of shareowners,
it was accounted for at fair value. The distribution resulted in a gain of
$24,461, net of $114 of Separation costs (net of tax benefits of $37).
Separation costs included cash payments under severance agreements of $45 and
financial advisory, legal, registration fee, printing and mailing costs.
Separation costs also included a one-time payment to terminate the sale of the
Minnesota cable systems.

95
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 24: DISCONTINUED OPERATIONS (CONTINUED)

Summarized financial information for the discontinued operations is as
follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
SUMMARIZED FINANCIAL POSITION 1997
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
ASSETS
Cash and cash equivalents........................................................................... $ 27
Accounts and notes receivable--net.................................................................. 1,717
Property, plant and equipment--net.................................................................. 14,308
Other assets........................................................................................ 1,344
------------
Total assets........................................................................................ $ 17,396
------------
------------

LIABILITIES
Debt................................................................................................ $ 5,715
Accounts payable, accrued liabilities and other..................................................... 4,260
Postretirement and other postemployment benefit obligation.......................................... 2,534
Deferred income taxes and credits................................................................... 520
------------
Total liabilities................................................................................... $ 13,029
------------
------------
Net investment in assets of discontinued operations................................................. $ 4,367
------------
------------
</TABLE>

<TABLE>
<CAPTION>
SUMMARIZED OPERATING RESULTS 1998 1997 1996
- ---------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Revenues.......................................................................... $ 5,454 $ 11,479 $ 11,168
Operating income.................................................................. 1,412 2,776 2,812
Income before income taxes, extraordinary item and cumulative effect of change in
accounting principle............................................................ 1,187 2,429 2,377
Income tax expense................................................................ (440) (902) (876)
--------- --------- ---------
Income before extraordinary item and cumulative effect of change in accounting
principle....................................................................... 747 1,527 1,501
Extraordinary item--debt extinguishment--net of tax............................... -- (3) --
Cumulative effect of change in accounting principle--net of tax................... -- -- 34
--------- --------- ---------
Net income of discontinued operations............................................. $ 747 $ 1,524 $ 1,535
--------- --------- ---------
--------- --------- ---------
</TABLE>

96
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 25: QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTERLY FINANCIAL DATA
------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
1998
Sales and other revenues(1).............................................. $ 972 $ 641 $ 626 $ 643
Income (loss) from continuing operations before income taxes............. (328) 3,716 (244) (506)
Income (loss) from continuing operations................................. (222) 2,174 (184) (338)
Income from discontinued operations - net of tax(2)...................... 434 24,774 -- --
Net income (loss)(2)..................................................... 212 26,615 (184) (338)

MEDIAONE GROUP STOCK:
Basic earnings (loss) per common share:
Income (loss) from continuing operations............................... $ (0.38) $ 3.46 $ (0.32) $ (0.58)
Income from discontinued operations per common share................... 0.14 40.28 -- --
Total basic earnings (loss) per common share........................... (0.24) 43.19 (0.32) (0.58)

Diluted earnings (loss) per common shares................................
Income (loss) from continuing operations............................... $ (0.38) $ 3.24 $ (0.32) $ (0.58)
Income from discontinued operations per common share................... 0.14 37.53 -- --
Total diluted earnings (loss) per common share......................... (0.24) 40.27 (0.32) (0.58)

COMMUNICATIONS STOCK:
Earnings from discontinued operations per common share:
Basic earnings......................................................... $ 0.72 $ 0.50 $ -- $ --
Diluted earnings....................................................... 0.72 0.49 -- --

1997
Sales and other revenues(3).............................................. $ 920 $ 981 $ 974 $ 972
Loss from continuing operations before income taxes...................... (270) (252) (342) (343)
Loss from continuing operations.......................................... (190) (181) (226) (230)
Income from discontinued operations--net of tax(4)....................... 420 416 420 268
Net income............................................................... 230 238 191 38

MEDIAONE GROUP STOCK:
Basic and diluted loss from continuing operations per common share..... $ (0.33) $ (0.31) $ (0.40) $ (0.40)
Basic and diluted earnings from discontinued operations per common
share................................................................ 0.13 0.14 0.14 0.16
----------- --------- ----------- -----------
Total basic and diluted loss per MediaOne Group Stock common share..... $ (0.20) $ (0.17) $ (0.26) $ (0.24)
----------- --------- ----------- -----------
----------- --------- ----------- -----------

COMMUNICATIONS STOCK:
Basic and diluted earnings from discontinued operations per common
share................................................................ $ 0.70 $ 0.69 $ 0.69 $ 0.35
----------- --------- ----------- -----------
----------- --------- ----------- -----------
</TABLE>

97
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 25: QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)
- ------------------------

(1) Sales and other revenues include revenues related to the domestic wireless
operations of $341 and $20 for the first and second quarters of 1998,
respectively. The domestic wireless operations were sold on April 6, 1998.

(2) Income from discontinued operations includes $87 and $72 related to Dex, and
$347 and $241 related to the Communications Group for the first and second
quarters of 1998, respectively.

(3) Sales and other revenues include revenues related to the domestic wireless
operations of $335, $363, $373 and $357 for the first, second, third and
fourth quarters of 1997, respectively

(4) Income from discontinued operations includes $81, $84, $84 and $98 related
to Dex, and $339, $332, $336 and $170 related to the Communications Group
for the first, second, third and fourth quarters of 1997, respectively.

First-quarter 1998 net income includes net income of $15 ($0.03 per share of
MediaOne Group Stock) related to the domestic wireless businesses and a gain of
$10 ($0.02 per share of MediaOne Group Stock) related to the sale of a cable
programming investment. Second-quarter 1998 net income includes a gain of
$24,461 ($40.16 per share of MediaOne Group Stock) related to the Separation, a
gain of $2,257 ($3.71 per share of MediaOne Group Stock) related to the sale of
MediaOne Group's domestic wireless businesses, gains of $14 ($0.02 per share of
MediaOne Group Stock) related to various investment sales, net income of $5
($0.01 per share of MediaOne Group Stock) related to the domestic wireless
businesses, and a charge of $333 ($0.55 per share of MediaOne Group Stock) for
the early extinguishment of debt. Third-quarter 1998 net income includes gains
of $2 (no per share impact) on sales of miscellaneous domestic cable systems and
a charge of $25 ($0.04 per share of MediaOne Group Stock) related to an interest
rate swap agreement which did not qualify for deferral accounting.
Fourth-quarter 1998 net income includes gains of $18 ($0.03 per share of
MediaOne Group Stock) related to sales of various investments, a charge of $100
($0.16 per share of MediaOne Group Stock) related to a write-down to zero of the
Company's investment in PrimeStar, and a charge of $18 ($0.03 per share of
MediaOne Group Stock) related to the termination of an interest rate swap
agreement and the purchase of an interest rate option.

First-quarter 1997 net income includes a gain of $31 ($0.05 per share of
MediaOne Group Stock) related to the sale of MediaOne Group's wireless interest
in France and net income of $25 ($0.04 per MediaOne Group Stock) related to the
domestic wireless businesses. Second-quarter 1997 net income includes net income
of $29 ($0.05 per MediaOne Group Stock) related to the domestic wireless
businesses, a gain of $25 ($0.04 per share of MediaOne Group Stock) related to
the sales of TCG and Time Warner shares and a gain of $3 (no per share MediaOne
Group Stock impact) on the early extinguishment of debt. Third-quarter 1997 net
income includes net income of $32 ($0.05 per MediaOne Group Stock) related to
the domestic wireless businesses, a gain of $7 ($0.01 per share of MediaOne
Group Stock) related to sales of TCG shares and a charge of $3 (no per share
MediaOne Group Stock impact) for the early extinguishment of debt.
Fourth-quarter 1997 net income includes a $120 charge ($0.20 per share of
MediaOne Group Stock) related to Asian investments. Also included is a gain of
$89 ($0.15 per share of MediaOne Group Stock) related to the sale of TCG shares,
a gain of $80 ($0.13 per share of MediaOne Group Stock) on the sale of Fintelco,
a gain of $17 ($0.03 per share of MediaOne Group Stock) from the sale of an
international directories investment and a net loss of $3 ($0.01 per share of
MediaOne Group Stock) related to the domestic wireless businesses.

98
<PAGE>
MEDIAONE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 25: QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
MARKET PRICE
(WHOLE DOLLARS)
----------------------------------
PER SHARE MARKET AND DIVIDEND DATA HIGH LOW CLOSE DIVIDENDS
- ------------------------------------------------------------------ ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1998
MEDIAONE GROUP STOCK
First quarter................................................... $ 37.1875 $ 27.0000 $ 34.7500 $ --
Second quarter.................................................. 44.2500 34.1875 43.9375 --
Third quarter................................................... 50.1250 40.0000 44.4375 --
Fourth quarter.................................................. 47.0000 33.4375 47.0000 --
COMMUNICATIONS STOCK
First quarter................................................... $ 56.7500 $ 43.3750 $ 54.6250 $ 0.5350
Second quarter (thru 6/12/98)(1)................................ 58.0000 49.5625 50.5000 --

1997
MEDIAONE GROUP STOCK
First quarter................................................... $ 20.6250 $ 17.6250 $ 18.5000 $ --
Second quarter.................................................. 22.3750 16.0000 20.2500 --
Third quarter................................................... 24.2500 19.8125 22.3125 --
Fourth quarter.................................................. 29.1250 22.3125 28.8750 --
COMMUNICATIONS STOCK
First quarter................................................... $ 37.2500 $ 31.7500 $ 33.8750 $ 0.5350
Second quarter.................................................. 38.5000 31.1250 37.6875 0.5350
Third quarter................................................... 39.4375 35.6250 38.5000 0.5350
Fourth quarter.................................................. 46.9375 36.8750 45.1250 0.5350
</TABLE>

- ------------------------

(1) The Communications Stock was canceled on June 12, 1998, effective with the
Separation.

99
<PAGE>
MEDIAONE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

The following unaudited pro forma condensed combined statement of operations
of MediaOne Group for the year ended December 31, 1998 gives effect to (i) the
Refinancing, including the refinancing by New U S WEST of the Dex Indebtedness
(the "MediaOne Group Separation Adjustments"), and (ii) the AirTouch Transaction
(the "AirTouch Transaction Adjustments"), as if such transactions had been
consummated as of January 1, 1998.

The pro forma adjustments included herein are based on available information
and certain assumptions that management believes are reasonable and are
described in the accompanying notes. The unaudited pro forma financial
statements do not necessarily represent what MediaOne Group's results of
operation would have been had the transactions occurred at such date or to
project MediaOne Group's results of operations at or for any future date or
period. In the opinion of management, all adjustments necessary to present
fairly the unaudited pro forma financial information have been made. The
unaudited pro forma financial statements should be read in conjunction with the
historical financial statements of MediaOne Group.

100
<PAGE>
MEDIAONE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
MEDIAONE
GROUP PRO
MEDIAONE FORMA
MEDIAONE GROUP EXCLUDING AIRTOUCH MEDIAONE
GROUP SEPARATION AIRTOUCH TRANSACTION GROUP PRO
HISTORICAL ADJUSTMENTS TRANSACTION ADJUSTMENTS FORMA
----------- ------------- ------------- ----------- -----------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C> <C>
Sales and other revenues....................... $ 2,882 $ 2,882 $ (359)(E) $ 2,523

Cost of sales and other revenues............... 1,013 1,013 (72)(E) 941
Selling, general and administrative............ 926 926 (139)(E) 787
Depreciation and amortization.................. 1,182 1,182 (55)(E) 1,127
----------- ----- ------ ----------- -----------
Total operating expense...................... 3,121 3,121 (266) 2,855
----------- ----- ------ ----------- -----------
Operating loss from continuing
operations................................... (239) (239) (93)(E) (332)
Other income (expense):
Interest expense............................. (491) 118(A) (373) 26(E) (347)
Equity losses in unconsolidated ventures..... (417) (417) 35(E) (382)
Other income (expense)--net.................. 3,785 17(B) 3,802 (3,841)(E) (39)
----------- ----- ------ ----------- -----------
Income (loss) from continuing operations before
income taxes................................. 2,638 135 2,773 (3,873) (1,100)
(Provision) benefit for income taxes........... (1,208) (54)(C) (1,262) 1,614(E) 352
----------- ----- ------ ----------- -----------
Income (loss) from continuing
operations................................... 1,430 81 1,511 (2,259) (748)
----------- ----- ------ ----------- -----------
Dividends and accretion on preferred stock..... (55) (55) (55)
Loss on redemption of Preferred Securities..... (53) 53(D) -- --
----------- ----- ------ ----------- -----------
Earnings (loss) available for common stock..... $ 1,322 $ 134 $ 1,456 $ (2,259) $ (803)
----------- ----- ------ ----------- -----------
----------- ----- ------ ----------- -----------

Basic earnings (loss) per share................ $ 2.18 $ (1.32)
----------- -----------
----------- -----------
Basic average shares outstanding............... 607,648 607,648
----------- -----------
----------- -----------
Diluted earnings (loss) per share.............. $ 2.10 $ (1.16)
----------- -----------
----------- -----------
Diluted average shares outstanding............. 652,955 652,955
----------- -----------
----------- -----------
</TABLE>

101
<PAGE>
MEDIAONE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(A) Reflects a reduction of historical interest expense of $109 million for the
year ended December 31, 1998 as a result of the Refinancing, including the
refinancing by New U S WEST of the Dex Indebtedness, and an increase in
interest expense of $7 million for financing the costs of the Refinancing
and the Separation. Also includes a $16 million decrease in interest expense
to reverse interest expense recognized on the early termination of interest
rate contracts due to the Separation.

(B) Reflects a reduction in guaranteed minority interest expense (included in
other income (expense)-- net) of $17 million for the year ended December 31,
1998 related to the redemption of the Preferred Securities.

(D) Reflects the reversal of the $53 million loss incurred on the redemption of
the Preferred Securities associated with the Separation in the year ended
December 31, 1998.

(E) Reflects the consummation of the AirTouch Transaction. The pro forma
adjustments reflect the following:

- Receipt of 59,314,000 of AirTouch common stock accounted for as
marketable equity securities.

- Receipt of $1,493 million of AirTouch preferred stock at market value
(liquidation value of $1,650 million).

- Receipt of $93 million in dividends per year ($25 million for the year
ended December 31, 1998 due to the April 6, 1998 consummation).

- Reduction in debt of $1,350 million and a corresponding reduction in
interest expense of $26 million for the year ended December 31, 1998.

- Removal of the consolidated revenues and expenses of MediaOne Group's
domestic cellular operations.

- Removal of MediaOne Group's equity method investments and related
equity losses associated with its investment in PrimeCo.

- Reversal of the $3,869 million pre-tax gain and the associated $1,612
million tax expense recognized for the sale of the domestic wireless
businesses.

102
<PAGE>
MEDIAONE GROUP, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING OF CHARGED TO OTHER BALANCE AT
PERIOD EXPENSE ACCOUNTS DEDUCTIONS END OF PERIOD
------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR CREDIT LOSSES
1998.............................................. $ 64 $ 43 $ (5)(a) $ (58)(b) $ 44
1997.............................................. 65 73 20 (94)(b) 64
1996.............................................. 38 44 28 (45)(b) 65

REAL ESTATE VALUATION ALLOWANCE AND 1993 PROVISION FOR
LOSS ON DISPOSAL OF THE CAPITAL ASSETS SEGMENT (after
tax)
1998.............................................. 116 -- -- (8) 108
1997.............................................. 100 -- -- 16 116
1996.............................................. 56 -- -- 44 100
</TABLE>

- ------------------------------

(a) Represents a reduction related to the sale of the domestic wireless
operations and an increase related to the capital assets segment. Effective
December 31, 1998, account balances of the capital assets segment are now
included in the Consolidated Balance Sheet.

(b) Represents credit losses written off during the period, less collection of
amounts previously written off.

S-1

<PAGE>
MEDIAONE GROUP, INC.
EXECUTIVE SHORT-TERM INCENTIVE PLAN

SECTION 1
PURPOSE

The purpose of the MediaOne Group, Inc. Executive Short-Term Incentive Plan
(the "Plan") is to provide key executives of MediaOne Group, Inc. and its
subsidiaries (the "Company") with incentive compensation based upon the
achievement of established performance goals.

SECTION 2
ELIGIBILITY

Eligibility for the Plan is limited to the Chief Executive Officer of
MediaOne Group, Inc. ("CEO") and any individuals employed by the Company (at the
end of any calendar year) who appear in the Summary Compensation Table of the
Company's Proxy Statement to Shareholders for that year. The Human Resources and
Executive Development Committee of the MediaOne Group Board of Directors (the
"Committee") shall certify eligibility for participation. Individuals eligible
to participate in the Plan are herein called "Participants."

SECTION 3
AWARDS

Participants will be eligible to receive shares of a cash bonus pool
established annually, as described in Section 5, provided that the Committee
shall have the authority to reduce the share of any participant to the extent it
deems appropriate. Any such reduction of a participant's share will not result
in an increase of another participant's share.

SECTION 4
PERFORMANCE PERIODS

Each performance period ("Period") shall have duration of one calendar year,
commencing on January 1, and terminating on December 31.

SECTION 5
PERFORMANCE FORMULA

5.1 At the end of each Period the Committee will certify the amount of the
cash bonus pool pursuant to Section 5.2.

5.2 The cash bonus pool for any Period will be 0.50% (one-half of one
percent) of the Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) of MediaOne Group, Inc. and its consolidated subsidiaries, determined
on a proportionate basis (i.e., MediaOne Group's proportionate share of EBITDA
of nonconsolidated investments are included with the EBITDA of consolidated
investments) in accordance with the standards of the Financial Accounting
Standards Board, less any amount that the Committee deems appropriate.

5.3 The pool shares shall be allocated 30% to the CEO, and the remainder
shall be allocated pro rata among the other participants.. The Committee shall
have the authority to reduce any participant's share of the cash bonus pool to
the extent it deems appropriate. In determining the amount to be paid to a
participant for any Period, the Committee will consider a number of performance
factors, including, but

1
<PAGE>
not limited to, the Company's EBITDA, revenues, cash flow, customer and quality
indicators, and other relative operating and strategic results.

5.4 Shares of the cash bonus pool will be paid in the year following the
completion of the performance period.

SECTION 6
SPECIAL DISTRIBUTION RULES

6.1 CHANGE OF CONTROL. In the event of a Change of Control, as defined
below, this Plan will cease to apply, and those individuals who would have
participated in this Plan shall be entitled to such short-term incentive
compensation as the Committee (or the Board, in the case of the CEO) shall have
previously determined without regard to the provisions of this Plan.

For purposes of the Plan, a "Change of Control" shall mean any of the
following:

(i) Any "person" (as such term is used in Sections 13 (d) and 14 (d) (2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") is or
becomes a beneficial owner of (or otherwise has the authority to vote), directly
or indirectly, securities representing twenty percent (20%) or more of the total
voting power of all the Company's then outstanding voting securities, unless
through a transaction arranged by, or consummated with the prior approval of the
MediaOne Group Board of Directors;

(ii) Any period of two (2) consecutive calendar years during which there
shall cease to be a majority of the MediaOne Group Board of Directors comprised
as follows: individuals who at the beginning of such period constitute the Board
of Directors any new director(s) whose election by the Board of Directors or
nominations for election by the Company's shareholders was approved by a vote of
at least two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved;

(iii) the Company becomes a party to a merger, consolidation or Share
exchange in which either (i) the Company will not be the surviving corporation
or (ii) the Company will be the surviving corporation and any outstanding shares
of Common Stock of the Company will be converted into shares of any other
company (other than a reincorporation or the establishment of a holding company
involving no change of ownership of the Company) or other securities or cash or
other property (excluding payments made solely for fractional shares); or

(iv) Any other event that a majority of the MediaOne Group Board of
Directors, in its sole discretion, shall determine constitutes a Change of
Control.

6.2 SPECIAL CIRCUMSTANCES. If, prior to a distribution from the cash bonus
pool, a Participant (i) is discharged by the Company, (ii) is demoted, or (iii)
becomes associated with, employed by or renders services to, or owns a material
interest in any business that is competitive with the Company, the Committee
shall have the authority to (a) reduce or cancel payments that would otherwise
be paid from the cash bonus pool, (b) permit continued participation in the Plan
or an early distribution therefrom, or (c) any combination of the foregoing.

SECTION 7
MISCELLANEOUS PROVISIONS

7.1 ASSIGNMENT OR TRANSFER. No opportunity shall be assignable or
transferable by a participant.

7.2 COSTS AND EXPENSES. The costs and expenses of administering the Plan
shall be borne by the Company and shall not be charged against any participant.

2
<PAGE>
7.3 OTHER INCENTIVE PLANS. The adoption of the Plan does not preclude the
adoption by appropriate means of any other incentive plan for employees.

7.4 EFFECT ON EMPLOYMENT. Nothing contained in this Plan or any agreement
related hereto or referred to herein shall affect, or be construed as affecting,
the terms of employment of any participant except to the extent specifically
provided herein or therein. Nothing contained in this Plan or any agreement
related hereto or referred to herein shall impose, or be construed as imposing,
any obligation on (i) the Company to continue the employment of any participant
and (ii) any participant to remain in the employ of the Company.

7.5 TAXATION. The Company shall have the right to deduct from any award to
be paid under the Plan any federal, state or local taxes required by law to be
withheld with respect to such payment.

7.6 AMENDMENT OF PLAN. The MediaOne Group Board of Directors shall have the
right to suspend or terminate this Plan at any time and may amend or modify the
Plan prior to the beginning of any Period.

SECTION 8
PLAN ADMINISTRATION

8.1 COMMITTEE AUTHORITY DELEGATION. The Committee shall have full power to
administer and interpret the Plan and to establish rules for its administration.
The Committee may designate Company employees to act in its behalf to engage in
daily administration of the Plan. The Committee or its designee may administer
the Plan in all respects including the proration or adjustment of awards in the
case of retirements, terminations, entrance to or exit from a level of
management, changes in base salary, dismissal or death and other conditions as
appropriate.

8.2 GOVERNING LAW. The Plan shall be governed by the laws of the state of
Colorado and applicable federal law.

8.3 COMMITTEE RELIANCE. The Committee, in making any determination under or
referred to in the Plan shall be entitled to rely on opinions, reports or
statements of officers or employees of the Company and other entities and of
counsel, public accountants and other professional expert persons.

SECTION 9
CLAIMS AND APPEALS

9.1 COMMITTEE PROCEDURE. Claims and appeals will be processed in accordance
with the following procedures:

(a) Any claim under the Plan by a participant or any one claiming through a
participant shall be presented to the Committee.

(b) Any person whose claim under the Plan has been denied may, within sixty
(60) days after receipt of notice of denial, submit to the Committee a written
request for review of the decision denying the claim.

9.2 ARBITRATION. Any dispute that may arise in connection with this Plan
shall be determined solely by arbitration in Denver, Colorado under the rules of
the American Arbitration Association. Any claim with respect to any benefit
under this Plan must be established by a preponderance of the evidence submitted
to the impartial arbitrator. The arbitrator shall have the authority to award
the prevailing party damages incurred as a result of any breach, costs,
reasonable attorneys' fees incurred in connection with the arbitration, and
direct that the non-prevailing party pay the expenses of arbitration. The
decision of the arbitrator (i) shall be final and binding; (ii) shall be
rendered within ninety (90) days after the impanelment

3
<PAGE>
of the arbitrator; and (iii) shall be kept confidential by the parties to such
arbitration. The arbitration award may be enforced in any court of competent
jurisdiction. The Federal Arbitration Act, 9 U.S.C. SS 1-15, not state law,
shall govern the arbitrability of all claims.

SECTION 10
ADOPTION OF THE PLAN

This Plan shall become effective on the date on which it is approved by
shareholders of MediaOne Group, Inc.

<PAGE>

DATED JANUARY 1, 1999 MEDIAONE GROUP

AMENDED MEDIAONE GROUP 1994 STOCK PLAN

I. PURPOSE.

This Amended MediaOne Group 1994 Stock Plan (the "Plan"), is intended to
promote the long term success of MediaOne Group, Inc. (the "Company") by
affording certain eligible employees, executive officers, non-employee directors
of the Company and its Subsidiaries (as defined below) and certain outside
consultants or advisors to the Company and its affiliates with an opportunity to
acquire a proprietary interest in the Company, in order to incentivize such
persons and to align the financial interests of such persons with the
stockholders of the Company.

II. DEFINITIONS.

The following defined terms are used in the Plan:

A. "Agreement" shall mean the agreement or grant letter accepted by the
Participant as described in Section VIII of the Plan between the Company and a
Participant under which the Participant receives an Award pursuant to this Plan.

B. "Award" shall mean individually, collectively or in tandem, an incentive
award granted under the Plan, whether in the form of Options, SARs, Stock Awards
or Phantom Units.

C. "Board" or "Board of Directors" shall mean the Board of Directors of the
Company.

D. "Change of Control" shall mean any of the following:

1. any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes a beneficial owner of (or otherwise has the
authority to vote), directly or indirectly, securities representing twenty
percent (20%) or more of the total voting power of all of the Company's then
outstanding voting securities, unless through a transaction arranged by, or
consummated with the prior approval of the Board of Directors; or

2. any period of two (2) consecutive calendar years during which there
shall cease to be a majority of the Board of Directors comprised as follows:
individuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved; or

3. the Company becomes a party to a merger or consolidation in which either
(i) the Company will not be the surviving corporation or (ii) the Company will
be the surviving corporation and any outstanding shares of Common Stock of the
Company will be converted into shares of any other company (other than a
reincorporation or the establishment of a holding company involving no change of
ownership of the Company) or other securities or cash or other property
(excluding payments made solely for fractional shares); or

4. any other event that a majority of the Board of Directors, in its sole
discretion, shall determine constitutes a Change of Control.

E. "Code" shall mean the Internal Revenue Code of 1986, as amended.

F. "Committee" shall mean the Human Resources Committee or the Sponsor
Committee or their delegates, as applicable, pursuant to provisions of Section
III of the Plan.

G. "Common Stock" shall mean the common stock, $.01 par value, of the
Company.

H. "Company" shall mean MediaOne Group, Inc., a Delaware corporation
(previously known as "U S WEST, Inc."), and any successor thereof.

I. "Director Compensation" shall mean all cash or stock remuneration
payable to an Outside Director for service to the Company as a director, other
than reimbursement for expenses or Common

- --------------------------------------------------------------------------------

THIS DOCUMENT CONSTITUTES A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.

<PAGE>

Stock received upon exercise of an Option, and shall include retainer fees for
service on, and fees for attendance at meetings of, the Board and any committees
thereof.

J. "Disabled" or "Disability" shall mean such condition as would qualify
the individual as "disabled" for purposes of receiving a disability pension
under the MediaOne Group Pension Plan or long-term disability benefits under the
provisions of any MediaOne Group disability plan that provides long-term
disability benefits and is maintained for the benefit of eligible employees of
the Company or any Related Entity, provided, however, that in the case of an
Incentive Option, "disability" shall have the meaning specified in Section
22(e)(3) of the Code.

K. "Dividend Equivalent Rights" shall mean the right to receive the amount
of any dividends that are paid on an equivalent number of shares of Common Stock
underlying an Option or Phantom Unit, which shall be payable either in cash or
in the form of additional Phantom Units or Stock.

L. "Effective Date" shall mean the date on which the Plan was first
approved by the stockholders of the Company.

M. "Eligible Employee" shall mean any employee of the Company or any
Related Entity who is employed on the date of the grant of an Award.

N. "Eligible Non-Employee" shall mean any consultant or advisor to the
Company or any Related Entity.

O. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

P. "Executive Officers" shall mean any Officer of the Company or any
Related Entity who, at the time of an Award, is subject to the reporting
requirements of Section 16(a) of the Exchange Act.

Q. "Fair Market Value" shall mean the closing price of a share of Common
Stock as reported on the New York Stock Exchange for the applicable date, or
if there were no sales on such date, on the last day on which there were
sales.

R. "Human Resources Committee" shall mean the human resources committee
of the Board or any other committee of the Board appointed by the Board to
administer the Plan in lieu of the Human Resources Committee, which committee
shall consist of no fewer than three (3) persons, each of whom shall be a
Non-Employee Director.

S. "Incentive Option" shall mean an incentive stock option under the
provisions of Section 422 of the Code.

T. "Indexed" shall mean the periodic adjustment of an Option Price based
upon adjustment criteria determined by the Committee, but in no event shall
the Option Price be adjusted to an amount less than the original Option Price.

U. "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3) and its successor promulgated under the Exchange Act.

V. "Nonqualified Option" shall mean an Option which does not qualify
under Section 422 of the Code.

W. "Officer" shall mean any executive of the Company or any Related
Entity who participates in the Company's executive compensation programs.

X. "Option" shall mean an option granted by the Company to purchase
Common Stock pursuant to the provisions of this Plan, including Incentive
Options, Nonqualified Options and Reload Options.

Y. "Optionee" shall mean a Participant to whom one or more Options have
been granted.

Z. "Option Price" shall mean the price per share payable to the Company
for shares of Common Stock upon the exercise of an Option.

AA. "Parent Corporation" shall mean any corporation within the meaning of
Section 424(e) of the Code.

2
<PAGE>

AB. "Participant" shall mean an Eligible Employee, Eligible Non-Employee,
Executive Officer or Non-Employee Director who is granted an Award.

AC. "Phantom Unit" shall mean a notional account representing a value
equivalent to one share of Common Stock on the Award date.

AD. "Plan" shall mean the Amended MediaOne Group 1994 Stock Plan.

AE. "Related Entity" shall mean any Parent Corporation or Subsidiary of
the Company.

AF. "Reload Option" shall mean the right to receive a further Option for
a number of shares equal to the number of shares of Common Stock surrendered
by the Optionee upon exercise of the original Option as provided in Section
IX.E of the Plan.

AG. "Restricted Period" shall mean the period of time from the date of
grant of Restricted Stock until the lapse of restrictions attached thereto
under the terms of the Agreement granting such Restricted Stock, pursuant to
the provisions of the Plan or by action of the Committee.

AH. "Restricted Stock" shall mean an Award made by the Committee
entitling the Participant to acquire, at no cost or for a purchase price
determined by the Committee at the time of grant, shares of Common Stock
which are subject to restrictions in accordance with the provisions of
Section XII hereof.

AI. "Retirement" shall mean with respect to any Eligible Employee, that
such person has terminated employment with the Company or any Related Entity
other than "for cause" (as defined in subsection IX.H.(v)) and (i) such
person specifically is treated as "retired" for purposes of the Plan under
any individually negotiated, custom, written agreement or arrangement between
the Company or any Related Entity and the Eligible Employee, or (ii) such
person has attained one of the following combinations of age and years of
service as of the date of such termination (measuring years of service for
this purpose in the same manner as "term of employment" is measured under the
MediaOne Group Pension Plan):

<TABLE>
<CAPTION>
AGE YEARS OF SERVICE
- ---------------- -------------------
<S> <C>
Any age At least 30 years
50 through 54 At least 25 years
55 through 59 At least 20 years
60 through 64 At least 15 years
65 and older At least 10 years
</TABLE>

AJ. "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.

AK. "Sponsor Committee" shall mean a committee of the Company consisting
of employees of the Company or any Related Entity appointed by the Human
Resources Committee and which shall administer the Plan as provided in
Section III hereof.

AL. "Stock Appreciation Right" or "SAR" shall mean a grant entitling the
Participant to receive an amount in cash or shares of Common Stock or a
combination thereof having a value equal to (or if the Committee shall so
determine at the time of a grant, less than) the excess of the Fair Market
Value of a share of Common Stock on the date of exercise over the Fair Market
Value of a share of Common Stock on the date of grant (or over the Option
Price or such other price as the Committee shall determine, if the Stock
Appreciation Right was granted in tandem with an Option) multiplied by the
number of shares with respect to which the Stock Appreciation Right shall
have been exercised, with the Committee having sole discretion to determine
the form or forms of payment at the time of grant of the SAR.

AM. "Stock Awards" shall mean any Award which is in the form of
Restricted Stock and any outright grants of Common Stock approved by the
Committee pursuant to the Plan.

AN. "Subsidiary" shall mean with respect to any Award other than an
Incentive Option, any corporation, joint venture or partnership in which the
Company owns, directly or indirectly, (i) with respect to a corporation,
stock possessing twenty percent (20%) or more of the total combined voting
power of all classes of stock in the corporation or (ii) in the case of a
joint venture or partnership, the Company possesses a twenty percent (20%)
interest in the capital or profits of such joint venture or partnership. In

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<PAGE>

the case of any Incentive Option, Subsidiary shall mean any corporation
within the meaning of Section 424(f) of the Code.

AO. "Vested" shall mean the status that results with respect to an Option
or other Award which may be immediately exercised under the terms of the
Agreement granting such Option or other Award, pursuant to the provisions of
the Plan or by action of the Committee.

III. ADMINISTRATION.

A. The Plan shall be administered by the Human Resources Committee with
respect to Officers, Executive Officers and Non-Employee Directors and by the
Sponsor Committee with respect to all other Eligible Employees and Eligible
Non-Employees. The Human Resources Committee may adopt such rules,
regulations and guidelines as it determines necessary for the administration
of the Plan. Subject to any such rules, regulations and guidelines adopted by
the Human Resources Committee, the Sponsor Committee shall have the power to
adopt rules, regulations and guidelines to permit such Committee to
administer the Plan with respect to Eligible Employees (other than Officers
and Executive Officers) and with respect to Eligible Non-Employees.

B. The Committee may delegate to one or more of its members, or to one
or more agents, such administrative duties as it may deem advisable, and the
Committee or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. The
Committee may employ such legal or other counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon
any opinion or computation received from any such counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company or such Related Entity whose
employees have benefited from the Plan, as determined by the Committee. The
Company shall indemnify members of the Committee and any agent of the
Committee who is an employee of the Company or a Related Entity against any
and all liabilities or expenses to which they may be subjected by reason of
any act or failure to act with respect to their duties on behalf of the Plan,
except in circumstances involving such person's gross negligence or willful
misconduct.

C. In furtherance of and not in limitation of the Committee's
discretionary authority, subject to the provisions of the Plan, the Committee
shall have the authority to:

1. determine the Participants to whom Awards shall be granted and the
number of and terms and conditions upon which Awards shall be granted (which
need not be the same for all Awards or types of Awards);

2. establish, in its sole discretion, annual or long-term financial
goals of the Company, Related Entity, or division, department, or group of
the Company or Related Entity, or individual goals which the Committee shall
consider in granting Awards, if any;

3. determine the satisfaction of performance goals established by the
Committee based upon periods of time or any combinations thereof;

4. determine the time when Awards shall be granted, the Option Price of
each Option, the period(s) during which Options shall be exercisable (whether
in whole or in part), the restrictions to be applicable to Awards, and the
other terms and provisions of Awards;

5. modify grants of Awards pursuant to Paragraph D. of this Section III
or rescind grants of Awards pursuant to Section IX.H(v), respectively;

6. provide the establishment of a procedure whereby a number of shares
of Common Stock or other securities may be withheld from the total number of
shares of Common Stock or other securities to be issued upon exercise of an
Option, the lapse of restrictions on Restricted Stock and the vesting of
Phantom Units (other than an Incentive Option) to meet the obligation of
withholding for income, social security and other taxes incurred by a
Participant upon such exercise or required to be withheld by the Company in
connection with such exercise;

7. adopt, modify and rescind rules and regulations and guidelines
relating to the Plan;

4
<PAGE>

8. adopt modifications to the Plan and procedures, as may be necessary
to comply with provisions of the laws and applicable regulatory rulings of
countries in which the Company or a Related Entity operates in order to
assure the legality of Awards granted under the Plan to Participants who
reside in such countries;

9. obtain the approval of the stockholders of the Company with respect
to Awards consisting of Phantom Units or Restricted Stock; provided, however,
no action shall be proposed to stockholders without the approval of the Board
of Directors; and

10. make all determinations, perform all other acts, exercise all other
powers and establish any other procedures determined by the Committee to be
necessary, appropriate or advisable in administering the Plan and to maintain
compliance with any applicable law.

D. The Committee may at any time, in its sole discretion, accelerate the
exercisability of any Awards and waive or amend any and all restrictions and
conditions of any Awards.

E. Subject to and not inconsistent with the express provisions of the
Plan, the Code and Rule 16b-3 of the Exchange Act, the Committee shall have
the authority to require, as a condition to the granting of any Option, SAR
or other Award (to the extent applicable) to any Executive Officer of the
Company or any Related Entity that the Executive Officer receiving such
Option, SAR or other Award agree not to sell or otherwise dispose of such
Option, SAR or other Award or Common Stock acquired pursuant to such Option,
SAR or other Award (to the extent applicable) or any other "derivative
security" (as defined by Rule 16a-1(c) under the Exchange Act) for a period
of six (6) months following the later of (i) the date of the grant of such
Option, SAR or other Award (to the extent applicable) or (ii) the date when
the other Option Price of such Option, SAR or other Award is fixed, if such
Option Price is not fixed at the date of grant of such Option, SAR or other
Award.

IV. DECISIONS FINAL.

Any decision, interpretation or other action made or taken in good faith
by the Committee arising out of or in connection with the Plan shall be
final, binding and conclusive on the Company and all Participants and their
respective heirs, executors, administrators, successors and assigns.

V. ARBITRATION.

Any agreement may contain, among other things, provisions that require
arbitration of any and all disputes between a Participant and the Company or
any Related Entity, in a form or forms acceptable to the Committee, in its
sole discretion.

VI. DURATION OF THE PLAN.

The Plan shall remain in effect for a period of ten (10) years from the
Effective Date, unless terminated by the Board pursuant to Section XX.

VII. SHARES AVAILABLE; LIMITATIONS.

A. The maximum aggregate number of shares of Common Stock that may be
granted in any calendar year for all purposes under the Plan shall be one
percent (1.0%) of the shares outstanding (excluding shares held in the
Company's treasury) on the first day of such calendar year, provided,
however, that in the event that fewer than the full aggregate number of
shares available for issuance in any calendar year are issued in such year,
the shares not issued shall be added to the shares available for issuance in
any subsequent year or years. If, for any reason, any shares of Common Stock
as to which Options, SARs, Restricted Stock, or Phantom Units have been
granted cease to be subject to exercise or purchase hereunder (other than the
exercise of SARs for cash), the underlying shares of Common Stock shall
thereafter be available for grants to Participants under the Plan during any
calendar year. Awards granted under the Plan may be fulfilled in accordance
with the terms of the Plan with (i) authorized and unissued shares of the
Common Stock or (ii) issued shares of Common Stock reacquired by the Company,
in each situation, as the Board of Directors or the Committee may determine
from time to time at its sole discretion.

5
<PAGE>

B. The maximum number of shares of Common Stock that shall be subject to
the grant of an Award in any calendar year for Awards other than Options or
SARs shall not exceed one-third ( 1/3) of the total number of shares of
Common Stock subject to Awards granted under the Plan for such calendar year.

C. The maximum number of shares of Common Stock with respect to which
Awards may be granted to any individual Participant in any calendar year may
not exceed one million five hundred thousand (1,500,000).

D. The cumulative number of shares of Common Stock that may be issued
under this Plan in connection with the exercise of Incentive Options shall
not exceed ten million (10,000,000).

VIII. GRANT OF AWARDS.

A. The Committee shall determine the type or types of Award(s) to be
made to each Participant. Awards may be granted singly, in combination or in
tandem subject to restrictions set forth in Section IX.C for Incentive
Options. The types of Awards that may be granted under the Plan are Options,
with or without Reload Options, SARs, Stock Awards and Phantom Units, and
with respect to Phantom Units and Restricted Stock, with or without Dividend
Equivalent Rights.

B. Each grant of an Award under this Plan shall be evidenced by an
Agreement dated as of the date of the grant of the Award, other than Stock
Awards consisting of an outright grant of shares of Common Stock. This
Agreement shall set forth the terms and conditions of the Award, as may be
determined by the Committee, and if the Agreement relates to the grant of an
Option, shall indicate whether the Option that it evidences, is intended to
be an Incentive Option or a Nonqualified Option. Each grant of an Award is
conditioned upon the acceptance by the Participant of the terms of the
Agreement. Unless otherwise extended by the Committee, a Participant shall
have ninety (90) days from the date of the Agreement to accept its terms.

IX. OPTIONS.

The Committee, in its sole discretion, may grant Incentive Options or
Nonqualified Options to Eligible Employees, Officers, and Executive Officers,
and Nonqualified Options to Non-Employee Directors and Eligible
Non-Employees. Any Options granted to a Participant under predecessor plans
which remain outstanding as of the Effective Date shall be governed by the
terms and conditions of the Plan, except to the extent the provisions of the
Plan are inconsistent with the terms of the Options granted under the
predecessor plans, in which event the applicable provisions of the
predecessor plans shall govern; provided, however, that in no event shall
there be a modification of the terms of any Incentive Option granted under
the predecessor plans. The terms and conditions of the Options granted under
this Section IX shall be determined from time to time by the Committee, as
set forth in the Agreement granting the Option, and subject to the following
conditions:

A. NONQUALIFIED OPTIONS. The Option Price for each share of Common
Stock issuable pursuant to a Nonqualified Option may be an amount at or above
the Fair Market Value on the date such Option is granted, may be Indexed from
the original Option Price and may be granted with or without Dividend
Equivalent Rights; provided, however, that with respect to Nonqualified
Options granted to any Executive Officer, no Dividend Equivalent Rights may
be granted.

B. INCENTIVE OPTIONS. The Option Price for each share of Common Stock
issuable pursuant to an Incentive Option shall not be less than one hundred
percent (100%) of the Fair Market Value on the date such Option is granted
and may be Indexed from the original Option Price.

C. INCENTIVE OPTIONS; SPECIAL RULES. Options granted in the form of
Incentive Options shall be subject to the following provisions:

1. GRANT. No Incentive Option shall be granted pursuant to this Plan
more than ten (10) years after the Effective Date.

2. ANNUAL LIMIT. The aggregate Fair Market Value (determined at the
time the Option is granted) of the shares of Common Stock with respect to
which one or more Incentive Options are exercisable for the first time by any
Optionee during any calendar year under the Plan or under any other stock
plan of the Company or any Related Entity shall not exceed $100,000 or such
other maximum amount permitted

6
<PAGE>

under Section 422 of the Code. Any Option purporting to constitute an
Incentive Option in excess of such limitation shall constitute a Nonqualified
Option.

3. 10% STOCKHOLDER. If any Optionee to whom an Incentive Option is to
be granted pursuant to the provisions of the Plan is, on the date of grant,
an individual described in Section 422(b)(6) of the Code, then the following
special provisions shall be applicable to the Option granted to such
individual:

(a) the Option Price of shares subject to such Incentive Option shall not
be less than 110% of the Fair Market Value of Common Stock on the date of
grant; and

(b) the Option shall not have a term in excess of (5) years from the date
of grant.

D. OTHER OPTIONS. The Committee may establish rules with respect to,
and may grant to Eligible Employees, Options to comply with any amendment to
the Code made after the Effective Date providing for special tax benefits for
stock options.

E. RELOAD OPTIONS. Without in any way limiting the authority of the
Committee to make Awards hereunder, the Committee shall have the authority to
grant Reload Options. Any such Reload Option shall be subject to such other
terms and conditions as the Committee may determine. Notwithstanding the
above, (i) the Committee shall have the right, in its sole discretion, to
withdraw a Reload Option to the extent that the grant thereof will result in
any adverse accounting consequences to the Company and (ii) no additional
Reload Options shall be granted upon the exercise of a Reload Option.

F. TERM OF OPTION. No Option shall be exercisable after the expiration
of ten (10) years from the date of grant of the Option.

G. EXERCISE OF STOCK OPTION. Each Option shall be exercisable in one or
more installments as the Committee in its sole discretion may determine at
the time of the Award and as provided in the Agreement. The right to purchase
shares shall be cumulative so that when the right to purchase any shares has
accrued such shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. The Option
Price shall be payable (i) in cash or by an equivalent means acceptable to
the Committee, (ii) by delivery (constructive or otherwise) to the Company of
shares of Common Stock owned by the Optionee or (iii) by any combination of
the above as provided in the Agreement. Shares delivered to the Company in
payment of the Option Price shall be valued at the Fair Market Value on the
date of the exercise of the Option.

H. VESTING. The Agreement shall specify the date or dates on which the
Optionee may begin to exercise all or a portion of his Option. Subsequent to
such date or dates, the Option shall be deemed vested and fully exercisable.

(i) DEATH. In the event of the death of any Optionee, all Options held by
such Optionee on the date of his death shall become Vested Options and the
estate of such Optionee, shall have the right, at any time and from time to
time within one year after the date of death, or such other period, if any,
as the Committee in its sole discretion may determine, to exercise the
Options of the Optionee (but not after the earlier of the expiration date of
the Option or, in the case of an Incentive Option, one (1) year from the date
of death).

(ii) DISABILITY. If the employment of any Optionee is terminated because
of Disability, all Options held by such Optionee on the date of his or her
termination shall be retained by such Optionee, and such Options that are not
yet Vested Options shall become Vested Options in accordance with the vesting
schedule established at the time such Options were issued. The Optionee shall
have the right to exercise Vested Options at any time and from time to time,
but not after the expiration date of the Option or, in the case of Incentive
Options where tax-advantaged treatment is desired, one year from the date of
termination of employment.

(iii) RETIREMENT. Upon an Optionee's Retirement, all Options held by such
Optionee on the date of his or her Retirement shall be retained by such
Optionee, and such Options that are not yet Vested Options shall become
Vested Options in accordance with the vesting schedule established at the
time such Options were issued, unless the Committee, in its sole discretion,
determines otherwise. Unless the Committee, in its sole discretion,
determines otherwise, the Optionee shall have the right to exercise Vested
Options at any time and from time to time, but not after the expiration date
of the Option. In the case of Incentive

7
<PAGE>

Options where tax-advantaged treatment is desired, the Optionee shall have
the right to exercise Vested Options three months from the date of Retirement.

(iv) OTHER TERMINATION. If the employment with the Company or a Related
Entity of an Optionee is terminated for any reason other than for death or
Disability and other than "for cause" as defined in subparagraph (v) below,
such Optionee shall have the right, in the case of a Vested Option, for a
period of three (3) months after the date of such termination or such longer
period as determined by the Committee, to exercise any such Vested Option,
but in any event not after the expiration date of any such Option.

(v) TERMINATION FOR CAUSE. Notwithstanding any other provision of the
Plan to the contrary, if the Optionee's employment is terminated by the
Company or any Related Entity "for cause" (as defined below), such Optionee
shall immediately forfeit all rights under his Options except as to the
shares of Common Stock already purchased prior to such termination.
Termination "for cause" shall mean (unless another definition is agreed to in
writing by the Company and the Optionee) termination by the Company because
of: (a) the Optionee's willful and continued failure to substantially perform
his duties (other than any such failure resulting from the Optionee's
incapacity due to physical or mental impairment) after a written demand for
substantial performance is delivered to the Optionee by the Company, which
demand specifically identifies the manner in which the Company believes the
Optionee has not substantially performed his duties, (b) the willful conduct
of the Optionee which is demonstrably and materially injurious to the Company
or Related Entity, monetarily or otherwise, or (c) the conviction of the
Optionee for a felony by a court of competent jurisdiction.

X. FOREIGN OPTIONS AND RIGHTS.

The Committee may make Awards of Options to Eligible Employees,
Officers, Executive Officers, Non-Employee Directors and Eligible
Non-Employees who are subject to the tax laws of nations other than the
United States, which Awards may have terms and conditions as determined by
the Committee as necessary to comply with applicable foreign laws. The
Committee may take any action which it deems advisable to obtain approval of
such Option by the appropriate foreign governmental entity; provided,
however, that no such Award may be granted pursuant to this Section X and no
action may be taken which would result in a violation of the Exchange Act,
the Code or any other applicable law.

XI. STOCK APPRECIATION RIGHTS.

The Committee shall have the authority to grant SARs to Eligible
Employees, Officers, Executive Officers, Non-Employee Directors and Eligible
Non-Employees either alone or in connection with an Option. SARs granted in
connection with an Option shall be granted either at the time of grant of the
Option or by amendment to the Option. The terms and conditions of all SARs,
whether granted individually or in connection with an Option, shall be
determined by the Committee and set forth in the Agreement granting the SARs,
provided, however, that no fractional shares of Common Stock shall be issued
upon exercise of any SAR.

XII. RESTRICTED STOCK.

The Committee may, in its sole discretion, grant Restricted Stock to
Eligible Employees, Eligible Non-Employees, Officers, Executive Officers or
Non-Employee Directors subject to the provisions below.

