<PAGE>
                                              

Page 1




                                                   UNITED STATES
                                        SECURITIES AND EXCHANGE COMMISSION

                                              Washington, D.C. 20549


                                                     FORM 10-Q



                     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF 
                                 THE SECURITIES  EXCHANGE ACT OF 1934

                              For the Quarterly Period Ended June 30, 1998

                                              OR

                  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                  SECURITIES EXCHANGE ACT OF 1934

                         For the transition period from _______ to _______

                                 Commission File Number 1-8611

                                     MEDIAONE GROUP, INC.
<TABLE>
<CAPTION>
<S>                                  <C>                                         <C>   

                                     A Delaware Corporation                      IRS Employer No. 84-0926774

</TABLE>

                             188 Inverness Drive West, Englewood, Colorado 80112

                                                   Telephone Number 303-858-3000

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 __ The number of shares of MediaOne
Group, Inc. common stock  outstanding (net of shares held in treasury),  at July
31, 1998, was 609,405,218 shares.





                                               MediaOne Group, Inc.
                                                     Form 10-Q
  
                                                 TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S>      <C>     <C>       <C>    

Item                                                                                                   Page
                                      PART I - FINANCIAL INFORMATION

1.        MediaOne Group, Inc. Financial Information

                 Consolidated Statements of Operations -
                           Three and Six Months Ended June 30, 1998 and 1997                              3

                 Consolidated Balance Sheets -
                            June 30, 1998 and December 31, 1997                                           6

                 Consolidated Statements of Cash Flows -
                            Six Months Ended June 30, 1998 and 1997                                       8

                  Notes to Consolidated Financial Statements                                              9

2.        MediaOne Group, Inc. Management's Discussion and Analysis of
                   Financial Condition and Results of Operations                                         29

3.        MediaOne Group, Inc. Quantitative and Qualitative Disclosures About
                  Market Risk                                                                            51
</TABLE>

                                       PART II - OTHER INFORMATION
<TABLE>
<CAPTION>
<S>       <C>   
1.        Legal Proceedings                                                                              52

4.        Submission of Matters to a Vote of Security Holders                                            52

6.        Exhibits and Reports on Form 8-K                                                               53

</TABLE>

Form 10-Q - Part I

MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S>  <C>                                                 <C>           <C>            <C>          <C>   

------------------------------------------------------- ----------------------------- -------------------------
                                                             Three Months Ended           Six Months Ended
                                                                  June 30,                   June 30,
                                                         ---------------------------- ------------------------
Dollars in millions                                          1998          1997          1998         1997
-------------------------------------------------------- ------------- -------------- ------------ -----------
Sales and other revenues:
   Cable and broadband                                           $613           $589       $1,237      $1,145
   Wireless communications                                         20            363          361         698
   Other                                                            8             29           15          58
                                                         ------------- -------------- ------------ -----------
      Total sales and other revenues                              641            981        1,613       1,901

Operating expenses:
   Cost of sales and other revenues                               241            326          558         631
   Selling, general and admin. expenses                           195            313          502         590
   Depreciation and amortization                                  258            290          606         584
                                                         ------------- -------------- ------------ -----------
      Total operating expenses                                    694            929        1,666       1,805
                                                         ------------- -------------- ------------ -----------

Income (loss) from operations                                    (53)             52         (53)          96

Interest expense                                                (143)          (166)        (293)       (340)
Equity losses in unconsolidated ventures                         (69)          (153)        (205)       (318)
Gain on sale of domestic wireless investment                    3,869              -        3,869           -
Gains on sales of investments                                      22             44           39          95
Guaranteed minority interest expense                             (20)           (22)         (42)        (44)
Other income (expense) - net                                      110            (7)           73        (11)
                                                         ------------- -------------- ------------ -----------

Income (loss) from continuing operations before income
taxes                                                           3,716          (252)        3,388       (522)
(Provision) benefit for income taxes                          (1,542)             71      (1,436)         151
                                                         ------------- -------------- ------------ -----------
Income (loss) from continuing operations                        2,174          (181)        1,952       (371)

Income from discontinued operations - net
       of income taxes (Note 13):
     Results of operations                                        313            416          747         836
     Gain on separation                                        24,461              -       24,461           -
                                                         ------------- -------------- ------------ -----------
Income before extraordinary item                               26,948            235       27,160         465
Extraordinary item:
    Early extinguishment of debt, net of tax                    (333)              3        (333)           3
                                                         ============= ============== ============ ===========
NET INCOME                                                    $26,615           $238      $26,827        $468
                                                         ============= ============== ============ ===========
-
Dividends on preferred stock                                     (13)           (12)         (26)        (25)
Loss on redemption of Preferred Securities                       (53)              -         (53)           -
                                                         ------------- -------------- ------------ -----------

EARNINGS AVAILABLE FOR
    COMMON STOCK                                              $26,549           $226      $26,748        $443
-------------------------------------------------------- ============= ============== ============ ===========
</TABLE>

See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited), continued
<TABLE>
<CAPTION>
<S>                                                       <C>            <C>             <C>           <C>  

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


                                                              Three Months Ended             Six Months Ended
                                                                   June 30,                      June 30,
                                                         ------------------------------ ---------------------------
In thousands (except per share amounts)                       1998           1997           1998          1997
-------------------------------------------------------- --------------- -------------- ------------- -------------

MEDIAONE GROUP STOCK  (Note 8)
BASIC EARNINGS (LOSS) PER COMMON SHARE:
   Income (loss) from continuing operations                       $3.46        $(0.31)         $3.08       $(0.65)
   Income from discontinued operations (1)                         0.12           0.14          0.26          0.27
   Gain on separation                                             40.16              -         40.19             -
   Extraordinary item - early extinguishment of debt
                                                                 (0.55)              -        (0.55)             -
                                                         --------------- -------------- ------------- -------------
Basic earnings (loss) per common share                           $43.19        $(0.17)        $42.98       $(0.38)
                                                         =============== ============== ============= =============

BASIC AVERAGE COMMON SHARES OUTSTANDING
                                                                609,098        606,446       608,699       606,486
                                                         =============== ============== ============= =============

COMMUNICATIONS STOCK (Note 8)
BASIC EARNINGS PER COMMON SHARE:
   Income from discontinued operations (2)                        $0.50          $0.69         $1.21         $1.39
                                                         =============== ============== ============= =============

BASIC AVERAGE COMMON SHARES OUTSTANDING (3)
                                                                484,982        482,542       484,972       481,945
                                                         =============== ============== ============= =============

COMMUNICATIONS STOCK DIVIDENDS PER COMMON SHARE
                                                                    $ -         $0.535        $0.535         $1.07
-------------------------------------------------------- =============== ============== ============= =============
</TABLE>

(1)  Amounts  represent  the  operations  of U S  WEST  Dex,  Inc.,  which  were
discontinued as of June 12, 1998.
(2)  Amounts  represent  the  operations  of  Communications  Group,  which were
discontinued as of June 12, 1998.
(3) The  computation of average  common shares  outstanding  for  Communications
Stock during 1998 reflects shares outstanding through June 12, 1998.



See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited), continued
<TABLE>
<CAPTION>
<S>                                                      <C>             <C>            <C>           <C> 

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


                                                              Three Months Ended             Six Months Ended
                                                                   June 30,                      June 30,
                                                         ------------------------------ ---------------------------
In thousands (except per share amounts)                     1998 (1)         1997           1998          1997
-------------------------------------------------------- --------------- -------------- ------------- -------------

MEDIAONE GROUP STOCK  (Note 8)
DILUTED EARNINGS (LOSS) PER COMMON SHARE:
   Income (loss) from continuing operations                       $3.24        $(0.31)         $2.91       $(0.65)
   Income from discontinued operations (2)                         0.11           0.14          0.24          0.27
   Gain on separation                                             37.42              -         37.48             -
   Extraordinary item - early extinguishment of debt
                                                                 (0.51)              -        (0.51)             -
                                                         --------------- -------------- ------------- -------------
Diluted earnings (loss) per common share                         $40.27        $(0.17)        $40.12       $(0.38)
                                                         =============== ============== ============= =============

DILUTED AVERAGE COMMON SHARES OUTSTANDING
                                                                653,611        606,446       652,601       606,486
                                                         =============== ============== ============= =============

COMMUNICATIONS STOCK (Note 8)
DILUTED EARNINGS PER COMMON SHARE:
   Income from discontinued operations (3)                        $0.49          $0.69         $1.20         $1.39
                                                         =============== ============== ============= =============

DILUTED AVERAGE COMMON SHARES OUTSTANDING (4)
                                                                489,057        482,542       489,069       481,945
-------------------------------------------------------- =============== ============== ============= =============
</TABLE>

(1)   Column does not add due to rounding of individual components.
(2)  Amounts  represent  the  operations  of U S  WEST  Dex,  Inc.,  which  were
discontinued as of June 12, 1998.
(3)  Amounts  represent  the  operations  of  Communications  Group,  which were
discontinued as of June 12, 1998.
(4) The  computation of average  common shares  outstanding  for  Communications
Stock during 1998 reflects shares outstanding through June 12, 1998.



See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

MEDIAONE GROUP, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
<S>                                                                      <C>               <C>    
------------------------------------------------------------------------ ----------------- -------------------
  

                                                                             June 30,         December 31,
Dollars in millions                                                            1998               1997
------------------------------------------------------------------------ ----------------- -------------------

ASSETS

Current assets:
     Cash and cash equivalents                                                       $384                $184
     Accounts and notes receivable  - net                                             376                 604
     Inventories and supplies                                                           8                  29
     Deferred tax asset                                                                80                 102
     Prepaid and other                                                                 32                  48
     Net investment in assets of discontinued operations                                -               4,367
                                                                         ----------------- -------------------

Total current assets                                                                  880               5,334

Gross property, plant and equipment                                                 4,161               5,571
Accumulated depreciation                                                              782               1,299
                                                                         ----------------- -------------------

Property, plant and equipment - net                                                 3,379               4,272

Investment in Time Warner Entertainment                                             2,491               2,486
Investment in AirTouch Communications                                               5,015                   -
Net investment in international ventures                                              728                 742
Net investment in assets held for sale                                                445                 419
Intangible assets - net                                                            11,886              12,597
Other assets                                                                          565                 933
                                                                         ----------------- -------------------

Total assets                                                                      $25,389             $26,783
------------------------------------------------------------------------ ================= ===================
</TABLE>




See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

MEDIAONE GROUP, INC.

CONSOLIDATED BALANCE SHEETS
 (Unaudited), continued
<TABLE>
<CAPTION>
<S>  <C>                                                                  <C>                <C>    

-------------------------------------------------------------------- -------------------- --------------------
                                                                          June 30,           December 31,
Dollars in millions                                                         1998                 1997
-------------------------------------------------------------------- -------------------- --------------------

LIABILITIES AND SHAREOWNERS' EQUITY

Current liabilities:
     Short-term debt                                                              $2,075                 $735
     Accounts payable                                                                125                  395
     Employee compensation                                                            62                  109
     Deferred revenues and customer deposits                                          79                  108
     Other                                                                           743                  841
                                                                     -------------------- --------------------

Total current liabilities                                                          3,084                2,188

Long-term debt                                                                     3,040                8,228
Deferred income taxes                                                              4,996                3,276
Deferred credits and other                                                           604                  587

Company-obligated mandatorily redeemable preferred
   securities of subsidiary trust holding solely
   Company-guaranteed debentures                                                     561                1,080
Preferred stock subject to mandatory redemption                                      100                  100

Shareowners' equity:
   Preferred stock                                                                   924                  923
   Common shares                                                                  10,515               10,876
   Retained earnings (deficit)                                                     1,218                (359)
   LESOP guarantee                                                                     -                 (46)
   Accumulated other comprehensive income (loss)                                     347                 (70)
                                                                     -------------------- --------------------
Total shareowners' equity                                                         13,004               11,324
                                                                     -------------------- --------------------

Total liabilities and shareowners' equity                                        $25,389              $26,783
-------------------------------------------------------------------- ==================== ====================
</TABLE>



See Notes to Consolidated Financial Statements.