A. RESTRICTIONS. A stock certificate representing the number of shares
of Restricted Stock granted shall be held in custody by the Company for the
Participant's account. The Participant shall have all rights and privileges
of a stockholder as to such Restricted Stock, including the right to receive
dividends, if any, and the right to vote such shares, except that, subject to
the provisions of Paragraph B. below, the following restrictions shall apply:
(i) the Participant shall not be entitled to delivery of the certificate
until the expiration of the Restricted Period; (ii) none of the shares of
Restricted Stock may be sold, transferred, assigned, pledged, or otherwise
encumbered or disposed of during the Restricted Period; (iii) the Participant
shall, if requested by the Company, execute and deliver to the Company, a
stock power endorsed in blank. The Restricted Period shall lapse upon a
Participant becoming Disabled or the death of a Participant. If a Participant
ceases to be an employee of the Company or a Related Entity prior to the
expiration of the Restricted Period applicable to such shares, except as a
result of the death or Disability of the Participant, shares of Restricted
Stock still subject to restrictions shall be forfeited unless otherwise
determined by the Committee, and all rights of the Participant to such shares
shall terminate without

8
<PAGE>

further obligation on the part of the Company. Upon the forfeiture (in whole
or in part) of shares of Restricted Stock, such forfeited shares shall become
shares of Common Stock held in the Company's treasury without further action
by the Participant.

B. TERMS AND CONDITIONS. The Committee shall establish the terms and
conditions for Restricted Stock pursuant to Section III of the Plan,
including whether any shares of Restricted Stock shall have voting rights or
a right to any dividends that are declared. Terms and conditions established
by the Committee need not be the same for all grants of Restricted Stock. The
Committee may provide for the restrictions to lapse with respect to a portion
or portions of the Restricted Stock at different times or upon the occurrence
of different events, and the Committee may waive, in whole or in part, any or
all restrictions applicable to a grant of Restricted Stock. Restricted Stock
Awards may be issued for no cash consideration or for such minimum
consideration as may be required by applicable law or such other
consideration as may be determined by the Committee.

C. DELIVERY OF RESTRICTED SHARES. At the end of the Restricted Period
as herein provided, a stock certificate for the number of shares of
Restricted Stock with respect to which the restrictions have lapsed shall be
delivered (less any shares delivered pursuant to Section XIX.C in
satisfaction of any withholding tax obligation), free of all such
restrictions, except applicable securities law restrictions, to the
Participant or the Participant's estate, as the case may be. The Company
shall not be required to deliver any fractional share of Common Stock but
shall pay, in lieu thereof, the Fair Market Value (measured as of the date
the restrictions lapse) of such fractional share to the Participant or the
Participant's estate, as the case may be. Notwithstanding the foregoing, the
Committee may authorize the delivery of the Restricted Stock to a Participant
during the Restricted Period, in which event any stock certificates in
respect of shares of Restricted Stock thus delivered to a Participant during
the Restricted Period applicable to such shares shall bear an appropriate
legend referring to the terms and conditions, including the restrictions,
applicable thereto.

XIII. PHANTOM UNITS.

A. GENERAL. The Committee may, in its sole discretion, grant the right
to earn Phantom Units to Eligible Employees, Officers, Executive Officers and
Eligible Non-Employees. The Committee shall determine the criteria for the
earning of Phantom Units, pursuant to Section III of the Plan. Upon
satisfaction of such criteria, a Phantom Unit shall be deemed a Vested Award.
A Phantom Unit granted by the Committee shall provide for payment in shares
of Common Stock. A Phantom Unit shall become a Vested Award upon (i) a
Participant becoming Disabled, or (ii) the death of a Participant. Shares of
Common Stock issued pursuant to this Section XIII may be issued for no cash
consideration or for such minimum consideration as may be required by
applicable law or such other consideration as may be determined by the
Committee. The Committee shall determine whether a Participant granted a
Phantom Unit shall be entitled to a Dividend Equivalent Right.

B. UNFUNDED CLAIM. The establishment of Phantom Units under the Plan
are unfunded obligations of the Company. The interest of a Participant in any
such units shall be considered a general unsecured claim against the Company
to the extent that the conditions for the earning of the Phantom Units have
been satisfied. Nothing contained herein shall be construed as creating a
trust or fiduciary relationship between the Participant, the Company or the
Committee.

C. ISSUANCE OF COMMON STOCK. Upon a Phantom Unit becoming a Vested
Award, unless a Participant has elected to defer under Paragraph D. below,
shares of Common Stock representing the Phantom Units shall be distributed to
the Participant, unless the Committee, with the consent of the Participant,
provides for the payment of the Phantom Units in cash or partly in cash and
partly in shares of Common Stock equal to the value of the shares of Common
Stock which would otherwise be distributed to the Participant.

D. DEFERRAL OF PHANTOM UNITS. Prior to the year with respect to which
a Phantom Unit may become a Vested Award, the Participant may elect not to
receive Common Stock upon the vesting of such Phantom Unit and for the
Company to continue to maintain the Phantom Unit on its books of account. In
such event, the value of a Phantom Unit shall be payable in shares of Common
Stock pursuant to the agreement of deferral.

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<PAGE>

E. FINANCIAL HARDSHIP. Notwithstanding any other provision hereof, at
the written request of a Participant who has elected to defer pursuant to
Paragraph D. above, the Committee, in its sole direction, upon a finding that
continued deferral will result in financial hardship to the Participant, may
authorize the payment of all or a part of a Participant's Vested Phantom
Units in a single installment or the acceleration of payment of any multiple
installments thereof; provided, however, that distributions will not be made
under this paragraph if such distribution would result in liability of an
Executive Officer under Section 16 of the Exchange Act.

F. DISTRIBUTION UPON DEATH. The Committee shall pay the Fair Market
Value of the Phantom Units of a deceased Participant to the estate of the
Participant, as soon as practicable following the death of the Participant.
The value of the Phantom Units for the purpose of such distribution shall be
based upon the Fair Market Value of shares of Common Stock underlying the
Phantom Units on the date of the Participant's death.

XIV. STOCK AWARDS TO NON-EMPLOYEE DIRECTORS.

On the date of his or her admission to the Board, or in the case of
existing Non-Employee directors, as of the first meeting of the Board that
follows the date of this Prospectus, each Non-Employee Director shall be
granted a Stock Award consisting of 1,000 shares of Common Stock, without
restrictions, and 5,000 shares of Restricted Stock, which shall become Vested
in 20% annual increments.

XV. OUTSIDE DIRECTOR'S COMPENSATION.

A. PAYMENT IN COMMON STOCK OR OPTIONS. Each Non-Employee Director may
elect to receive payment of all or any portion of Director Compensation
comprised of retainer fees for service on the Board and any committees
thereof in Common Stock or Options to purchase Common Stock. The amount of
Common Stock or Options then issuable shall be based on the Fair Market Value
of the Common Stock or the Company's standard Black-Scholes option pricing
model, as applicable, on the dates such retainer fees are otherwise due and
payable to the Non-Employee Director. When any fees are paid in Common Stock
under this Section XV.A, any fractional shares of Common Stock shall be paid
in cash. Certificates evidencing such Common Stock shall be delivered
promptly following such date.

B. DEFERRAL OF PAYMENT. Each Non-Employee Director may elect to defer
the receipt of Common Stock payable pursuant to Section XV.A, in which event
such Non-Employee Director shall receive an equivalent number of Phantom
Units with Dividend Equivalent Rights. Any such Phantom Units shall become
Vested Awards at such time as the Non-Employee Director no longer serves as a
member of the Board. If a Non-Employee Director elects to defer receipt of
Common Stock and receive Phantom Units pursuant to this Section XV.B, the
election shall be (i) in writing, (ii) delivered to the Secretary of the
Company in the year preceding the year in which the Director Compensation
would otherwise be paid (or, for a Director's initial calendar year of
service, delivered prior to the date for which such services are rendered)
and (iii) irrevocable.

C. DIRECTOR STOCK OPTIONS. On the date of his or her admission to the
Board, or in the case of existing Non-Employee Directors, as of the first
meeting of the Board that follows the date of this Prospectus, each
Non-Employee Director shall be granted an Option to purchase forty-two
thousand (42,000) shares Common Stock. When such Option has become a Vested
Option, the Non-Employee Director holding such Option shall be entitled, as
of the first day of each calendar year thereafter, to a further Option having
a value equal to $112,000 (as determined in accordance with the Company's
standard Black-Scholes option pricing model). Any Option issued pursuant to
this Section XV.C is (i) to become a Vested Option in annual one-third
increments following the date of grant or, if earlier, in full upon the
retirement of the Director, (ii) to remain exercisable notwithstanding the
retirement of the Director from the Board (but in no event after the
expiration date of the Option), and (iii) to expire ten years from the date
of grant.

XVI. FEDERAL SECURITIES LAW.

With respect to grants of Awards to Directors and Executive Officers,
the Company intends that the provisions of this Plan and all transactions
effected in accordance with Plan shall comply with Rule 16b-3 under the
Exchange Act. Accordingly, the Committee shall administer and interpret the
Plan to the extent practicable, to maintain compliance with such rule.

10
<PAGE>

XVII. CHANGE OF CONTROL; ACCELERATION.

Upon the occurrence of a Change of Control:

A. in the case of all outstanding Options and SARs, each such Option and
SAR shall automatically become immediately fully exercisable by the
Participant unless the Committee shall otherwise determine at the time such
Option or SAR is granted as set forth in the respective grant Agreement;

B. restrictions applicable to Restricted Stock shall automatically be
deemed lapsed and conditions applicable to Phantom Units shall automatically
be deemed waived, and the Participants who receive such grants shall become
immediately entitled to receipt of the Common Stock subject to such grants;
and

C. the Human Resources Committee, in its discretion, shall have the
right to accelerate payment of any deferrals of Vested Phantom Units.

XVIII. ADJUSTMENT OF SHARES.

A. In the event there is any change in the Common Stock by reason of
any consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares or other like change in capital
structure of the Company, the number or kind of shares or interests subject
to an Award and the per share price or value thereof shall be appropriately
adjusted by the Committee at the time of such event, provided that each
Participant's economic position with respect to the Award shall not, as a
result of such adjustment, be worse than it had been immediately prior to
such event. Any fractional shares or interests resulting from such adjustment
shall be rounded up to the next whole share of Common Stock. Notwithstanding
the foregoing, (i) each such adjustment with respect to an Incentive Option
shall comply with the rules of Section 424(a) of the Code, and (ii) in no
event shall any adjustment be made which would render any Incentive Option
granted hereunder other than an "incentive stock option" for purposes of
Section 422 of the Code.

B. In the event of an acquisition by the Company of another corporation
where the Company assumes outstanding stock options or similar obligations of
such corporation, the number of Awards available under the Plan shall be
appropriately increased to reflect the number of such options or other
obligations assumed.

XIX. MISCELLANEOUS PROVISIONS.

A. ASSIGNMENT OR TRANSFER. Except as otherwise permitted by this
Section, no grant of any "derivative security" (as defined in the rules
issued under Section 16 of the Exchange Act) made under the Plan or any
rights or interests therein shall be assignable or transferable except by
last will and testament or the laws of descent and distribution. No grant of
any such derivative security shall be assignable or transferrable pursuant to
a domestic relations order. An Optionee who is an Officer or a Non-Employee
Director may assign or transfer an Option (other than an Incentive Option) or
a SAR as a gift to one or more members of his or her immediate family or to
trusts maintained for the benefit of such immediate family members if such
assignment or transfer is not pursuant to a domestic relations order and (i)
such assignment or transfer is expressly approved in advance by the Committee
or its delegate(s) or (ii) such Option or SAR was granted to the Optionee on
or after August 15, 1996, and the Agreement pertaining to such Option or SAR
expressly permits the assignment or transfer of the Option or SAR.

B. INVESTMENT REPRESENTATION; LEGENDS. The Committee may require each
Participant acquiring shares of Common Stock pursuant to an Award to
represent to and agree with the Company in writing that such Participant is
acquiring the shares without a view to distribution thereof. No shares of
Common Stock shall be issued pursuant to an Award until all applicable
securities law and other legal and stock exchange requirements have been
satisfied. The Committee may require the placing of stop-orders and
restrictive legends on certificates for Common Stock as it deems appropriate.

C. WITHHOLDING TAXES. In the case of distributions of Common Stock or
other securities hereunder, the Company, as a condition of such distribution,
may require the payment (through withholding from the Participant's salary,
payment of cash by the Participant, reduction of the number of shares of
Common Stock or other securities to be issued (except in the case of an
Incentive Option), or otherwise) of any federal, state, local or foreign
taxes required by law to be withheld with respect to such distribution.

11
<PAGE>

D. COSTS AND EXPENSES. The costs and expenses of administering the
Plan shall be borne by the Company and shall not be charged against any Award
nor to any Participant receiving an Award.

E. OTHER INCENTIVE PLANS. The adoption of the Plan does not preclude
the adoption by appropriate means of any other incentive plan for employees.

F. EFFECT ON EMPLOYMENT. Nothing contained in the Plan or any
agreement related hereto or referred to herein shall affect, or be construed
as affecting, the terms of employment of any Participant except to the extent
specifically provided herein or therein. Nothing contained in the Plan or any
agreement related hereto or referred to herein shall impose, or be construed
as imposing, an obligation on (i) the Company or any Related Entity to
continue the employment of any Participant and (ii) any Participant to remain
in the employ of the Company or any Related Entity.

G. NONCOMPETITION. Any Agreement may contain, among other things,
provisions prohibiting Participants from competing with the Company or any
Related Entity in a form or forms acceptable to the Committee, in its sole
discretion.

H. GOVERNING LAW. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the State of
Colorado.

XX. AMENDMENT OR TERMINATION OF PLAN.

The Board shall have the right to amend, modify, suspend or terminate
the Plan at any time, provided that, with respect to Incentive Options, no
amendment shall be made that (i) decreases the minimum Option Price in the
case of any Incentive Option, or (ii) modifies the provisions of the Plan
with respect to Incentive Options, unless such amendment is made by or with
the approval of the stockholders or unless the Board receives an opinion of
counsel to the Company that stockholder approval is not necessary with
respect to any modifications relating to Incentive Options; and provided
further that no amendment shall be made that (i) increases the number of
shares of Common Stock that may be issued under the Plan, (ii) permits the
Option Price for any Option to be less than Fair Market Value on the date
such Option is granted, or (iii) extends the period during which awards may
be granted under the Plan beyond ten (10) years from the Effective Date,
unless such amendment is made by or with the approval of stockholders. No
amendment, modification, suspension or termination of the Plan shall alter or
impair any Awards previously granted under the Plan, without the consent of
the holder thereof.

<PAGE>

MEDIAONE GROUP
EXECUTIVE LIFE INSURANCE PLAN

AS AMENDED AND RESTATED EFFECTIVE AS OF JUNE 12, 1998

<PAGE>

TABLE OF CONTENTS

Page
<S> <C>
PREAMBLE 1

ARTICLE I DEFINITIONS 1

ARTICLE II ELIGIBILITY 5

Section 2.1 Eligibility to Participate 5
Section 2.2 Service with Other Entities 6

ARTICLE III BASIC EXECUTIVE LIFE INSURANCE 6

Section 3.1 Participation in BELI 6
Section 3.2 Coverage Amount under BELI 7
Section 3.3 Cost of BELI Coverage 7
Section 3.4 BELI Death Benefit Payments 8
Section 3.5 BELI Coverage After Separation from Service 8
Section 3.6 BELI Coverage during Leave of Absence 9
Section 3.7 BELI Coverage During and After Disability 9
Section 3.8 DELI Coverage During a Rotational Assignment 9

ARTICLE IV SUPPLEMENTAL EXECUTIVE LIFE INSURANCE 9

Section 4.1 Participation in SELI 9
Section 4.2 Coverage Amount Under SELI 11
Section 4.3 Cost of SELI Coverage 11
Section 4.4 SELI Death Benefit Payments 12
Section 4.5 SELI Coverage After Separation from Service 12
Section 4.6 SELI Coverage During a Leave of Absence 14
Section 4.7 SELI Coverage During and After Disability 14
Section 4.8 SELI Coverage During a Rotational Assignment 14

ARTICLE V CHANGE IN CONTROL 14

Section 5.1 Change in Control 14
Section 5.2 Effect on the Plan 15

<PAGE>

ARTICLE VI ADMINISTRATION 16

Section 6.1 The Committee 16
Section 6.2 The Administrator 16
Section 6.3 Claims Procedure 16
Section 6.4 Review of the Administrator's Decision 17
Section 6.5 Expenses 18
Section 6.6 Allocation of Responsibilities 18
Section 6.7 Adoption of Plan by Participating Companies 18

ARTICLE VII GENERAL PROVISIONS 18

Section 7.1 Rights to Benefit 18
Section 7.2 Source of Payments 18
Section 7.3 Assignment or Alienation 18
Section 7.4 Determination of Eligibility 19
Section 7.5 No Guarantee of Employment 19
Section 7.6 Nature of Benefits 19
Section 7.7 Plan Amendment and Termination 19
Section 7.8 Gender and Number 19
Section 7.9 Governing Law 19

SIGNATURE PAGE 19
</TABLE>

ii
<PAGE>

MEDIAONE GROUP
EXECUTIVE LIFE INSURANCE PLAN

As Amended and Restated Effective as of June 12, 1998

PREAMBLE

U S WEST, Inc. ("Old U S WEST"), a Delaware corporation, previously
established the U S WEST Executive Life Insurance Plan to provide financial
protection to a Participant and his beneficiaries in the event of his death
during active employment or, subject to policy and individual employment
agreement provisions, after active employment or during retirement.
Effective with the separation of Old U S WEST into two public companies,
USW-C, Inc., renamed U S WEST, Inc. as of the Separation Time, and MediaOne
Group, Inc. (the "Company"), the Company assumes sponsorship of that portion
of the U S WEST Executive Life Insurance Plan relating to its Eligible
Employees which it names the MediaOne Group Executive Life Insurance Plan
(the "Plan"). The Company hereby amends and restates the Plan in its
entirety.

ARTICLE I

DEFINITIONS

The following terms shall have the meanings set forth below.

1.1 "ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE" or "AD&D" shall mean
the insurance coverage provided under the Group Life Insurance and Basic
Executive Life Insurance that is payable in the event of a Participant's
accidental death or dismemberment, in accordance with and defined in the
policy or policies of insurance that apply to the Participant.

1.2 "ACTIVE EMPLOYEE" or "ACTIVELY EMPLOYED" shall mean an employee who
is not Terminated, Disabled, or Retired, and who is not currently on a Leave
of Absence.

1.3 "ADMINISTRATOR" shall mean the Senior Vice President of Human
Resources or his or her delegate (or, in the event the Plan benefits of the
Administrator are directly or indirectly impacted by any claim for benefits,
the Chairperson of the Committee or his delegate). To the extent applicable,
the Administrator shall be the "administrator" and the "named fiduciary" for
purposes of the Employee Retirement Income Security Act of 1974, as amended.

1.4 "ANNUAL PAY" shall mean an amount equal to the following, increased
to the next higher $1,000 increment:

<PAGE>

(a) For an Eligible Employee who is in his first year of
participation in the STIP, his annual rate of base pay plus the mid-range of
his target Short Term Incentive Award.

(b) For an Eligible Employee who is in his second year of
participation in the STIP, the average of the two amounts below:

(i) The amount in Subsection 1.4(a) above; and

(ii) His annual rate of base pay in effect in his second year
of participation in the STIP plus the actual Short Term Incentive Award he
was paid for the prior year, except that if his Short Term Incentive Award
was prorated, the full target amount of the Short Term Incentive Award for
such year;

(c) For an Eligible Employee who is in his third year of
participation in the STIP, the average of the three amounts below:

(i) The amount in Subsection 1.4(a) above;

(ii) The amount in Subsection 1.4(b)(ii) above; and

(iii) His annual rate of base pay in effect in his third year
of participation in the STIP plus the actual Short Term Incentive Award he
was paid for the prior year.

(d) For an Eligible Employee who is in his fourth year of
participation in the STIP, the average of the three amounts below:

(i) The amount in Subsection 1.4(b)(ii) above;

(ii) The amount in Subsection 1.4(c)(iii) above; and

(iii) His annual rate of base pay in effect in his fourth year
of participation in the STIP plus the actual Short Term Incentive Award he
was paid for the prior year.

(e) For an Eligible Employee who has been an STIP
participant for more than four years, the average of the two amounts below:

(i) The average of his annual rate of base pay in effect for
the applicable year, and the annual rate of base pay for the prior two years,
plus

(ii) The average of the prior three Short Term Incentive
Awards paid to the Eligible Employee.

2
<PAGE>

1.5 "BASIC EXECUTIVE LIFE INSURANCE" or "BELI" shall mean the insurance
coverage provided to Participants pursuant to Article III.

1.6 "BENEFICIARY" shall mean the person who is designated by the
Participant to receive the Death Benefit payable under this Plan on account
of the death of the Participant. The Beneficiary for BELI is determined
under Section 3.4, and the Beneficiary for SELI is determined under Section
4.4.

1.7 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors
of the Company.

1.8 "CASH VALUE" shall mean the total premiums paid for a policy of
BELI or SELI, plus earnings on such policy, minus the cost of insurance and
cash surrender charges, if any.

1.9 "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations and rulings in effect thereunder from
time to time.

1.10 "COMMITTEE" shall mean the Human Resources Committee of the Board
or its delegate.

1.11 "COMPANY" shall mean MediaOne Group, Inc., a Delaware corporation,
or its successors.

1.12 "DEATH BENEFIT" shall mean the total amount of benefit payable
pursuant to the terms of this Plan in the event of a Participant's death.

1.13 "DISABLED" or "DISABILITY" shall mean that a Participant is
eligible for a disability benefit under the terms and conditions of the
MediaOne Group Executive Disability Plan, as amended or superseded, or the
MediaOne Group Pension Plan.

1.14 "EFFECTIVE DATE" shall mean, with respect to this amended and
restated Plan, the Separation Time.

1.15 "ELIGIBLE EMPLOYEE" shall mean an employee who is eligible to
participate in the Plan pursuant to Section 2.1.

1.16 "GROUP LIFE INSURANCE" or "GLI" shall mean the MediaOne Group Life
Insurance Plan, as amended or superseded, except for purposes of this Plan,
dependent group life insurance coverage thereunder shall be excluded from the
definition of GLI.

1.17 "INSURANCE COMPANY" shall mean the life insurance company or
companies, which may be selected from time to time by the Administrator, to
provide insurance coverage under this Plan.

3
<PAGE>

1.18 "LEAVE OF ABSENCE" shall mean a Company-approved leave of absence.

1.19 "PARTICIPANT" shall mean an Eligible Employee who has satisfied the
applicable requirements of Section 2.1, and who has become a "BELI
Participant" by satisfying the requirements of Section 3.1 or a "SELI
Participant" by satisfying the requirements of Section 4.1.

1.20 "PARTICIPATING COMPANY" or "PARTICIPATING COMPANIES" shall mean the
Company or any subsidiary of the Company that, with the consent or at the
direction of the Administrator, participates in the Plan.

1.21 "PLAN" shall mean the MediaOne Group Executive Life Insurance Plan,
as set forth herein, together with the Split Dollar agreements and Appendices
attached hereto, as amended from time to time.

1.22 "PLAN YEAR" shall mean the fiscal year of the Plan, which shall be
the calendar year, except for the initial short Plan Year which begins on the
Effective Date and ends on December 31, 1998.

1.23 "RETIRED" or "RETIREMENT" shall mean a Participant's separation
from the service of a Participating Company in accordance with one of the
following circumstances:

(a) An entitlement to an immediate service pension benefit under
the MediaOne Group Pension Plan, as amended or superseded;

(b) An entitlement to a pension benefit under any individually
negotiated, custom written agreement or arrangement that the Participating
Company may have entered into with the Eligible Employee;

<TABLE>
<CAPTION>
RETIREMENT AGE TERM OF EMPLOYMENT*
<S> <C>
Any Age at least 30 years
50-54 at least 25 years
55-59 at least 20 years
60-64 at least 15 years

4
<PAGE>

65 and older at least 10 years
</TABLE>

*as defined in the MediaOne Group Pension Plan

(d) Any other circumstance as defined by the Committee.

1.24 "ROTATIONAL ASSIGNMENT" shall mean a work assignment in which an
Employee moves to the payroll of an entity outside of the Company's
"controlled group of corporations," as such term is defined in section 1563
of the Code, and retains a guarantee of re-employment with an entity within
such controlled group of corporations upon the conclusion of such an
assignment. Plan participation shall be continued for Eligible Employees on
Rotational Assignment.

1.25 "SEPARATION TIME" shall mean the time that U S WEST, Inc., a
Delaware corporation ("Old U S WEST"), is separated into two public
companies, USW-C, Inc., renamed U S WEST, Inc., as of the Separation Time,
and MediaOne Group, Inc. (the "Company").

1.26 "SHORT TERM INCENTIVE AWARD" shall mean an award determined
annually pursuant to the STIP.

1.27 "SPLIT DOLLAR" shall mean a method of purchasing life insurance in
which the Company and the Participant split, in accordance with a
predetermined formula, either the premium cost, the Cash Value and/or the
Death Benefit under a life insurance policy. With regard to this definition,
BELI is made available under an endorsement Split Dollar arrangement, and
SELI is made available under a collateral assignment Split Dollar arrangement.

1.28 "STIP" shall mean the MediaOne Group Short Term Incentive Plan or
the MediaOne Group Executive Short Term Incentive Plan, as amended or
superseded.

1.29 "SUPPLEMENTAL EXECUTIVE LIFE INSURANCE" or "SELI" shall mean the
insurance coverage provided to a Participant pursuant to Article IV.

1.30 "TERMINATED" or "TERMINATION" shall mean a Participant's separation
from service of a Participating Company for reasons other than the
Participant's death, Disability, or Retirement.

1.31 "UNDERWRITING" shall mean the process by which the Insurance
Company determines whether or not it will issue a policy of life insurance to
a Participant and the premium costs associated with the issuance of such a
policy. Underwriting shall generally occur whenever commencement of SELI
coverage or an increase in SELI coverage is elected by a Participant and
under such other circumstances as the Insurance Company shall determine in
accordance with its standard practices and procedures.

5
<PAGE>

ARTICLE II

ELIGIBILITY

2.1 ELIGIBILITY TO PARTICIPATE. An Active Employee who is:

(a) the chief executive officer of the Company;

(b) such other person designated by the Board or its delegate as
an Eligible Employee or as member of a class of employees to be made
Participants in this Plan; or

shall become a Participant in BELI on the date specified in Section 3.1.
Each Active Employee who satisfies all of the criteria in the preceding
sentence to be an Eligible Employee may also become a Participant in SELI on
the date specified in Section 4.1. Such individual shall continue to be
eligible to participate in BELI in accordance with Article III and in SELI in
accordance with Article IV as long as such individual continues to be an
Employee, regardless of the fact that he may no longer satisfy any of the
eligibility criteria set forth above. Notwithstanding the foregoing, any
individual who is a Participant in the MediaOne Group Select Executive Life
Insurance Plan may not be an Eligible Employee under this Plan.

2.2 SERVICE WITH OTHER ENTITIES. An individual who otherwise satisfies
the eligibility requirements specified in Section 2.1 and who is on
Rotational Assignment shall be eligible to participate in this Plan with
respect to service performed for an entity that is not a Participating
Company at the time that such service is performed.

ARTICLE III

BASIC EXECUTIVE LIFE INSURANCE

3.1 PARTICIPATION IN BELI.

(a) If, on or before the Effective Date, an Eligible Employee was
a Participant under the Plan, he shall remain a BELI Participant as of the
Effective Date.

(b) An Eligible Employee not described in Subsection 3.1(a) hereof
who is Actively Employed by a Participating Company shall commence
participation in BELI in accordance with the following rules:

(i) In the event such employee declines SELI coverage under
the Plan and elects BELI coverage only, he shall commence BELI participation
on the

6
<PAGE>

first day of the month coinciding with or next following his refusal of SELI
coverage and the occurrence of one of the following events: (A) the date
the Insurance Company accepts substitution of the Participant for a prior
insured former Participant, provided that such substitution can be made at
that time; or (B) if the substitution cannot be made, the Insurance Company
receives the premium payment from the Company; provided that the preceding
events occur on or before June 30th of a calendar year. If such events occur
after June 30th but before January 1st of the subsequent calendar year, he
shall commence BELI participation on the January 1st next following the
occurrence of such events.

(ii) In the event such Eligible Employee elects SELI
coverage, he shall commence BELI participation on his SELI participation
commencement date, provided he submits a completed enrollment form to the
Administrator and satisfies the requirements for SELI participation.

(iii) If a Participant declines SELI coverage or is not
approved for such coverage, he may elect either BELI coverage which shall
commence pursuant to the provisions of Subsection 3.1(b)(i) above or remain a
participant in GLI.

(c) An Eligible Employee may elect to waive participation in BELI
by choosing not to enroll. Failure by an Eligible Employee, however, to
submit a completed enrollment form in a timely manner shall be deemed to be a
waiver of BELI participation by such Eligible Employee. Once BELI
participation has commenced, a BELI Participant may cease his participation
by notifying the Administrator of such cessation, in a manner prescribed and
communicated to Participants by the Administrator.

(d) While an Eligible Employee is a BELI Participant, his GLI
coverage shall be reduced to $50,000 and he shall receive no supplemental
life insurance coverage under GLI.

3.2 COVERAGE AMOUNT UNDER BELI. A BELI Participant shall be
covered by insurance on his life equal to one times Annual Pay, reduced by
$50,000 as provided under GLI. In addition, a BELI Participant shall be
covered by AD&D insurance equal to one times Annual Pay, reduced by $50,000
as provided under GLI, in the event he suffers accidental death or
dismemberment, as defined in the applicable policy. Coverage amount changes
due to an increase or decrease in a Participant's Annual Pay shall become
effective on January 1st of the year following the year in which the change
in the Participant's Annual Pay becomes effective.

3.3 COST OF BELI COVERAGE.

(a) The premium cost of BELI coverage for Actively Employed BELI
Participants and Retired BELI Participants shall be paid by the Company.
Prior to Retirement, a BELI Participant shall be subject to the reporting of
imputed income with respect to coverage under the BELI policy provided by the
Company, in excess of the first $50,000 of GLI coverage.

7
<PAGE>

(b) The Company shall be the owner of the policy or policies of
BELI on each BELI Participant's life.

8
<PAGE>

3.4 BELI DEATH BENEFIT PAYMENTS.

(a) Payment of the BELI Death Benefit shall be made to the
deceased Participant's Beneficiary as designated by the Participant on a form
provided by the Administrator. Such payment shall be made in a single lump
sum.

(b) In the event that a Participant's Beneficiary designation for
the BELI Death Benefit is ineffective, and the applicable policy does not
provide for a different order of priority, such Participant's Beneficiary
shall be his surviving spouse, if any, or if there is no surviving spouse,
the Beneficiary shall be the Participant's then-living children and the
descendants, per stirpes, of any of the Participant's children who do not
survive the Participant, in equal shares. If there are no surviving children
and no surviving spouse, the Beneficiary shall be the estate of the deceased
Participant.

(c) In the event that a BELI Participant commits suicide within
one year after the effective date of initial BELI coverage, the Death Benefit
payable under the BELI policy with respect to the entire coverage amount
shall be zero. In the event a Participant commits suicide within one year
after the effective date of an increase in BELI coverage, the Death Benefit
shall be limited to the coverage amount in effect before such increase.

3.5 BELI COVERAGE AFTER SEPARATION FROM SERVICE.

(a) In the event that a BELI Participant is Terminated, BELI
coverage shall terminate at the end of the month in which such Termination
occurs. Notwithstanding the foregoing and at the Company's discretion, a
Terminated BELI Participant may purchase the BELI policy from the Company by
paying to the Company in cash the greater of the Cash Value of the policy or
the cumulative premiums that have been paid by the Company for such policy.

(b) In the event that a BELI Participant is Retired, the
Participant may elect either: (i) to continue the Split Dollar arrangement
with respect to the BELI policy and continue to be subject to the reporting
of imputed income with respect to coverage under the BELI policy in excess of
the first $50,000 of GLI coverage provided by the Company, or (ii) to
terminate the Split Dollar arrangement as of the date of Retirement. If the
Split Dollar arrangement is terminated, the Company shall own and be the
Beneficiary of the policy beginning on such date, and any future proceeds
from the policy shall be payable to the Company; nevertheless, BELI coverage
for the Retired Participant shall remain in effect in the same amount and on
the same premium payment basis as for active Employees and as determined at
the time of such Participant's Retirement, provided that the BELI benefit for
such Retired Participants shall be payable from the general assets of the
Company.

9
<PAGE>

(c) A Participant's AD&D coverage shall terminate on the last day
of the month in which Retirement occurs. Notwithstanding the foregoing and
subject to the terms and conditions of an applicable insurance policy, if
any, a Retired Participant may apply to convert the AD&D coverage, other than
the first $50,000 provided through GLI, to an individual policy.

3.6 BELI COVERAGE DURING LEAVE OF ABSENCE. BELI coverage, including
AD&D coverage, shall continue for a BELI Participant during a Leave of
Absence for a period of up to twelve months, except that AD&D coverage under
BELI shall not be continued for Participants who are on a military Leave of
Absence. The coverage amount during such period shall be the same as for an
Active Employee.

3.7 BELI COVERAGE DURING AND AFTER DISABILITY. BELI coverage
(including AD&D coverage) during a Participant's Disability shall continue in
the same amount as for an Active Employee. In the event that such a
Participant is no longer Disabled, the BELI coverage amount applicable to
such Participant upon his return to Active employment shall be calculated in
accordance with such Participant's level of Annual Pay during the period of
Active employment following the Disability, but in no event shall the amount
of coverage be less than the amount that was in effect immediately prior to
the Disability. If a Disabled Participant becomes eligible to receive long
term disability payments under the MediaOne Group Executive Disability Plan
or a disability pension under the MediaOne Group Pension Plan, the provisions
of Subsection 3.5(a) shall govern the continuation of such Participant's BELI
coverage. If a Disabled Participant becomes Retired, the provisions of
Subsections 3.5(b) and (c) shall govern the continuation of such
Participant's BELI coverage.

3.8 BELI COVERAGE DURING A ROTATIONAL ASSIGNMENT. At the discretion of
the Administrator, to be applied on a case by case basis, a BELI Participant
shall continue to participate in BELI for a period of up to five years while
on a Rotational Assignment. Except as set forth in Appendix A, all other
terms of participation for such Participant shall be determined by the
Administrator.

ARTICLE IV

SUPPLEMENTAL EXECUTIVE LIFE INSURANCE

4.1 PARTICIPATION IN SELI.

(a) If, on or before the Effective Date, an Eligible Employee was
a Participant under the Plan, he shall remain a SELI Participant as of the
Effective Date.

(b) An Eligible Employee not described in Subsection 4.1(a) hereof
who is Actively Employed by a Participating Company and who elects SELI coverage
shall commence participation in SELI on the first day of the month coinciding
with or next following the later of the following dates, provided that such date
is on or before

10
<PAGE>

June 30th and he is eligible to be a BELI Participant. In the event that the
later of the following dates falls between July 1st and December 31st of a
calendar year, the Eligible Employee shall commence SELI participation on
January 1st of the following calendar year:

(i) The date on which the Eligible Employee submits a
completed enrollment form to the Administrator, which includes a collateral
assignment to the Company of the total amount of the premiums paid, or to be
paid, by the Company for SELI coverage for the Eligible Employee; or

(ii) The date on which the Insurance Company completes
Underwriting with respect to the Eligible Employee and approves the Eligible
Employee for coverage and receives a premium for such coverage under a policy
of SELI.

(c) If an Eligible Employee fails to be approved for a SELI policy
based on the Insurance Company's Underwriting standards, such Participant
shall continue to be eligible for coverage under GLI in accordance with the
provisions of the applicable plan or for coverage under BELI if the
requirements specified in Section 3.1 have been met. In addition, such
Eligible Employee may reapply for SELI coverage no more frequently than
annually.

(d) A SELI Participant who is not Terminated or Retired may cease
participation in SELI by notifying the Administrator of such cessation, in a
manner prescribed and communicated to Participants by the Administrator.
Upon cessation of SELI participation, the SELI Participant shall have the
following options:

(i) Pay to the Company the total amount of cumulative
premiums that the Company has paid for the SELI policy, whereupon the
Company shall release the collateral assignment, thereby allowing the
Participant to exercise full ownership rights under the policy in accordance
with the rules and procedures established by the Insurance Company; or

(ii) Surrender all or a portion of the policy to the Company,
whereupon the Insurance Company shall pay to the Participant an amount equal
to the Cash Value of the policy or that portion of the policy that has been
surrendered, minus the total amount of the cumulative premiums that the
Company has paid for the policy or portion of the policy that has been
surrendered.

A SELI Participant's options under this Subsection 4.1(d) shall be
interpreted and administered in accordance with the terms of such SELI
Participant's collateral assignment agreement with the Company, as well as
with the terms of the applicable policy or policies.

4.2 COVERAGE AMOUNT UNDER SELI.

11
<PAGE>

(a) A SELI Participant shall be covered by insurance on his life
equal to one, two, three or four times his Annual Pay, or such other amount
as the Company may determine from time to time, based on factors selected by
the Company, such as a Participant's classification of employment, and all as
set forth on Appendix B, attached hereto and incorporated herein.

(b) Subject to the Insurance Company's Underwriting requirements,
a SELI Participant may apply for an increase in SELI coverage. Such increase
shall be effective on the first day of the month following the Insurance
Company's approval of such application.

(c) Coverage amount changes due to an increase or decrease in a
Participant's Annual Pay shall become effective on January 1st of the year
following the year in which:

(i) with respect to a decrease in Annual Pay, such decrease
becomes effective, or

(ii) with respect to an increase in Annual Pay, the Insurance
Company approves an increase in the coverage amount following Underwriting.

(d) The amount of SELI coverage for a Terminated or Retired
Participant shall be reduced in accordance with the provisions of Section 4.5.

4.3 COST OF SELI COVERAGE.

(a) The premium cost of SELI coverage while a SELI Participant is
Actively Employed by a Participating Company shall be divided between the
Participant and the Company. The Participant shall pay an amount equal to
the group term life insurance premium established by the Administrator for
each Plan Year, and the Company shall pay the balance of the total premium
cost for the Participant's SELI coverage.

(b) The Participant is the owner of the policy or policies of SELI
on such SELI Participant's life. Nevertheless, with the written consent of
the Company and the Insurance Company, a Participant may make an irrevocable
assignment of his rights under this Plan and his SELI policy or policies, in
which case, the assignee shall be entitled to exercise all the rights and
incidents of ownership that the Participant had immediately prior to the
assignment. Except as provided in Subsection 4.1(d)(i), no Participant or
assignee of the Participant may take a loan from the SELI policy on such
Participant's life during active employment with the Company.

(c) After a SELI Participant's Retirement, and provided that the
collateral assignment has not been released in accordance with Subsection
4.5(b)(ii), the Company shall pay the entire premium cost for such Participant's
SELI coverage until

12
<PAGE>

such time as there is sufficient Cash Value in the policy to allow the
Company to recover its cumulative premiums paid on the policy and to support
a Death Benefit equal to 50% of the SELI coverage amount that was in effect
immediately prior to the Participant's Retirement, based on mortality rates
and interest assumptions then in effect. Notwithstanding the foregoing, the
SELI coverage amount may be reduced pursuant to Subsection 4.5(b)(i) to avoid
the possibility that the policy may become a modified endowment contract. The
cost of SELI coverage for a Terminated or Retired Participant shall be
determined in accordance with the provisions of Section 4.5.

4.4 SELI DEATH BENEFIT PAYMENTS.

(a) Payment of the SELI Death Benefit shall be made to the
deceased Participant's Beneficiary designated by the Participant on a form
provided by the Administrator. For a Participant who was not Retired on the
date of death, such payment shall be made by the Insurance Company in a
single sum. Retired Participants may choose a Death Benefit settlement
option provided by the Insurance Company in the SELI policy. Such
Participants may change their election at any time in accordance with the
applicable policy provisions.

(b) In the event that the Participant's Beneficiary designation
for a SELI Death Benefit is ineffective, and the applicable policy does not
provide for a different order of priority, such Participant's Beneficiary
shall be his surviving spouse, if any, or if there is no surviving spouse,
the Beneficiary shall be the Participant's then-living children and the
descendants, per stirpes, of any of the Participant's children who do not
survive the Participant, in equal shares. If there are no surviving children
and no surviving spouse, the Beneficiary shall be the estate of the deceased
Participant.

(c) In the event that a SELI Participant commits suicide within
one year after the effective date of initial SELI coverage, the Death Benefit
payable under the SELI policy with respect to the entire coverage amount in
the case of suicide shall be zero. In the event a Participant commits
suicide within one year after the effective date of an increase in SELI
coverage, the Death Benefit shall be limited to the coverage amount in effect
before such increase.

4.5 SELI COVERAGE AFTER SEPARATION FROM SERVICE.

(a) TERMINATION OF EMPLOYMENT. In the event that a SELI
Participant is Terminated, the Company, in its sole discretion, shall cease
to pay premiums on the SELI policy for such Terminated Participant after such
Termination occurs. In such event, the termination provisions set forth in
the collateral assignment Split Dollar agreement shall apply, subject to
Article V.

(b) RETIREMENT. After a SELI Participant's Retirement, and
provided that the collateral assignment has not been released, the Company
shall pay the entire premium cost for the Participant's SELI coverage until
such time as there is sufficient

13
<PAGE>

Cash Value in the policy to allow the Company to recover its cumulative
premiums paid on the policy and to support a Death Benefit equal to 50% of
the SELI coverage amount that was in effect immediately prior to the
Participant's Retirement, based on mortality rates and interest assumptions
in effect at the time of the release of the collateral assignment.
Notwithstanding the foregoing, such amount may be reduced pursuant to
Subsection 4.5(b)(i) to avoid the possibility that the policy may become a
modified endowment contract.

(i) SELI DEATH BENEFIT.

(A) At or after a SELI Participant's Retirement, such
Participant's SELI Death Benefit shall be reduced by an amount to be
determined by the Administrator, but in no event shall the SELI Death Benefit
be more than 50% of the Participant's pre-Retirement SELI coverage amount.
At Retirement, SELI coverage shall be adjusted at the discretion of the
Company to ensure that the policy does not become a modified endowment
contract.

(B) In the event that a SELI Participant becomes Retired
on or after the Effective Date, such Participant shall bear the risk of
increased premium payments, reduction in Death Benefits, or outliving the
Death Benefit after the collateral assignment is released. A Retired SELI
Participant shall not have access to the policy's Cash Value either through
withdrawal or loan until the Company's collateral assignment is released in
accordance with Subsection 4.5(b)(ii) below.

(ii) RELEASE OF COLLATERAL ASSIGNMENT. A Retired SELI
Participant may obtain a release of the Company's collateral assignment and
be paid the Cash Value of the SELI policy in excess of the cumulative
premiums paid by the Company during the life of the policy, provided that:

(A) If the Participant begins participation in the Plan
after June 30, 1998, the Participant may not sever the collateral assignment
nor access any excess Cash Value under the policy until the Company recovers
all of the premiums that it has paid with respect to the policy.

(B) If the Participant began participation in the Plan
between January 1, 1991 and June 30, 1998, the SELI policy must have been in
effect for at least ten years before the Participant may sever the collateral
assignment and the Participant may have access to the Cash Value under the
policy to support a Death Benefit equal to 50% of the SELI coverage amount
then in effect, based upon mortality rates and interest assumptions in effect
at the time of the release of the collateral assignment.

(C) If the Participant began participation in the Plan on
or before December 31, 1990, the Participant may sever the collateral assignment
and may have access to a Cash Value under the policy to support a Death Benefit
equal to

14
<PAGE>

50% of the SELI coverage amount then in effect, based upon mortality rates
and interest assumptions in effect at the time of the release of the
collateral assignment.

After release of the collateral assignment, a Retired SELI Participant may
borrow against the Cash Value of the SELI policy and exercise full ownership
rights under the policy in accordance with such rules and procedures as may
be prescribed by the Insurance Company.

4.6 SELI COVERAGE DURING A LEAVE OF ABSENCE. SELI coverage shall
continue for a SELI Participant during a Leave of Absence for a period of up
to twelve months or such other period specified by the Administrator. The
coverage amount and premium payment basis during such period shall be the
same as for an Active Employee.

4.7 SELI COVERAGE DURING AND AFTER DISABILITY. SELI coverage during a
Participant's initial 52 weeks of Disability shall continue in the same
amount and on the same premium payment basis as for an Active Employee. In
the event that such a Participant is no longer Disabled, the SELI coverage
amount after the Participant returns to active employment following the
Disability shall be calculated in accordance with such Participant's level of
Annual Pay during the period of active employment following the Disability,
but in no event shall the amount of coverage be less than the amount that was
in effect immediately prior to the Disability. If a Disabled Participant
becomes eligible to receive disability payments under the MediaOne Group
Executive Disability Plan or the MediaOne Group Pension Plan, the applicable
provisions of Section 4.5 shall govern the continuation of such Participant's
SELI coverage.

4.8 SELI COVERAGE DURING A ROTATIONAL ASSIGNMENT. At the discretion of
the Committee, to be applied on a case by case basis, a SELI Participant
shall continue to participate in SELI for a period of up to five years while
on a Rotational Assignment. Except as set forth in Appendix A, all other
terms of participation for such Participant shall be determined by the
Administrator.

ARTICLE V

CHANGE IN CONTROL

5.1 CHANGE IN CONTROL. For the purposes of the Plan, a "Change of
Control" shall be deemed to have occurred under the following circumstances:

(a) Any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is or becomes a beneficial owner of (or otherwise has the authority to
vote), directly or indirectly, securities representing 20% or more of the
total voting power of all of the Company's then outstanding voting
securities, unless through a transaction arranged by, or consummated with the
prior approval of the Board;

15
<PAGE>

(b) Any period of two consecutive calendar years during which
there shall cease to be a majority of the Board of Directors comprised as
follows: individuals who at the beginning of such period constitute the Board
and any new director or directors whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved;

(c) The Company becomes a party to a merger, consolidation or
share exchange in which either (i) the Company will not be the surviving
corporation or (ii) the Company will be the surviving corporation and any
outstanding shares of common stock of the Company will be converted into
shares of any other (other than a reincorporation or the establishment of a
holding company involving no change of ownership of the Company) or other
securities or cash or other property (excluding payments made solely for
fractional shares); or

(d) Any other event that a majority of the Board of Directors, in
its sole discretion, shall determine constitutes a Change of Control for all
Plan Participants.

5.2 EFFECT ON THE PLAN. Upon the occurrence of a Change in Control of
the Company, as defined in Section 5.1, the Company shall give written notice
to the Administrator of such event and the following provisions shall take
immediate effect:

(a) GENERAL EFFECT. Except as set forth in Subsections 5.2(b) and
(c) below, for a period of at least three years after a Change in Control,
the Plan may not be amended or terminated in whole or in part to reduce the
benefits that were available hereunder on the date immediately prior to the
Change in Control. For the purposes of this Section 5.2, amendments that
reduce benefits shall include, but not be limited to, changes in coverage and
changes in participation requirements which have the effect of reducing
benefits, and increases in Participant cost.

(b) BELI COVERAGE. The Company shall not withdraw the Cash Value
of any BELI policy covering any Participant who was an Active Employee on the
date immediately prior to the Change in Control.

(c) SELI COVERAGE. At the expiration of such three-year period,
the Company shall release as a bonus to each SELI Participant in the Plan on
the date immediately prior to the Change in Control that portion of the
collateral assignment sufficient to fund a Death Benefit equal to 50% of the
full Active Employee Death Benefit (whether or not the Participant is an
Active Employee at the time), based on reasonable mortality and interest
assumptions in effect at such time and no less favorable that those in effect
prior to the Change in Control.

16
<PAGE>

ARTICLE VI

ADMINISTRATION

6.1 THE COMMITTEE. Acting in its capacity as the Plan sponsor, the
Committee shall have the power and authority to amend or terminate the Plan,
pursuant to Section 7.7 hereof, to appoint third party service providers and
vendors to the Plan, other than fiduciaries, and to establish the eligibility
criteria for participating in the Plan. Except to the extent delegated to
the Administrator, the Committee shall have the power and authority to
administer the Plan. The Committee shall have the discretion and authority
to determine conclusively for all parties all questions arising in the
administration of the Plan and any decision of the Committee shall be
conclusive and binding and shall not be subject to further review. To the
extent of any delegation under this Section 6.1, such discretion and
authority shall be delegated.