Form 10-Q - Part I
MEDIAONE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>                                                                                 <C>          <C>    

----------------------------------------------------------------------------------- ------------- ------------
Six Months Ended June 30,                                                               1998         1997
----------------------------------------------------------------------------------- ------------- ------------
OPERATING ACTIVITIES                                                                   Dollars in millions
   Net income                                                                            $26,827         $468
   Adjustments to net income:
     Discontinued operations                                                               (747)        (836)
     Gain on Separation                                                                 (24,461)            -
     Extraordinary (gain) loss on debt extinguishment                                        333          (3)
     Depreciation and amortization                                                           606          584
     Equity losses in unconsolidated ventures                                                205          318
     Distribution from unconsolidated ventures                                                28            5
     Gain on sale of domestic wireless investment                                        (3,869)            -
     Gains on sales of investments                                                          (39)         (95)
     Deferred income taxes and amortization of investment tax credits                      1,557         (76)
     Provision for uncollectibles                                                             27           32
  Separation costs paid                                                                     (97)            -
  Changes in operating assets and liabilities:
     Accounts and notes receivable                                                            29         (24)
     Inventories, supplies and other current assets                                         (46)         (30)
     Accounts payable and accrued liabilities                                              (286)           84
  Other - net                                                                                 91         (16)
                                                                                    ------------- ------------
  Cash provided by operating activities                                                      158          411
                                                                                    ------------- ------------

INVESTING ACTIVITIES
   Expenditures for property, plant and equipment                                          (725)        (709)
   Payment to Continental Cablevision shareowners                                              -      (1,150)
   Investment in international ventures                                                     (13)         (49)
   Investment in domestic ventures                                                          (79)        (116)
  Purchase of miscellaneous investments                                                     (35)         (25)
   Proceeds from sales of investments                                                        187          575
   Cash (to) from net investment in assets held for sale                                   (101)           50
   Other - net                                                                                 6            -
                                                                                    ------------- ------------
   Cash used for investing activities                                                      (760)      (1,424)
                                                                                    ------------- ------------

FINANCING ACTIVITIES
   Net proceeds from (repayments of) short-term debt                                       2,405      (3,051)
   Proceeds from issuance of long-term debt                                                    -        4,110
   Repayments of long-term debt                                                          (5,447)        (108)
   Repayments of Preferred Securities                                                      (582)            -
   Proceeds from issuance of common stock                                                    104           49
   Dividends paid on common stock                                                          (519)        (475)
   Dividends paid on preferred stock                                                        (27)         (23)
   Purchases of treasury stock                                                              (85)         (53)
                                                                                    ------------- ------------
   Cash (used for) provided by financing activities                                      (4,151)          449
                                                                                    ------------- ------------

  Cash provided by discontinued operations                                                 4,953          598
                                                                                    ------------- ------------

CASH AND CASH EQUIVALENTS
   Increase                                                                                  200           34
   Beginning balance                                                                         184          121
                                                                                    ============= ============
   Ending balance                                                                           $384         $155
----------------------------------------------------------------------------------- ============= ============
</TABLE>

See Notes to Consolidated Financial Statements.

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              For the Three and Six Months Ended June 30, 1998
                                               (Dollars in millions)
                                                    (Unaudited)

NOTE 1:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation.  The Consolidated Financial Statements have been prepared
by MediaOne  Group,  Inc.  ("MediaOne  Group" or the "Company")  pursuant to the
interim   reporting  rules  and  regulations  of  the  Securities  and  Exchange
Commission  ("SEC").  Certain  information  and  footnote  disclosures  normally
accompanying financial statements prepared in accordance with generally accepted
accounting  principles  ("GAAP") have been condensed or omitted pursuant to such
SEC rules and regulations.  In the opinion of MediaOne Group's  management,  the
Consolidated  Financial  Statements include all adjustments,  consisting of only
normal  recurring  adjustments,   necessary  to  present  fairly  the  financial
information set forth therein. It is suggested that these Consolidated Financial
Statements be read in conjunction with the MediaOne Group Consolidated Financial
Statements  and notes  thereto  filed on  Form 8-K  dated June 18,  1998.  The
MediaOne  Group  Form  8-K  filing  restated  the U S  WEST,  Inc.  Consolidated
Financial  Statements filed on Form 10-K/A dated April 13, 1998, and gave effect
to the classification of New U S WEST as a discontinued operation, as defined in
Note 2 - the Separation - to the Consolidated Financial Statements.

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

NOTE 2:  THE SEPARATION

Prior to June 12, 1998,  MediaOne Group 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").
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").

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

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)


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  13  -  Discontinued   Operations  -  to  the  Consolidated  Financial
Statements.

The Refinancing

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 4 - Debt - to the Consolidated Financial Statements.

NOTE 3:  ACQUISITIONS AND DISPOSITIONS

Sale of Domestic Wireless Businesses

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 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  preliminary  issuance to MediaOne  Group of  59,447,000  shares of AirTouch
common stock. During July, 1998, the number of shares was adjusted to 59,314,000
as a result of post-closing  adjustments.  The transaction resulted in a gain of
$2,257, net of deferred taxes of $1,612.

MediaOne  Group is  accounting  for its  investment  in AirTouch  under the cost
method of accounting, as available for sale securities.
 
Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

PrimeStar Transaction

Prior to April 1, 1998,  MediaOne Group held a 10.4 percent  equity  interest in
PrimeStar  Partners,  L.P.  ("Old  PrimeStar").   In  addition,  MediaOne  Group
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, MediaOne Group 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").  As a result, effective April 1, 1998, MediaOne
Group no longer  reflects  consolidated  operating  results  for  PrimeStar  DBS
services. MediaOne Group is accounting for the investment in PrimeStar under the
cost method of accounting.

High Speed Data Joint Venture

On June 15, 1998, MediaOne Group formed a joint venture with Time Warner,  Inc.,
("Time Warner"),  Time Warner Entertainment Company L.P. ("TWE") and Time Warner
Entertainment-Advance/Newhouse  Partnership  ("TWE/AN") called "ServiceCo,  LLC"
(the "HSD Joint Venture").  The parties to the joint venture contributed certain
of their respective high speed data ("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.  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  intends to account for its  investment in the HSD Joint Venture under the
equity method of accounting.

The HSD Joint Venture will be responsible for  maintaining an Internet  network,
providing  technical  customer  support and  developing  national  content.  The
parties to the joint venture will continue to operate their HSD  businesses  and
be responsible for customer  service and billing.  However,  the service will be
marketed  under the "Road Runner" brand name.  Accordingly,  MediaOne Group will
continue to reflect HSD service revenues in its consolidated results.  Beginning
in the third quarter of 1998, MediaOne Group will reflect a service fee, payable
to the HSD Joint Venture,  based upon a predetermined formula.


Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

Time Warner Cable Systems

The Company has reached a definitive  agreement with Time Warner to acquire Time
Warner's  cable  systems  in the cities of  Dearborn  and  Wayne,  Michigan  for
approximately $60. The systems serve approximately 30,000 subscribers.  The 
transaction is expected to close in the fourth quarter of 1998.

NOTE 4:  DEBT

Short-term Debt

As part of the  Refinancing,  $4.9 billion of notional medium and long-term debt
was redeemed,  effective  June 12, 1998, 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  the  amount  of
commercial paper issued in connection with the Refinancing.  Debt extinguishment
costs 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.

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

MediaOne Group maintains a commercial  paper program to finance  short-term cash
flow  requirements,  as well as to  maintain a presence in the  short-term  debt
market.  The Company is  permitted  to borrow up to $4.0  billion of  commercial
paper,  backed by lines of  credit,  of which  approximately  $2.2  billion  was
available at June 30, 1998.

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

The components of short-term debt follow:
<TABLE>
<S>                                                                             <C>              <C>    

      -------------------------------------------------------------------- -------------------- --------------------
                                                                                June 30,         December 31, 1997
                                                                                   1998
      -------------------------------------------------------------------- -------------------- --------------------
      Notes payable:
          Commercial paper                                                              $1,814                 $750
          Other                                                                             22                   17
      Current portion of long-term debt                                                    450                  266
      Allocated to the capital assets segment - net                                      (211)                (100)
      Allocated to the discontinued operations                                               -                (198)

                                                                           ==================== ====================
      Total                                                                             $2,075                 $735
      ==================================================================== ==================== ====================
</TABLE>

Long-term Debt

The components of long-term debt follow:
<TABLE>
<CAPTION>
<S>                                                                               <C>             <C>    

---------------------------------------------------------------------------- ------------------- --------------------
                                                                                  June 30,        December 31, 1997
                                                                                    1998
---------------------------------------------------------------------------- ------------------- --------------------

Senior unsecured notes, debentures and medium-term notes                                 $2,351               $7,275
Senior subordinated debt                                                                    300                  300
Debt exchangeable for common stock                                                            -                  254
Insurance company notes                                                                      18                   36
Capital lease obligations                                                                     5                    6
Other                                                                                        93                   81
Unamortized discount - net                                                                    -                  (8)
Unamortized premium - net                                                                   273                  284

                                                                             =================== ====================
Total                                                                                    $3,040               $8,228
============================================================================ =================== ====================
</TABLE>


Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

Interest rates and maturities of long-term debt follow:
<TABLE>
<CAPTION>
<S>                         <C>        <C>       <C>         <C>         <C>              <C>         <C>

------------------------- ------------------------------------------------------------ -------------------------
                                                  Maturities                                    Total
                          ------------------------------------------------------------ -------------------------
Interest Rates               1999       2000      2001        2002       Thereafter       1998         1997
------------------------- ----------- --------- ---------- ----------- --------------- ------------ ------------

Above 5% to 6%                    $-        $-         $-          $-              $-           $-          $10
Above 6% to 7%                    11         1          -          36              48           96        2,498
Above 7% to 8%                     -         -          -           2              47           49        2,730
Above 8% to 9%                     -         -        200           -           1,475        1,675        1,717
Above 9% to 10%                    4         3          -           -             525          532          575
Above 10%                         17         -          -           -             300          317          335
                          =========== ========= ========== =========== =============== ------------ ------------
                                 $32        $4       $200         $38          $2,395        2,669        7,865
                          =========== ========= ========== =========== ===============

Capital lease
 obligations and
 other                                                                                          98           87
Unamortized  discount  -
  net                                                                                            -          (8)
Unamortized   premium  -
  net                                                                                          273          284
                                                                                       ============ ============
Total                                                                                       $3,040       $8,228
------------------------- ----------- --------- ---------- ----------- --------------- ============ ============
</TABLE>

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

Interest Rate Risk Management

On June 3, 1998, in conjunction with the Refinancing,  MediaOne Group terminated
all of its outstanding  interest rate swap agreements,  resulting in a charge to
interest  expense of  approximately  $16. The swap agreements were terminated as
the debt underlying the instruments was refinanced on June 12, 1998.
 
NOTE 5:  FAIR VALUE 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.


Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

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
approximates the fair value based on estimated amounts MediaOne Group 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 long-term  debt,  including debt  associated with the capital
assets segment and Preferred Securities, 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>
<S>                                                         <C>            <C>        <C>            <C>    

--------------------------------------------------------------------------------------------------------------
                                                                June 30, 1998           December 31, 1997
                                                          ----------------------------------------------------
                                                          ----------------------------------------------------
                                                            Carrying       Fair       Carrying       Fair
                                                              Value        Value        Value        Value
--------------------------------------------------------------------------------------------------------------
Debt (includes short-term portion)                               $5,483      $5,960        $9,335      $9,910
Interest rate swap agreements - assets                                -           -             -           -
Interest rate swap agreements - liabilities                           -           -             -          19
                                                          ====================================================
Debt - net                                                       $5,483      $5,960        $9,335      $9,929
                                                          ====================================================

Preferred Securities                                               $561        $565        $1,080      $1,110
--------------------------------------------------------------------------------------------------------------
</TABLE>

Investments  in debt and equity  securities are classified as available for sale
and are carried at market value. The debt securities have various maturity dates
through the year 2002.  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.

The  amortized  cost and  estimated  market value of debt and equity  securities
follow:
<TABLE>
<CAPTION>
<S>      <C>                                           <C>          <C>              <C>   

         ----------------------------------------- -----------------------------------------------
                                                                   June 30, 1998
                                                   --------------- --------------- ---------------
                                                                       Gross
                                                                     Unrealized      Fair Value
         Securities                                     Cost           Gains
         ----------------------------------------- --------------- --------------- ---------------

         Equity securities                                 $5,128            $718          $5,846
         Debt securities                                       12               -              12
         Securitized loan                                      47               -              47
                                                   =============== =============== ===============
         Total                                             $5,187            $718          $5,905
         ----------------------------------------- =============== =============== ===============
</TABLE>

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

Net unrealized gains and losses on marketable securities are included in equity.
For the six-month  period ended June 30, 1998, net  unrealized  gains were $679,
net of deferred taxes of $265.

NOTE  6:  COMPANY  OBLIGATED  MANDATORILY  REDEEMABLE  PREFERRED  SECURITIES  OF
SUBSIDIARY TRUSTS HOLDING SOLELY COMPANY-GUARANTEED DEBENTURES

On June 12, 1998,  MediaOne  Group tendered for cash or exchanged (the "Exchange
Offer")  all  of  the  outstanding  Company  obligated  mandatorily   redeemable
preferred  securities of subsidiary  trusts  holding  solely  Company-guaranteed
debentures ("Preferred Securities").  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. In addition,  $266 face value of 7.96 percent Preferred Securities
and $213 face value of 8.25 percent Preferred Securities were exchanged for 9.30
percent   Preferred   Securities   and  9.50   percent   Preferred   Securities,
respectively, at fair value.

After the Exchange Offer,  there were outstanding $33 of 7.96 percent  Preferred
Securities and $30 of 8.25 percent Preferred Securities previously guaranteed by
Old U S WEST.  Such  guarantees  were assumed by MediaOne  Group. As of June 30,
1998,  there were  1,312,910  shares of 7.96 percent  Preferred  Securities  and
1,185,618 shares of 8.25 percent Preferred Securities outstanding.

MediaOne  Finance Trust I ("Finance  I"), a wholly owned  subsidiary of MediaOne
Group,  issued  $274 fair value of 9.30  percent  Preferred  Securities,  with a
maturity date of September 30, 2025, in exchange for  10,658,108  shares of 7.96
percent Preferred  Securities  previously  guaranteed by Old U S WEST.  MediaOne
Finance Trust II ("Finance  II"), a wholly owned  subsidiary of MediaOne  Group,
issued $224 fair value of 9.50  percent  Preferred  Securities,  with a maturity
date of October 29,  2036,  in exchange  for  8,520,289  shares of 8.25  percent
Preferred  Securities  previously  guaranteed  by Old  U S WEST.  The  Preferred
Securities of Finance I and Finance II were recorded at fair value of $25.75 and
$26.30  per  share,  respectively,  and have a  liquidation  value of $25.00 per
share. Finance I and Finance II also issued $9 and $7,  respectively,  of common
securities to MediaOne Group. Finance I used the total proceeds to purchase from
MediaOne Group Funding,  Inc.  ("MediaOne  Funding"),  a newly formed  financing
subsidiary of the Company,  $283 principal amount of MediaOne Group Funding 9.30
percent Subordinated Deferrable Interest Notes (the "Finance I Subordinated Debt
Securities") due 2025, the

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

obligations  under which are fully and  unconditionally  guaranteed  by MediaOne
Group (the "Finance I Debt  Guarantees").  The sole assets of Finance I are and
will be the  Finance  I  Subordinated  Debt  Securities  and the  Finance I Debt
Guarantees. Finance II used the total proceeds to purchase from MediaOne Funding
$231  principal  amount of MediaOne  Group  Funding  9.50  percent  Subordinated
Deferrable  Interest Notes (the "Finance II  Subordinated  Debt  Securities" and
together with the Finance I Subordinated Debt Securities, the "Subordinated Debt
Securities") due 2036, the obligations under which are fully and unconditionally
guaranteed by MediaOne Group (the "Finance II Debt Guarantees" and together with
the  Finance I Debt  Guarantees,  the  "Debt  Guarantees").  The sole  assets of
Finance II are and will be the Finance II  Subordinated  Debt Securities and the
Finance II Debt Guarantees.

MediaOne Group has guaranteed the payment of interest and redemption  amounts to
holders  of  Preferred  Securities  when  Finance I and  Finance  II have  funds
available  for such  payments  (the "Payment  Guarantee")  as well as  MediaOne
Funding's  undertaking to pay all of Finance I and Finance II's costs,  expenses
and other obligations (the "Expense Undertaking"). 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 Guarantee,  constitute a full and unconditional
guarantee by MediaOne  Group of Finance I's and Finance II's  obligations  under
the  Preferred  Securities.   The  interest  and  other  payment  dates  on  the
Subordinated  Debt Securities  correspond to the  distribution and other payment
dates on the Preferred Securities. Under certain circumstance,  the Subordinated
Debt  Securities may be  distributed to the holders of Preferred  Securities and
common securities in liquidation of Finance I and Finance II.

The 9.30 percent Subordinated Debt Securities are redeemable in whole or in part
by MediaOne  Funding at any time on or after September 11, 2000, at a redemption
price of $25.00 per Subordinated Debt Security plus accrued and unpaid interest.
If MediaOne  Funding  redeems the  Subordinated  Debt  Securities,  Finance I is
required to redeem the  Preferred  Securities  concurrently  at $25.00 per share
plus  accrued  and  unpaid  distributions.  As of  June  30,  1998,  there  were
10,658,108 shares of the 9.30 percent Preferred Securities outstanding. The 9.50
percent  Subordinated  Debt  Securities  are  redeemable  in whole or in part by
MediaOne Funding at any time on or after October 29, 2001, at a redemption price
of $25.00 per Subordinated  Debt Security plus accrued and unpaid  interest.  If
MediaOne  Funding  redeems  the  Subordinated  Debt  Securities,  Finance  II is
required to redeem the  Preferred  Securities  concurrently  at $25.00 per share
plus accrued and unpaid distributions. As of June 30, 1998, there were 8,520,289
shares of the 9.50 percent Preferred Securities outstanding.

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

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

NOTE 7:  SHAREOWNERS' EQUITY

Series D Preferred Stock.  Effective with the Separation,  the 19,999,478 shares
outstanding of  4.5 percent,  20 year,  Series D Preferred  Stock (the "Series D
Preferred  Stock")  remain  outstanding  and represent  shares of MediaOne Group
Series D Preferred Stock.  Since holders of the Series D Preferred Stock did not
participate  in  the  Dex  Dividend,  the  Board  of  Directors,  pursuant  to a
certificate  of  designation  of the  Series D  Preferred  Stock,  adjusted  the
conversion  rate of the Series D Preferred Stock to $25.25 per share from $26.25
per share.

Common Stock. 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 terms of the Separation
Agreement,  each  outstanding  share  of Media  Stock  remains  outstanding  and
represents  one share of MediaOne Group Common Stock  ("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,  resulting  in a reduction  of $421 to MediaOne
Group's Common Shares presented on the Consolidated Balance Sheet. Each share of
Communications Stock held as treasury stock by Old U S WEST was canceled.

During the six month period ended June 30, 1998,  MediaOne  Group  purchased and
placed into treasury  1,468,000  shares of MediaOne Group stock,  for an average
purchase price of $36.94 per share and a total cost basis of $54.

Retained Earnings (Deficit). MediaOne Group no longer holds Communications Stock
and,  accordingly,  the Consolidated Balance Sheet reflects decreased assets and
stockholders'  equity.  The  Separation  resulted  in an  overall  reduction  in
MediaOne  Group's  retained  earnings  of  $884  at  June  12,  1998,  including
Separation  costs. The reduction in equity represents the $770 net book value of
New  U S WEST,  net of the  $3.9  billion  debt  assumption,  and  the  $151  of
Separation costs, less the tax benefit on those costs of $37.

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

  The calculation of the gain on Separation is as follows:
<TABLE>
<CAPTION>
<S>               <C>                                                                        <C>    

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

                   Fair value of Communications Group at June 12, 1998                               $24,495
                   Dex Dividend                                                                          850
                                                                                             ----------------
                         Total fair value                                                             25,345
                   Net book value of New U S WEST at June 12, 1998                                   (4,670)
                   Debt assumption by New U S WEST                                                     3,900
                   Separation costs                                                                    (151)
                   Tax benefit on Separation costs                                                        37
                                                                                             ================
                   Gain on Separation                                                                $24,461
                   ------------------------------------------------------------------------- ================
</TABLE>

Comprehensive   Income.   Total  comprehensive  income  and  the  components  of
comprehensive income follow:
<TABLE>
<CAPTION>
<S>                                                   <C>            <C>            <C>            <C>    

----------------------------------------------------- ---------------------------- ---------------------------
                                                      Three Months Ended June 30,  Six Months Ended June 30,
                                                      ---------------------------- ---------------------------
                                                          1998           1997           1998          1997
----------------------------------------------------- -------------- -------------- -------------- -----------

Net income                                                  $26,615           $238        $26,827        $468
Other comprehensive income, before tax:
   Foreign currency translation adjustment                      (8)            (9)              9           2
   Unrealized gains on debt and equity securities
                                                                571            146            690          83
   Reclassification for gains realized in net income
                                                               (11)           (29)           (11)        (32)
Income  tax  provision  related  to  items  of other
   comprehensive income                                       (219)           (51)          (271)        (29)

                                                      ============== ============== ============== ===========
Total comprehensive income                                  $26,948           $295        $27,244        $492
----------------------------------------------------- ============== ============== ============== ===========
</TABLE>

The majority of the unrealized gains on debt and equity securities relate to the
Company's investment in AirTouch common and preferred stock. Such investment was
acquired on April 6, 1998, in connection with the AirTouch Transaction.


Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

Leveraged  Employee Stock  Ownership Plan  ("LESOP").  Old U S WEST maintained a
defined  contribution  savings plan for substantially all employees,  except for
employees of the Atlanta cable systems and foreign national  employees.  Old U S
WEST  matched a percentage  of eligible  employee  contributions  with shares of
MediaOne Group Stock and Communications Stock. In 1989, Old U S WEST established
two LESOPs to provide  stock for  matching  contributions  to the  savings  plan
through  borrowings at reduced  rates of  interest.  Shares in the  LESOP  were
released  as  principal  and  interest  were  paid on the debt.  The  borrowings
associated with the LESOP were  unconditionally  guaranteed by Old U S WEST, and
reflected as debt in the  Consolidated  Balance Sheet as of December 31, 1997. A
corresponding  reduction  in  shareowners' equity  was  also  reflected  on the
Consolidated  Balance Sheet.  In May, 1998, the borrowings  associated  with the
LESOP were repaid, resulting in corresponding adjustments to debt and equity.

In connection  with the Separation,  the  unallocated  shares in the LESOP as of
June 12, 1998,  were split between  MediaOne  Group and New U S WEST. As of June
30, 1998,  MediaOne  Group held  approximately  105,000 shares of MediaOne Group
Stock to be allocated to the defined contribution savings plan participants.

NOTE 8:  EARNINGS PER SHARE

The  following  table  reflects the  computation  of basic and diluted  earnings
(loss) per share for MediaOne  Group Stock and  Communications  Stock.  The 1998
dilutive  securities  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 1997 diluted loss and loss per
share amounts 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.