6.2 THE ADMINISTRATOR. In accordance with his or her delegation of
authority from the Committee pursuant to Section 6.1, the Administrator shall
have the specific powers and responsibilities set forth below:

(a) The Administrator shall award benefits under the Plan and
authorize disbursements according to the provisions hereof.

(b) In the event the Administrator denies a claim for benefits, he
or she shall provide written notice, setting forth the specific reasons for
such denial, to any Participant or Beneficiary whose claim has been denied in
accordance with Section 6.3 hereof, in a manner consistent with applicable
law and prescribed Participating Company practices.

(c) The Administrator shall oversee the day to day operation and
administration of the Plan, including the appointment of the Insurance
Company.

(d) The Administrator shall have limited authority to amend the
Plan only to the extent that any such amendment is with respect to
administrative matters only and that it does not affect the level of benefits
provided under the Plan in any way. The Committee shall retain the authority
to amend the Plan in all other respects and to terminate the Plan pursuant to
Section 7.7 hereof.

6.3 CLAIMS PROCEDURE. Any claims shall be submitted to the
Administrator or his or her delegate, in the circumstances and according to
the rules prescribed by the Administrator or the terms of any applicable
insurance policy. The review and appeal procedure for a Participant or
Beneficiary whose claim has been denied shall be as follows.

(a) All disputes concerning benefits under this Plan shall be
subject to this Section 6.3.

17
<PAGE>

(b) If a claim is denied, a written notice of denial shall be
furnished by the Administrator to the claimant within 90 days after the
receipt of the claim by the Administrator, unless special circumstances
require an extension of time for processing the claim, in which event
notification of the extension shall be provided to the Participant or
Beneficiary and such extension shall not exceed an additional 90 days.

(c) In the notice of denial, the Administrator shall set forth the
specific reasons for such denial, specific reference to pertinent Plan or
insurance policy provisions, a description of any additional material or
information necessary for the claimant to perfect his claim, an explanation
of why such material or information is necessary for the claimant to perfect
his claim, and an explanation of why such material or information is
necessary, all written in a manner calculated to be understood by the
claimant. Such notice shall include appropriate information as to the steps
to be taken if the claimant wishes to submit his claim for review. The
claimant or the claimant's authorized representative may request such a
review upon written application. The claimant may review pertinent documents
and may submit issues or comments in writing. The claimant or the claimant's
duly authorized representative must request such review within a reasonable
period of time prescribed by the Administrator. In no event shall such a
period of time be less than 60 days.

(d) The Administrator shall serve as the final reviewing authority
under the Plan and the Employee Retirement Income Security Act of 1974, as
amended, to the extent applicable to the Plan, for the review of all claims
by Participants whose initial claims for benefits have been denied, in whole
or in part, by the Administrator.

(e) A decision shall be rendered within 60 days after the receipt
of the request for review by the Administrator. If special circumstances
require a further extension of time for processing, a decision shall be
rendered not later than 120 days following the Administrator's receipt of
their request for review. If such an extension of time for review is
required, written notice of the extension shall be furnished to the claimant.
The decision of the Administrator shall be furnished to the claimant in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, as well as specific
references to the pertinent Plan provisions on which the decision is based.

(f) In any case in which the Administrator fails to notify a
Participant of his or her decision with respect to a claim as required under
this Section 6.3, such claim shall be considered to have been denied.

6.4 REVIEW OF THE ADMINISTRATOR'S DECISIONS. The Administrator shall
determine conclusively for all parties all questions arising in the
administration of the plan, and any decision of the Administrator shall not
be subject to further review, except as required by applicable law.

18
<PAGE>

6.5 EXPENSES. The expenses of the Administrator in administering the
Plan shall be borne by the Company.

6.6 ALLOCATION OF RESPONSIBILITIES. The Administrator may allocate
responsibilities for the operation and administration of the Plan consistent
with the Plan's terms, including allocation of responsibilities to
Participating Companies. The Administrator may designate in writing other
persons to carry out his or her responsibilities under the Plan, and may
employ persons to advise him or her with regard to any such responsibilities.

6.7 ADOPTION OF PLAN BY PARTICIPATING COMPANIES. The adoption of this
Plan by any subsidiary of the Company shall be subject to any reasonable
conditions and requirements that the Company or the Administrator sets forth
in its written consent. Such conditions and requirements may include, but
shall not be limited to, restrictions with respect to which Employees of any
subsidiary may become eligible to participate in the Plan. The Company
retains the right, in its sole discretion, to terminate prospectively any
subsidiary's participation in this Plan by providing written notice to such
subsidiary. In addition, the Company retains the sole right to amend,
terminate and administer the Plan. By agreeing to participate in the Plan as
an employer, each Participating Company (other than the Company) shall be
deemed to have designated irrevocably the Company, or its delegate, as its
agent in all matters concerning the Plan.

ARTICLE VII

GENERAL PROVISIONS

7.1 RIGHTS TO BENEFIT. A Participant or his Beneficiary shall have no
right to any benefit under this Plan except as may be provided by the Company
or each Participating Company through a policy of insurance covering the life
of such Participant and as set forth in this Plan.

7.2 SOURCE OF PAYMENTS. Nothing contained in this Plan or action taken
pursuant to the provisions of this Plan shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company
and any Participant, his Beneficiary or any other person. To the extent that
any person acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Company.

7.3 ASSIGNMENT OR ALIENATION. No Participant or Beneficiary shall have
any preferred claim on, or any beneficial ownership interest in, any assets
of the Company prior to the time such assets are paid to the Participant or
Beneficiary. Except as provided specifically in the Plan, the benefits under
this Plan shall not be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge by any Participant or Beneficiary,
and any attempt to do so shall be null and void.

19
<PAGE>

7.4 DETERMINATION OF ELIGIBILITY. In all questions relating to
eligibility for any benefit hereunder, or relating to rates of pay for
determining benefits, the decision of the Administrator, based upon this Plan
and upon the records of the Participating Company last employing such
individual, shall be final, in so far as permitted by applicable law.

7.5 NO GUARANTEE OF EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Participant the right to continue in the
employ of any Participating Company in any capacity.

7.6 NATURE OF BENEFITS. Any benefits payable under this Plan shall not
be deemed to be salary or other compensation to the employee for the purpose
of computing benefits to which he may be entitled under any pension plan or
other arrangement of any Participating Company for the benefit of its
employees.

7.7 PLAN AMENDMENT AND TERMINATION. The Company, through resolution of
the Committee or its delegate, retains the right to amend or terminate the
Plan (including the insurance policies) in whole or in part, in its sole and
absolute discretion, and each Participating Company retains the right to
withdraw from this Plan, at any time, for any reason, with or without notice.
Upon termination of the Plan, no Participant shall accrue any additional
benefits after the effective date of the termination, and payments shall be
made to Participants or their Beneficiaries as they become due under the
terms of the Plan.

7.8 GENDER AND NUMBER. Whenever used herein, words in any gender shall
be deemed to include the other genders, and the singular shall be deemed to
include the plural and vice versa, unless the context expressly indicates
otherwise.

7.9 GOVERNING LAW. This Plan shall be construed and enforced in
accordance the laws of the State of Colorado, except to the extent preempted
by Federal law.

Executed this ___________ day of ________________ , 1998

MEDIAONE GROUP, INC.

By
-----------------------------------

Title
-------------------------------

<PAGE>

MEDIAONE GROUP
EXECUTIVE DISABILITY PLAN

EFFECTIVE AS OF JUNE 12, 1998

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PREAMBLE 1

ARTICLE I DEFINITIONS 1

ARTICLE II ELIGIBILITY 4

Section 2.1 Eligibility to Participate 4

ARTICLE III SHORT TERM DISABILITY BENEFITS 4

Section 3.1 Benefit Commencement 4
Section 3.2 Amount of STD Payments 5
Section 3.3 Coordination with Other Sources of Disability
Income 5
Section 3.4 Duration of STD Payments 5

ARTICLE IV LONG TERM DISABILITY BENEFITS 5

Section 4.1 Benefit Commencement 5
Section 4.2 Amount of LTD Payments 5
Section 4.3 Sources and Order of LTD Payments under
the Plan 5
Section 4.4 Tax Effect 6
Section 4.5 Coordination with Other Sources of Disability
Income 6
Section 4.6 Duration of LTD Payments 6
Section 4.7 Employment Status 6
Section 4.8 Portability 6

ARTICLE V CHANGE IN CONTROL 7

Section 5.1 Change in Control 7
Section 5.2 Effect on the Plan 7

<PAGE>

ARTICLE VI ADMINISTRATION 8

Section 6.1 The Committee 8
Section 6.2 The Administrator 8
Section 6.3 Claims Procedure 9
Section 6.4 Review of the Administrator's Decision 10
Section 6.5 Expenses 10
Section 6.6 Allocation of Responsibilities 10
Section 6.7 Adoption of Plan by Participating Companies 10

ARTICLE VII GENERAL PROVISIONS 11

Section 7.1 Rights to Benefit 11
Section 7.2 Source of Payments 11
Section 7.3 Assignment or Alienation 11
Section 7.4 Determination of Eligibility 11
Section 7.5 No Guarantee of Employment
Section 7.6 Nature of Benefits 11
Section 7.7 Plan Amendment and Termination 11
Section 7.8 Gender and Number 12
Section 7.9 Governing Law 12

SIGNATURE PAGE 12
</TABLE>

<PAGE>

MEDIAONE GROUP
EXECUTIVE DISABILITY PLAN

Effective as of June 12, 1998

PREAMBLE

U S WEST, Inc. ("Old U S WEST"), a Delaware corporation, previously
established the U S WEST Senior Management Long Term Disability & Survivor
Protection Plan, which was terminated and replaced by the U S WEST Executive
Disability Plan. Effective with the separation of Old U S WEST into USW-C,
Inc. (renamed U S WEST, Inc. at the time of such separation) and MediaOne
Group, Inc. (the "Company"), the Company assumes sponsorship of that portion
of the Plan relating to its Eligible Employees, which it names the MediaOne
Group Executive Disability Plan (the "Plan"). The purpose of the Plan is to
provide disability benefits to Eligible Employees.

ARTICLE I

DEFINITIONS

The following terms shall have the meanings set forth below.

1.1 "ADMINISTRATOR" shall mean the Senior Vice President of Human
Resources or his or her delegate (or, in the event the Plan benefits of the
Administrator are directly or indirectly impacted by any claim for benefits,
the Chairperson of the Committee or his delegate). To the extent applicable,
the Administrator shall be the "administrator" and the "named fiduciary" for
purposes of the Employee Retirement Income Security Act of 1974, as amended.

1.2 "ANNUAL PAY" shall mean an amount equal to the following:

(a) For an Eligible Employee who is in his first year of
participation in the STIP, his annual rate of base pay plus the mid-range of
his target Short Term Incentive Award.

(b) For an Eligible Employee who is in his second year of
participation in the STIP, his annual rate of base pay in effect for such
year plus the average of the two amounts below:

(i) The Short Term Incentive Award amount in Subsection
1.2(a) above; and

<PAGE>

(ii) The actual Short Term Incentive Award he was paid for
the prior year, except that if his Short Term Incentive Award was prorated,
the full target amount of the Short Term Incentive Award for such year;

(c) For an Eligible Employee who is in his third year of
participation in the STIP, his annual rate of base pay in effect for such
year and the average of the three amounts below:

(i) The Short Term Incentive Award amount in Subsection
1.2(a) above;

(ii) The amount in Subsection 1.2(b)(ii) above; and

(iii) The actual Short Term Incentive Award he was paid for
the prior year.

(d) For an Eligible Employee who is in his fourth year of
participation in the STIP, his annual rate of base pay in effect for such
year and the average of the three amounts below:

(i) The amount in Subsection 1.2(b)(ii) above;

(ii) The amount in Subsection 1.2(c)(iii) above; and

(iii) The actual Short Term Incentive Award he was paid for
the prior year.

(e) For an Eligible Employee who has been an STIP participant for
more than four years, his annual rate of base pay in effect for such year and
the average of the prior three Short Term Incentive Awards paid to the
Eligible Employee.

1.3 "BASE PAYMENT" shall mean a Participant's Annual Pay.

(a) Pursuant to Article III, the Short Term Disability benefit
under the Plan shall be 100% of Annual Pay; and

(b) Pursuant to Article IV, the Long Term Disability benefit under
the Plan shall be 60% of Annual Pay.

1.4 "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors
of the Company.

1.5 "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations and rulings in effect thereunder from
time to time.

2
<PAGE>

1.6 "COMMITTEE" shall mean the Human Resources Committee of the Board
or its delegate.

1.7 "COMPANY" shall mean MediaOne Group, Inc., a Delaware corporation,
or its successors.

1.8 "CONTRACT" shall mean the contracts and individual insurance
policies entered by the Company and an Insurance Company to provide benefits
under the Plan.

1.9 "DISABLED" OR "DISABILITY" shall mean the circumstance when a
Participant is unable to perform the essential functions of his own
occupation due to an injury or illness, as determined in the sole discretion
of the Administrator, and is under the care of a physician. The Plan
provides Short Term Disability or STD benefits, as set forth in Article III
hereof, and Long Term Disability or LTD benefits, as set forth in Article IV
hereof.

1.10 "EFFECTIVE DATE" shall mean the Separation Time.

1.11 "ELIGIBLE EMPLOYEE" shall mean an employee who is eligible to
participate in the Plan pursuant to Section 2.1.

1.12 "GROUP PLAN" means the MediaOne Group Disability Plan, as amended
or superseded.

1.13 "INSURANCE COMPANY" shall mean the insurance company or companies,
which may be selected from time to time by the Administrator, to provide
disability insurance coverage under this Plan.

1.14 "PARTICIPANT" shall mean an Eligible Employee who has satisfied the
applicable requirements of Section 2.1.

1.15 "PARTICIPATING COMPANY" or "PARTICIPATING COMPANIES" shall mean the
Company or any subsidiary of the Company that, with the consent or at the
direction of the Administrator, participates in the Plan.

1.16 "PLAN" shall mean the MediaOne Group Executive Disability Plan, as
set forth herein, together with the Contracts and Appendices attached hereto,
as amended from time to time.

1.17 "PLAN YEAR" shall mean the fiscal year of the Plan, which shall be
the calendar year.

1.18 "SEPARATION TIME" shall mean the time that U S WEST, Inc., a
Delaware corporation ("Old U S WEST"), is separated into two public
companies, USW-C, Inc.,

3
<PAGE>

renamed U S WEST, Inc. as of the Separation Time, and MediaOne Group, Inc.
(the "Company").

1.19 "SERVICE" shall mean an Employee's Term of Employment as defined in
the MediaOne Group Pension Plan.

1.20 "SOCIAL SECURITY" shall mean the federal Social Security
Administration or disability benefits provided by that agency.

1.21 "SHORT TERM INCENTIVE AWARD" shall mean an award determined
annually pursuant to the STIP.

1.22 "STIP" shall mean the MediaOne Group Short Term Incentive Plan or
the MediaOne Group Executive Short Term Incentive Plan, as amended or
superseded.

1.23 "WORKERS' COMPENSATION" shall mean the state agencies or the wage
replacement benefits for an occupational injury or illness provided in
accordance with state law in the state where an Employee resides, regardless
of the differences in the title of the agency or the benefits provided.

ARTICLE II

ELIGIBILITY

2.1 ELIGIBILITY TO PARTICIPATE. An employee who is:

(a) the chief executive officer of the Company;

(b) such other person designated by the Board or its delegate as
an Eligible Employee or as member of a class of employees to be made
Participants in this Plan; or

shall be an Eligible Employee on the date upon which he is hired or placed
into an eligible classification. An Eligible Employee shall commence
participation in the Plan in accordance with the provisions set forth in
Articles III and IV.

ARTICLE III

SHORT TERM DISABILITY BENEFITS

3.1 BENEFIT COMMENCEMENT. STD benefit payments shall commence for an
Eligible Employee on the 8th calendar day after the date of the onset of his
Disability.

4
<PAGE>

3.2 AMOUNT OF STD PAYMENTS. A Participant shall receive STD
benefit payments in the amount of Base Payment, as defined in Subsection
1.3(a) above, regardless of his years of Service. Pay increases and
decreases that occur during a Participant's Disability shall be effective on
the scheduled date of change and STD benefits shall be paid at the new rate
for the duration of the STD period.

3.3 COORDINATION WITH OTHER SOURCES OF DISABILITY INCOME. Payments
provided hereunder shall be offset by other sources of disability income,
including, but not limited to, the Group Plan, Social Security and Workers'
Compensation. No Plan payments shall be made when other sources of
disability income exceed the STD benefit amount payable under the Plan.

3.4 DURATION OF STD PAYMENTS. Payments of STD benefits under the Plan
shall continue until the occurrence of one the following events:

(a) The Participant has expired 52 weeks of STD benefits;

(b) The Participant receives disability income from other sources
that exceeds the maximum STD benefit payable under the Plan;

(d) The Participant ceases to be an Eligible Employee.

ARTICLE IV

LONG TERM DISABILITY BENEFITS

4.1 BENEFIT COMMENCEMENT. An Eligible Employee shall commence
participation in the Plan for LTD benefits after he has expired the maximum
duration for STD benefit payments under the Plan and continues to be Disabled.

4.2 AMOUNT OF LTD PAYMENTS. A Participant shall receive LTD benefit
payments in the amount of Base Payment, as defined in Subsection 1.3(b)
above, regardless of his years of Service, but in no event shall such LTD
benefit exceed a maximum of $30,000 per month.

4.3 SOURCES AND ORDER OF LTD PAYMENTS UNDER THE PLAN. The Plan shall
provide LTD benefit payments through Contracts, if applicable, the MediaOne
Group Pension Plan, or the general assets of the Company. The order of the
sources from which LTD benefit payments shall be made to a Participant shall
be as follows:

5
<PAGE>

(a) Contract: An individual Contract shall provide LTD benefit
payments to each Participant on a monthly basis in an amount equal to a
Participant's Base Payment as set forth in Subsection 1.3(b), provided that
each such monthly payment shall not exceed $7,500. In the event that a
Primary Participant's monthly LTD benefit is greater than the maximum benefit
amount under the Contract or a Contract is not is not in force, LTD benefits
shall be paid using the other sources set forth above.

(b) Modified Disability Pension Plan payments under the MediaOne
Group Pension Plan; and

4.4 TAX EFFECT. All of the sources of LTD benefit payments set forth
in Section 4.3 hereof shall be taxed as ordinary income to a Participant when
paid, except in the event that a Participant makes an irrevocable election to
treat the premium payments made by the Company for the Contract as imputed
income while he is an active employee, the LTD benefit payments made to him
if he becomes disabled shall be excluded from tax. Such an election is
irrevocable and shall be made at the time the Contract is put in place. If a
Participant does not make such an election, the LTD benefit payments made
under the Contract shall be taxable to such Participant as ordinary income.

4.5 COORDINATION WITH OTHER SOURCES OF DISABILITY INCOME. Payments
provided hereunder shall be offset by other sources of disability income,
including, but not limited to, Social Security and Workers Compensation.

4.6 DURATION OF LTD PAYMENTS. Payments of LTD benefits under the Plan
shall continue until the occurrence of one the following events:

(a) The Participant is no longer Disabled;

(b) A Participant's attaining age 65, subject to any maximum
benefit periods set forth in the Contract;

(d) The Participant receives disability income from other sources
that exceeds the maximum LTD benefit payable under the Plan.

4.7 EMPLOYMENT STATUS. An individual who is receiving LTD benefits
under the Plan shall be deemed to be a former Employee.

4.8 PORTABILITY. In the event that the Company purchases individual
Contracts to provide Long Term Disability benefits to Eligible Employees
under the Plan, an Eligible Employee shall have the opportunity to maintain
such individual policy upon a

6
<PAGE>

termination of employment by continuing premium payments on his own to the
Insurance Company.

7
<PAGE>

ARTICLE V

CHANGE IN CONTROL

5.1 CHANGE IN CONTROL. For the purposes of the Plan, a "Change of
Control" shall be deemed to have occurred under the following circumstances:

(d) Any other event that a majority of the Board of Directors, in
its sole discretion, shall determine constitutes a Change of Control for all
Plan Participants.

(a) GENERAL EFFECT. For a period of three years after a Change in
Control and for such additional period as required to provide benefits under
Subsection 5.2(c) below, with respect to Participants covered by such
subsection, the Plan may not be amended or terminated in whole or in part to
reduce the benefits that were available hereunder on the date immediately
prior to the Change in Control. For the purposes of this Section 5.2,
amendments that reduce benefits shall include, but not be limited to,

8
<PAGE>

changes in coverage and changes in participation requirements which have the
effect of reducing benefits, and increases in Participant cost.

(b) ELIGIBLE EMPLOYEES UNDER THE PLAN. During the three-year
period following the occurrence of a Change in Control and for such
additional period as required to provide benefits under Subsection 5.2(c)
below, with respect to Participants covered by such subsection, the
definition of "Base Payment" hereunder shall not be amended, modified, or
eliminated. In addition, in the event benefits are provided hereunder
through Contracts, the Company contributions toward the premium amounts for
such Contracts shall not be reduced below the contribution amounts paid in
the period immediately preceding the Change in Control for the duration of
such three-year period.

(c) DISABLED PARTICIPANTS UNDER THE PLAN. A Participant who is
Disabled under the Plan on or before the occurrence of a Change in Control or
during the three-year period following such occurrence shall receive STD
and/or LTD benefits, as applicable, in the same amounts, under the same terms
and conditions, including the applicable maximum duration of benefit
payments, in effect under the Plan prior to the Change in Control.

ARTICLE VI

ADMINISTRATION

(a) The Administrator shall award benefits under the Plan and
authorize disbursements according to the provisions hereof.

9
<PAGE>

hereof, in a manner consistent with applicable law and prescribed
Participating Company practices.

(c) The Administrator shall oversee the day to day operation and
administration of the Plan, including the appointment of the Insurance
Company.

(a) All disputes concerning benefits under this Plan shall be
subject to this Section 6.3.

10
<PAGE>

6.4 REVIEW OF THE ADMINISTRATOR'S DECISIONS. The Administrator shall
determine conclusively for all parties all questions arising in the
administration of the Plan, and any decision of the Administrator shall not
be subject to further review, except as required by applicable law.

6.5 EXPENSES. The expenses of the Administrator in administering the
Plan shall be borne by the Company.

11
<PAGE>

ARTICLE VII

GENERAL PROVISIONS

7.5 NO GUARANTEE OF EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Participant the right to continue in the
employ of any Participating Company in any capacity.

7.7 PLAN AMENDMENT AND TERMINATION. The Company, through resolution of
the Committee or its delegate, retains the right to amend or terminate the Plan
(including the insurance policies) in whole or in part, in its sole and absolute
discretion, and each Participating Company retains the right to withdraw from
this Plan, at any time, for any reason, with or without notice. Upon
termination of the Plan, no Participant shall accrue any additional benefits
after the effective date of the termination, and payments shall be

12
<PAGE>

made to Participants or their Beneficiaries as they become due under the
terms of the Plan.

7.9 GOVERNING LAW. This Plan shall be construed and enforced in
accordance the laws of the State of Colorado, except to the extent preempted
by Federal law.

Executed this ___________ day of ________________ , 1998

MEDIAONE GROUP, INC.

By
-----------------------------------

Title
-------------------------------

<PAGE>

MEDIAONE GROUP
NONQUALIFIED PENSION PLAN

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

1.1 "Administrator". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 "Beneficiary". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Board" or "Board of Directors". . . . . . . . . . . . . . . . . . . . . 3
1.4 "Commencement Date". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 "Compensation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 "Installments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 "Nonqualified Percentage". . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 "Nonqualified Plan" or "Plan". . . . . . . . . . . . . . . . . . . . . . 3
1.10 "Nonqualified Plan Hypothetical Benefit". . . . . . . . . . . . . . . . 3
1.11 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 "Pension Plan". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Pension Plan Hypothetical Benefit" . . . . . . . . . . . . . . . . . . 4
1.14 "Pension Percentage". . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 "Plan". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Short Term Incentive Award". . . . . . . . . . . . . . . . . . . . . . 4
1.18 "Wages" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1 Eligibility to Participate . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Entitlement to Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE III PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 5

3.1 Commencement Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Lump Sum Distributions and Installments. . . . . . . . . . . . . . . . . 5
3.3 Election of Form of Benefit. . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Default Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Suspension of Benefit Payments . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE IV AMOUNT OF BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.1 Calculation in First Year. . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Calculation in Subsequent Years. . . . . . . . . . . . . . . . . . . . . 9
4.3 Survivor Annuity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

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<PAGE>

4.4 Actuarial Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Example. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Certain Increases in Pension Plan Benefits . . . . . . . . . . . . . . . 11

ARTICLE V SPECIAL RULES APPLICABLE TO
LUMP SUM DISTRIBUTIONS AND INSTALLMENTS. . . . . . . . . . . . . . . 11

5.1 Entire Pension Plan Benefit Paid in a Lump Sum . . . . . . . . . . . . . 11
5.2 Nonqualified Plan Benefit Paid in a Lump Sum . . . . . . . . . . . . . . 11
5.3 Deferral of Lump Sum Distribution. . . . . . . . . . . . . . . . . . . . 13
5.4 Special Rules for Participants Who
Elect a Partial Lump Sum Option
Under the Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 No Partial Lump Sum Option Under
the Nonqualified Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Example. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Special Rules for Participants
Electing Installments. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Inconsistent Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE VI PRE-RETIREMENT DEATH BENEFITS . . . . . . . . . . . . . . . . . . . 16

6.1 Death of Participant Prior to
Annuity Starting Date Under the Pension Plan . . . . . . . . . . . . . . 16
6.2 Death of Participant after Annuity
Starting Date under the Pension Plan
but Prior to Commencement Date
under the Nonqualified Plan. . . . . . . . . . . . . . . . . . . . . . . 16
6.3 No Election of Beneficiary or Form of Payment. . . . . . . . . . . . . . 17

ARTICLE VII ANCILLARY DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . . 17

7.1 Eligibility for Death Benefits . . . . . . . . . . . . . . . . . . . . . 17
7.2 Amount of Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 17
7.3 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE VIII Disability Benefits. . . . . . . . . . . . . . . . . . . . . . 19

8.1 Eligibility for Disability Benefit . . . . . . . . . . . . . . . . . . . 19
8.2 Amount of Disability Benefit . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE IX ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 20

9.1 Administrator Responsibility . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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<PAGE>

9.3 Review of Administrator Decisions. . . . . . . . . . . . . . . . . . . . 20
9.4 Delegation of Responsibilities . . . . . . . . . . . . . . . . . . . . . 20
9.5 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

10.1 Rights to Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2 Source of Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.3 Forfeiture of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 22
10.4 Assignment or Alienation. . . . . . . . . . . . . . . . . . . . . . . . 22
10.5 Determination of Eligibility. . . . . . . . . . . . . . . . . . . . . . 23
10.6 Payments to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.7 No Guarantee of Employment. . . . . . . . . . . . . . . . . . . . . . . 23
10.8 Nature of Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.9 Plan Amendment and Termination. . . . . . . . . . . . . . . . . . . . . 23
10.10 Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.11 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.12 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>

iii
<PAGE>

MEDIAONE GROUP
NONQUALIFIED PENSION PLAN

PREAMBLE

I. Predecessor Plan History.

U S WEST, Inc., a Delaware corporation ("Old U S WEST"),
established the U S WEST Senior Management Non-Qualified Pension Plan (the
"Predecessor Nonqualified Plan") effective January 1, 1984 to restore to
certain of its executives and to the executives of certain of its
subsidiaries various pension benefits that cannot be paid from the U S WEST
Pension Plan (the "Predecessor Pension Plan"). Effective January 1, 1997,
the Predecessor Nonqualified Plan was amended, restated, and renamed the U S
WEST Nonqualified Pension Plan.

II. Corporate History.

In 1995, pursuant to a Restated Certificate of Incorporation of Old
U S WEST, Old U S WEST assets, liabilities and businesses were divided
between the Communications Group and the Media Group. Both Communications
Group and Media Group employees participated in the Predecessor Nonqualified
Plan.

In 1998, Old U S WEST determined that it was desirable to separate
the Communications Group and the Media Group into two separate public
companies. In furtherance of that goal, Old U S WEST effected a
restructuring of certain of its assets among the Communications Group and
Media Group. In addition, Old U S WEST redeemed all of the Old U S WEST
Communications Group Common Stock for all of the capital stock of USW-C,
Inc., a wholly-owned subsidiary of Old U S WEST; as a result, USW-C, Inc.
ceased to be affiliated with Old U S WEST. Upon such redemption, USW-C, Inc.
was renamed U S WEST, Inc. In addition, Old U S WEST was renamed MediaOne
Group, Inc. All of the existing shares of Old U S WEST Media Group Common
Stock remain outstanding as MediaOne Group, Inc. Common Stock. The foregoing
transactions became effective on the Separation Time.

III. Current Plan.

In connection with the foregoing separation, Old U S WEST
determined that it was desirable to transfer sponsorship of the Predecessor
Nonqualified Plan to USW-C, Inc. In addition, MediaOne Group, Inc. adopted
this Nonqualified Plan to accept liabilities with respect to Media
Participants, as set forth in the Employee Matters Agreement between Old U S
WEST and USW-C, Inc.

This Plan document sets forth the terms and conditions of the
Nonqualified Plan, effective as of the Separation Time (except as otherwise
noted), and reflects the transfer of liabilities of all Media Participants to
this Nonqualified Plan from the

1
<PAGE>

Predecessor Nonqualified Plan. No benefits will be paid under this
Nonqualified Plan to Communications Participants after the Separation Time
unless (1) in accordance with the Employee Matters Agreement, a Terminated
Communications Employee is reclassified as a Terminated Media Employee (as
such terms are defined in the Employee Matters Agreement) or (2) a
Communications Participant becomes an Employee and Participant hereunder
after the Separation Time.

Except as otherwise provided herein, the provisions of this
Nonqualified Plan apply solely to an Employee of a Participating Company
whose Eligible Separation occurred on or after the Separation Time. If a
Media Participant's Eligible Separation occurred prior to the Separation
Time, that person is entitled to benefits under this Nonqualified Plan in
accordance with the terms of the Predecessor Nonqualified Plan as the
Predecessor Nonqualified Plan existed on the date of the Employee's Eligible
Separation.

ARTICLE I

DEFINITIONS

Capitalized terms in this Nonqualified Plan which are also defined in
the Pension Plan shall have the meaning set forth in the Pension Plan, unless
otherwise provided below:

1.1 "Administrator" shall mean the Senior Vice President of Human
Resources of the Company or his or her duly-authorized delegate, or, in the
event the Plan benefits of the Senior Vice President, Human Resources are
directly or indirectly impacted by any claim for benefits, the Human
Resources Committee of the Board.

1.2 "Beneficiary" means, as the context warrants, (i) the contingent
annuitant designated by a Participant with respect to a pension benefit
hereunder, (ii) the beneficiary set forth in Article VI with respect to a
pre-retirement death benefit payable in Article VI, (iii) the person or
persons designated to receive any unpaid Installments after the Participant's
death, and/or (iv) the beneficiary set forth in Section 7.3 with respect to
the ancillary benefits payable under Article VII.

1.3 "Board" or "Board of Directors" shall mean the Board of Directors
of the Company.

1.4 "Commencement Date" is defined in Section 3.1.

1.5 "Company" shall mean MediaOne Group, Inc., a Delaware corporation
and any successor thereto. Up and until immediately prior to the Separation
Time, Company meant Old U S WEST as defined in the Preamble.

1.6 "Compensation" shall mean compensation as defined in Section 1.10
of the Pension Plan without regard to sub-sections (d) and (e) thereof (the
provisions

2
<PAGE>

implementing Section 401(a)(17) of the Code), plus the following:

(a) Compensation deferred under the Company's Deferred
Compensation Plan for a Plan Year (excluding any amounts deferred or payable
pursuant to any incentive plan of the Company), prorated to one-twelfth
(1/12) and spread evenly over the months for the Plan Year of the deferral;

(b) The amount of any Short Term Incentive Awards paid with
respect to a Plan Year, prorated to one-twelfth (1/12) and spread evenly over
the twelve months of the Plan Year during which the Short Term Incentive
Awards were earned; and

(c) The value of the Company's common stock (without regard to
its restricted status on the date of grant) paid as an award under a plan
that provides for awards in the form of the Company's common stock in lieu of
cash and that has been approved by the shareholders of the Company, provided
that such award is designated by the Administrator as Compensation under this
Nonqualified Plan. In all cases, such awards shall be valued for purposes of
this Nonqualified Plan as of the date of the award.

1.7 "Installments" shall mean a form of benefit in which a
Participant's benefit under this Plan is paid in a fixed number of annual
installments, not to exceed ten, elected by the Participant in accordance
with procedures established by the Administrator.

1.8 "Nonqualified Percentage" is defined in Section 4.1(b).

1.9 "Nonqualified Plan" or "Plan" shall mean this MediaOne Group
Nonqualified Pension Plan, as amended.

1.10 "Nonqualified Plan Hypothetical Benefit" is defined in Section
4.1(c).

1.11 "Participant" . shall mean an Employee of a Participating Company
who has satisfied the applicable requirements of Section 2.1.

1.12 "Pension Plan" shall mean the MediaOne Group Pension Plan as it
exists after the Separation Time, and as amended from time to time.
References to any article or section of the Pension Plan include reference to
any comparable or succeeding provisions that amend, supplement or replace
such article or section. Prior to the Separation Time, "Pension Plan" meant
the U S WEST Pension Plan maintained by Old U S WEST. After the Separation
Time, the term "Pension Plan" shall also mean the U S WEST Pension Plan or
its successor to the extent such plan or successor provides benefits to
Participants in this Plan which are attributable to periods prior to the
Separation Time.

1.13 "Pension Plan Hypothetical Benefit" is defined in Section 4.1(a).

1.14 "Pension Percentage" is defined in Section 4.1(b).

3
<PAGE>

1.15 "Plan" shall mean this MediaOne Group Nonqualified Pension Plan,
as amended.

1.16 "Plan Year" shall mean the fiscal year of the Plan, which shall be
the calendar year.

1.17 "Short Term Incentive Award" shall mean an award determined
annually pursuant to either the Company's Short Term Incentive Plan or the
Company's Executive Short Term Incentive Plan, as amended or superseded. For
Nonqualified Plan benefit calculation purposes, (i) any Short Term Incentive
Award earned in the year of Termination shall be prorated and spread evenly
over the applicable months on the payroll in the final Plan Year of
employment and (ii) for a Participant who Terminates and who has a Short Term
Incentive Award that is paid after Termination, the award will be spread
evenly over the months of the year the award was earned. If a Short Term
Incentive Award is paid after Termination, the Participant's benefit under
this Nonqualified Plan shall be adjusted retroactively to reflect such
payment if necessary.

1.18 "Wages" shall mean wages as defined under Section 7.9 of the
Pension Plan as of February 28, 1993, calculated without regard to Code
Section 401(a)(17), plus the Short Term Incentive Award most recently paid
prior to February 28, 1993.

ARTICLE II

ELIGIBILITY

2.1 ELIGIBILITY TO PARTICIPATE. Each Media Participant who is a
participant in the Predecessor Nonqualified Plan immediately prior to the
Separation Time, shall become a Participant hereunder at the Separation Time.
Subject to Part III of the Preamble, each other participant in the Pension
Plan (a) whose Compensation for a Plan Year exceeds the limit on includible
compensation for benefit accrual purposes under Code Section 401(a)(17), or
(b) who is a participant in the Company's Deferred Compensation Plan, or (c)
who is eligible for a Short Term Incentive Award with respect to a Plan Year,
shall be eligible to participate in this Nonqualified Plan. Such an eligible
individual's participation in the Nonqualified Plan shall commence on the
90th day after the date he receives the information concerning participation
in the Nonqualified Plan. If the information is given by hand delivery, the
Participant shall receive the information on the date it is delivered. If
the information is given by mail, it shall be deemed received by the
Participant on the third day after deposit in the United States first class
mail, postage prepaid, addressed to the Participant at the most current
address in the Company's records. Such individual shall continue to
participate in this Nonqualified Plan until such Participant ceases to
satisfy at least one of the eligibility requirements specified in this
Section 2.1.

2.2 ENTITLEMENT TO BENEFITS. Notwithstanding the foregoing, a person
who is eligible to participate pursuant to subsection (a) of Section 2.1
shall not be entitled to any

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<PAGE>

benefits from this Plan unless such person's benefits under the Pension Plan
would be greater if the limit on includible compensation under Section
401(a)(17) of the Code did not apply or Compensation under the Nonqualified
Plan were substituted for compensation under the Pension Plan. For purposes
of the preceding sentence, the determination of whether the benefit under the
Pension Plan would be greater shall be made by assuming that Code Section 415
did not apply. If a person's benefits under the Pension Plan are reduced
solely by virtue of Code Section 415, no benefits shall be payable from this
Plan although the individual may be entitled to a benefit from the excess
plan set forth in Section 5C.2 of the Pension Plan. If a Participant is
entitled to a benefit under this Nonqualified Plan, no benefits shall be
payable from the excess plan set forth in Section 5C.2 of the Pension Plan.

ARTICLE III

PAYMENT OF BENEFITS

3.1 COMMENCEMENT DATE. Payment of a Nonqualified Plan benefit shall
commence as of such time (the "Commencement Date") as elected (or deemed
elected) by the Participant; provided, however, except as provided in
Sections 3.2, 3.4, 3.5 and 10.10, the Commencement Date may not be earlier
than the Annuity Starting Date elected under the Pension Plan or, except as
provided by the next sentence, later than the fifth anniversary of his
Eligible Separation. Except as provided in Sections 3.2, 3.4, 3.5 and 10.10,
if the Annuity Starting Date under the Pension Plan is later than the fifth
anniversary of the Participant's Eligible Separation, then the Commencement
Date shall be the same day as the Annuity Starting Date. For purposes of
this Section 3.1, if the Participant elects a partial lump sum under the
Pension Plan, the Annuity Starting Date under the Pension Plan shall be the
date as of which the annuity under the Pension Plan commences.

3.2 LUMP SUM DISTRIBUTIONS AND INSTALLMENTS.

(a) Notwithstanding Section 3.1, if a Participant elects payment
under this Plan in the form of a lump sum distribution or Installments, the
distribution shall be paid or commence to be paid approximately 60 days after
Eligible Separation (unless the Participant elects deferral of the
distribution), with an additional payment, which shall be paid approximately
sixty (60) days following the payment of the Participant's final Short Term
Incentive Award, which shall take into account any Short Term Incentive
Awards that were not included in the calculation of the payment that the
Participant had already received. The Commencement Date of such a
distribution shall be the Participant's First Starting Date, even though the
distribution may not be made for approximately 60 days (no interest shall be
paid due to the delay in payment). If a Participant who has elected payment
of benefits under this Plan in the form of a lump sum dies after the
Commencement Date, but before the payment of the lump sum, said lump sum
shall be paid to the deceased Participant's estate.

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<PAGE>

(b) Notwithstanding Section 3.1, if the Participant elects
deferral of the lump sum distribution or Installments, the distribution shall
be paid or commence to be paid, in accordance with the Participant's
election, in March of the first, second, third, fourth or fifth calendar year
after the calendar year in which the Eligible Separation occurs. The
Commencement Date of such a distribution shall be the March 1 of the year in
which the distribution is to commence, even though the distribution may not
actually commence on such date (no interest shall be paid due to the delay in
payment).

3.3 ELECTION OF FORM OF BENEFIT. (a) If a Participant becomes
eligible for participation in this Nonqualified Plan, he shall, within 90
days after he receives information regarding participation in the
Nonqualified Plan and prior to the date he commences participation in the
Nonqualified Plan, elect the form in which benefit payments shall be made. A
Participant may elect to change the form of benefit at any time after the
fifth anniversary of the previous election (excluding elections made under
the Predecessor Nonqualified Plan before May 1997). However, any such
election shall be void unless the Participant remains an Employee at least
six months after the date the election is filed with the Administrator. If a
Participant ceases to participate in the Plan and subsequently recommences
participation, any prior election (or deemed election) shall remain valid
unless a new election is made.

(b) A Participant may elect payment of the Nonqualified Plan
benefit in any form of benefit available to that Participant under the
Pension Plan (excluding the partial lump sum option) or Installments.

(d) Notwithstanding the foregoing, a Participant's affirmative
election of a lump sum benefit or Installments under this Nonqualified Plan
shall not be valid unless the Participant acknowledges that he will not be
entitled to any cost-of-living adjustments provided under Code Section 415
under the Pension Plan after his Eligible Separation.

(e) Any election in effect under the Predecessor Nonqualified
Plan at the Separation Time shall remain in effect under this Plan until
changed by the Participant in accordance with the rules set forth above.

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<PAGE>

3.4 SMALL BENEFITS. Notwithstanding any election or deemed election
pursuant to Sections 3.3 or 3.5 or any other provision of this Plan, if the
Participant's benefit under this Nonqualified Plan (excluding any benefits
payable under Article VII of this Nonqualified Plan), expressed as a lump sum
in accordance with Article V, is $10,000 or less, the Nonqualified Plan
benefit (excluding any benefits payable under Article VII of this
Nonqualified Plan) shall be payable only in the form of a lump sum
approximately sixty (60) days after the Participant's Eligible Separation.
For purposes of the preceding sentence, if the Participant's Annuity Starting
Date under the Pension Plan is more than sixty (60) days after his Eligible
Separation, the Participant's benefits under this Nonqualified Plan shall be
calculated as if the Participant elected a single life annuity under the
Pension Plan (if the Participant is not married on the First Starting Date)
or as a 50% joint and survivor annuity under the Pension Plan (if the
Participant is married on the First Starting Date), in each case commencing
at age 65 or the First Starting Date, whichever produces the lower
Nonqualified Percentage, based on the Code Section 415 limits in effect on
the date of Eligible Separation.

3.5 DEFAULT ELECTIONS. (a) This subsection (a) applies to all
Participants other than those described in sub-section (b) below. If a
Participant fails to elect a Commencement Date and either (i) fails to elect
a form of Nonqualified Plan benefit or (ii) elects a lump sum, the
Nonqualified Plan benefit shall be paid in the form of a lump sum
approximately 60 days after the Eligible Separation. If a Participant fails
to elect a Commencement Date and elects Installments, the Nonqualified Plan
benefit shall be paid in the form of Installments commencing approximately 60
days after the Eligible Separation. If a Participant elects an annuity form
of benefits under the Nonqualified Plan, but fails to elect a Commencement
Date, the Commencement Date shall be the Annuity Starting Date under the
Pension Plan. If the Participant elects a Commencement Date, but fails to
elect a form of Nonqualified Plan benefit, it shall be paid in a lump sum on
that date set forth in Section 3.2 coinciding with or immediately preceding
the elected Commencement Date.

(b) This subsection (b) applies to Media Participants hired by
Old U S WEST or one of its subsidiaries before May 1997 who do not make any
benefit elections after April 1997. If a Participant fails to elect a form
of Nonqualified Plan benefit, benefits shall be paid as a single life annuity
(if the Participant is not married on the Commencement Date) or as a 50%
joint and survivor annuity (if the Participant is married on the Commencement
Date). If a Participant elected a lump sum or Installments under the
Predecessor Nonqualified Plan before May, 1997, but fails to elect a
Commencement Date, the distribution shall be paid or commence to be paid
approximately 60 days after the Eligible Separation. If a Participant fails
to elect a Commencement Date, and (i) the Participant elected an annuity
under the Predecessor Nonqualified Plan prior to May 1997 or (ii) the
Participant did not elect a form of benefits, the Participant shall be deemed
to have elected a Commencement Date that is his Annuity Starting Date under
the Pension Plan.

3.6 SUSPENSION OF BENEFIT PAYMENTS. Reemployment with a Participating
Company commencing on or after January 1, 1997 as a Management Employee shall
not result in suspension of benefits. Reemployment with any Participating
Company prior to

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<PAGE>

1997 subsequent to Termination with any type of benefits described heretofore
shall result in the suspension of the benefit for the period of such
employment or reemployment.

ARTICLE IV

AMOUNT OF BENEFIT

4.1 CALCULATION IN FIRST YEAR. Subject to Articles III and V, the
amount of a Participant's benefit payable under this Nonqualified Plan in the
Plan Year in which the Commencement Date occurs shall be calculated in the
following manner:

(a) The Participant's hypothetical benefit that would be payable
under the Pension Plan for that year shall be calculated (i) by using the
form of benefit and Annuity Starting Date elected by the Participant under
the Pension Plan, (ii) by taking into account any cost-of-living adjustments
provided under the Pension Plan, and (iii) by assuming Code Sections
401(a)(17) and 415 (and the Pension Plan provisions implementing such Code
sections) did not apply and Compensation under the Nonqualified Plan were
substituted for compensation under the Pension Plan. This hypothetical
amount will be referred to as the Pension Plan Hypothetical Benefit.

(b) The ratio of (i) the actual Pension Plan benefit payable for
that year using the form of benefit and Annuity Starting Date elected by the
Participant under the Pension Plan and taking into account any cost-of-living
adjustments provided under the Pension Plan or under Code Section 415, if
applicable, to (ii) the Pension Plan Hypothetical Benefit, shall be
calculated and expressed as a percentage (or fraction). This amount shall be
referred to as the Pension Percentage for the year. The Nonqualified
Percentage for that year shall equal 100 percent (or one) minus the Pension
Percentage for the year.

(c) The Participant's hypothetical benefit that would be payable
under the Pension Plan for that year shall be calculated (i) by using the
form of benefit and Commencement Date elected by the Participant under the
Nonqualified Plan, (ii) by taking into account any cost-of-living adjustments
provided under the Pension Plan and (iii) by assuming if Code Sections
401(a)(17) and 415 (and the Pension Plan provisions implementing such Code
sections) did not apply and Compensation under the Nonqualified Plan were
substituted for compensation under the Pension Plan. This amount will be
referred to as the Nonqualified Plan Hypothetical Benefit.

(d) Except as provided in Section 5.7, the annual amount of the
Nonqualified Plan benefit payable for the Plan Year in which the Commencement
Date occurs equals the Nonqualified Plan Hypothetical Benefit multiplied by the
Nonqualified Percentage. Unless the Participant elects a lump sum benefit or
Installments, one-twelfth of such amount shall be paid each month in arrears
(with a pro rata adjustment for the first payment if the Commencement Date is
not the first day of a month), provided that

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<PAGE>

no payment shall be made for months (or parts of a month) prior to the
Commencement Date.

(e) In the event the Participant elects the same form of benefit
under both the Pension Plan and Nonqualified Plan (other than a lump sum) and
also elects that benefits under the two plans commence on the same date, the
foregoing calculations will result in a benefit payable from this
Nonqualified Plan equal to the excess of the amount set forth in Section
4.1(a) over the amount described in Section 4.1(b)(i).

(f) As set forth in Section 3.3, if the sole reason that the
Pension Plan Hypothetical Benefit exceeds the amount set forth in Section
4.1(b)(i) is due to the application of Code Section 415, no benefits shall be
payable from this Nonqualified Plan.

4.2 CALCULATION IN SUBSEQUENT YEARS. The calculations described in
Section 3.1 shall be performed again in each subsequent Plan Year in which a
Nonqualified Plan benefit (other than a benefit in the form of Installments)
is payable in accordance with the form of Nonqualified Plan benefit elected.
Subject to Section 4.3, if the Pension Plan benefit ceases to be paid prior
to the Nonqualified Plan benefit, the Nonqualified Percentage shall be fixed
in the last Plan Year the Pension Plan pension benefit or survivor annuity is
paid.

4.3 SURVIVOR ANNUITY. If the form of benefits elected by the
Participant under this Nonqualified Plan provides for a survivor annuity
(including a 10-year certain and life benefit, but excluding Installments)
after his death and, if applicable, the contingent beneficiary outlives the
Participant, the calculations described in this Article IV shall be performed
again, beginning in the first month a benefit is payable to the beneficiary
and recalculated in each subsequent Plan Year in which a Nonqualified Plan
survivor annuity is payable in accordance with the form of Nonqualified Plan
benefit elected. For this purpose, however, the respective survivor
annuities shall be used rather than the pension benefits. If the Pension
Plan benefit ceases to be paid prior to Nonqualified Plan benefit (or if
there is no Pension Plan survivor annuity), the Nonqualified Percentage shall
be fixed in the last Plan Year the Pension Plan pension benefit or survivor
annuity is paid.

4.4 ACTUARIAL FACTORS. Except as set forth in Article V, the Pension
Plan Hypothetical Benefit and the Nonqualified Plan Hypothetical Benefit
shall be calculated using the actuarial factors set forth in the Pension Plan
appropriate for the form of benefit and benefit commencement dates elected
for the Pension Plan benefit and Nonqualified Plan benefit respectively,
without regard to any adjustments under Code Section 415.