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)
<TABLE>
<CAPTION>
<S> <C>                                                   <C>           <C>            <C>          <C>   

--------------------------------------------------------- ---------------------------- -------------------------
                                                              Three Months Ended           Six Months Ended
                                                                   June 30,                    June 30,
                                                          ---------------------------- -------------------------
                                                              1998          1997          1998         1997
--------------------------------------------------------- ------------- -------------- ------------ ------------

MEDIAONE GROUP STOCK
Income (loss) from continuing operations                        $2,174         $(181)       $1,952       $(371)
    Preferred stock dividends                                     (13)           (12)         (27)         (25)
    Loss on redemption of Preferred Securities                    (53)              -         (53)            -
                                                          ------------- -------------- ------------ ------------
Income (loss) from continuing operations available for
  common shareowners used for basic earnings per share
                                                                $2,108         $(193)       $1,872       $(396)
  Preferred stock dividends on assumed conversion
                                                                    12              -           24            -
                                                          ============= ============== ============ ============
Income (loss) from continuing operations used for
  diluted earnings (loss) per share                             $2,120         $(193)       $1,896       $(396)
                                                          ============= ============== ============ ============

Income from discontinued operations
  Results of operations (1)                                        $71            $84         $158         $165
                                                          ============= ============== ============ ============
  Gain on Separation                                           $24,461              -      $24,461            -
                                                          ============= ============== ============ ============
Extraordinary item - early extinguishment of debt - net
  of tax                                                        $(333)             $3       $(333)            3
--------------------------------------------------------- ============= ============== ============ ============
</TABLE>

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)
<TABLE>
<CAPTION>
<S>                                                       <C>           <C>            <C>         <C>    

--------------------------------------------------------- ---------------------------- -------------------------
                                                              Three Months Ended           Six Months Ended
                                                                   June 30,                    June 30,
                                                          ---------------------------- -------------------------
                                                              1998          1997          1998         1997
--------------------------------------------------------- ------------- -------------- ------------ ------------
                                                                          (Shares in thousands)
MEDIAONE GROUP STOCK
Weighted average number of shares used for basic
  earnings (loss) per share                                    609,098        606,446      608,699      606,486
Effect of dilutive securities:
   Stock options                                                 6,112              -        5,651            -
  Series D Preferred Stock                                      38,401              -       38,251            -
                                                          ============= ============== ============ ============
Weighted average number of shares used for diluted
    earnings (loss) per share                                  653,611        606,446      652,601      606,486
                                                          ============= ============== ============ ============


BASIC EARNINGS(LOSS) PER SHARE:
Income (loss) from continuing operations                         $3.46        $(0.31)        $3.08      $(0.65)
                                                          ============= ============== ============ ============
Income from discontinued operations - results of
  operations (1)                                                 $0.12          $0.14        $0.26        $0.27
                                                          ============= ============== ============ ============
Income from discontinued operations - gain on Separation
                                                                $40.16            $ -       $40.19          $ -
                                                          ============= ============== ============ ============
Extraordinary item - early extinguishment of debt - net
  of tax                                                       $(0.55)            $ -      $(0.55)          $ -
                                                          ============= ============== ============ ============

DILUTED EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share from continuing operations
                                                                 $3.24        $(0.31)        $2.91      $(0.65)
                                                          ============= ============== ============ ============
Earnings per share from discontinued operations -
  results of operations (1)                                      $0.11          $0.14        $0.24        $0.27
                                                          ============= ============== ============ ============
Earnings per share from discontinued operations - gain
  on Separation                                                 $37.42            $ -       $37.48          $ -
                                                          ============= ============== ============ ============
Loss per share from extraordinary item - early
  extinguishment of debt - net of tax                          $(0.51)            $ -      $(0.51)          $ -
---------------------------------------------------------
                                                          ============= ============== ============ ============
</TABLE>

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

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (Dollars in millions, except per share amounts)
                                                    (Unaudited)
<TABLE>
<CAPTION>
<S>                                                         <C>          <C>          <C>           <C>    

----------------------------------------------------------- -------------------------- -------------------------
                                                               Three Months Ended          Six Months Ended
                                                                    June 30,                   June 30,
                                                            -------------------------- -------------------------
                                                               1998         1997          1998         1997
----------------------------------------------------------- ----------- -------------- ------------ ------------
                                                                           (Shares in thousands)
COMMUNICATIONS STOCK
Income from discontinued operations used for basic and
  diluted earnings per share (1)                                   $242           $332        $589         $671
                                                            ============ ============== =========== ============

Weighted average number of shares used for basic earnings
  per share                                                     484,982        482,542     484,972      481,945
Effect of dilutive securities:
   Stock options                                                  4,075              -       4,097            -
                                                            ============ ============== =========== ============
Weighted average number of shares used for diluted
    earnings per share                                          489,057        482,542     489,069      481,945
                                                            ============ ============== =========== ============

BASIC AND DILUTED EARNINGS PER SHARE:
Basic earnings per share from discontinued operations
                                                                  $0.50          $0.69       $1.21        $1.39
                                                            ============ ============== =========== ============
Diluted earnings per share from discontinued operations
                                                                  $0.49          $0.69       $1.20        $1.39
----------------------------------------------------------- ============ ============== =========== ============
</TABLE>

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

NOTE 9:  EMPLOYEE BENEFITS

Pension  Plans.  On June 12,  1998,  MediaOne  Group  established  a new defined
benefit  pension plan covering  substantially  all of its employees,  except for
foreign  national  employees.  Benefits  are based on a final pay  formula.  The
Company uses the projected unit credit method for the  determination  of pension
cost for financial  reporting purposes and the aggregate cost method for funding
purposes.  The Company's  policy is to fund amounts  required under the Employee
Retirement Income Security Act of 1974.

In connection with the Separation, a portion of the existing assets of the Old 
U S WEST pension  plan were transferred  at fair value to  MediaOne  Group.  The
following  discussion  utilizes  values  as of  June  12,  1998,  the day of the
Separation.


Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

The funded status of the plan follows:
<TABLE>
<CAPTION>
<S>                                                                                      <C>   

  ---------------------------------------------------------------------------------------==============
  Accumulated benefit obligation, including vested benefits of  $105                              $120
                                                                                         ==============
  Plan assets at fair value, primarily stocks and bonds                                           $200
  Less: Projected benefit obligation                                                               134
                                                                                         --------------
  Plan assets in excess of projected benefit obligation                                             66
  Unrecognized net (gain)                                                                         (68)
  Balance of unrecognized net asset at January 1, 1987                                             (8)
                                                                                         ==============
  Net pension liability                                                                          $(10)
  =====================================================================================================
</TABLE>

The actuarial  assumptions  used to calculate the projected  benefit  obligation
follow:
<TABLE>
<CAPTION>
<S>                                                                                         <C>    
--------------------------------------------------------------------------------------------------
Discount rate                                                                               7.00%
Weighted-average rate of compensation increase                                              5.50%
--------------------------------------------------------------------------------------------------
</TABLE>

Anticipated   future   benefit   changes  have  been   reflected  in  the  above
calculations.

Postretirement  Benefits  Other Than Pension.  Old U S WEST had  established  an
employee  welfare  benefit  program  that  included  retiree  medical  and  life
insurance benefits for certain employees.  Assets totaling approximately $4 were
transferred  from two Old U S WEST retiree  medical and life insurance  benefits
trusts to MediaOne Group at the time of the Separation. As of June 12, 1998, the
day of the Separation, the accumulated postretirement benefit obligation was $20
and the accrued  postretirement  benefit obligation was $12. A discount rate and
medical  trend rate of 7.0% and 8.5%,  respectively,  were used to calculate the
accumulated postretirement  obligation.  Anticipated future benefit changes were
also reflected in the postretirement benefit calculations.

NOTE 10:  COMMITMENTS

At  December  31,  1997,  a  subsidiary  of  MediaOne  Group   guaranteed  debt,
non-recourse to MediaOne Group, associated with its international investment, in
the principal  amount of  approximately  $600. In June 1998,  the  international
investment  refinanced  its line of credit  and drew on the new line of  credit,
resulting in an increase of the debt guarantee to approximately $900, as of June
30, 1998.


Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

NOTE 11:  SUBSEQUENT EVENTS.

Investment in Binariang Bhd. On July 24, 1998, British Telecom (BT) announced it
would  acquire  a 33.3  percent  stake  in  Binariang  Bhd,  a  major  Malaysian
telecommunications  group.  MediaOne Group  currently owns a 19 percent stake in
Binariang.  Under the  terms of the deal,  MediaOne  Group's  interest  would be
diluted to 12.6 percent. The Company's investment carrying value is currently at
zero due to an impairment  write-down at the end of 1997. The Company  continues
to monitor its investment in Malaysia.

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 its 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 18.88
percent interest in TW Telecom. Since the investment in TW Telecom resulted from
a  distribution  by TWE,  MediaOne  Group's  investment  balance  in TWE will be
reduced by the book value of the TW Telecom investment attributable to MediaOne
Group.  The investment in TW Telecom will be accounted for under the cost method
of accounting.

Debt  Issuance.  On August 5, 1998,  MediaOne  Group issued  approximately  $1.5
billion of 6.25 percent  notes,  mandatorily  exchangeable  at maturity 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,  at MediaOne  Group's
option. The notes mature in August,  2001.  Proceeds from the offering were used
to reduce outstanding commercial paper and for general corporate purposes.

NOTE 12:  NET INVESTMENT IN ASSETS HELD FOR SALE

The capital  assets  segment is being  accounted  for in  accordance  with Staff
Accounting  Bulletin  No. 93,  issued by the SEC,  which  requires  discontinued
operations  not  disposed  of  within  one  year of the  measurement  date to be
accounted  for  prospectively  in continuing  operations  as "net  investment in
assets held for sale." The net realizable value of the assets is being evaluated
on an ongoing basis with  adjustments  to the existing  reserve,  if any,  being
charged to continuing operations. No such adjustment has been required. Prior to
January 1, 1995, the entire capital

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

assets segment was accounted for as  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 components of net investment in assets held for sale follow:
<TABLE>
<CAPTION>
<S>                                                                 <C>                <C>    

------------------------------------------------------------------- ------------------ ---------------------
                                                                             June 30,          December 31,
                                                                                 1998                  1997
------------------------------------------------------------------- ------------------ ---------------------
ASSETS
Cash and cash equivalents                                                   $      37              $     54
Finance receivables - net                                                         778                   777
Investment in real estate - net of valuation allowance                             82                   156
Bonds, at market value                                                            116                   119
Investment in FSA                                                                 404                   365
Other assets                                                                      227                   197
                                                                    ------------------ ---------------------

Total assets                                                                   $1,644                $1,668
                                                                    ================== =====================

LIABILITIES
Debt                                                                           $  368                $  372
Deferred income taxes                                                             684                   669
Accounts payable, accrued liabilities and other                                   135                   197
Minority interests                                                                 12                    11
                                                                    ------------------ ---------------------

Total liabilities                                                               1,199                 1,249
                                                                    ------------------ ---------------------

Net investment in assets held for sale                                         $  445                $  419
=================================================================== ================== =====================
</TABLE>

Building sales and operating revenues of the capital assets segment were $59 and
$122 for the three- and six-month periods ended June 30, 1998, respectively, and
$21  and  $78  for the  three-  and  six-month  periods  ended  June  30,  1997,
respectively.

Revenues of MediaOne Financial Services, Inc. ("Financial  Services"),  a member
of the  capital  assets  segment,  were $5 and $10 for the three- and  six-month
periods  ended June 30,  1998,  respectively,  and $6 and $11 for the three-and
six-month periods ended June 30, 1997, respectively. Selected financial data for
Financial Services follows.

Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)
<TABLE>
<CAPTION>
<S>                                                                 <C>                <C>    

------------------------------------------------------------------- ------------------ --------------------
                                                                             June 30,         December 31,
                                                                                 1998                 1997
-------------------------------------------------------------------
                                                                    ------------------ --------------------
Net finance receivables                                                        $  819              $   824
Total assets                                                                    1,166                1,208
Total debt                                                                        354                  363
Total liabilities                                                               1,076                1,121
Equity                                                                             90                   87
------------------------------------------------------------------- ------------------ --------------------
</TABLE>

In conjunction with the Separation,  Financial  Services  redeemed $125 notional
medium-term debt for a cash redemption amount of $129. Financial Services funded
the redemption with proceeds loaned from MediaOne Funding.

NOTE 13:  DISCONTINUED OPERATIONS

The Company has  accounted for the  distribution  of  New U S WEST  stock to the
holders of  Communications  Stock, and to the holders of Media Stock for the Dex
Alignment,  as a discontinuance  of the businesses  comprising New U S WEST. The
measurement date for  discontinued  operations  accounting  purposes was June 4,
1998, the date upon which  Old U S WEST's  shareowners  approved the Separation.
The effective date of the Separation was June 12, 1998. Because the distribution
of New U S WEST 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 Separation
costs of $151 and 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.



Form 10-Q - Part I

                                               MEDIAONE GROUP, INC.
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                               (Dollars in millions)
                                                    (Unaudited)

Summarized financial information for the discontinued operations is as follows:
<TABLE>
<CAPTION>
<S>      <C>                                                               <C>    
         ----------------------------------------------------------------- ---------------------
                                                                               December 31,
         Summarized Financial Position                                             1997
         ----------------------------------------------------------------- ---------------------
         ASSETS
         Cash and cash equivalents                                                     $     27
         Accounts and notes receivables - 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>
<S>                                               <C>           <C>          <C>             <C>    

------------------------------------------------- -------------------------- ------------------------------
                                                     Three Months Ended            Six Months Ended
                                                          June 30,                     June 30,
                                                  -------------------------- ------------------------------
Summarized Operating Results                          1998         1997          1998            1997
------------------------------------------------- ------------- ------------ -------------- ---------------
Revenues                                                $2,445       $2,830         $5,454          $5,697

Operating income                                           597          756          1,412           1,533

Income before income taxes                                 494          667          1,187           1,337
Income tax expense                                       (181)        (251)          (440)           (501)
                                                  ============= ============ ============== ===============
Net income of discontinued operations                     $313         $416           $747            $836
================================================= ============= ============ ============== ===============
</TABLE>


Form 10-Q - Part I

Item 2. 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) changes in economic conditions in the various markets served by
MediaOne Group 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.

The Separation

Prior to June 12, 1998,  MediaOne  Group was known as Old U S WEST.  On June 12,
1998,  Old U S  WEST  consummated  a  transaction  in  which  it  separated  its
businesses  into  two  independent  public  companies.   Until  the  Separation,
Old U S WEST  conducted its businesses  through two groups:  the Media Group and
the  Communications  Group. Upon Separation,  Old U S WEST was renamed "MediaOne
Group, Inc." and retained the multimedia  businesses of Media Group,  except for
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. In addition, Dex was aligned with New U S WEST.

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.
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 $40.16
basic earnings per MediaOne Group share, net of Separation costs of $151 and tax
benefits  of $37.  Separation  costs  included  cash  payments  under  severance
agreements of $45 and financial advisory, legal, registration fees, printing and
mailing costs.


Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions, except per share amounts), continued

In conjunction  with the  Separation,  Old U S WEST redeemed $4.9 billion of its
long term debt outstanding.  The redemption resulted 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
accordance with 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 the
commercial paper issued in connection with the Refinancing.



Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions, except per share amounts), continued

Results of Operations - Continuing  Operations - Three and Six Months Ended June
30, 1998 Compared with 1997

Income (Loss) from Continuing Operations
<TABLE>
<CAPTION>
<S>                           <C>        <C>         <C>       <C>        <C>        <C>          <C>       <C>

----------------------------- ---------------------- -------------------- --------------------------------------------
                                                                                Basic Earnings (Loss) Per Share
                                                                                   From Continuing Operations
                                                                          --------------------------------------------
                               Three Months Ended                           Three Months Ended
                                    June 30,               Change                June 30,               Change
                              ---------------------- -------------------- ----------------------- --------------------
                                1998        1997        $          %        1998        1997         $          %
----------------------------- ---------- ----------- --------- ---------- ---------- ------------ --------- ----------
Income (loss) from
  continuing operations          $2,174      $(181)    $2,355          -      $3.46      $(0.31)     $3.77          -
Adjustments to reported
  gain (loss) from
  continuing operations:
   Gain on sale of domestic
    wireless investment         (2,257)           -   (2,257)          -     (3.71)            -    (3.71)          -
   Gains on sales of
    investments                    (14)        (25)        11     (44.0)     (0.02)       (0.04)      0.02     (50.0)
                              ========== =========== ========= ========== ========== ============ ========= ==========
Normalized loss from
  continuing operations           $(97)      $(206)      $109     (52.9)    $(0.27)       (0.35)     $0.08     (22.9)
============================= ========== =========== ========= ========== ========== ============ ========= ==========

----------------------------- --------------------- --------------------- -------------------------------------------
                                                                               Basic Earnings (Loss) Per Share
                                                                                  From Continuing Operations
                                                                          -------------------------------------------
                                Six Months Ended                            Six Months Ended
                                    June 30,               Change               June 30,               Change
                              --------------------- --------------------- --------------------- ---------------------
                                1998       1997         $          %        1998       1997         $          %
----------------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Gain (loss) from continuing
  operations                     $1,952     $(371)     $2,323          -      $3.08    $(0.65)      $3.73          -
Adjustments to reported
  gain (loss) from
  continuing operations:
   Gain on sale of domestic
    wireless investment         (2,257)          -    (2,257)          -     (3.71)          -     (3.71)          -
   Gains on sales of
    investments                    (24)       (56)         32     (57.1)     (0.04)     (0.09)       0.05     (55.6)
============================= ========== ========== ========== ========== ========== ========== ========== ==========
Normalized loss from
  continuing operations          $(329)     $(427)        $98     (23.0)    $(0.67)    $(0.74)      $0.07      (9.5)
============================= ========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>

The normalized  decreases in loss from  continuing  operations  were primarily a
result of decreased  equity  losses  generated by  unconsolidated  international
ventures  and  decreased  interest  expense due to lower debt levels at MediaOne
Group,  partially  offset by the lack of  operating  results  from the  domestic
wireless  businesses  which  were sold on April 6, 1998.  On a pro forma  basis,
removing  the  1998  and  1997  operating   results  of  the  domestic  wireless
operations,  and the 1998 gain on the sale of the domestic  wireless  investment
and loss on the redemption of the Preferred  Securities,  the loss per share for
the three- and six-month  periods ended June 30, 1998, would have been $0.17 and
$0.58,  respectively,  compared  with $0.36 and $0.74,  for the same  periods in
1997, respectively.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions, except per share amounts), continued

Sales and Other Revenues
<TABLE>
<CAPTION>
<S>                        <C>      <C>           <C>        <C>        <C>         <C>        <C>          <C>

------------------------- ----------------------- --------------------- ---------------------- ----------------------
                            Three Months Ended                          Six Months Ended
                                 June 30,                Change               June 30,                Change
                          ----------------------- --------------------- ---------------------- ----------------------
                            1998        1997          $          %         1998       1997         $           %
------------------------- ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------

Cable and broadband:
   Domestic                    $607         $585        $22        3.8      $1,226     $1,137         $89        7.8
   International                  6            4          2       50.0          11          8           3       37.5
                          ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------
                                613          589         24        4.1       1,237      1,145          92        8.0

Corporate                         7            6          1       16.7          14         13           1        7.7
Other(1)                          1           23       (22)     (95.7)           1         45        (44)     (97.8)
                          ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------

   Current operations           621          618          3        0.5       1,252      1,203          49        4.1

Domestic wireless(2)             20          363      (343)     (94.5)         361        698       (337)     (48.3)

                          ========== ============ ========== ========== =========== ========== =========== ==========
Total                          $641         $981     $(340)     (34.7)      $1,613     $1,901      $(288)     (15.1)
========================= ========== ============ ========== ========== =========== ========== =========== ==========
</TABLE>

(1) Primarily includes  international  directories which were sold in the second
and third quarters of 1997.
(2)   The domestic wireless businesses were sold effective 4/6/98.

MediaOne  Group sales and other  revenues  decreased  $340, or 34.7 percent,  to
$641, and $288, or 15.1 percent,  to $1,613 for the three- and six-month periods
ended  June 30,  1998,  respectively,  primarily  as a result of the sale of the
domestic wireless  businesses in April, 1998, and the international  directories
businesses  in  the  latter  part  of  1997.  Normalized  for  acquisitions  and
dispositions,  total  revenues  increased  9.5 percent and 10.2  percent for the
three- and six-month periods ended June 30, 1998, respectively.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Cable and Broadband - Domestic.
<TABLE>
<CAPTION>
<S>                       <C>         <C>         <C>        <C>        <C>         <C>        <C>         <C>

------------------------- ----------------------- --------------------- ---------------------- ----------------------
                            Three Months Ended                          Six Months Ended
                                 June 30,                Change               June 30,                Change
                          ----------------------- --------------------- ---------------------- ----------------------
REVENUES                    1998        1997          $          %         1998       1997         $           %
------------------------- ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------

Domestic
   Basic Cable                 $428         $382        $46       12.0        $847       $752         $95       12.6
   Premium                       80           81        (1)      (1.2)         159        163         (4)      (2.5)
   Pay-per-view                  11           19        (8)     (42.1)          24         30         (6)     (20.0)
   Advertising                   40           33          7       21.2          71         58          13       22.4
   Equipt. & Install.            44           38          6       15.8          84         73          11       15.1
   Other                        (7)            1        (8)          -        (14)          2        (16)          -
                          ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------
      Total core cable          596          554         42        7.6       1,171      1,078          93        8.6
   New Products                  11            5          6          -          21         10          11          -
   PrimeStar                      -           26       (26)          -          34         49        (15)     (30.6)
                          ========== ============ ========== ========== =========== ========== =========== ==========
      Total revenues           $607         $585        $22        3.8      $1,226     $1,137         $89        7.8
========================= ========== ============ ========== ========== =========== ========== =========== ==========
</TABLE>

Domestic cable and broadband  revenues  increased  $22, or 3.8 percent,  to $607
during the three-month  period ended June 30, 1998, and $89, or 7.8 percent,  to
$1,226,  during the  six-month  period  ended June 30,  1998,  due  primarily to
increased  core cable  revenues.  Normalized  for the one-time  effects of cable
system acquisitions and dispositions, and a change in classification of late fee
revenues, domestic cable and broadband revenues increased 9.0 percent during the
three- month period and 9.9 percent during the six-month period.

Core  cable  revenues  increased  $42,  or  7.6  percent,  to  $596  during  the
three-month  period,  and $93, or 8.6 percent,  to $1,171,  during the six-month
period,   primarily  a  result  of  higher  basic  cable  services  revenue  and
advertising  revenue  growth.  Core cable revenue per average  cable  subscriber
increased 5.4 percent to $40.28 in the three-month period of 1998, compared with
$38.20 in the same period of 1997,  and 6.4  percent to $39.73 in the  six-month
period of 1998,  compared with $37.34 during the same period in 1997.  Excluding
the one-time effects of cable system  acquisitions and dispositions and a change
in classification  of late fee revenues,  core cable revenue for the three month
period increased 8.0 percent,  of which 6.5 percent related to increased revenue
per subscriber and 1.5 percent related to increased  subscribers.  The increased
revenue per subscriber  related to increased channel  offerings,  repackaging of
services and increased rates.  The normalized  six-month period increase was 8.9
percent,  of which 7.4 percent  related to increased  revenue per subscriber and
1.5 percent related to increased subscribers.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Basic cable services  revenue  increased  $46, or 12.0 percent,  to $428 for the
three-month period due primarily to a 10 percent increase in revenue per average
cable  subscriber and increased basic  subscribers.  The increase in revenue per
subscriber is primarily a result of expanded channel  offerings,  repackaging of
services and rate increases.  During the six-month period,  basic cable services
revenue  increased $95, or 12.6 percent,  to $847. Basic cable  subscribers were
4,933,000  at June 30,  1998,  an increase of 1.5  percent,  normalized  for the
effect of cable system acquisitions and dispositions.

Advertising  revenues  contributed  increased  revenues  of $7 and $13,  for the
three-and  six-month  periods,  respectively,  primarily  a result of  increased
channel capacity and growth in local and national  advertising sales.  Equipment
and installation  revenues contributed  increased revenues of $6 and $11 for the
three- and six-month  periods,  respectively,  primarily a result of subscribers
upgrading converter boxes.

Partially  offsetting  the  increase  in core cable  revenues  was a decrease in
pay-per-view  revenues  of $8 and $6  for  the  three-  and  six-month  periods,
respectively. This decrease was due primarily to the airing of a boxing event in
June, 1997, with no comparable event in 1998.

New product  revenues  contributed  increased  revenues of $6 and $11 during the
three- and six-month  periods,  respectively,  primarily  from  growth  in HSD
services revenue.  As of June 30, 1998,  MediaOne Group had 40,600 HSD customers
compared  with 6,400 HSD  customers  for the same period in 1997.  On June,  15,
1998,  MediaOne  Group formed the HSD Joint  Venture  with Time Warner,  TWE and
TWE/AN to  deliver  HSD  services  under  the "Road  Runner"  brand  name.  The
investment will be accounted for under the equity method of accounting.  The HSD
Joint Venture will be responsible for maintaining an Internet network, providing
technical customer support and developing  national content.  The parties to the
joint venture will continue to operate their HSD  businesses  and be responsible
for customer service and billing.  Accordingly,  MediaOne Group will continue to
reflect HSD service revenues in its consolidated results. Beginning in the third
quarter of 1998,  MediaOne Group will reflect a service fee,  payable to the HSD
Joint Venture, based upon a predetermined formula.