4.5 EXAMPLE. This Section 4.5 illustrates how the amount of
Nonqualified Plan benefits is calculated for a Plan Year. For this purpose,
assume the Participant incurs an Eligible Separation on his 62nd birthday and
that his Defined Lump Sum and DLS Normal Pension under the Pension Plan (in
each case calculated as if Code Sections 401(a)(17) and 415 did not apply and
Compensation under the Nonqualified Plan were substituted for compensation
under the Pension Plan) are $2.2 million and $200,000/year, respectively.
The Participant's DLS benefits are in all cases greater than the benefits

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<PAGE>

under the grandfather formula in Pension Plan Article V-B (or Article V-A of
the Pension Plan, if applicable). At the time the Participant is 62, assume
the DLS Normal Pension payable at age 65 under the Pension Plan is limited to
$150,000/year due to Code Section 415. Assume that the Section 415 limit
increases to $160,000/year by the time the Participant attains age 65.

(a) (i) First, assume the Participant's Annuity Starting Date and
Commencement Date occur upon attainment of age 65. The Participant elects a
single life annuity under the Pension Plan and a Qualified Joint and 100%
Survivor Annuity under the Nonqualified Plan. In this case, the Nonqualified
Percentage is 20% [1 - ($160,000 DIVIDED BY $200,000)]. The Participant's
Nonqualified Plan Hypothetical Benefit is $200,000 multiplied by 84% (to
reflect payment in the form of a Qualified Joint and 100% Survivor Annuity),
or $168,000. The amount payable from the Nonqualified Plan for the year the
Participant attains age 65 is 20% of $168,000, or $33,600.

(ii) Assume that the next year the amount payable from the
Pension Plan increases to $165,000 due to the cost of living increases in
Code Section 415(d). Accordingly, this year, the Nonqualified Percentage is
17.5% [1 - ($165,000 DIVIDED BY $200,000)]. Thus, the amount payable from the
Nonqualified Plan this year is 17.5% of $168,000, or $29,400.

(b) Assume instead that the Participant elected Pension Plan
benefits in the form of a Qualified Joint and 100% Survivor Annuity at age
65. In this case, the Pension Plan Hypothetical Benefit is $168,000
[84% times $200,000]. The Pension Plan benefit remains $160,000/year since
the survivor spousal annuity is ignored under Code Section 415. Accordingly,
the Nonqualified Percentage is 8/168. If the Participant elected a Qualified
Joint and 100% Survivor Annuity under the Nonqualified Plan, he would receive
an $8,000/year benefit [$168,000 times 8/168]. If he elected a life annuity
under the Nonqualified Plan, the benefit would equal $200,000 times 8/168, or
$9,523.81.

(c) (i) Now assume the Participant commences Pension Plan
benefits at age 62 in the form of a single life annuity. In this case, the
Pension Plan Hypothetical Benefit is $144,000 [$200,000 times 72% (the Pension
Plan's early retirement factor]. In contrast, under Code Section 415, the
early retirement factor is 80% at 62; thus, the actual benefit payable under
the Pension Plan is $120,000. Accordingly, the Nonqualified Percentage is 1/6
[1 minus (120/144)]. If the Participant elected a 10 Year Certain Life Annuity
under the Nonqualified Plan at age 62, the Nonqualified Plan Hypothetical
Benefit is $144,000 multiplied by 96% (to reflect payment in the form of a 10
Year Certain Life Annuity), or $138,240. The amount payable from the
Nonqualified Plan for the year the Participant attains age 62 is $138,240
multiplied by 1/6, or $23,040.

(ii) Because the Section 415 limit increases to $160,000 by
the time the Participant attains age 65, the amount payable from the Pension
Plan increases to $128,000 [160,000 times .8]. Accordingly, this year the
Nonqualified Percentage is 1/9 [1 - ($128,000 DIVIDED BY $144,000)]. Thus,
the amount payable from the Nonqualified Plan this year is 1/9 of $138,240,
or $15,360.

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<PAGE>

(d) Assume the Participant in Section 4.5(c) commenced the
Pension Plan benefits at age 62, but started the Nonqualified Plan benefit at
age 65. As described in Section 4.5(c)(ii), the Nonqualified Percentage
equals 1/9 [1 minus (128/144)]. If the Participant elected a 10 Year Certain
Life Annuity under the Nonqualified Plan, the Nonqualified Plan Hypothetical
Benefit is $200,000 multiplied by 96% (to reflect payment in the form of a 10
Year Certain Life Annuity), or $192,000. The amount payable from the
Nonqualified Plan for the year is $192,000 multiplied by 1/9, or $21,333.33.
No adjustment is made to reflect the fact that the Nonqualified Percentage is
lower at age 65 when the Nonqualified Plan benefit commences than it would
have been in earlier years when the Pension Plan benefit commenced.

4.6 CERTAIN INCREASES IN PENSION PLAN BENEFITS. Notwithstanding any
other provision of this Nonqualified Plan, any increase in Pension Plan
benefits which may occur upon termination of the Pension Plan as a result of
the operation of Section 11.5(b) of the Pension Plan shall be disregarded in
determining each Participant's Nonqualified Plan Hypothetical Benefit and
Pension Plan Hypothetical Benefit (and Hypothetical Death Benefit) under this
Nonqualified Plan.

ARTICLE V

SPECIAL RULES APPLICABLE TO
LUMP SUM DISTRIBUTIONS AND INSTALLMENTS

5.1 ENTIRE PENSION PLAN BENEFIT PAID IN A LUMP SUM. Notwithstanding
Article IV, if a Participant receives his entire Pension Plan benefit in the
form of a lump sum, the Nonqualified Percentage shall be calculated as of the
First Starting Date and shall never change.

5.2 NONQUALIFIED PLAN BENEFIT PAID IN A LUMP SUM. Notwithstanding
Article IV, the following rules shall apply if a Participant elects to
receive his Nonqualified Plan benefit in the form of an immediate lump sum.
First, the Nonqualified Percentage shall be calculated in accordance with
Section 4.1(a) and (b), except that it shall be calculated as of the First
Starting Date and shall never change. For purposes of the preceding
sentence, if the Participant's Annuity Starting Date under the Pension Plan
is more than sixty (60) days after his Commencement Date, the Participant's
benefits under this Nonqualified Plan shall be calculated as if the
Participant elected a single life annuity under the Pension Plan (if the
Participant is not married on the First Starting Date) or as a 50% joint and
survivor annuity under the Pension Plan (if the Participant is married on the
First Starting Date), in each case commencing at age 65 or the First Starting
Date, whichever produces the lower Nonqualified Percentage, based on the Code
Section 415 limits in effect on the date of Eligible Separation. Second,
notwithstanding Sections 4.1(c) and (d), the benefit under this Nonqualified
Plan shall be equal to the Nonqualified Percentage multiplied by a lump sum
Nonqualified Plan Hypothetical Benefit, which is defined as set forth below.
The lump sum Nonqualified Plan Hypothetical Benefit shall be

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<PAGE>

computed as of the date of the Participant's Eligible Separation and shall
equal the greater of the following amounts:

(a) If the Participant has a pension under (i) Article V-A of the
Pension Plan and he is not SPE or (ii) Article V-B of the Pension Plan that
is not a service pension, a hypothetical Normal Retirement Pension under
Article V-A or V-B as applicable of the Pension Plan payable at age 65 shall
be calculated by assuming Code Sections 401(a)(17) and 415 (and the Plan
provisions implementing such Code sections) did not apply and Compensation
under the Nonqualified Plan were substituted for compensation under the
Pension Plan. If the Participant has a pension under (i) Article V-A of the
Pension Plan and he is SPE or (ii) Article V-B of the Pension Plan and is
eligible for a service pension in accordance with Section 5B.1 of the Pension
Plan, a hypothetical immediate annuity commencing on the First Starting Date
shall be calculated under that Section by assuming that Code Sections
401(a)(17) and 415 (and the Plan provisions implementing such Code sections)
did not apply and Compensation under the Nonqualified Plan were substituted
for compensation under the Pension Plan. For purposes of calculating the
lump sum Nonqualified Plan Hypothetical Benefit, the foregoing hypothetical
Normal Retirement Pension or immediate annuity, as applicable, under Article
V-A or V-B, as applicable, of the Pension Plan shall be converted into a lump
sum based on the following factors:

(i) The interest rate used for this purpose shall equal:

(A) 65% of the average yield on 30-Year Treasury Bonds as
released by the Federal Reserve Board for the five business days
immediately preceding the First Starting Date for Participants who
have an Eligible Separation prior to August 1, 1997; or

(B) 65% of the average yield on 30-Year Treasury Bonds as
released by the Federal Reserve Board for the business days occurring
during the 30-day calendar period ending on the day before the date
of Eligible Separation for Participants who have an Eligible
Separation on or after August 1, 1997.

(ii) Mortality shall be based on the 1983 Group Annuity
Mortality Table, weighted 80% for males and 20% for females.

The Administrator shall use such other actuarial assumptions in calculating
the present value of a Participant's benefit for the purpose of determining
the amount of a lump sum distribution as it shall determine in its sole
discretion.

(b) A hypothetical Defined Lump Sum under Article V-D or Article
V-E, as applicable, of the Pension Plan shall be calculated by assuming Code
Sections 401(a)(17) and 415 (and the Plan provisions implementing such Code
sections) did not apply and Compensation under the Nonqualified Plan were
substituted for compensation under the Pension Plan. For purposes of
calculating the lump sum Nonqualified Plan Hypothetical Benefit, the
resulting hypothetical Defined Lump Sum under Article V-D or

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<PAGE>

Article V-E, as applicable of the Pension Plan shall be multiplied by 1.35.

5.3 DEFERRAL OF LUMP SUM DISTRIBUTION. Notwithstanding Article IV, if
a Participant elects payment of his Nonqualified Plan benefit in the form of
a lump sum and defers payment of such benefit pursuant to Section 3.2(b), the
Nonqualified Plan Hypothetical Benefit shall not be computed by calculating
the lump sum that would be payable under the Pension Plan as of the
Commencement Date. Instead, the Nonqualified Plan benefit shall be
calculated in accordance with Section 5.2 above as of the Participant's
Eligible Separation and increased with interest from the date of the Eligible
Separation to the Commencement Date at an annual rate equal to:

(a) The yield on 10-year Treasury Notes on the date of the
Eligible Separation as released by the Federal Reserve Board plus one percent
during any period from the date of Eligible Separation to December 31, 1997;
and

(b) For any portion of a Plan Year occurring on or after January
1, 1998, the average yield on 5-year Treasury Notes as released by the
Federal Reserve Board on the business days occurring during December prior to
such Plan Year. This rate shall be revised each year for all deferrals,
including deferrals from prior years.

5.4 SPECIAL RULES FOR PARTICIPANTS WHO ELECT A PARTIAL LUMP SUM OPTION
UNDER THE PENSION PLAN. This Section 5.4 applies to an X Participant who
elects a partial lump sum option under the Pension Plan.

(a) Unless the Participant elects a lump sum under the
Nonqualified Plan, the Commencement Date may not be prior to the date the
annuity under the Pension Plan commences.

(b) The Pension Percentage shall equal the sum of two
percentages. The first shall equal the actual lump sum paid by the Pension
Plan divided by the Pension Plan Hypothetical Benefit, calculated as if the
ENTIRE benefit were paid as a lump sum in the year the Pension Plan lump sum
is paid. This amount shall not change in subsequent years. The second
percentage shall equal the actual annual annuity paid by the Pension Plan
divided by the Pension Plan Hypothetical Benefit for that year, calculated as
if the ENTIRE benefit were paid in the same form of annuity elected under the
Pension Plan. This amount may change in subsequent years. (If the
Participant elected a lump sum under this Plan, the second percentage shall
be calculated at the Eligible Separation in accordance with Section 5.2 and
shall never change.) The Nonqualified Percentage for each year shall equal
100 percent (or one) minus the Pension Percentage for the year as calculated
above.

5.5 NO PARTIAL LUMP SUM OPTION UNDER THE NONQUALIFIED PLAN. A
Participant may not elect a partial lump sum option under the Nonqualified
Plan.

5.6 EXAMPLE. This Section 5.6 illustrates how the lump sum
calculations apply. The basic assumptions are set forth in Section 4.5.

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<PAGE>

(a) Assume the Participant commences Pension Plan benefits in the
form of a single life annuity at age 62 and a lump sum under the Nonqualified
Plan at age 62. First, as set forth in Section 4.5(c)(i), the Nonqualified
Percentage is 1/6. Second, the hypothetical $2.2 million lump sum amount
that would be paid under the Pension Plan (if Code Sections 401(a)(17) and
415 were disregarded) is multiplied by 1.35 to provide a Nonqualified Plan
Hypothetical Benefit of $2.97 million. Finally, the Nonqualified Plan lump
sum benefit is 1/6 of $2.97 million, or $495,000.

(b) Now assume the Participant is single, defers his Pension Plan
benefits and elects a lump sum under the Nonqualified Plan at age 65. First,
as set forth in Section 5.2, because the Participant defers his Pension Plan
benefits, the Nonqualified Percentage is the lesser of the Nonqualified
Percentage which would result if the Participant is deemed to have elected a
life annuity at age 65 under the Pension Plan or the Nonqualified Percentage
which would result if the Participant is deemed to have elected a life
annuity at the First Starting Date (age 62 in this example) under the Pension
Plan, regardless of the Participant's actual elections, and is based on the
current Code Section 415 limits. Thus, the Nonqualified Percentage is the
lesser of:

(i) 25% [1 minus (150/200)] based on the assumption that the
Participant commences Pension Plan benefits in the form of a single life
annuity at age 65; or

(ii) 1/6 [1 minus (120/144)] based on the assumption that the
Participant commences Pension Plan benefits in the form of a single life
annuity at age 62.

Since, under Section 5.2, the lower percentage is used as the Nonqualified
Percentage, the Nonqualified Percentage would be 1/6. This Nonqualified
Percentage is then applied to the Nonqualified Plan Hypothetical Benefit of
$2.97 million calculated in Section 5.6(a) which results in a Nonqualified
Plan lump sum benefit at age 62 of $495,000. This amount would then be
increased with interest to age 65 pursuant to Section 5.3. Note that the
amount would be different if the Participant were married at age 62 since the
Nonqualified Percentage would be calculated by assuming the Participant
elected a 50% joint and survivor annuity under the Pension Plan.

(c) Now assume the Participant elected a lump sum under the
Pension Plan at age 62 upon Eligible Separation and a lump sum under the
Nonqualified Plan. Assume that due to Section 415, the Defined Lump Sum
payable from the Pension Plan is limited to $1.5 million. Accordingly, the
Nonqualified Percentage is 7/22 [1 minus 1,500,000/2,200,000)]. If the
Nonqualified Plan lump sum is also paid at age 62, it equals $2.97 million
(as determined in Section 5.6(a)) times 7/22, or $945,000. If the
Nonqualified Plan lump sum is paid at age 65, the amount of $945,000 is
increased with interest from age 62 to age 65 in accordance with Section 5.3.

(d) Now assume the Participant is single, elects a partial lump
sum of $750,000 under the Pension Plan at age 62 and defers the balance of
his pension under the Pension Plan. He also elects a lump sum under the
Nonqualified Plan at age 65.

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<PAGE>

Two Pension Percentages are calculated, one for each form of benefit. The
lump sum percentage is 7.5/22. The annuity percentage is calculated pursuant
to Section 5.2 and equals 5/12 [the greater of 4.5/12 (75,000/200,000, which
is the percentage assuming payment is at age 65) or 5/12 (60,000/144,000,
which is the percentage assuming payment is at age 62)]. The Nonqualified
Percentage equals 1 minus 7.5/22 minus 5/12. The Nonqualified Plan benefit is
the Nonqualified Percentage times $2.97 million, or $720,000 payable at age
62. This amount is increased with interest to age 65 pursuant to Section 5.3.

5.7 SPECIAL RULES FOR PARTICIPANTS ELECTING INSTALLMENTS.
Notwithstanding any other provision of this Plan to the contrary, if a
Participant elects payment of his Nonqualified Plan benefit in the form of
Installments, each Installment shall be calculated as follows:

(a) The Participant shall be deemed to have an account balance
which initially shall be equal to the amount that would have been payable
under this Plan if the Participant had elected payment under this
Nonqualified Plan in the form of a lump sum distribution to be paid on the
same date as the actual Commencement Date.

(b) The initial account balance shall be divided by the number of
annual Installments elected by the Participant to determine the first annual
Installment due on the Commencement Date.

(c) The account balance shall then be: (i) debited on the date of
each annual Installment by the amount of such Installment; and (ii) credited
with interest at the rates set forth in Section 5.3(b) (taking into account
the rate change as of January 1) from the date of such annual Installment to
the date of the next Installment.

(d) The account balance as of the date of the next Installment
shall be divided by the remaining number of annual Installments elected by
the Participant to determine the amount of such Installment.

(e) Subsections (c) and (d) shall be repeated each year to
determine each subsequent Installment.

(f) If a Participant who has elected payment of benefits under
this Plan in the form of Installments dies after the Commencement Date, but
before the payment of all Installments, any unpaid Installments shall be paid
to the deceased Participant's Beneficiary. Should the Beneficiary die before
payment of all remaining Installments, any remaining account balance shall be
paid to the Beneficiary's estate.

5.8 INCONSISTENT PROVISIONS. The provisions of this Article V shall
take precedence over any obviously inconsistent provisions in Article III or
Article IV (other than Sections 4.1(f) or 4.6).

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<PAGE>

ARTICLE VI

PRE-RETIREMENT DEATH BENEFITS

This Article VI describes the pre-retirement death benefits payable if
the Participant dies prior to the Commencement Date. For purposes of this
Article VI, the death benefits set forth in Article VII of the Pension Plan
and in Article VII of this Plan shall be ignored. If a Participant dies
after the Commencement Date, but before his Annuity Starting Date under the
Pension Plan, no benefit is payable under this Article VI.

6.1 DEATH OF PARTICIPANT PRIOR TO ANNUITY STARTING DATE UNDER THE
PENSION PLAN. This Section 6.1 applies if (i) a Participant dies while
employed by the Company or a Subsidiary or (ii) a Participant dies after his
Eligible Separation but prior to both his Commencement Date under this Plan
and his Annuity Starting Date under the Pension Plan. The Participant's
pre-retirement death benefits shall be paid in the same form and at the same
time as the pre-retirement death benefits under the Pension Plan; in
addition, his Beneficiary under the Nonqualified Plan shall be the same as
his beneficiary under the Pension Plan. The amount of the pre-retirement
death benefit from the Nonqualified Plan shall equal the excess, if any, of
the Hypothetical Death Benefit (as defined below) over the amount of
pre-retirement death benefits which are payable under the Pension Plan. The
Hypothetical Death Benefit shall equal the amount of pre-retirement death
benefit that would be payable from the Pension Plan (based on the form and
commencement date elected) if Code Sections 401(a)(17) and 415 (and the Plan
provisions implementing such Code Sections) did not apply, and Compensation
under the Nonqualified Plan were substituted for compensation under the
Pension Plan. If a lump sum (rather than an annuity) is payable, such excess
amount (as opposed to the Hypothetical Death Benefit) shall be calculated by
(i) converting the excess hypothetical Qualified Preretirement Survivor
Annuity under Article V-A or V-B of the Pension Plan into a lump sum using
the factors in Section 5.2(a)(i) and (ii), or (ii) multiplying the excess
hypothetical Defined Lump Sum by 1.35 as set forth in Section 5.2(b),
whichever is applicable.

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<PAGE>

6.2 DEATH OF PARTICIPANT AFTER ANNUITY STARTING DATE UNDER THE PENSION
PLAN BUT PRIOR TO COMMENCEMENT DATE UNDER THE NONQUALIFIED PLAN. This
Section 6.2 applies if a Participant dies after the Annuity Starting Date
under the Pension Plan but prior to the Commencement Date under this
Nonqualified Plan. In that case, the pre-retirement death benefits from the
Nonqualified Plan shall automatically be paid as an immediate lump sum. The
amount of such lump sum shall be calculated under Article V, as if the
Participant did not die but had instead elected a lump sum benefit from the
Nonqualified Plan payable on the date of his death. The pre-retirement lump
sum death benefit under this Section shall be paid to the beneficiary of the
survivor annuity under the Pension Plan. If no survivor annuity is payable
under the Pension Plan (either due to the form of Pension Plan benefit
elected or the fact that the beneficiary predeceases the Participant), then
the pre-retirement lump sum death benefit under this Section shall be paid to
the Participant's estate, or if there is no such estate to the person who
would receive such benefit under the rules set forth in Section 5D.5(g) of
the Pension Plan. After the date of death, no cost of living adjustments
under Code Section 415 shall be made to the survivor annuity payable under
the Pension Plan.

6.3 NO ELECTION OF BENEFICIARY OR FORM OF PAYMENT. A Participant may
not elect a Beneficiary or form of pre-retirement death benefit under this
Nonqualified Plan. All pre-retirement death benefits shall be paid pursuant
to Sections 6.1 through 6.3.

ARTICLE VII

ANCILLARY DEATH BENEFITS

7.1 ELIGIBILITY FOR DEATH BENEFITS. Any Participant who is eligible
for death benefits under Article VII of the Pension Plan shall be a
participant in the death benefit provisions of this Article VII, but only
with respect to the Wages of such Participant on February 28, 1993. Any
individual who became a Participant in the Pension Plan on or after March 1,
1993 shall not be entitled to any death benefits under this Article VII.
Notwithstanding any provision of the Plan to the contrary, the death benefit
payable under Article VII of the Pension Plan and Article VII of this
Nonqualified Plan shall be ignored for purposes of calculating the benefits
described in Articles III through VI and Article VIII of this Nonqualified
Plan.

7.2 AMOUNT OF DEATH BENEFITS.

(a) Upon the payment of a death benefit under Article VII of the
Pension Plan, the Participant shall also receive a death benefit under this
Nonqualified Plan at the same time. The amount of this death benefit shall
equal the excess, if any, of the Hypothetical Death Benefit (as defined
below) over the amount of death benefits which are payable pursuant to
Article VII of the Pension Plan.

(b) The Hypothetical Death Benefit shall equal the death benefit
that would be payable under Article VII of the Pension Plan if Code Sections
401(a)(17) and

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<PAGE>

415 (and the Plan provisions implementing such Code Sections) did not apply,
and Wages under the Nonqualified Plan were substituted for wages under the
Pension Plan. In addition, in the case of a Participant entitled to a death
benefit pursuant to Section 7.1 of the Pension Plan, the Hypothetical Death
Benefit shall be calculated without regard to the $50,000 limitation in
Section 7.1(a) of the Pension Plan and the benefit payable from this
Nonqualified Plan shall be reduced by any amount payable pursuant to Section
7.1(c) of the Pension Plan by a Participating Company or pursuant to any
insurance policy described therein.

(c) This subsection (c) applies only if a death benefit is
payable pursuant to Section 7.3(c) of the Pension Plan and the Participant is
married on his First Starting Date. In that case, the lump sum paid to the
Participant from this Plan under Article VII shall be the greater of the
amount set forth in Section 7.2(a) and the Special Death Benefit, as
described below. First, a Special Hypothetical Death Benefit shall be
calculated; it shall equal the Hypothetical Death Benefit described in
Section 7.2(b) except that it shall be calculated based on the assumptions
set forth in Section 5.2 of the Nonqualified Plan (with the spouse's
mortality based on the 1983 Group Annuity Mortality Table, weighted 20% for
males and 80% for females) and using the actual age of the Participant and
the Participant's spouse instead of the actuarial assumptions set forth in
the Section 7.3(c) of the Pension Plan and Appendix L of the Pension Plan.
Second, the ratio of (i) the actual death benefit paid pursuant to Section
7.3(c) of the Pension Plan (after the application of subsection (e), if
applicable) to (ii) the Hypothetical Death Benefit calculated pursuant to
Section 7.2(b), shall be calculated and expressed as a percentage. Finally,
the Special Death Benefit shall equal the Special Hypothetical Death Benefit
multiplied by a percentage equal to 1 minus the percentage calculated in the
preceding sentence.

(d) Notwithstanding the foregoing, in the case of a Participant
whose Eligible Separation occurred before July 1, 1998, who received his
benefit under the Pension Plan in the form of a lump sum and is receiving his
benefit under this Nonqualified Plan in a form other than a lump sum, Section
7.2(a)-(c) shall not apply and the death benefit under this Article VII shall
be paid at death if the Participant is survived by a beneficiary as defined
in Article VII of the Pension Plan. The amount of such benefit shall be
calculated in the following manner:

(i) The ratio of (A) the death benefit paid under Article VII
of the Pension Plan (after the application of sub-section (e) below, if
applicable), to (B) the Hypothetical Death Benefit, determined in accordance
with Section 7.2(b), shall be calculated and expressed as a percentage.

(ii) The death benefit payable under this Nonqualified Plan
shall equal the Hypothetical Death Benefit, determined under Section 7.2(b)
(assuming the Pension Plan death benefit was paid at death rather than
Eligible Separation), multiplied by a percentage equal to 1 minus the
percentage calculated in paragraph (i) above.

(e) For purposes of sub-sections (c) and (d) above, if the Pension
Plan benefit is limited by the application of Code Section 415, it shall be
assumed that the

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<PAGE>

retirement benefit portion of the Pension Plan benefit is paid prior to the
death benefit portion under Article VII of the Pension Plan benefit so that
the death benefit portion under Article VII is limited first.

7.3 METHOD OF PAYMENT. The death benefits payable under Section 7.2
shall be paid in a lump sum. Except in the case of a death benefit payable
to the Participant (i.e., the Participant is entitled to a death benefit
pursuant to Section 7.3(c) of the Pension Plan), the death benefit hereunder
shall be payable to the beneficiaries who receive such death benefit (or, if
Section 7.2(d) applies, would have received such benefit) pursuant to
Sections 7.4 and 7.5 of the Pension Plan; such payment shall be made within
180 days after the date that the Participant's death is reported to the
Administrator.

7.4 CLAIMS. All claims for death benefits must be made within one
year of the death on which the claim is based. If notice of the existence of
a spouse, child or other dependent relative of a deceased Participant or
pensioner is not given to the Administrator within one year after the
Participant's or pensioner's death, the Administrator shall not be required
to recognize any claim made by or in behalf of any such person.

ARTICLE VIII

DISABILITY BENEFITS

8.1 ELIGIBILITY FOR DISABILITY BENEFIT. A Participant who is entitled
to a disability benefit under Appendix H of the Pension Plan shall also be
entitled to a disability pension under this Nonqualified Plan.
Notwithstanding any provision of the Plan to the contrary, the disability
pension payable under the Pension Plan and under this Nonqualified Plan shall
be ignored for purposes of calculating the benefits and death benefits
described in Articles III through VII of this Nonqualified Plan.

8.2 AMOUNT OF DISABILITY BENEFIT. The amount of the disability
payable hereunder shall be the excess of (x) the Hypothetical Disability
Pension over (y) the sum of (i) actual amount of disability pension payable
under Appendix H of the Pension Plan, including any amount paid by the
Company or Participating Company pursuant to Section 3.4 of Appendix H of the
Pension Plan and (ii) any long term disability benefit paid through a
Company-provided plan or policy, including insurance or otherwise. The
Hypothetical Disability Pension equals the disability pension that would be
paid under Appendix H of the Pension Plan if Code Sections 401(a)(17) and 415
(and the Plan provisions implementing such Code sections) did not apply.

8.3 METHOD OF PAYMENT. The disability payable hereunder shall be paid
at the same time and in the same form as the disability pension under
Appendix H of the Pension Plan is paid. Such disability pension under this
Nonqualified Plan shall cease at the time the disability pension under
Appendix H of the Pension Plan ceases.

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<PAGE>

ARTICLE IX

ADMINISTRATION

9.1 ADMINISTRATOR RESPONSIBILITY. The Administrator shall have the
administrative responsibilities set forth below:

(a) The Administrator shall have the specific powers elsewhere
herein granted to it and shall have such other powers as may be necessary to
enable it to administer the Nonqualified Plan, except for powers herein
granted or provided to be granted to others.

(b) The Administrator shall have the full and complete power to
interpret the terms of this Nonqualified Plan, to determine the eligibility
of Employees to participate in this Nonqualified Plan and to determine the
amount of benefits payable to any Participant. The Administrator shall also
have full and complete power to determine the benefit payable if the specific
facts applicable to the Participant or his beneficiary are not addressed in
this document; such determination shall be made, by the Administrator in its
sole discretion, on a basis reasonably consistent with the purpose of, and
principles in, this Plan. In general, subject to the different actuarial
assumptions in this Plan and the Pension Plan, the Administrator shall
calculate benefits under this Plan so that the sum of the aggregate benefits
from this Plan and the Pension Plan do not exceed the aggregate benefits that
would be paid under the Pension Plan if Code Sections 401(a)(17) and 415 (and
the Plan provisions implementing such Code sections) did not apply and
Compensation under the Nonqualified Plan were substituted for compensation
under the Pension Plan.

9.2 CLAIMS PROCEDURE. The review and appeal procedure for a
Participant who has a claim under the Nonqualified Plan shall be the same
procedures set forth in Section 13.2 of the Pension Plan; Sections
13.2(a)-(d) are hereby incorporated by reference (substituting the
Administrator under this Plan for the Committee under the Pension Plan).

9.3 REVIEW OF ADMINISTRATOR DECISIONS. The Administrator shall
determine conclusively for all parties all questions arising in the
administration of the Nonqualified Plan, and any decision of the
Administrator shall not be subject to further review, except as required by
applicable law.

9.4 DELEGATION OF RESPONSIBILITIES. The Administrator may delegate
responsibilities for the operation and administration of the Nonqualified
Plan consistent with the Nonqualified Plan's terms, including delegation of
responsibilities to Participating Companies. The Administrator may designate
in writing other persons to carry out its responsibilities under the
Nonqualified Plan, and may employ persons to advise it with regard to any
such responsibilities.

9.5 OTHER PROVISIONS. The expenses of the Administrator shall be
borne by

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<PAGE>

the Company. The Administrator shall be the agent of the Plan for service of
legal process.

ARTICLE X

GENERAL PROVISIONS

10.1 RIGHTS TO BENEFIT,

(a) The Participant, spouse or beneficiary of the Participant,
shall have no right to any benefit under this Nonqualified Plan except as may
be provided by the Participating Company employing the Participant. Where a
Participant's Term of Employment has included service with more than one
Participating Company, the last such Participating Company to employ him
prior to his termination of employment shall be solely responsible for the
full benefit under this Plan. No Participant, spouse or Beneficiary shall
have any claim or interest in (i) the assets of the Participating Company
liable for the payments prior to the time such assets are payable to such
person under the terms of this Nonqualified Plan or (ii) the assets of any
other Participating Company at any time. However, if the Company establishes
a "rabbi trust" with respect to this Plan, the Participating Company shall
have no obligation to pay any benefits under this Nonqualified Plan to the
extent such benefits are paid from such trust.

(b) In circumstances specified in Section 10.3 below, benefits
previously awarded may be discontinued in the sole discretion of the
Participating Company or the Administrator.

(c) In addition to the other prerequisites for a benefit set
forth herein, an individual, or his surviving spouse or beneficiary, as
applicable, shall only be eligible for a benefit if the individual is a
Participant at the time of Eligible Separation.

10.2 SOURCE OF PAYMENTS. Except as set forth in Sections 10.1(a) or
10.10(a)(iii), nothing contained in this Nonqualified Plan or any action
taken pursuant to the provisions of this Nonqualified Plan shall create or be
construed to create a trust of any kind. Nothing contained in this
Nonqualified Plan or any action taken pursuant to the provisions of this
Nonqualified Plan shall create or be construed to create a fiduciary
relationship between the Company (or any Participating Company) and any
Participant, his beneficiary or any other person. The Nonqualified Plan is
intended to be "unfunded" for purposes of the Code and ERISA and shall be
interpreted and administered in a manner consistent with this intention. To
the extent that any person acquires a right to receive payments under this
Nonqualified Plan, such right shall be no greater than the right of any
unsecured general creditor of the Participating Company that owes the
payment, as set forth in Section 10.1.

10.3 FORFEITURE OF BENEFITS. All benefits for which a Participant
would be otherwise eligible hereunder may, at the sole discretion of the
Administrator, be forfeited

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<PAGE>

under any of the following circumstances:

(a) The Participant discloses "confidential information," except
under circumstances where the Company or a court of competent jurisdiction
has approved or required such disclosure. For purposes of this Section
10.3(a), "confidential information" means and includes, without limitation,
any confidential, legal, financial, marketing, business, technical, or other
information, including specifically but not exclusively, information that the
Participant prepared, caused to be prepared, or received in connection with
the Participant's employment with the Company (or its Subsidiaries), such as,
management and business plans, business strategies, software, software
evaluations, trade secrets, personnel information, marketing methods and
techniques, and any of the above-recited information as it relates to the
Company (or its Subsidiaries) that shall have been obtained and/or learned
during his or her employment and that shall not be public knowledge. This
definition does not apply to (i) information or knowledge that already is or
subsequently may come into the public domain after the termination of
employment other than by way of unauthorized disclosure by the Participant,
(ii) information or knowledge that the Participant is required to disclose by
order of a court or governmental agency after the Participant provides
advance notice to the Company (or its Subsidiaries) at least ten (10)
calendar days prior to such disclosure (or, if the Participant is so required
to make such disclosure within less than ten (10) calendar days of receipt of
such an order, after the Participant provides timely advance notice to the
Company (or its Subsidiaries)) to allow the Company (or its Subsidiaries) to
take legal action with respect to the matter, or (iii) information that the
Participant learns from a third party not known by the Participant, after due
inquiry, to be under a confidentiality agreement with the Company (or its
Subsidiaries).

(b) Determination by the Board of a Participating Company in its
sole discretion that a Participant is engaged in misconduct in connection
with his employment with such Participating Company.

(c) The Participant, without the consent of his employing
Participating Company or the Participating Company paying him a benefit
hereunder, at any time is employed by, becomes associated with, renders
service to, or owns an interest in any business that is competitive with the
Company or one of its Subsidiaries or with any business in which the Company
or one of its Subsidiaries has a substantial interest (other than as a
shareholder with a non-substantial interest in such business) as determined
by the board of such Participating Company.

10.4 ASSIGNMENT OR ALIENATION. The benefits under this Nonqualified
Plan shall not be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge by any Participant, spouse or
beneficiary, and any attempt to do so shall be null and void.

10.5 DETERMINATION OF ELIGIBILITY. In all questions relating to
eligibility for any benefit hereunder, or relating to Term of Employment and
rates of pay for determining benefits, the decision of the Administrator,
based upon this Nonqualified Plan and upon the records of the Participating
Company last employing such individual, and insofar as

22
<PAGE>

permitted by applicable law, shall be final.

10.6 PAYMENTS TO OTHERS. If any person entitled to a payment under the
Nonqualified Plan is a minor, or if the Administrator determines that any
such person is incapacitated by reason of physical or mental disability,
whether or not legally adjudicated an incompetent, the Administrator shall
have the power to cause the payments becoming due to such person to be made
to another for his benefit without responsibility of the Administrator to see
to the application of such payments. Payments made pursuant to such power
shall operate as a complete discharge of the Nonqualified Plan, the Company
and the Administrator.

10.7 NO GUARANTEE OF EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Participant the right to continue in the
employ of the Company or any Participating Company as an executive or in any
other capacity.

10.8 NATURE OF BENEFITS. Any benefits payable under this Nonqualified
Plan shall not be deemed to be salary or other compensation to the employee
for the purpose of computing benefits to which he may be entitled under any
pension plan or other arrangement of the Company or any Participating Company
for the benefit of its employees.

10.9 PLAN AMENDMENT AND TERMINATION. The Company, through resolution
of the Administrator, retains the right to make amendments to the
Nonqualified Plan in its sole and absolute discretion, except that the
Administrator may not make any amendment which would affect the level of
benefits under the Nonqualified Plan. The Company, through resolution of the
Human Resources Committee of the Board of Directors, retains the right to
make amendments to the Nonqualified Plan which would affect the level of
benefits under the Nonqualified Plan and to terminate the Nonqualified Plan
in whole or in part in its sole and absolute discretion. Each Participating
Company retains the right to withdraw from this Nonqualified Plan, at any
time, for any reason, with or without notice. Upon termination of the
Nonqualified Plan, payments shall be made to Participants and their
beneficiaries as they become due under the terms of the Nonqualified Plan,
but no participant shall accrue any additional benefits after the effective
date of the termination. In order to determine a Participant's benefit, (i)
following the effective date of termination of this Nonqualified Plan there
shall be no increases in any Participant's Nonqualified Plan Hypothetical
Benefit or Pension Plan Hypothetical Benefit (or Hypothetical Death Benefit)
and (ii) the Pension Percentage shall equal the percentage (not in excess of
100 percent) obtained by comparing the actual Pension Plan payment (as set
forth in Section 4.1(b)(i)), including any accruals earned after the date of
this Plan's termination, to the Pension Plan Hypothetical Benefit, as
modified by the preceding clause (i).

10.10 CHANGE IN CONTROL.

(a) Upon a "Change in Control" of the Company, as defined in the
Company's Executive Deferred Compensation Plan, the following provisions
shall be applicable:

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<PAGE>

(i) Each Participant in this Nonqualified Plan may elect, no
later than thirty days after the Change in Control, to receive (within sixty
days after the Change in Control) a single lump sum payment equal to 94
percent of the present value of his benefits under this Nonqualified Plan (as
set forth in subsection (b)) as of the date of the Change in Control. A
Participant making such election shall permanently forfeit the remaining six
percent of the present value of his benefits under this Nonqualified Plan (as
set forth in subsection (b)) as of the date of the Change in Control and the
Company shall have no further liability to the Participant with respect to
benefits accrued under this Nonqualified Plan for periods prior to the Change
in Control.

(ii) Without the written consent of each affected
Participant, this Nonqualified Plan may not be amended during the period
commencing on the date of the Change in Control and ending three years
thereafter in any way that would cause a Participant to receive lower
benefits under this Nonqualified Plan than he would have received if such
amendment had not been made.

(iii) The Company has established an irrevocable "rabbi trust"
that may provide a source of funds to satisfy the Company's liability under
this Nonqualified Plan. Upon a Change in Control, the Company shall transfer
to the trustee of such trust an amount equal to the present value of all
benefits under this Nonqualified Plan as of the date of the Change in
Control. The trustee shall be a bank or other entity that may be granted
corporate trustee powers under applicable law. The Company shall have no
obligation to pay any benefits under this Nonqualified Plan to the extent
such benefits are paid from such trust.

(b) For purposes of this Section 10.10, the present value of the
benefits under the Plan shall be determined as follows:

(i) In the case of a Participant or Beneficiary receiving
benefits under this Plan, the present value of the remaining benefits payable
in the future shall be calculated using the assumptions set forth in Section
5.2.

(ii) In the case of any other Participant, the present value
shall be that lump sum payment which would be made under this Plan if the
Participant terminated employment on the date of the Change in Control and
elected a Commencement Date on the next day. For purposes of the preceding
sentence, if the Participant's Annuity Starting Date under the Pension Plan
is more than sixty (60) days after the date of the Change in Control, the
Participant's benefits under this Nonqualified Plan shall be calculated as if
the Participant elected a single life annuity under the Pension Plan (if the
Participant is not married on the Plan termination date) or a 50% joint and
survivor annuity under the Pension Plan (if the Participant is married on the
Plan termination date), in each case commencing at age 65 or the date of the
Change in Control, whichever produces the lower Nonqualified Percentage,
based on the Code Section 415 limits in effect on the date of the Change in
Control.

24
<PAGE>

who is not a Vested Participant under the Pension Plan at the time of the
Change in Control shall be treated under this Nonqualified Plan (but not
under the Pension Plan) as if he were a Vested Participant under both this
Nonqualified Plan and the Pension Plan with respect to benefits accrued as of
the Change in Control, with the result that the Participant shall receive:

(i) (A) if the Participant makes the election described in
Section 10.10(a)(i), the amount provided under that Section to be paid within
sixty days following the Change in Control; or (B) if the Participant does
not make such election and is still not a Vested Participant under the
Pension Plan at the time of his Eligible Separation, a lump sum to be paid
within sixty days following his Eligible Separation equal to the amount that
would be payable under this Nonqualified Plan if the Participant were a
Vested Participant under the Pension Plan, had an Eligible Separation on the
date of the Change in Control, and elected payment under this Nonqualified
Plan in the form of a lump sum (for this purpose, the Pension Percentage
shall be calculated in accordance with the second sentence of Section
10.10(b)(ii)), plus interest on such amount at the rate set forth in Section
5.3(b) from the date which is 60 days after the date of the Change in Control
to the date of payment; and

(ii) within sixty days following the end of the Plan Year in
which his Eligible Separation occurs, an additional lump sum equal to the
lump sum that would have been payable under the Pension Plan as if he were
vested and incurred an Eligible Separation as of the date of the Change in
Control, plus interest on such amount at the rate set forth in Section 5.3(b)
from the date which is 60 days after the date of the Change in Control to the
date of payment, provided that no payment shall be made pursuant to this
clause (ii) if the Participant is a Vested Participant under the Pension Plan
at the end of the year in which his Eligible Separation occurs.

If the Participant does not make the election described in Section
10.10(a)(i) and is a Vested Participant under the Pension Plan at the time of
his Eligible Separation, the benefits otherwise payable under this Plan shall
be paid; no special rules apply. This Section 10.10(c) shall not affect the
determination of the Participant's benefit under the Pension Plan.

(d) If benefits under this Plan are paid to a Participant either
because the Participant makes the election described in Section 10.10(a)(i)
or because the Participant receives benefits after an Eligible Separation
pursuant to Section 10.10(c) (the amount of such benefits shall be the "First
Payment"), and the Participant subsequently becomes entitled to additional
benefits under this Nonqualified Plan (either because he continues to be
employed or is later reemployed) (a "Second Payment"), the following rules
shall apply:

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<PAGE>

sum of the First Payment and, if applicable, the amount forfeited under
Section 10.10(a)(i) increased with interest on such sum at the rate set forth
in Section 5.3(b) credited annually from the date of the First Payment to the
date of the Second Payment. If the lump sum or Installments are deferred,
such net amount shall be increased with interest in accordance with Section
5.3(b).

(ii) If the Participant elects to receive the Second Payment
in a form other than a lump sum or Installments, the Participant's monthly
benefit shall equal the amount determined under the following formula:

C x (1 - B/A)

where: C is the amount of the monthly benefit to which the Participant would
have been entitled under this Plan in the form elected by the Participant had
the First Payment not been made; and A and B are defined in accordance with
the preceding paragraph (i).

(iii) If the Participant received a payment pursuant to
Section 10.10(c)(ii), then for purposes of the preceding paragraphs (i) and
(ii), B shall equal the sum of the amount set forth in clause (B) of Section
10.10(d)(i) plus the lump sum made pursuant to Section 10.10(c)(ii),
increased with interest at the rate set forth in Section 5.3(b) credited
annually from the date of such payment to the date of the Second Payment.

(e) Notwithstanding the foregoing, no benefits shall be paid
pursuant to this Section 10.10 unless the Participant acknowledges that he
will not be entitled to any cost-of-living adjustments provided under Code
Section 415 under the Pension Plan after the earlier of the Change in Control
or the Participant's Eligible Separation.

10.11 GENDER AND NUMBER. Whenever used herein, words in any gender
shall be deemed to include the other genders, and the singular shall be
deemed to include the plural and vice versa, unless the context expressly
indicates otherwise.

10.12 GOVERNING LAW. This Nonqualified Plan shall be construed and
enforced in accordance the laws of the State of Colorado, except to the
extent preempted by Federal law.

Dated: __________, 1998

MEDIAONE GROUP, INC.

By
-----------------------------------
Its
-----------------------------------

<PAGE>

MEDIAONE GROUP, INC.
MID-CAREER PENSION PLAN

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Administrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Board or Board of Directors. . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Commencement Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Final Average Compensation . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Installments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Mid-Career Pension Credits . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.13 Short Term Incentive Award . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE II ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1 Eligibility to Participate . . . . . . . . . . . . . . . . . . . . . . . 4

ARTICLE III PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . 5

3.1 Commencement Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Lump Sum Distributions and Installments. . . . . . . . . . . . . . . . . 5
3.3 Election of Form of Benefit. . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Default Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Suspension of Benefit Payments . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE IV RETIREMENT BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . 7

4.1 Eligibility for Service Pension Benefit. . . . . . . . . . . . . . . . . 7
4.2 Amount of Service Pension Benefit. . . . . . . . . . . . . . . . . . . . 7
4.3 Early Retirement Discount. . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Eligibility for Deferred Vested Benefit. . . . . . . . . . . . . . . . . 8
4.5 Amount of Deferred Vested Benefit. . . . . . . . . . . . . . . . . . . . 8
4.6 Not Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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<PAGE>

ARTICLE V SPECIAL RULES APPLICABLE TO LUMP SUM DISTRIBUTIONS AND
INSTALLMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5.1 Plan Benefit Paid in a Lump Sum. . . . . . . . . . . . . . . . . . . . . 9
5.2 Deferral of Lump Sum Distribution. . . . . . . . . . . . . . . . . . . . 10
5.3 No Partial Lump Sum Option Under the Plan. . . . . . . . . . . . . . . . 10
5.4 Special Rules for Participants Electing Installments . . . . . . . . . . 10
5.5 Inconsistent Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE VI NO DISABILITY BENEFIT OR ANCILLARY DEATH BENEFITS . . . . . . . . . 11

6.1 No Disability Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 No Ancillary Death Benefits. . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE VII PRE-RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . 11

7.2 Qualified Preretirement Survivor Annuity . . . . . . . . . . . . . . . . 11
7.2 No Other Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE VIII ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 12

8.1 Administrator Responsibility . . . . . . . . . . . . . . . . . . . . . . 12
8.2 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8.3 Review of Administrator Decisions. . . . . . . . . . . . . . . . . . . . 12
8.4 Delegation of Responsibilities . . . . . . . . . . . . . . . . . . . . . 12
8.5 Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE IX GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . 13

9.2 Source of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.3 Forfeiture of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 13
9.4 Assignment or Alienation . . . . . . . . . . . . . . . . . . . . . . . . 14
9.5 Determination of Eligibility . . . . . . . . . . . . . . . . . . . . . . 14
9.6 Payments to Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.7 No Guarantee of Employment . . . . . . . . . . . . . . . . . . . . . . . 15
9.8 Nature of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.9 Plan Amendment and Termination . . . . . . . . . . . . . . . . . . . . . 15
9.10 Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.11 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.12 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>

ii
<PAGE>

MEDIAONE GROUP, INC.
MID-CAREER PENSION PLAN

PREAMBLE

I. Predecessor Plan History.

U S WEST, Inc., a Delaware corporation ("Old U S WEST"),
established the U S WEST Mid-Career Pension Plan (the "Predecessor Plan")
effective January 1, 1984 to restore to certain of its employees and to the
employees of certain of its subsidiaries various pension benefits to which
they would have been entitled if they had become employees at an earlier
stage of their careers. Effective January 1, 1988 and January 1, 1997, the
Predecessor Plan was amended and restated.

II. Corporate History.

III. Current Plan.

In connection with the foregoing separation, Old U S WEST
determined that it was desirable to transfer sponsorship of the Predecessor
Plan to USW-C, Inc. In addition, MediaOne Group, Inc. adopted this Plan to
accept liabilities with respect to Media Participants, as set forth in the
Employee Matters Agreement between Old U S WEST and USW-C, Inc.

This Plan document sets forth the terms and conditions of the Plan,
effective as of the Separation Time (except as otherwise noted), and reflects
the transfer of liabilities of all Media Participants to this Plan from the
Predecessor Plan. No benefits will be paid under this Plan to Communications
Participants after the Separation Time unless, in accordance with the
Employee Matters Agreement, a Terminated Communications

1
<PAGE>

Employee is reclassified as a Terminated Media Employee (as such terms are
defined in the Employee Matters Agreement).

Except as otherwise provided herein, the provisions of this Plan
apply solely to an Employee of a Participating Company whose Eligible
Separation occurred on or after the Separation Time. If a Media
Participant's Eligible Separation occurred prior to the Separation Time, that
person is entitled to benefits under this Plan in accordance with the terms
of the Predecessor Plan as the Predecessor Plan existed on the date of the
Employee's Eligible Separation.

ARTICLE I

DEFINITIONS

Capitalized terms in this Plan which are also defined in the Pension
Plan shall have the meaning set forth in the Pension Plan, unless otherwise
provided below:

1.1 "ADMINISTRATOR" shall mean the Senior Vice President of Human
Resources of the Company or his or her duly-authorized delegate, or, in the
event the Plan benefits of the Senior Vice President, Human Resources are
directly or indirectly impacted by any claim for benefits, the Human
Resources Committee of the Board.