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. Subsequent to April 1, 1998,
in  conjunction  with the  Prime  Star  Contribution,  MediaOne  Group no longer
reflects consolidated operating results for PrimeStar DBS services.

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.


Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Domestic Wireless.  On April 6, 1998,  MediaOne Group sold its domestic wireless
businesses to AirTouch.

Operating Income (Loss)
<TABLE>
<CAPTION>
<S>                        <C>       <C>          <C>        <C>        <C>        <C>         <C>         <C>

------------------------- ----------------------- --------------------- ---------------------- ----------------------
                            Three Months Ended                          Six Months Ended
                                 June 30,                Change               June 30,                Change
                          ----------------------- --------------------- ---------------------- ----------------------
                            1998        1997          $          %         1998       1997         $           %
------------------------- ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------

Cable and broadband:
   Domestic                   $(10)         $ 2       $ (12)          -      $(58)      $(15)       $ (43)        -
                                          
   International                (1)          (2)          1     (50.0)         (4)        (7)           3     (42.9)
                          ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------
                               (11)            -       (11)          -        (62)       (22)        (40)          -

International wireless          (2)          (6)          4     (66.7)         (5)        (9)           4     (44.4)
Corporate (1)                  (44)         (35)         (9)     25.7         (73)       (49)         (24)     49.0
Other(2)                        (3)          (7)          4     (57.1)         (6)       (18)          12     (66.7)
                          ---------- ------------ ---------- ---------- ----------- ---------- ----------- ----------

   Current operations          (60)         (48)        (12)     25.0        (146)       (98)         (48)     49.0

Domestic wireless(3)              7          100       (93)     (93.0)          93        194       (101)     (52.1)
                          ========== ============ ========== ========== =========== ========== =========== ==========
Total                         $(53)          $52     $(105)          -       $(53)        $96      $(149)         -
========================= ========== ============ ========== ========== =========== ========== =========== ==========
</TABLE>

(1) Primarily includes  headquarters expenses for shared services and divisional
expenses associated with equity investments.
(2) Primarily includes  international  directories which were sold in the second
and third quarters of 1997.
(3)   The domestic wireless businesses were sold effective 4/6/98.

During 1998, MediaOne Group's operating income decreased $105, to a loss of $53,
and $149, to a loss of $53, for the three- and six-month  periods ended June 30,
1998,  respectively.  The decrease in operating income was primarily a result of
selling the domestic wireless businesses in April, 1998.

MediaOne  Group's  earnings before income taxes,  depreciation  and amortization
("EBITDA") for the  three-month  period ended June 30, 1998 were $205,  compared
with $342 during the same period in 1997.  Excluding  the effect of the domestic
wireless  operations,  EBITDA would have been $196in the second quarter of 1998,
compared with $197 in the same period of 1997.  For the  six-month  period ended
June 30,  1998,  EBITDA was $553,  compared  with $680 during the same period in
1997.  Excluding the effect of the domestic  wireless  operations,  EBITDA would
have been $405 during the first  six-months  of 1998,  compared with $399 during
the same period in 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.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Cable and Broadband - Domestic.  Domestic cable and broadband  operating  income
decreased $12, to a loss of $10, for the three-month period ended June 30, 1998,
as  compared  with the same  period in 1997.  Operating  loss for the  six-month
period ended June 30, 1998,  increased  $43, to a loss of $58, as compared  with
the same period in 1997. The changes during the periods were caused primarily by
increased  depreciation and amortization expense. As MediaOne Group continues to
upgrade its cable networks,  depreciation expense will continue to escalate.  In
addition,  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 this property while it was held for sale in 1997.

EBITDA for domestic cable and broadband  operations during the second quarter of
1998 was $239 compared to $238 in the same period of 1997.  EBITDA remained flat
as  revenue  increases  of  $22,  or  3.8  percent,  were  offset  by  increased
programming costs of $9, or 6.8 percent, and increased operating,  marketing and
advertising,  and general and administrative  costs of $12, or 5.6 percent.  New
products  contributed  revenues of $11 and costs of $24 to total  domestic cable
and  broadband  EBITDA  during the second  quarter of 1998.  Domestic  cable and
broadband EBITDA  increased 1.7 percent,  normalized for the one-time effects of
cable system acquisitions and dispositions.

For the  six-month  period  ended June 30, 1998,  EBITDA for domestic  cable and
broadband operations was $479, an increase of $16, or 3.5 percent, over the same
period in 1997.  Revenue  increases  of $89,  or 7.8  percent,  more than offset
increased  programming costs of $31, or 12.0 percent,  and increased  operating,
marketing and advertising,  and general and administrative costs of $42, or 10.1
percent.  New  products  contributed  revenues  of $21 and costs of $43 to total
domestic  cable and  broadband  EBITDA  during the  period.  Domestic  cable and
broadband EBITDA  increased 3.7 percent,  normalized for the one-time effects of
cable system acquisitions and dispositions.

Core cable EBITDA was $276 in the second quarter of 1998, an increase of $20, or
7.8 percent,  compared  with $256 for the same period of 1997.  Normalizing  for
acquisitions and dispositions,  core cable EBITDA increased 6.3 percent.  During
the  six-month  period  ended  June 30,  1998,  core cable  EBITDA was $537,  an
increase of $45, or 9.1 percent,  compared with $492 in the same period of 1997.
Normalizing for acquisitions and  dispositions,  core cable EBITDA increased 8.3
percent.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Programming  costs were $141 for the second  quarter of 1998, an increase of $9,
or 6.8  percent,  over the same  period  in 1997.  Excluding  programming  costs
related to PrimeStar  services,  programming  costs increased 14.7 percent.  The
normalized  increase was primarily a result of increased  programming  costs per
subscriber as a result of rate  increases,  growth in  subscribers  and expanded
channel offerings.  During the six-month period ended June 30, 1998, programming
costs were $290,  an increase of $31, or 12.0  percent,  over the same period in
1997.  Excluding  programming costs related to PrimeStar  services,  programming
costs increased 14.3 percent during the six-month period ended June 30, 1998.

Operating,  marketing and advertising, and general and administrative costs were
$227 for the second  quarter of 1998,  an increase of $12, or 5.6 percent,  over
the same period in 1997. Increases in operating,  marketing and advertising, and
general  and  administrative  costs are  primarily a function  of  increases  in
employee costs, as well as costs associated with the deployment of new products,
such as  high-speed  data.  During the  six-month  period  ended June 30,  1998,
operating,  marketing and advertising, and general and administrative costs were
$457, an increase of $42, or 10.1 percent, over the same period in 1997.

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.  Other operating losses increased  primarily as a result of increased
corporate costs, including costs associated with international activities.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Interest Expense and Other
<TABLE>
<CAPTION>
<S>                            <C>        <C>          <C>        <C>       <C>        <C>       <C>        <C>

------------------------------ ----------------------- -------------------- -------------------- --------------------
                                 Three Months Ended                         Six Months Ended
                                      June 30,               Change              June 30,              Change
                               ----------------------- -------------------- -------------------- --------------------
                                 1998        1997          $         %        1998       1997        $         %
------------------------------ ---------- ------------ ---------- --------- ---------- --------- ---------- ---------

Interest expense                  $(143)       $(166)        $23    (13.9)     $(293)    $(340)        $47    (13.8)
Equity losses in
  unconsolidated ventures           (69)        (153)         84    (54.9)      (205)     (318)        113    (35.5)
Gains on sales of investments
                                      22           44       (22)    (50.0)         39        95       (56)    (58.9)
Gain on sale of domestic
  wireless investment              3,869            -      3,869         -      3,869         -      3,869         -
Guaranteed minority interest
  expense                           (20)         (22)          2     (9.1)       (42)      (44)          2     (4.5)
Other income (expense)-net           110          (7)        117         -         73      (11)         84         -
------------------------------ ---------- ------------ ---------- --------- ---------- --------- ---------- ---------
</TABLE>

Interest Expense.  Interest expense  decreased $23, or 13.9 percent,  during the
three-month  period  ended June 30,  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,
and the  Refinancing  which  resulted in lower  interest rate  commercial  paper
outstanding.  The reduction in interest expense was partially offset by 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.  Interest  expense  decreased $47, or 13.8 percent
during the six-month  period ended June 30, 1998, due to the debt assumption and
refinancing  described  above,  as well as overall  lower debt levels in 1998 as
compared with 1997.

Equity Losses in Unconsolidated  Ventures.  Equity losses decreased $84 and $113
for the three- and six-month periods ended June 30, 1998, predominantly due to a
decrease in losses generated from international  ventures and the absence of the
domestic  investment  in PrimeCo which was  transferred  to AirTouch on April 6,
1998 pursuant to the AirTouch Transaction.  The decrease in international losses
relates to foreign exchange rate  improvements at Telewest  Communications,  plc
("Telewest");  rapid  subscriber  growth  experienced  by the wireless  ventures
located in Hungary,  the Czech and Slovak Republics,  Poland, and India, and the
absence of losses  related to ventures in Malaysia  and  Indonesia  in the first
half of 1998. In 1998,  equity method  accounting was suspended on the Company's
investments in Malaysia and Indonesia in conjunction  with a 1997  adjustment 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.


Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

The Company  continues to monitor its  investments  in Malaysia  and  Indonesia.
During the first half of 1998,  the Indonesian  currency  declined 62 percent as
compared with the U. S. dollar and the Malaysian  currency  decreased  slightly.
During the first quarter of 1998,  the Company  funded an additional $6 pursuant
to the terms of the Indonesian venture shareholder support agreement. After such
fundings,  the Company's contractual funding commitment is $13 and the partners'
commitments are $36, for which MediaOne Group is contingently liable.

During the first  half of 1998,  the  Company  contributed  $4 to its  Malaysian
venture related to debt repayment. In addition, during July 1998, MediaOne Group
contributed $6 as a shareholder loan.

On July 24, 1998, British Telecom (BT) announced it would acquire a 33.3 percent
stake in Binariang Bhd, the Malaysian  venture  discussed above.  MediaOne Group
currently  owns a 19 percent stake in the venture.  Under the terms of the deal,
MediaOne Group's interest would be diluted to 12.6 percent.
 
MediaOne  Group's  interest in Old PrimeStar was exchanged for an approximate 10
percent interest in PrimeStar on April 1, 1998.

Gains on Sales of Investments. During the second quarter of 1998, MediaOne Group
sold various investments, resulting in a pretax gain of $22. In addition, during
the first  quarter of 1998,  the Company  sold a cable  programming  investment,
resulting in a pretax gain of $17.  During 1997,  MediaOne Group sold its shares
of Time Warner, (acquired in the acquisition of Continental Cablevision,  Inc.),
for a pretax  gain of $44  during  the  second  quarter,  and its  five  percent
interest  in a wireless  venture in France,  for a pretax gain of $51 during the
first quarter.

Gains on Sales of Investments in Domestic Wireless.  On April 6, 1998,  MediaOne
Group sold its domestic wireless  businesses to AirTouch,  resulting in a pretax
gain of $3,869.

Guaranteed  Minority Interest Expense. On June 12, 1998, MediaOne Group redeemed
for cash $301 face  value of 7.96  percent  Preferred  Securities  and $237 face
value of 8.25 percent Preferred  Securities,  resulting in decreased  guaranteed
minority interest expense for the quarter.

Other Income  (Expense) - Net. Other income of $110 during the second quarter of
1998  increased $117 due primarily to a reclass of Separation and other costs of
$53,  accrued  in  the  first  quarter  of  1998,  to  the  gain  realized  upon
distribution of New U S WEST. In addition, the recognition of dividend income on
the AirTouch preferred stock received in the AirTouch  Transaction and decreased
foreign  exchange  transaction  losses  associated  with loans to  international
ventures  contributed  to other  income in 1998.  Other income of $73 during the
six-month period ended June 30, 1998 increased $84 due primarily to the AirTouch
preferred  dividend income and foreign  exchange  transaction  losses  described
above.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Liquidity and Capital Resources

Operating Activities

Cash provided by operating activities during the six months ended June 30, 1998,
decreased  $253 to $158 as compared  with the same period in 1997.  The decrease
was caused by the domestic wireless operations which were sold on April 6, 1998,
as  well as from  the  timing  of  interest  payments  and  costs  paid  for the
Separation.  The decrease in cash provided by operating  activities was slightly
offset by the receipt in 1998 of $28 in dividends, primarily from Westel 450 and
Westel 900, the Company's European wireless investments in Hungary.