1.2 "BENEFICIARY" means, as the context warrants, (i) the contingent
annuitant designated by a Participant with respect to a pension benefit
hereunder or (ii) the person or persons designated to receive any unpaid
Installments after the Participant's death.

1.3 "BOARD" or "BOARD OF DIRECTORS". shall mean the Board of Directors
of the Company.

1.4 "COMMENCEMENT DATE" is defined in Section 3.1.

1.5 "COMPANY" shall mean MediaOne Group, Inc., a Delaware corporation
and any successor thereto. Up and until immediately prior to the Separation
Time, Company meant Old U S WEST as defined in the Preamble.

1.6 "FINAL AVERAGE COMPENSATION" shall mean final average compensation
as defined in Section 1.21 of the Pension Plan, except that for this purpose
the following definition of Compensation shall be substituted for
compensation as defined in Section 1.10 of the Pension Plan. Compensation
for this purpose shall mean compensation as defined in Section 1.10 of the
Pension Plan without regard to sub-sections (d) and (e) thereof (the
provisions implementing Section 401(a)(17) of the Code), plus the following:

2
<PAGE>

(c) The value of the Company's common stock (without regard to its
restricted status on the date of grant) paid as an award under a plan that
provides for awards in the form of the Company's common stock in lieu of cash
and that has been approved by the shareholders of the Company, provided that
such award is designated by the Administrator as Compensation under this
Plan. In all cases, such awards shall be valued for purposes of this Plan as
of the date of the award.

1.7 "INSTALLMENTS" shall mean a form of benefit in which a
Participant's benefit under this Plan is paid in a fixed number of annual
installments, not to exceed ten, elected by the Participant in accordance
with procedures established by the Administrator.

1.8 "MID-CAREER PENSION CREDITS" shall mean an amount equal to the
lesser of (a) one-half (1/2) of the number of full and fractional years of
the Participant's Pension Calculation Service under the Pension Plan earned
since the later of his Employment Commencement Date or his most recent
Reemployment Commencement Date or (b) one-half (1/2) of the difference
between (1) age 30 and (2) the Participant's attained age on the later of his
Employment Commencement Date or his most recent Reemployment Commencement
Date.

1.9 "PARTICIPANT" shall mean an Employee of a Participating Company who
has satisfied the applicable requirements of Section 2.1.

1.10 "PENSION PLAN" shall mean the MediaOne Group Pension Plan as it
exists after the Separation Time, and as amended from time to time.
References to any article or section of the Pension Plan include reference to
any comparable or succeeding provisions that amend, supplement or replace
such article or section. Prior to the Separation Time, "Pension Plan" meant
the U S WEST Pension Plan maintained by Old U S WEST.

1.11 "PLAN" shall mean this MediaOne Group Mid-Career Pension Plan, as
amended.

1.12 "PLAN YEAR" shall mean the fiscal year of the Plan, which shall be
the calendar year.

1.13 "SHORT TERM INCENTIVE AWARD" shall mean an award determined
annually pursuant to either the Company's Short Term Incentive Plan or the
Company's Executive Short Term Incentive Plan, as amended or superseded. For
Plan benefit calculation purposes, (i) any Short Term Incentive Award earned
in the year of Termination shall be prorated and spread evenly over the
applicable months on the payroll in the final Plan Year of employment and
(ii) for a Participant who Terminates and who has a Short Term Incentive
Award that is paid after Termination, the award will be spread evenly over
the months of the year the award was earned. If a Short Term Incentive Award
is paid after

3
<PAGE>

Termination, the Participant's benefit under this Plan shall be adjusted
retroactively to reflect such payment if necessary.

ARTICLE II

ELIGIBILITY

2.1 ELIGIBILITY TO PARTICIPATE.

(a) The only persons who shall be Participants in this Plan shall
be persons who both (1) are Media Participants and (2) were Participants in
the Predecessor Plan at the Separation Time. No person may become a
Participant on or after the Separation Time, including any person who
previously participated under the terms of the Predecessor Plan but is not a
Participant at the Separation Time.

(b) An individual was a Participant in the Predecessor Plan if he
met all of the following conditions: (1) he must have been a participant in
the Old U S WEST Pension Plan, (2) his Employment Commencement Date or most
recent Re-employment Commencement Date must have occurred on or after the
date on which such participant attained the age of thirty-five (35) years,
and (3) the Old U S WEST Vice President of Human Resources must have
designated him to participate in this Plan. Notwithstanding the foregoing,
no person, including a former Participant who is not employed on August 27,
1996 and was or is reemployed thereafter, became or shall become a
Participant on or after August 27, 1996.

(c) A Participant who incurs an Eligible Separation on or after
August 27, 1996 and is subsequently reemployed shall not be eligible to
participate with respect to periods of reemployment.

(d) The Participant's participation in the Plan commenced on the
90th day after the date he receives the information concerning participation
in the Plan. If the information is given by hand delivery, the Participant
shall receive the information on the date it is delivered. If the
information is given by mail, it shall be deemed received by the Participant
on the third day after deposit in the United States first class mail, postage
prepaid, addressed to the Participant at the most current address in the
Company's records.

ARTICLE III

PAYMENT OF BENEFITS

3.1 COMMENCEMENT DATE. Except as provided in Sections 3.2, 3.4, 3.5
and 9.10, payment of a Plan benefit shall commence as of such time (the
"Commencement Date") as elected (or deemed elected) by the Participant.

4
<PAGE>

3.2 LUMP SUM DISTRIBUTIONS AND INSTALLMENTS.

(a) Notwithstanding Section 3.1, but subject to Sections 3.4, 3.5
and 9.10, if a Participant elects payment under this Plan in the form of a
lump sum distribution or Installments, the distribution shall be paid or
commence to be paid approximately 60 days after Eligible Separation (unless
the Participant elects deferral of the distribution), with an additional
payment, which shall be paid approximately sixty (60) days following the
payment of the Participant's final Short Term Incentive Award, which shall
take into account any Short Term Incentive Awards that were not included in
the calculation of the payment that the Participant had already received.
The Commencement Date of such a distribution shall be the Participant's First
Starting Date, even though the distribution may not be made for approximately
60 days (no interest shall be paid due to the delay in payment). If a
Participant who has elected payment of benefits under this Plan in the form
of a lump sum dies after the Commencement Date, but before the payment of the
lump sum, said lump sum shall be paid to the deceased Participant's estate.

(b) Notwithstanding Section 3.1, but subject to Sections 3.4, 3.5
and 9.10, if the Participant elects deferral of the lump sum distribution or
Installments, the distribution shall be paid or commence to be paid, in
accordance with the Participant's election, in March of the first, second,
third, fourth or fifth calendar year after the calendar year in which the
Eligible Separation occurs. The Commencement Date of such a distribution
shall be the March 1 of the year in which the distribution is to commence,
even though the distribution may not actually commence on such date (no
interest shall be paid due to the delay in payment).

3.3 ELECTION OF FORM OF BENEFIT.

(a) Within 90 days after a Participant received information
regarding participation in the Plan and prior to the date he commenced
participation in the Plan, he was permitted to elect the form in which
benefit payments shall be made. A Participant may elect to change the form
of benefit at any time after the fifth anniversary of the previous election
(excluding elections made under the Predecessor Plan before May 1997).
However, any such election shall be void unless the Participant remains an
Employee at least six months after the date the election is filed with the
Administrator. If a Participant ceased to participate in the Plan and
subsequently recommenced participation, any prior election (or deemed
election) remained valid unless a new election is made.

(b) A Participant may elect payment of the Plan benefit in any
form of benefit available to that Participant under the Pension Plan
(excluding the partial lump sum option) or Installments. Except as set forth
in Article V (dealing with payments of lump sums and Installments), the
benefit under the Plan shall be calculated by converting the single life
annuity otherwise payable under Article IV into the form elected (or deemed
elected under Section 3.5) using the actuarial factors set forth in the
Pension Plan appropriate for the form of benefit elected, without regard to
any adjustments under Code Section 415.

5
<PAGE>

(c) The Participant shall have full power and authority to make
elections with respect to the form of payment of benefits under this Plan
without obtaining the consent of such Participant's spouse, including the
waiver of payment in the form of a joint and survivor annuity. All such
elections shall be made on a form provided by the Administrator in accordance
with procedures established by the Administrator. Any election in effect
under the Predecessor Plan at the Separation Time shall remain in effect
under this Plan until changed by the Participant in accordance with the rules
set forth above.

3.4 SMALL BENEFITS. Notwithstanding any election or deemed election
pursuant to Sections 3.3 or 3.5 or any other provision of this Plan, if the
Participant's benefit under this Plan, expressed as a lump sum in accordance
with Article V, is $10,000 or less, the Plan benefit shall be payable only in
the form of a lump sum approximately sixty (60) days after the Participant's
Eligible Separation.

3.5 DEFAULT ELECTIONS.

(a) This subsection (a) applies to Participants who make any
benefit elections after April 30, 1997. If a Participant fails to elect a
Commencement Date and either (i) fails to elect a form of Plan benefit or
(ii) elects a lump sum, the Plan benefit shall be paid in the form of a lump
sum approximately 60 days after the Eligible Separation. If a Participant
fails to elect a Commencement Date and elects Installments, the Plan benefit
shall be paid in the form of Installments commencing approximately 60 days
after the Eligible Separation. If a Participant elects an annuity form of
benefits under the Plan, but fails to elect a Commencement Date, the
Commencement Date shall be the Annuity Starting Date under the Pension Plan.
If the Participant elects a Commencement Date, but fails to elect a form of
Plan benefit, it shall be paid in a lump sum on that date set forth in
Section 3.2 coinciding with or immediately preceding the elected Commencement
Date.

(b) This subsection (b) applies to Participants who do not make
any benefit elections after April 1997. If a Participant fails to elect a
form of Plan benefit, benefits shall be paid as a single life annuity
(whether or not the Participant is married on the Commencement Date); no
survivor or contingent annuitant benefits shall be payable to any person. If
a Participant elected a lump sum or Installments under the Predecessor Plan
before May, 1997, but fails to elect a Commencement Date, the distribution
shall be paid or commence to be paid approximately 60 days after the Eligible
Separation. If a Participant fails to elect a Commencement Date, and (i) the
Participant elected an annuity under the Predecessor Plan prior to May 1997
or (ii) the Participant did not elect a form of benefits, the Participant
shall be deemed to have elected a Commencement Date that is his Annuity
Starting Date under the Pension Plan.

3.6 SUSPENSION OF BENEFIT PAYMENTS. Reemployment with a Participating
Company commencing on or after January 1, 1997 shall not result in suspension
of benefits. Reemployment with any Participating Company prior to 1997
subsequent to Termination with any type of benefits described heretofore
shall result in the suspension of the benefit for the period of such
employment or reemployment.

6
<PAGE>

ARTICLE IV

RETIREMENT BENEFIT

4.1 ELIGIBILITY FOR SERVICE PENSION BENEFIT. A Participant shall be
eligible for a service pension benefit pursuant to this Plan if he incurs an
Eligible Separation and qualifies for a service pension under Article V-B of
the Pension Plan. The Participant's Mid-Career Pension Credits shall not be
taken into account for purposes of determining whether the Participant is
eligible for a service pension under this Plan, the Pension Plan or any other
plan and shall not be considered as term of employment for any purpose under
any such plan or otherwise.

4.2 AMOUNT OF SERVICE PENSION BENEFIT.

(a) Benefit Formula. The service pension benefit of a Participant
under this Plan shall be a pension for the life of the Participant payable in
monthly installments, the monthly amount of which shall equal one-twelfth of
the following amount:

(1) the sum of 1.25 percent of the Participant's Final Average
Compensation (not in excess of Covered Compensation) and 1.50 percent of
the excess of Final Average Compensation over Covered Compensation,
multiplied by

(2) the number of Mid-Career Pension Credits which the
Participant has earned.

(b) Ad Hoc Increases. No ad hoc increases set forth in the
Pension Plan, including the increases effective January 1, 1996 and January
1, 1998, shall apply under this Plan.

4.3 EARLY RETIREMENT DISCOUNT. The monthly service pension benefit for
each Participant who is granted a service pension benefit under Section 4.1
shall be reduced by one-half percent (0.5%) for each month by which his age
(in terms of completed years and months) at the time of his Commencement Date
is less than 55. If the Participant has a Term of Employment of thirty or
more years, all of the adjustments set forth in Section 5B.1(d) shall be
applied.

4.4 ELIGIBILITY FOR DEFERRED VESTED BENEFIT. A Participant who is not
eligible for a service pension benefit under Section 4.1 shall be eligible
for a deferred vested benefit pursuant to this Plan if he incurs an Eligible
Separation and completed five or more Years of Vesting Service.

4.5 AMOUNT OF DEFERRED VESTED BENEFIT. The monthly benefit payable for
each Participant eligible for a deferred vested benefit under Section 4.4
shall be calculated exclusively in accordance with Section 4.2(a), provided
that if the Participant's Commencement Date under this Plan occurs prior to
attainment to age 65, the benefit shall be reduced in accordance with the
factors set forth in Appendix C of the Pension Plan.

7
<PAGE>

Such amount shall be calculated as of the date of the Participant's Eligible
Separation and shall be calculated as if such Participant had retired on such
date. No recalculation of the benefit shall be made after such date or as a
result of amendments made to this Plan subsequent to such date.

4.6 NOT VESTED. A participate who is not Vested under the Pension Plan
shall not be entitled to any benefits under this Plan.

4.7 OTHER PROVISIONS.

(a) The Pension Plan contains Defined Lump Sum benefits under
Articles V-D and V-E of the Pension Plan. No similar benefit is provided
under the terms of this Plan.

(b) The Pension Plan benefit is generally the greater of the
benefit under Article V-B or Article V-D of the Pension Plan. No similar
rules apply under this Plan. Accordingly, a Participant under this Plan is
entitled to the benefits set forth in this Plan regardless of whether the
Article V-D benefit under the Pension Plan exceeds the Article V-B benefit
under the Pension Plan.

(c) The Pension Plan contains different benefit formulas in
Article V-B depending upon whether the participant has 30 or more years of
Pension Calculation Service. No similar rules apply under this Plan.
Accordingly, the formula in Section 4.2(a) of this Plan applies even if the
Participant's Pension Calculation Service (or the sum of such service and his
Mid-Career Pension Credits) exceeds 30.

(d) Notwithstanding any other provision of this Plan, any increase
in Pension Plan benefits which may occur upon termination of the Pension Plan
as a result of the operation of Section 11.5(b) of the Pension Plan shall be
disregarded in determining the benefit under this Plan.

ARTICLE V

SPECIAL RULES APPLICABLE TO
LUMP SUM DISTRIBUTIONS AND INSTALLMENTS

5.1 PLAN BENEFIT PAID IN A LUMP SUM. Notwithstanding Article IV, the
following rules shall apply if a Participant elects to receive his Plan
benefit in the form of an immediate lump sum. The benefit under this Plan
shall be computed as of the date of the Participant's Eligible Separation and
shall equal the following amount. First, if the Participant has a pension
under Article V-B of the Pension Plan that is not a service pension, the
pension under Sections 4.4 and 4.5 payable at age 65 shall be calculated. If
the Participant is eligible for a service pension in accordance with Section
5B.1 of the Pension Plan, an immediate annuity under Sections 4.1, 4.2 and
4.3 commencing on the First Starting Date shall be calculated. Second, the
foregoing

8
<PAGE>

hypothetical pension payable at age 65 or immediate annuity, as applicable,
shall be converted into a lump sum based on the following factors:

(a) The interest rate used for this purpose shall equal:

(i) 65% of the average yield on 30-Year Treasury Bonds as
released by the Federal Reserve Board for the five business days
immediately preceding the First Starting Date for Participants who have an
Eligible Separation prior to August 1, 1997; or

(ii) 65% of the average yield on 30-Year Treasury Bonds as
released by the Federal Reserve Board for the business days occurring
during the 30-day calendar period ending on the day before the date of
Eligible Separation for Participants who have an Eligible Separation on or
after August 1, 1997.

(b) Mortality shall be based on the 1983 Group Annuity Mortality
Table, weighted 80% for males and 20% for females.

5.2 DEFERRAL OF LUMP SUM DISTRIBUTION. Notwithstanding Article IV, if
a Participant elects payment of his Plan benefit in the form of a lump sum
and defers payment of such benefit pursuant to Section 3.2, the Plan benefit
in this case shall not be computed by calculating the lump sum that would be
payable as of the Commencement Date. Instead, the Plan benefit shall be
calculated in accordance with Section 5.1 above as of the Participant's
Eligible Separation and increased with interest from the date of the Eligible
Separation to the Commencement Date at an annual rate equal to:

5.3 NO PARTIAL LUMP SUM OPTION UNDER THE PLAN. A Participant may not
elect a partial lump sum option under the Plan.

5.4 SPECIAL RULES FOR PARTICIPANTS ELECTING INSTALLMENTS.
Notwithstanding any other provision of this Plan to the contrary, if a
Participant elects payment of his Plan benefit in the form of Installments,
each Installment shall be calculated as follows:

(a) The Participant shall be deemed to have an account balance which

9
<PAGE>

initially shall be equal to the amount that would have been payable under
this Plan if the Participant had elected payment under this Plan in the form
of a lump sum distribution to be paid on the same date as the actual
Commencement Date.

(b) The initial account balance shall be divided by the number of
annual Installments elected by the Participant to determine the first annual
Installment due on the Commencement Date.

(c) The account balance shall then be: (i) debited on the date of
each annual Installment by the amount of such Installment; and (ii) credited
with interest at the rates set forth in Section 5.2 (taking into account the
rate change on January 1) from the date of such annual Installment to the
date of next Installment.

(d) The account balance as of the date of the next Installment
shall be divided by the remaining number of annual Installments elected by
the Participant to determine the amount of the next annual Installment.

(e) Subsections (c) and (d) shall be repeated each year to
determine each subsequent Installment.

5.5 INCONSISTENT PROVISIONS. The provisions of this Article V shall
take precedence over any obviously inconsistent provisions in Article III or
Article IV.

ARTICLE VI

NO DISABILITY BENEFIT OR ANCILLARY DEATH BENEFITS

6.1 NO DISABILITY BENEFIT. No person shall be eligible to receive a
disability pension from this Plan.

6.2 NO ANCILLARY DEATH BENEFITS. Article VII of the Pension Plan
provides for certain ancillary death benefits. No similar rules are provided
under this Plan. No ancillary death benefits are payable under this Plan.

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<PAGE>

ARTICLE VII

PRE-RETIREMENT BENEFITS

7.2 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. If a Vested Participant
dies prior to the Commencement Date and is survived by a spouse, a death
benefit in the form of a Qualified Preretirement Survivor Annuity, as
described below, shall be payable to such surviving spouse. Such Survivor
Annuity shall be a monthly life annuity for the life of the surviving spouse
which is equal to the greatest of the following:

(a) The amount the surviving spouse would have received under this
Plan if the Participant had commenced receiving benefits under a Qualified
Joint and 50% Survivor Annuity on the day before his death.

(b) An amount equal to 45% of the single life annuity that would
have been payable under this Plan had the Active Participant Terminated on
the date of his death, survived until age 65 and began to receive payments at
age 65. This clause (b) shall not apply to the surviving spouse of a Former
Participant.

Payment of the Survivor Annuity shall be made as soon as practicable after
the death of the Participant; the first payment shall include any payments
not made which were due on and after the date as of which it commenced.

7.2 NO OTHER DEATH BENEFITS. If a Participant dies before the
Commencement Date and does not have five years of Vesting Service (and is not
otherwise Vested) or if Participant is not survived by a surviving spouse, no
death benefit shall be payable under this Plan.

ARTICLE VIII

ADMINISTRATION

8.1 ADMINISTRATOR RESPONSIBILITY. The Administrator shall have the
administrative responsibilities set forth below:

(a) The Administrator shall have the specific powers elsewhere
herein granted to it and shall have such other powers as may be necessary to
enable it to administer the Plan, except for powers herein granted or
provided to be granted to others.

(b) The Administrator shall have the full and complete power to
interpret the terms of this Plan and to determine the amount of benefits
payable to any Participant. The Administrator shall also have full and
complete power to determine the benefit payable if the specific facts
applicable to the Participant or his beneficiary are not addressed in this
document; such determination shall be made, by the Administrator in its sole
discretion, on a basis reasonably consistent with the purpose of, and
principles in, this Plan.

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<PAGE>

8.2 CLAIMS PROCEDURE. The review and appeal procedure for a
Participant who has a claim under the Plan shall be the same procedures set
forth in Section 13.2 of the Pension Plan (substituting the Administrator
under this Plan for the Committee under the Pension Plan).

8.3 REVIEW OF ADMINISTRATOR DECISIONS. The Administrator shall
determine conclusively for all parties all questions arising in the
administration of the Plan, and any decision of the Administrator shall not
be subject to further review, except as required by applicable law.

8.4 DELEGATION OF RESPONSIBILITIES. The Administrator may delegate
responsibilities for the operation and administration of the Plan consistent
with the Plan's terms, including delegation of responsibilities to
Participating Companies. The Administrator may designate in writing other
persons to carry out its responsibilities under the Plan, and may employ
persons to advise it with regard to any such responsibilities.

8.5 OTHER PROVISIONS. The expenses of the Administrator shall be borne
by the Company. The Administrator shall be the agent of the Plan for service
of legal process.

ARTICLE IX

GENERAL PROVISIONS

9.1 RIGHTS TO BENEFIT.

(a) The Participant, spouse or beneficiary of the Participant,
shall have no right to any benefit under this Plan except as may be provided
by the Participating Company employing the Participant. Where a
Participant's Term of Employment has included service with more than one
Participating Company, the last such Participating Company to employ him
prior to his termination of employment shall be solely responsible for the
full benefit under this Plan. No Participant, spouse or Beneficiary shall
have any claim or interest in (i) the assets of the Participating Company
liable for the payments prior to the time such assets are payable to such
person under the terms of this Plan or (ii) the assets of any other
Participating Company at any time. However, if the Company establishes a
"rabbi trust" with respect to this Plan, the Participating Company shall have
no obligation to pay any benefits under this Plan to the extent such benefits
are paid from such trust.

(b) In circumstances specified in Section 9.3 below, benefits
previously awarded may be discontinued in the sole discretion of the
Participating Company or the Administrator.

9.2 SOURCE OF PAYMENTS. Except as set forth in Sections 9.1(a) or
9.10(a)(iii), nothing contained in this Plan or any action taken pursuant to
the provisions of this Plan shall create or be construed to create a trust of
any kind. Nothing contained in this Plan or

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<PAGE>

any action taken pursuant to the provisions of this Plan shall create or be
construed to create or a fiduciary relationship between the Company (or any
Participating Company) and any Participant, his beneficiary or any other
person. The Plan is intended to be "unfunded" for purposes of the Code and
ERISA and shall be interpreted and administered in a manner consistent with
this intention. To the extent that any person acquires a right to receive
payments under this Plan, such right shall be no greater than the right of
any unsecured general creditor of the Participating Company that owes the
payment, as set forth in Section 9.1.

9.3 FORFEITURE OF BENEFITS. All benefits for which a Participant would
be otherwise eligible hereunder may, at the sole discretion of the
Administrator, be forfeited under any of the following circumstances:

(a) The Participant discloses "confidential information," except
under circumstances where the Company or a court of competent jurisdiction
has approved or required such disclosure. For purposes of this Section
9.3(a), "confidential information" means and includes, without limitation,
any confidential, legal, financial, marketing, business, technical, or other
information, including specifically but not exclusively, information that the
Participant prepared, caused to be prepared, or received in connection with
the Participant's employment with the Company (or its Subsidiaries), such as,
management and business plans, business strategies, software, software
evaluations, trade secrets, personnel information, marketing methods and
techniques, and any of the above-recited information as it relates to the
Company (or its Subsidiaries) that shall have been obtained and/or learned
during his or her employment and that shall not be public knowledge. This
definition does not apply to (i) information or knowledge that already is or
subsequently may come into the public domain after the termination of
employment other than by way of unauthorized disclosure by the Participant,
(ii) information or knowledge that the Participant is required to disclose by
order of a court or governmental agency after the Participant provides
advance notice to the Company (or its Subsidiaries) at least ten (10)
calendar days prior to such disclosure (or, if the Participant is so required
to make such disclosure within less than ten (10) calendar days of receipt of
such an order, after the Participant provides timely advance notice to the
Company (or its Subsidiaries)) to allow the Company (or its Subsidiaries) to
take legal action with respect to the matter, or (iii) information that the
Participant learns from a third party not known by the Participant, after due
inquiry, to be under a confidentiality agreement with the Company (or its
Subsidiaries).

(b) Determination by the Board of a Participating Company in its
sole discretion that a Participant is engaged in misconduct in connection
with his employment with such Participating Company.

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<PAGE>

board of such Participating Company.

9.4 ASSIGNMENT OR ALIENATION. The benefits under this Plan shall not
be subject to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge by any Participant, spouse or beneficiary, and any
attempt to do so shall be null and void.

9.5 DETERMINATION OF ELIGIBILITY. In all questions relating to
eligibility for any benefit hereunder, or relating to Term of Employment and
rates of pay for determining benefits, the decision of the Administrator,
based upon this Plan and upon the records of the Participating Company last
employing such individual, and insofar as permitted by applicable law, shall
be final.

9.6 PAYMENTS TO OTHERS. If any person entitled to a payment under the
Plan is a minor, or if the Administrator determines that any such person is
incapacitated by reason of physical or mental disability, whether or not
legally adjudicated an incompetent, the Administrator shall have the power to
cause the payments becoming due to such person to be made to another for his
benefit without responsibility of the Administrator to see to the application
of such payments. Payments made pursuant to such power shall operate as a
complete discharge of the Plan, the Company and the Administrator.

9.7 NO GUARANTEE OF EMPLOYMENT. Nothing contained herein shall be
construed as conferring upon the Participant the right to continue in the
employ of the Company or any Participating Company as an executive or in any
other capacity.

9.8 NATURE OF BENEFITS. Any benefits payable under this Plan shall not
be deemed to be salary or other compensation to the employee for the purpose
of computing benefits to which he may be entitled under any pension plan or
other arrangement of the Company or any Participating Company for the benefit
of its employees.

9.9 PLAN AMENDMENT AND TERMINATION. The Company, through resolution of
the Administrator, retains the right to make amendments to the Plan in its
sole and absolute discretion, except that the Administrator may not make any
amendment which would affect the level of benefits under the Plan. The
Company, through resolution of the Human Resources Committee of the Board of
Directors, retains the right to make amendments to the Plan which would
affect the level of benefits under the Plan and to terminate the Plan in
whole or in part in its sole and absolute discretion. Each Participating
Company retains the right to withdraw from this Plan, at any time, for any
reason, with or without notice. Upon termination of the Plan, payments shall
be made to Participants and their beneficiaries as they become due under the
terms of the Plan, but no participant shall accrue any additional benefits
after the effective date of the termination.

9.10 CHANGE IN CONTROL.

(a) Upon a "Change in Control" of the Company, as defined in the
Company's Executive Compensation Plan, the following provisions shall be
applicable:

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<PAGE>

(i) Each Participant in this Plan may elect, no later than
thirty days after the Change in Control, to receive (as soon as practicable
after the Change in Control) a single lump sum payment equal to 94 percent
of the present value of his benefits under this Plan (as set forth in
subsection (b)) as of the date of the Change in Control. A Participant
making such election shall permanently forfeit the remaining six percent of
the present value of his benefits under this Plan (as set forth in
subsection (b)) as of the date of the Change in Control and the Company
shall have no further liability to the Participant with respect to benefits
accrued under this Plan for periods prior to the Change in Control.

(ii) Without the written consent of each affected Participant,
this Plan may not be amended during the period commencing on the date of
the Change in Control and ending three years thereafter in any way that
would cause a Participant to receive lower benefits under this Plan than he
would have received if such amendment had not been made.

(iii) The Company has established an irrevocable "rabbi trust"
which may provide a source of funds to satisfy the Company's liability
under this Plan. Upon a Change in Control, the Company shall transfer to
the trustee of such trust an amount equal to the present value of all
benefits under this Plan as of the date of the Change in Control. The
trustee shall be a bank or other entity that may be granted corporate
trustee powers under applicable law. The Company shall have no obligation
to pay any benefits under this Plan to the extent such benefits are paid
from such trust.

(b) For purposes of this Section 9.10, the present value of the
benefits under the Plan shall be determined as follows:

(i) In the case of a Participant or Beneficiary receiving
benefits under this Plan, the present value of the remaining benefits
payable in the future shall be calculated using the assumptions set forth
in Section 5.1.

(c) Notwithstanding the foregoing, a Participant in this Plan who
is not a Vested Participant under the Pension Plan at the time of the Change
in Control shall be treated under this Plan (but not under the Pension Plan)
as if he were a Vested Participant under this Plan with respect to benefits
accrued as of the Change in Control, with the result that the Participant
shall receive:

(i) if the Participant makes the election described in Section
9.10(a)(i), the amount provided under that Section to be paid within sixty
days following the Change in Control;

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<PAGE>

(ii) if the Participant does not make such election and is still
not a Vested Participant under the Pension Plan at the time of his Eligible
Separation, a lump sum to be paid within sixty days following his Eligible
Separation equal to the amount that would be payable under this Plan if the
Participant were vested under the Plan, had an Eligible Separation on the
date of the Change in Control, and elected payment under this Plan in the
form of a lump sum, plus interest on such amount at the rate set forth in
Section 5.2(b) from the date which is 60 days after the date of the Change
in Control to the date of payment. Such a Participant shall not be
entitled to any additional benefits if he is later reemployed; or

(iii) if the Participant does not make such election and is a
Vested Participant under the Pension Plan at the time of his Eligible
Separation, the benefits otherwise payable under this Plan shall be paid;
no special rules shall apply.

This Section 9.10(c) shall not affect the determination of the Participant's
benefit under the Pension Plan.

(d) If benefits under this Plan are paid to a Participant because
the Participant makes the election described in Section 9.10(a)(i) (the
amount of such benefits shall be the "First Payment"), and the Participant
subsequently becomes entitled to additional benefits under this Plan (because
he continues to be employed) (a "Second Payment"), the following rules shall
apply:

(i) If the Participant elects to receive the Second Payment in
the form of an immediate lump sum or Installments, such lump sum benefit
(or the initial account balance under Section 5.4(a), if Installments are
elected) shall equal: (A) the amount of the lump sum benefit to which the
Participant would have been entitled under this Plan had the First Payment
not been made; reduced by (B) an amount equal to the sum of the First
Payment and the amount forfeited under Section 9.10(a)(i), increased with
interest on such sum at the rate set forth in Section 5.2(b) credited
annually from the date of the First Payment to the date of the Second
Payment. If the lump sum or Installments are deferred, such net amount
shall be increased with interest in accordance with Section 5.2(b).

(ii) If the Participant elects to receive the Second Payment in
a form other than a lump sum or Installments, the Participant's monthly
benefit shall equal the amount determined under the following formula:

C x (1 - B/A)

9.11 GENDER AND NUMBER. Whenever used herein, words in any gender shall
be deemed to include the other genders, and the singular shall be deemed to
include the plural and vice versa, unless the context expressly indicates
otherwise.

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<PAGE>

9.12 GOVERNING LAW. This Plan shall be construed and enforced in
accordance the laws of the State of Colorado, except to the extent preempted
by Federal law.

Dated: __________, 1998

MEDIAONE GROUP, INC.

By
-----------------------------------
Its
-----------------------------------

<PAGE>

MEDIAONE GROUP
DEFERRED COMPENSATION PLAN

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
PREAMBLE 1

ARTICLE I DEFINITIONS 1

ARTICLE II PARTICIPATION 3

Section 2.1 Eligibility to Participate 3
Section 2.2 Election of Deferred Compensation 3
Section 2.3 Participants' Accounts 4

ARTICLE III DEFERRED ACCOUNTS 4

Section 3.1 Crediting of Deferrals--Cash Account 4
Section 3.2 Crediting of Deferrals--Company Shares Account 4
Section 3.3 Transferring Shares Between Accounts 4
Section 3.4 Dividends on Company Shares Accounts 4
Section 3.5 Cash Account 5
Section 3.6 Change in Outstanding Shares 5

ARTICLE IV MATCHING COMPANY CONTRIBUTIONS 5

Section 4.1 Funds Eligible for Company Match 5
Section 4.2 Forfeiture of Company Match 5
Section 4.3 Company Match Investment 6

ARTICLE V DISTRIBUTION 6

Section 5.1 Timing of Distribution 6
Section 5.2 Form of Distribution 6
Section 5.3 Automatic Lump Sum Distribution 7
Section 5.4 Distribution to Beneficiaries 7
Section 5.5 Unforeseeable Emergency 7

ARTICLE VI CHANGE IN CONTROL 8

Section 6.1 Change in Control 8
Section 6.2 Change in Control Defined 9

<PAGE>

ARTICLE VII MISCELLANEOUS 9

Section 7.1 Satisfaction of Interests 9
Section 7.2 Inalienability of Benefits 9
Section 7.3 Effect on Employment 10
Section 7.4 Taxation 10
Section 7.5 Amendment or Termination 10
Section 7.6 Binding Effect 10
Section 7.7 Status of Participants 10
Section 7.8 Governing Law 11
Section 7.9 Federal Securities Law 11

ARTICLE VIII CLAIMS PROCEDURE 11

Section 8.1 Disputes 11
Section 8.2 Submission of Claims 11
Section 8.3 Denial of Claim 11
Section 8.4 Adequate Notice 11
Section 8.5 Review of Claim 11
Section 8.6 Decision on Claim 12

SIGNATURE PAGE 12
</TABLE>

<PAGE>

MEDIAONE GROUP
DEFERRED COMPENSATION PLAN

PREAMBLE

Prior to the Separation Time, U S WEST, Inc. maintained the U S WEST,
Inc. Deferred Compensation Plan (the "U S WEST Plan") to permit certain
employees of U S WEST to defer receipt of a portion of their compensation and
to provide a "matching credit" with respect to all or a portion of such
deferred compensation. As of the Separation Time, the MediaOne Group, Inc.
Deferred Compensation Plan (the "Plan") was adopted as set forth herein to
permit certain MediaOne Group employees to defer a portion of their
compensation and to provide a "matching credit" with respect to all or a
portion of such deferred compensation. As of the Separation Time, U S WEST,
Inc. and the U S WEST Plan shall have no liability for benefits accrued under
the U S WEST Plan by individuals who participated in the U S WEST Plan prior
to the Separation Time and who are employees of MediaOne Group, Inc. at the
Separation Time. MediaOne Group, Inc. and this Plan shall assume all of the
liabilities accrued under the U S WEST Plan relating to such individuals.

The Plan is intended to be a nonqualified deferred compensation
"top-hat" plan for "a select group of management or highly compensated
employees," as that phrase is used in the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").

ARTICLE I

DEFINITIONS

1.1 "ADMINISTRATOR" means the Senior Vice President-Human Resources of
the Company or his or her delegate (or, in the event the Plan benefits of the
Senior Vice President-Human Resources are directly or indirectly impacted by
any claim for benefits, the Chairperson of the Committee or his or her
delegate).

1.2 "BOARD OF DIRECTORS" means the Board of Directors of the Company.

1.3 "CODE" means the Internal Revenue Code of 1986, as amended.

1.4 "COMMITTEE" means the Human Resources Committee of the Board of
Directors or its delegate.

1.5 "COMPANY" means MediaOne Group, Inc., a Delaware corporation, any
successor Company and any adopting subsidiaries approved by MediaOne Group,
Inc. or its successor.

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<PAGE>

1.6 "DEFERRED COMPENSATION" means Eligible Compensation deferred under
the Plan, reduced by any taxes deducted in accordance with Section 7.5.

1.7 "ELIGIBLE COMPENSATION" means (a) any award payable under an
annual incentive program, including a team award and an STIP, (b) Excluded
Compensation, and (c) Pay (as defined in the Savings Plan) earned by a
Participant during a Plan Year after the Participant has contributed to the
Savings Plan the maximum pre-tax contribution permitted under section 402(g)
of the Code.

1.8 "ELIGIBLE EMPLOYEE" means any management or highly compensated
employee of the Company solicited by the Administrator in his or her sole
discretion.

1.9 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

1.10 "EXCLUDED COMPENSATION" means that part of a Participant's Pay (as
defined in the Savings Plan) earned from the Company that exceeds the dollar
limit in effect during the Plan Year under section 401(a)(17) of the Code or
exceeds any other limit established by the Administrator.

1.11 "NEW EXECUTIVE" means an Eligible Employee who has not met the
minimum service requirements of the Savings Plan and any individual who,
during the Plan Year is promoted to a key executive or managerial position.

1.12 "PARTICIPANT" means an Eligible Employee who has elected to
participate in the Plan.

1.13 "PENSION PLAN" means the MediaOne Group Pension Plan, as amended
from time to time.

1.14 "PLAN" means this MediaOne Group Deferred Compensation Plan, as
amended from time to time.

1.15 "PLAN YEAR" means the calendar year.

1.16 "SAVINGS PLAN" means the MediaOne Group Savings Plan/ESOP, as
amended from time to time.

1.17 "SEPARATION TIME" means the time at which U S WEST, Inc., a
Delaware corporation, ("Old U S WEST") is separated into two separate public
companies, USW-C, Inc., renamed U S WEST, Inc. as of the Separation Time and
U S WEST, Inc., renamed MediaOne Group, Inc. as of the Separation Time (the
"Company").

2
<PAGE>

1.18 "STIP" means any senior management short term incentive award,
including any award under the Short Term Incentive Plan and the Executive
Short Term Incentive Plan maintained by the Company.

ARTICLE II

PARTICIPATION

2.1 ELIGIBILITY TO PARTICIPATE. Participation in the Plan shall be
limited to Eligible Employees who are chosen to participate in the Plan by
the Administrator in his or her sole discretion.

2.2 ELECTION OF DEFERRED COMPENSATION. Participants shall make
irrevocable Deferred Compensation elections in such form as is specified by
the Company. A Deferred Compensation election shall apply only to Eligible
Compensation earned during the Plan Year specified in the election, and shall
specify the whole percentage to be deferred, up to 75% of Excluded
Compensation and any annual incentive award or bonus other than an STIP and
the whole percentage up to 100%, net of required withholding taxes, of any
STIP.

Deferred Compensation elections shall be made prior to the last day of
the Plan Year preceding the Plan Year in which the services for which the
compensation is payable are performed or, if earlier, prior to the close of
the enrollment period specified by the Administrator. Compensation shall
actually be deferred at the time such compensation would otherwise be paid to
the Participant (e.g., a deferral election regarding an annual award to be
earned in 2000 must be made in 1999 and the actual deferral of such award
shall be at the time the award becomes payable in 2001). Notwithstanding the
foregoing, New Executives shall make Deferred Compensation elections within
30 days of the date their employment with the Company commences.

Annual elections are voluntary and irrevocable as to the amount of
Deferred Compensation. A Participant's initial annual election must specify
the time and form of payment (pursuant to Sections 5.1 and 5.2) of such
Deferred Compensation and must specify the accounts to which deferrals shall
be credited. Once a Participant has specified the time and form of payment
and the account to which deferrals shall be credited, such elections shall
remain in effect and apply to subsequent years' Deferred Compensation until
the Participant chooses different time, form and/or accounts in his or her
annual election. Payments attributable to the Company match shall be
distributed at the same time and in the same form as the corresponding
Deferred Compensation.

Subject to the limitations below, a Participant may make an additional
election to change elections made in prior years regarding the timing and form
of distributions from all prior annual accounts. Such additional elections
shall be made no more often than once every five years and only with regard to
prior years for which payment has not yet begun. Any such additional election
shall be effective on the date that is six months after the date the Participant
made such election, provided the Participant has been continuously

3
<PAGE>

employed by the Company for such six-month period. In the event a
Participant requests an Additional Election within five years of the date of
a previous Additional Election that has taken effect, or with respect to an
account that is scheduled to be distributed or to commence distribution
within 6 months of such election, such Additional Election shall be null and
void.

2.3 PARTICIPANTS' ACCOUNTS. For every Plan Year, a separate
bookkeeping account shall be maintained for each Participant. Each
Participant's accounts may include the following: (a) an account treated as
invested in MediaOne Group, Inc. common stock (the "Company Shares Account"),
(b) an account treated as invested in cash, ("Cash Account"), and (c) an
account accumulating the Company match (the "Company Match Account"), which
shall be treated as invested entirely in MediaOne Group, Inc. common stock in
a Company Shares Account.

ARTICLE III

DEFERRED ACCOUNTS

3.1 CREDITING OF DEFERRALS -- CASH ACCOUNT. A Participant may elect
that up to 50% of his or her annual Deferred Compensation be credited to the
Cash Account. The Cash Account shall be merely a bookkeeping entry and shall
not represent funds set aside and invested.

3.2 CREDITING OF DEFERRALS - COMPANY SHARES ACCOUNT. Pursuant to a
Participant's election, Deferred Compensation (unless credited to the Cash
Account) shall be credited to the Participant's Company Shares Account, which
shall be credited with phantom shares of MediaOne Group, Inc. common stock.
The amounts so credited shall be converted to shares of phantom stock in
accordance with standard record keeping procedures.

3.3 TRANSFERRING SHARES BETWEEN ACCOUNTS. No more frequently than two
times per year, or as otherwise determined by the Administrator, a
Participant may elect to transfer all or a portion of his or her Cash Account
to his or her Company Shares Account. A Participant may not transfer any
portion of his or her Company Shares Account to his or her Cash Account
unless the Participant is no longer employed by the Company.

3.4 DIVIDENDS ON COMPANY SHARES ACCOUNTS. Participants shall be
credited dividend payments on the phantom stock held in their Company Shares
Accounts if, and to the extent, a dividend is paid by the Company on its
common stock. The amount credited shall be credited in shares of phantom
stock and shall be calculated by multiplying the number of phantom shares
held in the Participant's Company Shares Accounts by the dividend payable per
share of Company common stock.

3.5 CASH ACCOUNT. Deferred Compensation that is credited to a
Participant's Cash Account shall be credited with additional amounts
representing earnings from the date

4
<PAGE>

the Deferred Compensation is credited to the Participant's Cash Account. The
crediting rate for such earnings shall be determined at the beginning of each
quarter and shall be based on 10-year U.S. Treasury note rates plus 1% for
deferrals credited after December 31, 1990 (DC-T Plus One). Deferrals made
to Cash Accounts prior to 1991 shall be credited with interest based on
10-year U.S. Treasury note rates plus 2% (DC-T Plus Two).

3.6 CHANGE IN OUTSTANDING SHARES. In the event of any change in
outstanding MediaOne Group, Inc. shares by reason of any stock dividend or
split, recapitalization, merger, consolidation or exchange of shares or other
similar corporate change, the Board of Directors or its delegate shall make
such adjustments, if any, that it deems appropriate in the number of phantom
shares then credited to the Participant's accounts. Any and all such
adjustments shall be conclusive and binding upon all parties concerned.

ARTICLE IV

MATCHING COMPANY CONTRIBUTIONS

4.1 FUNDS ELIGIBLE FOR COMPANY MATCH. A Participant who has
contributed the maximum before-tax amount permitted under Code section 402(g)
to the Savings Plan, less the amount, if any, by which such contributions are
reduced, recharacterized or refunded so that the Savings Plan may satisfy the
actual deferral percentage test of Code section 401(k), shall receive
matching contribution credits on his or her Deferred Compensation in
accordance with the matching formula, if any, applicable to such Participant
under the provisions of the Savings Plan, as if such Deferred Compensation
had been contributed to the Savings Plan. If a Participant contributes to
both the Savings Plan and the Plan, deferrals under the Plan shall receive
matching contributions credits only to the extent that the Participant has
elected a contribution percentage under the Savings Plan that is less than
the maximum percentage eligible for Company match under the Savings Plan.
Annual incentive awards shall be eligible for a match without regard to
whether the Participant is employed by the Company on the date the annual
incentive award is paid.

For purposes of matching contribution credits, STIP awards shall be
eligible for a match without regard to whether the maximum before-tax amount
permitted under Code section 402(g) has been met in the Savings Plan, without
regard to whether the Participant's Pay (as defined in the Savings Plan) has
exceeded the dollar limit in effect during the Plan Year under Code section
401(a)(17)), and without regard to whether the Participant is employed by the
Company on the date the STIP award is paid.

4.2 FORFEITURE OF COMPANY MATCH. Subject to Article 6, a Participant's
Company matching contribution credits and the earnings thereon shall be
subject to forfeiture unless and until the Participant is vested in the
Company match in the Savings Plan.

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<PAGE>

4.3 COMPANY MATCH INVESTMENT. The Company's matching contribution
shall be credited to the Participant's Company Match Account and shall be
treated as invested in accordance with Sections 2.3 and 3.2 above.

ARTICLE V

DISTRIBUTION

5.1 TIMING OF DISTRIBUTION. Benefit payments under the Plan shall
commence at the time specified in the Participant's deferral election made
pursuant to Section 2.2, which time may be while the Participant is employed
by the Company; however, benefit payments shall commence no later than March
of the Plan Year next following the earliest to occur of the following
events: (a) the date that is five years after the Participant's termination
of employment, (b) the Participant's 65th birthday if the Participant is not
employed by the Company on such date, or (c) the Participant's death. If
the Participant fails to specify a distribution date, the Participant's
benefit payments shall commence no later than March of the Plan Year next
following the Plan Year in which the Participant's termination of employment
occurs.

Notwithstanding the preceding paragraph, in the event that the Internal
Revenue Service or a court determines that amounts deferred under the Plan
are currently taxable to any Participant due to the administration, operation
or any provision of the Plan, the Committee shall have the discretion to
cause such taxable amounts to be distributed to such Participant during the
year in which such amounts are taxable or during any year thereafter.

5.2 FORM OF DISTRIBUTION.

(a) At the time a Participant makes an election to participate in the
Plan, the Participant shall also make an election with respect to the form or
timing of distribution of the amounts credited to such Participant's account.
Such election shall be made at the same time as part of the election made in
Section 2.2 above. Amounts shall be distributed in cash, provided, however
that a Participant may elect to receive amounts credited to the Participant's
Company Shares Accounts as shares of MediaOne Group, Inc. common stock.

(b) A Participant may elect to receive the amount credited to such
Participant's accounts: (i) in one lump sum payment, (ii) in some other
whole number of approximately equal or percentage-based annual installments,
not to exceed ten installments, or (iii) in a combination of a lump sum and
installments; except that if the total amount credited to all of a
Participant's accounts is less than $10,000 at the time benefits commence,
such amount shall be distributed as a lump sum pursuant to Section 5.3.
Notwithstanding the foregoing, Participants who commence a leave of absence
or other assignment approved by the Company or continue to accrue service
credit with the Company following their termination of employment shall not
be subject to an automatic lump sum distribution from the Plan.

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<PAGE>

5.3 AUTOMATIC LUMP SUM DISTRIBUTION. The entire amount credited to a
Participant's account shall be paid in a single payment to the Participant in
March of the Plan Year next following the Plan Year in which the
Participant's termination of employment occurs if: (a) a Participant failed
to specify a form of payment, (b) a Participant's balance is less than
$10,000 and the Participant has not received prior payments under the Plan,
or (c) a Participant becomes a proprietor, officer, partner, employee,
agent, or otherwise enters into a similar relationship with a competitor or a
governmental agency having jurisdiction over the activities of the Company.

5.4 DISTRIBUTION TO BENEFICIARIES. In connection with the election
described in Section 5.2, a Participant may elect that if such Participant
dies before full distribution of all amounts credited to his or her account,
the balance of the account shall be distributed to the beneficiary or
beneficiaries designated in writing by the Participant. If no such
designation has been made, the balance of the account shall be distributed to
the estate of the Participant. The Participant shall designate whether the
distribution to the beneficiary is to be made in one payment or some other
number of approximately equal installments (not exceeding 10). If the form
of distribution is not specified, the distribution shall be made as a lump
sum payment. The first installment (or the lump sum payment if the
Participant has so elected) shall be paid no later than March of the Plan
Year next following the Plan Year in which the Participant dies.

5.5 UNFORESEEABLE EMERGENCY. The Participant may, in writing, request
early withdrawal in the event of an "unforeseeable emergency." The request
should be directed to the Administrator, who may, in his or her discretion,
approve an early withdrawal in an amount not to exceed the amount reasonably
necessary to meet the emergency, reduced by any funds that the Administrator
determines may be used by a Participant to relieve the hardship, including,
but not limited to, reimbursement or compensation by insurance or otherwise,
liquidation of assets (to the extent such liquidation itself would not cause
severe financial hardship), or amounts realized through a cessation of
deferrals under the Plan. In the case of individuals subject to Section 16
of the Exchange Act (as hereinafter defined), an early withdrawal shall be
subject to the discretion of the Committee.