During 1997, the domestic wireless business  contributed  operating cash flow of
approximately $360. As a result of the AirTouch  Transaction,  MediaOne Group no
longer has access to this operating cash flow.  Operating cash flows of MediaOne
Group  will  consist  primarily  of the cash  generated  by its  domestic  cable
business.   MediaOne  Group  expects  that  its  future  cash  needs,  primarily
associated  with domestic  cable  capital  expenditures  and debt service,  will
exceed cash  generated  from  operations  during the next few years.  Additional
financing   will  come  primarily  from  a  combination  of  new  debt  and  the
monetization  of the  securities  received from AirTouch in connection  with the
AirTouch Transaction.

Effective June 12, 1998, New U S WEST was no longer part of the consolidated tax
return of MediaOne  Group.  MediaOne  Group  expects to recover tax benefits for
expected  consolidated  tax losses in 1998 and 1999 from the  carryback of these
losses to 1996 and 1997 consolidated tax returns. MediaOne Group does not expect
to be able to recover tax  benefits in the year 2000 if it incurs a tax loss for
that year.

Investing Activities

Total capital  expenditures at MediaOne Group, were $725 and $709 during the six
months ended June 30, 1998 and 1997,  respectively.  The majority of the capital
expenditures  were devoted to upgrading the domestic cable network and preparing
for the provision of new and enhanced  services.  The Company  anticipates  that
capital expenditures will accelerate during the latter part of 1998.

MediaOne Group holds various investments in international and domestic ventures.
For the six- month period ended June 30, 1998 and 1997, the Company invested $13
and $49, respectively, in international ventures, net of a $45 repayment in 1998
from a wireless  investment in the United  Kingdom.  The majority of investments
made during  1998 and 1997 were  capital  contributions.  During  1998,  capital
contributions were made to cable investments in Belgium, Japan and Singapore, as
well as a  wireless  venture  in India.  Investments  in 1997  included  capital
contributions  to a wireless  venture  in India.  Domestically,  MediaOne  Group
invested $79 and $116

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

during  the six  months  ended  June 30,  1998 and 1997,  respectively.  Of such
investments,  $64 and $98 represented  contributions  to PrimeCo during 1998 and
1997,  respectively.  The  investment  in PrimeCo  was sold  April 6,  1998,  in
conjunction with the AirTouch Transaction.

During 1998, MediaOne Group sold various  investments  resulting in net proceeds
of $187, comprised of the following:  (a) an equity investment in PrimeStar, for
net proceeds of $77,  (b) a cable  programming  investment,  for net proceeds of
$38, (c) various cable systems,  for net proceeds of $33, and (d)  miscellaneous
assets, for net proceeds of $39. During 1997,  MediaOne Group sold international
and domestic  investments  totaling $575, as follows: (a) shares of Time Warner,
for net proceeds of $220, (b) shares of Teleport  Communications  Group, for net
proceeds of $178, (c) Thomson Directories, the directory operation in the United
Kingdom,  for net proceeds of $121, (d) partial proceeds of $29 from the sale of
a five percent  interest in a French  wireless  venture,  and (e)  miscellaneous
investments, for net proceeds of $27.

During the first  quarter of 1997,  MediaOne  Group paid the cash portion of the
acquisition of Continental  Cablevision,  Inc., of $1,150 to the  shareowners of
that company.

Financing Activities

Dividends.  The Company paid dividends on the  Communications  Stock of $519 and
$475 during the six-months ended June 30, 1998 and 1997, respectively.  MediaOne
Group  will  no  longer  pay  dividends  on  the  Communications  Stock  as  all
Communications  Stock has been exchanged for New U S WEST stock,  effective June
12, 1998.

Cash from Discontinued Operations.  Cash from discontinued operations was $4,953
and $598 during the six months ended June 30, 1998 and 1997, 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 the  amount of  commercial  paper
issued in the Refinancing.

Debt  Activity.  Total debt at June 30,  1998 was  $5,115,  a decrease of $3,848
compared  with  December 31,  1997.  The  decrease in debt  outstanding  was due
primarily to the  assumption  by New U S WEST of  approximately  $3.9 billion of
indebtedness in connection with the Dex Alignment.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Excluding debt  associated  with the capital assets  segment,  MediaOne  Group's
percentage of debt to total  capital at June 30, 1998 was 27.2 percent  compared
with 41.8 percent at December  31,  1997.  Including  debt  associated  with the
capital  assets  segment,   Preferred  Securities  and  mandatorily   redeemable
preferred stock,  MediaOne  Group's  percentage of debt to total capital at June
30, 1998 was 32.1  percent  compared  with 48.1  percent at December  31,  1997.
Including debt  associated with the capital assets segment of $368 and Preferred
Securities of $561, total indebtedness at June 30, 1998 was $6,044.

On June 12, 1998,  MediaOne Group tendered $4.9 billion  notional amount of long
term debt.  The cash tender amount of $5.5 billion was financed with  commercial
paper,  at a weighted  average  interest rate of 5.85 percent.  Also on June 12,
1998,  MediaOne Group tendered for cash a portion of the  outstanding  Preferred
Securities.  Of the total outstanding Preferred  Securities,  $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 with  floating-rate  commercial paper, with a weighted average interest
rate of 5.85 percent.

On August 5, 1998,  MediaOne  Group  issued  approximately  $1.5 billion of 6.25
percent notes  mandatorily  exchangeable at maturity 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, at MediaOne  Group's option.  The
notes mature in August,  2001.  Proceeds  from the offering  were used to reduce
outstanding commercial paper and for general corporate purposes.

During the second  quarter of 1997,  MediaOne  Group  redeemed a 10-5/8  percent
senior  subordinated note with a recorded value of $110,  including a premium of
$10.  The debt  extinguishment  resulted  in a net gain of $3, net of income tax
expenses  of  $2.  The  Company  financed  the  redemption  with   floating-rate
commercial paper.

Other

At  December  31,  1997,  a  subsidiary  of  MediaOne  Group   guaranteed  debt,
non-recourse to MediaOne Group, associated with its international investment, in
the principal  amount of  approximately  $600. In June 1998,  the  international
investment  refinanced  its line of credit  and drew on the new line of  credit,
resulting in an increase of the debt guarantee to approximately $900, as of June
30, 1998.

Under  registration  statements  filed with the SEC as of August 10,  1998,  the
Company is permitted to issue up to approximately $500 of new debt securities.


Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

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.

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.

Risk Management

In conjunction with the Separation,  MediaOne Group refinanced substantially all
of the indebtedness issued or guaranteed by Old U S WEST and terminated existing
interest rate contracts. The cost of refinancing, including debt redemption, was
financed by issuing commercial paper.

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

Interest  Rate  Risk   Management.   At  June  30,  1998,   MediaOne  Group  had
approximately  $1,814 of floating rate commercial  paper debt exposed to changes
in interest  rates. A hypothetical 10 percent  increase in the weighted  average
commercial  paper  rate would  result in a $6  decrease  in the annual  reported
earnings of the company.

Competitive and Regulatory Environment

In June,  1998,  the  Federal  Communications  Commission  issued  formal  rules
providing for the retail sale of set-top  television boxes designed to integrate
digital  programming.  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 January 1, 2000.  The Company is currently  reviewing the impact of
this ruling.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Year 2000 Costs
 
MediaOne  Group uses software and related  technologies  throughout its business
that will 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.

MediaOne Group is progressing  through a  comprehensive  program to evaluate and
address the impact of the Year 2000 on its operations to ensure that its systems
recognize  calendar  Year 2000.  MediaOne  Group is utilizing  both internal and
external  resources in  implementing  the program.  The program  consists of the
following phases:
<TABLE>
<CAPTION>
<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>

MediaOne  Group has  aggregated  its  business  operations  into  four  critical
business  functions  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, and building  operations and
security.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

In addition to the program  phases and  critical  business  functions,  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 would have such an impact on the business,
that if the risk is not appropriately  managed and/or mitigated,  the occurrence
of the risk would have an adverse impact on the operations of the business.

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

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>
<S>                    <C>                       <C>                   <C>                <C>    

---------------------- ------------------------- --------------------- ------------------ -----------------
                                                                     Estimated Date
Business Functions      Current Areas of Focus    Operational Impact    Current Status     of Completion
---------------------- ------------------------- --------------------- ------------------ -----------------

Customer Service       Head End Controller       Inability to          Phase II           Q2 1999
                       Set Top Box               provide video,
                       Switches                  telephony & data
                       Ad Insertion              service

Customer Care &        Subscriber Billings       Loss of revenues      Phase II           Q2  1999
Billing                Ad Sales Billings
                       Call Center Operations


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


Employees, Health &    Payroll & Benefit         Loss  of  support     Phase III          Q2 1999
Safety                 Systems                   systems and
                       Facilities Functions      employee disruption

---------------------- ------------------------- --------------------- ------------------ -----------------
</TABLE>

MediaOne Group is currently  evaluating  Year 2000 cost estimates based upon the
definition  in the  SEC's  interpretation  on  disclosure  of Year  2000  issues
released on August 4, 1998.  MediaOne  Group  intends to provide  Year 2000 cost
estimates in the third quarter of 1998.

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

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 is closely evaluating
these  relationships  and associated  contracts to minimize the operational risk
which may exist while gaining  vendor  commitment to product  compliance on time
and within expected cost estimates. MediaOne Group is heavily dependent upon the
connectivity  with content and service providers who are in turn responsible for
their own systems and technology as well as systems and  technology  provided to
them.

Business  Continuity  teams are being  developed for the Year 2000 program which
will include contingency and disaster recovery management. Contingency plans are
being  developed as part of the vendor review which  includes  trigger dates and
processes for implementation of the contingency plan where necessary.  There can
be no assurance  that these  contingency  plans will eliminate all potential for
service interruption.

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  influences  Year 2000  efforts at TWE  through the TWE Board of
Representatives.  TWE  has  represented  to  MediaOne  Group  that  it is in the
conversion phase of their Year 2000 program as of June 30, 1998.  MediaOne Group
is planning to audit TWE and its  progress  relative to their Year 2000  program
during the last half of 1998 as deemed  necessary.  MediaOne Group will continue
to monitor information  provided to the investor community by AirTouch to insure
sufficient  progress  is being made toward  remediation  of Year 2000 issues and
that MediaOne Group's investment value is maintained.


Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

(II) International Investments

Internationally,   MediaOne   Group  holds  an  investment   in  Telewest,   the
second-largest provider of combined cable and broadband  communications services
in the  United  Kingdom.  MediaOne  Group  also  holds  interests  in cable  and
broadband properties in Singapore, the Netherlands,  Belgium, the Czech Republic
and Japan.  Additionally MediaOne Group holds wireless interests which include a
50 percent joint venture  interest in Mercury  Personal  Communications  ("One 2
One"),  a provider of PCS services in the United  Kingdom.  MediaOne  Group also
owns  interests  in  wireless  properties  in  Hungary,  the  Czech  and  Slovak
Republics, Russia, India and Poland.

Fifteen of the sixteen  international  ventures in which  MediaOne  Group has an
investment  have  completed  their  initial  inventory  of systems  and  related
technologies  subject  to Year 2000  exposure.  The  ventures  have  established
remediation  strategies  for  approximately  80 percent of the inventory  items,
while having  completed  remediation on  approximately 50 percent of the high to
medium  risk  related  items.  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.

SUMMARY

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 problem. Failure to complete the
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, local telephone companies,  long distance providers,  power providers,
etc. to correct their systems, which MediaOne Group's systems interconnect with,
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 personnel  with  appropriate  skills and abilities to locate and correct
all relevant computer code and similar  uncertainties.  However,  MediaOne Group
believes  that  with its  planned  repair,  replacement,  or  retirement  of the
relevant systems and related technologies, the Year 2000 issue can be mitigated.


Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Selected Proportionate Data

The  following  table and  discussion  is not  required  by GAAP or  intended to
replace the Combined Financial  Statements  prepared in accordance with GAAP. It
is presented  supplementally  because MediaOne Group believes that proportionate
financial and operating data facilitate the  understanding and assessment of its
Combined Financial Statements.  The table does not reflect financial data of the
capital assets  segment,  which had net assets of $445 and $419 at June 30, 1998
and December 31, 1997,  respectively.  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>
<S>  <C>                                                          <C>           <C>            <C>    
----------------------------------------------------------------- ------------- -------------- -------------
                                                                                                 Percent
Six Months Ended June 30,                                                 1998           1997     Change
----------------------------------------------------------------- ------------- -------------- -------------
Revenues
Cable and broadband:
     Domestic (1)                                                       $2,696         $2,496           8.0
     International                                                         150            226        (33.6)

Wireless communications:
     Domestic                                                              354            652        (45.7)
     International                                                         509            324          57.1

Corporate                                                                   10              7          42.9

Other (2)                                                                   32             77        (58.4)
                                                                  ------------- -------------- -------------

Total revenues                                                          $3,751         $3,782         (0.8)
================================================================= ============= ============== =============
EBITDA (3)
Cable and broadband:
     Domestic (1)                                                         $873           $792          10.2
     International                                                           3             20        (85.0)

Wireless communications:
     Domestic                                                              114            212        (46.2)
     International                                                          65            (3)             -

Corporate                                                                 (30)           (22)          36.4

Other (2)                                                                    -            (9)             -
                                                                  ------------- -------------- -------------

Total EBITDA                                                            $1,025         $  990           3.5
================================================================= ============= ============== =============
</TABLE>

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued

Selected Proportionate Data, continued
<TABLE>
<CAPTION>
<S>  <C>                                                          <C>           <C>            <C>   

----------------------------------------------------------------- ------------- -------------- ------------
                                                                                                 Percent
Six Months Ended June 30,                                                 1998           1997    Change
----------------------------------------------------------------- ------------- -------------- ------------
Subscribers
Cable and broadband:
     Domestic (1)                                                        7,452          7,674        (2.9)
     International                                                         903          1,199       (24.7)

Wireless communications:
     Domestic                                                                -          2,119            -
     International                                                       1,268            760         66.8
                                                                  ------------- -------------- ------------

Total subscribers                                                        9,623         11,752       (18.1)
================================================================= ============= ============== ============
</TABLE>

(1) The  proportionate  results are based on the 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.
(2)   Primarily includes international directories.
(3) Proportionate  EBITDA represents the MediaOne Group's equity interest in the
entities multiplied by the entity's EBITDA. As such,  proportionate  EBITDA does
not represent cash available to the MediaOne Group.

Proportionate  Results of  Operations - Six Months Ended June 30, 1998  Compared
with 1997

For the  first  six  months  of  1998,  proportionate  MediaOne  Group  revenues
decreased  0.8 percent,  to $3,751,  EBITDA  increased  3.5 percent,  to $1,025.
Normalized for the one-time effects of acquisitions,  dispositions, and a change
in classification of the domestic cable late fee revenues, proportionate revenue
increased 14.9 percent and EBITDA increased 20.8 percent.

Cable and Broadband. During the first six months of 1998, proportionate revenues
for the domestic  cable and  broadband  operations  increased  8.0  percent,  to
$2,696.  Normalized for the one-time  effects of cable system  acquisitions  and
dispositions,  and  a  change  in  classification  of  the  late  fee  revenues,
proportionate  revenue  increased 9.0 percent.  This is a result of increases in
subscribers  and  revenue  per  subscriber   mainly  due  to  price   increases.
Proportionate  EBITDA  increased  10.2  percent,  to  $873.  Normalized  for the
one-time effects of cable system  acquisitions and  dispositions,  proportionate
EBITDA increased 10.3. This increase is primarily a result of

Form 10-Q - Part I

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (Dollars in millions), continued


Selected Proportionate Data, continued

higher  revenues,   partially  offset  by  higher  programming  fees,  increased
personnel costs related to customer  service  initiatives  and costs  associated
with deployment of high speed data services. Proportionate EBITDA related to TWE
operations  increased 19.3 percent.  TWE's results benefited from improved cable
and programming operations and gains realized by asset sales.

During  the  first  six  months  of  1998,  international  cable  and  broadband
proportionate   revenues   decreased   $76,  or  33.6  percent,   to  $150,  and
proportionate  EBITDA  decreased  $17,  or 85  percent,  to $3.  Normalized  for
dispositions,  proportionate revenue increased $30, or 25.0 percent, to $150 and
EBITDA  increased $8 to $3.  Customer  growth at Telewest  Communications,  Inc.
("Telewest")  contributed to the increase in proportionate  revenue. A reduction
in MediaOne Group  international  staff costs as well as improved  operations at
Telewest  contributed  to the increase in  proportionate  EBITDA.  In 1998,  the
Company  suspended   proportionate  reporting  for  Malaysia  and  Indonesia  in
conjunction  with the  suspension  of  equity  method  accounting  for these two
ventures.

Proportionate  international cable subscribers totaled 903,000 at June 30, 1998,
a 5  percent  increase,  on a  comparable  basis.  Telewest's  cable  television
subscribers increased 14 percent compared with last year.

Wireless  Communications.  On April 6, 1998,  MediaOne  Group  sold its domestic
wireless businesses to AirTouch.

During  the  first  six  months  of  1998,   proportionate   revenues   for  the
international  wireless operations increased $185, or 57.1 percent, to $509, and
proportionate EBITDA increased $68 to $65. The increase in proportionate revenue
and  EBITDA  is the  result  of a 66.8  percent  increase  in the  international
wireless  subscriber  base to  1,268,000.  The digital  wireless  operations  in
Hungary,  Czech  Republic,  Slovakia,  Malaysia,  Poland  and India  contributed
significantly to the increase. The personal  communications  services venture in
the United  Kingdom,  One 2 One,  added 328,000  proportionate  customers,  a 93
percent increase, from a year ago.

Corporate.  During the first half of 1998, proportionate  revenue for  corporate
operations  increased $3, or 42.9 percent,  to $10. EBITDA decreased $8, or 36.4
percent to $(30).

Other.  MediaOne Group sold its wholly owned international  directory operations
in the  United  Kingdom  and  Poland  on June 4,  1997,  and  October  1,  1997,
respectively.  These two  operations  comprise  the  majority  of  proportionate
international directories results.


Form 10-Q - Part I

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.



Reference is made to the information set forth on page 43.



                                                      54
Form 10-Q - Part II

                                            PART II - OTHER INFORMATION

Item 1.  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

At the Company's  annual meeting of shareholders  on June 6, 1998,  shareholders
voted as follows to approve the Separation of Old U S WEST into MediaOne  Group,
Inc. and New U S WEST:
<TABLE>
<CAPTION>
<S>         <C>                                     <C>                                      <C>    

                 For                                   Against                               Abstained

             638,993,680                             13,740,673                              5,847,573
</TABLE>

The  shareholders  voted as follows for the purpose of electing five individuals
as directors of the Company:
<TABLE>
<CAPTION>
<S>           <C>                                  <C>                                    <C>    

              Directors                            Votes in Favor                         Votes Withheld

CLASS I

Grant A. Dove                                        721,898,887                            18,124,990
Allen F. Jacobson                                    721,576,398                            18,447,479
Charles M. Lillis                                    720,321,422                            19,702,455
Charles P. Russ, III                                 722,124,382                            17,899,495
Louis A. Simpson                                     722,279,645                            17,744,232
</TABLE>

Arthur  Andersen LLP was  confirmed as the Company's  independent  auditors with
729,715,548  votes  in  favor,  6,454,085  votes  against  and  3,853,011  votes
abstaining.

The  shareholders  voted as follows to approve an amendment to the U S WEST 1994
Stock Plan (renamed "MediaOne Group 1994 Stock Plan" effective with the split on
June 12, 1998):
<TABLE>
<CAPTION>
<S>          <C>                                     <C>                                   <C>    

               In Favor                                Against                               Abstained

             589,664,012                             58,543,696                             10,373,943

</TABLE>


Form 10-Q - Part II

Item 4.  Submission of Matters to a Vote of Security Holders (continued)


The  shareholders  voted as  follows to  approve  an  amendment  to the U S WEST
Executive   Short-Term   Incentive  Plan  (renamed   "MediaOne  Group  Executive
Short-Term Incentive Plan" effective with the split on June 12, 1998):
<TABLE>
<CAPTION>
<S>          <C>                                    <C>                                     <C>     

               In Favor                                Against                               Abstained

             564,029,310                             83,676,618                             10,875,723
</TABLE>

The  shareholders  also  considered and rejected the following two shareholder
proposals at the annual meeting:
<TABLE>
<CAPTION>
<S>             <C>                           <C>               <C>                <C>                <C>    

                Proposal                       In Favor           Against           Abstained          Not Voted

Elimination of Classified Board               279,095,426       358,753,835        20,722,694         81,451,922

Initiation of Cumulative Voting               229,361,902       401,500,167        27,710,490         81,451,318
</TABLE>



Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits
<TABLE>
<CAPTION>
<S>          <C>    

Exhibit
Number

(10a).       Form of Amended and Restated Rights Agreement  between  MediaOne Group,  Inc. and State Street
             Bank and Trust  Company,  as Rights Agent  (Exhibit 4 to the Company's  Current Report on Form
             8-K dated June 24, 1998).

(10b).       Separation  Agreement between U S WEST, Inc. (renamed "MediaOne Group,  Inc.") and USW-C, Inc.
             (renamed "U S WEST,  Inc."),  dated as of June 5, 1998 (Exhibit 99.1 to the Company's  Current
             Report on Form 8-K dated June 24, 1998).

(10c).       Employee Matters Agreement between U S WEST, Inc. (renamed "MediaOne Group,  Inc.") and USW-C,
             Inc. (renamed "U S WEST, Inc."), dated as of June 5, 1998 (Exhibit 99.2 to the Company's 
             Current Report on Form 8-K dated June 24, 1998).

(10d).       Tax Sharing Agreement between U S WEST, Inc. (renamed "MediaOne Group,  Inc.") and USW-C, Inc.
             (renamed "U S WEST, Inc."), dated as of June 5, 1998 (Exhibit 99.3 to the Company's Current
             Report on Form 8-K dated June 24, 1998).
</TABLE>

Form 10-Q - Part II

Item 6.  Exhibits and Reports on Form 8-K: (a)  Exhibits (cont'd.)
<TABLE>
<CAPTION>
<S>          <C>    

Exhibit
Number


10e.         Form of Chief Executive Officer Change of Control Agreement.

10f.         Form of Business Unit Executive Change of Control Agreement.

10g.         Form of Executive Change of Control Agreement.

12.          Statement  regarding  computation of earnings to fixed charges ratio of MediaOne  Group,  Inc.
             
99.          Unaudited Pro Forma Condensed Combined Statements of Operations of MediaOne Group, Inc.
</TABLE>


(b)  Reports on Form 8-K filed during the Second Quarter of 1998
<TABLE>
<CAPTION>
<S>          <C>    

(i)          Form 8-K/A report dated April 13, 1998,  containing amendments to the U S WEST, Inc. Unaudited
             Pro Forma Condensed  Combined  Financial  Statements with respect to U S WEST,  Inc.'s amended
             annual report filed on Form 10-K/A.

(ii)         Form 8-K report dated April 6, 1998,  with respect to the  disposition by the Media Group of 
             U S WEST, Inc. of its domestic wireless businesses to AirTouch Communications, Inc.

(iii)        Form 8-K report  dated April 24, 1998,  regarding  press  releases by U S WEST  Communications
             Group and U S WEST Media Group with respect to the Company's first quarter earnings.

(iv)         Form 8-K report dated May 15, 1998,  concerning  the release of Unaudited Pro Forma  Condensed
             Combined  Financial  Statements with respect to the Separation of U S WEST, Inc.'s Media Group
             and Communications Group into two separate companies.

(v)          Form 8-K report  dated  June 18,  1998,  concerning  the  issuance  of  restated  consolidated
             financial  statements  with  respect to the  Separation  of U S WEST,  Inc.'s  Media Group and
             Communications Group into two separate companies.

(vi)         Form 8-K report dated June 24, 1998,  with respect to the  disposition  of the Dex business to
             the New U S WEST and the acquisition of New U S WEST under the Dex Dividend.

</TABLE>



                                                    SIGNATURES




Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                               /S/   Richard A. Post
                              -------------------------------------------------

August 13, 1998               MediaOne Group, Inc.
                              Richard A. Post
                              Executive Vice President and
                              Chief Executive Officer