An "unforeseeable emergency" is an unanticipated emergency that is
caused by an event beyond the control of the Participant or beneficiary and
that would result in severe financial hardship to the individual if early
withdrawal were not permitted. "Unforeseeable emergency" includes:

(a) a severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or a dependent
of the Participant (as defined in Code section 152(a));

(b) a loss of property due to casualty; or

(c) other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the Participant's control.

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<PAGE>

"Unforeseeable emergencies" shall not include college tuition or the
costs of purchasing a home.

ARTICLE VI

CHANGE IN CONTROL

6.1 CHANGE IN CONTROL. Upon a Change in Control (defined in Section
6.2) of the Company, the following provisions shall apply:

(a) As of the Change in Control, each Participant shall be fully vested
in his or her Company Match Account, regardless of vesting status under the
Savings Plan. Each Participant whose service with the Company terminates
after the Change in Control and before such Participant is fully vested in
the Company match in the Savings Plan shall be entitled to an additional
payment under this Plan equal to the amount forfeited under the Savings Plan.
Such additional amount shall be payable in accordance with Article 5.

(b) Each Participant in this Plan may elect no later than thirty days
after the Change in Control to receive as soon as practicable following the
Change in Control a single lump sum payment equal to 94% of the value of his
benefits under this Plan as of the date of the Change in Control. A
Participant making such election shall permanently forfeit the remaining 6%
of the value of his benefits under this Plan as of the date of the Change in
Control and the Company shall have no further liability to the Participant
with respect to benefits accrued under this Plan for periods prior to the
Change in Control.

(c) Without the written consent of each affected Participant, this Plan
may not be amended during the period commencing on the date of the Change in
Control and ending three years thereafter in any way that would cause an
individual to receive lower benefits under this Plan than he would have
received if such amendment had not been made, including, but not limited to,
amendments affecting eligibility and coverage.

(d) The Company has established an irrevocable "rabbi trust" that may
provide a source of funds to satisfy the Company's liability under this Plan.
Upon a Change in Control, the Company shall transfer to the trustee of such
trust an amount equal to the present value of all benefits under this Plan as
of the date of the Change in Control. The trustee shall be a bank or other
entity that may be granted corporate trustee powers under applicable law.
The Company shall have no obligation to pay any benefits under this Plan to
the extent such benefits are paid from such trust.

6.2 CHANGE IN CONTROL DEFINED. For purposes of the Plan, a "Change in
Control" shall be deemed to have occurred in the following circumstances:

(a) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act) is or becomes a beneficial owner of (or otherwise has
the authority to vote),

8
<PAGE>

directly or indirectly, securities representing 20% or more of the total
voting power of all of the Company's then outstanding voting securities,
unless through a transaction arranged by, or consummated with the prior
approval of the Board of Directors;

(b) any period of two consecutive calendar years during which there
shall cease to be a majority of the Board of Directors comprised as follows:
individuals who at the beginning of such period constitute the Board of
Directors and any new director(s) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved; or

(c) the Company becomes a party to a merger, consolidation or share
exchange in which either (i) the Company shall not be the surviving
corporation or (ii) the Company shall be the surviving corporation and any
outstanding shares of common stock of the Company shall be converted into
shares of any other company (other than a reincorporation or the
establishment of a holding company involving no change of ownership of the
Company) or other securities or cash or other property (excluding payments
made solely for fractional shares); or

(d) any other event that a majority of the Board of Directors, in its
sole discretion, shall determine constitutes a Change of Control for all Plan
Participants.

ARTICLE VII

MISCELLANEOUS PROVISIONS

7.1 SATISFACTION OF INTERESTS. The Company may transfer assets to a
trustee to be held in trust. Any trust created by the Company and any assets
held by such trust to assist it in meeting its obligations under the Plan
shall conform to the terms of the model trust (the "Trust"), as described in
Revenue Procedure 92-64, 1992-33 I.R.B. 11, as modified, or any successor
thereto. It is the intention of the Company and the Participants that the
Plan be unfunded for tax purposes and for purposes of Title I of ERISA.
Benefits under the Plan shall be paid from the Trust to the extent that there
are sufficient assets in the Trust. However, the Company, at its discretion,
may pay the benefits payable under the Plan out of its operating assets. If
the assets of the Trust are not sufficient to pay the benefits under the
Plan, the Company shall pay the benefits.

7.2 INALIENABILITY OF BENEFITS. A Participant's rights to benefit
payments under the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Participant or creditors of the Participant's
beneficiary.

7.3 EFFECT ON EMPLOYMENT. Nothing contained in the Plan or any agreement
related hereto or referred to herein shall affect, or be construed as affecting,
the terms of

9
<PAGE>

employment of any Participant except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, any
obligation on (a) the Company to continue the employment of any Participant
and (b) any Participant to remain in the employ of the Company.

7.4 TAXATION. The Company shall have the right to deduct from any
deferral to be made or any distribution to be paid under the Plan any
federal, state or local income and employment taxes that it is required by
law to withhold.

In the event that the Internal Revenue Service or a court determines
that amounts deferred under the Plan are currently taxable to any Participant
due to the administration, operation or any provision of the Plan, such
liability shall be the sole responsibility of the Participant, and the
Company shall not be liable for any such taxes.

7.5 AMENDMENT OR TERMINATION. The Committee may at any time amend or
terminate the Plan, but such amendments or termination shall not adversely
affect the rights of any Participant to any accrued vested benefit under the
Plan prior to the effective date of such amendment or termination without his
or her consent. The Administrator or his or her delegate shall be authorized
to make minor or administrative amendments to the Plan. Participants'
account balances shall be frozen upon termination of the Plan, and any assets
held in trust pursuant to Section 7.1 in excess of the amount required to pay
benefits under the Plan shall be paid to the Company.

7.6 BINDING EFFECT. The Plan and all benefits payable hereunder shall
be binding upon and inure to the benefit of the Company, its successors and
assigns and the Participant and his or her heirs, executors, administrators
and legal representatives.

7.7 STATUS OF PARTICIPANTS. Participants and beneficiaries shall have
the status of unsecured creditors of the Company. The Plan constitutes a
mere promise by the Company to make benefit payments in the future.

No Participant or beneficiary shall have any preferred claim on, or any
beneficial ownership interest in, any assets of any trust established in
connection with the Plan pursuant to Section 7.1 prior to the time such
assets are paid to the Participant or beneficiary. All rights created under
the Plan and any trust shall be mere unsecured contractual, but enforceable
rights of the Participants and beneficiaries against the Company. The rights
under the Plan and assets in the trust, if any, shall not be subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge by any Participant or beneficiary, and any attempt to do so shall be
null and void.

7.8 GOVERNING LAW. The Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the State of
Colorado.

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<PAGE>

7.9 FEDERAL SECURITIES LAW. With respect to individuals subject to
Section 16 of the Exchange Act, the Company intends that the provisions of
this Plan and all transactions effected in accordance with the Plan shall
comply with Rule 16b-3 under the Exchange Act. Accordingly, notwithstanding
any other provision set forth in this Plan, the Administrator shall
administer and interpret the Plan to maintain compliance with such rule.

ARTICLE VIII

CLAIMS PROCEDURE

8.1 DISPUTES. All disputes concerning benefits under this Plan shall
be subject to this Article VIII.

8.2 SUBMISSION OF CLAIMS. Claims must be submitted in writing and
presented to the Administrator, who shall have full and absolute discretion
to interpret the provisions of the Plan.

8.3 DENIAL OF CLAIM. If a claim is denied, notice of denial shall be
furnished by the Administrator to the claimant within 90 days after the
receipt of the claim by the Administrator, unless special circumstances
require an extension of the time for processing the claim, in which event
notification of extension shall be provided to the Participant or the
beneficiary. The extension shall not exceed 90 days.

8.4 ADEQUATE NOTICE. The Administrator shall provide adequate notice,
in writing, to any claimant whose claim has been denied, setting forth the
specific reasons for such denial, specific reference to pertinent Plan
provisions, a description of any additional material or information necessary
for the claimant to perfect his or her claim and an explanation of why such
material or information is necessary, all written in a manner calculated to
be understood by the claimant. Such notice shall include appropriate
information as to the steps to be taken if the claimant wishes to submit his
or her claim for review. The claimant or the claimant's authorized
representative may request such a review upon written application. The
claimant may review pertinent documents and may submit issues or comments in
writing. The claimant or the claimant's duly authorized representative must
request such review within the reasonable period of time prescribed by the
Administrator. In no event shall such a period of time be less than 60 days.

8.5 REVIEW OF CLAIM. The Administrator shall serve as the final review
committee, under the Plan, ERISA, and the Code, for the review of all claims
by Participants whose initial claims for benefits have been denied, in whole
or in part, by the Company. The Administrator shall have the authority to
interpret the provisions of the Plan in his or her full and absolute
discretion.

8.6 DECISION ON CLAIM. A decision on review shall be rendered within
60 days after the receipt of the request for review by the Administrator. If
special circumstances require a further extension of time for processing, a
decision shall be rendered not later than

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<PAGE>

120 days following the Administrator's receipt of the request for the review.
If such an extension of time of review is required, written notice of the
extension shall be furnished to the claimant. The decision of the
Administrator shall be furnished to the claimant in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent
Plan provisions on which the decision is based. The decision of the
Administrator shall be final and binding.

Executed this ____________________ day of ___________________________, 1998.

MEDIAONE GROUP, INC.

By
---------------------------------
Its
---------------------------------

<PAGE>

MEDIAONE GROUP
EXECUTIVE FINANCIAL COUNSELING PLAN

ARTICLE I

PURPOSE

The MediaOne Group Executive Financial Counseling Plan (the "Plan") has
been established by MediaOne Group, Inc. to provide certain officers and
executives of MediaOne Group, Inc. and its subsidiaries (the "Company") with
the opportunity to understand more fully and maximize the value of the
compensation and benefits they receive from the Company through comprehensive
financial counseling and related services.

ARTICLE II

DEFINITIONS

2.1 "CAUSE" shall mean (unless another definition is agreed to in
writing by MediaOne Group, Inc. and the Participant) termination by the
Company because of (a) the Participant's willful and continued failure to
substantially perform his or her duties (other than any such failure
resulting from the Participant's incapacity due to physical or mental
impairment) after a written demand for substantial performance is delivered
to the Participant by the Company, which demand specifically identifies the
manner in which the Company believes the Participant has not substantially
performed his or her duties, (b) the willful conduct of the Participant which
is demonstrably and materially injurious to the Company, monetarily or
otherwise, or (c) the conviction of the Participant for a felony by a court
of competent jurisdiction.

2.2 "COMMITTEE" shall mean the Human Resources Committee of the
MediaOne Group, Inc. Board of Directors, its delegate, or any other person
the MediaOne Group, Inc. Board may designate from time to time.

2.3 "COMPANY" shall mean MediaOne Group, Inc., its subsidiaries,
affiliates and any successors thereof.

2.4 "CONSULTANT" shall mean a firm or individual that is a professional
provider of financial counseling and related services.

2.5 "PARTICIPANT" shall mean those individuals of the Company selected
to participate in the Plan as set forth in Article III.

<PAGE>

2.6 "PLAN" shall mean the MediaOne Group Executive Financial Counseling
Plan.

2.7 "PLAN YEAR" shall mean the year beginning on July 1 and ending on
June 30.

2.8 "PREFERRED PROVIDER" shall mean a Consultant with whom MediaOne
Group, Inc. has entered into an agreement for such Consultant to provide
Services at a negotiated fee for those Participants who so elect to receive
their Services.

2.9 "RETIREMENT" shall mean, for any Participant, that such Participant
has retired from the Company and currently is eligible to receive a service
pension benefit under the MediaOne Group Pension Plan or a pension benefit
under any individually negotiated, custom written agreement or arrangement
executed by a duly authorized representative of MediaOne Group, Inc. and the
Participant.

2.10 "SERVICES" shall mean financial counseling and related services
provided to a Participant by a Consultant, including without limitation,
estate planning, insurance planning, retirement planning, and tax planning
and preparation, except that Services shall not include services provided in
connection with a tax audit.

ARTICLE III

ELIGIBILITY

3.1 ELIGIBILITY CRITERIA. Eligibility for participation in the Plan
shall be limited to (i) the Chief Executive Officer of MediaOne Group, Inc.;
(ii) Band I officers of the Company; and (iii) such other Company officers
and/or executives selected to participate in the Plan by the Committee or its
delegate. Except as provided in Section 3.2, individuals who are eligible to
participate in the Plan on any day during a Plan Year shall be eligible for
the full financial counseling allowance provided under the Plan for such Plan
Year as set forth in Article IV.

3.2 DISCONTINUANCE OF EMPLOYMENT; INELIGIBILITY. A Participant who
ceases to meet the eligibility criteria for participation in the Plan during
any Plan Year as set forth in Section 3.1 due to the Participant's
discontinuance of employment with the Company (other than for Cause) or
change of position within the Company shall continue to be eligible to
participate in the Plan or, within the sole discretion of the Committee, to
receive a payment equal to the value of such continued participation, for the
remainder of the Plan Year and for such additional period, if any, as
provided by written agreement between the Participant and the Company. If a
Participant's employment with the Company terminates for Cause, such
Participant's participation in the Plan shall cease immediately.

2
<PAGE>

3.3 RETIREMENT. A Participant who ceases to meet the eligibility
criteria for participation in the Plan during any Plan Year as set forth in
Section 3.1 due to Retirement shall be eligible to participate in the Plan
or, within the sole discretion of the Committee, to receive a payment equal
to the value of such continued participation, for an additional Plan Year in
addition to, and immediately following, the continued eligibility for
participation set forth in Section 3.2.

ARTICLE IV

FINANCIAL COUNSELING ALLOWANCE

4.1 CHIEF EXECUTIVE OFFICER AND BAND I OFFICERS OF THE COMPANY. The
Chief Executive Officer and each Band I officer of the Company shall be
entitled to receive a benefit equal to 100 percent of the cost of Services
incurred by the Participant during any Plan Year, whether or not provided by
a Preferred Provider, up to such amount as may be determined by the Committee
or its delegate from time to time.

4.2 OTHER PARTICIPANTS. Any other Participant shall be entitled to
receive Services from a Consultant during any Plan Year. If such Consultant
is a Preferred Provider, MediaOne Group, Inc. shall pay to such Preferred
Provider a flat fee for Services provided during the Plan Year in such amount
as may be negotiated by MediaOne Group, Inc. and approved by the Committee or
its delegate from time to time. Alternatively, each such Participant shall
be entitled to receive, upon submission of invoice to MediaOne Group, Inc.,
reimbursement in an amount equal to 75 percent of the cost of Services
provided by any Consultants other than a Preferred Provider, up to a total of
$4,500, incurred by the Participant during any Plan Year. If a Participant
submits invoices for reimbursement under the Plan for Services from any
Consultants other than a Preferred Provider at any time during the Plan Year,
the total benefit payable for Services provided to such Participant for the
Plan Year shall not exceed $4,500 in the aggregate.

4.3 PREFERRED PROVIDER. If a Participant other than the Chief
Executive Officer or a Band I officer of the Company elects to receive
Services from a Preferred Provider, such Participant will be deemed to have
received a benefit for each quarter of a Plan Year (or part thereof) in which
the Participant maintains a relationship with such Preferred Provider,
regardless of the amount of Services actually provided to the Participant.
The value of such benefit to the Participant shall be equal to the fee paid
by MediaOne Group, Inc. to the Preferred Provider, the amount of which shall
be negotiated by MediaOne Group, Inc. and approved by the Committee or its
delegate from time to time. A Participant may discontinue his or her
relationship with a Preferred Provider at any time, effective upon the
expiration of the current quarter of the Plan Year, by providing written
notice to MediaOne Group, Inc. and the Preferred Provider.

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<PAGE>

ARTICLE V

ARBITRATION

5.1 SCOPE OF ARBITRATION. Any claim, controversy or dispute between a
Participant and the Company, whether sounding in contract, statute, tort,
fraud, misrepresentation, discrimination or any other legal theory,
including, but not limited to, disputes relating to the interpretation of
this Plan; claims under Title VII of the Civil Rights Act of 1964, as
amended; claims under the Civil Rights Act of 1991; claims under the Age
Discrimination in Employment Act of 1967, as amended; claims under 42 U.S.C.
Section 1981, Section 1981a, Section 1983, Section 1985, or Section 1988;
claims under the Family and Medical Leave Act of 1993; claims under the
Americans with Disabilities Act of 1990, as amended; claims under the Fair
Labor Standards Act of 1938, as amended; claims under the Employee Retirement
Income Security Act of 1974, as amended; claims under the Colorado
Anti-Discrimination Act; or claims under any other similar federal, state or
local law or regulation, whenever brought, shall be resolved by arbitration.
The only legal claims between Participant and the Company that are not
included for arbitration within this Plan are claims by Participant for
workers' compensation or unemployment compensation benefits and/or claims for
benefits under any Company benefit plan, if the plan does not provide for
arbitration of such disputes. IN CONSIDERATION OF ANY BENEFIT PROVIDED TO A
PARTICIPANT UNDER THE TERMS OF THIS PLAN, SUCH PARTICIPANT VOLUNTARILY,
KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHT HE OR SHE MAY OTHERWISE HAVE TO
SEEK REMEDIES IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO A JURY TRIAL
AND THE RIGHT TO RECOVER PUNITIVE DAMAGES ON ANY COMMON LAW AND/OR CONTRACT
CLAIMS. The Federal Arbitration Act, 9 U.S.C. Sections 1-16 ("FAA") shall
govern the arbitrability of all claims, provided that they are enforceable
under the FAA, as it may be amended from time to time. In the event the FAA
does not govern, the Colorado Uniform Arbitration Act shall apply.
Additionally, the substantive law of Colorado, to the extent it is consistent
with the terms stated in this Plan for arbitration, shall apply to any common
law claims. This arbitration provision supersedes any other arbitration
agreement between Participant and the Company to the extent they are
inconsistent.

5.2 ARBITRATION PROCEEDINGS. A single arbitrator engaged in the practice
of law shall conduct the arbitration under the applicable rules and procedures
of the American Arbitration Association ("AAA"). Any dispute that relates
directly or indirectly to Participant's employment with the Company or to the
termination of Participant's employment will be conducted under the AAA
Employment Dispute Resolution Rules, effective November 1993. The arbitrator
shall be chosen from a state other than Participant's state of residence and
other than Colorado. Other than as set forth herein, the arbitrator shall have
no authority to add to, detract from, change, amend, or modify existing law.
All arbitration proceedings, including without limitation, settlements and
awards, under this Plan will be confidential. The parties shall share equally
the hourly fees of the arbitrator. The Company shall pay the expenses (such as
travel and lodging) of the arbitrator. The prevailing party in any arbitration
may be entitled to receive reasonable attorneys' fees. The arbitrator's decision
and award shall be final and binding,

4
<PAGE>

as to all claims that were, or could have been, raised in the arbitration,
and judgment upon the award rendered by the arbitrator may be entered to any
court having jurisdiction thereof. If any party hereto files a judicial or
administrative action asserting claims subject to this arbitration provision,
and another party successfully stays such action and/or compels arbitration
of such claims, the party filing said action shall pay the other party's
costs and expenses incurred in seeking such stay and/or compelling
arbitration, including reasonable attorneys' fees.

5.3 REFORMATION. If any provision of this Article V is held by any
arbitrator or court of competent jurisdiction to be enforceable only if such
provision is modified in scope, then the Company and the Participant shall
consider such provision to be so amended and modified to comply with such
determination or order. All other terms and provisions of the Plan shall
remain in full force and effect as originally written or modified pursuant to
Section 6.6.

ARTICLE VI

MISCELLANEOUS PROVISIONS

6.1 COSTS AND EXPENSES. The costs and expenses of administering the
Plan shall be borne by MediaOne Group, Inc. and shall not be charged against
any Participant or the Plan benefit of any Participant.

6.2 RESPONSIBILITY LIMIT OF THE COMPANY. The Company shall not be
responsible or otherwise held liable for any advice or any other Service or
other matters whatsoever provided or not provided to a Participant by any
Consultant, whether or not a Preferred Provider, or for failure of a
Consultant to provide any such Service, advice or other matter or for any
loss or other loss experienced by any Participant or by any other party as a
result of any such advice or service. To the extent the Company is held so
liable, the Company shall be indemnified in full by any Consultant involved
in any way with the matter giving rise to the liability.

6.3 INALIENABILITY OF BENEFITS. A Participant's right to benefits
under the Plan are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by
creditors of the Participant or the Participant's beneficiary.

6.4 TAXATION. The Company shall have the right to deduct from a
Participant's regular salary any federal, state or local income and
employment taxes that it is required by law to withhold.

6.5 EFFECT ON EMPLOYMENT. Nothing contained in this Plan or any
related agreement or other related documentation shall affect, or be
construed as affecting, the terms of employment of any Participant. Nothing
contained in this Plan or any related

5
<PAGE>

agreement shall impose, or be construed as imposing, any obligation on the
Company to continue the employment of any Participant or any Participant to
remain in the employ of the Company or alter the "at will" nature of any
Participant's employment.

6.6 AMENDMENT OR TERMINATION OF PLAN. The Committee or its delegate
shall have the right to amend, modify, suspend or terminate this Plan at any
time for any reason and without prior notice to Participants.

6.7 ADMINISTRATION. The Plan shall be administered and interpreted by
the Committee, which may adopt such rules, regulations and guidelines as it
determines necessary for the administration of the Plan. The Committee may
delegate to one or more of its members, or to one or more other agents, such
duties as it may deem advisable, and the Committee or any person to whom it
has delegated such duties may employ one or more persons to render advice on
any responsibility that the Committee or such person or any Participant may
have under the Plan. The Company shall indemnify members of the Committee
and any agent of the Committee who is also an employee of the Company against
any and all liabilities or expenses to which they may be subject by reason of
any act or failure to act with respect to their duties on behalf of the Plan,
except in circumstances involving gross negligence or willful misconduct.

6.8 GOVERNING LAW. This Plan and actions taken in connection with this
Plan shall be governed and construed in accordance with the laws of the State
of Colorado.

6
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I PURPOSE 1

ARTICLE II DEFINITIONS 1

ARTICLE III ELIGIBILITY 2

Section 3.1 Eligibility Criteria 2
Section 3.2 Discontinuance of Employment; Ineligibility 2
Section 3.3 Retirement 2

ARTICLE IV FINANCIAL COUNSELING ALLOWANCE 3

Section 4.1 Chief Executive Officer and Bank I Officers
of the Company 3
Section 4.2 Other Participants 3
Section 4.3 Preferred Provider 3

ARTICLE V ARBITRATION 4

Section 5.1 Scope of Arbitration 4
Section 5.2 Arbitration Proceedings 4
Section 5.3 Reformation 5

ARTICLE VI MISCELLANEOUS

Section 6.1 Costs and Expenses 5
Section 6.2 Responsibility Limit of the Company 5
Section 6.3 Inalienability of Benefits 5
Section 6.4 Taxation 5
Section 6.5 Effect on Employment 5
Section 6.6 Amendment or Termination 6
Section 6.7 Administration 6
Section 6.8 Governing Law 6
</TABLE>

<PAGE>

[FORM 4 - NON-QUALIFIED STOCK OPTION AGREEMENT
(EXECUTIVE HRC VERSION)]

MEDIAONE GROUP, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

GRANT #

THIS AGREEMENT is made between MediaOne Group, Inc. (the "Company") and
the Optionee ("Optionee") named in the schedule attached to and made part of
this Agreement (the "Schedule"), as of the date set forth in the Schedule.

Pursuant to the MediaOne Group, Inc. Amended 1994 Stock Plan (the
"Plan"), the Human Resources Committee of the Company's Board of Directors
(the "Committee") has approved the granting to Optionee of an option to
purchase shares of Common Stock (the "Option"), without par value on the
terms and conditions set forth in this Agreement, as a matter of separate
inducement in connection with Optionee's engagement with the Company or a
Related Entity, and not in lieu of salary or other compensation for
Optionee's services. The Option shall not be treated as an incentive stock
option.

In consideration of the foregoing and of the mutual covenants set forth
herein, and other good and valuable consideration, the Company and Optionee
agree as follows:

1. INCORPORATION OF PLAN AND DEFINED TERMS. The Option is granted
pursuant to the Plan, the terms of which are incorporated by reference and
apply to this Agreement as if they were fully set forth herein. Terms used
in this Agreement and not otherwise defined shall have the meanings set forth
in the Plan.

2. SHARES OPTIONED; OPTION PRICE. Optionee may purchase all or any
part (in whole shares) of an aggregate of the number of shares of Common
Stock, at a purchase price per share (which is not less than the Fair Market
Value on the date of this Agreement) as specified in the Schedule, on the
terms and conditions set forth herein.

3. OPTION TERM; VESTING; TIMES OF EXERCISE. The Option shall become
Vested in one-third increments upon each of the first three (3) anniversaries
following the date hereof. The vesting on any such increment shall be
subject to the continuous employment of Optionee until the anniversary date
on which such increment is scheduled to vest, and provided further that the
Option shall expire and shall no longer be exercisable following ten (10)
years from the date of this Agreement (the "Expiration Date"). Except as
otherwise specifically set forth below and elsewhere in this Agreement, the
Option shall become Vested only to the extent that the foregoing continuous
employment requirement is satisfied, regardless of the circumstances under
which Optionee's employment is terminated.

<PAGE>

(i) DEATH. In the event of the death of Optionee, the Option shall
become Vested and the estate of the Optionee shall have the right, at any
time and from time to time consistent with rules established by the
Committee for the administration of the Plan, within one year after the
date of death or such longer period, if any, as the Committee in its sole
discretion shall determine (but not after the Expiration Date), to exercise
all or any portion of the Option.

(ii) DISABILITY. Except as otherwise set forth in this Agreement, if
the employment of Optionee is terminated because of Disability, the Option
shall be retained by Optionee, and the Option, if not then Vested, shall
become Vested as set forth in the vesting schedule in Paragraph 3 of this
Agreement. Upon vesting, Optionee shall have the right to exercise the
Option, at any time and from time to time, but not after the Expiration
Date.

(iv) OTHER TERMINATION. If Optionee's employment with the Company or
a Related Entity is terminated for any reason other than for death,
Disability or Retirement and other than "for cause," as such term is
defined in the Plan, Optionee shall have the right to exercise all or any
portion of the Option, if the Option is then Vested, at any time and from
time to time within three (3) months of termination or such other period,
if any, as the Committee in its sole discretion shall determine (but not
after the Expiration Date).

(v) EXECUTIVE SEVERANCE AGREEMENT. If Optionee has executed an
Executive Severance Agreement with the Company, the Option will be Vested
in accordance with the terms of the Executive Severance Agreement if
Optionee becomes entitled to the receipt of "Severance Benefits," as set
forth in that Executive Severance Agreement and sixteen (16) days have
passed following the execution of a standard form of "Waiver & Release" of
claims and compliance with the "Conditions" by Optionee as set forth in the
Company's standard Executive Severance Agreement.

(vi) CHANGE OF CONTROL. Upon the occurrence of a Change of Control,
the Option shall be Vested immediately. For purposes of this paragraph,
"Change of Control" shall have the identical meaning as set forth in the
Change of Control Agreement, if any, that Optionee has executed with the
Company. To ensure parallel application, for purposes of this paragraph
only, defined terms contained in the definition of "Change of Control" set
forth in Optionee's Change of Control Agreement shall have the same meaning
here as

2
<PAGE>

set forth in that Change of Control Agreement. If Optionee has not
executed any such Change of Control Agreement, "Change of Control" shall
have the identical meaning as set forth in the Plan.

(vii) TERMINATION FOR CAUSE. Notwithstanding any other provision in
this Agreement, if Optionee's employment is terminated by the Company or
any Related Entity "for cause," as such term is defined in the Plan,
Optionee shall forfeit immediately all rights under the Option except as to
the shares of Common Stock already purchased prior to such termination.

4. EXERCISE: PAYMENT FOR AND DELIVERY OF STOCK. The Option may be
exercised only by Optionee or his or her transferee(s) by last will and
testament or the laws of descent and distribution. The Option may be
exercised by giving notice of exercise to the Company specifying the number
of shares (minimum of 100, unless the unexercised balance of the Option is
less than 100) to be purchased and the total purchase price. The purchase
price shall be payable (i) in cash or by an equivalent means, (ii) by
delivery, constructive or otherwise, to the Company of shares of Common Stock
owned by Optionee, or (iii) any combination of the foregoing. Any shares of
Common Stock so tendered shall be valued as of the Option exercise date.

5. NON-TRANSFERABILITY OF OPTION. Except as specifically set forth in
this Paragraph, the Option is not transferable other than by last will and
testament or the laws of descent and distribution, and the Option shall not
be assigned, transferred, pledged, hypothecated, or otherwise disposed of in
any way, whether by operation of law or otherwise, and shall not be subject
to execution, attachment or similar process. The Option shall not be
assignable or transferable pursuant to a domestic relations order. In
limited circumstances, with the prior approval of the Senior Vice President -
Human Resources, in full compliance with Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder, and
after Optionee has satisfied the Company's executive stock ownership goal
then in effect and set by the Committee, Optionee may transfer the Option, in
whole or in part, to one or more member(s) of his or her family (as that term
is defined in Internal Revenue Code Reg. Section 25.2701-2(d)) ("Member(s) of
the Family") or to trusts maintained for the benefit of such Member(s) of the
Family (together, "Transferee(s)"). Any such transfer shall be contingent
upon the execution by both Optionee and Transferee(s) of a "Stock Option
Transfer Agreement," in the form provided by the Company ("Transfer
Agreement"). The Option shall not be transferable by Transferee(s). Upon
any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of
the Option other than as specifically set forth in this Paragraph, or upon
the levy of any execution, attachment or similar process upon the Option, the
Option shall immediately terminate and become null and void.

3
<PAGE>

6. PERFORMANCE FOR COMPETITORS. If at any time following the date of
this Agreement and before the Option is Vested, regardless of whether
Optionee has Retired, Optionee directly or indirectly receives payment for
services rendered to, or is otherwise employed by, any person, firm or
corporation that is in competition with the Company or engaged in providing
any goods or services that are substantially the same as any goods or
services provided or under development by the Company, Optionee immediately
shall forfeit all rights under the Option, unless the Committee in its sole
discretion determines otherwise, or unless Optionee is in full compliance
with the Company's Policy on Service on Outside Boards of Directors, as
interpreted solely by the Company's Senior Management Compliance Committee.
If at any time Optionee renders services to or becomes otherwise employed by
any person, firm or corporation that is in competition with the Company or
engaged in providing any goods or services that are substantially the same as
goods or services provided or under development by the Company, Optionee
shall have three (3) months after the date of such employment to exercise any
Vested and non-expired Option. Any determination under this Paragraph 6,
including whether a person, firm or corporation is "in competition with" the
Company or providing "substantially the same" goods or services as the
Company provides or is developing, will be subject to the sole discretion of
the Committee.

7. NON-SOLICITATION OF EMPLOYEES. Optionee agrees that he or she will
not for a period of one (1) year immediately following the termination of his
or her employment with the Company for any reason, either on Optionee's own
account or in conjunction with or on behalf of any other person or entity
whatsoever, directly or indirectly induce, solicit, or entice away any person
who, at any time during the three (3) months immediately preceding Optionee's
termination of employment, is a managerial level employee of the Company
(including, but not limited to, any Officer, Executive Director or
director-level employee, or any equivalent or successor term for any such
employees). If Optionee engages in any conduct contrary to the provisions
of this Paragraph 7, Optionee shall forfeit the Option to the extent the
Option has not Vested, unless the Committee determines otherwise. Such
forfeiture is in addition to any other remedies available under law.

8. INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION. Optionee agrees
that any inventions, discoveries, creations (including without limitation
software, writings, drawings and other works), improvements, confidential
information or other intellectual property that he or she may develop or
create, or assist in developing or creating, during his or her employment
with the Company, whether or not patentable or eligible for copyright, that
relate to the actual, planned, or foreseeable business or other activities of
the Company, or that result from his or her work for the Company, are the
exclusive property of the Company. Optionee agrees to disclose promptly such
property to the Company and will, both during and after his or her
employment, and without additional compensation, execute all assignments and
other documents and do all things reasonably necessary to secure and enforce
U.S. and foreign intellectual property rights for the Company, including
patents and copyrights.

Optionee is not obligated to assign any intellectual property to Company
that Optionee created prior to Optionee's employment with the Company. To
avoid any confusion, Optionee must identify in writing on Attachment A any
such intellectual property that has not been patented or published and
forward it along with this letter.

4
<PAGE>

Optionee agrees that Optionee will hold in confidence and will not,
during or after his or her employment, disclose or use for the benefit of any
person or entity other than Company, any Company confidential information
that was developed or received during his or her employment. "Company
confidential information" shall include all trade secrets, research and
development information, product and marketing plans, business or legal
strategies, personnel or financial data, product and service specifications,
prototypes, software, customer lists and other confidential information or
materials of Company or of others with whom Company has a confidential
relationship. Optionee will promptly return all such information and
materials to Company when his or her employment ends.

If Optionee fails to comply with the provisions of this Paragraph____,
Optionee shall forfeit the Option to the extent the Option has not vested,
unless the Committee determines otherwise. Such forfeiture is in addition to
any other remedies available to the Company.

9. DECISIONS OF COMMITTEE. Any decision, interpretation or other
action made or taken in good faith by the Committee arising out of or in
connection with the Plan or the Option shall be final, binding and conclusive
on the Company and Optionee and any respective heir, executor, administrator,
successor or assign.

10. ARBITRATION. Optionee agrees that any claim, controversy or
dispute that may arise directly or indirectly in connection with Optionee's
employment or termination of employment with MediaOne, and/or any associated
or related disputes arising therefrom involving MediaOne and/or any
employee(s), Director(s), officer(s), or agent(s) of MediaOne, whether
arising in contract, statute, tort, fraud, misrepresentation, discrimination,
common law or any other legal theory, including, but not limited to:
Disputes relating to the making, performance or interpretation of this
Agreement; and claims or other disputes arising under Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended; 42 U.S.C. Section
1981, Section 1981a, Section 1983, Section 1985, or Section 1988; the
Family and Medical Leave Act of 1993; the Americans with Disabilities Act of
1990, as amended; the Rehabilitation Act of 1973, as amended; the Fair Labor
Standards Act of 1938, as amended; the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"); the Colorado Anti-Discrimination Act; or
any other similar federal, state or local law or regulation, whenever
brought, shall be resolved by arbitration. If, however, Optionee would
otherwise be legally required to exhaust administrative remedies to obtain
legal relief, Optionee can and must exhaust such administrative remedies
prior to pursuing arbitration. The only legal claims between Optionee and
MediaOne that are not included for arbitration within this Agreement are
claims for workers' compensation or unemployment compensation benefits. BY
SIGNING THIS AGREEMENT, OPTIONEE VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY
WAIVES ANY RIGHT OPTIONEE MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR
OTHER FORUMS, INCLUDING THE RIGHT TO A JURY TRIAL. MEDIAONE ALSO HEREBY
VOLUNTARILY, KNOWINGLY, AND INTELLIGENTLY WAIVES ANY RIGHT IT MIGHT OTHERWISE
HAVE TO SEEK REMEDIES AGAINST OPTIONEE IN COURT OR OTHER FORUMS, INCLUDING
THE RIGHT TO A JURY TRIAL. The Federal Arbitration Act, 9 U.S.C. Sections
1-16 ("FAA") shall govern the arbitrability of all claims, provided that they
are enforceable under the FAA, as it may be amended from time to time. In
the event the FAA does not govern, the Colorado Uniform Arbitration Act shall
apply. Additionally, the substantive law of Colorado, to the extent it is
consistent with the terms stated in this Agreement for arbitration, shall
apply to any common law

5
<PAGE>

claims. This Agreement for arbitration supersedes any prior arbitration
agreement between Optionee and MediaOne to the extent they are inconsistent.

A single arbitrator engaged in the practice of law shall conduct the
arbitration under the applicable rules and procedures of the American
Arbitration Association ("AAA"), unless otherwise agreed to by the parties.
Any dispute, that relates directly or indirectly to Optionee's employment
with MediaOne or to the termination of Optionee's employment will be
conducted under the AAA National Rules for the Resolution of Employment
Disputes, effective June 1, 1997. The arbitrator shall be chosen from a
state other than Optionee's state of residence and other than Colorado.
Other than as set forth herein, the arbitrator shall have no authority to add
to, detract from, change, amend, or modify existing law. The arbitrator
shall have the authority to order such discovery as is necessary for a fair
resolution of the dispute. The arbitrator may award punitive damages, as
allowed by Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as
amended; and the Americans with Disabilities Act of 1990, as amended,
regardless of any limitations imposed by federal, state, or local laws
regarding amounts that may be awarded in arbitration proceedings. All
arbitration proceedings, including without limitation, settlements under this
Agreement, will be confidential. Optionee shall not be required to pay more
than One Hundred Fifty Dollars ($150.00) of the arbitrator's hourly fees and
expenses. The prevailing party in any arbitration shall be entitled to
receive reasonable attorneys' fees as provided by law. The arbitrator's
decision and award shall be final and binding, as to all claims that were, or
could have been, raised in the arbitration, and judgment upon the award
rendered by the arbitrator may be entered to any court having jurisdiction
thereof. If any party hereto files a judicial or administrative action
asserting claims subject to this arbitration provision, and another party
successfully stays such action and/or compels arbitration of such claims, the
party filing said action shall pay the other party's costs and expenses
incurred in seeking such stay and/or compelling arbitration, including
reasonable attorneys' fees not to exceed Two Thousand Five Hundred Dollars
($2,500.00).

11. MISCELLANEOUS.

(i) NOTICES. Any notice to be given to the Company shall be
personally delivered to or addressed to its Senior Vice President - Human
Resources, and any notice to be given to Optionee shall be addressed to him
or her at the address given beneath his or her signature below or such other
address as the Company reasonably believes to be his or her most current
address. Any notice to the Company is deemed given when received on behalf
of the Company by the Senior Vice President - Human Resources, of the Company
at 188 Inverness Drive West, 5th Floor Englewood, CO 80112. Any notice to
Optionee is deemed given when personally delivered or enclosed in a properly
sealed envelope addressed as aforesaid and deposited, postage prepaid, in a
post office or branch post office regularly maintained by the United States
Postal Service.

6
<PAGE>

(ii) EMPLOYMENT. THE COMPANY MAY TERMINATE OPTIONEE'S EMPLOYMENT
AT ANY TIME, WITH OR WITHOUT CAUSE, UNLESS THE TERM OF EMPLOYMENT IS COVERED
BY SEPARATE CONDITIONS CONTAINED IN ANOTHER AUTHORIZED WRITTEN AGREEMENT
SIGNED BY THE COMPANY AND THE OPTIONEE. NOTHING CONTAINED IN THIS AGREEMENT
CREATES OR IMPLIES AN EMPLOYMENT CONTRACT OR TERM OF EMPLOYMENT OR ANY
PROMISE OF SPECIFIC TREATMENT UPON WHICH THE OPTIONEE MAY RELY.

(iii) GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Colorado.

7
<PAGE>

(iv) AMENDMENTS. The Company may at any time propose to amend this
Agreement, but any such alteration or amendment shall be effective only if in
writing, signed by a duly authorized officer of the Company and by Optionee.

MediaOne Group, Inc.

By
/s/ [ILLEGIBLE]
OPTIONEE
CHAIRMAN, CEO & PRESIDENT
-------------------------------------
Full Name

-------------------------------------
Address

-------------------------------------
City, State, Zip

Social Security Number:
--------------

8
<PAGE>

[NAME]
DATE
ATTACHMENT A
PAGE 1

INTELLECTUAL PROPERTY THAT HAS NOT BEEN PATENTED OR PUBLISHED

<PAGE>

[FORM 5-LTIP OPTION AGREEMENT]
[1999 LTIP VERSION]

MEDIAONE GROUP, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

GRANT # _______

Pursuant to the MediaOne Group, Inc. Amended 1994 Stock Plan (the
"Plan"), the Human Resources Committee of the Company's Board of Directors
(the "Committee") has approved the granting to Optionee of an option to
purchase shares of Common Stock (the "Option") on the terms and conditions
set forth in this Agreement, as a matter of separate inducement in connection
with Optionee's engagement with the Company or a Related Entity, in addition
to and not in lieu of salary or other compensation for Optionee's services.
The Option shall not be treated as an incentive stock option.

In consideration of the foregoing and of the mutual covenants set forth
herein, and other good and valuable consideration, the Company and Optionee
agree as follows:

BEST PAYMENT PROVISO: IN THE EVENT THAT THE VESTING OF THE OPTION TOGETHER
WITH ALL OTHER PAYMENTS AND THE VALUE OF ANY BENEFIT RECEIVED OR TO BE RECEIVED
BY OPTIONEE (UNDER THIS OR ANY OTHER ARRANGEMENT) WOULD RESULT IN ALL OR A
PORTION OF SUCH TOTAL PAYMENTS TO BE SUBJECT TO EXCISE TAX UNDER SECTION 4999 OF
THE CODE, THEN OPTIONEE'S PAYMENTS UNDER THIS AGREEMENT AND ALL OTHER
ARRANGEMENTS SHALL BE EITHER (A) THE FULL PAYMENT OR (B) SUCH LESSER AMOUNT
WHICH WOULD RESULT IN NO PORTION OF THE PAYMENT BEING SUBJECT TO EXCISE TAX
UNDER SECTION 4999 OF THE CODE, WHICHEVER OF THE FOREGOING AMOUNTS, TAKING INTO
ACCOUNT THE APPLICABLE FEDERAL, STATE, AND LOCAL EMPLOYMENT TAXES, INCOME TAXES,
AND THE EXCISE TAX IMPOSED BY SECTION 4999 OF THE CODE, RESULTS IN THE RECEIPT
BY OPTIONEE, ON AN AFTER-TAX BASIS, OF THE GREATEST AMOUNT OF THE PAYMENT
NOTWITHSTANDING THAT ALL OR SOME PORTION OF THE PAYMENT MAY BE TAXABLE UNDER
SECTION 4999 OF THE CODE; PROVIDED, HOWEVER, THAT OPTIONEE WILL BE ENTITLED TO
RECEIVE THE FULL

<PAGE>

PAYMENT ONLY IF THE EXCESS OF (C) THE "PARACHUTE PAYMENTS" AS DEFINED IN
SECTION 280G(B)(2) OF THE CODE, OVER (D) 2.99 TIMES OPTIONEE'S "BASE AMOUNT"
AS DEFINED IN SECTION 280G(B)(3) OF THE CODE EXCEEDS THE SUM OF (X) FIVE
PERCENT (5%) OF THE AMOUNT IN CLAUSE (C), ABOVE, PLUS (Y) THE EXCISE TAX
IMPOSED UNDER SECTION 4999 OF THE CODE, PLUS (Z) THE APPLICABLE FEDERAL,
STATE, AND LOCAL EMPLOYMENT TAXES AND INCOME TAXES IMPOSED ON THE EXCESS OF
(i) THE "PARACHUTE PAYMENTS" AS DEFINED IN SECTION 280G(B)(2) OF THE CODE,
OVER (ii) 2.99 TIMES OPTIONEE'S "BASE AMOUNT" AS DEFINED IN SECTION
280G(B)(3) OF THE CODE. ALL DETERMINATIONS REQUIRED TO BE MADE UNDER THIS
PARAGRAPH SHALL BE MADE IN THE SOLE OPINION OF A TAX CONSULTANT SELECTED BY
THE COMPANY AND REASONABLY ACCEPTABLE TO OPTIONEE (THE "TAX CONSULTANT").
THE COMPANY SHALL CAUSE THE TAX CONSULTANT TO PROVIDE DETAILED SUPPORTING
CALCULATIONS OF ITS DETERMINATIONS TO THE COMPANY AND OPTIONEE. NOTICE MUST
BE GIVEN TO THE TAX CONSULTANT WITHIN FIFTEEN (15) BUSINESS DAYS AFTER AN
EVENT ENTITLING OPTIONEE TO A PAYMENT UNDER THIS AGREEMENT. ALL FEES AND
EXPENSES OF THE TAX CONSULTANT SHALL BE BORNE SOLELY BY THE COMPANY. THE TAX
CONSULTANT'S DETERMINATIONS MUST BE MADE WITH SUBSTANTIAL AUTHORITY (WITHIN
THE MEANING OF SECTION 6662 OF THE INTERNAL REVENUE CODE). FOR PURPOSES OF
THIS BEST PAYMENT PROVISO, THE TERM "PAYMENT" SHALL MEAN ANY AMOUNT THAT
WOULD BE CONSIDERED A "PARACHUTE PAYMENT" UNDER SECTION 280G(b)(2) OF THE
CODE.

3. OPTION TERM; VESTING; TIMES OF EXERCISE. The Option shall become
Vested in one-third increments upon each of the first three (3) annual
anniversaries from the date of this Agreement. The vesting of any such
increment shall be subject to the continuous employment of Optionee until the
anniversary date on which such increment is scheduled to vest, and provided
further that the Option shall expire and shall no longer be exercisable after
ten (10) years from the date of this Agreement (the "Expiration Date").
Except as otherwise specifically set forth below and elsewhere in this
Agreement, the Option shall become Vested only to the extent that the
foregoing continuous employment requirement is satisfied, regardless of the
circumstances under which Optionee's employment is terminated.

(i) DEATH. In the event of the death of Optionee, the Option shall
become Vested immediately and (i) the estate of Optionee, (ii) Optionee's
transferees by last will and testament or the laws of descent and
distribution, or (iii) in the event Optionee transfers the Option under the
limited circumstances specified in Paragraph 5 below, Transferee(s) (as
defined in Paragraph 5 below), shall have the right, at any time and from
time to time consistent with rules established by the Committee for the
administration of the Plan, within one (1) year after the date of death or
such longer period, if any, as the Committee in its sole discretion shall
determine (but not after the Expiration Date), to exercise all or any
portion of the Option.

2
<PAGE>

Date, unless otherwise provided in this Agreement.

(iii) RETIREMENT. Except as otherwise set forth in this Agreement,
upon Optionee's Retirement, the Option shall be retained by Optionee, and
the Option, if not then Vested, shall become Vested as set forth in the
vesting schedule in Paragraph 3 of this Agreement, unless the Committee, in
its sole discretion, determines otherwise; provided, however, that the
continuation of vesting shall be contingent upon Optionee's execution and
delivery to the Company, on or prior to the effective date of Optionee's
Retirement, of the Company's standard form of "Waiver & Release" of claims,
available from the Human Resources Department of the Company. Upon
vesting, Optionee shall have the right to exercise the Option, at any time
and from time to time, but not after the Expiration Date, unless otherwise
provided in this Agreement. NOTWITHSTANDING ANY OTHER TERMS OF THIS
PARAGRAPH 3(III), IF OPTIONEE'S RETIREMENT OCCURS BEFORE THE FIRST
ANNIVERSARY OF THE DATE OF OPTION GRANT SET FORTH IN THE SCHEDULE, ALL
OPTION RIGHTS AS TO ONE-HALF (1/2) OF THE NUMBER OF SHARES OF COMMON STOCK
WITH RESPECT TO WHICH OPTIONS ARE GRANTED SHALL BE FORFEITED EXCEPT AS TO
THOSE OPTIONS ALREADY EXERCISED PRIOR TO SUCH RETIREMENT.

(iv) TERMINATION FOR CAUSE. Notwithstanding any other provision in
this Agreement, if Optionee's employment is terminated by the Company or
any Related Entity "for cause," as such term is defined in the Plan,
Optionee shall forfeit immediately all rights under the Option except as to
the shares of Common Stock already purchased prior to such termination.

(v) OTHER TERMINATION. If Optionee's employment with the Company or a
Related Entity is terminated for any reason other than for death,
Disability or Retirement and other than "for cause," as such term is
defined in the Plan, Optionee shall have the right to exercise all or any
portion of the Option, if the Option is then Vested, at any time and from
time to time within three (3) months of termination or such other period,
if any, as the Committee in its sole discretion shall determine (but not
after the Expiration Date).

(vi) EXECUTIVE SEVERANCE AGREEMENT. If Optionee has executed an
Executive Severance Agreement with the Company, the Option will be Vested
in accordance with

3
<PAGE>

the terms of the Executive Severance Agreement if: (1) Optionee becomes
entitled to the receipt of "Severance Benefits," as set forth in that
Executive Severance Agreement; and (2) sixteen (16) calendar days have
passed following (i) the execution of a standard form of "Waiver &
Release" of claims and (ii) compliance with the "Conditions" by Optionee
as set forth in the Company's standard Executive Severance Agreement.

(vii) CHANGE OF CONTROL. Upon the occurrence of a Change of Control,
the Option shall be Vested immediately. For purposes of this paragraph,
"Change of Control" shall have the identical meaning as set forth in the
Change of Control Agreement, if any, that Optionee has executed with the
Company. To ensure parallel application, for purposes of this paragraph
only, defined terms contained in the definition of "Change of Control" set
forth in Optionee's Change of Control Agreement shall have the same meaning
here as set forth in that Change of Control Agreement. If Optionee has not
executed any such Change of Control Agreement, "Change of Control" shall
have the same meaning as set forth in Stock Plan.

4. EXERCISE: PAYMENT FOR AND DELIVERY OF STOCK. The Option shall be
exercisable only by: (i) Optionee; (ii) Optionee's guardian or legal
representative, (iii) Optionee's estate; (iv) Optionee's transferee(s) by
last will and testament or the laws of descent and distribution or, (v) in
the event Optionee transfers the Option under the limited circumstances
specified in Paragraph 5 below, by Transferee(s). The Option may be
exercised by giving notice of exercise to the Company, specifying the number
of shares to be purchased (minimum of 100, unless the unexercised balance of
the Option is less than 100) and the total purchase price. The purchase
price shall be payable: (i) in cash or by an equivalent means; (ii) by
delivery, constructive or otherwise, to the Company of shares of Common Stock
owned by Optionee; or (iii) any combination of the

4
<PAGE>

foregoing. Any shares of Common Stock so tendered shall be valued as of the
Option exercise date.

5. NON-TRANSFERABILITY OF OPTION. Except as specifically set forth in
this Paragraph 5, the Option is not transferable other than by last will and
testament or the laws of descent and distribution, and the Option shall not
be assigned, transferred, pledged, hypothecated, or otherwise disposed of in
any way, whether by operation of law or otherwise, and shall not be subject
to execution, attachment or similar process. The Option shall not be
assignable or transferable pursuant to a domestic relations order. In
limited circumstances, with the prior approval of the Senior Vice President -
Human Resources, in full compliance with Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules promulgated thereunder, and
after Optionee has satisfied the Company's executive stock ownership goal
then in effect and set by the Committee, Optionee may transfer the Option, in
whole or in part, to one or more member(s) of his or her family (as that term
is defined in Internal Revenue Code Reg. Section 25.2701-2(d)) ("Member(s) of
the Family") or to trusts maintained for the benefit of such Member(s) of the
Family (together, "Transferee(s)"). Any such transfer shall be contingent
upon the execution by both Optionee and Transferee(s) of a "Stock Option
Transfer Agreement," in the form provided by the Company ("Transfer
Agreement"). The Option shall not be transferable by Transferee(s). Upon
any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of
the Option other than as specifically set forth in this Paragraph 5, or upon
the levy of any execution, attachment or similar process upon the Option, the
Option shall immediately terminate and become null and void.

6. PERFORMANCE FOR COMPETITORS. If at any time following the date of
this Agreement and before the Option is Vested, regardless of whether
Optionee has Retired, Optionee directly or indirectly receives payment for
services rendered to, or is otherwise employed by, any person, firm or
corporation that is in competition with the Company or a Related Entity or
engaged in providing any goods or services that are substantially the same as
any goods or services provided or under development by the Company or a
Related Entity, Optionee immediately shall forfeit all rights under the
Option, unless: 1) the Committee in its sole discretion determines
otherwise; or 2) the only services rendered by Optionee to any such person,
firm or corporation are those of an outside director and Optionee is in full
compliance with the Company's Policy on Service on Outside Boards of
Directors (as if Optionee remained an employee of the Company or a Related
Entity), as interpreted solely by the Company's Senior Management Compliance
Committee. If at any time Optionee renders services to or becomes otherwise
employed by any person, firm or corporation that is in competition with the
Company or a Related Entity or engaged in providing any goods or services
that are substantially the same as goods or services provided or under
development by the Company or a Related Entity, Optionee shall have three (3)
months after the date of such employment to exercise any Vested and
non-expired Option. Any determination under this Paragraph 6, including
whether a person, firm or corporation is "in competition with" the Company or
a Related Entity or providing "substantially the same" goods or services as
the Company or a Related Entity provides or is developing, will be subject to
the sole discretion of the Committee.

5
<PAGE>

7. NON-SOLICITATION OF EMPLOYEES. Optionee agrees that he or she will
not for a period of one (1) year immediately following the termination of his
or her employment with the Company or a Related Entity for any reason, either
on Optionee's own account or in conjunction with or on behalf of any other
person or entity whatsoever, directly or indirectly induce, solicit, or
entice away any person who, at any time during the three (3) months
immediately preceding Optionee's termination of employment, is a managerial
level employee of the Company or a Related Entity (including, but not limited
to, any Officer, Executive Director or Director-level employee, or any
equivalent or successor term for any such employees). If Optionee engages in
any conduct contrary to the provisions of this Paragraph 7, Optionee shall
forfeit the Option to the extent the Option has not Vested, unless the
Committee determines otherwise. Such forfeiture is in addition to any other
remedies available to the Company by law.

If Optionee fails to comply with the provisions of this Paragraph 8, Optionee
shall forfeit the Option to the extent the Option has not vested, unless the
Committee determines otherwise. Such forfeiture is in addition to any other
remedies available to the Company.

9. DECISIONS OF COMMITTEE. Any decision, interpretation or other
action made or taken in good faith by the Committee or its designee arising
out of or in connection with the Plan or the

6
<PAGE>

Option shall be final, binding and conclusive on the Company and Optionee and
any respective heir, executor, administrator, successor or assign.

10. ARBITRATION. Optionee agrees that any claim, controversy or
dispute that may arise directly or indirectly in connection with Optionee's
employment or termination of employment with MediaOne Group, and/or any
associated or related disputes arising therefrom involving MediaOne Group
and/or any employee(s), Director(s), officer(s), or agent(s) of MediaOne
Group, whether arising in contract, statute, tort, fraud, misrepresentation,
discrimination, common law or any other legal theory, including, but not
limited to: Disputes relating to the making, performance or interpretation
of this Agreement; and claims or other disputes arising under Title VII of
the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the
Age Discrimination in Employment Act of 1967, as amended; 42 U.S.C. Section
1981, Section 1981a, Section 1983, Section 1985, or Section 1988; the
Family and Medical Leave Act of 1993; the Americans with Disabilities Act of
1990, as amended; the Rehabilitation Act of 1973, as amended; the Fair Labor
Standards Act of 1938, as amended; the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"); the Colorado Anti-Discrimination Act; or
any other similar federal, state or local law or regulation, whenever
brought, shall be resolved by arbitration. If, however, Optionee would
otherwise be legally required to exhaust administrative remedies to obtain
legal relief, Optionee can and must exhaust such administrative remedies
prior to pursuing arbitration. The only legal claims between Optionee and
MediaOne Group that are not included for arbitration within this Agreement
are claims for workers' compensation or unemployment compensation benefits.
BY SIGNING THIS AGREEMENT, OPTIONEE VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY
WAIVES ANY RIGHT OPTIONEE MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR
OTHER FORUMS, INCLUDING THE RIGHT TO A JURY TRIAL. MEDIAONE GROUP ALSO
HEREBY VOLUNTARILY, KNOWINGLY, AND INTELLIGENTLY WAIVES ANY RIGHT IT MIGHT
OTHERWISE HAVE TO SEEK REMEDIES AGAINST OPTIONEE IN COURT OR OTHER FORUMS,
INCLUDING THE RIGHT TO A JURY TRIAL. The Federal Arbitration Act, 9 U.S.C.
Sections 1-16 ("FAA") shall govern the arbitrability of all claims, provided
that they are enforceable under the FAA, as it may be amended from time to
time. In the event the FAA does not govern, the Colorado Uniform Arbitration
Act shall apply. Additionally, the substantive law of Colorado, to the
extent it is consistent with the terms stated in this Agreement for
arbitration, shall apply to any common law claims. This Agreement for
arbitration supersedes any prior arbitration agreement between Optionee and
MediaOne Group to the extent they are inconsistent.

7
<PAGE>

limitations imposed by federal, state, or local laws regarding amounts that
may be awarded in arbitration proceedings. All arbitration proceedings,
including without limitation, settlements under this Agreement, will be
confidential. Optionee shall not be required to pay more than One Hundred
Fifty Dollars ($150.00) of the arbitrator's hourly fees and expenses. The
prevailing party in any arbitration shall be entitled to receive reasonable
attorneys' fees as provided by law. The arbitrator's decision and award
shall be final and binding, as to all claims that were, or could have been,
raised in the arbitration, and judgment upon the award rendered by the
arbitrator may be entered to any court having jurisdiction thereof. If any
party hereto files a judicial or administrative action asserting claims
subject to this arbitration provision, and another party successfully stays
such action and/or compels arbitration of such claims, the party filing said
action shall pay the other party's costs and expenses incurred in seeking
such stay and/or compelling arbitration, including reasonable attorneys' fees
not to exceed Two Thousand Five Hundred Dollars ($2,500.00).

11. MISCELLANEOUS.

(i) NOTICES. Any notice to be given to the Company shall be
personally delivered to or addressed to its Senior Vice President - Human
Resources, and any notice to be given to Optionee shall be addressed to him
or her at the address given beneath his or her signature below or such other
address as the Company reasonably believes to be his or her most current
address. Any notice to the Company is deemed given when received on behalf
of the Company by the Senior Vice President - Human Resources of the Company
at 188 Inverness Drive West, 5th Floor, Englewood, CO 80112. Any notice to
Optionee is deemed given when personally delivered or enclosed in a properly
sealed envelope addressed as described above and deposited, postage prepaid,
in a post office or branch post office regularly maintained by the United
States Postal Service.

(ii) EMPLOYMENT. THE COMPANY OR A RELATED ENTITY MAY
TERMINATE OPTIONEE'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE, UNLESS
THE TERM OF EMPLOYMENT IS COVERED BY SEPARATE CONDITIONS CONTAINED IN ANOTHER
AUTHORIZED WRITTEN AGREEMENT SIGNED BY THE COMPANY AND THE OPTIONEE. NOTHING
CONTAINED IN THIS AGREEMENT CREATES OR IMPLIES AN EMPLOYMENT CONTRACT OR TERM
OF EMPLOYMENT OR ANY PROMISE OF SPECIFIC TREATMENT UPON WHICH THE OPTIONEE
MAY RELY.

(iii) GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Colorado.

8
<PAGE>

MediaOne Group, Inc.

By
/s/ [ILLEGIBLE]
OPTIONEE
CHAIRMAN, CEO & PRESIDENT
----------------------------------------
Full Name

----------------------------------------
Address

----------------------------------------
City, State, Zip

Social Security Number:
-----------------

9
<PAGE>

[NAME]
DATE
ATTACHMENT A
PAGE 7

INTELLECTUAL PROPERTY THAT HAS NOT BEEN PATENTED OR PUBLISHED

<PAGE>

[FORM 6 - RESTRICTED STOCK AGREEMENT (EXECUTIVE HRC VERSION)]

MEDIAONE GROUP

RESTRICTED STOCK AGREEMENT

THIS AGREEMENT is entered into between MediaOne Group (the "Company")
and the Grantee ("Grantee") named in the schedule attached hereto and made a
part of this Agreement (the "Schedule"), as of the date set forth in the
Schedule.

Pursuant to the MediaOne Group 1994 Stock Plan as amended (the "Plan"),
the Human Resources Committee of the Board of Directors (the "Committee") has
granted to Grantee restricted shares of Common Stock ("Restricted Shares") on
the terms and conditions set forth in this Agreement, as a matter of separate
inducement in connection with Grantee's engagement with the Company or a
Related Entity, and not in lieu of salary or other compensation for Grantee's
services.

In consideration of the foregoing and of the mutual covenants set forth
herein and other good and valuable consideration, the Company and Grantee
agree as follows:

1. INCORPORATION OF PLAN AND DEFINED TERMS. The Restricted Stock is
granted pursuant to the Plan, the terms of which are incorporated by
reference and apply to this Agreement as though they were fully set forth
herein. Terms used in this Agreement and not otherwise defined shall have
the meanings set forth in the Plan.

2. GRANT OF RESTRICTED STOCK. On the terms and conditions set forth in
this Agreement, the Company hereby grants to Grantee the aggregate number of
shares of Restricted Stock set forth in the Schedule.

3. RESTRICTED PERIOD. The Restricted Stock shall become Vested in
accordance with the schedule set forth in the Schedule (the "Restricted
Period"). Except as specifically set forth below and elsewhere in this
Agreement, the Restricted Stock shall not become Vested before the expiration
of the Restricted Period, regardless of the circumstances under which
Grantee's employment is terminated. The Restricted Stock shall remain
subject to forfeiture during the Restricted Period.

(i) DEATH. In the event of the death of Grantee, the Restricted
Stock shall no longer be subject to any restriction and shall be Vested
immediately.

<PAGE>

(ii) DISABILITY. Except as otherwise set forth in this Agreement,
if Grantee's employment with the Company or a Related Entity is terminated
because of Disability, the Restricted Stock shall no longer be subject to any
restriction and shall be Vested immediately.

(iii) RETIREMENT. Except as otherwise set forth in this
Agreement, if the Restricted Stock is not Vested upon Grantee's Retirement,
the Restricted Period shall continue and all restrictions respecting such
Restricted Stock shall lapse as of the date(s) such Restricted Stock is
scheduled to Vest, unless the Committee, in its sole discretion, determines
otherwise. The continuation of the Restricted Period after Retirement shall
be contingent upon Grantee's execution and delivery to the Company, on or
prior to the effective date of Grantee's Retirement, of the Company's
standard form of "Waiver & Release" of claims, available from the Human
Resources Department of the Company.

(iv) OTHER TERMINATION. If Grantee's employment with the Company
or a Related Entity is terminated for any reason other than for death,
Disability, or Retirement, any unvested portion of the Restricted Stock shall
be forfeited immediately unless (i) such forfeiture is contrary to the terms
of an Executive Severance Agreement executed by Grantee and an authorized
officer of the Company, (ii) another provision of this Agreement expressly
sets forth otherwise or (iii) the Committee, in its sole discretion,
determines that such Restricted Stock then is Vested or sets alternative
terms on which such Restricted Stock may become Vested.

(v) EXECUTIVE SEVERANCE AGREEMENT. If Grantee has executed an
Executive Severance Agreement with the Company and becomes entitled to the
receipt of "Severance Benefits," as set forth in that Executive Severance
Agreement, {[CHOICE A -- USE FOR "COMPENSATION TYPE" GRANTS, E.G.
LTIP-RELATED GRANTS] the Restricted Stock will become Vested immediately
upon the expiration of sixteen (16) days following Grantee's execution and
delivery to the Company of the standard "Waiver & Release" of claims and
compliance with the "Conditions" as set forth in that Executive Severance
Agreement.] OR [CHOICE B -- USE FOR "RETENTION TYPE" GRANTS] any unvested
portion of the Restricted Stock shall be forfeited immediately unless the
Committee, in its sole discretion, determines that any such Restricted Stock
then is Vested or sets alternative terms on which such Restricted Stock may
become Vested.

CHANGE OF CONTROL. For purposes of this Paragraph, "Change of
Control" shall have the identical meaning as set forth in the Change of Control
Agreement, if any, that Grantee has executed with the Company. To ensure
parallel application, for purposes of this Paragraph only, defined terms
contained in the definition of "Change of Control" set forth in Grantee's Change
of Control Agreement shall have the same meaning here as set forth in that
Change of Control Agreement. If Grantee has not executed any such Change of
Control

2
<PAGE>

Agreement, "Change of Control" shall have the identical meaning as set forth
in the [Stock, LTIP, etc.] Plan.

4. CUSTODY; VOTING AND DIVIDENDS. The Company shall hold the
Restricted Stock in an account on behalf of Grantee. Grantee shall execute
and return the attached Stock Power in favor of the Company, to be exercised
by the Company only in the case of the forfeiture or other return of the
Restricted Stock to the Company as provided in this Agreement. Grantee shall
receive such dividends as may be declared on such Restricted Stock and shall
be entitled to voting privileges associated with such Restricted Stock.

5. PERFORMANCE FOR COMPETITORS. If at any time following the date of
this Agreement and before the Restricted Stock is Vested, regardless of
whether Grantee has Retired, Grantee directly or indirectly receives payment
for services rendered to, or is otherwise employed by, any person, firm or
corporation that is in competition with the Company or engaged in providing
any goods or services that are substantially the same as any goods or
services provided or under development by the Company, Grantee immediately
shall forfeit all rights under the Restricted Stock, unless the Committee in
its sole discretion determines otherwise, or unless Grantee is in full
compliance with the Company's Policy on Service on Outside Boards of
Directors, as interpreted solely by the Company's Senior Management
Compliance Committee. If at any time Grantee renders services to or becomes
otherwise employed by any person, firm or corporation that is in competition
with the Company or engaged in providing any goods or services that are
substantially the same as goods or services provided or under development by
the Company, Grantee shall have ninety (90) days after the date of such
employment to exercise any Vested and non-expired Restricted Stock. Any
determination under this Paragraph 6, including whether a person, firm or
corporation is "in competition with" the Company or providing "substantially
the same" goods or services as the Company provides or is developing, will be
subject to the sole discretion of the Committee.

6. NON- SOLICITATION OF EMPLOYEES ("NO RAID"). Grantee agrees that he
or she will not for a period of one (1) year immediately following the
termination of his or her employment with the Company for any reason, either
on Grantee's own account or in conjunction with or on behalf of any other
person or entity whatsoever, directly or indirectly induce, solicit, or
entice away any person who, at any time during the three (3) months
immediately preceding Grantee's termination of employment, is a managerial
level employee of the Company (including, but not limited to, any Officer,
Executive Director or director-level employee, or any equivalent or successor
term for any such employees). If Grantee engages in any conduct contrary to
the provisions of this Paragraph 7, Grantee shall forfeit the Restricted
Stock to the extent the Restricted Stock has not Vested, unless the Committee
determines otherwise. Such forfeiture is in addition to any other remedies
available under law.

7. INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION. Grantee agrees that
any inventions, discoveries, creations (including without limitation
software, writings, drawings and other

3
<PAGE>

works), improvements, confidential information or other intellectual property
that he or she may develop or create, or assist in developing or creating,
during his or her employment with the Company, whether or not patentable or
eligible for copyright, that relate to the actual, planned, or foreseeable
business or other activities of the Company, or that result from his or her
work for the Company, are the exclusive property of the Company. Grantee
agrees to disclose promptly such property to the Company and will, both
during and after his or her employment, and without additional compensation,
execute all assignments and other documents and do all things reasonably
necessary to secure and enforce U.S. and foreign intellectual property rights
for the Company, including patents and copyrights.

Grantee is not obligated to assign any intellectual property to Company
that Grantee created prior to Grantee's employment with the Company. To
avoid any confusion, Grantee must identify in writing on Attachment A
[MAKE SURE APPROPRIATE ATTACHMENT IS REFERENCED] any such intellectual
property that has not been patented or published and forward it along with
this letter.

Grantee agrees that Grantee will hold in confidence and will not, during
or after his or her employment, disclose or use for the benefit of any person
or entity other than Company, any Company confidential information that was
developed or received during his or her employment. "Company confidential
information" shall include all trade secrets, research and development
information, product and marketing plans, business or legal strategies,
personnel or financial data, product and service specifications, prototypes,
software, customer lists and other confidential information or materials of
Company or of others with whom Company has a confidential relationship.
Grantee will promptly return all such information and materials to Company
when his or her employment ends.

[USE AS NEEDED, COULD REMOVE DEPENDING ON THE CIRCUMSTANCE I.E., NO STOCK IN THE
OFFER]. If Grantee fails to comply with the provisions of this paragraph____,
Grantee shall forfeit the Restricted Stock to the extent the Restricted Stock
has not vested, unless the Committee determines otherwise. Such forfeiture is
in addition to any other remedies available to the Company.

10. DECISIONS OF COMMITTEE. Any decision, interpretation or other
action made or taken in good faith by the Committee or its designee arising
out of or in connection with the Plan or the Restricted Stock shall be final,
binding and conclusive on the Company and Grantee and any respective heir,
executor, administrator, successor or assign.

11. ARBITRATION. Grantee agrees that any claim, controversy or dispute
that may arise directly or indirectly in connection with Grantee's employment
or termination of employment with MediaOne, and/or any associated or related
disputes arising therefrom involving MediaOne and/or any employee(s),
Director(s), officer(s), or agent(s) of MediaOne, whether arising in
contract, statute, tort, fraud, misrepresentation, discrimination, common law
or any other legal theory, including, but not limited to, disputes relating
to the making, performance or interpretation of this Agreement; and claims or
other disputes arising under Title VII of the Civil

4
<PAGE>

Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended; 42 U.S.C. Section
1981, Section 1981a, Section 1983, Section 1985, or Section 1988; the
Family and Medical Leave Act of 1993; the Americans with Disabilities Act of
1990, as amended; the Rehabilitation Act of 1973, as amended; the Fair Labor
Standards Act of 1938, as amended; the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"); the Colorado Anti-Discrimination Act; or
any other similar federal, state or local law or regulation, whenever
brought, shall be resolved by arbitration. If, however, Grantee would
otherwise be legally required to exhaust administrative remedies to obtain
legal relief, Grantee can and must exhaust such administrative remedies prior
to pursuing arbitration. The only legal claims between Grantee and MediaOne
that are not included for arbitration within this Agreement are claims for
workers' compensation or unemployment compensation benefits. BY SIGNING THIS
AGREEMENT, GRANTEE VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHT
GRANTEE MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS,
INCLUDING THE RIGHT TO A JURY TRIAL. MEDIAONE ALSO HEREBY VOLUNTARILY,
KNOWINGLY, AND INTELLIGENTLY WAIVES ANY RIGHT IT MIGHT OTHERWISE HAVE TO SEEK
REMEDIES AGAINST GRANTEE IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO A
JURY TRIAL. The Federal Arbitration Act, 9 U.S.C. Sections 1-16 ("FAA")
shall govern the arbitrability of all claims, provided that they are
enforceable under the FAA, as it may be amended from time to time. In the
event the FAA does not govern, the Colorado Uniform Arbitration Act shall
apply. Additionally, the substantive law of Colorado, to the extent it is
consistent with the terms stated in this Agreement for arbitration, shall
apply to any common law claims. This Agreement for arbitration supersedes any
prior arbitration agreement between Grantee and MediaOne to the extent they
are inconsistent.

A single arbitrator engaged in the practice of law shall conduct the
arbitration under the applicable rules and procedures of the American
Arbitration Association ("AAA"), unless otherwise agreed to by the parties.
Any dispute, that relates directly or indirectly to Grantee's employment with
MediaOne or to the termination of Grantee's employment will be conducted
under the AAA National Rules for the Resolution of Employment Disputes,
effective June 1, 1997. The arbitrator shall be chosen from a state other
than Grantee's state of residence and other than Colorado. Other than as set
forth herein, the arbitrator shall have no authority to add to, detract from,
change, amend, or modify existing law. The arbitrator shall have the
authority to order such discovery as is necessary for a fair resolution of
the dispute. The arbitrator may award punitive damages, as allowed by Title
VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of
1991; the Age Discrimination in Employment Act of 1967, as amended; and the
Americans with Disabilities Act of 1990, as amended, regardless of any
limitations imposed by federal, state, or local laws regarding amounts that
may be awarded in arbitration proceedings. All arbitration proceedings,
including without limitation, settlements under this Agreement, will be
confidential. Grantee shall not be required to pay more than One Hundred
Fifty Dollars ($150.00) of the arbitrator's hourly fees and expenses. The
prevailing party in any arbitration shall be entitled to receive reasonable
attorneys' fees as provided by law. The arbitrator's decision and award
shall be final and binding, as to all claims that were, or could have been,
raised in the arbitration, and judgment upon the award rendered by the
arbitrator may be entered to any court having jurisdiction thereof. If any
party hereto files a judicial or administrative action asserting claims
subject to this arbitration provision, and another party successfully stays
such action and/or compels arbitration of such claims, the party filing said

5
<PAGE>

action shall pay the other party's costs and expenses incurred in seeking
such stay and/or compelling arbitration, including reasonable attorneys' fees
not to exceed Two Thousand Five Hundred Dollars ($2,500.00).

12. MISCELLANEOUS.

(i) NOTICES. Any notice to be given to the Company shall be
personally delivered to or addressed to its Senior Vice President - Human
Resources, and any notice to be given to Grantee shall be addressed to him or
her at the address given beneath his or her signature below, or such other
address as the Company reasonably believes to be his or her most current
address. Any notice to the Company is deemed given when received on behalf
of the Company by its Senior Vice President - Human Resources at 188
Inverness Drive West, 5th Floor, Englewood, CO 80112. Any notice to Grantee
is deemed given when personally delivered or enclosed in a properly sealed
envelope addressed as described above and deposited, postage prepaid, in a
post office or branch post office regularly maintained by the United States
Postal Service.

(ii) EMPLOYMENT. THE COMPANY OR A RELATED ENTITY MAY TERMINATE
ANY GRANTEE'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE, UNLESS THE TERM
OF EMPLOYMENT IS COVERED BY SEPARATE CONDITIONS CONTAINED IN ANOTHER
AUTHORIZED WRITTEN AGREEMENT SIGNED BY THE COMPANY AND THE GRANTEE. NOTHING
CONTAINED IN THIS AGREEMENT CREATES OR IMPLIES AN EMPLOYMENT CONTRACT OR TERM
OF EMPLOYMENT OR ANY PROMISE OF SPECIFIC TREATMENT UPON WHICH GRANTEE MAY
RELY.

(iii) GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Colorado.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth in the Schedule.

MediaOne Group GRANTEE

By:
-------------------------- --------------------------------
Name

6
<PAGE>

----------------------------------
Street Address

----------------------------------
City, State and Zip Code

----------------------------------
Social Security Number

7
<PAGE>

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and
transfer to:

MEDIAONE GROUP
84-0926774
(Tax Identification Number)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

((NOShrs)) shares of Common Stock issued by MediaOne Group (the "Company")
represented by Grant Number ((Grant no)), standing in the name of the
undersigned on the books of the Company.

The undersigned does (do) hereby irrevocably constitute and appoint the
Executive Vice President - Human Resources for the Company as attorney to
transfer the said stock on the books of the Company, with full power of
substitution in the premises.

- ----------------------------------------- Dated:
((FirstName))((MidName))((LastName)) -------------------------

- ------------------------------------------------------------------------------
IMPORTANT -- READ CAREFULLY: The signature(s) of this Stock Power must
correspond with the name(s) as written upon the face of the certificate(s) or
account(s) in every particular without alteration or enlargement or any change
whatever.
- ------------------------------------------------------------------------------

8
<PAGE>

[NAME]
DATE
ATTACHMENT A
PAGE 1

INTELLECTUAL PROPERTY THAT HAS NOT BEEN PATENTED OR PUBLISHED

<PAGE>

[FORM 7-- EXECUTIVE RETENTION AGREEMENT (RESTRICTED STOCK ONLY)]

MEDIAONE GROUP, INC.

EXECUTIVE RETENTION AGREEMENT

THIS AGREEMENT is made between MediaOne Group, Inc. (the "Company") and
_________________ ("Grantee"), as of ____________________ ("Date of Grant").

Pursuant to the Amended MediaOne Group, Inc. 1994 Stock Plan (the
"Plan"), the Human Resources Committee of the Board of Directors (the
"Committee") has approved the granting to Grantee of restricted shares of
MediaOne Group Common Stock ("Restricted Stock"), as of the Date of Grant, on
the terms and conditions set forth in this Agreement, as a matter of separate
inducement in connection with Grantee's engagement with the Company or a
Related Entity, and not in lieu of salary or other compensation for Grantee's
services.

In consideration of the foregoing and of the mutual covenants set forth
herein, and other good and valuable consideration, the Company and Grantee
agree as follows:

1. INCORPORATION OF PLAN AND DEFINED TERMS. The Restricted Stock is
granted pursuant to the Plan, the terms of which are incorporated by
reference and apply to this Agreement as if they were fully set forth herein.
Terms used in this Agreement and not otherwise defined shall have the
meanings set forth in the Plan.

2. CONTINUOUS EMPLOYMENT REQUIREMENT. Grantee hereby expressly agrees
and acknowledges that he or she must remain in the continuous employment of
the Company or a Related Entity for the full duration of the vesting period
applicable to the Restricted Stock granted under this Agreement in order for
the Restricted Stock to become Vested, unless otherwise expressly set forth
elsewhere in this Agreement. Grantee further expressly agrees and
acknowledges that if he or she discontinues employment with the Company or a
Related Entity at any time whatsoever, for any reason whatsoever, including
without limitation termination of employment by the Company or Related
Entity, prior to the time at which the Restricted Stock granted under this
Agreement becomes Vested, Grantee shall forfeit all such unvested Restricted
Stock.

3. RESTRICTED STOCK.

A. GRANT OF RESTRICTED STOCK. On the terms and conditions set
forth in this Agreement, the Company hereby grants to Grantee ______ shares
of Restricted Stock.

1
<PAGE>

employment of Grantee until the fifth (5th) annual anniversary of the Date of
Grant (the "Restricted Period"). Except as set forth in this Agreement, the
Restricted Stock shall become Vested only to the extent that the foregoing
continuous employment requirement is satisfied, regardless of the
circumstances under which Grantee's employment is terminated, and the
Restricted Stock consequently shall remain subject to forfeiture during the
Restricted Period.

(i) DEATH OR DISABILITY. Except as otherwise set forth in
this Agreement, in the event of the death or Disability of Grantee, a
prorated number of shares of the Restricted Stock shall become Vested and the
Restricted Stock shall not vest further. Such proration shall be based on
the number of months in the Restricted Period through the month of Grantee's
death or Disability in relation to the total number of months in the
Restricted Period.

(ii) RETIREMENT. Except as otherwise set forth in this
Agreement, if the Restricted Stock has not Vested upon Grantee's Retirement,
the Restricted Period shall continue and restrictions shall lapse at the end
of the Restricted Period, unless the Committee, in its sole discretion,
determines otherwise. The continuation of vesting shall be contingent upon
Grantee's execution and delivery to the Company, on or prior to the effective
date of Grantee's Retirement, of the Company's standard form of "Waiver &
Release" of claims, available from the Human Resources Department of the
Company.

(iii) OTHER TERMINATION. If Grantee's employment with the
Company or a Related Entity is terminated for any reason other than for
death, Disability or Retirement, the Restricted Stock shall be forfeited
unless the Committee, in its sole discretion, determines that such Restricted
Stock is then Vested or sets alternative terms on which such Restricted Stock
may become Vested.

(iv) CHANGE OF CONTROL. Upon the occurrence of a Change of
Control, the restrictions on the Restricted Stock shall lapse and shall be
Vested immediately. For purposes of this Paragraph, "Change of Control"
shall have the identical meaning as set forth in the Change of Control
Agreement, if any, that Grantee has executed with the Company, as may be
amended in writing with the consent of both parties. To ensure parallel
application, for purposes of this Paragraph only, defined terms contained in
the definition of "Change of Control" set forth in Grantee's Change of
Control Agreement have the same meaning here as set forth in that Change of
Control Agreement. If Grantee has not executed any such Change of Control
Agreement, then "Change of Control" shall have the identical meaning as set
forth in the Plan.

C. CUSTODY; VOTING AND DIVIDENDS. The Company shall hold the
Restricted Stock in an account on behalf of Grantee. The Grantee shall
execute and return the attached Stock Power in favor of the Company, to be
exercised by the Company only in the case of the forfeiture or other return
of the Restricted Stock to the Company as provided herein. The Grantee shall
reinvest such dividends as may be declared on such Restricted Stock, which
dividends shall vest concurrently with the Restricted Stock. Grantee shall
be entitled to voting privileges associated with such Restricted Stock.

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<PAGE>

D. NON-TRANSFERABILITY OF RESTRICTED STOCK. Except as
specifically set forth in this Paragraph, the Share is not transferable other
than by last will and testament or the laws of descent and distribution, and
the Share shall not be assigned, transferred, pledged, hypothecated, or
otherwise disposed of in any way, whether by operation of law or otherwise,
and shall not be subject to execution, attachment or similar process. The
Share shall not be assignable or transferable pursuant to a domestic
relations order. In limited circumstances, with the prior approval of the
Senior Vice President - Human Resources, in full compliance with Section 16
of the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, and after Grantee has satisfied the Company's executive stock
ownership goal then in effect and set by the Committee, Grantee may transfer
the Share, in whole or in part, to one or more member(s) of his or her family
(as that term is defined in Internal Revenue Code Reg. Section 25.2701-2(d))
("Member(s) of the Family") or to trusts maintained for the benefit of such
Member(s) of the Family (together, "Transferee(s)"). Any such transfer shall
be contingent upon the execution by both Grantee and Transferee(s) of a
"Stock Transfer Agreement," in the form provided by the Company ("Transfer
Agreement"). The Share shall not be transferable by Transferee(s). Upon any
attempt to assign, transfer, pledge, hypothecate or otherwise dispose of the
Share other than as specifically set forth in this Paragraph, or upon the
levy of any execution, attachment or similar process upon the Share, the
Share shall immediately terminate and become null and void.

4. PERFORMANCE FOR COMPETITORS. If at any time following the date of
this Agreement and before the Restricted Stock is Vested, regardless of
whether Grantee has Retired, Grantee directly or indirectly receives payment
for services rendered to, or is otherwise employed by, any person, firm or
corporation that is in competition with the Company or engaged in providing
any goods or services that are substantially the same as any goods or
services provided or under development by the Company, Grantee immediately
shall forfeit all rights under the Restricted Stock, unless the Committee in
its sole discretion determines otherwise, or unless Grantee is in full
compliance with the Company's Policy on Service on Outside Boards of
Directors, as interpreted solely by the Company's Risk Management Executive
Council. If at any time Grantee renders services to or becomes otherwise
employed by any person, firm or corporation that is in competition with the
Company or engaged in providing any goods or services that are substantially
the same as goods or services provided or under development by the Company,
Grantee shall have three (3) months after the date of such employment to
exercise any Vested and non-expired Restricted Stock. Any determination
under this Paragraph 4, including whether a person, firm or corporation is
"in competition with" the Company or providing "substantially the same" goods
or services as the Company provides or is developing, will be subject to the
sole discretion of the Committee.

5. NON-SOLICITATION OF EMPLOYEES ("NO RAID"). Grantee agrees that he or
she will not for a period of one (1) year immediately following the
termination of his or her employment with the Company for any reason, either
on Grantee's own account or in conjunction with or on behalf of any other
person or entity whatsoever, directly or indirectly induce, solicit, or
entice away any

3
<PAGE>

person who, at any time during the three (3) months immediately preceding
Grantee's termination of employment, is a managerial level employee of the
Company (including, but not limited to, any Officer, Executive Director or
director-level employee, or any equivalent or successor term for any such
employees). If Grantee engages in any conduct contrary to the provisions of
this Paragraph 5, Grantee shall forfeit the Restricted Stock to the extent
the Restricted Stock has not Vested, unless the Committee determines
otherwise. Such forfeiture is in addition to any other remedies available
under law.

6. INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION. Grantee agrees that
any inventions, discoveries, creations (including without limitation
software, writings, drawings and other works), improvements, confidential
information or other intellectual property that he or she may develop or
create, or assist in developing or creating, during his or her employment
with the Company, whether or not patentable or eligible for copyright, that
relate to the actual, planned, or foreseeable business or other activities of
the Company, or that result from his or her work for the Company, are the
exclusive property of the Company. Grantee agrees to disclose promptly such
property to the Company and will, both during and after his or her
employment, and without additional compensation, execute all assignments and
other documents and do all things reasonably necessary to secure and enforce
U.S. and foreign intellectual property rights for the Company, including
patents and copyrights.

Grantee is not obligated to assign any intellectual property to Company
that Grantee created prior to Grantee's employment with the Company. To
avoid any confusion, Grantee must identify in writing on Attachment A any
such intellectual property that has not been patented or published and
forward it along with this letter.

If Grantee fails to comply with the provisions of this Paragraph, Grantee
shall forfeit the Restricted Stock to the extent the Restricted Stock has not
Vested, unless the Committee determines otherwise. Such forfeiture is in
addition to any other remedies available to the Company.

7. NON-DISCLOSURE OF AGREEMENT. As a condition of receipt of the
consideration in this Agreement, executive agrees not to disclose, directly
or indirectly, the existence of this Agreement, or the terms, conditions, or
amounts set forth in this Agreement, except as may be required by law (after
notice to the Company), provided, however, that the Executive may

4
<PAGE>

disclose the existence and terms of this Agreement to Executive's immediate
family, attorney, tax return preparer, and financial counselor.

8. DECISIONS OF COMMITTEE. Any decision, interpretation or other
action made or taken in good faith by the Committee arising out of or in
connection with the Plan or the Restricted Stock shall be final, binding and
conclusive on the Company and Grantee and any respective heir, executor,
administrator, successor or assign.

9. ARBITRATION. Grantee agrees that any claim, controversy or
dispute that may arise directly or indirectly in connection with Grantee's
employment or termination of employment with MediaOne Group, and/or any
associated or related disputes arising therefrom involving MediaOne Group
and/or any employee(s), Director(s), officer(s), or agent(s) of MediaOne
Group, whether arising in contract, statute, tort, fraud, misrepresentation,
discrimination, common law or any other legal theory, including, but not
limited to, disputes relating to the making, performance or interpretation of
this Agreement; and claims or other disputes arising under Title VII of the
Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended; 42 U.S.C. Section 1981,
Section 1981a, Section 1983, Section 1985, or Section 1988; the Family and
Medical Leave Act of 1993; the Americans with Disabilities Act of 1990, as
amended; the Rehabilitation Act of 1973, as amended; the Fair Labor Standards
Act of 1938, as amended; the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"); the Colorado Anti-Discrimination Act; or any other
similar federal, state or local law or regulation, whenever brought, shall be
resolved by arbitration. If, however, Grantee would otherwise be legally
required to exhaust administrative remedies to obtain legal relief, Grantee
can and must exhaust such administrative remedies prior to pursuing
arbitration. The only legal claims between Grantee and MediaOne Group that
are not included for arbitration within this Agreement are claims for
workers' compensation or unemployment compensation benefits. BY SIGNING THIS
AGREEMENT, GRANTEE VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHT
GRANTEE MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS,
INCLUDING THE RIGHT TO A JURY TRIAL. MEDIAONE GROUP ALSO HEREBY VOLUNTARILY,
KNOWINGLY, AND INTELLIGENTLY WAIVES ANY RIGHT IT MIGHT OTHERWISE HAVE TO SEEK
REMEDIES AGAINST GRANTEE IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO A
JURY TRIAL. The Federal Arbitration Act, 9 U.S.C. Sections et.seq. ("FAA")
shall govern the arbitrability of all claims, provided that they are
enforceable under the FAA, as it may be amended from time to time. In the
event the FAA does not govern, the Colorado Uniform Arbitration Act shall
apply. Additionally, the substantive law of Colorado, to the extent it is
consistent with the terms stated in this Agreement for arbitration, shall
apply to any common law claims. This Agreement for arbitration supersedes any
prior arbitration agreement between Grantee and MediaOne Group to the extent
they are inconsistent.

5
<PAGE>

add to, detract from, change, amend, or modify existing law. The arbitrator
shall have the authority to order such discovery as is necessary for a fair
resolution of the dispute. The arbitrator may award punitive damages, as
allowed by Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as
amended; and the Americans with Disabilities Act of 1990, as amended,
regardless of any limitations imposed by federal, state, or local laws
regarding amounts that may be awarded in arbitration proceedings. All
arbitration proceedings, including without limitation, settlements under this
Agreement, will be confidential. Grantee shall not be required to pay more
than One Hundred Fifty Dollars ($150.00) of the arbitrator's hourly fees and
expenses. The prevailing party in any arbitration shall be entitled to
receive reasonable attorneys' fees as provided by law. The arbitrator's
decision and award shall be final and binding, as to all claims that were, or
could have been, raised in the arbitration, and judgment upon the award
rendered by the arbitrator may be entered to any court having jurisdiction
thereof. If any party hereto files a judicial or administrative action
asserting claims subject to this arbitration provision, and another party
successfully stays such action and/or compels arbitration of such claims, the
party filing said action shall pay the other party's costs and expenses
incurred in seeking such stay and/or compelling arbitration, including
reasonable attorneys' fees not to exceed Two Thousand Five Hundred Dollars
($2,500.00).

10. EXECUTIVE SEVERANCE AGREEMENT AND OTHER AGREEMENT WITH THE COMPANY.
Except as expressly provided in this Agreement, the provisions of this
Agreement shall not be affected in any way whatsoever by any Executive
Severance Agreement or any other written or verbal agreement between Grantee
and the Company or a Related Entity.

11. MISCELLANEOUS.

A. NOTICES. Any notice to be given to the Company shall be
personally delivered to or addressed to its Senior Vice President - Human
Resources, and any notice to be given to Grantee shall be addressed to him or
her at the address given beneath his or her signature below or such other
address as the Company reasonably believes to be his or her most current
address. Any notice to the Company is deemed given when received on behalf
of the Company by the Senior Vice President - Human Resources, of the Company
at 188 Inverness Drive West, 5th Floor, Englewood, CO 80112. Any notice to
Grantee is deemed given when personally delivered or enclosed in a properly
sealed envelope addressed as aforesaid and deposited, postage prepaid, in a
post office or branch post office regularly maintained by the United States
Postal Service.

B. EMPLOYMENT. THE COMPANY OR RELATED ENTITY MAY TERMINATE
GRANTEE'S EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE, UNLESS THE
EMPLOYMENT IS COVERED BY SEPARATE CONDITIONS CONTAINED IN A COLLECTIVE
BARGAINING AGREEMENT OR OTHER AUTHORIZED WRITTEN AGREEMENT SIGNED BY BOTH
PARTIES, AND NOTHING CONTAINED IN THIS AGREEMENT CREATES OR IMPLIES AN
EMPLOYMENT CONTRACT OR TERM OF EMPLOYMENT OR ANY PROMISE OF SPECIFIC
TREATMENT UPON WHICH GRANTEE MAY RELY.

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<PAGE>

C. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Colorado.

7
<PAGE>

D. AMENDMENTS. The Company may at any time propose to amend this
Agreement, but any such alteration or amendment shall be effective only if in
writing, signed by a duly authorized officer of the Company and by Grantee.

MEDIAONE GROUP, INC. GRANTEE

By:

/s/ [ILLEGIBLE]
GRANTEE
CHAIRMAN, CEO & PRESIDENT

------------------------------------
Full Name

------------------------------------
Street Address

------------------------------------
City, State and Zip Code

------------------------------------
Social Security Number

8
<PAGE>

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and
transfer to:

MEDIAONE GROUP, INC.
84-0926774
(Tax Identification Number)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

((NOShrs)) shares of Common Stock issued by MediaOne Group, Inc. (the
"Company") represented by Grant Number ((Cgrantno)), standing in the name of
the undersigned on the books of the Company.

The undersigned does (do) hereby irrevocably constitute and appoint the Vice
President - Law, General Corporate and Litigation Group for the Company as
attorney to transfer the said stock on the books of the Company, with full power
of substitution in the premises.

Dated:
- ----------------------------------------- ------------------------
((FIRSTNAME)) ((MIDLNAME)) ((LASTNAME))

- -------------------------------------------------------------------------------
IMPORTANT -- READ CAREFULLY: The signature(s) of this Stock Power must
correspond with the name(s) as written upon the face of the certificate(s) or
account(s) in every particular without alteration or enlargement or any change
whatever.
- -------------------------------------------------------------------------------

9
<PAGE>

[NAME]
DATE
ATTACHMENT A
PAGE 1

INTELLECTUAL PROPERTY THAT HAS NOT BEEN PATENTED OR PUBLISHED

<PAGE>

[FORM 8 - EXECUTIVE RETENTION AGREEMENT

RESTRICTED STOCK AND OPTIONS VERSION]

MEDIAONE GROUP, INC.

EXECUTIVE RETENTION AGREEMENT

THIS AGREEMENT is made between MediaOne Group, Inc. (the "Company") and
_________________ ("Grantee"), as of ____________________ ("Date of Grant").

Pursuant to the MediaOne Group, Inc. 1994 Stock Plan (the "Plan"), the
Human Resources Committee of the Board of Directors (the "Committee") has
approved the granting to Grantee of restricted shares of __________________
Common Stock ("Restricted Stock") and an option to purchase shares of
__________________ Common Stock (the "Option"), without par value, as of the
Date of Grant, on the terms and conditions set forth in this Agreement, as a
matter of separate inducement in connection with Grantee's engagement with
the Company or a Related Entity, and not in lieu of salary or other
compensation for Grantee's services.

In consideration of the foregoing and of the mutual covenants set forth
herein, and other good and valuable consideration, the Company and Grantee
agree as follows:

1. INCORPORATION OF PLAN AND DEFINED TERMS. The Restricted Stock and
Option are granted pursuant to the Plan, the terms of which are incorporated
by reference and apply to this Agreement as if they were fully set forth
herein. Terms used in this Agreement and not otherwise defined shall have the
meanings set forth in the Plan.

2. CONTINUOUS EMPLOYMENT REQUIREMENT. Grantee hereby expressly agrees
and acknowledges that he or she must remain in the continuous employment of
the Company or a Related Entity for the full duration of the vesting period
applicable to any Award granted under this Agreement in order for the Award
to become Vested, unless otherwise expressly set forth elsewhere in this
Agreement. Grantee further expressly agrees and acknowledges that if he or
she discontinues employment with the Company or a Related Entity at any time
whatsoever, for any reason whatsoever, including without limitation
termination of employment by the Company or Related Entity, prior to the time
at which an Award granted under this Agreement becomes Vested, Grantee shall
forfeit all unvested Restricted Stock and unvested Stock Options granted
under this Agreement.

3. RESTRICTED STOCK.

<PAGE>

A. GRANT OF RESTRICTED STOCK. On the terms and conditions set
forth in this Agreement, the Company hereby grants to Grantee ______ shares
of Restricted Stock.

B. RESTRICTED PERIOD. Except as otherwise set forth in this
Agreement, the Restricted Stock shall become Vested on the fifth (5th) annual
anniversary of the Date of Grant; provided, however, that the vesting of the
Restricted Stock shall be subject to the continuous employment of Grantee
until the fifth (5th) annual anniversary of the Date of Grant (the
"Restricted Period"). Except as set forth in this Agreement, the Restricted
Stock shall become Vested only to the extent that the foregoing continuous
employment requirement is satisfied, regardless of the circumstances under
which Grantee's employment is terminated, and the Restricted Stock
consequently shall remain subject to forfeiture during the Restricted Period.

iv) CHANGE OF CONTROL. Upon the occurrence of a Change of
Control, the restrictions on the Restricted Stock shall lapse and shall be
Vested immediately. .For purposes of this Paragraph, "Change of Control"
shall have the identical meaning as set forth in the Change of Control
Agreement, if any, that Grantee has executed with the Company. To ensure
parallel application, for purposes of this Paragraph only, defined terms
contained in the definition of "Change of Control" set forth in Grantee's,
Change of Control Agreement shall have the same meaning here as set forth in
that Change of Control Agreement. If Grantee has not executed any such
Change of Control Agreement, "Change of Control" shall have the identical
meaning as set forth in the [Stock, LTIP, etc.] Plan.

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<PAGE>

4. STOCK OPTION.

A. SHARES OPTIONED; OPTION PRICE. The Grantee may purchase all or
any part (in whole shares) of an aggregate of ________ shares of Common
Stock, at a purchase price per share of ________ (which is not less than the
Fair Market Value on the Date of Grant), (the "Option Price") on the terms
and conditions set forth in this Agreement.

B. OPTION TERM; VESTING; TIMES OF EXERCISE. Except as otherwise
set forth in this Agreement, the Option shall become Vested upon the third
(3rd) annual anniversary of the Date of Grant, provided, however, that the
vesting of the Option shall be subject to the continuous employment of
Grantee until the third (3rd) annual anniversary of the Date of Grant (the
"Option Vesting Period"), and provided further that the Option shall expire
and shall no longer be exercisable following ten (10) years from the Date of
Grant (the "Expiration Date"). Except as set forth in this Agreement, the
Option shall become Vested only to the extent that the foregoing continuous
employment requirement is satisfied, regardless of the circumstances under
which Grantee's employment is terminated.

(i) DEATH. In the event of the death of Grantee, the Option
shall become Vested with respect to a prorated number of shares of Common
Stock underlying the Option and shall not vest further. The estate of
Grantee shall have the right to exercise all or any portion of the Option, at
any time and from time to time consistent with rules established by the
Committee for the administration of the Plan, within one (1) year after the
date of death or such other period, if any, as the Committee in its sole
discretion shall determine (but not after the Expiration Date). Such
proration shall be based on the number of months in the Option Vesting Period
through the month of Grantee's death in relation to the total number of
months in the Option Vesting Period.

(ii) DISABILITY. Except as otherwise set forth in this
Agreement, if the employment of Grantee is terminated because of Disability,
the Option shall become Vested with respect to a prorated number of shares of
Common Stock underlying the Option and shall not vest further. Such
proration shall be based on the number of months in the Option Vesting Period
through the month of Grantee's Disability in relation to the total number of
months in the Option Vesting Period. Upon vesting, Grantee shall have the
right to exercise the Option, at any time and from time to time, but not
after the Expiration Date.

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<PAGE>

(iii) RETIREMENT. Except as otherwise set forth in this
Agreement, upon Grantee's Retirement, the Option shall be retained by
Grantee, and the Option, if not then Vested, shall become Vested at the
expiration of the Option Vesting Period, unless the Committee, in its sole
discretion, determines otherwise; provided, however, that the continuation of
vesting shall be contingent upon Grantee's execution and delivery to the
Company, on or prior to the effective date of Grantee's Retirement, of the
Company's standard form of "Waiver & Release" of claims, available from the
Human Resources Department of the Company. Upon vesting, Grantee shall have
the right to exercise the Option, at any time and from time to time, until
the Expiration Date unless otherwise provided in this Agreement.

(iv) OTHER TERMINATION. If Grantee's employment with the
Company or a Related Entity is terminated for any reason other than for
death, Disability or Retirement and other than "for cause," as such term is
defined in the Plan, Grantee shall have the right to exercise all or any
portion of the Option, if the Option is Vested, at any time and from time to
time within three (3) months of termination or such other period, if any, as
the Committee in its sole discretion shall determine (but not after the
Expiration Date).

(v) CHANGE OF CONTROL. Upon the occurrence of a Change of
Control, the Option shall become Vested immediately. For purposes of this
Paragraph, "Change of Control" shall have the identical meaning as set forth
in the Change of Control Agreement, if any, that Grantee has executed with
the Company. To ensure parallel application, for purposes of this Paragraph
only, defined terms contained in the definition of "Change of Control" set
forth in Grantee's, Change of Control Agreement shall have the same meaning
here as set forth in that Change of Control Agreement. If Grantee has not
executed any such Change of Control Agreement, "Change of Control" shall have
the identical meaning as set forth in the [Stock, LTIP, etc.] Plan.

(vi) TERMINATION FOR CAUSE. Notwithstanding any other
provision in this Agreement, if Grantee's employment is terminated by the
Company or any Related Entity "for cause," as such term is defined in the
Plan, Grantee immediately shall forfeit all rights under the Option except as
to the shares of Common Stock already purchased prior to such termination.

C. EXERCISE: PAYMENT FOR AND DELIVERY OF STOCK. The Option may be
exercised only by Grantee or his or her transferee(s) by last will and testament
or the laws of descent and distribution. The Option may be exercised by giving
notice of exercise to the Company specifying the number of shares (minimum of
100, unless the unexercised balance of the Option is less than 100) to be
purchased and the total purchase price. The purchase price shall be payable (i)
in cash or by an equivalent means, (ii) by delivery, constructive or otherwise,
to the Company of shares of Common Stock owned by Grantee, or (iii) any
combination of the foregoing. Any shares of Common Stock so

4
<PAGE>

tendered shall be valued at their Fair Market Value as of the Option exercise
date.

D. NON-TRANSFERABILITY OF OPTION. The Option is not transferable
other than by last will and testament or the laws of descent and
distribution. The Option shall not otherwise be transferred or assigned,
pledged, hypothecated or otherwise disposed of in any way, whether by
operation of law or otherwise, and shall not be subject to execution,
attachment or similar process. The Option shall not be assignable or
transferable pursuant to a domestic relations order. During the lifetime of
Grantee, the Option shall be exercisable only by Grantee or Grantee's
guardian or legal representative. Upon any attempt to transfer the Option
other than by last will and testament or the laws of descent and
distribution, or to assign, pledge, hypothecate or otherwise dispose of the
Option, or upon the levy of any execution, attachment or similar process upon
the Option, the Option shall terminate immediately and become null and void.

5. PERFORMANCE FOR COMPETITORS. If at any time following the date of
this Agreement and before the [Option/Restricted Stock] is Vested, regardless
of whether Grantee has Retired, Grantee directly or indirectly receives
payment for services rendered to, or is otherwise employed by, any person,
firm or corporation that is in competition with the Company or engaged in
providing any goods or services that are substantially the same as any goods
or services provided or under development by the Company Grantee immediately
shall forfeit all rights under the [Option/Restricted Stock], unless the
Committee in its sole discretion determines otherwise, or unless Grantee is
in full compliance with the Company's Policy on Service on Outside Boards of
Directors, as interpreted solely by the Company's Senior Management
Compliance Committee. If at any time Grantee renders services to or becomes
otherwise employed by any person, firm or corporation that is in competition
with the Company or engaged in providing any goods or services that are
substantially the same as goods or services provided or under development by
the Company, Grantee shall have ninety (90) days after the date of such
employment to exercise any Vested and non-expired [Option/Restricted Stock].
Any determination under this Paragraph 5, including whether a person, firm or
corporation is "in competition with" the Company or providing "substantially
the same" goods or services as the Company provides or is developing, will be
subject to the sole discretion of the Committee.

6. NONSOLICITATION OF EMPLOYEES ("NO RAID") Grantee agrees that he or
she will not for a period of one (1) year immediately following the
termination of his or her employment with the Company for any reason, either
on Grantee's own account or in conjunction with or on behalf of any other
person or entity whatsoever, directly or indirectly induce, solicit, or
entice away any person who, at any time during the three (3) months
immediately preceding Grantee's termination of employment, is a managerial
level employee of the Company (including, but not limited to, any Officer,
Executive Director or director-level employee, or any equivalent or successor
term for any such employees). If Grantee engages in any conduct contrary to
the provisions of this Paragraph 6, Grantee shall forfeit the
[Option/Restricted Stock] to the extent the [Option/Restricted Stock] has not
Vested, unless the Committee determines otherwise. Such forfeiture is in
addition to any other remedies available under law.

5
<PAGE>

7. INTELLECTUAL PROPERTY OWNERSHIP AND PROTECTION. Grantee agrees that
any inventions, discoveries, creations (including without limitation
software, writings, drawings and other works), improvements, confidential
information or other intellectual property that he or she may develop or
create, or assist in developing or creating, during his or her employment
with the Company, whether or not patentable or eligible for copyright, that
relate to the actual, planned, or foreseeable business or other activities of
the Company, or that result from his or her work for the Company, are the
exclusive property of the Company. Grantee agrees to disclose promptly such
property to the Company and will, both during and after his or her
employment, and without additional compensation, execute all assignments and
other documents and do all things reasonably necessary to secure and enforce
U.S. and foreign intellectual property rights for the Company, including
patents and copyrights.

[USE AS NEEDED, COULD REMOVE DEPENDING ON THE CIRCUMSTANCE I.E., NO STOCK IN THE
OFFER]. If Grantee fails to comply with the provisions of this paragraph 7,
Grantee shall forfeit the [Option/Restricted Stock] to the extent the
[Option/Restricted Stock] has not vested, unless the Committee determines
otherwise. Such forfeiture is in addition to any other remedies available to
the Company.

8. NON-DISCLOSURE OF AGREEMENT. If, at any time, regardless of whether
Grantee is Retired or otherwise not employed by the Company or a Related
Entity, Grantee discloses, directly or indirectly, the existence of this
Agreement, or the terms, conditions, or amounts set forth in this Agreement,
except as may be required by law (after reasonable advance notice to the
Company), and other than to Grantee's immediate family, attorney, tax return
preparer and financial counselor, Grantee immediately shall forfeit the
Option or Restricted Stock to the extent the Option or Restricted Stock has
not Vested or to the extent the Restricted Stock or Option became Vested
within one year prior to the date Grantee discloses such information. If
Grantee has sold such forfeited Restricted Stock, Grantee immediately shall
remit to the Company, in cash, an amount equal to the Fair Market Value of
such Restricted Stock as of the date the Restricted Stock became Vested. If
Grantee discloses such information within one (1) year following the date
Grantee exercises any portion of the Option, Grantee immediately shall remit
to the Company, in cash, an amount equal to the Fair Market Value of the
number of shares of

6
<PAGE>

Common Stock acquired on the date Grantee exercised that portion of the
Option, less the Option Price paid by Grantee for such shares. The foregoing
provisions of this Paragraph 8 apply unless otherwise determined by the
Committee or its designee in its sole discretion.

9. DECISIONS OF COMMITTEE. Any decision, interpretation or other
action made or taken in good faith by the Committee arising out of or in
connection with the Plan or the Restricted Stock or Option shall be final,
binding and conclusive on the Company and Grantee and any respective heir,
executor, administrator, successor or assign.

10. ARBITRATION. Grantee agrees that any claim, controversy or
dispute that may arise directly or indirectly in connection with Grantee's
employment or termination of employment with MediaOne Group, and/or any
associated or related disputes arising therefrom involving MediaOne and/or
any employee(s), Director(s), officer(s), or agent(s) of MediaOne, whether
arising in contract, statute, tort, fraud, misrepresentation, discrimination,
common law or any other legal theory, including, but not limited to, disputes
relating to the making, performance or interpretation of this Agreement; and
claims or other disputes arising under Title VII of the Civil Rights Act of
1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended; 42 U.S.C. Section 1981, Section 1981a,
Section 1983, Section 1985, or Section 1988; the Family and Medical Leave
Act of 1993; the Americans with Disabilities Act of 1990, as amended; the
Rehabilitation Act of 1973, as amended; the Fair Labor Standards Act of 1938,
as amended; the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); the Colorado Anti-Discrimination Act; or any other similar
federal, state or local law or regulation, whenever brought, shall be
resolved by arbitration. If, however, Grantee would otherwise be legally
required to exhaust administrative remedies to obtain legal relief, Grantee
can and must exhaust such administrative remedies prior to pursuing
arbitration. The only legal claims between Grantee and MediaOne that are not
included for arbitration within this Agreement are claims for workers'
compensation or unemployment compensation benefits. BY SIGNING THIS
AGREEMENT, GRANTEE VOLUNTARILY, KNOWINGLY AND INTELLIGENTLY WAIVES ANY RIGHT
GRANTEE MAY OTHERWISE HAVE TO SEEK REMEDIES IN COURT OR OTHER FORUMS,
INCLUDING THE RIGHT TO A JURY TRIAL. MEDIAONE ALSO HEREBY VOLUNTARILY,
KNOWINGLY, AND INTELLIGENTLY WAIVES ANY RIGHT IT MIGHT OTHERWISE HAVE TO SEEK
REMEDIES AGAINST GRANTEE IN COURT OR OTHER FORUMS, INCLUDING THE RIGHT TO A
JURY TRIAL. The Federal Arbitration Act, 9 U.S.C. Sections 1-16 ("FAA")
shall govern the arbitrability of all claims, provided that they are
enforceable under the FAA, as it may be amended from time to time. In the
event the FAA does not govern, the Colorado Uniform Arbitration Act shall
apply. Additionally, the substantive law of Colorado, to the extent it is
consistent with the terms stated in this Agreement for arbitration, shall
apply to any common law claims. This Agreement for arbitration supersedes any
prior arbitration agreement between Grantee and MediaOne to the extent they
are inconsistent.

7
<PAGE>

detract from, change, amend, or modify existing law. The arbitrator shall
have the authority to order such discovery as is necessary for a fair
resolution of the dispute. The arbitrator may award punitive damages, as
allowed by Title VII of the Civil Rights Act of 1964, as amended; the Civil
Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as
amended; and the Americans with Disabilities Act of 1990, as amended,
regardless of any limitations imposed by federal, state, or local laws
regarding amounts that may be awarded in arbitration proceedings. All
arbitration proceedings, including without limitation, settlements under this
Agreement, will be confidential. Grantee shall not be required to pay more
than One Hundred Fifty Dollars ($150.00) of the arbitrator's hourly fees and
expenses. The prevailing party in any arbitration shall be entitled to
receive reasonable attorneys' fees as provided by law. The arbitrator's
decision and award shall be final and binding, as to all claims that were, or
could have been, raised in the arbitration, and judgment upon the award
rendered by the arbitrator may be entered to any court having jurisdiction
thereof. If any party hereto files a judicial or administrative action
asserting claims subject to this arbitration provision, and another party
successfully stays such action and/or compels arbitration of such claims, the
party filing said action shall pay the other party's costs and expenses
incurred in seeking such stay and/or compelling arbitration, including
reasonable attorneys' fees not to exceed Two Thousand Five Hundred Dollars
($2,500.00).

11. EXECUTIVE SEVERANCE AGREEMENT AND OTHER AGREEMENT WITH THE COMPANY.
Except as expressly provided in this Agreement, the provisions of this
Agreement shall not be affected in any way whatsoever by any Executive
Severance Agreement or any other written or verbal agreement between Grantee
and the Company or a Related Entity.

12. MISCELLANEOUS.

A. NOTICES. Any notice to be given to the Company shall be
personally delivered to or addressed to its Senior Vice President - Human
Resources, and any notice to be given to Grantee shall be addressed to him or
her at the address given beneath his or her signature below or such other
address as the Company reasonably believes to be his or her most current
address. Any notice to the Company is deemed given when received on behalf
of the Company by the Senior Vice President - Human Resources, of the Company
at 188 Inverness Drive West, Suite 500, Englewood, CO 80112. Any notice to
Grantee is deemed given when personally delivered or enclosed in a properly
sealed envelope addressed as aforesaid and deposited, postage prepaid, in a
post office or branch post office regularly maintained by the United States
Postal Service.

B. EMPLOYMENT. THE COMPANY MAY TERMINATE GRANTEE'S EMPLOYMENT AT
ANY TIME, WITH OR WITHOUT CAUSE, UNLESS THE EMPLOYMENT IS COVERED BY SEPARATE
CONDITIONS CONTAINED IN A COLLECTIVE BARGAINING AGREEMENT OR OTHER AUTHORIZED
WRITTEN AGREEMENT SIGNED BY BOTH PARTIES, AND NOTHING CONTAINED IN THIS
AGREEMENT CREATES OR IMPLIES AN EMPLOYMENT CONTRACT OR TERM OF EMPLOYMENT OR
ANY PROMISE OF SPECIFIC TREATMENT UPON WHICH GRANTEE MAY RELY.

8
<PAGE>

C. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Colorado.

MediaOne Group, Inc. GRANTEE

By:
--------------------------- ----------------------------------------
Title: Full Name
--------------------------

----------------------------------------
Street Address

----------------------------------------
City, State and Zip Code

----------------------------------------
Social Security Number

9
<PAGE>

IRREVOCABLE STOCK POWER

FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and
transfer to:

MEDIAONE GROUP, INC.
84-0926774
(Tax Identification Number)

((NOShrs)) shares of Common Stock issued by MediaOne Group, Inc. (the
"Company") represented by Grant Number ((Cgrantno)), standing in the name of
the undersigned on the books of the Company.

The undersigned does (do) hereby irrevocably constitute and appoint the Vice
President - Law for the Company as attorney to transfer the said stock on the
books of the Company, with full power of substitution in the premises.

Dated:
- ---------------------------------------- -----------------------
((FIRSTNAME)) ((MIDLNAME)) ((LASTNAME))

10
<PAGE>

[NAME]
DATE
ATTACHMENT A
PAGE 1

INTELLECTUAL PROPERTY THAT HAS NOT BEEN PATENTED OR PUBLISHED

<PAGE>

Exhibit 12

MediaOne Group, Inc.

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND

PREFERRED STOCK DIVIDENDS

(Dollars in Millions)

<TABLE>
<CAPTION>
Quarter Ended
12/31/98 12/31/97
- ------------------------------------------------------- -------- --------
<S> <C> <C>
(Loss) from continuing operations
before income taxes $ (506) $ (343)
Interest expense (net of amounts
capitalized) 112 160
Interest factor on rentals (1/3) 2 3
Equity losses in unconsolidated
ventures (less than 50% owned) 92 342
Minority interest expense 22 22
-------- --------
Earnings $ (278) $ 184
-------- --------
-------- --------

Interest expense $ 96 $ 176
Interest factor on rentals (1/3) 2 3
Minority interest expense 22 22
Preferred stock dividends (pre-tax
equivalent) 27 20
-------- --------
Fixed charges $ 147 $ 221
-------- --------
-------- --------
Ratio of earnings to combined fixed
charges and preferred stock dividends - # - #
- ------------------------------------------------------- -------- --------

</TABLE>

#) Earnings for the quarters ended December 31, 1998 and 1997 were insufficient
to cover fixed charges by $425 and $37, respectively.

<PAGE>

Exhibit 12

MediaOne Group, Inc.

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND

PREFERRED STOCK DIVIDENDS

(Dollars in Millions)

<TABLE>
<CAPTION>
Year-to-Date
12/31/98 12/31/97
- ------------------------------------------------------- -------- --------
<S> <C> <C>
Income (Loss) from continuing operations
before income taxes $ 2,638 $(1,207)
Interest expense (net of amounts
capitalized) 491 678
Interest factor on rentals (1/3) 8 14
Equity losses in unconsolidated
ventures (less than 50% owned) 280 690
Minority interest expense 85 87
-------- --------
Earnings $ 3,502 $ 262
-------- --------
-------- --------
Interest expense $ 510 $ 714
Interest factor on rentals (1/3) 8 14
Minority interest expense 85 87
Preferred stock dividends (pre-tax
equivalent) 102 76
-------- --------
Fixed charges $ 705 $ 891
-------- --------
-------- --------
Ratio of earnings to combined fixed
charges and preferred stock dividends 4.97 A - B
- ------------------------------------------------------- -------- --------
</TABLE>

A) Earnings for the year ended December 31, 1998 include a $3,869 gain from the
sale of domestic wireless operations. Without the gain, earnings would be
insufficient to cover fixed charges by $1,072.

B) Earnings for the period ended December 31, 1997 were insufficient
to cover fixed charges by $629.

<PAGE>

Exhibit 12

MediaOne Group, Inc.

RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in Millions)

<TABLE>
<CAPTION>
Quarter Ended
12/31/98 12/31/97
- ------------------------------------------------------- -------- --------
<S> <C> <C>
Loss from continuing operations
before income taxes $ (506) $ (343)
Interest expense (net of amounts
capitalized) 112 160
Interest factor on rentals (1/3) 2 3
Equity losses in unconsolidated
ventures (less than 50% owned) 92 342
Minority interest expense 22 22
-------- --------
Earnings $ (278) $ 184
-------- --------
-------- --------
Interest expense $ 96 $ 176
Interest factor on rentals (1/3) 2 3
Minority interest expense 22 22
-------- --------
Fixed charges $ 120 $ 201
-------- --------
-------- --------
Ratio of earnings to fixed charges - # - #
- ------------------------------------------------------- -------- --------
</TABLE>

#) Earnings for the quarters ended December 31, 1998 and 1997 were insufficient
to cover fixed charges by $398 and $ 17, respectively.

<PAGE>

Exhibit 12

MediaOne Group, Inc.

RATIO OF EARNINGS TO FIXED CHARGES

(Dollars in Millions)

<TABLE>
<CAPTION>
Year Ended
12/31/98 12/31/97
- ------------------------------------------------------- -------- --------
<S> <C> <C>
Income (Loss) from continuing operations
before income taxes $ 2,638 $(1,207)
Interest expense (net of amounts
capitalized) 491 678
Interest factor on rentals (1/3) 8 14
Equity losses in unconsolidated
ventures (less than 50% owned) 280 690
Minority interest expense 85 87
-------- --------
Earnings $ 3,502 $ 262
-------- --------
-------- --------
Interest expense $ 510 $ 714
Interest factor on rentals (1/3) 8 14
Minority interest expense 85 87
-------- --------
Fixed charges $ 603 $ 815
-------- --------
-------- --------
Ratio of earnings to fixed charges 5.81 A - B
- ------------------------------------------------------- -------- --------
</TABLE>

A) Earnings for the year ended December 31, 1998 include a $3,869 gain from the
sale of the domestic wireless operations. Without the gain, earnings would be
insufficient to cover fixed charges by $970.

B) Earnings for the period ended December 31, 1997 were insufficient
to cover fixed charges by $553.

<PAGE>

MEDIAONE GROUP, INC.
AND ITS SUBSIDIARIES

I. MediaOne Group, Inc. (DE 5/12/95) amended from U S WEST, Inc.

A. MediaOne of Colorado, Inc. (CO 5/10/93); amended name from MediaOne
Group, Inc. 9-16-98; amended name from U S WEST Multimedia
Communications, Inc. 4/13/98; amended name from U S WEST Cable
Corporation 9/16/93.

1. MediaOne of Delaware, Inc. (DE 6/13/96); amended name from
Continental Cablevision, Inc. 4/15/97; amended name from
Continental Merger Corporation 11/15/96.
a. MediaOne HSD, LLC (DE 5-7-98; 18.4% interest)
b. Continental Cablevision Asia Pacific, Inc. (MA 5/20/94)
(1) Continental Cablevision Singapore Pte Ltd. (Singapore
9/6/94)
c. MediaOne of Minnesota, Inc. (MN 6/20/86); amended name from
Continental Cablevision of Minnesota, Inc. 5/15/98.
(1) MediaOne Communications Holding Company, Inc. (DE
12/21/88); amended name from Minnesota Cable
Communications Holding Company, Inc. 5/22/98.
(2) MediaOne North Central Communications Corporation (DE
6/3/86); amended name from North Central Cable
Communications Corporation 5/22/98.
(a) MediaOne of Burnsville/Eagan, Inc. (MN 6/29/82);
amended name from Group W Cable of
Burnsville/Eagan, Inc. 5/15/98.
(b) MediaOne of Columbia Heights/Hilltop, Inc. (MN
5/14/81); amended name from Group W Cable of
Columbia Heights/Hilltop, Inc. 5/15/98.
(c) MediaOne of the North Suburbs, Inc. (MN 6/29/82);
amended name from Group W Cable of the North
Suburbs, Inc. 5/15/98.
(d) MediaOne of the North Central Suburbs, Inc. (MN
6/29/82); amended name from Group W Cable of the
North Central Suburbs, Inc. 5/15/98.
(e) MediaOne of Quad Cities, Inc. (MN 4/19/82); Group
W Cable of Quad Cities, Inc. 5/15/98.
(f) MediaOne of Ramsey/Washington, Inc. (MN 6/29/81);
amended name from Group W Cable of
Ramsey/Washington, Inc. 5/15/98.
d. MediaOne of St. Paul, Inc. (MN 2/23/83); amended name from
Continental Cablevision of St. Paul, Inc. 5/15/98.
e. Continental Cablevision Satellite Company of Northern
California, Inc. (CA 11/6/90)

<PAGE>

(1) MediaOne Satellite II, Inc. (DE 10/3/97; 50% interest,
other 50% interest held by Continental Satellite
Company of Florida, Inc.)
f. Continental Satellite Company, Inc. (MA 11/17/86)
g. Continental Satellite Company of Chicago, Inc. (IL 1/13/94)
h. Continental Satellite Company of Minnesota, Inc. (MN
5/31/94)
i. Continental Satellite Company of New England, Inc. (NH
11/1/90)
j. Continental Satellite Company of Ohio, Inc. (OH 1/23/92)
k. Continental Satellite Company of Virginia, Inc. (VA 10/30/90
l. MediaOne Acquisitions of Northern Illinois, Inc. (IL
3/9/95); amended name from Continental Cablevision
Acquisitions of Northern Illinois, Inc. 4/29/97.
m. MediaOne Digital Radio, Inc. (MA 1/30/91); amended name from
Continental Cablevision Digital Radio, Inc. 4/29/97.
n. MediaOne Enterprises, Inc. (RI 6/23/69); amended name from
Colony Communications, Inc. 5/29/97.
(1) CCF Management Services, Inc. (FL 11/18/92)
(2) CCI Management Services, Inc. (CA 12/16/91)
(3) MediaOne of Lakewood, Inc. (CA 10/21/91); amended name
from Colony Cablevision of Lakewood, Inc. 9/5/97.
(4) Copley/Colony, Inc. (DE 10/9/81)
(a) MediaOne of Costa Mesa, Inc. (CA 10/22/80);
amended name from Copley/Colony of Costa Mesa,
Inc. 9/5/97.
(b) MediaOne of Cypress, Inc. (CA 3/21/83); amended
name from Copley/Colony Cablevision of Cypress,
Inc. 9/5/97.
(c) MediaOne of Harbor, Inc. (CA 8/14/80); amended
name from Copley/Colony Harbor Cablevision, Inc.
9/5/97.
(d) MediaOne of Lomita, Inc. (CA 2/16/82); amended
name from Copley/Colony Cablevision of Lomita,
Inc. 9/5/97.
(e) MediaOne of Los Angeles County, Inc. (CA 8/2/82);
amended name from Copley/Colony Cablevision of Los
Angeles County, Inc. 9/5/97.
(f) MediaOne of Orange County, Inc. (CA 9/8/83);
amended name from Copley/Colony Cablevision of
Orange County, Inc. 9/5/97.
(5) King Videocable Company (WA 9/2/65)
(a) MediaOne of the Upper Midwest, Inc. (WA 7/2/88);
amended name from King Videocable
Company-Minnesota 5/26/98.
(b) King Videocable Company-Twin Falls (ID 6/10/64)
(i) King Videocable Company-Idaho (CO 12/5/69)

2
<PAGE>

(c) MediaOne of Newhall, Inc. (CA 1/10/67); amended
name from King Videocable Company-Newhall 9/15/97.
(d) MediaOne of North Valley, Inc. (CA 1/10/67);
amended name from King Videocable Company-Valencia
9/15/97.
(6) MediaOne Interconnects, Inc. (DE 3/15/83); amended name
from Colony Interconnects, Inc. 4/28/97.
(7) MediaOne of Greater New York, Inc. (RI 7/6/70); amended
name from U.S. Cablevision Corp. 6/20/97.
(8) MediaOne of South Florida, Inc. (FL 3/20/71); amended
name from Dynamic Cablevision of Florida, Inc. 4/29/97.
(9) MediaOne of Southern New England, Inc. (MA 6/16/70);
amended name from Continental Cablevision of Southern
New England, Inc. 5/15/97.
o. MediaOne Holdings 1, Inc. (DE 9/5/78); amended name from
American Cablesystems Corporation 4/28/97.
(1) MediaOne of Los Angeles, Inc. (CA 1/9/86); amended name
from American Cablesystems of California, Inc. 9/5/97.
(a) MEDIAONE OF SOUTH CENTRAL LOS ANGELES, INC.
amended from American Cablesystems of South
Central Los Angeles, Inc. (DE 4/3/87; 84.16%
interest)
(2) MediaOne of Milton, Inc. (MA 7/28/81; 99% interest);
amended name from Milton Cablesystems Corporation
5/15/97.
(3) MediaOne of New York, Inc. (NY 6/2/83); amended name
from American Cablesystems of New York, Inc. 5/16/97.
p. MediaOne Investments, Inc. (DE 4/3/97); amended name from
Continental Cablevision Investments, Inc. 4/28/97.
(1) Fostoria Communications, Inc. (MA 8/22/95)
(2) MediaOne Cable News, Inc. (MA 9/24/90); amended name
from CCI Cable News, Inc. 4/29/97.
(3) MediaOne of Southeast Michigan, Inc. (MI 6/29/95);
amended name from Continental Cablevision of Southeast
Michigan, Inc. 5/1/97.
(4) MediaOne Programming Partners 1, Inc. (MA 8/10/93);
amended name from Continental Programming Partners I,
Inc. 4/29/97.
q. MediaOne of Australia, Inc. (MA 2/17/94); amended name from
Continental Cablevision of Australia, Inc. 5/15/97.
r. MediaOne of Brockton, Inc. (DE 11/30/81; 99.9% interest);
amended name from Continental Cablevision Brockton, Inc.
5/9/97.

<PAGE>

s. MediaOne of California, Inc. (CA 3/1/69); amended name from
Continental Cablevision of California, Inc. 9/5/97.
t. MediaOne of Greater Florida, Inc. (FL 2/25/71); amended name
from Continental Cablevision of Jacksonville, Inc. 4/29/97.
(1) Alrif Co., Inc. (MA 6/4/85)
(2) Continental Satellite Company of Florida, Inc. (FL
1/20/94)
(a) MediaOne Satellite II, Inc. (DE 10/3/97; 50%
interest other 50% held by Continental Cablevision
Satellite Company of Northern California, Inc.)
u. MediaOne of Illinois, Inc. (DE 10/4/67); amended name from
Continental Cablevision of Illinois, Inc. 4/28/97.
v. MediaOne of Massachusetts, Inc. (MA 1/6/72); amended name
from Continental Cablevision of Massachusetts, Inc. 5/15/97.
w. MediaOne of Metropolitan Detroit, Inc. (MI 3/18/74); amended
name from Continental Cablevision of Michigan, Inc. 4/30/97.
(1) Continental Satellite Company of Michigan, Inc. (MI
12/27/93)
(2) MediaOne of Eastern Michigan, Inc. (DE 1/17/95);
amended name from Continental Cablevision of Eastern
Michigan, Inc. 4/28/97.
x. MediaOne of Needham, Inc. (DE 11/19/82; 99.8% interest);
amended name from Continental Cablevision of Needham, Inc.
4/28/97.
y. MediaOne of New England, Inc. (NH 1/30/68); amended name
from Continental Cablevision of New England, Inc. 4/30/97.
(1) MediaOne of New Hampshire, Inc. (MD 10/27/44); amended
name from Continental Cablevision of Manchester, Inc.
4/29/97.
z. MediaOne of Northern Illinois, Inc. (DE 8/29/79); amended
name from Continental Cablevision of Northern Illinois, Inc.
4/28/97.
aa. MediaOne of Ohio, Inc. (OH 5/5/66); amended name from
Continental Cablevision of Ohio, Inc. 4/29/97.
bb. MediaOne of Sierra Valleys, Inc. (CA 7/1/86); amended name
from Continental Cablevision of Sierra Valleys, Inc. 9/5/97.
(1) MediaOne of Fresno, Inc. (CA 9/10/75); amended name
from Fresno Cable TV Limited 11/6/97.
(2) MediaOne of Nevada, Inc. (NV 1/18/78); amended name
from Telcab Communications, Inc. 4/30/97.
(3) MediaOne of Northern California, Inc. (CA 10/24/60);
amended name from Nor Cal Cablevision, Inc. 9/5/97.
cc. MediaOne of Virginia, Inc. (VA 7/27/77); amended name from
Continental Cablevision of Virginia, Inc. 4/29/97.
(1) Continental Cablevision of Richmond, Inc. (VA 6/12/78;
CL.A 100% PS. 100%, CL.B 64%) d/b/a MediaOne of
Richmond, Inc. 5/19/97.

<PAGE>

dd. MediaOne of Western New England, Inc. (DE 2/10/82); amended
name from Continental Cablevision of Western New England,
Inc. 4/28/97.
ee. MediaOne Telecommunications Corp. (MA 11/6/92); amended name
from Continental Telecommunications Corp. 4/29/97.
(1) Continental Australia Programming, Inc. (MA 11/1/93)
(2) MediaOne Telecommunications Corp. of Minnesota (MN
3/12/93); amended name from Continental
Telecommunications Corp. of Minnesota 5/15/98.
(3) Continental Telecommunications Corp. of Virginia (VA
3/4/93)
(4) Continental Teleport Partners, Inc. (MA 12/10/92)
(5) MediaOne Connect, Inc. (DE 10/8/97)
(6) MediaOne Express Midwest, Inc. (OH 12/21/95); amended
name from Continental Online - Midwest, Inc. 4/29/97.
(a) MediaOne HSD, LLC (DE 5-7-98; 7.5% interest)
(7) MediaOne Express of California, Inc. (CA 12/21/95);
amended name from Continental Online of California,
Inc. 5/22/97.
(a) MediaOne HSD, LLC (DE 5-7-98; 10% interest)
(8) MediaOne Express of Florida, Inc. (FL 12/21/95);
amended name from Continental Online of Florida, Inc.
4/29/97.
(a) MediaOne HSD, LLC (DE 5-7-98; 26.9% interest)
(9) MediaOne Express of Illinois, Inc. (IL 12/21/95);
amended name from Continental Online of Illinois, Inc.
4/29/97.
(10) MediaOne Express of New England, Inc. (MA 12/19/95);
amended name from Continental Online of New England,
Inc. 4/29/97.
(a) MediaOne HSD, LLC (DE 5-7-98; 31.4% interest)
(11) MediaOne Express of Virginia, Inc. (VA 1/24/97);
amended name from Continental Online of Virginia, Inc.
4/29/97.
(12) MediaOne Fiber Technologies, Inc. (FL 1/17/92; 80%
interest); amended name from Continental Fiber
Technologies, Inc. 5/29/97.
(13) MediaOne Florida Telecommunications, Inc. (FL 6/19/95);
amended name from Continental Florida
Telecommunications, Inc. 4/29/97.
(14) MediaOne Information Technology Systems, Inc. (MA
1/9/96); amended name from Continental Information
Technology Systems, Inc. 4/29/97.
(15) MediaOne International Programming, Inc. (MA 10/8/93);
amended name from Continental International
Programming, Inc. 4/29/97.

<PAGE>

(16) MediaOne Telecommunications Corp. of New England (MA
11/6/92); amended name from Continental
Telecommunications Corp. of New England 4/29/97.
(17) MediaOne Telecommunications Corp. of Ohio (OH
12/21/93); amended name from Continental
Telecommunications Corp. of Ohio, Inc. 5/16/97.
(18) MediaOne Telecommunications of California, Inc. (CA
8/23/95); amended name from Continental
Telecommunications of California, Inc. 5/22/97.
(19) MediaOne Telecommunications of Illinois, Inc. (IL
11/9/92); amended from Continental Telecommunications
of Illinois, Inc. 4/29/97.
(20) MediaOne Telecommunications of Massachusetts, Inc. (MA
12/5/94); amended name from Continental
Telecommunications of Massachusetts, Inc. 4/29/97.
(21) MediaOne Telecommunications of Michigan, Inc. (MI
12/18/95); amended name from Continental
Telecommunications of Michigan, Inc. 4/30/97.
(22) MediaOne Telecommunications of New Hampshire, Inc. (NH
12/20/95); amended name from CCI Telecommunications of
New Hampshire, Inc. 4/30/97.
(23) MediaOne Telecommunications of Ohio, Inc. (OH
12/26/95);amended name from Continental
Telecommunications of Ohio, Inc. 4/29/97.
(24) MediaOne Telecommunications of Virginia, Inc. (VA
2/1/96); amended name from CCI Telecommunications of
Virginia, Inc. 4/29/97.
ff. S.A. Ventures, Inc. (MA 2/7/94)
(1) S.A. Ventures (Delaware), Inc. (DE 9/22/97)
gg. S.A. Ventures II, Inc. (MA 8/12/97)

2. MediaOne Capital Corporation (CO 11/9/89); amended name from
U S WEST Capital Corporation 5/1/98; Holding company for Capital
Assets Group companies.
a. MediaOne Capital (America), Inc. (CO 7/20/90); amended name
from U S WEST Capital (America) Inc. 5/1/98.
b. MediaOne Capital Limited (U. K. 12/1/90); amended name from
U S WEST Capital Limited effective 6/23/98.
c. Commercial Reinsurance Company (OK 12/23/93; 91.6% interest)
d. MediaOne Financial Services, Inc. (CO 1/4/84; amended name
from U S WEST Financial Services, Inc. 6/15/98).
(1) Commercial Funding, Inc. (NY 11/12/85)
(2) MediaOne Delta, Inc. (CO 12/29/89); amended name from
U S WEST Delta, Inc. 5/1/98.
(3) MediaOne Finance Corporation (CO 10/5/95); amended name
from USW Finance Corporation 5/1/98.

<PAGE>

(4) U S WEST Financial Services Foreign Sales, Inc. (Virgin
Islands 7/27/90)
(5) MediaOne FS Leasing 1995, Inc. (CO 12/19/95); amended
name from USWFS Leasing 1995, Inc. 5/1/98.
(6) New York Cogenco, Inc. (DE 5/29/92); amended name from
Onondaga Cogeneration Corporation 6/12/92.
(7) MediaOne Shacres, Inc. (CA 8/29/91); amended from USW
Shacres, Inc. 6/2/98.
(8) SIFD ONE, LTD. (DE 11/15/90)
(a) MediaOne FSC ONE, LTD. (Bermuda 11/16/90) amended
from USW FSC ONE, LTD. 7/10/98.
(9) SIFD TWO, LTD. (DE 1/3/91)
(a) MediaOne FSC TWO, LTD. (Bermuda 1/4/91) amended
from USW FSC TWO, LTD. 7/10/98.
(10) SIFD THREE, LTD. (DE Business Trust 4/1/91)
(a) MediaOne FSC THREE, LTD. (Bermuda 3/18/91) amended
from USW FSC THREE, LTD. 7/10/98.
(11) MediaOne SPE, Inc. (DE 8/1/97); amended name from
USWSPE, Inc. 5/1/98.
(12) MediaOne Leveraged Lease Partners 1997, L.P.
(13) Valertex, Inc. (TX 10/12/90)
e. MediaOne Services (America) Inc. (CO 7/20/90); amended name
from U S WEST Services (America) Inc. 5/1/98.
f. MediaOne Services Limited (U.K. 1/26/90); amended name from
U S WEST Services Limited effective 6/23/98.

3. MediaOne Cellular Holdings, Inc. (DE 7/18/94); amended name from
U S WEST Cellular Holdings, Inc. 5/1/98.

4. Domestic Cable, Inc. (CO 1/21/97)

5. Far East Investment Company (CO 8/19/97)
a. MediaOne Far East Telecommunications, Inc. (DE 6/17/94; 49%
interest) amended name from U S WEST Far East
Telecommunications, Inc. 5/1/98.

6. MediaOne Interactive Services, Inc. (CO 8/22/95); amended name
from US WEST Interactive Services, Inc. 4/13/98.

7. MediaOne International Holdings, Inc. (DE 3/11/88); amended name
from U S WEST International Holdings, Inc. 5/1/98.
a. MediaOne Cable Partnership Holdings, Inc. (CO 6/13/89);
amended name from U S WEST Cable Partnership Holdings, Inc.
5/1/98.

<PAGE>

b. MediaOne Cable Programming Corporation, Inc. (CO 7/11/92);
amended name from U S WEST Cable Programming Corporation
5/1/98.
c. MediaOne Czech Cable Company (DE 11/10/94); amended name
from U S WEST Czech Cable Company 5/1/98.
d. MediaOne Espana Telecommunications, Inc. (DE 12/8/93);
amended name from U S WEST Espana Telecommunications, Inc.
5/1/98; amended name from U S WEST Hungarian
Telecommunications, Inc. 6/27/94.
e. MediaOne Europe, Inc. (CO 6/29/92); amended name from
U S WEST Europe, Inc. 5/1/98.
f. MediaOne Far East Telecommunications, Inc. (DE 6/17/94; 51%
interest) amended name from U S WEST Far East
Telecommunications, Inc. 5/1/98.
g. MediaOne Foreign Investments, Inc. (CO 7/14/88); amended
name from U S WEST Foreign Investments, Inc. 5/1/98; amended
name from Euclid, Inc. 1/18/89.
h. MediaOne International, Inc. (CO 1/28/83); amended name from
U S WEST International, Inc. 5/1/98; amended name from
U S WEST Holdings, Inc. 2/15/85.
I. MEDIAONE JAPAN, INC. (DE 1-23-99)
j. WatchMark, Inc. (CO 11/21/94); amended name from U S WEST
International Systems Group, Inc. 5/1/98.
(1) WatchMark Technologies, Inc. (CO 11/21/94); amended
name from U S WEST ISG Technologies, Inc. 5/1/98.
(2) WATCHMARK OPTIONS CORP. (TX 1-30-86); acquired by
WatchMark, Inc. 12-22-98
k. Overseas Operations, Inc. (CO 3/7/89); amended name U S WEST
Overseas Operations, Inc. 3/19/97
l. Overseas Operations II, Inc. (DE 3/19/97)
m. MediaOne PCN, Inc. (CO 1/23/91); amended name from USW PCN,
Inc. 5/1/98; amended name from U S WEST U.K. PCN, Inc.
2/11/91.
n. RTDC Holdings, Inc. (DE 10/31/95; approximately 67.8%
interest)
(1) Russian Telecommunications Development Corporation (DE
12/15/93)
(a) Russian Telecommunications Asset Management
Corporation (DE 10/3/94)
(b) Russian Telecommunications Development Finance
Corporation (DE 3/19/96)
(c) Russian Telecommunications Development Holding
Corporation (DE 10/3/94)
(d) Russian Telecommunications Development Holding
Corporation II (DE 11/12/97)
(e) Russian Telecommunications Development Management
Corporation (DE 12/15/93)

<PAGE>

(f) U S WEST SERVICES (RUSSIA 12/22/93)
DISSOLVED 7-1-97
o. MediaOne U. K. Cable, Inc. (CO 2/7/90); amended name from U
S WEST U.K. Cable, Inc. 5/1/98; amended name from U S WEST
Avon Partnership Holdings, Inc. 7/30/90.
p. MediaOne India B. V. (Netherlands 6/25/93); amended name
from U S WEST India B.V. 6/15/98.
(1) MEDIAONE CELLULAR INVESTMENTS COMPANY (Mauritius
3-27-95); amended from U S WEST Cellular Investments
Company 9-1-98 (99% interest)
q. MediaOne International B.V. (Netherlands 11/14/90); amended
from U S WEST International B.V. 6/15/98.
(1) U S WEST Deutschland GmbH (Germany 12/4/91); amended
name from Maxi Beteiligungs GmbH 9/21/92; acquired
9/24/92.
(2) U S WEST Polska Sp. z.o.o (Poland 1/3/92)
r. MediaOne U.K. Limited (U.K. 3/3/89); amended name from
U S WEST U.K. Limited 4/6/98.
(1) U S WEST Cable Partnership Limited (U.K. 5/22/89)
(Inactive)
(2) WatchMark Limited (U.K. 2/24/89); amended name from
U S WEST International Systems Group Limited 6/4/98;
amended name from U S WEST Cable Communications Limited
10/19/94.
(3) WatchMark Installation Services Limited (U.K.
10/12/94); amended from U S WEST ISG Installation
Services Limited 6/4/98; amended name from Duskmist
Limited 11/23/94.
(4) MediaOne Marketing Resources (UK) Limited (U.K.
2/3/94); amended name from U S WEST Marketing Resources
(UK) Ltd. 4/6/98.
s. U S WEST Westelcom B.V. (Netherlands 8/12/92)

8. MediaOne Investments Holdings, Inc. (CO 11/1/85); amended name
from U S WEST Investments, Inc. 6/1/98.
a. MediaOne Real Estate, Inc. (CO 10/11/83); amended name from
US WEST Real Estate, Inc. 5/1/98; amended name from BetaWest
Properties, Inc. 5/11/90.
(1) MediaOne Fresno Properties, Inc. (CO 8/19/94); amended
name from USW Fresno, Inc. 5/1/98.
(2) Taurus Properties, Inc. (CO 2/22/85)
(3) Verend, Inc. (TX 11/3/89)

9. MediaOne PCS Services, Inc. (CO 7/27/95); amended name from
U S WEST PCS Services, Inc. 5/1/98.
10. MediaOne HSD, LLC (DE 5-7-98; 5.8% interest)

<PAGE>

11. MEDIAONE SPC I, LLC (DE 11-9-98)

a. MEDIAONE SPC II, LLC (DE 11-9-98)

12. MEDIAONE CABLE ADVERTISING OF METROPOLITAN ATLANTA, L.L.C
(CO 8-12-98)

13. MEDIAONE TELECOMMUNICATIONS OF GEORGIA, L.L.C (CO 7-21-98)

B. MediaOne Financing A amended from U S WEST Financing I (DE Business
Trust 3/1/95) 6-12-98

C. MediaOne Financing B amended from U S WEST Financing II (DE Business
Trust 3/1/95) 6-12-98

D. MEDIAONE B.V. HOLDINGS, INC. (DE 11-19-98)

E. MediaOne Finance Trust I (DE 4/13/98)

F. MediaOne Finance Trust II (DE 4/13/98)

G. MEDIAONE FINANCE TRUST III (DE 10-5-98)

H. MEDIAONE FINANCE TRUST IV (DE 10-5-98)

I. MEDIAONE FINANCE TRUST V (DE 10-5-98)

J. MEDIAONE FINANCE TRUST VI (DE 10-5-98)

K. MediaOne Group Funding, Inc. (DE 4/13/98)

L. MediaOne of Michigan, Inc. (DE 11/27/96)

M. MediaOne Federal Relations, Inc. (DE 5/8/97); amended name from USW,
Inc. 5/15/98.

N. MEDIAONE RACING , INC. (DE 1-11-99)

O. Western Range Insurance Co. (VT 4/1/87)

P. MEDIAONE TWE HOLDINGS, INC. (DE 3-15-99) Level 2 under MediaOne of
Colorado, Inc.

<PAGE>
EXHIBIT 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated February 18, 1999 (except with respect to the
matters discussed in Note 22, as to which the date is March 22, 1999) on the
consolidated financial statements and the consolidated financial statement
schedule of MediaOne Group, Inc., as of December 31, 1998 and 1997 and for each
of the three years in the period ended December 31, 1998, included in this
Annual Report on Form 10-K into MediaOne Group, Inc.'s previously filed
registration statements on Forms S-3 (Nos. 33-50047, 33-50047-01 and 333-50227)
and on Forms S-8 (Nos. 333-01931, 33-63093, 33-63085, 33-63091, 333-24285 and
333-67679).

Denver, Colorado,
March 30, 1999.

<PAGE>

EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, MediaOne Group, Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Exchange Act of
1934, as amended, an annual report on Form 10-K for the fiscal year ended
December 31, 1998; and

WHEREAS, each of the undersigned is a Director of the Company;

NOW THEREFORE, each of the undersigned constitutes and appoints
RICHARD A. POST, CONSTANCE P. CAMPBELL and STEPHEN E. BRILZ, and each of
them, as attorneys for him or her and in his or her name, place, and stead,
and in his or her capacity as a Director of the Company, to execute and file
such annual report, and thereafter to execute and file any amendment or
amendments thereto on Form 10-K, hereby giving and granting to said attorneys
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as
fully, to all intents and purposes, as he or she might or could do if
personally present at the doing thereof, hereby ratifying and confirming all
that said attorneys may or shall lawfully do, or cause to be done, by virtue
hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this __ day of March 1999.

/s/ KATHLEEN A. COTE /s/ CHARLES M. LILLIS
- ---------------------------------- --------------------------------
Kathleen A. Cote Charles M. Lillis

/s/ ROBERT L. CRANDALL /s/ CHARLES P. RUSS, III
- ---------------------------------- --------------------------------
Robert L. Crandall Charles P. Russ, III

/s/ GRANT A. DOVE /s/ LOUIS A. SIMPSON
- ---------------------------------- --------------------------------
Grant A. Dove Louis A. Simpson

/s/ ALLEN D. GILMOUR /s/ JACK SLEVIN
- ---------------------------------- --------------------------------
Allan D. Gilmour Jack Slevin

/s/ PIERSON M. GRIEVE /s/ DANIEL W. YOHANNES
- ---------------------------------- --------------------------------
Pierson M. Grieve Daniel W. Yohannes

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS;

WHEREAS, the undersigned is an officer or Director, or both, of the
Company and holds the office, or offices, in the Company as indicated below
his name;

NOW THEREFORE, the undersigned hereby constitutes and appoints
RICHARD A. POST, CONSTANCE P. CAMPBELL and STEPHEN E. BRILZ, and each of
them, as attorneys for him and in his name, place, and stead, and in each of
his offices and capacities in the Company, to execute and file such annual
report, and thereafter to execute and file any amendment or amendments
thereto on Form 10-K, hereby giving and granting to said attorneys full power
and authority to do and perform all and every act and thing whatsoever
requisite and necessary to be done in and about the premises as fully, to all
intents and purposes, as he might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this __ day of March, 1999.

/s/ CHARLES M. LILLIS
---------------------------------------
Charles M. Lillis
Chairman of the Board, President and
Chief Executive Officer

<PAGE>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
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1,161
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</TABLE>